DISTRIBUTOR AGREEMENT
THIS DISTRIBUTOR AGREEMENT (the "Agreement") made and entered into this
_____ day of _______________, 2000, by and between American Quantum Cycles,
Inc., a Florida corporation (hereinafter "Manufacturer") and Xxxxxx X. Xxxxxxxx
on behalf of a Michigan limited liability company (hereinafter "Distributor").
RECITALS UNDERLYING THIS AGREEMENT
Manufacturer manufactures and markets heavy weight cruiser motorcycles
and touring motorcycles, 4 valve engine head kits, and related parts, service,
including clothing and accessories (when available) and customization of said
motorcycles under the trade name "American Quantum Cycles" (the "Products") and
desires to increase the sales of such Products.
Distributor represents that it has the ability to promote the sale and
use of the Products. (Distributor will submit financial statements to
Manufacturer to permit Manufacturer to determine to its satisifaction that
Distributor has financial ability to perform its duties under this Agreement
prior to the execution of this aGREEMENT.)
Manufacturer is willing to appoint Distributor and Distributor is
willing to accept such appointment as an exclusive distributor of the Products
in the Territory (as hereinafter defined).
Dealerships and Dealer shall mean and include those persons or entities
as defined in MCLA 445.1565 and any and all sales representatives, sub-dealers,
or sub-dealerships which have been approved as Dealers by the Manufacturer to do
business in the Territory as defined herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto agree as follows:
1. Appointment. Manufacturer hereby appoints Distributor as Exclusive
Distributor for the sale of its Products at wholesale within the territory
consisting of the states of Michigan, Ohio, Illinois and Indiana. The territory
so described is hereinafter sometimes referred to as the "Territory".
Manufacturer acknowledges that Distributor may also operate as a retail dealer
through the same or a related entity within the Territory.
2. Exclusive Territory. During the initial term of this Agreement and any
renewal hereof, in the Territory, Manufacturer shall not appoint other
distributors, dealers, agents or representatives for the sale, service or
promotion to the Products within the Territory. Distributor acknowledges that
the Manufacturer will promote the sale of the Products through the Internet,
through direct marketing or other media. Addendum ___ sets forth the
compensation to be paid to the Distributor and or the Dealer in the Territory in
which the Products sold on the Internet or through other direct marketing or
other media are delivered within the Territory by the Manufacturer or a Dealer
from outside the Territory. Distributor shall be responsible for the payment of
the amount set forth in Addendum ___ for Products sold by it or Dealers within
Distributor's Territory and delivered by either Distributor or Dealers to
customers outside the Territory. The Manufacturer shall include this or a
similar provision requiring compensation for sales in other Distributor's or
Dealer's territory in future Distributor and Dealer agreements.
3. Term. This Agreement shall take effect as of the date first above
written and shall continue in force for the period of five (5) years. This
Agreement shall thereafter be automatically renewed for successive five (5) year
periods, unless either (a) Distributor has notified Manufacturer in writing at
least in the ninety (90) days prior to the end of the initial term or any
renewal hereof, that the Agreement shall terminate at the end of the then
current term, or (b) Distributor does not meet the minimum purchase requirements
as set forth in Section 4 below unless the reason for such failure is that the
Manufacturer is unable to ship Motorcycles ordered by Distributor within the
term of the Agreement.
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4. Minimum Purchase Requirements. If the Distributor does not elect to
terminate the Agreement within the required time period prior to the end of the
initial term or any renewal term, the Agreement shall be automatically renewed
provided that the following minimum performance requirements are met for the
immediately preceding five (5) year period, or the failure to meet said minimums
is because Manufacturer was unable to ship Motorcycles ordered by Distributor
during the period.
Motorcycles Sold Over
Five Year Period Five Year Period and Thereafter
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First (commencing upon
execution and until April 30,
2001) 200
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Second (May 1, 2001 -
April 30, 2002) 350
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Third (May 1, 2002 -
April 30, 2003) 500
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Fourth (May 1, 2003 -
April 30, 2004) 600
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Fifth (May 1, 2004 and
thereafter) 700
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The foregoing minimum performance requirements shall be applicable provided that
the Manufacturer has timely delivered sufficient Products to meet such goals and
the infrastructure necessary to support the sales of the Products, including but
not limited to service, repair, technical support, advertising and marketing
support, staff, materials, adequate supply and/or method of supply for repair
and replacement parts, service, and warranty matters.
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5. General Obligations of Distributor. Distributor may establish and/or
authorize the establishment of Dealerships within the Territory that will carry,
promote, sell and support the Manufacturer's Products. Such Dealerships can be
new stores founded, authorized and/or funded by the Distributor or existing,
qualified Motorcycle Dealerships which sign a Dealership Agreement in form and
content approved by Manufacturer and Distributor. Distributor shall be
responsible for all costs and expenses necessary to advertise, promote and sell
the Dealership relationship to prospective Dealers. Furthermore, Distributor
shall be the local representative for the approved Dealers in matters of sales
training, technician repair training, warranty support and Dealer level
promotions provided the manufacturer, at its expense, provides sales, technician
and warranty training to Distributor's employees. All administrative costs
within the Territory such as wages and employee benefits shall be borne by
Distributor.
6. Obligations of Manufacturer. Manufacturer shall produce and deliver
Products that are of high quality, competitive styling and performance, and an
adequate supply of repair and replacement parts for resale and use in the
Territory. Manufacturer shall use its best efforts to fill the Distributor's
purchase orders promptly. In addition, Manufacturer has the responsibility to
deliver to the Distributor the following current literature, technical
information and other materials of like nature relating to the Products at its
sole cost and expense as requested by Distributor from time to time:
(1) Dealer sales brochures.
(2) Dealer sales training material.
(3) Dealer repair technician manuals and training materials.
(4) Motorcycle owner's manuals.
(5) Copy for local newspaper, billboard, radio and television
advertising.
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Furthermore, Manufacturer will forward to Distributor all inquiries it receives
from customers in the Territory. Distributor agrees to adhere to and be bound by
the provisions of the Michigan Dealer Act (MCLA 445.1561, et. seq.) in its
relationship with Dealers within the Territory. Manufacturer and Distributor
agree that for purposes of defining their relationship, Manufacturer shall be
considered as such and Distribution shall be treated as a dealer as that term is
defined is the Michigan Dealer Agreement.
7. Prices. The prices to be paid by Distributor for Products (except for
repair and replacement parts) purchased pursuant to this Agreement ("Distributor
Price") shall be: (a) for the period ending April 30, 2003, the lesser of ten
(10%) percent of the published price charged by Manufacturer to any other
purchaser of the Products for resale ("Dealer Net Price") or One Thousand Five
Hundred and 00/100 ($1,500.00) Dollars less than Dealer Net Price for period
ending April 30, 2003 and (b) for the period from May 1, 2003 thereafter at the
lesser of eight (8%) percent of Dealer Net Price or One Thousand and 00/100
($1,000.00) Dollars less than said Dealer Net Price. This pricing discount does
not apply to model year end pricing. It is understood that Distributor must
comply with the terms of all offerings to receive the pricing discounts stated
herein. Distributor may resell the Products it purchases for its own use at such
prices as Distributor, in its sole discretion, shall determine. Notwithstanding
anything contained herein to the contrary, the Manufacturer may offer for
clearance sale or special promotion, Products at model year end, or, thereafter
for the prior years' or model year end Products, provided Distributor is given
the right of first refusal to acquire said Products for clearance sale or
special promotion not less than ten (10) days prior to said Products being
offered to any other purchaser. In the event Manufacturer does not deliver all
the Product ordered by Distributor prior to February 15, 2003, the Distributor
Price on an amount of Product equal to the undelivered Product shall be
calculated at Distributor Price set forth in (a) above, irrespective of the time
same is delivered.
8. Payment. Distributor shall pay Manufacturer for all Product it
purchases within seven (7) days from date of shipment, provided the Product is
delivered not less than two (2) business days before the due the of said
payment. In any event, payment for the Product shall be due the later of (7)
days from the date of shipment or two (2) days after delivery of the Product.
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9. Acceptance of Products. In the event of any shortage, damage or
discrepancy in or to a shipment of Products, whether to a Dealer or to the
Distributor, Manufacturer shall promptly provide a replacement or correction
Product(s) to make up for any such shortage, damage or discrepancy, and there
shall be no acceptance of said Product(s) until the shortage, damage, or
discrepancy is cured to the reasonable satisfaction of Distributor, and
Manufacturer shall reimburse the Distributor for any carrying charge, interest
expense, or penalties incurred by Distributor by reason of Manufacturer's
failure to timely deliver or cure same. Lack of acceptance of the Products,
unless due to a material defect which renders the motorcycle inoperable or
unsafe to operate, does not release Distributor from its obligations to make
payments for the Products in accord with the time limits set forth in this
Agreement. In such cases, payment shall be due within two (2) days of correction
of the condition which rendered the motorcycle inoperable or unsafe to operate.
10. Product Warranty. Manufacturer warrants and represents to Distributor
that the Products will be free from defects in material and workmanship at the
time of delivery. The specific warranty terms for the Products is described on
Schedule _____ hereto. Manufacturer agrees to pay, indemnify, defend and hold
harmless Distributor, its members, officers, employees, representatives and
agents against and in respect of any indebtedness, obligations, liabilities and
costs (including reasonable attorney fees, expert and consultant fees, and other
costs of defense) relating to, arising from or in connection with:
a any claims of breach of any express or implied warranty or
negligence or strict liability, product liability or similar theory
in connection with the production, design, sale or use of any of the
Products purchased by Distributor or a Dealer;
b any claims of patent or trademark infringement or other violation
of intellectual property rights of third persons in connection with
the production, design, sale or use of any of the Products purchased
by either Distributor or Dealer hereunder or the use of the
trademarks, trade names, logos, or other intellectual property
pertaining thereto, and
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c any and all other claims and liabilities of every kind or
character whatsoever arising out of, or related to, the production,
design, sale or use of Products purchased by Distributor or a Dealer
hereunder, unless the same results solely from the gross negligence
or knowing violation of law by Distributor.
Manufacturer shall at all times maintain in full force and effect, for the
benefit of itself, Distributor and the Dealers, general liability insurance
coverage on its operations, including broad form Vendor's coverage and product
liability insurance identifying Distributor as an additional insured. Such
insurance shall be in an amount of not less than Three Million ($3,000,000)
Dollars for each accident or occurrence.
11. Repair and Replacement Parts Distributor may purchase all replacement
parts and sub assemblies (collectively "Parts") for resale to dealers and for
warranty repairs from the Manufacturer. Manufacturer will sell Parts to
Distributor at fifteen (15%) percent less than the published Parts prices
charged to dealers. Manufacturer will provide Distributor with the parts
vendors' names and part numbers for all parts. Distributor may attempt to
purchase parts directly from such vendors.
12. Advertising, Trademarks, Trade Names.
In the advertising and sale of the Products, Manufacturer hereby grants
Distributor and the Dealers the right to use Manufacturer's trade names,
trademarks, logos, and designations in relation to the Products. Distributor
acknowledges Manufacturer's ownership of the name "American Quantum Cycles", and
any abbreviations thereof and all of Manufacturer's trademarks, trade names,
logos, and designations (whether registered or not). Upon the expiration or
termination of this Agreement, Distributor shall forthwith cease all display,
advertising and use of all Manufacturer names, marks, logos, and designations,
and will not thereafter use, advertise or display any name, xxxx, or logo which
is, or any part of which is, similar to or confusing with such designation
associated with any of the Products.
13. Publicity. Manufacturer shall expend an amount not less than
________________ __________ ($__________) Dollars for promotion of the Products
in the Territory and provide Distributor evidence of the amount expended on not
less than a quarterly basis. In the event Manufacturer fails to meet any
quarterly requirements, Distributor may do so and offset said sum so expended by
Distributor against amounts due and owing from Distributor to Manufacturer.
14. Termination of Prior Dealers. Manufacturer has heretofore granted
certain exclusive territory to American Discount Cycle Mart of Waterford,
Michigan and certain potential rights to Xxxxx X. Xxxxxx/Randy's Cycle Shop,
Inc. of Indianapolis, Indiana. Manufacturer will make every effort to terminate
the aforesaid dealers or to transfer their status to that of "dealers" under the
Distributor. In the event Manufacturer is unable to resolve the status of these
two Dealers within the Territory to the satisfaction of Distributor, Distributor
has the right to declare this Agreement void.
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15. Termination. This Agreement may be terminated prior to the end of the
initial term or any renewal term hereof only for good cause shown by (i) either
party by giving notice in writing to the other party, specifying in reasonable
detail the claimed good cause and such other party shall have a right to cure
any such cause within sixty (60) days of receipt of written notice thereof from
the first party; or (ii) mutual agreement of the parties hereto. In addition,
this Agreement shall terminate at the option of and upon written notice by
either party (who shall not be the party with respect to whom the event has
occurred) effective as of the date of the occurrence of any of the following
events:
(1) The failure of Distributor to satisfy the minimum purchase
requirements during any of the periods set forth in Section 4
of this Agreement
(2) The insolvency of either party; the voluntary filing by or, if
not dismissed within sixty (60) days, the filing against
either party of a petition in bankruptcy or a petition for
reorganization; any assignment by either party for the benefit
of creditors; the appointment of a receiver or a trustee for
either party; or the placement of either party's assets in the
hands of a trustee or receiver; or
(3) The permanent discontinuance of all of either party's business
for any reason.
(i) the failure of Distributor to fully perform any
Distributor's obligation, or under this Agreement, or
(ii) the death of Xxxxxx Ricuitti and his wife (as of
the execution date of this Agreement) or the failure of him to
continue active and substantial personal participation in the
management of the Distributor's operations, or
(iii) a misrepresentation of or change, whether
voluntary or by operation of law, in the ownership of
Distributor or of the ownership interests resulting in
transfer of control or majority interest in the capital stock
or partnership interest of Distributor, unless Manufacturer
has given prior written approval to such change, such approval
will not be unreasonably withheld. Nothing herein shall
prohibit Distributor from transferring the ownership of the
entity to a trust or other estate planning device as long as
control continues to vest in him or his spouse, or
(iv) any material misrepresentation by any of
Distributor's owners or executives as to any fact relied upon
by Manufacturer in entering into this Agreement, or
(v) the conviction of Distributor or any of
Distributor's owners herein of any felony that, in
Manufacturer's good faith opinion, may affect adversely the
operation or business of Distributor or the name, goodwill or
reputation of Manufacturer, Manufacturer's products or
Distributor, or
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(vi) the failure of Distributor to pay any material
indebtedness of Distributor to Manufacturer in accordance with
the applicable terms and conditions required by Manufacturer
which is not disputed in good faith, or
(vii) impairment of the reputation or financial standing
of Distributor or any of Distributor's owner or executives or
discovery by Manufacturer of any facts existing prior to or at
the time of signing this Agreement which, in Manufacturer's
opinion, tend to impair such reputation or financial standing,
or (vii) any submission by Distributor to Manufacturer of a
false or fraudulent application or claim, or any claim or
statements in support thereof, for payment including, but not
limited to, pre-delivery inspection or adjustments or repairs
performed or paid for by Distributor, sales incentives, parts
compensation, or any other discount, allowance, refund or
credit under any plan, provision or other program offered by
Manufacturer, whether or not Distributor offers or makes to
Manufacturer or Manufacturer seeks or obtains from Distributor
restitution of any payments made to Distributor on the basis
of any such false or fraudulent application, claim or
statement, or
(viii) conduct by Distributor which, in Distributor's
dealings with Dealers, customers or the public, is fraudulent
or constitutes a deceptive or unfair act or practice.
16. Rights and Obligations on Termination or Non-Renewal. Upon termination
or non-renewal of this Agreement in any manner, all rights and obligations
granted to Distributor under this Agreement shall cease (except Manufacturer's
obligations as set forth in Sections 6 and 10) and Distributor shall no longer
be an authorized Distributor of Manufacturer's Products. Distributor further
agrees that in the event of termination or non-renewal of this Agreement in any
matter:
a Distributor shall promptly pay all amounts owing the
Manufacturer including any such amounts which might have previously
become due at some future date because of deferred payment or credit
arrangements, and Manufacturer shall promptly pay all amounts owing
Distributor.
b Manufacturer will fill all unshipped orders.
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c Distributor will within fourteen (14) days resell and
deliver to Manufacturer, free and clear of all liens and
encumbrances, such of Manufacturer's Products and materials bearing
Manufacturer's name as Manufacturer shall elect, in its own
discretion, to repurchase. Any such repurchases shall be at the
higher of the Distributor's cost at time of acquisition or current
Distributor cost.
d Distributor will remove and discontinue the use of any sign
or any other designation containing any of Manufacturer's trademarks
or trade names. Should such trademarks or trade names be printed on
any of the Distributor's letterhead, business cards, sales
literature, order blanks, promotional materials, or other documents,
Distributor will promptly forward to Manufacturer all such documents
as may be in Distributor's possession at the time of termination or
non-renewal, and shall promptly reprint such documents so as to
remove any such trademarks or trade names of the Manufacturer.
17. Payments/Offsets. If at the time this Agreement terminates, the
Manufacturer is required to pay to the Distributor any sum pursuant to this
Agreement either by way of additional commission, indemnity payment, or
reimbursements of any kind, Distributor, at his sole discretion, may offset any
such amount against any amounts owed by Distributor to Manufacturer.
18. Governing Law; Arbitration.
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a Governing Law. This Agreement shall be governed by, and
construed in accordance with, as to all matters, including validity,
construction and effect, laws of the State of Michigan.
b Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach, termination or invalidity
of this Agreement, shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") at the offices of AAA located in Southfield,
Michigan (as the same may from time to time be relocated). The
arbitrator(s) shall be bound by the Agreement and shall interpret
the Agreement in accordance with the applicable laws of the United
States and the internal laws of the State of Michigan (other than
conflicts of laws and rules). Any award, order or judgment pursuant
to such arbitration shall be deemed final and shall be entered and
enforced in any court of competent jurisdiction.
19. Jurisdiction. Manufacturer and Distributor consent and agree that the
following courts shall have personal jurisdiction over all lawsuits relating or
arising out of this Agreement: a all courts included within the state court
system of the State of Michigan; and b all courts under the United States of
America sitting within the State of Michigan, including, but not limited to, all
of the United States District Courts sitting within the State of Michigan.
20. Miscellaneous.
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Relationship. This Agreement does not make either party the employee,
partner, joint venturer, agent or legal representative of the other for
any purpose whatsoever. Neither party is granted the right or authority to
assume or create any obligation or responsibility, express or implied, on
behalf of or in the name of the other party. Notices. Notices permitted or
required to be given hereunder shall be deemed effective if made in
writing (including telecommunications) and delivered to the recipient's
address, or facsimile number hereinafter set forth by any of the following
methods:
1 hand-deliveries;
2 registered or certified mail, postage prepaid with return receipt
requested;
3 first class or express mail, postage prepaid;
(1) Federal Express (or like overnight courier service); or
(2) facsimile.
Any notices or other communications required or permitted hereunder shall
be addressed to these addresses noted below or to such other addresses as
parties shall have designated to the other in writing in accordance with this
Section:
If addressed to Manufacturer: American Quantum Cycles
Attn: Xxxx Xxxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
If addressed to Distributor: Attn: Xxxxxx Xxxxxxxx
000 XxXxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.:
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Entire Agreement. This Agreement, including Schedules attached hereto,
constitutes the final, entire and complete agreement of the parties with
respect to the subject matter hereof; and supersedes any prior agreement
or understanding between or represented by the parties relating to the
subject matter.
Amendment. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by
written amendment signed by the parties hereto.
Severability. In the event any of the terms of this Agreement are in
conflict with any rule of law or statutory provision or are otherwise
unenforceable under the laws or regulations of any government or
subdivision thereof, such terms shall be stricken from this agreement, but
such invalidity or unenforceability shall not invalidate any of the other
terms of this Agreement and this Agreement shall continue in force, unless
the invalidity or unenforceability of any such provisions hereof does
substantial violence to or whether the invalid or unenforceable provisions
comprise an integral part of, or are otherwise inseparable from, the
remainder of this Agreement.
Counterparts. This Agreement shall be executed in two or more
counterparts, and each such counterpart shall be deemed an original
hereof. Waiver. No failure by either party to take any action or assert
any rights hereunder shall be deemed to be a waiver of such right in the
event of the continuation or repetition of the circumstances giving rise
to such right.
Assignment. Neither Manufacturer nor Distributor shall assign or transfer
any right or interest in and to this Agreement without the prior written
consent of the other.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on its behalf by a duly authorized individual, or officer, the day and
year first above written.
"Manufacturer":
American Quantum Cycles,
a Florida corporation
By /s/ Xxxx X. Xxxxxx
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Its Chief Operating Officer
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"Distributor":
Action Motorcycle Distributing Co., LLC
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a Michigan limited liability company
By /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Its Managing Member
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