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EXHIBIT 10.11
DISTRIBUTION AGREEMENT
This AGREEMENT, made as of this 11th day of October 1995 (the
"Agreement"), by and between THE COAST DISTRIBUTION SYSTEM, a California
corporation having its principal offices at 0000 Xxxxxx Xxxx, Xxx Xxxx,
Xxxxxxxxxx 00000 (hereinafter called "Distributor"), and RECREATION VEHICLE
PRODUCTS, INC., a Delaware corporation having its principal offices at 0000 X.
Xx. Xxxxxxx, Xxxxxxx, Xxxxxx 00000 (hereinafter called "RVP").
R E C I T A L S
A. RVP is the manufacturer of aftermarket accessories and parts for
recreational vehicles, including the accessories and parts listed in Exhibit A
hereto (the "RVP Products");
B. Distributor purchases and distributes and resells, at wholesale,
aftermarket accessories and parts of the types set forth in Exhibit A hereto, to
customers consisting primarily of retail dealers, supply stores and service
centers in the United States, and to other wholesale distributors of such
products that operate outside of the United States, that sell such products for
use in connection with the sale or lease, the use or operation or the servicing,
repair or reconditioning of recreation vehicles (hereinafter "After-Market
Customers").
C. Distributor has developed marketing and support programs for its
After-Market Customers that enhance the marketability and salability of the
products it distributes.
D. Distributor also has developed the tooling for the manufacture of
various proprietary recreational vehicle accessories and parts which are
manufactured for Distributor by third-party manufacturers on an exclusive basis
(which products are listed on Exhibit B hereto and are referred to hereinafter
as the "Coast Proprietary Products").
E. RVP desires to obtain more extensive distribution of the RVP Products,
both within and outside the United States and, at the same time, reduce the
costs of the distribution thereof by having such Products distributed through
Distributor's distribution channels in the geographic areas set forth in Exhibit
C hereto (the "Territories"), and to enhance the marketability of the RVP
Products by being able to offer to end-users of the RVP Products the marketing
and support programs developed by Distributor.
F. RVP also desires to be supplied with Coast Proprietary Products for the
purpose of re-selling the Coast Proprietary Products to manufacturers of
recreational vehicles (hereinafter "OEM's") solely for incorporation of such
Products in the vehicles at the time of their manufacture by such OEM's ("OEM
Sales").
G. Distributor desires to market the RVP Products to its customers, and is
willing to provide marketing support therefor, and to arrange for RVP to be
supplied with Coast Proprietary Products for OEM Sales by RVP, on the terms and
conditions hereinafter set forth in this Agreement.
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A G R E E M E N T:
NOW, THEREFORE, in consideration of the above premises and of the
respective promises of the parties hereinafter set forth, it is agreed as
follows:
1. SALES OF PRODUCTS TO DISTRIBUTOR
1.1 Commencing not later than October 11, 1995 and continuing through the
remainder of the term of this Agreement, RVP shall sell the RVP Products to
Distributor in the quantities thereof required by Distributor, and RVP hereby
appoints Distributor as a distributor of the RVP Products to sell the RVP
Products for re-sale in the Territories to After-Market Customers. For purposes
of this Agreement, the term "RVP Products" shall include, in addition to those
products specifically identified on Exhibit A hereto, any accessories, parts or
supplies for recreational vehicles that are introduced by RVP after the date
hereof, whether they represent improved models of existing RVP Products or new
products that RVP has not previously offered for sale and whether or not
manufactured by RVP or by a third party for RVP.
1.2 RVP agrees that, effective as of February 1, 1996, and continuing for
the remainder of the term of this Agreement, but subject to the terms and
conditions set forth in Paragraphs (a), (b) and (c) of this Section 1.2,
Distributor shall have the exclusive right to market and sell the RVP Products
to After-Market Customers in the Territories and RVP will not (i) sell or
otherwise supply (whether by consignment, lease or otherwise) the RVP Products,
or any products that are functionally equivalent thereto or competitive
therewith, whether manufactured by or for RVP, to (A) any wholesale distributor
or other business that sells, or proposes to sell, any of the RVP Products, or
any products that are functionally equivalent to or competitive with any of the
RVP Products, in any of the Territories to After-Market Customers, or (B) to any
After-Market Customers in the Territories, or (ii) authorize or appoint any
other distributor or representative to market or sell the RVP Products in any of
the Territories, except that RVP shall continue to conduct marketing programs
for the RVP Products in the Territories to support sales thereof by Distributor
in accordance with its obligations under this Agreement. Notwithstanding
anything to the contrary contained hereinabove in this paragraph:
(a) Nothing herein shall preclude RVP from selling:
(i) To Camping World, solely for resale at Camping World
retail stores, roof-mount air conditioners or any other products that include
the Xxxxxxx(R) trademark in its brand name; provided, however, that RVP agrees
not to sell to Camping World any RVP Products, or any products that are
functionally equivalent to or competitive with any of the RVP Products,
including, but not limited to, roll-up patio awnings (but excluding awning
supports or awning cradles), that are identified as a Xxxxxxxx(R) product or are
branded with any Xxxxxxxx(R) trade name or trademark or any variant thereof;
(ii) RVP Products to OEM's, but only for incorporation of such
Products on recreational vehicles at the time of their manufacture;
(iii) RVP Products to, or for resale to, end-users that use
such Products
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other than in connection with the sale or lease, the use or operation or the
servicing, repair or reconditioning of recreation vehicles (which, for purposes
of this Agreement, include, without limitation, Class A and Class B motor homes,
travel trailers, fifth-wheel campers and tent campers; and
(iv) RVP Products to Xxx Xxxx, a wholesale distributor owned
by Xxx Co., provided that RVP agrees to terminate sales of RVP Products to Xxx
Xxxx in the event Xxx Co. ceases to own more than fifty percent (50%) of the
outstanding voting stock, or more than fifty percent (50%) of all of the capital
stock, voting and non-voting, of Xxx Xxxx.
(b) Distributor shall not be entitled to purchase, for resale to
After-Market Customers in the Territories, from any manufacturer other than RVP,
any products that are functionally equivalent to or competitive with the RVP
Products listed on Exhibit D hereto (the "Primary Products") prior to the
expiration of the period beginning on February 1, 1996 and ending on the later
of (i) December 31, 1998 or (ii) twelve (12) months from the giving by
Distributor to RVP of written notice of Distributor's intention to begin making
such purchases (the "Distributor's Exclusivity Period"), except that Distributor
may make such purchases during Distributor's Exclusivity Period from other
manufacturers, and RVP shall have no right of termination hereunder as a result
thereof, if and only if such purchases are made by Distributor due to any of the
following events or circumstances: (A) RVP has terminated this Section 1.2 for
any of the reasons set forth in Subparagraphs 1.2(c) (ii) or (iii) hereof, (B)
an inability or failure by RVP, for any reason (including, but not limited to, a
Force Majeure Event as defined in Section 8), to supply Distributor, in
accordance with the provisions of this Agreement, with all of the requirements
of Distributor for the Primary Products as and when needed by Distributor, (C) a
material increase in the incidence of warranty problems, as compared to 1994,
with respect to, or a manufacturer's recall of, either of the Primary Products
or any model thereof, (D) the failure of either of the Primary Products, or any
model thereof, to meet any laws or government regulations applicable thereto or
to the sale or use thereof in any of the Territories, (E) any material breach of
this Agreement by RVP (provided that, in the case of the occurrence of any of
the events or circumstances set forth in clauses (B), (C) or (D) hereinabove
during Distributor's Exclusivity Period, Distributor shall cease purchasing
products that are functionally equivalent to or competitive with the Primary
Products ("Competing Products") when such event or circumstance has been
corrected and Distributor has been able to increase unit sales of the Primary
Products to its customers back to the unit sales volumes thereof being achieved
prior to the occurrence of such event or circumstance). RVP shall be entitled to
terminate this Agreement or may elect, instead, to terminate Section 1.2 of this
Agreement only, if, during the Distributor Exclusivity Period, Distributor
purchases Competing Products other than due to any of the events or
circumstances set forth in Clauses (A) through (E) in this Subparagraph 1.2(b),
and Distributor does not cease such purchases of Competing Products within
thirty (30) days of written notice from RVP that Distributor has violated
Subparagraph 1.2(b).
(c) RVP may terminate this Section 1.2 in its entirety, including
the restrictions agreed to by RVP in, and the exclusive rights granted by RVP to
Distributor under, this Section 1.2, but shall not be entitled to terminate this
Agreement:
(i) On, or at any time after, expiration of the Distributor
Exclusivity
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Period as a result of the giving by Distributor of 12 months' notice of its
intention to begin, at any time after December 31, 1998, making purchases of
Competing Products for resale to After-Market Purchasers in the Territories,
provided that no such termination of this Section 1.2 shall be effective until
the later of (A) the expiration of the Distributor Exclusivity Period or (B) two
(2) months following the delivery by RVP of written notice of such termination
of this Section 1.2 to Distributor; or
(ii) If, over the period commencing on the date hereof and
ending on December 31, 1996, the aggregate number of units of either of the
Primary Products purchased by Distributor from RVP is less than ninety percent
(90%) of the number thereof specified in Annex 1 to Exhibit D hereto, other than
due to (A) an inability or failure by RVP, for any reason (including, but not
limited to, a Force Majeure Event), to supply Distributor, in accordance with
the terms of this Agreement, with all of its requirements for either of the
Primary Products as and when needed by Distributor, (B) a material increase in
the incidence of warranty problems, as compared to 1994, with respect to, or a
manufacturer's recall of, either of the Primary Products, or any model thereof,
(C) the failure of either of the Primary Products or any model thereof, to meet
any laws or government regulations applicable thereto or to the sale or use
thereof in any of the Territories, (D) any Force Majeure Event (as defined in
Section 8 of this Agreement) or any other events outside the reasonable control
of Distributor that adversely affects Distributor's ability to sell either of
the Primary Products; (E) the failure of RVP to have introduced, by January 1,
1996, or such later date as may be agreed to by Distributor, an improved version
of the Roll-Up Patio Awning that meets the requirements set forth in Annex 1 to
Exhibit D or (F) any material breach of this Agreement by RVP.
(iii) If, in any calendar year during the Distributor
Exclusivity Period, commencing with calendar 1997, Distributor fails to purchase
either of the Primary Products in the respective quantities determined in
accordance with Annex 2 to Exhibit D, other than due to (A) an inability or
failure by RVP, for any reason (including, but not limited to, a Force Majeure
Event), to supply Distributor, in accordance with the terms of this Agreement,
with all of its requirements for either of the Primary Products as and when
needed by Distributor, (B) a material increase in the incidence of warranty
problems, as compared to 1994, with respect to, or a manufacturer's recall of,
either of the Primary Products or any model thereof, (C) the failure of the
Primary Products, or any model thereof, to meet any laws or government
regulations applicable thereto or to the sale or use thereof in any of the
Territories, (D) any Force Majeure Event (as defined in Section 8 of this
Agreement) or any other events outside the reasonable control of Distributor
that adversely affect Distributor's ability to sell either of the Primary
Products, (E) the failure of RVP to have introduced, by January 1, 1996, or such
later date as may be agreed to hereafter by Distributor, an improved version of
the Roll-Up Patio Awning that meets the requirements set forth in Annex 1 of
Exhibit D, or (F) any material breach of this Agreement by RVP.
(d) To be effective, termination of this Agreement by RVP pursuant
to Section 1.2(b) or termination of this Section 1.2 by RVP pursuant to
Subparagraph (c)(ii) or (iii) of this Section 1.2, shall require ninety (90)
days' prior written notice of such termination by RVP to Distributor that must
be given by RVP no later than thirty (30) days following the final determination
that Distributor has violated Section 1.2(b) or by March 31 of the calendar year
immediately following any calendar year in which Distributor has been determined
to have failed to
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meet the minimum purchase requirements of either Subparagraph 1.2(c)(ii) or
Subparagraph 1.2(c)(iii). Failure to give such written notice of termination of
this Agreement pursuant to Section 1.2(b) within such thirty (30) day period or
written notice of termination of this Section 1.2 pursuant to Subparagraph
1.2(c)(ii) or Subparagraph 1.2(c)(iii) by March 31 of the calendar year
immediately following any calendar year in which Distributor has been determined
to have failed to meet the minimum purchase requirements of either Subparagraph
1.2(c)(ii) or Subparagraph 1.2(c)(iii) shall constitute a waiver of such right
of termination as a result of the event or circumstance giving rise to such
right. If a dispute arises between the parties as to whether Distributor has
violated Section 1.2(b) or failed to meet the minimum purchase requirements of
Subparagraph 1.2(c)(ii) or Subparagraph 1.2(c)(iii), or as to whether any such
violation or failure is excused by reason of any one of the exceptions set forth
in Section 1.2(b) or by any of the causes set forth in clauses (A) through (F)
of Subparagraph 1.2(c)(ii) or Subparagraph 1.2(c)(iii), then, either party may,
after giving written notice of its intent to do so to the other party, submit
the matter in dispute to binding arbitration in accordance with Section 14
hereof and, in the event of the initiation of any such arbitration, any
termination of this Agreement pursuant to Section 1.2(b) or any termination of
this Section 1.2 (as the case may be) by RVP shall not become effective until
the earlier of the issuance of a decision in such arbitration that RVP is
entitled to terminate this Agreement due to a violation of Section 1.2(b) or to
terminate Section 1.2 pursuant to Section 1.2(c) thereof (as the case may be),
or the expiration of a period of one hundred eighty (180) days following the
initiation of such arbitration if no decision has been rendered by the end of
that 180-day period by the arbitrators. Termination of this Agreement shall be
RVP's sole right and remedy in the event of Distributor's violation of Section
1.2(b) and its failure to cease such violation within thirty (30) days after
written notice from RVP, and termination of Section 1.2 in accordance herewith
shall be RVP's sole right and remedy in the event Distributor has failed to meet
the minimum purchase requirements of either Subparagraph 1.2(c)(ii) or
Subparagraph 1.2(c)(iii).
(e) Notwithstanding anything to the contrary set forth above in this
Section 1.2, Distributor shall be entitled to purchase, market, distribute and
sell to After-Market Customers in the Territories any Competing Products from
any manufacturer other than RVP (i) in Distributor's discretion at any time on
or after the expiration of the Distributor Exclusivity Period, (ii) in
Distributor's discretion at any time on or after RVP has given Distributor
notice of RVP's intention to terminate this Section 1.2 due to any of the events
or circumstances set forth in Subparagraphs (c)(ii) or (iii) of this Section
1.2. Any termination by RVP of this Section 1.2 due to any of the events or
circumstances set forth in Subparagraphs (c)(i), (ii) or (iii) of this Section
1.2, or any election by Distributor to purchase and market, distribute or sell
any Competing Products pursuant to clauses (B), (C) (D) or (E) of Section 1.2(b)
or pursuant to clause (i) or (ii) of this Subsection 1.2 (e), shall not affect
the obligations of RVP or the rights of Distributor under Section 1.1 or any
other Sections of this Agreement, which shall continue in full force and effect,
provided that any and all restrictions on Distributor's right to purchase and
market, distribute or sell Competing Products from other manufacturers also
shall terminate in the event of a termination of this Section 1.2 by RVP or an
election by Distributor to purchase and market, distribute or sell any Competing
Products pursuant to clause (i) of this Subsection 1.2(e).
1.3 Distributor hereby agrees to authorize and permit the third-party
manufacturers of the Coast Proprietary Products ("Third-Party Manufacturers"),
who have exclusive supply arrangements with Distributor covering sales of such
Products for recreation vehicle applications,
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to sell such Coast Proprietary Products directly to RVP exclusively for OEM
Sales by RVP under any of the RVP Trademarks (which are listed on Exhibit H
hereto), during the term of this Agreement. The prices and delivery terms that
shall govern purchases of the Coast Proprietary Products by RVP shall be subject
to determination by agreement directly between RVP and such Third-Party
Manufacturers who, RVP hereby acknowledges, are under no obligation or duty to
sell any of the Coast Proprietary Products to RVP. RVP agrees that the failure
or refusal of any such Third-Party Manufacturers to sell the Coast Proprietary
Products to RVP shall not constitute a breach of this Agreement by Distributor,
but Distributor shall provide reasonable cooperation to RVP in its efforts to
obtain the agreements of such Third-Party Manufacturers to sell such Products to
RVP for OEM Sales. RVP further agrees that if it elects to purchase any Coast
Proprietary Products from any of the Third-Party Manufacturers, it shall notify
Distributor thereof in writing and, prior to commencing purchases thereof
(whether or not such notice has been given), RVP shall have agreed to compensate
Distributor, on an equitable basis, for research and development expenses
incurred or to be incurred by Distributor in the design of and the development
of tooling for, such Coast Proprietary Product and, upon agreement of the
parties as to the amount to be paid by RVP to Distributor, such amount shall be
set forth on Exhibit B hereto. Distributor agrees that the rights of RVP under
this Section 1.3 shall survive any termination of this Agreement, and, as
consideration for such agreement by Coast, RVP agrees that (i) it will not sell
any Coast Proprietary Products, or any products that are functionally equivalent
thereto or competitive therewith, to any After-Market Customers (including, but
not limited to, Camping World) in the Territories, other than to OEM's in OEM
Sales, either during the term of this Agreement or at any time thereafter
without the prior written consent of Distributor, which it may withhold in its
sole and absolute discretion, (ii) RVP is not acquiring hereby and agrees not to
seek to acquire from any such Third-Party Manufacturers any rights to
manufacture or make any of the Coast Proprietary Products and RVP shall not
develop tooling to manufacture or make, or have made by any other manufacturers,
any of the Coast Proprietary Products or any products functionally equivalent
thereto, either during the term of this Agreement or at any time thereafter
without the prior written consent of Distributor which it may withhold in its
sole and absolute discretion. RVP further agrees that it shall not enter into
any agreement with any of such Third-Party Manufacturers that would breach,
violate or conflict with any of the restrictions set forth hereinabove in this
Section 1.3 with respect to resales or manufacture of the Coast Proprietary
Products by RVP, which restrictions shall survive any termination of this
Agreement.
2. ORDERS AND PRICES
2.1 RVP Products shall be purchased hereunder pursuant to purchase orders
issued by Distributor to RVP specifying the RVP Products and the quantities
thereof being purchased and the delivery locations therefor; provided that, if
any provision of any such purchase order conflicts with any of the provisions of
this Agreement, the provisions of this Agreement shall control and no such
purchase order shall be effective to impose any obligation on RVP that is not
contained in this Agreement or imposed by applicable laws or regulations, or to
diminish any rights that RVP may have under this Agreement or under applicable
laws or regulations. No terms or provisions contained in any order confirmation,
invoice or shipping order issued by RVP shall be effective to alter any
provisions of this Agreement or to impose any obligation on Distributor that is
not contained in this Agreement or imposed by applicable laws or regulations, or
to diminish any rights that Distributor may have under this Agreement or under
applicable laws or regulations. RVP shall
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deliver, or cause to be delivered, to the locations specified by Distributor,
substantially all of the RVP Products ordered by Distributor within at least
thirty (30) days of the date the Distributor's purchase order for such RVP
Products is delivered to RVP. In each six-month period during the term of this
Agreement from and after April 1, 1996, Distributor shall endeavor to order RVP
Products from RVP in a quantity that will not vary, by more than twenty percent
(20%) from the forecast of its anticipated RVP Product orders for such periods
given to RVP by Distributor pursuant to Section 4.4 hereof.
2.2 The Distributor shall pay RVP, for the RVP Products purchased by
Distributor pursuant to this Agreement, the applicable prices for such Products
listed on Exhibit E hereto. Such prices are not subject to change until October
1, 1996. Effective as of October 1, 1996, and on each April 1 and October 1 in
each year thereafter during the term of this Agreement (hereinafter, "Adjustment
Dates"), the prices set forth in Exhibit E hereto shall be subject to adjustment
as follows:
(a) At least sixty (60) days prior to each Adjustment Date during
the term of this Agreement (the "Notice Dates"), RVP shall notify Distributor,
in writing, of the increases or decreases (as the case may be) in the direct
materials costs and the direct labor costs being incurred by RVP in the
manufacture of each RVP Product as of a date within ten (10) business days
preceding each Notice Date (hereinafter, the "Determination Date") from the
direct materials costs and direct labor costs being incurred by RVP in the
manufacture of each RVP Product as of the immediately preceding Determination
Date (which shall be the date of this Agreement in the case of the price
adjustments to be made as of October 1, 1996). Each such notice shall set forth
RVP's determination, made in accordance with the provisions hereinafter set
forth in this Subsection 2.2, of the price increases or decreases in each of the
RVP Products that will become effective as of the next succeeding Adjustment
Date, and shall be accompanied by sufficiently detailed financial information
and invoices of RVP's direct materials suppliers by which Distributor, or its
accountants, will be able to verify the amount of any such cost increases or
decreases and RVP shall provide to Distributor such additional information as it
may reasonably request for that purpose.
(b) Subject to Subsection 2.2(d), if the sum of the dollar amounts
of the direct materials costs and the direct labor costs of any RVP Product as
of the Determination Date immediately preceding a Notice Date (the "Current
Determination Date") has decreased from the sum of such costs as of the
Determination Date immediately preceding such Current Determination Date (the
"Immediately Preceding Determination Date"), the price of such RVP Product in
effect on the Current Determination Date shall be reduced, as of the next
succeeding Adjustment Date, by the dollar amount of that decrease. For example,
if as of a Current Determination Date the direct materials costs of a RVP
Product is $20.00 lower, and the direct labor costs are $10.00 higher, than at
the Immediately Preceding Determination Date, then, the price of that RVP
Product will be reduced by $10.00 per Product as of the next succeeding
Adjustment Date (i.e., $10 + (-$20) = -$10).
(c) Subject to Subsection 2.2(d), if the sum of the direct materials
costs and direct labor costs of any RVP Product as of the Current Determination
Date has increased from the sum of the direct materials costs and direct labor
costs of such Product as of the Immediately
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Preceding Determination Date, then, the price for that RVP Product that is in
effect on such Current Determination Date shall be increased as of the next
succeeding Adjustment Date by a dollar amount that is determined by multiplying
the price of the Product in effect on the Current Determination Date by the
percentage that results from multiplying (x) 0.87 times (y) the percentage
increase that has occurred in the sum of the direct materials and direct labor
costs of such RVP Product between such Immediately Preceding Determination Date
and the Current Determination Date. For example, if the sum of the direct
materials costs and direct labor costs of an RVP Product as of the Current
Determination Date is three percent (3%) higher than the sum of such costs of
that Product as of the Immediately Preceding Determination Date, the price of
that Product shall be increased as of the next succeeding Adjustment Date by a
dollar amount that results from multiplying the price of that Product in effect
as of the Current Determination Date by 2.61% (which is the percentage that
results from multiplying 0.87 and 3%).
(d) Notwithstanding the foregoing, any price adjustment that is to
be effective as of any Adjustment Date occurring during the period from October
1, 1996 through September 30, 1997, inclusive, shall be based only on the
increases or decreases (as the case may be) in direct materials costs that have
occurred from the Immediately Preceding Determination Date to the Current
Determination Date, so that increases or decreases in RVP's direct labor costs
occurring between the date hereof and October 1, 1997 shall be disregarded in
the determination of price adjustments, if any, that will become effective on
October 1, 1996, April 1, 1997 and October 1, 1997.
(e) On or before each Adjustment Date, Exhibit E hereto shall be
amended to set forth the prices of each of the RVP Products, as they have been
adjusted or are to be adjusted as of such Adjustment Date. In the event that,
during the term of this Agreement, any new products are added to the list of RVP
Products in Exhibit A hereto, the price thereof shall not be adjusted until the
first Adjustment Date occurring after two (2) months have elapsed following
Distributor's initial purchase of such Product from RVP and, in determining the
first price adjustment thereto, the date of such initial purchase shall be
deemed to be the immediately preceding Determination Date.
2.3 All amounts due RVP by Distributor for the purchase of any RVP
Products pursuant to this Agreement are due thirty (30) days from the date of
invoice thereof, provided that the invoice date shall be no earlier than the
date such RVP Products are shipped to Distributor. Distributor shall receive a
discount of two percent (2%) of all amounts paid within thirty (30) days from
the date of invoice thereof. Any such amounts not paid within thirty (30) days
of the invoice date shall bear interest thereafter at the lesser of fifteen
percent (15%) per annum or the maximum rate permitted by law, until such amounts
have been paid.
3. DELIVERY OF PRODUCTS
RVP Products to be delivered by RVP pursuant to any Distributor purchase
order to locations designated by Distributor within the United States shall be
shipped by truck and, in the case of shipments of roll-up patio awnings or
roof-mount air conditioners, shall be shipped in truckloads of 100 units and 224
units, respectively; unless Distributor supplies to RVP explicit instructions
for another method of shipment and Distributor agrees to pay for any additional
freight
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changes that result from its choice of an alternative method of delivery or the
parties agree on another method of delivery. Distributor shall take title to the
RVP Products at the time such Products are delivered to the delivery location
specified on the purchase order issued by Distributor for such Products.
Deliveries of RVP Products by RVP to Distributor shall be (a) F.O.B. the
Distributor's warehouse in the United States or Canada for which the RVP
Products have been ordered by Distributor, (b) F.O.B. at a location at the U.S.
Border designated by Distributor with respect to RVP Products for Mexico, (c)
F.O.B. at a United States port designated by Distributor with respect to air
conditioners for Australia, and (d) F.O.B. Malden, Massachusetts with respect to
Awnings for Australia.
4. OBLIGATIONS OF DISTRIBUTOR
4.1 Distributor shall, during the term of this Agreement, use its
commercially reasonable efforts to sell and promote the sale of the RVP Products
in the Territories.
4.2 Distributor shall, during the term of this Agreement, maintain (i) an
adequate sales organization reasonably capable of the active solicitation of the
sale of the RVP Products in the Territories; (ii) general liability and
contractual liability insurance, in such amounts as are set forth on Exhibit I
hereto, and with such insurance companies as is customary in accordance with
sound business practices for a business of the nature, size and scope of the
Distributor; and (iii) inventory levels of the RVP Products reasonably adequate
to meet the needs of Distributor's customers for the RVP Products.
4.3 Commencing not later than February 1, 1996, or such later date as may
be agreed by RVP, and continuing during the term of this Agreement, Distributor
shall undertake advertising and promotional activities with respect to the RVP
Products that are comparable to those activities undertaken by Distributor with
respect to functionally comparable products marketed and sold by Distributor
prior to entering into this Agreement. In connection therewith, during the term
of this Agreement, RVP shall, at the request of and at no charge to Distributor,
provide Distributor with camera-ready, full-color photographs and illustrations
of all of the RVP Products for inclusion in Distributor's catalogs and
advertising materials.
4.4 Distributor agrees to supply RVP with monthly reports prepared by
Distributor relating to each quarter's sales of the RVP Products by Distributor
in the Territories; inventories of the RVP Products on-hand at the warehouses of
the Distributor; forecasts twice each calendar year regarding anticipated sales
of the RVP Products in the Territories for the succeeding six (6) months; and
statistical and other information regarding the customers that purchase the
Products from Distributor; provided that Distributor shall not be obligated to
provide RVP with customer lists or other information identifying Distributor's
customers.
5. OBLIGATIONS OF RVP
RVP agrees, during the term of this Agreement, that:
5.1 Subject to the provisions of this Agreement, RVP shall supply all of
Distributor's requirements for the RVP Products as and when needed by
Distributor.
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5.2 RVP shall invoice Distributor for each Product sold no sooner than the
date of shipment thereof to the F.O.B. point and, unless otherwise instructed by
Distributor in writing, RVP shall ship the RVP Products ordered by Distributor
as soon as reasonably practicable after orders for Products are received by RVP
from Distributor; provided, however, that RVP agrees that, unless excused by
Section 8 or otherwise agreed by the parties, in no event shall RVP Products
ordered by Distributor be delivered by RVP more than thirty (30) days after
receipt by RVP of the purchase order therefor issued by Distributor.
5.3 RVP will from time to time provide Distributor with sales literature
relating to the RVP Products, at RVP's expense, in such quantities as RVP
reasonably determines.
5.4 RVP shall undertake in the Territories advertising and promotional
activities with respect to the RVP Products comparable to those activities
undertaken by RVP for the RVP Products prior to entering into this Agreement. In
addition, RVP shall participate in cooperative advertising programs with
Distributor on the terms described in Exhibit G hereto.
5.5 RVP shall use its best reasonable efforts to conduct on-going product
development and improvement activities designed to maintain and improve the
operation and competitiveness, and to prevent the obsolescence, of the RVP
Products.
5.6 Maintain, either directly, or through a third-party service provider
reasonably acceptable to Distributor, adequate service centers in the
Territories to provide warranty and post-warranty service on the RVP Products.
Notwithstanding any other provision hereof to the contrary, RVP may sell repair
parts to such service centers in the Territories.
5.7 RVP hereby grants to Distributor a fully-paid, non-exclusive right and
license, during the term of this Agreement, to (i) disclose to the public that
it is an authorized distributor of the RVP Products, (ii) to use and reproduce
the "Xxxxxxx" and "Xxxxxxxx" and other trademarks described and illustrated on
Exhibit H hereto, as well as any other trademarks that RVP may use hereafter to
identify or describe any of the RVP Products purchased by Distributor from RVP
for resale in the Territories (collectively the "RVP Trademarks") in connection
with the promotion, marketing and sale of the RVP Products, and (iii) use and
reproduce the RVP Trademarks listed on Annex 1 to Exhibit H on, and in
connection with the promotion, marketing and sale of, the Coast Proprietary
Products and those additional products manufactured by or for Distributor that,
by agreement of the parties hereafter, are listed on Annex 2 to Exhibit H hereto
(the "Coast After-Market Products"), provided that, in the case of the Coast
After-Market Products, such Products meet RVP's quality standards. RVP shall
determine whether any such Coast After-Market Products listed, as of the date
hereof, on Annex 2 to Exhibit H hereto meet RVP's quality standards within sixty
(60) days of the date hereof, and within sixty (60) days after Distributor
submits for evaluation by RVP any additional product for inclusion as a Coast
After-Market Product. If RVP concludes that any Coast After-Market Product does
not meet its quality standards, it shall provide Distributor with written notice
thereof within such applicable review period, specifying in detail the
deficiencies of such product (a "rejected product"). Distributor may re-submit
any such rejected products for re-evaluation by RVP, which shall not
unreasonably delay its evaluation thereof. The right and license granted
hereunder by RVP to Distributor shall be irrevocable during the term of this
Agreement; provided that Distributor agrees that it will not use
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any of the RVP Trademarks in connection with the marketing or sale of any goods
or services, other than the RVP Products, the Coast Proprietary Products, and
the Coast After-Market Products approved by RVP, and shall not publish any
advertising literature or other materials that incorporate any of the RVP
Trademarks unless such literature or other materials have been furnished to
Distributor by RVP or have been approved in advance by RVP. Distributor shall
submit all advertising copy and other materials (other than those supplied by
RVP) in which it intends to use any RVP Trademarks to RVP for its approval
thereof at least thirty (30) days prior to the anticipated publication thereof
by Distributor. RVP agrees to advise Distributor in writing within such thirty
(30) day period of RVP's approval or disapproval of such literature or other
materials and, if RVP disapproves of any literature or materials it shall
specify in the notice of disapproval the reasons therefor and any changes it
requires before it will approve the literature or other materials so submitted.
Distributor shall not make any material changes in any advertising or other
documents containing any RVP Trademarks that have previously been approved by
RVP without again obtaining RVP's approval thereof in accordance with the
provisions hereof. In the event of and notwithstanding any termination of this
Agreement, other than by reason of a material breach of this Agreement by or the
bankruptcy of Distributor, Distributor may elect, by written notice to RVP to
extend the term of the non-exclusive fully-paid trademark license granted to
Distributor by RVP hereunder for the Coast Proprietary Products and the Coast
After-Market Products for an additional five (5) years beyond the effective date
of termination of this Agreement without the payment of any royalty or license
fee to RVP.
5.8 RVP shall participate as a presenting manufacturer at each of
Distributor's annual trade shows that takes place during the term of this
Agreement, and, in connection therewith, shall:
(a) Pay to Distributor the sum of $32,000 for the floor space
occupied or used by RVP in promoting the sale of its Products at each annual
trade show; and
(b) In connection with sales of RVP Products made at each such trade
show under Distributor's "Dating Program," RVP shall provide Distributor with
credit terms comparable to those offered by Distributor to its customers under
such program; provided that the period of any such credit extension by RVP to
Distributor, as a result of the extension of credit by Distributor to any of its
customers, shall not exceed ninety (90) days and RVP shall not be obligated to
provide Distributor with any such credit extension more than once per calendar
year in respect of any extension of credit by Distributor to any customer under
Distributor's Dating Program.
5.9 RVP agrees that:
(a) During the term of this Agreement and for a period of three (3)
years following its termination, RVP shall maintain policies of insurance in the
amounts and with the insurers set forth in Exhibit I hereto, at all times naming
Distributor as an additional insured thereunder and, in addition, protecting
Distributor from any and all liabilities to customers or to other third parties
arising out of the manufacture by RVP, or the sale by Distributor or by its
customers (unless arising from the negligence or intentional wrongful acts of
Distributor or its customers), or the use by any person or entity, or the
condition of, any of the RVP Products.
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(b) In the event RVP is self-insured for any portion of its general
liability obligations, RVP agrees to maintain, during the period specified in
Subsection 5.9(a) above, policies of insurance naming Distributor as an
additional insured under RVP's primary and excess umbrella liability policies
and shall furnish to Distributor a certificate of an officer of RVP as to the
amount of the self-insured retention and the existence of umbrella coverage of
at least $_________.
(c) Each policy of insurance required to be maintained by RVP
hereunder shall contain provisions to the effect that the policy limits may not
be reduced, terms changed or the policy cancelled on less than thirty (30) days'
prior written notice to Distributor. The insurance required to be provided under
this Subsection 5.9 shall be primary with respect to any other insurance
available to Distributor or its subsidiaries and shall contain a waiver of
subrogation by the RVP's insurance carriers against Distributor and its
insurance carriers with respect to the liabilities and obligations required to
be covered by insurance to be obtained and maintained by RVP pursuant hereto.
(d) Within thirty (30) days of the date hereof, and at such other
times as may be requested by Distributor during the term of this Agreement and
during the three-year period referenced in Subsection 5.9(a) above, RVP shall
furnish Distributor certificates of insurance evidencing RVP's compliance with
the provisions of this Section 5.9.
6. RETURN OF PRODUCTS
RVP Products purchased by Distributor hereunder may be returned to RVP
when (i) such Products are defective or do not meet specifications; (ii) when
such Products are returned to Distributor by its customers pursuant to any RVP
Product warranty. RVP agrees to accept, without charge, the return of all RVP
Products returned for any of the reasons hereinabove set forth and all RVP
Products shipped in error by RVP to Distributor pursuant to this Agreement and
to issue to Distributor a credit in an amount equal to the prices charged by RVP
for such returned RVP Products, plus the freight charges incurred by Distributor
in returning such RVP Products. RVP further agrees, at Distributor's request, to
rework or upgrade obsolete RVP patio and window awnings in Distributor's
inventories of such RVP Products to current and saleable fabric colors or
patterns and to bear fifty percent (50%) of the costs thereof, provided that
Distributor agrees to pay the other fifty percent (50%) of such costs.
7. PATENTS AND TRADEMARKS
7.1 No rights to manufacture are granted to Distributor by this Agreement
and no licenses are granted or implied by this Agreement under any patents used,
owned or controlled by RVP or under which RVP has any rights of manufacture,
except the right to market, sell and use the RVP Products.
7.2 Except as and to the extent otherwise provided in Section 5.9,
Distributor shall not acquire any right, title or interest in or to any of the
RVP Trademarks. Distributor shall not in any way mutilate, deface, or alter
trademarks, trade names, or company names affixed to the RVP Products by RVP.
RVP agrees to add to the RVP Products or Product packaging materials,
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labeling, commercially acceptable to RVP, that is required by any laws or
regulations applicable to the marketing or sale of such Products.
7.3 Upon termination of this Agreement, Distributor shall return to RVP
all materials received by Distributor from RVP bearing any trademarks of RVP,
and shall not make any further use thereof, except in connection with the
marketing and sale of inventories of the RVP Products in the possession of
Distributor at the time of such termination as permitted by Section 12.1 of this
Agreement, and in connection with the marketing and sales, following such
termination, of Coast Proprietary Products and Coast After-Market Products.
7.4 RVP represents and warrants that it has the right to grant to
Distributor the licenses granted under Section 5.7 hereof, without violating the
rights of any other person or entity, and that neither the use by Distributor in
accordance with the terms of this Agreement of the RVP Trademarks licensed
hereunder to Distributor, nor any of the RVP Products supplied to Distributor
hereunder, will infringe any patent, copyright, trademark or other industrial or
intellectual property right or trade secret or other proprietary rights of any
third party in any country in the Territories.
8. FORCE MAJEURE
If any party hereto is prevented from performing its obligations hereunder
by reason of the occurrence of an event of force majeure or an act of God (a
"Force Majeure Event"), which shall include insurrections, riots, wars and
war-like operations, trade embargoes, explosions, governmental acts, epidemics,
failure of independent contractors to perform, strikes, lock-outs, fires, acts
of any public enemy, earthquakes, hurricanes and storms, inability to obtain
required materials or supplies or qualified labor or services (such as, but not
limited to, freight services), and the promulgation of any applicable law,
regulation or restriction, not in effect on the date hereof, by any foreign, or
federal, state or local governmental entity or instrumentality, such party shall
be excused from the performance of those of its obligations affected thereby for
the duration of such Force Majeure Event and for such period thereafter as may
be reasonably required to resume performance hereunder; but only if the
occurrence of the Force Majeure Event preventing performance could not have been
avoided through the exercise of reasonable diligence by the party seeking to be
excused from performance. Any party hereto whose performance is prevented by any
such Force Majeure Event shall use its commercially reasonable best efforts to
avoid, remove, or cure such circumstances and shall resume performance with
utmost dispatch when such circumstances are removed or cured. Any party claiming
such circumstances as an excuse for delay in performance shall give prompt
notice in writing thereof to the other party, together with an estimate as to
when performance shall be resumed.
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9. TAXES
Distributor shall, at its sole expense, pay all sales or similar taxes or
levies or import or export duties required by any state, local or municipal
government to be paid on the resale by Distributor of the RVP Products purchased
by it pursuant to this Agreement.
10. COMPLIANCE WITH LAWS
RVP agrees that the RVP Products, and all materials in which they are
packaged, shall comply with all applicable foreign, federal, state, and local
laws, including, but not limited to, those applicable to product packaging and
labeling and all environmental laws and regulations applicable to the Products
or the product packaging. Distributor shall comply with all applicable federal,
state, and local laws relating to its marketing and sales of the Products in the
Territories.
11. DURATION AND TERMINATION
11.1 Unless sooner terminated pursuant to Section 11.2 or Section 11.3
below, this Agreement shall become effective on the date hereof and shall remain
in full force and effect for a period of five (5) years from the date hereof
(the "Initial Term") and, commencing at the end of the Initial Term and each
year thereafter, this Agreement shall be automatically renewed (without the
requirement of any action on the part of either party) for an additional one (1)
year period (each, a "Renewal Period"). Notwithstanding the foregoing, either
party may terminate this Agreement, without cause, effective on two (2) years'
prior written notice of termination to the other party; provided that no
termination, other than a termination pursuant to Section 11.2 or Section 11.3,
shall be effective prior to the end of the Initial Term. For example, by way of
illustration, for a party to terminate this Agreement at the end of the Initial
Term, it must give written notice of termination to the other party by no later
than the end of the 36th month of the Initial Term; or, if a party were to give
such notice in the 37th month of the Initial Term, the effective date of such
termination (unless this Agreement is sooner terminated pursuant to Sections
11.2 or 11.3) would be the end of the 72nd month of the term of this Agreement,
because such termination notice would have been given less than two years prior
to the commencement of the first Renewal Period; or if such notice is given in
the 61st month (which would be the first month of the first Renewal Period),
this Agreement would not terminate (unless sooner terminated pursuant to
Sections 11.2 or 11.3) until the end of the third Renewal Period which would end
in the 96th month of the term of this Agreement, because such termination notice
would have been given less than two (2) years prior to the commencement of the
third Renewal Period. For purposes of this Agreement, the phrase "term of this
Agreement" shall refer to the period from the date hereof to the effective date
of any termination of this Agreement pursuant to this Section 11.1, Section 11.2
or Section 11.3 hereof, as the case may be.
11.2 In the event that either party shall have breached any of its
representations or warranties hereunder (other than a product warranty) or any
material covenant to be performed by it hereunder, including, but not limited
to, the failure of Distributor to have paid for any purchase of RVP Products
within thirty (30) days from the date of the delivery thereof to the F.O.B.
point (unless otherwise agreed to in writing by RVP), or the failure of RVP to
supply the RVP Products
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ordered by Distributor in accordance with the terms of this Agreement (other
than due to a Force Majeure Event, as defined in Section 8), the non-breaching
party may terminate this Agreement effective on ninety (90) days' prior written
notice (which notice shall specify the nature of such breach) to the breaching
party; provided that no such termination shall become effective if the breaching
party shall have cured such breach within ninety (90) days after its receipt of
such notice.
11.3 This Agreement shall be deemed terminated immediately and
automatically in the event that either RVP or Distributor shall be adjudged,
voluntarily, or involuntarily, bankrupt or shall have petitioned for consent to
or relief under bankruptcy, reorganization, receivership, liquidation or
arrangement.
12. TERMINATION PROCEDURES
In the event of the termination of this Agreement, whether pursuant to
Section 11.1, 11.2 or 11.3 hereof:
12.1 Distributor shall be entitled to continue selling RVP Products held
in its inventories, and to perform any other acts (not inconsistent with the
terms of this Agreement) which are necessary or appropriate to the sale thereof
and the orderly winding up of the dealings between the parties hereunder.
12.2 All of the rights of Distributor to purchase additional RVP Products
from RVP shall cease, except that Distributor shall have the right to purchase
additional quantities of the RVP Products on the terms contained in this
Agreement to meet purchase orders received prior to the effective date of
termination that cannot be filled from the existing inventories of Distributor
or to supply parts or components for roll-up awnings in connection with sales of
its existing inventories of RVP roll-up patio awnings.
12.3 Within ninety (90) days of termination, RVP shall offer to repurchase
the unused and unopened inventory of RVP Products that is held by Distributor
and is in a saleable condition and not over one (1) year old (measured from the
date of the delivery thereof to Distributor), at the purchase price charged for
such Products to Distributor, plus the costs of freight to ship those RVP
Products to locations designated by the RVP; provided, however, that there shall
be credited against such repurchase price a restocking fee equal to 15% of that
current purchase price in the event this Agreement was terminated pursuant to
Section 11.2 by RVP due to a material uncured breach by Distributor or pursuant
to Section 11.3 due to the bankruptcy of Distributor. Distributor may accept
such offer by written notice to RVP, given to RVP not more than thirty (30) days
following Distributor's receipt of such offer, which notice shall specify the
RVP Products and quantities thereof to be repurchased by RVP hereunder. Amounts
due hereunder by RVP to Distributor shall first be credited against any unpaid
amounts due by Distributor to RVP for Products purchased pursuant to this
Agreement and, if any amounts remain due by RVP to Distributor after giving
effect to such credits, such remaining amounts shall be paid to Distributor
within sixty (60) days after shipment of such Products by Distributor to RVP.
12.4 The respective rights and obligations of the parties hereto under
clause (ii) of
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Section 4.2, and under Section 5.7, Section 5.9, Section 6, Section 7.4, this
Section 12, Section 14, Section 17, Section 18, Section 19, Section 20 and the
provisions of Section 22, shall survive the termination of this Agreement.
13. HIRING OF FORMER EMPLOYEES
During the term of this Agreement, no party hereto shall solicit for hire
or hire any person who is employed by the other party, except with the prior
written consent of the Chief Executive Officer of such other party.
14. DISPUTES
14.1 Except as otherwise provided in Section 14.2 or in Annex 1 to Exhibit
D, any disputes, controversies or claims between the parties arising out of or
relating to this Agreement, or the performance by either party of any of its
obligations under this Agreement, that are not resolved by mutual agreement of
RVP and Distributor within thirty (30) days of receipt of written notice of such
dispute, controversy or claim, shall be submitted to binding arbitration in
accordance with the rules of the American Arbitration Association (the
"Association"). Either party may initiate such arbitration after the end of such
thirty (30) day period. RVP and Distributor agree that the Association will use
a panel of three (3) arbitrators to review the dispute, controversy or claim in
question in accordance with the Association's standard arbitration rules, and in
accordance with then existing statutes of the State of California. Each party
shall select one arbitrator from a listing of available arbitrators furnished by
the Association and those two arbitrators shall select the third; provided that
if any party fails to select an arbitrator within fifteen (15) days after the
submission of such listing of available arbitrators, the Association shall
select an arbitrator for such party. Any decision concurred in by at least two
of the three arbitrators shall be binding on the parties. This arbitration
agreement shall be specifically enforceable and judgment upon any award rendered
by arbitration may be entered in any court having jurisdiction. The first
arbitration initiated under or with respect to this Agreement shall take place
in San Jose, California, unless the parties agree on another location for such
arbitration. Thereafter, the location of subsequent arbitrations hereunder shall
alternate successively between Wichita, Kansas and San Jose, California, unless
the parties otherwise agree. Each party agrees to submit to and not to contest
the jurisdiction of the Association or the venue of any such arbitration and to
accept service of process by certified or registered mail, return receipt
requested.
14.2 Notwithstanding Section 14.1 above, either party may seek equitable
relief, such as specific performance or the issuance of a temporary restraining
order, or a preliminary or permanent injunction, with respect to a breach or
threatened breach of this Agreement in any court of competent jurisdiction.
14.3 In the event that any arbitration or other proceeding is instituted
between the parties pursuant to this Section 14, the non-prevailing party shall
pay all reasonable attorney fees and other legal costs of the other party
hereto.
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15. ASSIGNMENT
Each party agrees not to assign, transfer, sublicense, or convey this
Agreement without the prior written consent of the other party; except that
either party may assign this Agreement without the other party's consent in
connection with a merger of a party with, or a sale (in a single or series of
related transactions) of all or substantially all of a party's voting stock or
assets to, another person or entity; provided that at least thirty (30) days'
prior written notice of the anticipated date of such merger or sale is given to
the other party and the party to which this Agreement is assigned in any such
merger or sale confirms in writing that it will comply with the terms of this
Agreement. Any assignment, transfer, sublicense, or conveyance of this Agreement
made in violation of this Section 15 shall be void and ineffective. In the event
of an assignment made in accordance with this Section 15, all of the rights and
benefits under this Agreement to which the assigning party is entitled shall
inure to the benefit of the assignee of such party, and all obligations of the
assigning party under this Agreement shall be assumed by the assignee of such
party, provided that the assigning party shall remain liable hereunder for the
performance of any of its obligations that its assignee fails to perform.
16. INDEPENDENT CONTRACTORS
Nothing contained in this Agreement shall be deemed to create a
partnership or joint venture between the parties hereto, and neither of the
parties hereto shall in any matters connected hereto, or otherwise, hold itself
out as the partner of the other, nor shall either of the parties incur any
indebtedness or obligation in the name of, or which shall be binding on, the
other party, without the prior written consent of such other party.
17. CONFIDENTIAL INFORMATION
Each party (hereinafter, a "receiving party") shall take all reasonable
steps and do all things reasonably necessary to insure that confidential
information relating to any aspect of the business of the other party (the
"disclosing party"), disclosed to the receiving party under or in connection
with this Agreement, including, without limitation, any customer lists and sales
information furnished by Distributor to RVP, shall not be disclosed or made use
of by the receiving party except in connection with the performance by the
receiving party of its obligations under this Agreement, provided, however, that
the foregoing shall not apply to information which:
(a) The receiving party demonstrates was known to it prior to the
disclosure by the disclosing party;
(b) Is or becomes public knowledge through no fault or action of the
receiving party;
(c) Is lawfully disclosed to the receiving party by a third party
that is not subject to a confidentiality obligation to the disclosing party and
acquired such information with the consent of the disclosing party; or
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(d) Is compelled by judicial process or subpoena to be disclosed,
provided that in such event the receiving party shall promptly notify the other
party thereof and shall cooperate with such other party to quash such subpoena
or obtain an appropriate protective order limiting the disclosure thereof.
The parties' obligations hereunder shall survive the termination of this
Agreement.
18. PRODUCT WARRANTIES; LIMITATION OF LIABILITY
18.1 RVP warrants each RVP Product as set forth in the warranty attached
hereto in Exhibit F that is applicable to such Product, as such warranties may
be amended from time to time by mutual agreement of the parties. IT IS
UNDERSTOOD AND AGREED THAT EXCEPT FOR THE WARRANTIES OF RVP IN SECTION 7.4 OF
THIS AGREEMENT, RVP'S PRODUCT WARRANTIES TO DISTRIBUTOR SET FORTH IN EXHIBIT F
ARE IN LIEU OF ALL OTHER PRODUCT WARRANTIES TO DISTRIBUTOR, EXPRESSED OR
IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE. Distributor shall not have any authority to
make any representations or warranties concerning the RVP Products other than
those set forth in Exhibit F or in written materials provided to Distributor or
approved by RVP pursuant to this Agreement.
18.2 EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 18.2 AND IN SECTION 19.1
OF THIS AGREEMENT, THE LIABILITY OF RVP TO DISTRIBUTOR FOR OR IN CONNECTION WITH
ANY DEFECT IN OR NEGLIGENT MANUFACTURE OF ANY OF THE RVP PRODUCTS SOLD TO
DISTRIBUTOR HEREUNDER (WHETHER BASED ON PRINCIPLES OF STRICT PRODUCT LIABILITY
OR NEGLIGENCE OR BREACH OF WARRANTY OR ANY OTHER PRINCIPLES OF LAW) SHALL NOT
EXCEED THE PURCHASE PRICE PAID BY DISTRIBUTOR FOR THE DEFECTIVE OR NEGLIGENTLY
MANUFACTURED PRODUCTS AND THE DIRECT COSTS INCURRED BY DISTRIBUTOR IN CONNECTION
WITH THE REPLACEMENT, REPAIR OR RECALL THEREOF, AND THE LIABILITY OF DISTRIBUTOR
FOR NEGLIGENCE IN CONNECTION WITH THE DISTRIBUTION OR SALE OF ANY OF THE RVP
PRODUCTS SHALL NOT EXCEED THE PRICE PAID BY DISTRIBUTOR FOR THE RVP PRODUCTS
THAT WERE SOLD OR DISTRIBUTED IN A NEGLIGENT MANNER BY DISTRIBUTOR AND NO PARTY
HERETO SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL
OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS, LOSS
OF BUSINESS OPPORTUNITIES, OR LOSS OF BUSINESS INVESTMENT ARISING OUT OF ANY
DEFECT IN, OR NEGLIGENCE IN THE MANUFACTURE OR DISTRIBUTION OR SALE OF, ANY OF
THE RVP PRODUCTS; PROVIDED THAT ANY LOSSES, DAMAGES, LIABILITIES, COSTS OR
EXPENSES (INCLUDING, BUT NOT LIMITED TO, ATTORNEYS FEES) INCURRED BY DISTRIBUTOR
IN CONNECTION WITH ANY CLAIM, ACTION OR SUIT BY ANY PURCHASER OR USER OF THE RVP
PRODUCTS ARISING OUT OF THE SALE, OPERATION, CONDITION OR USE OF ANY RVP
PRODUCT, OTHER THAN DUE TO NEGLIGENT ACTS OF DISTRIBUTOR, SHALL BE DEEMED TO
CONSTITUTE DIRECT DAMAGES, AND NOT INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL
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DAMAGES, INCURRED BY DISTRIBUTOR AND SHALL NOT BE SUBJECT TO ANY OF THE
LIMITATIONS ON LIABILITY SET FORTH HEREINABOVE.
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19. INDEMNIFICATION
19.1 RVP shall indemnify, defend, and hold harmless Distributor and its
directors, officers, employees, representatives and their successors in interest
and permitted assigns (the "Distributor Indemnified Parties") from and against
any and all demands, claims, actions, suits and other proceedings, and any and
all losses, damages or liabilities, costs and expenses (including, but not
limited to, reasonable attorneys' fees), whether or not incurred in connection
with any demand, claim, action, suit or other proceeding, that arise out of or
are based on (i) any claim or determination that any of the RVP Products are or
were defective or were negligently manufactured, whether based on principles of
strict manufacturer's product liability, negligence or breach of warranty, or
otherwise, (ii) any claim or determination that the manufacture, marketing,
distribution, sale, lease or use of the Products, or the reproduction or use of
any of the trademarks of RVP which Distributor is granted the right to use
hereunder, infringes any patent rights, trademarks, copyrights or other
intellectual or industrial property, trade secret or other proprietary rights of
any third party, or (iii) any negligent act or negligent omission to act of RVP,
other than any act or omission for which the Distributor Indemnified Parties are
entitled to indemnification pursuant to clause (i) or clause (ii) of this
Section 19.1. The limitation on liabilities set forth in Section 18.2 of this
Agreement shall not apply to the obligations of RVP with respect to, or losses,
damages, liabilities or costs or expenses (including, but not limited to,
attorneys fees) arising out of, any of the claims or any of the determinations
referenced in clause (i) or clause (ii) of this Section 19.1. Without limiting
the indemnification rights of the Distributor Indemnified Parties hereunder, RVP
agrees that if any RVP Product is held by any court of competent jurisdiction in
any of the Territories to infringe any patent or other intellectual or
industrial property or trade secret or other proprietary right of any other
person or entity (an "Infringing Product"), or if RVP believes that such a claim
is reasonably likely to occur, RVP shall promptly notify Distributor thereof in
writing and RVP shall, at its sole expense and at no expense to Distributor,
take one or more of the following actions: (x) modify such Infringing Products
so that they are no longer infringing, or (y) procure the rights needed to
permit RVP to continue manufacturing and selling the Infringing Products to
Distributor and to permit Distributor to continue marketing, distributing and
selling such Products in the Territories on the terms and conditions of and with
the licenses and rights provided to Distributor under this Agreement and without
any additional obligations being imposed as a result thereof on Distributor, or
(z) repurchase all of the Infringing Products in the possession of Distributor
for resale, or returned by any of its customers, in any of the Territories in
which the manufacture, marketing or sale of such RVP Product was held, or RVP
believes is reasonably likely to be held, to be infringing, at the price paid by
Distributor for such Infringing Products. The determination of which of the
three foregoing actions that shall be taken by RVP with respect to any
Infringing Products shall be made by RVP. In addition, in the event RVP
repurchases any Infringing Products, RVP also shall reimburse Distributor for
all packaging and shipping costs incurred in connection with the shipment
thereof to RVP or to any person designated by RVP to receive such items. Amounts
due Distributor in respect of the repurchase, packaging and shipment of
Infringing Products shall first be credited against unpaid amounts due hereunder
by Distributor to RVP and any amounts remaining due by RVP to Distributor, after
giving effect to such credits, shall be paid to Distributor within thirty (30)
days after shipment of such Products by Distributor to RVP or to a person
designated by RVP in the United States.
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19.2 Distributor shall indemnify, defend, and hold harmless RVP and its
directors, officers, employees, representatives and their successors in interest
and permitted assigns (the "RVP Indemnified Parties") from and against any and
all demands, claims, actions, suits and other proceedings, and any and all
losses, damages or liabilities, costs and expenses (including, but not limited
to, reasonable attorneys' fees), whether or not incurred in connection with any
demand, claim, action, suit or other proceeding, that arise out of or are based
on any negligent act or negligent omission to act of Distributor.
20. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings (written or oral) of the parties in connection therewith.
21. AMENDMENTS AND WAIVERS
Any modifications to or amendments or waivers of any provision of this
Agreement must be in writing and bear the signatures of an authorized officer of
both RVP and Distributor. The failure of either party to require the performance
of any term of this Agreement, or the waiver by either party of any breach of
this Agreement, shall not prevent a subsequent enforcement of such term nor be
deemed a waiver of any subsequent breach.
22. MISCELLANEOUS
22.1 This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.
22.2 If any term of provision of this Agreement or any application thereof
shall be invalid or unenforceable, the remainder of this Agreement and any other
application of such provision shall not be affected thereby. The section
headings in this Agreement are for convenience of reference only and shall not
affect the construction or interpretation of any of the provisions of this
Agreement. This Agreement is the result of arms'-length negotiations between the
parties and no provision of this Agreement shall be construed against any party
because its attorneys were the draftsmen or principal draftsmen of such
provision.
22.3 Any notice hereunder given in writing shall be deemed sufficiently
given by one party to another (i) on the date of delivery or tender, if
delivered or tendered in person, or (ii) three (3) days after its deposit in the
United States Mail, if mailed in a sealed envelope, registered or certified,
with postage and postal charges prepaid, and addressed, if to Distributor, to
the attention of Distributor's Chief Executive Officer, at:
THE COAST DISTRIBUTION SYSTEM
0000 Xxxxxx Xxxx
Xxx Xxxx, Xxxxxxxxxx 00000
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and, if to RVP, to the attention of its Chief Executive Officer, at:
RECREATION VEHICLE PRODUCTS, INC.
0000 Xx. Xxxxxxx
Xxxxxxx, Xxxxxx 00000
Any party may change its address at which any notices are to be delivered or to
which they are to be mailed by giving the other party at least ten (10) days'
prior written notice of such change in the manner specified in this Subsection
22.3.
22.4 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of this date first above written.
THE COAST DISTRIBUTION SYSTEM
By: /s/ Xxxxxx X. XxXxxxx
-----------------------------
Date: October 11, 1995
RECREATION VEHICLE PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Date: October 11, 1995
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