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EXHIBIT 10.11
WITHOUT PREJUDICE - SUBJECT TO THE RECEIVER'S APPROVAL
FORM OF
DISTRIBUTION AGREEMENT
MADE AND ENTERED INTO IN
ON THIS _______ DAY OF _________, 1995
BETWEEN
MEPRO EPILADY LTD. (IN RECEIVERSHIP)
A COMPANY INCORPORATED IN AND UNDER
THE LAWS OF THE STATE OF ISRAEL
OF KIBBUTZ HAGOSHRIM, D.N. UPPER GALILEE 00000
XXXXXX
(HEREINAFTER - MEPRO)
OF THE FIRST PART
AND
RADIO SYSTEMS CORPORATION
A COMPANY INCORPORATED IN AND UNDER
THE LAWS OF THE UNITED STATES OF AMERICA
OF 0000 XXXXXXXX XXXXX
XXXXXXXXX, XXXXXXXXX 00000
(HEREINAFTER - THE DISTRIBUTOR)
OF THE SECOND PART
WHEREAS MEPRO IS ENGAGED, INTER ALIA, IN THE PRODUCTION AND SALE OF AN
ELECTRONIC FLEA COMB SUCH AS FURTHER DESCRIBED IN SCHEDULE "A" TO THIS
AGREEMENT (HEREINAFTER - THE "PRODUCTS"); AND
WHEREAS THE DISTRIBUTOR WISHES TO ACT AS MEPRO'S SOLE AND EXCLUSIVE DISTRIBUTOR
FOR THE SALE AND MARKETING OF THE PRODUCT IN THE USA, CANADA AND MEXICO
(HEREINAFTER - THE "TERRITORY"); AND
WHEREAS THE DISTRIBUTOR DECLARES THAT THERE IS NO LEGAL OR ANY OTHER
IMPEDIMENT, PREVENTING IT FROM ENTERING THIS AGREEMENT; AND
WHEREAS MEPRO AGREES TO APPOINT THE DISTRIBUTOR AS ITS SOLE AND EXCLUSIVE
DISTRIBUTOR FOR THE SALE AND MARKETING OF THE PRODUCT IN THE TERRITORY
ACCORDING TO THE TERMS AND CONDITIONS OF THIS AGREEMENT;
NOW THEREFORE, IT WAS AGREED BETWEEN THE PARTIES AS FOLLOWS:
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1. PREAMBLE AND ANNEXES
THE PREAMBLE TO THIS AGREEMENT AND THE SCHEDULES HERETO, AS UPDATED
FROM TIME TO TIME BY MUTUAL WRITTEN CONSENT, FORM AN INTEGRAL PART
THEREOF.
2. APPOINTMENT OF DISTRIBUTOR
A) MEPRO HEREBY APPOINTS THE DISTRIBUTOR AND THE DISTRIBUTOR HEREBY AGREES
TO ACT AS MEPRO'S SOLE AND EXCLUSIVE DISTRIBUTOR FOR THE SALE OF THE
PRODUCT IN THE TERRITORY SOLELY UNDER THE TERMS HEREOF. PROVIDED THE
AGREEMENT IS IN FORCE AND EFFECT MEPRO UNDERTAKES NOT TO SELL THE
PRODUCT IN THE TERRITORY OTHER THAN THROUGH THE DISTRIBUTOR, AND SHALL
USE ITS BEST EFFORTS AND COOPERATE WITH THE DISTRIBUTOR IN PREVENTING
ANY LEAKAGE OF THE PRODUCT INTO THE TERRITORY.
B) THE DISTRIBUTOR UNDERTAKES TO TAKE ALL NECESSARY MEASURES TO PREVENT
ANY LEAKAGE OF THE PRODUCT FROM THE TERRITORY AND SHALL NOT, DIRECTLY
OR INDIRECTLY, KNOWINGLY SELL ANY OF THE PRODUCT TO CUSTOMERS WHO MIGHT
GENERATE SAME. THIS PROVISION SHALL SURVIVE THE TERMINATION AND/OR
EXPIRATION OF THIS AGREEMENT.
C) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE AGREEMENT
AND THE DISTRIBUTORSHIP RIGHTS GRANTED TO THE DISTRIBUTOR HEREUNDER
SHALL BE VALID ONLY UNDER THE FOLLOWING SEPARATE AND CUMULATIVE STRICT
CONDITIONS:
i) THE DISTRIBUTOR PLACES, UPON EXECUTION OF THIS
AGREEMENT AN INITIAL ORDER (HEREINAFTER - THE INITIAL
ORDER) FOR 40,000 PRODUCT UNITS TO BE DELIVERED AS
FOLLOWS:
20,000 UNITS NOT LATER THAN BY 30/9/96
20,000 UNITS NOT LATER THAN BY 31/4/97
ii) THE DISTRIBUTOR ISSUES, NOT LATER THAN BY AUG. 25, 96
AN APPROPRIATE LETTER OF CREDIT FOR THE VALUE OF THE
FIRST 20,000 UNITS SHIPMENT AS PER 2C(i) ABOVE.
iii) THE DISTRIBUTOR ISSUES, NOT LATER THAN BY FEB. 28TH,
97 AN APPROPRIATE LETTER OF CREDIT FOR THE VALUE OF
THE SECOND 20,000 UNITS SHIPMENT AS PER 2C(i) ABOVE.
D) IN THE EVENT THE DISTRIBUTOR HAS FAILED TO MEET ITS ANNUAL MINIMUM
QUANTITIES UNDERTAKINGS MEPRO WILL BE ENTITLED, IN GOOD FAITH AND
TAKING INTO CONSIDERATION THE CURRENT RELEVANT FACTORS AND MARKET
CONDITIONS, TO RECONSIDER THE EXCLUSIVE RIGHTS GRANTED TO THE
DISTRIBUTOR HERETO. SUCH MEASURES WILL CONSIST MEPRO'S SOLE REMEDY IN
THIS RESPECT.
NOTWITHSTANDING, AFTER DISCONTINUATION OF HIS EXCLUSIVE RIGHTS AS PER
ABOVE AND IN ABSENCE OF ANY THIRD PARTY NEW EXCLUSIVE DISTRIBUTOR, THE
DISTRIBUTOR WILL BE ENTITLED AT ITS OWN DISCRETION,
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TO PURSUE ITS PURCHASING OF THE PRODUCT DIRECTLY FROM MEPRO FOR
NON-EXCLUSIVE SALES, IN THE TERRITORY, IN FULL COMPLIANCE WITH THE
MUTUALLY AGREED UPON SURVIVING TERMS OF THE AGREEMENT.
FIRST CONTRACTUAL PERIOD ENDING DEC. 31ST, 1996:
A MINIMUM QUANTITY OF NOT LESS THAN 20,000 PRODUCT UNITS (FIRST
SHIPMENT OF INITIAL ORDER).
SECOND SUCCESSIVE TWELVE MONTH CONTRACTUAL PERIOD ENDING DECEMBER 31ST,
97:
AN ANNUAL CUMULATIVE MINIMUM QUANTITY OF 125,000 UNITS (INCLUDING THE
INITIAL ORDER'S SECOND SHIPMENT)
THIRD SUCCESSIVE TWELVE MONTH CONTRACTUAL PERIOD ENDING DECEMBER 31ST,
98:
AN ANNUAL CUMULATIVE MINIMUM QUANTITY OF 250,000 UNITS.
FAILURE TO PURCHASE THE HEREINABOVE SPECIFIED QUANTITIES BY THE
DISTRIBUTOR, SHALL ENTITLE MEPRO, AT ITS SOLE DISCRETION, TO
DISCONTINUE THE DISTRIBUTOR'S EXCLUSIVE RIGHTS GRANTED HERETO AND THE
DISTRIBUTOR SHALL HAVE NO CLAIMS WHATSOEVER AGAINST MEPRO REGARDING THE
TERMINATION OF THIS AGREEMENT, AS PER ABOVE, AND/OR NON-RENEWAL
THEREOF, INCLUDING ANY CLAIM FOR DAMAGES, LOSS OF PROFIT OR IN RESPECT
OF GOODWILL.
3. SALE OF THE PRODUCT
A) THE DISTRIBUTOR SHALL, ON A SEMIANNUAL BASIS, PROVIDE MEPRO
WITH A FORECAST IN RESPECT OF THE QUANTITIES OF PRODUCTS IT
INTENDS TO PURCHASE FROM MEPRO DURING SAID PERIOD.
B) MEPRO WILL DELIVER THE PRODUCT FOB ISRAELI AIR OR SEA PORT
ACCORDING TO THE DISTRIBUTOR'S WRITTEN INSTRUCTIONS.
4. SALES PROMOTION
A) THE DISTRIBUTOR SHALL, AT ITS OWN RESPONSIBILITY AND EXPENSES
PROMOTE THE SALE OF THE PRODUCT IN THE TERRITORY AND INVEST
DURING THE FIRST 12 MONTH CONTRACTUAL PERIOD NOT LESS THAN US$
300,000 INTO THE DEVELOPMENT AND IMPLEMENTATION OF ITS SALES
AND PROMOTION CAMPAIGN.
B) MEPRO WILL SUPPLY THE DISTRIBUTOR WITH SEVERAL SAMPLES OF
ADVERTISING MATERIAL WHICH MEPRO HAS ALREADY PREPARED AND IS
AVAILABLE. THE DISTRIBUTOR SHALL, AT ITS SOLE DISCRETION, BE
ALLOWED TO MAKE USE OF SAID MATERIAL.
5. FOR AVOIDANCE OF ANY INADVERTENT PRINTING OF INACCURATE INFORMATION FOR
WHICH MEPRO MIGHT BE LIABLE, THE LEGAL CONTENT OF ALL ADVERTISING
MATERIAL AND/OR ANY PACKAGES, PREPARED BY THE DISTRIBUTOR, WILL BE
APPROVED BY MEPRO BEFORE ANY USAGE THEREOF IS
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MADE. MEPRO UNDERTAKES TO APPROVE SAID MATERIAL WITHIN TWO WORKING DAYS
AS OF RECEIPT BY MEPRO OR, IN ABSENCE OF SUCH APPROVAL CONSIDER SAME AS
HAVING BEEN APPROVED.
MEPRO SHALL, IN COORDINATION WITH THE DISTRIBUTOR, BE ALLOWED TO MAKE
USE OF SAID MATERIAL.
6. INTELLECTUAL PROPERTY
A) MEPRO SHALL REMAIN THE SOLE AND EXCLUSIVE PROPRIETOR OF ALL
THE INTELLECTUAL PROPERTY OWNED BY IT PRIOR TO THIS AGREEMENT
(PATENTS, TRADEMARKS AND TRADE NAMES) AND USED DURING THE
MANUFACTURING, ADVERTISING, MARKETING AND/OR ANY OTHER
ACTIVITY IN RESPECT OF THE PRODUCT.
HOWEVER, ALL ARTWORK, TRADE NAMES AND TRADEMARKS PRODUCED AND
REGISTERED BY THE DISTRIBUTOR WILL REMAIN ITS SOLE PROPERTY
AFTER THE EXPIRATION AND/OR TERMINATION OF THIS AGREEMENT.
B) THE DISTRIBUTOR UNDERTAKES TO NOTIFY MEPRO WITHOUT ANY DELAY
OF ANY INFRINGEMENT OF THE INTELLECTUAL PROPERTY OR ANY PART
THEREOF IN THE TERRITORY WHICH HAS BEEN DISCOVERED BY IT OR
BROUGHT TO ITS ATTENTION.
MEPRO AT ITS SOLE DISCRETION, SHALL DECIDE IF, WHEN AND IN
WHAT MANNER TO DEFEND AND PROTECT AGAINST SAID INFRINGEMENT.
HOWEVER, EACH PARTY WILL HAVE THE RIGHT, AT ITS OWN EXPENSE
AND BENEFIT, TO COMMENCE ITS OWN LEGAL ACTIVITIES AGAINST THE
INFRINGER. SUCH ACTIVITIES WILL BE COORDINATED WITH THE OTHER
PARTY WHICH, IN SUCH EVENT, WILL USE ITS BEST EFFORTS TO
AFFORD THE CLAIMANT PARTY ANY NECESSARY ASSISTANCE AND/OR
INFORMATION.
7. PRICES
A) THE FOB PORT OF ORIGIN PRICE OF THE PRODUCT UNIT TO BE SOLD TO
THE DISTRIBUTOR, IN BULK (EXCLUDING BATTERIES, PACKAGING, USER
MANUAL AND WARRANTY CERTIFICATE) TO THE DISTRIBUTOR SHALL BE
US$ 7.50.
B) ALL PRODUCTS SUPPLIED HEREUNDER SHALL REMAIN MEPRO'S EXCLUSIVE
PROPERTY UNTIL MEPRO RECEIVES FULL PAYMENT IN RESPECT THEREOF.
C) ALL TAXES, IN THE TERRITORY, WHEN IMPOSED, SHALL BE PAID BY
THE DISTRIBUTOR IN ADDITION TO THE ABOVE SPECIFIED PRICES.
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8. FIRM ORDERS AND DELIVERIES
FIRM ORDERS WILL BE PLACED BY THE DISTRIBUTOR WITH MEPRO NOT LATER THAN
60 (SIXTY) DAYS PRIOR TO EX-FACTORY DELIVERY DATE, AND DELIVERED TO THE
DISTRIBUTOR BY MEPRO NOT LATER THAN 30 (THIRTY) DAYS AS OF ISSUANCE OF
THE CORRESPONDING L/C.
9. TERMS OF PAYMENT
THE DISTRIBUTOR SHALL PAY FOR EACH ORDER OF PRODUCTS BY WAY OF WIRE
TRANSFER COVERING THE TOTAL AMOUNT OF THE RESPECTIVE ORDER AND PAYABLE
30 DAYS AS OF SHIPMENT DOCUMENTS DATE.
IN ORDER TO GUARANTEE TIMELY PAYMENTS THE DISTRIBUTOR SHALL ISSUE AN
APPROPRIATE STAND BY LETTER OF CREDIT (LC) IN A FORMAT HEREINATTACHED
AS SCHEDULE "D" TO THIS AGREEMENT, FOR THE AMOUNT OF US$ 300,000 TO BE
ISSUED, BY A FIRST CLASS BANK ACCEPTABLE TO MEPRO AND IN FAVOR OF MEPRO
AND/OR ANY OTHER ENTITY AS INSTRUCTED BY MEPRO ALLOWING IMMEDIATE AND
FULL PAYMENT OF ANY DELAYED WIRE TRANSFER AS PER ABOVE.
ISSUANCE DATE OF THE CORRESPONDING L/C WILL BE AS FOLLOWS:
a) ORDERS UP TO 30,000 UNITS:
IRREVOCABLE L/C TO BE ISSUED, IN FAVOR OF MEPRO, 30 DAYS PRIOR
TO FOB DELIVERY DATE, AND PAYABLE IN FULL 90 DAYS AFTER FOB
DELIVERY DATE, AGAINST PRESENTATION OF APPROPRIATE DOCUMENTS.
b) ORDERS BETWEEN 30,000 - 50,000 UNITS:
IRREVOCABLE L/C/ TO BE ISSUED, IN FAVOR OF MEPRO, 60 DAYS
PRIOR TO FOB DELIVERY DATE, AND PAYABLE IN FULL 90 DAYS AFTER
FOB DELIVERY DATE, AGAINST PRESENTATION OF APPROPRIATE
DOCUMENTS.
c) ORDERS EXCEEDING 50,000 UNITS:
IRREVOCABLE L/C TO BE ISSUED, IN FAVOR OF MEPRO, 90 DAYS PRIOR
TO FOB DELIVERY DATE, AND PAYABLE IN FULL 90 DAYS AFTER FOB
DELIVERY DATE, AGAINST PRESENTATION OF APPROPRIATE DOCUMENTS.
10. OPTIONAL MANUFACTURING OF THE PRODUCT BY A THIRD PARTY
PROVIDED IT HAD PURCHASED AT LEAST 75,000 PRODUCT UNITS FROM MEPRO, THE
DISTRIBUTOR WILL BE ENTITLED, SUBJECT TO THE SOLE AND STRICT PROVISIONS
SPECIFIED IN AMENDMENT NO. 1 TO BE ATTACHED TO THIS AGREEMENT, TO HAVE
THE PRODUCT MANUFACTURED BY AN AGREED UPON INDEPENDENT THIRD PARTY.
11. WARRANTY (ONLY FOR PRODUCTS SUPPLIED BY MEPRO)
11.1 MEPRO HEREBY WARRANTS THAT ALL PRODUCTS MANUFACTURED AND SOLD
TO THE DISTRIBUTOR BY MEPRO, AS PER THIS DOCUMENT, SHALL BE
FREE FROM ANY MATERIAL OR WORKMANSHIP DEFECTS AND IN FULL
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COMPLIANCE WITH ITS QC STANDARDS. SAID WARRANTY SHALL BE VALID
FOR A PERIOD OF 18 MONTHS AS OF THE PRODUCTION DATE STAMPED ON
THE PRODUCT OR 12 MONTHS FROM THE DATE OF PURCHASE BY THE
CONSUMER AS DOCUMENTED BY WARRANTY CARD, WHICHEVER IS THE
LATER.
11.2 AFTER THE LAPSE OF EITHER WARRANTY PERIOD AS PER SECTION 11.1
ABOVE, THE DISTRIBUTOR SHALL, AT ITS OWN RESPONSIBILITY AND
EXPENSE ENSURE, AS SPECIFIED IN SECTION 12 HEREUNDER, ADEQUATE
AFTER SALES SERVICE.
11.3 MEPRO SHALL REPLACE, FREE OF CHARGE, ALL DEFECTIVE PRODUCTS
(AS DEFINED IN SECTION 11.1 ABOVE) RETURNED BY THE DISTRIBUTOR
TO MEPRO SUBJECT TO THE FOLLOWING TERMS:
a) THE DEFECTIVE PRODUCTS (MINIMUM 500 UNITS PER
SHIPMENT) WILL BE SHIPPED (SUBJECT TO PRIOR
COORDINATION WITH MEPRO'S S. & M. DEPT.) F.O.B.
KNOXVILLE, TO MEPRO. NOTWITHSTANDING, MEPRO SHALL, AT
ITS OWN DISCRETION, BE ENTITLED TO REPLACE THE
REPORTED DEFECTIVE PRODUCTS WITHOUT REQUESTING
SHIPMENT OF SAME TO MEPRO.
b) UPON RECEIPT OF THE DEFECTIVE PRODUCTS SHIPMENT,
MEPRO'S COMPETENT PERSONAL WILL INSPECT AND SORT
SAME. ALL PRODUCTS COVERED BY THE WARRANTY AS PER
SECTION 11.1 ABOVE WILL BE REPLACED FREE OF CHARGE.
HOWEVER PRODUCTS THAT WILL BE FOUND TO HAVE BEEN
RETURNED FOR OTHER REASONS (DIRT, MISUSE, PHYSICAL
DAMAGE, REPAIR BY UNAUTHORISED PERSONNEL, ETC.) WILL
BE REPAIRED AGAINST PAYMENT BY THE DISTRIBUTOR FOR
PARTS AND LABOUR.
c) THE 500 REPLACED/REPAIRED UNITS RETURN SHIPMENT TO
THE DISTRIBUTOR WILL BE SENT F.O.B. ISRAEL AND
INCLUDE AN ITEMIZED REPORT AND INVOICE WITH REGARD TO
THE NUMBER OF REPLACED UNITS AND COSTS ACCRUED AS PER
SECTION 11.3(B) ABOVE.
d) NOTWITHSTANDING, THE DISTRIBUTOR MAY IN ITS SOLE
DISCRETION ELECT TO RECEIVE CREDIT FOR DEFECTIVE
PRODUCTS RATHER THAN REPLACEMENT AS PROVIDED FOR IN
SECTION 11.3(b) ABOVE.
IN NO EVENT SHALL MEPRO BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL AND/OR
INDIRECT DAMAGES.
12. AFTER SALES SERVICE
THE DISTRIBUTOR SHALL, AT ITS OWN EXPENSE, ORGANIZE AND KEEP ACTIVE A
COMPETENT AFTER SALES SERVICE CENTRE FOR THE PRODUCTS IN THE TERRITORY.
SAID CENTRE SHALL PROVIDE SERVICES AS FOLLOWS:
i) DURING THE WARRANTY PERIOD, AS DEFINED IN SECTION 11 ABOVE,
THE DISTRIBUTOR SHALL REPAIR OR REPLACE AT ITS EXPENSE, FREE
OF
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CHARGE TO THE FINAL CUSTOMER, ANY DEFECTIVE PRODUCT THE DEFECT
OF WHICH IS COVERED BY SAID WARRANTY.
ii) FOLLOWING THE WARRANTY PERIOD, THE DISTRIBUTOR SHALL PROVIDE
SERVICE FOR THE PRODUCTS AGAINST PAYMENT BY CUSTOMERS.
SPARE PARTS FOR SERVICES AS PER (i) AND (ii) ABOVE, SHALL BE PURCHASED
FROM MEPRO BY THE DISTRIBUTOR IN ACCORDANCE WITH MEPRO'S SPARE PARTS
PRICE LIST SPECIFIED IN SCHEDULE "C" TO THIS AGREEMENT.
13. PRODUCT LIABILITY
MEPRO SHALL PROCURE AND KEEP VALID, THROUGH THE TERM OF THIS AGREEMENT,
A PRODUCT LIABILITY INSURANCE POLICY COVERING MEPRO'S UNDERTAKINGS AND
LIABILITIES HEREUNDER AND PROVIDE THE DISTRIBUTOR WITH A "VENDOR'S
ENDORSEMENT", IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF SAID
POLICY. (HEREINATTACHED AS SCHEDULE "B" TO THIS AGREEMENT).
14. LICENSES
THE DISTRIBUTOR SHALL, AT ITS EXPENSE, PROCURE AND KEEP VALID ALL
LICENSES, PERMITS AND APPROVALS, REQUIRED BY ANY AUTHORITY IN THE
TERRITORY FOR THE PURPOSE OF THE IMPORTATION, MARKETING AND SALE OF THE
PRODUCTS IN THE TERRITORY.
15. NON-COMPETITION
DURING THE TERM OF THIS AGREEMENT AND FOR A PERIOD OF TWO YEARS
FOLLOWING ITS TERMINATION, FOR ANY REASON, THE DISTRIBUTOR SHALL NOT BE
ENGAGED, DIRECTLY OR INDIRECTLY, IN THE MANUFACTURE, SALE, PROMOTION IN
ANY OTHER COMMERCIAL ACTIVITY IN RESPECT OF ANY ELECTRONIC DEVICE WHICH
IS SIMILAR AND/OR CONFUSINGLY SIMILAR TO THE PRODUCT.
THE DISTRIBUTOR UNDERTAKES THAT THE ABOVE COMMITMENT SHALL APPLY TO ALL
OF ITS PARENT AND/OR SISTER AND/OR SUBSIDIARY AND/OR AFFILIATED
COMPANIES.
16. CONFIDENTIALITY
EACH OF THE PARTIES HERETO SHALL ACT LOYALLY TOWARDS THE OTHER PARTY
AND SHALL NOT DIVULGE TO ANY THIRD PARTY ANY INFORMATION WHICH BECOMES
AVAILABLE TO IT RESPECTING THE OTHER PARTY'S ACTIVITIES WITHOUT
OBTAINING THE LATTER'S PRIOR WRITTEN CONSENT.
17. NO LEGAL REPRESENTATION
THE DISTRIBUTOR, ITS AGENTS AND EMPLOYEES, ARE IN NO WAY THE LEGAL
REPRESENTATIVES OF MEPRO. THE DISTRIBUTOR HAS NOT RIGHT TO MAKE ANY
DECLARATIONS OR ACCEPT ANY COMMITMENTS OR LIABILITY ON BEHALF OF MEPRO.
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18. ASSIGNABILITY
MEPRO AND THE DISTRIBUTOR SHALL NOT ASSIGN ANY OF ITS RIGHTS OR
OBLIGATIONS HEREUNDER TO ANY OTHER PERSON OR ENTITY, WITHOUT THE OTHER
PARTY'S PRIOR WRITTEN CONSENT.
19. DURATION
THIS AGREEMENT SHALL BE VALID, SUBJECT TO THE PARTIES FULL COMPLIANCE
WITH THEIR UNDERTAKINGS UNDER THIS AGREEMENT, FOR A PERIOD STARTING AS
OF DATE OF EXECUTION THEREOF AND ENDING DECEMBER 31ST, 98.
SUBJECT TO THE DISTRIBUTOR'S FULL COMPLIANCE WITH ITS SEPARATE AND
CUMULATIVE UNDERTAKINGS AS SPECIFIED IN THIS AGREEMENT, AND TO ITS
UNDERTAKING TO CONTINUE TO PURCHASE A MINIMUM ANNUAL QUANTITY OF
250,000 UNITS, THIS AGREEMENT WILL AUTOMATICALLY BE ANNUALLY EXTENDED
FOR FIVE CONSECUTIVE SEPARATE 13 MONTHS PERIODS.
20. TERMINATION
A) IN THE EVENT ONE OF THE PARTIES HAS NOT FULFILLED ANY OF ITS
SEPARATE OR CUMULATIVE UNDERTAKINGS AS SPECIFIED IN THIS
AGREEMENT AND HAS NOT CURED SAID BREACH (EXCLUDING THE
NONCURABLE CONDITIONS SPECIFIED IN SECTION 2(C) HEREINABOVE)
WITHIN THIRTY DAYS AS OF THE OTHER PARTY'S FIRST WRITTEN
DEMAND TO DO SO, THEN THE OTHER PARTY SHALL BE ENTITLED TO
TERMINATE THIS AGREEMENT BY A THIRTY DAYS IN ADVANCE WRITTEN
NOTICE.
B) MEPRO WILL B ENTITLED TO TERMINATE THIS AGREEMENT FOLLOWING
THE ISSUANCE OF A WARRANT BY THE DISTRICT COURT OF HAIFA
SUPERVISING THE RECEIVERSHIP ORDERING MEPRO TO CEASE ALL ITS
BUSINESS IN REGARD TO THE PRODUCT/S IN THE TERRITORY OR IN
GENERAL.
C) UPON EXPIRATION OF THE ORIGINAL TERM, OR ANY MUTUALLY AGREED
UPON EXTENSION PERIOD, OR A MUTUALLY AGREED UPON EARLIER
TERMINATION OF THIS AGREEMENT, THE PARTIES HERETO SHALL HAVE
NO RIGHT OF ANY CLAIM WHATSOEVER AGAINST THE OTHER PARTY
REGARDING TERMINATION OF THIS AGREEMENT, AS PER ABOVE, AND/OR
NON-RENEWAL THEREOF, INCLUDING ANY CLAIM FOR DAMAGES, LOSS OF
PROFIT OR IN RESPECT OF GOODWILL.
D) SIXTY DAYS AS OF TERMINATION OF THIS AGREEMENT, PROVIDED MEPRO
HAS NOT COMMITTED ITSELF TO PURCHASE FROM THE DISTRIBUTOR THE
LATTER'S STOCK OF PRODUCTS OR ANY PART THEREOF, THE
DISTRIBUTOR SHALL BE FREE TO SELL SAID STOCK IN THE ORDINARY
COURSE OF BUSINESS, SUBJECT TO CLAUSE 2(B), BUT SHALL NOT BE
PERMITTED TO SELL PART OF ALL SUCH INVENTORY TO ANY THIRD
PARTY AT PRICES BELOW THE ACTUAL CURRENT MARKET PRICE.
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21. VARIATION OF AGREEMENT
THIS AGREEMENT CONTAINS THE ENTIRE AND ONLY AGREEMENT BETWEEN THE
PARTIES AND IT SHALL NOT BE CHANGED EXCEPT WITH THE WRITTEN CONSENT OF
BOTH PARTIES.
THIS AGREEMENT SUPERSEDES ANY OTHER AGREEMENT BETWEEN THE PARTIES,
WHETHER ORAL OR IN A WRITTEN FORM.
22. PROPER LAW AND JURISDICTION
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN
ACCORDANCE WITH THE LAWS OF ISRAEL AND THE PARTIES AGREE THAT THE
COURTS OF ISRAEL SHALL HAVE JURISDICTION IN RESPECT OF ANY DISPUTE,
SUIT ACTION, ARBITRATION OR PROCEEDINGS WHICH MAY ARISE OUT OF OR IN
CONNECTION WITH THIS AGREEMENT.
NOTWITHSTANDING THE ABOVE, MEPRO WILL HAVE THE RIGHT TO INITIATE
PROCEEDINGS IN THE TERRITORY. IN THAT EVENT, THE LAW OF THE TERRITORY
AND THE JURISDICTION OF ITS COURTS SHALL APPLY.
23. RECEIVERSHIP
A) THE DISTRIBUTOR IS AWARE THAT MEPRO IS UNDERGOING RECEIVERSHIP
PROCEEDINGS IN THE HAIFA DISTRICT COURT AND THAT THIS
AGREEMENT AND ITS CONTINUING EXECUTION IS SUBJECT TO COURT
APPROVAL.
B) WITHOUT DEROGATING FROM THE DISTRIBUTOR'S RIGHTS AS SPECIFIED
IN THIS AGREEMENT, THE RECEIVER OF MEPRO WILL APPROVE THE
SIGNING OF THIS AGREEMENT ON BEHALF OF MEPRO ONLY AFTER THE
COURT'S APPROVAL, IN HIS CAPACITY AS RECEIVER AND WITHOUT
UNDERTAKING ANY PERSONAL RESPONSIBILITY.
24. NOTICES
ANY NOTICE REQUIRED TO BE GIVEN HEREUNDER, SHALL BE SUFFICIENTLY GIVEN
IF FORWARDED BY REGISTERED POST, CABLE, TELEX OR TELEFAX TO THE
REGISTERED OFFICE OF THE PARTY TO WHOM THE SAME IS ADDRESSED. EVERY
NOTICE SHALL BE DEEMED TO HAVE BEEN RECEIVED AND GIVEN AT THE TIME
WHEN, IN THE ORDINARY COURSE OF BUSINESS, IT SHALL HAVE BEEN DELIVERED
AT THE ADDRESS TO WHICH IT WAS SENT.
IN WITNESS WHEREOF, THE PARTIES HAVE HEREUNTO SET THEIR HAND AND SEAL AT THE
PLACE AND ON THE DATE HEREINABOVE FIRST ABOVE MENTIONED.
------------------------- ---------------------------------
FOR: MEPRO FOR: RADIO SYSTEMS
BY: XXXX XXXXX - C.E.O. BY: XXXXX XXXX - PRESIDENT
SCHEDULES: "A" - PRODUCT SPECIFICATIONS.
"B" - VENDOR'S ENDORSEMENT.
"C" - SPARE PARTS PRICE LIST.
"D" - STAND BY L/C FORMAT.
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DRAFT - WITHOUT PREJUDICE
AMENDMENT NO. 1 TO THE MEPRO-RADIO SYSTEMS DISTRIBUTION AGREEMENT
THE FOLLOWING AMENDMENT IS INTENDED TO SET FORTH THE TERMS AND PROVISIONS UNDER
WHICH THE DISTRIBUTOR SHALL BE ENTITLED TO ORDER PRODUCT UNITS FROM A
MANUFACTURER OTHER THAN MEPRO. THIS AMENDMENT CONSTITUTES AN INTEGRAL PART OF
THE INITIAL DISTRIBUTION AGREEMENT AND IS SUBJECT TO ALL THE PERTINENT
PROVISIONS CONTAINED THEREOF.
WHEREAS MEPRO IS THE SOLE AND EXCLUSIVE OWNER OF THE PATENT AND TRADE XXXX
RIGHTS EXPLOITED AND EXERCISED IN THE PRODUCTION AND SALE OF THE
PRODUCT; AND
WHEREAS THE DISTRIBUTOR DESIRES TO HAVE THE PRODUCT MANUFACTURED OUTSIDE THE
TERRITORY (HEREINAFTER-THE IMPORTED PRODUCT) FOR THE SOLE AND ABSOLUTE
PURPOSE OF ITS IMPORTATION INTO, AND DISTRIBUTION WITHIN, THE TERRITORY
IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF THIS AMENDMENT; AND
WHEREAS MEPRO AGREES TO GRANT TO THE DISTRIBUTOR DISTRIBUTION RIGHTS IN RESPECT
OF THE SALE AND MARKETING OF THE IMPORTED PRODUCTS IN COMPLIANCE WITH
THE TERMS AND CONDITIONS OF THE INITIAL DISTRIBUTION AGREEMENT;
NOW THEREFORE, IT WAS AGREED BETWEEN THE PARTIES AS FOLLOWS
1. PREAMBLE AND ANNEXES
THE PREAMBLE TO THIS AMENDMENT AND THE SCHEDULES HERETO, AS UPDATED
FROM TIME TO TIME BY MUTUAL WRITTEN CONSENT, FORM AN INTEGRAL PART
THEREOF.
2. MANUFACTURING AND DISTRIBUTION RIGHTS
A) PROVIDED THE DISTRIBUTOR HAS PURCHASED AT LEAST 75,000 PRODUCT
UNITS FROM MEPRO AND SUBJECT TO MEPRO'S PRIOR APPROVAL OF THE
SELECTED MANUFACTURER, MEPRO WILL, JOINTLY WITH THE
DISTRIBUTOR SIGN WITH SAID MANUFACTURER, A TRIPARTITE
MANUFACTURING AGREEMENT SETTING FORTH THE TERMS UNDER WHICH
THE MANUFACTURER WILL BE GRANTED THE PRODUCT'S MANUFACTURING
RIGHTS.
SAID TRIPARTITE AGREEMENT WILL BE ATTACHED HERETO AS ANNEX "A"
TO THIS AMENDMENT, FORM AN INTEGRAL PART THEREOF AND
CONSTITUTE A STRICT PRECONDITION TO THE VALIDITY AND ENTRANCE
INTO EFFECT OF THIS AMENDMENT.
B) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AMENDMENT THE
AMENDMENT AND THE RIGHTS GRANTED TO THE DISTRIBUTOR HEREUNDER
SHALL BE VALID ONLY UNDER AND SUBJECT TO THE FOLLOWING
CUMULATIVE CONDITIONS:
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i) ORDERS FROM THE MANUFACTURER
MEPRO SHALL BE COADRESSED TO ALL THE CORRESPONDENCE
AND RECEIVE COPIES OF ALL THE DOCUMENTS PERTAINING TO
THE QUANTITY OF PRODUCTS ORDERED BY THE DISTRIBUTOR
FROM THE MANUFACTURER.
ii) ROYALTIES
IN RETURN FOR THE ABOVE MANUFACTURING RIGHTS, THE
DISTRIBUTOR SHALL PAY TO MEPRO ROYALTIES PER EACH
SUCH ORDERED MANUFACTURED PRODUCT UNIT AS HEREUNDER
SPECIFIED:
UP TO 100,000 UNITS: US$ 2.50 P/U
ANY QUANTITY EXCEEDING 100,000 UNITS: US$ 2.00 P/U
THE TERMS AND MEANS OF PAYMENT OF SAID ROYALTIES WILL
BE CONCLUDED BETWEEN THE PARTIES AND ATTACHED AS
SCHEDULE "A" TO THIS AMENDMENT.
IN ORDER TO GUARANTEE THE TIMELY PAYMENT OF THE
ROYALTIES AND THE FULFILLMENT OF ALL ITS OTHER
HEREINCONTAINED UNDERTAKINGS, THE DISTRIBUTOR WILL
ISSUE AND DEPOSIT WITH MEPRO, AN IRREVOCABLE
REVOLVING BANK GUARANTEE IN MEPRO'S FAVOR, FOR THE
AMOUNT OF US$ 125,000. SAID BANK GUARANTEE WILL
SURVIVE THE TERMINATION OR EXPIRATION OF THIS
AGREEMENT FOR ANY REASON, BY A PERIOD OF SIX MONTHS.
MEPRO UNDERTAKES TO PROVIDE THE DISTRIBUTOR WITH A
TEN DAYS IN ADVANCE WRITTEN NOTICE OF ANY DRAW TO BE
MADE AGAINST THE GUARANTEE.
3. PRODUCTION AND ORDERS
NOTWITHSTANDING AND IN ADDITION TO THE FOREGOING, THE DISTRIBUTOR'S
HEREIN GRANTED RIGHTS SHALL BE VALID AND IN EFFECT SUBJECT TO ITS
FULFILLMENT OF THE FOLLOWING UNDERTAKINGS:
A) THE DISTRIBUTOR SHALL BE ENTITLED TO EXERCISE ITS GRANTED
MANUFACTURING RIGHTS BY WAY OF ONE OR A COMBINATION OF BOTH
THE FOLLOWING OPTIONS:
(i) THE DISTRIBUTOR WILL ORDER, EXCLUSIVELY FROM MEPRO,
AT COST PRICE (FOB) ALL THE PRODUCTS, PLASTIC PARTS
AND COMBING UNITS, TO BE ASSEMBLED BY THE
MANUFACTURER AND DISTRIBUTED BY THE DISTRIBUTOR IN
COMPLIANCE WITH THE TERMS OF THE INITIAL AGREEMENT.
(ii) THE DISTRIBUTOR WILL ORDER THE PRODUCT, IN WHOLE,
FROM THE MANUFACTURER.
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B) SUBJECT TO PRIOR COORDINATION WITH THE MANUFACTURER'S
PRODUCTION CAPACITY, MEPRO WILL BE ENTITLED TO ORDER ANY
QUANTITY OF ROYALTY FREE PRODUCTS, AT THE SAME PAYMENT TERMS
AND NET PRICE PAID BY RSC TO THE MANUFACTURER.
C) THE DISTRIBUTOR SHALL, UNDER NO CIRCUMSTANCES WHATSOEVER,
ORDER, DIRECTLY AND/OR INDIRECTLY ANY PRODUCT UNITS AND/OR
PARTS OTHER THAN AS SPECIFIED IN SECTION 3(A) ABOVE.
4. SALES AND INVENTORY REPORTS
THE DISTRIBUTOR SHALL, WITHIN TEN DAYS FROM THE END OF EACH TWO MONTH
PERIOD, SUBMIT TO MEPRO A GENERAL ITEMIZED SALES AND INVENTORY REPORT
SPECIFYING THE TOTAL IMPORTED PRODUCTS SALES EXECUTED IN EACH OF THE
COUNTRIES IN THE TERRITORY DURING THE PERIOD IN QUESTION.
IN ORDER TO ASCERTAIN THE CORRELATION BETWEEN PRODUCTION AND SALES,
MEPRO SHALL BE ENTITLED, THROUGH T C.P.A. FIRM, ACCEPTABLE TO THE
DISTRIBUTOR, WHOSE ACCEPTANCE WILL NOT BE UNREASONABLY WITHHELD, TO
CONDUCT QUARTERLY INSPECTIONS OF ALL RELEVANT RECORDS.
SUCH INSPECTIONS WILL BE COORDINATED WITH THE DISTRIBUTOR SEVEN DAYS IN
ADVANCE, AND NONE OF THE INFORMATION OBTAINED DURING SUCH INSPECTION
AND CONSIDERED CONFIDENTIAL BY THE DISTRIBUTOR, EXCEPT FOR THE RESULTS
THEREOF, WILL BE DISCLOSED TO MEPRO BY THE C.P.A.
ANY OUTSTANDING PAYMENT IN FAVOR OF ONE OF THE PARTIES REVEALED BY THE
AUDIT WILL BE SETTLED WITHIN THIRTY DAYS FROM THE AUDIT'S INSPECTION
REPORT DATE.
THIS PROVISION SHALL SURVIVE TERMINATION OR EXPIRATION OF THIS
AGREEMENT TO THE FULL EXTENT NECESSARY FOR THE PROTECTION OF THE
PARTIES' RIGHTS HERETO.
5. INTELLECTUAL PROPERTY
MEPRO SHALL REMAIN THE SOLE AND EXCLUSIVE PROPRIETOR OF ALL THE
INTELLECTUAL PROPERTY RIGHTS (PATENTS, TRADEMARKS AND TRADE NAMES)
WHICH ARE TO BE USED DURING THE MANUFACTURING OF THE PRODUCT.
6. PRODUCT'S GUARANTEE
THE DISTRIBUTOR SHALL, AT ITS SOLE AND ABSOLUTE RESPONSIBILITY, ENSURE
THAT THE MANUFACTURER WILL FULFILL ITS CONTRACTUAL UNDERTAKINGS IN
RESPECT OF THE QUALITY CONTROL STANDARDS TO BE EXERCISED BY IT IN
CONNECTION WITH THE PRODUCT.
MEPRO WILL BE ENTITLED, IN ACCORDANCE WITH THE MANUFACTURING AGREEMENT,
TO RECEIVE FOR ITS Q.C. INSPECTION, SAMPLES OF THE MANUFACTURED
PRODUCTS AS PROVIDED FOR BY THE STANDARD Q.C. REGULATIONS.
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HOWEVER, ALL THE DISTRIBUTOR'S CLAIMS IN THIS RESPECT WILL BE DIRECTLY
LODGED WITH THE MANUFACTURER AND MEPRO SHALL, UNDER NO CIRCUMSTANCES,
BE LIABLE FOR ANY SUCH CLAIMS.
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FOR: MEPRO FOR: RADIO SYSTEMS
BY: XXXX XXXXX BY: XXXXX XXXX
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