EXHIBIT 10.3
DISTRIBUTION AGREEMENT
[GRAPHIC OMITTED]
0000 XXXXXXXX XXXXX, XXXXX X
XXXX XXXXXXX, XX 00000
AVL INFORMATION SYSTEMS, INC
WORLDWIDE EXCLUSIVE.
DISTRIBUTION AGREEMENT
This agreement entered into effective this 30th day of Sept., 2001 between AVL
INFORMATION SYSTEMS, INC. (AVLIS), a Michigan corporation, and "I-TRACK", INC.,
a Nevada corporation, operating in the country of the United States,
hereinafter referred to as "Distributor".
Whereas, AVLIS possesses certain expertise and experience in Remote Hub
GPS /AVL hardware and sensors and is a producer of such products, and
Whereas, the DISTRIBUTOR desires to obtain the rights to distribute
AVLIS products and,
Whereas, AVLIS desires to establish the DISTRIBUTOR as an EXCLUSIVE
distributor of such products,
Therefore, in consideration of the mutual covenants contained herein,
it is understood and agreed as follows:
SCOPE
1.1 AVLIS agrees to manufacture and/or by other means secure and sell the
component(s) required to create or help create an AVL solution hereto and
incorporated herein. Such products are hereinafter referred to as "AVLIS
Products" or "Product(s)"
1.2 The DISTRIBUTOR shall have the EXCLUSIVE right to market and distribute the
AVLIS Products on a worldwide bases ("xxx Xxxxxxxxx"). This EXCLUSIVE right
is not limited in scope to the exclusive. territory defined herein.
1.3 This EXCLUSIVE right to distribution does not preclude the addition of
future exclusitivity rights of distribution in other territories. Such
additions shall be subject to an amendment of this Distribution agreement.
AVLIS RESPONSIBILITIES
2.1 During the entire term of this Agreement, including any renewal years, in
accordance with the specifications set forth in Addendum1 hereto, AVLIS
shall manufacture and
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deliver for the Distributor, AVLIS Products as provided herein. Current
prices for the AVLIS Products are listed in Addendum 1. Such prices may be
changed by AVLIS only upon sixty (60) days prior written notice to the
Distributor, but such changes shall not apply to any valid outstanding
order from the Distributor which was issued and accepted by AVLIS prior to
receipt of the notice of such changes in prices.
2.2 The Distributor shall place orders with AVLIS in accordance with AVLIS
standard lead times in advance of requested delivery dates. All deliveries
shall be made by AVLIS as set forth in each Distributor purchase order
placed under this Agreement. Upon request by the Distributor, AVLIS shall
provide "Drop Shipment" of the Products directly to the Distributor's
customer, provided Distributor has obtained all the correct export
information and fees as well as appropriate payment documents. Shipping
shall be billed to the Distributor and AVL shall provide Distributor with a
best efforts cost basis.
2.2.1 Payment terms shall be as follows:
Cash in U.S. Funds or Net 30 day billing based on credit worthiness and
acceptance by the Company or an irrevocable Letter of Credit confirmed
on a US bank acceptable to AVLIS in US dollars.
2.3 AVLIS shall repair AVLIS Products in accordance with the warranty specified
in Addendum 2. The warranty period shall begin upon shipment of AVLIS
Products by AVLIS or the Distributor, whichever is applicable to the
customer. AVLIS shall provide an extended warranty and non-warranty repairs
at its standard published rates. AVLIS shall give thirty (30) days written
notice prior to implementing any change in labor rates.
2.4 If at any time during the term of this Agreement or any extension thereof,
AVLIS discontinues manufacturing and supplying all or any AVLIS Products
listed in Addendum1, Distributor shall have an opportunity to purchase a
reasonable stock of spare parts and documentation (in digital format) for
AVLIS Products to meet the requirements of the Distributor's customers.
AVLIS will issue a license to the Distributor for the technology, necessary
to maintain and repair the Products defined in section 2.1 of the
Agreement.
2.5 AVLIS shall inform the Distributor of any modifications, improvements or
changes in hardware or software components which can, or will, be
incorporated by AVLIS in Products.
2.6 AVLIS shall provide Distributor with accurate drawings, schematics and all
available AVLIS documentation of the Products (in both hard copy and
digital format) in order for the Distributor to provide competent repair
and maintenance services to customers
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in those cases that AVLIS cannot provide same. Such services may be
performed by subcontractors to Distributor in the event that AVLIS is
unable or desires not to perform such services utilizing the said AVLIS
technical information solely for the limited purposes of performing such
services or procurement of parts and components in connection with the
performance of such services or other obligations of the Distributor to its
customers.
2.7 AVLIS shall provide training as needed for the Distributor throughout the
life of this Agreement. Subsequent to the initial training, and at a time
to be agreed upon between the parties, continuous training to the
Distributor shall be provided as needed to support the installed customer
base and potential new sales customers and new product releases.
2.8 For the life of this Agreement, AVLIS will support the Distributor's sales
efforts (quoting procedures and product familiarity, technical information
and system applications, customer feasibility testing and seminar support).
AVLIS sales and service personnel shall provide continuous support to the
Distributor personnel for matters relating to custom quotes, special orders
and requests, troubleshooting hardware and software and other matters
respecting the needs of customers.
2.9 AVLIS shall supply Distributor with reasonable quantities of sales aids
produced by AVLIS in connection with the Products and all technical
information necessary in AVLIS' judgment for sales purposes. All sales aids
shall be in English. Any translation thereof shall be the responsibility of
and paid for by the Distributor. It is the Distributor's responsibility to
buy a demo unit from AVLIS for the purposes of demonstration for customers.
DISTRIBUTOR RESPONSIBILITIES
3.1 Distributor shall be free to determine and later adjust the prices and
pricing arrangements within the Territory for the Products. Nevertheless,
Distributor agrees to use best efforts to offer Products for sale so as to
be competitive in terms of price, delivery, quality, and services with
similar products sold by Distributor or others in the Territory.
3.2 During the term of this Agreement, the Distributor will use its best
efforts to promote, maintain and increase the sale of the Products in the
Territory by all usual and ethical means, including advertising and
personal solicitation of customers, demonstration of models, processing of
orders and customer complaints, and identification of Distributor as a
source of Products in business listings, trade publications, directories,
stationery and advertisements and through distribution of technical
literature, catalogues, brochures, and advertising matter issued by AVLIS.
3.3 Distributor represents and warrants that it has adequate facilities,
equipment, means of transportation, sales force, distribution capabilities
and business office and clerical staff to acquire and to promote the sale
of Products and to perform the services required by this Agreement.
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3.4 Distributor shall, at all times, use its best efforts to promote the sale
of the Products covered by this Agreement through all channels of
distribution in the Territory. Distributor will use its best efforts to
sell those Products aggressively and to see that customer service is always
maintained at the highest levels.
3.5 This Agreement requires Distributor to remain a sound and financially
viable entity. To that end, Distributor hereby promises that it shall:
a) maintain and employ such working capital and net worth as may be
required for Distributor to properly and effectively carry out the
performance called for under this Agreement.
b) furnish AVLIS with financial statements annually if requested to
facilitate a higher credit limit for purchases.
3.6 Distributor will keep itself and AVLIS informed of all conditions of the
market in the Territory, including competitive prices and trade statistics,
and will furnish AVLIS with reports, market conditions, and other
information relating to the Territory, including listings of existing and
prospective customers.
3.7 Distributor shall be responsible for coordination and obtaining of all
import licenses through the end user customer. Distributor is responsible
for payment of all taxes on imports (to include, sales, use, import,
duties, etc.). Distributor is also responsible for all shipping, packing
and insurance charges associated with any order.
Distributor agrees at all times to comply with all United States laws and
regulations as well as International Trade Laws, as they may exist from time to
time, regarding export licenses or the control or regulation of exportation or
re-exportation of products or technical data sold or supplied to Distributor.
Distributor also agrees to abide by the United States Foreign Corrupt Practices
Act.
RELATIONSHIP OF THE PARTIES
4.1 The parties shall act as independent contractors, and neither party shall
act as agent for, or partner of the other, nor be authorized to incur any
liability or to represent or make commitments on behalf of the other
(except as provided herein), and the employees or sales representatives of
one shall not be deemed the employees or sales representatives of the
other.
4.2 Nothing in this Agreement shall be deemed to constitute, create, give
effect to or otherwise recognize a joint venture, partnership or formal
business entity of any kind, and the rights and obligations of the parties
shall be limited to those expressly set forth herein. Neither party shall
have any liability or obligation to the other except as expressly provided
herein.
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DURATION AND TERMINATION
5.1 When signed by both parties, this Agreement shall become effective on the
date first above written and continue in force so long as the distributor
is making a best efforts approach to securing market share. Certain
performance criteria shall be mutually agreed upon between the parties. See
Schedule "A" for details.
5.2 In the event of termination of this agreement, there shall not be an affect
on orders for the AVLIS Products placed by the Distributor prior to
termination of this Agreement, nor AVLIS'S obligation to provide Products
to support any valid order outstanding to the Distributor's customers for
AVLIS Products.
5.3 In the event of Termination for Cause, ( See Schedule "B"), there will be
provision for immediate cancellation of this agreement. Otherwise the 30 day
written notice shall remain.
INDEMNIFICATION
6.1 Each party shall defend, save the other harmless from and against and shall
indemnify the other for any liability, loss, costs, expenses, or damages
caused by reason of its sole negligent acts or omissions. The indemnifying
party shall defend said action at its own expense and shall pay and
discharge any judgment that may be rendered in any such action. If such
indemnifying party fails or neglects to so defend, the party sued may
defend the same and any expenses, including reasonable attorneys' fees,
which it may be required to pay or incur in defending said action and the
amount of any judgment which it may be required to pay shall be promptly
reimbursed upon demand.
6.2 AVLIS shall pay all costs and damages, including without limitation court
costs, attorneys' fees and exemplary damages finally awarded in any suit
by a third party against the Distributor or its customers to the extent
based upon a finding that the design or construction of the AVLIS
Products, as furnished, infringes the proprietary rights (including patent
rights, copyrights, and trade secrets in the United States) of such third
party, except infringement occurring as a result of incorporating a
specific design or modification at the request of the Distributor or based
on its incorporation or use in conjunction with other equipment, provided
that the Distributor promptly notifies AVLIS of any allegation of
infringement, and AVLIS is given the right at its expense to settle such
charge and to defend or control the defense of any suit based on such
charge.
LIMITATION OF LIABILITY
7.0 In no event shall AVLIS or the Distributor be liable to each other, nor
shall AVLIS be liable to any third party end user, in contract or in tort
or under any other legal theory, for incidental, indirect, special,
punitive, or consequential damages, including,
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without limitation, loss of use, loss of revenue, or loss of profit, even
if such damages were foreseeable or resulted from the breach of a
fundamental term therein, regardless of whether it was informed about the
possibility of such damages. AVLIS liability for damages is limited to the
direct legal and natural consequence of the performance of AVLIS Products
and labor which is limited to the amount actually paid to AVLIS by the
Distributor. Except as otherwise provided by applicable law, no claim,
regardless of form, arising out of or in connection with this Agreement may
be brought by the buyer more than two (2) years after the cause of such
action has occurred.
PROPRIETARY INFORMATION
8.1 Preparation and submission of proposals or orders, including the conduct of
negotiations, may require the exchange of data and information considered
proprietary to the parties, To the extent that such data or information is
so identified in writing by the disclosing party at the time of exchange,
the receiving party agrees to hold such proprietary data and information in
confidence for a period of three (3) years from the expiration date of this
Agreement, including any renewal years, and further agrees that, within
that period of time, it will not use any such proprietary data or
information, except in connection with proposals or the granting of a
license to the Distributor, under Section 2.4 of this Agreement, and will
not disclose any such proprietary data unless authorized, in writing by the
party originally furnishing such data or information.
8.2 These provisions shall not apply to data or information in the public
domain at the time it was disclosed, or known to the party receiving it at
the time of disclosure, or which becomes known to the receiving party
independently of the disclosing party without breach of this Agreement, or
which is independently developed by the receiving party.
8.3 The receiving party shall not be liable for the disclosure of such
proprietary data or information which results from the use of the data or
information as specified above, nor for disclosure of such data or
information pursuant to judicial or governmental action, provided the
disclosing party is provided notice and an opportunity to object or obtain
confidential treatment.
PUBLICITY AND NEWS RELEASES
9.0 Any news release, public announcement, advertisement or publicity proposed
to be released concerning the projects or the activities of both parties in
connection with this Agreement shall be mutually approved in advance of
such release by both parties.
NO RIGHTS IN TRADE NAMES
10.0 Distributor agrees that it will not in any manner represent that it has
ownership of any trade names or trademarks used by AVLIS. Distributor
further agrees that it will
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not register or attempt to register any such trade names or trademarks
under the laws of any jurisdiction, and it will not at any time do, or
cause to be done, any act or thing contesting, or in any way impairing or
tending to impair any part thereof whether or not they are registered in
the jurisdictions in which the Distributor is located or does business.
ASSIGNMENT
11.0 Neither this Agreement nor any interest herein may be assigned, in whole or
in part, by either party hereto without the prior written consent of the
other party hereto, except that AVLIS may assign its rights to its parent
company or another subsidiary.
REPRESENTATIONS
12.0 Each party represents and warrants to the other that it is a corporation
duly organized and validly existing in the legal jurisdiction indicated in
this Agreement. Further, each party represents that it has full corporate
power and authority to enter into this Agreement and to do all things
necessary for the performance of this Agreement.
COMMISSIONS (WHERE APPLICABLE)
13.1 AVLIS shall pay the Distributor a negotiated commission based on the
gross profit of any sale requiring AVLIS price support for all orders for
Products received and accepted by AVLIS from customers located in the
Territory. Commissions are payable only after receipt of full and
unconditional payment by AVLIS. This commission shall be the Distributors
sole source of compensation for hardware and software products sold but
does not include ongoing service/subscription fees.
13.2 Service/Subscription fees shall be subject to a commission payable to the
Distributor in a minimum amount of 10% of said fees.
13.3 The term "Gross Profit" shall be construed to mean the net sales price
actually received by AVLIS after excluding all shipping and insurance
costs, applicable taxes, any allowances expressly granted to the customer
by AVLIS and any other costs or charges not generally included in AVLIS's
F.O.B., point of shipment price and actual cost of goods sold.
13.4 Occasionally, competitive pressures may require non-standard pricing in
order to close a sale. A lesser commission rate will be accepted by the
Distributor if it appears to be in the best in the best interest of both
parties and if the amount of such lesser commission is mutually agreed
upon before quotation to the customer.
13.5 Commissions are payable on the fifteenth day of each month which follows
the month that AVLIS received full and unconditional payment from the
customer. If a refund is made because of returned Products, commissions
already paid on such returned Products shall be deducted from future
commission payments. If no or insufficient future commission payments are
due within the immediately following
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six (6) months, Distributor agrees to refund such commission for the
returned products immediately. The Distributor shall not have the
authority to accept on behalf of AVLIS the return of or to make any
allowances with respect to any of the Products or authorize rework,
without prior written approval of AVLIS.
13.6 If a receivable becomes non-collectible (as determined by AVLIS's credit
department in its sole discretion), prior commissions already paid to
Distributor will be deducted from any present or future commission owing
or later accruing to Distributor. If no or insufficient future commission
payments are due within the immediately following six (6) months,
Distributor agrees to refund such commission for returned products
immediately.
13.7 When sales/engineering contact, execution of the order or shipment into
territory involved the Territory and the sales territory(ies) of one or
more of AVLIS's other sales representatives, AVLIS will split the full
negotiated commission, on the Gross Profit of the sale among the
Distributors whose territories are involved in accordance with the
following formula:
I. Seventy-five percent (75%) of the Full Commission shall be paid to
the Distributor responsible for the original engineering contract and
sales engineering (unless notified in writing prior to the actual
payment of commission, the point of origin of purchase order shall be
deemed to be the point of original engineering contact);
II. Twenty five percent (25%) of the Full Commission shall be paid to the
distributor responsible for the territory into which the Product is
to be supported.
AVLIS shall make the determination and advise the Distributor at the time the
order is accepted by AVLIS, or as soon as practicable thereafter. In all cases
the decision of AVLIS shall be final. The Distributor has the right to dispute
this decision in writing within fourteen (14) days after notification of the
allocation of the Full Commissions: however, after review by AVLIS of the
appeal, AVLIS's decision is rendered as final. A commission split will not be
made for issuance of a purchase order or point of first delivery from or into
the Territory where such issuance or delivery, in the opinion of AVLIS, is
merely the result of "administrative convenience" and does not involve any
significant efforts of the Distributor.
GENERAL PROVISIONS
14.1 This Agreement shall be governed by and construed in accordance with the
laws of the State of Michigan, United States of America, or the laws that
apply to the location of the place of sale, without giving effect to the
principles of conflicts of law thereof.
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14.2 Distributor will comply with all laws and regulations applicable to it in
the Territory, and will advise AVLIS of any laws in the Territory
applicable to AVLIS or the Products.
14.3 The English version of this Agreement regardless of whether a translation
in any other language is or will be made, shall be the only authentic one.
14.4 Any controversy or claim arising out of or relating to this Agreement, or
breach thereof, shall be finally settled by arbitration under the
International Chamber of Commerce Arbitration Rules by a single arbitrator
chosen in accordance with the said Rules. The award rendered by the
arbitrator shall state the reasons for the decision. The place of
arbitration shall be mutually agreed upon. In the event that no place for
arbitration can be agreed upon, an independent third party chosen by AVLIS
shall be entertained to make such decision. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
14.5 Except as expressly provided in this Agreement, waiver by either party or
failure by either party to claim a breach of any provision of this
Agreement, shall not be a waiver of any breach or subsequent breach, or
have the effect of any waiver of such provisions.
14.6 This Agreement (including Addendums attached hereto) constitutes the
entire agreement between the parties hereto with respect to the subject
matter hereof, and it supersedes all prior oral or written agreements,
commitments or understandings with respect to the matters provided for
herein. No amendment, modification, or discharge of this Agreement shall
be valid and binding unless set forth in writing and duly executed by the
party against whom enforcement of the amendment, modification or discharge
is sought.
14.7 No modification of this Agreement shall be effective, unless it is made in
writing and signed by authorized representatives of AVLIS and the
Distributor.
14.8 The failure of either party to require performance by the other party of
any provision hereunder shall not affect the full right to require such
performance at anytime thereafter, nor shall the waiver by either party of
a breach of any provision hereof be taken or held to be a waiver of the
provision itself.
14.9 Neither party shall be liable for its failure to perform any of its
obligations hereunder at any time during which performance is delayed by
events beyond the reasonable control of either party including, but not
limited to, events such as war, strike, unusually severe weather, flood,
riot, earthquake, embargo, epidemic or acts or any failures to act of any
governmental entity.
14.10 In the event that any provision of this Agreement is found to be or
becomes unenforceable or invalid, in whole or in part, under any
applicable law or judicial decision, the remainder of this Agreement shall
remain in full force.
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14.11 Any notices required or permitted by this Agreement or given in connection
herewith shall be in writing and be made either by facsimile (followed by
a mailed original) or by first-class mail, postage prepaid as follows:
NOTICE TO AVLIS SHALL BE ADDRESSED AS FOLLOWS:
AVL Information Systems Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx X
Xxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxx-Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
Email: XXXXX@XXXXXXXXXX.XXX
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized officers effective the date and year first
written above.
ACCEPTED: ACCEPTED:
AVL INFORMATION SYSTEMS, INC. "I-TRACK", INC.
DISTRIBUTOR
Vice President Chairman
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TITLE TITLE
/s/ Xxxx X. Xxxx /s/ Xxxx Xxxxxx
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SIGNATURE SIGNATURE
30 Sept. 2001 Sept. 30/01
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DATE DATE
