DISTRIBUTION AGREEMENT
(X.X. Xxxxx & Xxxxxxx & Xxxxx)
This AGREEMENT is made as of February 15, 2000, between X.X. Xxxxx
AG, a German limited liability company ("Xxxxx"), and Xxxxxxx & Xxxxx Inc., a
Delaware (U.S.A.) Corporation ("W&G").
RECITALS:
A. Effective January 1, 2000, the parties desire to continue their
existing business relationship under new contractual arrangements.
B. To accomplish this, it is agreed that effective January 1, 2000:
(i) the Distributorship Agreement, dated October 1, 1998 between Xxxxx and W&G
shall be terminated and (ii) the following new contract shall take effect to
govern the distribution by W&G in the United States of America and Puerto Rico
(the "Territory") of all spare or replacement parts ("Parts") for industrial
sewing machines (i.e., equipment for industrial use which either is a sewing
machine or incorporates a sewing machine as a part thereof) and related
accessories and attachments manufactured or sold by Xxxxx and its Affiliates
("Products").
C. For purposes of this Agreement, an "Affiliate" of a person means
any other person who owns, is owned by or is owned by any owner of such person.
For purpose of this definition an "Affiliate" of a person can be: (i) a
corporation when more than 50% of the outstanding voting shares or total
outstanding shares are owned directly or indirectly by such person; or (ii) a
partnership, trust or other entity when the person controls such entity or has
an equity interest therein greater than 50%; and will exclude Quick-Xxxxx.
1. Appointment
1.1 Subject to the terms and conditions of this Agreement, Xxxxx
grants to W&G the right to promote and sell Parts in the Territory. Such right
will be exclusive for the exclusive period specified in Article 5.1 hereof.
2. Terms of Sale
2.1 Xxxxx shall provide W&G such technical assistance and such
printed material (including operating and service manuals and sales literature)
as may be reasonably required by W&G in the promotion, sales and servicing of
Parts. The cost of such technical assistance and printed material shall be borne
by W&G.
2.2 W&G shall purchase Parts at prices set by Xxxxx, ex works
Xxxxx'x plant in Germany, although Xxxxx shall arrange for the shipment from its
Plant. Prices are subject to change from time to time by Xxxxx on 60 days'
written notice prior to the effective date of such notice. Price changes shall
take effect for all orders submitted after the expiration of the 60-day period.
In any event, however, Xxxxx prices to W&G shall not exceed the following:
(i) During the exclusive term hereof, Xxxxx shall afford to
W&G prices and shipping terms which are no less
favorable than those afforded to a customer in any
territory.
(ii) During the non-exclusive term hereof, if any, Xxxxx
shall afford W&G prices and other payment and shipping
terms which are no less favorable to W&G than those
afforded to any other person in the Territory.
2.3 W&G and Xxxxx will jointly define "highly visible" and
conversion parts. Selling prices to customers for those parts will be determined
by W&G after consultation with Xxxxx.
2.4 Xxxxx hereby extends to W&G Xxxxx'x standard warranty with
respect to Parts. Xxxxx disclaims, both under this Agreement and in connection
with any sales pursuant hereto, all express and implied warranties, including
any warranties of merchantability and fitness for purpose, other than those
express warranties specifically stated in Xxxxx'x then current standard
warranty, and Xxxxx further excludes all remedies other than those specifically
set forth in such standard warranty. All consequential, punitive, and all other
similar damages are excluded. Xxxxx'x standard warranty shall incorporate the
substance of the preceding two sentences. W&G agrees that it shall not give any
warranty or remedy in regard to Parts that is longer in duration or broader in
scope than such Xxxxx warranty without the prior written approval of Xxxxx.
2.5 Purchase of Parts or other merchandise by W&G shall be paid for
by W&G within 60 days. All amounts owed Xxxxx will be secured by an irrevocable
Letter of Credit.
3. Trademarks, Tradenames and Patents
3.1 Xxxxx grants to W&G the right and license to use in the
territory, without right of sublicense, all of the following now or hereafter
during the term of this Agreement owned or possessed by Xxxxx and its
Affiliates:
(i) all trademarks that are used by Xxxxx or any of its
Affiliates in the manufacture, promotion or sale of
Parts ("Trademarks");
(ii) the tradenames that are used by Xxxxx or any of its
Affiliates in the manufacture, promotion or sale of
Parts ("Tradenames"); and
(iii) all patents and patent applications relating to the
manufacture, use or sale of Parts ("patents");
but only for the purpose of promoting and selling Parts in the Territory and for
no other purpose. The foregoing shall not constitute an assignment of the
Trademarks, Tradenames or Patents.
3.2 W&G may place the Trademarks and Tradenames on its stationery,
catalogues, promotional literature, advertising material and signs, but only in
connection with the promotion, sale and servicing of Parts in the Territory. The
method of use of the Trademarks and Tradenames by W&G shall be strictly in
accordance with the instructions to be given by Xxxxx and subject to the prior
written approval by Xxxxx. W&G shall submit to Xxxxx for prior approval
representative samples of all leaflets and other advertising material referred
to above. W&G shall not be allowed to combine the Trademarks and Tradenames with
any other trademarks or tradenames or any sort of patterns or letters or
designs. W&G shall not make any changes or alterations to the original
configuration and color of the Trademarks and Tradenames.
4. Compensation
4.1 W&G shall pay to Xxxxx with respect to any calendar year during
the exclusive term of this Agreement a commission equal to ten percent of W&G's
total net sales of Parts under this Agreement. Payment of commissions shall be
minimum of US$50,000 per month commencing January 1, 2000. In addition, W&G will
make advance commission payments of US$20,000 per month for six months
commencing January 1, 2000. Payments with respect to each month shall be made 20
days after such month, and will be accompanied by a computation of the amount of
such commission certified by an officer of W&G. For purposes of this Section
4.1, net sales shall be computed net of discounts, allowances, credits and
returns and without consideration of any charges for taxes, freight, shipping
costs, import duties or the like.
4.2 In July 2000 and January 2001, and each January thereafter,
Xxxxx and W&G will jointly review the minimum commissions and determine new
minimum commissions which will not exceed the prior period's commissions and
will be no less than 90% of the prior period's commissions based on 10% of
sales.
5. Termination
5.1 This Agreement shall continue in full force and effect on an
exclusive basis until December 31, 2003. It shall automatically be renewed on
such exclusive basis for successive periods of two (2) years each, unless one of
the parties to this Agreement gives written notice of termination to the other
at least one year prior to the expiration of said initial period or any
successive two-year period, whichever is applicable, such termination to be
effective at the end of the initial period or the relevant two-year extension
thereof. This Agreement shall continue on an exclusive basis during the one-year
termination period, and shall continue thereafter on a non-exclusive basis for
three (3) years.
5.2 This Agreement may be terminated by the aggrieved party
immediately upon written notice to the other ("Defaulting Party"), in the event
that after the date hereof the Defaulting Party commits a material breach or
default under this Agreement, which breach or default shall not be remedied
within 30 days after giving notice thereof to the Defaulting Party.
5.3 Upon termination of this Agreement, all of W&G's rights with
respect to the Trademarks and Tradenames shall immediately cease. Xxxxx may
repurchase, but is not required to, all usable advertising and printed matter
made available by it to W&G and W&G shall have no further right to use the
designation "Xxxxx" in any manner.
5.4 Neither party hereto is under any obligation to continue this
Agreement in effect, nor to continue the legal and contractual arrangement
established hereunder, after termination of this Agreement in accordance with
this Article 5. Both parties recognize the necessity of making expenditures in
performing and in preparing to perform this Agreement. The parties nevertheless
agree that neither party shall be liable to the other for termination of this
Agreement in accordance with this Article 5, including but not limited to, for
loss or damage due to investments, leases and sales, and advertising and
promotional activities, whether incurred in connection with preparation to
perform or the performance of this Agreement or in the expectation of its
renewal or extension.
6. Miscellaneous Provisions
6.1 Neither of the parties hereto shall be responsible for or liable
to the other party for any damages or loss of any kind, directly or indirectly
resulting from fire, flood, explosion, riot, rebellion, revolution, war, labor
troubles (whether or not due to the fault of either party), requirements or acts
of any government or subdivision thereof, mechanical breakdown or any other
causes beyond the reasonable control of the parties. The occurrence and the
termination of such force majeure shall be promptly communicated to the other
party.
6.2 All notices, requests, demands and other communications
hereunder shall be in writing and shall be given by courier, delivery, by
facsimile transmission or by registered air mail, postage prepaid, addressed as
follows, or to such other address or person as a party may designate by notice
to the other party hereunder:
(i) if to W&G, to: (ii) if to Xxxxx, to:
Xxxxxxx & Xxxxx, Inc. X.X. Xxxxx AG
000 Xxxxx Xxxxxx Xxxxxxxxxxxx 000
Xxxxxxxx, XX 00000 D-67655 Kaiserslautern
Communications hereunder (i) by facsimile transmission shall be deemed given at
the time of transmission, (ii) by courier shall be deemed given upon receipt by
the addressee and (iii) by air mail shall be deemed given ten days after the
date of registration.
6.3 This Agreement shall be governed by the laws of the State of New
York. Xxxxx'x standard terms and conditions of sales and delivery of equipment,
however, shall be governed by German law so long as not in conflict with the
terms of this Agreement. In all events, the United Convention on Contracts for
the International Sales of Goods shall be inapplicable.
7. Insolvency Proceedings
7.1 Both W&G and Xxxxx are currently subject to insolvency
proceedings. Accordingly, this Agreement has been signed by Xxxxx'x insolvency
trustee ("Insolvenzverwalter") and is binding on Xxxxx. However, this Agreement
must be approved by the U.S. Bankruptcy Court for the District of Delaware to be
binding on W&G, and this Agreement shall not become effective until such court
issues an order approving this Agreement and such order becomes final and
nonappealable.
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the day first above written.
X.X. Xxxxx AG Insolvenzverwalter
By:_____________________ By:_____________________
Xxxxxxx & Xxxxx, Inc.
By:_____________________
