EXCLUSIVE DISTRIBUTOR AGREEMENT
This Agreement is entered into as of the 20th day of October, 1993, by
and among RACOM SYSTEMS, INC., a corporation organized and existing under
the laws of the State of Delaware, U.S.A., having offices at 0000 Xxxxxxxxx
Xxxxx Xxxx., Xxxxxxxxx, Xxxxxxxx 00000, (hereinafter referred to as "RACOM")
and RACOM JAPAN, INC., a company incorporated under the laws of Japan, with
its principal office at x/x X.X.X., Xxxxxx Xxxxxxxx, Xxxxxxxxxx,
Xxxxxxxxxx-xxx, Xxxxxxxx-Xxx, 000 Xxxxx, (hereinafter referred to as "RJ").
WHEREAS, RACOM is involved in designing and developing radio frequency
identification systems and products composed of transponders and communicators;
WHEREAS, RACOM and RJ have appointed NS as the exclusive importer of such
products for Japan;
WHEREAS, RJ desires to enter into an exclusive arrangement to market in
Japan certain products manufactured by RACOM and imported by NS; and
WHEREAS, RACOM desires to enter into such an exclusive arrangement with RJ
to authorize RJ to market certain of RACOM's products in Japan;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto hereby agree as follows:
ARTICLE 1 - APPOINTMENT
1.1 RACOM hereby appoints RJ as its exclusive distributor in Japan
(hereinafter referred to as the "Territory") for all products (hereinafter
referred to as "Products") manufactured or sold by RACOM to NS and listed
in the attached Appendix A and RJ hereby accepts such appointment.
ARTICLE 2 - TERM OF AGREEMENT
2.1 This Agreement shall become effective as of the date set forth above when
it has been duly executed BY authorized representatives of RACOM and RJ.
It shall continue in full force and effect for a term of two (2) years
after such date (subject to Article 17 and 18), and at the end of such
two-year period, RACOM and RJ will consider renewal of this Agreement on
mutually acceptable terms.
2.2 This Agreement includes the following appendices:
APPENDIX A: Description of Products
APPENDIX B: Not Applicable
APPENDIX C: Standard Terms and Conditions of Sale
ARTICLE 3 - PURCHASE AND RESALE OF PRODUCTS
3.1 The parties acknowledge that NS, as the exclusive importer of the Products
in Japan, will acquire the Products from RACOM and sell them exclusively to
RJ. RJ agrees to purchase from NS, Products for resale within the
Territory subject to the provisions of this Agreement.
3.2 Recognizing that certain users in the Territory may prefer to place orders
through RJ for direct importation from RACOM, the contribution of RJ toward
the development of such sales will be acknowledged by paying RJ a
commission (a percentage of the net invoiced amount [s]). The commission
percentage is to be determined prior to order placement.
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ARTICLE 4 - DUTIES OF DISTRIBUTOR
In addition to all other duties herein set forth, RJ shall have the
following material obligations.
4.1 SOLICITATION OF ORDERS
RJ shall extend its reasonable efforts in soliciting orders for and selling
Products for delivery to customers within the Territory.
4.2 ADVERTISING
RJ shall advertise Products to such an extent and in such media as is
reasonably necessary to encourage the sale of Products in the Territory.
The entire cost of said advertising shall be paid by RJ, unless otherwise
agreed to in writing by RACOM. If so agreed, RACOM may, at its sole
discretion, contribute an amount up to one-half (1/2) of the cost of said
advertising.
4.3 MAILING LIST
RJ shall develop and maintain a mailing list of existing and prospective
customers within the Territory, and shall periodically mail advertising
literature to said customers.
4.4 TRAINING OF SALES FORCE AND SERVICE PERSONNEL
RJ shall at all times maintain an adequate staff of sales personnel
reasonably necessary to carry out the obligations of RJ under this
Agreement, and shall fully train said sales personnel with respect to all
pertinent aspects of the Products.
4.5 MONTHLY REPORTS
RJ shall submit monthly reports to RACOM showing total sales of Products by
complete part number and type, quantity sold, unit price, price extension,
and customer identification and location. Each monthly report shall be
submitted to the person designated by RACOM, as appropriate, by the end of
the month immediately following the month covered by the report, and shall
further include an itemization of the RJ's inventory of each covered
Product as of the end of the month covered by the report.
4.6 MAINTENANCE OF SALES FACILITIES
RJ shall maintain sales offices in the Territory to encourage the sale of
Products and maintain adequate facilities to assure prompt handing of
inquiries, orders and shipments.
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4.7 SALES AND TECHNICAL LITERATURE
RJ shall at all times maintain sales data on the Products, including price
lists, catalogs and technical bulletin files. RJ shall keep confidential
all know-how and technical information, and any other proprietary
information furnished to it by RACOM.
4.8 BUSINESS INTEGRITY
RJ shall pursue a high degree of business integrity in its dealings with
customers.
ARTICLE 5 - PRICES
5.1 NS shall sell the Products to RJ at the prices designated as distributor
cost in RACOM's current price list or as distributor cost negotiated
between Racom and RJ, whichever is lower. Such prices are F.O.B.
Englewood, Colorado, United States of America, and do not include local
sales, use excise, customs, export, import or similar taxes. RJ shall
assume and pay, or cause to be paid, any and all such taxes, license fees
or other charges incident of the sale of Products, or in lieu thereof,
shall provide NS with a tax exempt certificate acceptable to the
appropriate taxing authorities. RJ shall reimburse NS for taxes and
expenses incurred by NS in importing the Products into the Territory, and
import fees which amount shall in no event exceed 2%, of the distributor
cost of such Products. RJ shall pay all fees, assessments and taxes
levied against Products in RJ's possession.
5.2 RACOM may from time to time, notwithstanding the above, upon written notice
to RJ, change the distributor cost set forth in RACOM's current price list,
such change to be effective thirty (30) days after the date of mailing of
said notice to RJ. RACOM's price list shall then be automatically amended
accordingly.
5.3 Any order from RJ received and accepted by RACOM prior to a price increase
on Products which are the subject of such order shall be shipped at the
price in effect at the time of acceptance of such order. Any order from RJ
received and accepted prior to a price decrease on Products which are the
subject of such order will be shipped at the price in effect at the time of
shipment of such order.
5.4 In the event that the price of precious metals (including, but not limited
to, gold and silver) that are incorporated into the Products rises prior to
the delivery of such Products by RACOM, RACOM may adjust the prices set
forth in
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the current price list immediately by written notice to RJ, and such prices
shall apply to all Products not delivered at the time of such notice. Such
adjustments shall be made in accordance with a formula, determined solely
by RACOM, reasonably designed to pass on the increased cost of such
precious metals.
5.5 In the event of a decrease made under this Agreement in distributor cost on
any Product, RJ may apply for a credit with respect to all items of such
Product then in RJ's inventory equal to the difference between RJ's
original purchase price from NS for such item (adjusted for any credits
previously given with respect to such item pursuant to this paragraph 5.5
or otherwise) and the new lower price. Application for such credit must be
submitted to RACOM within thirty (30) days following the effective date of
the price decrease, and must include a tabulated list setting forth the
following with respect to each applicable Product: RACOM's part number,
quantity, unit price paid, quantity on hand and new unit price. If
necessary, the price paid for such Products by RJ shall be determined on a
first-in, first-out basis. Any such application for credit will be subject
to verification by RACOM, for which purpose RACOM shall be permitted access
to RJ's books and records. No credit will be issued except upon approval
of the application by RACOM. To receive a credit, RJ must be in full
compliance with Paragraph 4.5 (Monthly Reports). Credits shall be applied
against pending or future purchase orders. No cash refunds will be made.
All rights of RJ under this Section 5.5 shall expire upon termination of
this Agreement for any reason.
ARTICLE 6 - PAYMENT
6.1 All payments for covered Products hereunder shall be made by RJ through NS
in accordance with the terms and conditions set forth in Appendix C.
6.2 All payments which are not paid when due shall bear interest at the lesser
of 1.5% per month or the maximum lawful rate from the date of invoice
until payment is received.
ARTICLE 7 - CHANGES IN PRODUCTS
7.1 Upon the mutual agreement of RACOM and RJ, RACOM may, at any time, either
add to, delete or change any of the Products. Any such change shall be
immediately effective upon the giving of written notice of such change to
RJ and upon receipt of such notice Appendix A hereto shall be automatically
amended to conform to such notice.
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7.2 Upon the mutual agreement of RACOM and RJ, RACOM may discontinue the
manufacture or sale of any Product and improve or change the design of any
Product, and RACOM shall not incur any liability thereby, or any obligation
to provide such improvements on Products previously purchased and/or sold
by RJ.
ARTICLE 8 - WARRANTY AND TERMS OF SALE TO END USERS
8.1 RACOM agrees to provide warranty terms to RJ's customers identical to the
standard warranty terms and procedures set forth in Appendix C, except that
the warranty period shall begin at the time of shipment to RJ's customer
from RJ. Subject to the preceding sentence and except as otherwise
expressly provided herein, NEITHER NS NOR RACOM MAKES ANY REPRESENTATION OR
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY,
FITNESS FOR PARTICULAR PURPOSE, OR ANY OTHER MATTER WITH RESPECT TO THE
PRODUCTS. RJ shall not make any additional representations or warranties
regarding the Products.
8.2 RJ shall not, on behalf of RACOM, extend or pass on to purchaser of RACOM's
Products any warranty, other than RACOM's standard warranty, without
written authorization from RACOM.
ARTICLE 9 - RELATIONSHIP OF PARTIES
9.1 The relationship of RJ to RACOM and NS, respectively, hereunder is solely
that of vendee and vendor. Nothing contained herein shall be deemed to
create an agency, joint venture or partnership relationship between the
parties hereto. Nothing contained herein shall be deemed or construed as
granting to RJ any right or authority to assume or to create any obligation
or responsibility, express or implied, for, on behalf of or in the name of
RACOM or NS, respectively, or to bind either RACOM or NS, or any parent,
subsidiary or affiliate of either such party, in any way or manner
whatsoever.
ARTICLE 10 - ASSIGNMENT OF AGREEMENT
10.1 Neither this Agreement nor any interest herein is assignable by any party
hereto, whether by way of assignment, operation of law or otherwise,
without the prior written consent of all other parties hereto. Any
attempted assignment or transfer by any party hereto without the prior
written consent of all other parties hereto shall be null and void.
Transfer of a controlling interest in any party hereto to a party not in
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control at the time of the execution of this Agreement shall be deemed an
assignment of this Agreement for purposes of the restrictions set forth in
this Article 10.
Notwithstanding the foregoing, any party hereto may assign or delegate the
performance of part or all of its obligations under this Agreement to one
or more of its parent, subsidiary or sister companies or affiliates,
provided that:
(i) Such assignment or delegation shall not relieve the assignor of
primary responsibility for performance of its obligations under
this Agreement; and
(ii) Any such assignment or delegation or any acts pursuant thereto
will not be deemed to create any relationship between any party
hereto and any such assignee other than that of vendee and
vendor.
ARTICLE 11 - PATENTS, TRADEMARKS AND TRADE NAMES
11.1 No rights are granted hereunder to RJ under any of RACOM's patents or
trademarks except as are incidental only to the sale of Products by RJ
and the right to use such Products by RJ's customers. RJ shall sell
and promote the Products only under the trade names and trademarks
regularly applied to the Products by RACOM. The forgoing rights
incidental to the sale of the Products shall not survive termination
of this Agreement.
11.2 Whenever RJ shall make reference to its relationship with RACOM, whether
in advertising or otherwise, such relationship shall be expressed only
as follows:
"the exclusive distributor of RACOM products in Japan."
The foregoing right shall not survive termination of this Agreement. RJ
shall be entitled to use the "Racom" name and trademarks only to promote
the sale of Racom products within the Territory and shall not use the
"RACOM" name and trademarks, or any variations thereof, alone or in
combination with other words, or in connection with any product or service
which has not been supplied by RACOM.
ARTICLE 12 - WAIVERS AND AMENDMENTS
12.1 No failure or delay by either party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial waiver thereof
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preclude any other or further exercise thereof or the exercise of any
other rights, powers or privileges.
12.2 Unless otherwise provided herein, this Agreement may not be changed,
waived, discharged or terminated orally, but only by a written
document signed by a duly authorized officer or designee of each party
hereto.
ARTICLE 13 - EXPORT CONTROL LAWS AND REGULATIONS
13.1 Nothing contained in this Agreement shall be construed to require any
party to do, and RJ shall not directly or indirectly do, any act or
thing that will or could constitute a violation of the export control
laws, or other laws and regulations similar in purpose or effect,
applicable in the United States of America, the Territory or any other
country having proper jurisdiction.
ARTICLE 14 - COMMERCIAL POLICY
14.1 Each party hereto agrees that it will not, in connection with this
Agreement or its performance hereunder, directly or indirectly offer,
pay, promise to pay or authorize the payment of any money or thing of
value to any government official or to any person, while knowing or
having reason to know that all or a portion of such money or thing of
value will be offered, given or promised, directly or indirectly, to a
government official for the purpose of (i) influencing any act or
decision of such government official, including a decision to fail to
perform his official functions; or (ii) inducing such government
official to use his or her influence with any government of
instrumentality thereof to affect or influence any act or decision of
such government or instrumentality, in order to assist in obtaining or
retaining business or directing business, to any other party.
14.2 As used in this Article 14, the term "government official" means any
officer or employee of any government or any department, agency,
instrumentality or wholly-owned corporation thereof, or any person
acting in an official capacity for or on behalf of any such government
or department, agency, instrumentality or wholly-owned corporation
thereof, or any candidate for political office.
14.3 Each party hereto shall notify the others immediately of any extortive
solicitation, demand or other request for anything of value, by or on
behalf of any government official or employee of any government and
related to the sale and/or service of the Products in the Territory.
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ARTICLE 15 - COMPETITION
15.1 RJ shall give RACOM sixty (60) days prior written notice before
stocking, handling, selling or offering for sale products competitive
with the Products and shall notify RACOM immediately of any
competitive products which RJ has agreed formally or informally to
stock, handle, sell or offer for sale.
ARTICLE 16 - FORCE MAJEURE
16.1 In the event that any party hereto shall be rendered wholly or partly
unable to carry out its obligations under this Agreement by reason of
causes beyond its control, including but not limited to fire, flood,
explosion, action of the elements, acts of God, accidents, epidemics,
strikes, lockouts, or other labor trouble or shortage, inability to
obtain, or shortage of, material, equipment or transportation,
insurrection, riots or other civil commotion, war, enemy action, acts,
demands or requirements of the governments in any state, or by any
other cause which it could not reasonably be expected to avoid, then
the performance of the obligations of any party as they are affected
by such causes shall be excused during the continuance of any
inability so caused, but such inability shall as far as possible be
remedied within a reasonable period of time; provided, however, that
notwithstanding the above, the provisions of this Article 16 shall not
apply to payment of monies due and owing from one party to another.
ARTICLE 17 - TERMINATION FOR CAUSE
17.1 This Agreement shall immediately terminate upon written notice to such
effect by any party to each other party, without the necessity of
prior advance notice: (i) in the event of any such other party's
voluntary or involuntary bankruptcy or insolvency; (ii) in the event
that any such other party shall make an assignment for the benefit of
creditors; or (iii) in the event that a petition shall have been filed
against such other party under a bankruptcy law, or other law for
relief of debtors, or other law similar in purpose of effect, the
effect of which is to cause such other party to have its business
effectively discontinued and such petition is not dismissed within
thirty (30) days after such filing.
17.2 If any party to this Agreement should breach any material obligation
hereunder, the injured party(s) may give written notice to the
defaulting party specifying the respect in which the said party has
breached the Agreement. In the
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event that such breach is not remedied within thirty (30) days after
such notice, the injured party may, by written notice to the
defaulting party, terminate this Agreement with respect to the
defaulting party, effective upon receipt of such notice.
17.3 The failure of any party to terminate this Agreement due to a breach
on the part of any other party shall not constitute a waiver of its
right to terminate on the basis of such breach or any subsequent
breach.
17.4 Upon termination for cause pursuant to this Article 17, NS may refuse
to fill RJ's orders regardless of receipt and any acceptance prior to
the effective date of such termination, provided, however, that should
NS fill such orders, RJ agrees to accept and make payment therefor in
accordance with the provisions of this Agreement.
ARTICLE 18 - RIGHTS
18.1 Upon expiration or termination of this Agreement, RJ shall return to
RACOM or, at RACOM's direction, dispose of the price lists,
advertising matter and other materials furnished by NS or RACOM, and
all customer records showing sales of Products, as RACOM may direct,
and RACOM's name, trademarks, part numbers and similar identifying
symbols shall not be displayed or used by RJ thereafter.
18.2 In the event of termination of this Agreement for any reason by any
party hereto, within 30 days after the effective date of such
termination, RACOM agrees to purchase and RJ agrees to sell RJ's
entire inventory of standard Products which are not non-moving
inventory or obsolete Products and which are in the original packages
and undamaged and unaltered in any manner from the original form. All
such inventory shall be subject to test inspection and acceptance by
RACOM. The price to be paid by RACOM for such inventory shall
be the lower of (1) RACOM's standard distributor price for the
quantity of each Product in RJ's inventory, in effect at the time of
termination, or (2) the price received from RJ by NS for such
Products, adjusted for prior credits.
18.3 In the event this Agreement is terminated by RJ under Article 17, RJ
agrees to sell and RACOM agrees to purchase RJ's entire inventory of
Products at a price computed as set forth in subparagraph 18.2 through NS.
RJ shall ship such inventory to the location designated by NS or RACOM,
freight and insurance prepaid.
18.4 In the event this Agreement is terminated with respect to RJ by NS or
RACOM under Xxxxxxx 00, XX agrees to sell and
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RACOM agrees to purchase RJ's entire inventory of Products at a price
computed as set forth in subparagraph 18.2, less a handling charge
equal to fifteen percent (15%) of such price through NS. RJ shall
ship such inventory to the location designated by NS or RACOM,
freight and insurance prepaid.
18.5 In the event of the termination of this Agreement by any party hereto,
RJ shall not be required to furnish, after notice of such termination
but before the effective date thereof, quantities of the Products in
greater number or volume than the monthly average furnished to RJ
during the four (4) months last preceding the service of notice of
such termination.
ARTICLE 19 - NOTICES
19.1 Any notice required or permitted to be given by any party to any other
pursuant to this Agreement shall be in writing and shall be deemed to
have been effectively given only if written in the English language
and either delivered to an officer of each other party hereto at such
party's address set forth above or at such other address as shall
hereafter be designated in writing by such party, or when sent to such
address by registered mail, postage prepaid. When a notice is given
by any other means, it shall be effective only upon the actual receipt
by an officer of the party for which it is intended.
ARTICLE 20 - WAIVER
20.1 No failure by any party to enforce or take advantage of any provision
hereof shall constitute a waiver of the right subsequently to enforce
or take advantage of such provision.
ARTICLE 21 - GOVERNING LAW
21.1 Except as altered or expanded by this Agreement, the laws of Japan shall
govern in all respects as to the validity, interpretation, construction
and enforcement of this Agreement.
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ARTICLE 22 - GOVERNING LANGUAGE
22.1 The official text of this Agreement shall be in the English language,
and any interpretation or construction of this Agreement shall be based
thereon.
ARTICLE 23 - ENTIRE AGREEMENT
23.1 This Agreement, including the Appendices hereto, is the entire
understanding between the parties with regard to the distribution of
Products, and supersedes and shall be substituted for each and every
agreement or understanding with respect to distribution of the Products,
whether written, oral or otherwise, except for that certain Exclusive
Import Agreement dated the date hereof between NS and RACOM, which shall
survive and co-exist with this Agreement.
23.2 In the event of any conflict between any of the terms of this Agreement
and anything in any of the Appendices hereto, the terms of this Agreement
shall govern.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement which
has been executed in two (2) English language original counterparts which
shall be regarded as one and the same instrument.
RACOM SYSTEMS, INC. RACOM JAPAN, INC.
By: /s/ illegible By: /s/ Y. Nakazaki
-------------------------------- --------------------------------
Title: President Title: President
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Date: 20 October 1993 Date: 20 October 1993
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