EXHIBIT 10.11
DISTRIBUTION AGREEMENT
This Distribution Agreement is made and entered into this 15 day of
February, 2005, by and between SEALIFE MARINE PRODUCTS, INC., a California
corporation ("Company"), having principal offices at 0000 Xxxxxxx Xxxxxx, Xxxxx
000, Xxxxxx Xxxx, Xxxxxxxxxx 00000, and SURFACE PROTECTION INDUSTRIES
INTERNATIONAL, a California corporation ("Distributor") having its principal
offices at 0000 Xxxx Xxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
RECITALS
A. Company is engaged in the manufacture and sale of marine
paints sold under the name of Sealife Marine Products.
B. Distributor desires to act as the exclusive distributor in the
territory hereafter described for the products manufactured by Company.
C. Distributor represents that it possesses the ability and
wherewithal to promote the sale and use of products manufactured by Company for
the types of accounts approved in Exhibit "A" and is desirous of developing
demand for and selling such products on an exclusive basis in the territory set
forth in Exhibit "A" (the "Territory).
D. Company is desirous of having Distributor develop demand for
and sell its products in the Territory on the terms and conditions set forth
herein.
E. Distributor and Company desire to set forth the terms and
conditions of their relationship and their respective rights and obligations.
NOW, THEREFORE, the parties do hereby agree as follows:
1. INCORPORATION OF RECITALS.
Each of the above Recitals are incorporated in this Agreement as though
set forth in full hereat.
2. APPOINTMENT.
2.01 TERRITORY. Company hereby appoints Distributor upon the terms
and conditions hereafter set forth, as its exclusive distributor in the
Territory to sell the marine paints manufactured by Company. The marine paints
are hereafter referred to as the "Products". See Exhibit "B" for product listing
an distributor pricing.
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2.02 ACCEPTANCE. Distributor accepts the appointment to develop
demand for and to sell Company Products within the Territory and will make all
sales hereunder in accordance with this Agreement. Distributor shall make every
effort to adhere to Company pricing schedules relative to wholesale prices and
volume discounting.
3. TERRITORY.
Distributor agrees that it will not sell any of the Products outside of
the Territory, and Company agrees that it will not appoint other distributors,
representatives or agents for the sale of the Products in the Territory nor will
any of its employees sell any of the Products in the Territory. Company further
agrees that it shall not assist distributors or representatives of the Products
in other territories to sell Products in the Territory by shipping Products to
or for them, into the Territory.
4. TERM.
The term of this Agreement shall be for a period of three (3) years,
commencing from the date of this Agreement. This Agreement shall be
automatically renewed on the same terms and conditions for successive periods of
twelve (12) months each unless one party gives to the other written notice of
its intention to terminate at least one hundred twenty (120) days prior to the
expiration of the initial term or the expiration of any renewal term.
Notwithstanding the foregoing, either party shall have the right to terminate
this Agreement on thirty (30) days written notice to the other for cause, if the
reason for the cause has not been cured within the time hereafter set forth.
5. DISTRIBUTOR'S DUTIES.
5.01 ACCEPTANCE OF APPOINTMENT. Distributor accepts its appointment
and agrees to use its best efforts to diligently promote and develop the
goodwill and sale of the Products in the Territory and in connection therewith
to make the Products an integral part of its marketing and sales programs.
5.02 SALES STAFF. Distributor agrees to maintain an adequate sales
staff and facilities in the Territory and in this regard, may appoint dealers,
salesmen and/or representatives to sell the Products in the Territory.
5.03 COMPLIANCE WITH LAWS. Distributor agrees to fully comply with
all applicable laws, statutes, rules and regulations in respect to the sale and
distribution of the Products.
6. OPERATIONS.
6.01 ACCEPTANCE OF ORDERS; FILLING.
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(a) All orders Company receives for the Products from
Distributor are subject to acceptance by Company. Company agrees that it will
not unreasonably refuse to accept an order and Company shall accept or reject an
order within five (5) days after receipt and, if rejected, shall advise
Distributor as to the reason.
(b) Company will use its best efforts to fill the
accepted orders as promptly as practicable, subject, however, to delays caused
by transportation conditions, labor or material shortages, strikes, riots,
fires, or any other cause beyond Company's control. In all cases, Company will
use its best efforts to advise Distributor in advance of any inability to make
full and timely delivery of any Products, which Distributor has previously
ordered.
6.02 ORDERS-PRICES-PAYMENT
(a) The Initial Minimum Order of the Products by
Distributor shall be 200 gallons. Payment for this for this order will require
50% deposit and remaining 50% due upon shipment of 200 gallons.
(b) Going forward payment for Products shall be made net
thirty (30) days from receipt of Product. Products ordered will be f.o.b.
factory in Los Angeles, California.
(c) The initial schedule of prices for the Products is as
set forth in Exhibit "B" hereto. Company may change the schedule of prices at
any time to become effective within sixty (60) days notice to Distributor.
Company will honor all orders received prior to the price change becoming
effective, although delivery is not made until after the effective date of the
price change. However, if the manufacturer incurs raw material increases and
passes those increases on to the company, the company in turn will increase its
price accordingly.
6.03 COMMON CARRIERS AGENTS OF DISTRIBUTOR. Whenever Company shall
deliver or cause to be delivered to a common carrier any goods ordered by
Distributor, whether the particular carrier shall have been designated in the
shipping or routing instructions of Distributor or not, Company shall not be
responsible for any delays or damages in shipment and the common carrier, to
which Company shall deliver goods shipped to Distributor or its customer, is
declared to be the agent of Distributor.
6.04 CONFLICTS OF INTEREST; NON-HIRE PROVISION. Distributor
represents it is free to enter into this Agreement, and that this engagement
does not violate the terms of any agreement between Distributor and any third
party. Further, Distributor, in rendering its duties shall not utilize any
invention, discovery, development, improvement, innovation, or trade secret in
which it does not have a proprietary interest. During the term of this
Agreement, Distributor shall devote as much of its productive time, energy and
abilities as Distributor, in its sole discretion, shall determine to accomplish
the sales of the Products. Distributor is expressly free to perform
non-competing sales or services for other parties while performing services for
Company.
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For a period of one year following the termination of this Agreement,
Distributor shall not, directly or indirectly, hire, solicit or encourage to
leave the Company's employment, any employee of Company or hire any such
employee who has left Company's employment.
6.05 EXPENSES. Except as specifically herein provided to the
contrary, Distributor shall bear the full cost and expense of providing all
services required to be provided, including expenses relating to salaries of its
employees, office, travel, correspondence, business communications,
demonstration time and any and all taxes which may be imposed upon Distributor
in connection with its selling and operating activities.
6.06 RIGHT TO USE NAME.
(a) Subject to the provisions of Subsection (b) of this
Section 6.06, Distributor must use the name SeaLife as applied to the Products
in any sign or advertising during the continuance of this Agreement.
(b) In case of termination of this Agreement, or upon
request of Company, Distributor shall discontinue use of such name in any sign
or advertising and thereafter shall not use the name, directly or indirectly, in
connection with its business nor use any other name, title or expression so
nearly resembling it as would be likely to lead to confusion or uncertainty or
to deceive the public. Distributor shall, however, have the right to continue to
sell any of its remaining inventory of the Products under the name SeaLife.
6.07 INSURANCE.
(a) Distributor will carry liability insurance in an
amount not less than $2,000,000 relative to any service that it performs for
Company, will name Company as an additional insured and will provide Company
with a Certificate of Insurance.
(b) Company will carry liability insurance in an amount
not less than $2,000,000, which shall include damage to third parties caused by
pollution due to use of the Products. Distributor shall be named as an
additional insured and will provide Distributor with a Certificate of Insurance.
7. DUTIES OF COMPANY.
7.01 DELIVERY OF PRODUCT. Subject to an event of force majeure,
Company shall deliver all Products ordered by Distributor within ten (10)
working days after receipt of the order.
7.02 TRAINING. Company shall provide, at no charge to Distributor,
training for all present and future employees and sales representatives of
Distributor
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who are engaged in selling the Products. The training shall be comprehensive to
enable such employees and sales representatives to competently advise
Distributor's customers as to the characteristics of the Products, their uses
and proper application.
7.03 ADVERTISING MATERIALS AND SALES TOOLS. Upon execution of this
Agreement and subsequent thereto as needed by Distributor, Company shall provide
Distributor, at Company's sole cost and expense, with an adequate supply of
sales tools and advertising materials, including but not limited to the
following:
(a) TO BE FURNISHED UPON EXECUTION OF THIS AGREEMENT:
Master brochure/catalogues, Metal color panels, Sell Sheets/Case Study Sheets,
MSDS Sheets, Tech Data Sheets, Application Guides and Price Lists;
(b) TO BE FURNISHED AS REQUESTED BY DISTRIBUTOR: Counter
cards, Tri-fold brochures, Header Boards, Posters and Videos.
7.04 DEMONSTRATION PRODUCTS. Company shall supply Distributor, at
no cost to Distributor, with Products required by Distributor to demonstrate to
its customers the use and performance of the Products. Upon completion of a
demonstration, Distributor shall advise Company of the name and address of the
customer to whom the demonstration was given, the color of the paint Product and
the quantity used. Upon receipt of the foregoing, Company shall issue a credit
to Distributor for the amount of the Product used in the demonstration, which
credit may be used against future purchases of Products by Distributor.
Notwithstanding the foregoing, Distributor shall be required to obtain the prior
written approval of Company for quantities of Product in excess of one (1)
gallon to be used in any one demonstration.
7.05 STOCK RETURN POLICY. Distributor shall be allowed to return to
Company slower moving colors for other colors selected by Distributor and
Company shall replace the returned colors on a 1:1 basis. Returns of Products to
Company may only be made two (2) times in any twelve (12) month period and
returned Products, not opened, must be "in date". Distributor will pay for
freight both ways.
7.06 DEALER SHOWS. If a dealer of the Products is offering a
special sales promotion event and requests that the Distributor participate in
promoting sales of the Products, Company will consider participating and
approving a discount percent off the Distributor price of the Products ordered
on behalf of the dealer within thirty (30) days of the special sales promotion
event. The special sales event must be registered with the Distributor 60
(sixty) days in advance of the event. Only one (1) event per dealer per calendar
year allowed.
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7.07 DEFECTIVE PRODUCT. If any Product is defective, Company shall,
at Distributor's option, either (I) replace all such defective Products with a
like quantity of new Products even though some or all of the defective Product
cannot be returned, or (ii) refund the purchase price of the defective Products
to Distributor.
7.08 CO-OP ADVERTISING. Company agrees to credit Distributor up to
six percent (6%) of prior year purchases for advertising activities payable at a
fifty percent (50%) basis based on proof of performance.
8. GOAL AND OBJECTIVE PLANNING.
Company and Distributor shall hold semi-annual sessions, at a time and
place to be mutually agreed upon, for the purposes of discussing and planning
goals and programs to further the sale of the Products. The sessions shall
include, but not be limited to, the following: Commitment of resources by
Company and Distributor, anticipated training needs with specific action plans,
targeting specific potential customers and providing a maintenance schedule for
existing customers.
9. USE OF NAME.
Distributor shall have the right to use the name "SeaLife Marine" or a
derivative thereof on any of the Products and any advertisement of the Products.
Distributor shall not, however, use such name as a part of its company name or
in any manner which could lead the public to believe that Distributor is the
owner of the name, or is affiliated with Company in any manner other than as a
distributor. Company represents and warrants that it is the sole owner of the
name "SeaLife Marine" and that the use thereof by Distributor will not infringe
on the right of any other person or entity, which has a right to use such name.
10. RELATIONSHIP OF THE PARTIES.
The purpose of this appointment is to provide for the development and
maintenance in the Territory of a substantial volume of sales of the Products in
the mutual interests of the parties in a totally professional and technically
competent manner. This Agreement creates no relationship of joint venturers,
partners, associates or principal and agent between the parties, and both
parties are acting independently as principals. Distributor and Company shall
each bear all expenses of its respective business and Distributor and Company
shall not be liable or responsible for the debts or expenses of the other in any
manner.
11. CONFIDENTIALITY AND NON-COMPETITION.
Each party acknowledges that in the course of performing this
Agreement, it will acquire and develop knowledge, information and materials
concerning the other, its business, customers, suppliers, products, application
procedures, prices, and that all such knowledge, information and materials are
and shall be the trade secrets and confidential and proprietary information of
the party owning the same (hereinafter "confidential information"). Each party
agrees to hold the confidential information of the other party in strict
confidence and not disclose it to others, not use it in any way or permit others
to use it in any way, commercially or otherwise, and not allow any unauthorized
persons access to it either before or after termination of this Agreement
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without the prior written consent of the other. SPI is not to disclose their
product cost to the Distributor.
12. INDEMNITY.
Distributor agrees to indemnify, defend and hold harmless Company from
and against any and all claims, liabilities, damages, demands, costs, expenses,
including reasonable attorneys' fees, of any nature whatsoever, that may be
asserted against or reasonably incurred by Company, whether involving injury to
or death of persons, or damages to or loss of property, which arise out of
Distributor's activities, obligations or duties negligently performed or omitted
to be performed under this Agreement.
Company agrees to indemnify, defend and hold harmless Distributor from
and against any and all claims, liabilities, damages, demands, costs, expenses,
including reasonable attorneys' fees, of any nature whatsoever that may be
asserted against or reasonably incurred by Distributor, whether involving injury
to or death of persons, or damages to or loss of property, which arise out of
defective Products or Company's activities, obligations or duties negligently
performed or omitted to be performed under this Agreement.
13. ARBITRATION.
(a) Any controversy, claim, dispute or other matter arising out
of, or relating to, this Agreement shall be decided by binding arbitration in
accordance with the Arbitration Rules of the American Arbitration Association.
Any arbitration shall be held in Los Angeles, California and in no other place,
unless mutually agreed upon by the parties.
(b) The party demanding arbitration shall give notice of the
demand in writing to the other party and to the American Arbitration Association
in Los Angeles, California. The demand for arbitration shall be made within a
reasonable time after a claim, dispute or other matter in question has arisen,
but except as otherwise expressly provided herein, in no event, after the date
when institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statute of
limitations. Section 1283.05 of the California Code of Civil Procedure is
incorporated in this Agreement and made a part hereof.
NOTICE: BY INITIALLING IN THE SPACE BELOW, YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THIS AGREEMENT, DETERMINED BY ARBITRATION AND ARE WAIVING
ANY RIGHT TO HAVE THE DISPUTE LITIGATED IN A COURT AND BY A JURY TRIAL.
Company's Initials:_________ Distributor's Initials:_________
14. NOTICES.
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Any notice required to be given hereunder shall be in writing and
delivered personally to the other designated party at the address set forth
below, or mailed by Certified or Registered Mail, Return Receipt Requested, or
delivered by a recognized national overnight courier service, in a sealed
envelope, with postage thereon fully paid and addressed as follows:
If to Distributor: 0000 Xxxx Xxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Xx., CEO and
Xxxxxx Xxxxxxx
If to Company: SeaLife Marine Products, Inc.
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx and Xxxxxx XxXxxxxx
00. EFFECT OF TERMINATION.
On the effective expiration or termination of this Agreement,
Distributor agrees to return to Company all originals and copies of sales and
marketing materials, information and promotional aids ("Marketing Materials")
previously provided to Distributor and any Confidential Information in written
form pertaining to the Products, this Agreement, or the operations of Company,
except that Distributor shall be entitled to retain and sell all of its
inventory of the Products and may keep and use sufficient copies of Marketing
Materials to enable it to sell such inventory. All outstanding Company
receivables are to be paid by the Distributor at date of termination.
16. FURTHER ACTS AND DOCUMENTS.
Each party covenants and agrees to perform all acts and execute,
acknowledge and deliver any and all further documents or instruments as may be
required for the purpose of giving full force and effect to this Agreement.
17. FORM OF AGREEMENT.
(a) HEADINGS. The subject headings of the paragraphs of this
Agreement are included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
(b) GENDER. The neuter gender includes the feminine and masculine,
the masculine includes the feminine and neuter, and the feminine includes the
masculine and neuter, and each includes the corporation if and when the context
so requires.
(c) ENTIRE AGREEMENT, MODIFICATION AND WAIVER. This Agreement
constitutes the entire agreement between the parties pertaining to the subject
matter
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contained in it and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties. No supplement, modification
or amendment of this Agreement shall be binding unless executed in writing by
all the parties. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.
(d) SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable by any court of final jurisdiction, it is the intent of
the parties that all other provisions of this Agreement be construed to remain
fully valid, enforceable and binding on the parties.
18. MISCELLANEOUS.
(a) SUCCESSORS. This Agreement shall be binding on and shall inure
to the benefit of the parties and their permitted successors and assigns.
(b) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in one or more counterparts, all of which taken together shall be
deemed an original.
(c) GOVERNING LAW. This Agreement shall be govern by, and
construed in accordance with, the laws of the State of California exclusive of
conflicts of laws provisions which would direct the application of another
jurisdiction's law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year hereinabove set forth.
SURFACE PROTECTION INDUSTRIES SEALIFE MARINE PRODUCTS, INC.,
INTERNATIONAL, a California corporation a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx, Xx. By: /s/ Barre Rorabaugh
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XXXXXX X. XXXXXXXX, Xx., Barre Rorabaugh
Its Chief Executive Officer Its President
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EXHIBIT "A"
THE TERRITORY AND CUSTOMER TYPES
1. TERRITORY:
States of Texas, Louisiana, Oklahoma, and Arkansas.
2. CUSTOMER TYPES:
Distributors (boats, barges and marine vessels only), shipyards,
boatyards and marine dealers. This does not include retail, internet,
and catalog categories.
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EXHIBIT "B"
PRODUCT LISTING AND PRICING
SeaLife 1100 XP Red
SeaLife 1200 XP Black
SeaLife 1001 Red
SeaLife 1002 Black
SeaLife 1003 Dark Blue
SeaLife 1008 Light Blue
SeaLife 1005 Light Green
SeaLife 1004 Dark Green
SeaLife 1006 Xxxxx
SeaLife 1007 Xxxx
SeaLife 1009 Shark Fin White
DISTRIBUTOR PRICING
$89.00 per gallon, FOB Los Angeles
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