AGREEMENT
Agreement made as of the 8th day of December, 1995, by and between Xxxxx
Electronics, Incorporated, a corporation, maintaining its principal
business offices at 0000 Xxxxxxxxxx Xxxx, Xxxxxxxx, XX 00000
(hereinafter referred to as "Manufacturer ") and KingAlarm Distributors,
Inc. of New Jersey, a New Jersey corporation., maintaining its principal
business offices at 00 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 (hereinafter
referred to, together with its affiliates, as "Distributor").
WITNESSETH:
WHEREAS, Manufacturer manufactures Wander Watch SPS-100 and the MPS-C50
multiresident system and desires 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 item 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 dealer).
1.5 "End-User" shall mean the person who purchases a Product for use
and not for resale (generally the customer of the Customer).
2. Appointment of Distributor
2.1 During the term of this Agreement, manufacturer hereby
designates, constitutes, and appoints the Distributor to market
and solicit orders of the Products. The Distributor shall have
exclusive worldwide rights to the SPS-100 Product which shall
entitle the Distributor to have the exclusive right to sell
the SPS-100 Product worldwide. The Distributor shall have
non-exclusive worldwide rights to the MPS-C50 Product which shall
entitle the Distributor to have, the non-exclusive, right to sell
the MPS-C50 Product worldwide. The Manufacturer agrees to retrain
from appointing other distributors of the SPS-100 Product and from
selling the SPS-100 Product itself at the retail level (including
sales to dealers and End-User) and that any orders submitted to
the Manufacturer for the SPS-100 Product 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 1996,
Distributor fails to use reasonable efforts to fully and effectively
promote the sale of the SPS-100 Product in the geographic area
in which Distributor promotes the sale of other products it
distributes, (b) with respect to calendar year 1997, 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 1996
(and such shortfall is not due to any breach of this Agreement
by the Manufacturer), or (c) with respect to any calendar
year after 1997, 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 of this Agreement by the Manufacturer)
and during such year Distributor fails to use reasonable efforts
to fully and effectively promote the sale of the SPS-100 Product
in the geographic area in which Distributor promotes the
sale of other products it distributes, 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 become non-exclusive, effective 90 days
after the date such notice is given. If Distributor's right
to distribute the SPS-100 Product 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.
3. Distributors 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, customer lists and 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.
4. Manufacturers 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.
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. 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 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 troubleshooting to the
Distributor and to its Customers for any Product under warranty during
the Term of this Agreement.
6.3 If Manufacturer shall at its sole option decide to repair an
item under warranty, it shall -strive to make such repairs in a
timely manner at the expense of Manufacturer, and return the Product
directly to the Customer, or to the Distributor when directed.
6.4 Products not under warranty shall be subject to the following
repair procedure. A 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. Purchases
7.1 Distributor and Manufacturer hereby acknowledge that an initial
purchase will be agreed upon during December 1995.
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 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.
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 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.
9. Municipal Bids
9.1 Manufacturer retains the right to sell directly to all
government entities through their Invitations to Bid, except
government entities in states in which the Distributor has a branch
(as of the time of the Invitation to Bid); provided that the
foregoing shall not be construed to restrict the Distributor or
its Customers from selling to government entities through
Invitations to Bid, in competition with the Manufacturer
or otherwise.
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 hive
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.
11. Term of Agreement
11.1 This Agreement shall become effective upon the date above first
written (hereinafter the "effective date") and shall be for a term of
three (3) years. 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 nonconformance and its desire to
terminate this Agreement.
11.2 Either party may terminate this Agreement in the event that the
other party 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 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,
for or by reason of any negligence or 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 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, sale or use by
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 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 person's patent rights, trademark
rights or other proprietary rights, but only where such action, claim
or proceeding results from the activities of Distributor contemplated
by this 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 or 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 such claim thereafter of any such claim or
action may be its own name, but no settlement or compromise
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.l 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 or 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 THEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Xxxxx Electronics KingAlarm Distributors, Inc.
of New Jersey
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxx X Xxxxx
Its: Vice President Its: Senior VP
ADDENDUM
Addendum to Agreement of December 8, 1995 (the "Agreement"), made as of
the 18" day of November, 1996, by and between Xxxxx Electronics, Inc.
("Manufacturer") and KingAlarm Distributors, Inc. of New Jersey
("Distributor"):
Manufacturer and Distributor hereby agree as follows:
1. The following Sections 1.6 and 1.7 are hereby added to Section 1
of the Agreement:
1.6 "Health Care Products Dealer" shall mean a person or entity that
is engaged primarily in the business of selling products to Health Care
Providers.
1.7 "Health Care Provider" shall mean a person or entity that is
engaged primarily in the business of providing health care.
2. Section 2.1 of the Agreement is hereby amended by adding the
following language at the end of the second sentence:
:provided, however, that the Distributor shall have no right to sell the
SPS-100 Product to any Customer that is a Health Care Products Dealer or
a Health Care Provider. The foregoing shall not prohibit any Customer of
the Distributor that is not a Health Care Products Dealer from selling
the SPS-100 Product to Health Care Providers.
3. Section 2.1 of the Agreement is hereby further amended by adding
the following language at the end of the last sentence:
:provided, however, that (a) the Manufacturer may grant to other
distributors the right to sell the SPS-100 Product to Health Care
Products Dealers and/or Health Care Provides, (b) the Manufacturer
itself may sell the SPS-100 Product to Health Care Products Dealers
and/or Health Care Providers, and (c) the Manufacturer is not obligated
to direct to the Distributor any orders for the SPS-100 Product
submitted to the Manufacturer by Health Care Providers or Health Care
Products Dealers.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of
the day and year written above.
XXXXX ELECTRONICS, INC. KINGALARM DISTRIBUTORS, INC.
OF NEW JERSEY
By: /s/ Xxxx X Xxxxx By: /s/ Xxxxx X Xxxxx
Its: President Its: President
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: Xxxxx 00, 0000
Xxxxxxxx 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 April 2, 1998
--------------------------------------
Chairman of the Board of Directors,
Secretary and Chief Financial Officer.
By: /s/ Xxxx X. Xxxxx March 31, 1998
--------------------------------------
President, Chief Executive Officer
and Director.
By: /s/ Xxxxxxx Xxxxxxx April 2, 1998
--------------------------------------
Senior Vice President and Director.
By: /s/ Xxxxxx X. Xxxxx April 2, 1998
--------------------------------------
Vice President - Marketing and
Director.
By: /s/ Xxxxx Xxxxxx April 2, 1998
--------------------------------------
Director
