EXHIBIT 99.4
Portions of this Exhibit have been omitted and confidentially and separately
filed with the Securities and Exchange Commission with a Request for
Confidential Treatment
The omitted portions are marked by opened and closed brackets as follows:
EXHIBIT 99.4
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made as of the 12th day of
March, 1999, by and between SPX CORPORATION, a Delaware corporation with its
office at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("Distributor"), and Top
Source Technologies, Inc., a Delaware corporation with its office at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("TPS").
RECITALS:
A. TPS is in the business of assembling and selling the MotorCheck(TM)
On-Site Oil Analyzer that performs on-site engine oil analysis (the "Product").
B. Distributor has an established marketing network, including the
publication of product catalogs, and a customer base through which the Product
may be distributed, and has developed substantial goodwill with its customers;
and
C. TPS and Distributor wish to enter into an agreement for the
marketing, distribution and sale of the Product by Distributor upon the terms
and conditions contained in this Agreement.
TERMS:
NOW, THEREFORE, in consideration of the covenants and conditions set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Recitals. The foregoing recitals are incorporated into, and
made a part of, this Agreement.
2. Appointment. TPS grants to Distributor the exclusive right to
market, distribute and sell the Product in the markets described in Schedule A
attached to this Agreement in the United States and Canada (the "Territory");
provided, however, that TPS reserves the right to sell the Product directly to
any end-user. Distributor accepts this appointment and agrees to act in such
capacity pursuant to the terms and conditions of this Agreement. For purposes of
this Agreement, "Customer" shall mean any person in the Territory to whom
Distributor markets, distributes and sell Product including, without limitation,
Distributor's existing customers.
3. Duties of Distributor. Distributor shall perform the following
duties: (a) Distributor shall include the Product in one or more of
Distributor's equipment catalogs; (b) Distributor shall assist TPS in marketing
the Product as specifically provided in this Agreement; and (c) Distributor
shall accept orders from Customers, transmit such orders to TPS as provided in
this Agreement and pay for the Product.
4. Marketing and Promotion. TPS shall provide Distributor with
camera-ready photography, literature and other written information concerning
the Product as requested by Distributor to assist Distributor in the marketing,
distribution and sale of the Product. In addition, the parties shall engage in
the marketing and promotional activities described in Schedule B attached to
this Agreement.
5. Sales Goals. Distributor shall attempt to meet the sales goals set
forth in Schedule C attached to this Agreement (the "Sales Goals"). In the event
Distributor does not attain the Sales Goals set forth in Schedule C, TPS may
revoke Distributor's exclusive right to market, distribute and sell the Product
in the Territory. The parties agree that Distributor's loss of its exclusive
distributorship shall be sole remedy available to TPS in the event that
Distributor does not attain the Sales Goals, but this Agreement shall otherwise
continue in full force and effect.
6. Product. Distributor may, in its sole discretion, purchase the
Product from TPS for the purposes of maintaining an inventory of the Product.
However, in no event shall Distributor be obligated to maintain an inventory or
take possession of or title to the Product.
7. Prices. The price to Distributor for the Product is listed in
Schedule D. Such price does not include delivery costs. While Distributor may
consider TPS's suggested retail prices, the parties agree that Distributor has
the exclusive right to establish the retail price at which the Product shall be
sold to the Customers.
8. Taxes. Any duty, sales tax, tariff, GST or other charge required to
be collected by Distributor pursuant to any federal, state, provincial,
municipal or local law, now in effect or enacted after the date of this
Agreement, with respect to the sale or delivery of the Product shall be added to
the price provided for in Schedule D by Distributor and shall be paid by
Distributor to the appropriate authority.
9. Purchase, Delivery and Payment Terms. The parties shall comply with
the purchase, delivery and payment terms and procedures set forth in Schedule E
attached to this Agreement.
10. Interruption of Deliveries. In the event that TPS's shipment of
Product to a Customer is delayed for any reason, TPS shall give immediate
written notice to Distributor of the delay, which written notice shall include
the reason for the delay and the anticipated date of delivery of the Product to
the Customer. Upon receiving such a notice of delay, Distributor shall have the
right to cancel the order for the delayed Product.
11. Risk of Loss. TPS shall be responsible for any and all risk of loss
until the Product is delivered to the Customer's designated facility.
12. Training. TPS shall provide training to Customers as set forth in
Schedule F attached to this Agreement.
13.
[ * ] CONFIDENTIAL PORTIONS OMMITTED AND FILED SEPARATELY WITH THE COMMISSION.
14. Product Returns. The parties agree that the procedures set forth in
Schedule G attached to this Agreement shall be applicable to Product returned to
Distributor or TPS by a Customer.
15. Product Warranty. TPS shall provide to Customers the warranty for
the Product as set forth in Schedule H attached to this Agreement which shall be
no less than one (1) year in duration. TPS agrees that its warranty shall not be
affected by any act or omission of Distributor. THE PARTIES AGREE THAT
DISTRIBUTOR SHALL MAKE NO WARRANTY, EXPRESSED OR IMPLIED, CONCERNING PRODUCT OR
SERVICING OF PRODUCT, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS OF A
PARTICULAR PURPOSE. Distributor shall have no liability to TPS or any Customer
for warranty claims. TPS shall also make available to Customers the service
plans, extended warranties and other similar programs as set forth in Schedule
H.
16. Intellectual Property. TPS represents and warrants that it has the
exclusive Right to all Intellectual Property (as defined below) incorporated in
the Product TPS grants to Distributor a non-exclusive, fully-paid up license to
use TPS's trademarks, trade names, brand names, and other product
identifications used by TPS with respect to the Product (the "Intellectual
Property") solely in furtherance of Distributor's efforts to market, distribute
and sell the Product. Such license shall terminate immediately upon termination
of this Agreement. The Intellectual Property shall, at all times, remain the
property of TPS, and Distributor shall acquire no property interest or ownership
in the Intellectual Property by virtue of this Agreement.
17. Remedies. TPS agrees that TPS, or any employee, representative or
agent of TPS, shall not take any action (including the refusal to accept an
order initiated by Distributor) which may result in a Customer terminating any
order placed with Distributor and purchasing substantially similar Product
directly from TPS, or any employee, representative or agent of TPS. In the event
that TPS, or any employee, representative or agent of TPS, breaches the
foregoing covenant, TPS shall pay to Distributor upon demand in cash an amount
equal to the profits Distributor would have earned if Distributor had
consummated the terminated transactions.
18. Termination. This Agreement may be terminated as follows:
(a) [ * ]
(b) By either party upon a breach of the other party's
obligations under this Agreement, provided that the non-breaching party has
given written notice of such breach to the breaching party and, further, that
such breach has not been cured within [ * ] of the breaching party's receipt of
such written notice; or
(c)
[* ] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
Upon termination of this Agreement: (i) TPS's obligation to ship Product for
which Distributor has placed orders with TPS prior to the termination of this
Agreement shall not be affected; and (ii) Distributor shall cease to be the
TPS's exclusive distributor for the Product.
[ * ] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
19. Insurance. TPS agrees to maintain commercial liability insurance,
including product liability coverage, which shall name both TPS and Distributor
as insured parties against claims for bodily injuries or death and property
damage occurring from use of the Product, such insurance to afford coverage of
not less than Five Hundred Thousand Dollars ($500,000) with respect to bodily
injury or death per occurrence and One Million Dollars ($1,000,000) in the
aggregate, and Five Hundred Thousand Dollars ($500,000) for property damage per
occurrence. TPS shall furnish Distributor with a copy of certificates of
coverage, which shall contain an obligation of the carrier to notify Distributor
at least thirty (30) days in advance of any cancellation or non-renewal of the
policy. The insurance policy shall contain a provision stating that no act or
omission of either TPS or Distributor shall affect or limit the obligation of
the insurance company to pay the amount for any losses sustained. TPS shall not
cancel or change the policy except upon thirty (30) days' prior written notice
to Distributor.
20. Indemnification. TPS, its successors and assigns shall defend,
indemnify and hold harmless Distributor, and Distributor's agents, employees,
officers, directors, successors and assigns, from and against any and all
damages, liabilities, losses, claims, obligations, liens, injuries, demands,
causes of action of any nature, penalties, fines, judgments, costs or expenses
(including, without limitation, attorneys' fees) of any kind or nature, whether
based upon breach of contract, breach of warranty, tort, strict liability,
negligence or otherwise, arising out of or relating to: (a) any act or omission
of TPS or its employees, representatives or agents; (b) any failure on the part
of TPS to perform or comply with any of the terms or conditions contained in
this Agreement, including without limitation any breach by TPS of any covenant
or warranty set forth in this Agreement; (c) the design, manufacture, assembly,
possession, use, installation, alteration, repair, maintenance, ownership,
delivery, removal or return of any Product, or any machinery or equipment of
which a Product is a component; or (d) infringement of any patent, trademark,
service ▇▇▇▇, copyright or other Intellectual Property of any third party
applicable to any of the Product furnished by TPS to Distributor or its Customer
pursuant to this Agreement. The indemnities and assumptions of liabilities and
obligations provided in this Section shall continue in full force and effect,
even after the termination of this Agreement.
21. Additional Remedies. The remedies set forth in this Agreement are
non-exclusive and in addition to all other remedies available.
22. Relationship of Parties. The relationship between Distributor and
TPS is that of buyer and seller. Distributor, including its agents and
employees, shall be regarded as an independent contractor. This Agreement does
not authorize TPS or Distributor to be the agent or the legal representative of
the other for any purpose. Neither Distributor nor TPS is granted any right or
authority to assume or to create any obligation or responsibility, express or
implied, on behalf of or in the name of the other party or to bind the other
party in any manner.
23. Non-Assignability. Neither party shall assign, sublet or transfer
this Agreement or any rights hereunder, directly or indirectly, without the
written consent of the other party. Any attempted assignment, transfer or
subletting in violation of this Section is void and without effect.
24. Entire Agreement. Both parties acknowledge and agree that there are
no oral or other agreements or understandings between them affecting this
Agreement, and that this Agreement and the Schedules attached to this Agreement
contain the entire understanding and agreement between the parties with respect
to the subject matter of this Agreement and cannot be amended, modified or
supplemented in any respect except by a subsequent written agreement entered
into by both parties.
25. Conflict. In the event of any conflict between the terms of this
Agreement and the terms of any Schedules attached to this Agreement, the terms
of this Agreement shall govern.
26. Notices. Any notice required or permitted to be given under this
Agreement must be in writing and is effective as of the business day after it is
sent by a nationally recognized overnight delivery service. Any communication
given in any other manner shall be effective only if and when received by the
parties to be notified. For purposes of this Section, the addresses of the
parties shall be as set forth in the first paragraph of this Agreement. Any
party may change the address to which such communication are to be sent by
notice to the other party as provided in this Agreement.
27. Waiver. Failure of Distributor to insist in any one or more
instances upon performance of any of the terms, covenants or conditions of this
Agreement shall not be construed as a waiver of future performance of any such
term, covenant or condition, and the obligations of TPS with respect to any such
term, covenant or condition shall continue in full force and effect.
28. Governing Law; Forum. This Agreement is a contract made under, and
shall be governed by and construed in accordance with, the laws of the State of
Michigan without regard to its choice of law principles. Each of the parties
agrees that any legal or equitable action or proceeding with the respect to this
Agreement or entered into in connection with this Agreement or transactions
contemplated by this Agreement shall be brought only in any court of the State
of Michigan, or in any court of the United States of America sitting in
Michigan, and each of the parties submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to such party's
person and property, and irrevocably consents to the service of process in
connection with any such action or proceeding by personal delivery to each party
at such party's address as set forth above, or in the manner set forth in
Section 28 of this Agreement. Nothing in this Section shall affect the right on
any party to serve process in any other manner permitted by law. Each party
irrevocably waives any objection to the laying of venue of any such action or
proceeding in the above-described courts.
29. Headings. The section headings contained in this Agreement are to
be used solely for convenience and are not to be used in construing or
interpreting this Agreement.
30.Severability. In the event that one or more clauses of this
Agreement are found to be unenforceable, illegal or contrary to public
policy by a court of competent jurisdiction, the remainder of this
Agreement shall remain in full force and effect except for the
unenforceable, illegal or other provisions.
31. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
SPX CORPORATION
_/s/ ▇▇▇▇▇ Boyer______________________
By: ▇▇▇▇ ▇▇▇▇▇
Its: Program Manager
TOP SOURCE TECHNOLOGIES, INC.
_/s/▇▇▇▇▇ Natan____________________
By: ▇▇▇▇▇ ▇▇▇▇▇
Its: Vice President and CFO
Attached Schedules:
Schedule A - Markets
Schedule B - Marketing and Promotion Schedule C - Sales Goals Schedule
D - Price Schedule E - Purchase, Delivery and Payment Terms Schedule F
- Training Schedule G - Returns Schedule H - Warranty
SCHEDULE A
Markets
[ * ] CONFINDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
SCHEDULE B
Marketing and Promotion
Private Label. Distributor may, in its sole discretion, market and sell the
Product under the names ▇▇▇▇-▇▇▇▇▇, SPX, or any other trade name of
Distributor.
[ * ] CONFIDENTIAL PORTIONS OMITTED AND FILED WITH THE COMMISSION.
Advertising. The parties may, from time to time, mutually agree to advertise the
Product in trade journals, printed brochures or by other means. The parties
shall divide the cost of advertising as mutually agreed in writing by the
parties prior to incurring such costs.
Trade Shows. The parties may mutually agree to participate in trade shows,
with the costs to participate in such shows to be borne proportionately by the
parties.
Sales Calls and Seminars. The parties may, from time to time, mutually agree to
make joint sales calls, presentations or seminars regarding the Product. Each
party will be responsible for the costs it incurs in supplying personnel for
such activities, including but not limited to travel expenses, lodging, and
meals. The parties shall mutually bear collective costs for such promotional
activities, such as the costs incurred in preparing materials for and making
presentations or seminars, including but not limited to printing of materials,
equipment rental, and rental of facility space.
SCHEDULE C
Sales Goals
[ * ] CONFIDENTIAL PORTIONS OMMITTED AND FILED SEPARATELY WITH THE COMMISSION.
SCHEDULE D
Price
The price to Distributor for the Product shall be [ * ]; however, TPS
reserves the right to increase the price upon [ * ] days prior written notice to
Distributor. The parties may, from time to time, negotiate volume or promotional
discounts on orders placed by Distributor.
[ * ] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
SCHEDULE E
Purchase, Delivery and Payment Terms
In addition to the parties' obligations set forth in the Agreement, the
following terms and procedures shall be applicable to the parties with respect
to the purchase and delivery of, and payment for, the Product:
A. Upon receipt of orders for the Product from a Customer, Distributor
shall promptly transmit such orders to TPS.
B. TPS shall ship the Product from its manufacturing facility
directly to the Customer's designated facility F.O.B. TPS's
facility, no later than the date set forth in TPS's quote. The
Product shall be shipped to Customer's designated facility in
the manner determined by TPS. The freight terms shall be
"prepay and add." TPS will prepay the outbound freight from
its facility, advise the Customer and Distributor of the
freight cost, and pass such cost through to Distributor.
C. Distributor shall be responsible for collecting the purchase price
of Product from its Customers. The foregoing notwithstanding, Distributor shall
pay TPS the purchase price for Product sold to a Customer net [ * ] days from
the date of the invoice. In no event shall Distributor be liable for payment for
Product before the Product has been accepted by the Customer pursuant to the
provisions of the Uniform Commercial Code as enacted by the State of Michigan
(MCL 440.1101 et. seq.).
[ * ] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
SCHEDULE F
Training
TPS shall, at no cost to Customer, train such personnel of Customer as
Customer deems appropriate to operate the Product. Such training shall occur at
Customer's location during the first calendar week following installation of the
Product, provided that Customer has [ * ] employees per location to be trained.
Any additional training will be at Customer's expense, at a rate of [ * ] per
day plus all associated out-of-pocket expenses.
[ * ] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
SCHEDULE G
Returns
A defective Product may be returned directly to TPS by a Customer upon
prior approval and the obtaining by Customer of a return merchandise
authorization number. Freight charges for authorized returns shall be paid by
TPS. Defective Products will promptly repaired or replaced by TPS, in its
reasonable discretion.
SCHEDULE H
Warranty
TOP SOURCE REPRESENTS AND WARRANTS TO CUSTOMER THAT (A) IT IS THE OWNER
OF THE OSAs AND THE RELATED TECHNOLOGY AND INTELLECTUAL PROPERTY, AND HAS
ALL RIGHT, TITLE AND INTEREST THERETO, AND THAT THE USE THEREOF BY AND THE
LICENSE TO CUSTOMER SHALL NOT INTERFERE WITH ANY OTHER PERSON'S RIGHT AND
TITLE TO SAME; (B) ALL THE OSAs AND ANY SUPPLIES PROVIDED BY TOP SOURCE OR
ITS SUPPLIERS IN CONNECTION THEREWITH SHALL BE FREE FROM ANY DEFECTS; AND
(C) ALL SUCH MATERIALS, INCLUDING THE OSAs, SHALL PERFORM THE FUNCTIONS FOR
WHICH THEY ARE INTENDED. TOP SOURCE DISCLAIMS ANY WARRANTIES OF ANY NATURE
WHETHER EXPRESS, WRITTEN, ORAL, IMPLIED OR STATUTORY, INCLUDING ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND ANY
WARRANTIES UNDER ARTICLE 2 OF THE UNIFORM COMMERCIAL CODE.
The OSA-IIs shall be used with due care solely in accordance with any
operating manual or other instructions (including any site specifications
and maintenance procedures) provided by Top Source Technologies, Inc., and
solely for the purpose(s) of testing and analyzing ("Oil Analysis") used
lubrication fluids (excluding lubrication fluids for airplanes).
This warranty is null and void if any of the following requirements are
not complied to:
Customer (for and on behalf of itself and its officers, employees,
agents and representatives) agrees:
a. Not to unpack, break the seal on or open any boxes or containers
shipped to it by TOP SOURCE, (or the manufacturer of the OSA) without
the direct authorization or supervision of Top Source (or persons
designated by Top Source). Customer further shall not open the cabinet,
covers, inspection doors or other enclosure containing the components
of the OSA, attempt any repair, adjustment or modification of the OSA,
except as authorized by Top Source disassemble, decompile, reverse
engineer,
SCHEDULE H - Warranty (Page 2)
interrogate, decode or otherwise tamper with the OSA or any software
related thereto (or attempt to derive any source code or algorithms from
such software);
b. Not to move or relocate the OSA from the site of original installation at
the locations set forth above
c. Not to remove, alter or obscure any markings or labels which are affixed to
the OSA at the time of installation or subsequently placed thereon by Top
Source; provided such were first approved by Customer;
d. To ensure that any person who operates any OSA has been trained by Top
Source (or persons previously trained or designated by Top Source);
e. To properly dispose of all fluids and solvents used in connection with or
in any way relating to the OSA in compliance with all applicable laws,
rules and regulations;
f. To maintain a safe site for the OSA including keeping all flammable gases,
petrochemical fluids, solvents and other substances outside the proximity
(generally not within 25 feet) of the OSA except to the absolute minimum
extent then being used in the operation thereof;
g. Customer may use the service marks appearing on the OSA and the reports
solely for the purpose of delivering Oil Analysis using the OSA. Customer
agrees to protect and not to infringe on all the trademarks and copyrights
owned by Top Source and its affiliate companies, including the Oil Lab 2100
trademark, the name or the trade names MotorCheck(TM), or TruckCheck(TM).