DISTRIBUTORSHIP AGREEMENT
Between EXOLON-ESK COMPANY
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
(hereinafter referred to as the
"Distributor")
and
ELEKTROSCHMELZWERK KEMPTEN GMBH
Xxxxx-Xxxxxx-Xxxxx 0
X-00000 Xxxxxxx
(hereinafter referred to as "ESK")
1. Subject and Definitions
1.1 Subject to the terms and conditions of this Agreement, ESK
hereby appoints the Distributor its sole and exclusive
Distributor of the products listed as follows: SIC MICRO
GRITS F 280 and finer ("Products") in the Territory as
defined in Section 1.2 hereof.
1.2 The Territory shall be the United States of America and its
territories (including the Commonwealth of Puerto Rico),
Canada and Central America. Central America shall be part
of the territory only under the provision that companies who
had been customers of Distributor under this Agreement in
the territory of the US and/or Canada transfer their
activities to a Central American Country and provided that
the Products for those former activities in the US and
Canada have been supplied by Distributor.
1.3 This Agreement shall become effective on January 1, 1998,
and the initial term thereof shall expire on December 31,
1999; provided, however, that the term of this Agreement
shall be automatically extended for an additional successive
two years term, commencing on January 1, 1999, and each
succeeding anniversary thereafter unless either party shall
give written notice of termination by June 30 of the
contract year of the original term or the renewal term
hereof then in effect, in which event this Agreement shall
terminate on the following December 31 of the same contract
year.
1.4 As used in this Agreement, "Buyer" shall mean the original
ultimate purchaser or user of any of the Products, after
purchase from Distributor or from any middleman, who has
ultimately acquired the Product in question in any series of
non-final sales originating with Distributor.
2. Promotion and Sale
2.1 Distributor shall use its best efforts to develop and
exploit the maximum sales potential for the entire line of
the Products in the Territory.
2.2 Distributor shall suitably promote the Products in the
Territory through the appropriate means.
2.3 Distributor shall maintain a sales force, which shall (a) be
properly trained, (b) competently promote and sell the
Products and (c) maintain the good will of customers
throughout the Territory.
2.4 ESK shall provide Distributor such technical assistance as
may reasonably be required by Distributor in the promotion
and sale of the Products, and the cost of such technical
assistance shall be borne by ESK, except however that
Distributor shall reimburse ESK for all travel, meal,
lodging, and related out-of-pocket expenses incurred by
personnel of ESK or its affiliates while in the Territory in
providing such technical assistance when such assistance is
requested by Distributor.
2.5 ESK's and Distributor's personnel shall have the right
periodically to visit each other. Both parties shall assist
where necessary in making arrangements for such visits.
Deficiencies in regard to proper storage of the inventory,
prompt processing of customer orders, inquiries or
complaints, appropriate limitation of warranties and
liability (as previously agreed upon by the parties), and
maintenance of appropriate inventory of Products noted
during such visits to such centers or otherwise shall be
remedied without delay by the responsible party.
2.6 The parties shall consult with one another concerning each
other's performance of its obligations under this section 2
and they shall render to each other such assistance as it
deems appropriate.
3. Reports; Planning
3.1 Not more than twenty-one (21) days after each June 30 and
January 31, while this Agreement is in force, DISTRIBUTOR
shall mail a report in writing to ESK. In such semi-annual
report DISTRIBUTOR shall:
(a) advise ESK of the inventories of the Products held, if
any, at the end of the just-completed quarter, by
classes and subclasses, in a form mutually agreed upon
by the parties hereto, showing grade, size, and product
type to the extent differentiated on each parties
records, cost thereof and quantity on hand;
(b) advise ESK of its anticipated requirements, if any, of
the Products in the coming two calendar quarters;
thereafter the parties shall jointly plan each other's
inventory requirements, if any, and determine the
quantities of the Products by classes and subclasses to
be ordered by Distributor from ESK.
3.2 In November of each year during the term of this Agreement,
Distributor shall furnish ESK with a report on its marketing
plans for the coming calendar year and setting forth the
activities of the competition, the market for the Products,
the price structure of the market, and reactions of its
customers to the Products.
3.3 Within ninety days (90) after the end of each fiscal year
(or portion thereof) of Distributor falling within the term
hereof, Distributor shall furnish to ESK a report of the
total gross sales in tonnage with the average price per ton
for each such Product during such year. ESK shall furnish
to Distributor a report with their direct sales value in the
Territory of such Products provided Distributor will furnish
a similar report regarding sales of said Products purchased
from other parties.
4. Prices, Payment, Sales and Delivery Terms
4.1 Distributor will purchase the Products for its own account
from ESK at the net list prices set by ESK for the
Territory, CIF Tonawanda or CIF at other ports of entry of
the Territory (based on the latest edition of INCO-terms).
Title to the Products and risk of loss thereof shall pass
from ESK to Distributor, irrespective of any agreement
between them as to purchase of insurance or shipment terms,
upon delivery by ESK of the Products to the carrier loaded
on board at the port of shipment. The port of entry shall
be mutually agreed upon by ESK and Distributor. Prices are
subject to change from time to time by ESK upon sixty (60)
days written notice to Distributor prior to the effective
date of any such change. Price changes shall not apply to
orders submitted before the expiration of the sixty-day
period unless delivery is scheduled by Distributor to take
place after such period expires, provided, however, that
Distributor's scheduling of such delivery conforms to the
normal and customary delivery schedules arranged between
Distributor and ESK previously and is for normal and
customary quantities of Products previously ordered by
Distributor from ESK.
4.2 Distributor shall be invoiced in American currency and
payment of the invoice prices shall be made in such
currency. Payment terms shall be net sixty (60) days from
B/L. All bank fees and other charges and expenses shall be
paid by buyer. Any sum not paid when due shall accrue
interest at a varying rate equal to three points above the
varying discount rate in effect from time to time as
announced by the Federal Reserve. Any demand or collection
of interest by seller shall not be deemed in lieu of any
other claim for damages which seller may have.
4.3 Terms and conditions of sale set forth in Section 6 shall be
governed by the actual ESK General Conditions of Sale
(Export), as by attached document A.
Such terms and conditions may only be modified upon the
parties' prior mutual written consent. Any terms and
conditions appearing on any quotation, purchase order, or
acknowledgment form of either party made hereto in
connection with any sales transactions within the framework
of this Agreement shall be without force or effect.
4.4 In the event that either party intends to grant any lien or
security interest in its inventory (other than machinery and
parts inventory) to secure obligations of any kind, that
party will, prior to such grant of any such lien or security
interest, grant to the other party, as security for its
payment to the other party of any and all amounts due under
any section of this paragraph 4 or any other provision of
this Agreement, including any and all attorney's fees and
legal costs incurred in enforcing this Agreement or
collecting any monies due for any reason, a first security
interest and lien in their inventory to the extent such
inventory is comprised of any Products sold or purchased
pursuant to this Agreement, as well as all products derived
from such Products, all rights of either party as a seller
or a buyer of such Products or products derived from such
Products under Article 2 of the Uniform Commercial Code, all
such Products or products derived from the Products which
are sold or transferred which have been subsequently
returned, reclaimed or repossessed, and all proceeds
thereof, including any cash or accounts receivable resulting
from the sale or purchase of such inventory or proceeds of
any insurance policy (collectively, the "Collateral"). Both
parties agree to keep the inventory identified so that it
can be distinguished from any goods not subject to this
security interest, to keep such inventory insured against
the customary casualties and risks for at least its
replacement costs, to protect the inventory from waste,
damage by the elements, theft and vandalism, and to pay all
taxes of any kind which may be imposed upon the inventory or
which, if not paid, could result in a lien upon the
inventory. Both parties agree that in the event they intend
to grant such lien or security interest to another, it will
at any time and from time to time execute any financing and
continuation statements reasonably requested by the other
party to perfect or to continue the perfection of such
security interest and further appoints the other party its
attorney-in-fact to execute and file such financing and
continuation statements if it fails to execute and deliver
the same within 5 days after the same is requested. The
parties warrant that such security interest shall be
superior to any and all liens and encumbrances upon such
Collateral. Failure of either party to observe the
covenants and warranties of this Section 4.4, or to observe
the other covenants, warranties and agreements of this
Agreement, or to pay any sum when due under this Agreement
shall constitute grounds, at its option, to declare all sums
immediately due and owing and to exercise its rights under
this Section 4.4. Any rights of the parties under this
Section 4.4 are cumulative of any other rights and remedies
which it may have at law or in equity.
5. Sales by ESK in the Territory
5.1 Notwithstanding section 1 hereof and subject to the
following conditions, ESK shall have the right after
consulting with Distributor, to sell and to make delivery of
the Products to those customers who ask to deal directly
with ESK. In regard to such customers, ESK hereby appoints
Distributor its exclusive sales representative for the
Territory during the term hereof, and Distributor agrees to
cooperate with ESK to promote and bring about such business
between ESK and such customers who wish to deal directly
with ESK, but the acceptance or refusal of such orders
procured by Distributor from such customers for ESK shall in
all instances be reserved to ESK, and ESK, not Distributor,
shall establish the selling prices as well as the terms and
conditions of sale and delivery to such customers, provided,
however, that ESK shall not make such sales at prices which
are less than the prices for Distributor for sales to its
customers of the same product of the same quality in the
same quantity and under the same delivery and payment terms.
5.2 In such cases of direct sale by ESK, ESK shall pay to
Distributor, in consideration of the performance of
Distributor's obligations hereunder, a commission equal to
3% of the invoice amount during 2 (two) years and 2% for the
subsequent years of the invoice amount charged by ESK to
such customers (less freight, taxes, insurance, customs
duties, and any discounts, rebates, and allowances) and in
fact paid by such customers. If for any reason any orders
shall remain unexecuted or unpaid after reasonable attempts
at collection have been made by ESK, Distributor shall have
no claim for any compensation or allowance with respect
thereto.
5.3 Notwithstanding Section 5.2 hereof, Distributor shall have
no claim for commissions on triangle and switch business
into third countries, nor shall any commission be paid to
Distributor in the event that American, Central American
(following section 1.2) or Canadian companies purchase
Products, in their own name and on their own account, for
direct or indirect shipment to a location outside the
Territory.
6. Terms and Conditions of Sale and Delivery
6.1 Any delivery dates given to Distributor by ESK are estimates
only, and shall not bind ESK to ship or deliver the Products
on the dates indicated, although ESK will use its best
efforts to meet such delivery dates, and ESK shall not be
liable for any direct, indirect, consequential or special
damages as a result of delay. In the event that ESK fails
to make delivery within the time agreed upon by ESK and
Distributor, and within a reasonable period thereafter,
Distributor's sole remedy shall be to cancel its order. ESK
reserves the right to make partial shipments of the Products
ordered and to submit separate invoices to Distributor for
such partial shipments.
6.2 If Distributor shall default in the timely performance of
its obligations in regard to any order or invoice, or any
partial shipment under a larger order, ESK may suspend its
performance under any subsequent order or in regard to any
further partial shipments under such larger order unless and
until Distributor shall have cured such default.
6.3 The term "force majeure" means any cause not within the
reasonable control of the party affected thereby, including
without limitation acts of God, fire, flood, explosion,
riot, rebellion, revolution, strikes or labor disturbances,
war, embargoes, shortages or raw materials or transportation
or fuel or electric power, failure or destruction of
production facilities, and any governmental decree. The
occurrence of force majeure shall not excuse either party
from the performance of its obligations to the other party,
but shall only suspend the same during the continuance of
the force majeure. If any force majeure shall prevail for
45 consecutive days, either party shall have the right to
terminate at once by written notice to the other party that
portion of any order between Distributor and ESK which is
still fully executory on the part of both parties. Neither
party shall be liable to the other party for any direct,
indirect, consequential, incidental or special damages
arising out of or relating to the suspension or termination
of any contractual relationship between the parties as a
result of force majeure; the occurrence and the termination
of such force majeure shall be promptly communicated to the
other party.
6.4 The provisions hereof may be changed by specific written
agreement as regards any individual case.
7. Expenses of Performance
Unless otherwise herein provided, each of the parties hereto
shall bear the entire cost of performing its obligations
hereunder.
8. Limitation of Warranty
8.1 ESK warrants only that the Products sold to Distributor
under this Agreement will meet ESK's specifications or the
relevant sample or any independent standard expressly
accepted by ESK, under normal use in accord with ESK's
specifications and instructions. If any failure to conform
to this warranty is reported to ESK in writing within thirty
(30) days after the date of the receipt of the Products by
Distributor or any Buyer receiving Products through
Distributor (in the case of any nonconformity discoverable
through reasonable inspection by Distributor or such Buyer)
or within thirty (30) days after the discovery of the
nonconformity (in the case of any nonconformity not
discoverable through such reasonable inspection, but in any
event notice of any nonconformity, whether or not
discoverable by reasonable inspection, must be given to ESK
within one hundred eighty (180) days after delivery of the
Products to Buyer), ESK, upon being satisfied of the
existence of such nonconformity, will correct the same by,
at the Distributor's option, delivering replacement Products
or refunding the purchase price (or, where appropriate, the
unit price for such relevant quantity of the Products as
have the nonconformity) paid by Distributor or Buyer. If
the Products are found by ESK to be nonconforming, ESK will
pay shipping costs for return. No Products shall be
returned to ESK, however, without its express written
consent.
The foregoing warranty is the sole warranty of ESK. All
other warranties, express or implied, including warranties
of merchantability and fitness for purpose, are excluded and
disclaimed.
9. Product Liability Insurance
The parties shall each carry product liability insurance,
covering the Products which are subject to this Agreement
and shall provide proof thereof upon request of the other
party.
10. Termination
10.1 This Agreement may be terminated:
(a) as set forth in section 1.3
(b) at once by either party if the other party hereto
commits a material breach or default under this
Agreement, which breach or default shall not be
remedied within 30 days after the giving of notice
thereof to the party in breach or default; or
(c) at once by either party if the other party hereto is
unable to pay its debts as they fall due for a period
of sixty (60) days or enters into liquidation or
dissolution or becomes insolvent, or if a trustee or
receiver is appointed for such party, whether by
voluntary act or otherwise, or if any proceeding is
instituted by or against such party under the
provisions of any bankruptcy act or amendment thereto
and is not dismissed within sixty (60) days; or
(d) at once by either party if (i) either direct or
indirect control of the Common Stock, Class A Common
Stock, Series A Preferred Stock or Series B Preferred
Stock, of Distributor is transferred, either
voluntarily or involuntarily, to any person or entity
other than the current control groups; or (ii) if all
or a substantial part of the assets of either party
shall be sold in other than the ordinary course of
business; or (iii) if either party attempts to assign
this Agreement without the other party's prior written
consent.
10.2 It is expressly understood and agreed that neither party
hereto is under any obligation to continue this Agreement in
effect, nor to continue the arrangement established
hereunder, after termination of this Agreement in accordance
with this section 10. Both parties recognize the necessity
of making expenditures in preparing to perform and in
performing this Agreement, and they recognize the
possibility and the likelihood of losses or damages
resulting from its termination. The parties nevertheless
agree that no party shall be liable to the other for
termination of this Agreement in accordance with this
section 10, and each party specifically agrees not to hold
the other liable for any losses or damages resulting from
such termination, including, but not limited to, loss of or
damage to investments, leases and sales, advertising and
promotional activities, whether incurred in connection with
the preparation to perform or the performance of this
Agreement or in the expectation of its renewal or extension.
10.3 After notice of termination is given by either party under
this section 10, the parties are entitled to restrict or
even stop entirely deliveries or acceptance of deliveries of
the Products, including deliveries on orders already
received at the time of notice of termination. However, ESK
is required to make the Products available to Distributor in
order to enable Distributor to maintain its own legally
binding delivery commitments existing before termination
becomes effective for delivery contracts signed by
Distributor for up to one year commitments.
11. Special and Consequential Damages
The parties agree that the remedies provided in this
Agreement are adequate, and that therefore no party shall be
liable to the other for special or consequential damages
arising from the breach of any obligation hereunder or for
any other reason whatsoever other than as specifically
provided for herein.
12. Miscellaneous Provisions
12.1 The relationship between Distributor and ESK is that of
independent contractor and not of employer-employee or
principal-agent. Distributor is not the legal
representative of ESK, and ESK is not the legal
representative of Distributor, and no party shall hold
itself out as such. Neither Distributor nor ESK has the
right or authority to assume or undertake any obligation or
make any representation on behalf of the other.
12.2 Both parties acknowledge and agree that any internal and
confidential knowledge or information or trade secrets about
the activities, processes or products of either party
hereto, which the other shall receive or learn in the
performance of its obligations hereunder, shall be kept
strictly confidential and secret, even after termination of
this Agreement, and shall not be used by such other party
hereto in its own business without the prior written consent
of the owner of the same or unless pursuant to a separate
license agreement between the parties or unless the same
shall have become known in the industry through no fault of
the party seeking to use the other's information or unless
the same shall have become known to such party from other
sources not involving a breach of any contractual
obligation. Each party shall be responsible for seeing that
its own employees and agents observe the terms of this
Agreement.
12.3 ESK agrees to inform Distributor of all inquiries and orders
received by it directly from the Territory for delivery in
the Territory of the Products. In return, Distributor shall
send to ESK all inquiries and orders received by it either
for delivery outside the Territory or in regard to customers
who wish to deal directly with ESK.
12.4 This Agreement, including any claims arising out of or
connected with this Agreement, may not be assigned by either
party except with the prior written consent of the other
party.
12.5 The failure of any party hereto to require the performance
of any term of this Agreement or waiver by any party of any
breach under this Agreement shall not prevent a subsequent
enforcement of such term nor be deemed waiver of any
subsequent breach. Subject to the provisions of section 10
hereof in regard to notice of default and right to cure,
time is of the essence in the performance of each party's
obligations hereunder.
12.6 The captions set forth herein are for convenience of
reference only and shall not be considered as part hereof or
in any way to limit or amplify the terms and provisions
hereof.
13. Notices
Any notice required or permitted to be given hereunder shall
be in writing and shall be deemed to have been given after
the same has been mailed by registered or certified mail
(air mail if overseas), return receipt requested, to the
respective addresses appearing on the first page of this
instrument, or to such other addresses as the parties may
from time to time designate in writing.
14. Controversies
Any controversy or claim arising out of or relating to this
Agreement, or the negotiation or breach thereof, shall be
settled by arbitration in accordance with the Rules of the
American Arbitration Association, and the judgment upon the
award rendered by the Arbitrator(s) may be entered in any
court having jurisdiction thereof. The arbitration shall be
held in such location as shall be mutually agreeable to the
parties, but in the absence of such agreement in New York,
New York.
15. Modifications
Modifications to this Agreement must be confirmed by both
parties in writing prior to the effective date.
16. Severability of the Contract
Should any provision of this contract lack validity or
become void, the remaining provisions hereof will remain in
force.
17. Applicable Law
This contract is subject to and shall be construed in
accordance with the law of the State of New York.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement this ___ day of July, 1997.
ELEKTROSCHMELZWERK KEMPTEN GMBH EXOLON-ESK COMPANY
By: By: J. Xxxx Xxxxxx,
President
