EXECUTION AGREEMENT
This DISTRIBUTOR AGREEMENT (the "Agreement"), made as of the 30th day of
June, 1997, between ADVANCED PARTICLE TECHNOLOGIES, INC., a Delaware corporation
("APT"), and VANGKOE INDUSTRIES, INC., a Florida corporation ("VANGKOE");
WITNESSETH:
WHEREAS, VANGKOE desires to market various coated and uncoated particles
for use in the market for swimming pool plasters and other swimming pool
material applications, including for spas, reflective pools and fountains and
the like;
WHEREAS, on the date hereof, pursuant to a Technology Purchase Agreement
dated the date hereof, APT has purchased certain proprietary coating technology
from VANGKOE which will be applied by APT to specialty glass particles; and
WHEREAS, APT, acting independently or through its affiliated companies, can
also supply uncoated specialty glass particles, as well as specialty fired
ceramic particles; and
WHEREAS, VANGKOE desires the exclusive right to market such coated
specialty glass, uncoated specialty glass, and fired ceramic particles into the
market for swimming pool plasters and other swimming pool material applications
in the United States and Canada; and
WHEREAS, APT is willing to grant such exclusive rights to VANGKOE, subject
to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
Section 1. Appointment; Exclusivity; Term.
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1.1 Appointment. Subject to the terms and conditions hereof, APT hereby
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appoints VANGKOE, and VANGKOE hereby accepts such appointment, as the exclusive
distributor of coated specialty glass, uncoated specialty glass, and fired
ceramic particles manufactured by APT or its affiliates (collectively, the
"Products") for swimming pool plasters and other swimming pool material
applications including for spas, reflective pools and fountains in the United
States and Canada (the "Market"). The parties acknowledge that such grant of
exclusivity means that neither APT nor its affiliates will sell the Products to
any other party if APT or its affiliates knows or has a reasonable basis to
believe that such party will sell the Products into the Market. In addition, as
long as VANGKOE maintains its exclusivity with respect to a Product hereunder,
to the extent legally permissible, APT will not sell such Product to any
industrial distributor of colored
particles in the United States or Canada unless such distributor has agreed in
writing to refrain from selling such Product in the Market (and APT agrees to
enforce such restriction in good faith). VANGKOE acknowledges that it shall not
have the right to sell or market any of the Products in any market other than
the Market (or to any customer or distributor who or which VANGKOE knows or has
reason to believe intends to sell the Products outside of the Market) unless and
until separately agreed to by the parties upon mutually acceptable terms agreed
to in writing. In addition, VANGKOE agrees that APT shall be its exclusive
source to apply color coatings to any uncoated Product VANGKOE purchases from
APT or its affiliates as long as this Agreement shall be in force. APT agrees to
forward to VANGKOE any leads or inquiries it or any of its affiliates receives
regarding the proposed use or purchase of any of the Products in the Market.
1.2 Retaining Exclusivity. The grant of exclusive rights pursuant to
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Section 1.1 with respect to each of the Products is subject to VANGKOE meeting
the respective sales volume targets set forth on Exhibit A hereto for each of
such Products, as the same may be amended from time to time by the mutual
written consent of the parties. In the event that VANGKOE fails to meet a sales
target with respect to a Product, VANGKOE will have a 60-day cure period within
which to satisfy such target. If VANGKOE fails to meet the target within such
60-day cure period, VANGKOE's right to market the Product in the Market shall
convert into a non-exclusive right for the remainder of the term of the
Agreement. The determination of whether a product is non-conforming shall be
made by testing the product in accordance with standard ASTM procedures and
equipment as applied to similar materials sold in the Market or in accordance
with such other procedures as shall be mutually agreed upon in writing by the
parties.
1.3 Best Efforts. VANGKOE agrees to use its best good faith efforts to
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market the Products in the Market and to meet the sales targets established
pursuant to Section 1.2 during the term of this Agreement. Notwithstanding the
foregoing, however, the parties acknowledge that VANGKOE shall not have any
liability to APT or its affiliates (other than to pay for ordered Products
conforming to the specifications established pursuant to Section 2.1) if it
fails to meet such sales targets or generate sales of the Products.
1.4 Term. The term of this Agreement shall be five years and shall
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automatically renew for successive one-year periods thereafter unless and until
terminated pursuant to Section 4.1.
Section 2. Product Specifications; Terms of Sale.
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2.1 Product Specifications. APT warrants that each Product will meet the
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specification established for such Product set forth on Exhibit B hereto, as the
same may be amended from time to time by the mutual written consent of the
parties.
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2.2 VANGKOE's Right to Reject; Exclusive Purchases. (a) VANGKOE's right to
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reject any shipment of Product shall be limited solely to the failure of such
shipment to conform to the specifications established pursuant to Section 2.1.
Any such rejection must be effected by written notice delivered within 60 days
of APT's (or its affiliate's) shipment, giving relevant order information and a
description of the non-conforming aspects of the Product. APT acknowledges and
agrees that VANGKOE shall not be deemed to have missed a sales target to the
extent that APT is unable to fulfill orders placed by VANGKOE (relating to firm
bona fide orders VANGKOE has in turn received from its customers) on a timely
basis. If any shipments are found to be non-conforming, APT (or its affiliates)
shall have a 30-day period to reprocess the non-conforming portion of such
shipment to make it conforming or replace such non-conforming material with new,
conforming material. If APT or its affiliates are unable to provide conforming
material within such 30-day period, VANGKOE shall have the right,
notwithstanding anything to the contrary contained in Section 2.2 (b), to
purchase substitute particles from a third party to replace such non-conforming
material, and APT (or its affiliates) will refund any amounts paid by VANGKOE to
APT (or its affiliates) in respect of such non-conforming material. APT (or its
affiliate) will bear the cost of freight of any returned shipment that fails to
meet the required specification.
(b) VANGKOE agrees that it will not purchase coated particles, uncoated
particles (to displace the Products), or fired ceramic particles, or any
substantially similar or equivalent particles, for use in the Market from any
party other than APT or its affiliated companies as long as the relevant APT (or
affiliate) Product conforms to the specification established pursuant to Section
2.1 (allowing, if applicable, for the 30-day grace period described above) and
to the extent that APT (or affiliates) can ship sufficient amounts of the
Products to fill the firm orders of VANGKOE's customers on a timely basis. The
parties acknowledge that VANGKOE's obligation to purchase such particles
exclusively from APT or its affiliates shall not apply to materials that are not
the functional equivalents of the Products.
2.3 Order Procedure. Products shall be ordered on a purchase order basis,
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with orders to be placed through one or more individuals located at APT's (or an
affiliate's) facility, which individuals shall be designated in writing by APT.
Such orders shall specify the Product, the quantity of material, grit sizes and
any other information required to fill the order, provided that all requirements
shall be within the specifications established pursuant to Section 2.1.
2.4 Best Efforts to Fill Orders. (a) Subject to production constraints and
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availability of materials, APT and its affiliates will use their best good faith
efforts to fill orders placed by VANGKOE on a timely basis and VANGKOE shall
have priority status on all production capacity. VANGKOE agrees to work in good
faith with APT to provide reasonable advance notice with respect to orders
wherever feasible, and in particular with respect to large orders or orders
involving more than one Product. The parties acknowledge that neither APT nor
any of its affiliates shall have any liability to VANGKOE or its customers as a
result of the failure to fill any order.
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(b) APT and/or its affiliates will use their best efforts to source a
functionally equivalent substitute glass material which meets the specialty
glass requirements in the event of inadequate supply of specialty glass. In the
event a functionally equivalent glass is unsourceable or in limited supply, APT
and/or its affiliates will use their best efforts to source mined minerals to be
color coated as an alternate lower-end product. This mined mineral to be color
coated will be priced at $0.02 per pound less than the specialty glass color
coated in order to differentiate glass and mined quartz as an alternative
product for the market.
2.5 Pricing and Payment. (a) The price for each of the Products shall be as
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set forth on Exhibit C hereto. Such prices shall be firm for the first two years
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of the term of this Agreement, subject to annual increase thereafter in an
amount not to exceed 5% of the prior years' price; provided, however, that any
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such price increase shall not be implemented to the extent that VANGKOE can
provide documented evidence of superior pricing available for particles produced
by other manufacturers that could serve as a substantially functional equivalent
for the Product in question in the Market. Payment shall be due from VANGKOE 60
days following the date of shipment to VANGKOE; provided, however, that, unless
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otherwise agreed to by APT, neither APT nor its affiliates will accept an order
for any Product if at the time of placing of such order the aggregate amount of
outstanding receivables owing from VANGKOE for Products exceeds the greater of
(i) $100,000 or (ii) 30% of the amount of receivables actually collected by APT
or its affiliates in respect of Products ordered by VANGKOE during the 90-day
period preceding the date of placement of the proposed order.
(b) Notwithstanding Section 2.5(a), (i) the pricing for coated specialty
glass set forth on Exhibit C hereto assumes that the average per pound cost for
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coating materials (meaning all costs relating to the color coating material up
to the point of introduction into the coating process) for one ton of coated
specialty glass will be $0.01; In the event that at any time such cost exceeds
$0.01 by $0.005 or more (other than as a result of change-over in pigment or
materials, equipment failure or other inefficiencies within the control of APT),
the amount of the excess over such estimated $0.01 cost shall be added to the
purchase price to VANGKOE (and Exhibit C shall automatically be deemed to be
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amended accordingly), (ii) if at any time VANGKOE fails to maintain its
exclusive right to distribute any of the Products in the Market and APT or its
affiliates sells such Product into the Market, VANGKOE will receive the most
favorable price given to any other party for the purchase of the Product within
the Market and (iii) such pricing is subject to increase in the event of
documented increases in costs in production or transport resulting from
increased energy costs.
Section 3. Certain Additional Agreements.
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3.1 Rights of First Offer. (a) Each of APT and VANGKOE agrees that it will
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not sell substantially all of its assets or business, or a majority of its
voting capital stock, to any third party, or enter into an agreement
contemplating such sale,
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unless it shall have first offered to effect such sale to the other party on the
same terms proposed to be offered to the third party. Such offer shall be in
writing setting forth all of the material terms of the proposed transaction,
including the form of the transaction, the purchase price, the form of
consideration to be paid, the proposed closing date and any other material
terms. The party receiving the offer shall notify the sending party in writing
of its decision to accept or decline the offer within 15 days following its
receipt of the offer. If a party refuses to accept such offer or fails to
respond within the 15-day time period, the sending party shall be free to
consummate the proposed transaction with a third party; provided, however, that
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if a material change occurs in the terms of the proposed transaction prior to
consummation (including, without limitation, a change of 5% or more in the price
to be paid or a change in the form of transaction as consideration, the right of
first offer must again be extended to APT or VANGKOE, as the case may be, in
accordance with this Section 3.2.
(b) Notwithstanding the foregoing, Section 3.1(a) shall not apply to a
public offering of securities, registered under the Securities Act of 1933, as
amended, or a bona fide private placement of securities (other than to a
competitor of the business conducted by APT), whether or not such public or
private offering results in the sale of 50% or more of the voting capital of the
offering party.
3.2 Trademarks. VANGKOE acknowledges that ALUMAGLASS, VISIGRIT and GREAT
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WHITE are trademarks of CTI and agrees that VANGKOE shall not use any of such
marks without the prior written consent of CTI which may be withheld in CTI's
sole discretion. APT and its affiliates acknowledge that CERAMAGLASS, CERAMITE,
CPM, Brillant Innovations and Clear Advantage are trademarks of VANGKOE and
agree that neither APT nor any of its affiliates shall use such name without
VANGKOE's prior written consent, which consent may be withheld in VANGKOE's sole
discretion.
3.3 Confidentiality. VANGKOE acknowledges that APT and its affiliates are
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subject to the reporting requirements of the Securities Exchange Act of 1934 and
public disclosure rules. Accordingly, VANGKOE agrees to refrain from making any
public disclosures regarding the sales volumes of materials supplied by APT or
its affiliates unless VANGKOE obtains APT's prior written consent. In addition,
VANGKOE acknowledges that APT and its affiliates deem the source of materials
and processes used to produce the Products as proprietary trade secrets of APT
or its affiliates, and VANGKOE agrees to keep such information confidential
unless the prior written consent of APT is obtained. Subject to its public
disclosure reporting requirements, APT agrees not to disclose any confidential
information relating to VANGKOE's operations; provided, however, that VANGKOE
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expressly acknowledges that APT's sales of material to VANGKOE will be
incorporated in the consolidated financial statements of APT's parent company
and that APT's business dealings with VANGKOE are subject to public disclosure
reporting requirements generally. VANGKOE acknowledges that remedies at law or
in damages may be insufficient with respect to any breach of Section 3.3 and
that injunctive relief or other equitable remedy
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will be appropriate in addition to any other remedies that may be available to
APT and its affiliates.
Section 4. Termination.
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4.1 Termination. Notwithstanding anything contained herein to the contrary:
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(i) either party may terminate this Agreement upon 60 days' prior
written notice in the event of a material breach of the terms
hereof by the other party, unless cured (if curable) prior to the
expiration of such 60-day period;
(ii) either party may terminate this Agreement at the end of the
initial five-year term hereof or at the end of any one-year term
thereafter by giving written notice at least 180 days prior to
the end of such term;
(iii)APT may terminate this Agreement immediately in the event that
it determines, in its reasonable discretion, that the sale of the
Products violates the laws or regulations of any state or country
into which VANGKOE shall sell Product (provided that, at
VANGKOE's option, this Agreement may remain in effect with the
written modification that the Distributor shall refrain from
selling into such state or country until such time as APT shall
determine in its sole discretion that the sale of the Product is
no longer so violative); and
(iv) either party may terminate this Agreement immediately if the
other files a voluntary petition in bankruptcy, makes an
assignment for the benefit of creditors or otherwise seeks
protection from creditors under applicable bankruptcy, insolvency
or similar laws, or if an involuntary petition in bankruptcy
shall be filed against such party or other action shall be
commenced against such party under bankruptcy, insolvency or
similar laws and such petition or action is not be stayed or
dismissed within 60 days.
4.2 Effect of Termination or Failure to Renew. Neither party shall have any
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liability to the other (whether for damages, lost profits or consequential or
other special damages) arising out the termination of this Agreement or the
failure to renew this Agreement, except to the extent resulting from the breach
of the terms hereof occurring prior to such termination.
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4.3 Survival of Certain Terms. The provisions of Sections 3, 5 and 6 shall
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survive the termination of this Agreement.
Section 5. Limited Warranty.
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5.1 Limited Warranty. The Products are sold as is and neither APT nor any
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of its affiliates makes any representation or warranty whatsoever, express or
implied, with respect thereto, other than the limited warranty that each Product
will conform to the specifications established for the Product in Exhibit B
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hereto and in all material respects to any Material Safety Data Sheet prepared
by APT or its affiliates for such Product. EXCEPT AS EXPRESSLY SET FORTH IN THIS
SECTION 5.1, NEITHER APT NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION OR
WARRANTY WITH RESPECT TO THE PRODUCTS WHATSOEVER AND ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY EXPRESSLY
DISCLAIMED.
5.2 Indemnity. VANGKOE hereby agrees not to make any representations or
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warranties concerning the Products except as set forth in Section 5.1 and hereby
indemnifies and holds harmless APT and its affiliates and their respective
officers, directors and stockholders with respect to any third party claim
arising out of, based on or relating to any other representation or warranty
made by VANGKOE to any third party.
5.3 Limitation of Liability. NOTWITHSTANDING ANYTHING CONTAINED IN THIS
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AGREEMENT TO THE CONTRARY, NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY
INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES. LOSSES OR EXPENSES
(INCLUDING WITHOUT LIMITATION LOST PROFITS OR LOST BUSINESS) ARISING, DIRECTLY
OR INDIRECTLY, UNDER THIS AGREEMENT OR FROM THE PURCHASE, USE OR SALE OF THE
PRODUCTS.
Section 6. Miscellaneous.
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6.1 Notices. Any notice required or permitted hereunder shall be given in
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writing and shall be conclusively deemed effective when given upon personal
delivery or delivery by courier, or five days after deposit in the United States
mail, by registered or certified mail, postage prepaid, addressed as follows (or
at such other address as may be designated by written notice):
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(i) if to APT, to:
Advanced Particle Technologies, Inc.
c/o Conversion Technologies International, Inc.
00 Xxxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: President
and
(ii) if to VANGKOE, to:
VANGKOE Industries, Inc.
0 Xxx Xxxxxxx Xxxxx
Xx. Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: President
6.2 Dispute Resolution. In the event of any dispute between the parties
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under this agreement, the parties shall attempt to resolve it in good faith as
soon as possible. If such dispute is not resolved within 20 days following
written notice thereof from one party to the other (or such number of days as
shall be otherwise specified herein), such dispute shall be resolved by
arbitration pursuant to the rules of the American Arbitration Association or
other mediation procedure agreed to by the parties. Such arbitration or
mediation shall take place in St. Augustine, Florida or other mutually agreeable
location. The arbitrator or mediator will be instructed to attempt to resolve
the dispute within 30 days of commencement of proceedings and any award shall be
final and binding upon the parties, unless non-binding arbitration or mediation
is mutually agreed upon. Each party will bear its own legal fees and other
expenses related to any such proceeding.
6.3 Assignment. This Agreement may not be assigned by VANGKOE without the
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prior written consent of APT, whether by operation of law or otherwise, except
to a purchaser of substantially all of the assets or business of VANGKOE
following APT's (or its affiliates') refusal to exercise its right of first
offer under this Agreement. This agreement may not be assigned by APT and/or its
affiliates without the prior written consent of VANGKOE, whether by operation of
law or otherwise, except to an affiliate of APT or a purchaser of substantially
all of the assets or business of APT following VANGKOE's refusal to exercise its
right of first offer under this Agreement.
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6.4 Independent Contractors. The parties are independent contractors and
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neither party has, or will represent that it has, authority to bind the other
with respect to any matter whatsoever.
6.5 Amendments. This Agreement may not be amended without the written
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agreement of the parties.
6.6 Entire Agreement. This Agreement constitutes the complete agreement of
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the parties with respect to the subject matter hereof and supersedes all prior
agreements of the parties, if any, whether oral or in writing, and no course of
dealing shall alter the terms hereof. Without limiting the foregoing, upon the
execution and delivery of this Agreement, the agreements and documents set forth
Exhibit D shall cease to be of any further force or effect. Upon execution and
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delivery of this Agreement each party releases the other party and its officers,
directors, stockholders and affiliates from any liability under the agreements
set forth under Exhibit D or arising out of the activities, promises or
commitments relating to the joint venture relationship contemplated by such
agreements up to and including the date hereof. Specifically, but without
limitation, VANGKOE is hereby released from its obligations to reimburse APT or
its affiliates for equipment, operating expenses or other property or materials
purchased or expended in connection with APT's operations (APT having sole
ownership thereof) prior to the date hereof and its minimum ALUMAGLASS purchase
commitments set forth in the Purchase, Supply and Distributorship Agreement
referenced on Exhibit D and to pay for materials shipped to VANGKOE to date that
do not conform to the specifications set forth for the Products pursuant to this
Agreement.
6.7 Severability. In the event that any provision of this Agreement would
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be held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
6.8 Successors and Assigns. Subject to the limitations set forth herein,
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this Agreement shall be binding on each party's successors and assigns.
6.9 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.
6.10 Counterparts. This Agreement can be signed in counterpart, with each
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such counterpart constituting an original but all such counterparts constituting
one agreement.
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IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of
the date appearing on the first page hereof.
ADVANCED PARTICLE
TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Acting President
CONVERSION TECHNOLOGIES
INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: Acting President
VANGKOE INDUSTRIES, INC.
By: /s/ Bo Gimvang
---------------------------------
Bo Gimvang
President
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