EXHIBIT 10.12
Distributorship Agreement with Jademar Corporation
DISTRIBUTORSHIP AGREEMENT
This Distributorship Agreement ("Agreement") is hereby entered into
Between K-TRONIK INT'L CORPORATION, having a place of business at 290 Vincent
Avenue, 3rd Floor, Hackensack, New Jersey 07601 (hereinafter called "K-TRONIK")
and JADEMAR CORPORATION, having a place of business at Gran Park, 10125 N.W.
116th Way, Suite 10, Miami, Florida 33178 (hereinafter called "JADEMAR"),
The parties agree as follows:
1. Appointment. K-TRONIK hereby appoints JADEMAR as its exclusive
sales distributor for the K-TRONIK products specified in Exhibit A
(hereinafter the "Territories"). K-TRONIK also authorizes JADEMAR to act
as its non-exclusive distributor of Products in all other areas of the
world, except for those restricted territories set forth in Exhibit C.
2. Duties and Status. JADEMAR agrees to act diligently to sell and
promote the sale of the Products in the Territories. JADEMAR is an
independent contractor and shall have no power, right or authority to and
agrees not to, commit, obligate or bind K-TRONIK in any manner whatsoever.
During the term of this Agreement, JADEMAR shall not directly (or
indirectly through another party), purchase, import, export, sell,
distribute or otherwise deal in products competitive with or similar to the
Products in the Territories; provided, however, that in the event that K-
Tronik is unable to provide Product for any reason by required delivery
dates, JADEMAR will be permitted to source substitutes for such Products
through another manufacturer. The parties agree that the period from
JADEMAR's current primary supplier of electronic ballasts,which transition
period is anticipated to last for approximately three (3) months.
3. Prices, Terms and Sales Policy. K-TRONIK will, from time to time,
advise JADEMAR of its current prices for the Products or changes to
its Terms or Sales Policies applicable to JADEMAR and will then invoice
JADEMAR at the prices set therein and/or implement the aforementioned
changes. Provided, however, that any increases in pricing shall be
implemented on not less ninety (90) days advance written notice to JADEMAR
and shall not apply to any binding purchase orders committed to by JADEMAR
based upon previous purchase prices, terms and conditions in effect prior
to the effective date of such notice. JADEMAR shall notify K-TRONIK by the
15th day of each month, the total quantity and style of Products committed
to by JADEMAR in the previous month. K-TRONIK hereby represents and
warrants that any or all terms and conditions, including, but
not limited to, the price and payment terms set forth herein, are
not less favorable than those terms and conditions applicable to any
third party purchasing the same or similar Products upon the same or
similar delivery conditions as those provided to JADEMAR hereunder.
Should K-TRONIK improve the terms and conditions applicable to the
aforesaid third party to ones more favourable than those available
to JADEMAR under this Agreement, K-TRONIK will, upon the request of
JADEMAR or voluntarily, reduce JADEMAR'S original terms and conditions
to such more favorable terms and conditions correspondingly.
After the Effective Date of this Agreement, K-TRONIK agrees to
provide to JADEMAR a consignment inventory of K-TRONIK electronic ballast in
an amount not less than $150,000. Such consignment inventory shall be
subject to invoicing and payment only upon resale by JADEMAR and in accordance
with the terms and conditions of a standard consignment agreement to be
entered into by the parties. Those items will include a requirement that
JADEMAR pay for consignment goods within sixty (60) days after shipment. In
addition, if the consignment inventory has an average annual turn of less than
three (3), JADEMAR and K-TRONIK will work together to reduce consignment
levels to a point where the average annual consignment inventory turn is
three (3) or better. K-TRONIK shall be named as an additional insured on
JADEMAR's insurance for the warehouse with respect to such consigned goods
within JADEMAR's control.
4. Sales Quotas. This Agreement is being entered into based upon
good faith sales estimates provided by JADEMAR. JADEMAR's sales
quota for the first full contract year shall be $750,000 of K-TRONIK
Product; for the second contract year, $1,500,000 ; and for the third
contract year, $2,000,000. For purposes of the foregoing, contract years
shall be considered calendar years beginning with calendar year 2000. For
reference purposes only, for the calendar year 1999, JADEMAR's sales goal
will be $150,000. During any renewal term, JADEMAR and K-TRONIK shall
jointly develop a sales quota for each year of the renewal term. The sales
quota for each such year shall take into consideration prior sales
volumes, existing market conditions and reasonable sales growth targets
(e.g. 5% to 15% per year).
5. Term of Agreement and Termination. The initial term of this
Agreement shall be for three (3) years and three (3) months commencing on
October 1, 1999. Thereafter, this Agreement shall automatically renew for
successive three (3) Year terms. During the initial or any renewal term,
this Agreement may only be terminated by either party for cause. Cause for
termination of this Agreement shall include (i) either party's failure to
comply with the material terms hereof; (ii) any representation, guarantee
or warranty made by the other party in this Agreement proving to have been
incorrect or false in any material respect when made; (iii) if the other
party ceases to function as a going concern or conduct its operations in
the ordinary course of business, or becomes insolvent, files or has
filed against it a petition in bankruptcy or reorganization; or
(iv) JADEMAR fails to meet its sales quotas for the prior two contract
years. In the event that either party wishes to terminate this Agreement
for cause, that party must give the other party written notice of the
alleged cause for termination and a forty-five (45) day period to cure the
alleged default; provided, however, that if the alleged default is cured
within that forty-five (45) day period, this Agreement shall
not terminate and the notice of termination shall be of no further
force and effect. Unless as otherwise expressly set forth in this
Agreement, any expiration or termination of this Agreement shall be without
prejudice to any claim for any antecedent breach and to the right of the
aggrieved party to recover damage, loss, compensation and all sums payable
hereunder.
Notwithstanding any expiration or termination of this Agreement,
any rights as well as obligations, duties and liabilities hereunder which
contemplate post termination commitments by either party shall survive and
continue in effect after any expiration or termination of this Agreement
and shall bind the parties concerned, their legal representatives,
successors, heirs and/or assigns.
6. Obligations Upon Termination. Termination shall not affect the financial
obligations of the parties arising prior to the termination.
Furthermore, upon termination, JADEMAR shall discontinue the sale of
K-TRONIK Products except for any Products that are then in JADEMAR's
Inventory. If goods are on consignment to JADEMAR on the date of
termination they will either be returned to K-TRONIK or invoiced on the
termination date to JADEMAR as if shipped on that date.
K-TRONIK shall not be liable for orders submitted by JADEMAR after the
effective date of termination, unless K-TRONIK agrees in writing to
accept such orders.
In addition, each of the parties will continue to be bound by the
confidentiality Obligations set forth in this Agreement with respect to any
confidential information of the other party shared with the other party
prior to the date of termination.
7. Confidential Information. A. JADEMAR agrees (a) that al
technical or other data furnished by K-TRONIK shall remain K-TRONIK's
property, (b) to hold such information confidential, except in those cases
where such information is already in the public domain through no fault of
JADEMAR, (c) not to use such information to K-TRONIK's detriment, (d) to
return all copies, excerpts or memoranda of or containing such information
to K-TRONIK upon demand, and (e) not to retain copies of memoranda of such
information after it has been requested to surrender such information. All
price lists, customer information, and other material furnished by K-TRONIK
shall remain K-TRONIK's property and are subject to return on demand.
B. K-TRONIK agrees (a) that all technical, market, customer or
other data furnished by JADEMAR shall remain JADEMAR's
property, (b) to hold such information confidential, except in
those cases where such information is already in the public
domain through no fault of the K-TRONIK, (c) not to use such
information to JADEMAR's detriment, (d) to return all copies,
excerpts or memoranda of or containing such information to
JADEMAR upon demand, and (e) not to retain copies of memoranda
of such information after it has been requested to surrender
such information. All price lists and other material furnished
by JADEMAR shall remain JADEMAR's property and are subject to
return on demand.
8. Warranty
8.1 End User Warranty. K-TRONIK warrants to JADEMAR that
it's Products will be free from defect in material
and workmanship and will be of the designated kind and quality
for a period of five (5) years from the date of manufacture by K-TRONIK.
JADEMAR shall pass on to its customers K-TRONIK's standard limited
warranty for the Products, including the limitations set forth
in Articles 8.2 and 8.3. K-TRONIK's Standard Warranty is attached hereto
as Exhibit D.
8.2 Exclusions. The Warranty reflected in Article 8.1 is not
applicable to the following: (i) any defects caused by the use or operation
of the ballast in an application or environment other than that intended or
recommended by K-TRONIK, including but not limited to, any ballast which is
not installed and operated in accordance with the current edition of the
National Electric Code (NEC), all applicable state and local codes,
Underwriters Laboratories, Inc. (UL) standards for safety, all applicable
American National Standards Institute (ANSI), and K-TRONIK's instructions
for Installation; (ii) any defects which are the result of unusual
physical stress or abnormal operating conditions, including but not limited
to, operating temperatures in excess of 65 degrees C on any part of the
ballast case; or (iii) any defects caused by modifications or alterations
made to the ballast by any party other than K-TRONIK.
8.3 Limitations of Liability. (a) K-TRONIK WILL NOT UNDER ANY
CIRCUMSTANCES WHETHER AS A RESULT OF BREACH OF CONTRACT, BREACH OF WARRANTY
TORT OR OTHERWISE BE LIABLE FOR CONSEQUENTIAL, INCIDENTIAL, SPECIAL OR
EXEMPLARY DAMAGES, including, but not limited to, loss of profits
or revenues, loss of use of or damage to any associated equipment, cost of
capital, cost of substitute products, facilities or services, downtime
costs, or claims of purchaser's customers; (b) K-TRONIK'S LIABILITY
ON ANY CLAIM OF ANY KIND FOR ANY LOSS OR DAMAGE ARISING OUT OF, RESULTING
FROM , OR CONCERNING ANY ASPECT OF THIS AGREEMENT OR FROM THE PRODUCTS OR
SERVICES FURNISHED HEREUNDER SHALL NOT EXCEED THE PRICE OF THE SPECIFIC
ORDER WHICH GIVES RISE TO THE CLAIM. This Warranty is designated a LIMITED
WARRANTY pursuant to the Federal Consumer Product Warranties Act. This
Warranty is in lieu of all other warranties whether statutory ,
express, implied, written or oral, including implied warranties of
merchantability, suitability of fitness, for particular purpose, and except
as specifically set forth above, no other warranties of any kind, statutory
or otherwise are herein expressed. This Warranty gives purchasers specific
legal rights and purchasers may also have other rights which vary from
state to state. This Warranty is not intended to limit in any way
K-RONIK's obligations reflected in the Defective Claims Procedure
attached hereto as Exhibit E.
8.4 After Service. Any and all warranty claims and services for
dealing with defective Products shall be JADEMAR's responsibility and
shall be resolved in accordance with K-TRONIK's Defective Claims
Procedure attached hereto as Exhibit E.
8.5 Disclaimer. EXCEPT FOR THE ABOVE EXPRESS WARRANTIES SET FORTH IN
ARTICLES 8.1, 8.2 and 8.3 ABOVE, K-TRONIK MAKES AND JADEMAR AND THE
CUSTOMER RECEIVE NO WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED,
STATUTORY, OR IN ANY OTHER PROVISION OF THIS AGREEMENT OR COMMUNICATION
WITH JADEMAR, AND K-TRONIK SPECIFICALLY DISCLAIMS ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
9. Product Liability. During the warranty period for the Products, K-
TRONIK shall (or K-TRONIK shall cause the manufacturer of the Products to)
defend, indemnify and hold JADEMAR and its customer harmless from any
or all loss, damage, liability or expense, including, but not limited
to, attorney's fees, incurred by JADEMAR and/or its customer, arising out of
or in relation to the Product Liability claim brought by any third party for
death or injury to person(s) or damage to or destruction of property caused or
resulting from the sale, resale, use, consumption or other disposal of the
Products after the delivery by K-TRONIK thereof, except to the extent any of
the aforesaid loss, damage, liability or expense is determined to have been
solely caused by JADEMAR or its customer or any employee thereof.
To implement the obligation of K-TRONIK under this Article, K-
TRONIK shall (or K-TRONIK shall cause the manufacturer of the Products to), at
all times during the term hereof and the warranty period for the final
shipment of the Products thereafter, maintain Product Liability Insurance
covering any or all Products sold by K-TRONIK to JADEMAR at the expense of K-
TRONIK (or such manufacturer) in aggregate limit of Two Million States
Dollars (US $2,000,000) Dollars. Additionally, K-TRONIK shall (or K-TRONIKs
shall cause the manufacturer of the Products to) provide to JADEMAR a
certificate of insurance for product liability and shall add JADEMAR as an
additional insured with respect to such coverage.
It is irrevocably understood and agreed that any or all duties,
obligations and responsibilities of K-TRONIK and those of the manufacturer of
the Products under this Agreement shall be primary, joint and several.
Therefore, K-TRONIK understands and agrees that any failure by such
manufacturer to implement its duties, obligations and responsibilities
hereunder shall constitute a failure by K-TRONIK of the duties, obligations
and/or responsibilities of K-TRONIK under this Agreement.
10. Reciprocal Indemnification. A. JADEMAR agrees to indemnify and
save K-TRONIK harmless from and against all claims, losses and liability
arising out of damage to property, or injury to, or death to, persons
occasioned by, or in connection with, the acts or omissions of JADEMAR or its
employees.
B. K-TRONIK agrees to indemnify and save JADEMAR harmless from and
against all claims, losses and liability arising out of damage
to property, or injury to, or death to, persons occasioned by,
or in connection with, the acts or omissions of the K-TRONIK or
its employees.
11. Miscellaneous
A. Notices. All notices, requests and other communications
hereunder shall be in writing and shall be delivered in person or sent by fax
transmission and overnight delivery, or by overnight courier service, and sent
to the address of the party set forth on the first page hereof, or to
such other addresses as may be stipulated in writing by the parties pursuant
hereto. Unless otherwise provided, notice shall be effective on the date it is
given.
B. Assignment. This Agreement cannot be assigned or transferred by
JADEMAR without K-TRONIK's prior written consent, which will not be
unreasonably withheld.
C. Amendment. This Agreement may not be amended except by
Written Instrument executed by both parties.
D. Headings; Counterparts. The headings of sections and
paragraphs herein are included for convenience of reference only and shall
not control the meaning or interpretation of any of the provisions of this
Agreement. This Agreement may be executed in one or more counterparts,
which together shall constitute but one original instrument.
E. Waiver. The failure of either party at any time to require
performance by the other party of any provision hereof shall in no way
affect the full right to require such performance at any time hereafter,
nor shall the waiver by either party of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such provision or
as a waiver of the provision itself.
F. Seperability. If any provision of this Agreement or the application
thereof to any person or circumstance shall to any extent be held to be
invalid or unenforceable, the parties shall use their best efforts to
substitute a provision of similar economic intent and the remainder
of the Agreement, or the application of such provisions to persons or
circumstances as to which it is not held to be invalid or unenforceable,
shall not be affected thereby, and each provision shall be valid and be
enforced to the fullest extent permitted by law.
G. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New
Jersey and the United States of America.
H. Force Majeure. If circumstances beyond the control of the
parties shall temporarily make it impossible for either or both of them to
perform their obligations under this Agreement, then the principals of
force majeure shall apply and the rights and obligations of the parties
will be temporarily suspended during the force majeure period to the extent
that such performance is reasonably affected thereby.
Notwithstanding the foregoing, if the performance of this Agreement, is
suspended for a period of three (3) months or more, either party may
terminate this Agreement upon at least thirty (30) days prior written
notice.
I. Affiliates. This Agreement and the obligations of each party, shall
inure to and be binding upon the successors and assigns of the
parties herein and the terms of "Confidentiality" set out in Article 7, are
intended to be binding upon all affiliates of such party, which means any
entity that controls, is controlled by or under common control with a
party.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be executed on the year and date written below.
K-TRONIK INT'L CORPORATION JADEMAR CORPORATION
By: /s/ Robert Y. Kim By: /s/ Joseph A. Demartino, Jr.
ROBERT Y. KIM JOSEPH A. DEMARTINO, JR.
President/CEO President
Date: October 26, 1999 Date: October 20, 1999
EXHIBIT A
PRODUCTS
Products which JADEMAR is responsible to market under this
Agreement between K-TRONIK INT'L CORPORATION and JADEMAR shall be:
Electronic Ballast Manufactured
By K-TRONIK INT'L CORPORATION
In the event that K-TRONIK begins offering new products that either
complement, replace or serve as suitable substitutes for the
Products, K-TRONIK agrees that such new offerings will be added to the
list of Products for purposes of this Agreement. K-TRONIK reserves the right
to solicit and to sell directly or indirectly in the Territories any products
not listed on or added to Exhibit A as set forth above if, and only if, JADEMAR
does not begin diligently promoting such products within a reasonable time
after they are available from K-TRONIK.
K-TRONIK INT'L CORPORATION JADEMAR CORPORATION
By: /s/ Robert Y. Kim By: /s/ Joseph A. deMartino, Jr.
Robert Y. Kim Joseph A. deMartino, Jr.
President/CEO President
Date: October 26, 1999 Date: October 20, 1999
EXHIBIT B
TERRITORY
The Territories, for purposes of this Agreement between K-TRONIK
INT'L CORPORATION and JADEMAR that are assigned to JADEMAR on an
exclusive basis shall be the following:
Argentina
Brazil
Chile
Colombia
Costa Rica
El Salvador
Guatemala
Honduras
Nicaragua
Panama
Ecuador
Peru
Venezuela
Dominican Republic
Haiti
Jamaica
Netherlands Antilles
Puerto Rico
Trinidad
Philippines*
* The Philippines shall be a non-exclusive territory.
K-TRONIK INT'L CORPORATION JADEMAR CORPORATION
By: /s/ Robert Kim By: /s/ Joseph A. deMartino, Jr.
Robert Kim Joseph A. deMartino, Jr.
President & CEO President
Date: October 26, 1999 Date: October 20, 1999
EXHIBIT C
EXCLUDED TERRITORIES
The territories, for purposes of this Agreement between K-TRONIK
INT'L CORPORATION and JADEMAR in which JADEMAR is expressly restricted
from selling and promoting the sale of Products, on an exclusive
or non-exclusive basis, shall be the following:
All countries or territories not listed on Schedule B,
or approved in writing as a non-exclusive territory
during the term of this Agreement.
K-TRONIK INT'L CORPORATION JADEMAR CORPORATION
By: /s/ Robert Kim By: /s/ Joseph A. deMartino, Jr.
Robert Kim Joseph A. deMartino, Jr.
President & CEO President
Date: October 26, 1999 Date: October 20, 1999
EXHIBIT D
K-TRONIK STANDARD WARRANTY
K-TRONIK INT'L CORPORATION (hereinafter "K-TRONIK") warrants to the
purchaser that its products will be free from defect in material and
workmanship and will be of the designated kind and quality for a
period of five (5) years from the date of manufacture by K-TRONIK.
This warranty is not applicable to the following: (i) any defects
caused by the use or operation of the ballast in an application or
environment other than that intended or recommended by K-TRONIK ,
including but not limited to, any ballast which is not installed and
operated in accordance with the current edition of the National
Electric Code (NEC), all applicable state and local codes,
Underwriters Laboratories, Inc. (UL ) standards for safety, all
applicable American National Standards Institute (ANSI), and K-
TRONIK's instructions for installation; (ii) any defects which are the
result of unusual physical stress or abnormal operating conditions,
including but not limited to, operating temperatures in excess of 65
degrees C on any part of the ballast case; or (iii) any defects caused
by modifications or alterations made to the ballast by any party other
than K-TRONIK.
If it appears within five (5) years from the date of manufacture by K-
TRONIK that any K-TRONIK ballast does not meet the warranty specified
above, the purchaser must notify JADEMAR CORPORATION, Gran Park, 10125
N.W. 116th Way, Suite 10, Miami, Florida 33178 USA, in writing, of
its warranty claim and, after receiving proper authorization, return
the product (s) at Purchaser's expense to JADEMAR, an authorized K-
TRONIK electronic ballast stocking distributor.
LIMITATIONS OF LIABILITY: (a) K-TRONIK WILL NOT UNDER ANY
CIRCUMSTANCES, WHETHER AS A RESULT OF BREACH OF CONTRACT, BREACH OF
WARRANTY, TORT OR OTHERWISE BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL,
SPECIAL OR EXEMPLARY DAMAGES including, but not limited to, loss of
profits or revenues, loss of use of or damage to any associated
equipment, cost of capital, cost of substitute products, facilities or
services, downtime costs, or claims of purchaser's customers; (b) K-
TRONIK's LIABILITY ON ANY CLAIM OF ANY KIND FOR ANY LOSS OR DAMAGE
ARISING OUT OF, RESULTING FROM, OR CONCERNING ANY ASPECT OF THIS
AGREEMENT OR FROM THE PRODUCTS OR SERVICES FURNISHED HEREUNDER SHALL
NOT EXCEED THE PRICE OF THE SPECIFIC ORDER WHICH GIVES RISE TO THE CLAIM.
This Warranty is designated a "LIMITED WARRANT" pursuant to the
Federal Consumer Product Warranties Act. This Warranty is in lieu of
all other warranties whether statutory, express, implied, written or
oral, including implied warranties of merchantability, suitability or
fitness for particular purpose, and except as specifically set forth
above, no other warranties of any kind, statutory or otherwise are
herein expressed. This Warranty gives you specific legal rights and
you may also have other rights which vary from state to state.
EXHIBIT E
DEFECTIVE CLAIMS PROCEDURE
1. Upon JADEMAR's receipt of a claim of defective product from a customer
within the warrantee period, JADEMAR will do the following initial
investigation.
a. Determine cause of failure. This will be done by
determining the application of the product, the conditions to which the
product was exposed, and any other factors relevant to the performance
of the unit.
b. If the warrantee claim is an isolated product failure within
the warrantee period, JADEMAR shall ship a replacement unit,
advise K-TRONIK of the replacement and receive a credit from
K-TRONIK for the cost thereof, plus shipping cost not to
exceed 40% of the unit cost. The credit will be issued in
connection with a periodic reconciliation between JADEMAR
and K-TRONIK.
2. If JADEMAR's initial investigation indicates a possible manufacturing
defect with broader implications, the following steps will be followed.
a. If requested, JADEMAR will make samples of the defective product
available to K-TRONIK for review and testing at K-TRONIK's cost.
Depending upon the size of the claim, K-TRONIK will determine the
number of units to be returned, not to exceed 20 units. JADEMAR will
make reference to the ballasts date code in order for K-TRONIK to
investigate the possible causes of failure. The cost of making the
samples available for review and testing will be reimbursed to
JADEMAR in the event the test results confirm a manufacturer defect.
b. Furthermore, upon confirmation of a manufacturing defect by
K-TRONIK, K-TRONIK will reimburse JADEMAR the cost of the
defective goods, plus any freight and/or overseas customs
duties, unless JADEMAR's customers requests that the defective units be
replaced by new product. In the event that JADEMAR's customer requests
the units be replaced, JADEMAR will do so from stock and receive a
credit for the number of units replaced, plus additional units covering
the value of the duties and freight incurred by JADEMAR to ship
replacement product.
3. JADEMAR will not request labor cost reimbursement from K-TRONIK for units
that are found to be defective. In lieu of this, K-TRONIK will reimburse
JADEMAR for the cost of duty and freight charges incurred in
connection with defective units. (These charges will not exceed 40 percent
of the value of the defective units, unless JADEMAR can substantiate
charges in excess of that amount.)
4. Any request by K-TRONIK to have defective units returned will be at
K-TRONIK's expense.