BUYING AGENCY AGREEMENT
DATED: OCTOBER 1, 1998
BETWEEN: NISSHO IWAI AMERICAN CORPORATION "NIAC"
1211 S.W. Fifth Avenue
Portland, Oregon 97204
AND: COLUMBIA SPORTSWEAR COMPANY "COLUMBIA"
6600 N. Baltimore Street
Portland, Oregon 97203
WHEREAS, NIAC and COLUMBIA entered into a certain Buying Agency Agreement
dated January 1, 1992 pursuant to which COLUMBIA appointed NIAC as its buying
agent with respect to COLUMBIA brand clothing products which COLUMBIA purchased
outside the United States for resale in the United States; and
WHEREAS, that Buying Agency Agreement, as subsequently amended, will expire
on September 30, 1998; and
WHEREAS, COLUMBIA and NIAC now desire to enter into a new Buying Agency
Agreement pursuant to which COLUMBIA appoints NIAC as a buying agent with
respect to COLUMBIA brand clothing products which will be purchased outside the
United States for resale by COLUMBIA in the United States (collectively the
"Goods").
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE
During each year of this Agreement, COLUMBIA agrees that it shall purchase
through NIAC, as its buying agent, at least eighty-five percent (85%) of the
Goods which COLUMBIA purchases outside of the United States for resale by
COLUMBIA in the United States.
ARTICLE II
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AGREEMENT TO PROCURE GOODS
--------------------------
2.1 During the term of the Agreement, NIAC will purchase as COLUMBIA's
agent under purchase price terms specified as F.O.B. vessel loading port of
country of origin (hereinafter referred to as "F.O.B. Price"), all Goods
requested by COLUMBIA and arrange for delivery of such Goods as directed by
COLUMBIA, to a delivery point within the United States after clearing U.S.
Customs ("Delivery Point"). COLUMBIA shall be responsible for locating the
supply source for the Goods ("Suppliers") and negotiating the purchase, the
F.O.B. Price, and delivery schedules for such Goods with the Suppliers. COLUMBIA
will also be responsible for negotiating all terms and conditions with any
freight forwarder or transportation provider involved in the movement and
delivery of the Goods.
2.2 On behalf of COLUMBIA, NIAC shall advance the costs for acquisition of
the Goods and other costs incurred in bringing the Goods to the Delivery Point
including, without limitation, the amount paid by NIAC to the Supplier for the
Goods purchased, transportation costs, costs of loading and unloading, costs of
insurance, any costs incurred in protecting the Goods, custom duties, and fees
of custom brokers for handling air shipments ("Reimbursable Costs").
Reimbursable Costs will not include bank service charges, fees of custom brokers
(except for air shipments), and NIAC's overhead costs, including salaries paid
to NIAC's employees.
ARTICLE III
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PAYMENT FOR GOODS
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3.1 At the direction of COLUMBIA, NIAC shall arrange for payment on behalf
of COLUMBIA to the Supplier of the Goods. Payment to the Supplier shall be made
as directed by COLUMBIA either through an at sight letter of credit opened by
NIAC to the Supplier ("L/C") or through a direct wire transfer of funds from
NIAC to the Supplier or its designated bank.
3.2 NIAC shall have the right to choose which bank it utilizes for the
opening of any L/C used for payment of the Goods. If NIAC should choose to use a
bank that does not presently have a system in place with NIAC which allows for
the direct electronic exchange of information associated with the L/C, NIAC will
use its best efforts to secure such a system with that bank as soon as possible.
ARTICLE IV
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REIMBURSEMENT TERMS
-------------------
4.1 COLUMBIA shall (i) reimburse NIAC for all Reimbursable Costs, and (ii)
pay a commission to NIAC for its services as COLUMBIA's buying agent in the
amount of one and one half percent (1.5%) of the F.O.B Price of the Goods
("Commission").
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Commission is a bona fide buying agency and financing commission and is not any
type of "selling commission" as that term is used in the U.S. Tariff Act of
1930, amended by the Trade Agreements Act of 1979, as set forth in 19 U.S.C.A.
Section 1401a(b)(1).
4.2 After delivery of the Goods to Delivery Point, NIAC shall invoice
COLUMBIA for all Reimbursable Costs and for the Commission. Any Reimbursable
Costs incurred thereafter shall be billed by NIAC as soon as possible after such
costs are incurred.
4.3 The "Reimbursement Starting Date" shall be (i) the date of the
disbursement of funds drawn under the L/C or (ii) the date payment is made
through wire transfer from NIAC to the Supplier. COLUMBIA shall pay NIAC for all
Reimbursable Costs and the applicable Commission in United States currency
within ninety (90) days from the Reimbursement Starting Date ("Due Date").
4.4 COLUMBIA shall pay interest to NIAC on all Reimbursable Costs and
Commission at a rate equal to thirty-five (35%) basis points over the three
month LIBOR published in the Wall Street Journal on the first business day of
each month. Interest shall accrue from the Reimbursement Starting Date to the
date of payment by COLUMBIA with the interest rate based on that which is in
effect on the first of the month in which NIAC makes payment to Supplier.
4.5 Overdue interest shall be payable on all amounts due NIAC from the Due
Date of said amount to the date NIAC actually receives payments thereof. The
applicable overdue interest rate shall be the Prime Rate announced by Citibank
N.A., New York plus two percent (2%) as set forth on each invoice issued by NIAC
or the maximum rate allowed by law, whichever is lower.
ARTICLE V
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LINE OF CREDIT
--------------
5.1 Prior to February 1 of each year, COLUMBIA shall submit to NIAC its
annual preliminary financial plan for COLUMBIA's forthcoming fiscal year. Such
plan will consist of monthly income statements, balance sheets, and statements
of cash flows. Following a reasonable review of said annual financial plan and
the financial statements, and provided NIAC is reasonably satisfied with the
financial plan and the financial statements provided under Article VII "Reports
and Records," NIAC shall specify the amount of the "Credit Line" which it is
willing to establish for COLUMBIA for the purchase of Goods under Articles II,
III and IV above for the forthcoming COLUMBIA fiscal year.
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5.2 The amount of Credit Line which shall be available from time to time
shall be an amount equal to the Credit Line minus (i) the amount of outstanding
unpaid invoices issued by NIAC to COLUMBIA, (ii) any Reimbursable Costs and
Commissions which have not yet been invoiced to COLUMBIA and (iii) the amount of
any purchase orders issued to Suppliers for which payment has not yet been made,
(collectively, the "Outstandings").
5.3 Notwithstanding the above, however, NIAC shall have no obligation to
place orders for Goods with the Supplier ("Orders") as requested by COLUMBIA or
extend credit under the Credit Line if at any time:
(a) COLUMBIA has operated at a loss during any three consecutive
fiscal quarters or COLUMBIA has accumulated a loss in the current fiscal year,
the total amount of which exceeds fifty percent (50%) of the amount of
consolidated net worth at the end of the preceding fiscal year;
(b) The Outstandings equal one hundred percent (100%) of the Credit
Line; or
(c) There is any default by COLUMBIA under this Agreement.
ARTICLE VI
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WARRANTY LIMITATIONS AND INDEMNIFICATION
----------------------------------------
6.1 NIAC shall purchase the Goods ordered by COLUMBIA from the Suppliers.
NIAC shall assign to COLUMBIA any warranties regarding the Goods, which are
provided by the Suppliers, but shall not provide any warranties itself. NIAC
EXPRESSLY DISCLAIMS ALL WARRANTIES, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PURPOSE. NIAC shall not be obligated to pay
or give any purchase discount or allowance to COLUMBIA for defective or B grade
goods. NIAC shall, however, give COLUMBIA any discounts or allowance given to
NIAC by the Supplier for Goods.
6.2 COLUMBIA hereby releases and shall indemnify and hold harmless NIAC
from any claim, loss, or liability arising from any claim by any third party
against NIAC arising out of this Agreement, any actions or omissions of NIAC
pursuant to this Agreement, or the Goods purchased hereunder unless and to the
extent such claim, loss or liability arises from the sole negligence of NIAC.
6.3 COLUMBIA shall maintain with a reasonably acceptable insurance company
product liability insurance in an amount per occurrence of not less than
$1,000,000 covering any claim of product liability with respect to the Goods
delivered by NIAC to COLUMBIA under this Agreement, naming NIAC as an additional
named
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insured, and providing for not less than ten (10) days' advance notice to NIAC
of cancellation. COLUMBIA shall submit to NIAC promptly upon issuance of such
policy of insurance and upon each anniversary thereof a certificate issued by
the insurance company evidencing such insurance.
ARTICLE VII
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REPORTS AND RECORDS
-------------------
7.1 COLUMBIA shall prepare and submit to NIAC the following reports:
(a) Within forty-five (45) days following the end of each of the first
three (3) COLUMBIA Fiscal Year quarters, COLUMBIA will submit to NIAC the
unaudited consolidated balance sheet and statement of income as of the end of
such quarter accompanied by a copy of COLUMBIA's quarterly report to the
Securities and Exchange Commission, Form 10-Q.
(b) Within ninety (90) days after the end of each COLUMBIA Fiscal
Year, COLUMBIA will submit to NIAC the consolidated balance sheet, statement of
earnings, and statement of cash flow accompanied by (i) the audit report of
COLUMBIA's independent certified public accountants and (ii) a copy of
COLUMBIA's annual report to the Securities and Exchange Commission, Form 10-K.
(c) At such time, if any, that COLUMBIA provides or is required to
provide to any entity extending credit to it any other report or financial
information, COLUMBIA shall at the same time provide a copy thereof to NIAC.
(d) Within fifteen (15) days of its receipt of notice from the
financial rating agencies, COLUMBIA will notify NIAC of any changes in
COLUMBIA's S&P or Moody's credit rating.
(e) Such other information and reports relating to the affairs of
COLUMBIA as NIAC may reasonably request from time to time.
7.2 All financial statements to be submitted by COLUMBIA to NIAC shall be
prepared in accordance with GAAP consistently maintained by COLUMBIA.
7.3 Upon NIAC's request, COLUMBIA shall submit any documents or agreements
related to customs or other purposes which are necessary for NIAC's handling of
the Goods in accordance with this Agreement.
7.4 NIAC shall during the term of this Agreement and for a period of five
(5) years following its termination maintain complete and accurate records of
all import transactions in accordance with the requirements of customs and shall
provide such records to COLUMBIA upon request.
7.5 NIAC shall, at the request of and in conjunction with COLUMBIA, provide
complete and timely information in response to any investigation or inquiry from
the U.S.
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Customs Service or any other governmental agency. In addition, NIAC will provide
any information requested by COLUMBIA for use in any lawsuit or administrative
proceeding in which COLUMBIA may be involved.
7.6 In the event one or both parties should incur any material
out-of-pocket expenses or costs related to any such investigations or
proceedings, the parties shall negotiate in good faith to determine the
responsibility for and allocation of such expenses or costs between the parties.
ARTICLE VIII
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ORDERING FORECASTS: ORDERING PROCEDURE
--------------------------------------
8.1 In order to facilitate NIAC's procurement of Goods, COLUMBIA shall
provide NIAC from time to time and as requested by NIAC with forecasts of the
quantity and type of Goods COLUMBIA intends to purchase using NIAC.
8.2 COLUMBIA shall provide NIAC any purchase orders for Goods to be
purchased under this Agreement as far in advance as is reasonably practicable
from the planned time of production of the Goods.
8.3 NIAC will place Orders with Suppliers and if applicable arrange to open
the L/C for such Orders as soon as reasonably practicable following NIAC's
receipt of the order from COLUMBIA.
8.4 NIAC may delay placing the Orders and opening the L/C should any of the
conditions described in Section 5.3 arise or exist.
8.5 In the event NIAC, for whatever reason, should decide with respect to
any particular order that it does not wish to provide financing and to handle
that order, it will immediately notify COLUMBIA of that decision. In such event,
COLUMBIA shall be free to secure other financing arrangements and place the
affected order without the assistance of NIAC. COLUMBIA's obligation for the
applicable year under Article I would then be reduced by the amount of such
affected order.
ARTICLE IX
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INSURANCE AND CLAIMS
--------------------
9.1 NIAC shall at COLUMBIA's expense maintain with a reasonably acceptable
insurance company a policy which will cover all Goods while in transit Ex
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Works to the ultimate Delivery Point. Such policy shall insure the Goods in an
amount equal to one hundred fifty percent (150%) of the F.O.B. Price.
9.2 NIAC shall promptly process any claims with the appropriate party for
damage or shortage that were incurred during the shipment and/or delivery of the
Goods. NIAC shall make every effort to settle each claim, either with the
responsible party or the insurance company, for an amount which will fully
compensate COLUMBIA for the total loss which COLUMBIA has incurred. NIAC shall
indemnify COLUMBIA for the loss due to such damage or shortages to the extent
NIAC is actually indemnified by the party responsible or the insurance company
for such loss and NIAC shall promptly forward to COLUMBIA the full amount of any
and all such payments.
ARTICLE X
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CONFIDENTIAL INFORMATION
------------------------
It is understood that certain of the information which COLUMBIA will
provide to NIAC during the term of this Agreement is confidential. NIAC shall
use its best efforts to maintain the confidentiality of all such confidential
information in the same manner in which NIAC maintains its own confidential
information. Upon termination of this Agreement, if requested by COLUMBIA in
writing, NIAC, at its option, will deliver to COLUMBIA or destroy that
confidential information of COLUMBIA which NIAC does not need to retain for its
own business purpose in connection with this Agreement.
ARTICLE XI
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COVENANT
--------
COLUMBIA shall, so long as (i) there are any amounts outstanding payable by
COLUMBIA to NIAC, or (ii) NIAC shall have any obligation to perform the services
as described herein:
(a) Perform and comply with each of the provisions of the "Credit
Agreement" dated July 31, 1997, between COLUMBIA and Wells Fargo Bank National
Association;
(b) As soon as possible and in any event within seven (7) days after
the occurrence of a default under the Credit Agreement notify NIAC in writing
setting forth the details of the default and the action which COLUMBIA proposes
to take with respect thereto;
(c) As soon as possible and in any event at least ninety (90) days
prior to the termination of the Credit Agreement notify NIAC in writing of such
termination, and in good faith negotiate with NIAC to promptly implement such
financial covenants herein as shall be mutually agreed.
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ARTICLE XII
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TERM
----
This Agreement shall be in effect as of October 1, 1998 and, unless sooner
terminated pursuant to its provisions, shall remain in full force and effect
until September 30, 2001. This Agreement shall be automatically extended for a
3-year period thereafter unless a party desiring not to renew the Agreement
gives the other party written notice of its election not to renew no later than
March 31, 2001.
ARTICLE XIII
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TERMINATION AND DEFAULT
-----------------------
13.1 If any party shall cease to conduct its business or shall make any
involuntary assignment of either its assets or its business for the benefit of
creditors; if a trustee or receiver is appointed to administer or conduct its
business affairs; if it is judged in any legal proceeding to be a debtor in
bankruptcy; or if any insolvency proceedings are commenced against it and not
terminated or dismissed within ninety (90) days, then such event shall be
considered a default of the Agreement and the other party may terminate this
Agreement.
13.2 In addition to the special rights of termination provided in the
section above, if (i) any party fails to perform any of its material obligations
in this Agreement or (ii) the lender has declared a default under the Credit
Agreement and has accelerated repayment of the loan thereunder, such event shall
constitute a default of this Agreement. If such non-performance is not cured
within thirty (30) days after notice of such failure is sent, then the party
giving the notice of non-performance may elect to terminate this Agreement. If
written election to terminate is given, this Agreement shall terminate ten (10)
days following delivery of this notice.
13.3 Upon Agreement expiration or termination by COLUMBIA arising from a
default by NIAC under this Agreement, (i) NIAC shall affirm any and all NIAC
commitments with respect to partially completed transactions including Goods in
transit and pending customs matters which have not been performed at such time,
(ii) COLUMBIA shall accept all orders for which NIAC has arranged for issuance
of an L/C or other payment to the Supplier, and (iii) all unpaid amounts due and
to become due to NIAC shall be accelerated and shall be payable upon demand.
13.4 Upon termination of this Agreement by NIAC arising from a default by
COLUMBIA under this Agreement, NIAC shall have the right to rescind and/or
reaffirm
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any or all purchase orders which have not been performed at such time, and
COLUMBIA shall be liable for all costs and expenses NIAC incurs thereby.
13.5 Upon any default the non-defaulting party shall have all rights
permitted to it under law including, without limitation, the rights arising from
default specified in this Agreement.
ARTICLE XIV
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SECURITY
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COLUMBIA shall not grant (or suffer the existence of) any liens, security
interests or encumbrances on COLUMBIA's inventories and accounts receivable to
any vendor other than NIAC without (i) at least thirty (30) days in advance of
such intended grant, giving NIAC written notice thereof and (ii) granting NIAC a
security interest in such assets, provided that this article shall not limit
COLUMBIA's ability to grant any liens, security interests or encumbrances to
COLUMBIA's banks or other institutional lenders.
ARTICLE XV
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YEAR 2000 SYSTEMS COMPLIANCE
----------------------------
NIAC agrees that it will review all internal information systems that are
required for the performance of this Agreement and take whatever action is
necessary to replace, upgrade, or modify such systems to assure that they are
century compliant for the year 2000.
ARTICLE XVI
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GOVERNING LAW
-------------
This Agreement is made in the State of Oregon and its effectiveness,
interpretation and enforcement shall be governed by the law of such state.
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ARTICLE XVII
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WAIVER
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The waiver of non-performance of an obligation of a party under this
Agreement in one case shall not be deemed to be waiver of non-performance of the
same obligation in any other case.
ARTICLE XVIII
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FORCE MAJEURE
-------------
No party shall be liable for the failure to carry out its obligations
hereunder in the event that it is prevented from doing so by any act beyond its
control, including without limitations, war or warlike condition, unavailability
of shipping vessels, insurrection, labor disturbances, casualty, governmental
tariffs or quotas, or U.S. Government credit restrictions. This Article shall
not apply to COLUMBIA's obligation to make any payment as provided in this
Agreement.
ARTICLE XIX
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NOTICES
-------
Any notice made in relation to this Agreement or performance thereunder
shall be in writing and delivered by hand or sent by prepaid certified mail,
return receipt requested, or facsimile (with a copy by certified mail) to the
following addresses or such other addresses as either party may designate by
notice duly given:
TO NIAC:
Nissho Iwai American Corporation
Suite 2200, Pacwest Center
1211 S.W. Fifth Avenue
Portland, OR 97204-3782
Attn: Branch General Manager
Fax No.: (503) 220-0560
WITH COPY TO:
General Counsel
Nissho Iwai American Corporation
1211 Avenue of Americas
New York, NY 10036-8880
Fax No.: (212) 840-2317
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TO COLUMBIA:
Columbia Sportswear Company
6600 N. Baltimore Street
Portland, OR 97203
Attn: Chief Financial Officer
Fax No.: (503) 286-9491
ARTICLE XX
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ENTIRE AGREEMENT
----------------
This instrument constitutes the entire agreement and understanding of the
parties hereto with respect to the subject matter of this Agreement, and
supersedes all prior discussions, agreements and understandings between the
parities with respect to the said matter. No amendment, modification or
assignment of this Agreement shall be binding on the parties unless made in
writing expressly referring to this Agreement and signed by authorized officers
or representatives of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
NISSHO IWAI AMERICAN CORP. COLUMBIA SPORTSWEAR COMPANY
By: /s/ YUTAKA KASE By: /s/ TIM BOYLE
-------------------------------- --------------------------------
Yutaka Kase, General Manager & Tim Boyle, President
Senior Vice President
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