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EXHIBIT 10.9
DISTRIBUTOR AGREEMENT
THIS AGREEMENT dated as of June 20, 1996, 1996 between Donlar Corporation
("Donlar") and National Starch and Chemical Company ("National Starch").
The parties hereto agree as follows:
1. Appointment of National Starch. Donlar appoints National Starch as
Donlar's world-wide exclusive distributor of Donlar's homopolymers of
thermal polyaspartate products initially as set forth on Appendix A
("Products") to the exclusion of Donlar in the following fields: textile
pre-treatment, water treatment/corrosion control, industrial dispersants,
detergents, cleaning products for industry and institutions, industrial
dispersants, personal care including hair, skin and dental products,
adhesives, and paper products - wet and dry ends, tissue and towel
(collectively, the "Exclusive Fields"). Donlar also appoints National
Starch its non-exclusive distributor of the Products in the
pharmaceuticals field (the "Non-Exclusive Field"). The Exclusive Fields
and Non-Exclusive Field are collectively herein referred to as the
"Fields". National Starch will use its best efforts to promote sales of
Products in the Fields. Donlar retains and from time to time may grant
marketing and distribution rights in the Products to third parties in all
fields other than the Exclusive Fields, including but not limited to
agriculture, pharmaceuticals, super absorbents and oilfield chemicals.
National Starch will not knowingly distribute Products for use in any
applications other than the Fields.
Appendix A shall be amended from time to time during the term of this
Agreement to add any thermal polyaspartate products developed by Donlar
during the term of this Agreement which was not theretofore included in
Appendix A. Any such amendment of Appendix A shall also include the
mutually agreed initial price and volume for such Product. Appendix B
shall also be amended to set forth the Specifications for any such
Product.
2. Prices and Terms of Sale for Products. The prices for Products are as set
forth on the Price Schedule attached hereto as Appendix A . Sixty days
prior to the end of each year commencing with the year ending December 31,
1996, the parties will commence negotiations for a new Price List for the
Products. If the parties are unable in good faith to agree upon a new
Price List by December
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31 of any year, this Agreement will continue for one additional year and
the prices theretofore in effect shall continue during such additional
one year period. If the parties have not reached agreement on the prices
for the Products at the end of such additional year this Agreement shall
terminate automatically on that date.
All Products purchased hereunder by National Starch shall be pursuant to
the terms and conditions as set forth herein and in National Starch's
purchase order with respect to any such order for Products. Any terms,
conditions, or provisions in any other documents shall be null and void
and of no force and effect.
Upon Donlar's receipt of orders for the purchase of Products hereunder,
Donlar shall sell and deliver such quantities of the Products as National
Starch may from time to time order.
3. Specifications, Quality, Title and Ability to Manufacture. Donlar
represents and warrants that (i) all Products manufactured, packaged and
delivered by Donlar will meet the specifications set forth in Appendix B
attached hereto (the "Specifications"), (ii) the Products will be of good
and merchantable quality, (iii) Donlar has the necessary expertise and
equipment to manufacture, handle, package and ship the Products and (iv)
National Starch shall receive good and marketable title to the Products
free of any claims, liens or encumbrances.
4. Tradenames and Trademarks. Donlar acknowledges and agrees that (i) the
Products will be sold under National Starch's tradenames and trademarks
(ii) that National Starch is the sole owner of such trademarks and trade
names, (iii) Donlar shall not, throughout the term hereof or thereafter,
use such tradenames or trademarks or any one confusingly similar thereto,
except in connection with the solicitation of orders for National Starch.
Donlar agrees not to use in its commercial name any of the tradenames or
trademarks, or a tradename or trademark confusingly similar thereto and,
not to file in any country, directly or indirectly, an application for
registration of such tradenames or trademarks.
5. Purchase Targets and Extension or Termination of Agreement.
(a) The purchase targets for National Starch during the term of this
Agreement (excluding from such purchases for each year the total
amount of purchases by Henkel from Donlar for use in the Fields
during the twelve months preceding the date of this Agreement) are
as follows:
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(i) From the date of this Agreement through
December 31, 1996: $-0-.
(ii) Calendar year 1997: $700,000.
(iii) Calendar year 1998: $1,800,000.
(iv) Calendar year 1999: $3,000,000.
(v) The dollar sales volume for calendar year
2000 and each calendar year thereafter
shall be the sales volume in the prior
calendar year plus 10% of such amount.
(b) If sales of Products through December 31, 1997, 1998 or 1999 are less
than 85% of the target sales for such calendar year plus shortfalls,
if any, from the prior calendar year, the parties will promptly meet
to review the reasons for the shortfall and National Starch will
propose a marketing plan for achieving its goals in the succeeding
calendar year plus any such shortfall.
(c) If the sales of Product to National Starch in any year commencing
calendar year 1998 are less than seventy five percent (75%) of the
target sales for such year as set forth in Section 5 (a) above:
(i) Donlar may convert National Starch's distribution rights
herein granted to non-exclusive if Donlar reasonably believes
that National Starch's marketing proposal does not represent
a sufficient commitment of marketing resources to achieve the
next calendar year target to be effective at the end of the
next calendar year; and
(ii) National Starch may terminate this Agreement except
as to any outstanding purchase order if it reasonably
believes that the market potential for the Products or
Derivatives, as applicable, in the Fields is insufficient to
permit the sales targets set forth in Section 5 (a) to be
achieved with a reasonable level of marketing effort.
6. Term of Agreement. The term of this Agreement begins on the date it is
signed and continues through December 31, 1999. This Agreement shall
continue thereafter unless terminated by either party upon the giving to
the other party of not less than one year prior written notice provided,
however Donlar may not terminate this Agreement
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pursuant to this Section 6 if National Starch has purchased at least
seventy five percent (75%) of the target purchases as set forth in
Section 5 (a)(v) above in the calendar year preceding the date of any
such notice.
7. Marketing Support. National Starch will develop technical and
applications information on the Products for the Fields and prepare
appropriate literature to support the marketing of the Products in the
Fields, all at National Starch's expense. National Starch will bear all
expenses it incurs in marketing and supporting Products in the Fields,
including advertising costs.
8. Communications and Reporting. National Starch will inform Donlar
regarding (a) customer feedback, (b) status and results of applications
testing, (c) competitive developments, and (d) other developments that
affect or may in the future affect sales of the Products in the Fields.
Donlar shall promptly communicate to National Starch all leads and
inquiries received by Donlar regarding the purchase of Products in the
Fields.
9. Information Sharing; Confidentiality. Each party will provide the other
party, in confidence, with technical information and marketing information
regarding Products, that is necessary to the other party's effective
performance of its functions under this Agreement.
Confidential information disclosed in tangible form will be conspicuously
marked to identify its ownership, for example by the following legend:
"CONFIDENTIAL - PROPERTY OF ".
Each party will preserve the other party's confidential information in
strict confidence and safeguard its confidentiality in accordance with
good industrial operating practice and with the same care and protection
that the party accords to its own confidential proprietary information.
Neither party will use the confidential information of the other party
except to perform this Agreement.
Confidential information shall include all proprietary and confidential
information, whether disclosed in tangible or non-tangible form,
including but not limited to all technical information relating to the
Products, processes for manufacturing the Products and end uses of the
Products, and customer names or related business information.
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The obligations of confidentiality specified in this Paragraph 11 shall
not apply to any Confidential Information which (1) is at the time of
disclosure or thereafter becomes, other than through the fault of the
receiving party, generally available to the public, (2) was known to the
receiving party prior to the disclosure thereof by the other party, (3)
is disclosed to the receiving party by a third party who is not thereby
in breach of any confidentiality obligation to the other party with
respect thereto, or (4) is independently developed by the receiving party
as evidenced by its records.
Donlar will keep confidential and not disclose to any person or entity
that Donlar is manufacturing and supplying the Products to National
Starch, except insurance or regulatory or other governmental agencies or
bodies or investors or potential investors in Donlar requesting said
information, or in the event the same is to be disclosed pursuant to
court order.
The provisions of Paragraph 10 shall survive the termination or
expiration of this Agreement.
10. Environmental and Safety. Donlar acknowledges that the Products and raw
materials used in the manufacture thereof contain hazardous or toxic
substances. Donlar shall at all times operate and maintain its plant in
compliance with all applicable federal, state, and local health, safety
and environmental laws and regulations governing the manufacture, handling
and packaging of the raw materials and/or the Products as well as all
other federal, state or local laws, rules, regulations, directives or
orders applicable to the manufacture of the Products. Donlar shall adhere
to all pertinent warnings or instructions of the manufacturers of any
materials used in the manufacture of the Products and undertake all
pertinent employee training programs to ensure compliance with any such
instructions. Donlar shall permit a qualified Health and Safety
representative of National Starch access to its plant during normal
business hours at any time during the term of this Agreement on reasonable
advance notice to verify compliance with the provisions of this Section
12.
Nothing in this Agreement shall be construed as requiring Donlar to
manufacture any Product when doing so would cause Donlar to be in
violation of any applicable health, safety or environmental laws or
regulations now or
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hereafter in effect.
11. Quality Control; Samples; Sample Retention. Donlar shall, at its expense,
perform quality control testing in accordance with its normal procedures
to ensure the Products meet the Specifications. Donlar shall have the
right to have any quality control testing which Donlar is not capable of
itself performing, performed by outside contractors acceptable to National
Starch.
Prior to shipment of any Products Donlar shall send to National Starch's
quality control department at NSC's facilities at ______________,
_______________ or such other location as National Starch may designate a
certificate of analysis of, and sample from, each such shipment of
Products. If National Starch determines that any such sample does not
meet the Specifications, National Starch will promptly notify Donlar of
the specific nature of such failure. Any such Product which does not meet
its Specifications shall be returned to Donlar at Donlar's sole cost and
expense. Donlar shall have access to one-half of the sample relating to
such returned Product for the purpose of submitting such sample to an
independent testing organization.
Donlar shall retain a sample from each batch for not less than one year.
Batch records and production records identifying lots of raw materials
used in the manufacture of a batch of Product shall be retained by Donlar
for three years.
12. Insurance. Donlar shall carry Workers' Compensation insurance coverage at
statutory limits, Employer's Liability insurance coverage in the amount of
$250,000 each accident; Comprehensive General Liability insurance coverage
with a Combined Single Limit-Bodily Injury and Property Damage of $1
million including contractual liability insurance coverage; naming
National Starch as an additional insured, covering the Product. Donlar
shall furnish National Starch with a certificate of insurance evidencing
such coverages and limits and containing a provision which requires the
insurer to use reasonable efforts to give NSC not less than 30 days prior
written notice in the event of cancellation of the insurance policy.
13. Indemnification. Donlar agrees to defend, indemnify and hold harmless
National Starch, its agents or employees from and against all claims,
actions, judgments, losses and expenses, including attorney's fees,
sustained or incurred by National Starch, its agents or employees
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which arises or results from (1) the performance, failure to perform or
improper performance of work under this agreement by Donlar or any other
breach by Donlar of the terms and provisions of this Agreement, (2)
Donlar's receipt, possession, handling, processing, manufacturing,
packaging or shipment of any raw materials, intermediates and/or the
Products, (3) the failure of any Product to meet the Specifications, (4)
any violation or alleged violation by Donlar of any federal, state or
local statutes, ordinances, orders, rules, regulations or directives
applicable to the receipt, possession, handling, processing,
manufacturing, packaging or shipment of the Products or any raw materials
or intermediates used in the manufacture of the Product or the disposal
of any waste or by-product arising or resulting from the manufacture of
the Products, (5) any negligent or willful act or omission of Donlar, its
employees, subcontractors or agents, or (6) the generation, handling,
storage, treatment or disposal of any solid or liquid waste or
by-products arising or resulting from the manufacture of the Products.
National Starch agrees to defend, indemnify and hold Donlar, its agents
or employees harmless from and against all claims, actions, judgements,
losses and expenses, including attorney fees, sustained or incurred by
Donlar, its agents or employees which arises or results from (1) the
performance, failure to perform or improper performance of work under
this agreement by National or any other breach by National of the terms
and provisions of this Agreement, (2) National's receipt, possession,
handling or shipment of any Products which conform to the Specifications,
(3) any violation or alleged violation by National of any federal, state
or local statutes, ordinances, orders, rules, regulations or directives
applicable to the receipt, possession, handling or shipment of the
Products which conform to the Specifications, or (4) any negligent or
willful act or omission of National, its employees, subcontractors or
agents.
14. Independent Contractors. Donlar and National Starch shall at all times
and for all purposes under this Agreement be considered independent
contractors. Manufacture of the Products shall at all times be under the
exclusive control and responsibility of Donlar.
15. Binding Effect; Entire Agreement; Amendment; Assignment. This Agreement
is binding upon the parties and their respective successors and assigns,
but may not be assigned by a party without the written consent of the
other party. This Agreement may not be modified or
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amended except by an instrument in writing signed by both parties. Any
inconsistency or conflict between the terms of this Agreement and any
purchase order, invoice or other communication shall be solely governed
by the terms of this Agreement. This Agreement is the entire agreement
between the parties hereto with regard to the subject matter hereof and
supersedes all prior discussions, arrangements or agreements between the
parties relating thereto.
16. Force Majeure. In the event either of the parties by reason of an act of
God, including fire, windstorm and flood; by inability to obtain raw
materials, supplies, fuel or power; by work stoppage caused by strike or
other labor dispute; by governmental prohibitions; or by any other cause
unrelated to acts or omissions of the party suffering such disability,
suffers the inability to perform all or any portion of its obligations
under this Agreement, except for payment of invoices, then the party
suffering such disability shall be excused from such performance for so
long as such event causes such inability to perform. Such party affected
by any such event shall immediately notify the other party and indicate
the expected duration of such interruption. However, if the ability of a
party to perform substantially all of its material obligations under this
Agreement is interrupted for a period of three months or more, the other
party may elect to terminate this Agreement.
17. General Provisions. The law of Illinois, U.S.A. will govern this
Agreement and the performance of the parties. Each party's address for
notice is set forth below the party's signature and may be changed from
time to time by notice to the other party. Notices are to be given in
writing and may be delivered by any customary commercial means including
postal service, facsimile, and air courier. Notices are effective upon
receipt by the addressee (or upon tender of delivery if the addressee
refuses delivery).
18. Assignment. This Agreement shall not be assigned or transferred by either
party by operation of law or otherwise, whether in whole or in part,
without the prior written consent of the other party, which consent will
not be unreasonably withheld. Donlar may not assign or subcontract any
obligation required to be performed hereunder by Donlar without the prior
written consent of National Starch.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
Donlar Corporation National Starch and Chemical
Company
By: Xxxxx X. Xxxxxx By: Xxxxxx Xxxx
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Name and Title: President Name and Title: Vice President
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Address: Address:
0000 Xxxxx Xxxxxx Xxxxxx 10 Finderne Avenue
Bedford Park, IL 60501 Xxxxxxxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxx Attn: Xx. Xxxxxx Xxxx
Xx. Xxxxxxxx Xxxx Xx. Xxxxxxx X. Xxxxxx
Mr. Win X. Xxxxx
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APPENDIX A
Initial prices for 1996 shall be agreed upon on a case-by-case basis.
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