DISTRIBUTOR AGREEMENT
THIS DISTRIBUTOR AGREEMENT is made and entered into as of the 19th
day of January, 2000 (hereinafter referred to as the "Effective Date") by and
between BARUDAN CO., LTD., having an address at 00 Xxxxxxxxxx, Xxxxxxx,
Xxxxxxxxxx, Xxxxx, 000-0000 Xxxxx (hereinafter referred to as "Barudan") and
XXXXXXX & XXXXX, INC. having an address at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxxxx 00000 XXX (hereinafter referred to as "Distributor").
RECITALS:
WHEREAS, Barudan manufactures various machine products certain of which
are described in Exhibit A attached hereto (hereinafter the "Products"); and
WHEREAS, Distributor desires to act as Barudan's exclusive distributor in
the Territory (hereinafter defined) for the Products,
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto mutually agree as follows:
1. RELATIONSHIP OF PARTIES.
A. APPOINTMENT AND ACCEPTANCE. Subject to the terms and conditions
hereinafter set forth, Barudan hereby appoints Distributor as the exclusive
distributor of the Products to third party customers in the United States and
Canada (the "Territory") and Distributor hereby accepts such appointment. This
exclusive appointment means that Barudan, during the term of this Agreement,
will not appoint any other distributors of the Products in the Territory nor
sell any of the Products directly to customers in the Territory. Distributor
shall only purchase the Products from Barudan.
B. TERRITORY. Distributor's exclusive territory of responsibility
is the continental United States and Canada (hereinafter referred to as the
"Territory"), Barudan may not enter into agreements with any other Distributor
or service representative for distribution, sale, repair or service of the
Products within the Territory.
C. NO AGENCY. Distributor and Barudan are independent contractors
and nothing contained in this Agreement shall be construed to create any agency,
partnership, joint venture, franchisor/franchisee, or employer/employee
relationship between the parties. Neither party is authorized to waive any right
to create or incur any obligation on behalf of the other party or to release or
settle any claim or other legal right of the other party.
D. NEW PRODUCTS. Barudan shall advise Distributor in writing if
Barudan intends to add new or modified products to the scope of this Agreement
or remove older products from the scope of this Agreement. Barudan shall provide
Distributor with all new or modified products at prices to be set forth in a
revised Exhibit A provided to Distributor by Barudan. Such new or modified
products shall constitute "Products" covered by this Agreement. Barudan shall
not sell any removed Products within the Territory directly or indirectly,
through another distributor or otherwise, during the term of this Agreement.
Subject to the fulfillment of all outstanding orders received by Barudan from
Distributor, Barudan has the right, at any time and from time to time, to
discontinue the manufacture of all or some of the Products including related
parts and supplies at its sole discretion.
2. TERM.
A. INITIAL TERM. This Agreement shall have an initial term
commencing on the Effective Date until December 31, 2003 (the "Initial Term")
and will be automatically extended for successive three (3) year periods
thereafter on the same terms and conditions as the original terms, so long as
the parties continue to perform under this Agreement until and unless terminated
as hereafter provided.
B. TERMINATION. In the event either party wishes to terminate the
Agreement upon the expiration of the Initial Term or thereafter during any
extension of the Initial Term, such party must give at least nine (9) months'
prior notice in writing of its desire to terminate. This Agreement may be
terminated by either party prior to the expiration of the Initial Term upon
three (3) days notice in the event that the Chapter 11 Proceeding is converted
to a Chapter 7 Bankruptcy or the Chapter 11 Proceeding is concluded and either
party thereafter files a voluntary petition for bankruptcy.
3. DISTRIBUTOR'S OBLIGATIONS.
A. SALES EFFORTS. Distributor shall use its best efforts to develop
business in, promote the use of and the sale of the Products within the
Territory. At its own expense, Distributor shall maintain an adequate and
efficient staff of sales personnel, field engineers and technical support
suitable for the requirements set forth in this Agreement. Sales quotas shall be
established annually for the Territory by mutual agreement of Barudan and
Distributor. The initial annual sales quotas are to be set by December 31, 1999
for the year 2000. Distributor shall use its best efforts to attain the annual
sales quotas.
B. FACILITIES. Distributor shall maintain adequate facilities
including warehouse, transportation, and service vehicles as necessary to meet
its obligations hereunder. Distributor shall maintain a toll-free "800"
telephone number, Internet access and facsimile service.
C. EXCLUSIVITY. During the term of this Agreement, Distributor shall
not represent, market, sell or otherwise deal with any products competitive with
the Products.
D. INVENTORY. Distributor shall maintain sufficient inventories of
parts far the Products consistent with the needs of the market and service.
E. PROMOTION. Distributor shall display notifications of its
authorized distributor relationship with Barudan in its facilities and
advertisements including, at a minimum, trade shows and trade publications.
Distributor shall display and circulate promotional materials and sales
literature as reasonably approved by Barudan.
F. SALES PROJECTIONS. At the beginning of each calendar year during
the term hereof, Distributor shall provide Barudan with a reasonable estimate of
Distributor's requirements for all Products during the following year and
estimates for the following three month period. The three month estimate shall
be updated and amended as necessary. No order that Distributor submits to
Barudan shall become effective unless and until it is formally acted by Barudan.
Payment for all orders shall be made by wire transfer. If Distributor shall fail
to pay for any Products or parts shipped hereunder, Barudan may defer further
deliveries until the overdue amounts are paid and until Barudan is satisfied
that payment will be made for further deliveries. Distributor shall make all
reasonable efforts to process orders for parts received from customers as soon
as possible subject to availability of parts from Barudan. Barudan shall make
all reasonable efforts to process orders for Products received from Distributor
as soon as possible. Neither party shall be liable for delays which are caused
by events that are beyond its reasonable control including, but not limited to
acts of God, acts of civil or military authority, fires, casualties, accidents,
strikes or labor difficulties, riots, police action, civil commotion or
demonstrations. In the event of a Product shortage, Barudan may allocate its
available Products among its other customers in such a manner as it deems best.
G. INSURANCE. Distributor agrees to maintain comprehensive general
liability, property damage and products liability insurance against any and all
damage, claims and liabilities arising out of, connected with, or resulting from
the possession, sale, lease, use or operation of the Products. Said insurance
policies shall be in form and amount with insurance carriers who are duly
licensed and in good standing with governmental authorities having jurisdiction
over them. In no case shall the limits of said insurance policies be less than
$2,000,000 per person, $4,000,000 per incident. The insurance policies described
above may not be altered or canceled except upon thirty days prior notice with a
copy of said notice to Barudan. Distributor shall provide Barudan with evidence
of its insurance coverage. Barudan may request that it, and Barudan America,
Inc. be listed as an additional insured on any of said insurance policies.
Distributor shall comply with all the terms and conditions of said policies of
insurance and give Barudan and the insurance company within 24 hours of an
incident a written report, and further agrees to cooperate with the insurance
company and Barudan in the defense of any and all claims arising out of the
possession, sale, lease, use and operation of the Products.
H. REPORTS. Distributor shall deliver to Barudan quarterly reports
concerning Products purchased by Distributor's customers and sales and service
visits with purchasers and potential purchasers. Distributor shall keep Barudan
reasonably informed of potential sales and problems pertaining to the Products.
Upon Barudan's request from time to time, Distributor shall furnish Barudan such
additional sales and inventory reports as Barudan shall reasonably require.
4. SERVICE OBLIGATIONS.
A. SERVICE EFFORTS. Distributor shall use its best efforts to
provide exemplary and outstanding service for the Products in accordance with
this Agreement.
B. WARRANTY SERVICE. Distributor shall provide warranty service in
the Territory for the Products in accordance with Barudan's existing warranty
practices which are described on Exhibit C attached hereto. The parties hereby
agree and acknowledge that Distributor shall be paid by Barudan for all work
covered by the warranty (Exhibit C) at the rates and on the terms set forth on
the warranty (Exhibit C). Any additional work performed by the Distributor with
the specific authorization of Barudan shall be paid for by Barudan on the terms
and at the rates agreed upon by the parties hereto.
C. ORIGINAL PARTS. Distributor shall use only original Barudan parts
in providing any service for the Products unless specifically authorized in
writing by Barudan. Distributor is hereby authorized to purchase all parts for
the Products directly from Barudan America, Inc. under mutually agreeable terms
and conditions.
D. COLLECTION. Distributor shall be responsible for billing and
collecting from the customer for all charges for labor, parts, transportation,
or other charges relating to service which is not warranty service or other
service which Barudan has specifically agreed to pay for in writing.
5. BARUDAN'S OBLIGATIONS.
A. INVENTORY SALES. Barudan shall sell to Distributor, Products in
amounts sufficient to permit Distributor to meet its obligations to its
customers (subject to the provisions of Section 3(f) hereof) and at prices
established in Section 6(a).
B. PROMOTION. Barudan shall identify Distributor as an authorized
representative in all advertising or promotional materials of Barudan which
identify authorized dealers, distributors, or representatives of the Products.
C. REFERRALS. Barudan shall refer inquiries regarding Products,
parts or service from customers within the Territory to Distributor.
D. TECHNICAL SUPPORT. During the term of this Agreement, Barudan
will supply reasonable on-going technical support for the Products to
Distributor.
6. PRICES; PAYMENT; TERMS.
A. DISTRIBUTOR PRICES. Barudan shall sell the Products to
Distributor at the prices shown on Exhibit A.
B. PRICE INCREASES. In the event Barudan increases the price of any
Product, it shall provide thirty (30) days prior written notification of that
increase to Distributor. Such increases shall not affect any orders received by
Barudan prior to the date of delivery of such notification to Distributor.
C. PAYMENT. During the Chapter 11 Bankruptcy proceeding that the
Distributor is involved in as of the date of this Agreement ("Chapter 11
Proceeding"), all invoices issued by Barudan will be paid by Distributor within
ninety (90) days of shipment. Distributor will provide a Letter of Credit for
all amounts due to Barudan hereunder during the Chapter 11 Proceeding. After the
Chapter 11 Proceeding is concluded, payment terms for any order shall be
according to one of the following as decided solely by Barudan: (1) Payment on
the invoice shall be paid by Distributor within sixty (60) days of shipment; or
(2) Payment on the invoice shall be paid by Distributor within ninety (90) days
of shipment and Distributor shall provide a Letter of Credit, from a financial
institution acceptable to Barudan and confirmed by a financial institution in
Japan of Barudan's choice, providing for payment to be made to Barudan, of one
half of the amount due, ninety (90) days after the date of shipment of that
order and providing such other consistent terms as Barudan may agree.
D. TERMS. Distributor acknowledges and agrees that its purchase of
Products from Barudan shall be subject and according to the standard terms and
conditions of sale set forth on Exhibit D attached hereto; provided however that
the terms of this Agreement shall take precedence over and control in the event
of any inconsistency between the terms of this Agreement and Exhibit D.
7. PROPRIETARY AND CONFIDENTIAL INFORMATION.
A. PROPRIETARY MARKS. Barudan hereby grants to Distributor the right
to use and display the trade names, trademarks, service marks, logos, designs,
and symbols of Barudan and Barudan applicable to the Products (the "Proprietary
Marks") in fulfilling its obligations under this Agreement. Such use shall be in
accordance with procedures communicated in writing by Barudan to Distributor
regarding the preservation of the distinctiveness of any Proprietary Xxxx. All
Proprietary Marks shall remain the property of Barudan, Barudan Company, Ltd.
(Japan) and Barudan America, Inc, as the case may be. Distributor shall not
remove, replace, or modify any Proprietary Marks applied to the Products or the
packing for the Products by Barudan. Distributor shall provide Barudan with
notice of any misuse or infringement of any Proprietary Xxxx of which
Distributor may become aware. Distributor may indicate in signs, advertising,
publicity or other sales or marketing media or material, that it is an
authorized distributor of Barudan's Products.
The parties hereby agree and acknowledge that Barudan Company, Ltd. (Japan) and
Barudan America, Inc. are and shall remain the exclusive owners of the various
patents, and all scientific or technical information, designs, processes,
invention, procedures, formulae and improvements, whether patentable or
unpatentable, conceived, invented, or originated by Barudan Company, Ltd.
(Japan) and Barudan America, Inc. as well as all Proprietary Marks and other
patented or unpatented knowledge or information used in connection with the
Products (the "Proprietary Property"). Distributor has and shall have no right,
title or interest in the Proprietary Property, or any goodwill related thereto,
during or after the term of this Agreement except to the extent and in the
manner, time and places Distributor is authorized to use the Proprietary Marks
and designs, subject to the provisions of this Agreement.
B. INDEMNITY. Barudan shall indemnify and hold Distributor and its
directors, officers, employees and agents harmless from any costs, expenses,
losses, judgments, or awards, including legal fees and expenses, which
Distributor may incur by reason of any claim that the Distributor's use of or
possession of the Products or Proprietary Marks infringe any patent, trademark,
service xxxx, trade name, or other intellectual property of any third party;
Barudan shall assume, at its sole expense, the defense and/or settlement of any
suit or proceeding naming Distributor as a party based on any such claim.
Distributor shall give prompt notice of any such claim to Barudan and provide
Barudan full opportunity to conduct the defense of any claim and shall cooperate
with Barudan in the defense of such claim. In all events, Distributor shall have
the right to participate in the defense of any such suit or proceeding through
counsel of its own choosing and at its own expense. This indemnity shall not
apply to the extent any claim relates to Distributor's use of any Proprietary
Xxxx in a manner not permitted or authorized under this Agreement.
C. CONFIDENTIAL INFORMATION. Each party acknowledges that it may
receive confidential information of the other party in connection with the
performance of this Agreement. Such confidential information, whether in written
or oral form, may include, but is not limited to formulas, patterns, programs,
devices, compilations of information, methods, techniques, processes, plans,
designs, drawings, specifications, customer fists, supplier lists, or other
materials which derive independent actual or potential commercial value from not
being generally known or readily ascertainable through independent development
or reverse engineering by persons who can obtain economic value from their
disclosure or use. Each party agrees to hold any information of the other party
marked as "confidential," similarly identified as confidential, or provided in a
manner indicating the confidential nature of the information, in confidence and
agrees not to disclose such information to third parties without the prior
written consent of the owner of such information. Each party agrees that it will
not use the confidential information of the other party for any purpose other
than fulfilling its obligations of performance under this Agreement.
8. WARRANTIES.
A. WARRANTIES OF DISTRIBUTOR.
(1) Distributor shall not be obligated to make any warranty to
customers regarding the Products sold in their original packaging and may fully
disclaim any express or implied warranties and exclude consequential and
incidental damages with customers in accordance with the warranty (Exhibit C).
(2) Distributor hereby warrants to Barudan and for the benefit
of Barudan Company, Ltd. (Japan) and Barudan America, Inc., for a period of a
minimum of thirty (30) days following the completion of any warranty service, or
other service performed by Distributor hereunder at Barudan's request and
expense, that such service will be free from defect and that all parts
incorporated into the Product serviced by Distributor are original parts unless
the specific written authorization of Barudan for use of other parts has been
received by Distributor.
B. LIMITED WARRANTIES. Barudan assigns and transfers to Distributor
the Limited Warranty issued by Barudan America, Inc. covering the Products as
set forth in Exhibit B. The express warranties set forth in this Section 8 and
Exhibit B constitute the only warranties of Barudan and Distributor to the
customer regarding the transactions described in this Agreement.
9. EVENTS OF DEFAULT AND TERMINATION.
A. EVENTS OF DEFAULT. Upon the occurrence of any of the following
events (which are deemed to be Events of Default), Barudan may (i) terminate
this Agreement, effective immediately and without notice to Distributor, (ii)
declare all of Distributor's indebtedness to Barudan immediately due and payable
and/or invoice customers directly pursuant to Xxxxxxxxx 00, (xxx) cancel the
exclusivity provision contained in Paragraph 1(b) and have the right to sell
directly into and to enter into additional Distributor or representative
agreements in the Territory and/or (iv) exercise all other legal remedies
available to Barudan:
(1) Distributor's failure to pay, within thirty (30) days after
the same shall become due and payable, any monetary obligation owed Barudan.
(2) Except as otherwise provided herein, Distributor's
assignment or attempted assignment of this Agreement, or of any right or
interest herein, without Barudan's prior written consent.
(3) Distributor's sale, mortgage, or other disposition of any
Products that are not in the regular course of business, and are for less than
full or adequate consideration.
(4) Distributor's failure or refusal to perform any of its
non-monetary obligations hereunder, for a period of sixty (60) days, after
written notice is given to Distributor to perform such obligations.
(5) Any change in the control of Distributor, except for any
change of control resulting from the Chapter 11 Proceedings which does not
result in a competitor of Barudan having control, which, in Barudan's reasonable
opinion, would adversely affect the representation of Barudan's interests in the
Territory.
(6) In the event that (i) Distributor's Chapter 11 Proceeding is
converted to a Chapter 7 Bankruptcy; or (ii) the Chapter 11 proceeding is
concluded and Distributor thereafter becomes insolvent, files or has filed
against it a case in bankruptcy which remains open after thirty days from date
of filing makes a general assignment for the benefit of its creditors, or has a
receiver or trustee appointed for its business or properties.
(7) If Distributor fails to use its best efforts to set sales
quotas or to fulfill its sales and marketing obligations set forth in Paragraph
3 (a).
B. RIGHTS UPON TERMINATION. Upon termination of this Agreement in
accordance with this Section 9 (b):
(1) All unfilled orders which have been accepted by Barudan
shall be fulfilled; provided, however, that Barudan may request such payment
terms and conditions, including direct payment from the customer, as Barudan
deems reasonable;
(2) Each party shall return the confidential information of the
other party in their possession and control to the owner of that confidential
information and shall cease using or distributing the confidential information
of the other parry for any purpose; Distributor shall cease using any
Proprietary Marks or promotional materials of Barudan Japan, Barudan America or
Barudan and shall return all materials bearing Proprietary Marks to Barudan; all
restrictions regarding use and disclosure of confidential information or
Proprietary Marks set forth herein shall continue after termination;
(3) Each party shall cease referring to Distributor as an
authorized dealer, representative, or distributor of Barudan; and
(4) Barudan may, within thirty (30) days following the effective
date of termination, request that Distributor return to Barudan all or any
portion of Distributor's inventory of the Products which are in original cartons
and are in merchantable condition for credit or reimbursement. Distributor shall
provide all reasonably necessary supporting documentation for returned goods to
Barudan. Distributor shall prepay all freight for the return of such inventory.
All amounts due Distributor for such returned inventory shall be due within
thirty (30) days after delivery to Barudan.
10. MISCELLANEOUS PROVISIONS.
A. ENTIRE AGREEMENT. This Agreement and the exhibits attached hereto
embody the entire understanding between the parties and supersedes all prior
understandings and agreements related to the subject matter including but not
limited to the Prior Agreements described on Exhibit C attached hereto. If there
is a conflict as between any term of this Agreement and any term of the Standard
Terms and Conditions of Sale attached hereto as Exhibit C, the term(s) of this
Agreement shall govern and control.
B. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their assigns, or successors;
provided, however, that no party shall assign any right or obligation hereunder,
in whole or in part, without the prior written consent of the other parties
herein, and any attempt to do so shall be void; except that it is agreed that
Barudan may assign its rights and obligations under this Agreement to Barudan
America, Inc. without the consent of any other party. Barudan hereby consents to
Distributor using the subdistributors listed on Exhibit D attached hereto.
C. AMENDMENT, MODIFICATION, OR WAIVER. No amendment, modification,
settlement, compromise, release, or waiver of any condition, provision, or term
of this Agreement shall be valid or of any effect unless made in writing, signed
by the party or parties to be bound, or its duly authorized representative and
specifying with particularity the nature and extent of such amendment,
modification, or waiver. Any waiver by any part of any default of another party
shall not affect or impair any right arising from any subsequent default. Except
as expressly provided in this Agreement, nothing herein shall limit the remedies
and rights of the parties hereto under and pursuant to this Agreement.
D. NOTICES. Except as otherwise provided in this Agreement, all
notices to be given under this Agreement shall be in writing and shall be deemed
to have been duly delivered if delivered in person or if mailed, certified mail,
postage prepaid, United States mail, to the party to be notified at its
principal place of business. Notice given by fax or email shall be confirmed by
written copy thereof sent according to the prior sentence. Any party may change
its address by giving notice in the aforesaid manner to the other party, and ten
(10) days after giving such notice, such party's address shall be deemed to have
been changed.
E. CAPTIONS, HEADINGS OR TITLES. All captions, headings, or titles
in the paragraphs or sections of this Agreement are inserted for convenience of
reference only and shall not constitute a part of this Agreement nor act as a
limitation of the scope of the particular paragraphs or sections to which they
apply.
F. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal, or unenforceable under any applicable law or rule in any jurisdiction,
such provision will be ineffective only to the extent of such invalidity,
illegality, or unenforceability in such jurisdiction without invalidating the
remainder of this Agreement in such jurisdiction or any provision hereof in any
other jurisdiction.
G. SPECIFIC PERFORMANCE. The parties hereto agree that the failure
of any party to perform any obligation or duty which each has agreed to perform
shall cause irreparable harm to the parties willing to perform the obligations
and duties herein, which harm cannot be adequately compensated for by money
damages. It is further agreed by the parties hereto that an order of specific
performance against a party or parties in default under the terms of this
Agreement would be equitable and would not work a hardship on the defaulting
party or parties. Accordingly, in the event of a default by any party hereto, a
non-defaulting party, in addition to whatever other remedies are available at
law or in equity, shall have the right to compel specific performance by the
defaulting party or parties of any obligation or duty herein.
H. CONDITION. This Agreement is conditioned upon Distributor, Xxxx
X. Xxxxxxx, Xx., and Xxxx X. Xxxxxxx, Xx. having executed and delivered to
Barudan a Non-Compete Agreement substantially in the form attached hereto as
Exhibit E.
I. EXHIBITS. The following Exhibits in their complete text are by
this reference incorporated herein and made a part of this Agreement:
Exhibit A Products
Exhibit B Barudan's Warranty Practices
Exhibit C Standard Terms and Conditions of Sale
Exhibit D Subdistributors
Exhibit E Non-Compete Agreement
J. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
K. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of North Carolina.
L. CUMULATIVE RIGHTS. Except as expressly stated herein, no right or
remedy herein conferred upon or reserved to any party hereto is intended to be
exclusive of any other right or remedy herein or by law provided, but each shall
be cumulative and in addition to every other right or remedy given herein or now
or hereafter existing at law or in equity or by statute.
IN WITNESS WHEREOF, the parties have set their hands the day and year
first above written.
BARUDAN:
Attest: BARUDAN COMPANY, LTD.
________________________________ By: ________________________________
Xxxxxx Xxxxxxx
President
DISTRIBUTOR:
Attest: XXXXXXX & XXXXX, INC.
________________________________ By: ________________________________
Xxxx X. Xxxxxxx
Vice President
