DISTRIBUTORSHIP AGREEMENT
AGREEMENT, made this 20th day of January, 2000, by and among BARUDAN CO.,
LTD., having an address at 00 Xxxxxxxxxx, Xxxxxxx, Xxxxxxxxxx, Xxxxx, 000-0000
Xxxxx (hereinafter referred to as "Barudan Japan"), BARUDAN AMERICA, INC.,
having an address at 00000 Xxxxxxxx Xxxxxxx, Xxxxx, Xxxx 00000 (hereinafter
"Barudan America") (Barudan Japan and Barudan America sometimes collectively
referred to as "Barudan") and XXXXXXX & XXXXX, INC. having an address at 000
Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 XXX, (hereinafter referred to "W&G").
WHEREAS, Barudan manufactures, sells and/or distributes the products
described in Exhibit A attached hereto (hereinafter the "Products"); and
WHEREAS, W&G's subsidiary, Macpherson Meistergram, Inc. ("Macpherson") has
heretofore acted as an exclusive distributor of the Products in the Territory
and W&G now desires to do so itself under the terms of this Agreement; and
WHEREAS, Barudan America has simultaneous with the execution of this
Agreement, acquired from Macpherson, certain assets related to that part of
Macpherson's business having to do with the sale of embroidery machines; and
WHEREAS, as part of the foregoing, Macpherson will no longer be a
distributor of Barudan branded embroidery machines and W&G will become an
exclusive distributor of Barudan branded parts according to the terms of this
Agreement; and
WHEREAS, Barudan and W&G recognize and agree that it is important that
they work with one another and support one another as respects the sale of
Barudan branded parts, by W&G, and Barudan branded embroidery machines, by
Barudan America, under the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties agree as follows:
1. APPOINTMENT AND ACCEPTANCE. Subject to the terms and conditions
hereinafter set forth, Barudan hereby appoints W&G as its exclusive distributor
of the Products to third party customers in the United States (the "Territory")
and W&G hereby accepts such appointment. This exclusive appointment means that
Barudan, during the term of this Agreement, will not appoint any other
distributors of the Products in the Territory. W&G shall only purchase the
Products from Barudan.
2. DUTIES OF W&G.
A. SALES EFFORTS. W&G shall use its best efforts to develop business in,
promote the use of, the sale of, and sell the Products within the Territory. At
its own expense, W&G shall maintain an adequate and efficient staff of sales
personnel, field engineers and technical support suitable for the requirements
set forth in this Agreement.
B. FACILITIES. W&G shall maintain adequate facilities including warehouse,
transportation, and service vehicles as necessary to meet its obligations
hereunder. W&G shall maintain a toll-free "800" telephone number, Internet
access and facsimile service to be used in carrying out this Agreement.
C. EXCLUSIVITY. During the term of this Agreement, W&G shall not
represent, market, sell or otherwise deal with any products competitive with the
Products except: (i) with the written consent of Barudan; and, (ii) as respects
the generic and/or other non-Barudan products carried by W&G in its product line
as of October 31, 1999.
D. INVENTORY. W&G shall maintain sufficient inventories of parts for the
Products consistent with the needs of the market and service.
E. PROMOTION. W&G shall display notifications of its authorized
distributor relationship with Barudan in its facilities and advertisements
including, at a minimum, trade shows and trade publications. W&G shall display
and circulate promotional materials and sales literature as reasonably approved
by Barudan.
F. ORDERS; PAYMENTS. No order that W&G submits to Barudan shall become
effective unless and until it is formally accepted by Barudan. Payment for all
orders shall be made by wire transfer. If W&G shall fail to pay for any Products
or parts shipped hereunder, Barudan may defer further deliveries until the
overdue amounts are paid and until Barudan is satisfied that payment will be
made for further deliveries. W&G shall make all reasonable efforts to process
orders for parts received from customers as soon as possible subject to
availability of parts from Barudan. Barudan shall make all reasonable efforts to
process orders for Products received from W&G as soon as possible. Neither party
shall be liable for delays which are caused by events that are beyond its
reasonable control including, but not limited to acts of God, acts of civil or
military authority, fires, casualties, accidents, strikes or labor difficulties,
riots, police action, civil commotion or demonstrations. In the event of a
Product shortage, Barudan may allocate its available Products among its other
customers in such a manner as it deems best.
G. INSURANCE. W&G agrees to maintain comprehensive general liability,
property damage and products liability insurance against any and all damage,
claims and liabilities arising out of, connected with, or resulting from the
possession, sale, lease, use or operation of the Products. Said insurance
policies shall be in form and amount with insurance carriers who are duly
licensed and in good standing with governmental authorities having jurisdiction
over them, In no case shall the limits of said insurance policies be less than
$2,000,000 per person, $4,000,000 per incident. The insurance policies described
above may be not altered or canceled except upon thirty days prior notice with a
copy of said notice to Barudan. W&G shall provide Barudan with evidence of its
insurance coverage. Barudan may request that it, and Barudan America, Inc. be
listed as an additional insured on any of said insurance policies. W&G shall
comply with all the terms and conditions of said policies of insurance and give
Barudan and the insurance company within 24 hours of an incident a written
report, and further agrees to cooperate with the insurance company and Barudan
in the defense of any and all claims arising out of the possession, sale, lease,
use and operation of the Products.
3. DUTIES OF BARUDAN.
A. INVENTORY SALES. Barudan shall sell to W&G, Products in amounts
sufficient to permit W&G to meet its obligations to its customers (subject to
the provisions of Section 2(f) hereof) and at prices established in Section 4.
B. PROMOTION. Barudan shall identify W&G as an authorized representative
in all advertising or promotional materials of Barudan which identify authorized
dealers, distributors, or representatives of the Products.
C. REFERRALS. Barudan shall refer inquiries regarding Products from
customers within the Territory to W&G.
4. PRICING.
A. W&G PRICES. Barudan shall sell the Products to W&G at the prices shown
on Exhibit A.
B. PRICE CHANGES. In the event Barudan changes the price of any Product,
it shall provide thirty (30) days prior written notification of that increase to
W&G. Such increases shall not affect any orders received by Barudan prior to the
date of delivery of such notification to W&G.
C. BARUDAN PRICES. W&G will sell Products to Barudan on an as need basis
at the prices set forth on Exhibit B.
5. PAYMENT.
A. On or about the 20th day of each month starting with the month of
November 1999, Barudan will prepare and issue a statement to W&G summarizing the
invoices for Products shipped to W&G during the preceding period of
approximately 30 days. W&G shall make payments by wire transfer to Barudan
against such statements by no later than the twentieth day of the following
month. (For example, payment is due by December 20, 1999 for the statement dated
November 20, 1999.) If and to the extent that W&G makes timely payments in
accordance with the foregoing, W&G shall be entitled to a discount of two
percent (2%) off the invoiced prices.
B. On a case by case basis and solely with the written authorization of
W&G, Barudan may, if a customer so requests, xxxx W&G's customer directly. In
such event, Barudan shall keep W&G fully informed of the status of all such
orders and shall provide W&G with copies of all purchase orders, invoices and
other relevant documentation.
6. TERMS. W&G acknowledges and agrees that its purchase of Products from
Barudan shall be subject and according to the Barudan's Standard Terms and
Conditions of Sale set forth on Exhibit C attached hereto; provided however that
the terms of this Agreement shall take precedence over and control in the event
of any inconsistency between the terms of this Agreement and Exhibit C. No
conditions, understanding, or agreement purporting to modify or vary the terms
of this Agreement, including Barudan's Standard Terms and Conditions of Sale,
shall be binding unless hereafter made in writing and signed by the party to be
bound and no modification shall be effected by the acknowledgment or acceptance
of purchase orders, shipping instruction, or other forms containing terms or
conditions at variance with or in addition to those set forth herein.
7. SHIPMENT. Unless otherwise agreed to by the parties, all deliveries of
Products will be to W&G's Sunbrand Division in Atlanta, Georgia. Except as
otherwise provided herein, W&G will ship and xxxx its customers directly from
its Sunbrand Division in Atlanta, Georgia.
8. INDEPENDENT CONTRACTOR. Each party, its employees and agents, shall be
independent contractors with respect to the other party in the performance of
each and all of its duties and obligations pursuant to this Agreement, and each
of the parties, its employees and agents, are not and shall not act or purport
to act as an employee, agent, partner, or representative of the other party or
of the party's manufacturing or marketing affiliates for any purpose whatsoever,
except as may be specifically provided for herein. Each party is and shall act
as an independent contractor, maintaining full responsibility and complete
control over all of its employees, agents, and operations. Neither party is
authorized to assume or create any obligation or responsibility, express or
implied, on behalf or in the name of the other party or its affiliates, or to
bind the other party or its affiliates in any manner or thing whatsoever.
9. PRODUCTS.
A. The Products shall include those Products set forth on Exhibit A and
all replacement, updates or upgrades of the Products or improvements
incorporated into the Products. Barudan will give W&G 30 days' advance written
notice of any changes to or the discontinuance of any of the Products.
B. During the term of this Agreement, Barudan may, at its option, so long
as Barudan does so at no charge (direct or indirect) to its customers,
incorporate in the price of new Barudan branded and Meistergram branded
embroidery machines sold to customers, up to but not exceeding one Tool Kit per
machine and the number of Barudan blue tubular frames set forth below and:
MACHINE TYPE NUMBER OF FRAMES PER SEWING HEAD
------------ --------------------------------
Single head machine 2
4 head machine 4
6 head machine 4
12 head machine 2
15 head machine 2
All other machines 2
In addition, to the inclusion of the above referenced Barudan blue
tubular frames and Tool Kit, Barudan may, at its option, include additional Tool
Kits and other Barudan branded parts and supplies in connection with the sale of
new Barudan branded and Meistergram branded embroidery machines which do not
exceed, in the aggregate, $5,000 per month at W&G's list prices. The
aforementioned Barudan blue tubular frames, Tool Kits and other Barudan branded
parts and supplies can be supplied by Barudan without purchasing such items from
W&G, notwithstanding W&G's exclusive distribution rights set forth in this
Agreement. All other additional or other such products included in the price of
new Barudan branded or Meistergram branded machines or otherwise shipped with
such machine free of charge or shipped with such machine and charged to the
customer must be purchased from W&G at the price and terms set forth in this
Agreement. Thereafter, customer requests for Products shall be referred to W&G
as stated in Section 3(c).
10. LIABILITY. Neither party shall be liable to the other for any indirect
indirect, incidental or consequential damages.
11. TERM. Effective Date until December 31, 2003 (the "Initial Term") and
will be automatically extended for successive three (3) year periods (the
"Extended Term") thereafter on the same terms and conditions as the original
terms, so long as the parties continue to perform under this Agreement until and
unless terminated as hereafter provided.
12. TERMINATION. In the event either party wishes to terminate the Agreement
upon the expiration of the Initial Term or any Extended Terms, such party must
give at least twelve (12) months' prior notice to the other party in writing of
its desire to so terminate at the expiration of the Initial Term or any Extended
Term as the case may be. This Agreement may be terminated by either party prior
to the expiration of the Initial Term or any Extended Term upon three (3) days
notice in the event that the Chapter 11 Bankruptcy proceeding in the United
States Federal Bankruptcy Court in District of Delaware that W&G and its
subsidiaries are involved in as of the date of this Agreement ("Chapter 11
Proceeding") is converted to a Chapter 7 Bankruptcy or the Chapter 11 Proceeding
is concluded and either party thereafter files a voluntary petition for
bankruptcy.
A. EVENTS OF DEFAULT. Upon the occurrence of any of the following events
(which are deemed to be Events of Default), Barudan may (i) terminate this
Agreement, effective immediately and without notice to W&G, (ii) declare all of
W&G's indebtedness to Barudan immediately due and payable and/or invoice
customers directly pursuant to Xxxxxxxxx 00, (xxx) cancel the exclusivity
provision contained in Paragraph 1(b) and have the right to sell directly into
and to enter into additional distributor or representative agreements in the
Territory and/or (iv) exercise all other legal remedies available to Barudan:
(1) W&G's failure to pay, within thirty (30) days after the same shall
become due and payable, any monetary obligation owed Barudan.
(2) Except as otherwise provided herein, W&G's assignment or attempted
assignment of this Agreement, or of any right or interest herein, without
Barudan's prior written consent.
(3) W&G's sale, mortgage, or other disposition of any Products that
are not in the regular course of business, and are for less than full or
adequate consideration.
(4) W&G's failure or refusal to perform any of its non-monetary
obligations hereunder, for a period of sixty (60) days, after written notice is
given to W&G to perform such obligations.
(5) Any change in the control of W&G, except for any change of control
resulting from the Chapter 11 Proceedings which does not result in a competitor
of Barudan having control, which, in Barudan's reasonable opinion, would
adversely affect the representation of Barudan's interests in the Territory.
(6) In the event that (i) W&G's Chapter 11 Proceeding is converted to
a Chapter 7 Bankruptcy; or (ii) the Chapter 11 Proceeding is concluded and W&G
thereafter becomes insolvent, files or has filed against it a case in bankruptcy
which remains open after thirty days from date of filing, makes a general
assignment for the benefit of its creditors, or has a receiver or trustee
appointed for its business or properties.
(7) If W&G fails to use its best efforts to fulfill its sales and
marketing obligations set forth in Section 2(a).
B. RIGHTS UPON TERMINATION. Upon termination of this Agreement:
(1) All unfilled orders which have been accepted by Barudan shall be
fulfilled provided, however, that Barudan may request such payment terms and
conditions, including direct payment from the customer, as Barudan deems
reasonable;
(2) Each party shall return the confidential information of the other
party in its possession and control to the owner of that confidential
information and shall cease using or distributing the confidential information
of the other party for any purpose; W&G shall cease using any Proprietary Marks
(as defined in Section 13 of this Agreement) or promotional materials of Barudan
Japan, Barudan America or Barudan and shall return all materials bearing
Proprietary Marks to Barudan; all restrictions regarding use and disclosure of
confidential information or Proprietary Marks set forth herein shall continue
after termination;
(3) Each party shall cease referring to W&G as an authorized dealer,
representative, or distributor of Barudan; and
(4) Barudan may, within thirty (30) days following the effective date
of termination, request that W&G return to Barudan all or any portion of W&G's
inventory of the Products which are in original cartons and are in merchantable
condition for credit or reimbursement. W&G shall provide all reasonably
necessary supporting documentation for returned goods to Barudan. W&G shall
prepay all freight for the return of such inventory. All amounts due W&G for
such returned inventory shall be due within thirty (30) days after delivery to
Barudan.
13. PROPRIETARY AND CONFIDENTIAL INFORMATION.
A. PROPRIETARY MARKS. Barudan hereby grants to W&G the right to use and
display the trade names, trademarks, service marks, logos, designs, and symbols
of Barudan and Barudan applicable to the Products (the "Proprietary Marks") in
fulfilling its obligations under this Agreement. Such use shall be in accordance
with procedures communicated in writing by Barudan to W&G regarding the
preservation of the distinctiveness of any Proprietary Xxxx. All Proprietary
Marks shall remain the property of Barudan, Barudan Company, Ltd. (Japan) and
Barudan America, Inc, as the case may be W&G shall not remove, replace, or
modify any Proprietary Marks applied to the Products or the packing for the
Products by Barudan. W&G shall provide Barudan with notice of any misuse or
infringement of any Proprietary Xxxx of which W&G may become aware. W&G may
indicate in signs, advertising, publicity or other sales or marketing media or
material, that it is an authorized distributor of Barudan's Products.
B. BENEFITS. The parties hereby agree and acknowledge that Barudan
Company, Ltd. (Japan) and Barudan America, Inc. are and shall remain the
exclusive owners of the various patents, and all scientific or technical
information, designs, processes, invention, procedures, formulae and
improvements, whether patentable or unpatentable, conceived, invented, or
originated by Barudan Company, Ltd. (Japan) and Barudan America, Inc. as well as
all Proprietary Marks and other patented or unpatented knowledge or information
used in connection with the Products (the "Proprietary Property"). W&G has and
shall have no right, title or interest in the Proprietary Property, or any
goodwill related thereto, during or after the term of this Agreement except to
the extent and in the manner, time and places W&G is authorized to use the
Proprietary Marks and designs, subject to the provisions of this Agreement.
C. CONFIDENTIAL INFORMATION. Each party acknowledges that it may receive
confidential information of the other party in connection with the performance
of this Agreement. Such confidential information, whether in written or oral
form, may include, but is not limited to formulas, patterns, programs, devices,
compilations of information, methods, techniques, processes, plans, designs,
drawings, specifications, customer lists, supplier lists, or other materials
which derive independent actual or potential commercial value from not being
generally known or readily ascertainable through independent development or
reverse engineering by persons who can obtain economic value from their
disclosure or use. Each party agrees to hold any information of the other party
marked as "confidential," similarly identified as confidential, or provided in a
manner indicating the confidential nature of the information, in confidence and
agrees not to disclose such information to third parties without the prior
written consent of the owner of such information. Each party agrees that it will
not use the confidential information of the other party for any purpose other
than fulfilling its obligations of performance under this Agreement.
14. WARRANTIES.
A. WARRANTIES OF W&G.
(1) W&G shall not be obligated to make any warranty to customers
regarding the Products sold in their original packaging and may fully disclaim
any express or implied warranties and exclude consequential and incidental
damages with customers in accordance with the warranty (Exhibit D).
(2) W&G hereby warrants to Barudan and for the benefit of Barudan
Company, Ltd. (Japan) and Barudan America, Inc., for a period of a minimum of
thirty (30) days following the completion of any warranty service, or other
service performed by W&G hereunder at Barudan's request and expense, that such
service will be free from defect and that all parts incorporated into the
Product serviced by W&G are original parts unless the specific written
authorization of Barudan for use of other parts has been received by W&G.
B. LIMITED WARRANTIES. Barudan assigns and transfers to W&G the
Limited Warranty issued by Barudan America, Inc. covering the Products as set
forth in Exhibit D. The express warranties set forth in this Section 14 and
Exhibit D shall constitute the only warranties of Barudan and W&G to the
customer regarding the transactions described in this Agreement.
15. RESTRICTIVE COVENANTS. During the continuance of this Agreement, W&G shall
not sell or otherwise represent products of other manufacturers in the Territory
that are in competition with the "New Machine Business" that is being acquired
by Barudan America from W&G by separate agreement (the "Asset Purchase
Agreement") of which this Agreement is a part. This Section 15 shall not limit
or reduce the provisions of Section 2(c).
16. MISCELLANEOUS PROVISIONS.
A. ENTIRE AGREEMENT. This Agreement and the exhibits attached hereto
hereto embody the entire understanding between the parties and supersedes all
prior understandings and agreements related to the subject matter of this
Agreement.
B. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their assigns, or successors; provided,
however, that no party shall assign any right or obligation hereunder, in whole
or in part, without the prior written consent of the other parties herein, and
any attempt to do so shall be void; except that it is agreed that Barudan Japan
may assign its rights and obligations under this Agreement to Barudan America
without the consent of any other party. Barudan hereby consents to W&G using the
subdistributors listed on Exhibit E attached hereto.
C. AMENDMENT, MODIFICATION, OR WAIVER. No amendment, modification,
settlement, compromise, release, or waiver of any condition, provision, or term
of this Agreement shall be valid or of any effect unless made in writing, signed
by the party or parties to be bound, or its duly authorized representative and
specifying with particularity the nature and extent of such amendment,
modification, or waiver. Any waiver by any part of any default of another party
shall not affect or impair any right arising from any subsequent default. Except
as expressly provided in this Agreement, nothing herein shall limit the remedies
and rights of the parties hereto under and pursuant to this Agreement.
D. NOTICES. Except as otherwise provided in this Agreement, all notices to
be given under this Agreement shall be in writing and shall be deemed to have
been duly delivered if delivered in person or if mailed, certified mail, postage
prepaid, United States mail, to the party to be notified at its principal place
of business. Notice given by fax or email shall be confirmed by written copy
thereof sent according to the prior sentence. Any party may change its address
by giving notice in the aforesaid manner to the other party, and ten (10) days
after giving such notice, such party's address shall be deemed to have been
changed.
E. CAPTIONS, HEADINGS OR TITLES. All captions, headings, or titles in
the paragraphs or sections of this Agreement are inserted for convenience of
reference only and shall not constitute a part of this Agreement nor act as a
limitation of the scope of the particular paragraphs or sections to which they
apply.
F. SEVERABILITY. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal, or
unenforceable under any applicable law or rule in any jurisdiction, such
provision will be ineffective only to the extent of such invalidity, illegality,
or unenforceability in such jurisdiction without invalidating the remainder of
this Agreement in such jurisdiction or any provision hereof in any other
jurisdiction.
G. CONDITION. This Agreement is conditioned upon Xxxx X. Xxxxxxx, Xx.
and Xxxx X. Xxxxxxx, Xx. having executed and delivered to Barudan a Non-Compete
Agreement substantially in the form attached hereto as Exhibit F.
H. EXHIBITS. The following Exhibits in their complete text are by this
reference incorporated herein and made a part of this Agreement:
Exhibit A Products and Prices to W&G
Exhibit B Prices to Barudan
Exhibit C Standard Terms and Conditions of Sale
Exhibit D Warranty
Exhibit E Subdistributors
Exhibit F Non-Compete Agreement
I. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
J. GOVERNING LAW. It is expressly understood and agreed that the law
governing this Agreement and the parties' rights hereunder shall be the law of
the State of Ohio. Any legal action or proceeding between the parties with
respect to this Agreement or the transactions contemplated by this Agreement or
the rights of the parties under this Agreement shall be instituted, maintained
and conducted within Cuyahoga County of the State of Ohio in the courts of the
State of Ohio or the United States of America for the Northern District of Ohio,
which courts shall have exclusive jurisdiction.
K. CUMULATIVE RIGHTS. Except as expressly stated herein, no right or
remedy herein conferred upon or reserved to any party hereto is intended to be
exclusive of any other right or remedy herein or by law provided, but each shall
be cumulative and in addition to every other right or remedy given herein or now
or hereafter existing at law or in equity or by statute.
Wherefor, each of the parties has caused this Agreement to be executed
through its duly authorized officer or agent, as of date first written above.
XXXXXXX & XXXXX, INC. BARUDAN CO., LTD.
By: _______________________________ By: _______________________________
Name: Xxxx X. Xxxxxxx Name: Xxxxxx Xxxxxxx
Title: Chairman Title: President
BARUDAN AMERICA, INC.
By: _______________________________
Name: Xxxxxxx Xxxxxx
Title: President
