Distribution Agreement - Acuson Corp. and US-China Industrial Exchange Inc.
DISTRIBUTION AGREEMENT
This Agreement is entered into as of January 1, 1998 by and between Acuson
Corporation ("Acuson"), a Delaware corporation having its principal place of
business a 1220 Charleston Road, Mountain View, California U.S.A. 94039-7393
and U.S.-China Industrial Exchange, Inc. ("Distributor") having its principal
place of business at 7201 Wisconsin Avenue, Suite 703, Bethesda, Maryland 20814,
U.S.A.
In consideration of the mutual covenants herein, the parties hereby agree as
follows:
1. Products.
The products of Acuson subject to this Agreement ("Products") are those
delineated on Exhibit A. These Products may be changed from time to time by
Acuson giving Distributor not less than (30) days prior notice of any such
changes.
2. Territory.
The Territory covered by this Agreement ("Territory") is as set forth on
Exhibit A.
3. Distribution Appointment and Distributor's Responsibilities.
3.1 Authorized Distributor.
During the term of this Agreement, Distributor shall be Acuson's authorized
distributor solely within the Territory for the sale of Products to customers
for use in diagnostic and therapeutic applications ("customers"). Subject to
Section 5.4, Distributor acknowledges that Acuson may call on customers in the
Territory and may sell the Products in the Territory itself.
3.2 Sales.
Distributor shall use its best efforts fully and actively to promote,
maintain and increase sales of the Products in the Territory.
3.3 Training.
Distributor shall train all customers in the Territory in the use of the
Products. Such training shall be performed as soon as practicable following
installation to ensure that the customer is properly using the Products.
3.4 Promotional Activities.
Distributor shall (i) maintain a sales organization which in the opinion of
Acuson is adequately qualified and trained, and, unless Acuson otherwise agrees
in writing, which at a minimum must include the equivalent of two full-time
sales persons in the Territory and two full-time field application specialists;
(ii) maintain an active sales program for all potential and actual customers of
the Products; (iii) promote and advertise Products and participate in trade
shows; and (iv) prepare and distribute any and all sales aids, sales literature,
other promotional materials, training aids and literature as needed or as
reasonably requested by Acuson. Distributor agrees to provide additional sales
and field application support as may be required to support new Products.
3.5 Promotional Distributor Materials.
Distributor shall not give a customer any warranty for the Products other
than as set forth in Section 6, unless otherwise agreed by Acuson. Distributor
shall obtain prior written approval from Acuson prior to distribution of any
promotional material.
3.6 Service.
Distributor shall maintain a technically qualified service capability and
use its best efforts to service and maintain all Products in the Territory, and
shall maintain an adequate inventory of spare parts which shall be used for
repairs and replacements of Products whether under Acuson's standard warranty
or not. Acuson shall issue credit for or replace the part in Distributor's
inventory upon receipt of a complete report on the failure and, at Acuson's
reasonable request, return of the failed part. Distributor shall provide
Acuson reports of Distributor's service activities, in such form and at such
times as Acuson may reasonably request.
3.7 Customs and Freight Charges.
Distributor shall perform and be financially responsible for all functions
to clear Products through non-United States customs, and arrange and pay for
transportation of the Products from Acuson's facility in Mountain View,
California, U.S.A. to the customer.
3.8 Demonstration System.
Distributor agrees to keep at least one dedicated Demo system in the
Territory at all times. Accordingly, if Distributor sells its Demo system,
Distributor agrees immediately to purchase another Demo system, from Acuson on
mutually acceptable terms. Distributor may purchase a maximum of one Demo
system every two years.
3.9 Reports
At least 30 days prior to the beginning of each calendar quarter,
Distributor shall provide Acuson with forecasts by quarter of anticipated
customer sales and purchases from Acuson, by Product, for the next four
quarters; and provide Acuson with such other reports as Acuson may reasonably
request.
3.10 Records.
Distributor shall maintain a complete record of all sales of Products,
showing customer name, date of sale, instrument model and serial number, and
copies of all sales order acknowledgments and invoices for all Products.
Distributor shall also maintain a compete record of all service calls relating
to Products, showing customer name, date of call, instrument model and serial
number, nature of call, service work performed and other information as Acuson
may reasonably request. The records referred to in this Section, or copies
thereof, shall be supplied to Acuson upon its request.
3.11 Customer Complaints.
Distributor shall notify Acuson immediately of any complaints or problems
concerning the Products or any misuse of the Products.
3.12 Notification of Infringement.
Distributor shall notify Acuson immediately of any actual, suspected or
alleged infringement of Acuson patents, trademarks or copyrights that it
becomes aware of in the Territory.
3.13 Competitive Products.
Without Acuson's prior written consent. Distributor shall not distribute
or sell any products competitive with or similar to Products and/or services
relating thereto.
3.14 Confidential Information.
During the term of this Agreement and at all times thereafter, Distributor
shall acknowledge as proprietary and keep confidential (i) all confidential or
proprietary information covering Products and/or processes, including without
limitation, technical specifications, engineering data, diagnostic software and
printed circuit boards, price lists and customer lists, (ii) any information
disclosed to Acuson by any third party which Acuson is obligated to treat as
confidential or proprietary, or (iii) any information pertaining to the
business of Acuson or any of its customers, consultants or affiliates, acquired
or learned by Distributor during the term of this Agreement, or (iv) any other
information designated by Acuson as confidential or proprietary. Distributor
acknowledges that the information referred to in this Section 3.14 (Proprietary
Information") shall at all times remain the property of Acuson and shall be
deemed furnished to Distributor in confidence. Distributor shall use
Proprietary Information only in connection with its obligations under this
Agreement.
3.15 Government Authorizations.
Distributor shall obtain and continue to maintain in good standing all
licenses, permits and other governmental approvals and/or authorizations
required in connection with this Agreement and the sale of Products in the
Territory, including without limitation, import licenses and foreign exchange
permits. Distributor shall keep Acuson apprised of the status of such licenses,
permits and approvals/authorizations.
3.16 Expenses.
Except as otherwise specifically provided in this Agreement, Distributor
shall pay its own expenses I carrying out its obligations under this Agreement.
4 Acuson's Responsibilities
4.1 Assistance.
Acuson shall make available a reasonable supply of sales literature,
including catalogues, data sheets, brochures and similar material, all in
English language, or in a foreign language as far as it is available, and
furnish reasonable sales technical assistance from time to time, including
sales and service training of Distributor's employees. Payment of the costs
for such training shall be mutually agreed upon.
4.2 Inquiries.
Acuson shall promptly forward to Distributor all Product inquiries received
from customers within the Territory during the term of this Agreement.
5. Order Acceptance, Delivery terms and Payments
5.1 Orders.
Orders by Distributor are subject to acceptance by Acuson at Acuson's
facility in Mountain View, California U.S.A., or at such other facility as
Acuson may from time to time determine. All orders shall be accepted subject
to the terms and conditions of Acuson's then current terms and conditions of
sale (the current version of which is attached hereto as Exhibit C), unless
otherwise provided in this Agreement. Such order terms may be changed by
Acuson at any time, but no such change shall have any effect o orders already
accepted by Acuson.
Purchase orders must be addressed to Acuson at the address set forth on
the first page of this Agreement. The provisions of this Agreement shall
supersede any provisions contained in Distributor's purchase orders and any
other communications from Distributor and/or its customers. Purchase orders
may be declined or accepted, wholly or in part, at Acuson's sole discretion.
Acuson will not unreasonably withhold acceptance.
5.2 Price.
Acuson shall sell Products to Distributor at the prices listed in the then
current version of Exhibit A, less applicable discounts listed in then current
version of Exhibit B. Prices quoted are F.O.B. Acuson's facility in Mountain
View, California, U.S.A. Acuson may change prices and/or discounts from time
to time upon ninety (90) days written notice. No commission or other form of
compensation shall be payable by Acuson to Distributor. Distributor shall pay
(and shall indemnify Acuson against) all applicable taxes and fees, including
without limitation, a value added, personal property, use of similar taxes,
customs duties, import ant and similar charges incurred or payable with
respect to the import and sale of the Products in the Territory.
5.3 Title.
Subject to Section 8, title to and risk of loss of Products shall pass to
Distributor upon delivery of the Products to Distributor or Distributor's
customer, whichever occurs first.
5.4 Payments.
All payments for Products shall be due and paid in full within 30 days
from the date of Acuson's invoice by letter of credit acceptable to Acuson in
accordance with the payment terms set forth on Exhibit A.
In event that a customer located in the Territory orders directly form
Acuson, all payments for Products shall be due and paid in full by letter of
credit \acceptable to Acuson within thirty (30) days from the date of Acuson's
invoice. Acuson agrees to pay Distributor a sum equivalent to the discount
structure agreed upon in Exhibit B within thirty (30) days from receipt of
payment in full by the customer.
6. Warranty
Acuson warrants that the Products will be free from defects in materials
and workmanship for a period ending thirteen (13) months from date of shipment,
provided that options added after initial installation of the Acuson 128 or
the Acuson 128XP are covered by the foregoing warranty for a period of one (1)
year after the date of the installation of the option or until the end of the
13 month period referred to above, whichever is longer. The Products furnished
under this Agreement may contain components or parts that have been reprocessed
to assure compliance with performance and reliability specifications. Acuson's
sole liability under valid warranty claims will be limited, at Acuson's option,
to repair or replacement of defective parts of the Products during Acuson's
normal business hours. Upon replacement, any removed part shall become the
property of Acuson. All warranty replacement or repair of parts will be
limited to Product malfunctions which, in the reasonable opinion of Acuson,
are due and traceable to defects in original material and workmanship. In
order to enable Acuson to properly administer this warranty, Distributor will
notify Acuson promptly in writing of any claims and will provide Acuson with
the opportunity to inspect and test each Product claimed to be defective.
This warranty does not extend to Products or parts thereof that have been
subjected to misuse, abuse, improper application, alteration, accident,
negligence or incorrect repair or servicing not performed or authorized by
Acuson.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. ACUSON SHALL NOT BE LIABLE FOR ANY LOSS, DDMAGE OR EXPENSE OF ANY
KIND WHATSOVER CAUSED BY THE EQUIPMENT OR BY ANY DEFECT THEREIN. THE USE OR
MAINTENANCE THEREOF, OR ANY SERVICING OR ADJUSTMENT THERETO, NOT EXPRESSLY
COVERED BY THE WARRANTY CONTAINED HEREIN.
7. Limitation of Liability.
In no event whether in contract, tort (including negligence), strict
liability or otherwise will Acuson be liable (a) for special, indirect or
consequential damages or for any lost profits, or (b) to Distributor or any
other person for an amount greater than the purchase price actually paid to
Acuson for the Product with respect to which such liability relates.
8. Software License.
Acuson or its suppliers retain(s) ownership of and title to any computer
program supplied with or in connection with the Products, to any diagnostic,
remedial or installation software and printed circuit boards provided to
Distributor and to the trade secrets embodied in such computer programs,
software and boards. Subject to acceptance of the obligations in this Section
and to the fulfillment of these obligations, Acuson grants Distributor's
immediate customer a perpetual, non-exclusive license to use such computer
program, software and boards solely in the form and on the medium in which such
program, software or board is delivered for the purpose of operating the
Products in accordance with the instructions set forth in the Operator's
Manual supplied with the Product and for no other purposes whatsoever. Acuson
grants Distributor a non-exclusive license only during the term of this
Agreement to use such diagnostic, remedial and installation software and
printed circuit boards, solely in the form an don the medium in which such
software and boards are delivered, for the purpose of servicing Products sold
to customers pursuant to this Agreement in accordance with service instructions
supplied by Acuson and for no other purpose whatsoever. Neither Distributor
nor its customer may reverse assemble, reverse compile or otherwise reverse
engineer such computer programs, software or printed circuit boards, nor may it
make a copy thereof or apply any techniques to derive the trade secrets
embodied therein. Distributor agrees that it will forward to Acuson the
customer's written consent to comply with the terms of this Section. In event
of a failure by Distributor or Distributor's customer to comply with the terms
of this license, the license granted by this Section shall terminate. Further,
because unauthorized use of such computer programs, software and boards will
leave Acuson without an adequate remedy at law, injunctive or other equitable
relief will be appropriate to restrain such use, threatened or actual.
Distributor's customer may assign such customer's license hereunder to its
immediate purchaser by forwarding to Acuson the purchaser's written consent to
comply with the terms of this Section. Distributor further agrees that (I) any
of Acuson's suppliers of software is a direct and intended beneficiary of this
software license and may enforce it directly against Distributor's customers
with respect to software supplied by such Supplier, and (ii) NO SUPPLIER OF
ACUSON SHALL BE LIABLE TO DISTRIBUTOR ANY CUSTOMER FOR ANY GENERAL, SPECIAL,
DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR OTHER DAMAGES ARISING OUT OT
THE SUBLICENSE OF THE SOFTWARE AND COMPUTER PROGRAMS SUPPLIED WITH THE PRODUCTS.
9. Independence of Distributor; Reference to Acuson.
Distributor agrees to conduct business in its name as an independent
distributor and contractor. No employment, agency, joint venture, or similar
arrangement is created or intended between Acuson and Distributor. Distributor
has no right or authority to act for or bind Acuson in any respect or to make
any representations or warranties, express or implied, on behalf of Acuson.
However, so long as this Agreement remains in effect, Distributor may
indicate to the public that it is an authorized distributor of the Products and
may advertise such Products under Acuson trademarks, logos and symbols.
10. Compliance with United States Export Regulations.
Distributor acknowledges that Acuson has informed it that United States
law and the United States Export Administration Regulations ("EAR") govern an
may forbid the export, reexport or other disposition, without prior United
States government approval, of Products, spare parts and related technical data
received by Distributor or its customers in the Territory. Distributor
therefore warrants that it will adhere to all provisions of United States law
and the EAR and to the terms , conditions, required procedures and documentation
of any export license available or issued for delivery to Distributor or its
customers of Products, spare parts or technical data. Upon request,
Distributor shall provide Acuson all customer information and documentary
assistance required to maintain strict compliance with such law, the EAR and
such license(s). Distributor shall take all actions within its power which may
be reasonably necessary to assure that no customer contravenes any United States
law, the EAR or the provisions of any such license. Acuson shall be relieved of
all obligations to provide Products, spare parts or technical data to
Distributor or any customer, should Distributor or such customer violate
United States law, the EAR or the provisions of any export license(s), or
should such license(s) be suspended or revoked by the United States government.
11. Force Majeure.
If the performance of this Agreement or any obligation hereunder (except
payment of monies due) is prevented, restricted or interfered with by reason of
fire or other casualty or accident, strikes or labor disputes, problems in
procurement of raw materials, power or supplies, war or other violence, any
law, order, proclamation, regulation, ordinance, demand or requirement of
governmental agency or intergovernmental body, or any other act or condition
whatsoever beyond the reasonable control of a party hereto (an "Event of Force
Majeure"), the party so effected, upon giving notice to the other party, shall
be excused from such performance to the extent and throughout the duration of
such prevention, restriction or interference. Notwithstanding the foregoing,
should an Event of Force Majeure remain in effect for a period of six (6)
months, Acuson and Distributor hereby agree to promptly renegotiate the terms
of this Agreement, and if an agreement cannot be reached within sixty (60) days
of the end of such six (6) month period, the party not so effected by the Event
of Force Majeure shall have the option to terminate this Agreement and if such
party so elects, then this Agreement shall automatically terminate and be of no
further force or effect, subject to Sections 13.5, 13.6, 13.7, and 13.8.
12. Assignability, Distributor's Organization.
(a) This Agreement shall be binding on the parties hereto, their
successors, and permitted assigns. This Agreement may not be assigned by
Distributor in whole or in part, directly or indirectly, by operation of law,
or otherwise, without the prior written approval of Acuson. Any such purported
transfer shall be void and of no effect.
(b) This Agreement has been entered into by Acuson relying upon
Distributor's present organization and personnel. Distributor shall
immediately advise Acuson of any changes affecting Distributor's ability to
perform hereunder or any changes affecting the ownership or control of
Distributor.
13. Duration and Termination.
Except as otherwise provided in this Agreement, the term of this Agreement
shall be as set forth on Exhibit A.
13.1 Termination by Acuson on 60 Days Notice.
Acuson shall have the right upon 60 days notice to Distributor to terminate
this Agreement and to appoint other distributors or make any other arrangements
regarding sales of the Products in the Territory (I) if, during the term of
this Agreement, Distributor fails to dedicate the equivalent of two full-time
field sales persons and two full-time field application specialists to sell
and promote Products in accordance with Section 3.4 or (ii) if, during any
calendar year, Distributor fails to purchase any pay for Products in an amount
that at least equals the minimum quotas set forth in Exhibit D.
13.2 Termination by Either Party.
Should the following event occur, either party may terminate this
Agreement immediately by giving the other party notice of such termination:
If any proceeding in bankruptcy, reorganization or arrangement for the
appointment of an assignee, referee, receiver or trustee for Distributor or
any other proceeding under any law for the relief of creditors hall be
instituted by or against distributor or if Distributor admits in writing of its
inability to pay its debts as they mature.
13.3 Immediate Termination by Acuson.
Should any of the following events occur, Acuson may terminate this
Agreement immediately by giving Distributor notice of such termination:
(i) The material breach by Distributor of any of the provisions of this
Agreement, including failure to remit payments for Products as provided in
Section 5.4; (ii) Any sale, transfer or relinquishment by operation of law or
otherwise, of any substantial interest in the ownership of Distributor; (iii)
Any material or other substantial change in the management or organization of
Distributor, which in Acuson's opinion, significantly impairs Distributor's
ability to distribute and support Products in the Territory.
13.4 Termination by Distributor.
Distributor may terminate this Agreement immediately by giving Acuson
notice if there is a material breach by Acuson of any of the provisions of this
Agreement.
13.5 Effect of Termination.
All orders not shipped by the date of termination shall be deemed canceled
unless otherwise agreed by Acuson. Termination of this Agreement for any
reason whatsoever shall not relieve Distributor of its obligation to make
prompt payment in full of any and all amounts owed to Acuson which are accrued
and outstanding as of the date of termination and shall not relieve either
party from any other liability or obligation which has previously accrued as of
such date. Acuson's right of termination under Section 13.1(i) or 13.3 is in
addition to any other right or remedy Acuson may have as a result of
Distributor's breach of this Agreement. The provisions of Section 3.14 shall
survive termination of this Agreement.
13.6 No Damages Upon Termination.
It is expressly understood and agreed that the rights of termination as
provided in this Agreement are absolute and that both parties have considered
(i) making expenditures in preparing for performance of this Agreement and (ii)
possible losses and damages incident and resulting to them in the event of its
termination. Therefore, in agreeing to said terms of termination, it is with
full knowledge of such possibilities, and except as expressly provided herein,
neither party shall have any liability to the other for compensation, damages
or otherwise by reason of such termination in accordance with the terms of this
Agreement.
13.7 Return of Materials.
Upon termination of this Agreement for any reason, Distributor shall
immediately cease using any materials which indicates it is an authorized
distributor of Acuson and cease using any Acuson trademark, logo, symbol or any
mark or name confusingly similar thereto. In addition, upon such termination,
all rights to use Acuson's trademarks, logos and symbols shall terminate.
Distributor shall also deliver to Acuson (a) all records and copies thereof
relating to service and sales, including those referred to in Sections 3.6,
3.9, and 3.10, (b) all operator of service manuals and materials, diagnostic
software and printed circuit boards, sales aids, sales literature, other
promotional materials, training aids and literature in Distributor's possession
or under Distributor's control, and all copies thereof, and (c) all
documentation and copies thereof containing or concerning Proprietary
Information. Distributor shall make no further use of any of the materials
referred to in this Section 13.7.
13.8 Inventory.
The parties agree to use best efforts to reach a mutually acceptable
agreement on Products (including spare parts purchased from Acuson) which are
in Distributor's inventory as of the date of termination of this Agreement.
14. Sole Understanding/Modification.
14.1 Sole Understanding.
This Agreement is the entire and sole agreement and understanding of the
parties hereto with respect to the subject matter hereof and supersedes all
other prior agreements, understandings and communications related thereto,
whether oral or written.
14.2 Modification.
This Agreement can be modified or amended only with the written agreement
of an authorized signatory of the parties hereto.
15. Construction and Governing Law.
15.1 Governing Language.
In the event that this Agreement is translated into any language other
than English, the English language version of this Agreement shall be
controlling and govern.
15.2 No Waiver.
The failure by Acuson to enforce or take advantage of any of the provisions
of this Agreement shall not constitute nor be construed as a waiver of such
provisions or of the right subsequently to enforce or take advantage of each
and every such provision.
15.3 Notices.
Any notices made pursuant to this Agreement shall be in writing and shall
be deemed delivered upon receipt (or upon refusal of acceptance of delivery)
and shall be hand delivered, telexed or mailed, airmail, postage prepaid,
addressed to Distributor or Acuson, as the case may be, at the address shown
on page 1 of this Agreement or such other address as a party may designate by
notice in accordance with this Section.
15.4 Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of California, U.S.A. applicable to contracts made and
wholly to be performed in California by residents of California.
15.5 Compliance with Law.
Distributor agrees to comply with all applicable laws, rules and
regulations of the Territory and to do nothing to cause Acuson to violate the
law, rules and regulations of the U.S.A. If this Agreement or the performance
hereof, is determined to be contrary of the laws, rules or regulations of the
Territory or of the U.S.A., this Agreement will automatically terminate subject
to Sections 13.5, 13.6, 13.7 and 13.8.
In Witness Whereof, the undersigned have executed and delivered this Agreement
by their duly authorized representatives as of the date first above written.
ACUSON CORPORATION U.S.-CHINA INDUSTRIAL EXCHANGE, INC.
By: /s/ F. Steven Feinberg By: /s/ Robert C. Goodwin, Jr.
Name: F. Steven Feinberg Name: Robert C. Goodwin, Jr.
Title: VP, Asia-Pacific/Latin America Title: Executive Vice President and
General Counsel