SALES REPRESENTATIVE AGREEMENT
This SALES REPRESENTATIVE AGREEMENT (this "Agreement") is made
and entered into this 9th day of December, 1998, effective January 1,
1999, between XXXXX-XXXXXXX ELECTRONICS CORPORATION, an Illinois
corporation (the "Company"), XXXXX INDUSTRIES, INC., an Illinois
corporation (the "Representative"), XXXXX X. XXXXXXX, XX. ("Xxxxxxx"),
and XXXX X. XXXXXX ("Xxxxxx").
WHEREAS, the Company designs, manufactures and markets electronics
video products consisting primarily of video monitors;
WHEREAS, the Company, the Representative and Xxxxxxx entered into a
Sales Representative Agreement dated January 1, 1996, as amended August
15, 1997, whereby the Company appointed the Representative as its sales
representative for certain products of the Company and the
Representative accepted such position as sales representative of such
products (collectively, the "Former Sales Representative Agreement");
WHEREAS, the Representative, Xxxxxxx and Xxxxxx have executed a
Promissory Note in favor of the Company of even date herewith (the
"Note"); and
WHEREAS, the Company, the Representative, Xxxxxxx and Xxxxxx desire
to cancel the Former Sales Representative Agreement and enter into this
Agreement, all in accordance with the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements contained herein and other valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Definitions.
"Annual Sales Goal" shall be the original equipment manufacturer
("OEM") sales goal for each fiscal year agreed upon between the Company
and the Representative and provided for in the annual budget approved by
the Board of Directors of the Company.
"Markets" shall mean the following markets and uses in which and
for which the Products may be sold: amusement, leisure/fitness, gaming,
automotive, and shall include only OEM customers.
"Net Sales" shall mean the aggregate amount of the Company's net
sales of Products in the Markets. For purposes of determining
commissions, Net Sales shall be calculated at the end of each month by
annualizing year-to-date Net Sales.
"New Accounts" shall mean companies agreed upon by the
Representative and the Company to which the Company has sold less than
$10,000 of Products in the twenty-four months prior to the date of this
Agreement.
"Products" shall mean all new and refurbished video monitors,
mechanical coin mechanisms and coin doors, liquid crystal displays and
plasma unit products currently produced or assembled and/or sold by the
Company and all future versions of such items. The Products shall not
include any newly developed, acquired or licensed products without the
prior written consent of the Company, which may be withheld in its sole
discretion.
2. Appointments. The Company hereby appoints the
Representative, and the Representative hereby accepts appointment by the
Company, as sales representative for the Products in the Markets, under
the terms and conditions contained herein. The Representative hereby
agrees to engage actively and diligently in the promotion and sale of
the Products, to use its best efforts to fully develop the Markets for
the Products, and to render prompt and complete sales and servicing to
its customers at its sole cost and expense.
3. Exclusivity. The Representative shall be the Company's
exclusive sales representative for the Products in the Markets in the
United States of America, Canada and Mexico (the "Territory") and shall
be the Company's sales representative for the Products in the Markets on
a non-exclusive basis in all other geographic areas other than the
Territory.
4. Sales Invoicing. The Company shall prepare all invoicing on
sales of Products to customers, except as mutually agreed upon in
writing. The Company shall furnish the Representative with a summary of
the following invoices on a monthly basis: (i) invoices of Products sold
in the Territory for use in the Markets; and (ii) invoices of other
products, if any, sold by the Company and for which the Representative
is entitled to a commission pursuant to this Agreement.
5. Commissions.
(a) Monthly Commission. On the 45th day after the end of each
month, the Company shall pay to the Representative a commission (the
"Monthly Commission") consisting of:
(i) a commission of 4.15% of Net Sales of Products in the
Markets to the international accounts listed on Exhibit A attached
hereto for such month; plus
(ii) a commission of 4.15% of Net Sales of Products in the
Markets for finished goods and refurbished monitors to the service
accounts listed on Exhibit B attached hereto for such month; plus
(iii) a commission of 1.00% of Net Sales of Products in the
Markets for finished goods and refurbished monitors to Mazzco and Happ
Controls for such month; plus
(iv) a commission of 2.28% of Net Sales of all t-models,
excluding consigned panels and controllers for such month; plus
(v) a commission of 4.15% of Net Sales of Products in the
Markets for such month for which commissions have not been paid
pursuant to Sections 5(a)(i)-(iv) above.
(b) New Customer Commission. In addition to the commissions
payable pursuant to Sections 5(a) and 5(c), the Company shall pay to the
Representative a commission of 0.5% of Net Sales of Products to New
Accounts during the first twelve months of sales to such New Accounts.
(c) Sales Goal Commissions. In addition to the commissions payable
pursuant to Sections 5(a) and 5(b), the Company shall pay to the
Representative a commission of 0.5% of the Company's Net Sales of
Products in excess of the Annual Sales Goal.
(d) Excluded Transactions. Notwithstanding Section 5(a) above, the
Company shall pay no commission on the following transactions:
(i) service sales, including parts, labor, finished goods and
refurbished monitors to any operators and distributors except as
explicitly provided for in Section 5(a)(ii) and (iii) above;
(ii) sales to OEM accounts listed on Exhibit C, attached
hereto; and
(iii) sales to Representative and its affiliates; provided
that the Company gives such companies the best available export pricing
and terms.
(d) All commissions to be paid to the Representative hereunder
shall be based upon the Company's invoice price to customers for its
Products, excluding amounts invoiced for taxes, freight, C.O.D.
charges or insurance.
(e) Notwithstanding anything herein to the contrary, the
Representative shall not be entitled to any commission on Products sold
for use in markets other than the Markets, on orders canceled or refused
for any reason whatsoever by the Company or by any customer, or on
Products returned for credit upon the Company's authorization. In the
event that the Company accepts Products for return or is not paid by a
customer within ninety (90) days of invoicing, the Company may charge
back against the Representative commission which have been paid or which
are due to the Representative as a result of the underlying sale of such
Products; provided, however, that once the Company has been paid in full
by such customers, the Representative shall be entitled to receive
commissions thereon at the rate set forth herein. The Representative
assumes responsibility for the accuracy of all matters on all orders
taken by the Representative.
(f) In the event that the Representative fails to notify the
Company of any disagreement within ninety (90) days after receiving a
statement of commissions due in accordance with the Section 5, such
statements shall be conclusively deemed to be correct and binding upon
the Representative.
(g) The parties agree not to amend the provisions of this Section
5 during the term of this Agreement, except as provided in Section
14(e).
(h) The Company shall have the right of set-off against amounts
due to it under the Note and any amendment thereto or other extension of
credit to Representative or any Representative Affiliate (as
hereinafter defined).
6. Sales Terms. All orders submitted by the Representative to the
Company shall be on the Company's regular terms and conditions then in
effect and shall be made expressly subject to the approval of the
Company at the home office of the Company at 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000. The Company reserves the right to reject, for
any reason whatsoever, any order submitted by the Representative to the
Company under this Agreement, all without any liability whatsoever to
the Company. The Company also reserves the right, for any reason
whatsoever, to change its quoted priced of Products form time to time
and to discontinue or modify at any time or times the production,
assembly, design and/or sales of Products.
7. Sample and Product Information. The Company shall furnish the
Representative with such samples, sales bulletins, product brochures,
instruction manuals, and technical guidance as may from time to time be
available; provided, however, that this Section 7 shall not obligate the
Company to furnish any other such material or any financial assistance
to the Representative.
8. Adjustments, Compromises and Collections. The Representative
has no authority, without prior written agreement by the Company, to
represent the Company in making any adjustments or compromises
and the Representative has no authority to make any connections for or
on behalf or the Company.
9. Intellectual Property Rights and Use. Ownership and all right,
title and interest in and to any trademarks, trade names, service marks
or copyrights, whether or not registered, relating to any Product are
and shall remain vested solely in the Company. The Representative may
not utilize any of the Company's trademarks, trade names, service marks
or copyrights, whether or not registered, without the Company's prior
written consent and shall immediately modify or discontinue such if,
when and as requested by the Company.
10. Product Warranty. It is understood and agreed that the
Company's product warranty with respect to the Products shall be limited
to the provisions set forth in the standard warranty of the Company in
effect at the time of delivery thereof. The Representative shall have
no authority to alter or enlarge upon such warranties.
11. Independent Contractor. It is expressly understood and agreed
by the parties:
(a) that the Representative is an independent contractor and shall
not in any way obligate or create liability on the party of the Company;
and
(b) that the Representative at no time shall represent itself as
the "owner of Xxxxx-Xxxxxxx";
(c) and that no contracts, commitments, statements or
representations made by or only behalf of the Representative shall be
binding in any binding in any respect on the Company. The Company shall
not be liable at any time for any payments to the Representative or on
behalf of the Representative not specifically set forth in this
Agreement.
12. Facilities Provided. The Company agrees to provide to the
Representative office space, at its sole option, within the Company's
premises at no cost to the Representative, and any costs incurred by the
Company of the Representative in connection with the Representative's
use of such facilities shall be borne by the Representative.
13. Representative Debt. If the Company receives written notice
from any customer of the Company that the Representative or any
Representative Affiliate is indebted to such customer for goods
purchased from such customer and the amount (the "Representative Debt")
is more that sixty (60) days past due and the Representative or
Representative Affiliate is not disputing such Representative Debt in
good faith and provides written notice of such dispute to the Company
(explaining in detail the dispute and reasons for its position), then:
(a) the Company may notify the Representative of such written
notice from such customer; and
(b) if the Representative does not pay, or otherwise negotiate an
acceptable payment plan for, the Representative Debt within thirty (30)
days after receiving the notice from the Company set forth in (a) above,
the Company shall have the right, in its sole discretion, to either (i)
apply to the Representative Debt any and all commissions then or
thereafter due to the Representative hereunder or (ii) terminate this
Agreement. For purposes of this Section 13, "Representative Affiliate"
shall mean any entity, at least 33 1/3% of the voting power or the
equity of which is beneficially owner, directly or indirectly by the
Representative, Xxxxxxx or Xxxxxx.
14. Term and Termination.
(a) Unless otherwise terminated in accordance with its terms, the
term of this Agreement shall be from the date hereof, to December 31,
2003; provided, however, that this Agreement shall be automatically
renewed for successive periods of one year, provided further that
neither party shall have given the other party twelve months prior
advance written notice of its intent to not renew this Agreement for a
successive one year term. Notwithstanding the above, this Agreement may
be terminated by the Representative or the Company with approval of the
Company's Board of Directors upon twelve (12) months prior written
notice to the other party (such termination, the expiration of this
Agreement in accordance with its terms or a termination pursuant to
Section 14(e) are collectively referred to herein as a "Board
Termination").
(b) As long as any amounts remain outstanding under the Note, in
the event of a material breach or default of any of the terms or
conditions of either this Agreement, the Note or the Guaranty dated of
even date herewith by and between the Company, Xxxxxxx and Xxxxxx (the
"Guaranty") by the Representative, the Company may immediately withhold
any and all commissions due and owing to the Representative under this
Agreement. If such breach or default continues uncured for fifteen (15)
days, the Company may (i) terminate this Agreement and/or (ii) apply any
withheld commissions to the amounts outstanding under the Note. Neither
the exercise nor the failure to exercise the right subsection (ii) shall
constitute an election of remedies or limit the Company in any manner in
the enforcement of other remedies that might be available to it.
(c) Subject to Section 14(b), in the event of a material breach or
default of any of the terms or conditions of this Agreement by one
party, the other party may terminate this Agreement; provided, however,
that if the breach or default is capable of being cured, the
nonbreaching party must provide the breaching party with written notice
thereof and if cured within sixty (60) days of such notice, such breach
or default may not be grounds for termination hereunder.
(d) This Agreement shall terminate upon an assignment for the
benefit of creditors by the Representative or by or against the
Representative, Xxxxxxx, Xxxxxx or any Representative Affiliate, or the
institution of proceedings by or against the Representative, Xxxxxxx,
Xxxxxx or any Representative Affiliate in bankruptcy or under any
insolvency laws or for reorganization, receivership or liquidation,
provided such proceeding is not dismissed within sixty (60) days of the
institution thereof.
(e) In the event of the death, legal incapacity or permanent
disability of Xxxxxxx or the termination of his full-time employment by
the Representative, then, in any such event, the Company and the
Representative shall negotiate the terms on which this Agreement shall
continue, and if the parties fail to reach an agreement after a period
of twelve (12) months, this Agreement shall forthwith terminate.
(f) The parties agree that in the event of the termination of this
Agreement for any reason other than pursuant to a Board Termination, the
Company will not employ any person employed by the Representative,
Xxxxxxx or Xxxxxx at any time during the twelve (12) months preceding
the date of such termination for a period of one (1) year following such
termination except as mutually agreed upon by the parties.
(g) In addition to its other rights hereunder or otherwise, the
Company shall, on or before the effective termination date of this
Agreement, have the right to inspect and make copies of all or any
portion of the books and records of the Representative which pertain to
the Company's business and to the fulfillment of the
Representative's obligations under this Agreement.
(h) Subject to Section 14(b), the Representative shall be entitled
to receive commissions hereunder on Net Sales made after termination of
this Agreement if any to the extent orders therefor were received by the
Company prior to the effective date of termination of this Agreement,
subject to all other conditions of payment hereof.
15. Remedies. It is agreed that each party shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and
to specifically enforce the terms and provisions thereof in any action
instituted in any court of the United States or any stated thereof
having subject matter jurisdiction, in addition to and not in lieu of,
any other remedy to which such party may be entitled, at law or in
equity.
16. Confidential Information.
(a) The Representative acknowledges that, in the course of
promoting and selling the Products and performing its duties under this
Agreement, it may obtain information relating to the Company and its
products which the Representative knows or has reason to know is of a
confidential and/or proprietary nature ("Confidential Information").
Such Confidential Information may include, but is not limited to, price
guidelines, future products releases, trade secrets, know-how,
inventions, methods of manufacture, techniques, processes, programs,
data, pricing and discount lists and schedules, customer lists,
financial information and sales and marketing plans. The Representative
shall at all times, both during the terms of this Agreement and at all
times thereafter, keep and hold such Confidential Information in the
strictest confidence, and shall not use or disclose such Confidential
Information for any purpose, other than as may be reasonably necessary
for the performance of its duties as a representative pursuant to and
during the term of this Agreement. The Representative shall not use or
disclose any Confidential Information to any person or entity, other
than the Representative's employees with a need to know such
Confidential Information. The Representative warrants that the
Representative's principals, employees, agents and representatives,
included, but not limited to, Xxxxxxx and Xxxxxx shall be advised of the
provisions of this Agreement relating to Confidential Information as set
forth in this Section 16 and shall abide by the terms of this Section 16
to the same extent as the Representative is required to do so.
(b) Promptly upon the termination of this Agreement, the
Representative shall on its own initiative turn over to the Company all
Confidential Information and all other information and material,
including, without limitation, all and any Product samples, pamphlets,
catalogs, booklets and other advertising data and literature concerning
the Company and/or the Products, and all copies thereof, in the
possession, custody or control of the Representative.
17. Noncompetition.
(a) The Representative, Xxxxxxx and Xxxxxx agree that during the
term hereof and, if, but only if, this Agreement is terminated other
than pursuant to a Board Termination, then for a period of one (1) year
after such termination, they will not, directly or indirectly, be in any
manner engaged in, connected with (as a shareholder, employee,
independent contractor or otherwise) or employed by (or act as an
independent contractor or other representative for) any person, firm or
corporation which is engaged in a business which, anywhere inside or
outside the Territory, (i) is competitive with the Company or a
successor affiliate thereof of (ii) promotes, sells, markets, licenses,
distributes, or advertises products whether existing or under
development, which are similar to or competitive with the Products
anywhere; provided, however, that this subsection shall not be deemed to
limit the Representative's, Robert's and Xxxxxx'x right to own less than
10% of the common stock of a publicly held corporation whose shares are
traded on a recognized stock exchange or over-the-counter), and
provided, further, that the Representative, Xxxxxxx and Xxxxxx may so
compete in Xxxxxxx County, Illinois.
(b) In the event of a breach, violation or attempted breach or
violation of any of the provisions of this Section 17, the Company shall
be entitled to an injunction or restraining order immediately upon the
commencement of any suit therefor by the Company and without notice.
Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedy available to it for any such breach of
violation for the recovery of damages, including punitive damages by
reason thereof.
(c) The necessity of protection against the competition of the
Representative and the Representative's principal and the nature and
scope of such protection has been carefully considered by the parties
hereto. The parties hereby agree and acknowledge that the duration,
scope and geographic area applicable to the restrictions set forth in
this Section 17 are fair, reasonable and necessary. The consideration
provided for herein is sufficient and adequate to compensate for
agreeing to the restrictions contained in this Section 17. If, however,
any court determines that the foregoing restrictions are not reasonable,
such restrictions shall be modified, rewritten or interpreted to include
as much of their nature and scope as will render them enforceable.
18. Limitation of Remedy. The Representative shall have no claim
against the Company for compensation or otherwise with regard to this
Agreement or the representation created hereby, whether in contract, in
tort, under any warranty or otherwise, either during the term of this
Agreement or after its termination, for any termination in accordance
with this Agreement. The Company shall not, by any reason of this
termination of this Agreement, for sale or use of Products, for
negligence, or otherwise, be liable to the Representative for any
special, incidental of consequential damages or similar relief,
including but not limited to, property damage, personal injury,
compensation or damages for loss of present or prospect profits or
revenues, loss of goodwill or expenditures, investments or commitments
made in entering to this Agreement or in connection with the performance
of obligations hereunder.
19. Waiver. No change in, addition to, or waiver of any of the
provisions of this Agreement shall be binding upon any party hereto
unless in writing signed by each party except as otherwise provided
herein. No failure of a party to exercise any right given to it
hereunder, or to insist upon strict compliance with any obligation
hereunder, an not custom or practice of the parties at variance with the
terms hereof shall constitute a waiver of the party's rights to
demand exact compliance with the terms hereof. Waiver by a party of any
particular default shall not affect or impair its rights in respect to
any subsequent default of the same or of a different nature, nor shall
any delay or omission of a party to exercise any rights arising form
such default affect or impair the party's rights as to such default or
any subsequent default.
20. Notices. All notices required or permitted by the terms of
this Agreement shall be in writing and shall be sent by certified or
registered mail, postage prepaid, addressed as follows:
If to the Company:
Xxxxx-Xxxxxxx Electronics Corporation
Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
If to the Representative, Xxxxxxx or Xxxxxx:
Xxxxx Industries, Inc.
Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
or such other address as any party may designate in a notice to the
others.
21. Assignments. This Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns. This
Agreement shall not be assignable by the Representative without the
prior written consent of the Company. Upon any assignment by the
Representative that is not consented to in writing by the Company, the
Company may terminate this Agreement solely at its option.
22. Survival. Notwithstanding any termination of this Agreement,
any duty or obligation which has been incurred by the terms hereof or
which has not been fully observed, performed or discharged, shall
survive termination until such duty or obligation has been fully
observed, performed or discharged. The rights or remedies hereunder are
cumulative to any other rights or remedies which may be grant by law.
23. Severability. If any covenant or other provisions of this
Agreement is invalid, illegal, or incapable of being enforced, by reason
of any rule of law, administrative order, provisions of this Agreement
shall, nevertheless, remain in full force and effect, and no covenant or
provision shall be deemed dependent upon any other covenant or provision
unless so expressed herein.
24. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
25. No Third Party Beneficiaries. No persons other than the
Company and the Representative shall have any rights, to commissions or
otherwise, by virtue of or under this Agreement, and the Representative
shall not acquire, by virtue of this Agreement, any rights to
commissions or otherwise under any other agreement that the Company may
execute with any other sales representative.
26. Integration/Modification/Entire Agreement. This Agreement,
the Guaranty and Note constitutes the entire agreement and final
understanding of the parties with respect to the subject matter hereof
and supersedes and terminates any and all prior distributorship
agreements, prior and/or contemporaneous communications and/or
agreements between the parties, whether written or verbal, express or
implied, direct or indirect, relating in any way to the subject matter
hereof including, but not limited to the Former Sales
Representative Agreement. This Agreement is intended by the parties to
be a complete and wholly integrated expression of their understanding
and agreement, and it may not be altered, amended, revised, modified or
otherwise changed in any way except by a written instrument, which
specifically identifies the intended alteration, amendment, revision,
modification or other change and clearly expresses the intention to so
change this Agreement, signed by Xxxxxxx or Xxxxxx on behalf of the
Representative, Xxxxxxx, Xxxxxx and by an officer of the Company.
27. Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
28. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but both of
which constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date of first written above.
XXXXX-XXXXXXX
ELECTRONICS CORPORATION XXXXX INDUSTRIES, INC.
By: /S/ XXXXXXX XXXXX By: /S/ XXXXX X. XXXXXXX XX.
Title: CEO Title: CEO
/S/ XXXXX X. XXXXXXX XX.
XXXXX X. XXXXXXX, XX.
/S/ XXXX X. XXXXXX
XXXX X. XXXXXX
EXHIBIT A
INTERNATIONAL ACCOUNTS
1. Lomonoco
2. Arigato
3. Deith Leisure
4. Trident Gaming
5. Namco Ireland
6. Diveberas
EXHIBIT B
SERVICE ACCOUNTS
1. RBA
2. Laniel
3. Xxxxxxxxx
4. Hanaho
5. Fun Company
6. Miscellaneous OEMs
EXHIBIT C
OEM HOUSE ACCOUNTS
1. Xxxxxx
2. Telesensory*
3. Optelec
4. Polaroid
5. Mendes
* will be reviewed by Xxxxx-Xxxxxxx management on June 30, 1999. If
Xxxxx-Xxxxxxx management is satisfied with Xxxxx Industries performance,
commission will be restated at 2.075%.
