EXHIBIT 99.1
MANUFACTURING AND DISTRIBUTION AGREEMENT
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AGREEMENT made this 10th day of February 1997 by and between SEPTIMA
ENTERPRISES, INC.(hereinafter "SEPTIMA"), a Colorado Corporation with offices at
000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxx 00000, and S. W. R.
INDUSTRIES, LTD. (hereinafter "SWR"), a Canadian corporation with offices at 000
Xxxxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxx X0X 0X0, Xxxxxx.
ARTICLE I
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Definitions
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As used in this Agreement, each of the following terms has the meaning set
forth thereafter, such meaning to be equally applicable both to the singular and
plural forms of the terms herein defined:
"Affiliate" means any individual, partnership, corporation or company
owning ten percent (10%) or more of SWR or SEPTIMA, or any partnership,
corporation or company in which SWR or SEPTIMA has at least a ten percent (10%)
ownership interest.
"Agreement" means this agreement, together with all schedules hereto now or
hereafter signed by, modified, amended or supplemented from time to time.
"Product" means (1) those Products manufactured by SEPTIMA and which are
described in Schedule B, attached hereto, and (2) unless the context indicates
otherwise, all spare and replacement parts for those Products.
"Inserts" means each Product's subassembly as manufactured by SEPTIMA and
described in Schedule B, hereto.
The terms "sale" and "resale" and any grammatical variant thereof shall
include, without limitation, sales, contracts for sale, conditional sales,
installment sales, rentals or leases, and any other arrangement whereby Products
are placed at the disposal of the ultimate user.
"Territory" means the locations referred to in Schedule A, attached hereto.
All amounts are in United States Dollars.
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XXXXX Confidential treatment has been requested for portions of this exhibit.
The copy filed herewith omits the information subject to the
confidentiality request. The omitted information has been filed separately
with the Securities and Exchange Commission. Omissions are designated as
"XXXXX".
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ARTICLE II
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Appointment as Manufacturer/Distributor
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2.01 SEPTIMA appoints SWR as EXCLUSIVE AUTHORIZED MANUFACTURER/
DISTRIBUTOR in the Territory for the manufacture and sale of Products and SWR
hereby accepts this appointment. SWR will not sell the Products and/or Inserts
outside of the Territory, nor will they resell the Inserts, as such, inside the
Territory, except to an Affiliate of or other company controlled by SWR which,
in turn, will not resell the Products and/or Inserts outside the Territory. SWR
will certify that all Products and/or Inserts will not be resold outside the
Territory. All orders or direct inquiries received by SEPTIMA with respect to
the sale of Products in the Territory will be referred by SEPTIMA to SWR. All
orders or direct inquires received by SWR with respect to the sale of Products
outside the Territory will be referred by SWR to SEPTIMA. No other companies
will be allowed to sell the Products in the territory.
2.02 SWR shall conduct its business in the purchase and resale of the
Products and/or Inserts for its own account and its own expense and risk. This
Agreement does not in any way create the relationship of principal and agent, or
any similar relationship, between SEPTIMA and SWR. SWR covenants and warrants
that it will not act nor represent itself directly or by implication as agent
for SEPTIMA, and it will not attempt to create any obligation or make any
representation on behalf of or in the name of SEPTIMA. SWR has the authority to
appoint an associate manufacturer, sub-manufacturer, distributor or sub-
distributor of the Products and/or Inserts provided the appointment: (i) does
not conflict with the ongoing activities of SEPTIMA, (ii) is in compliance with
the specifications as established by SEPTIMA, (iii) is subject to SWR's
obligations set forth in the Agreement, and (iv) is subject to SEPTIMA's
reasonable approval.
2.03 No minimum will be required in the first year (12 month period). In
future years, SWR shall be required to order for shipment a minimum of 120,000
aggregate Products and/or Inserts per year. Should SWR not order the required
minimum number of Products and/or Inserts for any twelve (12) month period,
SEPTIMA shall have the right to terminate this Agreement by giving SWR 30 days
to cure the default. If SWR does not cure within the 30 day period, this
Agreement terminates automatically and without notice.
2.04 SEPTIMA shall sell to SWR based on SWR's requirements on a quarterly
basis, as submitted to SEPTIMA on or before the thirtieth (30/th/) day of each
calendar quarter. SWR shall deliver to SEPTIMA an estimate of the quantities of
Products and/or Inserts required by SWR for the (a) succeeding two (2) calendar
quarters and (b) the succeeding four (4) calendar quarters. Forecasted Product
will be shipped by Septima within 30 days of receipt of order. Products not
forecasted will be shipped on a best effort basis by Septima.
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ARTICLE III
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Manufacturing
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3.01 SWR shall purchase from SEPTIMA Products and/or Inserts as described in
Schedule B, hereto, and cause the manufacturing process to be completed by
either acquiring or manufacturing those items described in Schedule C, attached
hereto, and assembling to completion the final Products or through Joint Venture
or other similar arrangements having those items described in Schedule C,
attached hereto, acquired or manufactured and assembled to completion the final
Products for sale.
3.02 SEPTIMA shall provide to SWR the necessary technical drawings and
specifications for those items listed in Schedule C, attached hereto. SWR shall
manufacture or cause the manufacture of the Products in accordance with said
technical drawings and specifications.
3.03 SEPTIMA shall provide, at SWR's expense, personnel to assist SWR in the
establishment of the manufacturing and quality control process. The number of
personnel and time dedicated to the process shall be agreed upon by SWR and
SEPTIMA prior to the scheduling of said personnel. Septima personnel's salaries
will be paid by Septima, and SWR will pay all other related expenses. Expenses
for Septima employees' visits to the Territory, initiated by Septima, will be
paid by Septima.
ARTICLE IV
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Sales and Service
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4.01 SWR shall use its best efforts to sell and promote the sale of the
completed Products within the Territory.
4.02 SEPTIMA shall provide, if requested by SWR and at SWR's expense,
personnel to assist in the technical training of SWR's marketing organization.
The number of SEPTIMA personnel and length of stay in the Territory is to be
agreed upon by SWR and SEPTIMA. Septima personnel's salaries will be paid by
Septima, and SWR will pay all other related expenses. Expenses for Septima
employees' visits to the Territory, initiated by Septima, will be paid by
Septima.
4.03 SWR will be responsible for the sale and servicing of the Products
and/or Inserts in the Territory. SWR will perform all service work at its own
expense within a reasonable amount of time not to exceed sixty (60) days from
the discovery of a defective Product and/or Insert. SEPTIMA will provide
replacement Products and/or Inserts in exchange for defective Products and/or
Inserts after examination by SEPTIMA of the Products and/or
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Inserts and good faith determination that the defects have not been caused by
misuse, abuse, improper installation or application, repair, alteration,
accident or negligence in the use, storage, transportation or handling.
ARTICLE V
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Inventory, Marketing and Related Obligations
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5.01 The Products and/or Inserts shall not be returned for credit except for
defective Products and/or Inserts which shall be replaced by SEPTIMA, said
defects as reasonably determined by SEPTIMA not to have been caused by misuse,
abuse, improper installation or application, repair, alteration, accident, or
negligence in the use, storage, transportation or handling.
5.02 All marketing and sales materials for the Products and/or Inserts to be
used by SWR in the marketing effort will be provided to SEPTIMA for approval.
Approval will be deemed granted if there is no response within thirty (30) days
of receipt. SWR may use the trade names and trademarks as used by SEPTIMA in
the United States provided SWR shall submit the material containing the trade
names and/or trademarks for approval by SEPTIMA in writing prior to use, said
approval deemed to be granted if response has not been received within sixty
(60) days of submission.
5.03 XXXXX
ARTICLE VI
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Conditions of Sale
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6.01 Products and/or Inserts shall be packaged and shipped as agreed to by
both parties.
6.02 Delivery to SWR shall be F.O.B. Latrobe PA with all costs, insurance
and freight paid by SWR. SEPTIMA shall not be liable for transportation or for
loss or damage in transit. Claims for shortage or damages to shipments shall be
made against the carrier by SWR. Claims for shortage not attributable to the
carrier must be initiated by SWR against SEPTIMA within ten (10) days after
arrival of shipment at the specified destination.
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Shipping dates are estimated, and SEPTIMA shall not be liable for loss or
control including, but not limited to, compliance with regulations, orders or
instructions of any governmental authority, or any department or agent thereof,
acts of God, acts or omissions of SWR, acts of civil or military authority,
fires, strikes, facilities shutdowns or alterations, embargoes, war, riot,
delays in transportation, or inability to obtain necessary labor, manufacturing
facilities or materials from usual source, and delays resulting from any such
cause shall extend the time for delivery correspondingly. As it relates to
shipping, in no event shall SEPTIMA be liable for consequential, incidental,
punitive, or special damages due for any reason whatsoever. All expense and
charges caused by SWR and which arise out of the reshipment or rerouting of the
Products and/or Inserts purchased by SWR, including, but not limited to, its
failure to accept delivery, except a non-conforming delivery, of or pay for such
Products and/or Inserts, shall be paid by SWR to SEPTIMA on demand. After
thirty (30) days of nonpayment, a ten percent (10%) interest factor will be
added to the unpaid balance.
6.03 SWR shall purchase from SEPTIMA with payment conditions as follows:
Prepayment, Cash in United States Dollars, or a Letter of Credit satisfactory to
SEPTIMA and SWR. If the Letter of Credit is the chosen method, SEPTIMA shall be
permitted to negotiate that portion of the Letter of Credit corresponding to
each shipment of the Products and/or Inserts to SWR. Any cost associated with
the Letter of Credit will be borne solely by SWR.
6.04 SWR shall pay all license fees, sales, use, service use, occupation,
retailer's occupation, service occupation, personal property, import/export and
excise taxes in the territory which may be assessed or levied by any
governmental authority and any departments and subdivisions thereof against any
of the Products and/or Inserts ordered by SWR.
6.05 SWR shall not make any changes to the Products and/or Inserts without
the prior written approval of SEPTIMA. The proposed changes must be submitted to
SEPTIMA in writing with supporting drawings and technical information. No
response by SEPTIMA within ninety (90) days shall be deemed as non-approval of
the proposed changes. Any changes to the Products and/or Inserts remain the sole
property of SEPTIMA or the patent holders, as the case may be.
6.06 SEPTIMA shall provide to SWR, during the term of this Agreement, any
and all modifications or upgrades made by SEPTIMA to the Products and/or Inserts
distributed in the United States. XXXXX
6.07 SEPTIMA shall offer to SWR for distribution in the Territory any new
Products not listed on Schedule A, attached hereto, manufactured and distributed
by SEPTIMA in the United States. The new Products shall be offered under an
entirely new agreement
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negotiated between SEPTIMA and SWR. Should SWR and SEPTIMA not reach agreement
as to the new products, SEPTIMA shall retain the right to distribute the new
Products in the Territory and the right to secure a distributor to market the
new Products in the Territory. The new products will not be similar to the
Septima products manufactured or sold by SWR in the territory.
6.08 SWR shall keep all information, including technical information, design
drawings, engineering specifications and know-how delivered by SEPTIMA regarding
the Products and/or Inserts confidential, except as necessary and with the
approval of SEPTIMA, for the marketing and distribution of Products and/or
Inserts.
ARTICLE VII
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Warranties
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7.01 All Products and/or Inserts purchased by SWR from SEPTIMA in accordance
with the terms of this Agreement shall be warranted by SEPTIMA against any
defects in materials and workmanship. Any warranties extended by SEPTIMA for
the Products and/or Inserts in the United States or in any other country shall
also be extended to SWR under the same terms and conditions. SWR agrees to
furnish all warranty services required for all the Products and/or Inserts.
SEPTIMA agrees to supply to SWR free of charge, including shipping charges,
those replacement parts or Inserts for the Products which are required to be
supplied under this paragraph. SEPTIMA, at its discretion, shall decide and pay
those costs associated with the return and testing of defective Products and/or
Inserts. Those Products returned under this paragraph, after testing, found to
be within factory specifications shall be returned to SWR at SWR's expense.
7.02 NO WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN THOSE MADE IN SECTION
7.01, HEREIN, ARE GIVEN IN RESPECT OF THE PRODUCTS AND/OR INSERTS, AND ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE IS HEREBY
EXPRESSLY DISCLAIMED. ANY CLAIM OR CAUSE OF ACTION PURSUANT TO THE WARRANTY
PROVIDED IN SECTION 7.01 OF THIS AGREEMENT MUST BE COMMENCED WITHIN ONE (1) YEAR
OF SUCH CLAIM OR CAUSE OF ACTION ARISING OR SUCH CLAIM OR CAUSE OF ACTION SHALL
BE DEEMED WAIVED.
7.03 SWR agrees to indemnify and hold SEPTIMA and its officers, directors,
employees, shareholders, affiliates, agents, and attorneys harmless against any
and all losses, damages, liabilities, claims, demands, suits, or causes of
action, including attorney's fees and expenses of defending against such claims,
demands, suits, or causes of action, resulting from (a) third party claims
arising, directly or indirectly, out of or in connection with SWR's sale,
installation or operation of the Products and/or Inserts or (b) conduct of SWR's
business.
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ARTICLE VIII
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Term
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8.01 This Agreement shall become effective on the date of execution by SWR
and SEPTIMA, and shall run until February 10, 1998 unless sooner terminated
as provided for herein. This Agreement shall be automatically renewed for
additional one (1) year periods so long as the minimum sales levels as provided
in Section 2.04 are met. XXXXXX
ARTICLE IX
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Termination
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9.01 SWR may terminate this Agreement by written notice of termination
delivered to SEPTIMA, such termination to be effective not less than ninety (90)
days after receipt by SEPTIMA of such notice, unless SEPTIMA agrees to such
termination becoming effective on a sooner date.
9.02 SEPTIMA may terminate this Agreement immediately by delivering to SWR
or its representative notice of such termination in the event of the happening
of any of the following:
i. Any attempted transfer or assignment of this Agreement, or any right or
obligation hereunder, or any sale, transfer, relinquishment voluntary or
involuntary by operation of law, or otherwise of any majority interest in the
direct or indirect ownership, control or active management of SWR without the
prior written approval of SEPTIMA; said approval shall not be unreasonably
withheld; or
ii. The execution of SWR of an assignment for the benefit of creditors;
the conviction of SWR or any principal officer of SWR of any crimes which in the
opinion of SEPTIMA may adversely affect the ownership, operation, management,
business or interest of SWR or SEPTIMA; or
iii. Failure of SWR to pay when due any indebtedness owing by SWR to
SEPTIMA, unless expressly waived in writing by SEPTIMA; or
iv. The sale of all or substantially all of SWR's assets.
9.03 This Agreement shall terminate automatically and without the giving of
notice in the event SWR shall become insolvent or shall have outstanding
balances due and owing
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SEPTIMA for a period longer than ninety (90) days or shall suffer appointment
of a temporary or permanent receiver, trustee, or custodian for all or a
substantial part of its assets who shall not be discharged within ninety (90)
days.
9.04 This Agreement shall terminate automatically and without giving of
notice in the event SEPTIMA is in default of the Assignment Agreement between
SEPTIMA and XXXXXXX PLASMA PLUG PARTNERSHIP ("XXXXXXX") dated September 26,
1995, and pursuant to the default provisions of the Assignment Agreement,
SEPTIMA returns to XXXXXXX all rights to the technology transferred to SEPTIMA
under the Assignment Agreement.
9.05 Notwithstanding any other provision of this Article IX, either Party
may terminate this Agreement for failure by the other Party to perform or adhere
to any of its obligations under this Agreement by notifying the other Party of
such default and allowing the other Party thirty (30) days to cure said default.
The Party giving notice of default may terminate this Agreement at any time
thereafter upon notice to the other Party.
9.06 Any termination of this Agreement shall not release SWR from paying any
amount which may then be due and owing to SEPTIMA or from any obligation to pay
for any Products and/or Inserts which may be ordered by SWR and shipped prior to
the effective date of such termination. In the event of any termination of this
Agreement, all obligations owed by SWR to SEPTIMA shall become immediately due
and payable on the effective date of termination whether otherwise then due or
not (without presentment, demand, protest or notice of any kind, all of which
are hereby waived by SWR) and SEPTIMA may offset and deduct from any or all
amounts owed to SWR any or all amounts owed by SWR to SEPTIMA rendering to SWR
the excess, if any.
9.07 Upon the termination of this Agreement the following shall occur:
i. SWR and its Affiliates shall immediately cease to, directly or
indirectly, represent to the public or hold itself out as a present or former
distributor or manufacturer of the Products and/or Inserts or in any other way
affiliate itself with SEPTIMA; and
ii. SWR and its Affiliates will not use any reproductions, counterfeit,
copy or colorable imitation of SEPTIMA's trademarks, copyrights, logos or other
proprietary marks or undertake any other conduct which is likely to cause
confusion, mistake or deception, or which is likely to dilute SEPTIMA's rights
in and to its proprietary marks; and
iii. SWR and its Affiliates shall immediately deliver to SEPTIMA all
marketing and sales materials for the Products and/or Inserts, all technical
drawings and specifications for the Products and/or Inserts and all other
confidential information provided by SEPTIMA to SWR.
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9.08 During the term of this Agreement and for a period of three (3) years
after the termination of this Agreement, for any reason whatsoever, SWR and its
Affiliates shall not in any manner engage directly or indirectly in the
marketing or distribution of any products competitive with the Products and/or
Inserts covered by this Agreement. Competitive products are defined as those
products falling within the scope of the patents attached hereto.
ARTICLE X
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Miscellaneous
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10.01 This Agreement supersedes all prior or contemporaneous agreements,
representations, warranties and understandings and contains the entire agreement
between the Parties hereto. No amendment, modification, termination, or waiver
of any provision of this Agreement, nor consent to any departure therefrom,
shall in any event be effective unless the same shall be in writing and signed
by duly authorized representatives of each Party hereto. No notice to, or
demand on, SWR in any case shall entitle it to any other or further notice or
demand in similar or other circumstances. No failure or delay on the part of
SEPTIMA in exercising any right, power or remedy, hereunder, shall retire the
right, power or remedy.
10.02 This Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors and assigns, except that SWR
shall not have the right to assign or otherwise transfer its rights hereunder or
any interest therein without the prior written consent of SEPTIMA; such consent
shall not be unreasonably withheld.
10.03 SEPTIMA shall not by reason of termination of the Agreement be liable
to SWR for any claims, losses, costs, expenses, or damages, including but not
limited to, compensation, reimbursement, or damages arising from, resulting
from, or related to loss of revenue, loss of profit, investments or expenditures
of goodwill of SWR.
10.04 All notices, requests, demands, directions and other communications
provided for hereunder shall be in writing (including telegraphic, fax, or
telex) and mailed or delivered to the applicable Party at the address of such
Party set forth on the first page hereof or at such address as a party shall
notify the other party of in writing. Each such notice, request, demand,
direction or other communication shall be deemed delivered (a) on the date
delivered if by personal delivery, (b) on the date of transmission with
confirmed answer back if by electronic transmission, and (c) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as non deliverable, as the case may be, if
mailed.
10.05 SWR shall at its own expense purchase comprehensive general liability
insurance in the face amount of at least $5,000,000 per occurrence, including
contractual liability
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insurance and product liability insurance, on an occurrence basis against
claims for bodily injury or death, including personal injury and property
damage. All policies of insurance shall provide that SEPTIMA is an additional
insured. In addition, all such policies shall contain an agreement on the part
of the insurers that in the event of cancellation of the policy in whole or in
part, or by a reduction as to coverage or amount thereof, whether initiated by
the insurer or any insured, the insurer shall provide at lease thirty (30) days'
advance written notice to SEPTIMA prior to such cancellation or reduction in
coverage.
10.06 Any controversy or claim arising out of or relating to this Agreement
or the breach thereof shall be settled by arbitration held at West Palm Beach,
Florida, administered by the American Arbitration Association under its
Commercial Arbitration Rules, and judgement on the award rendered by arbitrators
may be entered in any court having jurisdiction thereof.
10.07 This Agreement shall be governed by and construed under the laws of
the State of Florida.
10.08 This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be original and all of
which taken together shall constitute one complete instrument.
10.09 Headings in this Agreement are included herein for convenience of
references only and shall not constitute a part of this Agreement for any other
purpose.
10.10 In the event any section, paragraph or portion of this Agreement shall
be, or be deemed to be by the American Arbitration Association in accordance
with paragraph 10.05 above, void, voidable or invalid for any reason, this
Agreement shall be otherwise valid and enforceable as if the void, voidable or
invalid section, paragraph or portion of this Agreement had not been a part of
it in the first instance except for the provisions under Article IX herein.
IN WITNESS WHEREOF, The parties herein have caused this Agreement to be executed
as of the date first above written.
S. W. R. INDUSTRIES, LTD.
By: /s/ Xxxx Xxx Date: February 10, 1997
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SEPTIMA ENTERPRISES, INC.
By: /s/ R. Xxxxx Xxxxxx Date: February 21, 1997
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Xxxxxxxxx Xxxxxxx February 21, 1997
Notary Public
My Comission CC316611
Expires Oct. 11, 1997
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SCHEDULE A
COUNTRY OF MANUFACTURE AND DISTRIBUTION
1. Peoples Republic of China
2. Hong Kong
3. Macao
4. Taiwan
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SCHEDULE B
Inserts are to be defined as molded Inserts Code MC-80 and MC-100. These
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Inserts are the integral components of the SEPTIMA products.
Products coded S-80 and S-100 which can be described as high voltage, coaxial,
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bipolar capacitors designed for attachment to a non-resistor spark plug as used
in internal combustion non-diesel engines; S-80 designed for small displacement
engines as found on motorcycles; S-100 designed for large displacement engines
as found on automobiles and stationary engines.
These Products are protected under U. S. Patents No. 32,505 (reissue of
4,333,135), No. 4,333,126, No. 4,402,036, No. 4,589, 398, No. 5,272,415, No.
5,371,436; European Patents Xx. 0 000 000 X0, Xx. 0 000 000 X0; Japanese Patents
No. 0-000-000, No. 0-000-000; and Chinese Patent Application No. 95119282.5, and
the patent application as being filed with the Mexican Patent and Trademark
office Exp. No. 964101.
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SCHEDULE C
Components for the completion of the sub-assemblies described in SCHEDULE B:
For MC-80:
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1. Outer ground plate housing
2. Grounding alignment bushing
3. Terminal nut
4. Locking washer
5. Weather-Plasma seal
6. Label
7. Instructions and packaging
For MC-100:
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1. Outer ground plate housing
2. Grounding alignment bushing
3. Terminal nut
4. Locking washer
5. Weather-Plasma seal
6. Label
7. Instructions and packaging
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