EXHIBIT 10.13
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DISTRIBUTION AGREEMENT
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AGREEMENT made this 23/rd/ day of September 1997 by and between
SEPTIMA ENTERPRISES, INC. (hereinafter "SEPTIMA"), a Colorado corporation with
offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and RH
PERFORMANCE PRODUCTS (hereinafter "RHPP"), an Australian sole proprietor whose
address is P. ▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
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 RHPP or SEPTIMA, or any partnership,
corporation or company in which RHPP 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.
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 DISTRIBUTOR
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2.01 SEPTIMA appoints RHPP as EXCLUSIVE AUTHORIZED DISTRIBUTOR in the
Territory for the sale of Products and RHPP hereby accepts this appointment.
RHPP will not sell the Products outside of the Territory. RHPP will certify
that all Products 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 RHPP. All orders or direct inquires
received by RHPP with respect to the sale of Products outside the Territory will
be referred by RHPP to SEPTIMA.
2.02 RHPP shall conduct its business in the purchase and resale of the
Products 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 RHPP. RHPP 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.
2.03 No minimum will be required in the first year (12 month period). In
future years, RHPP shall be required to order for shipment a minimum aggregate
Products per year. These minimums will be negotiated at the end of the first
year.
2.04 SEPTIMA shall sell to RHPP based on RHPP's requirements on a quarterly
basis, as submitted to SEPTIMA on or before the thirtieth (30/th/) day of each
calendar quarter. RHPP shall deliver to SEPTIMA an estimate of the quantities
of Products required by RHPP for the (a) succeeding two (2) calendar quarters
and (b) the succeeding four (4) calendar quarters. Forecasted Products 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.
ARTICLE III
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Sales and Service
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3.01 RHPP shall use its best efforts to sell and promote the sale of the
completed Products within the Territory.
3.02 SEPTIMA shall provide, if requested by RHPP and at RHPP's expense,
personnel to assist in the technical training of RHPP's marketing organization.
The number of SEPTIMA personnel and length of stay in the Territory is to be
agreed upon by RHPP and SEPTIMA.
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3.03 RHPP will be responsible for the sale and servicing of the Products in
the Territory. RHPP 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. SEPTIMA will provide replacement Products in exchange for
defective Products after examination by SEPTIMA of the Products 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 IV
Inventory, Marketing and Related Obligations
4.01 The Products shall not be returned for credit except for defective
Products 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.
4.02 All marketing and sales materials for the Products to be used by RHPP
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.
RHPP may use the trade names and trademarks as used by SEPTIMA in the United
States provided RHPP 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 thirty (30) days of
submission.
4.03 XXXXX
ARTICLE V
Conditions of Sale
5.01 Products shall be packaged and shipped as agreed to by both parties.
5.02 Delivery to RHPP shall be F.O.B. Latrobe PA with all costs, insurance
and freight paid by RHPP. 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 RHPP. Claims for shortage not attributable to the
carrier must be initiated by RHPP against SEPTIMA within ten (10) days after
arrival of shipment at the specified destination. 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
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omissions of RHPP, 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
RHPP and which arise out of the reshipment or rerouting of the Products
purchased by RHPP , including, but not limited to, its failure to accept
delivery, except a non-conforming delivery, of or pay for such Products, shall
be paid by RHPP to SEPTIMA on demand. After thirty (30) days of nonpayment, a
ten percent (10%) interest factor will be added to the unpaid balance.
5.03 RHPP shall purchase from SEPTIMA with payment conditions as follows:
Prepayment, Cash in United States Dollars, or a Letter of Credit satisfactory to
SEPTIMA and RHPP. 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 to RHPP. Any cost associated with the Letter of
Credit will be borne solely by RHPP. Prepayment to be made by RHPP following
receipt of written confirmation from Septima that any particular shipment of
stock is ready for packaging prior to shipment. Septima shall dispatch for
shipment on the terms set out in Paragraph 5.02 within 7 days of receipt of
prepayment from ▇▇▇▇.
▇.▇▇ ▇▇▇▇ 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 ordered by ▇▇▇▇.
▇.▇▇ ▇▇▇▇ shall not make any changes to the Products 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 remain the sole property of SEPTIMA or the
patent holders, as the case may be.
5.06 SEPTIMA shall provide to RHPP, during the term of this Agreement, any
and all modifications or upgrades made by SEPTIMA to the Products distributed in
the United States. XXXXX
5.07 SEPTIMA shall offer to RHPP for distribution in the Territory any new
Products not listed on Schedule B, attached hereto, manufactured and distributed
by SEPTIMA in the United States. The new Products shall be offered under an
entirely new agreement negotiated between SEPTIMA and RHPP. Should RHPP and
SEPTIMA not reach agreement as to the new products, SEPTIMA shall retain the
right to distribute the new
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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, nor will
they fall within the scope of the patents attached hereto, the Septima products
sold by RHPP in the Territory.
5.08 RHPP shall keep all information, including technical information,
design drawings, engineering specifications and know-how delivered by SEPTIMA
regarding the Products confidential, except as necessary and with the approval
of SEPTIMA, for the marketing and distribution of Products.
ARTICLE VI
Warranties
6.01 All Products purchased by RHPP 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
in the United States or in any other country shall also be extended to RHPP
under the same terms and conditions. RHPP agrees to furnish all warranty
services required for all the Products. SEPTIMA agrees to supply to RHPP free
of charge, including shipping charges, those replacement parts 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. Those Products returned under this paragraph,
after testing, found to be within factory specifications shall be returned to
RHPP at RHPP's expense.
6.02 NO WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN THOSE MADE IN SECTION
6.01, HEREIN, ARE GIVEN IN RESPECT OF THE PRODUCTS, 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 6.01 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.
6.03 RHPP 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 RHPP's sale,
installation or operation of the Products or (b) conduct of RHPP's business.
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ARTICLE VII
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Term
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7.01 This Agreement shall become effective on the date of execution by RHPP
and SEPTIMA, and shall run until October 1, 2000, 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. XXXXX
ARTICLE VIII
Termination
8.01 RHPP 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.
8.02 SEPTIMA may terminate this Agreement immediately by delivering to RHPP
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 RHPP without the
prior written approval of SEPTIMA; said approval shall not be unreasonably
withheld; or
ii. The execution by RHPP of an assignment for the benefit of
creditors; the conviction of RHPP or any principal officer of RHPP of any crimes
which in the opinion of SEPTIMA may adversely affect the ownership, operation,
management, business or interest of RHPP or SEPTIMA; or
iii. Failure of RHPP to pay when due any indebtedness owing by RHPP
to SEPTIMA, unless expressly waived in writing by SEPTIMA; or
iv. The sale of all or substantially all of RHPP's assets.
8.03 This Agreement shall terminate automatically and without the giving of
notice in the event RHPP shall become insolvent or shall have outstanding
balances due and owing SEPTIMA for a period longer than ninety (90) days or
shall suffer appointment of a
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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.
8.04 This Agreement shall terminate automatically and without giving of
notice in the event SEPTIMA is in default of the Assignment Agreement between
SEPTIMA and ▇▇▇▇▇▇▇ PLASMA PLUG PARTNERSHIP ("▇▇▇▇▇▇▇") dated September 26,
1995, and pursuant to the default provisions of the Assignment Agreement,
SEPTIMA returns to ▇▇▇▇▇▇▇ all rights to the technology transferred to SEPTIMA
under the Assignment Agreement.
8.05 Notwithstanding any other provision of this Article VIII, 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.
8.06 Any termination of this Agreement shall not release RHPP from paying
any amount which may then be due and owing to SEPTIMA or from any obligation to
pay for any Products which may be ordered by RHPP and shipped prior to the
effective date of such termination. In the event of any termination of this
Agreement, all obligations owed by RHPP 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 RHPP), and SEPTIMA may offset and deduct from any or all
amounts owed to RHPP any or all amounts owed by RHPP to SEPTIMA rendering to
RHPP the excess, if any.
8.07 Upon the termination of this Agreement the following shall occur:
i. RHPP and its Affiliates shall immediately cease to, directly or
indirectly, represent to the public or hold itself out as a present or former
distributor of the Products or in any other way affiliate itself with SEPTIMA;
and
ii. RHPP 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. RHPP and its Affiliates shall immediately deliver to SEPTIMA
all marketing and sales materials for the Products, all technical drawings and
specifications for the Products and all other confidential information provided
by SEPTIMA to RHPP.
iv. Notwithstanding termination, RHPP shall be at liberty to sell
its remaining
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stock without being in breach of the terms of this Agreement.
8.08 During the term of this Agreement and for a period of three (3) years
after the termination of this Agreement, for any reason whatsoever, RHPP and its
Affiliates shall not in any manner engage directly or indirectly in the
marketing or distribution of any products competitive with the Products covered
by this Agreement. Competitive products are defined as those products falling
within the scope of the patents listed on Schedule B, attached hereto.
ARTICLE IX
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Miscellaneous
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9.01 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, RHPP 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.
9.02 This Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their respective successors and assigns, except that RHPP
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.
9.03 SEPTIMA shall not by reason of termination of the Agreement be liable
to RHPP 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 RHPP.
9.04 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.
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9.05 RHPP 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 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 least thirty (30) days' advance written notice to SEPTIMA prior to
such cancellation or reduction in coverage.
9.06 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.
9.07 This Agreement shall be governed by and construed under the laws of the
State of Florida.
9.08 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.
9.09 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.
9.10 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 9.05 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 VIII herein.
IN WITNESS WHEREOF, The parties herein have caused this Agreement to be executed
as of the date first above written.
RH PERFORMANCE PRODUCTS
By: /s/ ▇▇▇▇ ▇▇▇ Date: 1 - Oct - 1997
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SEPTIMA ENTERPRISES, INC.
By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇ Date: Sept. 23, 1997
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SCHEDULE A
COUNTRIES OF DISTRIBUTION
Australia
New Zealand
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SCHEDULE B
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 ▇▇. ▇ ▇▇▇ ▇▇▇ ▇▇, ▇▇. ▇ ▇▇▇ ▇▇▇ ▇▇; Japanese Patents
No. ▇-▇▇▇-▇▇▇, No. ▇-▇▇▇-▇▇▇; 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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