EXHIBIT 10.9
FIRST AMENDMENT TO DISTRIBUTION AGREEMENT
This First Amendment (the "First Amendment") to the Distribution Agreement is
entered into as of the 8th day of March, 2006, (the "Effective Date") by and
between Ovation Products Corporation, a Delaware corporation ("Ovation"), having
a principal place of business at 000 Xxxx Xxxxxxxxx Xxxx, Xxxxxx, Xxx Xxxxxxxxx
00000, and Lancy Technology Limited, a company registered in England and Wales
under company code number 4473542 (previously Lancy Water Technology Limited and
hereafter "Lancy"), having a principal place of business at Xxxxxx Xxxxx,
Xxxxxxxx, XX0 0XX, Xxxxxx Xxxxxxx. Ovation and Lancy may each be referred to
hereinafter as a "Party" or collectively as the "Parties".
NOW THEREFORE, in consideration of the mutual covenants set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
1. Purpose. This First Amendment clarifies and amends the Distribution Agreement
(the "Agreement") entered into between the Parties on December 16, 2002.
2. Definitions. Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Agreement.
3. Amendment to Section 1.1. Delete the definitions for "Market" and "Territory"
and insert the following definitions:
"Impregnation Market" means the impregnation markets for the Products
within the Impregnation Territory set out in schedule 2 as amended from
time to time pursuant to this agreement.
"Industrial Market" means the industrial markets for the Products
within the Industrial Territory set out in schedule 2 as amended from time
to time pursuant to this agreement.
"Impregnation Territory" means the impregnation territories set out in
schedule 2 as amended from time to time pursuant to this agreement.
"Industrial Territory" means the industrial territories set out in
schedule 2 as amended from time to time pursuant to this agreement.
"Territory" means the Impregnation Territory for Sale of Products in
the Impregnation Market and the Industrial Territory for Sale of
Products in the Industrial Market.
"Market" means the Impregnation Market for Sale of Products in the
Impregnation Territory and the Industrial Market for Sale of Products
in the Industrial Territory.
4. Amendment of Section 2 . Section 2 is hereby deleted and replaced in its
entirety by the following:
2.1 The Company appoints the Distributor as its distributor in the Impregnation
Territory for the Sale of Products in the Impregnation Market in accordance with
the terms and conditions of this agreement. The Distributor's appointment under
this Section 2.1 is exclusive but for the terms of Xxxxxxx Agreement (as defined
in Section 7.6 below) in relation to the Impregnation Market and the Company
shall not sell or appoint any other distributor or agent for the Sale of
Products in the Impregnation Market within the Impregnation Territory. The
Distributor's appointment under this Section 2.1 shall become non-exclusive if
in any calendar year after 2011, the Distributor does not sell at least 50
distillation units total in the Impregnation Market and Industrial Market
combined. The Distributor's appointment under this Section 2.1 may be canceled
by the Company if the Distributor has less than $25,000 of sales of Impregnation
Products in any calendar year after 2011.
2.2 In addition the Company appoints the Distributor as its distributor in the
Industrial Territory for the Sale of Products in the Industrial Market in
accordance with the terms and conditions of this agreement. The Distributor's
appointment under this Section 2.2 is exclusive but for the terms of the Xxxxxxx
Agreement (as defined in Section 7.6 below) in relation to the Industrial Market
and the Company shall not sell or appoint any other distributor or agent for the
Sale of Products in the Industrial Market within the Industrial Territory. The
Distributor's appointment under this Section 2.2 shall become non-exclusive if
in any calendar year after 2011, the Distributor does not sell at least 50
distillation units total in the Impregnation Market and Industrial Market
combined. The Distributor's appointment under this Section 2.2 may be canceled
by the Company if the Distributor has less than $25,000 of sales of Industrial
Products in any calendar year after 2011.
2.3 In addition the Company will consider granting the Distributor additional
distribution rights when the Distributor requests distribution for markets or
territory for which the Distributor submits a plan on a project-by-project
basis.
5. Amendment of Section 3.8. Section 3.8 is hereby deleted and replaced in its
entirety by the following:
3.8 In exchange for the promises contained herein, the Company shall: (a) pay
Distributor $90,000 for return of deposit on Products plus interest and costs
related to the reduction in distribution rights; (b) issue to Distributor a
certificate for 150,000 shares of the Company common stock, par value $0.01 per
share; (c) supply to the U.K. at Company expense 5 Products during 2006 for
evaluation and test, which Products shall be returned to Company at
Distributor's expense within 6 months of delivery to Distributor or paid for at
$10,000 per Product, and the first of the 5 Products delivered will be the first
unit Ovation ships to any customer or partner and is targeted for shipment in
April 2006, with the additional 4 Products shipped as soon as possible
thereafter, and the obligation to deliver these 5 Products will replace the
Company's obligation to deliver the first 10 Products under Section 3 and
Section 9 of the Agreement; (d) pay Distributor a commission of $500.00 per
Product, but not to exceed 3% of Product revenue, on sale of Products for use in
the Industrial Market, but not in the Impregnation Market, to customers outside
the Industrial Territory up to a maximum of $1.5 million total commissions
including payments made to Distributor pursuant to Section 7.6; (e) after the
$1.5 million maximum is reached in 4(d) above, pay Distributor a commission of
1.0% of Product revenue, but not less than $30 per distillation unit Product, on
sale of Products for use in the Industrial Market, but not in the Impregnation
Market, to customers outside the Industrial Territory until a date ten years
after the Company has shipped commercial Product of at least10 units per month
for two consecutive months; and (f) cancel shares of Lancy Water Technology
Limited previously issued to the Company.
Proprietary and Confidential - Ovation Products Corporation
First Amendment to Distribution Agreement
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6. Amendment of Section 7.4. Section 7.4 is hereby deleted and replaced in its
entirety by the following: ", in appointing other allowed distributors for the
Sale of Industrial Products, make it a condition of such appointment that such
other allowed distributors shall not, within the Industrial Territory and in
relation to the Industrial Market, seek customers or establish any branch or
maintain any distribution depot.
7. Amendment to Section 7.6. Section 7.6 is hereby deleted and replaced in its
entirety by the following: to make a payment to the Distributor of $200 in
respect of (i) any Impregnation Product sold in the Impregnation Territory or
any Industrial Product sold in the Industrial Territory pursuant to the
distribution agreement dated 22 December 1997 between the Company and Xxxxxxx
Xxxxxxx d/b/a WMS Enterprises (the "Xxxxxxx Agreement") provided that the
Company shall be under no obligation to make any payment in excess of $1,500,000
in aggregate including payments made under Section 3.8(d); and indemnify and
keep indemnified the Distributor against all liability, loss, damage, expenses
and costs incurred by the Distributor which result directly or indirectly from
the operation of or activities pursuant to the Xxxxxxx Agreement, such liability
not to exceed $1,500,000.
8. Ratification. Except as expressly amended by this First Amendment, the
Agreement is hereby ratified, confirmed and approved.
IN WITNESS OF, the Parties hereto have executed this Agreement to be effective
as of the date first written above.
OVATION PRODUCTS CORPORATION
By:/s/ Xxxxxx X. XxxXxxxxx
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Name: Xxxxxx X. XxxXxxxxx
Title: Chief Executive Officer
LANCY TECHNOLOGY LIMITED
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Chief Operating Officer
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First Amendment to Distribution Agreement
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SCHEDULE 2
TERRITORIES AND MARKETS
IMPREGNATION TERRITORIES
The World
IMPREGNATION MARKETS
The Worldwide market for non-domestic applications of the Products,
solely as set out below.
1. Treating of waste water resulting from porous material impregnation
equipment similar to that manufactured and supplied by Xxxxxx Xxx
(Ultraseal International) and their competitors .
INDUSTRIAL TERRITORIES
United Kingdom
Eire
INDUSTRIAL MARKETS
The UK market for Industrial Applications (for purposes of clarification not to
include domestic, commercial, septic or drinking water applications)
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First Amendment to Distribution Agreement
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