DISTRIBUTORSHIP AGREEMENT
This distributorship agreement ("Agreement") is made and entered into as of
this day of April 4, 1997, by and between ONTRO, INC., a California corporation,
("Company") and THE L.L. XXXXXXXXXXXXX COMPANY, INC., a California corporation
("Distributor"), in view of the following facts:
A. Company is engaged in the business of engineering, designing,
manufacturing, and supplying containers, such as cans, bottles, bowls, and
trays, that initiate a Chemical reaction in a sealed heating module inside the
container to heat the contents with which the container is filled, such as
beverages and foodstuffs, when a user presses an actuator on the container; and
B. Distributor desires to market products packaged in Company's
containers and to be designated as an exclusive distributor of such products
packaged in Company's containers.
COMPANY AND DISTRIBUTOR THEREFORE AGREE AS FOLLOWS:
1. DEFINITIONS:
For the purposes of this Agreement, the following words and terms shall
have the meaning set forth below:
1.1. The term "Containers" shall mean the types of containers and parts
and accessories thereto set forth in Schedule "A", a copy of which is attached
to this Agreement and incorporated herein by this reference.
1.2. The term "Approved Products" shall mean those product offerings of
Distributor comprised of certain Containers that have been filled with the type
of materials, for distribution in the areas and markets, and pursuant to the
distribution plan, and all other reasonable requirements or conditions all as
set forth in Schedule "B", a copy of which is attached to this Agreement and
incorporated herein by this reference.
1.3. The term "Territory" shall mean the territory, or markets which have
been designated and agreed upon by the Company and Distributor as exclusive to
Distribution in connection with each Approved Product.
1.6. The term "Written Notice" shall mean mailing of the information by
first-class, registered, certified, U.S. Express Mail, or by a recognized
overnight delivery service, addressed as follows:
1
if to Company:
Ontro, Inc.
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Fax: (000) 000-0000
if to Distributor:
The L.L. Xxxxxxxxxxxxx Co., Inc.
00000 Xxxxxxxx
Xxxxxx Xxxxx Xxxxxxxxx, XX 00000
Fax: (000) 000-0000
2. GRANT OF DISTRIBUTORSHIP:
2.1. Sale to Distributor: Subject to the terms of this Agreement, Company
shall sell Containers to Distributor for Distributor's use in manufacturing and
selling Approved Products in the Territory.
2.2. Exclusive Dealing: Company shall not, without Distributor's written
authorization, make, sell or deliver Containers to or for any party other than
Distributor which party the Company knows or should reasonably know intends to
use such Containers , to promote or sell Approved Products or substantially
similar products in a Territory defined as exclusive to Distributor in
connection with an Approved Product, during the term of this Agreement.
Distributor shall not utilize the Containers delivered to it pursuant to this
Agreement to package, sell, distribute, resell or otherwise dispose of the
Containers in a manner which will or may result in the Containers being filled
for sale to consumers with any material or marketed in any areas or in any
markets other than as set forth in connection with any Approved Product.
Distributor undertakes and agrees to take all steps necessary to ensure that
any Sub-distributor appointed pursuant to the terms of Section 2.3 below will
comply with the terms of this Section. Distributor shall not, without Company's
written authorization, purchase, acquire, manufacture or otherwise utilize any
package or container utilizing an integral means of heating the contents thereof
if such package or container was not acquired from the Company pursuant to the
terms of this Agreement. Any failure on the part of either Distributor or any
Sub-distributor to comply with the terms of this Section constitutes a material
breach of this Agreement on the part of Distributor.
2.3. Sub-distributors: Distributor may appoint Sub-distributors subject
to the approval in writing of Company, which Company shall not unreasonably
withhold. Appointment of a Sub-distributor by Distributor shall not impose on
Company any requirement that Company deal with the Sub-distributor. Appointment
of a Sub-distributor by Distributor shall not relieve Distributor
2
from any of its obligations, undertakings, or risks assigned to it under this
Agreement. Distributor may contract with manufacturers to produce Approved
Products for Distributor and to package such Approved Products, using the
Containers purchased by Distributor from Company. Appointment of a Sub-
distributor or contracting with a manufacturer or any other party by Distributor
shall not relieve Distributor from any of its obligations, undertakings, or
risks assigned to it under this Agreement.
2.4. Best Efforts by Distributor: Distributor agrees to use its best
efforts to enact and carry out a policy designed to create demand for and
continually increase sales of Approved Products in the Territory. Distributor
agrees to maintain adequate working capital, facilities and personnel to
accomplish this purpose at all times. Distributor shall undertake all such
efforts at Distributor's sole cost and expense. Company shall be under no
obligation to aid Distributor in such efforts in any manner other than that
which is incidental to Company's fulfilment of obligations that may be specified
in other provisions of this Agreement.
2.5 Additional Approved Products: Distributor may, at any time, propose
additional materials for packaging in the Containers for distribution as
Approved Products by Written Notice to Company, which specifies the specific
material proposed, the name under which it will be labeled and the proposed
areas and marketing plan for its distribution. Distributor shall provide to
Company any additional information it may request concerning the proposed
material and its marketing and distribution. The Company agrees to promptly
consider any such additional product offerings proposed by Distributor. Upon
approval of such additional Distributor by Company, the parties will amend
Schedule "B" hereto and cause the additional product offerings to be included in
Schedule "B" as an Approved Product. Any amendment to Schedule "B" as provided
herein must be in writing and signed by both parties in order to become
effective.
2.6 Reports: Not less frequently than every calendar quarter,
Distributor shall prepare and deliver to Company a report of the sales activity
of the Distributor for the calendar quarter. Such report shall be in writing
and set forth, by approved product, the volume of sales during the quarter and,
with respect to each purchaser, the zip code to which the product was shipped,
the quantity purchased, the sex of the purchaser and all other demographic
information in the control, custody or possession of Distributor, other than the
name, address and telephone number of specific purchasers. The report required
by this section shall be delivered to Company not later than thirty (30) days
following the close of the calendar quarter to which the report relates.
3. MINIMUM QUANTITIES:
3.1. Minimum Quantities: Distributor shall be required to purchase, in
the first calendar month during which the Company accepts an order from
Distributor, a total of at least fifty thousand (50,000) Containers. In the
first succeeding calendar month, Distributor shall be required to purchase a
total of at least one hundred thousand (100,000) Containers. In the second
succeeding calendar month, Distributor shall be required to purchase a total of
at least two hundred thousand (200,000) Containers. During each calendar month
thereafter until the beginning of the next
3
succeeding calendar quarter, Distributor shall be required to purchase a total
of at least two hundred fifty thousand (250,000) Containers. During each three
month period thereafter, Distributor shall be required to purchase at least
seven hundred fifty thousand (750,000) Containers. Failure by Distributor to
order this minimum quantity in any period specified herein shall be considered a
material breach of this Agreement.
4. PRICE:
4.1. Determination of Price: The Containers shall be sold to Distributor
by Company at the best price for the specified quantity of identical Containers
with identical heating parameters times and temperatures, set forth in Company's
published price list that is delivered to Distributor along with the notice of
acceptance of the initial order for such Products. Company shall have the right
to change all applicable prices for all Products every twelve (12) months
thereafter at its sole discretion by providing at least thirty (30) days Written
Notice to Distributor, and any such change shall become effective thirty (30)
days after such Written Notice is provided or on the date specified in such
notice, whichever is later. In no event shall a change in the price of the
Containers affect orders by Distributor that were accepted by Company before the
Written Notice of the price change was provided. The price list that is current
as of the date of this Agreement is set forth in Schedule "C", a copy of which
is attached to this Agreement and incorporated herein by this reference.
4.2. Reimbursement for Special Delivery Conditions, Taxes and Charges:
In the event that any labor or material is required to be supplied by Company in
an effort to comply with any special delivery conditions requested by
Distributor, any and all costs and expenses incurred by Company for such labor
or material shall be added to the invoice price of the Containers involved. In
the event that any sale or order of the Containers results in the imposition of
any charges or taxes by any governmental authority, such charges or taxes shall
be added to the invoice price of the Containers involved.
5. ACCEPTANCE OF ORDERS:
5.1. Acceptance: Company will not be bound by any order for Containers
placed by Distributor until such order has been accepted by Company, which
acceptance may be in whole or part at Company's sole discretion. Any order or
part thereof shall be deemed accepted only upon shipment of Containers relating
to the order by Company or by provision of Written Notice of acceptance to
Distributor. Upon acceptance of the order by Company, such acceptance shall
constitute a binding agreement of Company to sell and ship the Containers
ordered, and of Distributor to purchase and tender payment for the Containers
ordered, under the terms and conditions of this Agreement. An order placed with
and accepted by Company can be canceled only with Company's consent and upon
terms that indemnify Company against loss. Company may, at its option, give
Distributor written notice of any delay in production or delivery of the
Containers, and delivery of the Containers to Distributor, subject to such
delay, shall be deemed to be substantial compliance with the terms of such
order.
4
5.2. Inconsistent Terms in an Order: In the event that any terms or
conditions contained in any order are inconsistent with the terms of this
Agreement, such inconsistent terms or conditions in the order shall be null and
void and shall not be binding on Company in the event that the order containing
such inconsistent terms or conditions is accepted by Company.
6. PAYMENTS FOR PRODUCTS:
6.1. All payments are due net, within thirty (30) days following the date
of the invoice relating to an order. Invoices will be issued following
acceptance of an order. In the event that the Company has not accepted an order
in writing, issuance of an invoice relating to the order shall constitute
acceptance thereof, according to the terms of the invoice. Any payment not
received by Company within thirty (30) days following issuance of an invoice
will be subjected to a late charge equal to 1.5% per month on the outstanding
principal balance due, but in no event greater than that allowed by law. Any
Containers manufactured or held by Company and relating to an invoice which has
not been paid within thirty (30) days following the date thereof which have not
been shipped, may be held by Company pending payment of the invoice or may be
resold to other customers. Any delay in delivery of Containers following
payment of an invoice which was not paid in full within thirty days following
its date, which delay is caused by Company's election to either hold or resell
the Containers pursuant to the terms of this Section shall be deemed in
compliance with the shipment terms of the order to which the unpaid invoice
relates. In the event the Company elects to ship any Containers pursuant to the
terms of an order whose invoice remains unpaid after thirty days, the ability of
the Company to withhold such shipment under the terms of this section shall not
be construed in any way limit the liability of Distributor for the amount of the
invoice, late fees imposed or the price of Containers shipped. The charging of
a late fee or any other action contemplated under the terms of this section
shall be cumulative and in addition to Company's other remedies under this
Agreement, at law or in equity.
6.2. Limitation on Deductions: Distributor hereby agrees that in making
any and all payments to Company under the terms of this Agreement, no deductions
for warranty or any other claims against Company shall be made unless
Distributor receives from Company prior written approval of the validity of such
a claim and the specific amount of the deduction, or such claim is limited to
the purchase price of defective containers returned to the Company pursuant to
Section 8.3 hereinbelow.
6.3. Failure to Make Payments: It is understood by the parties hereto
that the ability of Distributor to make the payments contemplated hereunder is
of the essence of this Agreement and in the event that Distributor fails to make
the payments in accordance with the terms and conditions of this Agreement, for
any reason or cause, including without limitation, by virtue of any regulation
or order of any government authority, Company may elect to terminate this
Agreement, which termination shall become effective immediately upon Company
providing Written Notice thereof, and notwithstanding the termination provisions
otherwise provided in this Agreement. Notwithstanding any other provision of
this Agreement, Distributor grants to Company a security interest in any and all
Containers in Distributor's inventory, possession or control to secure
5
the purchase price of Containers delivered from time to time. This Agreement is
intended by the parties to constitute a security agreement under the terms of
the California Commercial Code. The security interest granted herein shall be a
floating and ongoing security interest in all Containers within the custody,
possession or control of the Distributor from time to time and shall not be
limited in any way to the specific Containers giving rise to a particular
payment obligation of Distributor. Company shall have the right to file UCC-1
and other statements, as it deems appropriate, to perfect such security
interest, and Distributor shall take all steps reasonably necessary to assist
Company in such filings, including execution thereof. Distributor's failure to
take any requested step for a period of fifteen (15) days following written
request therefor shall be considered a material breach of this Agreement.
7. SHIPMENT OF CONTAINERS:
7.1. Time and Costs: Company shall ship to Distributor the Containers
set forth in an accepted order to Distributor, within a commercially reasonable
time after Company's acceptance of such order. Company and Distributor
understand and agree that all shipping dates shall be approximate and shall be
computed from the date that an order is accepted by Company. All costs of
shipping and any other costs related to transfer of Containers to Distributor
shall be added to invoices and shall be borne by Distributor. Any additional
insurance costs will be added to the cost of shipping to be purchased from the
carrier, and all such costs shall be borne by Distributor.
7.2. Discharge of Company's Obligation: Company's obligation to ship the
products shall be fully and completely discharged, and ownership, legal title
and all risk of loss or damage shall immediately pass to Distributor, at the
time that the products are delivered F.O.B. San Diego, California, provided,
however, that any and all security interest in the products created in favor of
Company shall remain intact. Distributor may designate its own carrier. Company
shall not be liable for any discrepancy between the estimated shipping weights
and the actual weights of Containers shipped.
7.3. Excuse of Performance: Company shall not be obligated to sell
Containers to Distributor, including filling any order that Distributor has
placed, if Company's performance becomes impossible, whether legally or
practically. Without limiting the generality of the foregoing and by way of
example only, a sale shall be considered legally impossible, among other
circumstances, in the event of issuance of an order by a court of competent
jurisdiction enjoining Company from manufacturing, using or selling Containers
or portions thereof or holding that the manufacture, use or sale of Containers
infringes a patent held by another party, constitutes an act of unfair
competition, or violates any other right of another party.
7.4. Limitation on Damages: Company agrees to use its best efforts to
satisfy and fill orders placed by Distributor. Nevertheless, it is understood
that lead time will vary according to manufacturing and other conditions and,
consequently, any and all delivery dates communicated by Company are mere
estimates. Under no circumstances shall Company be liable to Distributor, its
agents, sub-distributors, customers or any other persons on account of late
delivery or non-delivery,
6
for any special or consequential damages, whether based upon lost goodwill, lost
profits, work stoppage, impairment of other goods, breach of contract,
negligence or such other actions as may be deemed or alleged to be the cause of
a loss or damage to such person. Distributor's sole and exclusive remedy shall
be the recovery of so much of the purchase price, if any, as Distributor may
have paid to Company for the ordered Containers. Distributor expressly releases
Company from liabilities for any loss or damage arising from the failure of
Company to fill any orders of Distributor.
8. QUALITY OF CONTAINERS:
8.1. Quality of Containers: Company shall furnish to Distributor a sample
of each type of Container ("Sample Container") set forth in Schedule "A" that
shall serve as the sole and exclusive standard for gauging the quality of
Containers of that type subsequently shipped to Distributor. From time to time,
but not more than once per month, at the Request of Distributor, Company shall
furnish to Distributor a further Sample Container that shall supersede all
previously furnished Sample Containers of that type.
8.2. Limitation of Warranty: COMPANY WARRANTS THAT EACH CONTAINER SHIPPED
TO DISTRIBUTOR IS OF AT LEAST THE SAME LEVEL OF QUALITY AS THE SAMPLE CONTAINER
OF THAT TYPE AT THE TIME OF SHIPMENT. DISTRIBUTOR HEREBY ACCEPTS THIS WARRANTY
IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESSED OR IMPLIED, INCLUDING BUT NOT
LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS. Distributor shall
satisfy itself that the Containers are suitable for the materials with which
Distributor intends to fill them, and acknowledges that it has not relied upon
any representation by Company regarding such suitability. Distributor warrants
only the quality of the empty Containers; the quality of Containers shall not be
judged in connection with their effect upon such materials, including but not
limited to the effectiveness or ineffectiveness of Containers at heating such
materials or any change such materials may undergo as a result of being placed
in, sealed in, and/or heated in Containers.
8.3. Return of Defective Containers: Within sixty (60) days of
Distributor's receipt of a shipment of Containers, Distributor may return for
credit Containers that are below the standard of quality defined by the Sample
Container. Distributor shall not be permitted to return any Containers for
credit without obtaining the prior written approval of Company to return such
products and a written authorization number issued by Company. Distributor must
include with any such return a listing detailing the Containers being returned,
the invoice number on which they were originally purchased, and a description of
the defect(s). Distributor shall bear all costs and expenses of returning the
Containers, and all risk of loss until the Containers are received by Company at
its San Diego shipping location.
7
9. CONFIDENTIAL INFORMATION:
Distributor shall neither use nor disclose to any third parties any
confidential information concerning the business, affairs or products of Company
that Distributor may acquire during the course of its activities under this
Agreement. In addition, Distributor shall take all necessary precautions to
prevent any disclosure by any of its employees, officers, directors,
representatives, agents or sub-distributors. Distributor acknowledges that any
right, title and interest in and to the aforesaid confidential information is
vested in Company and that such information is the sole property of Company.
For purposes of this Agreement, it is understood by the parties hereto that the
term "confidential information" shall include, but is not limited to, trade
secrets and unpatentable intellectual property that may be communicated orally,
in writing, in drawings, or in any other medium, or by demonstration of a device
or method. Distributor acknowledges that it will hold in confidence and trust
any such confidential information and that, upon termination of this Agreement
for any cause or reason whatsoever, Distributor will promptly retrieve and
deliver to Company all documents, data and records in any medium that contains
or relates to Company's confidential information. It is specifically understood
and agreed that Distributor will not, under any circumstances, either during the
term hereof or following termination, undertake the manufacture of any Container
or component thereof or of any item intended to function in a manner
substantially similar to the Containers. For purposes of this Agreement, an
item will be deemed to function in a manner substantially similar to the
Containers if such item consists of a package, or packaging component, which
package or component, when combined with the remaining packaging components, is
self contained and intended to heat its contents.
10. TRADEMARKS, PATENTS AND COPYRIGHTS:
10.1. Ownership of Trademarks, Patents and Copyrights: Distributor
acknowledges Company's exclusive right, title and interest in and to any and all
trademarks and trade names (hereinafter such trademarks and trade names shall be
collectively referred to as the"Trademarks"), patents ("Patents") and copyrights
("Copyrights") in which Company may have at any time acquired a license or other
rights or interests in the United States of America or in any other country.
Distributor acknowledges that, in connection with any reference to the
Trademarks, Patents and Copyrights, Distributor shall not in any manner
represent that it possesses any ownership interest in the Trademarks, Patents
and Copyrights or the registration thereof, nor shall any action taken by
Distributor or on Distributor's behalf create in Distributors's favor any right,
title or interest in and to the Trademarks, Patents and Copyrights.
10.2. Attribution: Distributor shall xxxx each Product in the following
manner or in a similar manner that Company may, from time to time, designate
upon giving Distributor reasonable Written Notice: "This product is packaged in
an Ontro, Inc. brand self-heating container." Distributor shall not use
Company's name or Trademarks in any other manner. Distributor shall not in any
manner state or imply that Company, its licensor Insta-Heat, Inc., or any
parent, subsidiary or related entity of Company or Insta-Heat, Inc. is the
source or origin of the contents of the Containers.
8
10.3. Patent Marking: Distributor shall xxxx each Product covered by one
or more of the Patents with a proper patent notice. Although Company shall
advise Distributor of the patent numbers) that in Company's opinion cover the
Products, Distributor shall bear all risks associated with inadvertent mis-
marking of the Products. Distributor hereby waives all claims against Company
that may arise out of its marking Products with patent notices and Company's
representations regarding the patent coverage or patent number(s).
10.4. Notification of Violations: Distributor shall promptly notify
Company, in writing, of any and all infringements, imitations, illegal use or
misuse of the Trademarks, Patents and/or Copyrights that come to Distributor's
attention. Distributor further agrees that it shall not at any time take any
other action in connection with the Trademarks, Patents or Copyrights, or
otherwise attempt to prevent infringement, imitation, illegal use or misuse of
the Trademarks, Patents and/or Copyrights.
10.5. Assistance in the Protection of the Trademarks, Patents and
Copyrights: Distributor agrees to render to Company all assistance requested of
it by Company in connection with the protection of Trademarks, Patents and/or
Copyrights, and to make promptly available to Company Distributor's records,
personnel files and any other files or information it possesses or to which it
has access that may be of use to Company in such connection.
11. COMPANY'S WARRANTY AGAINST INFRINGEMENT; INDEMNIFICATION:
Company warrants that distribution and sale of Containers shall not violate
or infringe any valid trademarks, patents and/or copyrights held by third
parties and shall defend, indemnify and save harmless Distributor, its agents,
sub-distributors, officers, directors, employees, shareholders, successors and
assigns, and each of them, from and against any and all claims, actions and
suits, whether groundless or otherwise, and from and against any and all
liabilities, judgments, losses, damages, costs, charges, attorneys' fees, and
other expenses of every nature and character by reason of such violation or
infringement.
12. DISTRIBUTOR'S INDEMNIFICATION OF COMPANY AND ASSUMPTION OF RISK:
12.1. Indemnification: Distributor agrees to indemnify, defend and save
harmless Company and its officers, directors, agents, employees, shareholders,
legal representatives, successors and assigns, and each of them, from any and
all claims, actions and suits, whether groundless or otherwise, and from and
against any and all liabilities, judgments, losses, damages, costs, charges,
attorney's fees, and other expenses of every nature and character by reason of
Distributor's business and/or actions with respect to the Products and
Containers, including any claims, actions or suits not covered under Company's
warranty as set forth in this Agreement.
9
Distributor further agrees that the provisions contained in this paragraph
shall survive the termination or expiration of this Agreement and shall be
liberally construed in favor of Company.
12.2. Assumption of Risk: Distributor hereby assumes all risks of damage
to property or injury to person, arising from any cause, and Distributor hereby
waives all claims in respect thereto against Company. By way of illustration and
not by way of limitation, examples of such causes include any product-related
responsibility of Distributor, any action or proceeding alleging any violation
of any antitrust, trade regulation, unfair competition or similar statute or
regulation. Distributor further agrees that the provisions contained in this
paragraph shall survive the termination or expiration of this Agreement and
shall be liberally construed in favor of Company.
13. INDEPENDENT CONTRACTOR RELATIONSHIP:
Distributor agrees that, with respect to all matters relating to this
Agreement, Distributor shall be deemed to be an independent contractor and shall
bear all of its own expenses in connection with this Agreement. Distributor
shall have no authority, whether express or implied, to assume or create any
obligation on behalf of Company nor shall Distributor issue or cause to be
issued any quotations or draft any letters or documents over the name of
Company, but rather shall use its own name for such purposes .
14. TERM AND CANCELLATION:
14.1. Term: Subject to the termination and cancellation provisions of this
Agreement, the term of this Agreement shall commence as of the date hereof
("Effective Date") and shall continue in full force and effect for an initial
term of five (5) years. Subject to the termination and cancellation provisions
of this Agreement, unless either party gives written notice prior to the
expiration of the initial term, as provided below, this Agreement shall
automatically renew for one five (5) year renewal term on the same terms and
conditions set forth herein.
14.2. Cancellation: Subject to the other provisions of this Section,
either party may terminate this Agreement effective at the expiration of its
initial term or any actual or proposed renewal term hereof for any reason by
giving the other party at least sixty (60) days Written Notice prior to such
expiration.
14.3. Termination Date: The date upon which this Agreement is canceled or
terminated shall be hereinafter referred to as the "Termination Date".
15. TERMINATION:
This Agreement shall be terminable or shall terminate, as the case may be,
prior to the expiration of the initial five (5) year period or any renewals
thereafter if and when any of the following events occur:
10
15.1. Breach of Agreement by Distributor: Subject to any Sections of this
Agreement that may provide for immediate termination without right of cure,
Company may provide Written Notice to Distributor of any breach of this
Agreement, and if Distributor fails to cure the breach within thirty (30) days
of the Written Notice, the Agreement shall terminate immediately upon Written
Notice to Distributor of such termination .
15.2. Bankruptcy or Cessation of Business: This Agreement shall be
terminated automatically and immediately upon Distributor's cessation of
business, election to dissolve, dissolution, insolvency, failure in business,
commission of an act of bankruptcy, general assignment for the benefit of
creditors, or filing of any petition in bankruptcy or relief under the
provisions of the bankruptcy laws.
15.3. Commission of a Felony: Company may terminate this Agreement
immediately upon Written Notice to Distributor if any of Distributor's principal
officers or employees are convicted of any felony involving fraud, theft or
moral turpitude.
15.4. Merger, Consolidation or Change of Ownership: Company may terminate
this Agreement immediately in the event that Distributor, without the prior
written approval of Company, merges, consolidates or sells all or substantially
all of its assets or if there is a change of more than fifty percent (50%) of
the stock ownership of Distributor.
16. RIGHTS AND OBLIGATIONS UPON TERMINATION OR CANCELLATION:
Upon the termination or cancellation of this Agreement the parties hereto
agree as follows:
16.1. Non-Liability of Company: Company shall not be liable for
consequential damages of any kind, whether as a result of a loss by Distributor
of present or prospective profits, anticipated sales, expenditures, investments,
commitments made in connection with this Agreement, or on account of any other
reason or cause whatsoever.
16.2. Continuing Obligations: Notwithstanding any contrary provision
contained in this Agreement, the parties hereto agree that each shall abide by
and uphold any and all rights or obligations accrued or existing as of the
Termination Date.
17. COMPLIANCE WITH GOVERNMENTAL REGULATIONS:
In the event any legislation, rule, judgment or order is enacted, adopted
or issued that commercially frustrates Company's purpose in entering into this
Agreement or its ability to perform, Company has the right, in its sole
discretion, notwithstanding any other provisions of this Agreement, to
immediately terminate this Agreement or to cease performing or to unilaterally
modify that portion of the Agreement that has been so affected.
11
18. MEETINGS:
Company shall have the right to call meetings with Distributor to be held
at Company's primary place of business or such other location as Company and
Distributor may agree not more frequently than quarterly, provided that Company
furnishes at least fourteen (14) days Written Notice to Distributor, to review
matters relating to the terms and conditions of this Agreement and the
compliance of each of the parties therewith and to consider any special matter
of concern.
19. FORCE MAJEURE:
Distributor understands and acknowledges that Company shall not be liable
for any loss, damage, detention, delay or failure to perform in whole or in part
resulting from causes beyond Company's control, including, but not limited to,
fires, weather, strikes, insurrections, riots, embargoes, shortages of motor
vehicles, delays in transportation, inability to obtain supplies of raw
materials, or requirements or regulations of the United States government or any
other civil or military authority. Furthermore, it is understood that in no
event shall Company be liable for incidental or consequential damages resulting
therefrom.
20. CONFLICTS WITH OTHER AGREEMENTS:
Company and Distributor warrant that neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereunder
will violate or constitute a default under any agreement or instrument to which
either Company or Distributor is a party.
21. ENTIRE AGREEMENT; AMENDMENT:
This Agreement contains the entire understanding between the parties with
respect to the subject matter hereof and supersedes all prior contemporaneous
written or oral negotiations and agreements between them regarding the subject
matter hereof. This Agreement may be amended only by a writing signed by both of
the parties and clearly designated as an amendment to this Agreement by an
appropriate heading .
22. SEVERABILITY:
If any provision or portion thereof of this Agreement is determined to be
invalid or unenforceable, the provision or portion shall be deemed to be
severable from the remainder of this Agreement and shall not cause the
invalidity or unenforceability of the remainder of this Agreement.
23. ASSIGNMENT:
The parties acknowledge that this Agreement contemplates and requires in
its performance the unique circumstances, knowledge and business contacts of
Distributor. Distributor may not transfer or assign this Agreement or any
portion thereof or any right or obligation thereunder without
12
Company's prior written approval, which approval shall not be unreasonably
withheld. Any attempted transfer or assignment by Distributor of this Agreement
or portion thereof or any right or obligation thereunder shall be null and void
and constitute a material breach of the Agreement. This Agreement shall be
binding upon and shall inure to the benefit of Company and its successors and
assigns, and shall be binding upon and, subject to the foregoing limitations,
inure to the benefit of Distributor and its permitted assignees and successors.
It is specifically contemplated by the parties that the Company may utilize
other persons in connection with the manufacture of the Containers and may
cause components or complete Containers to be manufactured or shipped from
locations other than the Company's facilities.
24. NO IMPLIED WAIVERS:
The failure of either party at any time to require performance by the other
party of any provision hereof shall not affect in any way the right to require
such performance at any later time, nor shall the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of such
provision.
25. ATTORNEYS' FEES:
If any arbitration or legal proceeding is brought for the enforcement of
this Agreement, or because of an alleged breach, default or misrepresentation in
connection with any provision of this Agreement or other dispute concerning this
Agreement, the successful or prevailing party shall be entitled to recover all
attorneys fees reasonably incurred.
26. ARBITRATION:
Any controversy of claim arising out of or relating to this Agreement shall
be settled by binding arbitration conducted in accordance with the Commercial
Rules of the American Arbitration Association ("AAA"), and judgment upon any
award rendered in such arbitration may be entered in any court having
jurisdiction of whether one of the parties fails or refuses to participate. Any
dispute in which monetary damages greater than one-hundred thousand dollars
($100,000) are alleged or in which injunctive relief or specific performance is
requested shall be heard by a panel of three arbitration judges, which shall
have the power to grant requests for injunctive relief and specific performance.
27. GOVERNING LAW:
This Agreement shall be construed and interpreted under the laws of the
State of California. All disputes or controversies or questions arising under
or relating to this Agreement between the parties hereto in relation to this
Agreement shall be construed and resolved under the laws of the State of
California. Any judgments upon the award entered by the arbitrators may be
entered int the State of Federal Courts situated in the State of California.
13
28. COUNTERPARTS:
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Dated: Ontro, Inc.
---------------------- a California corporation
By:
-------------------------------
Xxxxx X. Xxxxxxx, President
Dated: The L.L. Xxxxxxxxxxxxx Co., Inc.
---------------------- a California corporation
By:
-------------------------------
Xxxxx X. Xxxxxxxxxxxxx, President
14
SCHEDULE "A"
CONTAINERS
SCHEDULE "B"
INITIAL APPROVED PRODUCTS
SCHEDULE "C"
INITIAL PRICE LIST
