DISTRIBUTION AGREEMENT
THIS AGREEMENT is made this September 18, 1996.
BY AND BETWEEN
SCHMITT MEASUREMENT SYSTEMS, INC., a company organized and existing under the
laws of the State of Oregon, U.S.A., having its registered office at 2765 NW
Nicolai St., Portland, Oregon 97210, represented hereto by Mr. Wayne A. Case,
acting in his capacity as President and Chairman of the Board (hereinafter
referred to as "SMS")
AND
SLOAN TECHNOLOGY INC., a company organized and existing under the laws of the
State of California, U.S.A., having its registered office at 602 East Montecito
Street, Santa Barbara, California 93013, represented hereto by Dr. Timothy
Stultz, Vice-President and General Manager (hereinafter referred to as "Sloan").
WHEREAS
Sloan is willing to promote and sell the SMS products listed in Appendix (1)
hereto to Customers in the Territory, as such terms are defined herein, under
the terms and conditions herein set forth.
NOW THEREFORE IT HAS BEEN AGREED AS FOLLOWS:
ARTICLE 1 - DEFINITIONS
Whenever used in this Agreement, the following terms and expressions, whether
used in the singular or in the plural, shall have the meaning set forth in the
Article 1, except where the context clearly otherwise requires:
- - "Contractual Year" shall mean any period of twelve consecutive months
starting from the date of entry into force of the Agreement or from any
anniversary date of entry into force of this Agreement.
- - "Customers" shall mean those persons and entities comprising the micro-
electronics markets, including, without limitations semi-conductor, device,
materials and equipment manufacturers, data storage products, materials
and equipment manufacturers, flat panel display products, materials and
equipment manufacturers, and university and research laboratories engaged
in the development, production and/or characterization of micro-electronic
materials and devices.
- - "Products" shall mean the products listed in Appendix 1, attached hereto,
which products are manufactured and/or sold by SMS.
- - "Territory" shall mean the world subject, however, to the following:
SMS has granted to others the exclusive right to promote and sell the
Products in the States of Washington, Oregon, Idaho, California, Arizona,
New Mexico, Colorado, Texas and Utah, U.S.A. (the "Western U.S.A.
Distribution Agreement"), and Japan (the "Japan Distribution Agreement").
SMS represents and warrants that the Western U.S.A. Distribution Agreement
may be terminated by SMS upon ninety (90) days written notice and that the
Japan Distribution Agreement may be terminated by SMS as of December 31,
1997. SMS further represents and warrants that it will use its best
efforts to cause the immediate termination of the Western U.S.A.
Distribution Agreement and the Japan Distribution Agreement, but that in no
event shall the termination of the Western U.S.A. Distribution Agreement be
later than ninety (90) days from the date hereof, and in no event shall the
termination of the Japan Distribution Agreement be later than December 31,
1997. Upon the termination of the Western U.S.A. Distribution Agreement
and/or the Japan Distribution Agreement, the Territory shall be deemed to
include the geographic areas encompassed thereby.
- - "Trademarks" shall mean the trademark "SMS" and its associated logo as well
as the trademarks registered by Sloan (or of its affiliated companies) in
the Territory.
ARTICLE 2 - PURPOSE OF THIS AGREEMENT
2.1 SMS hereby appoints Sloan as its exclusive distributor for the promotion
and sale of the Products to Customers in the Territory, under the terms and
conditions of this Agreement.
2.2 During the term of this Agreement, Sloan shall purchase the Products
exclusively from SMS for the purpose of their exclusive resale by Sloan to
Customers in the Territory. Sloan shall resell the Products purchased from
SMS under the names of one or more of the Trademarks.
ARTICLE 3 - LEGAL STATUS
Sloan is an independent legal entity acting for its own account and at its own
risk in its capacity as distributor. Its relationship with SMS is that of a
purchaser and a seller. Nothing in this Agreement shall be construed as
conferring upon Sloan any authority, express or implied, to bind or commit SMS
to any third party in any way.
ARTICLE 4 - EXCLUSIVITY - NON COMPETITION
4.1 During the term of this Agreement, SMS undertakes not to appoint, directly
or indirectly, any other distributor, agent or representative for the
promotion or sale of the Products to Customers in the Territory. SMS also
undertakes not to sell, directly or indirectly, the Products to the
Customers in the Territory. Notwithstanding the foregoing, SMS may upon
the written consent of Sloan, sell Products to Customers in the Territory
provided that such Customers request that SMS sell Products to them in lieu
of Sloan selling Products to them in the event of such a sale, SMS shall
pay to Sloan, as a commission, a sum to be agreed to by SMS and Sloan prior
to the effectuation of any such sale but which shall not be less than ten
percent (10%) of the gross sales price of the Products sold, such
commission to be paid to Sloan upon SMS' receipt of the sale proceeds.
ARTICLE 5 - OBLIGATIONS OF SLOAN
5.1 Sloan agrees to use reasonable efforts (I) to promote and sell the Products
to customers in the Territory, and (ii) to provide the customers in the
Territory to whom Sloan sells the Products with reasonably diligent and
efficient services, in particular after-sale services.
5.2 In order to carry out these responsibilities, Sloan, at its sole expense,
agrees:
(I) to take all measures reasonably necessary to ensure the
promotion, sale and service of the Products to Customers in the
Territory;
(II) to treat its Customers and conduct its business activities with a
view to maintaining and increasing the public goodwill and
reputation attached to the Products and to the Trademarks;
(III) to distribute to prospective purchasers of the Products such
commercial or technical catalogues, booklets, leaflets and other
printed documentation as SMS may, at its own expense, supply to
Sloan for such purpose;
(IV) to prepare, with the assistance of SMS, and distribute to
potential Customers any other booklets or documentation which are
reasonably necessary for the sale of the Products to Customers in
the Territory;
(V) to participate, at its own expense, in fairs, exhibitions or
other trade shows which are likely to promote the sale of the
Products to Customers in the Territory;
(VI) to apply its general conditions of sale and warranty in
compliance with the requirements of the laws, regulations and
practices applicable to the sale of the Products to Customers in
the Territory;
(VII) to ensure adequate after-sales service for the Products in the
Territory by itself (or through any third party);
(VIII) to obtain all permits and authorizations required for the import
of the Products in the Territory; and
(IX) to purchase and maintain all necessary insurance policies
reasonably required in connection with the promotion and sale of
the Products to Customers in the Territory.
ARTICLE 6 - OBLIGATIONS OF SMS
6.1 SMS shall provide to Sloan, upon the request of Sloan, reasonable
assistance in promoting the sale of the Products to Customers in the
Territory. To this effect, SMS shall provide, at its offices, training to
Sloan's personnel with respect to the specifications, promotion, sale and
usage of the Products; the specifics of this training program shall be
jointly defined and agreed to in advance between the parties. Traveling
and living expenses incurred by Sloan for the training of its staff shall
be borne by Sloan.
6.2 SMS shall furnish to Sloan, at no charge to Sloan, specifications,
promotional material and other documentation relevant to the Products which
are currently in its possession. SMS shall also furnish to Sloan at the
prices set forth herein, demonstration units of the Products which are
currently in its possession.
6.3 SMS shall ensure an adequate Product flow so that it is able to promptly
deliver to Sloan Products ordered by Sloan hereunder.
6.4 SMS shall promptly deliver to Sloan all Products ordered by Sloan
hereunder, in the condition warranted by SMS hereunder.
ARTICLE 7 - WARRANTY
7.1 SMS warrants to the Sloan that each Product sold and delivered to Sloan
shall be fit for the purpose intended, free from defects in material and
workmanship, and be of the quality described in the Product specifications.
7.2 In the event Sloan receives notice from a purchaser of a Product, within
twenty-four (24) months of the delivery of the Product to such purchaser,
that the purchased Product fails to satisfy the warranty set forth in
Section 7.1, Sloan shall make such product available for inspection by SMS
and, within ten (10) days of such inspection, SMS shall at its own expense,
either (I) correct the defect by repairing the Product or, at its option,
(ii) replace the defective Product, and deliver the repaired or replaced
Product to Sloan.
ARTICLE 8 - PRICES - METHODS OF PAYMENT
8.1 The discounted prices applicable to the sales of Products by SMS to Sloan
shall be those appearing in Appendix 2, attached hereto.
8.2 The prices set forth in Appendix 2, both list and discounted, shall remain
constant during the first Contractual Year. Such prices may be increased
for subsequent Contractual Years upon the written agreement of SMS and
Sloan.
8.3 All monies due to SMS from Sloan for purchased Products shall be paid
within sixty (60) days of the date of invoicing, and shall be paid in
United States dollars.
8.4 Sloan shall sell the Products to Customers at the list prices listed on
Appendix 2, unless otherwise agreed upon in writing by SMS and Sloan.
ARTICLE 9 - CHANGES IN THE PRODUCTS
9.1 SMS shall have the right to modify any of the Products provided, however,
(I) the modification does not change the performance to the specifications
of the Products, and (ii) SMS furnishes Sloan with three (3) months prior
written notice of any such modification, or immediately with Sloan's
agreement.
ARTICLE 10 - TRADEMARK - ASSISTANCE AGAINST UNFAIR COMPETITION AND INFRINGEMENT
OF INTELLECTUAL PROPERTY RIGHTS
10.1 SMS hereby authorizes Sloan to use the Trademarks owned by it but only in
connection with the promotion and sale of the Products pursuant to this
Agreement and under the terms and conditions described in Article 10.2
hereafter.
10.2 Sloan agrees in particular:
- to use the Trademarks owned by SMS only in connection with the
promotion and sale of the Products and the performance of this
Agreement;
- to inform forthwith SMS of any trademark infringement of which Sloan
becomes aware of in the Territory;
- to cease and desist from using the Trademarks owned by SMS at the
expiry or termination of this Agreement for any reason whatsoever.
10.3 Sloan shall inform SMS of any act of unfair competition, and of any
infringement of the intellectual property rights of SMS, of which Sloan may
be aware.
10.4 SMS represents and warrants that it is the sole owner of the Products and
the intellectual property rights associated therewith, and that the
Products do not infringe on intellectual property rights of third parties.
SMS agrees to defend, indemnify and hold Sloan (and its affiliated
companies) harmless with respect to any claims by others that the promotion
and sale of any of the Products constitutes an act of unfair competition or
infringes on the intellectual property rights of another.
10.5 SMS shall aggressively defend its rights in the Products, and aggressively
prosecute actions against those who are unfairly competing with the
Products, or otherwise infringing on the intellectual property rights
associated with the Products.
ARTICLE 11 - TERM
This agreement shall enter into force on its date of signature by both parties
and shall remain in force for an initial period of one (1) Contractual Year.
This Agreement shall be automatically renewed for additional Contractual Years
unless either party notifies the other party, by certified letter with return
receipt requested, of its intention not to renew this Agreement six (6) months
prior to the expiry of the initial Contractual Year or any following Contractual
Year.
ARTICLE 12 - EARLY TERMINATION
12.1 Either party shall have the right to terminate this Agreement by sending a
ninety (90) day notice, by certified mail with return receipt requested, in
the event that the other party fails to perform any of its material
obligations under this Agreement, and has not ceased such failure within
thirty (30) days after receipt of notice in writing to that effect from the
first party, sent by certified letter with return receipt requested,
without prejudice to any damages which might be claimed by the non-
defaulting party.
12.2 Either party shall have the right to terminate forthwith this Agreement by
sending a notice, by certified mail with return receipt requested, to the
other party should this other party be subject to bankruptcy proceedings or
to a reorganization plan with creditors (whether amicable or decided by the
court), or in the event of appointment of a bankruptcy trustee, arrangement
for the benefit of creditors, or should this other party be subject to
winding-up or any other procedure evidencing the insolvency of this other
party.
ARTICLE 13 - CONSEQUENCES OF EXPIRY OR EARLY TERMINATION
Upon expiry or termination of this Agreement as provided for in Articles 11 and
12 hereabove, SMS shall have the option:
(i) either to authorize Sloan to sell, on a non-exclusive basis, the remaining
stock of Products in its possession for a limited period of time, to be
defined by SMS and Sloan according to the magnitude of the remaining stock
of Products at the time of expiry or termination, or
(ii) to repurchase all Products still existing in Sloan's stock and which were
purchased by Sloan from SMS, at a price equivalent to the net price (all
taxes excluded), paid to SMS by Sloan for such Products, less a 10%
restocking charge.
ARTICLE 14 - TERMINATION OF EXCLUSIVITY
The exclusive nature of Sloan's right to promote and sell a Product to Customers
in the Territory may be terminated by SMS in the event Sloan fails to purchase
from SMS a minimum number of units of such Product, as set forth on Appendix 3,
attached hereto. Any such termination may be effected by furnishing to Sloan
ninety (90) days written notice thereof, to be sent by certified mail, return
receipt requested. The termination of the exclusive nature of Sloan's right to
promote and sell any one Product shall not affect the exclusive nature of
Sloan's right to promote and sell other Products, which exclusive right shall
continue unabated.
ARTICLE 15 - FORCE MAJEURE
Neither party hereto shall be in default hereunder by reason of its delay in the
performance or failure to perform any of its obligations hereunder due to any
event, circumstance or cause beyond its control such as, but not limited to,
Acts of God, strikes, lock-out, acts or restrictions of governmental
authorities, wars, threats of war, hostilities, shortage in the raw materials or
means of transportation, revolution, riots, epidemics, fire, floods, all of
which shall be considered as events of force majeure.
The party affected by any such event shall notify the other party within fifteen
(15) days of its occurrence. The performance of this Agreement shall then be
suspended for as long as any such event shall prevent the affected party from
performing its obligations hereunder. If such suspension lasts more than three
(3) months, either party may terminate forthwith this Agreement by sending a
thirty (30) day written notice to this effect to the other party by certified
letter with return receipt requested.
ARTICLE 16 - CONFIDENTIALITY
Each party agrees at any times, even after the expiry or termination of this
Agreement, for any reason whatsoever, to keep and maintain secret and in strict
confidence all proprietary information received from the other party under this
Agreement and not to permit such proprietary information to be disclosed to
third parties as long as this information is not in the public domain, except
for the purpose of the promotion, sale and/or servicing of the Products as
provided for in this Agreement. See the secrecy agreement singed by both
Parties.
ARTICLE 17 - APPENDICES
The appendices to this Agreement form an integral part thereof. There are three
(3) appendices.
ARTICLE 18 - NOTICES
Any notice required or permitted hereunder, made by any party to the other
party, shall be in writing and sent by certified mail with return receipt
requested at the addresses shown herein or at the last address notified by
either party to the other.
ARTICLE 19 - ENTIRE AGREEMENT - MODIFICATIONS
This Agreement contains the entire agreement of the parties hereto relating to
the subject matter hereof and supersedes all previous agreements between the
parties pertaining to subject matters covered by this Agreement.
ARTICLE 20 - APPLICABLE LAW
This Agreement shall be governed by and interpreted in accordance with Oregon
Law.
ARTICLE 21 - JURISDICTION
All disputes between the parties which may arise under this Agreement shall be
submitted to the exclusive jurisdiction of the Courts of Oregon, even where
there are multiple defendants or appeals.
Dated Portland, Oregon, September 18, 1996.
/s/ /s/
- ----------------------------------- -----------------------------------
Wayne A. Case, President Dr. Timothy Stultz, Vice President
Schmitt Measurement Systems, Inc. Sloan Instruments Inc.
Distribution Agreement
by and between
Schmitt Measurement Systems, Inc. and
Sloan Technology Inc.
APPENDIX 1
PRODUCTS
SMS Light Scatter Measurement Systems for application to the
microelectronics markets.
TMS-2000
TMS-2000W
TMS-3000W
Distribution Agreement
by and between
Schmitt Measurement Systems, Inc. and
Sloan Technology, Inc.
APPENDIX 2
GENERAL CONDITIONS OF SALE
PRODUCT LIST PRICE(1) DISCOUNT TRANSFER PRICE
TMS-2000 $65,000 40% $39,000
WITH COMPUTER
TMS-2000 $63,000 40% $37,800
WITHOUT COMPUTER
TMS-2000W $85,000 40% $51,000
WITH COMPUTER
TMS-2000W $83,000 40% $49,800
WITHOUT COMPUTER
TMS-3000W $125,000 40% $75,000
WITH COMPUTER
TMS-3000W $123,000 40% $73,800
WITHOUT COMPUTER
SPARES & CONSUMABLES per SMS parts list 40% 60% of list price
All prices are F.O.B. Portland, Oregon.
(1) Both parties agree to review pricing on a regular basis, and by mutual
consent, adjust as necessary to meet market needs, competitive requirements
and market opportunities.
Distribution Agreement
by and between
Schmitt Measurement Systems, Inc. and
Sloan Technology Inc.
APPENDIX 3
MINIMUM ANNUAL QUANTITY & FIRST PERIOD FORECAST
Both parties will mutually agree upon annual minimum quantities of SMS products
which must be purchased by Sloan from SMS in order to maintain its exclusivity
rights under this agreement. It is also agreed that the first period of this
agreement will run from October 1, 1996 through December 31, 1997.
Both parties further agree that the timely assignment of distribution rights for
all regions of the World Wide Territory to Sloan is critical to achieving
targeted sales volumes. Further, both parties agree that product performance,
customer support, applications development and customer driven product
improvements also are key factors which directly impact long term success and
subsequent sales volumes.
Both parties are however committed to apply resources, support one another and
achieve total customer satisfaction in order to meet and/or exceed minimum
targeted quantities in support of a combined market success.
The initial annual minimum quantity agreed upon for the first period of this
Agreement is 110 systems.
A quarterly forecast for the first period of this Agreement is:
Q4 1996 12 units
Q1 1997 17 units
Q2 1997 22 units
Q3 1997 27 units
Q4 1997 32 units