DISTRIBUTORSHIP AGREEMENT
(G.M. PFAFF/WILLCOX & GIBBS)
This AGREEMENT is made as of October 1, 1998, between G.M. Pfaff AG, a
German limited liability company ("Pfaff"), and Willcox & Gibbs, Inc., a
Delaware (U.S.A.) corporation ("W&G").
R E C I T A L S :
A. Effective January 1, 1999, the parties desire to continue their
existing business relationship under new contractual arrangements.
B. To accomplish this, it is agreed that effective January 1, 1999: (i)
the Distributorship Agreement, dated as of October 1, 1994, between Pfaff and
W&G (f.k.a. WG, Inc.) shall be terminated and (ii) the following new contract
terms shall take effect to govern the distribution by W&G in the United States
of America and Puerto Rico (the "Territory") of all spare or replacement parts
("Parts") for industrial sewing machines (i.e., equipment for industrial use
which either is a sewing machine or incorporates a sewing machine as a part
thereof) and related accessories and attachments manufactured or sold by Pfaff
and its Affiliates ("Products"), it being understood that Parts manufactured by
The Singer Company or Semi-Tech (Global) Limited are not Products for purposes
of this Agreement.
C. For purposes of this Agreement, an "Affiliate" of a person means any
other person who owns, is owned by or is owned by any owner of such person. For
purposes of this definition, an "Affiliate" of a person can be: (i) a
corporation when more than 50% of the outstanding voting shares or total
outstanding shares are owned directly or indirectly by such person; or (ii) a
partnership, trust or other entity when the person controls such entity or has
an equity interest therein greater than 50%.
1. APPOINTMENT
1.1 Subject to the terms and conditions of this Agreement, Pfaff
grants to W&G the right to promote and sell Parts in the Territory. Such
right shall be non-exclusive.
2. TERMS OF SALE
2.1 Pfaff shall provide W&G such technical assistance and such printed
material (including operating and service manuals and sales literature) as may
be reasonably required by W&G in the promotion, sales and servicing of Parts.
The cost of such technical assistance and printed material shall be borne by
W&G.
2.2 W&G shall purchase Parts from the industrial sewing products parts
business of Singer Industrial Sewing Products Company, currently located in
Murfreesboro, Tennessee ("Singer"), and Pfaff shall cause Singer to sell to W&G
Parts in accordance with this Agreement. Parts, at Singer's discretion, will be
shipped to W&G from Murfreesboro, Tennessee or from Pfaff's plant in Germany
direct to W&G. On occasion, and at Singer's discretion, when Parts delivery may
be critical for customer back order, Singer will effect a direct shipment to W&G
by Pfaff.
2.3 For W&G purchase orders submitted during the period January 1, 1999 to
June 30, 1999, W&G shall purchase parts based on Singer Murfreesboro's average
cost (including freight and duties) which is based on the Pfaff pricing formula
applicable to W&G which exists as of the date of this Agreement ("Special
Pricing").
2.4 For W&G purchase orders submitted during the period July 1, 1999 to
December 31, 1999, W&G shall purchase parts at Special Pricing. If, during this
period, Singer, in any two consecutive calendar months, delivers 75% (based on
invoice price) of the W&G current orders from Murfreesboro, Tennessee, then, for
the period commencing on the 1st of the month following such two month period to
December 31, 1999, prices will be at W&G's USA list prices in effect (published
list) as of September 1, 1998 ("USA List Price") less 32 1/2%. For these
purposes, "current orders" shall mean those shipped and billed within one week
of placement of the order by W&G.
2.5 For W&G purchase orders submitted from January 1, 2000, until December
31, 2000, the purchase price of Parts will be USA List Price less 32 1/2%. The
parties shall negotiate the purchase price of Parts for any subsequent period,
which in no event shall be (i) lower than USA List Price less 32.5% or (ii)
greater than USA List Price less 25%.
2.6 During the Special Pricing term hereof, Pfaff and Singer shall afford
to W&G prices which are no less favorable to W&G than those afforded by Pfaff or
any Affiliate of Pfaff to Pfaff USA, Inc., to Singer or to any Affiliate of
Singer or to any other person in the Territory.
2.7 Purchase of Parts or other merchandise by W&G shall be paid for by W&G
within 60 days. Amounts not paid within 60 days will bear interest after such
60th day at a rate of 6% per annum.
2.8 Pfaff hereby extends to W&G Pfaff's standard warranty with respect to
Parts. PFAFF DISCLAIMS, BOTH UNDER THIS AGREEMENT AND IN CONNECTION WITH ANY
SALES PURSUANT HERETO, ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING ANY
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PURPOSE, OTHER THAN THOSE EXPRESS
WARRANTIES SPECIFICALLY STATED IN PFAFF'S THEN CURRENT STANDARD WARRANTY, AND
PFAFF FURTHER EXCLUDES ALL REMEDIES OTHER THAN THOSE SPECIFICALLY SET FORTH IN
SUCH STANDARD WARRANTY. ALL CONSEQUENTIAL, PUNITIVE, AND ALL OTHER SIMILAR
DAMAGES ARE EXCLUDED. Pfaff's standard warranty shall incorporate the substance
of the preceding two sentences. W&G agrees that it shall not give any warranty
or remedy in regard to Parts that is any longer in duration or broader in scope
than such Pfaff warranty without the prior written approval of Pfaff.
3. TRADEMARKS, TRADENAMES AND PATENTS
3.1 Pfaff grants to W&G the right and license to use in the Territory,
without right of sublicense, all of the following now or hereafter during the
term of this Agreement owned or possessed by Pfaff and its Affiliates:
(i) all trademarks that are used by Pfaff or any of its Affiliates
in the manufacture, promotion or sale of Parts ("Trademarks");
(ii) the tradenames that are used by Pfaff or any of its Affiliates
in the manufacture, promotion or sale of Parts ("Tradenames");
and
(iii) all patents and patent applications relating to the
manufacture, use or sale of Parts ("patents");
but only for the purpose of promoting and selling Parts in the Territory and for
no other purpose. The foregoing shall not constitute an assignment of the
Trademarks, Tradenames or Patents.
3.2 W&G may place the Trademarks and Tradenames on its stationery,
catalogues, promotional literature, advertising material and signs, but only in
connection with the promotion, sale and servicing of Parts in the Territory. The
method of use of the Trademarks and Tradenames by W&G shall be strictly in
accordance with the instructions to be given by Pfaff and subject to the prior
written approval by Pfaff. W&G shall submit to Pfaff for prior approval
representative samples of all leaflets and other advertising materials referred
to above. W&G shall not be allowed to combine the Trademarks and Tradenames with
any other trademarks or tradenames or any sort of patterns or letters or
designs. W&G shall not make any change or alteration to the original
configuration and colors of the Trademarks and Tradenames.
4. COMPENSATION
4.1 W&G shall pay to Pfaff USA, Inc., with respect to any period during
which the Special Pricing terms of this Agreement are in effect, a commission
equal to ten percent of W&G's total net sales of Parts under this Agreement.
Payments with respect to each month shall be made within 15 days after the end
of such month, and will be accompanied by a computation of the amount of such
commission certified by an officer of W&G. Amounts not paid within such 15 days
shall bear interest after such 15th day at a rate of 6% per annum. For purposes
of this Section 4.1, net sales shall be computed net of discounts, allowances,
credits and returns and without consideration of any charges for taxes, freight,
shipping costs, import duties or the like.
5. TERMINATION
5.1 This Agreement shall continue in full force and effect on a
non-exclusive basis until December 31, 2001. It shall automatically be renewed
on such non-exclusive basis for successive periods of one (1) year each, unless
one of the parties to this Agreement gives written notice of termination to the
other at least three months prior to the expiration of said initial period or
any successive one-year period, whichever is applicable, such termination to be
effective at the end of the initial period or the relevant one-year extension
thereof.
5.2 This Agreement may be terminated by the aggrieved party immediately
upon written notice to the other ("Defaulting Party"), in the event that after
the date hereof the Defaulting Party commits a material breach or default under
this Agreement, which breach or default shall not be remedied within 30 days
after giving of notice thereof to the Defaulting Party.
5.3 Upon termination of this Agreement, all of W&G's rights with respect
to the Trademarks and Tradenames shall immediately cease, Pfaff shall repurchase
all usable advertising and printed matter made available by it to W&G and W&G
shall have no further right to use the designation "Pfaff" in any manner.
5.4 Neither party hereto is under any obligation to continue this
Agreement in effect, nor to continue the legal and contractual arrangement
established hereunder, after termination of this Agreement in accordance with
this Article 5. Both parties recognize the necessity of making expenditures in
performing and in preparing to perform this Agreement. The parties nevertheless
agree that neither party shall be liable to the other for termination of this
Agreement in accordance with this Article 5, including but not limited to, for
loss or damage due to investments, leases and sales, and advertising and
promotional activities, whether incurred in connection with the preparation to
perform or the performance of this Agreement or in the expectation of its
renewal or extension.
6. MISCELLANEOUS PROVISIONS
6.1 Neither of the parties hereto shall be responsible for or liable to
the other party for any damages or loss of any kind, directly or indirectly
resulting from fire, flood, explosion, riot, rebellion, revolution, war, labor
trouble (whether or not due to the fault of either party), requirements or acts
of any government or subdivision thereof, mechanical breakdown or any other
causes beyond the reasonable control of the party. The occurrence and the
termination of such force majeure shall be promptly communicated to the other
party.
6.2 All notices, requests, demands and other communications hereunder
shall be in writing and shall be given by courier delivery, by facsimile
transmission or by registered air mail, postage prepaid, addressed as follows,
or to such other address or person as a party may designate by notice to the
other party hereunder:
(i) if to W&G, to: (ii) if to Pfaff, to:
Willcox & Gibbs, Inc. G.M. Pfaff AG
900 Milik Street Konigstrasse 154
Carteret, NJ 07008 D-67655 Kaiserslautern
Communications hereunder (i) by facsimile transmission shall be deemed given at
the time of transmission, (ii) by courier shall be deemed given upon receipt by
the addressee and (iii) by airmail shall be deemed given ten days after the date
of registration.
6.3 This Agreement shall be governed by the laws of the State of New York.
Pfaff's standard terms and conditions of sales and delivery of equipment,
however, shall be governed by German law so long as not in conflict with the
terms of this Agreement. In all events, the United Nations Convention on
Contracts for the International Sale of Goods shall be inapplicable.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day first above written.
G.M. PFAFF AG
By: _____________________________
WILLCOX & GIBBS, INC.
By: _____________________________