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EXHIBIT 10.1
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT entered into as of the
30th day of September, 2005 (the “Effective Date”) by
and between DEGUSSA WALL SYSTEMS, INC. , a Delaware
corporation ("Degussa") and JUST-RITE SUPPLY, INC. , a
Florida corporation (“Just-Rite”). Degussa and
Just-Rite may hereinafter be referred to individually as a
“Party” or collectively as the
“Parties.”
R E C I T A L S :
A.
Degussa and an affiliate of Just-Rite Supply, Inc.
entered into that certain Asset Purchase Agreement as of July 25,
2005 (“Purchase Agreement”), whereby Degussa purchased
certain of the assets associated with the manufacturing operations
of Acrocrete, Inc. and the Acrocrete products produced in
Acrocrete’s Kennesaw, Georgia manufacturing facility.
B.
Following the closing of the Purchase Agreement,
Degussa will manufacture those certain Acrocrete products under the
trade name “Acrocrete” as identified on Exhibit
“A” hereto which were previously manufactured by
Acrocrete, Inc. immediately prior to such closing (the
“Products”).
C.
Degussa desires to appoint Just-Rite as its
exclusive distributor of the Products in the States of Alabama,
Florida, Georgia, Louisiana and Mississippi (the
“Territory”) and Just-Rite has agreed to serve as the
exclusive distributor of the Products in the Territory, subject to
the terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual
promises and covenants contained herein and such other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1.
Recitations . The above
recitations are true and correct and are incorporated herein by
this reference.
2.
Appointment . Degussa hereby
appoints Just-Rite as its exclusive distributor of the Products in
the Territory. Just-Rite shall have the exclusive right to
sell to, solicit and take orders from customers within the
Territory for the Products. Just-Rite accepts such
appointment and agrees to act as exclusive distributor within the
Territory. In connection therewith, Just-Rite agrees not to
purchase products and supplies of other manufacturers for sale in
the Territory that perform the same purpose as the Products, so
long as the Products are available for purchase from Degussa.
Such exclusivity shall not impair Just-Rite’s ability
to sell products which are manufactured by its affiliates.
3.
Right of First Refusal . During
the term hereof, Degussa hereby grants to Just-Rite a Right of
First Refusal to serve as the exclusive distributor in North
Carolina or South Carolina, as the case may be, in the event either
B&L in South Carolina or AllSouth in North Carolina ceases to
be an exclusive distributor of the Products, and in the event
Just-Rite, within a
reasonable time of giving Degussa notice of its
intention to do so, establishes a full service distribution
facility (“New Territories”). Just-Rite shall
notify Degussa of the establishment of a new facility.
Upon such notification, and upon approval by Degussa based
on the other conditions set forth in this Section 3, Just-Rite
shall become the exclusive distributor for Products for the New
Territories.
4.
Just-Rite Duties . Just-Rite
agrees to use it best efforts to actively and diligently promote
and sell the Products in the Territory. Just-Rite shall
purchase one hundred percent (100%) of its requirements of the
Products from Degussa. Just-Rite shall solicit and take
orders from their potential customers at prices to be established
from time to time by Just-Rite and on the terms and conditions
specified by Just-Rite. Decisions regarding customer
credit and all matters relating to billing shall be made only by
Just-Rite.
5.
Degussa Duties . Degussa shall
use its best efforts to continuously and timely manufacture
Products during the Term (as hereinafter defined) sufficient to
meet the demands of Just-Rite. Degussa shall sell to
Just-Rite the Products upon the terms hereof and shall ship such
Products to Just-Rite in a timely and commercially reasonable
manner; provided, however, that Just-Rite shall be current under
the payment terms set forth herein. Degussa agrees that it
will refer any inquiries of purchases of Products directly to
Just-Rite as its exclusive distributor within the Territory.
Degussa will ship the Products FOB Degussa’s facility.
Just-Rite may give to Degussa direction for direct shipment
from time to time to Just-Rite’s customers. Upon
receipt of such directions, Degussa agrees to directly ship the
Products in accordance therewith and charge Just-Rite the cost of
shipping. Degussa shall provide to Just-Rite marketing
materials, sales and product literature and general sales and
marketing support comparable to the materials, literature and
support provided by Degussa to distributors of its other product
lines such as Finestone, Senergy and Sonowall Stucco Systems (the
“Other Product Lines”).
6.
Trademark . Degussa hereby
grants to Just-Rite, a royalty free license to use the trademark
“Acrocrete” (the “Trademark”) on and in
connection with the promotion and sale of Products. Such use
shall at all times meet such commercially reasonable requirements
with respect to style, appearance and quality as Degussa may
establish from time to time to ensure that the standards of all
products and promotions using the Trademark shall be maintained.
Just-Rite expressly agrees that it shall not have any right,
title or interest in the Trademark, except as otherwise provided
herein. Nothing in this Agreement shall be construed to grant
or assign to Just-Rite any additional right, title or interest in
said Trademark. Degussa makes no representation or warranty
with respect to the ownership of any rights relating to the
Trademark.
7.
Price of Products . All sales
of the Products by Degussa to Just-Rite shall be made at the
pricing as set forth on Exhibit B. Such pricing shall remain
unchanged for a period of one year from the Effective Date.
After the one-year anniversary of the Effective Date, Degussa
shall have the right to increase prices for the Products at a level
commensurate with increases to Degussa’s Other Product
Lines.
8.
Payment . Payment for Products
purchased by Just-Rite shall be paid two percent (2%) ten (10), net
thirty (30) days. All payments shall be paid to Degussa at
the address indicated in the Notices section indicated below or
such other address that Degussa shall provide to Just-Rite from
time to time during the term of this Agreement. In the event
of termination of
this Agreement all sums then unpaid shall
continue to be payable on the terms and conditions set forth
herein.
9.
Title and Risk of Loss . Title
and risk of loss or damage to Products shall pass from Degussa to
Just-Rite upon delivery to the carrier at Degussa’s
manufacturing facility.
10.
Minimum Purchase Requirements
.
During the Term of this Agreement, and so long as
Degussa continues to manufacture Products in sufficient quantity,
Just-Rite shall purchase a minimum of Sixteen Million Dollars
($16,000,000) of Products and any other products sold or to be sold
by Degussa during the Term, including Acrodry (“Degussa
Products”) from Degussa (the “Purchase
Requirement”). In the event Just-Rite purchases less
than the Purchase Requirement during the Term, then the following
conditions shall apply:
(a)
If Just-Rite purchases $12,000,000 in Products or
less during the Term, then Just-Rite shall pay Degussa, not more
than thirty (30) days after the expiration of the Term, a total of
$2,300,000, representing a refund of the purchase price under the
Purchase Agreement, plus thirty percent (30%) of the difference
between $12,000,000 and $16,000,000.
(b)
If Just-Rite purchases less than $16,000,000 but
more than $12,000,000 in Products during the Term, then Just-Rite
shall pay Degussa, not more than thirty (30) days after the
expiration of the Term, an amount equal to thirty percent (30%) of
the difference between $16,000,000 and the amount of
Just-Rite’s purchases during the Term. The amounts
payable by Just-Rite in accordance with Sections 10(a) or (b) in
the event that Just-Rite does not satisfy the Purchase Requirement
shall be referred to herein as the “Shortfall
Requirement.”
(c)
If Just-Rite’s purchases during the Term fall
within the range contemplated in 10(b), above (i.e., more than
$12,000,000, but less than $16,000,000), then Just-Rite may elect,
within five business days of the expiration of the Term, to extend
the Term for one additional period of two years (the
“Extended Term”). During the Extended Term,
Just-Rite may “earn back” an amount up to the Shortfall
Requirement owed under the calculation described in Section 10(b),
above. The “earn back” shall be earned by way of
a commission (the “Commission”) of thirty percent (30%)
of the amount by which Just-Rite’s purchases during the
Extended Term exceeds two times the annual average of purchases
during the Term. At the end of the Extended Term, Just-Rite
shall continue to be obligated to pay the difference between the
Commission and the Shortfall Requirement set forth in Section
10(b), above.
Open orders, not filled by Degussa on account of
non-payment or other failures by Just-Rite to fulfill its
obligations hereunder shall not be counted toward the Purchase
Requirement. Orders made by Just-Rite which are not fulfilled
by Degussa when Just-Rite is not in default hereunder shall count
toward the Purchase Requirement, provided that such unfilled orders
shall have a thirty-day lead time and cannot represent more than
four percent (4%) of the Purchase Requirement.
11.
Compliance with the Laws . Each
Party agrees to comply with all applicable laws and regulations
relating to the manufacture, sale and distribution of Products.
12.
Independent Contractor . In
performing any services hereunder, Just-Rite shall operate as an
independent contractor. This Agreement shall not be deemed to
create or constitute a fiduciary relationship, partnership or joint
venture between Degussa and Just-Rite. Neither party hereto
shall have any authority to make contracts in the name of, or be
binding on, the other party or to otherwise pledge the other
party's credit.
13.
Governmental Approvals . Each
party shall be responsible for their respective governmental
approvals related to the manufacture, distribution and sale of
Products within the Territory.
14.
Term .
(a)
Term . This Agreement shall commence
on the Effective Date, and shall terminate at the end of three (3)
years (the “Term”), unless extended in accordance with
Section 10 herein (the “Extended Term”) or otherwise
terminated pursuant to the provisions hereof.
(b)
Automatic Extensions . This Agreement
shall be automatically extended for successive one (1) year periods
at the end of the initial and each extended Term, unless either
party provides written notice of termination to the other party at
least one hundred twenty (120) days prior to the expiration of the
initial or such extended term, respectively.
(c)
Termination by Degussa . Degussa may
terminate this Agreement prior to the end of the Term hereof, upon
one hundred twenty (120) days written notice for any default upon
Just-Rite’s failure to cure any default of any term,
provision or obligation of this Agreement within such notice
periods.
(d)
Termination by Just-Rite . Just-Rite
may terminate this Agreement prior to the end of the Term hereof
upon one hundred twenty (120) days written notice for any default
upon Degussa’s failure to cure any default of any term,
provision or obligation of this Agreement within such notice
periods.
(e)
Liability upon Default . Except as
otherwise set forth in the Purchase Agreement, upon termination,
the non-defaulting party shall not have any further liability to
the defaulting party, except any obligations or liabilities, if
any, which accrued before the termination date.
(f)
Post Termination . Upon termination of
this Agreement, all rights of Just-Rite to use the Tradename shall
terminate, except for the completion of orders and contracts
already made and to sell the remaining balance of Product Just-Rite
has in inventory as of the date of the termination. All Degussa
property in the possession of Just-Rite shall be returned to
Degussa upon the effective date of such termination. All
other obligations of the parties that are intended to survive the
termination of this Agreement shall remain in full force and
effect.
15.
Product Standards . Degussa
agrees and acknowledges the importance of maintaining the Product
standards and quality of production as exist on the date hereof.
In accordance therewith Degussa agrees to maintain the
Products standards and to support the
Tradename in a commercially reasonable manner.
Such Product standards shall inclu
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