Exhibit 10.7
DATED 2002
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(1) OVATION PRODUCTS CORPORATION INC
- and -
(2) LANCY WATER TECHNOLOGY LIMITED
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DISTRIBUTION AGREEMENT
relating to
water distillation systems
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TABLE OF CONTENTS
PAGE
1. INTERPRETATION........................................................1
2. APPOINTMENT...........................................................3
3. TERMS OF BUSINESS.....................................................3
4. SPECIFICATION OF THE PRODUCTS.........................................6
5. MANUFACTURE AND DELIVERY OF THE PRODUCTS..............................6
6. OBLIGATIONS OF THE DISTRIBUTOR........................................7
7. OBLIGATIONS OF THE COMPANY...........................................10
8. MODIFICATIONS........................................................11
9. PURCHASE TARGETS.....................................................11
10. DEFECTIVE PRODUCTS...................................................12
11. INDUSTRIAL PROPERTY RIGHTS...........................................12
12. GRANT OF PATENT LICENCE..............................................13
13. WARRANTIES...........................................................13
14. PAGE MISSING!!!!!!!!!!!!!............................................14
15. DEFENCE OF LICENSED PATENTS..........................................14
16. CONFIDENTIALITY......................................................15
17. DURATION AND TERMINATION.............................................15
18. CONSEQUENCES OF TERMINATION..........................................16
19. FORCE MAJEURE........................................................17
20. ENTIRE AGREEMENT.....................................................17
21. WAIVER OF RIGHTS BASED ON MISREPRESENTATION..........................18
22. ASSIGNMENT...........................................................18
23. RELATIONSHIP OF THE PARTIES..........................................18
24. COSTS AND EXPENSES...................................................18
25. EXECUTION...........................................................18
26. AMENDMENT AND WAIVER.................................................19
27. THIRD PARTY RIGHTS...................................................19
28. LAW AND JURISDICTION.................................................19
29. NOTICES..............................................................19
30. SURVIVORSHIP.........................................................19
31. PRECEDENCE AND INVALIDITY............................................20
SCHEDULE 1....................................................................26
Products......................................................................26
SCHEDULE 2....................................................................27
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TABLE OF CONTENTS
(continued)
PAGE
Territory and Market..........................................................27
SCHEDULE 3....................................................................28
List prices of Products.......................................................28
SCHEDULE 4....................................................................29
Minimum purchase targets and Time Period......................................29
SCHEDULE 5....................................................................30
Specification.................................................................30
SCHEDULE 6....................................................................31
Licensed Patents..............................................................31
SCHEDULE 7....................................................................32
Trade Xxxx....................................................................32
-ii-
THIS DISTRIBUTION AGREEMENT is made on 2002
BETWEEN
(1) OVATION PRODUCTS CORPORATION INC of 000 Xxxx Xxxxxxxxx Xxxx, Xxxxxx, XX
00000 XXX ("COMPANY")
(2) LANCY WATER TECHNOLOGY LIMITED (registered in England and Wales under
company number 4473542) whose registered office is at Xxxxxx Xxxxx,
Xxxxxxxx XX0 0XX, Xxxxxx Xxxxxxx ("DISTRIBUTOR")
1. INTERPRETATION
1.1 In this agreement unless the context requires otherwise:
"ALPHA PRODUCT" means 8 gallon per hour bottom drive compressor with
a non-cleanable heat exchanger.
"BETA PRODUCT" means 15-20 gallon per hour distiller top with a
clean inplace heat exchanger.
"IMPROVEMENT" means
(i) any invention developed or acquired with free rights of
disposal by the Company or the Distributor (as the case may
be) and used commercially by the Company or the Distributor
during the term of this agreement, the use of which in the
territory without a licence under the licensed patents would
be an infringement thereof; and/or
(ii) any change in the process involved in the construction of the
products or their specifications which has been developed or
acquired with free rights of disposal by the Company or the
Distributor (as the case may be) and used commercially by the
Company or the Distributor, during the term of this agreement,
which makes the products more efficient or adaptable or
enables them to be manufactured more cheaply or efficiently.
"INDUSTRIAL PROPERTY RIGHTS" means all know-how, copyright, trade
marks, patents, designs, information and documentation (including,
but not limited to, drawings relating to the manufacture, assembly
and use of the Products and sales and promotional literature
relating to the Products) other than the Trade Xxxx which in any way
relates to the Products.
"KNOW-HOW" means information, knowledge, experience, test results,
formulae, data, drawings and designs in the possession and free
disposal of the Company on the date of this agreement or which the
Company develops during the life of this agreement and which relate
to the construction, use, marketing or sale of the products.
"LICENSED PATENTS" means:
(i) the patents and patents applications particulars of which are
set out in schedule 6 hereto (or which are added to schedule 6
dining the term hereof);
(ii) any improvement patent filed pursuant to the provisions of
this agreement;
(iii) any application for utility models;
(iv) any continuations-in-part; and
(v) any patents granted on the applications set out in (i) to (iv)
above.
"MARKET" means the market for the Products within the Territory set
out in schedule 2 as amended from time to time pursuant to this
agreement.
"NET SELLING PRICE" means twelve thousand US Dollars (US$12,000).
"PRODUCTS" means those products currently being manufactured and
sold by the Company set out in schedule 1 together with any extras,
accessories, spare parts and maintenance equipment supplied with
them and all modifications, developments and improvements relating
to the Products introduced or acquired by the Company during the
continuance of this agreement.
"SALE" means, with respect to any Product, the sale, lease,
licensing, transfer or other disposal of that Product or any rights
in it (whether or not for value or at arm's length and whether or
not individually or in combination with any other Product(s]). For
the purposes of this agreement, in the context of sales made by the
Distributor on its own account of Products sold to it by the
Company, "Sale" shall include resale where the context admits and
"sell" and "sold" shall be construed accordingly.
"SHAREHOLDERS `AGREEMENT'" means an agreement entered into on the
date of this agreement between the Company, its independent
investors and Xxxxxx Xxx Plc.
"SPECIFICATION" means the specification of the Products set out in
schedule 5 or any other specification agreed in writing between the
parties.
"TERRITORY" means the territories set out in schedule 2 as amended
from time to time pursuant to this agreement.
"TRADE XXXX" means the name and xxxx details of which are set out in
schedule 7.
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1.2 Reference to a clause, paragraph or schedule is to a clause,
paragraph or schedule of or to this agreement unless the context
requires otherwise.
1.3 Reference to the singular includes the plural and vice versa, and
reference to a gender includes the other genders unless the context
requires otherwise. Reference to a "person" includes any individual,
firm, unincorporated association or body corporate.
1.4 Reference to a statutory provision includes a reference to that
statutory provision as from time to time amended, extended or
re-enacted and any regulations made under it.
1.5 The headings in this agreement are for ease of reference only and
shall not affect its construction or interpretation.
2. APPOINTMENT
The Company appoints the Distributor as its distributor in the Territory
for the Sale of Products in accordance with the terms and conditions of
this agreement. The Distributor's appointment under this agreement is
exclusive (but for the terms of Xxxxxxx Agreement (as defined below) in
relation to the Market and the Company shall not sell or appoint any other
distributor or agent for the Sale of Products in the Market within the
Territory. In addition, in the first year of the agreement the Distributor
shall be appointed on an exclusive project basis (but for the terms of
Xxxxxxx Agreement (as defined below)) in respect of government/statutory
third world clean up and manufacturing effluent following consultation
with Ovation on the terms of appointment for such project.
3. TERMS OF BUSINESS
3.1 All Sales of Products by the Company to the Distributor shall be
made in accordance with the terms of this agreement.
3.2 The Products shall be sold by the Company to the Distributor at the
list prices of the Company set out in schedule 3, as varied from
time to time by written agreement of the parties.
3.3 All prices for the Products exclude any charge for postage,
packaging, carriage, freight, any handling charges, insurance,
import or other duties and value added tax or other applicable sales
tax, all of which will be separately invoiced to, and paid by, the
Distributor and the Distributor hereby undertakes to indemnify the
Company accordingly in respect of any liability, expense, cost,
damage or other loss of whatever kind arising, directly or
indirectly, out of the Distributor's failure to make any such
payment.
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3.4 The Company shall allow the Distributor such discount for prompt
payment or otherwise as the Company may from time to time notify to
the Distributor provided that the Distributor is not then in breach
of any of the terms of this agreement.
3.5 The Distributor shall pay the Company for all Products sold to the
Distributor under this agreement within 45 days from date of the
relevant invoice. All payments for Products shall be made by the
Distributor in US dollars (US$) or such other currency in which the
Company notifies the Distributor of the price of the Products from
time to time. In addition to the Company's rights to suspend under
clause 17, if the Distributor does not pay any amount or amounts
when due, the Company may charge interest (calculated on a daily
basis) at the statutory rate of eight percent (8%) per annum above
the base rate of the Bank of England from time to time, from the due
date until the date of actual payment (whether before or after
judgement). The Distributor's common law right of set off is hereby
expressly excluded and all sums due from the Distributor shall be
paid by the Distributor to the Company free from any deductions,
withholding or set off of any kind.
3.6 The Products shall be promoted, marketed and sold by the Distributor
bearing the Trade Xxxx. The Company hereby grants to the
Distributor, and the Distributor hereby accepts from the Company, a
non-exclusive, non-transferable, and royalty-free license to use the
Trade Xxxx and other intellectual property notified in writing by
the Company from time to time (the "Intellectual Property") solely
in connection with the promotion, advertising and distribution of
the Products. The Distributor shall not use any other marks,
intellectual property or trade names in connection with the
marketing and distribution of the Products unless otherwise agreed
with the Company. The Intellectual Property shall be used by the
Distributor solely in accordance with the Company's standards,
specifications and instructions, but in no event beyond the terms
set down in this agreement. The Distributor is not granted any
right, title or interest in the Trade Xxxx or generally in the
Intellectual Property, other than the foregoing limited license, and
the Distributor shall not use any such Trade Xxxx or Intellectual
Property as part of the Distributor's corporate or trade name or
otherwise than as expressly permitted hereunder, nor shall it permit
any third party to do so. In addition, the Distributor shall not
register or use any of the Company's trademarks, trade names,
slogans, intellectual property, logos or packaging designs (or any
similar trademarks, trade names, slogans, intellectual property,
logos or packaging designs) except as specifically authorised in
writing in advance. Sale by the Distributor of Products in the
packages in which they were shipped shall not be considered use for
this purpose. The Distributor shall not remove or alter any
trademarks, trade names, copyright notices, labels, tags or other
identifying marks, symbols or legends affixed to the Products,
containers or packages by or on behalf of the Company. The
Distributor shall not add any trademarks, trade names, copyright
notices, labels, tags or other
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identifying marks, symbols or legends to the Products or packaging
without the prior written consent of the Company. Should the
Distributor become aware of the fact that a third party has
infringed upon the patent rights, trademarks or trade names or other
intellectual property of the Company or that such rights, trademarks
or trade names or other intellectual property are likely to be
infringed, the Distributor shall immediately inform the Company of
the facts and at the same time shall make reasonable efforts (but
only if specifically requested by the Company) to assist the Company
in prevention and/or remedy of such infringement. The Company shall
have no obligation to the Distributor under this agreement to
prevent or remedy any such infringement.
3.7 Delivery or performance dates in relation to the supply by the
Company of Products are approximate only and, unless otherwise
expressly stated, time is not of the essence for delivery. The
Company will use commercially reasonable endeavours to deliver or
procure the delivery of the Products by the stated delivery date but
may suspend or delay delivery and will not be liable for any loss,
damage, cost, expense or other liability whatsoever in the event of
late delivery or non-delivery of Products or any instalment
outstanding. The Distributor shall not be entitled to refuse to
accept late delivery or treat late delivery as a breach of contract.
Title to each of the Products shall transfer upon the later of (a)
delivery of such Product to the Distributor (or as agreed with the
Distributor) or (b) receipt by the Company of payment in full of all
sums due and owing from the Distributor to the Company, pursuant to
this agreement. The Company at all times reserves the legal and
beneficial ownership in Products sold by it until payment has been
made by the Distributor in full of all sums owing by the Distributor
to the Company, pursuant hereto and the Distributor hereby
authorises the Company to enter onto the Distributor's premises (or
any other premises at which Products may be stored) to recover any
Products which are not paid for in accordance with the terms of this
agreement. Risk of loss or damage to any Product shall pass to the
Distributor upon the earlier of (a) delivery of such Product to the
freight carrier nominated by the Distributor (or as agreed with the
Distributor) or (b) receipt by the Company of payment in full for
such Product from the Distributor.
3.8 In addition to clauses 3.1 - 3.7. The supply of the first 10
Products shall be subject to the following terms.
3.8.1 Upon signature of this agreement the Distributor will place an
order for 10 Products and will make a pre-payment of US
$80,000.
3.8.2 Delivery of the 10 Products referred to in clause 3.8.1 shall
take place as follows:
3.8.2.1 the first Alpha Product which shall be a test and
evaluation unit will be delivered no later than
30 January 2003; and
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3.8.2.2 the remaining nine Products which shall be full
production units will be delivered no later than
six months after receipt of the signed purchase order.
3.8.3 It is a condition of the Distributor entering into this
agreement that the Company provide an on demand guarantee in
favour of the Distributor to the value of US $80,000 of common
stock of the Company at $15 per share, such guarantee shall
expire on the later of (i) the date which is three (3) months
after the date of signature of this agreement and (ii) the
delivery of the first ten Products to the Distributor (or as
agreed with the Distributor).
3.8.4 During 2003 the Distributor shall use all reasonable
endeavours to place further orders consistent with demand.
3.8.5 Not later than 31 December 2003 the Company shall supply five
Beta Products to the Distributor such Products to be in
satisfaction of the Company's obligation to provide
consideration for its investment in the share capital of the
Distributor pursuant to the Shareholders' Agreement.
4. SPECIFICATION OF THE PRODUCTS
4.1 The Company shall use all reasonable endeavours to ensure that all
Products sold by the Company to the Distributor pursuant to this
agreement shall conform in all material respects to the
Specification and, subject to the provisions of clause 5, the
Distributor shall be entitled to reject any quantity of the Products
which are not in accordance with the Specification.
4.2 The Company shall consult with the Distributor from time to time
during the continuance of this agreement to ensure that the
Specification is acceptable to both parties.
5. MANUFACTURE AND DELIVERY OF THE PRODUCTS
5.1 The Company shall use all reasonable endeavours to manufacture and
maintain sufficient stocks of the Products to fulfil its obligations
under this agreement. No accepted order for Product or Products may
be modified or cancelled except in writing and as agreed by the
Company and any terms or conditions of purchase, order or change
order which add to, modify or conflict with the terms or conditions
of this agreement shall be deemed excluded and of no legal effect as
between the parties.
5.2 Delivery of the Products shall take place FOB Port.
5.3 The Distributor shall, within 30 days of the arrival of each
delivery of the Products at the Distributor's premises, give notice
to the Company of any defect by reason of which
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the Distributor alleges that the Products delivered are not in
accordance with the Specification and which should be apparent on
reasonable inspection. All claims must be in writing, must recite
the nature and details of the claim, the date the cause of the claim
was first observed and the serial number of the Product concerned.
5.4 If the Distributor rejects any delivery of the Products which are
not in accordance with the Specification, the Company shall, within
30 days of being requested to do so by the Distributor, repair the
relevant Products or supply replacement Products which are in
accordance with the Specification (in which event the Company shall
not be deemed to be in breach of this agreement or have any
liabilities to the Distributor) or shall notify the Distributor that
it is unable to do so. For the avoidance of doubt, the Distributor's
sole remedy against the Company with respect to Products considered
to be defective or faulty shall be to require, at the sole
discretion of the Company, (i) the repair of such Products; (ii) the
replacement of such Products with Products which conform to the
requirements set out in this agreement; or (iii) the refund of the
purchase price of such Products paid by the Distributor to the
Company excluding any freight, taxes or other charges.
5.5 If the Company is unable to meet the requirements of any order
placed on it by the Distributor in terms of either numbers of
Products or delivery times, or if the Company is unable to repair
the Products or supply replacement Products in accordance with
clause 5.4 within six months of a request from the Distributor then
the Distributor shall, subject to payment of a royalty of 5% of the
Net Selling Price of the Products, be entitled to manufacture itself
or to obtain from any other person such quantity of the Products as
the Company has been unable so to supply, and that quantity shall be
deemed, for the purposes only of clause 10, to have been ordered
from the Company.
6. OBLIGATIONS OF THE DISTRIBUTOR
6.1 The Distributor undertakes and agrees with the Company that it
shall, at all times and at its own expense during the continuance of
this agreement:
6.1.1 use its best endeavours to sell and promote the Sale of the
Products and, subject to the Company being able to supply,
the same to ensure that it maintains adequate stocks of
Products to meet demand and to promptly fulfil orders from
its customers within the Territory;
6.1.2 employ such numbers of technically qualified sales
personnel, able efficiently to demonstrate and explain the
Products, as may be necessary to ensure full promotion of
the Products throughout the Territory;
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6.1.3 supply the Company with a report every three months
informing. the Company of the progress and development of
the market for the Products in the Territory and of all
regulations affecting the import, distribution and Sale of
the Products in the Territory;
6.1.4 send to the Company, on reasonable request, such details of
future Sales and stocks and other statistical forecasts as
the Company may reasonably require for budgetary purposes
and for programming future production;
6.1.5 promptly submit to the Company all complaints relating to
the Products together with all available evidence and other
information relating to those complaints and forward to the
Company, at the Company's expense, for examination,
representative samples of the Products in respect of which
complaints are made (including, but not limited to, full
identification of such Products including Product references
and numbers);
6.1.6 in all relevant correspondence and other dealings relating
directly or indirectly to the Sale of the Products, clearly
indicate that it is acting as principal, and, in no
circumstances, expressly or impliedly do any act or thing
which may cause third parties to think that it is acting as
an agent of the Company;
6.1.7 comply with all applicable laws and regulations during the
course of performance of this agreement and in related
activities and be responsible for obtaining and maintaining
in force all such licences, consents and approvals of any
governmental or quasi-governmental or other regulatory
authority as may be required in connection with the import,
advertising, storage, marketing and Sale of the Products in
the Territory and shall indemnify the Company against any
and all loss, damage, costs, expenses, claims or other
liabilities which may arise, directly or indirectly, out of
the Distributor's failure to comply with its obligations
hereunder;
6.1.8 instruct the purchasers and users in the correct operation
and safe use of the Products [and supply to every such
person a copy of the Company's service/operational
manual/guarantee;
6.1.9 make available after-sales service and service under the
Company's guarantee, on a free of charge basis to all users
of the Products situated in the Territory (whether or not
such Products were purchased from the Distributor);
6.1.10 keep full accounts and records showing clearly all enquiries
and transactions relating to the Products and permit
authorised officers of the Company at all reasonable times
to have access to the premises where such accounts and
records are kept for the purpose of inspecting the same;
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6.1.11 respond promptly to all enquiries received from potential or
actual customers and to all referrals whether from the
Company or elsewhere;
6.1.12 provide the Company in advance with full details of its
proposed marketing and promotional activities regarding the
Products including, without limitation, a copy of its
proposed business plan for approval by the Company and such
other information and/or documentation as the Company may
reasonably require;
6.1.13 upon request from the Company, return to the Company or make
such other disposition (including, but not limited to,
recalling Products) as the Company shall direct of any
portion of the Products determined by the Company to be
outdated or to otherwise require such disposition. In the
event of any such return or disposition before such time as
the Products become outdated based on their labelled
expiration date, the Company shall either replace the
Products or reimburse the Distributor in an amount equal to
the original basic price paid by the Distributor for the
Products excluding any freight, taxes or other charges. The
Distributor acknowledges and agrees that its sole remedy in
relation to any such return or disposition shall be to
receive replacement Products or reimbursement per the
preceding sentence. In no event shall the Company be liable
for any special, consequential or other loss or damages
related to or arising out of (whether directly or
indirectly) such return or disposition (save that nothing
herein shall exclude any liability of the Company for
personal injury or death occurring through the Company's
negligence). The Distributor hereby agrees to maintain
records sufficient, in the Company's reasonable opinion, to
enable an effective recall of Products that it sells, and to
co-operate fully and at its own cost in any recall effort
conducted by the Company. The Company expressly retains the
right to direct any recall of Products in the Territory; and
6.1.14 maintain in force, during the term of this agreement and for
as long as a practical need exists, one or more policies of
liability insurance which shall cover all liabilities of the
Distributor, whenever arising, attributable to Products sold
under this agreement and the risk of loss or damage to the
Products whilst risk is with the Distributor. The
Distributor shall also maintain all necessary insurances
required by applicable law(s) within the Territory,
including, without limitation, employer's liability
insurance.
6.2 The Distributor shall not:
6.2.1 solicit customers for the Products outside the Market within
the Territory, or establish any branch or maintain any depot
outside the Territory for the Sale of the Products;
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6.2.2 make purchases or sales or incur any liabilities whatever on
behalf of the Company or attempt to bind the Company to third
parties in any manner whatever or participate in activities or
practices that may injure the reputation of the Company, the
Company's businesses (or the goods and services provided
pursuant thereto) or the Products;
6.2.3 in any way pledge the credit of the Company;
6.2.4 use the name of the Company or any part of it or the trade
names of the Products or any part of them in the corporate
name or the title of the Distributor or any associated company
or on any advertisement (including public signs and displays)
or use such name or trade names in any manner as a description
of the business of the Distributor or any associated company
without the prior written consent of the Company provided that
the Distributor may, on its letter headings and business
forms, describe itself as an exclusive distributor in the
Territory for the Products;
6.2.5 make any representation or give any warranty in relation to
the Products unless such representation or warranty has been
previously approved in writing by the Company;
6.2.6 deface or alter the Products or their packaging in any manner
whatever and, in particular, alter, remove or in any way
tamper with any warnings or instructions for use of the
Products or any indication of the source of origin of the
Products;
6.2.7 and shall procure that none of its employees, consultants or
agents, either directly or indirectly manufacture, offer,
promote, sell or distribute goods which are of the same kind,
similar to or compete with the Products. Subject to clause 5.5
the Distributor shall further obtain the Products for resale
only from the Company or from such other source as the Company
may expressly authorise or direct in writing and shall not,
and shall procure that none of its employees, consultants or
agents, actively advertise, promote or solicit customers for
the Products outside the Market within the Territory. In
addition, the Distributor shall not, and shall procure that
none of its employees, consultants or agents, sell the
Products to customers outside the Market within the Territory
unless expressly authorised by the Company in writing.
However, should the parties continue this agreement beyond
five years after the date of signature, the foregoing
restriction in the first sentence of this clause 6.2.7 shall
apply only to the extent that such competitive products
account for more than 20% of the combined sales of the
Products and competitive products by the Distributor during
the preceding 12-month period. Notwithstanding the foregoing,
nothing in this clause 6.2.7 shall preclude the Distributor
from responding to unsolicited requests from any individual
customer outside the Market but within a Member State of the
European Union or the European Economic Area,
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wherever located, who purchases Products with a view to their
use within the territory of a Member State of the European
Union or European Economic Area; and
6.2.8 and shall procure so far as is reasonably possible that no
third party shall, alter, modify, destroy, tamper with,
reverse engineer or otherwise deal with any Product sold to it
pursuant hereto in a manner other than as contemplated and
permitted hereunder, without the Company's express written
consent (which may be withheld at its sole discretion).
7. OBLIGATIONS OF THE COMPANY
The Company undertakes and agrees with the Distributor that it shall,
during the continuance of this agreement:
7.1 provide such technical assistance as it may deem appropriate
including, if necessary, the training of a reasonable number of the
Distributor's personnel at the Company's premises at the cost of the
Distributor. The content and duration of any such training programme
shall be determined by the Company after consultation with the
Distributor;
7.2 send (subject to prior agreement with the Distributor), at its own
cost, a representative to visit the Distributor for the purpose of
providing advice in connection with the Products and/or promoting
Sales of the Products and shall, at the cost of the Distributor,
send such a representative when reasonably requested by the
Distributor including (without limitation) a representative to
provide advice and assistance in connection with trade fairs,
exhibitions or demonstrations;
7.3 meet the Distributor at regular intervals to discuss all aspects of
the Sale and marketing of the Products and the best method of
promoting them;
7.4 in appointing other distributors for the Sale of the Products
outside the Territory, make it a condition of such appointment that
such other distributors shall not, within the Territory and in
relation to the Products, seek customers or establish any branch or
maintain any distribution depot;
7.5 pass any queries relating to the Products which it may receive from
within the Territory to the Distributor; and
7.6 to make a payment to the Distributor of $200 in respect of any
product sold pursuant to the distribution agreement dated 22
December 1997 between (1) the Company and (2) Xxxxxxx Xxxxxxx d/b/a
WMS Enterprises (the "Xxxxxxx Agreement") provided that the Company
shall be under no obligation to make any payment in excess of
$1,500,000 in aggregate; and indemnify and keep indemnified the
Distributor against all liability, loss, damage, expenses and costs
incurred by
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the Distributor which result directly or indirectly from the
operation of or activities pursuant to the Xxxxxxx Agreement such
liability not to exceed $1,500,000.
8. MODIFICATIONS
8.1 Subject to clause 8.2, the Company reserves the right to discontinue
the manufacture or supply of any of the Products and make changes
and improvements at any time in the construction or design of any of
the Products without incurring any obligation or liability to the
Distributor or the Distributor's customers.
8.2 The Company shall inform the Distributor of such withdrawals of,
modifications to, or improvements to, the Products, wherever
possible before their implementation, but otherwise as soon as is
reasonably practicable.
9. PURCHASE TARGETS
9.1 Up to 31 December 2003 the Distributor shall use all reasonable
endeavours to achieve the minimum purchase targets specified in
schedule 4. Purchase targets for the second year will be subject to
agreement following delivery of the first 10 Products and in
subsequent years minimum purchase targets shall be agreed annually
in advance. In the event that the parties do not agree the minimum
purchase targets within thirty (30) calendar days of the end of the
preceding year in which minimum purchase targets were set, the
previous year's minimum purchase targets shall be increased by 10%
for first 3 years following the date of this Agreement and shall be
deemed to be the minimum purchase targets for the year in respect of
which agreement was not reached.
9.2 If, in any period so specified in schedule 4, the number of Products
purchased by the Distributor in respect of the Territory in that
period is less than the amount of the stated minimum purchase
targets for that period, the Company shall be entitled, at its
option, by notice to the Distributor given within ninety calendar
days of the end of such period, to terminate the Distributor's
exclusivity with effect from ninety (90) calendar days after giving
such notice.
10. DEFECTIVE PRODUCTS
In the event of any of the Products supplied to a customer of the
Distributor being found by the Distributor to be defective within one year
of despatch by the Company or within nine months of Sale by the
Distributor, whichever is the shorter, the Distributor shall submit a full
report to the Company about it immediately together with an estimate of
the cost of rectification. On receipt of such report, the Company shall
immediately instruct the Distributor to carry out such rectification or
shall request the Distributor to return the defective Products to the
Company for repair or replacement. In respect of such Products, the
Company shall pay the cost of rectification or the cost of transport and
insurance from the Distributor's depot to the Company. In the event of
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such Products being found by the Company to be defective owing to faulty
workmanship or materials, the Company shall either, at the Company's
option, put such Products into good working order and return them to the
Distributor carriage paid or shall replace such Products and despatch
those replacements to the Distributor carriage paid or shall refund the
purchase price of such Products. For the avoidance of doubt, the
Distributor's sole remedy against the Company with respect to Products
considered to be defective or faulty shall be to require, at the sole
discretion of the Company, (i) the repair of such Products; (ii) the
replacement of such Products with Products which conform to the
requirements set out in this agreement; or (iii) the refund of the
purchase price of such Products paid by the Distributor to the Company
excluding any freight, taxes or other charges.
11. INDUSTRIAL PROPERTY RIGHTS
11.1 The Distributor acknowledges that title to the Industrial Property
Rights is and remains at all times exclusively the Company's, and
that the Distributor has no right to use, disclose, copy or
otherwise dispose of the same except in accordance with any express
authority under this agreement and, further, that any such authority
shall immediately cease on termination of the Distributor's
appointment under this agreement whatever the cause of termination.
The Distributor shall, on termination, return to the Company, and
shall not retain in any way or in any format, all documents relating
in any way to the Industrial Property Rights and any and all copies,
extracts or abstracts of them in whatever format and on whatever
media.
11.2 The Distributor shall immediately bring to the attention of the
Company any improper or wrongful use in the Territory of any
Industrial Property Rights relating to the Products (or any
component part of the Products) which comes to its notice, and shall
use every effort to safeguard the Industrial Property Rights and
interests of the Company and shall assist the Company in taking all
steps to defend the Industrial Property Rights of the Company
including, at the specific request of the Company, the prosecution
of any actions which the Company may deem necessary to commence for
the protection of any of its rights.
12. GRANT OF PATENT LICENCE
12.1 For the purposes of clause 5.5 only, and only to the extent that the
circumstances referred to in clause 5.5 are operative, the Company
grants to the Distributor:
12.1.1 the exclusive licence (subject to the terms of the Xxxxxxx
Agreement) in the Territory under the Licensed Patents for
the construction, marketing, use and/or sale of the Products
in the Territory according to the Company's instructions on
the terms and conditions of this agreement;
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12.1.2 the exclusive right (subject to the terms of the Xxxxxxx
Agreement) to use the Know-how for the construction, use
and/or sale of the Products in the Territory according to
the Company's instructions on the terms and conditions of
this agreement; and
12.1.3 the right to grant non-exclusive sub-licences under the
Licensed Patents and the Know-how to subcontractors in the
Territory to manufacture Products for supply to the
Distributor.
13. WARRANTIES
13.1 The Company hereby warrants to the Distributor that:
13.1.1 it has the right to grant the licence rights granted by
clause 12;
13.1.2 it is not aware (at the date hereof), without having
undertaken any investigation whatsoever, of any matter or
prior art that would invalidate or impede the grant of any
of the Licensed patents and that the construction, use, or
sale of the Products does not to the Company's knowledge
infringe any third party's intellectual property rights in
the Territory;
13.1.3 it has not entered into any (and there are no) outstanding
assignments, obligations, charges or agreements, either
written, oral, or implied, which are inconsistent with this
agreement; and
13.1.4 save in respect of the Xxxxxxx Agreement, it has not at any
time granted a licence and/or rights in respect of the
Products to any other person in the Territory.
13.2 The warranties set forth or referred to in this agreement are
intended solely for the benefit of the Distributor and may not be
made to the Distributor's customers. The warranties set forth above
are in lieu of all other warranties, express or implied, which are
hereby disclaimed and excluded by the Company, including, without
limitation, any warranty of merchantability or fitness for a
particular purpose or use and all obligations or liabilities on the
part of the Company for damages arising out of or in conjunction
with the use, repair or performance of the Products (save in respect
of personal injury or death caused by the Company's negligence which
is not excluded hereby).
13.3 Notwithstanding anything to the contrary in this agreement, the
Company shall not (except in respect of death or personal injury
caused by its negligence) be liable to the Distributor by reason of
any non-fraudulent representation or implied warranty, condition or
other term or any duty at common law, any tort or under the express
terms of this agreement, for any consequential loss (whether direct
or indirect), loss of profits, loss of income, loss of business,
loss of revenue, loss
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of goodwill, loss of anticipated savings, loss of data or any
indirect loss or damage howsoever caused. This clause 13.3 shall
apply whether or not the Company was advised of the possibility of
such loss and whether or not such damage or loss is foreseeable. The
Company's total liability arising under or in relation to this
agreement or its termination (whether in contract, for breach of
warranty, tort including negligence, breach of statutory duty, non
fraudulent misrepresentation, under any indemnity or otherwise
howsoever) shall not exceed in aggregate the aggregate price paid by
the Distributor to the Company for Products pursuant to this
agreement in the relevant calendar year in which the claim is made,
except in respect of death or personal injury caused by the
Company's negligence or fraudulent misrepresentation, for which the
Company's liability is unlimited.
14. PAGE MISSING!!!!!!!!!!!!!
15. DEFENCE OF LICENSED PATENTS
15.1 The Distributor shall forthwith give notice in writing to the
Company of any infringement or suspected or threatened infringement
in the Territory of any of the Licensed Patents (which expression
for the purpose of this clause shall be deemed to include any Patent
granted in the Territory in respect of an Improvement) which shall
at any time come to its knowledge.
15.2 The Company shall decide in its absolute discretion whether and what
steps should be taken to prevent or terminate such infringement
including the institution of legal proceedings where necessary and
the Company shall notify the Distributor in writing of such decision
as soon as reasonably possible following the receipt of the notice
from the Distributor under this clause 15.
15.3 The Company shall have sole control over and shall conduct any such
action(s) as it shall deem necessary in pursuance of this clause.
15.4 The Distributor agrees, at the expense of the Company, to provide
reasonable assistance to the Company in trials, suits and other
actions against infringers of the Licensed Patents.
16. CONFIDENTIALITY
16.1 The Distributor undertakes with the Company that it will not during
the continuance of this agreement or at any time after it has
terminated divulge or communicate to any person any of the trade
secrets or other confidential information, including, without
limitation, information relating to the manufacturing processes,
affairs or business or method of carrying on business of the Company
which it may have received or obtained in the performance of, or
otherwise as a direct or indirect result of, its appointment under
this agreement.
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16.2 The Distributor further undertakes that it will not at any time
during the continuance of this agreement or during the three (3)
year period after it has terminated (such period commencing on the
date of termination) entice or induce or attempt to entice or induce
away from the Company any person who, at any time during the
continuance of this agreement, is, or has been, employed, appointed
or engaged by the Company as an employee, agent, director,
consultant or independent contractor employed, and who by reason of
such employment, appointment or engagement and in particular his/her
seniority and expertise or knowledge of trade secrets or
confidential information of the Company or knowledge of or influence
over the clients, customers or suppliers of the Company, is likely
to be able to assist or benefit a business in or proposing to be in
competition with the Company.
16.3 Whilst the restrictions in this clause 16 are regarded by the
parties as fair and reasonable, it is hereby declared that each of
the restrictions in this clause 16 is intended to be separate and
severable. If any restriction is held to be unreasonably wide but
would be valid if part of the wording were deleted, such restriction
will apply with so much of the wording deleted as may be necessary
to make it valid.
17. DURATION AND TERMINATION
17.1 Either party may terminate this agreement immediately by notice if
any of the following events occurs:
17.1.1 the other party fails to observe or perform any of the terms
or conditions of this agreement or is in breach of any
contract for the purchase by it of Products under this
agreement and such default or breach (if capable of remedy)
continues for a period of ninety (90) calendar days after
notice, specifying the breach and requiring the same to be
remedied, has been given;
17.1.2 an order is made or a resolution is passed for the
winding-up of a party, except in the case of a voluntary
winding-up for the purposes of a scheme of reconstruction or
amalgamation the terms of which have previously been
approved in writing by the other party;
17.1.3 an administrative order is made or a petition for such an
order is presented in respect of a party;
17.1.4 a receiver (which expression includes an administrative
receiver) is appointed in respect of a party or all or any
of its assets;
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17.1.5 a party is unable to pay its debts within the meaning of
section 123 of the Insolvency Xxx 0000; or
17.1.6 any voluntary arrangement is proposed under section 1 of the
Insolvency Xxx 0000 in respect of a party.
17.1.7 any event analogous to those described in clauses 17.1.3 to
17.1.6 occurs in any jurisdiction in which either party is
incorporated or resident or carries on business;
17.1.8 either party ceases, or threatens to cease, to carry on
business; and
17.2 During any period in which a notice to terminate this agreement is
in force, the Company shall be obliged to supply only such
quantities of the Products as are required to enable the Distributor
to meet any purchase orders already placed with it and to meet such
demands for the Products as (taking into account the previous
performance of the Distributor) are likely to exist for Sales made
during the unexpired period of notice.
17.3 Notwithstanding any other rights or remedies that the Company may
have, whether pursuant to this agreement or otherwise, if the
Distributor fails to make payment in respect of any amount when due
the Company may, not earlier than seventy-two (72) hours after
providing the Distributor with written notice of the Company's
intention to do so, suspend the sale and/or delivery of Products
until it has received payment in full of all amounts outstanding
from the Distributor. Such suspension shall not be a breach of
contract, the Company shall not be bound to comply with its
obligations under this agreement for the duration of the suspension
and shall have no liability to the Distributor or its customers in
respect of the suspension of sale and/or delivery of Products.
18. CONSEQUENCES OF TERMINATION
18.1 Following the expiry or termination of this agreement for any reason
whatever, the Company shall be entitled (at its option) to do all or
any of the following:
18.1.1 cancel any orders for the Products placed with it by the
Distributor and not yet delivered;
18.1.2 repurchase unsold stocks of the Products owned by the
Distributor at a price equal to the price paid to the
Company by the Distributor (less any deductions reasonably
made by reason of any damage, including fair wear and tear)
together with any expense reasonably incurred by the
Distributor in arranging for the transport and insurance for
redelivery of the same to the Company; and
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18.1.3 call upon the Distributor to return to the Company, at the
expense of the Distributor, all advertising or promotional
material relating to the Products and any other documents or
papers relating to the business of the Company or the
Products which it has in its possession without retaining in
any way or in any format, any copies, extracts or abstracts
of them in whatever format and on whatever media.
18.2 Upon termination of this agreement then the Company shall be
entitled to purchase the right to use the Trade Xxxx on terms to be
agreed.
19. FORCE MAJEURE
19.1 Neither party shall be liable to the other or be deemed to be in
breach of this agreement by reason of any delay in performing, or
failure to perform, any of its obligations under this agreement,
save in respect of its payment obligations which are expressly
excluded from the effect of this clause, if the delay or failure was
beyond that party's reasonable control (including, without
limitation, any strike, lockout or other industrial action, act of
God, war or threat of war, accidental or malicious damage, or
prohibition by governments or other legal authority). For the
avoidance of doubt, no event of force majeure as set out above shall
excuse either party from failing to comply with its payment
obligations under this agreement.
19.2 A party claiming to be unable to perform its obligations under this
agreement (either on time or at all) in any of the circumstances set
out in clause 19.1 must immediately notify the other party of the
nature and extent of the circumstances in question.
19.3 This clause 19 shall cease to apply when such circumstances have
ceased to have effect on the performance of this agreement.
19.4 If any circumstance relied on by any party for the purpose of this
clause 19 continues for more than six calendar months, the other
party shall be entitled to terminate this agreement forthwith on
provision of written notice to the other party.
20. ENTIRE AGREEMENT
20.1 This agreement constitutes the entire agreement between the parties
in connection with its subject matter.
20.2 No party has relied upon any representation or promise except as
expressly set out in this agreement.
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21. WAIVER OF RIGHTS BASED ON MISREPRESENTATION
21.1 Each party unconditionally waives any rights it may have to claim
damages against the other on the basis of any statement made by the
other (whether made carelessly or not) not set out or referred to in
this agreement (or for breach of any warranty given by the other not
so set out or referred to) unless such statement or warranty was
trade or given fraudulently.
21.2 Each party unconditionally waives any rights it may have to seek to
rescind this agreement on the basis of any statement made by the
other (whether made carelessly or not) whether or not such statement
is set out or referred to in this agreement unless such statement
was made fraudulently.
22. ASSIGNMENT
Either party shall be permitted to assign or transfer its rights under
this agreement and subcontract or transfer its obligations under this
agreement to any associated company, group company or affiliate on the
provision of written notice to the other party. Otherwise, neither party
shall without the prior written consent of the other party assign,
transfer, charge or deal in any other similar manner with this agreement
or its rights or any part of them under this agreement, or purport to do
any of the same.
23. RELATIONSHIP OF THE PARTIES
Nothing in this agreement shall create, or be deemed to create, a
partnership between the parties. The relationship of the parties
established by this agreement is that of independent contractors, and not
an employment, agency, franchise, joint venture or any other such
relationship. Each of the parties shall conduct its respective business at
its own initiative, responsibility and expense and shall have no authority
to incur any obligations on behalf of the other party to this agreement.
24. COSTS AND EXPENSES
Except as otherwise stated in this agreement, each party shall pay its own
costs and expenses in relation to the negotiation, preparation, execution
and implementation of this agreement.
25. EXECUTION
This agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, each of which when so executed shall be
an original, but all counterparts shall together constitute one and the
same instrument.
26. AMENDMENT AND WAIVER
26.1 No variation of this agreement shall be effective unless it is made
in writing, refers specifically to this agreement and is signed by
the parties.
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26.2 No waiver of any term, provision or condition of this agreement
shall be effective except to the extent made in writing and signed
by the waiving party.
26.3 No omission or delay on the part of any party in exercising any
right, power or privilege under this agreement shall operate as a
waiver by it of any right to exercise it in future or of any other
of its rights under this agreement.
27. THIRD PARTY RIGHTS
A person who is not party to this agreement shall have no right, whether
under the Contracts (Rights of Third Parties) Xxx 0000, at common law or
otherwise howsoever, to enforce any term of this agreement.
28. LAW AND JURISDICTION
28.1 This agreement shall be governed by and construed in all respects in
accordance with English law.
28.2 The parties submit to the exclusive jurisdiction of the English
courts and agree that, in respect of proceedings in England and any
other jurisdiction, process may be served on either of them in the
manner specified for notices in clause 29.
28.3 The rights set out in this clause 28 are in addition to any other
manner of service permitted by law.
29. NOTICES
29.1 Any notice or other communication to be given under this agreement
must be in writing and may be delivered or sent by reputable
international overnight courier or facsimile transmission to the
party to be served at that party's last-known address.
29.2 Any notice or document shall be deemed served: if delivered, at the
time of delivery; if sent by courier, 72 hours after sending; and if
sent by facsimile transmission, at the time of transmission provided
a successful transmission report has been received confirming
complete transmission.
30. SURVIVORSHIP
Any provisions of this agreement stated to survive termination of this
agreement shall remain in full force and effect despite termination.
31. PRECEDENCE AND INVALIDITY
In the event of any conflict between the terms of this agreement and the
terms of any other document, the terms of this agreement shall take
precedence. The invalidity, illegality or unenforceability of any term of
this agreement shall not affect the other terms.
AS WITNESS the hands of the parties to this agreement.
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