EXHIBIT 10.1
[*] DESIGNATES MATERIAL FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED, WHICH MATERIAL HAS BEEN SEPARATELY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.
SUPPLY AGREEMENT
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SUPPLY AGREEMENT, made as of January 1, 1997, between FUJI PHOTO FILM
U.S.A., INC., a New York corporation ("Fuji"), and SEATTLE FILM WORKS, INC., a
Washington corporation ("Customer"),
W I T N E S S E T H:
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WHEREAS, Customer is engaged in the retail businesses of photofinishing and
sales of photographic products, and Fuji is engaged in the manufacture, through
its affiliated companies, and distribution of photographic products.
WHEREAS, Customer desires to purchase quantities of Fuji's color negative
photographic film, packaged to Customer's specifications, from Fuji, and Fuji is
willing to sell such quantities of its color negative photographic film, so
packaged, to Customer on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, the parties hereby agree as follows:
1. Definitions. When used in this Agreement, the following terms will
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have the respective meanings set forth in this Article 1. Definitions used
herein are used without regard to gender, and definitions in the singular shall
apply equally when used in the plural.
"Annual Period" means a period of time, the first of which begins on
the date of the first shipment of Product and ends on the anniversary day
thereof; the second and each successive Annual Period shall be each successive
twelve-month period ending on an anniversary of the end of the first Annual
Period.
"Calendar Quarter" means a period of time of three-calendar months, or
such part thereof which occurs during the term of this Agreement, commencing on
January 1, April 1, July 1 and October 1 of each calendar year.
"Confidential Information" means all information and data of the
disclosing party designated as confidential concerning products or the business
of the disclosing party or its affiliated companies, disclosed to the receiving
party orally or in writing, including, without limitation, the Specifications.
If either party hereunder discloses information to the other party orally, then
within two (2) weeks after such disclosure the disclosing party will confirm in
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writing to the receiving party the confidential nature of the information so
disclosed. "Confidential Information" shall not include any information which
the receiving party can establish:
(a) is now generally known or available to the public or which
hereafter through no act or failure on the part of the receiving party becomes
generally known or available to the public;
(b) is legally known to the receiving party at the time of
receiving such information;
(c) is furnished to others by the disclosing party without a
restriction on disclosure;
(d) is hereafter furnished to the receiving party in writing by a
third party without restriction on disclosure, where such third party legally
obtained such information and the right to disclose it to the receiving party;
or
(e) is independently developed by the receiving party without
violation of any legal rights which the disclosing party may have in such
information.
"Fuji," as the context may require, means the corporation under common
control with Fuji Photo Film U.S.A., Inc. to which the manufacture and packaging
of the Products will be delegated hereunder and Fuji Photo Film U.S.A., Inc.,
collectively.
"Product" means the [*] color negative
photographic film manufactured by Fuji, as the same may be improved from time to
time, or such new color negative photographic film that Fuji introduces as a
replacement for the foregoing to be cut into [*] exposure lengths and marked and
packaged by Fuji for sale to Customer under this Agreement.
"Specifications" means the technical and other specifications for the
Product and the packaging therefor set forth on Exhibit A attached hereto.
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"UCC" means the Uniform Commercial Code, as in force in the State of
Washington on the date of this Agreement.
2. Manufacture and Sale.
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2.1 Fuji will manufacture, mark and package the Product in strict
accordance with the Specifications.
2.2 Customer will be solely responsible for the content and layout
of all packaging and labeling as set forth in the Specifications, including any
warranties and limitations of liability or remedies, disclaimers, cautionary
statements or warnings or notices on care and instructions directed to the end
user of the Product.
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3. Forecasts; Orders.
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3.1 Prior to the execution of this Agreement, Customer has
submitted to Fuji a forecast of its requirements of the Product during the first
Annual Period. Hereafter, Customer will submit to Fuji on a monthly basis, not
less than fifteen (15) days prior to the commencement of each month, a written
estimate for its requirements for the Product during the next following six
months, on a rolling basis. The parties agree that, although Fuji may, in its
sole discretion, permit adjustments, the forecast of Products required for a
particular calendar month shall become a "firm order" within the meaning of
Section 2-205 of the UCC three months prior to the commencement of such month.
The format for such written forecasts will be mutually agreeable to both
parties.
3.2 Customer will submit purchase orders to Fuji in writing, which
may be transmitted to Fuji by electronic facsimile or by electronic data
interchange system. Customer will submit its purchase orders not less than
ninety (90) days prior to the requested shipment date of such order. Each such
purchase order will be a "firm offer" within the meaning of Section 2-205 of the
UCC.
(a) Customer must place orders in minimum lots of one full
container of each Product ordered.
(b) Customer's purchase orders will be subject to acceptance by
Fuji, which will not be unreasonably withheld or delayed; provided that, in all
events, Fuji will be entitled to withhold or delay its acceptance of Customer's
purchase orders or to refuse to ship Products ordered if Customer is in default
(and any grace or cure period therefor has elapsed) in payment of any amounts
due to Fuji hereunder and such default is continuing. Should Fuji decline to
accept any purchase order from Customer when Customer is not in default under
this Agreement, Customer may, in its sole discretion, terminate this Agreement.
4. Purchase Targets.
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4.1 The parties hereto have agreed on an aggregate annual
purchase target for all Products to be purchased by Customer during the three
Annual Periods occurring during the term of this Agreement, as follows:
Annual Period Number of Rolls
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First [*]
Second [*]
Third [*]
4.2 The parties agree that such purchase targets are not
purchase orders and that Customer is not required to purchase all pieces of the
Product specified in such targets. However, such targets constitute an
inducement to Fuji to enter into this Agreement, and Customer's failure to place
purchase orders for the minimum number of rolls of the Products
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specified above for the applicable purchase target during any Annual Period will
constitute cause for Fuji to terminate this Agreement as provided in Section
10.2(d).
For any renewal or extension of this Agreement pursuant to Section 10.1
hereof, the parties agree to negotiate in good faith to set new purchase targets
for any additional Annual Periods.
5. Sales Terms; Delivery.
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5.1 Fuji will sell the Product to Customer pursuant to the terms
and conditions of sale (the "Sales Terms") set forth in this Agreement.
5.2 The Sales Terms govern the sales transactions between the
parties except to the extent otherwise provided herein. If there are any
inconsistencies between the Sales Terms and the provisions of this Agreement,
the provisions of this Agreement will control. If there are any inconsistencies
between the Sales Terms or the provisions of this Agreement and the terms of any
purchase order, invoice or other writing used by the parties regarding sale
transactions involving the Products, the Sales Terms or provisions of this
Agreement will control. No additional or different terms or conditions contained
in any such writing will be binding on a party unless expressly and
affirmatively accepted in writing by that party.
5.3 Fuji will deliver Products F.O.B. Customer's dock at Seattle.
Shipments will be made by carrier selected by Fuji and approved by Customer.
Product ordered by Customer pursuant to a particular purchase order shall be
completed and made available for delivery or other disposition as specified
herein in approximately one hundred twenty (120) days from Fuji's receipt of
such purchase order; provided that Fuji's specification of any delivery date is
approximate and Fuji will have no liability if delivery is not made on or by
such date; further provided, however, that if Customer is not in default of this
Agreement and Fuji shall fail to deliver Product pursuant to a particular
purchase order within approximately one hundred twenty (120) days from Fuji's
receipt of such purchase order, Customer may, except as otherwise provided in
this Agreement, terminate this Agreement.
6. Prices; Payment.
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6.1 The prices for Products during the term hereof are as follows:
Product Price Per Roll
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[*] [*]
[*] [*]
6.2 The foregoing notwithstanding, upon the occurrence of any
economic, governmental or political events which affect manufacturers or
distributors of color negative photographic film and which result in an
extraordinary increase or decrease in prices to U.S. customers for color
negative photographic film, Fuji or Customer, as the case may be, may give
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notice of such events to the other party and Fuji and Customer shall thereupon
renegotiate the prices of Product hereunder. For purposes of this Agreement,
"extraordinary increase or decrease" means an aggregate increase or decrease on
or after the commencement of the term hereof of [*] or more.
If, within forty-five (45) days after the date of such notice, Fuji and Customer
fail to agree upon new prices for Product, then either Fuji or Customer may
terminate this Agreement. If the parties fail to agree upon new prices and the
party who did not provide the notice of the need to renegotiate fails to
terminate this Agreement pursuant to this Section 6.2 within ten (10) days of
the end of the 45 day renegotiation period, the Agreement shall continue in
effect at the new prices reasonably substantiated as necessary by the notifying
party. After prices for Product are renegotiated or reset pursuant to this
Section 6.2, upon the occurrence of any subsequent extraordinary increase or
decrease in prices to U.S. customers for color negative photographic film, the
provisions of this Section 6.2 shall again apply.
For any renewal or extension of this Agreement pursuant to Section 10.1
hereof, the parties agree to negotiate in good faith to revise the Product
prices set forth in Section 6.1 hereof.
6.3 Prices are exclusive of all federal, state, local, excise, use
and similar taxes. All taxes of any nature which are billed to Customer shall
be identified, separately stated and paid by Customer or, in lieu thereof,
Customer shall provide Fuji with a tax-exemption certificate acceptable to the
relevant taxing authorities. Prices include duty and freight.
6.4 Payment shall be due net thirty (30) days after invoice date.
7. Warranty.
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7.1 Fuji's Warranty. Fuji warrants to Customer that all pieces of
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the Products sold hereunder will conform in all respects to the Specifications
and will be free from defects in manufacturing and packaging. This warranty
will survive any delivery, acceptance, inspection or payment by Customer or a
third person of and for pieces of the Product. Fuji will, at Fuji's option,
replace any pieces of the Product which Fuji finds do not conform to the
Specifications or contain defects in manufacturing or packaging after delivery
to Customer or to Customer's customer.
7.2 Customer Warranty. Fuji acknowledges that Customer's warranty
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to its customers for the Products is initially as set forth in Exhibit B
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attached hereto. Fuji shall have no responsibility for such warranty extended by
Customer except to the extent expressly stated in this Article 7.
7.3 Intellectual Property Warranty. Fuji hereby warrants that the
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Products do not infringe any rights of third persons.
7.4 Limited Liability. Except as specifically and unambiguously
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provided herein, Fuji does not make any warranties to Customer or to Customer's
customers with respect to the Products. THIS ARTICLE 7 IS A COMPLETE STATEMENT
OF FUJI'S
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WARRANTIES REGARDING THE PRODUCTS AND IS IN LIEU OF ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE. THE WARRANTIES SET FORTH IN THIS ARTICLE 7
PROVIDE THE EXCLUSIVE REMEDIES FOR ANY NON-CONFORMITY OR DEFECT IN THE PRODUCTS.
If any court having jurisdiction finally holds that this limitation of remedies
is void or unenforceable, Fuji's liability for any claim shall be limited to the
invoice price of the Product giving rise to the claim. IN NO EVENT WILL FUJI BE
LIABLE FOR INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, EVEN IF SUCH DAMAGES
RESULT FROM NEGLIGENCE OR OTHER FAULT.
8. Confidential Information.
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8.1 Both during and after the term of this Agreement, each party
will maintain in secrecy, and will neither disclose to a third person nor use
for any purpose other than its performance hereunder, the other party's
Confidential Information. In implementation of the preceding sentence, forthwith
upon the expiration or earlier termination of this Agreement, each party will
return to the other party, at no charge, all Confidential Information previously
delivered to the receiving party in written, quantitative or schematic
expression or other tangible form and all copies of the foregoing (including as
Confidential Information for purposes hereof Exhibit A provided by Customer to
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Fuji). Fuji shall limit access to Confidential Information to those of its
employees and subcontractors for whom access is necessary in order to perform
their employment or subcontracting duties.
8.2 Neither Fuji nor Customer shall, at any time, disclose
Confidential Information to any third party except (i) with the prior written
consent of the other party, or (ii) by reason of legal compulsion in any legal
proceedings or pursuant to law. In the event either party proposes to make any
such disclosure pursuant to the exclusion contained in clause (ii) of the
preceding sentence, such party shall, prior to or concurrently with such
disclosure, furnish the other party a written opinion of legal counsel to the
effect that such disclosure is made by reason of legal compulsion.
9. Trademarks; Product Origin.
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9.1 Fuji will cause the Customer trade name, trademarks and logo
(collectively the "Mark") and applicable product designations to be imprinted on
the Product therefor in strict conformity to the Specifications; provided,
however, that nothing herein contained will confer on Fuji any right to or
interest in the Mark, and Fuji shall not use the Mark except on the Product
ordered by Customer pursuant to this Agreement, and shall not sell pieces of the
Product bearing the Mark to any person other than Customer. Forthwith upon the
expiration or earlier termination of this Agreement, except as may be required
to fill any orders outstanding hereunder as of the date of expiration or earlier
termination (and not cancelled by Customer pursuant to Article 9), Fuji will
cease and desist from the use of the Mark and any name, mark or logo similar
thereto.
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9.2 Neither party shall, at any time, disclose to any third party
the fact that Fuji manufactures the Product sold under the Mark, disclose the
terms and conditions of this Agreement or in any manner advertise or publish any
information concerning this Agreement, except that either party may make such
disclosure (i) with the prior written consent of the other party, or (ii) by
reason of legal compulsion in any legal proceedings or pursuant to law,
including any disclosure requirements existing under federal Securities Laws
relating to public companies. In the event either party proposes to make any
such disclosure pursuant to the exclusion contained in clause (ii) of the
preceding sentence, such party shall, prior to or concurrently with such
disclosure, furnish the other party an opinion of outside legal counsel in the
same manner as provided in Section 8.2. Each party shall take all reasonable
measures to cause its employees and agents to hold in confidence the fact that
Fuji manufactures the Product sold under the Mark and the terms and conditions
of this Agreement. For purposes of the preceding sentence, each party shall be
deemed to take "reasonable measures" to the extent that it adopts, or causes to
be adopted, the same or more stringent procedures and acts with the same or
greater care that it adopts in respect of its own proprietary information, know-
how and trade secrets.
10. Term and Termination.
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10.1 This Agreement will become effective as of the date and year
first above written and, unless earlier terminated in accordance with Section
10.2, will continue in effect until the end of the third Annual Period.
Thereafter, this Agreement shall renew automatically for successive one year
periods, each of which shall constitute an additional Annual Period, unless
either party provides the other with at least sixty (60) days' prior notice of
its intent not to renew the Agreement.
10.2 This Agreement may be terminated prior to expiration as
follows:
(a) Upon any of the following events, either party may give
notice of termination, effective immediately: (i) the other party becomes
insolvent or admits its inability to pay its debts generally as they come due;
(ii) any sheriff, marshall, custodian, trustee or receiver is appointed by order
of any court of competent jurisdiction to take charge of or sell any material
portion of the other party's property; (iii) a case is filed by the other party
under the Bankruptcy Code or any other insolvency law; (iv) a case is filed
against the other party without such party's application or consent under the
Bankruptcy Code or any other insolvency law and such case continues undismissed
for 60 days; (v) the other party makes a general assignment for the benefit of
creditors; or (vi) the other party is dissolved or liquidated or takes any
corporate action for such purpose.
(b) Either party may terminate this Agreement if the other
party commits a material breach of this Agreement and such breach shall continue
more than 30 days after written notice of such breach is given to the party in
breach by the party not in breach.
(c) Either party may terminate this Agreement as provided in
Section 11.9.
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(d) Fuji may terminate this Agreement for the cause set forth
in Section 4.2 by written notice to Customer given within 90 days following the
end of the Annual Period during which the minimum purchase target was not
satisfied, such termination to be effective as of the end of the next Calendar
Quarter.
10.3 Upon expiration or termination of this Agreement for any
cause, Customer shall purchase from Fuji all finished Product which are the
subject of unfilled purchase orders outstanding at the price specified in the
respective purchase orders.
10.4 Upon termination of this Agreement for any reason specified in
Sections 10.2(a), 10.2(b) or 10.2(d) of this Agreement, all amounts payable by
Customer hereunder will be accelerated and will become due immediately.
11. General.
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11.1 Each of the parties has taken all corporate action required to
duly authorize its execution, delivery and performance of this Agreement, and
this Agreement constitutes an obligation enforceable against it in accordance
with its terms.
11.2 Fuji and Customer are acting in the capacity of independent
contractors. Nothing herein contained may be construed as constituting either
party the agent, employee, partner or co-venturer of the other party.
11.3 This Agreement may be amended by the parties hereto only by an
instrument in writing signed on behalf of each of the parties hereto.
11.4 Any waiver of any default in performance of the provisions
hereof must be in writing and shall not operate as a waiver of, or estoppel with
respect to, any subsequent default.
11.5 All notices, consents, approvals, or other communications
hereunder (other than routine operational communications) shall be in writing
and shall be delivered personally or by overnight delivery service (e.g., FedEx)
or registered or certified mail, postage prepaid, or sent by telecopy, promptly
confirmed by mail as set forth above, addressed to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to Fuji, to
Fuji Photo Film U.S.A., Inc.
555 Taxter Road
Elmsford, New York 10523
Attention: Mr. Manny Almeida
Fax: (914) 789-8179
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with a copy to:
Fuji Photo Film U.S.A., Inc.
555 Taxter Road
Elmsford, New York 10523
Attention: Jonathan E. File, Esq.
Fax: (914) 789-8142
If to Customer, to:
Seattle Film Works
1260 16th Avenue West
Seattle, WA 98119-3401
Attention: Mr. Rob Brammer
Fax: (206) 284-5357
with a copy to:
Seattle Film Works
1260 16th Avenue West
Seattle, WA 98119-3401
Attention: Case Kuehn
Fax: (206) 284-5357
Any such notice, consent, approval and other communication shall be deemed
given, in the case of mailing, on the third day following its deposit in the
mail, in the case of telecopy, upon transmission if confirmed by mail as set
forth above, and in all other cases upon receipt.
11.6 Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned (either consensually or by operation of
law) by either of the parties hereto without the prior written consent of the
other party, and any purported assignment in the absence of such consent will be
void. The foregoing notwithstanding, Fuji acknowledges that Customer may, from
time to time, purchase Product on behalf of its wholly owned subsidiary, Seattle
Film Works Manufacturing Company pursuant to the terms of this Agreement, and
(ii) Customer acknowledges that Fuji will cause one or more corporations under
common control with it to manufacture and package the Products Fuji will sell to
Customer hereunder; provided that Fuji remains obligated for the performance of
all of Fuji's obligations hereunder.
11.7 This Agreement shall be governed by and construed in accordance
with the laws of the State of Washington (without giving effect to its
principles of conflict of laws). The parties acknowledge and agree that each
has entered into this Agreement in the mutual expectation that its terms and
conditions will be governed by and interpreted in accordance with the
substantive law of the State of Washington. Therefore, the parties waive any
right which either may have to challenge the efficacy of this provision or to
contend that the laws of any
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other jurisdiction should govern the interpretation of this Agreement because
such other jurisdiction has more significant contacts with, or a greater
interest in, the matter in dispute than does the State of Washington.
11.8 The expiration or earlier termination of this Agreement will
not operate to release either party hereto from its obligations under Articles 7
or 8 and Section 9.2 (which obligations will survive such expiration or
termination) or from any liability which has already accrued to the other party
as of the date of expiration or termination or which may thereafter accrue in
respect of an act or omission occurring prior to expiration or termination. The
expiration or earlier termination of this Agreement will not operate to relieve
either party hereto of the obligation to perform in a timely manner all duties
which it is required hereunder to perform in respect of any orders for pieces of
the Product outstanding as of the date of expiration or earlier termination and
not cancelled by Customer as permitted hereby.
11.9 Neither party shall be held liable for any failure or delay in
the performance of any of the obligations on its part to be performed hereunder,
if and to the extent such failure or delay results from any cause or causes
beyond the reasonable control of such party, including, but not limited to,
fire, storm, flood, earthquake, explosion, accident, military operation, war,
rebellion, riot, wreck, epidemic, quarantine, regulations, labor, labor dispute,
shortage of manpower, embargo, failure or delay in transportation, governmental
regulations, or inability to obtain required raw materials or machines. Both
parties will have the right to terminate or suspend performance under this
Agreement by reasonable notice due to circumstances beyond the affected party's
control, including but not limited to actions or impending proceedings by
governmental authorities or other events of force majeure specified above, for
the duration of such event.
11.10 The headings in this Agreement are for convenience only and in
no way alter, modify, amend, limit or restrict the contractual obligations of
the parties.
11.11 This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.12 This Agreement, including the preamble and the Exhibits hereto,
contains the entire agreement between Fuji and Customer with respect to the
transaction which is the subject matter hereof.
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IN WITNESS WHEREOF, Fuji and Customer have caused this Agreement to be
executed by their duly authorized representatives as of the date and year first
above written.
FUJI PHOTO FILM U.S.A., INC.
By: /s/ Osamu Inoue
Name: Osamu Inoue
Title: President
SEATTLE FILM WORKS, INC.
By: /s/Case H. Kuehn
Name: Case H. Kuehn
Title: Vice President
List of Exhibits
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EXHIBIT A Specifications
EXHIBIT B Customer's Warranty
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EXHIBIT A
SPECIFICATIONS
1. FILM
Type: [*]
Speed: [*]
Size: [*]
Edge Prints: [*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
2. 135 METAL CARTRIDGE
Graphic Design: To be Provided by Customer
Bar Code: Position and Bar Code as Specified by ISO
CAS Patterns: Position and Patterns as Specified by ISO
Lot No.: Printed, Customer's Own Lot Number
Expiration Date: Printed
3. PLASTIC CASE (to contain film in 135 metal cartridge)
Color: Black
Recycling Mark: Yes, with Abbreviated Description of the Plastic
Material Used.
Outer Label: No
4. SHIPPING CASE
Case Quantity: Eight Thousand (8,000) Rolls of a Film Speed in Plastic
Case.
Case Mark: At Fuji's Option
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EXHIBIT B
CUSTOMER'S WARRANTY
LIMIT OF LIABILITY: The photographic material you send us for handling will be
treated with care. However, our responsibility for damage or loss, even though
due to negligence or other fault, will be limited to the cost of unexposed film
unless you have declared a higher value and paid a premium for that value in
advance. SFW is wholly separate from any shipper and all other warranties,
express or implied, and all incidental or consequential damages are specifically
excluded. SFW reserves the right to refuse to reproduce any image when such
action would be prohibited under copyright law (Title 17 of the United States
code).
Pictures On Disk, PhotoWorks, PhotoMail and Pictures Plus are trademarks of
Seattle FilmWorks, Inc. Windows is a trademark of Microsoft Corporation.
Macintosh is a registered trademark of Apple Computer Corporation.
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