Independent Representation Contract
Between
The company XXXXXXX XxxX & Xx. Xxxxxxxxxxxxxxxxx XX, Xxxxxxxxx-Xxxxxx-Xxxxxxx
00, 00000 Allershausen, represented by the general partner OXYWELL GmbH, in turn
represented by its sole representative, the managing director Or, Xxxxxxx
Xxxx-Xxxxxx
- in the following called "OxyweIl"-- and
Xx. Xxxxx X. Xxxxxxx, Morassistr 2 A, 80489 Munchen
- in the following called "XXXXXXX" or "Independent Representative"--
I. Preamble
Oxywell owns the exclusive licenses for the production and distribution of
patented devices and methods for processing and enriching water with oxygen in
Germany, Austria and Switzerland. Oxywell or affiliated parties are in the
process of receiving worldwide protection for the devices or methods. Oxywell
will especially seek patent protection (particularly registered design,
trademarks Oxywell, Optiwell, Sportwell, possibly taste trademarks to secure the
independent representation by XXXXXXX in the USA and Canada. There is no
guaranty that individual trademark names can be protected in the countries
covered by this contract.
XXXXXXX has many contacts and relationships in the United States of America and
Canada, which may assist him with the distribution of Oxywell's products in
those areas.
Based on the above, the parties to this contract agree to the following
II. Independent Representation Contract
Page 1
1
Object of the Contract
1. Oxywell gives the independent representative the exclusive rights to
distribute the products according to attached exhibit "Oxywell-Products"
(Exhibit 1) ("Oxywell-Products") to wholesalers and retailers, other
resellers and end users and to provide appropriate customer service. With
regards to other oxygenated products, the independent representative is
given the right of first refusal in the geographical area covered in this
contract. The independent representative has the right to step into a
contract entered Into with a third party or a binding offer made by a third
party. The independent representative can execute this right of first
refusal within one month of having been notified of such a contract or
offer.
2. Oxywell can demand that this contract be extended to such products that
Oxywell produces or distributes as follow-up or complimentary products to
those shown in Exhibit 1,
3. The independent representative purchases and distributes the Oxywell
Products and provides customer service exclusively in his own name and
covers his own costs. He has no right to represent Oxywell in any
contracts.
4. XXXXXXX can transfer. the rights and obligations of this contract to a
legal entity as long as it is assured that Xxxxxxx has the absolute
majority both in the shares and in voting rights.
2
Geographic Area covered by this Contract
1, The geographic area covered by this contract consists of the territories of
the United States of America, Puerto Rico and Canada. In addition, the
independent representative receives the right of first refusal on the
territory of Mexico. The independent representative can step into a
contract entered into with a third party as independent representative or
distributor, or a binding offer made by a third party. The independent
representative has one month after being notified of such a contract or
offer to make use of his right of first refusal.
2. Oxywell has the right to notify of a partial termination effective at the
beginning of the calendar quarter following the notice, changing the
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geographic area, decreasing it and adding additional independent
representatives if these measures are in the best interest of a proper
market penetration and if the independent representative did not meet the
minimum quantity required in ss. 5, No. 1, as long as the independent
representative is responsible for this shortage according to ss. 5, No. 2.
Oxywell has to notify the independent representative of this change
immediately.
3. In the case of a reduction in territory according to No. 2, the minimum
quantity required will be reduced relative to the population in the
contractual geographic area. If additional independent representatives are
put into the same territory according to No. 2, then the minimum quantity
required will be adjusted from that date forward by dividing the original
quantity by the number of independent representatives.
4. Prior to a partial termination according to No. 2 above, Oxywell has to
give the independent representative an extension of one month during which
he fulfill the requirements by purchasing additional units as required to
remedy the breach.
3
Protection of Customers
1. Oxywell gives the independent representative unconditional protection of
his customers so that the delivery to third parties within the exclusive
territory by the producer in addition to the independent representative is
only possible under the following exceptions:
- delivery to international or supranational governmental agencies
- delivery to wholesalers or retailers with the written consent of the
independent representative
Under these exceptions the independent representative will receive a
commission currently at least 10% of the independent representative's net
purchase price for the Oxywell products excluding sales tax.
2. Within the exclusive territory, Oxywell is not allowed to contract with
other independent representatives with regards to the business described
inss.1, No. 1, unless the conditions ofss.2 apply. Also, Oxywell itself or
its representatives (e.g. agents) are not allowed to canvas customers or
procure or complete contracts. Canvassing of customers by Oxywell is not
allowed with respect to customers described in No. 1.
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3. Therefore, Oxywell will hand over all orders from natural or legal entities
living or headquartered in the territory, especially from wholesale or
retailers, but also from other resellers.
4. Oxywell requests from its partners that they are present on the Internet
only in the language of their territory. Oxywell will provide a link on its
homepage per ss. 8, No, 9 to the independent representative.
5. Oxywell will require all authorized sellers of Oxywell products, receiving
Oxywell products from Oxywell to transfer afl orders from buyers whose
delivery address is in the territory of XXXXXXX to XXXXXXX Should an
authorized Oxywell seller not comply with this requirement, Oxywell will
act appropriately when given the information and the request to act by the
independent representative.
6. Should Oxywell commit a breach of contract with regards to the protection
of customers, the independent representative has the right to demand
compensation in the amount of the proven damages and the hereby-caused lack
of profit, if Oxywell's breach was premeditated or grossly negligent.
7. With regards to other contracts, Oxywell has obligations to its independent
representatives in other areas. Therefore Oxywell will not compensate
XXXXXXX for any business conducted by these other independent
representatives, even if XXXXXXX helped procure this business outside his
territory. Contractual agreements between the independent representatives
are not affected. Sales to supranational companies completed by XXXXXXX
within his territory are treated separately.
4
Limitations to the Distribution Rights
1. The independent representative agrees to the following:
a) He will not solicit customers for Oxywell products, nor have branches
or distribution centers outside of his territory. This does not
restrict the independent representative on the Internet, as long as ss.
4, No. 1 d) is adhered to.
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b) He will contract with sub-distributors or sales representatives only
with prior approval of Oxywell. Oxywell may deny such approval only
with just cause, as long as these sub-distributors or sales
representatives are bound by the same rules as this independent
contractor.
c) He may not enter into any contracts for Oxywell products with
purchasers whose headquarters or places of residence are exclusively
outside of his territory. This does not apply if and to the extent that
Oxywell violates ss. 3, No. 5.
d) He may not advertise or receive orders for Oxywell products from an
Internet site whose address does not have a country-code top-level
domain of the countries included in the territory.
2. In addition to selling Oxywell products to end users, the independent
representative is required with the exception of those re-sellers referred
to in No. 1b), to sell to only such re-sellers who have the necessary
knowledge, set up and service abilities required for the sale to end-users.
5
Minimum Sales Volume
1. We agree to the following minimum sales volume:
Starting with beginning of the month following the receipt of the necessary
permits
Until Aug. 31, 2002 1,000 oxygenating water units I month
From Sep. 1 through Aug. 31, 2003 5,000 oxygenating water units I month
In subsequent years (always beginning with Sep. 1), the contractual parties
assume an increase of 30% per year in sales volume.
The contractual parties also assume, based on experience, that
approximately 15 cartridges per month per unit are sold. The independent
representative has to use this experience rate as a basis for planning his
requirements, whereby the already existing units need to be taken into
account, However, this is not a minimum sales volume requirement, as the
independent representative cannot predict the consumer behavior in his
territory because of the novelty of the Oxywell products. The independent
representative agrees to purchase cartridges exclusively from Oxywell.
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2. The independent representative cannot be held accountable for not reaching
the minimum sales volume if Oxywell cannot deliver within the agreed upon
time periods or a delivery to the independent contractor is not completed
to no fault of the independent representative. This does not apply if
Oxywell makes justifiable partial deliveries in such quantities as to allow
for the minimum sales volume to be reached and the independent
representative is not hindered in his sates activities due to this partial
delivery.
3. Minimum sales volume for follow up and complimentary products marketed by
the independent representative, as requested by Oxywell per ss. 1, No, 2,
will be agreed upon by both parties.
4. In case of non-compliance with the minimum sales volume requirement,
Oxywell has only those rights as described in ss. 2, No, 2.
6
Production within the Contractual Geographic Area
1. Should the annual sales of replacement cartridges exceed 50,000 pieces,
Oxywell will cause the production or re-filling of replacement cartridges
to take place within the contractual geographic area by appropriately
investing in production facilities.
2. The independent representative has first rights on the option to take part
in a joint venture (minority owner) or to act as the broker in the capital
raising effort.
7
1, ~me independent representative will not market any other products within
the contractual geographic area which compete with those Oxywell products
for the production of oxygenated water as described in Exhibit 1.
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2. The independent representative will refrain from directly or indirectly
becoming involved with a competitor of Oxywell or support the business
activities of a competitor in any form or fashion. Competitors as defined
by this contract are companies, which produce or distribute equipment for
the production of oxygenated water. The independent representative is under
the obligation not to market products similar to those described in Exhibit
I from other producers, which are in competition within the contractual
geographic area.
3. The independent representative receives the Oxywell products directly from
Oxywell. If the independent representative receives Oxywell products from a
third party, the independent representative will inform Oxywell.
8
Collaborative Marketing Efforts
1. The independent representative will do all in his power to sell Oxywell
products in the contractual geographic area. The independent representative
will focus especially on familiarizing his sales organization with Oxywell
products and he will advertise in print, radio or TV broadcast. When
requested, he will inform Oxywell based on criteria provided by Oxywell as
concurrently as possible of his activities and the general market
development, especially on the competition; also, as needed, he will inform
Oxywell about individual customers or interested parties. The independent
representative will furthermore inform Oxywell about changes in his own
company or his situation if it is of importance to Oxywell.
2. XXXXXXX will be using his own warehouse for the Oxywell products within the
contractual geographic area to supply his customers. He will carry all
costs and risks associated with such warehousing.
3. Oxywell will provide existing marketing material to the independent
representative at no cost. Oxywell will share equally the cost of
transferring the existing materials into the language of the contractual
geographic area.
4. The independent representative will orient the advertising effort by
recommendations of Oxywell with reservations as to the special legal
conditions in the contractual territory and notwithstanding his obligation
towards his advertising statements. He releases Oxywell from all
obligations,
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which may arise from civil or criminal law suits brought on by third
parties as a result of his advertising in the contractual territory, as
long as those claims do not fall under No. 7, sentence 2.
5. Advertising materials from Oxywell remain the property of Oxywell. Upon
completion of the contractual relationship, these materials have to be
returned to Oxywell promptly unless they have been duly used up.
6. The independent representative will market and sell the Oxywell products
under names and trademarks chosen by the independent representative in
conjunction with Oxywell. Oxywell will design the packaging and product
information according to the independent representative's wishes within the
price parameters given by OxyweIl.
7. The independent representative will immediately inform Oxywell about any
infringements on Oxywell's registered names and trademarks and also of any
imitations of the products. Oxywell releases the independent representative
from any claims made by third parties because of the use of names and
trademarks suggested by Oxywell, or because of advertising statements made
based on information from Oxywell. Oxywell does not release the independent
representative from any claims based on other product representations or
advertising statements.
8. Oxywell will surrender to the independent representative all technical
documentation necessary for every-day business conduct in German or if
available in English at no cost, which he needs to fulfill his contractual
obligations. In any case, upon request, Oxywell will give the independent
representative copies of all available documents (research and test
results, medical expert opinions, TUB Rhineland (technical protection
governmental agency), Bundesanstalt fur Materialprufung in Berlin (federal
office for material testing in Berlin)), which might be useful in the
procurement of permits for the products in the sales territory.
9. Oxywell owns the Internet domain "xxxxxxx.xxx". During the term of this
contract, Oxywell will refer appropriately to the independent
representative on its homepages and provide links for visitors to the
independent representative's homepage as described in the following
paragraph.
10. During the term of this contract, the independent representative has the
right to register and use the internet domain `www.oxvwell-usa (or
optiwell-usa,
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sportwell-usa or a product name in conjunction with "usa".[top level
domains with the exception of registering and using country-code top level
domains from countries outside of the contractual geographic area. This
right extends six months following the end of the contract term. While the
independent representative has ownership of the Internet domain
"www.oxvwell-usa (Or optiwell-usa, sportwell-usa or a product name in
conjunction with "-usa") [top level-domain]", Oxywell will not register any
second-level-domain containing the combination "Oxywell" and "USA". Oxywell
does not guarantee that the independent representative can register and use
the allowed domain name. Oxywell will support the independent
representative appropriately in the registration and defense of the domain
name.
11. Unaffected by the rights of the independent representative in ss. 8, No.
10, the parties are in agreement that no terms may be used as part of the
independent representative's company or fictious description which might
result in the danger of confusion with the registered trademarks of
"Oxywell", "Optiwell" or $Sportwell". Therefore, the independent
representative will use the term "Oxywell" only for the marketing and sale
of the contractual products for the duration of this contract. The
independent representative has six months after the end of this contract to
cease using the terms "Oxywell", "Optiwell" or "Sportswell" in his conduct
of business. The independent representative does not have the right to
sell, license or otherwise allow the use of the terms "Oxywell, "Optiwell"
or "Sportswell".
9
Customer Service, Warranty, Product Liability
1. Oxywell's terms of sale and delivery apply to the deliveries and other
legal relationships between Oxywell and the independent representative, as
long as they do not conflict with the terms of this contract.
The terms of sale and delivery are included in the signed contract as
Exhibit.
2. Oxywell has the right to adjust the terms of delivery if it becomes
necessary because of overall developments in legislation or court
decisions. The independent representative is required to agree to these
changes if they are reasonable. Oxywell will inform the independent
representative immediately of any changes in the terms of sale and delivery
and seek his approval.
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2. Contrary to the terms of sale and delivery the following apply:
a) The warranty term is two years. The term begins with the delivery from
the independent representative to the end user, at the latest three
months after delivery to the independent representative.
b) The settlement of the warranty is regulated in Exhibit 4.
c) Oxywell supports the independent representative in the warranty claims
from the end customer per Exhibit 4.
3. The independent representative is obligated to have an appropriate customer
service in place to support the products. This also applies to products
delivered prior to the commencement of this contract.
4. For work done under warranty the independent representative must use spare
parts sold or recommended by Oxywell. Spare parts made by other companies
may not be used in repairs made under warranty as described in No, 3 above.
To ensure the repair and maintenance work, the independent representative
will maintain an original spare parts supply.
5. If German legal or norm regulations apply to Oxywell products, Oxywell will
deliver products, conforming to such regulations. If other legal or norm
regulations apply in the contractual territory, Oxywell will deliver
products which conform to such regulations as long as XXXXXXX has informed
Oxywell of such regulations or such regulations have come to the attention
of Oxywell. Oxywell will do all in its power to stay informed of the
regulations applying to the contractual territory. If Oxywell is not able
to supply products, which adhere to these regulations, then the minimum
sales volume does not apply. In this case, the independent representative
has the right but is not required to make the necessary adjustments to the
Oxywell products himself so that they will comply with the local
regulations or he can cancel the contract with cause.
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6. Oxywell releases the independent representative or legal entity per ss. 1,
No 4. of damage claims from end users or third parties based on product
liability up to DM 5,000,000 per incident. The independent representative
or legal entity will supply Oxywell in accordance with ss. 1, No 4. with
all factual or legal information available in a product liability case; and
to support Oxywell in its claim with the insurance carrier of the product
liability insurance.
10
Confidentiality
1. Both parties agree to keep the contents of this contract confidential.
Furthermore, all business and trade secrets made known through the conduct
of business, e.g. distribution methods, distribution structure, equipment
construction, new and further developments, development and test results,
business practices will be kept confidential.
2. Furthermore both parties agree to keep all information on research results
confidential, which will be or have been given by one party ("revealing
party") to the other party ("information receiver"). Those research results
received may not be made public or used in advertising without consent.
3. Confidentiality does not apply if the confidential information:
a) was known to the information receiver prior to the revealing party
having revealed such information or
b) was developed independently by the information receiver without use of
prior information received from the revealing party or
c) was purchased from third parties who to its knowledge were not bound
by a confidentiality agreement and this third party did not acquire
this information by violating protective requirements of the revealing
party or
d) became or are known to the information receiver without violating any
of these points or other protected trade secrets of the revealing party
or
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e) is required to be made public because of governmental or court order.
In this case the information receiver has to inform the revealing party
immediately.
4. Each party is obligated to ensure the confidentiality within its own
company through confidentiality agreements with its employees and through
trade espionage protection.
5. The confidentiality requirement continues to apply after termination of the
contract.
ss.11
Duration of Contract
1. The contract begins on October 1, 2001 and will terminate
on December 31, 2006 with reservation as to ss. 14, No. 7. Upon the
independent representatives request, the contract can be extended twice by
two years if the independent representative -notifies Oxywell three months
prior to the end of the contract of his wish to extend. Subsequently, the
contract renews for a year at a time, unless it is cancelled three months
prior to the end of the contract.
2. This does not affect the right of termination with cause. Termination with
cause applies when terms of this contract have been violated to such an
extent that the other party cannot be reasonably expected to continue under
this contract. Violations to a lesser extent can be cause for termination
if the other party has sent a written reprimands for the violation, and the
just cause and its results have not been remedied; for the completion of
the remedy of the violation and its results, a proper time frame needs to
have been set.
3. Just cause for termination are the following:
- the begin of legal bankruptcy proceedings or the legal refusal to begin
such proceedings by one of the parties
- compulsory proceedings by a creditor against the assets of the
independent representative, if these proceedings are not cleared
within a month
- any direct or indirect participation of competitors (~ 7, No. 2,
sentence 2) of Oxywell in the independent representative's business;
if the independent representative transfers his contractual rights and
obligations perss.1, No. 4 to a corporation set up by him, which is
traded on the stock
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market, then this stipulation only applies if a competitor acquires
more than 25% of this corporation and notifies the corporation freely
or because of legal requirements.
- Sale of the business, introduction into or change of the business to
the extent that a third party owns more than 50% of the capital or
voting rights, or the transfer of more than half of the capital shares
of the independent representative within one year, if Oxywell's
interests are gravely impacted;
- the loss of Xx. XXXXXXX'x direct or indirect majority of capital and
voting rights in the company of the independent representative, if
Oxywell's interests are gravely impacted,
- the transfer of rights and obligations of this contract through partial
or complete legal succession if Oxywell's interests are gravely
impacted,
- perpetual discontinuance of the business activities of the independent
representative because of loss of trade license or enforced
discontinuance by a sovereign act.
4. If one of the parties is unable to comply with the regulations of this
contract because of dependency on third parties (e.g. loss of subcontractor
due to production changes, insolvency, strike, loss of trade license of a
distributor), then the parties are obligated to change the contents of this
contract according to the changes in circumstance.
5. In any case the notice of termination has to be sent by certified mail.
12
Prices and Conditions of Delivery
1. The independent representative's compensation is the profit margin. The
prices for the contractual products agreed upon with the independent
representative are based on the price list representing individual products
or product groups and are shown as special prices for general importers in
the price list, Currently, Oxywell is not offering any better prices to
other distribution partners (based on an exchange rate of US $1 DM 2)
The possibly incurred legal sales tax will have to be added to the price if
the specific completion of the delivery or the export documents provided by
the independent representative do not specify the non-taxable status of the
delivery.
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2. The independent representative sets the market price for the Oxywell
products as well as the replacement and accessory parts independently based
on market conditions.
3. Changing the list prices of the Oxywell products for the independent
representative is only possible by giving written notice at least four
months prior to the end of the quarter. The delivery conditions confirmed
by Oxywell prior to the change will not be affected by the price change.
Price increases based on a change in the currency parity (official average
rate of exchange at the stock exchange in Frankfurt) as described No. 1
above rate of exchange of US $1 = DAM, is only allowed if the exchange rate
rises more than 10%. If the range of variation lasts longer than one month,
the parties commit, that upon request of one of the parties, they will
agree upon a proper adjustment of the price based on the changed conditions
in the procurement or sales market, Otherwise, an increase in price is only
allowed if the price increase applies to all authorized dealers of Oxywell
products.
4. For each order the independent representative has to provide to Oxywell an
irrevocable letter of credit drawn on a correspondence bank of DO Bank
which is made known to the independent representative upon commencement of
this contract. This letter of credit instructs the bank to transfer the
funds to OxywelI upon receipt of proper transfer documents and an invoice
of the delivered products by Oxywell.
5. Deviating from terms of sale and delivery, No. B in Exhibit 2, Oxywell does
not have a reservation of title on the Oxywell products delivered by
Oxywell to the independent representative.
6. Oxywell commits to fulfilling the orders of the independent representative.
Oxywell can refuse an order of the independent representative only if
a) Oxywell has changed the model and has informed the independent
representative six months prior,
b) a delivery bottleneck exists which was not caused by Oxywell, and
Oxywell can prove that it has distributed the existing Oxywell products
evenly on all orders received prior to the publicizing of the delivery
bottleneck.
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13
Termination and Conclusion of Contract
1. The termination and conclusion of this contract do not affect the
completion of individual trades between Oxywell and the independent
representative. In the case of an ordinary termination, Oxywell will
continue to deliver products to the independent representative so that he
can fulfill his obligation to third parties based on contracts made prior
to the effective date of the termination.
2. In case of an ordinary termination by Oxywell or an extraordinary
termination by the independent representative because of something Oxywell
did, Oxywell agrees to supply the independent representative with supply
parts in sufficient numbers on existing terms, so that he is able to
provide warranty services as well as customer service and inspection
services within the normal warranty term to the fullest extent.
3. The independent representative is to transfer back all documentation to
Oxywell to which Oxywell has right of ownership per this contract unless
they are needed, or when they are no longer needed to fulfill the
contractual warranty obligations.
4. Oxywell has the right but no obligation at the time of termination of the
agreement to buy back from the independent representative all Oxywell
products not yet sold including spare parts in original packaging at the
price charged by Oxywell, the market value being the maximum price.
5. At the termination of the contract, the independent representative has no
right to indemnification.
6. With the exception ofss.4, No. 4, the independent representative is not
authorized to transfer his rights and obligations from this contract to a
third party.
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14
Final Provisions
1. Offsetting claims of one party against the other is only possible with
undisputed, legally binding and acknowledged claims.
2. This contract falls under German jurisdiction. The application of the
UN-treaty on contracts with regards to international sale of products
(CISG) dated April 11, 1980 is excluded.
3. Changes or additions to the contract are required to be in writing to be
valid. This also applies to changes to this sentence, There are no side
agreements between the two parties.
4. With the signing of this contract any existing agreements between the two
parties about the distribution of Oxywell products in the contractual
territory are declared void and have been substituted with this contract.
5. Exhibits I through 3 of this contract are integral parts of this document.
6. It is agreed that the legal venue, as long as it is legally possible, is
the Landesgericht Munchen II, Xxxxxx fur Handelssachen.
7. This contract stands based on the following conditions being met. By June
30, 2002 the independent representative
- will have received the necessary permits for marketing and selling
within the contractual territory from the appropriate authorities and
agencies (e.g. FDA and UL -- United Laboratories); and has forwarded
copies to Oxywell to inform of the permission
- has placed a binding order for the year 2002 based onss.5, No. 1.
Oxywell is bound not to enter into any contract with another independent
representative or sales person until June 30, 2002, as long as the
independent representative does not of his own accord relinquish the rights
of distribution under the contract nor does one of the parties legally
terminate the contract.
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8. Should one of the stipulations of this contract be invalid, or should the
interpretation of the contract result in a deficiency, which cannot be
removed, it will not affect the validity of the remaining stipulations of
the contract. Instead of the invalid stipulation or deficiency, a new
legally binding stipulation will be agreed upon which comes closest to what
both parties would have wanted if they had known the invalidity of the
stipulation.
Allershausen, dated Munich, dated
/s/ Xx. Xxxxxxx Xxxx-Xxxxxx /s/ Xxxxx X. Xxxxxxx
Oxywell
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