EXHIBIT 99
Portions of this Exhibit have been omitted and confidentially and separately
filed with the Securities and Exchange Commission with a Request for
Confidential Treatment.
The omitted portions are marked by opened and closed brackets as follows: [ * ]
[OBJECT OMITTED]
EQUIPMENT LEASE
AND
SOFTWARE LICENSE AGREEMENT
THIS EQUIPMENT LEASE AND SOFTWARE LICENSE AGREEMENT (this "Agreement"),
is effective August 19, 1999, between Top Source Technologies, Inc., ("Top
Source," "we", "us" or "ours") and Speedco, Inc. ("Customer", "Licensee", "you"
or "your") and is hereby agreed to as follows:
1. Lease and License.
Top Source agrees to lease to Customer, and to license to Customer on a
nonexclusive basis, and Customer agrees to so lease and license from Top Source,
by March 30, 2000, thirty (30) MotorCheck(TM)/TruckCheck(TM) Analyzers including
the Confidential Information and other proprietary technology incorporated
therein ("the OSA"), all on the terms and conditions set forth herein. The OSA
shall be used solely at Customer facilities operated under the "Speedco" name,
(the "Site"). The OSA's shall be used with due care solely in accordance with
any operating manual or other instructions (including any site specifications
and maintenance procedures) provided by Top Source, and solely for the
purpose(s) of testing and analyzing ("Oil Analysis") used lubrication fluids
(excluding lubrication fluids for airplanes).
2. Term.
This Agreement is effective August 19, 1999 through [ * ] regardless of the
actual date of signature. With respect to future locations, Top Source shall
install an OSA unit within * days of notice from Customer to Top Source. This
Agreement and Customer's right to use the OSA expires ( [ * ] from installation
of the [ * ] OSA unit) [ * ] . [ * ] , this Agreement is renewable by mutual
consent for successive one-year terms.
Upon termination, Customer will take any and all actions to allow Top Source to
repossess the OSA's (which shall be returned by Customer in the same condition
as when delivered, ordinary wear and tear excepted).
[ * ] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARTELY WITH THE COMMISSION.
3. Price and Payment.
All monthly payments with respect to any OSA shall commence only after such OSA
has been delivered, installed, tested and is operational. The monthly lease
charges for each OSA are:
LEASE: o A minimum monthly charge of [ * ] per month per location
[ * ]
[ * ]
o An additional charge of [ * ] per sample per month and per
location [ * ]
[ * ] .
The above fees are applicable for the 48- month term of this agreement for each
OSA placed, from the time of operation. For the first 30 OSAs.
All invoices are due upon receipt. Customer will be invoiced at the completion
of each month.
Top Source reserves the right to charge interest on all amounts owed after
30 days from the due date at the highest applicable legal rate, but not to
exceed 1.5% per month.
4. Ownership and Confidentiality.
(a) All right, title, and interest in the OSA (including all Confidential
Information and other proprietary technology incorporated therein) shall
be and remain vested in TOP SOURCE, (or such other party as may be
designated by TOP SOURCE, Inc.), including any improvements or
modifications thereto (whether requested or suggested by Customer or
derived by reason of Top Source's relationship with Customer or
otherwise).
(b) For so long as the lease and license set forth in this Agreement remain
in effect and for a period of two (2) years after the termination thereof
(provided that in addition to the 2 year period described above in the
case of a trade secret, such period shall continue for so long as the
information, matter or thing remains a trade secret unless the trade
secret was disclosed directly or indirectly by one party, through your
act or omission), and without
[ * ] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARTELY WITH THE COMMISSION
limiting any rights or protections afforded to either Customer or Top
Source, each party will maintain in strictest confidence and safeguard as
confidential the Confidential Information (exercising at least the same
degree of care Customer would use in protecting the confidentiality of
its own similar information) and will not use, disclose, duplicate,
reproduce, copy or distribute any of the Confidential Information in any
manner to any person whatsoever except as permitted by the express
provisions of this Agreement. Additionally, the fee terms of this
agreement will be kept in confidence by the parties.
(c) For purposes of this Agreement, "Confidential Information" means all
information and matters of a confidential nature, whether or not in
written form, and regardless of the media (if any) on which stored,
which pertain, or relate in any way, to the business of the respective
parties (or their parent or affiliated corporations') services,
products, or business, including trade secrets, processes, techniques,
designs, specifications, drawings, know-how, show-how, technical
information, technology, research developments, inventions, engineering
concepts, software operating manuals, and improvements, modifications
and enhancements to the foregoing, and the terms of this Agreements.
(d) Notwithstanding the foregoing, either of the parties may identify the
other in any press release and other marketing materials; provided that
the party being identified shall have the right of review and approve of
such materials, which approval shall not to be unreasonably withheld.
5. Warranty
TOP SOURCE REPRESENTS AND WARRANTS TO CUSTOMER THAT (A) IT IS THE OWNER OF THE
OSAs AND THE RELATED TECHNOLOGY AND INTELLECTUAL PROPERTY, AND HAS ALL RIGHT,
TITLE AND INTERESTED THERETO, AND THAT THE USE THEREOF BY AND THE LICENSE TO
CUSTOMER SHALL NOT INTERFERE WITH ANY OTHER PERSON'S RIGHT AND TITLE TO SAME
(EXCEPT AS PROVIDED IN SECTION 10, BELOW); (B) ALL THE OSAs AND ANY SUPPLIES
PROVIDED BY TOP SOURCE OR ITS SUPPLIERS IN CONNECTION THEREWITH SHALL BE FREE
FROM ANY DEFECTS; AND (C) ALL SUCH MATERIALS, INCLUDING THE OSAs, SHALL PERFORM
THE FUNCTIONS FOR WHICH THEY ARE INTENDED. EXCEPT AS PROVIDED IN SECTIONS 5(A),
(B), AND (C). TOP SOURCE DISCLAIMS ANY WARRANTIES OF ANY NATURE WHETHER EXPRESS,
WRITTEN, ORAL, IMPLIED OR STATUTORY, ICNLUDING ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND WARRANTIES UNDER ARTICLE
2A OF THE UNIFORM COMERCIAL CODE.
6. Consequential Damages and Exclusive Remedy.
(a) EXCEPT WITH RESPECT TO A BREACH OF THE EXPRESS WARRANTIES CONTAINED IN
THIS AGREEMENT, NEITHER OF THE PARTIES SHALL BE LIABLE UNDER ANY
CIRCUMSTANCES TO THE OTHER FOR ANY CONSEQUENTIAL, SPEACIAL, EXEMPLARY,
INDIRECT, INCIDENTAL OR COLLATERAL DAMAGES OF ANY NATURE WHATSOEVER IN
CONNECTION WITH THE SUBJECT MATTER OF THIS AGREEMENT, EVEN IF ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES, REGARDLESS OF WHETHER BASED IN TORT
OR IN CONTRACT.
(b) Top Source shall indemnify and hold Customer harmless from any loss or
damage, including attorneys fees, resulting from a breach of the
express warranties contained in this Agreement, and for any other act
or omission of Top Source, its agents or employees. Top Source shall
name and keep Customer as an additional insured on its general
liability coverage with respect to such indemnity rights, and as
Customer's interests otherwise appear.
(c) Customer shall indemnify and hold Top Source harmless from any loss or
damage, including attorneys fees, resulting from a breach of the
express warranties contained in this Agreement, and for any other act
or omission of Customer, its agents or employees. Customer shall name
and keep Top Source as an additional insured on its general liability
coverage with respect to such indemnity rights, and as Top Source's
interests otherwise appear.
7. Operating Requirements.
Customer (for and on behalf of itself and its officers, employees, agents and
representatives) agrees:
(a) Not to unpack, break the seal on or open any boxes or containers shipped to
it by TOP SOURCE, (or the manufacturer of the OSA) without the direct
supervision of Top Source (or persons designated by Top Source). Customer
further shall not open the cabinet, covers, inspection doors or other
enclosure containing the components of the OSA, attempt any repair,
adjustment or modification of the OSA, except as authorized by Top Source
disassemble, decompile, reverse engineer, interrogate, decode or otherwise
tamper with the OSA or any software related thereto (or attempt to derive
any source code or algorithms from such software);
(b) Not to move or relocate the OSA from the site of original installation at
the locations set forth above;
(c) Not to remove, alter or obscure any markings or labels which are affixed to
the OSA at the time of installation or subsequently placed thereon by Top
Source, provided such were first approved by Customer;
(d) To ensure that any person who operates the OSA has been trained by Top
Source (or persons designated by Top Source);
(e) To pay all taxes (including sales, use and excise taxes) which may be
imposed by any taxing authority on the OSA or on the amounts paid by
Customer hereunder or as a result of this Agreement;
(f) To allow Top Source and its agents, representatives and employees
reasonable access to Customer's facility to inspect the OSA upon reasonable
notice from Top Source;
(g) To properly dispose of all fluids and solvents used in connection with or
in any way relating to the OSA in compliance with all applicable laws,
rules and regulations;
(h) To maintain a safe site for the OSA including keeping all flammable gases,
petrochemical fluids, solvents and other substances outside the proximity
(generally not within 25 feet) of the OSA except to the absolute minimum
extent then being used in the operation thereof;
(i) To assume all risk of loss, theft, damage, requisition of use and
destruction to the OSA from any cause whatsoever and to include under each
site's property insurance each OSA in an amount not less than $69,900 with
a carrier reasonably approved by Top Source and name Top Source as loss
payee and additional named insured on the applicable policies (and furnish
Top Source with a copy thereof). In the event of any such occurrence,
Customer shall promptly notify Top Source and shall at its expense cause
the OSA to be placed in good repair, condition and working order. In the
event of a total loss, all right, title and interest in the subject OSA
(and any insurance proceeds associated therewith) shall remain vested in
Top Source;
(j) To keep the OSA free and clear of all levies, liens and encumbrances of any
kind whatsoever;
(k) Customer may use the service marks appearing on the OSA and the reports
solely for the purpose of delivering Oil Analysis using the OSA. Customer
agrees to protect and not to infringe on all the trademarks and copyrights
owned by Top Source and its affiliate companies, including the Oil Lab 2100
trademark, the Detect trademark, the name On-Site Analysis, Inc., or the
trade name MotorCheck(TM), or TruckCheck(TM).
(l) To use its best efforts to market and sell its testing services and
maximize utilization of the OSA.
(m) If the OSA is temporarily out of service and Top Source and Customer agree
that samples should be shipped to Top Source for analysis, Top Source shall
do so at no cost to Customer.
8. Covenants of Top Source.
During the term of this Agreement, Top Source represents, warrants and covenants
that it shall: (a) provide to Customer an uninterrupted supply of samples and
related consumables as may be required by Customer; (b) train such personnel of
Customer as Customer deems appropriate to operate the OSA at Customer's location
and at no cost to Customer, such training to be limited to three (3) employees
per location during the first calendar week following the installation of the
OSA; (c) provide follow-up service and repair with respect to any OSA provided
under this Agreement, which shall be provided at no cost during the first year
of this Agreement, and thereafter at a cost to be agreed upon by the parties;
and (d) defend Customer's right to use the OSAs and related supplies and
consumables, as provided in this agreement, if challenge by a third party.
9. Assignment.
Customer may not assign, transfer, pledge, sublicense or sublease the OSA
(including any software incorporated therein) or any right, interest or license
it may have pursuant to this Agreement without the prior written consent of Top
Source.
10. Sublicense.
Certain components and proprietary technology of the OSA licensed hereunder may
constitute a sublicense by Top Source from a third party owner, developer or
manufacturer. Customer agrees to take such actions and execute such documents as
Top Source reasonably may request on behalf of such third party in connection
with such sublicense.
11. Acknowledgments.
In signing this Agreement, Customer acknowledges that Customer has reviewed
this Agreement, in its entirety; has independently assessed the market and/or
risks associated with OSA operations and, except as provided in Section 5,
above, is not relying on any representations or warranties from Top Source;
including representation concerning profits, income, or success; sales revenue
from OSA, if any, shall produce no more than 20% of Customer's total sales
revenue for related business services, and Customer is already engaged in the
truck service business.
12. Default and Remedies:
(A) Customer is in default under this agreement if any of the following occur:
(a) failure to make payment (b) breach of this agreement and (c) Customer
becomes insolvent or bankrupt. If Customer is in default under this
Agreement, Top Source may do any or all of the following: (a) terminate
the agreement, (b) take possession of the OSA by any manner permitted by
law, (c) seek payment for any money owed to Top Source, and d) pursue any
other right to remedy permitted by law or in equity.
(B) Top Source is in default under the Agreement if any of the following
occur: (a) any warranty contained in this Agreement is untrue or
misleading; (b) Top Source fails to provide any service under this
Agreement; (c) Top Source otherwise breaches this Agreement; or (d) Top
Source becomes insolvent or bankrupt. If Top Source is in default under
this Agreement, Customer may do any or all of the following: (a) terminate
this Agreement, without cost or penalty of any kind; (b) cease any and all
payments to Top Source, except those due and owing as of the date of
termination; and (c) pursue any other right or remedy permitted by law or
equity.
13. Voluntary Early Termination
If this agreement is terminated by the Customer before the completion of the
initial 48 month Lease, the Customer must return the OSA and all supplies to Top
Source at the Customer's expense. The Customer must also pay an early
termination fee equivalent to the balance of the 48 months minimum amounts owed.
14. Miscellaneous.
This Agreement shall be governed by and construed and enforced in accordance
with and subject to the laws of the State of Florida. This Agreement and the
Letter Agreement between Top Source and Speedco dated August 12, 1999, a copy of
which is attached hereto as Exhibit 1, which letter and the terms contained
therein are hereby incorporated by reference; contains the entire agreement
between the parties hereto and supersedes all prior and contemporaneous
agreements, the Agreement between Top Source and Speedco dated September 1,
1998, purchase orders, arrangements, negotiations and understandings between the
parties hereto relating to the subject matter hereof. No waiver of any term,
provision or condition of this Agreement, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be, or shall constitute, a waiver
of any other provision hereof, whether or not similar, nor shall such waiver
constitute a continuing waiver, and no waiver shall be binding unless executed
in writing by the party making the waiver. Failure or delay of either party to
insist upon compliance with any provision hereof will not operate and is not to
be construed as a waiver or amendment of the provision or the right of the
aggrieved party to insist upon compliance with such provision or take remedial
steps to recover damages or other relief for noncompliance. No provision of this
Agreement may be altered, amended, revoked or waived except by an instrument
signed by both parties. For purposes of this Agreement, the term "including"
shall mean "including, but not limited to." The unenforceability or invalidity
of any provision or provisions of this Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid. If any action
at law or in equity is necessary to enforce or interpret the terms of this
Agreement or collect any amount due hereunder, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled. Except as
expressly provided in this Agreement, the rights and remedies of the parties
under this Agreement are in addition to all other rights and remedies at law or
equity that they may have against each other. In the event of any litigation
relating to this Agreement, if such is initiated by Top Source, it shall be
initiated and shall remain in any State of Federal Court located in Xxxxxx
County, Indiana; if such is initiated by Customer, it shall be initiated and
shall remain in any State or Federal Court located in Palm Beach County,
Florida.
15. Top Source agrees to apply these same terms to any additional units placed
in Speedco Service centers during the term of this agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the 19th day of August, 1999.
TOP SOURCE TECHNOLOGIES, INC. CUSTOMER
0000 Xxxxxxx Xxxxx Speedco, Inc.
Xxxxx 000 X.X. Xxx 000
Xxxx Xxxxx Xxxxxxx, XX 00000 000 X. Xxxx Xx.
Xxxxxx, XX 00000
By: /s/ Xxxxx Xxxxx ______ By: ____________________
Title: Vice President & CEO Title:
[ * ]CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
Top Source Technologies, Inc.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx Xxxxxxx, XX 00000-0000
561)775-5756
Fax (000) 000-0000
EXHIBIT 1 (to above Speedco agreement)
VIA FACSIMILE (765) 492-3411
August 12, 1999
Mr. Xxxx Xxxxx
President
Speedco
000 Xxxx Xxxx Xxxxxx
Xxxxxx, XX 00000
Dear Xxxx,
We appreciate the success Speedco has achieved in the marketplace and value the
benefits associated with our partnership.
The proposal we offered to Speedco has been modified as a result of our recent
meeting to allow [ * ] of monies credited from Shell, Texaco, or Equilon
purchases to be applied towards purchase of future TruckCheck analyzers. The
proposal reflects three primary goals. The first goal is to increase test volume
at each of the Speedco sites to benefits both companies. The second goal is to
share the benefits of TruckCheck product introduction into the Equilon group
with Speedco. The third goal is to increase the resources available to supply
the required increase in support.
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INCREASED SUPPORT TO INCREASE TEST VOLUME
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We are sensitive to the need to increase product support at each of the Speedco
sites. This increase in support will translate into a higher test volume
benefiting both Speedco and Top Source. Our goal is to smooth out the high
volume spikes associated with Top Source visits by bringing up the baseline to
an overall higher number of tests on a per month basis by providing more routine
support.
[ * ] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
[ * ]
[ * ]
[ * ]The support persons will work with counter people to generate business form
Speedco customers and to help develop local fleet business to augment existing
site traffic. Arrow Truck Sales is an example of the types of customers, that in
addition to local fleets, will be targeted to increase local test volume.
Top Source will generate and provide a training video that will help employees
familiarize themselves with operation and maintenance of the TruckCheck oil
analyzer. The training video will be professionally produced at our Atlanta
facility during August.
Speedco has planned a marketing loop video that will include oil analysis as a
marketing tool.
Top Source will also participate in quarterly Speedco promotions as coordinated
by Xxxxx Xxx of Shell Houston. We will also work with Speedco to participate in
periodic coupon specials to be agreed upon between the two respective companies.
Speedco has contracted a "Teleselling" group, and we will assist with a brief
script of description of the benefits of on-site oil analysis to be incorporated
into the program.
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[ * ] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION
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As Top Source develops new versions of the TruckCheck oil analyzer, they will be
available to Speedco at new locations as they open, [ * ]
[ * ] .
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[ * ]
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[ * ]CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
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[ * ]
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[ * ]CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
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SPEEDCO CORPORATE PROGRAM
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The special pricing described herein is considered confidential
[ * ]CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARTELY WITH THE COMMISSION.
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MASTER LEASE
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Our current leasing arrangement with Speedco [ * ]
[ * ]
[ * ]
The lease is financed by Top Source and the capital outlay is considerable.
We appreciate Speedco Shell's willingness to restructure the lease to allow
us to free up working capital.
The proposed lease arrangement covers the current and planned TruckCheck oil
analyzer developments for up to thirty units. The four-year lease is structured
at [ * ]
[ * ]
[ * ]CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARTELY WITH THE COMMISSION.
The terms of this lease are financially more rewarding for Speedco and free up
capital for Top Source to expand support efforts that will in turn drive the
sample volume. The lease originally signed by Speedco has been modified to
reflect the terms described above. Two copies of the lease are enclosed for your
review. One copy has all changes from the previous Speedco Shell approved and
signed lease highlighted in red for easy identification of changes, and the
second copy is normal black typeface throughout. There are no other differences
in the two copies of the lease.
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CLOSING
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We hope that we have addressed the three main goals initially outlined. We
believe that the increased support and target focus of local fleets and truck
sales sites in Speedco site areas will increase per test volumes significantly.
[ * ] as a result of penetration into the Equilon group appear fair and
equitable. [ * ]
[ * ]
[ * ] . The restructuring of the lease program
provides Speedco with more profit opportunity while freeing up cash for Top
Source to invest resources in support of Speedco. We will provide the summary
reports for each of the sites to identify those sites in need of the most
immediate attention for support, and to identify the sites most likely to be
justified candidates for outright purchase in the future.
As we continue to grow the business together, there will be opportunities for
both Speedco and Top Source to share the risk and the reward afforded on-site
oil analysis. Separate from this proposal, we would like to continue dialog on
how to fairly pursue a closer relationship. Perhaps we can host our next meeting
in West Palm Beach at our corporate office and discuss how to specifically and
aggressively grow the market and jointly share the benefits.
Please contact me with any questions. We look forward to working together as our
relationship continues to grow.
Very truly yours,
/s/ Xxxx Xxxxx
Xxxx Xxxxx
Vice President
Sales and Marketing
copies: Xxx Xxxxx, Xxx Xxxxxx; Speedco
Xxxx Xxxxxx, Xxx Xxxxxxxx Xxxxx; Top Source
[ * ]CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARETLY WITH THE COMMISSION.
