EXHIBIT 10.31
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:
[*]
Confidential
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is made as of November
22, 1999, by and among Xxxx X. Xxxxx ("Xxxxx") and BioTek Environmental
Services, Inc. ("BioTek"), a Texas corporation, whose principal place of
business is 0000 Xxxxxxxx Xxxx, Xxxxx X000, Xxxxxxx, Xxxxx 00000 and Top Source
Technologies, Inc. (the "Distributor"), a Delaware corporation, whose principal
place of business is 000 Xxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxx Xxxxxxx, XX
00000-0000. All references herein to BioTek shall also refer to Xxxxx unless
otherwise stated. BioTek is engaged in the business of growing hydrocarbon
eating microbes. The Distributor desires to solicit and sell, as an independent
distributor, the products or product lines particularly described on Schedule 1
attached to this Agreement (the "Products"); and BioTek desires the Distributor
to act as an independent distributor to solicit and sell the Products, all in
accordance with the terms and conditions of this Agreement.
1. Appointment.
(a) BioTek hereby appoints the Distributor as the exclusive
distributor of BioTek to solicit and sell the Products to the
customers described on Schedule 1 attached hereto (the
"Customers"). The Distributor accepts such appointment in
accordance with the terms of this Agreement. The Distributor
represents and warrants that it has the ability and experience
to carry out its obligations under this Agreement, and that
Distributor is not under any restriction prohibiting the
Distributor's performance under this Agreement.
(b) If the Distributor fails to generate at least $1,000,000 in
revenues by May 31, 2001 (or such longer period on a month
ending at least 18 full months following the Distributor's
receipt of inventory pursuant to the initial order for
inventory), the Distributor's exclusivity shall cease as to
Customers except for those Customers (and any affiliates and
entity under common control) to which the Distributor has sold
Products. The Distributor shall retain its right to continue
to sell Products on a non-exclusive basis.
2. Term. Unless sooner terminated as provided elsewhere in this
Agreement, this Agreement shall be effective from the date hereof and for 25
calendar years immediately following such date, and, thereafter, it shall be
renewed automatically on a calendar year basis, unless 180 days' prior notice is
given by either party.
3. Relationship of Parties. The Distributor is an independent
contractor, conducting all of its business in its own name and responsible for
its own business and means of carrying out the performance of its obligations
under this Agreement. Neither party shall have authority to make any
representations, warranties, or guaranties on behalf of the other, to enter into
any contracts or commitments in the name or on behalf of the other, or to bind
the other in any way. The Distributor shall have no liability to any third party
in connection with any representation made by the BioTek to such third party.
The parties to this Agreement do not intend, and nothing in this Agreement shall
be construed, to create a partnership or joint venture between them.
4. General Obligations of BioTek. In addition to other provisions of this
Agreement, BioTek shall:
(a) [*] Any cost increases not evidenced by 30 days' notice from suppliers and
prompt notice from BioTek shall be borne by BioTek. The Distributor shall have
the right to cause BioTek to change any of its suppliers upon 30 days' notice.
On one occasion during any calendar year, the Distributor may have its employees
and auditors review the books and records including electronic media of BioTek,
and any other available information for the purpose of verifying BioTek's direct
costs. If the parties cannot agree upon the actual direct costs, the dispute
shall be settled by arbitration as provided by Section 25. If there is any
variance in excess of 5%, the costs incurred in reviewing BioTek's direct costs
and the cost of arbitration shall be paid by BioTek; supply the products within
30 days from date of receipt of each purchase order.
(b) supply the Products within 30 days from date of receipt of each purchase
order;
(c) permit the Distributor to market the Products under its own name using the
tradename MightyClean 2000(TM) or any other mutually acceptable tradename;
(d) permit the
Distributor to offer the Products to national or key accounts on a "private
label" basis;
(e) [*] The Distributor will promptly reimburse BioTek for the
reasonable expenses it incurs in attending these training sessions;
(f) supply customer leads in the Territory in accordance with BioTek's
independent distributor policies;
[*] CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION. (g)
provide the Distributor with technical and sales information, literature and
promotional materials for the Products as are made available to other BioTek
distributors from time to time; (h) upon the reasonable request of the
Distributor, cause its sales management and other sales personnel to participate
in national sales meetings sponsored by the Distributor and attend sales
presentations to potential customers. The Distributor will promptly reimburse
BioTek for the reasonable expenses it incurs in attending these meetings and
sales presentations; (i) not sell any Products directly or indirectly to any
Customer or potential Customer (as defined); (j) inform all other BioTek
distributors that the Distributor, for the duration of this Agreement, will be
the exclusive distributor for the Territory; (k) provide the Distributor with
technical and field sales support to the customer as deemed necessary by BioTek;
(l) comply fully with all federal, state and local environmental, unfair trade
practices, food and drug, occupational health and safety and other laws and
regulations relating to the Products; (m) provide the Distributor with prompt
written notice of any claims, governmental inquiry or investigation, lawsuit or
arbitration relating to the Products except for routine commercial disputes over
payment not involving the safety or effectiveness of the Products or their
compliance with law; (n) provide the Distributor with proof of product liability
insurance in the amount of $1,000,000 and add the Distributor as a named cover
insured under such policy; and (o) keep this Agreement and the pricing terms
contained herein confidential in view of the fact that public disclosure would
be harmful to the Distributor's ability to fulfill its obligations hereunder.
Provided, however, solely to the extent that Distributor publicly discloses any
of the terms of this Agreement in a press release or filing with the Securities
and Exchange Commission, the foregoing confidentiality provision shall not
apply.
. General Obligations of Distributor. The Distributor shall: (a) use
its best efforts at all times to promote, market and sell the Products in the
Territory, which shall include, without limitation, employing or engaging such
personnel and assistance as may be necessary to promote and sell the Products,
attending training seminars, maintaining personal contact with Customers, and
complying with such other reasonable and customary marketing and sales efforts;
(b) not modify, improve, or otherwise alter any of the Products, unless prior
written consent is obtained from BioTek; (c) portray fairly, accurately and in
good faith BioTek's Products and not knowingly take any actions which are
adverse to BioTek's best interests or which might harm BioTek's reputation; (d)
be responsible for and pay all costs and expenses of the Distributor associated
with this Agreement, its obligations hereunder and the conduct of its business,
except as provided for in Section 4. (e) advise BioTek immediately of any
complaints received regarding the Products thereof; provided, however, that the
Distributor has no authority to, and shall not, make any offer on behalf of
BioTek with regard thereto without BioTek's prior written consent; (f) secure
and maintain all necessary licenses and permits required to operate its business
and comply in all material respects with all laws applicable to it and the sale
of the Products; (g) cause its affiliates and employees to abide by the
provisions of this Agreement and be responsible for all acts and omissions of
such persons; (h) provide follow-up and support services to customers
appropriately tailored to ensure customer satisfaction; and (i) provide such
other services related or incidental to the Distributor's obligations under this
Agreement as BioTek and the Distributor may agree upon from time to time.
6. Acceptance of Orders and Terms of Sale. Each order for the Products submitted
by the Distributor to BioTek shall be in writing, set forth the types and
quantity of the Products ordered and requested shipment date(s), and otherwise
be in accordance with BioTek's order placement requirements as established from
time to time. BioTek shall acknowledge each purchase order in writing as soon as
practical and may not cancel such orders. All Products shall be shipped f.o.b.
Houston as disclosed on each order. Unless, the Distributor gives prior notice
of defective Products to BioTek, all payments for the cost of Products shall be
due 30 days after receipt of the Products. [*]
[*]
7. Warranty. BioTek represents and warrants to the Distributor that all Products
supplied by it (i) shall not infringe upon or violate any patent, copyright,
Trade Secret, as defined, trade xxxx, other proprietary right or any
Confidential Information, as defined; (ii) shall at all times comply with all
laws, rules and regulations including those relating to the environment, food,
drug or health concerns, and occupational safety or other work related matters,
(iii) shall be free from any defects, and (iv) shall be merchantable and fit for
their intended purpose. It is specifically intended by the parties to this
Agreement that the provisions of Article 2 of the Florida Uniform Commercial
Code, Section 672.314 and 672.315, including any case law interpreting these
sections, are applicable to this Agreement.
8. Proprietary Rights Escrow. Concurrently with execution of this Agreement,
BioTek shall place in escrow with Xxxxxxx Xxxxxx, P.A. the Products' formula,
specifications, manufacturing instructions and other Trade Secrets and
Confidential Information necessary for a party to manufacture or produce the
Products (the "Escrowed Information"). The Distributor shall be entitled to
receive and be an owner of the Escrowed Information within 24 hours of written
demand and entitled to manufacture and produce the Products itself or contract
with a third party to do so upon the occurrence of any of the following:
(a) BioTek's failure to fill the Distributor's order for the Products
within 60 days of the date of a purchase order; or [*] CONFIDENTIAL PORTIONS
OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
(b) BioTek's insolvency, voluntary abandonment or cessation of
business, the revocation of any articles of incorporation or similar charter or
license of BioTek or the dissolution or liquidation of BioTek; or
(c) BioTek's entering into or filing by or against BioTek a petition,
arrangement or proceeding seeking an order for relief under the bankruptcy laws
of the United States or any other similar federal or state laws, a receivership
for any of its assets, a composition with or assignment for the benefit of its
creditors, a readjustment of debt or the marshalling of its assets. The parties
shall enter into a Proprietary Rights Escrow Agreement in the form annexed as
Schedule 9 which shall permit the Distributor at its cost and expense to retain
an expert to have full access to the Escrowed Information for the purpose of
ascertaining and verifying that the Products are fit for their intended purpose
as described on Schedule 1. BioTek shall co-operate fully with the expert who
shall execute any reasonable and customary non-disclosure agreement.
9. Proprietary Rights and Indemnification. BioTek shall defend, indemnify and
hold harmless the Distributor and any licensee at BioTek's sole expense from any
claim or action brought against the Distributor or any licensee to the extent
that it is based on a claim that the Products infringe a patent, copyright,
Trade Secret, trademark or any other proprietary right or Confidential
Information, and BioTek shall pay all damages and costs arising therefrom
including reasonable attorneys fees, expert witness fees and disbursements
awarded against the Distributor or any licensee. Provided, however, that the
Distributor and such licensees shall not individually be entitled to any
indemnification unless the affected party provides written notice to BioTek
within 10 business days from receipt of the initial claim, lawsuit or
arbitration procedure and allows BioTek the right to defend the claim on its
behalf. This indemnification right shall not affect any other rights or remedies
of law or in equity as a result of any alleged infringement.
10. Trademarks. The Distributor shall promote and sell the Products under the
trademarks set forth on Schedule 10 attached to this Agreement and under such
other marks as the Distributor may from time to time trademark for distribution
of the Products (the "Trademarks"). The Trademarks will be the sole property of
the Distributor. Neither party shall acquire any rights, title, interest or
license (express or implied) in any trademarks of the other. The Distributor
shall not use the Trademarks in any manner likely to confuse, mislead or deceive
the public, or to be injurious to, or contrary to the best interest of, BioTek.
The Trademarks shall be used by the Distributor solely to designate the
Products. Each party shall inform the other of any infringement known to it of
its trademarks and, the other party's part in preventing or defending any such
infringement. Each Party shall also inform the other promptly of any claim of a
third party of infringement by the other.
11. Restrictive Covenants. During the term of this Agreement, and for a period
of two years after the expiration or termination hereof for any reason
whatsoever, BioTek shall not, either directly or indirectly, on BioTek's own
behalf or in the service or on behalf of others (i) solicit, divert or hire
away, or attempt to solicit, divert or hire away, any person employed by the
Distributor or any of its subsidiaries, or (ii) solicit business from or sell or
market any Products to any Customer of the Distributor. For purposes of this
Section 11 the term "Customer" means any person, firm, corporation, partnership,
association or other entity to which the Distributor or any of its subsidiaries
or licensee, or any of its affiliates sold or provided Products during the
24-month period prior to the time at which any determination is required to be
made as to whether any such person, firm, corporation, partnership, association
or other entity is a Customer. It also includes any affiliate or entity under
common control with any Customer.
12. Confidential and Proprietary Information. In connection with the business
relationship between the parties, the Distributor and BioTek may each have
access to certain confidential information of the other that is not generally
known to the public which includes, but is not limited to, designs,
specifications and technical information, advertising strategies, market targets
and marketing plans, information regarding present and prospective Customers,
suppliers, types of services and products, pricing, special customer
requirements, business strategies and methods and financial information and
other information other than Trade Secrets (as defined below) ("Confidential
Information"); provided, that, Confidential Information shall include
information specifically designated as a Trade Secret that is, notwithstanding
the designation, determined by a court of competent jurisdiction upon final
appeal not to be a trade secret under applicable law.
"Trade Secrets" are defined as information including, but not limited
to, technical or nontechnical data, a formula, a pattern, a compilation, a
program, a devise, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, or a list of actual or potential customer or
suppliers, which derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and
which is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy. To the extent that the foregoing is inconsistent with the
definition of "trade secret" mandated by applicable law, the foregoing shall be
deemed amended to the degree necessary to render it consistent with applicable
law. Information shall be deemed to be treated as secret and confidential by a
party with respect to any oral communication if denominated as confidential
immediately before, during or after the communication.
During the term of this Agreement and for a period of 24 months after
the expiration or termination hereof for any reason whatsoever, and as to Trade
Secrets, for so long afterwards as the data or information remain "Trade
Secrets," the Distributor and BioTek shall not use, disclose, disseminate,
publish or otherwise divulge or make available, directly or indirectly, to any
person, any Confidential Information or Trade Secrets of the other, except with
the prior express written consent of the other or strictly in the performance of
their duties hereunder. After the expiration or termination of this Agreement,
each party shall return to the other all physical embodiments of Confidential
Information and Trade Secrets in its possession or control and retain no copies
thereof or notes with respect thereto.
13. Injunctive Remedies. The parties acknowledge and agree that monetary damages
will not be an adequate remedy for a breach by the other of any of the
provisions of Sections 11 and 12 of this Agreement and the irreparable injury
will result to other party, its business and property in the event of such a
breach. Accordingly, the parties acknowledge and agree that each may, in
addition to recovering damages, proceed in equity to enjoin the other from
violating any of the provisions of this Agreement. For purposes of Sections 11
and 12 of this Agreement, the term Distributor and BioTek shall include all
owners, directors, officers, employees, independent contractors and agents of
the Distributor and BioTek, and the Distributor and BioTek shall take all
appropriate actions to ensure that each of them is bound by the terms of the
referenced Sections hereof.
14. Termination of Agreement. This Agreement may be terminated at any time:
- by mutual written consent of the parties hereto;
- by Distributor, upon BioTek's failure, refusal or inability to perform any of
its obligations under this Agreement (all of which are acknowledged to be
material), after such breach has not been cured within 60 days after written
notice thereof has been given by Distributor to BioTek.
- by BioTek, upon Distributor's failure, refusal or inability to perform any of
its obligations under this Agreement (all of which are acknowledged to be
material), after such breach has not been cured within 60 days after written
notice thereof has been given by BioTek to Distributor.
- by Distributor, upon breach of any material warranty or representation made by
BioTek in the Agreement.
Upon expiration or termination of this Agreement, the Distributor shall
cease immediately all promotion, sales and service of the Products, cease use of
the Trademarks, BioTek names and logos, and return to BioTek all forms,
contracts, price lists, sales literature, technical documentation, and other
documents and items relating to the Products and services, all of which are
acknowledged to be proprietary to and the sole property of BioTek. Provided,
however, the Distributor may continue to sell all Products remaining in
inventory.
Termination shall not affect any claim, demand, liability or right of
either party hereto arising pursuant to this Agreement prior to the termination
or expiration hereof or arising after termination or expiration in connection
with any of the rights or obligations which survive termination of this
Agreement.
15. Force Xxxxxx. BioTek and Distributor shall each be excused from any
delay in performance or for non-performance of any of the terms and conditions
of this Agreement caused by any circumstances beyond their respective control,
including, but not limited to, any act of God, fire, flood, or government
regulation, direction or request, or accident, labor dispute, unavoidable
breakdown, civil unrest or disruption to the extent that any such circumstances
affect the Products, delivery, acceptance, transportation, sale, or consumption
of Products. Each party agrees to give the other circumstances which might give
rise to a delay, interruption or reduction of any delivery or acceptance of
Products.
16. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision by its severance herefrom.
17. Assignment. The Agreement is not assignable, by operation of law or
otherwise by BioTek without the prior written consent of the Distributor. The
Distributor, at its sole option may assign the Agreement and it shall inure to
the benefit of and be enforceable by any successor, assignee or legal
representative of Distributor.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
19. Benefit. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their legal representatives, successors and
assigns.
20. Notices and Addresses. All notices, offers, acceptance and any
other acts under this Agreement (except payment) shall be in writing, and shall
be sufficiently given if delivered to the addressees in person, by Federal
Express or similar receipted delivery, by facsimile delivery or, if mailed,
postage prepaid, by certified mail, return receipt requested, as follows:
Distributor:
Top Source Technologies, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxx Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx, Xx.,
President
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxx, P.A.
0000 Xxxx Xxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Facsimile (000) 000-0000
BioTek and Xxxxx: BioTek Environmental Services, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx X000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xx. Xxxx X. Xxxxx, President
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive evidence of successful facsimile delivery.
Time shall be counted to, or from, as the case may be, the delivery in person or
by mailing.
21. Attorney's Fees. In the event that there is any controversy or
claim arising out of or relating to this Agreement, or to the interpretation,
breach or enforcement thereof, and any action or proceeding including an
arbitration proceeding is commenced to enforce the provisions of this Agreement,
the prevailing party shall be entitled to an award by the court or arbitrator,
as appropriate, of reasonable attorney's fees, including the fees on appeal,
costs and expenses.
22. Oral Evidence. This Agreement constitutes the entire Agreement
between the parties and supersedes all prior oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties against which enforcement or the change, waiver discharge or termination
is sought. Notwithstanding the above it is acknowledged that in entering into
this Agreement, the Distributor has specifically relied on representations of
BioTek that: (i) the Products are 100% environmentally safe; (ii) that neither
Food and Drug Administration nor Environmental Protection Agency or similar
approvals are required to use, manufacture or distribute the Products; and (iii)
BioTek and/or Xxxxx owns the Products. In the event it is later discovered that
any one of these representations are not true, the Distributor has the right to
unilaterally terminate the Agreement and recover direct and indirect costs
incurred in promoting and distributing the Products and other damages it incurs
including consequential damages.
23. Additional Documents. The parties hereto shall execute such
additional instruments as may be reasonably required by their counsel in order
to carry out the purpose
24. Governing Law This Agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether relating to
its execution, its validity, the obligations provided herein or performance
shall be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
25. Arbitration. Any controversy, dispute or claim arising out of or
relating to this Agreement, or its interpretation, application, implementation,
breach or enforcement which the parties are unable to resolve by mutual
agreement, shall be settled by submission by either party of the controversy,
claim or dispute to binding arbitration in West Palm Beach, Florida (unless the
parties agree in writing to a different location), before a single arbitrator in
accordance with the rules of the American Arbitration Association then in
effect. In any such arbitration proceeding the parties agree to provide all
discovery deemed necessary by the arbitrator. The decision and award made by the
arbitrator shall be final, binding and conclusive on all parties hereto for all
purposes, and judgment may be entered thereon in any court having jurisdiction
thereof.
IN WITNESS WHEREOF, BioTek, Xxxxx and the Distributor have
executed this Distribution Agreement on the date and year first above written.
Witnesses: BioTek Environmental Services, Inc.
By:
--------------------------
Xxxx X. Xxxxx, President
------------------------
------------------------------
-------------------------
Top Source Technologies, Inc.
By____________________________
Xxxxxxx X. Xxxxxx, Xx., President
SCHEDULE 1 TO AGREEMENT AMONG
XXXX X. XXXXX, BIOTEK ENVIRONMENTAL SERVICES, INC. AND
TOP SOURCE TECHNOLOGIES, INC.
CUSTOMER As used in this Agreement, the Distributor shall have the exclusive
right to market an sell the Products anywhere in the world to customers or
potential customers engaged in any aspect of the automotive and food service
business, which term "business" is not limited to for profit entities (the
"Customers"). The term "automotive" includes but is not limited to,
manufacturers of automobiles and trucks, manufacturers and assemblers of
components used in automobiles and trucks, automotive and truck dealers,
businesses which repair automobiles and trucks and/or sell gasoline and oil,
businesses which provide maintenance services to automobiles and trucks such as
tire and battery stores, truck stops, quick lube dealers and all businesses
which use multiple automobiles to provide services to others, such as United
Parcel Service, Federal Express, other delivery services, trucking companies,
corporations and other entities which use fleets of automobiles and trucks and
municipalities and other governmental units. The term "food service" refers to
restaurants, fast food stores, food distributors and manufacturers of food
products including meat packers, poultry providers and businesses engaged in
catching, harvesting, packing or distributing fish or seafood.
SCHEDULE 1 TO AGREEMENT AMONG
XXXX X. XXXXX, BIOTEK ENVIRONMENTAL SERVICES, INC. AND
TOP SOURCE TECHNOLOGIES, INC.
PRODUCTS
As used in this Agreement, "Products" refer to MightyClean 2000(TM), an
industrial surfactant containing hydrocarbon specific microbes that will degrade
oil, gas, hydraulic fuels, other petrochemical fluids, and other oils derived
from vegetable, animal or hydrocarbon products.
SCHEDULE 4 TO AGREEMENT AMONG
XXXX X. XXXXX, BIOTEK ENVIRONMENTAL SERVICES, INC. AND
TOP SOURCE TECHNOLOGIES, INC
COMMISSION
[*]
CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
SCHEDULE 9 TO AGREEMENT AMONG
XXXX X. XXXXX, BIOTEK ENVIRONMENTAL SERVICES, INC. AND
TOP SOURCE TECHNOLOGIES, INC
"FORM OF PROPRIETARY RIGHTS ESCROW AGREEMENT"
SCHEDULE 10 TO AGREEMENT AMONG
XXXX X. XXXXX, BIOTEK ENVIRONMENTAL SERVICES, INC. AND
TOP SOURCE TECHNOLOGIES, INC
TRADEMARKS
MightyClean 2000(TM); any other trademark legally available that the
Distributor may deem necessary to carry out the terms of the Agreement.
