EXHIBIT 10.13
DISTRIBUTION AGREEMENT
This Distribution Agreement (the "Agreement") is executed on the dates set below
to be effective as of the 7th day of October, 1998 between Antennas American,
Inc., a Utah corporation, ("AAI") with its principal place of business located
at 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxx 00000, and Jasco Products,
Co. Inc., an Oklahoma corporation, ("Distributor") with its principal place of
business located at 000 X.X. 000, Xxxxxxxx Xxxx, Xxxxxxxx, 00000.
Recitals
A. AAI is engaged in the design, manufacturing and marketing of a variety of
antennas and antenna systems.
B. AAI has designed, developed and is currently manufacturing VHF/UHF Off-Air
TV antennas and related systems.
C. Pursuant to the terms and conditions described in this Agreement, AAI
desires to establish Distributor as the Exclusive Distributor for Consumer
Electronics Retail Customers for the Specified Product, each as defined
below.
Agreement
In consideration of the covenants and mutual promises contained in this
Agreement, AAI and Distributor agree as follows:
Article I: Definitions
1.01 As used in this Agreement, each of the following terms has the meaning set
forth below, each meaning to be equally applicable both to the singular and
plural forms of the terms defined.
(a) The terms "sale" and "resale" and any grammatical variant of these
terms shall include, without limitation, sales, contracts for sales,
conditional sales, installment sales, rentals or leases, and any other
arrangement whereby units of the Specified Product are placed at the
disposal of the ultimate user.
(b) "Specified Product" shall consist of the products designated in Exhibit
A, and Exhibit A(i) attached hereto and incorporated herein.
(c) "Purchase Order" shall consist of a bona fide contract to purchase the
Specified Product from AAI by the Distributor and shall be in
accordance with the terms and conditions as defined in Section 5.02 and
5.03 below. Any provision of any Purchase Order inserted by Distributor
that is not as defined in this Agreement shall be null and void unless
accepted by AAI in writing in a document other than the Purchase Order.
(d) "Exclusive Distributor" includes Distributor's rights, as set forth in
this Agreement, to distribute and market the Specified Product
throughout the United States, Mexico and Central America to Consumer
Electronics Retail Customers on an exclusive basis.
(e) "Consumer Electronics Retail Customers" are customers whose primary
business is the distribution or retail sale of a variety of consumer
electronics products that includes, but is not limited to, direct to
home satellite equipment. "Consumer Electronics Retail Customers" also
includes Thomson Consumer Electronics, Inc. for the Specified Products.
(f) TVRO customers are non-Exclusive Distributor accounts that include
customers whose primary business is the distribution or retail sale of
satellite equipment to independent satellite retail customers and
installers.
(g) Other non-Exclusive Distributor accounts are Program Distributors, as
defined by DirecTV(R), at its sole discretion, such as DirecTV(R),
USSB, AT&T and Regional Xxxx Operating Companies. This also includes
Primestar, Echostar, and their affiliates, that are licensed to
distribute or provide the distribution of video, audio, or data
services that such entities owns or are otherwise permitted to
distribute from any DBS Satellite.
Article II: Appointment as Distributor
2.01 AAI hereby appoints Distributor, and Distributor hereby accepts the
appointment, as the Exclusive Distributor for the sale to Consumer Electronics
Retail Customers of the Specified Product. AAI will not directly solicit
Consumer Electronics Retail Customers and all future inquiries and leads
received by AAI from Consumer Electronics Retail Customers regarding sales of
Specified Product will be referred by AAI to Distributor for follow up.
2.02 Distributor may not sell or otherwise make available the Specified Product
to persons or entities that Distributor knows or has a reasonable basis to know
intend to alter, modify, reverse engineer or otherwise attempt to manufacture or
remanufacture the Specified Product. Distributor may not cause or attempt to
cause the alteration, modification, reverse engineering, manufacture or
remanufacture of the Specified Product.
2.03 Except as herein set forth, Distributor shall conduct its business in the
purchase and resale of the Specified Product for its own account and at its own
expense and risk. This Agreement does not in any way create the relationship of
principal and agent, partners, co-venturers, or any similar relationship,
between AAI and Distributor. Distributor covenants and warrants that it will not
act or represent itself directly or by implication as agent for AAI and will not
create or attempt to create any obligation, or make any representation, on
behalf of or in the name of AAI. Except as otherwise set forth in this
Agreement, it is understood that AAI shall exercise no control over the
activities or operations of the Distributor, with each of the Distributor and
AAI recognized hereunder as independent and free of one another except as set
forth in this Agreement. It is further understood that AAI shall place no
restrictions on Distributor's rights to work with or otherwise utilize other
persons or entities in selling the Specified Product provided that (a) no person
or persons or entity other than Distributor shall have any rights pursuant to
this Agreement, and (b) Distributor shall be solely responsible to AAI for all
obligations of Distributor to AAI and Distributor may not assign any such
obligations, and (c) unless AAI otherwise enters into a written agreement with
any such person or entity, (i) AAI shall have no relationship with any such
persons or entities, (ii) such persons shall be at the sole risk and expense,
and will be the sole responsibility of, Distributor, (iii) AAI shall not be
responsible for salaries, commissions, or any other item of cost related to any
such persons or entities, and (iv) no such person or entity will have any claim
against AAI for any matter whatsoever. Distributor agrees to indemnify and hold
harmless AAI against any and all losses, claims, damages, liabilities, costs and
expenses (including but not limited to attorney's fees and other expenses of
investigation and defense of any claims or actions) incurred by AAI due to
resulting from, relating to, or arising out of the appointment of any such
persons or entities or any other representatives, contractors, or
sub-contractors engaged or alleged to have been engaged by Distributor with
respect to the Specified Product.
2.04 Except as otherwise set forth in this Agreement, it is understood that AAI
shall exercise no control over the activities or operations of the Distributor,
with each of the Distributor and AAI recognized hereunder as independent and
free of one another except as set forth in this Agreement. It is further
understood that Distributor shall place no restrictions on AAI's rights to work
with or otherwise utilize other persons or entities in manufacturing the
Specified Product provided that (a) AAI shall be solely responsible to
Distributor for all obligations of AAI to Distributor and AAI may not assign any
such obligations, and (b) unless Distributor otherwise enters into a written
agreement with any such person or entity, (i) distributor shall have no
relationship with any such persons or entities, (ii) such persons shall be at
the sole risk and expense, and will be the sole responsibility of, AAI, (iii)
Distributor shall not be responsible for salaries, commissions, or any other
item of cost related to any such persons or entities, and (iv) no such person or
entity will have any claim against Distributor for any matter whatsoever. AAI
agrees to indemnify, defend and hold harmless Distributor against any and all
losses, claims, damages, liabilities, costs and expenses (including but not
limited to attorneys' fees and other expenses of investigation and defense of
any claims or actions) incurred by Distributor due to, resulting from, relating
to, or arising out of the appointment of any such persons or entities or any
other representatives, contractors, or sub-contractors engaged or alleged to
have been engaged by AAI with respect to the specified Product.
2.05 AAI is the owner of all rights, title and interest in the Specified Product
and all trademarks, trade names, registered or unregistered patents, the Patent
Application, copyrights, trade secrets, know-how and rights relating to the
manufacture of such Specified Products of which are not specifically owned by
Distributor, including but not limited to trademarks owned or used by
Distributor.
2.06 AAI agrees to indemnify, defend, and hold Distributor harmless from all
liabilities of Distributor resulting from infringement by the Specified Products
of any patent rights of third parties under the laws of the United States which
may result from the sale or distribution of the Specified Product by Distributor
as contemplated and authorized by this Agreement, provided that (i) this
indemnification will arise only if a Distributor gives AAI prompt notice of the
infringement claim; and (ii) the obligation will cover only the Specified
Products as delivered by AAI and will not cover any correction, modification or
addition made by anyone other than AAI. THE FOREGOING IS AAI'S EXCLUSIVE
OBLIGATION WITH RESPECT TO CLAIMS OF INFRINGEMENT OF PATENT RIGHTS OF ANY KIND.
Article III: Sales And Service
3.01 Distributor shall use all reasonable efforts to sell and promote the sales
of the Specified Product, which all reasonable efforts shall include, but not be
limited to prompt performance of all its obligations under this Agreement.
3.02 AAI shall use its reasonable efforts to develop and provide additional
VHF/UHF off-air TV antenna products for the consideration of Distributor. Such
products shall be for the consideration to add to this Agreement. Distributor
will have 90 days to evaluate any new products to add to this Agreement.
Article IV: Marketing And Related Obligations
4.01 AAI will provide reasonable assistance to Distributor in matters of
approaching and soliciting potential customers for the Specified Product. In the
event Distributor requests AAI's reasonable assistance in promoting the
Specified Product, which requests may include but are not limited to and,
schedule permitting, that AAI attend specific trade shows or make sales
presentations, then AAI agrees to provide its reasonable assistance in such
regard or other reasonable activities at AAI's expense; provided, however, that
in the event Distributor's requests are unreasonable or disproportionate to
Distributor's purchases, and AAI informs Distributor that the requests are
unreasonable or disproportionate to Distributor's purchases, Distributor will
reimburse AAI for its reasonable cost of travel and other expenses related to
this Section 4.01 in connection with any such activities undertaken solely at
the request of Distributor.
4.02 Upon the execution of this Agreement and continuing through the term of
this Agreement, AAI, at AAI's expense, will make available a toll-free customer
service number for the reasonable assistance to end-users of the Specified
Products with respect to the proper installation and operation of the Specified
Products.
4.03 On an ongoing basis, AAI will furnish Distributor with reasonable technical
information concerning the Specified Product, which shall include, without
limitation, a copy of customer manuals, user information, instructions as to
proper care and installation, and updates of the foregoing.
4.04 Any use of AAI's trade name, trademark (or any xxxx or name closely
resembling the same) now or hereafter owned or licensed by AAI or any of its
affiliates shall be subject to prior written approval of AAI.
Article V: Conditions Of Sale
5.01 The sale by AAI to Distributor of the Specified Product shall be subject to
the provisions of this Agreement and to no other terms and conditions unless
agreed to in writing by the parties.
5.02 The price of the units of the Specified Product (the "Unit Price") sold to
Distributor by AAI is listed in Exhibits A and A(i) attached to and made a part
of this Agreement.
5.03 Distributor agrees to purchase per month (the "Monthly Quota") as outlined
in Exhibit A of this Agreement. In order to determine whether the required
minimum number of units has been purchased by Distributor during a particular
period, the following factors apply: units shall be considered purchased during
the particular period if the Purchase Order with respect to those units is
accepted by AAI during the period.
5.04 Provided Distributor is not in default of this Agreement, including the
terms stated in 5.02 and 5.03 above, all Purchase Orders received during a
calendar month in the aggregate up to but not exceeding 6,000 units shall be
binding on AAI upon receipt. AAI shall use its best efforts to fill and ship all
Purchase Orders within accepted delivery dates specified in such Purchase Order
or at least within 9 weeks if no delivery date is accepted or specified,
acceptance not to be unreasonably withheld. Should AAI not deliver orders within
one week of the specified or accepted ship date, Distributor shall be entitled
to recover reasonable losses or costs incurred by Distributor related to said
late deliveries. Loss limitation as described in Sections 6.03 and 9.02 does not
apply to the reasonable losses or costs mentioned above, unless the late
delivery is due to demonstrable acts of God or any other cause that was beyond
AAI's reasonable control.
5.05 Delivery to Distributor or Distributor's customers shall be by carrier
reasonably agreed to between Distributor and AAI and shall be F.O.B. AAI's
facility in the Denver, Colorado area. Claims for damage or shortages must be
made in writing by Distributor to AAI within 30 days after arrival of the
shipment. If a claim is not made in this time period and manner, AAI shall not
be required to forward the claim to the carrier and Distributor shall bear the
responsibility of the shipment.
5.06 AAI agrees to deliver Specified Product direct to customers of Distributor
as Distributor may reasonably request. All freight claims and other shipping
matters are subject to the terms of this Agreement.
Article VI: Warranties and Indemnification
6.01 The Specified Product sold under this Agreement by AAI to Distributor shall
be Warranted by AAI to Distributor and the end-user to be free from defects in
workmanship and materials for (i) not more than one year from the date the end
user purchases the Specified Product, and (ii) with respect to units in
Distributor's inventory or its Dealer's inventory for not more than two years
from the date of delivery by AAI to Distributor. Such Warranty shall not be
affected by the termination of this Agreement. With respect to any such
specified Product which are defective, they shall be returned to AAI's
designated location, freight prepaid, and upon receipt by AAI, AAI shall either
(a) replace the defective Specified Product with non-defective Specified
Product, or (b) remit a check to Distributor equal to the amount of
Distributor's price paid to AAI, including outbound freight, for such Specified
Product.
6.02 NO WARRANTIES, EXPRESSED OR IMPLIED, OTHER THAN THOSE ABOUT WHICH
DISTRIBUTOR IS INFORMED PURSUANT TO SECTION 6.01 HEREOF, ARE GIVEN IN RESPECT TO
THE SPECIFIED PRODUCT, AND ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR ANY PURPOSE IS HEREBY EXPRESSLY DISCLAIMED. ANY ACTION FOR ANY ALLEGED
BREACH OF ANY CONTRACT OF SALE OR OF THE ABOVE-STATED WARRANTY IN RESPECT OF THE
PRODUCT MUST BE COMMENCED WITHIN ONE YEAR AFTER THE CAUSE OF ACTION ACCRUES, AND
IF NOT COMMENCED WITHIN THAT PERIOD, THE RIGHT TO BRING SUCH CAUSE OF ACTION
SHALL BE DEEMED TO HAVE BEEN WAIVED.
6.03 IN NO EVENT SHALL AAI BE LIABLE FOR ANY LOSS OF ANTICIPATED PROFITS, OR FOR
THE LOSS OF USE, OR FOR THE COST OF "COVER" OR FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES. BUYER WAIVES ANY RIGHT, EXTENDING BEYOND THE FOREGOING
WARRANTY, TO CLAIM FOR NEGLIGENCE IN DESIGN, MATERIAL, WORKMANSHIP OR
INSTALLATION.
6.04 Distributor will use reasonable efforts to become familiar with the
requirements of safety codes and laws of the states and in which it sells and
delivers the Specified Product under this Agreement. Whenever Distributor learns
of any such code or law, or changes in such code or law, with which the
Specified Product are not in compliance, Distributor will advise and consult
with AAI about such code or law. In the event Distributor learns of any such
code or law, Distributor hereby indemnifies AAI from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, (including attorneys' fees), expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against AAI
arising from the sale by Distributor of any units of the Specified Product which
did not comply at the time of Distributor's sale of such product with the safety
codes and law, as the same may be amended from time to time, of the states and
in which the Specified Product are delivered. Upon notification by Distributor
to AAI of any violation of a code or law, AAI will use its best efforts to
modify future product to meet such codes or laws within 60 days of notification.
6.05 Upon the execution of this Agreement and continuing through the term of
this Agreement, both AAI and Distributor shall obtain and maintain in effect a
product liability insurance policy covering the Specified Product, which policy
shall provide coverage of at least $1,000,000 and other reasonable provisions as
determined by applicable revenues of Distributor. Both parties shall make a copy
of the insurance policy available upon request by the other party.
Article VII: Termination And Breach
7.01 This Agreement shall be effective as of the date hereof when executed by
Distributor and AAI, and shall be for a 5 year term with 2 successive 1 year
renewal periods unless otherwise terminated as provided in this Agreement.
Termination of this Agreement as provided in this Agreement shall automatically
terminate all Exhibits to this Agreement. Monthly Quotas pursuant to this
Agreement will be reviewed and adjusted if necessary at each annual anniversary
date based on reasonable estimates of both market and manufacturing conditions.
The new Monthly Quotas will be determined only by an amendment to Exhibits A and
A(i) mutually agreed to by AAI and Distributor.
7.02 AAI may terminate this Agreement immediately by delivery to Distributor
written notice of such termination in the event of the happening of any of the
following:
(a) Failure of Distributor to purchase and pay for at least the
Monthly Quota of the Specified Product as set forth in this
Agreement. Such termination shall immediately release
distributor from any past and future Monthly Quota purchases.
(b) A material breach of any other provision of this Agreement by
Distributor, after written notice and failure to cure same
either within thirty (30) days or in the event that more than
thirty (30) days are reasonably required to cure such default,
then after the expiration of such longer agreed to period.
7.03 Distributor may elect to terminate this Agreement immediately by delivery
to AAI or its representative written notice of such termination in the event of
the happening of any of the following:
(a) A material breach of any provision of this Agreement by AAI,
after written notice and failure to cure same within thirty
(30) days unless that in the event that more than thirty (30)
days are reasonably required to cure such default, then after
the expiration of such longer agreed to period.
(b) Failure by AAI to deliver the Specified Product pursuant to
the terms of this Agreement and such failure continues for
more than thirty (30) days after the scheduled delivery date
provided that in the event that more than thirty (30) days are
reasonably required to cure such failure, then after the
expiration of such agreed to longer period.
(c) Change in Distributor customer base and market conditions.
Such termination shall be not be effective until 60 days after
delivery of notice by Distributor of such change in
Distributor's customer base or market conditions.
7.04 This Agreement shall terminate automatically and without the giving of
notice in the event Distributor shall ask its creditors for a moratorium, or
execute an assignment for the benefit of creditors, or shall file a voluntary
petition in bankruptcy, or shall be adjudicated as a bankruptcy pursuant to an
involuntary petition, or shall suffer for a period exceeding sixty (60) days
appointment of a temporary or permanent receiver, trustee, or custodian on all
or substantial part of its assets.
7.05 This Agreement shall terminate automatically and without the giving of
notice in the event AAI shall ask its creditors for a moratorium, or execute an
assignment for the benefit of creditors, or shall file a voluntary petition in
bankruptcy, or shall be adjudicated as a bankruptcy pursuant to an involuntary
petition, or shall suffer for a period exceeding sixty (60) days appointment of
a temporary or permanent receiver, trustee, or custodian on all or a substantial
part of its assets.
Article VIII: Transactions After Termination
8.01 Any termination of this Agreement shall not release Distributor from paying
any amount which may then be owing to AAI or for paying for any units of the
Specified Product, less defective units, which may have been ordered by and/or
shipped to Distributor, as of the date of termination. AAI may offset and deduct
from any or all amounts owed to Distributor, any or all amounts owed by
Distributor to AAI, rendering to Distributor the excess, if any.
8.02 In the event of termination of this Agreement, AAI will maintain, at AAI's
expense, the toll-free customer service number as described in Section 4, of
this Agreement, for a period of at least 12 months after termination.
8.03 In the event of termination of this Agreement by either party as provided
herein except as expressly provided in this Agreement, AAI is relieved from any
obligation to make any further shipments hereunder. The acceptance of Purchase
Orders by AAI from Distributor or the continuous sale of units of the Specified
Product or parts to Distributor shall not be construed as a renewal of this
Agreement for any further term nor as a waiver of the termination. In the event
of AAI's acceptance of Purchase Orders from Distributor after the termination of
this Agreement, then AAI shall be obligated to deliver such units as though this
Agreement were in full force and effect, unless agreed to otherwise in writing
by the parties, but shall not be construed as a renewal of this Agreement for
any further term nor as a waiver of the termination.
8.04 In the event this Agreement is terminated for any reason, all subsequent
defective returns will be settled by a remittance check from AAI to Distributor
for the original purchase price paid by Distributor within 14 days of receipt of
the defective returns by AAI. Any defective returns deemed by AAI not to be
defective, as specified in Section 6.01, 6.02 and 6.03 shall be returned to
Distributor freight collect.
Article IX: Miscellaneous
9.01 There are no understandings with respect to the subject matter hereof not
contained in this Agreement. This Agreement shall supersede and cancel all
previous contracts, arrangements or understandings that may have existed or may
exist between the parties with respect to the subject matter hereof. All
amendments, changes, revisions and discharges of this Agreement, in whole or
part, and from time to time, shall be binding upon the parties only as the same
shall be in writing and executed by the parties hereto.
9.02 Neither AAI nor Distributor shall by reason of the termination or
non-renewal of this Agreement be liable to the other for compensation,
reimbursement or damages on account of the loss of prospective profits, or
anticipated sales or on account of expediters, investments, leases, property
improvement or commitment in connection with the business or goodwill of AAI,
Distributor or otherwise.
9.03 Neither this Agreement nor any rights or obligations covered by it are
transferable or assignable, in whole or in part, by Distributor either
voluntarily, or by operation of law, without first obtaining the prior written
consent of AAI which consent shall not be unreasonably withheld.
9.04 All notices, requests, demands, directions and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and shall be mailed or delivered personally or sent by telegraph, telecopier or
facsimile to the applicable party or, as to each party, at such address as shall
be designated by such party in a written notice to the other party complying as
to delivery with the terms of this section. Each such notice, request, demand,
direction or other communication shall, when mailed or telegraphed, be effective
on the fifth working day after it has been deposited in the mails or delivered
to the telegraph company, respectively, addressed as aforesaid, and when mailed
shall be sent by first class certified air mail, return receipt requested,
enclosed in a postage-prepaid wrapper. Each such notice, request, demand,
direction or other communications shall, when delivered personally or sent by
telecopier or facsimile, be effective when delivered.
9.05 No change, addition, or modification to this Agreement shall be effective
unless and until the same is in writing and properly executed by the parties
hereto.
9.06 The laws of the state of domiciliary of the violated party shall apply and
bind the parties in all questions arising hereunder, regardless of the
jurisdiction in which any action or proceeding may be initiated or maintained.
It is understood, however, that if any of the provisions of this Agreement in
any way violated or contravenes the laws of any state or territory, such
provision shall be deemed not to be part of this Agreement, and the remainder of
this Agreement shall remain in full force and effect. In the event any provision
of this Agreement is found to be inapplicable or uncertain, then to the extent
not inconsistent with both the provisions of this Agreement and the intent of
such Agreement, then the Oklahoma Uniform Commercial Code shall apply.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals on the
dates set forth below.
Antennas America, Inc. Jasco Products Co., Inc.
By: /s/ Xxxxxxx X. Xxxx, CEO By: /s/ Xxxxx Xxxxx, VP CFO/COO
-------------------------- ---------------------------
Date: October 7, 1998 Date: October 7, 1998
