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EXHIBIT 10.29
DISTRIBUTORSHIP AGREEMENT
Agreement made by and between
1. FCI FIBERCHEM, INC. of Las Vegas, Nevada, USA ("FCI") and
2. ENRAF BV of Delft, the Netherlands, acting on its own behalf and on behalf
of the Enraf Sales and Services Organization ("ES&SO") (which consists of:
Enraf's subsidiaries, Enraf Authorized Distributors and Enraf Agents)
("Enraf").
Whereas
- Enraf develops, manufactures, sells and services systems and equipment used
for the storage and transport of oil and other liquids and gas on a
worldwide basis;
- FCI develops, manufactures and sells instruments for leak detection ("FCI's
Products");
- FCI wishes to appoint, and Enraf wishes to accept such appointment, Enraf
to act as FCI's exclusive, worldwide distributor of FCI's Products;
- the parties wish to define and establish their respective responsibilities,
obligations and rights;
now therefore the parties agree as follows:
1. APPOINTMENT
a. FCI appoints Enraf as exclusive distributor for FCI's products listed in
Annex 1 (FCI Products) and grants the right to sell FCI's Products to
customers in the AST market worldwide, either by itself or through
sub-distributors, and integrate them into the Enraf solutions offering.
Other market can be added, subject to mutual agreement.
b. Enraf appoints ES&SO as sub-distributors to assist in the sale and service
of FCI's Products.
c. Enraf shall sell or lease to customers, and shall as appropriate install,
maintain, perform non-warranty service and repair FCI's Products at the
customers expense, all in accordance with the terms of this Agreement and
the applicable standards established by Enraf.
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2. SALE OF COMPETITIVE PRODUCTS
Except as agreed by the parties, Enraf shall not sell any goods other than
supplies (like installation materials, materials used for repairs and
spareparts) that are in direct competition with FCI's Products.
3. TERMS OF SALE
a. Enraf shall establish and enforce general terms and conditions (see Annex
0), which are not inconsistent (except where required by law), with this
Agreement or any Annex thereto. Sales by Enraf to Enraf customers shall be
made in conformity with such terms and conditions and with all approved
policies and standards of Enraf.
b. The prices for which FCI will sell FCI's Products to Enraf, the delivery
terms, the method of payment and the warranties given by FCI are specified
in Annex 1 to this Agreement.
c. Once a year parties shall discuss and agree on the necessity to make
changes to the prices referred to in section 3.b. Parties shall establish
prices so as to allow Enraf to earn a competitive gross margin and will
take into consideration market, local costs and competitive conditions to
determine the price of FCI's Products.
d. Special price reductions may be negotiated between FCI and Enraf to meet
strategic business needs, to enhance market penetration or for special
projects.
4. DISTRIBUTORSHIP ACTIVITIES
Enraf shall assure that the activities, described below, relating to FCI's
Products are carried out. Enraf may at their discretion carry on other
activities generally related to FCI's Products.
a. Sales and marketing activities shall include, but will not be limited to,
the following:
1. Maintaining a well-trained, competent sales and support organization
of the technical competency necessary to sell FCI's Products.
2. Maintaining facilities to assure adequate sales representation,
competent technical assistance, prompt handling of inquiries, orders
and shipments.
3. Engaging in product advertising and developing and implementing
marketing strategies so as to create customer demand to purchase FCI's
Products.
4. Components for a sales kit and other marketing material will be made
available by FCI to Enraf. Enraf can modify this material to make it
fit for Enraf's marketing purposes. Prices are indicated in Annex 1.
b. Installation and maintenance activities shall be:
1. Installing, testing, maintaining and repairing FCI's Products at the
customers expense in accordance with the instructions of FCI in order
to secure customer acceptance and to meet all legal and product safety
requirements.
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2. Carrying out the activities described in 4.b.1 in conformity with the
standards established by Enraf for such activities.
Annex 2 to this Agreement describes the procedures for warranty work and
repairs that can not be carried out by Enraf or ES&SO.
5. TRADENAME
Parties agree that FCI's Products will be marketed and sold under the Enraf
name. A reference to FCI's patented technology must be included on each
system sold.
6. DISCONTINUATION OF PRODUCTS
Parties can agree to discontinue the sales of one or more FCI's Products.
FCI can decide to discontinue the manufacturing of one or more FCI
Products. However, FCI shall continue to sell materials for the maintenance
and repair of products discontinued for so long as Enraf shall require such
materials to meet service obligations to customers, but no longer than 5
years from the date of discontinuation, subject to final lifetime purchase
by Enraf.
7. TECHNICAL INFORMATION
a. Parties will conclude a separate escrow agreement, which will be an annex
to this Agreement and which will survive the termination of this Agreement.
The escrow agreement will stipulate that FCI gives in escrow with an
independent third party all specifications, manufacturing information,
drawings and other information, including source codes of software, patents
and designs, of FCI's Products that have been delivered under this
Agreement ("the Information in Escrow").
b. Upon completion of sales of FCI products of over 3.5 M$ by Enraf, if FCI
terminates this Agreement in accordance with section 14 and FCI will start
selling FCI's Products directly to end-users, FCI hereby grants Enraf the
irrevocable, perpetual and worldwide right to use the Information in Escrow
free of charge for the maintenance and repair of FCI's Products that have
been delivered to customers under this Agreement. The escrow agent will
hand over the Information in Escrow to Enraf within ten days after the
termination of this Agreement.
c. Upon completion of sales of FCI products of over 3.5 M$ by Enraf, if either
party terminates this Agreement in accordance with section 14 and FCI will
not start selling FCI's Products directly to end-users, FCI hereby grants
Enraf the irrevocable, perpetual and worldwide right to use the Information
in Escrow free of charge for the further development, manufacturing,
selling, maintenance and repair of FCI's Products. The escrow agent will
hand over the Information in Escrow to Enraf within ten days after the
termination of this Agreement.
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8. CONFIDENTIAL INFORMATION
a. For the purpose of this Agreement "Confidential Information" shall mean any
information and data which the disclosing party regards as confidential and
which has been or will be made available to the receiving party.
b. All Confidential Information exchanged between the Parties pursuant to this
Agreement:
1. shall not be distributed, disclosed or disseminated in any way or form
by the receiving party to anyone except to its own employees and
advisors (distributors, agents, consultants who have agreed to
maintain such information confidential) affiliated to or directly
instructed by the receiving party, who have a reasonable need to know
said Confidential Information;
2. shall be treated by the receiving party with the same degree of care
to avoid disclosure to any third party as is used with respect to the
receiving party 's own information of like importance which is to be
kept secret;
3. shall not be used by the receiving party for other purposes, except as
otherwise expressly stated herein, without the express written
permission of the disclosing party.
c. The obligations of paragraph b shall not apply, however, to any
Confidential Information which:
1. is already in the public domain or becomes available to the public
through no breach of this Agreement by the receiving party;
2. is received independently without restriction on disclosure from a
third party free to disclose such information to the receiving party;
3. is developed independently by the receiving party without the use of
confidential information.
4. is required to be disclosed by law.
5. in each case of disclosure , the receiving party gives the disclosing
party prior notice of any disclosure in reliance on clauses 1 - 4
above.
d. Notwithstanding the termination of the other portions of this Agreement,
the obligations and provisions of this provision on confidentiality shall
survive the termination of this Agreement for a period of three years.
9. EMPLOYEES
For the period of this Agreement parties will not, directly or indirectly,
solicit, cause or incent employees or consultants of the other party to
terminate their employment or other arrangement with the other party and
commence employment or a consulting relationship with Enraf or FCI or any
of its subsidiaries without the foregoing written approval of the other
party. In the event that a party breaches its obligations in this section
9, it will pay the other party an amount equal to two years' salary or
consulting fees of the employee or individual employed or retained by the
party in breach of the obligations of this section 9. If however, the
employee is subject to an involuntary termination, this paragraph will not
be applicable.
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10. PROPRIETARY RIGHTS INDEMNIFICATION
a. Except as expressly set forth in this Agreement, FCI grants no right, title
or interest in its intellectual property rights to Enraf.
b. FCI will defend, at its own expense, any claim brought against Enraf
alleging that any FCI's Product furnished hereunder infringes a patent or
copyright valid in the country where delivery took place. FCI shall pay all
costs and damages finally awarded or in settlement agreed.
c. It is Enraf's obligation to give FCI prompt written notice of any claim,
and to give FCI information, assistance and sole authority to defend or
settle the claim.
11. LIMITATION OF LIABILITY
FOR THE FOLLOWING REFERENCE IS MADE TO ANNEX 0:
a. Except as provided in section 10 FCI's maximum liability to Enraf for any
cause whatsoever will be for direct damages only, and will be limited to
the greater of US$ 1,000,000.00 (one million US dollars) or the purchase
price paid to FCI for FCI's Products that are the subject of Enraf's claim.
b. The foregoing limitation does not apply to damages resulting from personal
injury caused by willful misconduct or gross negligence of FCI.
c. FCI shall not be liable for any incidental, indirect, consequential or
punitive damages, nor for any damages resulting from the use of FCI's
Products outside the scope of the intended use, and Enraf shall hold FCI
harmless for any third party claims.
12. INSURANCE
a. For the duration of this Agreement and a period of three years thereafter,
FCI shall maintain a Comprehensive General Liability insurance (including
contractual liability, independent contractor's liability, products and/or
completed operations liability, and a personal injury/property damage
coverage) in a combined single limit of not less than $1,000,000.- and an
Umbrella Liability insurance in a combined single limit of not less than
$2,000,000.-.
b. Certificates of Insurance indicating such coverage shall be delivered by
FCI to Enraf. The Certificates shall indicate that the policies will not be
changed or terminated without at least ten days prior written notice to
Enraf.
13. TERM
a. This Agreement, effective as from the date of its signing, shall extend for
a period of three (3) years unless terminated sooner in accordance with
section 14, or extended according to 13b.
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b. Upon completion of sales of FCI products of over 3.5 M$ by Enraf during the
first term of this agreement, this Agreement shall automatically be renewed
for two (2) years' period from the expiration of the three year period for
a total period of five years, unless earlier terminated in accordance with
section 14.
14. TERMINATION
a. Subject to the provisions of Section 13(b), this Agreement may be
terminated by either party effective as of the end of the initial three
year term of this Agreement by giving written notice of termination to the
other party at least six months prior to the expiration of such initial
term.
b. Either Party may at any time terminate this Agreement forthwith by written
notice sent by registered mail to the other Party in any of the following
events:
1. after a thirty (30) days' notice by registered mail in case the other
Party is in such "material" default under the terms and conditions of
this Agreement and fails to remedy such default within that thirty
(30) days' period;
2. the other is guilty of fraud or misconduct;
3. the other Party is declared bankrupt or is involved in any insolvency
proceedings or other proceedings preventing such Party from duly
fulfilling its obligations under this Agreement;
4. the other Party has any distress or execution levied on its assets.
c. Change of ownership of or merger with a third party by either party to this
Agreement shall constitute an event which, at the option of the other party
to this Agreement, can lead to termination of this Agreement. If the other
party to this Agreement decides to terminate this Agreement it may do so
either immediately or with a notice period of one year. The stipulations of
sections 7b and 7c will apply, however with the exclusion of the minimum
dollar amount of sales.
15. PUBLICITY
Both parties shall issue news releases, public announcements,
advertisements or any other form of publicity concerning its efforts in
connection with this Agreement, proposals or projects with the prior
written approval of the other party. Where appropriate and required parties
will cooperate to release information for e.g. Securities (SEC).
16. RELATIONSHIP OF THE PARTIES
FCI and Enraf are independent parties, and there exist no relationship of
joint venture, partnership or agency between them. FCI and Enraf do not
have and neither shall hold itself out as having any right or authority to
act or assume or create any obligations or responsibilities on behalf of
the other.
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17. GENERAL
a. This Agreement shall be governed by and interpreted under the laws of the
Netherlands.
b. In case of the event of a dispute parties agree to pursue arbitration in
Paris, France in accordance with the rules of arbitration of the ICC. Any
proceedings shall be in the English language.
c. This Agreement contains the entire and exclusive agreement of the parties
and supersedes any previous understanding or agreement related to the
cooperation established by this Agreement, whether written or oral.
d. All changes or modifications to this Agreement must be agreed to in writing
by the parties.
e. The obligations set forth in sections 7 through 12 shall survive the
termination for any reason of this Agreement for the periods as indicated
in those sections, or indefinitely if no period has been specified.
Signed this 12 day of December, 2000
/s/G.F. Hewitt, CEO /s/H.A. Algra
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FCI FIBERCHEM, INC. ENRAF BV
(name) G.F. Hewitt (name) H.A. Algra
