Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
INTERNATIONAL BUSINESS DEVELOPMENT, MARKETING AND SALES AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of April 7,
2000, by and between EXPRESS SUCCESS INTERNATIONAL, LLC., a Nevada limited
liability company ("Express"), and AMERICAN TECHNOLOGIES GROUP, INC., a Nevada
corporation ("ATG").
R E C I T A L S:
WHEREAS, ATG desires to develop demand for and sell the Products described
on Exhibit A, as may be amended from time to time, worldwide and desires the
assistance of Express it its efforts; and
WHEREAS, Express possesses unique skills and adequate resources to
assistance ATG in its product development and marketing efforts;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, ATG and Express hereby agree as follows:
1. RELATIONSHIP.
1.1 Appointment.
(a) Upon the terms, and subject to the terms and conditions, contained
herein, ATG hereby appoints Express as a Special Worldwide Distributor of the
Products, subject to the limitations contained in Exhibit 1.1. The rights
granted hereunder shall be exclusive as to certain countries or marketing areas
upon the agreement of ATG as to certain volume and other requirements as may be
included in Exhibit 1.1 from time-to-time. Exhibit 1.1 also contains those
territories wherein ATG has previously granted exclusive rights and Express
shall not market the Products in such territories. ATG has and will continue to
grant to other parties the non-exclusive right to market the Products in other
parts of the world where Express is not granted exclusive marketing rights.
(b) If ATG objects to any sales of Products by or through Express
("Objected Sales") , ATG shall give Express written notice ("Objection Notice")
which shall reasonably identify the Objected Sales and specify each purchaser
and state the basis of the objection, consistent with this Agreement. If Express
believes that such identified sales are not inconsistent with the provisions of
the Agreement, then ATG and Express shall endeavor to resolve such disagreement.
If ATG gives Express an
-1-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
Objection Notice, and Express thereafter ceases to sell Products to purchasers
specified in the Objection Notice, then the Objected Sales identified in the
Objection Notice shall not be a Express's default under this Agreement.
(c) ATG shall not sell Products to identified potential customers or
existing customers of Express. If Express objects to sales by ATG, Express shall
give ATG written notice of such objection. The notice shall reasonably identify
the sales to which Express objects, specify each purchaser and the reason for
the objection. If ATG believes that such identified sales are not inconsistent
with the provisions of the Agreement, then ATG and Express shall endeavor to
resolve such disagreement. If Express gives ATG such a notice and ATG thereafter
ceases to sell Products to purchasers specified in the notice, then the sales
identified in the notice shall not be a ATG's default under this Agreement.
1.2 Acceptance of Appointment. Express hereby accepts appointment as
provided in Section 1.1 above, and hereby agrees fully and faithfully to perform
and discharge all of its duties, obligations and responsibilities as set forth
in this Agreement. Express hereby acknowledges the proprietary and intellectual
property rights of ATG in the Products.
1.3 Competing Products. During the term of this Agreement, Express, its
officers, directors, shareholders, employees, agents or representatives
(collectively, "Agents"), and any entity in which Express or any of its Agents
has a direct or indirect controlling ownership interest, shall not, directly or
indirectly, promote, sell or distribute products which are directly competitive
with the Products.
1.4 Independent Contractor. The relationship of ATG and Express established
by this Agreement is that of independent contractors, and nothing contained in
this Agreement shall be construed to (a) give either party hereto the power to
direct and control the day-to-day activities of the other, or (b) constitute the
parties as partners, joint venturers, co-owners or otherwise as participants in
a joint or common undertaking. Neither party hereto nor any of its Agents is the
representative of the other party for any purpose except as expressly set forth
in this Agreement, and has no power or authority as agent, employee or in any
other capacity to represent, act for, bind, or otherwise create or assume an
obligation on behalf of the other for any purpose whatsoever. All financial
obligations associated with Express's business are the sole responsibility of
Express. All sales and other agreements between Express and its customers are
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Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
Express's exclusive responsibility and shall have no effect on Express's
obligations under this agreement.
1.5 Product Development. From time to time Express may recommend certain
Products or modifications to existing Products and ATG shall work with Express
in developing same into viable commercial Products to the extent that ATG
believes such recommendations are viable. Further at the sole cost of Express,
Express may "private label" the Products with or without ATG labels. The use of
ATG labels must comply with the provisions of 8.4 and 8.5, as applicable. No
representations regarding the Products shall be made in any private label or
branded marketing materials, packaging etc. without the prior written approval
of ATG, which approval shall not be unreasonably withheld.
1.6 Promotional Duties.
(a) Express shall (i) exert its best efforts consistent with sound business
planning and projected profitability and sales potential to introduce and
diligently advertise, promote, sell, distribute, and service (collectively,
"Marketing") the Products, (ii) make use of, and disseminate to its existing
customers, and to potential purchasers, all promotional materials, if any,
supplied by ATG, and (iii) cooperate with ATG in activities directed toward the
Marketing of the Products. At ATG's request, Express shall make immediately
available to ATG copies of all print and electronic Marketing materials used by
it for the Products.
(b) ATG will provide reasonable quantities of its combustion enhancement
products for promotional use and evaluation purposes at no cost to Express. The
use of such samples for testing will be at the discretion and direction of ATG.
(c) Express shall at all times demonstrate and otherwise represent the
Products fairly in comparison with competitive products from other
manufacturers, shall make no false or misleading representations with regard to
the Products or ATG, and shall not make any representations with respect to the
specifications, features or capabilities of the Products which are not
consistent with those described in the Product literature or other material
supplied by ATG.
(d) ATG shall assist Express in its efforts by making available reasonable
quantities of such marketing materials as ATG has developed and jointly
developing such marketing materials as Express may recommend.
-3-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
1.7 Technical Support. ATG shall provide Express with such technical
support regarding the Products as is reasonably necessary for Express to assist
ATG under this Agreement, including but not limited to copies of all applicable
Product test results.
1.8 Reporting Obligations of Express. Express shall provide to ATG, no
later than the fifteenth (15th) day of each month, as to the following calendar
month, Express's sales projection reports setting forth the projected sales of
each Product, as well as such other information that ATG may reasonably request
from time to time. Express may from time to time give ATG notice of accounts
acquired by Express and the notice shall be deemed accurate unless ATG gives
Express notice otherwise within seven (7) days of Express's notice to ATG.
1.9 Stock Options. Subject to the approval of the Board of Directors of
ATG, the parties shall enter into a stock option agreement in the form of
Exhibit 1.9 which provides for the granting of stock options which vest upon the
achievement of certain sales requirements.
2. PURCHASE OF PRODUCTS
2.1 Ordering Procedure. Purchase of the Products shall be made by Express
by means of purchase orders submitted to ATG. Each such purchase order shall
specify, inter alia, the number of units of each Product ordered by Express, the
desired date and location of delivery.
2.2 Purchase Order Form. Each purchase order for the Products shall be
submitted on the purchase order form attached hereto as Exhibit 2.2. No
additional or conflicting terms or conditions may be proposed by Express in or
in connection with any purchase order, and no such additional or conflicting
terms or conditions shall be binding upon ATG without its prior written consent.
2.3 Production, Supply and Delivery of Products. During the term of this
Agreement or thereafter, ATG reserves the right, without obligation or liability
to Express, to manufacture, produce, warehouse or source the Products at any
worldwide location, including locations outside of the United States of America.
The Products ordered by Express shall be delivered F.O.B. place of
manufacturing. ATG further reserves the right, in its sole discretion with one
hundred and eighty (180) days prior notice to Express, to discontinue the
production of any Product. If ATG discontinues production of any products for
any reason or
-4-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
any action is taken under Section 2.3(c), Express has the right to acquire the
necessary manufacturing rights and resources to manufacture the products on such
terms as the parties may reasonably determine in order to guarantee supply of
the products to Express and its customers under a "private label" only.
If (a) Express properly orders Products but is unable to receive the full
amount of its order due solely to the failure of ATG to supply such Products;
(b) ATG's failure is due to discontinuance of such Products; or (c) such
discontinuance is not due to ATG's transfer of any of its Confidential
Information (as hereinafter defined), ATG's Patents (as hereinafter defined), or
other intellectual property rights relating to the Products owned or controlled
by ATG to another person or entity, then ATG's failure to supply Products to
Express shall not constitute a breach of this Agreement.
2.4 Title and Risk of Loss. Title to the Products and all risk of loss
shall pass from ATG to Express at the time and place of ATG's delivery of the
Products to a common carrier for delivery to Express in accordance with the
delivery terms prescribed in each purchase order, notwithstanding that ATG may
retain rights of possession or repossession to ensure collection of the purchase
price thereof. Express shall be solely responsible for insuring the Products
after delivery to a common carrier for delivery to Express. Express shall
designate the common carrier used for transportation of the Products. ATG shall
not be responsible for any delay caused by the carrier.
2.5 Inspection and Rejection. Express shall have the obligation to inspect
the Products delivered to it within fifteen (15) business days after Express
receipt thereof from the local custom's agent at Express's designated delivery
point ("Receipt"), and unless any claim is made within said fifteen (15)
business day period, Express shall have conclusively deemed to have accepted in
good and marketable condition all the Products delivered to it.
3. PRODUCT PRICES. The prices at which ATG shall supply Express with Products
(the "Supply Price") shall be set forth in the Product price list which is set
forth on Schedule 3 attached hereto. The Product price list is subject to change
upon ninety (90) days notice. At no time shall the then applicable Supply Price
be greater than the price at which the Products are sold to other customers for
similar quantities and under similar conditions.
-5-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
4. PAYMENT FOR PRODUCTS.
4.1 Payment Terms. Express shall place into effect an irrevocable
letter of credit ("ILOC") in an amount sufficient to cover the purchase order,
plus shipping costs (unless shipping has been prepaid by Express), from a bank
and in a form acceptable to ATG. ATG may draw upon the ILOC to the extent of (i)
50% of the total purchase order, plus shipping if applicable, upon delivery of
the Product so ordered to the common carrier designated by Express, (ii) 25% of
the total purchase order upon Receipt of the Product by Express, and (iii) 25%
ninety (90) days after Receipt of the Product. The ILOC shall be paid (i) upon
delivery to ATG's bank of evidence of delivery to Express's selected carrier of
the Product ordered and as to (ii) upon delivery to ATG's bank of evidence of
receipt by Express of the Product order received by ATG from Express's selected
carrier.
4.2 Invoices. ATG shall invoice Express for the purchase price of the
Products upon ATG's delivery of such Products to a common carrier for shipment
to Express.
4.3 Right to Discontinue Any Credit. If ATG at any time extends credit to
Express, whether on open account, time draft, or otherwise, ATG may, if Express
is in default of its credit arrangement and with 30 (thirty) days notice,
discontinue such credit arrangement and require payment on the non-credit
payment terms set forth in Section 4.1 hereof.
4.4 Late Payment. If Express fails to pay to ATG any amount when due,
Express agrees to pay interest on the overdue balance at the rate of ten percent
per annum or, if such rate exceeds the maximum rate permitted by the governing
law of this Agreement, Express shall pay interest on such overdue balance at the
maximum rate permitted by such law. Payments received from Express when any
overdue balance exists shall be applied first against accrued interest. Express
shall pay all collection charges and expenses, including but not limited to
attorney's fees, incurred by ATG in connection with its payment of the purchase
price for the Products or otherwise in connection with the enforcement of this
Agreement.
5. REPRESENTATIONS AND WARRANTIES. Express represents and warrants to ATG that
it: (a) has full and unrestricted authority to enter into this Agreement and, by
executing, delivering or performing under this Agreement, it will not breach any
agreement to which it is currently a party; (b) has the legal right, free of any
right or interest of any third party, to perform its obligations hereunder; and
(c) currently is in material compliance with all applicable Laws and has
received all applicable product safety certifications and registrations from
appropriate governmental entities necessary to perform its obligations under
-6-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
this Agreement. ATG represents and warrants to Express that, except as disclosed
in its filings with the Securities and Exchange Commission, it: (a) has full and
unrestricted authority to enter into this Agreement and, by executing,
delivering or performing under this Agreement, it will not breach any agreement
to which it is currently a party; (b) has the legal right, free of any right or
interest of any third party, to perform its obligations hereunder; (c) currently
is in material compliance with all applicable Laws and has received all
applicable product safety certifications and registrations from appropriate
governmental entities necessary to perform its obligations under
this Agreement, and, (d) has legal ownership of the Products, free and clear of
any right or interest of any third party whatsoever.
6. Confidential Information.
6.1 Definition. The Parties recognize that the relationship created by this
Agreement may involve access by the parties to information of substantial value
to each other, including, but not limited to, designs, drawings, plans,
software, programs, material and manufacturing specifications, devices, trade
secrets, applications, formulae, know-how, methods, techniques, and processes
(whether related to ATG's Patents (as such term is hereinafter defined), or
otherwise), as well as financial, business, marketing and product development
information, and customer lists including contact lists provided to ATG by
Express relating to the Products (collectively, "Confidential Information"),
provided that Confidential Information shall not include information:
(a) In the public domain or which subsequently falls into the public
domain;
(b) Specifically intended by ATG for disclosure to customers of Express;
(c) Which the recipient can prove was known through a source independent of
the disclosing party prior to any communication by the disclosing party; or
(a) Disclosed to the recipient in good faith by a third party having a
legal right to do so.
6.2 Non-Disclosure. The Parties acknowledge and agree that they own all
rights, title and interest in and to their Confidential Information. The Parties
further agree that they shall (i) maintain the secrecy and confidentiality of
all
-7-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
Confidential Information which comes to its attention, (ii) take all necessary
precautions to prevent any disclosure of Confidential Information by any of its
Agents, and (iii) during the term of this Agreement and for so long as
Confidential Information does not enter into the public domain through no act or
omission of Express, neither publish, disclose nor disseminate any part of such
Confidential Information in any manner, or use the same, without the prior
written consent of ATG.
6.3 Injunctive Relief. The Parties understand and agree that the
Confidential Information has special value, the loss of which cannot be
reasonably or adequately compensated in damages or in an action at law, and
therefore, in the event of any breach or violation of the provisions of this
Section 6 by any party to this agreement, the other party shall be entitled to
equitable relief by way of injunction without bond and without the necessity of
proving actual damages, in addition to, and not in limitation of, any other
relief or rights to which they may be entitled. The terms and provisions of this
Section 6 shall survive any termination or expiration of this Agreement.
6.4 Non-Circumvention. The terms and conditions of that certain
Non-Circumvention & Disclosure Agreement dated March 21, 2000 between the
parties hereto is hereby incorporated by reference, provided however, that in
the event of any conflict between the terms thereof and the terms of this
Agreement, the terms of this Agreement shall control. During the term hereof,
ATG hereby covenants not to sell directly or indirectly to customers and
contacts as disclosed to ATG. In addition, ATG will not knowingly supply the
Products to third parties who wish to circumvent Express and sell the Product to
customers and contacts of Express to which ATG is prohibited from selling under
the terms hereof.
7. PRODUCT WARRANTY. The sole warranty given by ATG regarding any Product is
that it shall be free from design or manufacturing defects. All Product
packaging shall contain such disclaimer of warranty language as ATG may require.
Any "satisfaction guaranteed or money back" promotion offered by ATG in
connection with the sale of the Products shall be honored by Express in
accordance with ATG's terms and, if so honored, ATG shall return to Express its
purchase price for any returned Product.
8. TRADEMARKS.
8.1 ATG's Marks. ATG owns or has the right to use certain trademarks,
service marks and/or trade names in connection with the distribution, sale and
promotion of the Products (the "ATG
-8-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
Marks"), including without limitation those trademarks, service marks and trade
names listed in Schedule 8.1 hereto.
8.2 Use of ATG's Marks by Express. ATG hereby grants to Express a
non-exclusive right and license to use the ATG Marks during the term of this
Agreement solely in connection with the Marketing of the Products including in
the name of Express. This right and license shall not be assignable or
transferable by, or subject to any encumbrance of, Express in any manner
whatsoever, nor shall Express have the right to grant any sublicenses without
ATG's prior written consent. All rights with respect to the ATG Marks and all
other trademarks, service marks and trade names used by ATG not specifically
granted to Express in this Agreement shall be and hereby are reserved to ATG.
The right to use ATG Marks in Express's name is subject to the following
limitations: (i) Express shall only sell ATG's products and (ii) within thirty
(30) days of the expiration or other termination of this Agreement Express shall
change its name so as to no longer include ATG Marks.
8.3 Acknowledgment of Ownership. Express acknowledges that (i) ATG owns the
ATG Marks and all goodwill associated with or symbolized by the ATG Marks, (ii)
Express has no ownership right in or to any of the ATG Marks, (iii) Express
shall acquire no ownership interest in or to any of the ATG Marks by virtue of
this Agreement, and (iv) Express acknowledges that the ATG Marks have acquired
secondary meaning. Express shall do nothing inconsistent with ATG's ownership of
the ATG Marks and related goodwill and agrees that all use of the ATG Marks by
Express shall inure to the benefit of ATG. Nothing in this Agreement shall be
deemed to constitute or result in an assignment of any of the ATG Marks to
Express or the creation of any equitable or other interests therein. Express
shall not use any of the ATG Marks in any manner as a part of its business,
corporate or trade name or otherwise in violation of this Section 8.
8.4 Form of Use. Express shall use the ATG Marks only in the form and
manner prescribed from time to time by ATG. Express shall ▇▇▇▇ each Product and
all Marketing or other materials bearing any of the ATG Marks with such notices
as ATG may reasonably require, including, but not limited to, notices that the
ATG Marks are trademarks of ATG and are being used with the permission of ATG.
It will be deemed reasonable for references to the ATG name, satisfactory in
form and substance to ATG, to appear on all packaging and in all of Express's
advertising of the ATG branded products.
-9-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
8.5 Submissions. Express shall submit to ATG for its written approval,
before any use is made thereof, representative samples of all stationery,
invoices, catalogs, brochures, packages, and marketing materials bearing any of
the ATG Marks which Express or its Agents prepare. Express shall not make any
use of the ATG Marks unless and until it receives ATG's prior written approval.
ATG shall have the absolute right to approve or reject any proposed use of any
of the ATG Marks, in its sole discretion. ATG shall approve or reject each
proposal within thirty (30) calendar days after submission, and ATG's failure to
respond within such time period shall result in the automatic approval of such
proposal.
8.6 Registration. ATG shall have the sole right to take such action as it
deems appropriate to obtain trademark registration for any of the ATG Marks. If
it shall be necessary for Express to be the applicant to effect any such
registrations, Express shall cooperate with ATG to effect any such
registrations, and hereby does assign all of its right, title and interest in
and to each such application, and any resulting registration, to ATG, and shall
execute all papers and documents necessary to effectuate or confirm any such
assignment. Express shall perform all reasonable and necessary acts and execute
all necessary documents to effect the registration of the ATG Marks as ATG may
request, all at ATG's sole expense. Express shall not obtain or attempt to
obtain in the Territory, or elsewhere, any right, title or interest,
registration, or otherwise, in or to the ATG Marks, any applications or
registrations therefor, or any of them. In the event that any such right, title
or interest should be obtained by Express in contravention hereof, Express shall
hold the same on behalf of, and in trust for, ATG and shall transfer the same to
ATG upon ATG's request and without expense to ATG.
8.7 Infringement Information. Express shall notify ATG promptly of any
unauthorized use of the ATG Marks or of any ▇▇▇▇ confusingly similar thereto
which comes to its attention. Within twenty (20) days after ATG's receipt of
such notice, ATG and Express shall decide jointly whether to proceed with any
claim or litigation, and each shall have the right to do so independently if the
other elects not to participate. If any action taken by ATG and Express is
joint, then both parties shall share equally in the costs and proceeds. If one
party elects to proceed with a claim or litigation independently, the party
which proceeds with the claim or litigation shall retain all the proceeds
thereof and shall bear all of the costs thereof. If ATG elects to make a claim
or litigate, Express may not proceed with its own separate claim or litigation
without first obtaining the written consent of ATG to do so. Express shall
provide ATG with all reasonable
-10-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
assistance, at ATG's expense, in any prosecution of any such infringement which
ATG may decide to institute. If such infringement reduces the sales of the
Products by Express, then the parties shall mutually agree upon a reduction of
the Sales Requirement during the period of such infringement. With respect to
any joint action, ATG shall have the sole right to employ counsel and to direct
the handling of the action and litigation and any settlement thereof. As to
claims or litigation with which Express decides to proceed but in which ATG
elects not to participate, ATG shall provide Express with all reasonable
assistance, at Express's expense.
8.8 Termination of Use. Upon expiration or earlier termination of this
Agreement, Express shall cease using the ATG Marks in any manner, either similar
or dissimilar to the uses enumerated above.
9. PATENT OWNERSHIP AND RIGHTS TO INVENTIONS. Express shall not be deemed by
anything contained in this Agreement or done pursuant to it to acquire any
right, title or interest in or to ATG's Patents (as such term is hereinafter
defined) or any patent now or hereafter covering or applicable to any Product,
nor in or to any invention or improvement now or hereafter embodied in any
Product, whether or not such invention or improvement is patentable under the
laws of any country.
10. THIRD PARTY INFRINGERS. If Express becomes aware that a third party is or
may be making unauthorized use of (a) any patent owned by ATG, or for which ATG
has the exclusive right of use, which relates to the Products ("ATG's Patents"),
or (b) any other intellectual property rights relating to the Products owned or
controlled by ATG, Express shall promptly give ATG written notice thereof, which
notice shall fully describe the potentially infringing actions of such third
party. Within twenty (20) days after ATG's receipt of such notice, ATG and
Express shall decide jointly whether to proceed with any claim or litigation,
and each shall have the right to do so independently if the other elects not to
participate. If any action taken by ATG and Express is joint, then both parties
shall share equally in the costs and proceeds. If one party elects to proceed
with a claim or litigation independently, the party which proceeds with the
claim or litigation shall retain all the proceeds thereof, subject to the rights
of licensors of ATG regarding such proceeds, and shall bear all of the costs
thereof. If ATG elects to make a claim or litigate, Express may not proceed with
its own separate claim or litigation without first obtaining the written consent
of ATG to do so. Express shall provide ATG with all reasonable assistance, at
ATG's expense, in any prosecution of any such infringement
-11-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
which ATG may decide to institute. With respect to any joint action, ATG shall
have the sole right to employ counsel and to direct the handling of the action
and litigation and any settlement thereof.
11. CLAIMS.
11.1 Product Liability Claims. Express shall notify ATG in writing
immediately of any products liability claim or action brought with respect to
the Products based on alleged defects in the design or manufacture of the
Products. Upon receiving such written notice, ATG shall assume and have sole
control of the defense of any such claim or action, including the power to
conduct and conclude any and all negotiations, compromises or settlements.
Express shall comply with all reasonable requests from ATG for information,
materials or assistance, with respect to the conduct of such defense at
Express's expense, provided that ATG shall reimburse reasonable out of pocket
expenditures of Express which ATG approved in advance in writing, provided
further that the retaining of any outside consultant, attorneys and others
requires the prior written consent of ATG. ATG shall be responsible for payment
of all claims based on the design or manufacture of the Products, and all legal
expenses and costs incurred in that regard. Nothing in this Section 11.1 shall
be construed as requiring ATG to conduct and/or assume Express's independent
defense against any claim or action, to the extent that such claim or action
involves only the independent conduct, acts or omissions of Express. The
foregoing represents the entire liability of ATG to Express for products
liability claims or actions brought with respect to design or manufacturing
defects in the Products.
11.2 Notice from Express. Express shall promptly notify ATG of any
potential or actual litigation or governmental legal activity in the Territory
relating to the Products or the business operations of Express or ATG. Express
shall provide such notice within ten (10) days from the time that Express learns
of such litigation or activity. ATG shall have no liability for any judgment
without such notice, or any settlement, compromise, expenses or costs made or
incurred by Express without the consent of ATG.
11.3 Indemnification. Each party assumes sole responsibility for all acts
performed by it pursuant to this Agreement and shall be solely responsible for
all Claims (as defined herein) in connection therewith. Each party shall
indemnify, defend and hold the other harmless from any and all claims, actions,
lawsuits, demands, costs, liabilities, losses,
-12-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
damages and/or expenses (including reasonable attorneys' fees and costs of
litigation) by any other party resulting from or relating to any acts, omissions
or misrepresentations of such party, its Agents or any of them (collectively,
"Claims"). As defined herein, "Claims" shall not include claims or actions
against Express resulting solely from the Products' infringement of Third Party
Rights through no fault of Express or from product liability claims or actions
through no fault of Express.
11.4 Product Quality Complaints. Express shall notify ATG in writing
immediately of any Product quality complaints and any Product packaging quality
complaints from any party, including, without limitation, wholesalers,
retailers, consumers, or governmental entities. Express agrees to coordinate any
response to such complaints with ATG and to follow ATG's instructions in dealing
with any such complaints.
12. PRODUCT LIABILITY INSURANCE. ATG shall maintain in full force and effect
product liability insurance and property damage insurance on its operations
naming Express as an additional insured. ATG shall furnish to Express copies of
policies of insurance or certificates evidencing the existence and amounts of
such insurance within thirty (30) days of Express's request for such copies. ATG
shall provide Express with written notice of any cancellation of any insurance
hereunder at least thirty (30) days prior to such cancellation.
13. TERM. Subject to the termination provisions of Section 14 hereof, the term
of this Agreement shall be for a period of six years commencing on the date of
this Agreement (the "Initial Term"). Notwithstanding the aforesaid, unless
terminated on six months advance notice, the term of this Agreement shall
automatically be extended for consecutive three (3) year terms ("Renewal Term").
However, in the event that it becomes in ATG's best interest to grant exclusive
rights to a certain territory or territories for which Express does not already
have exclusive rights, ATG shall offer Express the right of first refusal to
acquire such exclusive rights for a period of 30 calendar days from the delivery
of written notice of the terms of such exclusive rights and if Express does not
exercise its right to acquire such exclusive rights, then Express shall
thereafter be barred from selling Products to customers in such territory. Any
such territories shall be added to Exhibit 1.1. Notwithstanding the foregoing,
ATG shall endeavor to provide Express with earlier notice of its intention to
enter into an exclusive agreement for a territory.
-13-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
14. TERMINATION. This Agreement shall remain in full force and effect as
specifically set forth in Section 13 hereof, unless earlier terminated as
follows:
(a) By mutual consent of the parties in writing at any time.
(b) By either party upon giving written notice to the other party if such
other party is in default of any term or provision hereunder, and such default
is not cured within thirty (30) days of written notice of such default. Any such
notice shall identify the nature of the claimed default and the action or
actions required to cure each claimed default.
(c) By ATG's giving written notice to Express: (i) if all or substantially
all of Express's assets are transferred to another person or entity other than
the persons or entities exercising ownership of Express at the date of this
Agreement; or (ii) if a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Express in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereinafter in
effect, or appoint a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Express or for any substantial part of its
property, or order the winding up or liquidation of its affairs, and such decree
or order shall remain unstayed and in effect for a period of sixty (60)
consecutive days; or (iii) if Express shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in any involuntary case
under any such law, or consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or similar
official) of such party or for any substantial part of its property, or make any
general assignment for the benefit of creditors, or fail generally to pay its
debts as they become due or shall take any action in furtherance of any of the
foregoing.
(d) Without notice if Express has not generated sales of at least * during
any consecutive 12 month period commencing after April 1, 2001.
15. EFFECT OF TERMINATION. Termination of this Agreement shall not extinguish
debts and other obligations created or arising between the parties by virtue of
this Agreement or by virtue of contracts or arrangements entered into hereunder
before the effective date of termination of this Agreement (the "Termination
Date"). Without limiting the generality of the foregoing, upon the Termination
Date:
-14-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
(a) Express shall not be relieved of its obligation to (i) pay for the
Products ordered by Express prior to the Termination Date or (ii) receive and
pay for all Products covered by orders which have been accepted by ATG prior to
the Termination Date; ATG shall be obligated to complete all Product orders
which were accepted by ATG prior to the Termination Date, provided that ATG
receives assurance satisfactory to ATG in its sole discretion that it will be
paid in accordance with the terms of this Agreement; and in each such case,
Express shall be permitted to distribute such Products as well as any Products
in Express's inventory. After the Termination Date, ATG shall have no obligation
of any kind to accept any orders, for the Products or otherwise, from Express.
(b) Express shall submit to ATG within thirty (30) days after the
Termination Date a list of all the Products owned by Express which were
purchased from ATG as of the Termination Date; ATG may, at its option, purchase
none or all of such Products from Express upon written notice of its intention
to do so, at prices to be agreed upon between the parties but in no event
greater than Express's landed cost for such Products; after receipt of such
Products from Express, ATG will pay Express for such Products on thirty (30) day
terms. Express shall permit ATG and its representatives to have access to its
inventory of the Products during Express's usual business hours for purposes of
inspection and verification of Express's inventory of Products after the
Termination Date. If ATG does not purchase the remaining inventory, then Express
will be permitted to sell this product.
(c) Express shall cease to use any Confidential Information relating to or
in connection with its continued business operations and shall promptly return
to ATG any and all registrations of the ATG Marks and all physical, written and
descriptive matter (including all reproductions and copies thereof) containing
Confidential Information as ATG shall specify.
(d) Express's license to use the ATG Marks shall terminate.
(e) NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY FOR DAMAGES OF
ANY KIND, INCLUDING, WITHOUT LIMITATION, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ON
ACCOUNT OF THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH ITS TERMS.
16. EXCUSABLE DELAYS. ATG shall not be liable for any delay in the manufacture
or delivery of the Products pursuant to the terms
-15-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
and provisions of this Agreement, or for any damages suffered by Express by
reason of such delay, when such delay is, directly or indirectly, caused by, or
in any manner arises from, earthquakes, fires, floods, accidents, riots, acts of
God, war, governmental interference or restrictions, strikes, labor
difficulties, or any other cause beyond the reasonable control of ATG, whether
similar or dissimilar to the foregoing. If any such delay occurs, ATG shall make
its best efforts to find alternative sources for the Products and shall permit
Express to cancel its order and obtain the quantities of Product in the canceled
order from alternative sources, subject to ATG's approval of the quality of such
alternative Products.
17. GENERAL PROVISIONS.
17.1 Successors and Assigns. This Agreement shall inure to the benefit of,
and be binding upon, the respective successors and assigns of the respective
parties hereto; provided, however, that neither party hereto shall have the
right to assign any of its rights under this Agreement without the prior written
consent of the other party which consent shall not be unreasonably withheld or
delayed, except that ATG may assign its rights and interest in and to this
Agreement in connection with the merger or consolidation of ATG with a majority
owned subsidiary of its parent company; and provided, further, that neither
party hereto shall be relieved of its respective obligations hereunder upon any
assignment, whether voluntary, involuntary or by operation of law, of its rights
under this Agreement.
17.2 Notices. All notices, requests, demands and other communications which
may be given or are required to be given under this Agreement shall be in
writing and in the English language. All notices shall be sent by facsimile
transmission and confirmed by overnight courier, and shall be deemed given on
the date of such facsimile transmission. All notices shall be addressed as set
forth below:
If to Express: Express Success International, LLC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Manager
If to ATG: American Technologies Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
-16-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
or to such other address as each party hereto may from time to time designate by
written notice to the other party as provided herein.
17.3 Governing Law. This Agreement has been executed and delivered in, and
shall be governed by and construed in accordance with the laws of the State of
California without regard to its conflict of laws provisions.
17.4 Resolution of Disputes. Any controversy or claim relating to this
Agreement (whether contract, tort, or both) or to the breach of this Agreement
shall be arbitrated by and in accordance with the then existing commercial
arbitration rules of the American Arbitration Association, in Los Angeles,
California. The arbitrator may render a judgment awarding actual compensatory
damages only, and no consequential, incidental, or punitive damages may be
awarded by the arbitrator. Judgment on the award rendered by such arbitrator may
be entered in any court having jurisdiction. Nothing in this Section 17.4 shall
affect ATG's right to bring an action or proceeding against Express in the
courts of any jurisdiction where the purpose of such action or proceeding is to
(i) seek injunctive relief against Express, or (ii) collect moneys due and owing
from Express to ATG on account of Express's failure to pay for Products or
services provided by ATG. Service of process in any such action or proceeding
brought hereunder may be made by mailing copies of such process to the address
of the parties provided for in Section 17.2 hereto, provided that nothing in
this Section 17.2 shall affect the right to serve legal process in any other
manner permitted by law. In the event of any action or proceeding to enforce
this Agreement, the successful or prevailing party will be entitled to recover
its attorneys' fees actually incurred and other costs incurred in any such
action or proceeding, in addition to any other relief to which it may be
entitled.
17.5 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement, and shall not be deemed to limit or affect
any of the terms or provisions hereof.
17.6 Construction. Whenever in this Agreement the context so requires,
references to the masculine shall be deemed to include feminine and the neuter,
references to the neuter shall be deemed to include the masculine and feminine,
and references to the plural shall be deemed to include the singular and the
singular to include the plural. Any reference in this Agreement to either party
hereto shall include such party's Agents.
-17-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
17.7 Waiver and Amendment. No waiver, amendment, modification or change of
any provision of this Agreement shall be effective unless and until made in
writing and signed by all of the parties hereto. No waiver, forbearance or
failure by any party hereto of its right to enforce any provision of this
Agreement shall constitute a waiver or estoppel of such party's right to enforce
any other provision of this Agreement or a continuing waiver by such party of
compliance with any provision.
17.8 Severability. The provisions of this Agreement are intended to be
interpreted and construed in a manner so as to make such provisions valid,
binding and enforceable. In the event that any provision of this Agreement is
determined to be partially or wholly invalid, illegal or unenforceable, then
such provision shall be deemed to be modified or restricted to the extent
necessary to make such provision valid, binding and enforceable, or, if such
provision cannot be modified or restricted in a manner so as to make such
provision valid, binding and enforceable, then such provision shall be deemed to
be excised from this Agreement and the validity, binding effect and
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired in any manner.
17.9 Cooperation. Each party hereto shall cooperate with the other party
hereto and shall take such further action and shall execute and deliver such
further documents as may be necessary or desirable in order to carry out the
provisions and purposes of this Agreement.
17.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
17.11 Entire Agreement. This Agreement (including the exhibits and
schedules hereto, each of which is incorporated herein and made a part of this
Agreement) constitutes the entire agreement and understanding of the parties
hereto and terminates and supersedes any and all prior agreements, arrangements
and understandings, both oral and written, express or implied, between the
parties hereto concerning the subject matter of this Agreement.
-18-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
EXPRESS SUCCESS INTERNATINAL, LLC. AMERICAN TECHNOLOGIES GROUP INC.
By: s/s ▇▇▇▇▇▇ ▇▇▇▇▇ By: s/s ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------- -------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Managing Member Its: Chief Executive Officer
-19-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
EXHIBIT A
PRODUCTS
Combustion enhancement products
ScreenMagic - Screen cleaner/anti-static
Household cleaning products, if available
Car care products, if available
-20-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
EXHIBIT 1.1
EXCLUDED TERRITORIES
Costa Rica
Panama
Nicaragua
El Salvador
Guatemala
Honduras
Mexico
Chile
Peru
Argentina
Brazil
Bolivia
Columbia
Venezuela
Equator
Uruguay
Paraguay
-21-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
EXHIBIT 2.3
PURCHASE ORDER FORM
No. ______ Date: ___________, 200_
To: _________________________
_________________________
Please furnish us the following goods:
No. Units Product Unit Price Territory Total
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Shipment by: __________________
Delivery date: ________________
Delivery location: ____________
This order is submitted pursuant to that Distribution Agreement between Express
Success International, LLC.,. and American Technologies Group, Inc. dated as of
March ___, 2000, and is subject to the terms and conditions of that Agreement
and no other terms or conditions.
Express Success International, LLC.,
By: ______________________
Name:_____________________
Title:____________________
-22-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
Schedule 3
PRODUCT PRICE
Force Fleet Formula (Individual Gel-Pack) Regular Price US$ *
Force Fleet Formula (Individual Gel-Pack) Promotional Price US$ *
- All prices are FOB ATG's designated manufacturing facility and are subject
to change.
- Prices will at all times represent ATG's best prices offered on similar
terms and conditions.
- Minimum purchase is one full 20 foot container of any combination of
product, with a minimum of one full pallet of any included product per
container.
- The * a market being defined as a specific agreed-upon geographical area.
-23-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
Schedule 11.1
TRADEMARKS, SERVICE MARKS AND TRADE NAMES
The Force
ScreenMagic
and such others as may be identified under cover of separate letter and appended
and incorporated by reference herein.
-24-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
ADDENDUM TO AGREEMENT
This is an addendum to the agreement made by and between American Technologies
Group, Inc. (ATG) and Express Success International, LLC (ESI) dated April 7,
2000 as follows:
A) ESI shall purchase the following minimum numbers of a certain air borne
catalyst product for internal combustion engine enhancement known as The
Fleet Formula gel packs of the 24 oz. Size (New 2 solution):
1. 11/01/2000 to 07/31/2001: * containers *
2. 08/01/2001 to 07/31/2002: * containers *
3. 08/01/2002 to 07/31/2003: * containers *
4. 08/01/2003 to 07/31/2004: * containers *
5. 08/01/2004 to 07/31/2005: * containers *
6. 08/01/2005 to 07/31/2006: * containers *
7. 08/01/2006 to 07/31/2007: * containers *
Any order of the bulk IE solution by ESI shall be counted as part of its
minimum purchase requirement in dollar terms, and shall not be used for the
production of gel packs without prior authorization of ATG. (*)
B. ESI is hereby granted by ATG the exclusive rights to market and to
distribute both the 16 oz. the 24 oz. and of any other size and of the
latest improved formulation of the above said Fleet Formula gel packs in
The Force and/or any other private label(s) and the bulk IE solution,
particularly to the asphalt, trucking, shipping and transportation
(including coaches and buses but excluding trains) industries in the United
States of America, Canada and Mexico for the entire duration of this
agreement and any extension(s). In addition, ESI may market to the power
generation industry in these countries on a non-exclusive basis, and will
receive absolute customer protection for those to whom ESI makes sales.
C. It is understood and agreed by ESI and ATG that to maintain the momentum of
successful distribution of the subject product is by means of a continuous
increase of its sales volume and the market shares. To achieve this goal
the maintenance of price stability is essential. Therefore, the selling
price of the subject 24 oz. gel packs shall be set as follows: (The sale
prices shown below are net to ATG, FOB Monrovia or its designated shipping
location in California).
-25-
Exhibit 10.9
Confidential Treatment
Omissions Noted by (*).
Omissions in accordance with Rule 406 of the Securities Act of 1933.
Omitted portions have been filed with the Securities and Exchange Commission.
1. 11/01/2000 to 07/31/2002: (*) (alpha)
2. 08/01/2003 to 07/31/2004: (*) (alpha)
3. 08/01/2004 to 07/31/2005: (*) (alpha)
4. 08/01/2005 to 07/31/2006: (*) (alpha)
5. 08/01/2006 to 07/31/2007: (*) (alpha)
(alpha) does not include any extraordinary increases in manufacturing costs
which may be added to the above increases upon mutual consent of both
ESI and ATG which shall not be unreasonably denied by ESI.
D. Payment by ESI will be * purchase credit will be made available to ESI by
ATG on 35-day credit terms for payment upon product delivery. *.
E. ESI will be entitled to * made from ATG. This * will be made available to
ESI at the end of each * and will be subject to audit.
F. ESI will be entitled to * placed under this agreement. In no case will this
* be available *
G. ATG shall provide appropriate and adequate personnel acceptable to ESI to
ensure proper quality control of production at its own in-house facilities
as well as at its outside contracting facilities. ESI shall have the rights
to carry out bi-weekly inspections at its sole discretion.
H. ATG shall guarantee the delivery of the quality and quantity of product as
ordered within the specified dates as agreed to by ESI and ATG. ESI will
reserve the right to cancel the purchase order if such order(s) are being
cancelled on ESI by its distributors or customers due to ATG's failure to
deliver product as specified or for more than 30 days late.
I. This addendum of Agreement shall be an integral part of the original
agreement made by and between ATG and ESI dated April 7, 2000. The contents
of this Addendum shall take effect over any and all conflicting clause(s)
in the original agreement of April 7, 2000 on the same subject.
J. The effective expiry date for this Addendum and also for the original
agreement shall be July 31, 2007 if not extended by mutual written consent.
Dated this 31st day of October, 2000
s/s ▇▇▇▇▇▇ ▇▇▇▇▇ s/s ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------- ---------------------------------
Express Success International, LLC American Technologies Group, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇, General Manager ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, C.E.O.
-26-