SALES REPRESENTATIVE AGREEMENT
THIS AGREEMENT is made and entered into this 29th day of February,
1996, effective as of January 1, 1996, between WELLS-GARDNER ELECTRONICS
CORPORATION, an Illinois corporation (the "Company"), JAMES INDUSTRIES, INC.,
an Illinois corporation (the "Representative"), and JAMES J. ROBERTS, JR.
("Roberts").
WHEREAS, the Company designs, manufactures and markets electronic
video products consisting primarily of video monitors; and
WHEREAS, the Company wishes to appoint the Representative as its
sales representative for certain products of the Company and the Representative
desires to be a sales representative of such products, 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, the parties agree as follows:
1. Definitions.
"Products" shall mean all products produced or
assembled and/or sold by the Company, including, but not limited
to, spare and replacement parts and the service of such products.
"Markets" shall mean the following markets and uses in
which and for which the Products may be sold: amusement, leisure,
gaming, automotive, video walls, presentation monitors,
transportation monitors and kiosk monitors, and shall also
include the data display market but only for the customers listed
on Exhibit A attached hereto.
2. Appointment. 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
areas.
4. Sales Invoicing. The Company shall do 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 40th 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 Five Percent (5%) of the Company's
net sales in the Territory of Products in the video wall,
presentation monitor, transportation monitor and kiosk
monitor Markets for such month; plus
(ii) a commission of such percentage of the Company's
net sales in the Territory of Products in Markets other than
the video wall, presentation monitor, transportation monitor
and kiosk monitor Markets for such month equal to the
Commission Percentage (as hereinafter defined); plus
(iii) commissions, at the rates set forth in (i) and
(ii) above, for sales of Products in the Markets outside the
Territory for such month, which sales are generated by the
Representative.
(b) Annual Commission. As soon as practicable, but
in no event later than April 1 each year, the Company shall
calculate the Representative's annual commission for the
preceding calendar year (the "Annual Commission") in the
following manner:
(i) a commission of Five Percent (5%) of the Company's
net sales in the Territory of Products in the video wall,
presentation monitor, transportation monitor and kiosk
monitor Markets for the preceding calendar year; plus
(ii) a commission of such percentage of the Company's
net sales in the Territory of Products in Markets other than
the video wall, presentation monitor, transportation monitor
and kiosk monitor Markets for the preceding calendar year
equal to the Commission Percentage; plus
(iii) commissions, at the rates set forth in (i) and
(ii) above, for sales of Products in the Markets outside the
Territory for the preceding calendar year, which sales are
generated by the Representative.
If the Annual Commission is greater than the sum of
Monthly Commissions paid for the preceding calendar year (the
"Aggregate Monthly Commission"), the Company shall, no later than
ten (10) business days after such calculation, pay to the
Representative the difference between the Annual Commission and
the Aggregate Monthly Commission.
If the Aggregate Monthly Commission is greater than the
Annual Commission, the Representative shall, no later than ten
(10) business days after such calculation, pay to the Company the
difference between the Aggregate Monthly Commission and the
Annual Commission.
(c) Definitions
(i) "Net Sales" shall mean the aggregate amount of
the Company's net sales of Products in the Markets. For
purposes of determining Monthly Commissions, Net Sales shall
be calculated at the end of each month by annualizing year-
to-date Net Sales. For purposes of determining Annual
Commissions, Net Sales shall equal the Company's net sales
of Products in the Markets for the preceding calendar year.
(ii) "Profit" shall mean year-to-date net income
after taxes.
(iii) "Loss" shall mean year-to-date net loss after taxes.
(iv) The "Commission Percentage" for any month or
year shall be (1) the Applicable Rate set forth in Column B
of Exhibit B if the Company has operated at a Loss, year-to-
date, through the end of such month or year as the case may
be, or (2) the Applicable Rate set forth in Column C of
Exhibit B if the Company has operated at a Profit, year-to-
date, through the end of such month or year as the case may
be. The "Applicable Rate" for any month or year shall be
based upon the Net Sales calculated as provided herein.
(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 commissions 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 customer, 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
this Section 5, such statements shall be conclusively deemed to
be correct and binding upon the Representative.
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 2701 North Kildare Avenue, Chicago, Illinois 60639.
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 prices of
Products from time to time and to discontinue at any time or
times the production, assembly, design and/or sale 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 collections for or on behalf of 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 use 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 part of the Company; and
(b) that the Representative at no time shall
represent itself as the "owner of Wells-Gardner;"
(c) and that no contracts, commitments, statements
or representations made by or on behalf of the
Representative shall be 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 or 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 (as hereinafter
defined) is indebted to such customer for goods purchased from
such customer and the amount (the "Representative Debt") is more
than sixty (60) days past due, 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 discretion, to either (i) apply to the
Representative Debt any and all Monthly or Annual
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 50% of the voting power or the equity
of which is beneficially owned, directly or indirectly by the
Representative, Roberts, and John R. Blouin.
14. Term and Termination.
(a) The term of this Agreement shall be from January
1, 1996, to December 31, 2000; provided, however, that this
Agreement will be automatically renewed for successive periods of
one (1) year. Notwithstanding the above, this Agreement may be
terminated by any party upon twelve (12) months prior written
notice to the other party.
(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.
(c) This Agreement shall terminate upon an
assignment for the benefit of creditors by the Representative or
by or against the Representative or Roberts, or the institution
of proceedings by or against the Representative or Roberts 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.
(d) In the event of the death, legal incapacity or
permanent disability of Roberts, 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, this Agreement shall forthwith terminate.
(e) The Company agrees that in the event of the
termination of this Agreement for any reason (other than a
termination by the Representative under Sections 14(a) or (b)),
it will not employ any person employed by the Representative or
Roberts 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.
(f) In addition to its other rights, 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.
(g) The Representative shall be entitled to receive
commissions hereunder on Net Sales made after termination of this
Agreement if and 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 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 state 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 product
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 term 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 to 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, James J. Roberts,
Jr., 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 and Roberts agree that during
the term hereof and, if, but only if, the Representative or
Roberts voluntarily terminates this Agreement under Section
14(a), or the Company terminates this Agreement under Section
14(b) or 14(c), then for a period of one (1) year after notice of
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 or affiliate thereof or (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 and Robert's 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 and Roberts may so
compete in Johnson 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 or 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
principals 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 or nonrenewal in accordance with
this Agreement. The Company shall not, by reason of the
termination of this Agreement, for sale or use of Products, for
negligence, or otherwise, be liable to the Representative for any
special, incidental or consequential damages or similar relief,
including but not limited to, property damage, personal injury,
compensation or damages for loss of present or prospective
profits or revenues, loss of goodwill or expenditures,
investments or commitments made in entering into 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, and no 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 from 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:
Wells-Gardner Electronics Corporation
2701 North Kildare Avenue
Chicago, Illinois 60639
If to the Representative or Roberts:
James Industries, Inc.
1619 Colonial Parkway
Inverness, Illinois 60067
or such other address as any party may designate in a notice to
the others.
21. Assignment. 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 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 granted by law.
23. Severability. If any covenant or other
provision 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 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 Agreement dated March 1, 1991, as subsequently
amended, by and between the parties hereto. 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 an officer of the
Representative 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 first written above.
WELLS-GARDNER JAMES INDUSTRIES, INC.
ELECTRONICS CORPORATION:
By: /s/ ANTHONY SPIER By: /s/ JAMES J. ROBERTS, JR.
Anthony Spier James J. Roberts, Jr.
Title: CEO Title: CEO
/s/ JAMES J. ROBERTS, JR.
James J. Roberts, Jr.
EXHIBIT A
CUSTOMERS IN DATA DISPLAY MARKET
1. Polaroid
2. North American Drager
3. Coulter Electronics
4. Optelec
5. Telesensory
6. Simrad
7. Future new accounts must be mutually agreed
EXHIBIT B
COMMISSION SCHEDULE
NET SALES LOSS PROFIT
Under $27.5 million 3.00 percent 3.25 percent
$27.5 million to $29.99 million 3.25 percent 3.50 percent
$30.0 million to $37.49 million 3.50 percent 3.75 percent
$37.5 million to $42.49 million 4.00 percent 4.00 percent
$42.5 million to $47.49 million 4.50 percent 4.50 percent
$47.5 million and over 5.00 percent 5.00 percent