Exhibit 10.5
DISTRIBUTORSHIP AGREEMENT
THIS AGREEMENT (Agreement) is entered into this 12th day of July, 2005, by
and between Reclamation Consulting and Applications Inc., a Colorado, USA
corporation ("RCAI") and Mark Lang ("Distributor")
RECITALS
WHEREAS, RCAI manufactures and distributes the Products (as defined below).
WHEREAS, RCAI desires to appoint Distributor to promote, market, sell,
distribute and service the Products and Distributor desires to promote, market,
sell, distribute and provide customer service for the Products in the Territory,
defined herein below.
THEREFORE, in consideration of the mutual representations, agreements and
conditions contained in this Agreement, RCAI and Distributor hereby agree as
follows:
SECTION 1: DEFINITIONS
1.1 `Products' means asphalt, cement and related product release agents,
cleaners and lubricants, in liquid form which are used in the construction and
similar industries and which are sold under the Trademarks and which are
non-toxic, non-explosive and environmentally compatible. New Products and
markets developed and introduced by RCAI over the term of this Agreement may be
sold by Distributor on a non-exclusive basis, unless otherwise agreed to in
writing.
1.2 `Territory' means the geographic area of Colorado.
1.3 `Effective Date' means the date first written above which will be
concurrent with the date upon which an authorized representative of the last
party to sign this Agreement does so.
1.4 `Agreement Year' means any partial or whole calendar year, commencing
with the Effective Date hereof, or any such subsequent period during the
continuance of this Agreement.
1.5 `Trademarks' means all trademarks, trade names, designs, logos or other
protected or protectable commercial symbols used by RCAI to identify RCAI as the
source of the Products to which RCAI grants Distributor the right of
distribution hereunder and as set forth in Schedule A attached hereto.
1.6 `Documentation' means any promotional, advertising, technical or
training materials developed and furnished by RCAI to Distributor hereunder,
specifically intended for the public, including customers and potential
customers and concerning the promotion, distribution, application or handling of
the Products.
1.7 `Distributor' means the Distributor, and any sub-distributor or
subcontractor, agent, representative, successor or assign to whom any of the
rights or obligations of Distributor herein are assigned or delegated upon the
prior written consent of RCAI as required under this Agreement.
1
SECTION 2: GRANT OF EXCLUSIVE DISTRIBUTORSHIP
2.1 As of the Effective Date of this Agreement and for the term hereof,
RCAI hereby appoints Distributor and Distributor hereby accepts the exclusive
appointment to promote, sell distribute and provide customer service for the
Products under the Trademarks in the Territory under the terms and conditions of
this Agreement.
2.2 The exclusive right granted herein will apply provided Distributor uses
all reasonable efforts to achieve the Minimum Sales Objectives in the Territory
for each Agreement Year during the term hereof as further described in Section 4
below.
2.3 During the term hereof, Distributor will refrain from directly
promoting, selling or servicing the Products outside the Territory by soliciting
orders, establishing or operating any branch or facilities for said purposes
outside the Territory, or taking any other direct action to obtain customer
orders outside of the Territory without prior written consent from RCAI.
2.4 RCAI will use reasonable efforts to refer promptly to Distributor any
customer inquiry or order originating from the Territory and to advise
Distributor of such inquiries. However, Distributor will not be liable to RCAI
for compensation of any kind in the event of the sale, distribution or servicing
of Products by RCAI in the Territory.
2.5 The rights of Distributor to promote, distribute or provide customer
service for the Products include the right of sub-distribution or subcontract,
upon the prior written consent of RCAI such consent not to be unreasonably
withheld or delayed. All other rights not expressly granted in this Agreement to
Distributor are reserved to RCAI.
SECTION 3: AUTHORIZED USE OF TRADEMARKS
3.1 As of the Effective Date and for the term hereof, RCAI hereby grants
Distributor the nontransferable right to use the Trademarks set forth in
Schedule A hereto in connection with the promotion, distribution and servicing
of the Products in the Territory. RCAI may upon reasonable prior notice in
writing to Distributor amend Schedule A from time to time.
3.2 Distributor will comply with all prior reasonable written RCAI
requirements for affixing or using the Trademarks on or in connection with the
Products.
3.3 During the term hereof, Distributor will represent to customers and
other third parties that Distributor is an authorized independent distributor of
RCAI and the Products for the Territory.
SECTION 4: MINIMUM SALES OBJECTIVE
4.1 The parties acknowledge that the minimum volume of sales for the
Territory (`Minimum Sales Objective') for each Agreement Year will be as
described in Schedule B attached.
4.2 Distributor will use all reasonable efforts to achieve the Minimum
Sales Objective in any given Agreement Year. In particular, Distributor will:
a) actively promote, distribute and service the Products in the
Territory;
b) diligently pursue sales leads provided by RCAI;
c) initiate sales programs, campaigns, surveys, promotions and
advertising programs;
d) comply with all provisions of this Agreement on training and
advertising; and
e) respond promptly and fully to any of RCAI's reasonable written
requests for information on customers or market conditions in
the Territory.
2
f) reasonably assist RCAI at RCAI's expense, when requested, in the
development and testing of new products developed by RCAI
SECTION 5: SALES TRAINING & SUPPORT
5.1 Upon execution of this Agreement, RCAI will provide Distributor with
one (1) spray applicator system suitable for demonstration projects, 300 gallons
of Alderox(R) product, all required sales, marketing and promotional materials,
and a minimum of three (3) days product and sales training.
5.2 RCAI will provide distributor with sales and marketing support
including providing Distributor with promotional materials, participation in
trade-shows, technical support, etc.
SECTION 6: TERMS OF DELIVERY
6.1 Unless otherwise agreed, RCAI will deliver all Products for which it
accepts purchase orders FOB RCAI's facility at Salt Lake City, UT, at which time
and place title to the Products and risk of loss of the Products will pass to
Distributor.
6.2 Distributor is responsible for all costs and risks of transportation,
insurance, sales, use or other taxes, and licenses or approvals required for the
transport, promotion, distribution and sale of the Products in the Territory,
and any loss or damage sustained.
SECTION 7: TERMS OF PAYMENT
7.1 Payments made to RCAI from Distributor will reflect the prices set
forth on RCAI's Price List for the Products, attached hereto as Schedule C.
7.2 RCAI may amend the Product/Price List of Schedule C from time to time,
any changes to said prices to be effective upon ninety (90) days prior written
notice by RCAI to Distributor. Any price changes will be based on increases in
the cost of commodities, manufacturing and/or business operations.
7.3 Distributor will tender payments to RCAI in USD either in check, money
order, bank transfer or other unconditional methods of payment agreed by RCAI
and shall pay the entire amount due for the Products upon acceptance of those
Products by Distributor.
3
SECTION 8: QUALITY CONTROL, SAFETY STANDARDS
8.1 In order to ensure that a high standard of reliability, application and
handling of the Products is maintained and that proper use of the Trademarks in
connection with the Products is made, RCAI will exercise in a reasonable manner
its rights of supervision and quality control over Distributor's provision of
customer service for the Products during the term of this Agreement.
8.2 Distributor will:
a) employ and maintain sufficient personnel to perform the
obligations of Distributor herein and ensure their adequate
training in accordance with this Agreement;
b) provide customers with adequate information and training on the
safe and effective handling of the Product(s) and their
applications;
c) furnish all market development information reasonably requested
by RCAI in writing concerning the customers of Products sold by
Distributor; and
d) notify RCAI by phone, confirming in writing or confirming by
e-mail, as promptly as practicable after it comes to
Distributor's attention, of any customer complaints regarding
the Products.
e) advertise & publicize the Products in the Territory in
accordance with any reasonable RCAI advertising and promotional
guidelines set forth in any Documentation or other materials, or
as provided during any training or market development assistance
by RCAI.
SECTION 9: LIMITED WARRANTIES AND INDEMNIFICATION FOR PRODUCTS
9.1 RCAI hereby warrants to the Distributor:-
9.1.1 that all of the Products are completely non-hazardous, 100%
bio-degradable and are made with a blend of all-natural materials and are not
toxic or environmentally hazardous and that the manufacture of the Products is
fully compliant with all requirements of any governmental agency in the United
States or in the Territory, including specifically, but not limited to, any
environmental laws.
9.1.2 that neither the sale nor use of the Products shall cause the
Distributor to infringe any intellectual property rights owned or controlled by
a third party.
9.1.3 that RCAI shall, at time of delivery of the Products, have legal
title and rights of ownership of the Products and otherwise has all necessary
rights, title and interest to grant the rights set forth herein to Distributor,
free of any claims, liens or conflicting rights in favor of any third parties.
9.2 RCAI hereby warrants with respect to all Products delivered to
Distributor pursuant to the terms and conditions hereof that all such Products
will be suitable for the applications intended, provided they are used as is
intended from the date of delivery to Distributor until one (1) year from the
purchase date by the end user.
4
9.3 Except as provided at Section 9.6 below, RCAI's entire liability and
Distributor's customers' exclusive remedy is limited to either the replacement
without charge, or refund of the sale price of any Products which prove not to
function as intended within the warranty period.
9.4 RCAI will not be liable for the replacement of Products where it can be
objectively demonstrated that those Products have been subjected to misuse,
accident, alteration, neglect or damage.
9.5 The warranties provided herein are the only warranties made by RCAI and
excludes all other express and implied warranties including those of
merchantability and fitness of the Products for a particular purpose.
9.6 RCAI shall defend, indemnify and hold Distributor harmless from any
claims, actions, costs, expenses (including reasonable Attorney's fees), losses,
damages or liability incurred because of the actual or alleged violation of any
regulation or law as mentioned in Section 9.1 and for any actual or alleged
infringement as mentioned in Section 9.2. This indemnification shall not apply
unless:
9.6.1 The Distributor shall first notify RCAI in writing of any such
allegation;
9.6.2 The Distributor shall make no admissions without RCAI's consent;
and
9.6.3 The Distributor shall allow RCAI to conduct and/or settle all
negotiations and litigation and shall give RCAI all reasonable assistance in
relation thereto (all the costs incurred or recovered in such negotiations and
litigation being for RCAI's account).
SECTION 10: DISTRIBUTOR'S LIABILITY
10.1 Distributor will limit its representations on warranty with regard to
the Products to correspond to the provisions of this Agreement.
SECTION 11: PROPRIETARY RIGHTS
11.1 Distributor on behalf of itself, its officers, employees, agents,
representatives, and assigns:
a) acknowledges that RCAI is the owner of all proprietary rights in
the Products and the Trademarks, to which RCAI grants
Distributor the rights to distribute and use pursuant to the
provisions of this Agreement; and
b) will knowingly refrain from any unauthorized or infringing use
of the Products, Trademarks or any Documentation for the term
hereof and thereafter.
11.2 Promptly after Distributor learns of any suspected or actual
unauthorized third party use of the Products, Trademarks or Documentation,
Distributor will notify RCAI of said unauthorized use or disclosure.
11.3 Should RCAI decide to take any action to defend against or terminate
said infringing or unauthorized use of its proprietary rights in the
Distributor's Territory, Distributor will, upon RCAI's request, render any
reasonable assistance RCAI may require, at RCAI's expense.
5
SECTION 12: TERM AND TERMINATION
12.1 This Agreement will commence on the Effective Date hereof and will
continue for an initial term of one (1) year (Initial Term). This Agreement may
be renewed for one or more successive terms of 1 year each (Successive Term) by
90 days prior written notice of RCAI to Distributor. At the time of renewal
Distributor will:
a) have complied with its reasonable efforts obligation to achieve
the Minimum Sales Objective for the Agreement Year concerned;
and
b) have complied with all other obligations of this Agreement to
RCAI's reasonable satisfaction.
12.2 RCAI may terminate this Agreement at any time during the Initial Term
or any Successive Term by giving written notice to Distributor, notice effective
upon the date given, in the event of any one or more of the following:
a) the failure of Distributor to use its reasonable efforts to
achieve the Minimum Sales Objective required hereunder;
b) Distributor's breach of any material obligation concerning
RCAI's proprietary rights;
c) Distributor's material breach of any obligation or
representation, other than those of paragraphs a) and b) above;
d) Distributor's assignment of this Agreement or any of rights
granted hereunder by Distributor by agreement or operation of
law, without the prior written consent of RCAI;
f) any legal or business transaction or event which causes a change
in majority ownership of Distributor and effectively results in
an assignment of this Agreement to owners substantially
different from the owners of Distributor at the time of
execution of this Agreement without the prior written consent of
RCAI; and
g) any insolvency or inability of Distributor to pay debts as and
when due, or the initiation or pendency of any proceeding
involving the insolvency, bankruptcy, reorganization, or
liquidation of Distributor.
12.3 In the event that RCAI claims Distributor is in breach of any
provision of this Agreement, it shall give three (3) months prior written notice
of such deficiency and Distributor shall have a period of three (3) months from
date of receipt of aforesaid notice to cure said deficiency.
SECTION 13: EFFECTS OF TERMINATION
13.1 Subject to the terms of this Agreement, upon valid termination,
Distributor will immediately discontinue the promotion, distribution and
servicing of the Products and will cease to represent itself as an authorized
Distributor of RCAI.
6
13.2 Distributor will further discontinue any use of RCAI's Trademarks and
any Documentation. At RCAI's option, Distributor will certify destruction of
Documentation.
13.3 Distributor will refrain from using any name, mark or logo which may
create a likelihood of confusion with RCAI's Trademarks and will further refrain
from copying in whole or in part any of the Confidential Information or
Documentation.
13.4 Unless termination occurs for cause, Distributor may sell any Products
remaining as of the date of termination, provided it does so within 30 days of
the date of termination. All other Products remaining thereafter shall be
purchased by RCAI from Distributor at either Distributor's blending cost which
is the total of the raw materials cost of the Product and the labor costs to
blend) or the cost of the Products.
13.5 Nothing herein will relieve or extinguish any of Distributor's payment
obligations under any provision of this Agreement. Nevertheless, in the event of
insolvency or refusal to pay for any reason by Distributor, RCAI may take
reasonable actions to mitigate its losses by sale of the Products ordered to
other distributors or customers.
13.6 Distributor will offer to RCAI and RCAI may elect to assume the rights
and obligations of any agreements between Distributor and its customers for the
service of the Products, effective as of the date of termination or expiration.
13.7 In no event will termination or expiration with or without cause of
this Agreement entitle Distributor to any compensation by RCAI on any grounds
whatsoever.
SECTION 14: GOVERNING LAW, ARBITRATION, ATTORNEY'S FEES
14.1 Governing Law. This Agreement together with the Schedules hereto and
any valid agreement subsequently entered into between the parties regarding the
subject matter hereof will be governed and construed in accordance with the laws
of California, United States of America.
14.2 Dispute Resolution. In the event of any controversy or claim arising
out of or relating to this Agreement, the parties agree to try in good faith to
settle the claim by mediation administered by the American Arbitration
Association (`AAA') before resorting to arbitration. Any controversy or claim
that cannot be resolved by mediation will be settled by arbitration administered
by the AAA in Orange County, California. Judgment on the award rendered by the
arbitrator will be final and may be entered in any court having jurisdiction
thereof.
14.3 In the event of unauthorized use or disclosure of the Products,
Trademarks, or Documentation, Distributor acknowledges that RCAI will be
irreparably harmed and, as there is no adequate remedy at law, RCAI may seek and
obtain injunctive relief against Distributor for any harm arising from or
relating to said unauthorized use or disclosure. Moreover, should the interim
measures for injunctive relief under the AAA Rules prove inadequate, RCAI may
seek injunctive relief, specific performance or any other equitable relief from
any competent court having jurisdiction.
14.4 Attorney's Fees. In the event an action or arbitral proceeding is
instituted relating to this Agreement, the party which the arbitrator or court
of competent jurisdiction shall deem to have substantially prevailed therein
shall be entitled to recover all costs, expenses, and attorney's fees adjudged
by such arbitral tribunal or court.
7
SECTION 15: GENERAL PROVISIONS
15.1 Relationship of the Parties. Nothing in this Agreement will be
construed as creating a partnership or joint venture between the parties or
making Distributor a shareholder, agent, employee or other representative of
RCAI, but in all of its operations hereunder Distributor will be an independent
contractor, conduct its business at its own cost and expense and make no
representation, express or implied, that it is an employee, partner,
shareholder, joint venture or other representative of RCAI. Distributor will
have no authority to make any representation or warranty on behalf of RCAI,
except as specified in this Agreement.
15.2 Force Majeure. In the event that either party is rendered wholly or
partially unable to carry out its obligations under this Agreement due to
reasons beyond its control (including, without limitation, acts of God,
industrial disputes, war or civil disturbances, fire, floods, storms,
earthquakes, landslides, acts of any governmental authority or agency, embargoes
or unavailability of equipment or transport), the failure to so perform will be
excused and not constitute default hereunder during the continuation of the
intervention of such force majeure. The party affected shall give prompt notice
to the other party, shall take all reasonable steps to eliminate the intervening
event and shall resume performance as promptly as is practicable.
15.3 Assignment. This Agreement will be binding upon and inure to the
benefit of RCAI, its successors and assigns. This Agreement will not be
assignable or transferable by Distributor unless prior written consent is
obtained from RCAI (such consent not to be unreasonably withheld or delayed) and
provided that the assignee or transferee agrees in writing to be bound by all
the terms, condition and obligations of this Agreement by which Distributor is
bound and Distributor remains subject to the obligations on confidentiality and
proprietary rights set forth herein. Any assignment of this Agreement or any
rights or obligations arising therefrom without RCAI's prior written consent
shall be deemed void.
15.4 Severability. If any provision of this Agreement is held to be
invalid, illegal, or unenforceable by a court or other tribunal of competent
jurisdiction, this Agreement will be considered divisible as to such provision
and the remaining provisions hereof will remain valid and binding.
15.5 No Waiver. Failure or delay by either party to exercise or enforce any
term, right, power or privilege of this Agreement will not operate as a waiver
thereof nor will any single or partial exercise of any term, right, power or
privilege preclude any other or further exercise thereof.
15.6 Entire Agreement. This Agreement, and all schedules hereto form the
entire agreement of the parties hereto with respect to the subject matter
hereof. No modification, renewal, extension or waiver of this Agreement or any
of its provisions will be binding unless made in writing and signed by each
party's duly authorized representative, except as to the Schedules attached
hereto, which RCAI may amend from time to time during the term hereof.
15.7 Survival. Neither termination nor expiration will affect any right or
obligation of either party hereunder which by its terms continues beyond the
effective date of termination or expiration.
15.8 Notices. Unless otherwise provided herein, any notice or other written
communication required or permitted in connection with this Agreement will be
properly given when made in writing and sent by first-class registered or
certified airmail, return receipt requested, or by courier or other personal
delivery service, and properly addressed to the appropriate party at the address
set forth below, until changed by written notice. Notice shall be effective when
given, provided it is given in accordance with this Section 15.8.
8
If to RCAI:
Gordon Davies
RCAI
23832 Rockfield Blvd., Ste. 275
Lake Forest, CA 92630
If to Distributor: ________________________________
________________________________
________________________________
15.9 Third Party Rights. Except insofar as this Agreement expressly
provides that a third party may in his own right enforce a term of this
Agreement, a person who is not a party to this Agreement has no right to rely
upon or enforce any term of this Agreement. Neither party may declare itself a
trustee of the rights under this Agreement for the benefit of any third party
IN WITNESS WHEREOF, RCAI and Distributor have each caused this Agreement to
be executed on its behalf by it's duly authorized officer as of the date first
written above.
RCAI DISTRIBUTOR
By: /s/ GORDON DAVIES By: /s/ MARK LANG
----------------- -------------
Gordon Davies Mark Lang
President