Contract
EX-10.6
9
v115179_ex10-6.htm
Exhibit
10.6
Form
of
Genset Distribution Agreement
GENSET
DISTRIBUTION AGREEMENT
This
Genset Distribution Agreement (the “Agreement”) is made as of _______________,
by and between Hydrogen Engine Center Inc., an Iowa corporation (“HEC”), which
has an office at 000 Xxxx Xxxx Xxxxxx, Xxxxxx, Xxxx 00000, and
_____________________________________ a ___________________ (“Distributor”),
which has an office at ___________________________. HEC and the Distributor
are
referred to in this Agreement from time to time individually as a “Party” and
together as the “Parties.”
Background
A. HEC
is in
the business of designing, developing, manufacturing, distributing and selling
electrical power generation systems using internal combustion engines fueled
by
either gaseous or liquid fuels.
B. HEC
wishes to appoint the Distributor as one of its distributors of the Systems,
and
the Distributor wishes to be HEC’s distributor of the Systems (as defined in
Section 1.1).
C. HEC
wishes to have the Distributor market, distribute, and sell the Systems using
the Licensed Trademarks.
D. HEC
is
the owner of the Licensed Trademarks and has agreed to license the use of the
Licensed Trademarks to the Distributor in accordance with the terms and
conditions of this Agreement.
E. Capitalized
terms used in this Agreement and not defined in the body of this Agreement
are
defined in Exhibit A to this Agreement.
NOW,
THEREFORE, THE PARTIES AGREE AS FOLLOWS:
Article
I
Appointment
1.1 Appointment.
Effective as of ____________________ (the “Effective Date”), HEC appoints the
Distributor as a distributor of HEC’s Oxx PowerTM
brand
electrical power generation systems using internal combustion engines fueled
by
either gaseous or liquid fuels (the “Systems”). This appointment is valid only
for the assigned territory or market segment defined on Exhibit D the
“Territory” and the Distributor hereby accepts such appointment. The Distributor
acknowledges that it may sell, deliver or otherwise distribute Systems only
in
the Territory, except as provided for in Section 2.5.
Article
II
Obligations
of the Distributor
2.1 Organization
of the Distributor.
(a) The
Distributor will use its best efforts to solicit sales of the Systems, to
service customers for the Systems, and to promote the goodwill, Trademarks
and
interest of HEC.
(b) The
Distributor will establish and maintain a level of representation for the
Systems reasonably satisfactory to HEC, by:
(i) employing
such reasonable numbers of individuals who have been adequately trained in
the
marketing and sales of the Systems as well as adequate numbers of service
technicians who have successfully completed HEC training in the installation,
startup, repair, field service and maintenance of the Systems;
(ii) maintaining
such premises, facilities and equipment for sales, stocking and servicing of
the
Systems as are, in HEC’s reasonable opinion, adequate for the Distributor’s
sales targets, sales plans and marketing strategies as set forth in Section
2.4.
The Distributor will ensure that full service support is provided to the
customers purchasing Systems from it, regardless of the location of the
customer. This full service support will include System start-up at the customer
location(s), warranty registration, warranty repairs, and normal repairs and
maintenance, including field service. This full service support will be provided
by the Distributor directly, by its Dealers (as defined in Section 2.13) (if
any), or through another HEC distributor, subject to the prior approval of
both
the customer and the other distributor.
(c) The
Distributor will establish and maintain adequate financial and credit resources
needed to perform its obligations under this Agreement.
2.2 Promotion.
The
Distributor will (a) promote in every reasonable manner and at its expense,
to
the satisfaction of HEC, the sale of the Systems and (b) immediately pass to
HEC
details of any complaints received from customers or others relating to the
System.
2.3 Competing
Products.
If the
Distributor markets or sells Competing Products, the Distributor will
demonstrate, to HEC’s satisfaction, its ability and strategy to market both
brands successfully and without detrimental effect to the HEC brand(s). The
Distributor will provide HEC’s with fourteen days written notice in advance of
any agreement to market and/or distribute additional brands of Competing
Products. If the Distributor does not satisfy HEC’s concerns regarding Competing
Products, then HEC shall have the right to terminate this
Agreement.
2.4 Sales
Targets. Each
year, HEC, after consulting with the Distributor, will set sales targets for
the
Distributor and the Distributor will develop and present marketing strategies
and sales plans to achieve the sales targets. The Distributor will comply with
HEC’s policies concerning sales and service policies, procedures and systems,
marketing programs, advertising and sales promotion, and such other requirements
as HEC may, from time to time, establish. HEC shall provide reasonable notice
to
the Distributor of such policies and any changes to such policies.
2.5 Sales
Out Of Territory/Market.
The
Distributor agrees to the following provisions for out-of-territory sales,
both
for instances when the Distributor is making the sale to a customer outside
the
Distributor’s Territory and for instances where other HEC distributors are
making sales to customers within the Distributor’s Territory.
(a) A
distributor will not, directly or indirectly, solicit orders for the Systems,
advertise the Systems, maintain any branch for the marketing of the Systems,
or
keep any inventory of the Systems, outside of the distributor’s Territory.
However, if a potential customer outside the Territory contacts the distributor,
then the distributor will notify HEC and choose to either:
(i) let
HEC
refer that customer to the distributor assigned to the customer’s Territory, if
such a distributor exists.
(ii) make
the
sale and manage the customer account and interaction related to the sale. If
this option is chosen, HEC will provide the distributor responsible for the
customer’s Territory, if any, with an “out of territory” fee equal to either 5%
of list price and that distributor will handle installation, startup and
warranty/repair service of the System. The distributor making the sale will
reimburse HEC for the “out of territory” fee.
(iii)
if
there
is no distributor responsible for that Territory, make the sale, manage the
customer account and provide the customer with full service support under the
terms of this Agreement.
(b) In
situations where the customer or customer business unit has multiple locations
that involve two or more distributor’s assigned Territories, then the customer
account and sales will be handled by the distributor responsible for the
Principal Location of the customer or customer business unit (if that is the
level making the purchasing decisions). The “Principal Location” of a customer
is defined as having two or more of the following functions (the requisitioning
activity issuing the purchase order, the engineering activity qualifying the
System for use by the customer, and using location where the System(s) will
be
installed). In instances where affected distributors cannot agree on the
customer’s Principal Location, HEC will decide.
Where
the
multiple-location or multiple-market customers result in one distributor making
the sale and some of the Systems then being shipped to and installed in other
distributors’ Territories, the distributor making the sale will be responsible
for managing the customer account and for handling the System installation
and
startup at the customer’s using locations (including responsibility for sending
the completed warranty registration card to HEC) and may subcontract the
installation and startup tasks to the distributor responsible for the customer’s
using location by negotiating mutually-acceptable terms. HEC will provide the
distributor responsible for the customer’s using location with an “out of
territory” fee equal to 2% of list price for the Systems involved and that
distributor will be responsible for the System’s ongoing product warranty
service, routine service and maintenance.
2.6 The
Distributor to Act as Principal.
The
Distributor will:
(a) in
all
correspondence and other dealings relating directly or indirectly to the sale
or
disposition of the Systems indicate that it is acting as principal and not
as an
agent of HEC, and
(b) not
incur
any liability on behalf of HEC or in any way pledge or purport to pledge HEC’s
credit or accept any order or make any contract binding upon HEC or give or
make
or purport to give or make any warranty or representation on behalf of
HEC.
2.7 Inspections
and Reports.
(a) The
Distributor will provide HEC with such statements, forms, reports, estimates
and
other information regarding its financial condition, inventory, sales, future
requirements, and other matters as HEC may reasonably request from time to
time.
Such reports will include, but not necessarily be limited to, the Distributor’s
quarterly financial statements, annual audited financial statements, warranty
registrations for new product installations, warranty repair reporting and
tracking, and marketing and sales plans and results.
(b) The
Distributor will permit and enable HEC’s authorized representatives to have
access to the premises of the Distributor for the purpose of inspecting the
equipment and facilities and the work carried out there in connection with
the
sale and servicing of Systems and inspecting and checking inventory of the
Systems and the inventory records applicable thereto.
(c) The
Distributor will report immediately to HEC in writing of any actual or
anticipated Change of Control.
2.8 Applications
Engineering.
The
Distributor will have a number of qualified engineers on staff or under contract
sufficient to provide applications engineering services for customers, including
customizing the System by adding accessories without modifying the content,
configuration or performance of the System as it is provided by
HEC.
2.9 Standards
of Performance.
The
Distributor will
(a) maintain
standards of performance for the Systems (including regarding warehousing and
stocking capabilities, engineering, delivery, customer training and information,
warranty, and repair services) as are reasonably acceptable to HEC;
and
(b) comply
with all procedures and policies set by HEC regarding standards
of
performance.
2.l0 Sales
and Service Performance.
(a) If
the
Distributor is not, as determined in good faith by HEC, at any time providing
sales or service coverage for the Systems (including at its own facility(ies)
or
at customer locations) in a responsive and highly professional manner (including
with respect to regular maintenance and repairs, warranty service,
factory-authorized startup procedures, maintaining service parts inventories,
liaison with HEC’s suppliers, and, if applicable, oversight of sub-distributors,
agents or dealers), then HEC will have the right
notwithstanding
anything to the contrary in this Agreement and without prejudice to any other
of
its rights under this Agreement, to serve notice on the Distributor requiring
the Distributor at its sole expense to remedy the defects or omissions in the
sales or service coverage, as applicable, specified in the notice within sixty
(60) days of the date of the notice.
(b) If
the
Distributor fails to remedy all or any of the specified defects or omissions
within the sixty (60) day period, then HEC will have the option, in its sole
discretion, to (i) terminate this Agreement, or (ii) exclude from this Agreement
such one or more of the Systems and/or geographic regions and/or market segments
in respect of which the specified defects or omissions have not been remedied
by
the Distributor within such sixty day period. HEC will also have the option,
in
its sole discretion; to extend such sixty (60) day period if the Distributor
has
defined a corrective action plan which is satisfactory to HEC and is making
satisfactory progress in implementing that plan.
2.11 Indemnification.
The
Distributor will indemnify and save harmless HEC from and against any and all
actions, suits, investigations, proceedings or claims of every kind and any
and
all expenses, losses, damages or liabilities (collectively, the “Liabilities”)
as and when incurred, insofar as such claims or Liabilities arise out of or
are
based, directly or indirectly, upon: (i) any action or inaction of the
Distributor, its permitted assigns, and their respective directors, officers,
employees, and agents, with respect to the Systems or their use; (ii) claims,
excluding claims arising from the breach by HEC of the provisions of this
Agreement, by third parties arising out of or relating to the Distributor’s use
of the Systems or the operation of its business; or (iii) any breach by the
Distributor of the provisions of this Agreement.
2.12 Insurance.
(a) The
Distributor shall maintain in force at all times during the term of this
Agreement commercial general liability insurance, including coverage for
contractual liability, products liability and completed operations, with a
minimum combined single limit for bodily injury and property damage of at least
$2,000,000 per occurrence and in the aggregate. Such policy shall provide
coverage for the negligent or other wrongful acts of the Distributor as well
as
any Dealers.
(b) The
Distributor shall provide to HEC a certificate of insurance reasonably
acceptable to HEC showing (i) the amount of coverage, policy number and date
of
expiration of the policy, (ii) that the policy names “Hydrogen Engine Center,
Inc., its subsidiaries and assigns, agents, officers, and directors” as
“additional insureds” for the coverage and as a “loss payee” with respect to all
property coverage, and (iii) that thirty days prior written notice must be
given
to HEC before any modification, lapse or cancellation of the policy. The
Distributor, on behalf of itself and its insurers, hereby waives any right
of
subrogation against HEC for any liability, costs or expenses imposed on the
Distributor or its insurers.
2.13 Compliance
with Laws; USA Export Controls.
(a) Distributor
shall comply with all applicable laws, including but not limited to export
control laws, anti boycott laws, and the Foreign Corrupt Practices Act, which
prohibits certain payments to third parties, in connection with its marketing,
distribution, and sale of the Systems, including obtaining (at its own expense)
any and all governmental approvals and authorizations that may be required.
Further, Distributor shall, at its own expense, take any measure required within
the Territory to declare, record, file, notify, authenticate, or otherwise
render valid this Agreement.
(b) Without
limiting the foregoing, Distributor agrees not to export, re-export, or permit
the re-exportation of the Systems to any country now or hereafter included
in
the U.S. Department of Commerce’s list of countries to which exportation of the
Systems is or may be restricted or prohibited, unless that exportation or
re-exportation is specifically authorized by a special license issued by the
U.S. Office of Export Administration. This provision shall not in any way be
interpreted to expand the definition of “Territory” set forth in Section 1.1 of
this Agreement.
2.14 Miscellaneous
Covenants.
(a) The
Distributor will not alter, secure, remove, conceal or otherwise interfere
with
any markings or nameplates or other indication of the source of origin of the
Systems.
(b)
HEC
recognizes that the Distributor may use agents, dealers or sub-distributors
(together, the “Dealers”) to assist it with its sales of the Distributors’s
products containing Systems. However, unless HEC consents in writing to such
arrangements and unless any such Dealer signs such acknowledgments or agreements
as HEC requires, the HEC obligations, warranties, trademark licenses and other
responsibilities contained in this Agreement shall remain solely with the
Distributor and the Dealer shall have no rights with respect to
HEC.
If
HEC
consents to such arrangements and the Dealer signs such acknowledgments or
agreements as HEC requires, the Distributor will not be released from any of
its
obligations under this Agreement. The Distributor shall be responsible for
monitoring and ensuring that the Dealers comply with all of the terms and
conditions of this Agreement which apply to the Distributor.
Article
III
Obligations
of HEC
3.1 HEC’s
Assistance.
HEC will
assist the Distributor in the marketing of the Systems by:
(a) ensuring
that sales brochures, catalogues, service manuals, and other literature relative
to the Systems are made available at reasonable cost to the Distributor
according to the types and quantities of the Systems purchased by the
Distributor from HEC;
(b) providing
a recommended stocking level and mix of Systems for the Distributor’s initial
stocking (“Recommended Initial Stocking Package”), as well as the recommended
stocking level for new System or Systems products subsequently introduced by
HEC
(“Recommended New Product Stocking Package”), which recommendations the
Distributor will be free to accept or reject;
(c) acquainting
the Distributor with such new methods of selling and new applications for the
Systems as may be recommended by HEC;
(d) providing
factory training for service technicians at no cost for the first six months
after the Effective Date; and
(e) making
available, at a reasonable cost to the Distributor, factory training for the
Distributor’ s staff in the marketing and servicing of Systems in accordance
with the programs and subject to the conditions established from time to time
by
HEC.
3.2 Warranty.
(a) HEC
warrants that, subject to the limitations in Section 3.3 below, at the time
of
delivery by HEC to the Distributor, the Systems will be in conformance with
HEC’s specifications and will be substantially free of defects resulting from
defective materials or workmanship (the “Warranty”). The Warranty will be
effective for the period (the “Warranty Period”) as defined on Exhibit B and
will be subject to the other provisions set forth in Exhibit B, which exhibit
may be revised by HEC from time to time with advanced written notice to the
Distributor. Subject to Section 3.3, if the Distributor or its customer
discovers any such defect within the Warranty Period, then HEC shall reimburse
the Distributor for the cost of repairs in accordance with Exhibit
B.
(b) The
Warranty shall only apply if the System is operated and maintained in accordance
with HEC specifications, operating instructions, and maintenance schedule.
In
addition, it will only apply if all maintenance and repairs are performed by
qualified service technicians using HEC authorized parts and
materials.
3.3 Warranty
Exclusion and Limitations
(a) THE
WARRANTY IS THE SOLE WARRANTY MADE BY HEC WITH RESPECT TO THE SYSTEMS, IS
EXCLUSIVE, AND IS GIVEN AND ACCEPTED IN LIEU OF (I) ANY AND ALL OTHER
WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND (II) ANY OBLIGATION,
LIABILITY, RIGHT, CLAIM OR REMEDY IN CONTRACT OR TORT, WHETHER OR NOT ARISING
FROM THE NEGLIGENCE, ACTUAL OR IMPUTED OF HEC.
(b) The
Warranty shall not apply to any Systems if a System or any part of
a
System:
(i) is
damaged by misuse, accident, negligence or failure to maintain the Systems
as
specified by HEC;
(ii)
has
been
altered, modified or in any way changed after delivery of the System by HEC,
unless such alterations, modification, or change has been authorized in writing
by HEC;
(iii)
is
installed, modified, operated or disassembled contrary to the procedures
specified by HEC; or
iv)
is
used
in combination with items, articles or materials not authorized by
HEC.
(c) In
addition, the Warranty is subject to the following limitations:
(i)
HEC’s
responsibility, and the Distributor’s exclusive remedy, under the Warranty is
limited to the repair or replacement of defects in materials and workmanship
as
set forth below.
(ii) THE
WARRANTY IS THE ONLY WARRANTY APPLICABLE TO THE SYSTEMS. THE WARRANTY EXCLUDES
ALL OTHER EXPRESS ORAL OR WRITTEN WARRANTIES AND ALL WARRANTIES IMPLIED BY
LAW
WITH RESPECT TO THE SYSTEMS, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
(iii)
The
Warranty is for the benefit of, and shall be enforceable by or on behalf of,
the
Distributor only, and not by any other person or entity.
(iv)
Every
claim under the Warranty for a particular System shall be deemed waived by
the
Distributor unless such claim is made in writing to HEC within sixty days after
the expiration of the Warranty Period.
(d) HEC
is
not responsible for any indirect, incidental or consequential damages resulting
from the breach of this or any other express or implied warranty with respect
to
the Systems.
3.4 Indemnification.
Within
the limitations of the Warranty, HEC will indemnify and save harmless the
Distributor from and against any and all actions, suits, investigations,
proceedings or claims of every kind and any and all Liabilities as and when
incurred, insofar as such claims or Liabilities arise out of or are based,
directly or indirectly, upon any breach by HEC of the provisions of this
Agreement or caused by defects in the HEC products as supplied by HEC to the
Distributor; provided, however, that under no circumstances shall HEC have
any
indemnification obligations to the Distributor if any System is altered,
modified, or improved in any way after delivery by HEC.
3.5 Modification
of Warranty.
No
agreement varying or extending the Warranty or the remedies set forth in this
article will be binding upon HEC unless in writing and signed by a duly
authorized officer of HEC.
Article
IV
Terms
and Conditions of Ordering and Purchase
4.1 Notice
of Requirements.
The
Distributor will give to HEC at least [90] days notice of its requirements
for
Systems in every month of this Agreement.
4.2 Orders.
All
orders for Systems required by the Distributor must be dispatched by the
Distributor to HEC in writing or by electronic data transmission.
4.3 Acceptance/Rejection
of Orders.
Each
order may be accepted or rejected by HEC. No order placed will be deemed
accepted until a formal acceptance has been dispatched to the Distributor by
HEC
in writing or by electronic data transmission. HEC is under no obligation to
accept all or any orders tendered by the Distributor.
4.4 Conditions
of Sale. Each
order placed by the Distributor for the purchase of a System and accepted by
HEC
will (whether or not expressly stated in the order or acceptance) be deemed
to
have been so accepted upon and subject to the terms and conditions of this
Agreement, including HEC’s standard terms and conditions of sale (including
warranty) current at the time of acceptance of such order. The Distributor
shall
take delivery of the Systems at HEC’s facility, title to the Systems shall pass
upon delivery, and the Distributor will be responsible for all transportation
costs and expenses from HEC’s facility.
4.5 Price.
Unless
otherwise agreed between the Parties, the purchase price the Distributor will
pay HEC for the Systems will be those specified in HEC’s Systems price list
current at the date of delivery by HEC to the Distributor, less any discount
mutually agreed upon in writing by the Parties and less any financial incentives
specified by HEC for purchases by the Distributor that exceed the then-current
sales targets. HEC may suggest the price levels for the Distributor to charge
its customers, but the Distributor will make the final decision regarding the
prices and discounts that it will provide to its customers and any
Dealers.
4.6 Payment.
All
payments, including charges for the purchase price, taxes, shipping, and other
costs that are payable by Distributor shall be (i) prepaid, or (ii) paid by
letter of credit at a bank in the United States acceptable to HEC, or (iii)
upon
such other payment terms as may be agreed to in writing by HEC.
4.7 Returns.
(a) For
the
first twelve months after purchasing and receiving Systems from HEC as part
of
either a Recommended Initial Stocking Package or a Recommended New Product
Stocking Package, the Distributor shall have the right to exchange any such
unused, undamaged Systems for a different System and shall be responsible only
for paying the costs of transportation, and any price difference.
(b) For
all
other Systems purchased from HEC, the Distributor shall have the right to
exchange any unused and undamaged Systems for a different System and shall
be
responsible for paying the costs of transportation and for paying to HEC a
reasonable restocking fee set by HEC; provided, however, that HEC shall not
be
required to accept the exchange of a System from the Distributor after the
first
anniversary of the delivery of the System to the Distributor
4.8 Warranty
By The Distributor.
The
Distributor will, in supplying the Systems, give for the benefit of the first
user of the Systems a warranty no less favorable to the first user than the
warranty given to the Distributor by HEC.
4.9 Modifications
By HEC.
HEC may
make modifications to the design of, or fitments to, any of the Systems or
make
improvements to them at any time, but shall be under no obligation to apply
the
same to any System previously purchased by the Distributor.
4.10 No
Modifications By The Distributor.
The
Distributor will not make any modifications to, or in any way vary, the HEC
specifications of any System.
4.11 Right
to Discontinue.
HEC
reserves for itself the right to discontinue the manufacture of any System
without incurring any obligation or liability to the Distributor.
4.12 Taxes.
(a) Distributor
will pay, or reimburse HEC for, any taxes, duties, and tariffs, however
designated, arising from or based upon HEC’s sale of the System to Distributor,
this Agreement, the licenses granted pursuant to this Agreement, or
Distributor’s use or sale of the Systems, but not including any income or
corporate excise tax assessed against, or levied on, HEC.
(b) If
applicable, Distributor shall furnish HEC with whatever certificates or other
instruments may be necessary or appropriate to evidence that HEC’s sales of the
Systems to Distributor are not subject to tax under applicable law.
Article
V
Licensed
Trademarks
5.1 License
Grant.
Effective on the Effective Date and ending on the date of the
termination
or expiration of this Agreement, HEC grants to the Distributor a
non-transferable, non-exclusive license (the “License”) to use the Licensed
Trademarks solely in the Territory for promoting the sale of Systems and for
no
other purpose whatsoever.
5.2 License
Terms.
The
remaining terms governing the grant of the License are as follows.
(a) The
Distributor shall only use the Licensed Trademarks in accordance with the
instructions, standards of quality and specifications set by and approved by
HEC
from time to time.
(b) The
Distributor acknowledges and agrees that HEC is the sole and lawful owner of
the
Licensed Trademarks and the Distributor has no right, title or interest in
or to
the Licensed Trademark, or any part thereof; except the right to use the same
as
set out in this article and that nothing in this Agreement will be construed
as
an assignment or grant to the Distributor of any right, title or interest in
or
to the Licensed Trademarks other than by way of the License granted in this
Agreement.
(c) The
Distributor will not challenge, directly or indirectly, HEC’s right, title or
interest in the Licensed Trademarks or any one or more of them during or after
the term of this Agreement or adopt or use any trademark, symbol, name, word
or
other xxxx which includes, or is confusingly similar to, any of the Licensed
Trademarks or any part of the Licensed Trademark.
(d) Upon
termination of this Agreement, the Distributor will immediately cease to use
the
Licensed Trademarks and will remove and discontinue the use of all signs,
stationery, advertising and other material that would make it appear to the
public that the Distributor is still in any way associated with HEC or the
rights granted under this Agreement.
(e) Without
restricting any of the other rights or remedies of HEC under this Agreement,
upon termination of the rights granted under the License and regardless of
the
reason for termination, all rights whatsoever granted or accruing to the
Distributor pursuant to this article will automatically revert to
HEC.
(f)
During
the term of this Agreement, all packaging and marketing materials used by the
Distributor for the Systems shall use the Licensed Trademarks.
5.3 Goodwill;
Assignment of Rights.
Any
goodwill arising from Distributor’s use of the Licensed Trademarks under this
Agreement shall inure to the sole benefit of HEC and any enhancement in the
value of Licensed Trademarks that results from the efforts of Distributor shall
be effected to the sole benefit of HEC and shall not give rise to any
compensation to Distributor in the event of the expiration or termination of
this Agreement, with or without cause, or otherwise.
Article
VI
Term
and Termination
6.1 Term.
This
Agreement shall remain in force for an initial period expiring on the third
anniversary of the Effective Date (the “Initial Term”). This Agreement may be
extended for additional one-year terms, expiring on the next anniversary of
the
Effective Date, unless written notice of termination is delivered by either
Party no less than 30 days prior to the expiration of the term.
6.2 Termination.
Notwithstanding Section 6.1, this Agreement may be terminated as
follows:
(a) if
an
Event of Default has occurred and is not cured within thirty days of receiving
written notice of such event by the non-defaulting Party to the other Party;
provided, however, that such cure period shall not apply to (i) any Event of
Default described in (d), (e), (f) or (g) of the definition of Event of Default,
or (ii) any breach of Article VII;
b) by
HEC
pursuant to Section 2.10;
(c) by
HEC,
if the Distributor fails to discontinue (within thirty (30) days of HEC’s
written request) any line of products which, in the reasonable opinion of HEC,
might interfere with the proper distribution of the Systems;
(d) immediately
by HEC if, any change occurs in the constitution, management, or the financial
or other circumstances of the Distributor, including a Change of Control,
including if any interest in the Distributor is, directly or indirectly,
acquired by any Company engaged in any business which, in the opinion of HEC,
competes with the business of HEC or any Affiliate of HEC; or
(e) by
either
Party in accordance with Section 6.3.
6.3 Force
Majeure.
(a) Upon
giving written notice to the other Party, a Party affected by an event of Force
Majeure (as defined in Section 6.3(c)) shall be released without any liability
on its part from the performance of its obligations under this Agreement, except
for the obligation to pay any amounts due and owing under this Agreement, but
only to the extent and only for the period that its performance of such
obligations is prevented by the event of Force Majeure. Such notice shall
include a description of the nature of the event of Force Majeure, and its
cause
and possible consequences. The Party claiming Force Majeure shall promptly
notify the other Party of the termination of such event. The Party invoking
Force Majeure shall also provide to the other Party confirmation of the
circumstances constituting Force Majeure. Such evidence may consist of a
statement of an appropriate governmental department or agency where available,
or a statement describing in detail the facts claimed to constitute Force
Majeure.
(b) If
the
conditions of Force Majeure continue for a period longer than three (3)
consecutive months which prevents the other Party from fulfilling one or more
of
its material obligations under this Agreement, then either Party may terminate
this Agreement by giving thirty days notice in writing to the other
Party.
(c) “Force
Majeure” shall mean any event or combination of events which (i) did not exist
on the date of this Agreement, (ii) was not reasonably foreseeable on the date
of this Agreement, (Hi) is the direct or substantial cause of preventing or
delaying the fulfillment by either Party of one or more of its material
obligations under this Agreement, and (iv) is beyond the reasonable control
of
such Party and could not have been avoided by the exercise of due care. Such
events shall include fire, floods, typhoons or hurricanes, earthquakes and
other
natural disasters, war or terrorist incident, and riots.
6.4 Results
of Termination.
Upon the
termination of this Agreement, the following shall apply.
(a) All
unfulfilled orders for Systems from the Distributor to HEC will
automatically
be cancelled except those which HEC agrees to fulfill.
(b) All
rights granted by HEC to the Distributor under this Agreement will immediately
be relinquished by the Distributor with no further action required by either
Party.
(c) The
Distributor will:
(i) immediately
discontinue all use of the Licensed Trademarks or any other trade marks, trade
names, designations, and slogans owned or used by HEC, including on signs and
in
stationery and advertising as well as in websites and other electronic formats;
and
(ii) take
no
action that would make it appear to the public that the Distributor is still
servicing or supplying the Systems.
(d) Any
indebtedness of the Distributor to HEC will become due and payable on the date
of termination of this Agreement.
(e) HEC
will
have the option to repurchase from the Distributor, free from all liens and
encumbrances, any new and unused Systems which are unsold and in the
Distributor’s possession upon refund of the purchase price actually paid by the
Distributor to HEC for such Systems, less costs of reconditioning assessed
by
HEC at its sole discretion. If HEC exercises that option, then HEC shall take
delivery of the Systems at the Distributor’s facility, title to the Systems
shall pass upon delivery, and HEC will be responsible for all transportation
costs and expenses from the Distributor’s facility. Such option will extend for
a period of ninety days from the date of termination and the Distributor will
ensure that delivery of each such repurchased System is in accordance with
HEC’s
directions; provided, however, that nothing in this subsection will be construed
so as to oblige HEC to purchase all or any part of the Distributor’s inventory
of Systems.
(f)
The
Distributor will deliver to HEC all price lists, bulletins, manuals, catalogues
and other literature and publications relating to sales and product information,
servicing and repair parts, together with a copy of all sales and service record
cards pertaining to the Systems. For this purpose, the Distributor will give
HEC
or its nominee access at all reasonable times to all customer and service
records of the Distributor relating to the Systems and permit copies to be
taken
of such records.
(g) The
Distributor will, at its expense, promptly, and in any event within ten days
after the termination of this Agreement, at HEC’s option:
(i) destroy
all the HEC Confidential Information (in whatever form) and all reproductions
of
such information and all samples of materials provided by HEC to the Distributor
in its possession or control and confirm such destruction to HEC in writing,
or
(ii) deliver
to HEC all the HEC Confidential Information, including all such information
that
is electronically stored, all reproductions thereof and all samples of materials
provided by HEC to the Distributor in its possession or control.
6.5 Surviving
Covenants.
Upon the
termination of this Agreement, subject as
otherwise
provided in this Agreement and to any rights or obligations which may have
accrued before such termination, no Party will have any further obligations
to
the other Party under this Agreement.
Article
VII
Confidentiality
7.1 Confidentiality
Obligations.
The
Distributor:
(a) will,
and
will ensure that each of its directors, officers, employees, agents, Affiliates,
and any Dealers (collectively, the “Distributor Agents”) will, hold in
confidence and keep confidential the HEC Confidential Information;
(b) will
only
disclose the HEC Confidential Information to the Distributor
Agents:
(i) with
a
definable need to know the HEC Confidential Information in connection with
this
Agreement, and
(ii) who
are
informed of, and agree to comply with, the confidential nature of the HEC
Confidential Information;
(c) will
not,
and will ensure that none of the Distributor Agents will, directly or
indirectly, use or disclose any HEC Confidential Information except to the
extent that it is strictly necessary for the purposes of this
Agreement;
(d) will
not,
and will ensure that none of the Distributor Agents will, except to the extent
necessary for the purposes of this Agreement, make copies of or otherwise
reproduce the HEC Confidential Information, and
(e) will,
and
will ensure that each of the Distributor Agents will, maintain all the HEC
Confidential Information in a manner so as to protect the same against wrongful
disclosure, misuse, espionage and theft.
7.2 Exceptions
for Confidentiality.
“HEC
Confidential Information” shall not include any information:
(a) which
is
or becomes generally available to the public through no breach of the terms
of
this Agreement or any other obligation of the Distributor or the Distributor
Agents to HEC;
(b) of
which
the Distributor or the Distributor Agents had knowledge before the Effective
Date unless the same was disclosed to the Distributor or the Distributor Agents
by HEC as demonstrated by independent evidence;
(c) of
which
the Distributor or the Distributor Agents obtained knowledge from a third party,
unless such third party obtained the HEC Confidential Information in violation
of any duty of confidence owed to HEC; or
(d) which
is
required to be disclosed pursuant to law or a rule, regulation, policy or order
of a governmental authority having jurisdiction or pursuant to a final order
or
judgment of a court of competent jurisdiction, and in such case the Parties
will
cooperate with one another to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be afforded to the HEC
Confidential Information.
7.3 Reasonable
Restriction.
The
Distributor agrees that the restrictions contained in this article are
reasonable for the protection of the legitimate business interests of
HEC.
7.4 Injunctive
Relief.
The
Distributor acknowledges that a breach by it of any covenant contained in this
article could result in damages to HEC which may not adequately be compensated
for by monetary award alone. Accordingly, if any such breach by the Distributor
occurs (either directly or through the actions of the Distributor Agents),
then,
in addition to all other remedies available to HEC at law or in equity, HEC
will
be entitled as a matter of right to apply to a court of competent jurisdiction
for relief by way of restraining order, injunction, decree or otherwise, as
may
be appropriate, to ensure compliance with the provisions of this
article.
7.5 Survival
of Covenants.
The
provisions of this article are separate and distinct covenants and agreements
and will be enforceable after the termination of this Agreement regardless
of
the reasons for the termination.
Article
VIII
Dispute
Resolution
8.1 Arbitration.
Except
as otherwise provided for in this Agreement, any dispute arising
under this Agreement shall be settled by arbitration in metropolitan Des Moines,
Iowa in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the “AAA”). It is the intention of the Parties that the
arbitration award shall be final and binding, shall not be appealable, and
that
a judgment of any court having jurisdiction thereof may be rendered upon the
award, and enforcement may be had according to its terms. This agreement to
arbitrate shall be specifically enforceable against each Party.
8.2 Arbitrators.
Arbitration shall be conducted by one arbitrator mutually agreed upon by the
Parties, or, if the Parties cannot agree on an arbitrator within thirty days
of
submission, then the single arbitrator shall be selected in accordance with
the
provisions of the AAA rules governing selection of an arbitrator. At no time,
however, may an arbitrator be selected by the AAA.
8.3 Enforcement.
The
Parties agree that an action to compel arbitration pursuant to this Agreement
may be brought in any court of competent jurisdiction in the United States.
Application may also be made to any such court for confirmation of any decision
or award of the arbitrators, for an order of enforcement and for other remedies
that may be necessary to effectuate such decision or award. The Parties consent
to the jurisdiction of the arbitrators and of such court and waive any objection
to the jurisdiction of such arbitrator and court.
8.4 Costs
and Expenses.
Each
Party shall pay its or their own costs and expenses incurred as a result of
arbitration under this article and each Party shall pay one-half of the costs
and expenses of the arbitrator.
Article
IX
General
Provisions
9.1 Interpretation.
(a) The
headings in this Agreement are inserted for convenience only and do not form
a
part of this Agreement and are not intended to interpret, define or limit the
scope, extent or intent of this Agreement or any provision of this
Agreement.
(b) The
word
“including” means “including, but not limited to.”
(c) Except
where otherwise specified, all references to currency mean currency of the
United States of America.
(d) A
reference to a statute includes all regulations made under such statute, all
amendments to the statute or regulations in force from time to time, and any
statute or regulation that supplements or supersedes such statute or
regulations.
(e) Unless
otherwise specified, all references to Articles and Sections shall mean Articles
and Sections of this Agreement.
9.2 Entire
Agreement. This
Agreement constitutes the entire agreement among the parties and supersedes
any
prior or contemporaneous agreement, communication, expectation, negotiation,
representation or understanding, whether oral or written, express or implied,
statutory or otherwise, among the Parties with respect to the subject matter
of
this Agreement.
9.3 Severability.
If any
provision of this Agreement is at any time unenforceable or invalid for any
reason it will be severable from the remainder of this Agreement and, in its
application at that time, then this Agreement will be construed as though such
provision was not contained in this Agreement and the remainder will continue
in
full force and effect and be construed as if this Agreement had been executed
without the invalid or unenforceable provision.
9.4 Waiver
and Consent.
No
consent or waiver, express or implied, by any Party to or of any breach or
default by any other Party of any or all of its obligations under this Agreement
will:
(a) be
valid
unless it is in writing and stated to be a consent or waiver pursuant to this
section;
(b) be
relied
upon as a consent to or waiver of any other breach or default of the same or
any
other obligation;
(c) constitute
a general waiver under this Agreement; or
(d) eliminate
or modify the need for a specific consent or waiver pursuant to this section
in
any other or subsequent instance.
9.5 Independent
Contractors.
No
agency, employment or partnership is created between HEC and the Distributor
and
the Parties acknowledge that the business operated by the Distributor is
separate and apart from any that may be operated by HEC. No representation
will
be made by either Party which could create obligations or debts which may be
binding on the other Party. The only relationship between the Parties is that
of
independent contractors.
9.6 Amendments.
This
Agreement may not be amended except in writing signed by each
Party.
9.7 Assignment.
The
Distributor may not assign or delegate this Agreement or its rights or
obligations under this Agreement without the prior written consent of HEC (which
consent HEC may withhold in its sole discretion), and any purported assignment
without such consent will be null and void. HEC will be entitled, without
restriction, to assign or delegate its rights or obligations under this
Agreement.
9.8 Governing
Law.
This
Agreement for all purposes will be governed exclusively by and construed and
enforced in accordance with the laws of the State of Iowa, without regard to
the
conflicts or choice of law principles of that jurisdiction.
9.9 Notice.
(a) Every
notice, request, demand or direction (each, a “Notice”) to be given pursuant to
this Agreement must be in writing and must be delivered by certified mail,
return receipt requested, by an internationally recognized overnight delivery
service upon subsequent written confirmation of receipt, or by facsimile
transmission or other similar form of written transmission by electronic means,
in each case addressed as follows:
If
to
HEC, to:
Hydrogen
Engine Center Inc.
000
Xxxx
Xxxx Xxxxxx
Xxxxxx,
Xxxx XXX 00000
Attention: V.P.
Operations
Facsimile: 000-000-0000
If
to the
Distributor, to:
_____________________________________
_____________________________________
_____________________________________
_____________________________________
Each
Party shall give the other Party prompt written notice of any change of the
Party’s address.
(b) Any
Notice delivered or sent by facsimile transmission or other similar form of
electronic transmission will be deemed conclusively to have been effectively
given on the day the Notice was delivered or sent in such fashion if it was
delivered or sent on a business day at the place of the intended recipient
or on
the next day that is a business day at such place if it was delivered or sent
on
a day that was not a business day at such place.
9.10 Further
Assurances.
Each
Party will execute and deliver such further agreements and other documents
and
do such further acts and things as the other Party reasonably requests to
evidence, carry out or give full force and effect to the intent of this
Agreement.
9.11 Time
of Essence.
Time is
of the essence in the performance of each Party’s obligations under this
Agreement.
9.12 Binding
Effect.
This
Agreement will inure to the benefit of and be binding upon the respective
successors and permitted assigns of the Parties.
9.13 Survival.
All
rights and obligations of the Parties occurring before the effective date of
the
termination of this Agreement and all rights and obligations expressly stated
to
continue after, or accrue as a result of, the termination of this Agreement,
are
separate and distinct rights and obligations binding on the Parties, will
survive its termination and will continue in full force and effect and nothing
in this Agreement will affect the enforceability of such
provisions.
9.14 No
Partnership.
Nothing
in this Agreement will or will be deemed to create any partnership or joint
venture between the Parties or to give any Party any right or authority to
act
as the agent of or to pledge the credit of any other Party. In fulfilling its
obligations under this Agreement, each Party shall be acting as an independent
contractor.
9.15 Publicity.
Except
as required by applicable securities laws, a Governmental Authority or
regulatory requirements, Distributor shall not issue a press release, grant
an
interview to the press, or otherwise make a general public announcement,
regarding the existence or subject matter of this Agreement without the prior
written consent of HEC, with such consent not to be unreasonably withheld or
delayed.
9.16 Language.
The
official language of this Agreement is English. In the event of any difference
in the meaning between English and translated text, the English text shall
govern. It shall be the obligation of Distributor to comply with any laws in
the
Territory requiring System literature to be presented in a language other than
English. If any translations of the Agreement are required for import of Systems
into the Territory, the Distributor will furnish a qualified interpreter to
make
such translations at Distributor’s expense.
The
Parties executed this Distribution Agreement as of the date first-above
written.
Hydrogen
Engine Center Inc.
By:
_____________________
Name:
___________________
Title:
____________________
By:
______________________
Name:
____________________
Title:
_____________________
(DISTRIBUTOR)
By:
______________________
Name:
____________________
Title:
_____________________
Exhibit
A
Definitions
And Interpretations
“Affiliate”
means any direct or indirect subsidiary or parent company of a Party, or
any
other
Company which is 20% or more owned, directly or indirectly, by a Party or by
the
majority owner of a Party.
“HEC
Confidential Information” means information known or used by HEC in
connection
with its business and technology, including HEC’s Intellectual Property,
customer information, financial information, marketing information, and
information as to business opportunities and research and
development.
“Change
of Control” of a Party shall have occurred if (a) the Party sells all
or
substantially
all of its assets, (b) merges with another Company after which the majority
owner of the Party before the merger, or largest shareholder if there is no
majority owner, is not the majority or largest owner of the surviving company
after the merger, and (c) the majority owner of the Party, or largest
shareholder if there is no majority owner, as of the date of this Agreement
is
no longer the majority or largest owner of the Party.
“Company”
means an individual, corporation, limited liability company (LLC), partnership,
unincorporated organization or other entity.
“Competing
Products” means products manufactured by Companies other than HEC or its
Affiliates which compete with the Systems.
“Event
of
Default” means the occurrence of one or more of the following
circumstances:
(a) a
Party
provides materially inaccurate information to the other Party;
(b) the
Distributor breaches a legal or ethical duty owed to HEC, or takes any action
that would bring disrepute to, or harm the commercial goodwill of, HEC, the
Systems or the Licensed Trademarks;
(c) a
Party
is in material breach of any of its obligations under this
Agreement;
(d) a
Party
takes any action to liquidate, dissolve or wind-up its business;
(e) a
Party
applies to be put in bankruptcy, takes any action that would permit its
creditors to make an application to put such Party in bankruptcy, is adjudged
or
declared bankrupt or makes an assignment for the benefit of creditors, consents
to a proposal or similar action under any bankruptcy or insolvency legislation
applicable to it, or commences any other proceedings relating to it under any
bankruptcy, reorganization or dissolution law or statute of any jurisdiction,
or
consents to any such proceeding;
(f)
a
custodian, liquidator, receiver, receiver and manager, receiver-manager, trustee
or any other person with similar powers is appointed for such Party or in
respect of any material property or assets or material part of the property
or
assets of such Party; or
(g) a
final,
non-appealable, decision of any judicial, administrative, governmental or other
authority or arbitrator is made which enjoins or restrains, or renders illegal
or unenforceable, the performance or observance by a Party of any material
term
of this Agreement.
“Governmental
Authority” means any United States or other federal, state, or local
government.
“Intellectual
Property” means all rights held by a Party (by ownership or under license) in
and to various inventions and trade secrets, including any patent, patent
application (whether now existing or pending or whether obtained or applied
for
after the date of this Agreement), industrial design, invention, design, trade
secret, idea, work, methodology, technology, innovation, creation, concept,
moral right, development drawing, research, analysis, know-how, experiment,
copyright, data, formula, method, procedure, process, system or technique and
the goodwill associated with the foregoing, but does not include trademarks
or
tradenames.
“Internal
combustion engine” means an engine using the combustion of any liquid or gaseous
fuel to create energy and motion.
“Licensed
Trademarks” means the trademarks, tradenames or logos listed on Exhibit C, as
revised by HEC from time to time in its sole discretion.
Exhibit
B
HEC
Limited Warranty Terms and Conditions
for
Oxx PowerTM
Systems
These
warranty terms apply to Systems, as defined in the Distribution Agreement by
and
between
HEC and the Distributor. These terms may be revised by HEC from time to time
with advanced written notice to the Company.
Warranty
Period
The
warranty terms will apply for the following period of time (“the Warranty
Period”):
• For
Systems designed to be fueled by natural gas or liquid propane, this warranty
expires on the earlier of (a) the third anniversary of the shipment of the
Systems by HEC to the Company or (b) 1,000 hours of operation of the System
at
the using customer’s location.
• For
Systems designed to be fueled by hydrogen, the warranty for all of the
components in the Systems except for the internal combustion engines will expire
on the earlier of (a) the third anniversary of the shipment of the Systems
by
HEC to the Company or (b) 1,000 hours of operation of the System at the using
customer’s location. The warranty duration and terms for the hydrogen-fueled
internal combustion engine are still to be determined by HEC.
Remedies
The
Distributor may return defective Systems to HEC after HEC has had a
reasonable
opportunity
to inspect such Systems. HEC, at its option, will either replace or repair
defective Systems and will deliver the replacement System or repaired System
to
the Distributor without additional charge to the Distributor.
If
the
Distributor is required to make repairs for defects covered by this warranty
to
any System delivered by the Distributor to its customer, then the Distributor
must seek advanced authorization from HEC for such repairs as
follows:
• The
Distributor’s repair technicians, after assessing the customer’s complaint and
before traveling to the customer location, must call HEC’s customer service
center at (000) 000-0000 and provide (a) the System’s serial number, (b) its
current location, (c) the elapsed number of hours of operation of the System,
(d) the name of the repair technician and the name of the Distributor, and
(e) a
description of the System’s problem and a detailed summary of the prior
maintenance, including dates of maintenance activities (including regularly
scheduled maintenance activities) and by whom such activities were
performed.
• In
response, HEC Customer Service will take one of the following
actions:
(i) Authorize
the warranty repair by the Distributor’s technician and provide a warranty
repair authorization number to use in subsequent requests for reimbursement
by
the Distributor. If, in the process of making the authorized warranty repairs,
the technician determines that additional warranty repairs are necessary, he/she
must repeat the process of obtaining authorization from HEC for these additional
repairs.
(ii) Authorize
the technician to visit the customer location for on-site diagnosis and
assessment of the needed repairs, providing a repair diagnosis authorization
number for use in subsequent requests for reimbursement. If HEC elects this
option, then the repair technician must call the HEC Customer Service Center
from the System’s location with the results of the assessment and request
warranty repair authorization before proceeding with warranty
repairs.
(iii)
Reject the repair as being outside of warranty coverage.
• If
the
Distributor would like to use a Dealer or other organization to perform warranty
repairs and receive reimbursement directly from HEC, it must first receive
written authorization from HEC Customer Service.
• For
all
authorized warranty repairs, the repair technician will take possession of
the
defective parts removed from the System and make them available to HEC for
subsequent inspection and assessment.
Warranty
Reimbursement
HEC’s
reimbursement of warranty repairs will cover:
• the
cost
of HEC authorized repair parts (at HEC list prices at the time of the repair)
plus actual shipping charges; and
• the
cost of
repair labor, as well as the repair technician’s travel time and expenses going
to and from the System’s location. The reimbursable amounts for these items will
be based on the then-current HEC Warranty and Policy Procedures Manual, which
HEC will publish and update periodically.
HEC
will
not be responsible for any direct, indirect or consequential damages incurred
by
the System user or the Distributor due to the malfunction of the System or
to
the loss of operation of the System while awaiting repairs. HEC will also not
be
responsible for excess travel and labor charges resulting from technician travel
to System locations that are greater than 300 miles from the Distributor’s
location.
The
Distributor agrees that if HEC disputes a warranty claim made by the
Distributor, then, in connection with such dispute, the Distributor making
the
warranty claim shall not reduce or withhold any payments owed by the Distributor
to HEC before such dispute is resolved.
Warranty
and Policy Procedures Manual
All
other
terms of the HEC Warranty and Policy Manual shall apply.
Distribution
Agreement
HEC
gives
this warranty in connection with the Distribution Agreement between the
Distributor and HEC and, except as specifically provided for in this warranty,
all terms and conditions set forth in such agreement shall apply to this
warranty, including all dispute resolution provisions.
Exhibit
C
Licensed
Trademarks
[list
to
be provided by HEC]
