1
EXHIBIT 10.26
Japan Distributorship Agreement
Between
Argo-Tech Corporation, a Delaware Corporation
and
Aerotech World Trade Corporation, Yamada Corporation, Yamada
International Corporation and Vestar Capital Partners, Inc.
December 24, 1990
2
TABLE OF CONTENTS
Page
----
1. Appointment and Acceptance ................................. 2
2. Distribution Term .......................................... 2
3. Terms of Purchase and Sale ................................. 4
4. Distributor's Compensation ................................. 6
5. Distributor's Duties ....................................... 12
6. Distributor's Representations and Warranties ............... 13
7. Limitation of Territory .................................... 14
8. Exclusive Dealings ......................................... 14
9. Argo-Tech's Duties ......................................... 15
10. Changes .................................................... 15
11. Direct Call Customers ...................................... 16
12. Cancellation ............................................... 17
13. Trademarks ................................................. 18
14. Repurchase of Inventory .................................... 19
15. Status ..................................................... 20
16. Assignment ................................................. 20
17. Third Parties .............................................. 21
18. Modifications .............................................. 22
19. Export ..................................................... 22
20. No Waiver .................................................. 22
21. Governing Law .............................................. 22
22. Notices .................................................... 23
23. Exhibits ................................................... 23
24. Complete Agreement ......................................... 23
3
Page
----
25. Limitation of Liability .................................... 24
26. Confidentiality ............................................ 24
Exhibit A - Products, Territory and Notices
Exhibit B - Prices
Exhibit C - Direct Call Customers
Terms and Conditions or Sale
-ii-
4
JAPAN DISTRIBUTORSHIP AGREEMENT
THIS DISTRIBUTORSHIP AGREEMENT (this "Agreement") dated as of the 24th day
of December, 1990, is between Argo-Tech Corporation, ("Argo-Tech") , a Delaware
corporation, and Aerotech World Trade Corporation, Yamada Corporation, Yamada
International Corporation and Vestar Capital Partners, Inc.
WITNESSETH:
----------
WHEREAS, Argo-Tech manufactures and sells and proposes to manufacture and
sell the products identified at Items IA and 1B of Exhibit A hereto (the
"Products") and desires to appoint Distributor as its distributor of the
Products within the geographical territory described in Item 2 of Exhibit A
hereto (the "Territory") on and subject to the terms and conditions hereinafter
provided; and
WHEREAS, Distributor desires to accept such appointment and dedicate such
portion of its present warehousing facilities, sales organization, and other
resources as may be required for the performance of its obligations hereunder;
-1-
5
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration had and received, the parties hereby agree as follows:
1. Appointment and Acceptance: Argo-Tech hereby appoints Distributor, and
Distributor hereby accepts appointment, as Argo-Tech's exclusive distributor of
Products identified in Item 1A of Exhibit A hereto within the Territory as set
forth in said Exhibit A at Item 2 for the Distribution Term (as hereinafter
defined), on and subject to the terms and conditions herein set forth and as
Argo-Tech's non-exclusive distributor of Products identified in Item 1B of
Exhibit A hereto within the Territory as set forth in said Exhibit A at Item 2
for the Distribution Term, on and subject to the terms and conditions herein
set forth. Argo-Tech covenants and Distributor acknowledges that the only other
distributor for the Product listed as Item 3 in Item 1B will be Xxxxx and
Xxxxxxx.
2. Distribution Term:
a. Except as stated below in this Section 2, the term during which
Distributor shall distribute Products hereunder (the "Distribution Term") will
begin on the date hereof. Unless earlier cancelled or terminated as herein
provided, this Agreement and the Distribution Term will expire on October 31,
1994. This Agreement and the
-2-
6
Distribution Term automatically will be renewed for successive one-year periods
thereafter unless either Argo-Tech or Distributor shall have delivered to the
other written notice of its intention not to renew this Agreement and the
Distribution Term. A notice of non-renewal must be given at least one (1) year
prior to the date on which the Distribution Term otherwise would be renewed.
b. The parties hereby agree that, subject to Section 2.c. below, until
October 31, 2044, Argo-Tech shall renew the Distribution Term so long as Yamada
Corporation and its affiliates retain five percent (5%) ownership of Argo-Tech.
Specifically, Argo-Tech will not have the right to give a notice of non-renewal
for any one-year renewal period prior to October 31, 2044, at any time when the
"Yamada Ownership Condition" is met, which means that Yamada Corporation and
all persons and entities directly or indirectly controlling or controlled by
Yamada Corporation own in the aggregate five percent (5%) or more of the common
stock of Argo-Tech or of any entity which directly or indirectly controls
Argo-Tech, provided that the calculation of percentage ownership of Argo-Tech
and or entities directly or indirectly controlling Argo-Tech shall be made as
if all outstanding convertible securities of Argo-Tech and those entities had
been converted to the extent that they are then
-3-
7
eligible for conversion without paying additional consideration.
c. Despite anything else in this Agreement, if Argo-Tech and Yamada
Corporation (or its designee) have agreed that Yamada Corporation (or its
designee) will become a distributor of Products in the Territory promptly or
immediately after the end of the Distribution Term or any one-year renewal
thereof, and that agreement is still in effect on the last day of the
Distribution Term, then regardless of whether or not either party has given a
notice of non-renewal, the Distribution Term shall not be renewed and Yamada
Corporation (or its designee) shall become a distributor of Products.
3. Terms of Purchase and Sale: During the Distribution Term, Argo-Tech
will sell to Distributor, and Distributor will purchase from Argo-Tech,
Products for resale by Distributor. The prices for such Products will be
determined and will be subject to change in accordance with the provisions in
Exhibit B hereto. Payment will be due thirty (30) days after Distributor's
receipt of Product or Argo-Tech's invoice, whichever is later. Simultaneously
with or prior to the execution and delivery of this Agreement, Argo-Tech has
delivered to Distributor (and Distributor hereby acknowledges receipt of)
Argo-Tech's terms and
-4-
8
conditions of sale and product warranty. Such terms and conditions constitute a
part of this Agreement and apply to all sales hereunder. However, all
warranties shall extend at least one (1) year after delivery to Distributor's
customer. Argo-Tech will, to the extent required, provide special warranties
required in order to obtain government and military orders, provided that
Argo-Tech will have no obligation to accept any such orders if Argo-Tech
considers such special warranty requirements unreasonable. Failure by Argo-Tech
to make deliveries in quantities and at times specified by Distributor will not
constitute a breach or default by Argo-Tech unless (i) an officer of Argo-Tech
shall hive expressly guaranteed to do so in writing (acknowledgments of
purchase orders or correspondence concerning standard delivery items shall not
be deemed to be guarantees unless they are signed by an officer and expressly
state guarantees) or (ii) Argo-Tech does not use reasonable efforts to do so.
Acceptance for purposes of Clause 7 of the attached Terms and Conditions of
Sale and the right to reject non-conforming Products for purposes of Clause 4
of the attached Terms and Conditions of Sale will expire sixty (60) days after
delivery of such Products by Distributor to its customer or one hundred twenty
(120) days after delivery by Argo-Tech to Distributor, whichever occurs later.
In addition, if Distributor or its customer reject Product as permitted by such
terms and conditions, Argo-Tech will pay
-5-
9
the costs of shipping the rejected Product to Argo-Tech and shipping
replacement product to Distributor or its customer if the Product was
rightfully rejected, and Argo-Tech shall have no obligation to pay such costs
of shipping if the Product was wrongfully rejected.
4. Distributor's Compensation:
a. As used in this Section 4, the term "Override Commission" shall mean
any commission payable pursuant to subparaqraphs c., d. or e. below, and the
term "Other Incentive Compensation" shall mean any compensation payable
pursuant to subparagraphs f., g. or h. below. Except for Override Commission
and Other Incentive Compensation, Distributor's compensation under this
Agreement for the performance of its obligations hereunder or otherwise with
respect hereto will be the profits received by Distributor upon resale of
Products purchased by the Distributor under the pricing terms set forth in
Exhibit B hereto. In no event will Distributor be entitled to any payment for
goodwill inuring to Argo-Tech's benefit which results from Distributor's
performance hereunder; and neither Distributor nor Argo-Tech will be liable for
damages on account of any loss of prospective profits, or any expenditure,
investment, or obligations made or incurred by the other.
-6-
10
b. In consideration for the investment Distributor will make in
creating good will for Argo-Tech and the Products in the Territory, Argo-Tech
will pay Distributor the Override Commission and Other Incentive Compensation.
x. Xxxx-Tech will pay a commission of twelve percent (12%) of the
purchase price of any Product(s) (as that term is defined either in Item 1A or
in Item 1B of Exhibit A) 801d by Argo-Tech in or for use in Japan. Whenever the
phrase "for use in Japan" is used in this Agreement, such phrase shall include
the manufacture in Japan of aircraft, aircraft engines and aircraft equipment
incorporating Products, but otherwise shall not be construed or interpreted so
as to include the use of such Products in Japan by non-Japanese airlines
arriving or departing Japan on a routine basis.
x. Xxxx-Tech will pay a commission of twelve percent (12%) of the
purchase price of any Product(s) (as that term is defined either in Item 1A or
in Item 1B of Exhibit A) sold by Argo-Tech in or for use in the United States
and its possessions and territories to any Japanese governmental organization
or body, to any company incorporated in Japan, to any Japanese individual,
unincorporated business or the like, or to any entity owned
-7-
11
or controlled by any of the foregoing (collectively, "Japanese Purchasers").
x. Xxxx-Tech will pay a commission of twelve percent (12%) of the
purchase price of any Products (as that term is defined either in Item 1A or in
Item 1B of Exhibit A) sold by Argo-Tech anywhere in the world except Japan, the
United States and its possessions and territories to Japanese Purchasers which
are original aircraft, aircraft engine or aircraft equipment manufacturers.
f. If (i) Argo-Tech directly or indirectly sells Product(s) (as that
term is defined either in Item 1A(b) or in Item 1B of Exhibit) to an original
aircraft, aircraft engine or aircraft equipment manufacturer which is a
Japanese Purchaser and (ii) no Override Commission is payable with respect to
that sale, then Argo-Tech will compensate Distributor commensurate with
Distributor's contribution. Argo-Tech and Distributor will negotiate in good
faith to determine that compensation.
g. If Argo-Tech directly or indirectly sells Product(s) (as that term
is defined either in Item 1A or in Item 1B of Exhibit A) to any agency of the
United States government, which Products have bean identified to Argo-Tech for
resale to Japanese Purchasers or for use in Japan, and
-8-
12
Distributor is directly responsible for any portion of those sales, Argo-Tech
will compensate Distributor commensurate with Distributor's contribution.
Argo-Tech and Distributor will negotiate in good faith to determine that
compensation.
h. If (i) Argo-Tech directly or indirectly sells Product(s) (as that
term is defined either in Item 1A(b) or in Item 1B of Exhibit A) to any
governmental organization or body for use in Japan, (ii) Argo-Tech knows that
the governmental organization or body is purchasing such products for use in
Japan and (iii) no Override Commission is payable with respect to that sale,
Argo-Tech will compensate Distributor commensurate with Distributor's
contribution. Argo-Tech and Distributor will negotiate in good faith to
determine that compensation.
i. If Argo-Tech directly or indirectly sells Product(s) to any third
party other than an agency of the United States government and Argo-Tech knows
that the third party is purchasing for resale in or for use in Japan or to
Japanese purchasers, then for purposes of determining whether Override
Commission or Other Incentive Compensation shall be paid to Distributor and the
amount thereof, the sale to the third party shall be ignored and Argo-Tech will
be treated as if Argo-Tech had sold the Product(s) to the party to whom, and at
the price for which, the third party resold the
-9-
13
Product(s). If Argo-Tech ham reason to believe (but does not know) that a third
party is purchasing for such a resale, Argo-Tech will inform Distributor and
Argo-Tech and Distributor will cooperate in trying to determine whether such
resales actually occur. If such resales are determined to have occurred,
Override Commission and Other Incentive Compensation will be paid as provided
in the first sentence of this Section 4.i.
j. Override Commission with respect to receipts during each calendar
month shall be paid to Distributor within thirty (30) days after the end of
such calendar month to the extent that necessary data is then reasonably
available to Argo-Tech and otherwise within sixty (60) days after the end of
such calendar month. Each payment shall be accompanied by a detailed report of
sales in or for use in Japan and sales to Japanese Purchasers, identifying each
Product sold, the purchaser of each Product and the receipts with respect to
each Product. Argo-Tech will retain complete records of each Sale in or for use
in Japan and each sale to a Japanese Purchaser by Argo-Tech and by any third
party for at least three years after each such sale, and Distributor will have
the right to audit Argo-Tech's books and records regarding those sales.
-10-
14
x. Xxxx-Tech will use reasonable efforts to keep Distributor informed,
in advance wherever possible, of Argo-Tech's plans to sell Product(s) in or for
use in Japan and to Japanese Purchasers. Distributor will not contact
Argo-Tech's customers without Argo-Tech's consent, which consent shall not be
unreasonably withheld where Argo-Tech has informed Distributor of its intention
to contact such customers as contemplated by this Section 4.k.
l. Pursuant to Section 11.10 of that certain Stockholders' Agreement
among Argo-Tech, Yamada Corporation and certain other parties of even date
herewith, under certain conditions the Override Commission may terminate during
the Distribution Term. Said Section 11.10 hereby is incorporated in this
Agreement as if set forth in full herein and shall be binding upon Distributor
as if Distributor were Yamada Corporation.
m. Upon request from either Argo-Tech or Distributor regarding one or
more specifically identified proposed sales of Products where Distributor is
not entitled to an Override Commission, Argo-Tech and Distributor will engage
in good faith discussions regarding whether or not Distributor is likely to be
entitled to Other Incentive Compensation and, if so, in what amounts.
-11-
15
5. Distributor's Duties: During the Distribution Term, Distributor will
give the Products commercially reasonable sales and service priority within the
Territory. In addition, Distributor, at its sole expense, will:
a. Use its reasonable efforts to maximize sales of Products within the
Territory by all usual and ethical means, including, without limitation,
personal solicitations of customers and prospective customers, demonstrations,
prompt and efficient processing of customer orders and complaints, distribution
of technical and promotional literature concerning Products, and advertising in
trade publications, directories, and the like;
b. Cooperate with Argo-Tech in identifying customers and providing
customers with sales and service assistance;
c. Maintain at all times inventories of Products in sufficient
quantities to meet Distributor's reasonably anticipated demand for Products and
continue to maintain adequate warehousing and other facilities for storage of
the same;
-12-
16
d. Continue to maintain a well-trained staff for sales of Products to
support Distributor's marketing efforts and fulfill its customer needs;
e. Prepare and maintain for a period of at least two (2) years after
the preparation thereof detailed records of Distributor's sales of Products and
allow Argo-Tech to inspect and copy such records upon request; and
f. Subject to pressing business requirements and other commercially
reasonable reasons for not attending, cause Distributor's employees who
regularly call on Product customers to attend annual meetings conducted by
Argo-Tech in Cleveland, Ohio, provided always that the subject matter of such
meetings is relevant for such employees.
6. Distributor's Representations and Warranties: Distributor hereby
represents and warrants to Argo-Tech that Distributor currently has or will
develop plans to establish adequate warehousing and other facilities and
adequate sales staffs to perform its obligations under this Agreement, to
exploit reasonably fully opportunities for sales of Products within the
Territory, and to provide adequate servicing thereof.
-13-
17
7. Limitation of Territory: Distributor has not been appointed as
Argo-Tech's distributor in any geographical territory other than the Territory.
Accordingly, Distributor will not make sales calls or otherwise solicit sales
of Products outside of the Territory; provided, however, that Distributor shall
be entitled to make sales calls upon, and solicit and accept sales orders from,
foreign purchasing missions, agents, customers and employees having offices
located outside the Territory of customers located within the Territory
provided that all such Products so sold shall be sold for delivery into the
Territory. If Distributor has sales branches outside of the Territory, then
personnel associated with such sales branches will not, except as authorized in
the aforestated proviso, solicit sales of Products outside of the Territory.
8. Exclusive Dealings: During the Distribution Term, Distributor will not,
within the Territory, sell, distribute, or in any manner promote the sale of
products manufactured by persons other than Argo-Tech which are competitive
with the Products identified in Items 1A and 1B of Exhibit A. Distributor,
however, may from time to time upon request from potential customers supply
products which are competitive with the products identified in Items 1A and 1B
of Exhibit A, provided that Argo-Tech is first informed of any such request
and, provided further, that Argo-Tech
-14-
18
indicates in writing to Distributor that Argo-Tech is unable to furnish
products meeting the required specifications and that Argo-Tech does not deem
any such sale as promotional or an attempt on the part of the Distributor to
enter into any long term commitment with Argo-Tech's competition. This Section
8 will not, however, prevent Distributor or its affiliates from continuing to
engage in any line of business in which Distributor or its affiliates were
engaged prior to the date of this Agreement.
9. Argo-Tech's Duties: During the Distribution Term, Argo-Tech will,
from time to time, make available to Distributor such assistance as Argo-Tech
customarily makes available to its distributors of Products. Without limiting
the generality of the foregoing, at its expense Argo-Tech will use its best
efforts to provide Distributor and its personnel with supplies of Products and
technical and promotional literature concerning Products.
10. Changes: Argo-Tech reserves the right to make such changes in
Products or to discontinue Products from time to time as it deems appropriate,
and Argo-Tech may make changes in or discontinue a Product without notice to
Distributor if Argo-Tech reasonably believes that its action is required by
safety problems. In all other cases, however, Argo-Tech shall give Distributor
at least thirty (30) days
-15-
19
notice before changing or discontinuing a Product and shall use its best
efforts to satisfy any orders for prompt delivery of the unchanged Product
placed by Distributor during that thirty (30) day period, including, if
necessary, manufacturing more of the unchanged Product. Otherwise, Argo-Tech
will be under no obligation to Distributor, Distributor's customers, or
otherwise (a) to continue the manufacture of any particular Product, (b) to
introduce new Products, (c) to change the specifications, designs, or other
characteristics of any particular Product, or (d) to maintain any inventory of
discontinued Products past the date manufacture thereof shall have ceased.
Distributor may return to Argo-Tech for credit and at Argo-Tech's expense
Products which are declared obsolete, discontinued or overaged by Argo-Tech.
Credit for any Product returned to Argo-Tech pursuant to this article shall be
at the price last paid by Distributor to Argo-Tech for that Product, and
Argo-Tech will pay shipping costs for Product that is so returned.
11. Direct Call Customers: Distributor acknowledges that it understands
that Argo-Tech currently has and intends to maintain a direct sales force which
services the customers listed on Exhibit C. Nothing in this Agreement shall
prevent Argo-Tech from selling Products within the Territory to such direct
call customers. However, Section 2 and the override commissions provided for
therein shall apply
-16-
20
to sales to such direct call customers if such sales are in or for use in Japan
or to Japanese customers. Argo-Tech will cooperate with Distributor in
attempting to persuade direct call customers to purchase all Products through
Distributor, provided that this obligation will not apply to direct call
customers listed in category 1 in Exhibit C.
12. Cancellation: Either Argo-Tech or Distributor may at any time during
the Distribution Term cancel this Agreement by giving at least ninety (90) days
notice thereof if, before the notice of termination is given, the other shall
materially breach any of its obligations hereunder, the party wishing to
terminate has given notice of the breach to the breaching party, and at least
one of the following conditions has occurred:
i. The breach consists of Distributor's failure to pay for
Products in timely fashion and Distributor fails to cure within thirty (30)
days after Argo-Tech gives notice of the breach;
ii. The breaching party does not commence commercially reasonable
efforts to cure the breach within thirty (30) days after the non-breaching
party gives notice of the breach to the breaching party; or
iii. The breaching party, having commenced making commercially
reasonable efforts to cure the breach within thirty (30) days after the
non-breaching party
-17-
21
gives notice of the breach to the breaching party, discontinues those efforts
while it is commercially reasonable to continue them.
13. Trademarks: During the course of its performance of this Agreement,
Distributor shall be entitled to identify itself as a distributor of
Argo-Tech's Products and to use the trademarks of Argo-Tech only in connection
with the promotion and sale of Products. Distributor acknowledges that
"Argo-Tech" identifies Argo-Tech Corporation and its divisions and subsidiaries
and that Argo-Tech is the exclusive owner of such name and xxxx and of
copyrights in the promotional materials furnished to Distributor. Distributor
further acknowledges that Distributor has no other license or similar right
with respect to such marks and names and covenants that it will neither claim
nor assert any such right by reason of this Agreement. Upon termination of this
Agreement, Distributor will return to Argo-Tech free of charge all materials,
including signs, advertising matter and catalogs, then in Distributor's or its
employees' or agents' possession which contain property (including trademarks
and trade names) in which Argo-Tech has property rights and will cease
immediately use of the same. Upon request from Distributor and at Distributor's
expense, Argo-Tech will cooperate in registering Distributor as a licensed user
of Argo-Tech's
-18-
22
trademarks in countries in the Territory specified by Distributor. Argo-Tech
agrees that, in the event that Argo-Tech becomes aware of any alleged or actual
trademark infringement related to the Products, it shall notify Distributor
immediately of such allegation or actual infringement. In the event that
Argo-Tech or Distributor is determined by a court or tribunal of competent
jurisdiction to be infringing on any trademark of another party or Argo-Tech
believes that such a holding is more likely than not, Argo-Tech will use
reasonable efforts to change the then-current trademarks to which such actual
infringement relates to eliminate such trademark infringement.
14. Repurchase of Inventory:
a. If the World Airline & Suppliers Guide (or any successor to that
Guide) published by the Air Transport Association of America (or any successor
to that Association) recommends or requires that Distributor repurchase
Products from customers, Argo-Tech will repurchase those same Products from
Distributor at the same price and on the same terms and conditions as
Distributor repurchases from its customers.
b. Upon termination or cancellation of this Agreement, Argo-Tech will
repurchase all or any portion of
-19-
23
Distributor's inventory which Distributor identifies. Commercially reasonable
prices, terms and conditions for any such repurchase shall be negotiated by
Argo-Tech and Distributor at the time of any such termination or cancellation.
15. Status: This Agreement shall not in any respect constitute an
appointment of any party as the agent or legal representative of any other
party for any purpose whatsoever. Distributor will not transact any business or
make any promises or representations in respect of Products or any other
matters in Argo-Tech's name or on its behalf. This Agreement shall not be
deemed to constitute a grant of a franchise to Distributor, nor shall
Distributor be deemed to be a franchisee of Argo-Tech.
16. Assignment: This Agreement is binding upon and will inure to the
benefit of the successors of each of the parties hereto, but neither this
Agreement nor any interest herein may be assigned, and no duty or obligation of
any party may be delegated, by any party without the prior written consent of
Argo-Tech and Distributor except that: (i) Distributor may assign this
Agreement or any interest herein and delegate any obligations hereunder to any
other corporation whose stock is controlled by or under common control with
Distributor, Yamada Corporation, the controlling
-20-
24
shareholder of Yamada Corporation, any parent corporation or parent
corporations of Yamada Corporation, or any controlling shareholder of a parent
corporation of Yamada Corporation, (ii) without receiving the consent of the
other, either Argo-Tech or Distributor shall have the right to assign this
Agreement or any interest herein and to delegate any obligations hereunder to
any successor of such party by way or merger or consolidation or the
acquisition of substantially all of the business and assets of the assigning
party relating to the subject matter of this Agreement, and (iii) Distributor
may assign this Agreement or any interest herein and delegate any obligations
herein to any person or entity reasonably acceptable to Argo-Tech, provided
that Distributor guarantees the performance of such person or entity, and
provided further that Distributor shall not make an assignment pursuant to this
clause (iii) without first obtaining the written approval of Argo-Tech.
17. Third Parties: Yamada Corporation is a third party beneficiary of
Sections 2.c. and 18 hereof and can enforce them directly against the parties
hereto. Each party acknowledges the receipt of adequate consideration to
support this covenant. Otherwise, this Agreement is not intended to, and shall
not, create any rights in or confer any benefits upon anyone other than the
parties hereto except as expressly provided herein.
-21-
25
18. Modifications: No change in, addition to or other modification of this
Agreement (or the Exhibits and Terms and Conditions of Sale attached hereto)
will be effective or binding upon Argo-Tech or Distributor unless embodied in a
writing signed by an authorized representative of Argo-Tech, of Distributor,
and of Yamada Corporation. Argo-Tech and Distributor both agree to use
reasonable efforts to satisfy customer requirements.
19. Export: Distributor will not export from the United States any Product
purchased from Argo-Tech hereunder in any manner which is not in accordance
with U.S. laws and regulations. Upon request from Distributor, Argo-Tech will
use reasonable efforts to assist Distributor in interpreting and complying with
same.
20. No Waiver: The failure by any party to enforce any of the terms or
conditions of this Agreement will not constitute or be deemed to be a waiver of
that party's right thereafter to enforce that particular term or condition or
each and every other term and condition of this Agreement.
21. Governing Law: This Agreement will be governed and construed in
accordance with the internal
-22-
26
substantive laws of the State of Ohio, except where the laws of some other
jurisdiction mandatorily apply.
22. Notices: All notices, requests and other communications hereunder
shall be in writing and will be deemed to have been duly given at the time of
receipt if delivered by hand, by overnight courier, or by facsimile, or mailed,
registered or certified mail, return receipt requested, with postage prepaid:
(a) if to Argo-Tech, then to Argo-Tech Corporation, 00000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx 00000 or facsimile telephone number 216/000-0000, Attn:
Manager, Contract Administration; and (b) if to Distributor, then to the
addresses and facsimile telephone numbers indicated on Item 3 of Exhibit A
hereto.
23. Exhibits: Exhibits A, B and C hereto, and also the attached Terms and
Conditions of Sale, as the same may from time to time be modified or amended as
herein provided, constitute an integral part of this Agreement and are hereby
incorporated into this Agreement by this reference.
24. Complete Agreement: This Agreement sets forth the entire understanding
of the parties hereto with respect to the subject matter hereof and supersedes
all prior letters of intent, agreements, covenants, arrangements,
-23-
27
communications, representations, or warranties, whether oral or written, by any
officer, employee, or representative of any party relating thereto.
25. Limitation of Liability: In the event that Argo-Tech's liability is in
any way limited pursuant to the provisions of Clause 7 of the attached Terms
and Conditions of Sale, Argo-Tech and Distributor agree that, as between
Argo-Tech and Distributor only, Distributor's liability shall be limited to the
same extent.
26. Confidentiality: Distributor and Argo-Tech each agrees that all
non-public technical information, trade secrets and any other confidential
information regarding the business affairs of the other, including the methods
or business operations, the names of customers or potential customers, and any
other confidential information concerning the business affairs of the other
that it may obtain as a result of this Agreement, constitutes trade secrets, is
confidential, and is the valuable property of the party from which it was
obtained, and that all such information shall be held confidential and not
disclosed to any third party except
-24-
28
as reasonably required to distribute Products pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have caused this Distributorship Agreement
to be executed by their respective duly authorized representatives, all as of
the date first above written.
ARGO-TECH CORPORATION
-------------------------------
By: /S/ XXXXXXX X. XXXXXXXX By: /S/ XXXXX XXXXXXX
-------------------------- --------------------------------
Xxxxxxx X. Xxxxxxxx Xxxxx Xxxxxxx
-------------------------- --------------------------------
President
-------------------------- --------------------------------
WITNESS: /s/ Xxxx X. Xxxx WITNESS: [ILLEGIBLE]
------------------------- ----------------------------
-25-
29
Exhibit A
to
Distributorship Agreement
Name of Distributor: _____________________________________
Date of Agreement: December 24, 1990
Item 1: Products
For purposes hereof, the term "Products" means:
Item 1A:
All fuel pumps, all products designed for use in connection with fuel
pumps, and all components and assemblies for the foregoing, except those listed
in Item 1B. For example:
1. Engine Driven Fuel Pumps.
2. Fuel Booster Pumps.
3. Selector Valves.
4. Quick Disconnect Couplings.
5. Transfer Pumps and Air Driven Pumps.
Also, all new products, whether or not related to fuel pumps, and all tools
used for overhaul of all Products otherwise included in this Item 1A.
30
Item 1B :
1. Engine Drive Fuel Pump designed for Xxxxxxx 250 Series
Engines.
2. P&W Canada PW 901A, PT6, PT7, and JT15 Series Engines .
3. F100 Main Engine Fuel Pumps.
Item 2: Territory
For purposes hereof, the term "Territory" shall mean:
Japan.
Note: Sections 4 and 11 of the Distributorship Agreement, Item 1A, Item 1B,
Item 2A and Item 2B of this Exhibit A, and also Exhibit C, are
explained graphically in the chart attached as Exhibit A-l.
Item 3: Notices
Notices to Distributor shall be addressed as follows:
31
------------------------------
------------------------------
------------------------------
Attention:
--------------------
with a copy to
Yamada Corporation
Xxxx-Xxxxxx Xxxxxxxx, Xxxx
0-0, 0-Xxxxx Xxxxxxxxxxxx Xxxxxx-Xx
Xxxxx 000, Xxxxx
Attention: Senior Vice President and
General Manager
Facsimile: 011-81-3-479-1789
and another copy to
Yamada International Corp.
Pan Am Building, Suit. 5110
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Facsimile: 212/370-1935
-3-
32
Exhibit A-l
Government/
OEM's Airlines Military
----- -------- -----------
Japan D(1)(4) D(1) D(1)(3)
(FMS)
U.S. N(2) N(2) N(2)
Rest of the world N(2) N(2) N(2)
(1) Direct call customers described in Exhibit C may continue to be served by
AT. However, D shall receive override commission for such sales. AT will
cooperate with D in persuading customers to purchase from D. In addition,
D may receive compensation for FMS (foreign military sales) to Japan as
described in Section 4(g) of the Distributorship Agreement.
(2) For sales to Japanese customers making purchases outside Japan, D shall
receive override commission.
(3) D may receive compensation for sales as described in Section 4(h) of the
Distributorship Agreement.
(4) D may receive compensation for sales as described in Section 4(f) of the
Distributorship Agreement.
D - Distributor
N - Not Distributor
AT - Argo-Tech
33
EXHIBIT B
to Distributorship Agreement
PRICES
Argo-Tech will annually provide Distributor with one (1) copy of
Argo-Tech's current "Commercial Spare Parts Prices" catalog and one (1) copy of
any other catalog, letter, or publication used for general distribution to
Argo-Tech's U.S. Customers containing prices applicable to Products.
Prices for Distributor's purchases of Products listed in such catalogs,
Letters, or publications shall be the prices in such documents current at the
time of order placement less fifteen percent (15%) or those prices.
Argo-Tech reserves the right to revise prices in such catalogs, letter,
and publications annually or at any time by giving written notice thereof
ninety (90) days in advance of the effective date or such change. Net prices
for each Product which has been ordered by Distributor but not shipped as of
the effective date of such changed pricing
(i) will not be changed if the revised price for that Product is
higher and Distributor states and
34
verifies that Distributor has received an order from its customer for that
Product,
(ii) will be changed to the revised price less fifteen percent
(15%) if the revised price for that Product is higher and Distributor does not
state and verify that Distributor has received an order from a customer for
that Product, and
(iii) will be changed to the revised price less fifteen percent
(15%) if the revised price for that Product is lower.
In the event Distributor desires to purchase Products not listed in any
current Argo-Tech catalog or other general Argo-Tech publication of prices,
Argo-Tech will determine net prices for those Products and sell said Products
to Distributor at those net prices.
35
EXHIBIT C
to Distributorship Agreement
DIRECT CALL CUSTOMERS
1. All original aircraft, aircraft engine and aircraft equipment
manufacturers except Japanese Purchasers (as defined in Section 4(d)
of the Distributorship Agreement).
2. Ansett
3. Qantas
4. Japan Air Lines
5. All Nippon Air Lines
6. Any other customers who are unwilling to purchase from Distributor
7. Argo-Tech will cooperate with Distributor in persuading customers in
categories 2-6 above that they should be willing to purchase from
Distributor.
36
Terms and Conditions of Sale
The following are the terms and conditions of sale under the Distributorship
Agreement described below:
CLAUSE 1. - APPLICATION: The terms and conditions set forth herein apply to all
sales made by Argo-Tech Corporation ("Argo-Tech"), a Delaware corporation,
pursuant to the Distributorship Agreement between Argo-Tech and Distributor.
Any additions to, changes in, modifications to, or revisions of this order
proposed by Distributor are hereby rejected by Argo-Tech unless otherwise
expressly agreed to in writing by Argo-Tech. Without limiting the generality of
the foregoing, Distributor may for its own convenience make use of its own
preprinted forms in connection with correspondence concerning purchases
hereunder, but terms stated on such forms shall not affect the terms hereof
unless expressly so agreed in writing by Argo-Tech.
CLAUSE 2. - DISTRIBUTORSHIP AGREEMENT: The terms and conditions herein
contained are in all events subject to the terms and conditions of the
Distributorship Agreement. In the event of a difference in meaning between
these terms and conditions and the terms and conditions of the Distributorship
Agreement those of the Distributorship Agreement will govern. Terms defined in
the Distributorship
37
Agreement shall have the meanings ascribed thereto in such agreement where used
herein and identified with initial capital letters.
CLAUSE 3. - SHIPMENT AND DELIVERY: Argo-Tech will use reasonable efforts to
effect delivery of the Products both in quantities and at times specified by
Distributor; provided, however, that failure by Argo-Tech to make deliveries as
so provided will not constitute a breach or default by Argo-Tech unless
Argo-Tech shall have otherwise expressly guaranteed delivery in writing. All
deliveries hereunder will be F.O.B. Argo-Tech's plant in Cleveland, Ohio.
Unless otherwise requested by Distributor, Argo-Tech will arrange for shipment
of Products hereunder at Distributor's cost and expense. Expedited means of
shipment will be used only if Distributor requests such routing in writing and
agrees in advance to pay any additional cost resulting therefrom. In all cases,
the carrier will be deemed to be an agent of Distributor and Distributor will
bear the entire risk of loss or damage to Products in transit. Distributor may
return, at Argo-Tech's expense, Products delivered by Argo-Tech more than
thirty (30) days in advance of the mutually agreed to delivery schedule.
CLAUSE 4. - ACCEPTANCE OR REJECTION OF GOODS: If upon delivery any of the goods
do not conform with the
38
requirements of Distributor's order, Distributor will have the right to reject
such goods, provided, however, that such right to reject will expire sixty (60)
days after delivery of such goods by Distributor to its customer or after one
hundred twenty (120) days after delivery by Argo-Tech to Distributor, whichever
occurs first. Distributor shall promptly, upon discovery of such
non-conformity, advise Argo-Tech in writing of the nature of the
non-conformity. Argo-Tech will then have the right to inspect the goods
Distributor believes are nonconforming. If the goods are in fact nonconforming,
Argo-Tech will promptly send Distributor instructions for disposition,
replacement, and/or correction as Argo-Tech, in its sole discretion, may
determine is appropriate.
CLAUSE 5. - EXCUSABLE DELAYS: Neither party will be liable for damages for
delay in delivery without its fault or negligence arising out of acts of God,
acts of the public enemy, acts of the Government in either its sovereign or
contractual capacity, fires, floods, epidemics, quarantine restrictions,
strikes, freight embargoes, and unusually severe weather.
CLAUSE 6. - TAXES: Argo-Tech's prices will be exclusive of any federal, state,
provincial, local sales, use, or excise taxes levied upon, or measured by, the
sale, the sales price,
39
or use of Products. Argo-Tech will list separately on its invoice any such tax
lawfully applicable to any such Products, and payable by Distributor, with
respect to which Distributor does not furnish to Argo-Tech satisfactory
evidence of exemption.
CLAUSE 7. - PRODUCT WARRANTY:
(a) Argo-Tech warrants to Distributor and Purchasers of Distributor's products
and services (Purchasers), that all items when delivered hereunder, will be
free from defects in material and workmanship and design (if of Argo-Tech's
design), and will conform to the applicable specifications and drawings. The
liability of Argo-Tech and remedies of Distributor and Purchasers, in respect
of any item delivered hereunder, shall be limited to the repair or replacement
of any such item which does not conform to the foregoing warranties.
Acceptance shall be deemed to have occurred within sixty (60) days
following receipt of the products or repaired articles by the
Distributor's customer or one hundred twenty (120) days after delivery to
Distributor by Argo-Tech, whichever occurs first.
40
PERFORMANCE WARRANTY OR SERVICE POLICY. FURTHER, THE FOREGOING WARRANTIES
AND FOREGOING REMEDIES SHALL TERMINATE UPON FAILURE BY DISTRIBUTOR OR
PURCHASERS TO PRESERVE, INSTALL, OPERATE, MAINTAIN, REPAIR, REPLACE OR
ALTER THE SAME IN ACCORDANCE WITH APPLICABLE RECOMMENDATIONS BY Argo-Tech
OR THE AIRFRAME OR ENGINE MANUFACTURER, OR MISUSE, NEGLECT, OR ACCIDENT
INCLUDING FOREIGN OBJECT DAMAGE WHETHER IN OPERATION, IN TRANSIT, OR IN
STORAGE.
(d) It is agreed that Argo-Tech is not an insurer of goods delivered hereunder
for repair; that Argo-Tech's obligation is to use ordinary care in
receiving, handling, repairing and shipping said goods or products to be
sold or sold by Argo-Tech; and that the ceiling limit of damages for which
Argo-Tech may be liable, under the Warranty or otherwise (including but
not limited to BREACH OF ANY TERM OF THE AGREEMENT BETWEEN DISTRIBUTOR AND
Argo-Tech WHETHER OR NOT IT RELATES TO THIS WARRANTY PROVISION, loss of
goods, including any loss, damage, or destruction occurring while the
goods are being repaired), shall be the amount on the purchase order or
delivery order which is allocable to the product or service which caused
loss or damage to the Distributor.
41
(e) A notice in writing of a warranty claim must be given to Argo-Tech not
later than 60 days after the claimed failure, malfunction, defect or
nonconformity is discovered and the item(s) must be returned to Argo-Tech
not later than 120 days after such notification is made.
(f) In the event of a resale of any of the Products sold hereunder,
Distributor will include the foregoing language in its contract with its
purchasers.
CLAUSE 8. - PATENT INDEMNIFICATION: Argo-Tech will indemnify, defend, and hold
harmless Distributor from and against any and all losses, liabilities, and
damages, including attorney fees and other costs and expenses incident thereto,
resulting from any claims that the manufacture, use, sale, or resale, of the
Products infringe any patent or patent right; PROVIDED, HOWEVER, that such
indemnification will not apply to any such infringement arising out of
Distributor's use of the Product as a component part of another product or
Argo-Tech's compliance with Distributor's designs or specifications.
CLAUSE 9. - NONASSIGNMENT: Neither any order hereunder nor any interest herein
(including any claims for monies due or to become due) may be assigned, and no
performance, duty or
42
other obligation may be delegated, by either party to any other person without
the prior written consent of the other, provided, however, that without
receiving such consent: (i) either party shall have the right to assign any
order hereunder or any interest herein and to delegate any obligations
hereunder to any successor of such party by way of merger or consolidation or
the acquisition of substantially all of the business and assets of the
assigning party relating to the subject matter of this Agreement, (ii)
Distributor shall have the right to assign any order hereunder or any interest
herein and to delegate any obligations hereunder to any other corporation whose
stock is controlled by or under common control with Yamada Corporation, the
controlling shareholder of Yamada Corporation, any parent corporation or parent
corporations of Yamada Corporation, or any controlling shareholder of a parent
corporation of Yamada Corporation, and (iii) Distributor shall have the right
to assign any order hereunder or any interest herein and to delegate any
obligations hereunder to any person or entity reasonably acceptable to
Argo-Tech provided that Distributor guarantees the performance of such person
or entity.
CLAUSE 10. - SEVERABILITY: In the event any provision hereof shall be finally
determined to be unlawful, such provision
43
shall be deemed to be severed and every other lawful provision hereof shall
remain in full force and effect.