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EXHIBIT 10.6
MARKET DEVELOPMENT AND DISTRIBUTORSHIP AGREEMENT
This Agreement is made as of the 31st day of January, 1996, by and between
Donlar Corporation ("DONLAR"), an Illinois Corporation, having its principal
office at 0000 X. Xxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxxxxx, X.X.X 00000, and FMC
CORPORATION (UK) LIMITED, Process Additives Division ("FMC"), a company
registered in England and Wales No. 259569, having its principal office at
Tenax Road, Trafford Park, Manchester M17 1WT, United.
BACKGROUND
DONLAR has developed and manufactures certain proprietary biodegradable
polyaspartic polymers ("Products"), which may have certain applications within
the oilfield industry ("Field"). The Products and Field are more specifically
described in Schedule A. DONLAR lacks the established market presence required
for successful development and marketing of Products in the Field and does not,
at this time, intend to develop such a presence. FMC is recognized as a leading
manufacturer and distributor of high performance polymers within the Field.
Both DONLAR and FMC desire for FMC to be appointed DONLAR's exclusive
distributor of Products in the Field under the terms of this Agreement.
Intending to be legally bound, the parties agree as follows:
AGREEMENT
1. Distributorship
A. Exclusive Appointment. Under the terms and conditions of this
Agreement, DONLAR appoints FMC its sole and exclusive worldwide
distributor for the sale of Products in the Field and FMC accepts such
appointment. FMC's retention of its exclusive distributor status is
conditioned on its purchase from DONLAR of the following quantity of
Products during the indicated calendar years:
Calendar Year Minimum Purchase Quantity
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1996 15 metric tonnes
1997 180 metric tonnes
1998 550 metric tonnes
1999 1750 metric tonnes
2000 2500 metric tonnes
Should FMC fail to meet such minimum in any year, it will nevertheless
retain its exclusive status if it can provide DONLAR with reasonable
demonstration of its ability to meet the required minimum for the next
calendar year. To this end FMC may present to DONLAR forecasted or budgeted
sales of Product with supporting documentation. Beginning in 1997, should
the above Minimum Purchase Quantities not be met due to any shortfall in
Product availability then FMC shall retain its exclusive distribution
rights under this Agreement, the
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Minimum Purchase Quantity in the following year shall automatically be
decreased by the same percentage as the shortfall bears to Minimum Purchase
Quantity for that year, and FMC and DONLAR shall confer as to whether the
Minimum Purchase Quantity for subsequent years should be revised downward.
B. Nature of Relationship. It is agreed that the relationship between
DONLAR and FMC shall be that of a seller and a buyer and that this
Agreement shall not constitute an appointment of FMC as DONLAR's agent or
legal representative for any purpose whatsoever.
C. Activities. FMC is not authorized to distribute the Products for use
in any applications outside of the Field. Moreover, for so long as FMC
retains its exclusive distributor status under this Agreement, FMC will not
purchase from any source other than DONLAR, manufacture or sell for use in
the Field any readily biodegradable (as defined in Schedule C) polymer
products with physical characteristics similar to Products. The preceding
sentence does not preclude FMC from continuing to manufacture and/or
distribute for use in the Field any products which it currently offers.
During the term of this Agreement, FMC shall be free to offer or sell, and
DONLAR shall not offer nor sell, Products to any person or company residing
anywhere throughout the world.
D. FMC Compensation. FMC's sole compensation for distribution of
Products shall consist of the difference between FMC's purchase price and
selling price of Products.
2. Order and Delivery
A. Demand Forecast. On or before October 31 of each year during the
term of this Agreement, FMC shall provide DONLAR with a nonbinding estimate
of its purchase quantities of Products for the subsequent year. FMC shall
also provide DONLAR with a nonbinding estimate of the purchase quantity and
delivery schedule of Products for each calendar quarter at least one month
prior to the beginning of such calendar quarter.
B. Purchase Orders. The purchase quantity and the delivery schedule of
individual sales contracts shall be agreed and confirmed in writing by both
parties pursuant to purchase orders or releases against this Agreement. No
shipments shall be made prior to such written confirmation. This written
confirmation shall finally fix the purchase quantity and the delivery
schedule of the individual sales contracts.
C. Delivery. Terms of delivery of the Products to FMC shall be DDP,
FMC's Trafford Park, UK, facility, (INCOTERMS 1994), unless otherwise
mutually agreed in writing. DONLAR shall also be responsible for any other
taxes or other governmental charges imposed in connection with putting
Products in FMC's possession in the United Kingdom. All deliveries shall be
accompanied by a certificate containing the lot numbers, drum numbers,
certificates of analysis and the analytical approval dates for the
shipment. Ownership of and the risk of loss on Products shall pass to FMC
from DONLAR upon delivery to FMC on such terms.
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3. Price. The price for Products during the 1996 calendar year is set
forth on Schedule A. On or before December 1 of each year, DONLAR shall
propose a price schedule for the upcoming calendar year. Any agreed upon
price schedule must be in writing and signed by both parties. If the parties
are unable to agree on the effective price schedule by January 1 of that
upcoming calendar year, then either party may by written notice to the
other party terminate this Agreement under Section 6B(i) below and, until
such termination is effective, the price schedule for the prior year shall
apply to all Product sold to FMC. Under no circumstances shall DONLAR
exercise control over, influence, or be consulted regarding the prices for
FMC's sales of Products.
4. Payment. Payment shall be made by FMC to DONLAR in British Pounds Sterling
by electronic transfer within sixty (60) days from the delivery date of
Products pursuant to Section 2C (hereinafter referred to as "Delivery Date")
for all Products meeting the applicable specifications set forth in
Schedule B.
5. Market Development Activities.
A. FMC. FMC intends to market the Products under FMC's "Bellasol" trade
names. FMC will use its best efforts and bear all of its costs (including
all advertising) to promote and enhance the sale of the Products in the
Field. FMC will provide and maintain at its own expense facilities and
qualified personnel sufficient to provide a high standard of service in the
sale of Products to its customers in the Field and sufficient inventories
to meet its customers' needs. FMC shall comply with all applicable laws and
regulations during the course of performance of this Agreement and in
related activities, including registering this Agreement and any Product
where required. FMC shall bear costs of any testing required in connection
with such Product registration, but FMC retains ultimate discretion to
determine whether to undertake registration and associated costs in any
particular jurisdiction (i.e., will costs be justified by the anticipated
market opportunities there).
B. DONLAR. DONLAR shall sell Products to FMC meeting the applicable
specifications set forth in Schedule B and shall use reasonable diligence
to deliver Products to FMC pursuant to the individual sales contracts
agreed and confirmed in accordance with Section 2B, but shall not be
responsible for delay in delivery, or failure to deliver, any Products sold
hereunder for reasons which are beyond its reasonable control. DONLAR shall
furnish FMC on an ongoing basis with appropriate technical information and
product support in its possession to enable FMC to effectively market the
Products in the Field. DONLAR will also share with FMC (and represents that
it is so entitled to do) applicable Product technical and applications
information generated by or with British Petroleum ("BP") relating to the
Field, and will promptly inform BP of FMC's exclusive status under this
Agreement.
C. Joint Activity. The parties intend to work closely together and to
keep each other regularly informed of activities related to the Field that
may be pertinent to the Products. Each fall the parties shall review market
conditions, marketing strategy, Product requirements, long-range
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marketing plans and prices for the next year. In addition, FMC shall
keep DONLAR informed on a quarterly basis (or more frequently if the
parties so desire) regarding (i) FMC sales efforts and Product sales
effectuated, (ii) customer feedback on Products, (iii) status of Product
application testing, environmental testing and registrations, and (iv)
development or activity of products competitive with the Products. DONLAR
shall keep FMC informed on a regular basis of development or activity of
products competitive with the Products. The parties shall inform the other
party immediately of any potential injurious effects or side effects to
humans, other living creatures or the environment of any nature whatsoever
that could occur from the distribution, handling, storage or use of any of
the Products.
6. Term and Termination.
A. Term. The term of this Agreement shall commence as of the date first
above written and shall continue in full force and effect through December
31, 2000, and shall automatically thereafter renew for an additional five
(5) year term, unless at any time terminated pursuant to Section 6B.
B. Termination. This Agreement may be terminated prior to the
expiration of the term (or renewal term) specified in section 6A, in any of
the following:
(i) By either party, upon 120 days' prior written notice to the
other party.
(ii) If either party enters or is placed in bankruptcy, receivership or
liquidation, is nationalized, becomes insolvent or makes an
assignment for the benefit of its creditors, the other party may
terminate this Agreement forthwith by giving written notice of such
termination to the party.
(iii) By either party if the other party is in material breach or
default of any obligation required hereunder and such breach or
default has not been remedied within sixty (60) days after
receipt of written notice describing such breach or default.
C. Post Expiration/Termination Delivery of Product. If this Agreement
expires pursuant to Section 6A or is terminated pursuant to Sections 6B(i)
or 6B(iii), DONLAR's obligation to deliver Products shall be limited to the
delivery on the individual sales contracts agreed and confirmed prior to
such expiration or termination date. If this Agreement is terminated
pursuant to Section 6B(ii), the individual sales contracts then existing
but not performed shall be automatically cancelled.
D. Consequences of Expiration/Termination. Neither party, by reason of
the termination or expiration of this Agreement, shall be liable to the
other party for compensation, reimbursement or damages because of the
loss of goodwill, anticipated sales or prospective profits, or because of
expenditures, investments or other matters related to the performance
hereunder or to the business of the parties.
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E. Continuing Obligations. Neither termination nor expiration of this
Agreement shall relieve either party from the duty to discharge in full all
obligations accrued or due under this Agreement prior to the date of
termination or expiration.
7. Warranties and Representations.
A. Products. DONLAR warrants that Products delivered hereunder shall
meet the applicable product specifications, which is shown in Schedule B,
for twelve (12) months from the respective Delivery Date. DONLAR warrants
that it has previously disclosed to FMC all material information relating
to health, safety and environmental aspects of handling, storing and using
in the Field the Products, and that such information (including, without
limitation material safety data sheets for the Products) is true, complete
and accurate to the best of DONLAR's knowledge.
B. Technology and Exclusive Rights. DONLAR warrants and represents to
FMC that (i) it possesses full rights, title and interest in and to any and
all patents, know-how and other property rights in every jurisdiction
throughout the world which may be necessary to make, distribute and use the
Products in the Field throughout the world (and hereby grants FMC and its
customers a license to practice the same throughout the duration of this
Agreement), and (ii) DONLAR's grant of any and all rights in this Agreement
to FMC and the disclosure of information hereunder does not breach or
violate any other agreement or obligation of confidentiality between DONLAR
and a third party, nor any governmental prohibitions.
C. Exclusion. Except for the above, DONLAR makes no representation or
warranty with respect to Products sold hereunder, whether express or
implied, including, but not limited to, any implied warranty of
merchantability or fitness for a particular purpose.
8. Patents; Trademarks and Confidentiality.
A. Patents. Each party shall promptly notify the other party in writing
with respect to any claim of infringement or alleged infringement of
patent, know-how or other intellectual property rights that may be brought
by a third party with respect to the manufacture, distribution or use of
the Products in the Field. DONLAR shall defend, indemnify and hold harmless
FMC against any claims of infringement or alleged infringement of patent,
know-how or other intellectual property right that may be brought by a third
party with respect to the distribution and/or use of Products in the Field
(except for claims respecting FMC trademarks).
B. Trademarks. FMC shall be free to use its own marks, names or trade
dress in connection with distribution of Products for use in the Field, and
DONLAR shall have no interest in and shall not register or use any xxxx,
name or trade dress of FMC. FMC shall defend, indemnify and hold harmless
DONLAR against any claims of infringement or alleged infringement of any
xxxx, name or trade dress that may be brought by a third party with
respect to FMC's distribution of Products in the Field.
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C. Confidentiality. The provisions of that certain Confidential and
Non-Analysis Disclosure Agreement dated July 26, 1994 and amended by letter
dated September 29, 1994 shall continue to apply to any confidentiality
designated disclosures from either party to the other party in connection
with performance hereunder.
9. Disputes. In the event of any dispute or difference of opinion
between the parties arising out of or in connection with this Agreement or
with regard to performance of any obligation hereunder by either party,
both parties shall use their best efforts to settle such dispute or
difference of opinion amicably through consultations. Unless otherwise
agreed in writing, if after six (6) months after any request for
consultations, the parties have failed to reach a settlement, any dispute,
controversy or claim arising out of or relating to this contract, or the
breach, termination or invalidity thereof, shall be finally settled by an
arbitration in accordance with the then current rules of the American
Arbitration Association. The number of arbitrators shall be three (3)
appointed in accordance therewith, at least one of which arbitrators being
named by each party. The place of arbitration shall be Philadelphia,
Pennsylvania, U.S.A. The language to be used in the arbitral proceedings
shall be English. Judgment on the award may be entered in any court having
jurisdiction over the parties.
10. Miscellaneous.
A. Notices. Any notice required or permitted herein may be hand delivered,
telexed, telecopied, cabled, mailed or air couriered, properly addressed to
the party at the address and attention set forth below or at the last known
address given by such party to the other party, and shall be deemed
effective upon receipt by the addressee (or under tender of delivery if the
addressee refuses delivery).
If to DONLAR If to FMC:
______________ Tenax Road
______________ Trafford Park
______________ Xxxxxxxxxx X00 xXX, Xxxxxx Xxxxxxx
Attn:_________ Attn: Marketing Executive,
Fax:__________ Process Industries, Water
Additives Business
Fax: 0000-000-0000
B. Waiver. A waiver of a breach of any of the provisions of this
Agreement shall not be deemed to be a waiver of any succeeding breach of the
same or any other provision of this Agreement.
C. Applicable Law. The construction, performance and completion of this
Agreement shall be governed by the laws of Illinois, U.S.A. The
unenforceability or invalidity of any provision of this Agreement shall not
affect the enforceability or validity of any other provisions of this
Agreement.
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D. Assignment. Neither party may assign this Agreement or any right,
interest or obligation under this Agreement without the prior written
consent of the other party and any purported assignment without such consent
shall be void and ineffective. Notwithstanding the preceding provision,
either party may assign its rights and delegate its performance hereunder,
in whole or in part, to any affiliated company, to any successor in interest
or transferee of that portion of its business that is directly involved in
the performance of this Agreement.
E. Entirety; Prior Agreements. This Agreement supersedes any and all
existing agreements, whether written or oral, between the parties relating
to the distribution of Products and all such prior agreements are hereby
deemed terminated by mutual consent of the parties. This Agreement,
including its Schedules, constitutes the full understanding of the parties
and a complete and exclusive statement of the terms of their agreement on
the subject matter hereof. No terms, conditions, understanding or agreement
purporting to modify or vary the term of this Agreement shall be binding
unless hereafter made in writing and signed by the party to be bound. No
modification shall be affected by the acknowledgment or acceptance of
purchase order or shipping instruction forms containing terms or conditions
at variance with those set forth herein.
F. Headings. The headings used in this Agreement are for convenience of
reference only and shall not be construed to limit, alter or modify this
Agreement in any regard.
G. Disclosure. The parties acknowledge that either party might be
required by law to disclose the existence of this Agreement or its terms and
conditions to governmental agencies or authorities throughout the world and
consent to any such disclosure.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first written above.
DONLAR CORPORATION FMC CORPORATION (UK) LIMITED
BY: Xxxxxxxx X. Xxxx BY: Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxx Name: X. Xxxxxxx
Title: Executive Vice President Title: Business Director
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SCHEDULE A
TO THE MARKET DEVELOPMENT AND DISTRIBUTION AGREEMENT
BETWEEN
DONLAR CORPORATION AND FMC CORPORATION (UK) LIMITED
Products
Sodium polyaspartate CAS No. 00000-00-0
Chemical Name: Poly-a, B-D, L-aspartic acid, sodium salt
Synonyms: Sodium Polyaspartate
L-Aspartic Acid, Homopolymer, Sodium Salt
Description: Anionic Amino Acid Polymer
Field
Applications in the oil field industry including
- Metal corrosion inhibition
- Downhole and topside inorganic scale inhibition
1996 Price for Products:
Volume Price U.S. Equivalent*
(metric tonnes) L./kg. ($lb.)
<15 1.317 (0.92)
15-50 1.260 (0.88)
51-200 1.174 (0.82)
>200 1.145 (0.80)
* using exchange rate of US $/L, 1.54
The price in the above price schedule which corresponds to the cumulative TOTAL
volume FMC has purchased during the entire year shall apply to all actual
metric tonnes of Products purchased that year. For administrative convenience,
the invoiced price FMC pays during the year shall be based on its forecast
demand. On or before January 31 of the next year the parties shall determine if
the actual total volume of Products FMC purchased was in a different
volume/price category and recalculate the total purchase price FMC should have
paid on such total volume, and the party owing any money to the other party
based on this recalculation shall remit such difference.
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SCHEDULE B
TO THE MARKET DEVELOPMENT AND DISTRIBUllON AGREEMENT
BETWEEN
DOLLAR CORPORATION AND FMC CORPORATION (UK) LIMITED
Products' Specifications
Common Chemical Name: Sodium Polyaspartate, S12-21
Colour: Yellow to Amber
Specific Gravity: 1.27-1.29 at 23 degrees C ASTMD-1298
pH (neat): 9.0-10.0 at 23 degrees C ASTM E-70
Flash Point:- None (PMCC) ASTM D-93
Actives: 39-42% polymer salt in an aqueous solution
Freeze Point: -10 degrees to -15 degrees C
Refractive Index: 1.41-1.43 at 20 degrees C
Solubility in Water: Very soluble
Form: Liquid
Product Specifications for other sodium polyaspartates will be agreed upon
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SCHEDULE C
TO THE MARKET DEVELOPMENT AND DISTRIBUTION AGREEMENT
BETWEEN
DONLAR CORPORATION AND FERRIC CORPORATION (UK) LIMITED
A product is defined as readily biodegradable if the following pass rates are
achieved in the following industry recognized OECD tests.
OECD Test No. Pass %
301A 70
301B 60
301C 60
301D 60
301E 70
301F 60
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