Document:

exv10w47

 

Exhibit 10.47

DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT (“Agreement”) effective between CytoCore, Inc. (“CytoCore”), a
corporation organized and existing under the laws of the State of Delaware, United States of
America whose principal address is 414 N. Orleans, Chicago 60601 and Palex Medical SA
(“Distributor”), organized and existing under the laws of whose principal address is Johann
Sebastian Bach, 12, 08021 Barcelona, Spain. (Distributor and CytoCore may sometimes be referred to
herein individually as a “party” or collectively as the “parties”).

IN CONSIDERATION of the mutual promises and payments contained herein the parties hereto agree as
follows:

	1.	 	APPOINTMENT OF DISTRIBUTOR.
	 
	 	 	CytoCore hereby appoints Distributor as the exclusive Distributor in (“Area”) of the
products set forth on Schedule A annexed hereto as of the date hereof and such other
products (if any) as may be added to the said Schedule by mutual agreement (“Products”).
CytoCore may delete any Products from Schedule A at any time in its sole discretion upon
written notice to Distributor.
	 
	2	 	SUPPLY OF PRODUCTS
	 
	a.	 	CytoCore or its designee shall sell and Distributor shall purchase such quantities
of Products (as are agreed herein) for sale in the Area. CytoCore may from time
to time change the source of supply of Products and, if CytoCore or its designated
supplier shall discontinue the manufacture, sale or promotion of any Product,
CytoCore shall delete such Product Schedule A and cease selling the Product to
Distributor. Distributor shall be entitled to continue selling such Product in the
Area until such time as the stocks of such Product held by Distributor have been
exhausted unless CytoCore advises Distributor to return such inventory to
Cytocore.
	 
	b.	 	CytoCore or its designee shall sell and Distributor shall purchase Products at
prices established in accordance with Schedule A.
	 
	c.	 	Risks for Products shall pass to Distributor when Products are delivered into the
Area covered by this agreement and Distributor shall thereafter be responsible for
any damage to or loss of Products. Distributor shall notify CytoCore of the details
of any incorrect delivery or of any damage to or shortage in any delivery within
eight (8) working days of the receipt thereof by Distributor. Title in and to the
Products shall pass to Distributor upon receipt of the Products by Distributor in
accordance with clause 2(e) of this Agreement.
	 
	d.	 	Distributor shall not knowingly re-export or sell Products for sale outside the Area
without the prior written consent of CytoCore, except that nothing in this

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	 	 	Agreement shall prevent Distributor from accepting unsolicited orders from outside the Area
for the Products, as long as there is no exclusive distributor for the Area.
	 
	e.	 	Distributor shall pay the price stated on the invoice by 50% prepayment and 50%
net 60 days for the Initial Term (as defined below at clause 6a) . Distributor
shall make payment to CytoCore in the currency of Euros ( ) at such place as
CytoCore shall from time to time in writing.
	 
	f.	 	Distributor shall not be entitled by reason of any set off, counter claim, abatement,
or other similar deduction to withhold payment of any invoiced amount due to
CytoCore. If Distributor fails to pay by the due date any amount payable by it
under this Agreement, CytoCore shall be entitled, but not obliged, to charge
Distributor interest on the overdue amount payable by Distributor immediately on
demand, from the due date up to the date of actual payment, after as well as before
judgment at the rate of 2 %per cent above the base rate for the time being of (8%),
and fixed sum compensation under the Late Payment of Commercial Debts
Regulations 2002. Such interest shall accrue on a daily basis and be compounded
quarterly. CytoCore may increase the Base Rate to reflect then market conditions.
	 
	g.	 	During the term of this Agreement Distributor shall provide CytoCore every
quarter with a written twelve (12) month forecast containing its best estimates of
the number of units of each Product which will be required by Distributor, the
production and delivery of which shall be subject to approval by CytoCore
(“Forecast”). The Forecast for the immediate next three (3) months shall be
binding on Distributor. If notice of termination of this Agreement has been served
by either party in accordance with the terms of this Agreement, the Forecast shall
be binding on Distributor until such time as this Agreement terminates.
	 
	h.	 	Distributor shall submit written purchase orders to CytoCore or its designee stating
both the quantities of Products to be purchased and delivery schedules therefore in accordance
with the purchasing procedures mutually agreed upon by CytoCore and Distributor from time to
time. CytoCore, upon acceptance of the purchase order from Distributor, shall use its
reasonable endeavors to deliver or cause to be delivered to Distributor the quantities of
Products set forth in such purchase orders at the times specified therein.
	 
	3.	 	SALVAGE OF DAMAGED GOODS
	 
	 	 	CytoCore shall have the full right under the Distributor’s insurance policies to
possession of any of the Products involved in any loss or damage and shall control the
possession of any such Products, even if full payment of same already has been made by
Distributor to CytoCore. For the duration of this Agreement, Distributor shall maintain
insurance in respect of the Products and will list CytoCore as a “named insured” on the
face of the insurance policy. CytoCore, exercising its reasonable discretion, shall be the
sole judge as to whether Products

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	 	 	involved in any loss or damage under the Distributor’s policies are fit for consumption or
sale, or shall be sold or otherwise disposed of. Where payment for Products already has
been made by Distributor, Distributor, after deduction of salvage expenses, shall be
entitled to all proceeds below the policy retention or deductible. Under no circumstances
may Distributor release Products involved in any loss or damage to the insurer without
CytoCore’s prior written approval.
	 
	4.	 	RETURN OF MERCHANDISE TO CYTOCORE
	 
	 	 	CytoCore shall be obliged to accept the return of the Products from Distributor only
according to the policy set forth in Schedule B attached hereto.
	 
	5.	 	DISTRIBUTION AND PROMOTION OF PRODUCTS
	 
	a.	 	During the first (six) 6 months of this Agreement from the Effective Date
(“Implementation Period”), and annually thereafter, the parties shall work together
and provide the other party with all reasonable assistance and information in order
to produce a business plan in respect of the Products including, without limitation,
minimum purchase requirements (Schedule A) for the Products in the Area,
pricing of Products advertising and marketing expense committed by each party
and any other aspect relevant to the distribution, sale and promotion of the
Products in the Area (“Business Plan”). For this purpose, the parties shall meet no
later than one (1) month prior to the end of the Implementation Period, and
thereafter annually thereafter for the duration of this Agreement, as amended or
extended at a mutually convenient time and location, to review the Business Plan.
	 
	b.	 	The parties will agree on minimum purchase requirements to apply during the
Implementation Period, based on current realistic sales trends as at the Effective
Date for the Products (or similar or competing products) in the Area. No later
than one (1) month prior to the end of the Implementation Period the parties will
meet to discuss the minimum purchase requirements of Distributor for the
Products for the following twelve (12) month period following the
Implementation Period. Within seven (7) days of such meeting, the parties will
negotiate in good faith the level of minimum purchase requirements for the
Products for the following twelve (12) months (“Yearly Commitment”) and
within seven (7) business days shall agree on the parties= respective knowledge of
the marketplace in general. Subsequent year volume commitments will be agreed
upon in writing by both parties, no later than the end of each twelve (12) months
of this Agreement. In the event the parties fail for any reason to agree on
minimum purchase requirements for the Products for any calendar year, the
minimum purchase requirements for such year shall be deemed to be the same as
those established or deemed hereby to be established for the preceding calendar
year, or the same as the actual sales in such preceding calendar year if greater,
increased in each case by 10 % of the prior twelve month’s sales.. The attainment
of such minimum purchase requirements shall be an essential condition to the
continuation of this Agreement, and failure shall constitute for CytoCore the right,

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	 	 	but without the obligation to CytoCore to terminate this Agreement pursuant to clauses
14(b) (6).
	 
	c.	 	Distributor shall use its best efforts to create and maintain a market for and to
increase the sales or Products in the Area, shall provide at its sole expense an
organization for the continuous sale, promotion and distribution of the Products
throughout the Area, and shall sell, ship, and invoice the Products to purchasers in
the Area. In the Area, Distributor shall use its own sales force to sell, promote
and distribute the Products. Distributor may not sell, promote or otherwise
distribute any products which compete either directly or indirectly with the
Products and Distributor shall not establish any branch, or maintain any
distribution depot, outside of its Area for the sale of the Products. CytoCore shall
not be obligated to provide any resources to Distributor for the obligations set out
in this clause except for initial Product training to the Distributor’s sales force and
the provision of appropriate marketing materials.
	 
	d.	 	Distributor shall maintain a minimum inventory of Products not less than three (3)
months as set forth in the Forecast, as amended from time to time.
	 
	e.	 	CytoCore or its designee shall have the right to inspect and audit at all reasonable
times and by previous agreement with Distributor, Distributor’s inventory of the
Products and any data related to CytoCore’s business and/or the Products.
	 
	6.	 	Term
	 
	a.	 	This Agreement shall begin on the Effective Date and shall continue in effect,
unless sooner terminated as provided herein, for a period of five (5) years (“Initial
Term”). At the end of the Initial Term this Agreement will be automatically
extended for a further (three) years unless one of the parties has advised the other
in writing at least twelve (12) months prior to expiration of the Initial Term that it
intends to terminate this Agreement.
	 
	b.	 	In addition to the right of termination granted by Clause 14, CytoCore shall have
the right to terminate this Agreement at any time prior to the expiration of its term
upon sixty (60) days’ prior this Agreement should Distributor shall fail to attain
the annual minimum purchase requirements referred to in clause 5a.above and
shall take effect immediately unless otherwise agreed by CytoCore. Distributor
shall notify CytoCore as soon as Distributor becomes aware that that the annual
minimum purchase requirements are unlikely to be attained.. For the first full
calendar year of this agreement a mutually agreed range for the value of purchases
will be established by the end of the first quarter. This minimum-maximum range
will be agreed by Distributor and CytoCore and relate to purchases for the
remaining three-quarters of the first calendar year. In the event CytoCore
terminates this Agreement before the end of the Initial Term, CytoCore shall
repurchase from Distributor the inventory of Products at prices prevailing at the
start of the calendar year in which such Products are to be repurchased by

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	 	 	CytoCore. Such inventory of Products must be in saleable condition and have at least twenty
four( 24 )months shelf life before expiration.

	c.	 	In addition to such other rights of termination granted by clause 14, CytoCore shall
have the right to terminate of this Agreement at any time if the continued performance under
this Agreement becomes impractical due to the enactment of, or threatened enactment of, any
ordinance, statute, regulation, law or similar provision by any local, state or national
government. This Agreement shall terminate sixty (60) days after the date of written notice by
CytoCore to Distributor.
	 
	7.	 	INTELLECTUAL PROPERTY
	 
	a.	 	Distributor acknowledges and agrees that CytoCore or its Affiliate are the owners
of all Intellectual Property Rights incorporated on, in or relating to the Products.
For the purposes of this Agreement, “Intellectual Property Rights” includes all
intellectual property rights including (without limitation) patients, supplementary
protection certificates, pending patents, utility models, trade marks, database
rights, rights in designs, copyrights and topography rights (whether or not any of
these rights are registered, and including applications and the right to apply for
registration of any such rights) and all inventions, know-how, trade secrets,
techniques and confidential information, and all rights and forms of protection of
a similar nature or having equivalent or similar effect to any of these which may
subsist anywhere in the world, in each case for their full term, and together with
any renewals or extensions. Distributor acknowledges that it neither has nor shall
secure by this Agreement or by its acts during the term of this Agreement any
right to any Intellectual Property Rights incorporated on, in or relating to the
Products. Distributor agrees that title to and the right to use all such Intellectual
Property Rights incorporated on, in or relating to the Products shall at all times be
vested in CytoCore or its Affiliates whether or not such Intellectual Property
Rights incorporated on, in or relating to the Products become vested in
Distributor, Distributor hereby assigns to CytoCore, including by way of present
assignment of present and future rights, with full title guarantee, any Intellectual
Property Rights incorporated on, in or relating to the Products, together with all of
the goodwill associated therewith to hold the same unto CytoCore, its successors
in title and assigns.
	 
	b.	 	Distributor shall make no use of Intellectual Property Rights in or relating to the
Products as part of or in conjunction with or in relation to or associated with
Distributor’s company name, commercial name, tradename, corporate name,
divisional name, subsidiary name, nickname, translated name, transliterated name,
trading style, or similar name (hereinafter referred to as Marks”).
	 
	c.	 	Distributor shall comply, at all times, with such rules and regulations as CytoCore
may issue with respect to the reproduction or reference to any Intellectual Property
Rights incorporated on, in or relating to the Products. In particular, Distributor

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	 	 	shall ensure that on all advertising and promotional materials to be used and/or prepared
by Distributor relating to the Products, the  symbol ® shall be used in conjunction with any
registered Marks owned by CytoCore or “TM” in the cast of any unregistered trade marks
owned by CytoCore.
	 
	d.	 	Distributor shall make no use of any Intellectual Property Rights incorporated on,
in or relating to the Products without CytoCore prior to written consent on
Distributor’s material such as, but not limited to, advertising, stationery, bills,
business forms, calling cards, or real property signs.
	 
	e.	 	Distributor shall not use any of CytoCore’s trade marks in any way which would
tend to allow them to become generic, lose their distinctiveness, become liable to
mislead the public, or be materially detrimental to or inconsistent with the good
name, goodwill, reputation and image of CytoCore or any Affiliate and shall use
its best endeavors not to do anything which would bring into disrepute CytoCore,
the Products or any of CytoCore’s trade marks.
	 
	f.	 	Distributor shall not adopt or use any trade mark, symbol or device which
incorporates or is confusingly similar to, or is a simulation or colorable imitation
of any of CytoCore’s Marks or unfairly competes with any of CytoCore’s trade
marks. Distributor shall not any time, whether during or after termination of this
Agreement, apply anywhere in the world to register any trade marks identical to or
so nearly resembling any of CytoCore’s Marks as to be likely to deceive or cause
confusion.
	 
	g.	 	If Distributor believes or becomes aware that third parties are infringing any
Intellectual Property Rights incorporated on, in or relating to the Products or are
passing-off their products as products of CytoCore or of any of its Affiliates or of
any allegation that the Intellectual Property Rights incorporated on, in or relating
to the Products infringe the Intellectual Property Rights of a third party,
Distributor shall notify immediately Distributor shall not, without the prior written
consent of CytoCore, take any action in respect thereof, informal or formal,
including but limited to making any admission notifying others or of bringing any
legal proceedings or entering into any administrative proceedings against any such
alleged infringement or passing off. Distributor shall co-operate fully with
CytoCore or its Affiliates in the preparation or prosecution of any legal
proceeding or administrative proceeding and shall be reimbursed by CytoCore for
its reasonable costs.
	 
	h.	 	CytoCore may defend or initiate proceedings against unauthorized use of
CytoCore’s Intellectual Property Rights incorporated on, in or relating to the Products
and shall, in its sole discretion, decide what action (including litigation, arbitration
or compromise), if any, to take in respect of any infringement or alleged infringement of
any of the Intellectual Property Rights incorporated on, in or relating to the Products or
any other claim or counterclaim brought or threatened in respect of the Intellectual
Property Rights incorporated on, in or

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	 	 	relating to the Products. CytoCore shall not be obliged to bring or defend any proceedings,
whether for infringement or otherwise in relation to any of Intellectual Property Rights
incorporated on, in or relating to the Products, if it decides in its absolute discretion
not do so. In the event that Distributor is charged with any infringement of the
Intellectual Property Rights of any third party as a consequence of the necessary
activities of Distributor hereunder and Distributor notifies CytoCore fully and promptly in
writing thereof, CytoCore agrees to defend Distributor in any action taken against it based
upon such infringement and to indemnify Distributor in respect of all costs, claims,
demands and expenses associated therewith; provide however, CytoCore shall have the sole
conduct of such claims and shall have the right to require Distributor to discontinue the
acts complained of and to cancel the rights granted by this Agreement in respect thereof.
	 
	i.	 	In any infringement proceedings which are brought by CytoCore, CytoCore shall
be entitled to claim in respect of any loss suffered or likely to be suffered by the
Distributor, and any costs or damages awarded in respect of such claim shall first be
applied to satisfy CytoCore’s costs and expenses and shall then be apportioned between
CytoCore and Distributor in accordance with their respective losses.
	 
	j.	 	Distributor shall, on CytoCore’s reasonable request, give to CytoCore or its
authorized representative any information as to its use of Intellectual Property Rights
incorporated on, in or relating to the Products which may require and will render any
reasonable assistance required at reasonable cost in maintaining the Intellectual Property
Rights incorporated on, in or relating to the Products.
	 
	8.	 	ADVERTISING AND PROMOTION OF PRODUCTS
	 
	a.	 	As part of the Business Plan to be produced in accordance with clause 5a,
CytoCore shall from time to time deliver advertising, promotional and
instructional programs for the Products. Such programs may be modified in
CytoCore in its sole discretion at any time. Advertisements and the media in
which it is to be used, as well as all promotional and instructional materials to be
used, must be approved in advance in writing by CytoCore. Distributor shall at its
sole expense distribute all promotional and instructional materials supplied by
CytoCore from time to time. Distributor shall be free to utilize advertising as is
reasonably necessary to promote the sale of the Products in the Area, however any
advertising by Distributor with regard to the Products shall be conducted with
prior approval in writing by CytoCore.
	 
	b.	 	CytoCore recognizes that Distributor may from time to time request authorization
in writing from CytoCore to use the Intellectual Property Rights on, in or relating
to the Products. CytoCore grants a non-exclusive royalty-free license to
Distributor to use in the Area the Intellectual Property Rights on, in or relating to
the Products for the purposes only of fulfilling any orders made pursuant to this
Agreement, and performing its obligations under this Agreement. Distributor

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	 	 	shall provide CytoCore, for CytoCore’s prior written approval, copies of any materials to
be used and/or prepared by Distributor on or in relation to the Products. The right of
Distributor to use such Intellectual Property Rights on, in or relating to the Products may
unilaterally be revoked by CytoCore at any time and Distributor shall immediately stop such
use upon receipt of notification from CytoCore.
	 
	9.	 	RECORDS, REPORTS. AND INSPECTION Within fifteen (15) days after the last day of each
calendar month Distributor shall furnish a report to CytoCore in such form as CytoCore may
from time to time specify covering Distributor’s performance under this Agreement during the
previous calendar month. Distributor shall keep true and correct books of account in which
shall be entered contained in any of said reports. CytoCore or its designee shall have the
right at any reasonable time to inspect and examine such data, records and books of account
and Distributor’s inventory of Products, samples and product literature, and records relating
to Products. Review of the Distributor’s books shall be done by a reputable independent
auditing company that is acceptable to both parties necessary information to permit
Distributor to furnish the data to be
	 
	10.	 	LEGAL MATTERS
	 
	a.	 	Distributor shall notify CytoCore of all laws, regulations, or decrees relating to the
purchase, sale and importation, if applicable, of Products and to the carrying the

terms of this Agreement and of any transactions contemplated hereby.
	 
	b.	 	The formulae, ingredients or specifications for Products may be changed at any
time by CytoCore at the sole discretion of CytoCore when such changes are
deemed necessary for any reason satisfactory to CytoCore. When necessary for
the maintenance of any applicable registrations, approvals, or consents, CytoCore
shall inform Distributor of such changes.
	 
	c.	 	Distributor shall promptly send to CytoCore any data, report or information
regarding Products which may come to Distributor’s attention in the Area during
the term of this Agreement and shall report promptly to CytoCore any unexpected
or serious adverse reactions which arise in patients using Products. The person to
contact with respect to any such reactions is Richard Domanik, President., or his
successor. Should it be necessary, during the term of this Agreement, to recall the
Products due to an error imputable to the manufacture of the Products, or to any
third party who handled, worked with or gave advice in respect of the Products or
for any other reason, Distributor shall cease selling such Products in the Area and
shall provide CytoCore with all reasonable assistance to recall any such Products
and shall, at all terms, act in accordance with CytoCore’s directions
	 
	d.	 	Distributor understands that the Business Code of Conduct of CytoCore and its
Affiliates dictates that all of the Products are sold only on the basis of quality,
service, price and other legitimate marketing attributes, only to duly licensed and

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	 	 	authorized parties and that the payment of bribes for any purpose has no place in CytoCore’s
business and its absolutely prohibited. Distributor represents and warrants that it will not
engage in any conduct which is in violation of any applicable law in the Area, the United
States Foreign Corrupt Practices Act, or any other applicable laws or regulations.
	 
	e.	 	CytoCore may in its sole discretion decide to cease the distribution of any of the
Products by Distributor in the Area in circumstances where it appears to CytoCore, acting
reasonably, that any of the Products may, for whatever reason, be injurious to health or unfit
for human consumption or where the continued sale of a Product would be inconsistent with the
principles and standards applicable to good food production. The costs associated with any
Product recall (including, for the avoidance of doubt, the cost of any of the Products and the
costs involved in recalling any of the Products) will be borne by CytoCore. If either party
becomes aware of any circumstances which may require the distribution of any of the Products
to be suspended under this clause l0f, it shall immediately notify the other party of such
circumstances. Distributor shall execute any documents and do all such acts and things in
accordance with the reasonable directions of CytoCore to assist with the recall of any
Products. CytoCore shall, in its sole discretion, determine when the distribution and sale of
the affected Product can recommence. In the event of a recall, the agreed minimum purchase
levels will be reviewed by mutual consent.
	 
	11.	 	FORCE MAJEURE Neither CytoCore, nor its Affiliates, or their suppliers shall. be
liable for any failure or delay in the delivery of Products occasioned in whole or in part by
force majeure, Act of God, strike, lockout, fire, inability to obtain materials or shipping
space, boycott, breakdown, war, terrorism, civil commotion, destruction of plant, delay of
carrier, any governmental act, requirement, or regulation, or any other cause beyond its
control. IN NO EVENT WILL CYTOCORE BE LIABLE FOR CONSEQUENTIAL OR SPECIAL DAMAGES DUE TO ANY
SUCH CAUSE.
	 
	12.	 	RELATIONSHIP OF PARTIES The relationship between CytoCore and Distributor is and
during the term hereof shall be that of the seller and purchaser. Distributor, its agents and
employees are not the legal representatives, employees or agents of CytoCore for any purpose
and have no right or authority to assume or create, in writing or otherwise, any obligation of
any kind, express or implied, in the name of or on behalf of CytoCore. Distributor shall make
not representation inconsistent with the foregoing during or after termination of this
Agreement.
	 
	13.	 	OTHER OBLIGATIONS OF DISTRIBUTOR
	 
	a.	 	Distributor shall not market or sell, distribute or promote any product comparable
to or competitive with any Product covered by this Agreement. Distributor may request the
CytoCore’s prior written approval. The notice shall specify the source

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	13.	 	OTHER OBLIGATIONS OF DISTRIBUTOR
	 
	a.	 	Distributor shall not market or sell, distribute or promote any product comparable
to or competitive with any Product covered by this Agreement. Distributor may
request the CytoCore’s prior written approval. The notice shall specify the source
and name of such product and include a full and complete description of the
nature, characteristics, and uses of such product.
	 
	b.	 	Distributor shall maintain in confidence and not use except for purposes of this
Agreement any confidential information furnished to it by CytoCore including
information contained in any report furnished by Distributor hereunder, all
confidential Product information and all advertising programs and plans.
Distributor shall impose the same obligation upon its employees and agents,
including advertising agencies. Such obligation will not apply in respect of any
information which was already in the public domain; or is already known to
Distributor or which Distributor acquired from a third party who has the free right
to disclose the information to them.
	 
	c.	 	Distributor shall maintain in confidence and not use except for purpose of this
Agreement any Confidential Product Information and all advertising programs
and plans. Distributor shall impose the same obligation upon its employees and
agents, including advertising agencies. Such obligation will not apply in respect
of any information which was already in the public domain; or is already known
to Distributor or which Distributor acquired from a third party who has the free
right to disclose the information to them.
	 
	d.	 	Inasmuch as the laws of particular countries mandate the use of specified
ingredients, forms of labels and instructions for use, the precise requirements for
which vary from country to country and also frequently differ even as between
lines of trade in the same country, Distributor shall resell Products only to
purchasers as to whom Products meet all local legal requirements and shall not
sell Products to any purchaser that Distributor has reason to believe may resell
them otherwise than as provided herein.
	 
	e.	 	CytoCore will not accept any return Products for credit unless (1)
Distributor has first obtained CytoCore’s authorization in writing to return such
Products in saleable condition and Distributor prepays the return freight, or (2)
packaging for the Products is defective, or Distributor becomes aware that the
Products are defective, and notice of such defect is received by CytoCore from
Distributor within thirty (30) days of delivery of such Products to Distributor.
	 
	14.	 	TERMINATION FOR CAUSE
	 
	a.	 	Subject to clause 6 of this Agreement, failure by any party to comply with any of
its material obligations hereunder shall entitle the other party to give the party in
default notice requiring it to make good such default. If such default shall not
be

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	b.	 	CytoCore may (without prejudice to any of its other rights conferred on it by
this Agreement by law) terminate this Agreement forthwith by giving notice to such effect
in the event.

(1) of war, insurrection, invasion or extended civil commotion in the Area,

(2) that Distributor or any part of its assets is acquired by or otherwise comes
under the direct or indirect control of any third party (governmental, private or
public) other than the present owners, or

(3) that Distributor becomes insolvent or any insolvency proceedings are instituted by or
against it, or

(4) that Distributor engages in illegal activities or conduct which CytoCore deems to
damage the commercial reputation of either CytoCore or Distributor or

(5) of any breach by Distributor of any of the provision of Clause 10, 13 (b) (c), or (d)
above, or

(6) of any failure to attain the minimum purchase requirements referred to in clause
5b of the Agreement or

(7) of any failure to make the expenditures for advertising and promotion agreed to in
clause 8 above, or

(8) that Distributor knowingly without CytoCore’s prior written consent, reexports or sells
the Products outside the Area (but excluding any re export or sale of the Products outside
the Area by Distributor in response to unsolicited orders), or

(9) Distributor challenges the validity of any of CytoCore’s trade marks.

(10) Distributor, without CytoCore’s prior written consent, sells, promotes, or
otherwise distributes products which compete either directly or indirectly with the
Products.

	c.	 	The parties hereby agree that any of the above-mentioned events will constitute
just cause for termination as provided in this clause 14.
	 
	15.	 	UPON TERMINATION OR EXPIRATION
	 
	a.	 	CytoCore or its designee shall, by giving Distributor written notice within
ninety (90) days following the expiration or termination of this Agreement,
purchase from Distributor any part of all or Products not theretofore sold by
Distributor, at a price, payable in such currency as CytoCore may determine, equal to the
sum of the purchase price paid by Distributor plus the actual cost of

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	 	 	shipment and importation of such Products, against which amounts due from Distributor may
be applied. Such Products must be in saleable condition and have at least 12 months shelf
life remaining.
	 
	 	 	Upon such purchase or upon the expiration of two (2) months from the aforesaid expiration
or termination, Distributor shall cease to display or use any Intellectual Property Rights
on, in or relating to the Products or signs, labels or other indications identifying
Distributor or any products in any way with CytoCore and shall deliver to CytoCore all
printed material, including advertising, promotional and instruction material, and all
labels and packages, relating to Products, together with all samples, parts, tools, or
other equipment relating to Products that CytoCore may have furnished free of charge (other
than for shipping and import costs) to Distributor and together with all records of
Distributor’s sales necessary for CytoCore to ascertain any outstanding guarantee
obligations thereunder.
	 
	b.	 	Following any expiration or termination of this Agreement, Distributor shall
immediately cease to make any use of the Intellectual Property Rights on, in or
relating to the Products in any way.
	 
	c.	 	Immediately upon termination or expiration of this Agreement, Distributor shall
cease in any manner whatsoever to make any reference to its former role as the
Distributor of the Products.
	 
	d.	 	Upon the expiration of this Agreement all rights granted or obligations undertaken
hereunder shall terminate forthwith except rights and obligations which arose
prior to such expiration or termination and those set forth in clauses 7, 8, 9, 10,
15, 16, and 21, and in sub-classes 13(b), (c) and (d). Neither CytoCore or
Distributor shall incur any liability to the other by reason of the expiration or
termination of this Agreement as provided herein, nor for its non-renewal,
whether for loss of goodwill, anticipated profits or otherwise, and CytoCore and
Distributor shall accept all rights granted and all obligations assumed hereunder
including those in connection with such expiration or termination in full
satisfaction of any claim resulting from such expiration or termination.
	 
	e.	 	The acceptance of any order form or the sale of any Products to Distributor, after
the expiration or termination of this Agreement shall, unless otherwise specified,
be subject to all the pertinent terms of this Agreement but shall not be construed
as a renewal or extension of this Agreement nor as a waiver of termination
thereof.
	 
	16.	 	INDEMNIFICATION
	 
	a.	 	Distributor agrees to indemnify and hold harmless CytoCore, its Affiliates and their
respective directors, officers, and employees against any and all claims, demands,
proceedings, losses, costs, and expenses which may be brought against or suffered or incurred
by CytoCore, its Affiliates or its or their respective

12

 

	 	 	directors, officers, and employees, in consequence of any error, mistake, acts,
omissions, or negligence on the part of Distributor or any of its employees or
agents, in storing, selling, promoting, or distributing any of the Products.
	 
	b.	 	CytoCore agrees to indemnify and hold harmless Distributor, its affiliates, and its
directors, officers, and employees, against any and all claims, demands, proceedings, losses,
costs, expenses which may be brought against or suffered or incurred by Distributor, its
affiliates, or its directors, officer, and employees, in consequence of any error, mistake, or
negligence on the part of CytoCore or any of its employees or agents, in promoting, or
manufacturing any of the Products. CytoCore shall not, in any event, be liable for indirect or
consequential losses, special charges, loss of profit or loss of reputation or goodwill.
Distributor shall have no right to an indemnity under this clause 16b to the extent that the
negligence of Distributor, or its employees or agents has contributed to the loss, liability
or cost for which Distributor is claiming an indemnity.
	 
	c.	 	It shall be a condition of any obligation to defend, indemnify and hold harmless
hereunder that the party seeking indemnification (i) promptly notify the party from which
indemnification is sought of the assertion of any claim to be covered, (ii) permit the
indemnifying party to assume and control the defense thereof, and (iii) co-operate fully in
such defense.
	 
	d.	 	Nothing in this Agreement shall in any way exclude or limit either party’s
liability for death or personal injury.
	 
	17.	 	ASSIGNMENT
	 
	a.	 	CytoCore may assign all or any part of this Agreement to any Affiliate. Subject
clause 17b. below, in all other respects this Agreement and the distributorship
and/or sub-distributorship shall be non-assignable. Any non-permitted
assignment shall be void.
	 
	b.	 	Distributor may, with CytoCore’s prior written consent, appoint agents for the
distribution, sale and promotion of the Products provided that:

	 	(1)	 	no such sub-license shall relieve Distributor of any of its obligations
under his Agreement.
	 
	 	(2)	 	Distributor shall ensure that any sub-licensee agrees to be bound by the
terms of this Agreement, and
	 
	 	(3)	 	such sub-licensee shall only be used to supplement the existing structure
of CytoCore’s business and not for the purposes of creating other opportunities for
Distributor.

13

 

	18.	 	NOTICES Any notice or report pursuant to this Agreement shall be deemed duly
given if sent by prepaid registered mail letter (air mail, if sent overseas), or facsimile
addressed to the party at the address or fax number, as applicable, set forth at the
beginning of this Agreement, or to such other address or fax number as shall have been
furnished in writing.
	 
	19.	 	SEVERABLE CONDITIONS/UNENFORCED PROVISIONS
	 
	a.	 	Any provision of this Agreement held to be void, invalid, or unenforceable, will
be construed as severable and will not in any way affect render void, invalid, or
unenforceable any other provision of this Agreement, and this Agreement will be
carried out as if such void, invalid, or unenforceable provision was not a part of
this Agreement.
	 
	b.	 	Failure by any party to exercise any right given in this Agreement or to insist on
strict compliance by the other party of any obligation under this Agreement does
not constitute a waiver of the Party’s right to later demand exact compliance with
the terms of this Agreement.
	 
	20.	 	GOVERNING LAW Any dispute that may arise between the parties in connection with or as
a consequence of this Agreement shall be settled in accordance with the Rules of Conciliation
and Arbitration of the International Chamber of Commerce, by three arbitrators appointed in
accordance with its rules. Such arbitration shall be in the English language with arbitration
to take place in the City of Madrid, Spain..
	 
	21.	 	ENTIRE AGREEMENT This Agreement, including its Schedules, contains the entire
understanding of the parties with respect to the matters herein contained and voids all prior
understandings, if any, between the parties with respect to the distribution of the Products.
With the exception of changes that may be made by CytoCore at its sole discretion to Schedule
A as set forth in clause 2 (a), the Agreement may be changed from time to time only by an
instrument in writing signed by an officer of CytoCore and an authorized representation of
Distributor.
	 
	22.	 	THIRD PARTY RIGHTS
	 
	a.	 	Except as provide at clause 23b (or insofar as this Agreement otherwise expressly
provides that a third party may in his own right enforce a term of this Agreement),
a person who is not a party to this Agreement has no right under the Contracts
(Rights of Third Parties) Act 1999 to rely upon or enforce any term of this
Agreement but this Agreement does not affect any right or remedy of a third party
which exists or is available apart from that Act.
	 
	b.	 	Any Affiliate may rely upon and enforce the terms of clause 16a.

14

 

	c.	 	The decision of the Expert shall be final and binding on the parties. The costs of
the reference to the Expert (including the costs of any expert appointed by him)
and will be borne as agreed between the parties prior to making the reference or,
failing such agreement, in accordance with the instructions of the Expert.
	 
	d.	 	Except for any party’s right to seek interim relief in the courts, no party may
commence legal proceedings while the dispute resolution procedures referred to in

this clause 24 are being undertaken.
	 
	23.	 	EXECUTION IN COUNTERPARTS This Agreement may be executed in one or more
counterparts, all of which should be considered one and the same agreement, and should become
a binding agreement when one or more counterparts have been signed by each of the parties and
delivered to the other party.
	 
	 	 	IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 	 	 	 	 
	PALEX MEDICAL SA	 	 	 	CYTOCORE, INC.	 	 
	 
	By:

	 	/s/ Jose Terol
 

Name: Jose Terol
	 	 
	 	By:
	 	 /s/ Bob McCullough Jr.
 

Name: Bob McCullough, Jr.
	 	 
	 

	 	Title:   General Manager
	 	 	 	 	 	Title:   CFO	 	 

15

 

SCHEDULE A

PRODUCTS. PRICES. AND QUOTAS

Whether described genetically or by reference to trade mark, only the products having the form and
composition in which they are sold by CytoCore on the Effective Date, are intended to be included
in this Agreement.

Prices

For the first calendar year from the Effective Date, prices to be charged for the Products by
CytoCore to Distributor are as per attached appendix.

Quotas

	1.	 	Annual Quotas
	 
	 	 	•       Period

	 	1.	 	First 12 Months—600,000 Units
	 
	 	2.	 	Second 12 Months—1,200,000 Units
	 
	 	3.	 	Third 12 Months—2,400,000 Units

	2.	 	Terms

	 	• 	 	 Orders will be applied against the Annual Quota based
on the net invoice price of the Products ordered from and billed by Seller
during the Period

     Thereafter, the parties shall meet twelve (12) months after the date hereof during each
calendar year of this Agreement to discuss and agree on any increase in prices to be charged for
the Products to Distributor by CytoCore. Prices may be changed at other times on agreement between
the parties, taking into account market conditions in the Area which have an effect on the
distribution, sale or promotion of the Products. Notwithstanding the foregoing, if prices can not
be agreed to by both parties acting in good faith, either party may terminate this Agreement upon
sixty (60) days’ prior written notice.

16

 

SCHEDULE B

	A.	 	CytoCore will only entertain claims for returned Products where same was
originally purchased from CytoCore. Proof of purchase must be provided upon
request.
	 
	B.	 	Returned Products will be valued at the original sale price or the current price whichever is lower.
	 
	C.	 	Full credit will only be given if CytoCore is notified within twelve (12) months
prior to expiry of the returned Product so that arrangements can be made for
disposal prior to the Product’s expiry date. This request is made in recognition of
the fact that, in most instances, the Products are delivered with expiry dating in
excess of one (1) year B twelve (12) months.
	 
	D.	 	In no instance will credit be given for Products for which are returned because of
insufficient sales.
	 
	E.	 	Credit will also be denied for Products which have not been stored in accordance
with CytoCore’s instructions.
	 
	F.	 	It is not CytoCore’s policy to reimburse Distributor damaged Products but each
case will be reviewed at CytoCore’s sole discretion in light of any special
circumstances that may necessitate special consideration.
	 
	 	 	CytoCore Sales Representative will inspect all expired or damaged Products and will issue a
Preliminary Credit Report which will be referred to his/her immediate Supervisor for final
approval.
	 
	 	 	Destruction of all expired and/or damaged Products is to be in accordance with the Food and
Drugs ordinances within the Area and, if requested, witnessed by a CytoCore Sales
Representative.

17

 

SCHEDULE C

UNIT BY PRODUCT

	 	 	 	 	 
	ITEM	 	DESCRIPTION	 	UNIT PRICE
	 

	 	Soft PapTM Disposable
	 	US$5.00
	 

	 	Soft PapTM Reusable Handle
	 	US$12.00

18exv10w48

 

Exhibit 10.48

DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT (“Agreement”) is made this 16th day of February 2008 (the
“Effective Date”) by and between CytoCore, Inc. (“CytoCore”), a Delaware corporation whose
principal address is 414 N. Orleans, Chicago 60610 and CoMedical, Inc. (“Distributor”), a
Washington corporation whose principal address is 7100 Roosevelt Way N.E., Seattle, WA 98115.
Distributor and CytoCore may sometimes be referred to herein individually as a “party” or
collectively as the “parties.”

          Whereas, CytoCore has developed and patented a particular device know as SoftPap® (patent No.
6,475,164) approved by U.S. Food and Drug Administration on January 30, 2008;

          Whereas, Distributor desires to be an exclusive distributor of the SoftPap® device in
accordance with the terms and conditions of this agreement;

          Whereas, Distributor has represented to CytoCore that it has a staff of highly trained sales
representatives who are capable of selling SoftPap® to licensed medical service providers for
consumer use; and,

          Whereas Distributor has represented to CytoCore that is has sufficient capitalization to
effectively market SoftPap® in the Area assigned to Distributor as set forth on schedule “A”
hereto.

IN CONSIDERATION of the foregoing recitals (which are incorporated herein), mutual promises and
covenants contained herein the parties hereto agree as follows:

	1.	 	APPOINTMENT OF DISTRIBUTOR.
	 
	 	 	CytoCore hereby appoints Distributor as the Exclusive Distributor of the Products in the
“Area” set forth on Schedule “A” annexed hereto as of the Effective Date and such other
products (if any) as may be added to the Schedule by mutual agreement (“Products”).
CytoCore may delete any Products from Schedule “A” at any time at its sole discretion upon
30 days written notice to Distributor.
	 
	2	 	SUPPLY OF PRODUCTS
	 
	a.	 	CytoCore or its designee shall sell and Distributor shall purchase such minimum quantities of
Products
(as are agreed herein in accordance with section 4.b. hereof) for sale in the Area. CytoCore
may from
time to time change the source of supply of Products and, if CytoCore or its designated
supplier shall
discontinue the manufacture, sale or promotion of any Product, CytoCore shall delete such
Product from
Schedule A and cease selling the Product to Distributor. Distributor shall be entitled to
continue selling
such Product in the Area until such time as the stocks of such Product held by Distributor
have been
exhausted unless CytoCore advises Distributor to return such inventory to CytoCore.
	 
	b.	 	CytoCore or its designee shall sell and Distributor shall purchase Products at prices
established in
accordance with Schedule B. Prices for all Products shall be subject to change by CytoCore
twice each
year after December 31, 2009, with written notice to Customer. Price adjustment
descriptions and
formula are set forth on Schedule B.
	 
	c.	 	All prices and charges are F.O.B. Origin, freight prepaid and charged back so that
Distributor shall pay delivery charges from the plant to the Distributor location or from
the warehouse to the Distributor location. CytoCore shall not be liable for delays in
deliveries caused by a recognized delivery service or common carrier. Any and all Products
delivered or made available to Distributor shall be conclusively deemed accepted by
Distributor without objection unless, within five (5) days following the delivery thereof,
Distributor rejects such Products by delivering to CytoCore a written notice describing with
particularity the basis upon which such Products are rejected. Distributor shall not be
entitled to reject any Products that conform in all material respects to CytoCore’s
published Product specifications.
	 
	d.	 	Distributor shall not knowingly re-export or sell Products outside the Area without the
prior written consent

 

 

	 	 	of CytoCore, except that nothing in this Agreement shall prevent Distributor from accepting
unsolicited orders from outside the Area for the Products as long as there is no exclusive
distributor for that Area.
	 
	e.	 	Distributor will be invoiced by CytoCore’s direct billing procedure. Payment shall be due
within thirty (30)
days from the invoice date. A discount of 1% of the invoice price (exclusive of freight and
taxes) will be
allowed if CytoCore receives payment with fifteen (15) days of invoice date. All late
payments shall
accrue interest from the due date at a rate of one and one-half percent (11/2%)
per month or, if lower, the
highest rate allowed by law. If Distributor fails to pay any amounts when due, CytoCore may,
without
liability, cease performing any Services or delivering any Products until full payment for
all outstanding
amounts is received. CytoCore reserves the right at any time to alter or suspend credit or to
change any
credit terms provided herein when, in its sole discretion, the financial condition of
Distributor so warrants.
Should any portion of an invoice become disputed, Distributor agrees to promptly notify
CytoCore of the
dispute and to deduct and pay the undisputed amount in accordance with the foregoing. The
parties shall
use their best efforts to resolve a disputed invoice amount within thirty (30) days.
	 
	 	 	CytoCore is required to charge applicable state and local taxes (“Applicable Taxes”) on
every item for which a sales tax exemption certification has not been provided. In the event
that Distributor seeks to claim any exemption from Applicable Taxes in any transaction,
Distributor agrees to promptly furnish CytoCore tangible copies of any appropriate or
required exemption certificates or other required documentation deemed necessary or
desirable by CytoCore to properly support any such claimed exemptions. Failure on
Distributors part to promptly provide any such exemption certificates or other documentation
to CytoCore upon request will give CytoCore the right to immediately invoice Distributor for
all Applicable Taxes due as if the claimed exemption did not apply. IN ANY EVENT,
DISTRIBUTOR AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS CYTOCORE FROM ANY TAXES
INCURRED BY CYTOCORE AS THE RESULT OF ANY CLAIMED EXEMPTION FROM APPLICABLE TAXES.
	 
	f.	 	Except as provided in subsection 2.(e) above, Distributor shall not be entitled by reason of
any set off,
counter claim, abatement, or other similar deduction to withhold payment of any invoiced
amount due to
CytoCore.
	 
	g.	 	Distributor shall submit written purchase orders, or electronic equivalents, to CytoCore or
its designee
stating both the quantities of Products to be purchased and delivery schedules therefore in
accordance
with the purchasing procedures mutually agreed upon by CytoCore and Distributor. CytoCore,
upon
acceptance of Distributor’s purchase order, shall use its commercially reasonable efforts to
deliver or
cause to be delivered to Distributor the quantities of Products set forth in such purchase
orders at the
times specified therein. For its convenience, Distributor may use its preprinted forms to
order Products,
and CytoCore may use its preprinted forms to acknowledge same; provided, however, that the
provisions
of this Agreement shall override the provisions of such forms and govern the transaction and
that neither
this Agreement nor any provision hereof shall be deemed to be superseded or otherwise changed
in any
way by any preprinted or other provision contained in any such forms.
	 
	3.	 	RETURN OF PRODCUT INVENTORY OR SALVAGE OF DAMAGED PRODUCTS TO CYTOCORE
	 
	 	 	CytoCore shall be obliged to accept the return of the Products from Distributor only
according to the policy set forth in Schedule D attached hereto.
	 
	4.	 	DISTRIBUTION AND PROMOTION OF PRODUCTS
	 
	a.	 	During the first six (6) months from the Effective Date (“Implementation Period”), and
annually thereafter,
the parties shall work together and provide the other party with all reasonable assistance
and information
in order to produce a business plan in respect of the Products including, without
limitation, minimum
purchase requirements (Schedule A) for the Products in the Area, advertising and marketing
expenses
committed by each party and any other aspect relevant to the distribution, sale and
promotion of the
Products in the Area (“Business Plan”).
	 
	b.	 	No later than one (1) month prior to the end of the Implementation Period the parties will
meet to discuss
the minimum purchase requirements of Distributor for the Products for the twelve (12) month
period
following the Implementation Period. The attainment of such minimum purchase requirements is
an
essential condition to the continuation of this Agreement, and failure shall give CytoCore
the right to
terminate this Agreement pursuant to sections 5(a) and 12(b) (6).

2

 

	c.	 	Distributor shall use its best efforts to create and maintain a market for and to increase
the sales of
Products in the Area, shall provide at its sole expense an organization for the continuous
sale, promotion
and distribution of the Products throughout the Area, and shall sell, ship, and invoice the
Products to
qualified purchasers in the Area. In the Area, Distributor shall use its own employed sales
force to sell,
promote and distribute the Products. CytoCore shall not be obligated to provide any resources
to
Distributor for the obligations stipulated in this Agreement, except for initial appropriate
training of
Distributor’s sales force and the provision of appropriate marketing materials. These
services and
materials will be provided to Distributor without cost.
	 
	d.	 	Distributor shall maintain a minimum inventory of Products not less than one (1) month as set
forth in the
Forecast, as amended from time to time.
	 
	e.	 	Distributor agrees to keep in full force and effect and maintain at its sole cost and expense
the following
policies of insurance during the entire duration of the Agreement:

	 	(a)	 	Types and Limits of Insurance.

	 	(1)	 	Workers Compensation with statutory limits and Employers Liability
Insurance limits of
$500,000 per employee, accident or disease.
	 
	 	(2)	 	Commercial General Liability Insurance providing coverage for
bodily injury and property
damage arising out of the work to be performed and including coverage for
personal and
advertising injury and contractual liabilities providing limits of not less
than $1,000,000 per
occurrence.
	 
	 	(3)	 	Professional Liability Insurance including coverage for wrongful
acts, errors and
omissions, with limits of not less than $1,000,000 per claim.

	 	(b)	 	All such insurance shall be with insurance companies that maintain a rating of
not less than A- VII
in the most current publication of Best’s Insurance Reports published by A.M. Best.
	 
	 	(c)	 	Distributor shall provide certificates of insurance signed by an authorized
representative of the
respective carriers within 10 days of the Effective Date of this Agreement. All such
certificates
will contain no less than thirty (30) days prior written notice of cancellation,
non-renewal, or
material change in coverage.

	5.	 	Term
	 
	a.	 	This Agreement shall begin on the Effective Date and shall continue in effect, unless sooner
terminated
as provided herein, for a period of three (3) years (“Initial Term”). At the end of the
Initial Term this
Agreement will be automatically extended for further one (1) year periods unless one of the
parties has
advised the other in writing at least ninety (90) days prior to expiration of the Initial
Term that it intends to
terminate this Agreement.
	 
	b.	 	In addition to the right of termination granted by Section 12, CytoCore shall have the right
to terminate
this Agreement at any time prior to the expiration of its term upon ninety (90) days’ prior
written notice
should Distributor fail to attain the annual minimum purchase requirements referred to in
section
4a.above. Distributor shall notify CytoCore as soon as Distributor becomes aware that the
annual
minimum purchase requirements are unlikely to be attained. In the event CytoCore
terminates this
Agreement before the end of the Initial Term, CytoCore shall repurchase from Distributor the
inventory of
Products at prices prevailing at the start of the calendar year in which such Products are
to be
repurchased by CytoCore. Such inventory of Products must be in saleable condition, in
unopened full
cartons, and have at least nine (9) months shelf life before expiration.
	 
	c.	 	In addition to such other rights of termination granted by section 12, CytoCore shall have
the right to
terminate of this Agreement at any time if the continued performance under this Agreement
becomes
impractical due to the enactment of, or threatened enactment of, any ordinance, statute,
regulation, law
or similar provision by any local, state or national government. This Agreement shall
terminate sixty (60)
days after the date of written notice by CytoCore to Distributor.

3

 

	6.	 	INTELLECTUAL PROPERTY
	 
	a.	 	This Section 6 will be binding upon Distributor’s Shareholders, beneficial owners, directors,
officers and
employees as if they were actual signatories to this Agreement.
	 
	b.	 	Distributor acknowledges and agrees that CytoCore or its Affiliate are the owners of all
Intellectual
Property Rights incorporated on, in or relating to the Products. For the purposes of this
Agreement,
“Intellectual Property Rights” includes all intellectual property rights including (without
limitation) patents,
supplementary protection certificates, pending patents, utility models, trade marks,
database rights,
rights in designs, copyrights (whether or not any of these rights are registered, and
including applications
and the right to apply for registration of any such rights) and all inventions, know-how,
trade secrets,
techniques and confidential information, and ail rights and forms of protection of a similar
nature or having
equivalent or similar effect to any of these which may subsist anywhere in the world, in each
case for their
full term, and together with any renewals or extensions. Distributor acknowledges that it
neither has nor
shall secure by this Agreement or by its acts during the term of this Agreement any right to
any
Intellectual Property Rights incorporated on, in or relating to the Products. Distributor
agrees that title to
and the right to use all such Intellectual Property Rights incorporated on, in or relating to
the Products
shall at all times be vested in CytoCore or its Affiliates whether or not such Intellectual
Property Rights
are incorporated on, in or relating to the Products become vested in Distributor.
Distributor hereby
assigns to CytoCore, including by way of present assignment of present and future rights, any
Intellectual
Property Rights incorporated on, in or relating to the Products, together with all of the
goodwill associated
therewith to hold the same unto CytoCore, its successors and assigns.
	 
	c.	 	Without CytoCore’s prior written permission, Distributor shall make no use of Intellectual
Property Rights
in or relating to the Products as part of or in conjunction with or in relation to or
associated with
Distributor’s company name, commercial name, tradename, corporate name, divisional name,
subsidiary
name, nickname, translated name, transliterated name, trading style, or similar name
(hereinafter referred
to as (“...”).
	 
	d.	 	Distributor shall comply, at all times, with such rules and regulations as CytoCore may issue
with respect
to the reproduction or reference to any Intellectual Property Rights incorporated on, in or
relating to the
Products. In particular, Distributor shall ensure that on all advertising and promotional
materials to be
used and/or prepared by Distributor relating to the Products, the symbol ® shall be used in
conjunction
with any registered trade marks or service marks owned by CytoCore or “TM” in the case of any
unregistered trade marks owned by CytoCore.
	 
	e.	 	Distributor shall not use any of CytoCore’s trade marks in any way which would tend to allow
them to
become generic, lose their distinctiveness, become liable to mislead the public, or be
materially
detrimental to or inconsistent with the good name, goodwill, reputation and image of CytoCore
or any
affiliate and shall use its best efforts not to do anything which would bring into disrepute
CytoCore, the
Products or any of CytoCore’s trade marks.
	 
	f.	 	In any infringement proceedings which are brought by CytoCore, CytoCore shall be entitled to
claim in
respect of any loss suffered or likely to be suffered by the Distributor, and any costs or
damages awarded
in respect of such claim shall first be applied to satisfy CytoCore’s costs and expenses and
shall then be
apportioned between CytoCore and Distributor in accordance with their respective losses.
	 
	g.	 	Distributor shall, on CytoCore’s reasonable request, give to CytoCore or its authorized
representative any
information as to its use of Intellectual Property Rights incorporated on, in or relating to
the Products
which it may require and will render any reasonable assistance required at reasonable cost in
maintaining registrations of the Intellectual Property Rights incorporated on, in or relating
to the Products.
	 
	h.	 	Distributor agrees that it will not seek to (i) challenge, through the courts,
administrative governmental bodies, private organizations or in any other manner, the rights
of CytoCore to exploit the Intellectual Property by any means whatsoever or (ii) thwart,
hinder or subvert the intent of the preceding grants and conveyances to CytoCore, or the
collection by CytoCore of any proceeds relating to the rights conveyed under this Agreement.
	 
	7.	 	ADVERTISING AND PROMOTION OF PRODUCTS
	 
	a.	 	As part of the Business Plan to be produced in accordance with section 4a, CytoCore shall, at
its sole discretion, from time to time deliver to Distributor advertising, promotional and
instructional programs for the Products. Such programs may be modified by CytoCore in its
sole discretion at any time.

4

 

	 	 	Advertisements and the media in which it is to be used, as well as all promotional and
instructional materials to be used, must be approved in advance in writing by CytoCore.
	 
	b.	 	CytoCore recognizes that Distributor may from time to time request authorization in writing
from CytoCore to use the Intellectual Property Rights on, in or relating to the Products.
CytoCore grants a non-exclusive royalty-free license to Distributor to use in the Area the
Intellectual Property Rights on, in or relating to the Products for the purposes only of
fulfilling any orders made pursuant to this Agreement, and performing its obligations under
this Agreement. The right of Distributor to use such Intellectual Property Rights on, in or
relating to the Products may unilaterally be revoked by CytoCore at any time and Distributor
shall immediately stop such use upon receipt of notification from CytoCore.
	 
	8.	 	RECORDS. REPORTS. AND INSPECTION.
	 
	 	 	Distributor shall provide CytoCore, on a monthly basis, a complete list of customers to whom
it has sold Products and the quantities of such sales.
	 
	9.	 	GENERAL MATTERS
	 
	a.	 	The formulae, ingredients or specifications for Products may be changed at any time by
CytoCore at its
sole discretion when such changes are deemed necessary for any reason to CytoCore including
compliance with applicable laws and regulations. When necessary for the maintenance of any
applicable
registrations, approvals, or consents, CytoCore shall inform Distributor of such changes.
	 
	b.	 	Should it be necessary, during the term of this Agreement, to recall the Products due to an
error
imputable to the manufacture of the Products, or to any third party who handled, worked with
or gave
advice in respect of the Products or for any other reason, Distributor shall cease selling
such Products in
the Area and shall provide CytoCore with all reasonable assistance to recall any such
Products and shall,
at all terms, act in accordance with CytoCore’s directions. The return of said Products
will be in
accordance with schedule D hereof.
	 
	c.	 	Distributor shall promptly send to CytoCore any data, report or information regarding
Products which may
come to Distributor’s attention in the Area during the term of this Agreement and shall
report promptly to
CytoCore any unexpected or serious adverse reactions which arise in patients using Products.
The
person to contact with respect to any such reactions is CytoCore’s Quality Assurance Manager.
CytoCore may in its sole discretion decide to cease the distribution of any of the Products
by Distributor in
the Area in circumstances where it appears to CytoCore, acting reasonably, that any of the
Products may,
for whatever reason, be injurious to health or unfit for human consumption or where the
continued sale of
a Product would be inconsistent with the principles and standards applicable to careful
medical device
production. The costs associated with any Product recall (including, for the avoidance of
doubt, the cost
of any of the Products and the costs involved in recalling any of the Products) will be borne
by CytoCore.
If either party becomes aware of any circumstances which may require the distribution of any
of the
Products to be suspended under this subsection 9c, it shall immediately notify the other
party of such
circumstances. Distributor shall execute any documents and do all such acts and things in
accordance
with the reasonable directions of CytoCore to assist with the recall of any Products.
CytoCore shall, in its
sole discretion, determine when the distribution and sale of the affected Product can
recommence. In the
event of a recall, the agreed minimum purchase levels will be reviewed by mutual consent.
	 
	10.	 	FORCE MAJEURE
	 
	 	 	Neither CytoCore, nor its Affiliates, or their suppliers shall be liable for any failure or
delay in the delivery of Products occasioned in whole or in part by force majeure, Act of
God, strike, lockout, fire, inability to obtain materials or shipping space, boycott,
breakdown, war, terrorism, civil commotion, destruction of plant, delay of carriers, any
governmental act, requirement, or regulation, or any other cause beyond its control. IN NO
EVENT WILL CYTOCORE BE LIABLE FOR CONSEQUENTIAL OR SPECIAL DAMAGES DUE TO ANY SUCH CAUSE.
	 
	11.	 	OTHER OBLIGATIONS OF DISTRIBUTOR
	 
	a.	 	Neither Distributor, nor its affiliates or subsidiaries may sell, promote or otherwise
distribute any products which compete directly with the Products. Distributor shall not
establish any branch, or maintain any distribution depot, outside of its Area for the sale of
the Products. This provision will apply to other business entities owned by Distributor’s
shareholders, directors, beneficial owners, or employees as if such individuals or entities
were actual signatories to this Agreement.

5

 

	b.	 	Distributor shall maintain in confidence and not use except for purposes of this Agreement
any
confidential information furnished to it by CytoCore including information contained in any
report furnished
by Distributor hereunder, all confidential Product information and all advertising programs
and plans.
Distributor shall impose the same obligation upon its agents, if any, permitted under
subsection 14(b)
hereof. This Section 1 will be binding upon Distributors Shareholders, beneficial owners,
directors,
officers, employees and agents, including advertising agencies as if they were original
signatories to this
Agreement. This subsection 11B shall not affect Distributor’s right to use or disclose
information that: (i)
is or may hereafter be in the public domain; (ii) the Distributor can show was Known to it
without any
confidentiality obligation prior to the disclosure by CytoCore; (iii) is disclosed to the
Distributor by a third
party, without violation of any confidentiality obligation, subsequent to disclosure by
CytoCore; (iv) is
independently developed by the receiving party without use of the Confidential Information of
CytoCore; or
(v) is required to be disclosed pursuant to governmental or judicial process, provided that
notice of such
process is promptly provided to CytoCore in order that it may have every opportunity to
intercede in such
process to contest such disclosure.
	 
	c.	 	On an annual basis Distributor’s chief financial officer, or independent public accountant,
must verify in
writing to CytoCore that its financial condition meets 3 out of the following 4 metrics:

Return
on Sales (Net Profit/Sales) > 3.5%

Return on Assets (Net Profit/Total Assets) > 9.0%

Return on Net Worth (Net Profit/Net Worth) > 25.5%

Inventory Turns > 11.5 times

	 	 	These ratios were calculated using data published in Dun & Bradstreet’s Industry Norms &
Financial Ratios for SIC 5097 (Medical Equipment and Device Wholesalers).
	 
	12.	 	TERMINATION FOR CAUSE

This Agreement shall be a continuing Agreement unless terminated earlier as follows:

	a.	 	This Agreement may be terminated with cause upon notice, which shall become effective
ten (10) days
after receipt. To the extent that the form of notice or the time period of notice permitted
herein shall
conflict with applicable law, then such alternate form of notice or notice period of such
applicable law
shall be deemed to be incorporated into this Agreement.
	 
	b.	 	To the extent that the CytoCore shall elect to terminate this Agreement for cause or to
the extent that any
applicable law shall determine that cause is required for the termination or non-renewal of
this
Agreement, good cause shall include, but not be limited to, the following:

(i) Consistent failure by the Distributor to achieve minimum annual sales volume of
as defined in Schedule A in the assigned Area;

(ii) Consistent failure by the Distributor to maintain and properly train a staff of
sales and service personnel of adequate size for meeting the minimum volume
requirement for the Area as established in accordance with Section 4.b. hereof the
Products;

(iii) Failure by the Distributor to maintain a current
account status, or to furnish financial information on request; or,

(iv) Persistent (for 3 consecutive months) failure by the Distributor to make timely
paymentofany obligation owing to CytoCore.

	c.	 	The transfer by any means of more than ten percent (10%) of Distributor’s assets (other than
in the ordinary
course of business) or the transfer of more than ten percent (10%) of the stock of the
Distributor, if the Distributor is a corporation; or the transfer, removal, resignation,
withdrawal, elimination or any other change of principal owners or principal managers of
the Distributor for any reason without prior written approval of CytoCore, which shall not
be unreasonably withheld;
	 
	d.	 	A misrepresentation to CytoCore by the Distributor or by any principal owner or
principal manager in
applying for the appointment as the Distributor under this Agreement or, after
appointment, as to the
records of the Distributor, the status of current accounts or orders for Products or
concerning the
beneficial ownership or management of the Distributor;
	 
	e.	 	Any attempted sale, transfer or assignment, voluntarily or involuntarily, by operation
of law or otherwise,
including merger, consolidation or reorganization to which the Distributor is a party, by
the Distributor of
this Agreement or any of the rights granted to the Distributor under the provisions of this
Agreement; or

6

 

	 	 	any attempted transfer, assignment or delegation, voluntarily or involuntarily, by operation of
law or otherwise, by the Distributor of any of the responsibilities assumed by the Distributor
under the provisions of this Agreement, without the prior written consent of CytoCore;
	 
	f.	 	Conviction of any principal owner or principal manager of the Distributor of any crime
which, in the
opinion of CytoCore, may adversely affect the reputation of CytoCore or the reputation of
CytoCore’s
Products;
	 
	g.	 	Any submission by the Distributor to CytoCore of any false or fraudulent claim, or statement
in support
thereof, for payment, for parts, for compensation or for any discount, allowance, refund or
credit, warranty
claim, or any claim made by the Distributor to CytoCore;
	 
	h.	 	Willful failure by the Distributor to comply with the provisions of any law or regulation
relating to the operation of its business as a Distributor or to the sales or servicing of
the Products;
	 
	i.	 	Failure by the Distributor to perform any of the other obligations, duties or
responsibilities under this Agreement, which continues for a period of thirty (30) days after
notice thereof from CytoCore;
	 
	j.	 	The decision by CytoCore to: (a) discontinue the Product line or lines that are the subject
matter of this Agreement; or (b) withdraw from all or a substantial portion of the geographic
market in which the Area is located; or (c) sell, convey, merge or otherwise transfer all or
a substantial portion of the part or parts of the business of CytoCore responsible for the
Product line or lines that are the subject matter of this Agreement.
	 
	k.	 	In the event that Distributor shall be declared bankrupt or insolvent, or have a receiver
appointed over its property or shall petition for reorganization or other remedy under the
bankruptcy laws as now or hereafter existing, or make any assignment for the benefit of
creditors or pursue any other remedy under any other insolvency laws, to the extent permitted
by law, this Agreement may be terminated by CytoCore, effective immediately upon the mailing
of a notice of such termination by certified mail. In the event of termination of this
Agreement under this subsection k, all amounts owed to CytoCore shall be immediately due and
payable.
	 
	l.	 	In the event of termination of this Agreement by either party as provided herein the
following provisions shall apply:

	 	(i.) 	 	CytoCore is relieved from any obligation to make any further shipments
hereunder, and may cancel all of the Distributor’s unshipped orders for any
Products, irrespective of previous acceptance by CytoCore, except those Products
which are proved to CytoCore’s satisfaction to have been sold by the Distributor
prior to the receipt by the Distributor of notice of termination. CytoCore shall
have no obligation or liability to the Distributor or its prospective customers in
connection with any such cancellation. If CytoCore accepts such an order and the
Product is shipped, CytoCore will arrange for the delivery and warranty service of
the Product. The acceptance of orders from the Distributor or the continuous sale
of Products to the Distributor or any other act after termination of this Agreement
shall not be construed as a renewal of this Agreement for any further term nor as a
waiver of the termination.
	 
	 	(ii.) 	 	Upon termination of this Agreement or of any schedule hereto, the
Distributor shall return to CytoCore, upon CytoCore’s request and at CytoCore’s
expense, promptly and without charge (except as hereinafter provided) all
documents regarding Products, Product customer lists, price books, and service
policy manuals, service bulletins, sales aids, such as videos, CD’s, filmstrips
and recordings, and other publications of CytoCore and its affiliates which the
Distributor has on hand relating to Products.
	 
	 	(iii)	 	Upon termination of this Agreement Distributor shall cease to display
or use any Intellectual Property Rights on, in or relating to the Products or
signs, labels or other indications identifying Distributor or any products in any
way with CytoCore and shall deliver to CytoCore all printed material, including
advertising, promotional and instruction material, and all labels and packages,
relating to Products, together with all samples, parts, tools, or other equipment
relating to Products that CytoCore may have furnished free of charge (other than
for shipping and import costs) to Distributor and together with all records of
Distributor’s sales necessary for CytoCore to ascertain any outstanding guarantee
obligations thereunder.

	m.	 	The Distributor shall be solely responsible for all commitments incurred or assumed by it
during the term of this Agreement or hereafter, and CytoCore shall not be held responsible in
any manner therefore,

7

 

	 	 	irrespective of any suggestion or recommendation with respect thereto by CytoCore or any of
its employees or representatives unless CytoCore has expressly agreed in writing to assume
the responsibility.
	 
	n.	 	In the event of any termination of this Agreement, all obligations owed by the
Distributor to CytoCore shall become immediately due and payable on the effective date of
termination whether otherwise then due or not (without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Distributor); and CytoCore may
offset and deduct from any or all sums owed to the Distributor any or all sums owed by the
Distributor, rendering to the Distributor the excess, if any.
	 
	o.	 	Neither CytoCore nor the Distributor shall, by reason of the termination of the
Agreement, be liable to the other for compensation, reimbursement, or damages either on
account of present or prospective profits on sales or anticipated sales, or on account of
expenditures, investments or commitments made in connection therewith or in connection with
the establishment, development or maintenance of the business or goodwill of CytoCore or
the Distributor, or on account of any cause or thing whatsoever, provided, however, that
such termination shall not affect the rights or liabilities of the parties with respect to
Products previously sold hereunder or with respect to any indebtedness then owing by either
party to the other. Distributor shall accept all rights granted and all obligations assumed
hereunder including those in connection with such expiration or termination in full
satisfaction of any claim resulting from such expiration or termination.
	 
	p.	 	Unless otherwise provided by applicable law, in the event this Agreement is terminated,
CytoCore will repurchase at Distributor’s request all new, unused, current, complete and
undamaged Products at the original invoice prices, less any applicable discounts or
payments made thereon, less a 10% handling charge computed on Distributor’s net price. In
addition, such return of Products will be in accordance with Schedule D hereof.
	 
	q.	 	Neither party will be in breach of this Agreement unless the other party provides
written notice to the allegedly breaching party of any violation of this Agreement and the
allegedly breaching party fails to cure this violation within 30 days after receiving this
notice. If the default is not cured by the end of the 30 day period, then termination will
be effective without further notice. Notwithstanding the above, a breach by Distributor of
any part of sections 2, 5, or 6 of this Agreement is not subject to cure and, accordingly,
any such breach gives CytoCore the right to terminate the Agreement immediately upon
written notice to Distributor.
	 
	13.	 	INDEMNIFICATION
	 
	 	 	Each party (“indemnifying Party”) shall at all times (both during and after the term hereof)
defend, indemnify, and hold the other party and its agents, officers, affiliates, directors,
and employees (each of them, individually, an “Indemnified Party”) harmless against and from
any and all third party actions, suits, liabilities, settlements, losses, damages, charges,
costs, counsel fees, and all other expenses relating to or arising in connection with any and
all claims (whether or not groundless) relating to or arising out of this Agreement relating
to personal injury or death to persons and damage to real and personal property of the
Indemnified Party to the proportionate extent caused by the actual or alleged negligence,
dishonesty, willful misconduct, or negligent omission by the Indemnifying Party, or any of
its employees or agents; and in case any action, suit or proceeding shall at any time (either
during or after the term hereof) be brought against an Indemnified Party by reason of any
such claim, the Indemnifying Party shall resist and defend such action, suit or proceeding,
at the sole expense of the Indemnifying Party by counsel of its choice, provided that (i) the
Indemnified Party notifies the Indemnifying Party promptly in writing of the claim; and (ii)
the Indemnified Party provides the Indemnifying Party with all reasonably necessary
assistance, information, and authority to perform the foregoing at the Indemnified Party’s
expense. Neither party’s liability hereunder shall include consequential, incidental,
special, or punitive damages, including without limitation lost profits and/or lost business
opportunities, whether arising in tort, warranty contract or strict liability.
	 
	14.	 	ASSIGNMENT
	 
	a.	 	CytoCore may assign all or any part of this Agreement to any Affiliate. Subject to subsection
14b,
below, in all other respects this Agreement and the distributorship and/or
sub-distributorship
shall be non-assignable. Any non-permitted assignment shall be void.
	 
	b.	 	Distributor may, with CytoCore’s prior written consent, appoint agents
for the
distribution, sale and promotion of the Products provided that:

8

 

	 	(1)	 	no such agent shall relieve Distributor of any of its obligations under his Agreement;
	 
	 	(2)	 	Distributor shall ensure that any agent agrees to be bound by the terms of this
Agreement;
and,
	 
	 	(3)	 	such agent shall only be used to supplement the existing structure of CytoCore’s
business
and not for the purposes of creating other opportunities for Distributor.

	15.	 	NOTICES
	 
	 	 	Any notice or report pursuant to this Agreement shall be deemed duly given if sent by
prepaid registered mail letter (air mail, if sent overseas), or facsimile addressed to the
party at the address or fax number, as applicable, set forth at the beginning of this
Agreement, or to such other address or fax number as shall have been furnished in writing.
	 
	16.	 	SEVERABLE CONDITIONS/UNENFORCED PROVISIONS
	 
	a.	 	Any provision of this Agreement held to be void, invalid, or unenforceable, will be construed
as severable
and will not in any way affect render void, invalid, or unenforceable any other provision of
this Agreement,
and this Agreement will be carried out as if such void, invalid, or unenforceable provision
was not a part
of this Agreement.
	 
	b.	 	Failure by any party to exercise any right given in this Agreement or to insist on strict
compliance by the
other party of any obligation under this Agreement does not constitute a waiver of the
Party’s right to later
demand exact compliance with the terms of this Agreement.
	 
	17.	 	GOVERNING LAW.

	 	(i)	 	All controversies and disputes arising out of or under this Agreement will be
determined pursuant to the laws of the State Delaware, regardless of applicable
principles of conflicts of laws. The Parties irrevocably submit to the exclusive
jurisdiction of (i) the Courts of the State of Illinois, and (ii) if federal
jurisdiction exists, to the Federal District Court, Northern District of Illinois for
the purposes of any suit, action, or other proceeding arising out of the Agreement.
The Parties hereby irrevocably waive any objection, including that of inconvenient
forum, which they may now or hereafter have to the laying of venue for any suit,
action or proceeding arising out of or relating to the Agreement in the Courts of the
State of Illinois, or in the Federal District Court, Northern District of Illinois. In
the event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
	 
	 	(ii)	 	THE PARTIES AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY AND
ALL CLAIMS OR CAUSES OF ACTION BASED UPON OR ARISING OUT OF THE AGREEMENT.

	18.	 	ENTIRE AGREEMENT
	 
	 	 	This Agreement, including its Schedules, contains the entire understanding of the parties
with respect to the matters herein contained and voids all prior understandings, if any,
between the parties with respect to the distribution of the Products. With the exception of
changes that may be made by CytoCore at its sole discretion to Schedule A as set forth in
section 2 (a), the Agreement may be changed from time to time only by an instrument in
writing signed by an officer of CytoCore and an authorized representation of Distributor.
	 
	19.	 	THIRD PARTY RIGHTS
	 
	 	 	This Agreement and the rights and obligations created under it shall be binding upon and inure
solely to the benefit of the parties hereto and their respective successors and permitted assigns,
and nothing in this Agreement, express or implied, is intended or should be construed to confer
upon any other person any right, remedy or claim under or by virtue of this Agreement.
	 
	20.	 	INDEPENDENT PARTIES

9

 

	 	 	In all dealings within the scope of this Agreement, the parties acknowledge and agree that the
relationship created by this Agreement is that of independent contracting parties and is not,
and will not be deemed to be any other relationship, including, without limitation, that of
joint venturers, joint employers, or a partnership. Personnel employed by, or acting under the
authority of, a party to this Agreement are not employees or agents of the other party.
CytoCore and Distributor assume full responsibility for the acts, supervision and control of
their own respective employees. Distributor is not a general agent of CytoCore. When conducting
business under this Agreement, Distributor must identify itself as an “Authorized Distributor”
of CytoCore. Distributor has not paid and will not be required to pay any franchise fee or
other fee to be a Distributor for CytoCore or to use CytoCore’s name or other intellectual
property. This Agreement does not create any franchise between the parties.
	 
	21.	 	COMPLIANCE WITH LAWS
	 
	 	 	This Agreement is subject to changes or modifications necessary to comply with the laws,
orders, or regulations of, and any necessary approvals of, local, state and federal regulatory
agencies having jurisdiction over the offering or provision of the Products in the Area or
Distributor’s activities in connection therewith. Accordingly, CytoCore may add, delete,
suspend or modify the rates for, and features included with the Product, and determine whether
these changes apply to both existing and future Distributors. CytoCore will notify Distributor
as soon as practicable of each modification. Distributor may not take any action inconsistent
with any efforts by the CytoCore before regulatory authorities or others regarding any
modification of Product prices or modifications. Distributor shall strictly comply with all
applicable laws and regulations, including the Federal Food, Drug and Cosmetic Act (including
all laws which it administers), all laws and regulations promulgated under the U.S, Medicare
program including its anti-fraud provisions, export laws and regulations in connection with the
Products and other materials provided hereunder. Distributor shall insure that all of its
personnel strictly adhere to all applicable laws relating to the use and sale of the Products.
Distributor shall not, and shall not permit any other person or entity to, export or re-export,
directly or indirectly, any Product or technical data (as defined by the U.S. Export
Administration Regulations) produced or provided under or in connection with this Agreement, or
export or re-export, directly or indirectly, any direct product of any of the foregoing,
including software, to any person, entity, government or destination for which such export or
re-export is restricted or prohibited by U.S. or non-U.S. law, without obtaining prior
authorization from U.S. Department of Commerce and other competent government authorities to
the extent required by those laws. If, in CytoCore’s opinion, a Business Associate Agreement
with Distributor is required by Federal or State laws, such agreement will be duly executed,
without additional compensation, by Distributor.
	 
	22.	 	MANUFACTURER’S LIMITED WARRANTY
	 
	 	 	The manufacturer’s limited warranty as set forth on Schedule “C” is the only warranty, except
for warranty of title, provided with the Products furnished under this Agreement. Distributor
must make the limited warranty statement readily available to Distributor’s end-user purchasers
prior to sale. Any warranty statements made by Distributor that are in addition to the
statements in the limited warranty apply against Distributor only and any costs, administrative,
legal, or otherwise connected with any such additional warranty statements must be borne by
Distributor. Distributor agrees to indemnify, defend and hold CytoCore harmless from all direct
and indirect results and claims flowing from such statements.
	 
	23.	 	DISCLAIMER OF WARRANTIES
	 
	 	 	EXCEPT FOR THE WARRANTY OF TITLE, AS STATED ABOVE, CYTOCORE MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, AS TO ANY PRODUCTS. CYTOCORE SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER WARRANTY OF FITNESS OR
QUALITY.

10

 

	24.	 	LIMITATION OF LIABILITIES
	 
	 	 	IN NO EVENT WILL CYTOCORE BE LIABLE TO DISTRIBUTOR FOR LOST PROFITS OR REVENUES, WHETHER
PRESENT OR PROSPECTIVE, FOR LOSS OF TIME OR BUSINESS REPUTATION, INCONVENIENCE, LOSS OF USE OF
ANY EQUIPMENT OR PROPERTY DAMAGE CAUSED BY ANY PRODUCTS SOLD UNDER THIS AGREEMENT OR THEIR
FAILURE TO WORK, OR FOR ANY OTHER INDIRECT, SPECIAL, RELIANCE, INCIDENTAL OR CONSEQUENTIAL LOSS
OR DAMAGE ARISING OUT OF THIS AGREEMENT OR ANY OBLIGATION RESULTING THEREFROM, OR FROM THE USE
OR PERFORMANCE OF ANY PRODUCTS. THESE LIMITATIONS OF LIABILITY APPLY TO ALL CAUSES OF ACTION IN
ANY WAY RELATED TO THIS AGREEMENT OR THE PRODUCTS, INCLUDING, WITHOUT LIMITATION, ALLEGED
BREACH OF WARRANTY, BREACH OF CONTRACT, PATENT OR COPYRIGHT INFRINGEMENT, OR TORT, WHETHER IN
NEGLIGENCE, STRICT LIABILITY, OR OTHERWISE, EVEN IF CYTOCORE HAS BEEN ADVISED OF THE
POSSIBILITY OF ANY SUCH LOSSES OR DAMAGES. IN THE EVENT OF ANY LIABILITY OF CYTOCORE TO
DISTRIBUTOR RELATED TO PRODUCTS SOLD UNDER THIS AGREEMENT, THIS LIABILITY WILL BE LIMITED TO
THE LESSER OF (A) DISTRIBUTOR’S PROVEN DIRECT DAMAGES AND (B) THE PURCHASE PRICE OF THE
PRODUCTS WITH RESPECT TO WHICH THE ALLEGED LOSSES OR DAMAGES ARE CLAIMED.
	 
	25.	 	AMENDMENT
	 
	 	 	This Agreement may only be amended or superseded by written agreement executed by authorized
representatives of both parties, except as otherwise explicitly stated in this Agreement. Each
such modification will be effective only in the specific instance for the specific purpose for
which given. No course of dealing, course of performance, or usage of trade may be invoked to
modify or supplement in any way the terms and conditions of this Agreement. No other
understandings or representations, whether oral or in writing, will amend or supersede this
Agreement.
	 
	26.	 	INTERPRETATION
	 
	 	 	CytoCore and Distributor acknowledge that they have read this Agreement and understand and
accept the terms, conditions and covenants contained in it as being reasonably necessary to
maintain CytoCore’s high PRODUCT standards and thereby to protect and preserve the goodwill of
CytoCore’s Products and its Intellectual Property. Distributor has independently investigated
the business outlined in this Agreement and the profitability (if any) and risks, and is not
relying on any representation, guarantee, or statement of CytoCore other than as set forth in
this Agreement.
	 
	27.	 	ALLOCATION OF RISK
	 
	 	 	CytoCore and Distributor each acknowledge that the limitations and exclusions contained in this
Agreement have been the subject of active and complete negotiation between the parties and
represent the parties’ agreement based upon the level of risk to CytoCore and Distributor
associated with their respective obligations under this Agreement and the payments to be made
to Distributor and charges incurred by Distributor pursuant to this Agreement. The parties
agree that the terms and conditions of this Agreement will not be construed in favor of or
against any party by reason of the extent to which any party or its professional advisors
participated in the preparation of this Agreement.
	 
	28.	 	SURVIVAL
	 
	 	 	Unless otherwise indicated herein, all provisions of this Agreement regarding payment,
indemnification, liability and limitations on liability, disclaimers of warranty,
confidentiality and/or protection of proprietary rights and trade secrets shall survive the
expiration or termination of this Agreement and remain in full force and effect in perpetuity
thereafter. In addition, upon the expiration of this Agreement all rights granted or
obligations undertaken hereunder shall terminate forthwith except rights and obligations which
arose prior to such expiration or termination and those set forth in sections 6, 9, , and 12,
and in subclasses 11 (b), (c) and (d).

11

 

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	Illegible	 	 	 	By:	 	CytoCore, Inc.	 	 
	Name:
	 	Illegible
	 	 	 	Name:	 	 	 	 	 
	Title:	 	PRESIDENT	 	 	 	Title:	 	 
	 	 
	 

	 	 	 	 	 	 	 	 	 	 

	 	 
	Date: 	 	February 16, 2008	 	 	 	Date: 	 	February      , 2008	 

12

 

Schedule A: Area Appointment and Product Schedule:

Area Appointment: Alaska, Washington, Idaho, Montana, Oregon

Product Schedule:

SoftPapTM cervical cell collector

Non-disposable SoftPAPTM handle

Minimum Purchase Requirement: Data from the American Medical Association indicate that there are
1,434 physicians specializing in obstetrics and gynecology in private practice in the designated
area of appointment. These and other data suggest that each physician in this category will
collect an average of 1,800 specimens per annum for Pap testing.

The Distributor agrees to purchase the following minimum quantities of the aforementioned
product(s) for resale into the Area of appointment,

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	# OBGYN	 	Annual Pap	 	Minimum	 	 
	 	 	in Area	 	Specimens	 	Purchases (Each)	 	% Opportunity
	Year 1 (2008)

	 		1,434
		 	 	2,581,200
	 	 	 	195,741
	 	 		8
	%

	
Year 2 (2009)

	 	

	
1,434	

	 	 	
2,581,200	 	 	 	
1,338,998	 	 	

	
52	
%
	Year 3 (2010)

	 	 	1,434	 	 	 	2,581,200	 	 	 	2,323,080	 	 	 	90	%

Schedule B: Product Prices And Escalation Provisions:

Product Pricing:

	 	 	 
	SoftPAPTM cervical cell collector:

	 	$5.00 per unit
	Non-disposable SoftPAPTM handle:

	 	$35.00 each

Escalation Provision:

Starting January 1, 2009, CytoCore, may, at its sole discretion, adjust product pricing either
upward or downward to reflect changes in material and labor costs and to respond to changing market
conditions. Such price changes will occur no more frequently that twice per annum.

Schedule C: CytoCore Warranty Policies

The SoftPapTM handle is guaranteed against any defects in materials and workmanship for a period of
1 year from the date of sale or placement with an end-use physician when used according to
manufacturer’s instructions.

The SoftPAPTM disposable is guaranteed against any defects in materials and workmanship for a
period of two years from the date of manufacture (expiration date) when used according to
manufacturer’s instructions.

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     Schedule D: CytoCore’s Product Return Policy

	1.	 	PURPOSE

	 	1.1.	 	This document describes the procedure for handling of returned goods.

	2.	 	SCOPE

	 	2.1.	 	This procedure applies to materials shipped by CytoCore to distributors or customers.
This procedure applies to returned medical devices that have been returned under the
following conditions:

	 	•	 	Material was received by the customer, opened or partially used, returned remaining quantities to
CytoCore.
	 
	 	•	 	Material was received by the customer/distributor, unopened and returned to CytoCore.
	 
	 	•	 	Material was undelivered due to shipping requirements or related complications.

	3.	 	RESPONSIBILITY

	 	3.1.	 	QA is responsible for handling and documentation of returned goods and is responsible
for inspecting returned goods to determine their incoming status.

	4.	 	REFERENCES

	 	4.1.	 	QAP-005 Complaint Handling
	 
	 	4.2.	 	QAP-005-F1 Complaint/RGA Form
	 
	 	4.3.	 	WRP-001-F1 Incoming Material Log

	5.	 	PROCEDURE

	 	5.1.	 	General

	 	5.1.1.	 	Document all requests for returned goods on the “Complaint/RGA Form” QAP-005-F1.
	 
	 	5.1.2.	 	Returned Good are accepted under the following circumstances.

	 	•	 	CytoCore shipping error (wrong quantity/wrong item shipped)
	 
	 	•	 	Defective merchandise (within warranty period)
	 
	 	•	 	Unopened merchandise (in whole packaged unit quantities).
	 
	 	•	 	At the discretion of the Marketing Director
	 
	 	•	 	Merchandise that is past its expiration date will not be accepted.

	 	5.1.3.	 	Enter the return of goods (or complaint) into the complaint log. Assign a tracking number following
QAP-005.
	 
	 	5.1.4.	 	Provide the customer with the tracking number and instructions for marking the tracking number on
the outside of the shipping carton.
	 
	 	5.1.5.	 	Forward QAP-005-F1 to Quality Assurance for notification and investigation.

	5.2.	 	Receiving Returned Goods

	 	5.2.1.	 	QA (or designee) shall log in the receipt of the material into the Incoming Material Log (WRP-001-F1).
	 
	 	5.2.2.	 	QA will inspect the containers for damage, contamination, and broken seals.

14

 

	 	5.2.3.	 	All returned materials will be quarantined until and appropriate investigation and
inspection can be
performed by quality assurance.
	 
	 	5.2.4.	 	If appropriate, QA will contact the person returning the goods with any questions or will provide an
appropriate follow-up.
	 
	 	5.2.5.	 	Quality Assurance will prepare an inspection file to document the return and inspection of any
returned goods.
	 
	 	5.2.6.	 	Goods that were received by the customer and returned unopened and in whole unit quantities can
be returned to the approved inventory and be redistributed as needed.
	 
	 	5.2.7.	 	Any goods that were opened by the customer cannot be returned to the approved inventory. Items
that were opened by the customer may be investigated to determine the root cause for the reason for
the return.
	 
	 	5.2.8.	 	After the investigation into any returned goods is complete the completed QAP-005-F1 will be
forwarded to the accounting department for notification of the return and to issue any refunds (as
appropriate).
	 
	 	5.2.9.	 	If appropriate (as determined by QA) — returned merchandise may be reworked, tested, and returned
to approved inventory.

15

 

Addendum #1 to Distribution Agreement

By and between CytoCore Inc. and Co- Medical Inc.

dated February 16th, 2008 (the “Agreement”)

The parties agree to modify the Agreement as follows. The capitalized terms in this
Addendum shall have the same meaning as in the Agreement.

	1.	 	Section 13, Indemnification, of the Agreement is revised by
re-designating the first paragraph
thereof as (a) and adding a new paragraph (b) that reads as follows:

“(b) CytoCore will accept full responsibility and liability for its
products distributed by the Distributor and will furnish the Distributor
with an appropriate rider on CytoCore’s liability policy, naming the
Distributor as an additional insured party. CytoCore agrees to indemnify
Distributor for reasonable attorney fees and costs incurred as a result
of a lawsuit initiated against Distributor arising out of the sale of
CytoCore’s product(s) only as it relates to product that is defective in
workmanship or materials.”

	2.	 	The agreement is amended by adding a new Section 29, Non-Solicitation of
Employees,
thereto that reads as follows:

“Section 29. NON-SOLICITATION OF EMPLOYEES.

CytoCore and Distributor agree not to employ or engage the services of
any employee or agent of the other during the term of this agreement, and
for two (2) years from the effective date of termination or Nonrenewal;
nor, to employ anyone who has left the other’s employment or has ceased
being its agent within six (6) months of the date the ex-employee or
agent ceased such employment or service.”

	3.	 	All other terms of the Agreement shall remain unchanged and in full force and effect.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	CytoCore Inc.	 	 	 	Co-Medical Inc.
	 
	By:	 	/s/ Robert F. McCullough Jr	 	 	 	By:	 	/s/ DOUG OVERTURF
	 

	 	Name:
	 	Robert F. McCullough Jr
	 	 	 	 	 	Name:
	 	DOUG OVERTURF
	 

	 	Title:
	 	CEO
	 	 	 	 	 	Title:
	 	PRESIDENT

1

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