EXHIBIT 10.6
DISTRIBUTION AGREEMENT
BETWEEN
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BRISTOL WORLDSOURCE, INC.
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AND
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VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.
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DATED
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SEPTEMBER 6,1996
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DISTRIBUTION AGREEMENT
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TABLE OF CONTENTS
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1. INTERPRETATION.................................................. 4
1.1. Interpretation........................................... 4
1.2. Schedules................................................ 4
2. APPOINTMENT OF REPRESENTATIVE................................... 5
2.1. Appointment.............................................. 5
2.2. Distributor's Market Obligations......................... 5
2.3. Sub-Distributors and Agents.............................. 6
2.4. Marketing Effort......................................... 6
2.5. Marketing Tools.......................................... 6
2.6. Sales Support/Training................................... 6
2.7. Distributor's Indemnity.................................. 6
3. PRICING......................................................... 6
3.1. Price.................................................... 6
3.2. Price Changes............................................ 7
3.3. Price Changes Not Applicable............................. 7
3.4. Re-Sale Prices........................................... 7
4. PURCHASE ORDERS AND SHIPPING SCHEDULES.......................... 7
4.1. Minimum Volumes.......................................... 7
4.2. Purchase Orders.......................................... 7
4.3. Amendments to Purchase Orders............................ 7
4.4. Communication of Information............................. 8
4.5. Shipping................................................. 8
4.6. Additional Procedures.................................... 8
5. MANUFACTURING BY MANUFACTURER................................... 8
5.1. Specifications........................................... 8
5.2. Manufacturer's Limited Warranty.......................... 8
5.3. Manufacturer's Indemnity................................. 8
5.4. Installation............................................. 9
6. PACKAGING AND INSPECTION........................................ 9
6.1. Packaging................................................ 9
6.2. Marking.................................................. 9
7. PAYMENT......................................................... 9
8. REPRESENTATIONS AND WARRANTIES.................................. 10
8.1. Manufacturer's Representations and Warranties............ 10
8.2. Distributor's Representations and Warranties............. 10
9. TERM AND TERMINATION............................................ 11
9.1. Term..................................................... 11
9.2. Option to Renew.......................................... 11
9.3. Termination by Either Party.............................. 11
9.4. Liabilities.............................................. 12
9.5. Force Majeure............................................ 12
9.6. Survival of Covenants.................................... 12
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DISTRIBUTION AGREEMENT
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TABLE OF CONTENTS
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9.7. Survival of Representations, Warranties and Indemnities. 12
10. MANUFACTURER'S PROPRIETARY RIGHTS AND ADDITIONAL COVENANTS
OF DISTRIBUTOR.................................................... 12
11. DISTRIBUTOR'S PROPRIETARY RIGHTS.............................. 13
12. GENERAL PROVISIONS............................................ 14
12.1. Entire Agreement....................................... 14
12.2. Severability........................................... 14
12.3. Amendments............................................. 14
12.4. Assignment............................................. 14
12.5. Waiver and Consent..................................... 15
12.6. Governing Law.......................................... 15
12.7. Venue and Jurisdiction................................. 15
12.8. WAIVER OF TRIAL BY JURY................................ 15
12.9. Attorney's Fees and Costs.............................. 16
12.10. Notice................................................ 16
12.11. Binding Effect........................................ 17
12.12. Time of Essence....................................... 17
12.13. No Partnership........................................ 17
12.14. Counterparts.......................................... 17
13. SCHEDULES..................................................... 18
SCHEDULE "A": MANUFACTURER'S PRODUCTS AND PRICES............. 19
SCHEDULE "B": MINIMUM VOLUMES................................ 20
SCHEDULE "C": MARKET......................................... 21
SCHEDULE "D": PATENTS AND TRADEMARKS......................... 22
SCHEDULE "E": PROFIT DISTRIBUTION RATIO...................... 23
SCHEDULE "F": CONSUMER PRODUCTS NOT IN DIRECT COMPETITION.... 24
13. EXHIBITS......................................................
EXHIBIT "1": SALES REPRESENTATIVE AGREEMENT, MARCH 3, 1996...
EXHIBIT "2": MARKETING PLAN..................................
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MASTER DISTRIBUTION AGREEMENT
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THIS AGREEMENT made as of September __, 1996, Supersedes all agreements related
to the subject matter hereof
BETWEEN:
BRISTOL WORLDSOURCE, INC.
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a Texas corporation having an office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and any subsidiaries and/or affiliates
(the "Distributor")
AND:
VECTOR ENVIRONMENTAL TECHNOLOGIES, INC.,
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a Delaware corporation having an office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and any subsidiaries and/or affiliates
(the "Manufacturer")
WHEREAS:
A) The Distributor wishes to engage in the consumer and commercial water
filtration and purification products market described in Schedule "C" (the
"Market") and is interested in selling in the Market the products of the
Manufacturer as defined in Schedule "A" to this Agreement (the "Products")
under the Manufacturer's trademarks, "Diamond Rain(TM)" and "Filtura(TM)"
and to engage the Manufacturer to produce similar products on a private
label basis.
B) The Manufacturer has expressed its desire to produce and sell the Products
to the Distributor for exclusive distribution in the Market, and
C) The Manufacturer has agreed to license the Distributor to use the trademarks
"Diamond Rain(TM)", "Filtura(TM), and all other marks and distinctive
designs described in Schedule "D" to this Agreement and any future
trademarks or trade names which the Manufacturer may develop and agree to
license to the Distributor (collectively referred to as the "Trademarks")
for the sole purpose of permitting the Distributor to market and sell the
Products in the Market; and
D) The Manufacturer has agreed to, subject to the terms of this Agreement,
license the Distributor with the right to utilize Product covered by certain
Patents or Trademarks described in Schedule "D" to this Agreement, and any
future patents which the Manufacturer may obtain in connection with the
Products, for the sole purpose of permitting the Distributor to market and
sell the Manufacturer's Products in the Market. The Distributor specifically
acknowledges and agrees with the Manufacturer that the Distributor has no
proprietary rights in and to the Trademarks and Patents.
E) THIS AGREEMENT WITNESSES that, in consideration of the covenants contained
herein, the parties mutually agree as follows:
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1. INTERPRETATION
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1.1. INTERPRETATION
For all purposes of this Agreement, except as otherwise expressly provided or
unless the content otherwise requires:
a) "this Agreement" means this Distribution Agreement as from time to
time supplemented or amended by one or more agreements entered into
pursuant to its provisions ;
b) the headings are for convenience only and do not form a part of this
Agreement nor are they intended to interpret, define or limit the
scope, extent or intent of this Agreement or any portion thereof;
c) the word "including", when following any general statement, term or
matter, is not to be construed as limiting such general statement,
term or matter to the specific items or matters set forth immediately
following such words or to similar items or matters;
d) all accounting terms not otherwise defined have the meanings assigned
to them and all calculations to be made hereunder are to be made in
accordance with United States generally accepted accounting principles
applied on a consistent basis;
e) all references to currency means lawful money of the United States of
America and all amounts to be calculated or paid pursuant to this
Agreement are to be calculated in lawful money of the United States of
America;
f) a reference to a statute includes all regulations made under that
statute, all amendments to such statute or regulations in force from
time to time, and any statute or regulation which supplements or
supersedes such statute or regulations;
g) words imparting the masculine gender include the feminine or neuter,
words in the singular include the plural, and vice versa;
h) a reference to "approval", "authorization" or "consent" means written
approval, authorization or consent;
i) all references in this Agreement to a designated "Part", "Section" or
to a Schedule is to the designated part, section or schedule to this
Agreement, and followed by a number, letter or some combination of
numbers and letters refers to the provision of this Agreement so
designated; and
j) "person" means an individual, corporation, body corporate,
partnership, joint venture, limited liability company, association,
trust or unincorporated organization or any trustee, executor,
administrator or other legal representative.
1.2. SCHEDULES
The following schedules constitute an integral part of and are deemed to be
incorporated by reference into this Agreement:
Schedule "A" Manufacturer's Products and Prices
Schedule "B" Minimum Volumes
Schedule "C" The Market
Schedule "D" Patents and Trademarks
Schedule "E" Profit Distribution Ratio
Schedule "F" Products not in Direct Competition
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2. APPOINTMENT OF REPRESENTATIVE
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2.1. APPOINTMENT
The Manufacturer hereby appoints the Distributor as its Exclusive Distributor
for the Products for resale within the Market as listed in Schedule "C" on an
independent contractor basis and not as an employee. The distributor hereby
accepts its appointment as the Manufacturer's Master Distributor of the Products
in the Market, under the Manufacturer's trademarks, for the Term of this
Agreement set out in Part 9. The Manufacturer shall not market, distribute,
sell or lease the Products in or for sale or distribution in the Market for the
term of this Agreement, provided, however, that the Manufacturer shall be
entitled to take any such action if (a) the Distributor shall have breached any
material term hereof or shall have failed to comply with any material condition
set forth herein, and (b) Distributor has not remedied or cured any such breach
or failure to comply within sixty (60) days following receipt by Distributor of
written notice from Manufacturer setting forth in reasonable detail the
provisions which have been breached or where there has been a failure to comply.
Distributor shall not be entitled to such sixty (60) day notice if (i)
Distributor shall fail materially to comply with the provisions of Part 10
requiring Distributor to keep certain proprietary information confidential, or
(ii) Distributor shall fail to make payments required to be made by it hereunder
when due.
All Purchase orders received after the date of this Agreement will be forwarded
to the Distributor for review and approval and will be accounted for as sales of
the Distributor. Manufacturer agrees to assign and Distributor agrees to assume
all rights and obligations under the Sales Representative Agreement with Eagle
Associates, Inc. (which includes Maverick Sales), dated March 3, 1996 (Exhibit
1), upon the signing of this Agreement. Distributor further agrees to provide
direction to Manufacturer's Sales Manager following the signing of this
Agreement and continuing until the earlier of December 31, 1996 or the
termination of the employment relationship between the Sales Manager and the
Manufacturer. Manufacturer, agrees to continue the employment of the Sales
Manager until December 31,1996, subject to the continuing levels of performance
which are mutually acceptable to both the Manufacturer and Distributor. The cost
of employing the Sales Manager, excluding travel and entertainment expense, for
the first two month period following the signing of this Agreement will be to
the account of the Manufacturer. All costs after the initial two month period up
to and including December 31, 1996, relating to the Sales Manager, will be
reimbursed to the Manufacturer by the Distributor on a semi-monthly basis. The
Manufacturer will have the option to extend the employment of the Sales Manger
for an additional period of up to 60 days following December 31,1996, under the
then existing terms, if the Distributor has not achieved the Minimum Purchase
level for the period as defined in Schedule B. The Manufacturer will have no
obligation to replace the Sales Manager in the case of a voluntary or
involuntary termination. Manufacturer agrees to release and Distributor agrees
to offer employment to the Sales Manager at the end of the two month period. It
is understood that the Distributor's obligation to offer employment to the Sales
Manager is subject in all respects to the Sales Manager's demonstrated
performance during this period.
2.2. DISTRIBUTOR'S MARKET OBLIGATIONS
During the Term of this Agreement, the Distributor will use its reasonable
efforts to promote the sale of the Products in the Market and will maintain a
trained and competent sales force and provide such training at the Distributor's
expense. Training at the Manufacturer's place of business for Distributor's
personnel who will train other Distributor personnel may be scheduled from time
to time by the parties.
The Distributor agrees that during the term of this agreement that it will not
represent, promote or sell any products that are in direct competition to those
offered by the Manufacturer as outlined in Schedule "A". However, the
Distributor may represent, promote or sell products that are complementary and /
or
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which will provide the Distributor with a full product line of water
purification and treatment products. Products which are specifically agreed as
not in direct competition include, but not limited to items listed on Schedule
"F.
2.3. SUB-DISTRIBUTORS AND AGENTS
The Distributor may appoint by contract one or more sub-distributors or agents
of the Products in the Market, provided that the Manufacturer will have no
obligation to, or responsibility for, such sub-distributors or agents. Such
sub-distributors or agents will be made subject to the limitations and
restrictions as are imposed upon the Distributor under this Agreement including
but not limited to Sections 9 and 10 of the Agreement. Termination of this
Agreement with the Distributor will at the option of the Manufacturer terminate
any sub-distributors or agents.
2.4. MARKETING EFFORT
Any costs of marketing efforts by the Distributor on behalf of the Products are
to be borne by the Distributor unless other prior specific agreement is provided
in writing by the Manufacturer.
2.5. MARKETING TOOLS
The Manufacturer acknowledges that the Distributor will require access to
Manufacturer's technical and promotional materials for the Products and agrees
that it will provide at no cost to the Distributor technical information,
operating manuals, mechanical artwork and design work for reproduction by
Distributor at Distributor's expense. However, Manufacturer is under no
obligation to prepare or develop new mechanical artwork, design work,
promotional or advertising material. The Manufacturer will have the right, and
will be provided the opportunity, to review all advertising and promotional
material relating to the Manufacturer's Products to assure technical accuracy as
to the performance of the Products and to assure that the Manufacturer's name,
products and trademarks are not improperly represented.
Manufacturer agrees to provide all reasonably requested technical support by
telephone or in writing. Any on-site support by Manufacturer's personnel (on-
site support shall be defined to mean any support provided outside of
Manufacturer's offices in Nevada), requested by the Distributor, shall be
provided at Distributor's expense.
2.6. SALES SUPPORT/TRAINING
The Manufacturer will provide to the Distributor and the Distributor and its
sub-Distributors will obtain the necessary product information, training and
expertise at locations to be designated by Distributor in order to equip
Distributor and sub-Distributors to complete successful sales. This Agreement
is not a franchise agreement and shall not be construed as such.
2.7. DISTRIBUTOR'S INDEMNITY
Distributor will indemnify and save harmless the Manufacturer of and from all
claims, damages, losses or expenses (including attorneys' fees) for or relating
to missrepresentations made by the Distributor or the Distributor's agents or
representatives as to the Manufacturer or Products.
3. PRICING
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3.1. PRICE
Subject to Section 3.2, during the Term of this Agreement, the Manufacturer will
sell the Products to the Distributor, complete for sale in the Market, at the
Distributor prices set out in Schedule "A" to this Agreement.
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3.2. PRICE CHANGES
The prices of Products will be established and adjusted in accordance with
Schedule A of this Agreement, provided, however, that the prices set out in
Schedule "A" shall remain in effect for a period of one year from the date of
this Agreement and represent a floor for future price adjustments. Distributor
may request quotations of prices from Manufacturer, and the quotations made
shall remain in effect for the period of time agreed between Manufacturer and
Distributor from time to time. Manufacturer understands that Distributor may be
required to supply over a long period of time systems utilizing Manufacturer's
Products, and the parties shall work together to determine a method of obtaining
quotes and establishing prices in such circumstances.
3.3. PRICE CHANGES NOT APPLICABLE
Notwithstanding the provision for increasing or decreasing the prices of the
Products, the parties agree that no price change will affect any Products for
which a Purchase Order (as defined in Part 4) has been issued and accepted.
3.4. RE-SALE PRICES
Subject to all applicable laws, the Distributor may, in its sole discretion,
determine the prices of the Products which it sells to its customers or sub-
Distributors in the Market, while receiving suggested retail pricing from the
Manufacturer as a guideline to follow.
4. PURCHASE ORDERS AND SHIPPING SCHEDULES
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4.1. MINIMUM VOLUMES
Subject to Section 9.5, the Distributor will, in the ordinary course, order in
each year of this Agreement, and pay for, the minimum volumes of Products set
out in Schedule "B" and the Manufacturer will deliver such minimum volumes of
Products in accordance with the other terms and conditions of this Agreement.
4.2. PURCHASE ORDERS
Manufacturer agrees to supply the Products to the Distributor in the quantities
requested and at prices provided for herein. If a Purchase Order (hereinafter
defined) conflicts with the provisions hereof, the provisions of this Agreement
shall govern. The Distributor will prepare Purchase Orders (the "Purchase
Orders") for all Products and each such order will specify the type of Products,
the quantity of each model number ordered, delivery schedules and any other
information which the Distributor or Manufacturer considers necessary. All
Purchase Orders must specify the requested shipping date, which must be agreed
to in writing by Manufacturer. The obligations of Manufacturer to deliver the
Products in accordance with the accepted Purchase Orders are subject to the
force majeure conditions set forth in Section 9.5 of this Agreement. The
Manufacturer will make all reasonable efforts to provide for timely deliveries
of Produces, however, under no circumstances will the Manufacturer be subject to
penalties for late deliveries unless specifically agreed to in writing by the
Manufacturer.
4.3. AMENDMENTS TO PURCHASE ORDERS
The parties acknowledge that Purchase Orders may need to be modified depending
upon the specifications developed through feasibility studies conducted or
through information obtained by or on behalf of Distributor in the Market. If
the Distributor requires a modification of a Purchase Order, Distributor shall
submit a change order, and Manufacturer promptly shall respond to such proposed
change. Manufacturer shall acknowledge its acceptance or rejection of a
proposed change order within seven (7) business days of receipt of the
Distributor's proposed change in the Purchase Order.
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4.4. COMMUNICATION OF INFORMATION
The parties agree that all Purchase Orders, amended Purchase Orders, changes to
shipping schedules and amended shipping schedules will be communicated by
facsimile or such other method of communication as the parties may agree to from
time to time. The Manufacturer agrees that it will acknowledge receipt,
approval or disapproval of all Purchase Orders by a facsimile sent within three
business days of receipt of the Distributor's Purchase Order.
4.5. SHIPPING
All sales shall be Free on Board (FOB) at Manufacturer's designated shipping
location in the State of Nevada, as provided in the Purchase Order, unless
otherwise agreed by the parties in writing. Cartage, insurance and freight are
to be paid by Distributor.
4.6. ADDITIONAL PROCEDURES
The parties recognize that additional procedures may be necessary from time to
time during the term of this Agreement and each agrees to cooperate with each
other to formulate and implement new policies and procedures.
5. MANUFACTURING BY MANUFACTURER
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5.1. SPECIFICATIONS
The Manufacturer will produce all Products to the technical specifications set
forth in Purchase Orders accepted in writing by Manufacturer.
5.2. MANUFACTURER'S LIMITED WARRANTY
The Manufacturer warrants its Products against defects in material or
workmanship and failure to meet agreed specifications for a period of twelve
(12) months from the date of shipment. This warranty extends to the end-user.
The Manufacturer agrees to provide, at Manufacturer's cost, a North America
based warranty service via 24-hour phone available to end-users. If
Manufacturer is notified in writing during the warranty period of a defective
Product, and proof of purchase of the Product is provided, the defective Product
will be repaired or replaced (with the same or similar model), at Manufacturer's
option, without charge for either parts or labor or shipping. This limited
warranty shall cover defects arising only from normal usage and does not cover
malfunction or failure resulting from misuse, abuse, neglect, alteration,
modification, abnormal working conditions, or repairs by other than the
Manufacturer. To obtain warranty service for defective Products for which
Manufacturer received written or verbal ( via the warranty phone service) notice
during the applicable warranty period, the Product must be delivered properly
packaged, shipping prepaid, to the Manufacturer along with proof of purchase
documentation.
REPAIR OR REPLACEMENT AS PROVIDED UNDER THIS WARRANTY IS THE EXCLUSIVE REMEDY OF
THE PURCHASER. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE, AND THE MANUFACTURER SHALL IN NO EVENT BE LIABLE TO
PURCHASER FOR INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND OR CHARACTER.
5.3. MANUFACTURER'S INDEMNITY
Manufacturer will indemnify and save harmless the Distributor of and from all
claims, damages, losses or expenses (including attorneys' fees) for claimed
infringement of intellectual property rights by any Products.
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5.4. INSTALLATION
The Distributor will assume responsibility for any claims arising as a result of
improper installation of the Products or improper training of purchasers. The
Distributor acknowledges that Manufacturer is not responsible for improper
installation of the Products. Distributor will indemnify and hold Manufacturer
harmless of and from any claims, damages, losses or expenses (including
attorneys' fees) related thereto.
6. PACKAGING AND INSPECTION
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6.1. PACKAGING
The Manufacturer will ensure that each shipment conforms to the Purchase Order
or any amendment thereto, and that all Products will be properly packaged for
international shipment in packaging materials supplied by the Manufacturer. The
cost of all custom packaging will be borne by the Distributor and shall be
subject to prior written agreement.
6.2. MARKING
The Manufacturer will ensure that all packaged Products will, at its expense, be
clearly marked in English as to contents and as required pursuant to the Laws of
the United States of America, State of Nevada and those generally required of
international shipping. All translation expenses from English to another
language shall be at the sole expense of the Distributor. Any marking or
labeling expense other than the customary marking and labeling supplied by the
Manufacturer shall be the expense of the Distributor. Information regarding
marking in languages other than English and/or for shipment outside the United
States of America shall be supplied by Distributor and will be affixed to the
packaging by Manufacturer according to instructions provided by Distributor.
7. PAYMENT
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Distributor will assign all customer receivables, excluding credit card sales
and customers for which the Manufacturer has declined to approve credit
("Declined Credits"), to Manufacturer with payments to be made by customers to a
"lock-box" account maintained by the Manufacturer at USBank or other mutually
agreed bank. The Manufacturer will have the right to approve or decline any
customer credit, however, approval shall not be unreasonably withheld by the
Manufacturer. All instructions to the bank will be required to be in writing and
signed by both the Manufacturer and the Distributor. The bank will be instructed
to transfer all funds in excess of any minimum balance requirement to separate
accounts maintained by Manufacturer and Distributor on a daily basis in
accordance with an estimated ratio agreed upon from time to time in writing by
the Manufacturer and Distributor (see Schedule "E"). A mutually agreed upon
third party will be engaged to prepare monthly analyses of the account and
settlement statement by the 15th of each month for the prior month with
settlement to be made within five days. The Manufacturer will make records of
the account will be available for audit and inspection by the Distributor during
normal business hours. Neither the Manufacturer or the Distributor will permit
this account to be subject to claim or offset by any third party through pledged
collateralization or otherwise unless agreed to in writing by the other party.
Unless otherwise mutually agreed in writing, all customer terms will be net 30
days. If customer fails to pay within 60 days following the due date, the
Distributor will pay the Manufacturer the amount due the Manufacturer for
products sold to the customer. Upon receipt of payment from the Distributor the
Manufacturer will release its assignment of the receivable from the customer.
Sales to the Distributor, representing cash, credit card sales and Declined
Credits, by the Distributor, will be on a cash basis unless otherwise agreed to
in writing by the Manufacturer.
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At the option of the Distributor, the Distributor may convert to straight 60 day
terms, with no assignment of receivables, by providing the Manufacturer with a
letter of credit(s) equal or greater than the maximum amount of credit that from
time to time may be outstanding. Such letter of credit(s) to be drawn on any US
money center or major regional bank or other bank acceptable to the
Manufacturer. Letter(s) of credit to be payable at sight with presentation of
unpaid invoice supported by purchase order from Distributor, shipping documents
and / or such other documents as may be mutually agreed by the parties.
All payments shall be made in currency of the United States of America unless
otherwise agreed, in writing, by the Manufacturer.
8. REPRESENTATIONS AND WARRANTIES
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8.1. MANUFACTURER'S REPRESENTATIONS AND WARRANTIES
The Manufacturer represents and warrants to the Distributor that:
a) the Manufacturer is a corporation organized, validly existing and in
good standing under the laws of the State of Delaware.
b) the Manufacturer has full and unrestricted power and authority to
execute and deliver this Agreement and perform its obligations under
this Agreement, all necessary corporate action has been taken to
authorize the execution and delivery of this Agreement and the
performance of the Manufacturer's obligations under this Agreement and
no consent of the Manufacturer's shareholders or of any other person
or governmental agency is required to permit the Manufacturer to
execute and deliver this Agreement and perform its obligations;
c) neither the execution or delivery of this Agreement nor the
performance by the Manufacturer of its obligations under this
Agreement conflict with or will result in a default under any
contract, judgment, order, bylaw, charter provision, law, rule,
regulation or arbitration award to which the Manufacturer is a party
or by which the Manufacturer or its property is bound;
d) the sale or use of the Products in the Market do not and will not
infringe any patent or other intellectual property rights of others.
8.2. DISTRIBUTOR'S REPRESENTATIONS AND WARRANTIES
The Distributor represents and warrants to the Manufacturer that:
a) the Distributor is a corporation organized, validly existing and in
good standing under the laws of Texas;
b) the Distributor has full and unrestricted power and authority to
execute and deliver this Agreement and perform its obligations under
this Agreement, and necessary corporate action has been taken to
authorize the execution and delivery of this Agreement and the
performance of the Distributor's obligations under this Agreement and
no consent of the Distributor's shareholders or of any other person or
governmental agency is required to permit the Distributor to execute
and deliver this Agreement and perform its obligations, except as may
be required by a particular government agency or instrumentality in
respect of importing the Products into a country in the Market;
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c) neither the execution or delivery of this Agreement nor the
performance by the Distributor of its obligations under this Agreement
conflict with or will result in a default under any contract,
judgment, order, bylaw, charter provision or arbitration award to
which the Distributor is a party or by which the Distributor is bound;
and
d) there is no pending or threatened claim, litigation, arbitration,
investigation or other proceeding whatsoever which purports to, or
which may, affect the Distributor's right, power and authority to
enter into this Agreement, or which may result in a materially adverse
change in the Distributor's financial condition or business prospects.
9. TERM AND TERMINATION
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9.1. TERM
If the Distributor does not purchase, and pay for, the minimum volumes required
under Schedule B, the Manufacturer may terminate the exclusive nature of this
Agreement by written notice if Distributor shall not have cured any failure
within 60 days following receipt of written notice from Manufacturer of
Distributor's failure to make such purchases.
Subject to the other provisions hereof, this Agreement shall have a term of five
(5) years commencing from the date of this Agreement.
9.2. OPTION TO RENEW
Upon the expiration of this agreement the Distributor and Manufacturer agree to
discuss the a renewal of this agreement for a further five (5) year period. Any
renewal will be based on mutually agreed terms and conditions. The Manufacturer
is under no obligation to offer and the Distributor is under obligation to
accept, any specific terms or conditions.
9.3. TERMINATION BY EITHER PARTY
Either party may, at its option, terminate this Agreement upon 60 days' prior
written notice if the other party:
a) is in breach or violates any of the material terms and conditions of
or fails to perform any of its material obligations, including the
achievement of minimum purchase levels, under this Agreement;
b) becomes insolvent, bankrupt, makes an assignment for the benefit of
its creditors or has a receiver, receiver/manager, trustee or
liquidator appointed in respect of its business or its assets.
The Distributor may also terminate his Agreement at the end of any calendar year
(following one full year of this contract period) upon giving sixty (60) days
prior written notice of termination.
The Manufacturer can terminate the agreement at any time upon sixty (60) days
notice by paying a termination fee equal to 10% of each of the remaining Minimum
Purchase Volumes, discounted at 12% for that term and assuming in each year that
the amount is discounted from the end of the year. Upon such termination the
Manufacturer must agree to assume all contractual liabilities of the Distributor
relating directly to the marketing and sale of the Manufacturer's products,
including but not limited to product advertising, promotions and commissions.
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If the Distributor and Manufacturer do not renew the agreement under Section
9.2, or if the agreement is terminated pursuant to Section 9.1, 9.3 or 9.5 of
the Agreement, then the Manufacturer, or it agent, distributor or
representative, the Manufacturer may sell to current and prior customers of the
Distributor without limitation or compensation to the Distributor.
9.4. LIABILITIES
Upon termination of this Agreement, the Manufacturer will be required to
complete any and all accepted Purchase Orders as at the date of termination and
the Distributor will be required to receive and pay for all Products shipped in
connection with such Purchase Orders.
9.5. FORCE MAJEURE
No party will be liable for its failure to perform any of its obligations under
this Agreement as a result of Acts of God (including all natural disasters),
strikes, lockouts, civil disturbances, government or court ordered interruptions
or delays, changes in regulations or public policy, acts of war and riots, or
other such occurrences outside its reasonable control (acts of "force majeure").
Either party to this Agreement may elect to terminate this Agreement upon three
(3) months written notice to the other if the force majeure condition cannot be
remedied by the Manufacturer within three (3) months of the commencement of the
force majeure condition, and this Agreement shall be terminated at the end of
such three (3) months period. A failure to make payments hereunder when due
shall not be subject to any claim by Distributor of force majeure.
9.6. SURVIVAL OF COVENANTS
The terms and conditions of this Agreement which require performance by the
Distributor or the Manufacturer after the expiration or other termination of
this Agreement, are and will remain enforceable notwithstanding such expiration
or other termination of this Agreement for any reason whatsoever.
9.7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES
All representations, warranties and indemnities made by the Manufacturer and
Distributor hereunder or pursuant hereto will survive the termination of this
Agreement for a period of one year.
10. MANUFACTURER'S PROPRIETARY RIGHTS AND ADDITIONAL COVENANTS OF DISTRIBUTOR
--- -------------------------------------------------------------------------
The Distributor acknowledges that the Manufacturer has proprietary rights
related to the development and production of the Products, as well as in the
information being provided to Distributor regarding Manufacturer's Products.
The Distributor acknowledges that because of the relationship between these
parties certain proprietary information and other confidential information may
be provided to the Distributor by the Manufacturer. The Distributor agrees not
to use any of the Manufacturer's proprietary information for any purpose other
than to carry out the purposes for which the proprietary information was
disclosed, to wit: the Distributor's acquisition for resale of the
Manufacturer's Products. The Distributor shall not disclose the proprietary
information to any third party except to its sub-distributors and agents, but
only on a "need to know" basis and only so long as the sub-distributor or agent
signs an agreement which includes this provision of non-disclosure. The
Distributor further agrees that after the Agreement is terminated it shall
promptly return all proprietary information to the Manufacturer upon written
request therefore from the Manufacturer.
For purposes of this Agreement, the Manufacturer's proprietary information shall
include, but not be limited to, any of Manufacturer's manuals, records, plans,
specifications, data, know how, training materials, products apparatus,
equipment, processes, manufacturing methods, compositions, designs, and
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all other items belonging to, or relating to the affairs of, the Manufacturer
which the Distributor could not have reasonably obtained but for its
relationship with the Manufacturer, provided that proprietary information shall
not include information in the public domain or obtained from others under
circumstances not involving a breach of this Agreement. Accordingly, at all
times hereafter, except as authorized herein, Distributor agrees not to divulge,
communicate, use to the detriment of the Manufacturer, or for the benefit of any
person or entity for purposes not authorized hereunder or misuse in any way, any
proprietary information of the Manufacturer. Except for information known to
Distributor or its personnel prior to the signing of this Agreement or obtained
from others in circumstances not involving a breach of this Agreement, the
Distributor acknowledges and agrees that any information or data it has acquired
from Manufacturer is received in confidence. The Distributor makes the aforesaid
representations on its behalf as well as on behalf of its officers, directors,
shareholders, employees and agents.
The aforesaid provisions shall remain in effect during the term of this
Agreement and for a period of one (1) year after termination of this Agreement.
The Distributor agrees that in the event of a violation by it of any of the
provisions of this Agreement, Manufacturer will be entitled, if it so elects, to
institute and prosecute proceedings at law or in equity to obtain damages with
respect to such violation or to enforce the specific performance of these terms
by Distributor or to enjoin Distributor from engaging in any activity in
violation thereof. That parties acknowledge that the remedy at law for any
breach or threatened breach by Distributor of the covenants and provisions set
forth in this Agreement may be inadequate, that any such breach or threatened
breach would cause immediate and permanent damage and would be irreparable, and
that the exact amount of money damages may be impossible to ascertain. In
addition to any and all other legal or equitable remedies which may be available
to the Manufacturer, the Manufacturer may obtain temporary and permanent
injunctive relief without the necessity of proving actual damage by reason of
any such breach or threatened breach, and without being required to post any
bond or other security.
11. DISTRIBUTOR'S PROPRIETARY RIGHTS
--- --------------------------------
The Manufacturer acknowledges that the Distributor has proprietary rights
related to the marketing and sales of the Products, as well as in the
information being provided to the Manufacturer regarding the Market. The
Manufacturer acknowledges that because of the relationship between these parties
certain proprietary information and other confidential information may be
provided to the Manufacturer by the Distributor. The Manufacturer agrees not to
use any of the Distributor's proprietary information for any purpose other than
to carry out the purposes for which the proprietary information was disclosed,
to wit: the Manufacturer's development of Product for sale through the
Distributor. The Manufacturer shall not disclose the proprietary information to
any third party except to its sub-Manufacturers and agents, but only on a "need
to know" basis and only so long as the sub-Manufacturer or agent signs an
agreement which includes this provision of non-disclosure. The Manufacturer
further agrees that after the Agreement is terminated it shall promptly return
all proprietary information to the Distributor upon written request therefore
from the Distributor.
For purposes of this Agreement, the Distributor's proprietary information shall
include, but not be limited to, any of Distributor's manuals, records, plans,
specifications, data, know how, training materials, selling methods, and all
other items belonging to, or relating to the affairs of, the Distributor,
including confidential information pertaining to the business of customers,
which the Manufacturer could not have reasonably obtained but for its
relationship with the Distributor, provided that proprietary information shall
not include information in the public domain or obtained from others under
circumstances not involving a breach of this Agreement. Accordingly, at all
times hereafter, except as authorized herein,
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Manufacturer agrees not to divulge, communicate, use to the detriment of the
Distributor, or for the benefit of any person or entity for purposes not
authorized hereunder or misuse in any way, any proprietary information of the
Distributor. Except for information known to Manufacturer or its personnel prior
to the signing of this Agreement or obtained from others in circumstances not
involving a breach of this Agreement, the Manufacturer acknowledges and agrees
that any information or data it has acquired from Distributor is received in
confidence. The Manufacturer makes the aforesaid representations on its behalf
as well as on behalf of its officers, directors, shareholders, employees and
agents.
The aforesaid provisions shall remain in effect during the term of this
Agreement and for a period of one (1) year after termination of this Agreement.
The Manufacturer agrees that in the event of a violation by it of any of the
provisions of this Agreement, Distributor will be entitled, if it so elects, to
institute and prosecute proceedings at law or in equity to obtain damages with
respect to such violation or to enforce the specific performance of these terms
by Manufacturer or to enjoin Manufacturer from engaging in any activity in
violation thereof. That parties acknowledge that the remedy at law for any
breach or threatened breach by Manufacturer of the covenants and provisions set
forth in this Agreement may be inadequate, that any such breach or threatened
breach would cause immediate and permanent damage and would be irreparable, and
that the exact amount of money damages may be impossible to ascertain. In
addition to any and all other legal or equitable remedies which may be available
to the Distributor, the Distributor may obtain temporary and permanent
injunctive relief without the necessity of proving actual damage by reason of
any such breach or threatened breach, and without being required to post any
bond or other security.
12. GENERAL PROVISIONS
--- ------------------
12.1. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties and
supersedes every previous agreement, communication, expectation, negotiation,
representation or understanding, whether oral or written, expressed or implied,
statutory or otherwise, between the parties with respect to the subject matter
of this Agreement.
12.2. SEVERABILITY
If any provision of this Agreement is at any time unenforceable or invalid for
any reason it will be severable from the remainder of this Agreement and, in its
application at that time, this Agreement will be construed as though such
provision was not contained herein and the remainder will continue in full force
and effect and be construed as if the Agreement had been executed without the
invalid or unenforceable provision.
12.3. AMENDMENTS
This Agreement may not be amended except in writing signed by the parties.
12.4. ASSIGNMENT
Neither party may assign any right, benefit or interest in this Agreement
without the written consent of the other party, except that either party may
assign its rights, benefits and interest to a subsidiary, venture, corporation,
partnership or limited partnership in which the assigning party maintains a
controlling interest, and any other purported assignment without such consent
will be void. No
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assignment shall relieve a party of its obligations hereunder without the
written consent of the other party.
Should the Manufacturer desire to sell its Consumer Products Division or any
component of the company containing the Consumer Products Division including the
company as a whole ("Component"), then the Manufacturer must first offer, in
writing, to sell the Component to the Distributor. For the purpose of this
provision the "Consumer Products Division is defined as any component(s) of the
Manufacturer which has direct responsibility for the design, production and
management of products for which the Distributor has exclusive marketing and
distribution rights. Upon receiving a written offer from the Manufacturer, the
Distributor will have up to 30 days in which to accept the offer and to
demonstrate the capacity to complete any proposed purchase. Should the
Distributor not elect to purchase the Component, or fail to adequately
demonstrate the capacity to complete a purchase, then the Manufacturer may sell
the Component to a third party under terms which are no more favorable than
those offered to the Distributor.
Should the Manufacturer elect to sell the Component to a third party then that
party shall agree to assume all of the rights and obligations of the
Manufacturer under this agreement.
12.5. WAIVER AND CONSENT
No consent or waiver, expressed or implied, by any party to or of any breach or
default by any other party of any or all of its obligations under this Agreement
will:
12.5.1. be valid unless it is in writing and stated to be a consent or
waiver pursuant to this section,
12.5.2. be relied upon as a consent to or waiver of any other breach or
default of the same or any other obligation,
12.5.3. constitute a general waiver under this Agreement, or
12.5.4. eliminate or modify the need for a specific consenter waiver
pursuant to this section in any other or subsequent instance.
12.6. GOVERNING LAW
This Agreement is and will be deemed to have been made in Texas and for all
purposes will be governed exclusively by and construed and enforced in
accordance with the domestic laws prevailing in Texas.
12.7. VENUE AND JURISDICTION
The Parties agree that the jurisdiction and sole venue for enforcement of this
Agreement should be a Federal or State court in Dallas County, Texas.
12.8. WAIVER OF TRIAL BY JURY
THE PARTIES AGREE IN THE SPIRIT OF MUTUAL COOPERATION TO INITIALLY SUBMIT ANY
DISPUTES ARISING PURSUANT TO THIS AGREEMENT TO NON-BINDING MEDIATION. THEY WILL
UTILIZE A MEDIATOR FROM EITHER THE AMERICAN ARBITRATION ASSOCIATION OR J.A.M.S.
ENDISPUTE, BOTH LOCATED IN DALLAS, TEXAS.
NOTWITHSTANDING THIS PROVISION, IN THE EVENT THAT SUCH MEDIATION DOES NOT RESULT
IN SUCCESSFUL RESOLUTION OF AN AFFECTED DISPUTE, EACH THE PARTIES
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WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM INVOLVING ANY
MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT,
THE RELATIONSHIP OF THE PARTIES AND THE RIGHT TO ANY STATUTORY RELIEF OR REMEDY.
THIS WAIVER IS MADE KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY BY THE PARTIES AND
EACH PARTY FURTHER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY LEGAL COUNSEL
WHICH HAS BEEN SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE
OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL, OR HAS HAD THE OPPORTUNITY TO
BE REPRESENTED AND HAS DECLINED SAME, PRIOR TO THE EXECUTION BY IT OF THIS
AGREEMENT. EACH PARTY ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING
AND RAMIFICATIONS OF THIS WAIVER PROVISION.
12.9. ATTORNEY'S FEES AND COSTS
If any legal action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any provisions of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys' fees, court costs (including, without limitation, all such
fees, costs and expenses incident to appeals), incurred in that action or
proceeding, in addition to any other relief to which such party or parties may
be entitled.
12.10. NOTICE
Each notice, request or direction given pursuant to this Agreement by either
party to the other will be in writing and sent by facsimile to the numbers set
forth below. Either party may, by notice to the other, change its number for
facsimile delivery and the parties may mutually agree to amend the method of
delivery of notice at any time during the term of this Agreement. All notices
sent by facsimile will be deemed to be received on the following day.
To the Manufacturer:
Vector Environmental Technologies, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, VP, Treasurer and Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
To the Distributor:
Bristol WorldSource, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Managing Director
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
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12.11. BINDING EFFECT
This Agreement will inure to the benefit of and be binding upon the respective
legal representatives, successors and permitted assigns of the parties.
12.12. TIME OF ESSENCE
Time is of the essence in the performance of each obligation under this
Agreement.
12.13. NO PARTNERSHIP
The parties acknowledge and agree that nothing in this Agreement will
constitute, by any means, a partnership between the parties.
12.14. COUNTERPARTS
This Agreement may be executed in any number of counterparts with the same
effect as if all parties to this Agreement had signed the same document and all
counterparts will be construed together and will constitute one and the same
instrument.
"Manufacturer"
Vector Environmental Technologies, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President, Secretary and Treasurer
Date executed by Manufacturer: 9/6/96
-------------------------
"Distributor"
Bristol WorldSource, Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Managing Director
Date executed by Distributor: 9/6/96
------------------------
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13. SCHEDULES
--- ---------
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SCHEDULE "A"; MANUFACTURER'S PRODUCTS AND PRICES
------------------------------------------------
Products shall include all current and future consumer products of Vector
Environmental Technologies, Inc. and any successor thereof including, but not
limited to, all products relating to the filtration, purification, processing
and treatment of water for drinking and personal hygiene, but excluding
industrial and community-size applications and food and beverage processing.
With respect to future products, Distributor will have the option but not the
obligation to sell or otherwise represent such products on an exclusive basis.
If Distributor elects to sell or otherwise represent such products on an
exclusive basis, then Distributor must advise Manufacturer within 30 days after
receiving a written request for determination from the Manufacturer. If the
Distributor elects to represent future product on an exclusive basis then the
Distributor will immediately cease the sale or other relationship with products
which are considered as directly competitive. Should the Distributor elect not
to represent a future product on an exclusive basis then the Distributor may
sell and represent such products on a non-exclusive basis unless and until
advised by the Manufacturer that an exclusive distributor has been authorized by
the Manufacturer.
The price of the Products will be equal to 135% of the Manufacturer's direct
manufacturing cost, adjusted once every six months, unless otherwise agreed to
in writing by the Manufacturer, except that the price for the Filtura and
Filtura - Sport shall be fixed at $5.00 each and the ICE100 at $6.25 for the
first year.
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SCHEDULE "B"; MINIMUM VOLUMES
-----------------------------
Purchase Volume
The Manufacturer and Distributor will work closely together to sell and
distribute Products representing the entire Product line of the Manufacturer
meeting the criteria in Schedule "A".
The Minimum Purchase Volumes to be achieved, of which 25% must be from non-US
North American sales, are established as follows:
First Year: The Distributor agrees to purchase, on a take-or-pay basis, a
minimum of $1,000,000 in product from the Manufacturer during the first year
following the date of this Agreement; $250,000 during the first three months;
during the second three months; and $500,000 during the last six months.
condition.
For each subsequent year of this contract, the Distributor will agree to minimum
purchases in the following amounts:
Year Minimum Purchase
2 $2,000,000
3 $3,000,000
4 $5,000,000
5 $7,500,000
For purposes of determining "Minimum Purchases", purchased are defined as
occurring as of the date that purchase orders are accepted by the Manufacturer.
Accordingly purchases during a period are equal to the Net Sales during the
period less outstanding accepted purchase orders at the beginning of the period
plus outstanding accepted purchase orders at the end of the period. "Net Sales"
for this calculation being defined as equal to sales by the Manufacturer to the
Distributor, less any returns and allowances. Should the Distributor fail to
achieve minimum purchase level during any year then the Manufacturer has the
option to terminate the exclusive nature of the Distribution Agreement.
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SCHEDULE "C"; MARKET
--------------------
Exclusive Market
----------------
The Exclusive Distribution Rights granted to the Distributor include sales to
customers within the North American Market to include the countries and
territories of: Canada, United States, Mexico and territories of the United
States including Puerto Rico and Guam.
Open Market
-----------
All regions and territories will be deemed open for purposes of this agreement
except for:
The Exclusive Market regions noted above
Vietnam
India
The GCC Countries
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SCHEDULE "D"; PATENTS AND TRADEMARKS
-------------------------------------
Diamond Rain(TM)
Filtura(TM)
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SCHEDULE "E"; PROFIT DISTRIBUTION RATIO
----------------------------------------
The ratio of funds to be distributed by the bank to the Manufacturer and the
Distributor will be determined on a periodic basis at the request of either
party. Determination of the ratio will be as follows:
Based on sales to date:
Distributor sales to customers
Freight billed to customers not included in sales
Other amounts billed to customers not included in sales ____________
Total (a)
------------
Manufacturer's sales to Distributor (b)
------------
Ratio of funds to Manufacturer (b)/(a)
------------
Ratio of funds to Distributor 1-(b)/(a)
------------
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SCHEDULE "F"; CONSUMER PRODUCTS NOT IN DIRECT COMPETITION
---------------------------------------------------------
REVERSE OSMOSIS BASED SYSTEMS
ULTRAVIOLET LIGHT BASED SYSTEMS
FAUCET MOUNTED FILTERS AND/OR PURIFICATION SYSTEMS*
PORTABLE SYSTEMS**
SHOWER MOUNTED FILTRATION AND/OR PURIFICATION SYSTEMS
CARAFE BASED FILTRATION AND/OR PURIFICATION SYSTEMS
* Does not include countertop systems which attach to faucets with diverter
valves and tubing
** Limited to bacteriocidal systems and /or filtration systems capable of less
than 3 micron filtration but not to bacteriostatic or filtration type systems
not capable of less than 3 micron filtration.
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