EXHIBIT 10.2
DISTRIBUTION AGREEMENT
BETWEEN
SIGN MEDIA SYSTEMS, INC.
AND
APPLIED ADVERTISING NETWORK, LLC
SIGN MEDIA SYSTEMS, INC.
DISTRIBUTOR AGREEMENT
THIS DISTRIBUTOR AGREEMENT ("Agreement") is made and entered into on
this 30th day of December 2003 (the "Effective Date"), between SIGN MEDIA
SYSTEMS, INC. of 0000 00xx Xxxxxx, Xxxxxxxx, XX 000000 ("SMS"), and ADvanced
ADvertising Network, LLC of 000 Xxxxx Xx Xxxx Xxxxxxx, Xxx. 000, Xxxx Xxxx, XX
00000 ("Distributor").
The parties agree as follows:
1. SCOPE OF AGREEMENT; DEFINITIONS
1.1. SCOPE OF AGREEMENT. This Agreement provides for the marketing and
distribution by Distributor of the SMS products ("Products" as defined below)
identified on one or more Commercial Terms Schedules ("Commercial Terms")
attached to this Agreement or subsequently executed by both parties referencing
this Agreement. The parties may, but shall be under no obligation to, execute
multiple Commercial Terms Schedules to provide for the distribution by
Distributor of more than one line of SMS products. The Commercial Terms are
subject to change by SMS in the sole and absolute discretion of SMS upon 15 days
written notice of such change.
1.2. DEFINITIONS.
(a) "Agreement" means this agreement.
(b) "Commercial Terms" means the meaning set forth in section
1.1 of this Agreement.
(c) "Dealer" mans a third party that acquires Products from
the Distributor for resale to End Users.
(d) "Demonstration Products" means the commercially available
Products listed in the Commercial Terms which are used internally by Distributor
listed in the applicable Demonstration Products order form(s) for demonstration
and support purposes only and not for resale.
(e) "Documentation" means technical manuals relating to the
end use of the Products.
(f) "Effective Date" means the day and year first above
written.
(g) "End User" means a third party that acquires Products from
a Dealer for the third party's own use.
(h) "Products" means all or any portion of the commercially
available products specified in the Commercial Terms. If more than one
Commercial Terms Schedule is executed by the parties referencing this Agreement,
"Products" shall refer collectively to the products listed in all Commercial
Terms Schedules.
(i) "SMS" means Sign Media Systems, Inc., a Florida
corporation.
(j) "Term" means the period set forth in Section 6.1 of this
Agreement.
(k) "Territory" means the United States of America and Central
America.
2. APPOINTMENT AS DISTRIBUTOR
2.1. APPOINTMENT. During the Term and subject to the terms and
conditions of this Agreement, SMS hereby grants to Distributor, and Distributor
hereby accepts, the non-exclusive right to distribute and sell the Products to
Dealers in the Territory. The Products shall be distributed by Distributor under
SMS's trademarks. SMS reserves the right to establish or appoint any number of
other distributors, resellers, private labelers, dealers or third parties, in
any area for any purpose, directly or indirectly, to sell and lease Products.
Notwithstanding anything herein to the contrary, the Distributor shall only sell
and distribute Products to Dealers approved by SMS as provided herein, and shall
not sell or distribute Products to End Users.
2.2. DEMONSTRATION PRODUCTS. Distributor may acquire Demonstration
Products in accordance with the terms and conditions set forth in the Commercial
Terms. Distributor must complete SMS's then standard Demonstration Products
order form and deliver such order form to SMS for each of the Demonstration
Products acquired by Distributor under this Agreement. Demonstration Products
may not be used by Distributor for production purposes or transferred, sold or
leased to any third party.
2.3. APPOINTMENT OF DEALERS. Subject to the written approval of SMS,
Distributor may appoint Dealers anywhere in the Territory.
2.4 DISTRIBUTION LIMITATIONS.
(a) Except as approved by SMS in writing as hereinabove
provided, Distributor shall not have any right to establish or appoint any
Dealers, sub-dealers, resellers, or sub-distributors of the Products.
(b) Distributor shall not, nor shall it permit any third party
to: (i) sell, lease, copy or manufacture the Products or any portion thereof;
(ii) modify, adapt, enhance, extend, or reverse engineer the Products.
Distributor may provide other products and services in combination with the
Products.
(c) Distributor agrees not to export, re-export or disclose,
directly or indirectly, the Products or related technical information, documents
or materials (or any direct product thereof) without the prior written consent,
if required, of the Office of Export Administration of the US Department of
Commerce. Distributor agrees to comply with any other applicable export laws and
regulations.
2.5. COMPLIANCE WITH LAWS.
(a) Distributor will, at its expense, obtain and maintain the
governmental authorizations, registrations and filings that may be required
under the laws of the Territory to execute or perform this Agreement.
Distributor will consult SMS and obtain SMS's prior written approval before
registering this Agreement with any government authorities. Distributor will
otherwise comply with all laws, regulations and other legal requirements that
apply to this Agreement, including tax and foreign exchange legislation and will
promptly notify SMS of any change in legislation that may affect Distributor's
performance of this Agreement.
(b) Distributor will not use any payment or other benefit
derived from SMS to offer, promise or pay any money, gift or any other thing of
value to any person for the purpose of influencing official actions or decisions
affecting this Agreement, while knowing or having reason to know that any
portion of this money, gift or thing will, directly or indirectly, be given,
offered or promised to an employee, officer or other person acting in an
official capacity for any government or agency or any political party, party
official or candidate for political office.
3. OBLIGATIONS OF THE DISTRIBUTOR
3.1. MARKETING. Distributor shall use its best efforts to actively
promote, market and sell the Products, and shall maintain the formal name of the
Products (with their appropriate trademark, service xxxx, logo, or trade name
designations) in all advertising and other printed materials relating to the
Products. SMS reserves the right to require Distributor to furnish to SMS in
advance for review and approval any and all promotional, advertising and other
materials which refer to the Products or which use or display any trademark,
service xxxx, logo or trade name of SMS. SMS also reserves the right to require
Distributor to discontinue use of any promotional, advertising or other
materials referring to SMS or the Products.
3.2. ORDERS.
(a) Distributor is responsible for shipment, delivery and
installation of the Products and all associated shipment charges, customs
duties, import or export licenses, taxes and other such items. Distributor shall
report all sales and leases of the Products to SMS on a monthly basis within
fifteen (15) days of the end of each calendar month. All such reports shall list
the Dealer name and address, the number of Products sold, and, if then
available, the make, model, tag number and serial number of the vehicle(s) on
which the Product(s) will be attached.
(b) Distributor understands and acknowledges that the issuance
of warranties for the Products distributed under this Agreement shall require
Distributor or its Dealers to submit SMS's then standard registration form for
the Products containing the information required by SMS about how a prospective
End User proposes to use the Product(s), the identity of the End User, the make,
tag number, model and serial number of the vehicle on which the Products will be
used and the other information set forth on SMS's then current registration
form. In addition, SMS shall not be authorized to issue such warranty to any End
User unless the Products delivered have been reported by Distributor to SMS as
provided herein and authorized by SMS for the usage identified by the End User.
Distributor understands and agrees that SMS may delay or withhold issuance of
warranties for the Products in the event Distributor or the End User fails to
provide the necessary information to issue the warranties as provided herein. No
provisions in Distributor's purchase orders, agreements or in any other business
forms employed by Distributor shall add to or supersede the terms and conditions
of this Agreement, which shall exclusively govern the relationship of the
parties.
(c) Upon receipt of orders from Distributor that comply with
all requirements of this Agreement, SMS will, unless Distributor is delinquent
in its payments or in breach of its agreements with SMS, make reasonable efforts
to fill all orders for the Products, and issue associated warranties, to
Distributor or the End Users. SMS shall not be liable to Distributor, or to any
other person, for SMS's failure to fill any orders, or for any delay in delivery
or error in filing any orders for any reason whatsoever. SMS shall have no
obligation to export any Products from the United States. Risk of loss to the
Products shall pass to Distributor F.O.B. SMS's shipping facility.
(d) Unless otherwise agreed, all Products shall be shipped by
SMS at the expense of the Distributor to Distributor at Distributor's address
set forth above or such other address in the Territory as Distributor may notify
SMS as its delivery address FOB SMS's shipping facility. SMS shall have no
obligation to ship directly to Distributor's customers. SMS will select the
appropriate method of shipment for Distributor's account. Distributor shall be
responsible for shipment to its Customers.
3.3. REPRESENTATIONS. Distributor shall not make (i) any representation
or warranty whatsoever on behalf of SMS; (ii) any representation or warranty
concerning the quality, performance or other characteristics of the Products
other than those which are consistent in all respects with, and do not expand
the scope of, the warranties set forth in this Agreement; or (iii) any
commitment to modify any of the Products.
4. PRICES
4.1 PRODUCT PRICES. The price charged by SMS to Distributor for the
Products acquired by Distributor from SMS during the term of this Agreement
shall be the then prevailing suggested list price for the Products ordered by
Distributor under the Commercial Terms less a Thirty-Five percent (35%)
discount. The current prevailing suggest list price for the Products is set
forth on the Commercial Terms and SMS may, from time to time, upon fifteen (15)
days prior notice, in its sole and absolute discretion, make changes in the
prevailing suggest list price for the Products and such changed prevailing
suggest list price shall become the then prevailing suggested list price for the
Products.
4.2 TRAINING AND OTHER FEES. Distributor agrees to pay for training,
education and other services provided by SMS to Distributor.
5. GENERAL TERMS AND CONDITIONS
5.1 TERM OF AGREEMENT. The Initial Term of this Agreement shall
commence on the Effective Date and shall continue for a period of twelve (12)
months from such date, unless sooner terminated as hereinafter provided. After
the Initial Term, this Agreement may be renewed on an annual basis if mutually
agreed by both parties in writing prior to the end of the Term. "Term" shall
mean the Initial Term together with any agreed renewal periods.
5.2 RECORDS AND REPORTS. During the Term and for a period of at least
one year following termination of this Agreement, Distributor shall keep full,
true and accurate records to show: (i) each Dealer's name and address; (ii) each
End User's name and address; (iii) the date of shipment and Products shipped to
each Dealer; (iii) the date of shipment and Products shipped to each End User;
and (iv) a copy of each Dealer and End User order. SMS shall have the right, at
its sole cost and expense, on notice to Distributor, to examine such records or
to have such records examined by SMS's designated agents during normal business
hours.
5.3 PAYMENTS.
(a) Unless otherwise agreed between SMS and the Distributor,
terms of payment on all invoices from SMS shall be net thirty (30) days. All
payments shall be made in US Dollars to SMS's address for payment indicated on
SMS's invoice to Distributor or such other address as advised by SMS on at least
10 days written notice. In addition to such other rights as SMS may have,
Distributor shall pay a monthly late charge equal to the lesser of one and
one-half percent (1.5%) of the outstanding amount or the maximum amount allowed
by law on any invoice rendered by SMS that is not paid when due.
(b) All prices listed in the Commercial Terms are exclusive of
all taxes, including sales, use or value added taxes where applicable. Upon
presentation of invoices by SMS, Distributor shall pay any and all applicable
tariffs, duties or taxes (other than franchise and income taxes for which SMS is
responsible) imposed or levied by any government or agency, including, without
limitation, federal, state and local sales, use, value added and personal
property taxes. Any claimed exemption from such tariffs, duties or taxes must be
supported by a tax exemption certificate and other proper documentary evidence
delivered to SMS.
5.4 PROPRIETARY INFORMATION AND NON-DISCLOSURE.
(a) SMS retains ownership of all intellectual property rights
(including but not limited to patents, copyrights, trademarks, service marks,
logos or trade names) in and relating to the Products. The Products, the
Documentation and all other proprietary information provided by SMS to
Distributor hereunder contain and constitute trade secrets, information and data
proprietary to and copyrighted by SMS. Neither Distributor or its employees
shall cause or allow such information or data to be disclosed to third parties
or duplicated except as expressly permitted in this Agreement. Any
customizations, enhancements, improvements, translations, derivative works or
other modifications of the Products made by Distributor shall belong to SMS and
SMS shall have all right, title and intellectual property interest in and to
such work. SMS shall have no obligation to support any customizations,
extensions or other modifications made to the Products by any third party unless
otherwise agreed to by SMS in writing.
(b) Distributor acknowledges and agrees that the unauthorized
disclosure, use or copying of the Products may cause SMS serious financial loss.
Accordingly, in the event of any unauthorized disclosure, use or copying of the
Products, Distributor agrees that SMS shall have the right to obtain injunctive
or other equitable relief without the posting of any bond in addition to any
other damages.
(c) Distributor may use the trademarks, trade names, service
marks and logos that relate to SMS or the Product (the "Marks") solely in
connection with this Agreement; provided that Distributor clearly identifies
SMS's ownership of such Marks. The Marks remain the exclusive property of SMS
and Distributor will not register the Marks or take any action that jeopardizes
SMS's proprietary rights in the Marks. Distributor agrees to cooperate with
SMS's instructions and quality control procedures relating to the Marks and
shall only use the Marks in unaltered form. SMS reserves the right to require
Distributor to discontinue use of any advertising or marketing materials
relating to SMS, the Marks or the Products.
5.5 LIMITED WARRANTY.
(a) SMS warrants the Products as set forth in the Commercial
Terms. If it is determined that the Products do not perform as warranted, SMS's
only responsibility will be to use reasonable efforts, consistent with industry
standards, to cure the defect. THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES.
TO THE MAXIMUM EXTENT PERMITTED UNDER APPLICABLE LAW, ALL OTHER WARRANTIES,
CONDITIONS AND REPRESENTATIONS, WHETHER EXPRESS OR IMPLIED, VERBAL, STATUTORY OR
OTHERWISE, AND WHETHER ARISING UNDER THIS AGREEMENT OR OTHERWISE ARE HEREBY
EXCLUDED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. SMS SHALL NOT BE BOUND BY
OR LIABLE FOR ANY REPRESENTATIONS OR WARRANTIES, WHETHER WRITTEN OR ORAL, WITH
RESPECT TO THE PRODUCTS MADE BY DISTRIBUTOR OR ITS AGENTS, EMPLOYEES OR
REPRESENTATIVES.
(b) Except for the Indemnification set forth below in Section
5.6(a), SMS's maximum liability for damages under this Agreement (regardless of
the form of action, whether in contract or tort) shall not exceed the amount
paid by Distributor to SMS for the Products or services as to which the claim
relates.
(c) IN NO EVENT SHALL SMS BE LIABLE TO DISTRIBUTOR OR ANY
OTHER PARTY, WHETHER IN CONTRACT OR TORT, FOR ANY INCIDENTAL, INDIRECT, SPECIAL,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL LOSS OR DAMAGES (INCLUDING, WITHOUT
LIMITATION, LOSS OF PROFITS, REVENUE OR DAMAGE TO ANY SURFACE TO WHICH THE
PRODUCTS ARE APPLIED), THAT MAY ARISE FROM THE USE, OPERATION OR MODIFICATION OF
THE PRODUCT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGES BEING
INCURRED.
5.6 INDEMNIFICATION.
(a) SMS, at its expense, shall defend any action brought
against Distributor to the extent that it is based on a claim that any Product
infringes a third party's copyright or a patent duly issued by the United States
of America. SMS shall pay all damages and costs finally awarded against
Distributor in such action, provided that SMS is notified in writing of the
existence of such claim against Distributor within seven (7) days of
Distributor's first learning of the same; and provided that SMS is given full
authority to control the defense, costs and settlement of the claim and that SMS
receives reasonable cooperation and assistance from Distributor. SMS will not be
obligated to defend or otherwise indemnify Distributor in any lawsuit or as to
any claim which arises from or relates to any combination of the Product with
another product not supplied by SMS, or if such claim is based upon a use of the
Product for a purpose for which it was not designed or if the Product has been
modified by any party other than SMS. In lieu of the foregoing indemnification
obligations, SMS shall have the option, at its expense, either to procure for an
End User the right to continue using the Product or to replace or modify the
Product so that it is no longer infringing, or, if such options are not
reasonably available, to refund to Distributor the amount actually paid by
Distributor to SMS for the Product. The foregoing states the entire obligation
of SMS with respect to the infringement of intellectual property rights of any
third party.
(b) Distributor shall indemnify and hold SMS harmless from and
against all claims, judgments, awards, costs, expenses, damages and liabilities
(including reasonable attorneys' fees) of whatsoever kind and nature that may be
asserted, granted or imposed against SMS directly or indirectly arising from or
in connection with (i) any claims that any services or products supplied by
Distributor other than any unmodified Products provided by SMS infringes any
third party intellectual property rights; (ii) any misrepresentation made by
Distributor regarding SMS or the Products; and (iii) any warranty, condition,
representation, guarantee or indemnity granted by Distributor with respect to
the Products in addition to the limited warranty specified in the Section 5.5 of
this Agreement titled "Limited Warranty."
5.7 DEFAULT AND TERMINATION.
(a) If this Agreement expires or is terminated by either
party, for any reason, Distributor will immediately pay all sums due
and owing to SMS.
(b) Either party may terminate this Agreement, with or
without cause, on thirty (30) days written notice to the other party.
(c) If Distributor fails to pay any sum of money due and owing
under this Agreement within ten (10) days of written notice thereof
from SMS, SMS shall have the right to terminate this Agreement without
further notice to Distributor. If either party breaches any of the
terms, conditions or provisions of this Agreement, and fails to cure
such breach within thirty (30) days after written notice thereof, the
other party shall have the right to terminate this Agreement without
any further notice.
(d) This Agreement may be immediately terminated by SMS if:
(i) Distributor violates any of the conditions of Section 5.4; (ii)
Distributor shall cease business, file for bankruptcy, be adjudged
bankrupt or insolvent or commit any other act of bankruptcy; (iii)
there is a sale or transfer, whether by operation of law or otherwise,
of the direct or indirect control of Distributor; or (iv) there is an
attempt by Distributor to assign this Agreement or any right or
obligation hereunder without SMS's prior written consent.
(e) In the event of a party's uncured breach of this
Agreement, the non-breaching party may, in addition to the right to
withhold its performance under and/or terminate this Agreement, avail
itself of all other rights, remedies and causes of action available at
law, in equity or otherwise, against such party for damages as a result
of such breach. Unless otherwise provided in this Agreement, remedies
shall be cumulative and there shall be no obligation to exercise a
particular remedy.
(f) Except as set forth below in Section 5.7 (g), upon
expiration or termination of this Agreement, Distributor shall
immediately return to SMS, at Distributor's expense, all Products not
fully paid for by the Distributor, all demonstration copies of the
Product, all Documentation and all Product brochures, marketing
collateral and materials, together with a certified statement by a duly
authorized officer of Distributor stating that all such Demonstration
Products and materials and any other confidential information of SMS
have been returned to SMS.
(g) In the event of any termination of this Agreement (other
than termination by SMS under Sections 5.7 (c) or (d) above),
Distributor shall be entitled to distribute, for a period not to exceed
ninety (90) days, any Products already paid for and held in its
inventory as of the termination date, subject to its continuing
compliance with all terms of this Agreement, including, but not limited
to, the requirements of Section 3.
(h) Any expiration or termination of this Agreement shall not
prejudice, limit or restrict any other rights or remedies either party
may have arising prior to such expiration or termination. SMS shall be
under no obligation to refund any amounts paid to SMS by Distributor
for any undistributed Products held by Distributor upon any expiration
or termination of this Agreement.
(i) In addition to this Section 5.7, Sections 5.4, 5.5,
5.6 and 5.8 shall survive termination of this Agreement.
5.8 MISCELLANEOUS.
(a) The laws of the State of Florida without reference to
principles of conflict of laws shall govern the construction and
enforceability of this Agreement. The parties agree that any action
arising under or relating to this Agreement or the Products shall lie
within the exclusive jurisdiction of the State and Federal Courts
located in Sarasota County, Florida. Distributor consents to the
exercise of jurisdiction by any such court and agrees that process may
be served on Distributor in any such action by mailing same to
Distributor at the address set forth above. If either party is
compelled to seek judicial enforcement of its rights under this
Agreement, the prevailing party in any such action shall be entitled to
recover its costs incurred in such action, including reasonable
attorneys' fees.
(b) Each provision of this Agreement is severable from the
entire Agreement, and in the event that any provision is declared
invalid or unenforceable, that provision shall be amended if possible
to be enforceable, but in any event, the remaining provisions hereof
shall remain in effect.
(c) All notices and demands of any kind or nature which any
party to this Agreement may be required or may desire to serve upon any
other in connection with this Agreement shall be in writing and may be
served personally or by prepaid certified mail (return receipt
requested) or by private mail service (e.g., Federal Express) if a
confirmation of delivery is obtained, in either case to the addresses
shown on page 1 of this Agreement. Any party hereto may from time to
time, by notice in writing served upon the other parties as aforesaid,
designate a different mailing address or a different person to which
following such service all further notices or demands are thereafter to
be addressed.
(d) The parties shall be deemed for all purposes to be
independent contractors. This Agreement shall not constitute either
party the employee, legal representative or agent of the other, nor
shall either party have the right or authority to assume, create, or
incur any liability or any obligation of any kind, express or implied,
against or in the name of or on behalf of the other party.
(e) No waiver by either party of any default shall operate as
a waiver of any other default or of a similar default on a future
occasion. No waiver of any term or condition shall be effective unless
in writing and signed by the party against whom enforcement of the
waiver is sought. Neither party shall be responsible for any failure to
perform any obligation hereunder (except a failure to pay) due to
causes beyond its reasonable control.
(f) Neither party shall be held responsible for any reasonable
delay or failure in performance hereunder caused by fires, strikes,
embargoes, acts of nature, or other causes beyond their reasonable
control.
(g) This Agreement (including any attached Exhibits and
subsequently executed Commercial Terms Schedules referencing this
document) is the complete and exclusive statement of the understanding
between the parties and supersedes all prior agreements and
representations between them relating to the subject matter of this
Agreement. The following order of precedence shall control in the event
of a conflict between the terms and conditions of this Agreement and
the terms and conditions of any Commercial Terms Schedule: (i) the
Commercial Terms Schedule for the applicable Product; and (ii) the
terms of this Agreement. Amendments to this Agreement shall not be
effective unless they are in writing and signed by authorized
representatives of both parties. Distributor may not assign this
Agreement or any of its rights hereunder by operation of law or
otherwise.
IN WITNESS WHEREOF, the undersigned authorized representatives of the
parties have affixed their signatures as of the Effective Date.
DISTRIBUTOR:
ADvanced ADvertising SIGN MEDIA SYSTEMS, INC.
Network, LLC
/S/ Xxxxxx Xxxxxx /S/ Xxxxxxx X. Xxxxxxx, III
------------------- ----------------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxxx, III
Managing Member President/CEO
