Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to a confidentiality request. Omissions are designated [*****]. A complete version of this exhibit has been filed separately...
Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to a confidentiality request. Omissions
are designated [*****]. A complete version of this exhibit has been filed
separately with the Securities and Exchange Commission with the confidentiality
request.
EXCLUSIVE
RESELLER AND
This
Exclusive Reseller and Market Development Agreement (“Agreement”) is entered
into between Enerteck Chemical Corporation (“ECC”), and Custom Fuel Services
Inc. (“Custom Fuel”) as reseller, to be effective as of the date set forth on
the signature page hereof (the “Effective Date”). ECC and Custom Fuel agree as
follows:
RECITALS:
WHEREAS,
ECC has certain proprietary knowledge of the product EnerBurn and expertise
relating to the commercial application of the product in diesel engines to
improve fuel economy, increase engine life, and increase engine performance
(the
“Technology”).
WHEREAS,
Xxxxxx Barge Company desires to use EnerBurn in their Lower Mississippi River
Fleet and EC desires to make Custom Fuel the exclusive reseller on the Western
Rivers of the United States. For the purposes of this Agreement, “Western Rivers
of the United States” means the Mississippi River, its tributaries, South Pass,
and Southwest Pass, to the navigational demarcation lines dividing the high
seas
from harbors, rivers and other inland waters of the United States, excluding
the
Intra Coastal Waterway.
NOW,
THEREFORE, ECC and Custom Fuel hereby agree as follows:
|
1.
|
Definition
of Market
|
For
purposes of this Agreement, the term “Market” shall mean Western Rivers of the
United States excluding the Intra Coastal Waterway.
|
2.
|
Appointment
of Reseller
|
In
consideration of Custom Fuel’s activities promoting ECC’s Product and investment
in marketing programs to develop substantial sales in the Market for the
TECHNOLOGY, ECC hereby appoints Custom Fuel to serve as the exclusive reseller
in the Market of the TECHNOLOGY and the Product, subject to the terms and
conditions set forth herein.
| a. |
Term
|
The
initial term of this Agreement shall be three years (“Initial Term”). If this
Agreement has not been terminated earlier, on the third anniversary of the
Effective Date (such third anniversary, together with each successive
anniversary of the Effective Date in which the Agreement remains in effect,
collectively referred to as the “Renewal Date”) it shall renew automatically for
successive one year terms. (The Initial Term and each successive one year term
hereafter referred to collectively as the “Term”).
|
(i)
|
ECC
shall have the right to terminate this Agreement at any time if Custom
Fuel has defaulted under the terms hereof and such default remains
outstanding and uncured on and after the thirtieth day following
Custom
Fuel’s receipt of written notice of such
default.
|
|
(ii)
|
Custom
Fuel shall have the right to terminate this Agreement at any time
if ECC
has defaulted under the terms hereof and such default remains outstanding
and uncured on and after the thirtieth day following ECC’s receipt of
written notice of such default.
|
|
(iii)
|
This
Agreement is terminable by either party upon sixty (60) days prior
written
notice to the other party.
|
|
(iv)
|
Custom
Fuel and Xxxxxx Barge Company will not use this agreement to retain
exclusive use of solely EnerBurn for its own
fleet.
|
| 3. |
Exclusive
Appointment
|
ECC
agrees that, throughout the term of this Agreement, Custom Fuel shall be the
exclusive authorized reseller of the Products and the TECHNOLOGY in the Market.
The foregoing notwithstanding, EC shall not be in breach of this Agreement
if,
unknown to EC, a purchaser of the TECHNOLOGY or the Products for use or resale
outside the Market also uses the TECHNOLOGY in part for diesel performance
enhancement.
|
(i)
|
ECC
will actively enforce the exclusive market rights granted
hereunder.
|
|
(ii)
|
ECC
will not attempt to circumvent Custom Fuel and sell the Products
or the
TECHNOLOGY directly to any end user in the Market. ECC additionally
will
not compete against Custom Fuel within the Market during the Term
of this
Agreement.
|
|
(iii)
|
However
if there is a potential customer who refuses to purchase through
Custom
Fuel, and wishes to purchase directly from
ECC.
|
2
-ECC
shall with Custom Fuel’s knowledge and approval effect the sale at a wholesale
price of $[*****]
per
gallon of product to other reseller’s in the market. Other end user’s will be
charged the retail price of $[*****].
-If
the
product is sold through Custom Fuel, Custom Fuel retains all profit over and
above $[*****].
-If
ECC
sells product at $[*****]
per
gallon ECC will pay Custom Fuel $[*****]
per
gallon sold. ECC retains $[*****].
-
If ECC
sells product at $[*****]
per
gallon ECC will pay Custom Fuel $[*****]
per
gallon sold. ECC retains $[*****].
|
(iv)
|
ECC
shall provide 100% of the Products required by Custom Fuel for resale
in
the Market.
|
|
b.
|
Support
for Market Development
|
ECC
agrees that it shall provide Custom Fuel with support to develop the commercial
demand for the Technology and product within the Market. In furtherance of
this
commitment, ECC agrees that it shall, without limitation:
|
(i)
|
Provide
consulting statistician services to Custom
Fuel;
|
|
(ii)
|
Assist
Custom Fuel in marketing meetings and presentations at times and
places
agreed upon by ECC and Custom Fuel;
|
|
(iii)
|
Provide
Custom Fuel with performance assessment
methodology.
|
| 4. |
Product
Pricing
|
During
the Initial Term, Custom Fuel agrees to pay ECC the price of $[*****]
per
gallon FOB manufacturing point for the Product. The parties agree that the
price
can be adjusted at the end of the first year from the date of this agreement.
The price per gallon shall be adjusted no more than [*****] percent
([*****]%),
based
upon ECC’s demonstrated costs. Any such increase in the price per gallon shall
also adjust the pricing for the Products sold by ECC under the terms of Section
3 hereof so as to also incrementally increase the payment to Custom Fuel from
ECC under Section 3.
| 5. |
Product
Quality
|
ECC
agrees that it shall manufacture the Product to it’s proprietary specifications
and warranty the quality of it’s product.
3
| 6. |
Confidentiality
|
| a. |
Confidential
Information Defined
|
Both
parties shall maintain as confidential all information relating
to their respective products, personnel, customers, business operations,
financial condition,
supplied
by either party separately and/or developed jointly by the parties. Both parties
further agree to safeguard as confidential all price books, customers’ lists,
quotations, discount schedules, product formulations and engineering data,
in
any form, and will not permit their use in any way which would be detrimental
to
either party. Both parties also agree to surrender all confidential data to
other party on request or on cancellation or termination of this agreement,
and
will not retain copies or memoranda of said information in any form whatsoever.
This clause shall remain effective even after the cancellation or termination
of
this agreement for any reason.
|
b.
|
Use
of Confidential Information in Marketing
Activities
|
ECC
agrees and consents to the use of Confidential Information by Custom Fuel for
purposes of marketing the Product and the TECHNOLOGY within the Market, subject
to the following terms and conditions:
|
(i)
|
ECC
shall be provided with copies, in advance, of all written advertising
and
marketing materials that characterize the specifications, or assess
the
performance qualities, of the Products or otherwise disclose Confidential
Information;
|
|
(ii)
|
ECC
shall be entitled to utilize any Confidential Information relating
to its
own proprietary products, business operations or financial condition
for
all marketing and other purposes; except that ECC shall not disclose
any
Confidential Information for the purpose of competing with, or assisting
any other person to compete with, Custom Fuel within the Market;
and
|
|
(iii)
|
Custom
Fuel shall be entitled to utilize any Confidential Information relating
to
its own proprietary products, business operations or financial condition
for all marketing and other
purposes.
|
|
c.
|
Non-Disclosure
of Confidential
Information
|
Throughout
the term of this Agreement, and for twenty-four (24) months thereafter, neither
ECC nor Custom Fuel shall disclose any Confidential Information to any person,
and shall limit access to the Confidential Information to only those persons
having need during the normal course of their employment, except:
4
|
(i)
|
As
permitted in Section 5(c) above;
|
|
(ii)
|
Upon
the written consent of the non-disclosing
party;
|
|
(iii)
|
Where
the disclosing party can demonstrate, by written evidence, that such
Confidential Information:
|
-Is
or
becomes part of the public domain through no act or omission of the disclosing
party;
-Is
in
the possession of the receiving party prior to the disclosure, as evidenced
by
the receiving party’s business records;
-Has
been
disclosed to the receiving party by a third party having no obligation of
confidence to the disclosing party; or
-Is
developed independently by employees of the receiving party, as evidenced by
the
receiving party’s business records; or
|
(iv)
|
Where
disclosure of the Confidential Information is required by law or
governmental request, where the parties have reviewed such governmental
request in advance of disclosure and where the requirement of such
disclosure can not be ameliorated by the reasonable efforts of the
disclosing party.
|
The
parties agree that Confidential is not within, and does not come within, the
public domain merely because features of the Confidential Information may be
found separately within the public domain.
|
d.
|
Remedies
for Disclosure
|
Each
ECC
and Custom Fuel agree that a breach of its respective obligations under this
Section 5 shall cause irreparable injury to the non-disclosing party, and that
the non-disclosing party shall have the right to immediate injunctive relief
restraining the disclosing party from further breaches of this Section 5.
|
e.
|
Return
of Confidential
Information
|
Upon
the
termination of this Agreement, all Confidential Information shall be returned
to
the disclosing party. The provisions of this Section 5 shall survive termination
of the Agreement.
|
7.
|
COMPETITION.
|
Other
than any existing agreements or alliances that Custom Fuel, or its affiliates,
has in place as of the date hereof, Custom Fuel agrees that it shall (a) not
furnish services substantially similar to or that competes with the services
being provided by Custom Fuel to EnerTeck pursuant to this agreement to any
third party in competition with EnerTeck, and (b) not directly engage in, nor
enter into a joint venture which engages in, the particular
business activities offered by EnerTeck in the territory. The restrictions
placed on Custom Fuel under this Section 6 shall be limited to activities and
competitors related solely to fuel additives.
5
|
8.
|
INDEMNITY
|
EnerTeck
agrees to protect, defend, indemnify and hold harmless and release Custom Fuel,
its parent, subsidiary and affiliated companies, its officers, directors and
employees, from and against any manner of loss, liability, claim, damage,
penalty or cost, including but not limited to, reasonable attorneys’ fees
arising in connection with this Agreement or the design, specifications, design
or manufacture of EnerTeck’s products.
Custom
Fuel agrees to protect, defend, indemnify and hold harmless and release
EnerTeck, its parent, subsidiary and affiliated companies, its officers,
directors and employees, from and against any manner of loss, liability, claim,
damage, penalty or cost, including but not limited to, reasonable attorneys’
fees arising in connection with this Agreement or that is asserted by any third
party to the extent that such loss is caused by any grossly negligent or willful
misconduct of Custom Fuel.
|
9.
|
Miscellaneous
|
|
a.
|
Governing
Law. THE
INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED
BY THE
INTERNAL LAWS OF THE STATE OF
TEXAS.
|
|
b.
|
Amendment.
This
Agreement shall not be amended except in a writing signed by both
parties
hereto.
|
|
c.
|
Assignment.
This Agreement and the rights and obligations of the parties hereunder
shall not be assigned to any person except upon the written consent
of the
non-assigning party.
|
|
d.
|
Relationship
of the Parties. This
Agreement shall not operate to create a relationship of partnership,
joint
venture or agency between the parties.
|
[Signature
Page to Follow]
6
SIGNED
to be effective the 11th day of July, 2005.
ENERTECK
CHEMICAL CORPORATION
By:
/s/ Xxxxxx Xxxxx
Name:
Xxxxxx Xxxxx
Title:
Chairman and CEO
CUSTOM
FUEL SERVICES INC.
By:
/s/ Xxxxx Xxxxxxxx
Name:
Xxxxx Xxxxxxxx
Title:
Vice President and General Manager
7
