EXHIBIT 10.3
U.S. DISTRIBUTION AGREEMENT
THIS AGREEMENT is effective this 1st day of August, 1999, by and between
Spectra Products Inc. (herein after referred to as "SPI"), a corporation located
at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ #▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and Trancom Industries, Inc.,
(herein after referred to as "the Distributor"), a corporation located at ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS SPI has the exclusive rights for all of the United States to make,
market, distribute, sell and promote Brake Safe(TM) a visual brake stroke
indicator;
WHEREAS SPI and Distributor wish to enter into this agreement to provide
for Distributor to assist SPI in locating buyers who wish to purchase its Brake
Safe(TM) Visual Brake Stroke Indicator on the terms and conditions set forth
below;
NOW THEREFORE, THIS AGREEMENT WITNESSES THAT in consideration of mutual
covenants and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency whereof is hereby acknowledged by
each of the parties, SPI and Distributor hereby agree as follows:
1. AGREEMENT
This is an agreement for the marketing, distribution, sales and promotion
of the Brake Safe(TM) products manufactured by SPI (the "Products"). The
description and identification of the Products appear on Schedule "A"
attached hereto.
1.1 TerritoryThe Distributor has requested that SPI grant distributor
rights on a non-exclusive basis for the Products for all markets
within the United States including all states (herein after referred
to as "the Territory"). The markets will include all Government,
Trucking and Bus transportation segments. The Distributor will stock
sufficient Products to meet the needs of its customers and its
distribution network.
2. SPI OBLIGATIONS
2.1 SPI will:
(a) sell the Products to Distributor as provided in Schedule "A";
(b) provide technical assistance and advice to Distributor with
respect to sales of the Products;
(c) provide necessary sales aids and technical documentation at SPI's
collateral materials price schedule as provided in Clause 12.9;
(d) assist in the presentation of training seminars and trade shows
as provided in Clause 12.8; and
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(e) have in full force a liability insurance policy in an amount SPI
deems necessary to hold harmless and indemnify Distributor from
any and all claims arising from manufacturer's defects. SPI will
provide the Distributor with a certificate of liability insurance
providing liability coverage of two million dollars naming
Distributor as an insured party.
2.2 SPI reserves the right to provide direct customer support in those
cases where so requested by the customer and/or where Distributor
fails to adequately support the customer.
2.3 SPI will support the Distributor by referring United States inquiries
for Brake Safe and the related Products described in Schedule "A",
including fleet and distribution requests, to the Distributor.
3. DISTRIBUTOR'S OBLIGATIONS
3.1 Distributor will purchase, promote, sell, distribute, market and stock
the Products as specified in Schedule "A".
3.2 Distributor will maintain a professional place or places of business
suitable for a distributor of the Products, and will operate such a
place of business in the manner and during the hours in accordance
with good industry practice.
3.3 Distributor will not market, distribute, sell or promote other
products similar in use and function to the Products during the term
of the Agreement.
3.4 All transactions under this agreement shall be in U.S. dollars.
3.5 Distributor, at its own cost, shall maintain comprehensive general
liability insurance including completed operations liability insurance
and all-risk type property insurance in form and with amount and with
an insurer reasonably satisfactory to SPI, the amount of such
insurance not to be less than $1,000,000 for each occurrence, with no
amount deductible.
3.6 The Distributor will not make, attempt to make, or knowingly allow to
be made alterations and/or improvements to the Products.
4. USE OF SPI TRADEMARKS
4.1 Distributor agrees not to use SPI trade-marks (whether registered or
not), or trade-marks similar thereto in Distributor's trade name
and/or otherwise use SPI trademarks, without the prior written consent
of SPI.
4.2 The Distributor subject to the provisions of the Agreement agrees to
use the trademarks only in connection with the Products and the
advertising and promotion thereof and for no other reason and in the
use of the trademarks, to comply with all applicable laws,
regulations, rules and orders.
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4.3 The Distributor should not use or permit the use of the SPI trademarks
or any part thereof anywhere outside the Territory without the prior
written consent of SPI.
5. ORDERS AND SHIPMENTS OF PRODUCTS
5.1 SPI will endeavour to fill Distributor's orders promptly, but shall
not be liable for any loss or damage due to delay in shipment for any
reason or because of failure to ship. Upon acceptance of the order,
SPI will endeavour to fill the order in due course, taking into
consideration any back orders that may exist and its other business.
SPI will normally fill orders in the sequence of which the orders are
submitted to SPI (first in, first out).
5.2 The Distributor will place orders for the Products with SPI and will
endeavor to provide SPI with a four week lead time for shipment of
such orders.
5.3 All orders from the Distributor to SPI shall be subject to the terms
and conditions set forth in Schedule "B", which terms and conditions
may be amended from time to time by SPI as provided for herein and
shall be deemed to be incorporated in this Agreement as fully as if
set forth herein in their entirety.
5.4 The terms and conditions set forth in this Agreement and those set
forth in the Schedules attached hereto shall prevail notwithstanding
the terms and conditions on any other submitted by Distributor.
5.5 Upon shipment or fulfilment of an order, orders may be cancelled only
with SPI's written consent and upon payment of reasonable and proper
cancellation charges, including cost of placing returned goods in
saleable condition.
6. PRICING/LEADTIME/TERMS
6.1 SPI will sell Brake Safe to the Distributor at a preferred distributor
price of $18.50 U.S. per axle (1/2 inch clevis pins) and $19.75 U.S.
per axle (5/8 inch clevis pins). Custom products will be priced as set
forth in Schedule "B" as may be amended under the provisions of this
agreement. The suggested manufacturer's list price for Brake Safe is
$33.00 U.S. per axle.
6.2 The Distributor is free to establish a suggested list price for the
sale of the Brake Safe product line consistent with the Distributor's
trade practices. However, the Distributor will advise its dealers of
the appropriate market level pricing suggested by SPI.
6.3 SPI will hold the distributor price firm for a period of 12 months
commencing the effective date of this Agreement except as provided
herein. During this period, SPI shall limit its price increases to
increased cost of raw materials and labour incurred by SPI in the
manufacture of the Brake Safe product line. In the event of a price
increase, SPI will provide the Distributor with 60 days advance
notice.
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6.4 All prices will be in U.S. dollars, FOB SPI's warehouse. Payment shall
be made in full within 30 days of Distributor receiving SPI's invoice.
In the event Distributor submits payment within 10 days of receiving
SPI's invoice, said invoice shall be discounted 2%.
7. ANNUAL VOLUME REBATE
SPI will provide the Distributor with an annual volume rebate based on the
total number of axles purchased during each year of the term of the
distribution agreement. The rebate will be paid within 60 days of
verification of annual purchase quantities. For purposes hereof a "year"
shall mean a 12 month period commencing on the effective date hereof or on
the anniversary hereof. The volume rebate is as follows:
TOTAL QUANTITY PURCHASED PERCENTAGE DISCOUNT
60,000 axles 3.0%
100,000 axles 5.0%
150,000 axles 7.5%
210,000 axles 10.0%
8. WARRANTY OF SPI
8.1 SPI will extend to the customers of Distributor only the warranty
given by SPI to Distributor as set forth in Schedule "C" to this
Agreement and Distributor is not authorized or empowered to make any
changes thereto.
8.2 SPI will indemnify, defend and hold Distributor harmless from any and
all claims, damages, losses and expenses, including reasonable
attorney's fees and costs sustained by Distributor as a result of
defect or alleged defects in the Products sold to Distributor by SPI.
9. INDEMNIFICATION
9.1 Distributor shall indemnify and hold SPI harmless from any and all
liability excluding product liability (including legal fees due to
litigation or the threat thereof), resulting from an act, omission,
statement or coneuct by, through or under the Distributor in the
performance of its rights and obligations under this Agreement. This
includes any action arising from the use of the trade-marks or trade
name "Brake Safe".
9.2 SPI shall indemnify and hold Distributor harmless from any and all
liability arising from claims or allegations that the patents issued
to SPI infringe upon a third party's patent or patents. In the event
SPI is prevented from selling the Products to Distributor, SPI agrees
to sell to Distributor, if Distributor so elects, the ▇▇▇▇▇▇▇▇▇▇▇▇▇
brake adjustment gauge or a product similar to the Products.
Alternatively, in such an event, this Agreement may be terminated by
Distributor, and if so terminated SPI and Distributor shall owe no
further obligation to one another. At no additional cost to
Distributor, Distributor shall co- operate with SPI in the defence of
any such action including furnishing witnesses, records and
information regarding such alleged infringement.
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9.3 With respect to any patents which may be issued regarding the
Products, if any such patent is infringed by a third party, SPI shall,
at SPI's own expense, take all steps which SPI deems reasonable in
order to terminate or ▇▇▇▇▇ the infringement. Distributor shall
promptly notify SPI in writing of any infringement of the right,
ownership or title of SPI pertaining to any patent issued with respect
to the Products which comes to the attention of Distributor. Any
damages, costs or other compensation awarded as a result of the
infringement will belong to SPI. Provided there is no additional cost
to Distributor, Distributor shall cooperate with SPI in furnishing
witnesses, records and information for any legal proceedings regarding
such infringement.
10. EFFECTIVE DATE AND TERM
10.1 The term of this Agreement shall commence as of August 1, 1999 and
shall be effective thereafter for an initial term of 5 years
thereafter, and will continue thereafter in effect until terminated by
either party as provided for herein.
10.2 This Agreement may be terminated without cause by Distributor upon
Distributor providing notice in writing of the termination, such
termination to be effective 90 days from receipt by SPI of such
notice.
10.3 This Agreement may be terminated by SPI in its sole discretion,
without prior written notice, in the event that:
(a) Distributor files a voluntary action in bankruptcy;
(b) Distributor makes any assignment for the benefit of creditors; or
(c) Distributor breaches the provisions set out in Clauses 3.3 and
3.6 herein.
10.4 This Agreement may also be terminated by SPI in the event of: (i)
breaches by Distributor in the provisions set out in Clause 3.1; or
(ii) a breach or default by Distributor of any other provision of this
Agreement, provided that Distributor shall have 30 days to cure such
breach or default upon written notice by SPI of such breach or
default. In the event that Distributor fails to cure such breach or
default within such 30 days period, SPI may terminate this Agreement
without further notice.
11. RIGHTS UPON TERMINATION
11.1 Upon termination of this Agreement by SPI pursuant to Section 10, SPI
will purchase from Distributor any and all current Products, described
in Schedule "A", which Distributor has not sold, at the net price paid
by Distributor less any amount due and owing SPI by Distributor;
11.2 In the event of termination of this Agreement by Distributor, SPI may,
at its option, purchase all or some of the Products at the net price
paid by Distributor less:
(a) the greater of 20% of then current price to the Distributor
and SPI's then current restocking charge;
(b) Transportation from Distributor's location to SPI's
warehouse at Distributor's cost, and
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(c) Any amount due and owing to SPI by Distributor.
11.3 Notwithstanding the above, SPI shall have no obligation to purchase
any Products which are not contained in full master cartons of 12
units per carton.
12. RETURNS
12.1 SPI will permit the Distributor to return goods in unused condition,
freight prepaid, for full credit less a 20 percent restocking charge
at any time. No restocking charges will apply to Products returned
resulting from warranty claims, product design charges or obsolescence
provided that such returns are made within six (6) months of written
notification by the Distributor to SPI of Product returns relating to
warranty, design changes and obsolescence.
13. GENERAL
13.1 This Agreement cannot be assigned or transferred by Distributor, nor
shall Distributor delegate all or part of its duties hereunder,
without the written consent of SPI and any such purported assignment,
transfer or relegation is null and void. SPI may assign this Agreement
to any successor by reason of corporate acquisition or merger.
13.2 No waiver by SPI of any breach or default of the performance of any
part of this Agreement by Distributor shall be deemed to be a waiver
of any subsequent breach or default.
13.3 No representation or statement not contained in this Agreement shall
be binding upon SPI as a warranty or otherwise and this Agreement
shall not, except as specifically set forth herein, be modified or
amended unless by a writing executed by an officer, partner or
proprietor for the party against whom the modification or amendment is
sought to be enforced.
13.4 In case one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
13.5 This Agreement shall be subject to and shall be construed and enforced
in accordance with the domestic laws of the Province of Ontario,
Canada. The parties hereby irrevocably attorn to the jurisdiction of
the Courts of Ontario.
13.6 This Agreement constitutes the entire Agreement between SPI and
Distributor with respect to the subject matter hereof and supersedes
all prior and contemporaneous statements, promises, understandings or
agreements.
13.7 Any notice, request, consent or other communication required or
desired to be given by one party hereto to the other under this
Agreement shall be in writing and shall for all purposes be deemed to
be fully given and received if and when received by personal delivery
or eight days after posting by prepaid registered mail, return receipt
requested, or by 10:00 a.m. the next ordinary business day if by
cable, telegram, facsimile or telex, addressed to the party to be
notified at the respective address of such party as set forth herein
unless and until other addresses are supplied in writing by the
parties:
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For SPI: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
For Distributor: ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
13.8 SPI will provide initial and periodic training of the Distributor's
Sales agents and sales support subject to mutually acceptable
scheduling. SPI will provide training on a no charge basis when
scheduled locally in the Toronto area on a central basis. For training
and sales support necessitating travel outside the general Toronto
area, the Distributor will pay reasonable travel, accommodation and
meal costs for SPI's designated trainer.
13.9 SPI will supply the Distributor its current collateral materials at
its published prices. SPI will provide a Brake Safe sales video, for
use by the Distributor and will supply the Distributor with one master
copy at no charge.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the 28th day of July, 1999 by their duly authorized signatories.
SPECTRA PRODUCTS INC.
/s/ ▇▇▇ Daey Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
----------------- --------------------------
Title: Vice-President
/s/ ▇▇▇ Daey Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------- --------------------------
Title: President
TRANCOM INDUSTRIES, INC.
/s/ Kineha Frei Per: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------- --------------------------
Title: President
Schedules: A The Products; B Terms; C Warranty
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Schedule "A"
SPI will sell to Distributor its full line of visual brake stroke
indicators as set forth below and as amended from time to time.
Power Units
Product Code Units Description
-------------- ----- -------------
PU242 2 Type 16, 20, 24 ▇▇▇▇▇▇▇▇; 1/2" clevis pin
PU242-58 2 Type 16, 20, 24 ▇▇▇▇▇▇▇▇; 5/8" clevis pin
PU250LS 2 Type 24LS square port long stroke chamber; 1/2" clevis pin
PU250LS-58 2 Type 24LS square port long stroke chamber; 5/8" clevis pin
PU302 2 Type 30 chamber and long stroke type 16L, 20L, 24L; 1/2"
clevis pin
PU302-58 2 Type 30 chamber and long stroke type 16L, 20L, 24L; 5/8"
clevis pin
PU302E 2 Type 30 chamber; 1/2" clevis pin; camel back, custom
applications
CP302 2 Type 30 chamber; clamp push rod indicator pin (transit bus
extended push rod application)
CLVS58 6 Clevis pins per bag 5/8" diameter
CLVS12 6 Clevis pins per bag 1/2" diameter
Trailer Units
-------------- ----- -------------
TL250LS 2 Type 30LS square port long stroke chamber; 1/2" clevis pin
TL250LS-58 2 Type 30LS, square port long stroke chamber; 5/8" clevis pin
TL250LS-CP 2 Type 30 square port long stroke chamber; clamp push rod
indicator pin (Intraax and extended push rod applications)
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Trailer Units
Product Code Units Description
-------------- ----- -------------
TL302 2 Type 30 chamber; 1/2" clevis pin
TL302-58 2 Type 30 chamber; 5/8" clevis pin
TL302-CP 2 Type 30 chamber; clamp push rod indicator pin (Intraax and
extended push rod applications)
TL302S 2 Type 30 chamber; 1/2" clevis pin shorter trailer bracket
custom applications
CLVS58 6 Clevis pin, 5/8" diameter
CLVS12 6 Clevis pin, 1/2" diameter
Bulk Packaging of 25 axles per carton is available upon request.
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Schedule "B"
SPI and Distributor agree that Distributor will purchase Brake Safe(TM)
products at prices set forth below and as may be amended from time to time by
SPI, to reflect increases in the cost of production for the same as provided for
in this Agreement.
Product Code Price
-------------- ---------
PU242 $18.50
PU242-58 $19.75
PU250LS-58 $19.75
PU250LS $18.50
PU302 $18.50
PU302-58 $19.75
PU302E $23.50
TL250LS $18.50
TL250LS-CP $23.50
TL250LS-58 $19.75
TL302 $18.50
TL302-CP $23.50
TL302-58 $19.75
TL302S $23.50
CP302 $23.50
CLVS58 $12.00
CLVS12 $12.00
BPU242 $18.50 per axle (25 per master ctn)
BPU302 $18.50 per axle (25 per master ctn)
BTL302 $18.50 per axle (25 per master ctn)
B175 $ 4.40
B200 $ 4.40
B250 $ 4.40
YP1 $ 2.50 (25 per bag)
RP1 $ 2.50 (25 per bag)
o All prices are U.S. dollars FOB Toronto, Ontario and exclude applicable taxes
o Payment Terms are Net 30 days; 2% Net 10.
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▇▇▇▇▇▇▇▇ "▇" - ▇▇▇▇▇▇▇▇
SPI will warranty its Brake SafeTM products purchased from Distributor by
Distributor's customers under the terms and conditions set forth hereunder: