Exclusive Distribution Agreement

EXCLUSIVE DISTRIBUTION AGREEMENT


THIS EXCLUSIVE DISTRIBUTION AGREEMENT ("Agreement") is made and entered into this 14th day of December, 2000 ("Effective Date") by and between AMDL, INC., a Delaware corporation ("Company"), having its principal place of business at 2492 Walnut Avenue, Suite 100, Tustin, California 92780-6953, and CHINESE UNIVERSAL TECHNOLOGIES CO., LTD., a Taiwanese corporation ("Distributor"), having his principal place of business at 7F-3B1,61 SEC GUN GY1 Road, 403 Taichung, Taiwan.


RECITALS


A. Distributor desires to obtain the exclusive right to market, sell and distribute the products (the "Products") which are set forth on Exhibit A hereto in the "Territory" (as defined in Section 1(b) below, all in accordance with the terms and conditions set forth herein.


B. Company is willing to grant, in consideration of a distributorship fee of $300,000 US, such rights to Distributor subject to the terms and conditions of this Agreement.


AGREEMENT


NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties hereinafter set forth, the parties hereby covenant and agree as follows:


1. GRANT.


(a) Upon the terms and subject to the conditions set forth herein, Company hereby grants to Distributor the exclusive right, within the Territory, to distribute, market and sell the Products which are set forth on Exhibit A (the "Distributorship").


(b) For purposes of this Agreement, the "Territory" includes the following countries in Asia: Taiwan, Hong Kong, Korea, Philippines, Japan, Singapore, Malaysia, Thailand, Vietnam and Cambodia.


(c) During the Term (as hereinafter defined), Distributor shall be permitted to use all trademarks and tradenames of Company associated with the Products and all Products shall bear the trade names and trademarks applied by Company at its production facility. Distributor, at its own expense may add its name, logo, and the words, "Distributor in [insert name of applicable country]" to Product packaging and labels.


2. ACCEPTANCE. Distributor hereby accepts the Distributorship and agrees to make all sales hereunder in accordance with this Agreement. Distributor further agrees to pay to Company a fee of $300,000 US upon execution of this agreement, and to use its best efforts to promote sales of the Products within the Territory and not to distribute, market or sell any Products outside thereof. It is further understood and agreed that the Product(s) is(are) to be used within the Territory on patient samples drawn within the Territory.


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3. STANDARD CONDITIONS OF SALE TO DISTRIBUTOR. Company's "Standard Conditions of Sale" ("Standard Conditions") effective on the date of each Distributor order to Company are made a part of this Agreement, are incorporated herein by this reference and shall be applicable to all orders placed by Distributor. A copy of the presently effective Standard Conditions is attached as Exhibit B. Company will not ship Product(s) to Distributor until Distributor shall request such shipment in writing.


4. TERM.


4.1 Initial Term. The initial term of this Agreement shall commence on the date hereof, and shall end on October 31, 2005, unless earlier terminated pursuant to the provisions of Section 10 (the "Initial Term").


4.2 Renewal Terms. Upon written notice of Distributor's desire to renew the term of this Agreement given by Distributor to Company not less than one ninety (90) days prior to expiration of the Initial Term, Distributor and Company shall enter into good faith negotiations respecting the terms of such renewal. Distributor's notice shall set forth its proposed terms and conditions for such renewal. Notwithstanding the above, neither party shall be under any obligation to renew the Distributorship.


5. PRICES; PAYMENT.


5.1 Prices. The prices for Products to be sold by Company to Distributor pursuant to this Agreement shall be as set out in the Price List published from time to time by Company, and which Company shall supply to Distributor after each revision thereof. Prices shall be subject to change at Company's discretion and shall be reflective of the market. A copy of the presently effective Price List is attached as Exhibit C.


5.2 Payment. Payment for Products shall be made via wire transfer prior to shipment.


6. CONFIDENTIAL INFORMATION.


(a) All Product lists, catalogs, circulars, sales leaflets, advertising materials and other marketing aids furnished by Company to Distributor pursuant to this Agreement are the property of Company, are of a confidential nature and not intended to be disclosed to others and shall be utilized by Distributor solely for the purpose of this Agreement. Distributor shall not, for any reason whatsoever, divulge or communicate directly or indirectly any part of such information to any third party, except where permitted under this Agreement.


(b) Distributor shall have the right to communicate such information to employees, subsidiary dealers, assistants and after-sales personnel when necessary for the purposes of this Agreement and shall assume at its cost all precautions and measures necessary for the purpose of discharging its obligations pursuant to this Section 6.


(c) All marketing reports and plans provided by Distributor to Company shall be treated by Company as confidential information if so marked unless such information shall become known to others without disclosure by Company.


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(d) Distributor and Company agree that all data, reports, papers and other information arising out of clinical trials or studies conducted in Asia, whether under the auspices of Distributor or Company, shall be treated as confidential information by both parties until published or other wise made public. It is further agreed that both parties will assist in and facilitate the process of getting data, reports, and/or papers which are likely to increase the market appeal of Product(s) covered by this agreement published in appropriate professional periodicals.


(e) The obligations of Distributor under this Section shall survive the expiration or termination of this Agreement.


7. DISTRIBUTOR'S GENERAL COVENANTS.


Distributor shall do all of the following:


(a) use its best efforts to promote and extend sales of the Products in the Territory and to meet the demand therefor on reasonable terms and at competitive prices;


(b) work diligently to obtain orders and to enhance the reputation of Company and the Products and shall at all times act in a responsible and ethical way in connection with the promotion and sale of the Products;


(c) not manufacture, market, sell or distribute products competitive with those to which the Distributorship relates during the term of this Agreement and for three (3) years after the termination of this Agreement:


(d) submit to Company all advertising, labeling and other promotional materials with respect to the Products before utilizing the same;


(e) not publish, cause to be published, encourage or permit any advertising or practice which might deceive the public or might be detrimental to the good name, trade marks, goodwill or reputation of Company;


(f) in all correspondence and other dealings relating directly or indirectly to the sale of the Products make clear to all concerned that Distributor is acting as independent contractor and not as agent for or partner of Company;


(g) not in any manner (i) pledge the credit of Company or (ii) receive any money on behalf of Company or (iii) commit Company to any obligation or give any representation, warranty or promise on Company's behalf or (iv) give any representation or warranty regarding the Products other than those contained in Company's current literature;


(h) not sell or make available for sale any of the Products to anyone other than appropriately licensed medical professionals for use in the Territory;


(i) refer to Company all inquiries and orders Distributor may receive for the Products which relate to areas outside the Territory;


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(j) maintain adequate facilities (including inventories and price lists) and staff reasonably sufficient in the opinion of Company to serve the needs of the Territory;


(k) when Company's tradenames or trademarks for the Products are used in any advertising, sales material or promotional material relating to the Products, Distributor shall not alter, remove or interfere with any markings or nameplates or other trademarks attached to Products;


(l) immediately and in writing bring to the attention of Company any improper or wrongful use in the Territory (or elsewhere) of Company patents, trademarks, designs or other industrial or commercial property rights (if any) known to Distributor and shall take such reasonable steps as may be requested by Company to safeguard Company's proprietary rights and interests therein;


(m) immediately in writing pass to Company details of any complaints received from customers of Distributor or others relating to the Products or Distributor's services;


(n) supply to Company copies of (i) medical histories of patients to be considered for inclusion in clinical trials on the Products and (ii) any reports, tests or results of clinical trials on the Products that come into its possession whether carried out by or for Distributor or by or for its customers;


(o) allow Company to exclude, in its sole and absolute discretion, any patient, volunteer or control person from inclusion in any clinical trial;


(p) at all times hereafter save and keep Company and its successors and assigns harmless and indemnified against all actions, proceedings, losses, costs, damages, expenses, claims and demands whatsoever arising in any way in connection with (i) any breach by Distributor of this Agreement or (ii) any breach by Distributor of any of Distributor's obligations to any customer of Distributor; and


(q) not at any time after the termination of this Agreement represent itself or cause or permit itself to be represented as being in any way a seller or Distributor of the Products.


8. COMPANY'S GENERAL COVENANTS.


Company shall do all of the following:


(a) use its best efforts to be supportive of Distributor's selling of the Products in the Territory, and help the Distributor to solve Product related technical problems that might arise with marketing the Product;


(b) inform Distributor of all significant new developments related to the Product(s);


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(c) not in any manner (i) pledge the credit of the Distributor or (ii) receive any money on behalf of the Distributor or (iii) commit the Distributor to any obligation or give any representation, warranty or promise on the Distributors behalf;


(d) use its best efforts to insure that Product(s) shipped to Distributor shall have a useful shelf life of no less than 180 days at the time of shipment, except as provided in section "Payment and Late Charges" in Exhibit B hereof;


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