Agreement
Agreement made as of the 22 day of November, 1996, by and between Xxxxx
Electronics, Incorporated, a Florida corporation, maintaining its
principal business offices at 0000 Xxxxxxxxxx Xxxx, Xxxxxxxx, XX 00000
(Hereinafter referred to as "Manufacturer") and Response USA, Inc., a
Delaware corporation, maintaining its principal business offices at 00-X
Xxxxxxxx Xxxx, Xxxxxxxxxxxxx, XX 00000 (Hereinafter referred to, together
with its affiliates, as "Distributor").
WITNESSETH:
WHEREAS, Manufacturer manufactures Wander Watch SPS-100 and the MPSC50
multi-resident system and desire to market said products.
WHEREAS, the distributor has proven to Manufacturer that it is capable
of providing the marketing efforts desired by Manufacturer.
WHEREAS, the Manufacturer has proven it can design and produce the
quality and quantity of products required by the Distributor.
NOW, THEREFORE, by reason of these premises and in consideration of the
mutual covenants herein set forth, the parties hereto agree as follows.
1. Definitions.
For the purpose of this Agreement, the following items shall be defined
as indicated below:
1.1 SPS-100 Product" shall mean Manufacturer's items designated as
"Wander Watch SPS-100' and any additions, revisions and/or
modifications thereto.
1,2 "MPS-C50 Product" shall mean Manufacturer's item designated as
"Wander Watch MPS-C50 multi-resident system" and any additions,
revisions and/or modifications thereto.
1.3 "Products' shall mean the SPS-100 Product and the MPS-C50 Product.
1.4 "Customer" shall mean the initial purchaser from the Distributor
(which is generally a Healthcare Institution).
1.5 "End-User" shall mean the person who purchases a Product for
use, and not for resale (generally the customer of the Customer),
1.6 "Healthcare Industry" shall mean that segment of the economy
engaged in the provision and/or delivery of medical and healthcare
services to individuals.
1.7 "Healthcare Institutions" shall mean the businesses and
governmental agencies engaged in the Healthcare Industry, including but
not limited to hospitals, pharmacies, nursing associations, home health
care delivery organizations, and municipal, state and federal agencies
providing for the delivery of and/or reimbursement for home healthcare
services,
1.8 "Distributor's Healthcare Distribution Network" shall mean the
Distributor's existing and future network of Healthcare Institutions and
persons that Distributor now or in the future may market its Personal
Emergency Response Systems ("PERS") to, including but not limited to
dealers and franchisees of Distributor and end-users of Distributor's
PERS.
Appointment of Distributor.
2.1 During the term of this Agreement, manufacturer hereby
designates, the Products. The Distributor shall have the exclusive
worldwide Healthcare Industry rights to the SPS-100 Product which shall
entitle the Distributor to have the exclusive right to sell the SPS-100
Product worldwide to Healthcare Institutions and to individuals through
Distributor's Healthcare Distribution Network. The Distributor shall
have non-exclusive worldwide rights to the MPS-CSO Product which shall
entitle the Distributor to have non-exclusive right to sell the MPS-CSO
Product worldwide, Other than KingAlarm Distributors, Inc., of New Jersey
("KingAlarm"), the Manufacturer agrees to refrain from appointing other
distributors of the SPS-100 Product and from selling the SPS-100 Product
itself at the retail or wholesale level (including sales to Healthcare
Institutions, dealers and End-Users) and that any orders submitted to
the Manufacturer for the SPS-100 Product from the Healthcare Industry
shall be directed to the Distributor.
2.2 Manufacturer hereby grants the Distributor a license to use the
trademarks and service marks of the Products and the trade name "SEI" to
identify the manufacturer of the Products.
2.3 In the event that. (a) with respect to calendar year 1997,
Distributor fails to use reasonable efforts to fully and effectively
promote the We of the SPS-100 Product to the Healthcare Industry, (b)
with respect to calendar year 1998, Distributor's not sales of the SPS-100
Product for such year are not at least 20% greater than its net sales of
the SPS-100 Product for 1997 (and such shortfall is not due to any
breach of this Agreement by the Manufacturer), of (c) with respect to any
calendar year after 1998, Distributor's net sales of the SPS-100 Product
for such year are not at least 20% greater than its net sales of the
SPS-100 Product for the preceding year (and such shortfall is not due to
any breach by the Manufacturer) and during each such year Distributor
fails to use reasonable efforts to fully and effectively promote the sale
of the SPS-100 Product to the Healthcare Industry, then in any such case
Manufacturer shall have the right, by written notice given to Distributor
within 90 days after the end of the relevant calendar year, to cause
Distributor's rights to distribute the SPS-100 Product hereunder to the
Healthcare Industry to become non-exclusive, effective 90 days after the
date such notice is given. If Distributor's right to distribute the SPS-100
Product to the Healthcare Industry becomes non-exclusive, then
Manufacturer shall have the right to market and sell the SPS-100 Product
itself and/or to appoint other distributors of the SPS-100 Product to the
Healthcare Industry.
3. Distributor's Rights and Obligations.
During the term of this Agreement, the Distributor shall:
3.1 The Distributor shall provide Manufacturer with data regarding the
location of all products identified by a serial number from Manufacturer,
provided that Manufacturer agrees to keep all such data (including the
identities of Customers and End-Users) confidential and not to disclose
it to any third party or use it for any purpose other than in connection
with recalls of Products or as otherwise required by law.
3.2 The Distributor shall have the right to use any and all of the
Manufacturer's marketing tools, resources, Healthcare Industry customer
lists and Healthcare Industry customer inquiries, and any related
information or supplies related to the Products and market as may be
appropriate, in connection with the marketing and sale of the SPS-100
Product.
3.3 The Distributor, upon receipt of a written release and consent
in satisfactory form from KingAlarm as described in Section 4.6 below,
shall pay to Manufacturer a licensing fee 'in the amount of $35, 000.
Such fee will include the development of the Communications Package
described in Section 4.7 below.
3.4 Distributor shall not produce any product(s) which could be
considered directly competitive with the product line currently known
as Wander Watch SPS-100.
4. Manufacturer's Rights and Obligations.
4.1 Manufacturer shall manufacture quality Products ready for resale
at mutually agreed upon time frames using quality components and good
manufacturing procedures. Manufacturer shall deliver Products within a
reasonable time after receipt of Distributor's orders.
4.2 Manufacturer shall allocate such time and financial resources as
it deems necessary and appropriate for research and development to improve
the Products in accordance with changes in the industry, advancements in
technology, recommendations from the Distributor and its agents in
comparison with competition, knowledge gained by Manufacturer, and related
enterprises.
4.3 Manufacturer shall not produce any product(s) which could be
considered directly competitive with the product line currently known as
Wander Watch SPS-100.
4.4 Manufacturer shall continue its best efforts to enhance and
expand Products to help Distributor meet its twenty percent (20%) sales
increase requirements in order to maintain exclusivity under Section 2.3.
4.5 Manufacturer will not use the Distributor's name or logo in any
advertising or promotional materials without the prior written approval
of such materials by the Distributor.
4.6 Manufacturer shall, as a condition to the effectiveness of this
Agreement and payment of the fee described in Section 3.3 above, obtain
a release and consent from KingAlarm Distributors, Inc. of New Jersey,
permitting Manufacturer to enter into this Agreement with Distributor.
4.7 Manufacturer shall develop a digital communicator for the
Products to communicate to standard receivers used at Distributor's central
station (the "Communications Package'). Manufacturer shall use its
best efforts to complete its research and development of the
Communications Package in order that the Products may be manufactured
with the Communications Package fully installed, and available for
distribution on or before 60 days following the execution of this Agreement.
5. Training and Related Expenses.
5.1 Each of the parties hereto shall bear its own expenses for
travel and training. In the event that Distributor desires to have
individuals under its control attend meetings with Manufacturer, it
will contact Manufacturer so that a mutually agreeable time and place
can be established for the meetings.
6. Warranty, Maintenance and Repairs.
6.1 Manufacturer shall issue a limited warranty on the Products as
published in its current promotional materials, a copy of which is
attached hereto as Schedule "B". The limited warranty shall provide
for the right to return the Product for credit (in the full amount of
the purchase price) within 60 days of the date of purchase by the
Customer and for the repair or replacement of the Product at no charge
for parts or labor for two years (except transmitter batteries which
shall be for one year) from the date of purchase by the Customer, and
shall exclude any consequential damages the purchaser may suffer. The
Distributor shall be allowed to pass the Warranty to the Customer and
to the End-user.
6.2 The Manufacturer shall provide basic trouble-shooting to the
Distributor and to its Customers for any Product under warranty during
the Term of this Agreement and for two years following the term of this
Agreement.
6.3 If Manufacturer shall at its sole option decide to repair an
item under warranty, it shall make such repairs in a timely manner at the
expense of Manufacturer, and return the Product directly to the
Customer, the EndUser, or the Distributor when directed.
6.4 Products not under warranty shall be subject to the following
repair procedure. A reasonable repair cost estimate shall be made by
Manufacturer and reported immediately to the Distributor for information
and instruction as to whether to repair or not. If directed by the
Distributor to go ahead and repair, Manufacturer will repair items for
the reasonably stated estimate, upon written request by Distributor.
Distributor shall pay the costs for the repair within 30 days of
delivery of the repaired Product. Costs shall include, but not be limited
to, labor, shipping, and parts.
7. Purchase.
7.1 Distributor hereby places an initial pre-production purchase
order for 100 units of the SPS-100 Product with the Communications
Package.
7.2 Distributor shall pay for all Products delivered within
forty-five (45) days of receipt, except that the initial purchase
referred to in Section 7. 1 shall be paid for within thirty (30) days
of receipt.
7.3 The Distributor shall purchase mutually agreed upon quantities
of the Products at the prices shown on "Schedule A" pricing from
Manufacturer attached hereto. Any price change must be reasonable and
in line with the electronics/computer industry (but in no event to
exceed 10 % per annum) = and shall not become effective until 60 days
after the Manufacturer notifies the Distributor of such change or, if
later, such effective date as may be specified by the Manufacturer.
A schedule of Products shall be published in January of each year.
Each order for Products shall be made by:
A. A Purchase Order signed by an authorized officer or employee of
the Distributor, and
B. Payment in the amount of one-half the order amount to the
Manufacturer's assembly firm (to be named upon receipt Of P.O.) to be
placed in escrow pending receipt of the Products by Distributor.
8. Assignment.
8.1 The parties shall not assign or otherwise transfer this
Agreement or any interest or rights herein without the prior written
consent of the other party. Any such purported assignment, transfer or
attempt to assign or transfer any interest or right herein, without
the prior written consent of the other party, shall be null and void,
and of no effect. Notwithstanding the foregoing, either party may
assign this Agreement without the consent of the other party in
connection with the sale of the business of such party, whether by
sale of assets, merger or otherwise, and Distributor may assign this
Agreement to any of its subsidiary companies.
9. Municipal Bids.
9.1 Manufacturer expressly waives the right to sell directly to any
government entities engaged in the Healthcare Industry.
10. Commercial Sales.
10.1 Manufacturer retains the right to market and sell the SPS-100
Product solely in connection with sales of the MPS-C50 Product by
Manufacturer. The SPS- 100 product is supplied in connection with the
MPS-C50 Product as a demonstrator only, and numbers supplied have been
limited. The provisions of this Section 10.1 shall not be construed as
restricting the Distributor or its Customers from selling the SPS-100
Product in connection with sales of the MPS-C50 Product.
ii. Term of Agreement.
11.1 This Agreement shall become effective upon the date first
written (hereinafter the "effective date") and shall be for a term of two
(2) years commencing on the date that the Products containing the
Communications Package are available for purchase. The Agreement shall be
automatically renewed on a year-to-year basis thereafter unless either
of the parties fail to conform to the terms and conditions hereof.
The party alleging that the other party has failed to so conform
shall sixty (60) days prior to the expiration of the term notify
the other party as to the particulars of its allegation of
non-conformance and its desire to terminate this Agreement.
11.2 Either party may terminate this Agreement in the event that the
otherparty materially breaches this Agreement and fails to cure such
breach within 30 days after written demand therefor.
12. Indemnification and Insurance.
12.1 Distributor shall indemnify and hold harmless Manufacturer and
its directors, officers, employees and agents from and against any all
losses, liabilities, damages and expenses (including reasonable
attorney Is fees and expenses) which it may incur or be obligated
to pay in any action, claim of proceeding against it, for or by
reason of any negligence of misconduct by Distributor or any of its
agents or employees in connection with Distributor's performance of
this Agreement. The provisions of this Section and Distributor's
obligations hereunder shall survive any termination of this Agreement.
12.2 Except to the extent Manufacturer is entitled to be indemnified
by Distributor pursuant to Section 12.1 hereof, Manufacturer shall
indemnify and hold harmless Distributor and its directors, officers,
employees and agents from and against any and all losses, liabilities,
damages and expenses (including reasonable attorney's fees and expenses)
which it may incur or be obligated to pay in any action, claim or
proceeding against it arising out of or relating to the manufacture,
distribution, promotion, or use by Customers or End-Users of the
Products distributed by Distributor hereunder. The provisions of this
Section and Manufacturer's obligations hereunder shall survive any
termination of this Agreement.
12.3 Manufacturer shall indemnify and hold harmless Distributor and
its directors, officers, employees and agents from and against any and
all such losses, liability, damages and expenses (including reasonable
attorney's fees and expenses) which any of them may incur or be
obligated to pay in any action, claim or proceeding against any of
them for infringement of any other persons patent rights, trademark
rights or other proprietary rights, but only where such action, claim
or proceeding results from the activities of Distributor contemplated
by the Agreement conducted in accordance with the terms of this
Agreement. Distributor shall give Manufacturer prompt written notice
of any such claim or action and thereupon Manufacturer shall
undertake and conduct the defense of any suit so brought.
Distributor shall have the right to participate in the defense of
any such claim of action at its expense through counsel of its
choosing. In the event appropriate action is not taken by Manufacturer
within 10 days of its receipt of notice from Distributor or
Manufacturer fails to diligently pursue the defense of such claim
thereafter, Distributor shall have the right to defend such claim
or action in its own name, but no settlement or compromise of any
such claim or action may be made without prior written approval
of Manufacturer (which approval shall not be unreasonably
withheld or delayed). In either case, Manufacturer and Distributor
shall keep each other fully advised of all developments and shall
cooperate with each other in all respects in connection with any
such defense as is made. The provisions of this Section and
Manufacturer's obligations hereunder shall survive any termination
of this Agreement.
12.4 Commencing on or before the date on which Manufacturer first
ships Products to Distributor hereunder, Manufacturer shall obtain and
maintain at least $2 million of products liability insurance coverage
with respect to the Products distributed by Distributor hereunder, with
a deductible per occurrence of no more than the customary deductible
for products liability insurance in the electronics/computer industry,
but in any event no more than $15,000, at Manufacturer's expense, and
shall cause Distributor to be named as an additional named insured on
the policy under which such insurance is provided. Manufacturer shall
maintain "tail" insurance coverage, of the same type, amount and
deductible as it is required to maintain during the term of this
Agreement, for a period of two years after termination of this
Agreement for any reason whatsoever.
13. Miscellaneous.
13.1 Neither party shall represent itself as the agent or legal
representative of the other party or shall have any right to create or
assume any obligation of any kind, express of implied, for or on behalf
of the other party in any way whatsoever. This Agreement and the
performance by any party under this Agreement shall not be deemed to
create a relationship other than as independent contractors.
13.2 This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and this Agreement may not be
amended or modified, except in a writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Xxxxx Electronics Response USA
By /s/ Xxxx X. Xxxxx By /s/ Xxxxxxx X Xxxxxx
Its President Its President and COED
SCHEDULE A
Initial preproduction order of 100 units of SPS-100 Products $400.00 per
Unit*
Minimum Orders of:
0-100 units of SPS-100 Products $ per Unit*
101-500 units of SPS-100 Products $ per Unit*
Over 500 units of SPS-100 Products $ per Unit*
0-100 units of MPS-CSO Products $ per Unit*
101-500 units of MPS-C50 Products $ per Unit*
Over 500 units of MPS-C50 Products $ per Unit*
In addition to the above price, Distributor shall pay to Manufacturer a
portion of the monthly monitoring fee equal to (deleted) 20% of such fee
or $7.50 (whichever is lower) derived from central station monitoring
revenues actually received from Customers or End Users of the Products
during the Term of this Agreement.
*Including a built-in digital communicator. The prices are to be
mutually agreed upon between Manufacturer and Distributor following
receipt of the initial 100 preproduction order of SPS100 Products.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Xxxxx Electronics, Inc.
By: /s/ Xxxx Xxxxx
----------------------------------
Xxxx Xxxxx
President, Chief Executive Officer
and Director
Date: June 3, 1998
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual
Report on Form 10-KSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
By: /s/ Xxxxx Xxxxxxx June 3, 1998
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Chairman of the Board of Directors,
Secretary and Chief Financial Officer.
By: /s/ Xxxx X. Xxxxx June 3, 1998
--------------------------------------
President, Chief Executive Officer
and Director.
By: /s/ Xxxxxxx Xxxxxxx June 3, 1998
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Senior Vice President and Director.
By: /s/ Xxxxxx X. Xxxxx June 3, 1998
--------------------------------------
Vice President - Marketing and
Director.
By: /s/ Xxxxx Xxxxxx June 3, 1998
--------------------------------------
Director
