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EXHIBIT 10.24
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AGREEMENT BY AND BETWEEN XXXXX EQUIPMENT COMPANY
AS BUYER
AND
MITSUBISHI CORPORATION, MITSUBISHI HEAVY INDUSTRIES, LTD.
AND MITSUBISHI MOTORS CORPORATION
AS SELLER
EFFECTIVE AS OF JUNE 1, 1983
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AGREEMENT
Contents
PURPOSE PAGE
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1. Definitions ......................................... 2
2. Sale and Purchase ................................... 3
3. Term ................................................ 3
4. Prices and Price Adjustments ........................ 3
5. Payment, Exchange Rates ............................. 8
6. Delivery ............................................ 11
7. Orders .............................................. 13
8. Supply Protection Reserve ........................... 16
9. Warranty ............................................ 17
10. Patents ............................................. 21
11. Quality Assurance, Design Changes ................... 21
12. Technical Documentation ............................. 22
13. Force Majeure ....................................... 23
14. Confidentiality ..................................... 23
15. Exchange of Market Information ...................... 25
16. Documentation for Duty Drawback Rights .............. 25
17. Antidumping and Countervailing Duties ............... 25
18. Law of Agreement .................................... 25
19. Arbitration ......................................... 25
20. Changed Conditions .................................. 26
21. Product Liability ................................... 26
22. General Provisions .................................. 27
Exhibit 1 (Specifications)
Exhibit 2 (Quality Guidelines)
Exhibit 3 (Warranty)
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THIS AGREEMENT, effective as of June 1, 1983, is entered into by and between
XXXXX EQUIPMENT COMPANY, a Delaware corporation with principal offices at
Buchanan, Michigan, U.S.A., referred to in this Agreement as "Buyer", and
MITSUBISHI CORPORATION ("MC"), MITSUBISHI HEAVY INDUSTRIES, LTD. ("MHI") and
MITSUBISHI MOTORS CORPORATION ("MMC"), separate Japanese companies each with
offices in Tokyo, Japan, contracting jointly and severally as sellers and/or
manufacturers and referred to in this Agreement as "Seller".
PURPOSE
Buyer wishes to purchase certain Products and Parts manufactured or sold by
Seller for incorporation into certain of Buyer's Industrial Trucks manufactured
by Buyer in the United States for use in the United States and for export.
Buyer and Seller both wish to establish a stable working relationship. Both
Parties also recognize the necessity for flexibility in addressing changes in
the business factors which may affect this arrangement and, therefore, expect
that as changed conditions arise the Parties will be able and willing to discuss
appropriate modifications to this Agreement.
This Agreement will he considered the basic agreement relating to the sale of
Seller's Products and Parts for incorporation into Buyer's Industrial Trucks.
This Agreement may be extended to cover the sale of Seller's Products and Parts
for Buyer's Industrial Trucks manufactured by Buyer or Buyer's subsidiaries In
other countries; however, Buyer and Seller recognize that it may be appropriate
to modify certain provisions to conform to local laws and procedures.
The purpose of this Agreement is to establish a procedure for the sale and
purchase of the Products and Parts covered by this Agreement and to establish
the terms and conditions which will apply to sales of the Products and Parts
during the term of this Agreement.
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NOW, THEREFORE, in consideration of Buyer's selection of Seller as a principal
supplier, Buyer's initial purchase of Products and Parts, and the mutual
promises set forth in this Agreement, the Parties agree as follows:
1. DEFINITIONS
1.1. PRODUCTS - The term "Products" means the engines, transmissions, axles and
other components manufactured by the Parties contracting as Seller to their
specifications together with the alterations or modifications thereto made for
Buyer as described and specified in Exhibit 1, attached and incorporated as a
part of this Agreement, together with such modifications, replacements or
additions to such components as may be agreed upon by the Parties from time to
time during the term of this Agreement.
1.2. PARTS - The term "Parts" means service and replacement components, parts
and accessories for all Products purchased by Buyer pursuant to this Agreement.
1.3. INDUSTRIAL TRUCKS - The term "Industrial Truck" means the lift trucks and
other industrial trucks manufactured by Buyer or Buyer's subsidiaries into which
Seller's Products are incorporated. Initially this will be Buyer's "base truck"
series cushion and pneumatic lift trucks In the two (2) to three (3) metric ton
capacity range, as described In Exhibit 1.
1.4. UNIT PRICE - The term "Unit Price" means the price for a single unit of the
Products and Parts. The Unit Price may be adjusted in accordance with the
provisions of the Agreement.
1.5. BASE PRICE - The base price for Products is the initial Unit Price which is
set forth for each Product in Exhibit 1. The base price for Parts refers to the
price for each Party) set forth in the initial applicable MHI or MMC factory
suggested list price referred to in paragraph 4.2, below.
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2. SALE AND PURCHASE
During the term and subject to the terms and conditions of this
Agreement, Buyer will purchase and take from Seller and Seller will sell and
deliver to Buyer the Products and Parts ordered by Buyer in accordance with the
procedures set forth in this Agreement.
3. TERM
This Agreement will be for an initial five (5) year term effective from
the date first written above through and including May 31, 1988, and will be
automatically extended for an additional five (5) year term through and
including May 31' 1993, unless either Party elects to terminate the Agreement at
the end of the initial term by written notice to the other Party, which notice
must be given on or before January 1, 1988.
4. PRICES AND PRICE ADJUSTMENTS
4.1 The initial Unit Price for each Product will be the price stated in
Japanese yen set forth in Exhibit 1.
4.2 The Unit Prices for Parts supplied by MHI will be 43.75% of the
prices stated in US dollars set forth for each Part in MHI's suggested retail
price list. Unit Prices for Parts supplied by MMC will be 65% of the prices
stated in Japanese yen set forth for each Part in MMC's suggested dealer price
lists. Suggested price lists will generally be revised by MHI or MMC on an
annual basis. Revised suggested price lists will be effective for shipments made
after the effective date of the price list.
4.3 The Unit Price of any Product or Party) may be increased or
decreased at any time by mutual agreement ("Interim Price Adjustment"). Such
Interim Price Adjustments will be made for mutually agreed upon design changes.
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4.4 Subject to Interim Price Adjustments, the initial Unit Prices for
Products will be effective, without increase, for all Products shipped on or
before May 31, 1984. Thereafter, Seller may, after consultation with Buyer,
adjust the Unit Prices for Products effective June 1, 1984, and annually on June
1 of each successive year thereafter during the term of this Agreement ("Annual
Price Adjustment"). Unless otherwise agreed, Buyer and Seller will jointly
review Unit Prices of Products not later than April 30, 1984, and annually not
later than April 30 of each succeeding year thereafter during the term of this
Agreement.
4.5 Subject to Interim Price Adjustments, the Annual Price Adjustment
for Products effective on June 1 of each year, will be effective, without
increase, for all Products shipped on or after June 1, the effective date of the
price increase, and through and including May 31 of the following year.
4.6 The Annual Price Adjustment to the Unit Price for each Product will
be determined by multiplying the Unit Price for each Product which is effective
on May 31 by the applicable price adjustment formula set forth below. In each
formula each abbreviation has the following meaning:
Pm = Unit Price after the annual adjustment
PC = Unit Price effective on May 31
A1 = annual price index of "Aluminum casting for
machinery" in the "Nonferrous metal castings"
commodity class of the "Nonferrous Metal
Castings and Diecastings" subgroup from January
1st through December 31st as indicated in the
"Price Indexes Annual" in the April issue for
the calendar year in which the price adjustment
will be effective.
Ao = annual price index of "Aluminum casting for
machinery' in the "Nonferrous metal castings"
commodity class of the "Nonferrous Metal
Castings and Diecastings" subgroup from January
1st through December 31st as indicated in the
"Price Indexes Annual" in the April issue for
the previous calendar year
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C1 = annual price index of "Iron casting" in the
"Cast iron products" commodity class of the
"Miscellaneous Iron and Steel Products" subgroup
from January 1st through December 31st indicated
in the "Price Indexes Annual" in the April issue
for the year in which the price adjustment is to
be effective
Co = annual price index of "Iron castings" in the
"Cast iron products" commodity class of the
"Miscellaneous Iron and Steel Products" subgroup
from January 1st through December 31st indicated
in the "Price Indexes Annual" in the April issue
of the previous calendar year
E1 = annual price index of "Other electrical
machinery" in the "Other Electrical Machinery"
subgroup from January 1st through December 31st
indicated in the "Price Indexes Annual" in the
April issue of the year in which the price
increase is to be effective
Eo = annual price index of "Other electrical
machinery" in the "Other Electrical Machinery"
subgroup from January 1st through December 31st
indicated in the "Price Indexes Annual" in the
April issue of the previous calendar year
F1 = annual price index of "Closed and open die
forgings" in the "Miscellaneous Iron and Steel
Products" subgroup from January 1st through
December 31st indicated in the "Price Indexes
Annual" in the April issue of the year in which
the price adjustment is to be effective
Fo = annual price index of "Closed and open die
forgings" in the "Miscellaneous Iron and Steel
Products" subgroup from January 1st through
December 31st indicated in the "Price Indexes
Annual" in the April issue of the previous
calendar year
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L1 = annual price index of "Cash Earning Indexes of
Regular Workers, Transportation and
Communication - nominal from January 1st through
December 31st indicated in the "Economic
Statistic Annual" issued by the Research and
Statistics Department of the Bank of Japan (the
"Economic Statistic Annual") in the March issue
of the calendar year in which the price
adjustment is to be effective
Lo = annual price index of "Cash Earning Indexes of
Regular Workers, Transportation and
Communication - nominal" from January 1st
through December 31st indicated in the "Economic
Statistic Annual" issued by the Research and
Statistics Department of the Bank of Japan (the
"Economic Statistic Annual") in the March issue
of the previous calendar year
M1 = annual price index of "Manufacturing Industry
Products" in the "Indexes for Industries"
subgroup from January 1st through December 31st
indicated in the "Price Indexes Annual" in the
April issue of the calendar year in which the
price adjustment is to be effective
Mo = annual price index of "Manufacturing Industry
Products" in the "Indexes for Industries"
subgroup from January 1st through December 31st
indicated in the "Price Indexes Annual" in the
April issue of the previous calendar year
S1 = annual price index of "Ordinary Steel Products"
from January 1st through December 31st indicated
in the "Price Indexes Annual" in the April issue
of the calendar year in which the price
adjustment is to be effective
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So = annual price index of "Ordinary Steel Products"
from January 1st through December 31st indicated
in the "Price Indexes Annual" in the April issue
of the previous calendar year
Sections of the Price Indexes Annual referred to in the preceding
definitions may be found in the Price Indexes Annual, Wholesale
Price Indexes, Export and Import Price Indexes, Input-Output Price
Indexes of Manufacturing Industry by Sector, published by the
Research and Statistics Department of the Bank of Japan.
A. The Annual Price Adjustment to the Unit Price for Products identified
in Exhibit 1 as subject to price adjustment formula A will be calculated
by the following formula:
S1 C1 A1
Pm = Pc{1 + .55 [(.10) -- + (.14) -- + (.03) -- +
S0 C0 A0
F1 E1 L1
(.12) -- + (.05) -- + (.56) -- - 1]}
F0 E0 L0
B. The Annual Price Adjustment to the Unit Price for Products identified
in Exhibit 1 as subject to price adjustment formula B will be calculated
by the following formula;
S1 C1
Pm = Pc{1 + .55 [(.07) -- + (.17) -- +
S0 C0
F1 L1
(.18) -- + (.02) -- + (.56) -- -1]}
M0 F0 L0
C. The Annual Price Adjustment to the Unit Price for Products identified in
Exhibit 1 as subject to price adjustment formula C will be calculated pursuant
to the following formula:
S1 C1
Pm = Pc{1 + .55 [(.18) -- + (.16) -- +
S0 C0
A1 L1
(.10) -- + (.56) -- - 1]}
A0 L0
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4.7 If any of the referenced indexes are discontinued or if the Bank of
Japan alters its method of calculating an index (including a change in the base
period), the Parties will mutually agree upon a substitute index.
4.8 If the Unit Price is not calculated by the data for the Annual
Price Adjustment, Products will be shipped at the Unit Price in effect on May
31, subject to adjustment in the price when the Unit Price is calculated. The
Unit Price will be calculated as soon as possible thereafter, or the parties
will mutually agree upon the Annual Price Adjustment. The prices for Products
delivered after June 1, but prior to calculation of the Unit Price or agreement
upon the Annual Price Adjustment, will be retroactively adjusted and payment of
any differential in prices will be due and payable in accordance with the
payment terms of this Agreement thirty (30) days after receipt by Buyer of an
appropriate invoice from Seller.
4.9 Prices for Products and Parts stated in Exhibit 1 are for Products
and Parts delivered F.O.B. from a suitable Japanese port. Delivery of Products
and Parts will be subject to and in accordance with the provisions set forth in
Section 6 below.
5. PAYMENT, EXCHANGE RATES
5.1 Payment for Products and Parts will be due and payable thirty (30)
days plus the average transport time after delivery at Chicago and receipt by
Buyer of Seller's invoice. The average transport time will be the number of days
mutually agreed upon by the Parties which are normally required by Buyer to
process the Products or Parts through U.S. Customs and to transport them to the
appropriate U.S.
manufacturing plant or parts warehouse.
5.2 The currency of payment for Parts supplied by MHI and MMC will be
US dollars. The MMC price stated in Japanese yen will be converted to a payment
amount stated in US dollars on each invoice at
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the rate of exchange established by this paragraph (the "MMC Exchange Rate").
The initial MMC Exchange Rate will be equal to the average at-sight buying rate
of the Mitsubishi Bank, Ltd., Tokyo, Japan (the "Bank") for buying US dollars
with Japanese yen for a period of two (2) months beginning three (3) months
prior to the first Shipment, the date of which will be mutually agreed upon.
when invoices for Parts are prepared (approximately one (1) week to ten (10)
days prior to shipment) the average at-sight buying rate of the Bank for US
dollars during the preceding seven (7) business days will be calculated and
compared with the MMC Exchange Rate. If the average rate varies from the MMC
Exchange Rate by more than five (5) Japanese yen, the MMC Exchange Rate will be
adjusted to equal the average rate and will apply to all subsequent shipments of
Parts until a further change is made in accordance with this paragraph. The
method used to calculate the exchange will be discussed at the request of either
Party after approximately one (1) year's experience with the method provided by
this paragraph.
5.3 The currency of payment for Products will be either Japanese yen or
U.S. dollars. The currency of payment for Products will be Japanese yen for
Products shipped in the period beginning on June 1, 1983 through and including
May 31, 1984. Thereafter, Buyer may select the currency of payment at Buyer's
option, twice each year by written notice to Seller on or before May 1, 1984,
and November 1, 1984, and on or before May 1 and November 1 of each successive
year thereafter during the term of this Agreement. The currency of payment
selected on May 1 will apply to payments for Products shipped on June 1 and
through and including November 30, and the currency selected on November 1 will
apply to payments for Products shipped on December 1 and through and including
May 31. If Buyer fails to notify Seller of its selection of the currency for
payment within 10 days after the applicable date for selection, the currency of
payment then in effect will continue until the next period for which Buyer has
the option to change the currency of payment.
5.4 Payments In Japanese yen will be mad. by check, bank draft, or
other suitable method in Tokyo, Japan at a bank designated by
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Seller. Payments in U.S. dollars will be made by check, bank draft, or other
suitable method in Chicago, Illinois, U.S.A., at a bank designated by Seller.
5.5 When the currency of payment selected by Buyer for a period is U.S.
dollars, the prices of Products which are stated In Japanese yen will be
converted to a U.S. dollar payment amount at the currency exchange rate
established for that period in the manner described below.
(a) An exchange rate will be calculated to correspond with the periods
during which Buyer may select the currency of payment regardless of the
currency selected. The first exchange rate will be calculated on April
27, 1983, for the period from June 1, 1983 through and including
November 30, 1983. The second exchange rate will be calculated on
October 26, 1983, for the period from December 1, 1983 through and
including May 31, 1984. Thereafter, the exchange rate will be
calculated on the fourth Wednesday in each April and October during the
term of this Agreement and the exchange rates calculated will be
applicable for the periods from June 1 through and including November
30 and from December 1 through and including May 31, respectively.
(b) The exchange rate will be determined on the basis of the average of
the forward exchange buying rates quoted by the Bank of Tokyo on the
calculation date for the first business day in each of the fourth
through and including the ninth months following the date the exchange
rate is calculated (including the month the rate is calculated as the
first month following such date). The applicable exchange rate for the
first period will be the average of such forward rates. Thereafter, the
applicable exchange rate will be determined as follows:
(i) if the average of the forward rates varies by not more
than 10% from the previous applicable exchange rate, the
exchange rate will be equal to the previous applicable
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exchange rate adjusted to reflect one-half of the amount
by which the average of the forward rates varies from the
previous applicable exchange rate.
(ii) If the average of the forward rates varies by more than
10% from the previous applicable exchange rate, the
Parties will negotiate in good faith and on or before
five days preceding the date on which Buyer must make its
currency selection will agree upon the applicable
exchange rate.
6. DELIVERY
6.1 Products and Parts will be delivered cost and freight (C&F), from
any suitable port in Japan to Chicago, Illinois, USA, in accordance with the
definition of the C&F delivery term set forth in the International Chamber of
Commerce publication entitled "INCOTERMS", 1980 edition, modified as follows:
a. Seller will contract and pay for the carriage of the Products and
Parts to Chicago, Illinois, USA, in U.S. dollars in accordance with the
INCOTERM C&F definition, paragraph A2, but Buyer will reimburse Seller
for such actual costs and expenses, including reasonable charges for
handling the transportation arrangements. Seller's invoices for such
charges will be in U.S. dollars, will separately identify such charges,
and will be due and payable by Buyer by check, bank draft, or other
suitable method in Chicago, Illinois, USA, at a bank designated by
Seller.
b. Seller will bear all risks of the Products and Parts until such time
as they have been delivered to Chicago, Illinois, USA, the carrier has
notified Buyer's customs agent of the arrival of the Products or Parts,
and Buyer has received all necessary
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documents from Seller required to clear customs and take possession of the
Products and Parts. Buyer shall bear all risks of the Products and Parts
thereafter. Title will pass with the risk of loss. This provision supersedes
paragraphs A5 and B3 of the INCOTERM C&F definition.
c. Buyer will maintain, at its cost and expense, a marine open cargo
insurance policy to cover each shipment subject to this Agreement at
110% of the invoice price of the Shipment for the protection of Buyer
and Seller as their interests may appear with the following policy
limits:
$3,500,000 per vessel under deck
$ 100,000 per aircraft
$1,000,000 per truck or rail car
$ 1,500 per package - mail or parcel post
Upon request Buyer will provide Seller a certificate of insurance from
Buyer's insurance carrier evidencing said coverage and providing for
the insurance carrier to give Seller with at least ten (10) days' prior
notice of termination or reduction in coverage.
6.2 Buyer may elect to expedite transportation and may select alternate
methods of transportation, including air transport when reasonably required.
Except as otherwise provided below, Buyer will reimburse Seller for any
additional costs or expenses incurred by Seller in connection with the expedited
transportation. If at any time delivery of Products or Parts is significantly
delayed due to any failure by Seller to perform its obligations under this
Agreement, Seller will pay, or reimburse Buyer, for any additional costs
resulting from such alternate methods of transportation. Seller shall not, in
any event, be responsible for any such additional costs which are due solely to
Buyer's failure and negligence with respect to any obligations relating to
Buyer's purchasing of such Products or Parts pursuant to this Agreement. If the
cause of the requirement for expedited transportation is not the responsibility
of either Party, the Parties will negotiate the allocation of such costs in good
faith.
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6.3 All Products and Parts will be received subject to Buyer's
inspection and test. Buyer will inspect Products and Parts as soon as possible
by audit at Buyer's designated manufacturing plant or parts warehouse and in any
event within four weeks after their arrival. Unless notice of nonconformity or
shortage is provided within four weeks, the Products and Parts will be
considered accepted by Buyer. Nothing in this provision will modify or impair in
any way Buyer's rights under the warranty provisions of this Agreement. If
written notice is provided by Buyer within four (4) weeks after the arrival of
said Products or Parts at the manufacturing plant or parts warehouse, or within
three (3) months after delivery at Chicago in accordance with Section 6.1 above
whichever comes earlier, and if such nonconformity or shortage is attributable
to a failure by Seller to perform any of its contract obligations, Seller shall
either promptly remedy the nonconformity or shortage or Buyer may reject the
Products or Parts and return them to Seller at Seller's expense.
7. ORDERS
7.1 Buyer will order Products from Seller by means of one of the
following methods:
a. by issuing an annual blanket purchase order which will be
supplemented by Supplier Delivery Authorization and Planning Schedules
("Monthly Schedules") issued at least monthly, or
b. under special circumstances, by issuing a separate purchase order.
7.2 When the method identified in paragraph 7.1.a., above, is used, the
annual blanket purchase order will be used for the purpose of stating the
current Unit Prices for Products and the current mutually agreed upon
specifications, but it will not be an order for any quantity of Products. The
Monthly Schedule will be the document by which specific quantities of Products
are ordered. Each Monthly Schedule will contain the following information:
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a. The Products ordered by the Monthly Schedule and the delivery
schedule for those Products. In each Monthly Schedule the quantities of
Products identified as "Firm" for the first time in that Monthly
Schedule will be the Products ordered by that Monthly Schedule.
b. Reconfirmation of Products ordered and the delivery schedule for
Products which have been ordered on previous Monthly Schedules. Such
Products will be identified as "Firm" on each Monthly Schedule.
c. Buyer's estimate of the quantity of Products which will be ordered
in the following month, which quantity may be increased or decreased by
Buyer by up to 50% when the Products are ordered. Such quantities will
be identified as "Planning".
d. Buyer's estimate of the quantities of Products which may be ordered
for a period of six (6) months from the seventh month through the
twelfth month from the date of the Monthly Schedule (the month for
which the Monthly Schedule is issued will be counted as the first
month). Such quantities will also be identified as "Planning".
Buyer will issue the Monthly Schedules periodically as required, but
will at least issue a Monthly Schedule on or before January 5, 1984, and on or
before the fifth (5th) working day of each month thereafter during the term of
this Agreement. Monthly Schedules issued after the fifth (5th) working day of
each month through the last day of the month will be considered to be issued for
the next following month (the month in which production will be scheduled by
Seller). Seller will acknowledge the "Firm" order in Monthly Schedules by the
fifteenth (15th) working day of each month.
7.3 Products ordered on or before the fifth (5th) working day of each
month will be scheduled for delivery after the first (1st) day of the fifth
(5th) month after the month for which the Monthly Schedule is issued. (The month
for which the Monthly Schedule is issued will be counted as the first month of
the five (5) month period.) The quantity of Products identified as "Planning"
for delivery during the sixth (6th) month after the month for which Monthly
Schedule is issued (counting the month for which the Monthly Schedule is issued
as the first month of the six (6) month period) may be adjusted by only 50%,
increase or decrease,
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in orders for the following month. If Buyer issues more than one Monthly
Schedule before the fifth (5th) working day of a month, the last Monthly
Schedule received by Seller by the fifth (5th) working day of a month will be
controlling.
7.4 Under special circumstances Buyer may order Products by individual
purchase orders separate and apart from the Monthly Schedule system described in
Section 7.1, 7.2 and 7.3 above. Special circumstances will include orders which
require special terms, special Product specifications, or other special
conditions. All such orders will be subject to acceptance by Seller.
7.5 The normal lead time for delivery of Parts will be approximately
three (3) months. Seller will, however, at no additional charge make every
reasonable effort to satisfy Buyer's reasonable requests for emergency delivery
of Parts in less than the normal lead time. This arrangement for emergency Parts
orders will be discussed at the request of either party after approximately one
(1) year's experience with Parts sales and purchases under this Agreement.
7.6 Buyer's liability, if any, upon cancellation of any order will be
limited to the actual costs incurred by Seller and properly attributable to the
cancelled portion of any orders, but not to exceed the aggregate Unit Price for
Products or Parts cancelled plus delivery charges incurred. Buyer will not be
liable for incidental, special or consequential damages.
7.7 All sales of Products and Parts ordered during the term of this
Agreement will be subject to the terms and conditions of this Agreement together
with any different or additional terms or conditions mutually agreed upon in
writing. Buyer and Seller may use their standard forms to order and to
acknowledge orders for Products and Parts; however, unless otherwise mutually
agreed in writing, no different or additional terms contained in any such form
will add to or modify in any way the terms and Conditions provided by this
Agreement.
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7.8 Buyer estimates that the quantities of Industrial Trucks for which
Seller's Products will be purchased will be approximately as follows:
CALENDAR YEAR WORLDWIDE QUANTITY OF "BASE TRUCK" SERIES INDUSTRIAL TRUCKS
------------- -----------------------------------------------------------
1985 5,100
1986 6,300
1987 6,800
1988 5,700
1989 5,500
8. SUPPLY PROTECTION RESERVE
8.1 Buyer may, by written notice given before delivery or after
delivery, but on or before the date payment would be due pursuant to Section 5,
"Payment, Exchange Rates", designate certain of the Products ordered to be part
of a supply protection reserve to be held and maintained by Buyer in good
condition at a suitable location to be provided by Buyer. Title will transfer
from Seller to Buyer in accordance with Section 6, "Delivery". The quantity of
Products placed in the supply protection reserve will be a reasonable quantity
determined by Buyer up to a quantity sufficient to supply Buyer's production for
approximately thirty (30) days. Units placed in the supply protection reserve
will be removed from the reserve and made available for use in production within
six (6) months after delivery and may be replaced, as required, with new units
to maintain the established quantity of the supply protection reserve. Buyer
will notify Seller promptly when units are removed from the supply protection
reserve, and Seller will invoice Buyer for Products which are removed from the
supply protection reserve. The Unit Price for such products will be due and
payable after removal from the supply protection reserve within thirty (30) days
after the date of Seller's invoice. Payment will be made in accordance with
Section 5, "Payment, Exchange Rates", in the currency of payment selected by
Buyer as of the Invoice date.
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8.2 Buyer will pay Seller a carrying charge calculated on the Unit
Price of Products held in the supply protection reserve after the date payment
for such units would otherwise be due Pursuant to Section 5, "Payment, Exchange
Rates". The carrying charges will be a percentage of the Unit Price equal to
simple interest per annum at a rate equal to the prime rate of interest offered
by the Bank of Tokyo, Tokyo, Japan, to its largest Japanese business customers
in effect on the first day of each month. Seller will Invoice Buyer for the
carrying charge periodically, but not more frequently than quarterly, and the
carrying charge will be payable in Japanese yen thirty (30) days after the date
of Seller's invoice by check, bank draft, or other suitable method in Tokyo,
Japan, at a bank designated by Seller.
9. WARRANTY ON PRODUCTS AND PARTS
9.1 Seller warrants that the Products will conform to the
specifications identified in Exhibit 1 attached and incorporated by reference
herein, and will be merchantable and sufficient for the purpose intended, of
good material and workmanship, and free from defects. For purposes of this
Agreement any failure of a Product to be as warranted is referred to as a
"Defect". This warranty extends to the performance of the Products in Buyer's
Industrial Truck Division produCts into which the Products are incorporated as
follows:
a. If any Defect is discovered in a Product prior to shipment of an
Industrial Truck into which it has been Incorporated, Seller will pay or
reimburse Buyer for the parts and labor required to correct the Defect and any
damage to the Industrial Truck resulting from the Defect. For purposes of this
Section 9.1a and Sections 9.1b, 9.1d, and 9.1e below, the term labor costs to
correct a Defect shall include, without limiting the general meaning of the
term, reasonable charges to remove the Defective Product or Part from the
Industrial Truck and to replace a repaired or replacement Product or Part, and a
reasonable allocation of Buyer's overhead costs to Buyer's labor charges.
b. If any Defect is discovered in a Product within six (6) months after
the date of delivery to the first retail purchaser of an
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Industrial Truck into which it has been incorporated or during the first 1000
hours of use of the Industrial Truck, whichever occurs first, Seller will pay or
reimburse Buyer for the parts and labor (plus any reasonable travel costs)
required to correct the Defect and any damage to the Industrial Truck resulting
from the Defect.
c. If any Defect is discovered in a Product after the period stated in
Section 9.1b above, but within twelve months after delivery to the first retail
purchaser of the Industrial Truck into which it is incorporated or during the
first 2000 hours of use of the Industrial Truck, whichever occurs first, Seller
will either reimburse Buyer for a replacement part or, at Seller's option, for
the cost of repairing the Defective part and Seller will reimburse Buyer for the
cost of repairing any damage to the Industrial Truck caused by the Defect.
d. If any latent Defect is discovered in a Product In any of the parts,
components, or assemblies set forth in Exhibit 3, attached and incorporated as
part of this Agreement, which may materially affect performance of the
Industrial Truck into which it is incorporated, after the periods stated in
paragraph 9.1c above, but during the period indicated below, Seller and Buyer
will negotiate in good faith the method of correcting the Defect. Seller will
pay or reimburse Buyer for fifty percent (50%) of the reasonable costs incurred
by Buyer to correct the Defect and to repair any damage to the Industrial Truck
caused by the Defect. The period of warranty coverage for parts, components, or
assemblies identified in Exhibit 3 as "Category A" will be thirty two (32)
months after delivery to the first retail purchaser or 4,000 hours, whichever
occurs first. The period of warranty coverage for parts, components or
assemblies identified in Exhibit 3 as "Category B" will be twenty one (21)
months after delivery to the first retail purchaser or 3,000 hours, whichever
occurs first.
e. If a latent Defect discovered at any time poses a hazard which may
cause personal injury or property damage, notwithstanding any other warranty
provision or warranty limitation, Seller will repay
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or reimburse Buyer for the cost of parts and labor (plus reasonable travel
costs) to correct the Defect and any damage to the Industrial Truck caused by
the Defect, Buyer's reasonable labor and overhead expenses to locate and repair
any Industrial Truck into which the Defective Product has been incorporated, and
Buyer's costs to provide reasonable and proper notice and warnings to Buyer's
dealers and to owners and users of such Industrial Trucks. Seller and Buyer will
negotiate In good faith the method of correcting the Defect.
9.2 Replacement Parts provided by Seller for Products under the
warranty provisions of this Agreement are covered by the Product warranty
provisions for the remainder of any applicable warranty period and, thereafter,
are covered by the Parts warranty to the extent that the Parts warranty period
exceeds the Product warranty period.
9.3 Seller warrants that the Parts will conform to Seller's
specifications and descriptions together with any mutually agreed upon
modification and will be merchantable, satisfactory and sufficient for the
purpose intended, of good quality and workmanship, and free from defects for a
period of six (6) months from the date of sale to the first retail purchaser or
the date the Part is installed in a customer's Industrial Truck as a service or
replacement Part, whichever occurs first. For purposes of this Agreement any
failure of a Part to be as warranted is referred to as a "Defect". This warranty
extends to the performance of the Parts during the warranty period. If any
Defect is discovered within the warranty period Seller will reimburse Buyer for
the cost of the Defective Part, for the labor of Buyer's authorized service
personnel at an hourly rate equal to Buyer's national average cost, and for the
cost of repairing any damage to the Industrial Truck caused by the Defect, plus
a charge of twenty-five (25%) percent of the current price of the Defective
Parts to cover restocking and handling fee. The amount of warranty reimbursement
will be discussed upon request of either Party after approximately one (1)
year's experience with warranty claims.
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9.4 When a written claim for warranty reimbursement is made Seller may
take the following actions:
a. Seller may require Buyer to return the Defective Products (or the
Defective Parts thereof) and Parts at Seller's expense to Buyer's designated
administration facility ("Warranty Facility").
b. Seller may inspect any such allegedly Defective Products and Parts
at Buyer's Warranty Facility and may further, upon prompt written notice require
Buyer to return all or any of such Products and Parts at Seller's expense. Buyer
will notify Seller when such Defective Products and Parts are available for
inspection. The notice will include a list of the Defective Products and Parts
and a brief description of the warranty claims.
c. If Seller determines any such Products or Parts are not Defective,
Seller will provide Buyer with the data and analysis upon which Seller's
determination is based. Otherwise, Seller will promptly pay or reimburse Buyer
in accordance with the applicable warranty provision.
Any warranty claim made by Buyer will be considered accepted, unless within
thirty (30) days after Seller's receipt of Buyer's claim Seller either notifies
Buyer in writing (i) that the claim is denied or (ii) that Seller requests
additional time to review the claim. Every such notice will include a statement
of the reasons for the denial or the request for additional time.
9.5 The warranties provided by this Section 9, "Warranties", will not
apply to Products which are incorporated into Industrial Trucks which have not
been approved by Seller for use with that Product.
9.6 The warranties provided by this Agreement do not apply to Defects
in Products or Parts caused after delivery to Buyer by parties other than Seller
or Seller's representatives by accident, misuse, or neglect or arising from
alterations not authorized by Seller. These warranties do not cover normal
service replacement of normal service items such as tune-up parts, filters and
fan belts.
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9.7 The warranties provided in this Agreement are in lieu of all other
warranties of quality, express or implied, and state Seller's entire obligation
with respect to Defects in Products or Parts. THERE ARE NO IMPLIED WARRANTIES OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE. Except as stated in this
Agreement, Seller will not be liable for incidental or consequential commercial
damages for breach of this warranty.
10. PATENTS
10.1 Seller represents and warrants that the Products and Parts ordered
under this Agreement and their sale or use, alone or in a combination specified
by Seller, according to Seller's specifications or recommendations, if any, will
not infringe any U.S. or foreign patents and Seller agrees to defend, protect
and save harmless Buyer, its successors, assigns, customers and users of its
products, against all suits and from all damages, claims and demands resulting
from such alleged infringements, and agrees that Seller will, upon request,
defend or assist in the defense at Seller's expense of any such suit.
10.2 Buyer and Seller agree that neither will directly or indirectly
obtain or attempt to obtain in any country or territory whatsoever, any rights,
title or interest, by registration, patent, copyright or otherwise, in or to any
designs, improvements or inventions whatsoever of the other Party.
11. QUALITY ASSURANCE, DESIGN CHANGES
11.1 Seller represents and warrants that it has and will maintain
during the term of this Agreement a quality assurance program using as a
guideline the quality assurance program set forth in Exhibit 2 attached and
incorporated as part of this Agreement, and that each Product and Part delivered
pursuant to this Agreement will have been manufactured subject to Seller's
quality assurance program. Seller further warrants that it will provide Buyer
with prompt notice of any Defect in Products or Parts discovered by Seller after
delivery to Buyer.
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11.2 Subject to Seller's approval, Buyer, for reasonable purposes, may
have access to materials, work-in-process, and finished Products and Parts at
any facilities at which such Products and Parts are manufactured under this
Agreement. Without additional charge, Seller will provide Buyer's
representatives with reasonable assistance, including testing and inspection
devices and equipment, which may be requested to allow Buyer's representatives
to safely and effectively perform their duties while at Seller's manufacturing
locations. Buyer's review or evaluation of Seller's quality assurance program or
of the quality of Products or Parts will not constitute acceptance of any
Products and will not alter in any way Seller's warranties of the quality of
Products and Parts.
11.3 Design changes to Products which may affect mountability,
performance or serviceability of a Product will be made only upon mutual
agreement of the Parties (including any price adjustments) the effective date of
the engineering change, any drawings, documents or samples to be provided, and
any other matters relating to effecting the engineering change) and after proper
engineering documentation has been provided to Buyer. Seller will hold Buyer
harmless of and from any liability, damages, costs or expenses incurred by Buyer
as a result of any substantial changes implemented by Seller without prior
agreement. Seller will promptly notify Buyer of any other design changes made to
Products and will provide appropriate engineering documentation.
12. TECHNICAL DOCUMENTATION
Seller will provide Buyer with layouts and drawings on either 35mm
microfilm cards or legible white prints and parts lists for all Products and all
components or assemblies for Products with appropriate descriptions and
illustrations; reasonably required for Buyer to service or provide service
information on all Products covered by this Agreement. The technical
documentation will be provided in English. Buyer may reprint or copy any
information provided for this purpose.
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13. FORCE MAJEURE
13.1 Except as otherwise provided, if either Party is temporarily
unable to perform its obligations under this Agreement because of events beyond
its control, including, but not limited to, acts of God, strikes, lockouts, or
other labor disputes, war, riot, embargo and acts of government, no liability
shall exist for failure of performance during this period of inability, nor
shall temporary inability to perform obligations be cause for termination of
this Agreement by either Party; provided the Party which is temporarily unable
to perform provides prompt notice of the commencement and the termination of the
event which temporarily causes the inability to perform. however, any such cause
for temporary inability to perform the obligations hereunder shall be remedied
with all reasonable promptness by the Party prevented from performing, to the
extent such Party can take remedial action, and the Parties will promptly and
amicably discuss actions which may be taken to minimize any loss or damage which
may occur to any Party.
13.2 Notwithstanding Seller's right to invoke force majeure Buyer shall
have the right to make other reasonably necessary arrangements to buy components
to maintain Buyer's production and to complete any such arrangements after the
cause for Seller's temporary inability to perform has been eliminated. Both
Parties will use all reasonable efforts to resume normal operations under this
Agreement as soon as possible after removal of any cause for a temporary
inability to perform.
14. CONFIDENTIAL INFORMATION
14.1 During the term of this Agreement and for a period of two (2)
years thereafter, each Party will hold in confidence any confidential
information received from another Party in connection with this Agreement and
(except for mandatory disclosures to governments or to such third parties as
insurers, shippers and financial institutions whose knowledge
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or participation may be essential to completion of supply arrangements) will not
disclose the confidential information to any third party without the written
consent of the Party which provided the information. A Party receiving
confidential information will protect it from disclosure by handling it with the
same care that the Party normally exercises in respect of its own confidential
information of similar importance.
14.2 As used in this Agreement, confidential information means any
information held in confidence by a Party and disclosed by that Party to another
Party in connection with this Agreement; provided the information is:
(a) a type of information classified as confidential by other
provisions of this Agreement;
(b) information provided in a written form and clearly
identified as confidential; or
(c) information provided verbally, and identified as
confidential when disclosed, if the disclosing Party promptly
thereafter provides the Party to which it is disclosed a
written disclosure identified as confidential.
14.3 Information will not be considered confidential and the
obligations of this Section 14 "Confidential Information" will not apply under
the following circumstances:
(a) the information is In the public domain at the time of
disclosure or becomes part of the public domain thereafter
without the fault of the receiving Party;
(b) the information is known to the receiving Party at the
time of the disclosure; or
(c) the information is rightfully acquired by the receiving
Party from a third person which is not a party to this
Agreement, or is independently developed by the receiving
Party.
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15. EXCHANGE OF MARKET INFORMATION
Upon Seller's request Buyer will provide market information which Buyer
has available on Products, unless in Buyer's opinion such information prejudices
Buyer's interests. To the extent such information includes market information
about Buyer's lift truck markets or customers the information will be considered
confidential information.
16. DOCUMENTATION FOR DUTY DRAWBACK RIGHTS
Seller agrees to provide Buyer with a certificate of delivery,
U.S. Customs Form No. 7543, for any Products or Parts which have been
imported for resale for export, either as a service or replacement
part or incorporated in an Industrial Truck Division product, and with
any other reasonable documentation in addition to or which may replace
U.S. Customs Form No. 7343 to enable Buyer to obtain appropriate duty
drawback rights.
17. ANTIDUMPING AND COUNTERVAILING DUTIES
Seller represents and warrants that the importation by Buyer into the
United States of America of Products arid Parts pursuant to this Agreement will
not cause Buyer to incur antidumping or countervailing duties under the laws of
the United States of America. The Parties will share equally any antidumping
duties assessed against Buyer.
18. LAW OF AGREEMENT
The rights and duties of the Parties to this Agreement will be
construed and enforced under the laws of the State of Illinois, U.S.A.
19. ARBITRATION
Any dispute, controversy or claim arising out of or relating to
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this Agreement, or the breach, termination, or invalidity thereof, will be
settled by arbitration in accordance with the UNCITRAL Arbitration Rules in
effect on the date of this Agreement. The appointing authority will be the
American Arbitration Association. The case will be administered by the American
Arbitration Association in accordance with its procedures for cases under the
UNCITRAL Arbitration Rules. The number of arbitrators for each case will be
three. Unless otherwise agreed by the Parties upon submission of a claim, the
arbitration will be held in Chicago, Illinois, U.S.A. Arbitration proceedings
will be in English and Japanese by means of simultaneous translation. The
Parties will share equally the cost of any translations reasonably requested by
either Party or the arbitrators in connection with any proceeding. The award of
arbitration will be binding and final and a judgment upon that award may be
entered in any court having jurisdiction.
20. CHANGED CONDITIONS
Either Party may by written request reopen discussion on the terms of
this Agreement any time business conditions change, and the Parties will attempt
in good faith to address the changed conditions. If the issues raised cannot be
resolved within 60 days after the written request to reopen discussions, either
Party may terminate the Agreement upon 120 days prior written notice. Orders
placed prior to the termination of the Agreement will be completed in accordance
with its terms.
21. PRODUCT LIABILITY INSURANCE
All of the Parties hereto will carry product liability insurance or
otherwise provide for similar protection at their own cost and expense
respectively. No Party will be responsible for insuring any other Party.
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22. GENERAL PROVISIONS
22.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties with respect to the purchase and sale of Products and Parts
and supersedes any and all previous agreements, memoranda, negotiations or other
understandings of the Parties with respect thereto.
22.2 This Agreement may be amended only by a writing signed by both
Parties by the representatives identified in writing by each Party from time to
time as authorized to sign such an amendment.
a. Until further notice the only representatives authorized to sign for
Buyer are its President, any Vice President of Xxxxx Equipment Company,
or the Industrial Truck Division Manager of Purchasing.
b. Until further notice the only representatives authorized to sign for
MC, NHI, and MMC, respectively are the representatives which sign this
Agreement.
22.3 SEPARABILITY OF PROVISIONS. If for any reason any provision of
this Agreement is invalid, illegal or unenforceable, then such provision will be
deemed severable from the other provisions of this Agreement, all of which will
remain in full force and effect and binding on the Parties hereto.
22.4 WAIVER. Any failure by either Party hereto to enforce, at any
time, any term or condition of this Agreement will not constitute, nor be
construed as, a waiver of that Party's right thereafter to enforce each and
every term and condition of this Agreement.
22.5 NOTICES. Notices to be given by either Party will be in writing
and may be delivered by telegram or by prepaid certified mail to the other Party
at the following addresses:
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Seller: Mitsubishi Corporation
Mitsubishi Heavy Industries, Ltd.
Mitsubishi Motors Corporation
c/o Mitsubishi International Corporation
Chicago, Illinois USA
Attention: Manager, Machinery Division
Buyer: Xxxxx Equipment Company
Industrial Truck Division
000 X. 00xx Xxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000 XXX
Attention: Manager, Purchasing Department
Either Party may change its address by written notice to the other
Party.
22.6 The provisions of Sections 10, "Patents": 14, "Confidential
Information"; and 19, "Arbitration", create continuing obligations which
will survive termination of this Agreement for any cause.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
written above.
SELLER: BUYER:
MITSUBISHI CORPORATION (MC) XXXXX EQUIPMENT COMPANY
/s/ X. Xxxxxx /s/ X. Xxxxxx
--------------------------------------- ---------------------------------
X. Xxxxxx X. Xxxxxx
Managing Director Group Vice President
MITSUBISHI HEAVY INDUSTRIES, LTD. (MHI) /s/ X. Xxxxxx
---------------------------------
/s/ X. Xxxxxxxx X. Xxxxxx
--------------------------------------- Vice President
X. Xxxxxxxx
Managing Director
MITSUBISHI MOTORS CORPORATION (MMC)
/s/ X. Xxxx WITNESSED BY:
--------------------------------------- MITSUBISHI INTERNATIONAL
X. Xxxx CORPORATION (MIC)
Managing Director
/s/ X. Xxxxx
----------------------------------
for X. Xxxxxx
Xx. Vice President and General
Manager, Chicago Branch
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