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EXHIBIT 10.2
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80 (B) (4),
200.83 AND 240.24B-2
MASTER DISTRIBUTOR AGREEMENT
THIS MASTER DISTRIBUTOR AGREEMENT ("Agreement") made as of the 1st day
of April, 1999 (the "Effective Date"), by and between GLOBAL LEAK DETECTION
(U.S.A.), INC., a Nevada, U.S.A. corporation with its principal offices at Las
Vegas, Nevada, U.S.A. (herein called "MANUFACTURER"), and MOTORVAC TECHNOLOGIES,
INC., a Delaware, U.S.A. corporation with its principal office at Santa Ana,
California, U.S.A. (the "MASTER Distributor").
RECITALS:
WHEREAS
A. Manufacturer and its parent corporation, Global Leak Detection Corp.,
an Alberta, Canada corporation ("PARENT"), have rights as licensee of Graminia
Developments Ltd. of proprietary methodology, processes and machinery for the
manufacture of and have the right to distribute certain proprietary products for
the detection of leaks in automotive, commercial, industrial, marine or
residential applications, including any modifications, changes, updates,
replacements, or improvements thereto, which shall be deemed part of the
Products for purposes of this Agreement and including any and all patents
related thereto ("PRODUCTS," as defined below), which Products include a
combined apparatus, casing, and appurtenances for the detection of leaks in
automotive systems (the "AUTOMOTIVE UNIT"), which Automotive Unit contains vapor
generation capability housed in a sealed canister (the "AUTOMOTIVE CANISTER").
B. Manufacturer and Parent continue to carry out research and
development programs in respect of the Products and their manufacture.
C. Master Distributor desires to become the exclusive distributor in the
Trading Area, as defined herein, of the Automotive Unit or a unit similar in
form and function which it will assemble, containing the Automotive Canister,
and Manufacturer desires to appoint Master Distributor as such exclusive
distributor, in the Trading Area (as defined herein) . This Agreement initially
covers the distribution of only the Automotive Canister in the Automotive Unit
(whether assembled by Manufacturer or by Master Distributor). Master Distributor
also desires from time to time to become the exclusive distributor of other
Products, and to that extent Master Distributor shall have a right of first
refusal to distribute the Products, this Agreement will serve as an umbrella or
master agreement for that purpose and other Products may be added from time to
time to the list of Products for distribution by Master Distributor.
D. Manufacturer and Master Distributor both desire to enhance sales in
the Trading Area through the Master Distributor's broadbased distribution
network.
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E. Whereas the following additional provisions attached as Schedules
hereto shall form part of this Agreement:
Schedule A Description of Products and Prices
Schedule B Description of Trading Area
Schedule C Initial and Minimum Purchase of Products
Schedule D-1 Confidentiality and Non-disclosure Agreement (Manufacturer)
Schedule D-2 Confidentiality and Non-Disclosure Agreement (Master Distributor)
Schedule E Non-Competition Agreement
Schedule F Dispute Resolution
NOW THEREFORE in consideration of the mutual promises and covenants
herein the parties agree as follows:
1. APPOINTMENT AND GRANT OF LICENSE.
(a) Manufacturer hereby appoints and grants Master Distributor an
exclusive right and license to market, sell and distribute ("DISTRIBUTE") the
Products specified on SCHEDULE A attached hereto (as incorporated into the
Automotive Unit or otherwise), in the Trading Area for the Term of this
Agreement, and Master Distributor hereby accepts such grant, upon the terms and
conditions of this Agreement. Manufacturer shall terminate all of its sales of
Products in the Trading Area by May 30, 1999. New territories may be added to
the Trading Area in accordance with, and subject to the provisions relating to
the determination of minimum purchases as contemplated in, Section 20. The
distribution Trading Area is as set out on SCHEDULE B hereto, as it may be
amended from time to time upon agreement of the parties.
(b) The rights granted under paragraph (a) above include the
right to sublicense such rights through multiple tiers of distributors,
including, without limitation, the right to sublicense to Snap-On Canada Inc. or
any of its affiliates ("SNAP-ON"), subject to compliance with Section 18.
(c) Master Distributor shall pay to the Manufacturer the sum of
[...***...] of the United States of America upon execution of this Agreement,
plus order and pay for all Products as and when required hereunder to secure and
maintain its exclusive right to Distribute the Products in the Trading Area.
* CONFIDENTIAL TREATMENT REQUESTED
2. PRODUCTS.
(a) The Products which are covered by this Agreement are set out
on SCHEDULE A hereto. Additions or deletions to the list of Products on SCHEDULE
A may be made from time to time by written agreement of the parties and are then
subject to the terms of this Agreement.
(b) Manufacturer will provide, at its expense, a master copy of
documentation related to the Products (e.g. technical and commercial manuals) to
Master Distributor. Manufacturer will promptly disclose to Master Distributor
any improvements to the Products,
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and all subsequent improvements to any documentation related thereto, developed
by Manufacturer or Parent during the Term. Master Distributor shall own
exclusively, without obligation to Manufacturer or any third party, all Products
purchased from Manufacturer and paid for pursuant to this Agreement.
3. TERM. This Agreement shall be in effect for an initial term of five (5) years
commencing on the Effective Date ("TERM"), and provided that Master Distributor
has not failed to cure any material default under this Agreement following the
notice required under Section 25, the Term of this Agreement shall automatically
renew for a renewal term of five (5) years.
4. INITIAL PURCHASE. Master Distributor hereby agrees to make an initial
purchase pursuant to a purchase order as specified in SCHEDULE C hereto on or
before (and subject to) execution of this Agreement and the Assembly Agreement
by all parties hereto and thereto), with shipment and payment in accordance with
the terms and conditions specified thereon (which shall not be inconsistent with
the terms of this Agreement). Such initial purchase is a condition precedent to
this Agreement, which condition may be waived or extended by Manufacturer in its
sole unfettered discretion.
5. SALES AND MARKETING. Master Distributor shall develop a marketing plan,
including a monthly, non-binding, rolling 90-day market projection, which will
reflect Master Distributor's then current good-faith estimate of future sales of
Products in the Trading Area, and provide a copy of the plan to Manufacturer.
These forecasts are for information only and are not guarantees Master
Distributor will purchase or sell in such volumes or at all.
6. MINIMUM PURCHASES.
(a) Master Distributor shall purchase as and when required all of
the volumes of Products stipulated herein as being required, shall use
commercially reasonable efforts to advertise and promote the sale of the
Products within the Trading Area and shall use its commercially reasonable
efforts to maximize sales of the Products in the Trading Area in excess of the
minimum sales volume required.
(b) Annual minimum purchases by Master Distributor of Products
for each calendar year and each territory in the Trading Area shall be as set
out on SCHEDULE C hereto or as otherwise agreed in writing from time to time.
7. FAILURE TO PURCHASE THE MINIMUM AMOUNT. In the event that Master Distributor
fails to purchase and pay for the minimum volume of Products in a calendar year,
its rights as to exclusivity of Distribution of the Products under this
Agreement shall at Manufacturer's option (the exercise of which shall require
thirty (30) days prior written notice to Master Distributor), be reduced to
non-exclusive license as to Distribution of the Products in the Trading Area. In
the event Manufacturer validly executes its rights under this Section 8 to
remove the exclusivity, no such ongoing business shall be construed as affirming
or re-establishing the exclusive nature of the Distribution rights unless in
writing signed by Manufacturer.
8. PRICE AND DISCOUNT. Manufacturer shall sell the Products to the Master
Distributor at the price set out on SCHEDULE A. Manufacturer agrees to provide
Master Distributor with the most favored pricing for Products so long as Master
Distributor is entitled to exclusivity under this
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Agreement. So long as the Master Distributor is entitled to exclusivity, should
Manufacturer sell Products or substantially similar products to a third party
(based on equivalent lot size and quantity pricing), at less than the applicable
prices set forth in SCHEDULE A (as it may be modified or amended from time to
time), then Manufacturer shall adjust the prices set forth in SCHEDULE A to the
same level as such sales to the third party, effective as of the date that
Manufacturer offered such lower prices to the third party. Notwithstanding
anything contained herein to the contrary, in the event Manufacturer does not
own a valid patent in the United States and Canada relating to the technology
incorporated in the Products or it becomes reasonably apparent that patents will
not be awarded upon the pending patent applications related to such technology,
Master Distributor shall only be obligated to pay the base price for the
Products and shall not pay any sliding percentage, gross percentage or other
royalties as described on SCHEDULE A.
9. PRICE CHANGES. Unless otherwise specified herein, prices for the Products
shall be unilaterally set by Manufacturer from time to time in recognition of
various factors such as the increase in the cost of materials and labor. If
Manufacturer intends to charge a higher price than provided in SCHEDULE A,
Manufacturer shall substantiate such increase in price to the reasonable
satisfaction of Assembler as resulting from an actual increase in the cost of
materials or labor to Manufacturer such that Manufacturer is hereby maintaining
its margins and shall permit Master Distributor to order a quantity of the older
Products sufficient for Master Distributor's reasonable needs for a period of
three (3) months. Master Distributor may, at its option exercised by notice in
writing to Manufacturer within thirty (30) days of written receipt of notice
from Manufacturer of a proposed price increase for the Products and prior to any
purchases of the particular Product(s) which price has been increased,
immediately terminate the Distribution of the particular Product(s) which price
has increased by more than [...***...] per annum (the "Maximum Price"),
excluding currency exchange. If Master Distributor terminates Distribution of a
particular Product, then its rights in respect of exclusive or non-exclusive
Distribution of that particular Product shall cease, and any subsequent sales
shall not restore, extend or renew such rights unless in writing signed by
Manufacturer; provided, however, that if any such Product is, within twelve (12)
months of termination of such Product, subsequently sold by Manufacturer or
through a licensee of Manufacturer, at a price less than the Maximum Price, such
Product shall, at the Master Distributor's sole option, be deemed to be a
Product hereunder, subject to the exclusivity obligations and requirements for
minimum purchase.
* CONFIDENTIAL TREATMENT REQUESTED
10. NEW PRODUCTS. Unless otherwise specified by Master Distributor, Manufacturer
shall supply the newest version or enhancement of the Product to Master
Distributor determined as of the date of the order by Master Distributor.
Manufacturer reserves the right at any time to make changes in specifications,
construction or design of the Products; provided, however, that any changes
shall meet the requirements and conform to the specifications of Master
Distributor as set forth in this Agreement. Manufacturer shall provide not less
than 90 days prior written notification of any proposed changes. Any Products so
changed shall be accepted by Master Distributor as standard Products conforming
to existing orders so long as they do not adversely affect physical or
functional interchangeability or performance of the particular Product.
Manufacturer shall not be obligated to furnish Master Distributor or its
wholesale or retail customers with changes on Products previously delivered to
Master Distributor except in accordance with the warranty of such Products.
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11. CONTINUING AVAILABILITY. Manufacturer shall offer for sale to Master
Distributor, for a period of eighteen (18) months (unless a longer period is
required pursuant to any applicable statute or regulation, in which case this
provision shall apply for such longer period) after the termination of this
Agreement, functionally equivalent maintenance, replacement and repair parts for
Products. Such parts shall be available at the lower of (i) the price for such
parts immediately prior to the termination of this Agreement or (ii) the then
current contract price for other customers, or if no such contract exists, at a
price agreed upon by Manufacturer and Master Distributor.
12. NO PRICE PROTECTION FOR PRIOR PRODUCT. In the event Manufacturer releases an
upgraded or enhanced version of a Product which is not yet listed as a Product
pursuant to this Agreement, then Master Distributor may acquire such upgraded or
enhanced Product subject to the terms of this Agreement. Master Distributor
shall not have any right or obligation to return previously ordered Products nor
to receive any refund, rebate or offset in price in respect of previously
ordered Products solely as a result of the released new Products.
13. ORDER, ACCEPTANCE, CANCELLATIONS, AND RETURNS.
(a) PURCHASE ORDER. All purchases are subject to acceptance by
Manufacturer and orders must reference this Agreement. Products shall be ordered
by Master Distributor through the issuance of purchase orders, which shall be
subject to and governed by this Agreement. Master Distributor shall submit
written purchase orders to Manufacturer from time to time during the Term of
this Agreement. The terms and conditions of this Agreement will supersede and
take precedence over any additional or different terms on the face or reverse
side of any such purchase order. Any such additional or different terms are
deemed to be material alterations to the terms and conditions of this Agreement
and will not be binding even if there is a signed acknowledgment or confirmation
by Manufacturer of such purchase order, unless the acknowledgement or
confirmation is by an executive officer of the Manufacturer.
(b) QUANTITY, DELIVERY DATE. Each such purchase order of Master
Distributor will specify the type and quantity of Products being ordered,
delivery terms, and the requested delivery date. Time is of the essence in
delivery of all Products.
(c) SHIPPING. Prices and fees are C.I.F. Master Distributor's
warehouse. The Manufacturer will prepay and add applicable freight, insurance
costs, duties, rates, charges and other shipping charges to the invoice. All
Products shall be packed for shipment and storage in accordance with standard
commercial practices and adequately insured by Manufacturer or the carrier. All
risk of loss or damage will pass to Master Distributor upon delivery to Master
Distributor's warehouse. Manufacturer will deliver Products according to the
delivery dates specified in Master Distributor's purchase orders, such delivery
dates being not later than ninety (90) days after the date such order is
received by Manufacturer. Manufacturer will notify Master Distributor
immediately and in writing of any anticipated failure of Manufacturer to be able
to deliver Products according to such delivery dates, and in such event Master
Distributor shall have the right to: (I) reschedule such delivery dates to
mutually-agreed dates in the future; or (II) cancel, in whole or in part, the
purchase orders applicable to such Products, without further liability to
Manufacturer (except as may otherwise specifically be required hereunder); or
(III) consider such anticipated failure to deliver according to applicable
delivery dates to be a material
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breach of the Agreement. No shipment will be deemed complete until all ordered
units have been delivered.
(d) ALLOCATION OF INVENTORY. So long as Master Distributor is entitled
to exclusivity under this Agreement, if at any time the purchase orders of
Master Distributor together with all other orders received by Manufacturer for
the Products exceed the then current available inventory of Manufacturer and
foreseeable production within thirty (30) days, then Manufacturer shall fill
Master Distributor's purchase order before filling part or all of any purchase
order from any third party.
(e) INSPECTION AND ACCEPTANCE OF PRODUCTS; INVOICES. Master Distributor
will inspect all Products for obvious physical damage promptly upon receipt
thereof and may reject any Products that fail in any material respect to meet
any product specifications or for Products which are obviously damaged. Master
Distributor shall notify Manufacturer of any nonconformity and shall in good
faith discuss with Manufacturer acceptable alternative curative efforts prior to
returning a rejected shipment at Manufacturer's expense. Any Products not
properly rejected within fifteen (15) business days of receipt of such Products
by Master Distributor will be deemed accepted. Master Distributor will return
all rejected Products to Manufacturer promptly, and at Manufacturer's expense,
and Manufacturer shall within ten (10) days re-ship to Master Distributor
Products which do conform to their product specifications. Invoices shall be
issued after the Products listed on the invoice have been delivered to Master
Distributor. Freight charges, insurance costs, duties, rates, charges and other
shipping charges will be added as a separate item to Manufacturer's invoice.
(f) OTHER RESPONSIBILITIES OF MANUFACTURER. Manufacturer will provide
Manufacturer's two (2) days standard training course and materials for the
Products to the marketing and technical support personnel of Master Distributor
at Master Distributor's place of business at the equally shared expense of
Master Distributor and Manufacturer. This training will include Manufacturer's
standard course material regarding installation, operation and maintenance of
the Products and will be sufficient to enable Master Distributor's employees to
incorporate the Products into any other equipment as described in this Agreement
or the Assembly Agreement and training and/or develop further training for the
end users. Manufacturer will provide, at no charge to Master Distributor, a
complete set of all training materials and documentation.
14. PAYMENT. Manufacturer will invoice Master Distributor at the time of
shipment for each Product order. Each such invoice will include the aggregate
price for the Product shipment plus freight, insurance, taxes, duties and other
costs prepaid by Manufacturer. All payments shall be made in U.S. dollars. Full
payment of the amounts invoiced for each shipment will be paid within forty-five
(45) days of the later of (i) the date of Master Distributor's receipt of such
invoice or (ii) the date of delivery of such Products to Master Distributor. Any
invoice not paid when due, as provided in this section will be subject to a
monthly charge of one percent (1.0%) of the unpaid portion thereof from invoice
date.
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15. LIMITED LIABILITY AND LIMITED WARRANTY.
(a) Master Distributor hereby agrees to give on behalf of Manufacturer
to any purchaser or user of the Products no warranty other than the written
limited Manufacturer's warranty of Manufacturer in respect of the Products
provided to Master Distributor by Manufacturer, subject to statutory warranties
which may be necessarily implied and not capable of being reduced or eliminated
by contract in certain jurisdictions. Manufacturer shall have the right to prior
approval of the form and content of any other warranty provided by Master
Distributor in respect of any Product. The Master Distributor is not authorized
to grant, extend or assume for Manufacturer any additional warranty or other
obligations concerning the Products. Master Distributor shall make the limited
warranty of Manufacturer an integral part of all sales of the Products, and
shall process warranty claims and make warranty repairs or replacements of all
the Products in the Trading Area as stipulated by Manufacturer. In the event
Master Distributor processes warranty claims or makes warranty repairs or
replacements, Manufacturer shall reimburse Master Distributor for the cost of
its labor and materials upon reasonable rates previously agreed upon by
Manufacturer and Master Distributor. Master Distributor shall not return any
Products for repair or replacement to Manufacturer except as specifically set
out herein. Failure by Master Distributor to make the terms of the then
applicable Manufacturer's warranty an integral part of a particular sale shall
have the effect of relieving Manufacturer from any warranty obligations
hereunder in respect of such sale as between Manufacturer and Master
Distributor, and Master Distributor shall be responsible for satisfying, at its
expense, any warranty claims related to any such sale.
(b) Manufacturer warrants to Master Distributor and end users of the
Products that at the time of Distribution to end users and for a period of one
(1) year thereafter the Products are of commercial quality, free of defects in
materials and workmanship, and that operation of the Product conform to the
Products' specifications in effect at the time of distribution. Manufacturer's
warranty obligation under this subsection (b) shall not apply to Housings or
Automotive Canisters, if any, that are manufactured by Master Distributor under
the Assembly Agreement.
(c) Manufacturer shall, at its option, either repair or replace a
defective part within the period stipulated by Manufacturer after the date of
purchase, upon proof of purchase and delivery of the Product to an authorized
service center as designated by Manufacturer.
(d) Manufacturer represents and warrants that the Products do not and
will not infringe or misappropriate any third party's copyright, patent, trade
secret, trademark, or other proprietary or intellectual property rights, and
that Manufacturer has the unencumbered right, title and interest to distribute
the Products to Master Distributor.
(e) All warranties under this Agreement shall survive inspection,
delivery, acceptance or payment by Master Distributor, and will be extended
directly to end users purchasing the Products as part of Master Distributor's
equipment.
(f) NO PARTY SHALL BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES INCLUDING WITHOUT LIMITATION,
LOST PROFITS, SAVINGS, OR INCOME,
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REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING
NEGLIGENCE), STRICT PRODUCT LIABILITY OR OTHERWISE, EVEN IF IT HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.
(g) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, MANUFACTURER DOES
NOT MAKE ANY REPRESENTATION OR WARRANTY TO THE MASTER DISTRIBUTOR OF ANY KIND,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
16. SERVICE IS THE RESPONSIBILITY OF MASTER DISTRIBUTOR. It is the
responsibility of the Master Distributor to provide purchasers and users of the
Products which it has sold efficient repair and replacement parts and service
(other than services to be provided by Manufacturer pursuant to the
Manufacturer's warranties hereunder). Manufacturer shall provide to Master
Distributor the information for adequately servicing the Products, and Master
Distributor shall be responsible for the adequate training of persons selling or
servicing the Products. Master Distributor may obtain replacement parts without
charge during the limited warranty period described in Section 16(b) provided by
Manufacturer in respect of the Products.
17. NO WARRANTY CONCERNING IMPORT TARIFFS. Master Distributor shall be liable
for all duties, rates and charges respecting the importation of the Products
into the Trading Area by Manufacturer or otherwise, except that Master
Distributor shall not be liable for any duties or material changes resulting
from any Products returned to Manufacturer under warranty. Master Distributor
accepts all risks and costs whatever in respect of the importation of the
Products. Manufacturer does not represent or warrant that the Products are
eligible for any favorable treatment or tariff reduction pursuant to any
applicable treaty or legislation or regulation and Master Distributor relies
upon its own knowledge in that regard.
18. PERMITTED SUB-DISTRIBUTORS. Master Distributor shall be permitted to
establish subdistributors within the Trading Area provided:
(a) Manufacturer receives a copy of the proposed arrangement;
(b) Manufacturer receives detailed information about the
subdistributors; and
(c) Manufacturer gives prior approval in writing of such
subdistributors and all arrangements therefor, which approval
shall not be unreasonably withheld.
Notwithstanding the foregoing, Manufacturer hereby specifically approves
the appointment by Master Distributor of Snap-On Canada, Inc. or its parent
corporation or any affiliate as a sub-distributor of the Products in the Trading
Area.
19. STANDARD OF CONDUCT OF THE PARTIES. The parties hereby agree to deal with
each other in good faith and provide their commercially reasonable efforts in
the supply, manufacture and support of quality Products and Distribution of
those Products in the Trading Area. The parties agree to keep each other
reasonably and currently informed with respect to the Products and Distribution
of the Products in the Trading Area.
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20. UNDEVELOPED DISTRIBUTION AREA. Manufacturer shall refer to Master
Distributor all leads or inquiries which it knows of and/or come to its
attention in respect of the Products which are the subject of this Agreement and
sub-distributors. Master Distributor shall have discretion to exclusively
distribute Products in any such new territory. Except for the minimum numbers to
be determined pursuant to the provisions of part 2.D of SCHEDULE C, Manufacturer
and Master Distributor shall negotiate in good faith to agree on the minimum
volume of sales for such territory for subsequent periods on or before the first
anniversary of the date sales by Master Distributor began in such territory. The
determination of such minimum number shall not be subject to the Dispute
Resolution provisions of Schedule F.
21. CERTAIN TECHNOLOGY RIGHTS. Master Distributor hereby acknowledges that,
subject to the provisions of its Assembly Agreement with Manufacturer, all
intellectual property, including know how and proprietary rights relating to the
Products (but excluding the Housing), including without limitation, the
Automotive Canister, is the property of Manufacturer or its affiliates (such
acknowledgement based upon representations made by Manufacturer) and does not
belong to Master Distributor. Subject to the provisions of the Assembly
Agreement, any enhancements, improvements, discoveries or developments
("IMPROVEMENTS") made or done whatever by Master Distributor relating to the
Automotive Canister or other Products, or the process of manufacturing the
Products, or products derived, in whole or in part, therefrom or similar thereto
in function or design shall belong to Master Distributor, and Master Distributor
shall fully inform Manufacturer in writing within thirty (30) days of any such
enhancements, improvements, discoveries or developments. Manufacturer shall be
entitled to use such Improvements (other than Improvements related to the
Housing) without additional royalties for the purposes of this Agreement without
further license or fees and Manufacturer shall have a perpetual, non-exclusive,
royalty-free license to use or sublicense such Improvements following
termination of this Agreement or exclusivity thereof. Notwithstanding anything
to the contrary contained herein, if any Improvements made solely by Master
Distributor are utilized by Manufacturer and result in any cost reduction of
materials used or direct labor in the production of Products, Master Distributor
shall receive the benefit of such cost reduction of materials used or direct
labor as of the date of notification of such Improvements to Manufacturer
through a reduction in the purchase price for such Product.
22. NON-DISCLOSURE AND NON-COMPETITION COVENANTS. The Non-Disclosure Agreements
attached hereto as SCHEDULE D-1 AND SCHEDULE D-2, and the Non-Competition
Agreement attached hereto as SCHEDULE E are hereby incorporated herein as part
of this Agreement.
23. INTELLECTUAL PROPERTY INDEMNIFICATION.
(a) THIRD PARTY CLAIMS. Manufacturer shall defend at its own expense any
claim, suit, threat or legal proceeding (collectively, a "CLAIM") brought
against Master Distributor, its officers, directors, employees, stockholders,
customers, distributors and agents insofar as such Claim is based on a claim
that any of the Products provided by Manufacturer or Parent pursuant to this
Agreement infringes the patent, copyright, trade secret, mask work rights or any
other intellectual property rights or misappropriate any trade secret of any
third party, so long as Master Distributor notifies Manufacturer promptly in
writing of such Claim and gives Manufacturer sole control over and information
and cooperation reasonably necessary (at Manufacturer's expense) for the defense
thereof. Manufacturer shall fully indemnify, defend,
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hold harmless and pay damages, costs (including attorneys' fees), expenses, and
liabilities finally awarded to third parties against or otherwise incurred by
Master Distributor, its officers, directors, employees, stockholders, customers,
and agents or incurred pursuant to a Claim or a bona fide settlement in any such
Claim.
(b) REMEDY. In the event that Manufacturer has reason to believe or
receives notification that any Manufacturer copyright, trademark, service mark,
patent or trade secret may infringe or misappropriate the intellectual property
rights of a third party, Manufacturer shall obtain the right for Master
Distributor to continue to exercise the rights granted under this Agreement, to
substitute the Products with substantially similar ones, or to modify the
Products so that they no longer infringe, but have substantially similar
operating capabilities and fit, form and function, subject to the express
written approval of Master Distributor, and/or obtain a license to grant such
rights as may be required to make the Products non-infringing while still
complying with the representations and warranties of this Agreement. Master
Distributor's failure to provide prompt notice of infringement or allegation of
infringement shall not void provisions of this Section.
24. INDEMNIFICATION.
(a) MANUFACTURER INDEMNIFICATION. Manufacturer will fully defend,
indemnify, and hold Master Distributor and its officers, directors and employees
in respect of lawful acts, harmless from any claim, suit, threat or legal
proceeding and all damages, costs, expenses, and other liabilities arising from
any of the foregoing (including attorneys' fees) resulting from Manufacturer's
breach of its warranty obligations, the use of the Products or from product
liability claims alleging defects in the Products (other than the Housing or
Automotive Canisters manufactured by Master Distributor under the Assembly
Agreement, if any).
(b) MASTER DISTRIBUTOR INDEMNIFICATION. Subject to Manufacturer 's
obligations set forth in this Agreement, Master Distributor will defend,
indemnify, and hold Manufacturer harmless from any claim, suit, threat or legal
proceeding and all damages, costs, expenses, and other liabilities arising from
any of the foregoing (including attorney's fees) resulting from Master
Distributor's breach of its warranty obligations related to the Housing or
Automotive Canisters that it manufactures under Section 2.1 of the Assembly
Agreement, if any.
(c) NOTIFICATION. Each party agrees to notify the other party promptly
in writing of each claim, suit, threat or legal proceeding, and to give such
other party sole control over and information and reasonable cooperation (at
such other party's expense) for the defense thereof.
25. TERMINATION
(a) TERMINATION FOR CAUSE. Either party may terminate this Agreement for
the material breach of this Agreement or any purchase order by the other party
which material breach has remained uncured for a period of thirty (30) days from
the date of delivery of written notice thereof to such breaching party, which
notice shall specify the curative or remedial action to be taken by the other
party. In such case, termination shall become effective after the end of the
thirtieth day from such notice. For purposes of this Agreement, material breach
shall include, without limitation, the occurrence of any of the following: (i)
any proceedings in bankruptcy,
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insolvency, receivership or liquidation are taken or instituted against a party;
or (ii) a party makes an assignment for the benefit of creditors or commits an
act of bankruptcy or insolvency.
(b) EFFECT OF TERMINATION.
(i) DISTRIBUTION. Upon termination of this Agreement, Master
Distributor may continue to Distribute the Products and any equipment
incorporating the Products until its inventory of Products existing at the date
of termination and any Products for which Master Distributor has submitted a
Purchase Order and which Purchase Order has been accepted by Manufacturer is
depleted. Upon depletion of such Product inventory, Master Distributor shall
cease distributing the Products.
(ii) SURVIVAL. Either Party's obligations under this Agreement
which by their nature would continue beyond termination, expiration or
cancellation of this Agreement shall survive termination, expiration or
cancellation of this Agreement. Upon expiration or termination of this
Agreement, all sub-distributors shall have the right to continue distribution of
Products until their inventories at the time of termination are depleted.
(iii) The termination shall not affect the rights or liabilities
of the parties with respect to Products previously sold under this Agreement or
with respect to any indebtedness then owing by either party to the other.
(iv) The acceptance of any order for the sale of any Products to
Master Distributor after the termination of this Agreement shall not be
construed as a renewal or extension of this Agreement, or as a waiver of
termination, but in the absence of a new written agreement signed by the
parties, all such transactions shall be governed in the same manner as are
ordinary purchase orders placed with Manufacturer by Master Distributor pursuant
to this Agreement.
26. INDEPENDENT CONTRACTOR STATUS. This Agreement does not constitute Master
Distributor as a legal representative, joint venturer, partner, employee,
servant or agent of Manufacturer for any purpose whatever. Master Distributor is
an independent contractor buying and distributing Products and carrying on
business solely on its own behalf and is in no way authorized to make any
contract, agreement, warranty or representation on behalf of Manufacturer, or to
create any obligation, express or implied, on behalf of Manufacturer, other than
as expressly set out herein.
27. NO ASSIGNMENT. This Agreement may not be assigned, sold or encumbered
without the prior written consent of the other party. Any purported assignment,
sale or encumbrance shall be void and of no force and effect.
28. DISPUTE RESOLUTION. The parties agree to resolve disputes without litigation
and in accordance with the dispute resolution and arbitration provisions set out
in SCHEDULE F hereto which are hereby incorporated herein as part of this
Agreement.
29. MISCELLANEOUS.
(a) INTERPRETATION. Wherever the singular or masculine is used in this
Agreement the same shall be interpreted as including the plural, feminine or
neuter wherever the context so
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requires. The captions and headings are inserted for convenience of reference
only, form no part of this Agreement and in no way define, describe or limit the
scope or intent of this Agreement or any provision hereof.
(b) FURTHER ACTS. In order to fulfill the intent of the parties hereto,
they shall execute from time to time all reasonable documents and do all such
things as may be necessary or desirable to more completely and effectively carry
out the terms and intentions of this Agreement, to implement it in all respects
or to fulfill consequential aspects thereof, which any other party may request
from time to time at the expense, if any, of the party so requesting.
(c) SEVERABILITY. If a Court or duly constituted arbitrator would
declare that all or any portion of the provisions of this Agreement are void or
unenforceable in the circumstances, this Agreement shall, automatically and
without further act on the part of the parties hereto, be reduced in scope to
such an extent as to be valid and enforceable in the circumstances. The
invalidity of any provision of this Agreement or any covenant contained herein
on the part of any party shall not affect the validity of any other provision or
covenant herein, which shall remain in fun force and effect
(d) GOVERNING LAW. Subject to the procedures set out in the Dispute
Resolution provisions set out in Schedule F, this Agreement shall be governed by
and construed pursuant to and in accordance with, including the enforcement
thereof, the laws of the State of California and the laws of United States of
America applicable therein without reference to conflict of laws principles and
excluding the United Nations Convention on Contracts for the International Sale
of Goods. Any disputes under this Agreement shall be subject to the exclusive
jurisdiction and venue of the California state courts and the Federal courts
located in Orange County, California, and the parties hereby consent to the
personal and exclusive jurisdiction and venue of these courts.
(e) ENTIRE AGREEMENT. This Agreement, including the Schedules attached
hereto, and the Assembly Agreement, constitute the entire agreement between the
parties. reflects all the agreements, understandings, representations,
conditions and warranties by and between the parties, and any prior
understanding or representation of any kind preceding the Effective Date shall
not be binding upon either party unless expressly stated herein in writing or
clearly and expressly incorporated by reference herein in writing. The execution
of this Agreement has not been induced by, nor do any of the parties hereto rely
upon or regard as material, any representations or promises whatever except to
the extent expressly granted herein in writing or clearly and expressly
incorporated by reference herein in writing. No party shall be liable for any
representation made or omitted unless it is expressly set forth in this
Agreement.
(f) AMENDMENT OF THIS AGREEMENT. Any amendment or modification of this
Agreement or additional obligation assumed by any party in connection with this
Agreement shall be binding only if evidenced in writing signed by each party or
an authorized representative of each party. Any alteration, amendment or
qualification of this Agreement shall be null and void and shall not bind any
party unless made in writing.
(g) NOTICE. All notices contemplated or required to be given hereunder
shall be effective if sent by prepaid mail, facsimile transfer or delivered
personally to any of the parties at
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the address listed below or at such other address as the party to whom such
notice is to be given otherwise directs in writing. Any notice delivered
aforesaid shall be effective on the date of facsimile transfer or delivery and
any notice mailed as aforesaid shall be effective three (3) business days after
the mailing thereof, provided that where interruption of mail services is likely
by reason of any strike or other labor dispute, notice shall be by personal
delivery only to the person or to the address as aforesaid.
To Manufacturer at: c/o 7717-67 Street
Edmonton, Alberta Canada T6B 2K4
Attn: Gerald Vanberg
Fax: (780) 448-3610
With a copy to: Nichols & Company
#2020, 10123-99 Street
Edmonton, Alberta Canada T5J 3H1
Attn: Neil W. Nichols
Fax: (780) 497-7799
To Master Distributor at:
Lee W. Melody
1431 S. Village Way
Santa Ana, CA 92705
Fax: (714) 558-0370
With a copy to: Jeremy D. Glaser, Esq.
Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
Fax: (619) 453-3555
(h) TIME OF ESSENCE. Time shall be of the essence of this Agreement.
(i) WAIVER. Any waiver of any term, provision or condition of this
Agreement to be effective must be in writing and signed by the party waiving
such term, provision or condition stating with specificity the particular
provision or provisions being waived and for what event or period of time. No
waiver of any one or more provisions shall be deemed to be a further waiver or
continuing waiver of such terms, provisions or conditions or any other term
provisions or conditions unless the waiver specifically so states.
(j) FORCE MAJEURE. No right of any party hereto shall be prejudiced by
events beyond a party's reasonable control and without negligence of the party
charged with performance hereunder, including without limitation pressures or
delays from outside parties, labor disputes, the exigencies of nature,
governments, regulatory authorities and acts of God, particularly as they may
affect the performance of this Agreement. All times herein provided for shall be
extended by the period necessary to cure any such event and the party affected
shall use all reasonable means to do so promptly.
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(k) WARRANTY OF AUTHORITY. Any such execution of this Agreement is a
representation and warranty to the other party that the party so signing has
full authority in all requisite capacities to do so.
(l) ENUREMENT. This Agreement shall be binding upon and enure to the
benefit of the Parties and their respective successors and permitted assigns.
(m) COUNTERPARTS AND FAX COPIES. This Agreement may be executed in
counterpart and may be delivered by fax copies thereof and when the whole is so
executed and delivered it shall constitute a valid and binding agreement among
the parties so executing and delivering the agreement effective as of the
Effective Date. Fax Signatures shall be deemed to be accepted as original.
(n) ATTORNEYS' FEES. In any proceeding between the parties arising from
or related to the interpretation, construction or enforcement of this Agreement,
subject to the Dispute Resolution provisions set forth in SCHEDULE F, the
prevailing party shall, in addition to recovering all costs of suit, be entitled
to an award of actual attorneys' fees incurred, whether in an original action or
on appeal.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
as of the day and year first above written.
GLOBAL LEAK DETECTION (U.S.A.), INC.
s/ Gerald Vanberg
----------------------------------------
Gerald Vanberg, President
MOTORVAC TECHNOLOGIES, INC.
s/ Lee W. Melody
----------------------------------------
Lee W. Melody, President
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SCHEDULES AND EXHIBITS NOT INCLUDED
1.