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EXHIBIT 10.9
DISTRIBUTION AGREEMENT
This Distribution Agreement, dated as of February 24, 1998 (this
"Agreement"), is entered into by and between Collegiate Pacific Inc., a
Pennsylvania corporation ("CPI" or "Distributor"), and Equipmart, Inc., a Texas
corporation ("Seller").
BACKGROUND
Seller is in the business of manufacturing rollers (and component parts
and related accessories) designed for the tennis industry, which are used in
the removal of water from tennis courts.
Seller desires Distributor to be the exclusive and perpetual distributor
of all rollers manufactured by Seller on the terms and subject to the
conditions set forth in this Agreement, and Distributor desires to distribute
the rollers 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 "Custom Roller" shall mean that certain 48-inch
roller and complete 48-inch unit designed and manufactured by Seller for the
removal of water from tennis courts.
Section 1.4 The term "Roller" shall mean all rollers, along with all
component parts and related accessories, designed and manufactured by Seller
for the removal of water from tennis courts, including the Custom Roller.
Section 1.5 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 and perpetual marketer, seller,
distributor, and sales representative for all sales in the Territory of
Seller's Rollers.
Section 2.2 Consideration. In consideration for being appointed the
exclusive distributor of Seller's Rollers, Distributor agrees to deliver to
Seller on the date hereof (a) the aggregate amount of $25,000 in immediately
available funds and (b) certificates representing 100,000 shares (the "Shares")
of CPI common stock, $.01 par value per share.
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ARTICLE III
TERM
Section 3.1 Term. The term of this Agreement will commence on the
date hereof and continue until terminated by Distributor on thirty (30) days
advance written notice to Seller.
ARTICLE IV
OPERATING PROCEDURES
Section 4.1 Additional Consideration with Respect to Custom Rollers.
For a period beginning on the date of this Agreement and ending on the third
anniversary of this Agreement, Distributor, in addition to any other
consideration to be delivered under this Agreement, agrees to pay and deliver
to Seller for each Custom Roller actually sold by Distributor an amount equal
to 5% of the net revenue from sales (the "Custom Roller Royalty") actually
collected by Distributor with respect to such Custom Rollers.
Section 4.2 Cost of Rollers. At any time during the term of this
Agreement, Seller may submit to Distributor a written statement outlining the
manufacturing cost increases or decreases, if any, in producing Rollers and the
corresponding per unit sales price increase or decrease, if any, for each
Roller. 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 Rollers that are developed and manufactured by Seller.
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 Rollers. During the
term of this Agreement, Seller agrees to use all commercially reasonable
efforts to maintain its exclusive rights to manufacture Rollers as currently
manufactured, 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 Rollers. At any time during
the term of this Agreement, if Seller fails to deliver any Roller 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.
ARTICLE V
ACQUISITION OPTION
Section 5.1 Acquisition Option. Seller hereby grants to Distributor
the option (the "Option") to purchase all of Seller's manufacturing assets,
intellectual property (including, without limitation, all trade names,
trademarks, patents, know-how, and other forms of intellectual property), and
all other items related to the design and manufacture of Rollers (collectively,
the "Assets") for a cash purchase price equal to the greater of (a) $5,000 or
(b) the actual cost of such Assets minus $25,000. The Option shall commence on
the date of this Agreement and continue throughout the term of this Agreement.
Section 5.2 Exercise of Option; Closing. Distributor may exercise
this Option at any time during the term of this Agreement by delivering to
Seller a written notice (the "Exercise Notice") of Distributor's intent to
exercise the Option. Upon receipt of the Exercise Notice, Seller shall
promptly deliver to Distributor an itemized statement detailing the actual cost
of the Assets. The closing of the purchase and sale of the Assets shall take
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place at a mutually agreed upon time and place, provided, however, that the
closing of the Option shall take place no later than 30 days from the date of
the Exercise Notice.
ARTICLE VI
PROVISIONS RELATED TO THE SHARES
Section 6.1 Restrictions on Transfer. The Shares issued pursuant to
the terms of this Agreement will be subject to the following restrictions on
transfer: (i) Seller will not sell or offer to sell any of the Shares in the
absence of an effective registration statement for such Shares under the
Securities Act of 1933, as amended (the "Securities Act"), or an opinion of
counsel reasonably acceptable to CPI to the effect that such registration is
not required; and (ii) CPI will not be obligated to recognize any purported
transfer in violation of this Section 6.1(i), and, unless it elects to do
otherwise, CPI may treat any such purported transfer as null, void, and of no
effect.
Section 6.2 Legend on Stock. Each certificate representing the Shares
to be issued pursuant to the terms of this Agreement will bear substantially
the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE REQUIREMENTS OF SUCH LAWS.
Section 6.3 Piggyback Registration Rights in Underwritten Offerings.
(a) In the case of an underwritten offering by CPI of
securities, CPI shall, with respect to the number of Shares that Seller
then desires to sell, enter into an underwriting agreement with the same
underwriters engaged by CPI with respect to securities being offered by
CPI and cause such underwriters to include in any such underwriting all
of the Shares that Seller then desires to sell; provided, however, that
such underwriting agreement is in substantially the same form as the
underwriting agreement that CPI enters into in connection with the
primary offering it is making.
(b) If the managing underwriter with respect to an offering
pursuant to this Section 6.3 requests that the number of Shares of
Seller that are entitled to be registered pursuant to this Section 6.3
be reduced because of marketing factors, then the Shares of Seller that
Seller wishes to register pursuant to this Section 6.3 shall be reduced
by such amount as the managing underwriter may determine.
Section 6.4 Investment Intent. Seller hereby confirms that the Shares
issued and to be issued pursuant to the terms of this Agreement will be
acquired for investment for his own account, not as nominee or agent, and not
with a view to the resale or distribution of any part thereof in a manner which
would violate the registration provisions of the Securities Act or any
applicable state securities laws.
ARTICLE VII
MISCELLANEOUS
Section 7.1 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 7.2 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 7.3 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.
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Section 7.4 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 7.5 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 7.6 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 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 7.7 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 7.8 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 7.9 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 7.10 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
EQUIPMART INC.,
a Texas corporation
By: /s/ XXX XXXXXX
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Name: Xxx Xxxxxx
Title: President
Address: 0000 Xxxx Xxxxx, #00
Xxxxxxx, Xxxxx 00000
