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EXHIBIT 10.11
DISTRIBUTION AGREEMENT
This Distribution Agreement, dated as of March 21, 1998 (this
"Agreement"), is entered into by and between Collegiate Pacific Inc., a
Pennsylvania corporation ("CPI" or "Distributor"), and Pro Gym Equipment, Inc.,
a _______ corporation ("Seller").
BACKGROUND
Seller is in the business of manufacturing and distributing weight
lifting and exercise equipment and other recreational and sporting goods (all
such equipment and sporting goods, along with all component parts and related
accessories, manufactured by Seller are collectively referred to herein as "Pro
Gym Equipment").
CPI is in the business of distributing sporting goods and related
equipment. From time to time, CPI will request that Seller modify some of its
Pro Gym Equipment for distribution to CPI's customers (all such Pro Gym
Equipment that is modified by Seller at the request of CPI and manufactured by
Seller is collectively referred to herein as the "Modified Pro Gym Equipment").
Seller desires Distributor to be the exclusive distributor of all
Modified Pro Gym Equipment and New Pro Gym Equipment manufactured by Seller on
the terms and subject to the conditions set forth in this Agreement, and
Distributor desires to distribute the Modified Pro Gym Equipment and New Pro
Gym Equipment manufactured by Seller on the terms and subject to the conditions
set forth in this Agreement.
Therefore, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth in this
Agreement and other good and valuable consideration, the receipt and
sufficiency of which all parties mutually acknowledge, Seller and Distributor
hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 The term "Affiliate" shall mean, with respect to each of
the parties, any other person or party which at the relevant time, directly or
indirectly, controls, is controlled by, or is under common control with such
party. The term "Control" as used with respect to any person or party means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or party, whether
through the ownership of voting securities, by contract, or otherwise.
Section 1.2 The term "Agreement" shall mean this Distribution
Agreement.
Section 1.3 The term "Modified Pro Gym Equipment" shall mean all Pro
Gym Equipment that is manufactured by Seller with those certain modifications
as requested by CPI.
Section 1.4 The term "New Pro Gym Equipment" shall mean all Pro Gym
Equipment products that are designed and developed after the date of this
Agreement and manufactured by Seller.
Section 1.5 The term "Non-Exclusive House Accounts" shall mean those
certain geographic areas set forth on Exhibit A to this Agreement.
Section 1.6 The term "Pro Gym Equipment" shall mean all weight lifting
and exercise equipment and other recreational and sporting goods, along with
all component parts and related accessories, manufactured by Seller.
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Section 1.7 The term "Territory" shall mean the world.
ARTICLE II
APPOINTMENT OF DISTRIBUTOR
Section 2.1 Appointment of CPI as Exclusive Distributor. Seller
hereby appoints CPI as the exclusive marketer, seller, distributor, and sales
representative for all sales in the Territory (except for sales in the Non-
Exclusive House Accounts) of Seller's Modified Pro Gym Equipment and New Pro
Gym Equipment.
Section 2.2 Consideration. In consideration for being appointed the
exclusive distributor of Seller's Modified Pro Gym Equipment and New Pro Gym
Equipment, Distributor agrees to market and sell such Modified Pro Gym
Equipment and New Pro Gym Equipment in accordance with its ordinary course and
past business practices.
ARTICLE III
TERM
Section 3.1 Term. The term of this Agreement will commence on the
date hereof and continue for a period to end on the fifth (5th) anniversary of
the date of this Agreement. This Agreement may be renewed prior to its
termination upon the mutual written consent of Seller and Distributor.
ARTICLE IV
OPERATING PROCEDURES
Section 4.1 Purchase Commitments. Distributor will order from Seller,
and Seller agrees to manufacture for Distributor, an amount of Modified Pro Gym
Equipment and New Pro Gym Equipment as required by Distributor in its sole
discretion.
Section 4.2 Cost of Equipment. During the first year of this
Agreement, the per unit cost of all Modified Pro Gym Equipment to be charged to
Distributor will be an amount not to exceed the per unit prices set forth on
Exhibit B. On or prior to the forty-fifth (45th) day prior to each anniversary
of this Agreement, Seller will submit to Distributor a written statement
outlining the manufacturing cost increases or decreases, if any, in producing
Pro Gym Equipment and Modified Pro Gym Equipment and the corresponding per unit
sales price increase or decrease, if any, for each piece of Pro Gym Equipment
and Modified Pro Gym Equipment, respectively, which price will govern this
Agreement for the ensuing twelve (12) month period. Notwithstanding anything
in the foregoing to the contrary, each party agrees to use good faith efforts
to resolve any disputes regarding any price increases or decreases in existing
products or in the establishment of prices for New Pro Gym Equipment and
Modified Pro Gym Equipment developed and manufactured by Seller. After the per
unit price of New Pro Gym Equipment is established by Seller and Distributor,
the price of such New Pro Gym Equipment shall remain the same until modified in
accordance with this Section 4.2.
Section 4.3 Purchase Orders; Invoices. Purchase orders and invoices
will be submitted and paid in a timely manner that is consistent with each
party's ordinary course of business and past business practice.
Section 4.4 Seller as Exclusive Manufacturer of Pro Gym Equipment.
During the term of this Agreement, Seller agrees to use all commercially
reasonable efforts to maintain its exclusive rights to manufacture all Pro Gym
Equipment products, and will not sell or otherwise license such right to any
third party without the prior written consent of Distributor.
Section 4.5 Failure of Seller to Deliver Equipment. At any time
during the term of this Agreement, if Seller fails to deliver any Pro Gym
Equipment, Modified Pro Gym Equipment or New Pro Gym Equipment ordered by CPI
for any reason whatsoever, including, without limitation, the bankruptcy or
insolvency of Seller, force majeure, fire, breakdown of machinery, delay in
supply and/or transit of materials, labor disturbance, or any other reason,
then, in such event, CPI shall have the right to acquire replacement products
from any third party as CPI may require to meet its needs.
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Section 4.6 Covenant of Seller. Promptly upon execution of this
Agreement, Seller agrees to submit a "GSA" letter to all appropriate
governmental agencies or offices which identifies CPI as an approved government
supplier of products manufactured by Seller.
ARTICLE V
OPTION TO APPOINT CPI AS EXCLUSIVE DISTRIBUTOR FOR PRO GYM EQUIPMENT
Section 5.1 Mutual Option to Appoint CPI as Exclusive Distributor for
Pro Gym Equipment. At any time during the term of this Agreement, Seller and
CPI may mutually agree (the "Agreed Option") to make CPI the exclusive and
perpetual distributor of all Pro Gym Equipment. The Agreed Option shall
commence on the date of this Agreement and continue throughout the term of this
Agreement.
Section 5.2 Exercise of Agreed Option. If Seller and CPI both elect
to exercise the Agreed Option, then Seller and CPI shall promptly enter into a
new Distribution Agreement for the exclusive and perpetual distribution of all
Pro Gym Equipment by CPI, which agreement will contain similar terms and
provisions as this Agreement.
Section 5.3 Consideration. Seller and CPI hereby agree that the
consideration to be paid to Seller in the event that the Agreed Option is
exercised and a new distribution agreement for all Pro Gym Equipment is
executed by Seller and CPI shall be $100,000, which will be payable either (a)
in cash or (b) by a number of shares of CPI common stock with a fair market
value equal to $100,000. The form of consideration for the new distribution
agreement for Pro Gym Equipment shall be determined by CPI in its sole
discretion. If CPI determines to issue Seller stock, Seller agrees to provide
CPI with such representations and other information as may be required to
ensure that such stock issuance is exempt from registration under federal or
any applicable state securities laws.
ARTICLE VI
MISCELLANEOUS
Section 6.1 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any person other than the parties and their
respective successors and permitted assigns.
Section 6.2 Entire Agreement. This Agreement constitutes the entire
agreement among the parties related to the subject matter hereof and supersedes
any prior understandings, agreements, or representations by or among the
parties, written or oral, that may have related in any way to the subject
matter hereof.
Section 6.3 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns.
Section 6.4 Assignment. No party may assign or otherwise transfer any
of its rights or obligations under this Agreement, by operation of law or
otherwise, without the prior written consent of the other parties, which
consent shall not be unreasonably withheld. Any purported or attempted
assignment contrary to the terms hereof shall be null and void and of no force
or effect. Notwithstanding the foregoing, Distributor may assign this
Agreement to an Affiliate without Seller's prior written consent.
Section 6.5 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
Section 6.6 Notices. All notices, demands, requests, and other
communications to be given or made under this Agreement shall be in writing and
shall be (a) personally delivered with signed receipt obtained acknowledging
delivery; (b) transmitted by postage prepaid registered mail, return receipt
requested (air mail if
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international); (c) transmitted by telex or facsimile, subject to confirmation
of receipt by the addressee; or (d) sent by overnight express mail, to the
parties at the addresses set forth on the signature page. Any notice, demand,
request, or other communication shall be effective only if and when it is
received by the addressee.
SECTION 6.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, UNITED
STATES OF AMERICA, WITHOUT GIVING EFFECT TO ANY CONFLICTS-OF-LAW RULES OR
PRINCIPLE THAT MIGHT REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
Section 6.8 Amendments and Wavier. This Agreement may be amended,
modified, superseded, or canceled and any of its terms, covenants,
representations, warranties, undertakings, or conditions may be waived only by
an instrument in writing signed by (or by some person duly authorized by) all
of the parties hereto or, in the case of a waiver, by the party waiving
compliance.
Section 6.9 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
SECTION 6.10 ARBITRATION. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT,
THE PARTIES AGREE THAT ANY CLAIMS, INCLUDING ANY STATUTORY CLAIMS, ARISING OUT
OF OR RELATING TO THIS AGREEMENT WILL BE SUBJECT TO BINDING ARBITRATION
CONDUCTED BY AND IN ACCORDANCE WITH THE RULES OF AN INDEPENDENT,
NATIONALLY-RECOGNIZED DISPUTE RESOLUTION ORGANIZATION SELECTED BY CPI. THE
ARBITRATION PROCEEDING WILL BE CONDUCTED IN DALLAS, TEXAS. NO PARTY WILL BE
LIABLE TO THE OTHER FOR PUNITIVE DAMAGES FOR ANY SUCH CLAIMS AND EACH HEREBY
WAIVES ANY CLAIMS FOR SUCH DAMAGES.
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IN WITNESS WHEREOF, the parties have hereunto have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
COLLEGIATE PACIFIC INC.,
a Pennsylvania corporation
By: /s/ XXXXXXX X. XXXXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
Address: 13950 Senlac, Xxxxx 000
Xxxxxxx Xxxxxx, Xxxxx 00000
PRO GYM EQUIPMENT INC.,
a _________ corporation
By: /s/ XXXX XXXX
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Name: Xxxx Xxxx
Title: President
Address:
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( ) (fax)
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