EX-10.3- Distribution Agreement
DISTRIBUTION AGREEMENT
THIS AGREEMENT (Agreement) is entered into this 4th day of June 2003, by and
between Reclamation Consulting and Applications Inc., a company organized under
the laws of Colorado with its principal place of business at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ and its manufacturing and
sales training site at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
('RCAI')
and
ProGear Environmental Solutions, Inc., a company organized under the laws of
Canada and having its principal place of business at unit ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ('Distributor')
RECITALS
RCAI manufactures and distributes certain asphalt, cement and related product
release agents, which are used in the construction and similar industries and
which are sold under the RCAI trademarks 'Alderox' and/or 'ASA12'.
RCAI desires to appoint Distributor to promote, distribute and service RCAI's
products and Distributor desires to promote, distribute and provide customer
service for RCAI products in the territory, defined hereinbelow.
In consideration of the mutual representations, agreements and conditions
contained in this Agreement, RCAI and Distributor hereby agree as follows:
SECTION 1: DEFINITIONS
1.1 'Products' means asphalt, cement and related product release agents, in
liquid form which are non-toxic, non-explosive and environmentally compatible
and that RCAI formulates and manufactures. RCAI authorizes Distributor to
distribute these Products under the RCAI Trademarks.
1.2 'Territory' means the entire geographic area of Canada.
1.3 'Effective Date' means the date first written above which will be
concurrent with the date when an authorized representative of the last party
hereto executes this Agreement.
1.4 'Agreement Year' means any partial or whole calendar year, commencing
with the Effective Date hereof, or any such subsequent period during the
continuance of this Agreement.
1.5 'Trademarks' means all trademarks, trade names, designs, logos or other
protected or protectable commercial symbols used by RCAI to identify RCAI as the
source of the Products to which RCAI grants Distributor the right of
distribution hereunder and as set forth in Schedule A hereto.
1.6 'Documentation' means any promotional, advertising, technical or
training materials developed and furnished by RCAI to Distributor hereunder,
specifically intended for the public, including customers and potential
customers and concerning the promotion, distribution, application or handling of
the Products.
1.7 'Distributor' means Pro-Gear, and any sub-distributor or subcontractor,
agent, representative, successor or assign to whom any of the rights or
obligations of Distributor herein are assigned or delegated upon the prior
written consent of RCAI.
SECTION 2: GRANT OF DISTRIBUTORSHIP
2.1 As of the Effective Date of this Agreement and for the term hereof, RCAI
hereby appoints Distributor and Distributor hereby accepts the exclusive
appointment to promote, distribute and provide customer service for the Products
in the Territory under the terms and conditions of this Agreement.
2.2 The exclusive right granted herein will apply provided Distributor uses
its best efforts to achieve the Minimum Sales Objective for each Agreement Year
during the term hereof as further described in Section 4 below.
2.3 During the term hereof, Distributor will refrain from directly
promoting, distributing or servicing the Products outside the Territory by
soliciting orders, establishing or operating any branch or facilities for said
purposes outside the Territory, or taking any other direct action to obtain
customer orders outside of the Territory.
2.4 RCAI will use reasonable efforts to refer to Distributor any customer
inquiry or order originating from Distributor's Territory. However, RCAI will
not be liable to Distributor for compensation of any kind in the event of the
sale, distribution or servicing of Products by RCAI in the Territory.
2.5 The rights of Distributor to promote, distribute or provide customer
service for the Products include the right of sub-distribution or subcontract,
upon the prior written consent of RCAI. All other rights not expressly granted
in this Agreement to Distributor are reserved to RCAI.
SECTION 3: AUTHORIZED USE OF TRADEMARKS
3.1 As of the Effective Date of this Agreement and for the term hereof, RCAI
hereby grants Distributor the nonexclusive, nontransferable right to use the
Trademarks set forth in Schedule A hereto in connection with the promotion,
distribution and servicing of the Products in the Territory. RCAI may amend
Schedule A from time to time.
3.2 Distributor will comply with all RCAI requirements for affixing or using
the Trademarks on or in connection with the Products.
3.3 During the term hereof, Distributor will represent to customers and
other third parties that Distributor is an authorized independent distributor of
RCAI and the Products for the Territory. Distributor will refrain from using
any trademarks or other identifying symbols that may be considered by customers
or other third parties to be misleading as to the identity of Distributor, the
relationship of RCAI and Distributor, or the origin or nature of the Products.
SECTION 4: MINIMUM SALES OBJECTIVE
4.1 Promptly after the Effective Date hereof, RCAI will determine a minimum
volume of sales of the Products that Distributor will aim to achieve in the
first Agreement Year in consultation with Distributor. RCAI will review the
minimum volume of sales of the Products prior to the beginning of any successive
term during which this Agreement may continue in consultation with Distributor.
The minimum volume of sales ('Minimum Sales Objective') for each Agreement Year
will be set forth in Schedule B attached hereto.
4.2 Distributor will use its best efforts to achieve the Minimum Sales
Objective in any given Agreement Year. In particular, Distributor will:
a) actively promote, distribute and service the Products in the Territory;
b) diligently pursue sales leads provided by RCAI;
c) initiate sales programs, campaigns, surveys, promotions or advertising
programs;
d) comply with all provisions of Sections 8 and 9 hereof on training and
advertising; and
e) respond promptly and fully to any of RCAI's requests for information on
customers or market conditions in Distributor's Territory.
4.3 In the event that Distributor fails to achieve the Minimum Sales
Objective in any Agreement Year, RCAI may, in its sole discretion, revise the
Minimum Sales Objective, revoke the exclusive appointment granted herein with
immediate effect and appoint other distributors in the Territory, or determine
that Distributor is not in full compliance with the provisions of this Agreement
in accordance with Section 14 hereof.
SECTION 5: PURCHASE ORDERS
5.1 Any order placed by Distributor must be in writing, and include complete
and accurate information on the quantity, required shipment date and any details
required for import into the Territory.
5.2 Any order placed by Distributor will be subject to acceptance by RCAI in
writing. RCAI will fill the accepted order as promptly as practicable, subject,
however, to failure or delay caused by reasons beyond the reasonable control of
RCAI specified in Section 17.2 below.
5.3 Any order for Products accepted by RCAI may be cancelled by Distributor
provided RCAI receives written notice of cancellation on or before 10 working
days prior to the scheduled pick-up date.
SECTION 6: TERMS OF SALE
6.1 Unless otherwise agreed by RCAI, RCAI will deliver all Products for
which it accepts Distributor's orders FCA RCAI's manufacturing plant Salt Lake
City, Utah, Incoterms 2000, at which time and place title to the Products and
risk of loss of the Products will pass to Distributor.
6.2 After loading by RCAI at its facility, Distributor is responsible for
all costs and risks of transportation from RCAI's Salt Lake City facility,
insurance, any import duties or other charges, sales, use or other taxes, and
licenses or approvals required for the transport, import, promotion,
distribution and sale of the Products in the Territory, and any loss or damage
sustained from the point RCAI's facility.
SECTION 7: TERMS OF PAYMENT
7.1 In consideration of RCAI's production and supply of the Products ordered
by Distributor, Distributor will pay RCAI the total amount of each order, as
indicated on each invoice. Invoices for Products will reflect the prices set
forth on RCAI's Price List for the Products, attached hereto as Schedule C.
7.2 RCAI may amend the Product/Price List of Schedule C from time to time,
any changes to said prices to be effective upon ninety (90) days written notice
by RCAI to Distributor.
7.3 Unless otherwise agreed, Distributor will make payment of the full
invoice amount to RCAI, excluding any bank transfer or other charges, in US
dollars, transfer orders to be made payable to RCAI and to any bank account as
RCAI may designate from time to time.
7.4 Distributor will pay the full amount of the invoice to RCAI prior to the
date of pick-up of the ordered Products from RCAI's manufacturing facility by
Distributor. Any delay by Distributor in making payment will result in a delay
in pick-up until payment in full is received by RCAI, with all resulting costs
or losses to be born by Distributor. Failure to pay will be deemed a breach of
Distributor's obligations herein and subject Distributor to the provisions of
Section 14 hereof.
7.5 RCAI reserves the right to request special terms of payment from
Distributor in an individual case, as RCAI determines in its sole discretion.
7.6 If it is necessary to convert any amount paid or payable to US dollars
from any other currency, the conversion will be made at the rate of exchange
prevailing for the purchase of the US dollars at noon on the date when the
payment was paid or became due.
SECTION 8: TRAINING
A. RCAI's obligations:
8.1 At the commencement of this Agreement, RCAI will provide to Distributor
initial training in the applications, use and handling of the Products. During
the term hereof, RCAI will further provide training from time to time as is it
determines is reasonably needed to ensure Distributor's provision of the high
standard of quality, application and handling associated with the Products.
8.2 RCAI may offer training services in the form which it determines most
suitable, including, without limitation, group or individualized instruction at
RCAI's Salt Lake City premises.
8.3 RCAI will provide training services without charge to Distributor
provided, however, that Distributor bear all travel and related costs for
Distributor's employees to attend the training sessions.
B. Distributor's obligations:
8.4 Distributor and its employees assigned to the Products will attend and
successfully complete the initial training and any additional training offered
from time to time by RCAI as RCAI determines.
8.5 Distributor will bear all travel costs for training, including, without
limitation, transportation, lodging, meals, and communication charges.
SECTION 9: ADVERTISING AND PROMOTION
A. RCAI's obligations:
9.1 RCAI will provide promotional support to Distributor, including, without
limitation, customer leads in the Distributor's Territory, sample Documentation
created by RCAI for promoting, distributing and providing customer service for
the Products, sales training, and ongoing consultation during the term hereof.
B. Distributor's obligations:
9.2 Distributor and its employees assigned to the Products will attend and
successfully complete any initial or subsequent market development or sales
training as RCAI determines.
9.3 Distributor will advertise and publicize the Products in the Territory
in accordance with any RCAI advertising and promotional guidelines set forth in
any Documentation or other materials, or as provided during any sales training
or market development assistance by RCAI.
9.4 Distributor will pay in full for the travel costs of Distributor's
employees for sales training at RCAI's Salt Lake City premises.
SECTION 10: QUALITY CONTROL, SAFETY STANDARDS
10.1 In order to ensure that a high standard of reliability, application and
handling of the Products is maintained and that proper use of the Trademarks in
connection with the Products is made, RCAI will exercise its rights of
supervision and quality control over Distributor's provision of customer service
for the Products during the term of this Agreement.
10.2 Distributor will:
a) employ and maintain sufficient personnel to perform the obligations of
Distributor herein and ensure their adequate training in accordance with
Sections 8 and 9 hereof;
b) provide customers with adequate information and training on the safe and
effective handling of the Product(s) and their applications;
c) furnish all market development information reasonably requested by RCAI
concerning the customers of Products sold by Distributor; and
d) notify RCAI by phone, confirming in writing or confirming by e-mail, as
promptly as practicable after it comes to Distributor's attention, of any
customer complaints regarding the Products.
SECTION 11: LIMITED WARRANTIES FOR PRODUCTS
11.1 RCAI hereby warrants with respect to all Products delivered to
Distributor pursuant to the terms and conditions hereof that all such Products
will be suitable for the applications intended, provided they are used as is
intended from the date of delivery to Distributor until one (1) year from the
pick-up date.
11.2 RCAI's entire liability and Distributor's customers' exclusive remedy is
limited to the replacement without charge, of any Products which prove not to
function as intended within the warranty period.
11.3 RCAI will not be liable for the replacement of Products which, in RCAI's
sole opinion, have been subjected to misuse, accident, alteration, neglect or
damage.
11.4 The warranties provided herein are the only warranties made by RCAI and
excludes all other express and implied warranties including those of
merchantability and fitness of the Products for a particular purpose.
11.5 IN NO EVENT WILL RCAI BE LIABLE FOR DAMAGES OF ANY KIND, DIRECT OR
INDIRECT, INCLUDING, WITHOUT LIMITATION, GENERAL AND SPECIAL DAMAGES SUFFERED BY
DISTRIBUTOR OR ANY CUSTOMER OR DISTRIBUTOR ARISING FROM BREACH OF WARRANTY,
BREACH OF CONTRACT, NEGLIGENCE OR OTHER TORT, EQUITY, OR ANY OTHER LEGAL GROUND
OF ACTION.
SECTION 12: DISTRIBUTOR'S LIABILITY
12.1 Distributor will limit its representations on warranty with regard to
the Products to correspond to the provisions of Section 11 hereof.
12.2 Distributor will obtain as of the Effective Date of this Agreement and
maintain for the term hereof general liability coverage which includes
specifically the Products and completed operations coverage of at least
$1,000,000 per incident, property of at least $1,000,000 and such additional
insurance as may be required by the law or laws of the Territory.
12.3 Within ten (10) days of the Effective Date, Distributor will provide
RCAI with a copy of the insurance policy evidencing compliance with Section 12.2
and will refrain from canceling or changing said policy, except to increase
Distributor's coverage, without prior written notice of RCAI.
SECTION 13: PROPRIETARY RIGHTS
13.1 Distributor on behalf of itself, its officers, employees, agents,
representatives, and assigns:
a) acknowledges that RCAI is the owner of all proprietary rights in the
Products and the Trademarks, to which RCAI grants Distributor the rights to
distribute and use pursuant to the provisions of this Agreement; and
b) will refrain from any unauthorized or infringing use of the Products,
Trademarks or any Documentation for the term hereof and thereafter.
13.2 Promptly after Distributor learns of any suspected or actual
unauthorized third party use of the Products, Trademarks or Documentation,
Distributor will notify RCAI of said unauthorized use or disclosure.
13.3 Should RCAI decide to take any action to defend against or terminate
said infringing or unauthorized use of its proprietary rights in the
Distributor's Territory, Distributor will, upon RCAI's request, render any
assistance RCAI may require, at RCAI's expense.
SECTION 14: TERM AND TERMINATION
14.1 This Agreement will commence on the Effective Date hereof and will
continue for an initial term of one (1) year (Initial Term). This Agreement may
be renewed for one or more successive terms of 1 year each (Successive Term) by
90 days prior written notice of RCAI to Distributor. At the time of renewal
Distributor will:
a) have complied with its best efforts obligation to achieve the Minimum
Sales Objective for the Agreement Year concerned; and
b) have complied with all other obligations of this Agreement to RCAI's
satisfaction.
14.2 This Agreement may be terminated without cause by either party hereto if
the party wishing to terminate gives prior written notice to the other party at
least 90 days prior to the end of the Initial Term or any Successive Term.
14.3 RCAI may terminate this Agreement at any time during the Initial Term or
any Successive Term by giving written notice to Distributor, notice effective
upon the date given, in the event of any one or more of the following:
a) the failure of Distributor to use best efforts to achieve the Minimum
Sales Objective required hereunder, provided, however, that RCAI may elect in
lieu of termination, to revise the Minimum Sales Objective, appoint other
distributors in the Territory or take any other measures to ensure that the
market in Distributor's Territory is optimally developed;
b) Distributor's default in payment when due of any amount payable
hereunder, provided however, in lieu of or in addition to termination, RCAI may
take any measures to mitigate or reduce the extent of Distributor's default.
c) Distributor's breach of any obligation concerning RCAI's proprietary
rights;
d) Distributor's breach of any obligation or representation, other than
those of paragraphs a), b) and c) above,
e) Distributor's assignment of this Agreement or any of rights granted
hereunder by Distributor by agreement or operation of law, without the prior
written consent of RCAI;
f) any legal or business transaction or event which causes a change in
majority ownership of Distributor and effectively results in an assignment of
this Agreement to owners substantially different from the owners of Distributor
at the time of execution of this Agreement without the prior written consent of
RCAI; and
g) any insolvency or inability of Distributor to pay debts as and when due,
or the initiation or pendency of any proceeding involving the insolvency,
bankruptcy, reorganization, or liquidation of Distributor.
SECTION 15: EFFECTS OF TERMINATION
15.1 Subject to Section 15.6, upon termination, Distributor will immediately
discontinue the promotion, distribution and servicing of the Products and will
cease to represent itself as an authorized Distributor of RCAI.
15.2 Distributor will further discontinue any use of RCAI's Trademarks and
any Documentation. At RCAI's option, Distributor will certify destruction of
Documentation.
15.3 Distributor will refrain from using any name, ▇▇▇▇ or logo which may
create a likelihood of confusion with RCAI's Trademarks and will further refrain
from copying in whole or in part any of the Confidential Information or
Documentation.
15.4 Unless termination occurs for cause, Distributor may sell any Products
remaining as of the date of termination, provided it does so within 30 days of
the date of termination. All other Products remaining thereafter must be
disposed of by Distributor and certified to RCAI.
15.5 Nothing herein will relieve or extinguish any of Distributor's payment
obligations under any provision of this Agreement. Nevertheless, in the event of
insolvency or refusal to pay for any reason by Distributor, RCAI may take
reasonable actions to mitigate its losses by sale of the Products ordered to
other distributors or customers.
15.6 Distributor will offer to RCAI and RCAI may elect to assume the rights
and obligations of any agreements between Distributor and its customers for the
service of the Products, effective as of the date of termination or expiration.
15.7 In no event will termination or expiration with or without cause of this
Agreement entitle Distributor to any compensation by RCAI on any grounds
whatsoever.
SECTION 16: GOVERNING LAW, ARBITRATION, ATTORNEY'S FEES
16.1 Governing Law. This Agreement together with the Schedules hereto and
any valid agreement subsequently entered into between the parties regarding the
subject matter hereof will be governed and construed in accordance with the laws
of California.
16.2 Dispute Resolution. In the event of any controversy or claim arising
out of or relating to this Agreement, the parties agree to try in good faith to
settle the claim by mediation administered by the American Arbitration
Association ('AAA') under its International Commercial Mediation Rules before
resorting to arbitration. Any controversy or claim that cannot be resolved by
mediation will be settled by arbitration administered by the AAA in accordance
with its International Arbitration Rules. To the extent these rules require
supplementation and do not contradict the aforesaid Rules, the arbitral tribunal
will apply the California rules on Arbitration and Conciliation of International
Commercial Disputes. Unless otherwise agreed, the place of arbitration will be
Los Angeles, California. Judgment on the award rendered by the arbitrator will
be final and may be entered in any court having jurisdiction thereof.
16.3 In the event of unauthorized use or disclosure of the Products,
Trademarks, or Documentation, Distributor acknowledges that RCAI will be
irreparably harmed and, as there is no adequate remedy at law, RCAI may seek and
obtain injunctive relief against Distributor for any harm arising from or
relating to said unauthorized use or disclosure. Moreover, should the interim
measures for injunctive relief under the AAA International Arbitration Rules
prove inadequate, RCAI may seek injunctive relief, specific performance or any
other equitable relief from any competent court having jurisdiction.
16.4 The award of the arbitrator will be final and binding on the parties,
provided said award does not contradict in whole or in part the state of the
governing law hereof. Judgment upon the award rendered may be entered in any
court having jurisdiction or application may be made to such court for a
judicial acceptance of the award and an order of enforcement.
16.5 Attorney's Fees. In the event an action or arbitral proceeding is
instituted relating to this Agreement, the party which the arbitrator or court
of competent jurisdiction shall deem to have substantially prevailed therein
shall be entitled to recover all costs, expenses, and attorneys= fees adjudged
by such arbitral tribunal or court.
SECTION 17: GENERAL PROVISIONS
17.1 Relationship of the Parties. Nothing in this Agreement will be
construed as creating a partnership or joint venture between the parties or
making Distributor a shareholder, agent, employee or other representative of
RCAI, but in all of its operations hereunder Distributor will be an independent
contractor, conduct its business at its own cost and expense and make no
representation, express or implied, that it is an employee, partner,
shareholder, joint venturer or other representative of RCAI. Distributor will
have no authority to make any representation or warranty on behalf of RCAI,
except as specified in this Agreement.
17.2 Force Majeure. In the event that either party is rendered wholly or
partially unable to carry out its obligations under this Agreement due to
reasons beyond its control (including, without limitation, acts of God,
industrial disputes, war or civil disturbances, fire, floods, storms,
earthquakes, landslides, acts of any governmental authority or agency, embargoes
or unavailability of equipment or transport), the failure to so perform will be
excused and not constitute default hereunder during the continuation of the
intervention of such force majeure. The party affected shall give prompt notice
to the other party, shall take all reasonable steps to eliminate the intervening
event and shall resume performance as promptly as is practicable.
17.3 Assignment. This Agreement will be binding upon and inure to the
benefit of RCAI, its successors and assigns. This Agreement will not be
assignable or transferable by Distributor unless prior written consent is
obtained from RCAI and provided that the assignee or transferee agrees in
writing to be bound by all the terms, condition and obligations of this
Agreement by which Distributor is bound and Distributor remains subject to the
obligations on confidentiality and proprietary rights set forth herein. Any
assignment of this Agreement or any rights or obligations arising therefrom
without RCAI's prior written consent shall be deemed void.
17.4 Severability. If any provision of this Agreement is held to be invalid,
illegal, or unenforceable by a court or other tribunal of competent
jurisdiction, this Agreement will be considered divisible as to such provision
and the remaining provisions hereof will remain valid and binding.
17.5 No Waiver. Failure or delay by either party to exercise or enforce any
term, right, power or privilege of this Agreement will not operate as a waiver
thereof nor will any single or partial exercise of any term, right, power or
privilege preclude any other or further exercise thereof.
17.6 Entire Agreement. This Agreement, and all schedules hereto form the
entire agreement of the parties hereto with respect to the subject matter
hereof. No modification, renewal, extension or waiver of this Agreement or any
of its provisions will be binding unless made in writing and signed by each
party's duly authorized representative, except as to the Schedules attached
hereto, which RCAI may amend from time to time during the term hereof.
17.7 Survival. Neither termination nor expiration will affect any right or
obligation of either party hereunder which by its terms continues beyond the
effective date of termination or expiration.
17.8 Notices. Unless otherwise provided herein, any notice or other written
communication required or permitted in connection with this Agreement will be
properly given when made in writing and sent by first-class registered or
certified airmail, return receipt requested, or by courier or other personal
delivery service, and properly addressed to the appropriate party at the address
set forth above, until changed by written notice. Notice shall be effective
when given, provided it is given in accordance with this Section 17.8.
IN WITNESS WHEREOF, RCAI and Distributor has each caused this Agreement to be
executed on its behalf by its duly authorized officer as of the date first
written above.
RCAI Distributor
By:__________________________ By:__________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
President
