Fsi/metron Distribution Agreement

FSI/METRON
DISTRIBUTION AGREEMENT


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TABLE OF CONTENTS


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Article 1: General Conditions ......................................................................2


Section 1.1 Appointment and Acceptance......................................................2
Section 1.2 Distributor Not Agent ..........................................................2
Section 1-3 Product Registration ...........................................................2
Section 1.4 Term ...........................................................................3
Section 1.5 Customer Sales .................................................................3


Article 2: Responsibilities and Obligations of Distributor .........................................3


Section 2.1 Best Efforts ...................................................................3
Section 2.2 Terms of Sale ..................................................................3
Section 2.3 Spare Parts Inventory...........................................................3
Section 2.4 No Sub-Distribution ............................................................4
Section 2.5 Distribution Functions..........................................................4
Section 2.6 Globalization ..................................................................4
Section 2.7 Applications/Process Support ...................................................4
Section 2.8 Sales and Marketing Personnel...................................................4
Section 2.9 Service Personnel...............................................................5
Section 2.10 Consideration..................................................................5
Section 2.11 Business Plan..................................................................5
Section 2.12 Periodic Performance Reviews...................................................6
Section 2.13 Financial Data.................................................................6
Section 2.14 Books and Records..............................................................6
Section 2.15 Export Sales...................................................................6
Section 2.16 Competition ............................................ ......................6
Section 2.17 Indemnification................................................................7
Section 2.18 Limitation of Product Warranty: Warranty.......................................7
Section 2.19 Insurance......................................................................7
Section 2.20 Escalation Policy..............................................................7
Section 2.21 Installation Obligations.......................................................7
Section 2.22 New Product Introduction Installation Obligations..............................8
Section 2.23 Metrics .......................................................................8


Article 3: Obligation to Maintain Integrity of Company Trademarks,
Service Marks and Brand Names ...........................................................8


Section 3.1 Ownership of Trademarks, Patents, and Copyrights ...............................8
Section 3.2 Prominence of Trademarks........................................................8
Section 3.3 Compliance with Laws............................................................9
Section 3.4 Notification of Violations......................................................9
Section 3.3 Notification of Violations......................................................9
Section 3.6 Assistance In the Protection of the Trademarks,
Patents and Copyrights ..................................................................9
Section 3.7 Limitation on Distributor Rights................................................9


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Section 3.8 License Agreements .........................................................9


Article 4: Responsibilities and Obligations of Company..........................................10


Section 4.1 Consideration of Orders.....................................................10
Section 4.2 Sale by Company.............................................................10
Section 4.3 Shipment of Products........................................................10
Section 4.4 Approval of Business Plan ..................................................10
Section 4.5 Technical and Sales Assistance..............................................11
Section 4.6 Stock Obsolescence..........................................................11
Section 4.7 New Product Introduction....................................................12
Section 4.8 Newly Acquired Products.....................................................12
Section 4.9 New Product Installation ...................................................12
Section 4.10 Product Performance........................................................12


Section 5: Terms and Termination................................................................12


Section 5.1 Termination: Renewal........................................................12
Section 5.2 Orders......................................................................13
Section 5.3 Default: Failure to Cure....................................................13
Section 5.4 Default: Insolvency.........................................................14
Section 5.5 Waiver: Repurchase of Inventory.............................................14
Section 5.6 Terms Applying after Termination ...........................................14


Article 6: Miscellaneous........................................................................14


Section 6.1 Confidential Data and Information...........................................14
Section 6.2 Financial Condition.........................................................15
Section 6.3 Affiliates of Company ......................................................15
Section 6.4 Maintenance of Records......................................................15
Section 6.5 Irreparable Harm............................................................15
Section 6.6 Compliance With Governmental Regulations....................................15
Section 6.7 Force Majeure...............................................................15
Section 6.8 Non-Assignability...........................................................16
Section 6.9 Notice......................................................................16
Section 6.10 Construction of Agreement..................................................16
Section 6.11 Compliance with Laws and Regulations.......................................16
Section 6.12 Execution..................................................................17
Section 6.13 Alternative Dispute Resolution ............................................17
Section 6.14 Governing Law..............................................................18
Section 6.15 Waiver of Breach...........................................................18
Section 6.16 Benefit....................................................................18
Section 6.17 No Other Agreements........................................................18
Section 6.18 Amendments.................................................................18
Section 6.19 Severability...............................................................18


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Section 6.20 Solicitation of Employees...............................................18
Section 6.21 Competing Principal.....................................................18
Section 6.22 Resale of Equipment.....................................................18
Section 6.23 Signatures..............................................................18


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FSI/METRON DISTRIBUTION AGREEMENT


THIS AGREEMENT is made and entered into this 31st day of March, 1998, by and between FSI INTERNATIONAL, INC., organized and existing under the laws of the State of Minnesota, United States of America ("Company"), and METRON TECHNOLOGY B.V., organized and existing under the laws of The Netherlands, ("Distributor").


WHEREAS, Company designs, manufactures and sells products for use in the microelectronics industry and wishes to expand its market for the Products (defined below) in the geographic territory (defined below) set forth herein;


WHEREAS, Distributor distributes and sells products in the microelectronics industry and desires to serve as Company's distributor of the Products upon the terms and conditions set forth herein; and


WHEREAS, Distributor and Company have over the past several months negotiated and developed a formal outline describing their respective roles and responsibilities, which is attached as Exhibit D.


WHEREAS, the Company and Distributor desire to enter into a new Distribution Agreement to reflect the terms and provisions of Exhibit D.


NOW, THEREFORE, Company and Distributor hereby agree as follows:


1. GENERAL CONDITIONS


1.1 APPOINTMENT AND ACCEPTANCE. Subject to terms and conditions contained in this Agreement, Company hereby hires and appoints, and Distributor hereby undertakes and accepts, an appointment as the Distributor of those Company products described in Exhibit A, Part I and spare parts related thereto (described below) ("Spare Parts") (collectively "Products") for the geographic territory described or defined in Exhibit B, Part I ("Territory") for the period commencing on the date set forth above (the "Effective Date") for the term set forth in Section 1.4 hereof. Distributor agrees to sell Products to all customers within the Territory ("Customers"), except for those customers Products or geographic areas specifically excluded in Exhibit B, Part II.


1.2 DISTRIBUTOR NOT AGENT. Distributor is not an agent, servant, employee, co-partner, or joint venture of or for Company for any purpose whatsoever. Distributor shall not have any right or authority to assume or create any obligation or responsibility, expressed or implied, on behalf of or in the name of Company, or to bind Company in any manner or way whatsoever. Distributor shall perform its duties and obligations under this Agreement as an independent contractor.


1.3 PRODUCT REGISTRATION. If required by local law, registration of Products shall be in the name of the Company whenever possible. Within thirty (30) days of the date of this Agreement, any registration documents required under local law shall be provided to Company by Distributor. A copy of registration documents are to be provided to the Company within ten (10) days of receiving registration by


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Distributor if the registration is granted after the effective date of this Agreement. If this Agreement is terminated, then said registrations belong solely to Company and Distributor shall execute any assignments, modifications or changes necessary to immediately transfer such registration(s) to Company.


1.4 TERM. This Agreement shall take effect as of the Effective Date and shall continue until January 31, 2000 (the "Initial Term"), unless sooner terminated as provided in Article 5.


1.5 CUSTOMER SALES. Distributor will follow its discount escalation policy in its negotiations with its customers and will provide Company with a current copy of same. Except to the extent expressly prohibited by applicable law, Distributor shall not discount prices to global customers; (i.e., those with multi-geographic locations or influence including existing or future joint ventures) below Company's U.S. list (exclusive of any applicable Company discounts to such customers) without Company's prior knowledge and consent. Upon request, Distributor shall inform FSI of the discounts provided to its customers and of complete sales proposals to potential customers. Sales proposals to potential customers will be consistent with the divisional or product format approved by the Company.


2. RESPONSIBILITIES AND OBLIGATIONS OF DISTRIBUTOR


2.1 BEST EFFORTS. Distributor shall exercise its best efforts to sell Products in the Territory to the reasonable satisfaction of Company, and in connection therewith, Distributor shall carry out its responsibilities and obligations set forth in this Article 2.


2.2 TERMS OF SALE. Distributor shall purchase Products in accordance with Company's current prices, terms, and conditions of sale as established by Company as of the date of sale and as set forth in Exhibit A, Parts I, II, and III. No terms proposed by Distributor in a Purchase order or otherwise that are different from or in addition to the terms of this Agreement shall apply to any purchase hereunder unless expressly agreed to in writing by an authorized representative of the Company. Company may, in its absolute discretion, change the prices, terms and conditions of sale, other than Distributor discounts or commissions, upon sixty (60) days prior written notice to Distributor; provided, however, that Company will hold prices on firm quotes for products (but not Spare Parts) issued in writing by Distributor to a Customer prior to the notice of the price increase where the delivery date is within 180 days of the effective date of such price increase so long as said Customer accepts that delivery date and issues an order consistent with Product lead times. Notwithstanding anything contained in this Section, prices are subject to change immediately and without notice for correction of errors or Product structure changes. Distributor shall make payment in full within sixty (60) days of shipment.


2.3 SPARE PARTS INVENTORY. Distributor shall maintain a level of Spare Parts inventory necessary to enable Distributor to carry out its distribution responsibilities and obligations under this Agreement. The level of such inventory shall be as set forth in Distributor's Initial and Periodic Business Plans as approved by Company as set forth in Section 2.11 below. Upon reasonable advance notice, Distributor shall permit Company's representatives to enter its premises during normal business hours and at regular intervals to verify the inventory level of Products and to examine parts from which a credit or warranty claim is or had been made.


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Notwithstanding the provisions of Exhibit E, for two years following a new product's introduction to which this Agreement applies any spare parts purchase during the first twelve months following the new product introduction may be returned by Distributor within the two-year anniversary of the product's introduction for a credit at Distributor's original cost. Any spare parts for such new product obsoleted during this period will be covered by the Company's general spare parts policy.


2.4 NO SUB-DISTRIBUTION. Distributor shall not appoint sub-distributors in the Territory to carry out its responsibilities and obligations under this Agreement.


2.5 DISTRIBUTION FUNCTIONS. Except for those Products, Territories, or Customers listed in Exhibit B, Part II and notwithstanding any other provisions contained herein, Distributor shall perform directly all ordering, handling, stocking, selling, shipping, installation, and all warranty, application, and engineering support necessary to distribute Products effectively throughout the Territory, shall adequately maintain agreed upon levels of Spare Parts inventory in good and marketable condition. Unless otherwise agreed in writing by Company, Distributor will not distribute directly or indirectly in the Territory any products, control systems or systems which are similar to or competitive with the Products or their applications; provided, however, that Distributor may, with the written permission of Company, manufacture items integral to Company's equipment, control systems, or systems. Exhibit C Part I sets forth Distributor's general responsibilities with respect to Product sales and service hereunder, which responsibilities may be revised from time to time to include new products.


2.6 GLOBALIZATION. Although Distributor's sales responsibility is limited to the Territory, Distributor and Company recognize that customers within the Territory may have facilities or business relationships outside the Territory. Distributor agrees to actively support the Company's globalization efforts including sales to Distributor's customers outside of the Territory. Distributor acknowledges that support of this globalization effort is part of its obligations under this Agreement and that it will not be entitled to any additional compensation for sales to its customers outside of the Territory unless such sale has been identified as a "strategic account" as part of the Company's globalization efforts and then only to the extent such globalization plan provides for compensation.


2.7 APPLICATIONS/PROCESS SUPPORT. In addition to its responsibilities above, Distributor shall provide applications/process support in the Territory by:


Providing trained field applications personnel in Asia and Europe to troubleshoot and define customer processes and supply reports and data to Company with respect to such endeavors;


Participating and facilitating user conferences with Customers and Company;


Providing ongoing support directly or in cooperation with Company to Customers in the areas of applications development, system acceptance and qualification, troubleshooting, data collection and process refinement.


2.8 SALES AND MARKETING PERSONNEL. Distributor shall engage and maintain, at its sole expense, fully qualified and technically knowledgeable sales and marketing personnel to promote the sale and service of Products in the Territory as set forth in Distributor's Business Plan. Distributor's sales and


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marketing personnel shall actually participate with Company in developing product and marketing plans, in user groups and in Company programs relating to the marketing, sale and promotion of the Products. Distributor shall also participate in trade shows and exhibitions to promote the sale of Products in the Territory. Distributor shall organize, at its expense, Product training seminars as may be reasonably necessary to promote effectively the sale of Products in the Territory. Distributor's use of non-qualified personnel to sell, market, or represent the Company in any way is prohibited


2.9 SERVICE PERSONNEL. Distributor's Service Personnel must have relevant technical background or experience. They must also meet any minimum standards set by FSI prior to training for certification on FSI's Products. The Distributor also will train its Service Personnel and supply them with the proper tools and Distributor shall only permit level 3 certified service personnel to service and maintain Products. Distributor also agrees to supply its Service Personnel with and train them regarding safety equipment. Distributor also agrees to maintain adequate service levels and to provide retraining and recertification of its personnel and the Company will provide assistance in establishing such levels. The Company may provide Distributor with guidelines as to the qualifications, certifications, and abilities of Distributor's service personnel.. In the event that Company is required to provide installation support to Distributor due to the non-certification of Distributor's personnel, Distributor shall reimburse Company at Company's then current hourly labor rate for each hour of service (plus travel expenses) for such services.


2.10 CONSIDERATION. The grant of distribution rights is the sole consideration provided by Company to Distributor for activities undertaken by Distributor pursuant to this Agreement. Distributor is not entitled to any compensation from Company for such activities, unless Company so agrees in writing. All travel and selling expenses associated with sale and service of Products shall be the sole responsibility of Distributor.


2.11 BUSINESS PLAN. Within ninety (90) days of the execution of this Agreement, Distributor shall submit to Company an initial business plan (the "Initial Business Plan") for its review and comment per Section 4.4. After submission of the Initial Business Plan, Distributor shall update and submit periodically (but no less than annually) to Company a written business plan (the "Business Plan"), which shall set forth information including, but not limited to, the number and addresses of locations within the Territory where Distributor intends to maintain inventory, a projected level of annual sales of Products which Distributor intends to achieve within the Territory and Distributor's marketing strategies for the Product. Such sales projections shall set forth estimated US dollar sales and volume of each Product by Territory. After receipt of the Initial Business Plan, Company shall provide to Distributor the form and content of such Business Plan at least ninety (90) days prior to the start of Company's next fiscal year.


In addition, if requested to do so by Company, Distributor shall provide or cause to be provided:


2.11.1 Distributor's current price lists for the sale of
Products to its customers in the Territory.


2.11.2 Distributor's merchandising plans and programs
developed and utilized with copies of any promotional
written materials that contain the Company name or
logo.


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2.11.3 Distributor's actual and planned sales volumes,
itemized by Product and customer.


2.11.4 Any other information reasonably related to the
...