Exhibit 10.6
DISTRIBUTORSHIP AGREEMENT
This Agreement is made and entered into this 24 day of May, 2002 by and between
CinTel Co. Ltd., a corporation duly organized and existing under the laws of the
Republic of Korea, having its principal office at 7th Floor, MSA Building,
#000-00, Xxxxxx-xxxx, Xxxxxxx-xx, Xxxxx, Xxxxx (hereinafter referred to as "the
Principal") and Sumitomo Metal System Solutions Co., Ltd., a corporation duly
organized and existing under the laws of Japan, having its principal office at
0-0-00, Xxxxxxxxx, Xxxxxx-xx, Xxxxx 000-0000, Xxxxx, (hereinafter referred to as
"the Distributor").
WHEREAS, the Principal desires to appoint the Distributor and the Distributor
desires to be appointed, as the Principal's non-exclusive Distributor for the
sale of the Products (as defined hereinafter) in the Territory (as defined
hereinafter).
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS
In this Agreement except where the context otherwise requires, the following
terms and expressions shall be understood to have the precise meaning as
follows:
1.1 "Products" shall mean the products specified in Appendix 1-1 and 1-2 which
are manufactured by CinTel Co., Ltd. (hereinafter referred to as
"Manufacturer") which shall not include products manufactured by the
Manufacturer on the basis of the Original Equipment Manufacture (OEM)
and/or Contract Manufacture (CM) requested by other parties and products
not having the CinTel brand name.
1.2 "Retail Price" shall mean the price of Products being applied to the
customers in the Territory.
1.3 "Spare parts" shall mean any or all parts and/or components assembled or
incorporated in the Products.
1.4 "Territory" shall mean Japan, which may be extended to other countries
subject to the mutual agreement in writing from time to time.
1.5 "Trademark" shall mean the trademark affixed and/or embodied to the
Products.
ARTICLE 2. APPOINTMENT AND ACCEPTANCE
2.1 [APPOINTMENT & ACCEPTANCE]
During the term and subject to the conditions hereinafter set forth, the
Principal hereby appoints the Distributor as the Principal's non-exclusive
distributor for the Products in the Territory and the Distributor accepts such
appointment.
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2.2 [PROHIBITION ON COMPETITOR'S PRODUCT]
The Distributor shall not, directly or indirectly, through another party,
purchase, import, export, sell, distribute, or otherwise deal in products
competitive with or similar to the Products in the Territory.
2.3 [PROHIBITION ON INDIRECT SALES]
Without the prior written consent of the Principal, the Distributor, its
subsidiary or affiliate shall not, directly or indirectly, sell the Products to
any person or entity which may resell them outside the Territory.
ARTICLE 3. CONDITIONS OF THE DISTRIBUTOR WITHOUT EXCLUSIVE RIGHT
3.1 [OBLIGATION OF THE DISTRIBUTOR]
In order to obtain all the rights of this agreement, the Distributor
simultaneously purchases 3 sets of iCache. And the conditions for the payment of
the price are based on 7.3. in this agreement.
ARTICLE 4. OBLIGATION OF THE DISTRIBUTOR
4.1 [SALES PROMOTION]
The Distributor shall, at its own expenses, use its best efforts to promote the
sale of the Products in the Territory and employee qualified salesman throughout
the Territory to obtain the largest sales volume of the Products in the
Territory.
4.2 [MAINTENANCE]
The Distributor shall perform maintenance and after-sale service for the
customers who bought the Products from the Distributor. For this purpose, the
Distributor shall maintain adequate facilities and sufficient qualified
technician to enable the Distributor to perform maintenance and after-sale
service for the Products.
4.3 [STOCK]
The Distributor shall maintain adequate stocks of the Products to meet its
customer's demand in time. The Distributor shall maintain adequate stocks of
replacement parts, facilities and qualified mechanics and shall provide
reasonable after sales-service to its customers.
4.4 [REPORT ON CUSTOMER'S CLAIM]
The Distributor shall make reasonable efforts to handle all matters necessary to
satisfy the customers relating to the sale of the Products in the Territory and
immediately report to the Principal any claims received by the Distributor from
the customers relating to the Products.
4.5 [REPORT ON PERFORMANCE & MARKETING]
The Distributor shall cooperate with the Principal's request on the sales of the
Products, and the Distributor shall send to the Principal:
a. a written report on its activities in the Territory at three monthly
intervals, such reports to include sales by product including both the
value and units, sales by state, recommended retail price lists,
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advertising and promotion plans for the future and a commentary on the
marketing, sales and distribution performance and plans, matters affecting
pricing policies and achievements and proposals in respect of major
customers; and
b. a written report at three monthly intervals on the stocks of the Product
and parts thereof held by the Distributor.
4.6 [ROLE AS SELLER WITH CUSTOMER]
The Distributor will, in all correspondences and dealings relating directly or
indirectly to the sale or other disposition of the Products, clearly indicate
that it is acting as a principal and not as an agent and/or legal representative
of the Principal.
4.7 [PROHIBITION ON BINDING THE PRINCIPAL]
The Distributor will not give any guarantee or warranty in respect of the
Products except the warranty provisions of Article 8 hereof and will not
otherwise incur any liability on behalf of the Principal or in any way pledge
the credit of the Principal or accept any order or make any contract binding
upon the Principal without the Principal's prior approving the terms thereof.
ARTICLE 5. OBLIGATION OF THE PRINCIPAL
5.1 [SUPPLY PRODUCTS]
The Principal shall supply the Distributor with enough Products to satisfy the
order placed with the Distributor by customers in the Territory.
5.2 [SUPPLY SPARE PARTS]
The Principal shall supply the Spare parts to the Distributor with agreed price
between the parties from time to time for one (1) year after the last shipment
of the Products from the Principal to the Distributor, provided, however, that
the Distributor may purchase the Spare parts from the vendor of the Principal.
5.3 [TECHNICAL ASSISTANCE]
The Principal is obligated to supply the Distributor with technical assistance
such as information and illustrated material, and to send advertising material
suitable for the promotion and advertising of the Products, as in the opinion of
the Principal may be necessary or useful to the Distributor.
ARTICLE 6. ORDER AND SHIPMENT
6.1 [ORDER]
In the Distributor's placing purchase orders for the Products with the
Principal, the Distributor shall clearly describe the Products and quantity
required, price, delivery time, packing, invoicing and shipping conditions, etc.
6.2 [ACCEPTANCE]
Any purchase order placed by the Distributor shall not be binding any parties
unless and until it is accepted by the Principal at its discretion.
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6.3 [TIME TO ORDER & ACCEPTANCE]
The Distributor shall place the order not less than three (3) months prior to
the first shipment date written on such order and the Principal shall give the
Distributor written notice of acceptance or refusal of such order placed by the
Distributor within two (2) weeks from the date of receipt of such order.
6.4 [ORDER FORECAST]
Before three (3) months prior to the end of the each calendar year during the
term of this Agreement, the Distributor shall provide the Principal with an
annual forecast covering coming twelve (12) months.
6.5 [ORDER CANCELLATION]
In case the Distributor cancels the Individual Contract, the Distributor shall
compensate the Principal's damages relating to the Products already made or in
manufacturing process in accordance with such order including any and all costs
and expenses and expected profits of the Principal.
ARTICLE 7. PRICE AND PAYMENT
7.1 [PRICE]
a. The prices of the Products shall be specified in Appendix 2-1 and 2-2
attached hereto and may be varied subject to the mutual agreement by both
parties from time to time. Pricing term for the Products shall be F.O.B.
Inchon Airport in Korea.
b. If the parties cannot agree on prices, the Principal reserves the right to
terminate forthwith this Agreement by giving a written notice to the
Distributor with immediate effect.
c. The increase of the prices for the Products shall not apply to the
Distributor's order which was accepted by the Company before the price
increases.
7.2 [RETAIL PRICE]
The Distributor has a right to decide retail prices for the Products to be sold
by the Distributor in the Territory during the term of this Agreement. The
Distributor shall be in comply with the agreed retail prices by the Principal.
7.3 [PAYMENT]
a. Payment for the Products shall be made by an irrevocable and confirmed at
sight letter of credit issued by a first class international bank. The
confirmation charge of letter of credit shall be borne by the Distributor.
b. For the payment of the value of the Individual Contract, the Distributor
shall open the letter of credit in favor of the Principal or the
Principal's nominee in the form satisfactory to the Principal in accordance
with the instruction of the Principal at least thirty (30) days prior to
the first shipment date written on the Individual Contract and the expiry
date of such letter of credit shall be at least thirty (30) days from the
last shipment date written on the Individual Contract.
c. Currency of payment shall be in United States Dollars.
d. The Distributor shall be liable for and shall pay any tax, duty, charge or
any other impost of a similar nature imposed upon the Principal or the
Distributor according to the laws of the Territory.
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ARTICLE 8. TITLE AND RISK, DELIVERY
8.1 [DELIVERY TERM]
Unless otherwise agreed, the delivery term of the Products shall be FOB Inchon
Airport in accordance with the INCOTERMS 1990 as revised and the title and risk
of Products shall be transferred to the Distributor when the Products shall pass
the ship's rail of the vessel to be shipped.
8.2 [DELIVERY DATE]
The date on the xxxx of lading shall be deemed to be the delivery date of the
Products.
ARTICLE 9. WARRANTY
9.1 [INSPECT]
Promptly after the receipt of the Products, the Distributor may inspect the
quantity and quality of the Products in Territory at the Distributor's cost. If,
upon receipt of the Products after proper and thorough inspection, any of the
Products is found not to be in compliance with the quantity and quality
standards, the Distributor shall notify in writing the Principal of the shortage
or defect of the Products in detail within one (1) month from the discharging
date of the Products and the Principal shall repair or replace the Products not
meeting the quantity and quality standards.
9.2 [WARRANTY PERIOD]
The Principal warrants that the Products shall be free from defects in material
and workmanship for a period of fifteen (15) months from the date of manufacture
of the Products shipped. Any of the Products defective in workmanship shall be
repaired or replaced with good Products free of charge at the Principal's
choice, and defective Product(s) shall be returned to the Principal `Freight
Collect' while repaired Product(s) or replacement Product(s) shall be sent to
the Distributor `Freight Collect.' Namely, all expenses related to sending back
and shipping shall be borne by the parties on a 50-50 basis. Specifically, the
transportation cost from Japan to Korea shall be borne by the Distributor, while
the transportation cost from Korea to Japan shall be borne by the Principal.
9.3 [EXCLUSION OF WARRANTY]
a. This warranty does not extend to any of the said Products which have been:
(1) subjected to misuse, neglect, accident or abuse, (2) improperly
repaired, or altered or modified in any way unless such modification is
approved in writing by the Principal, and (3) used in violation of
instructions furnished by the Principal.
b. THE PARTIES AGREE THAT THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE AND ALL OTHER WARRANTIES AND/OR GUARANTEES
NOT SPECIFIED IN THIS AGREEMENT ARE EXCLUDED FROM THIS TRANSACTION AND
SHALL NOT APPLY FOR THE PRODUCTS.
9.4 [CLAIM NOTICE]
Claims by the Distributor in regard to any defect in the Products shall be in
writing and be dispatched by the Distributor with full particulars within thirty
(30) days after the receipt of Products.
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ARTICLE 10. TRADEMARK
10.1 [GRANT TRADEMARK LICENSE]
During the term of this Agreement, the Principal hereby grants to the
Distributor, a non-exclusive license to use the Trademark for the purpose of
sales and promotion of the Products within the Territory to the extent that the
Principal has been granted the right to use based on the Principal's exclusive
distributorship. When the Distributor uses the trademark, it shall indicate
clearly that the Principal or other entity is sole and exclusive proprietary of
the Trademark.
10.2 [APPROVAL OF AD MATERIAL]
When the Distributor intends to use the Trademark, prior to use, the Distributor
shall inform the Principal of the manner of such use and submit a sample of any
materials including but not limited to, catalogues, leaflets, posters,
newspapers, bearing the Trademark for the Principal's prior inspection and
approval thereto. When the Distributor wishes to change the approved use of the
Trademark, prior to change, the Distributor shall inform the Principal of the
desired change and submit a sample of the materials bearing the altered use of
the Trademark for prior inspection and approval by the Principal in any event,
the manner of use of the Trademark of any change thereof shall be subject to the
Principal's prior written approval and the Distributor shall not use the
Trademark in any other manner than that approved in advance by the Principal.
10.3 [OWNERSHIP ON PROPRIETARY RIGHTS]
The Distributor recognizes that any of the Trademark, trade names, designs,
patent, copyrights, know-how and other proprietary rights, used on or embodied
in the Products ("Proprietary Rights") shall remain the exclusive property of
the Principal. The Distributor shall not have or acquire any right, title or
interest in Proprietary Rights.
10.4 [PROHIBITION]
a. The Distributor shall not, directly or indirectly, apply for the
registration of Proprietary Rights including their translation into any
language.
b. During the term of this Agreement or even after termination, except
otherwise consented by the Principal, the Distributor shall not:
i) use the Proprietary Rights or similar trademark on any other
companies products than the Principal's nor let other companies use
the Trademark; and
ii) directly or indirectly apply for the registration of the trademark
or any other trademark similar thereto with respect to the Products
or any other materials in any country of the world.
c. The Distributor shall not alter, deface, remove, cover or mutilate in any
manner the Proprietary Rights, serial or model numbers, brand, or
Principal's name attached or affixed to any of the Products, without the
prior written consent of the Principal.
10.5 [ANNOUNCEMENT]
The Distributor may, with the prior written consent of the Principal, indicate
that it is an authorized distributor of the Products.
10.6 [NOTICE OF INFRINGEMENT]
When the Distributor finds that a third party infringes or impairs the Trademark
or the Principal's goodwill involved therein, or when a third party brings a
claim, suit or action against the Principal or the Distributor on the ground
that the Distributor's use of the Proprietary Rights may infringe on the third
party's rights, the Distributor shall promptly inform the Principal thereof and
cooperate with the Principal to settle the problem.
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10.7 [CEASE TO USE]
Upon termination of this Agreement for any cause, the Distributor shall cease
holding itself out as a distributor of the Products and cease using, in any way,
Trademark, Principal's name, or its Proprietary Rights or any material similar
thereto.
ARTICLE 11. STATUS OF DISTRIBUTOR
11.1 [NO AGENCYSHIP]
This Agreement does not in any way create the relationship of principal and
agent between the Principal and the Distributor, and under no circumstances
shall the Distributor be considered to be the agent of the Principal. The
Distributor shall not act or attempt to act, or represent itself, directly or by
implication, as an agent of the Principal or in any manner assume or create, or
attempt to assume or create any obligation, liability, representation, warranty
or guarantee on behalf of, or in the name of the Principal. The Distributor
shall conduct its business in the purchase and resale of the Products as a
principal for its own account and at its own expenses and risk.
11.2 [OBEYANCE OF LAWS]
The Distributor shall, at all times, comply with all applicable laws,
regulations, and orders of any government of the Territory or political
subdivisions thereof, relating to or in any way affecting this Agreement and the
Distributor's performance hereunder including the obtaining of any required
licenses, permits or approvals.
ARTICLE 12. NON-DISCLOSURE
The Distributor shall not disclose to any third party, without the prior written
consent of the Principal, or use for any purpose other than the performance of
its obligations under this Agreement, any confidential information concerning
the Products or business affairs of the Principal (including but not limited to,
prices, discounts, terms and conditions of sale, customers, business affairs,
Products or Product specification) which it acquires or develops in the course
of its transaction with the Principal.
ARTICLE 13. TERM
13.1 [TERM & EXTENSION]
This Agreement shall become effective upon signing, and shall continue in full
force and effect for a period of two (2) years from the date hereof, unless
earlier terminated pursuant to Article 15. This Agreement shall be automatically
extended for a successive two (2) years thereafter, unless and until either
party shall give to the other party at least thirty (30) days prior written
notice of its intention not to extend this Agreement.
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13.2 [REVISION OF MINIMUM PURCHASE AMOUNT]
Upon the extension of this Agreement in accordance with Paragraph 14.1, the
minimum purchase amount for each period shall be reviewed and a new minimum
purchase shall be mutually agreed upon in writing by the parties within thirty
(30) days before the commencement of each new period, provided, however, that
the new minimum purchase amount shall be more that those of previous year.
ARTICLE 14. TERMINATION
14.1 [TERMINATION RIGHT WITH IMMEDIATE EFFECTIVENESS]
In each case of the following events, either party ("Terminating Party") may
terminate this Agreement, with immediate effect, by giving the written notice of
termination to the other party ("Defaulting Party"):
a. if the Defaulting Party becomes bankrupt or insolvent, or have its
business placed in the hand of a receiver, assignee or trustee,
whether by voluntary act or otherwise;
b. if the Defaulting Party assigns this Agreement or any rights
hereunder to a third party without the non-defaulting party's prior
written consent;
c. if the Defaulting Party ceases to function as a going concern or to
conduct its operations in the normal course of business;
d. if the Distributor should be acquired by, or should itself acquire,
in whole or in part, a manufacturer of products which in the
reasonable judgment of Principal competes to a material extent with
the Products; or
e. if the Defaulting Party does not remedy the breach or failure to
perform or observe any agreement or condition herein contained within
thirty (30) days of a notice requiring remedy of such breach or
failure to perform or observe
14.2 [PRINCIPAL'S ARBITRARY TERMINATION RIGHT]
Notwithstanding anything to the contrary contained in this Agreement, the
Principal may terminate this Agreement by ninety (90) days prior written notice
served on the Distributor.
14.3 [BREACH OF MINIMUM ANNUAL PURCHASE OBLIGATION]
In case the Distributor fails to achieve the minimum annual purchase for
whatever reasons, unless solely and clearly attributable to the Principal, the
Principal has the right to terminate this Agreement.
14.4 [DUE]
All payments owed to the Principal upon termination of this Agreement shall
become immediately due and no cancellation or termination of this Agreement
shall serve to release the Distributor or its successors or assignees from any
obligations under this Agreement.
14.5 [REPURCHASE OPTION]
In cases of termination of this Agreement by either party for any reason, the
Principal may at its sole option repurchase from the Distributor, at the net
price paid by the Distributor to the Principal, any or all Products or parts
thereof in the possession of the Distributor.
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ARTICLE 15. INDEMNITY
The Distributor hereby irrevocably indemnifies and holds the Principal harmless
from and against all costs, claims, charges, damages, expenses, liabilities and
losses howsoever arising out of or in connection with any breach by the
Distributor of any of its obligations under this Agreement and in particular
without limitation all and any claims and damages of whatsoever nature arising
from the injury or death of any person or persons and for damage to or loss of
property, arising out of or attributable whether directly or indirectly to the
misuse, conduct, operations or performance of the Distributor in violation of
the instruction provided by the Principal.
ARTICLE 16. FORCE MAJEURE
16.1 [FACTORS]
Neither party shall be liable to the other party for non-performance or delay in
performance of any of its obligation under this Agreement due to causes
reasonably beyond its control including but not limited to fire, flood, strikes,
labor troubles or other industrial disturbances, unavoidable accidents,
governmental regulations, riots and insurrections.
16.2 [NOTICE]
Upon the occurrence of such a force majeure condition, the affected party shall
immediately notify the other party with as much detail as possible and shall
promptly inform the other party of any further developments. Immediately after
the cause is removed, the affected party shall perform such obligations with all
due speed.
ARTICLE 17. GOVERNING LAW
This Agreement shall be interpreted and governed by the laws of the Republic of
Korea.
ARTICLE 18. SETTLEMENT (ARBITRATION)
18.1 [ARBITRATION]
All disputes, controversies or differences which may arise between the parties,
out of, or in relation to, or in connection with this Agreement, or for the
breach thereof, shall be finally settled by arbitration in Seoul, Korea in
accordance with the Commercial Arbitration Rules of the Korean Commercial
Arbitration Board and under the laws of Korea.
The award rendered by the arbitrators shall be final and binding upon both
parties concerned.
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18.2 [EXPENSES]
If any action or arbitration or other proceeding shall be commenced to enforce
this Agreement, the prevailing party in such action or proceeding shall be
entitled to recover from the other party reasonable attorney's fees, arbitration
costs and out-of-pocket expenses incurred by such prevailing party in connection
with such action or proceeding.
ARTICLE 19. MISCELLANEOUS PROVISIONS
19.1 [NOTICES]
Any notice required or permitted to be given hereunder shall be in writing, and
may be given by personal service, registered airmail, if confirmed on the same
day in writing by registered airmail, with postage prepaid to the following
addressed:
To the Principal Tel No.: 00-0-000-0000
Fax No.: 00-0-000-0000
Addr.: 0xx Xxxxx, XXX Xxxxxxxx, #000-00, Xxxxxx-xxxx,
Xxxxxxx-xx, Xxxxx, Xxxxx
Attn.: Xxxx Xxxx, Xxx (xxxxxx@xxxxxx.xx.xx)
To the Distributor Tel No.: 00-0-0000-0000
Fax No.: 00-0-0000-0000
Addr.: 0-0-00, Xxxxxxxxx, Xxxxxx-xx, Xxxxx, 000-0000, Xxxxx
19.2 [ENTIRE AGREEMENT & AMENDMENTS]
This Agreement constitutes the entire understanding of the Principal and the
Distributor with respect to the subject matter hereof. No amendment,
modification or alteration of any terms of this Agreement shall be binding on
either party unless the same shall be made in writing, dated subsequent to the
date hereof and executed by or on behalf of the parties hereto.
19.3 [ASSIGNMENT & SUCCESSION]
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors. No assignment of this Agreement shall be
valid without the prior written consent of the other party hereto.
19.4 [WAIVER]
All waivers hereunder shall be in writing, and the failure of any party at any
time to require the other party's performance of any obligations under this
Agreement shall not affect the right subsequently to require performance of the
obligation. Any waiver of any breach of any provision of this Agreement shall
not be construed as a waiver of any continuing or succeeding breach of such
provision or a waiver or modification of the provision.
19.5 [SEVERABILITY]
If any one or more of the provisions contained in this Agreement shall be
declared invalid, illegal or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired, and in such case
the parties hereto oblige themselves to reach the purpose of the invalid
provision by a new, valid and legal stipulation.
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19.6 [HEADINGS]
The headings herein are included for purposes of convenience only and shall not
affect the construction or interpretation of any of the provision of this
Agreement.
19.7 [LANGUAGE]
For the purposes of communication, this Agreement may be translated into another
language, but this Agreement, which is executed in the English language, shall
be the only binding version.
19.8 [TIME]
All time referred in this Agreement and any Individual Contract made under this
Agreement shall be of the essence and material provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have authorized this Agreement to be
executed by their respective duly authorized officers.
CINTEL CO., LTD. SUMITOMO METAL SYSTEM SOLUTIONS CO., LTD.
By : By :
------------------------ ------------------------------
Name: Name:
Title : President/CEO Title :
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APPENDIX 1-1.
ICACHE SPECIFICATIONS
APPENDIX 1-2.
ICACHE SPECIFICATIONS
APPENDIX 2-1.
ICACHE PRICES
(Unit: US$, Exclude VAT)
-------------------------- --------------------- --------------------- --------------------- ----------------------
ICACHE 400 ICACHE 800 ICACHE 1500 ICACHE 2000
-------------------------- --------------------- --------------------- --------------------- ----------------------
-------------------------- --------------------- --------------------- --------------------- ----------------------
10,500 13,500 51,000 118,000
LIST PRICE
-------------------------- --------------------- --------------------- --------------------- ----------------------
-------------------------- --------------------- --------------------- --------------------- ----------------------
60% 60% 60% 60%
D/C RATE
-------------------------- --------------------- --------------------- --------------------- ----------------------
APPENDIX 2-2.
* SPECIFICATIONS IN APPENDIX 1-1, 1-2 AND PRICES IN XXXXXXXX 0-0, 0-0 XXX XX
CHANGED ACCORDING TO THE CONDITIONS OF THE MARKET BY JUDGMENT OF THE PRINCIPAL
(CINTEL).
