EXHIBIT 99.2
DISTRIBUTOR AGREEMENT
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Appointment
1. Upon prompt return by Distributor to Thomson Inc. (hereinafter "Thomson")
of two unaltered copies of this Agreement signed by a duly authorized
representative of Distributor, the above named company is appointed an
authorized Distributor (hereinafter "Distributor") of Thomson for
consumer electronics products as described in Attachment A (hereinafter
"Products"). This appointment is made subject to the terms and conditions
set forth in this Agreement.
Non-Exclusive Appointment
2. Thomson reserves the right, in its sole discretion, to appoint additional
distributors and to sell Products to dealers and any other customers of
any nature, in Distributor's Area and any other area.
Products Covered
3. This Agreement is for the Products as long as they are offered for sale
to Distributor by Thomson during the term of this Agreement. Thomson is
under no obligation to sell or continue to sell any of the Products or
lines of Products covered by this Agreement or any other models or types
of such Products. Thomson may at its sole discretion discontinue at any
time the sale of any of these Products or lines of Products or any models
or types of these Products.
Area
4. Distributor's distribution of Products hereunder is restricted and
limited to the area designated in Attachment B (hereinafter "Area").
Distributor agrees not to sell or distribute, directly or indirectly,
Products in any area other than Distributor's Area.
Warranty and Service/
Product and Sales Training Support
5. An explanation of Thomson's consumer electronics products warranty and a
statement of the respective responsibilities of Thomson and Distributor
in connection with the service and repair of Thomson products is set out
in Attachment C, "Warranty and Service Responsibilities", dated January
1, 1999. The respective responsibilities of Thomson and Distributor in
connection with product/sales training support are set out in Attachment
F, "Product/Sales Training Support". Attachments C and F, including any
changes hereafter made by Thomson, in its sole discretion, are
incorporated by reference and made part of this Agreement.
Performance
6. a) Distributor agrees to maintain a level of performance, which, in
Thomson's judgment, is deemed acceptable. At appropriate intervals,
Thomson may evaluate Distributor's performance, including the customer
structure, actual sales compared to the sales and penetration goals of
Thomson, and additional factors as outlined below and in Attachment D.
b) Distributor agrees to maintain adequate inventories of Products and to
vigorously and effectively promote sales of such Products. Distributor
will use its best efforts to sell Products to active, reputable and
financially responsible purchasers.
c) Distributor shall use its best efforts to promote and sell the
Products, avoiding potential conflicts of interest. In this regard,
Distributor acknowledges that the sale of competitive brands of products
or the sale at retail of Products by Distributor, or by companies
affiliated with Distributor through ownership, are likely to create a
conflict adverse to Distributor's responsibilities under this Agreement.
In the event Distributor sells such competitive products or sells at
retail, Thomson shall have the right, at its option, to terminate this
Agreement upon thirty (30) days written notice to Distributor.
Customers
7. a) Thomson reserves the exclusive right to sell Product to distributors.
Therefore, Distributor shall sell Product only to the following
purchasers (all of which may hereinafter be referred to as "Customers"):
Value added resellers specializing in the sale of consumer electronics to
the lodging, healthcare, professional and educational markets.
Distributor shall not sell Product to consumers or retail dealers.
Written approval must be obtained from Thomson to solicit retail
establishments of any type.
b) In the event Thomson decides during the Term of this Agreement that
Customers of Products shall be required to sign a Customer agreement,
Distributor agrees to require that Customers to which Distributor sells
Products sign such an agreement in the form provided by Thomson.
Reports
8. Distributor agrees to provide such reports, periodically or otherwise, of
inventories, sales and other pertinent information regarding its handling
of Products purchased from Thomson as Thomson may from time to time
request. Such reports and information shall be prepared by Distributor in
accordance with forms and instructions provided by Thomson.
Certificate of Insurance
9. Thomson reserves the right to require the annual submission by
Distributor of a Certificate of Insurance showing that it carries
adequate insurance to cover Distributor's usual maximum inventory of
Products.
Indemnity
10. Distributor shall indemnify, protect and save Thomson, its parent,
subsidiaries, and affiliates harmless from all claims, demands, suits or
actions for damages to property or person asserted by any third party as
a proximate result of intentional or negligent acts or omissions on the
part of Distributor, its agents or employees.
Change of Ownership
11. Distributor represents that Attachment E is an accurate summary of
information supplied by Distributor concerning ownership, control and
management of Distributor.
Distributor agrees to give Thomson immediate notice in writing of any of
the following:
a) A transaction or occurrence which alters or affects the ownership of
the capital stock of Distributor, if a corporation.
b) A change in the respective interests of the partners in the
Distributor, if a partnership.
c) A transaction or occurrence which alters or affects the ownership of
any part of the business, if an individual proprietorship; or
d) A transaction or occurrence that would materially reduce or impair the
financial capacity of the Distributor to discharge its obligations under
this Agreement, including, without limitation, the granting of any
security interest or lien against Distributor's property or the taking of
any judgment against Distributor, any assertion by any governmental
taxing authority that Distributor has failed to pay its taxes; any
cancellation or modification of the insurance covering Distributor's
inventory; any assertion or notice that Distributor is in default of any
obligation to repay a loan or other indebtedness; Distributor's purchase
of any corporation or other business enterprise; Distributor's sale,
lease or transfer of a substantial part of its assets; or any other event
that may have a material impact on Distributor's viability or ability to
continue as a going concern.
Terms of Sale
12. Products will be sold to Distributor at prices and on terms and
conditions of sale established by Thomson from time to time and in effect
at the time of shipment. Thomson reserves the right, in its sole
discretion, to change or withdraw such prices and terms and conditions of
sale at any time without prior notice; however, Thomson will endeavor to
provide reasonable prior written notice to Distributor. Products are sold
F.O.B. point of shipment with freight prepaid to a warehouse in the Area
designated by Distributor. Title and risk of loss pass to Distributor
when the products are placed in the hands of the carrier at the point of
shipment. A Return Authorization number must first be secured from
Thomson before any Products can be returned by Distributor.
Payment
13. Terms of payment shall be established by Thomson and may be modified from
time to time upon notice to Distributor.
In the event Distributor or the finance company fails to make timely
payment, or in the event of notice of termination or expiration of
Distributor's Appointment, all outstanding amounts owing to Thomson or
the finance company will become immediately due and payable. Thomson
shall have the right to immediately stop shipments of Products to
Distributor, as well as to exercise any other rights Thomson may have
under the Uniform Commercial Code and applicable law and require
Distributor to promptly assemble Distributor's inventory of Products and
make it available to Thomson at a place and time reasonably convenient to
Thomson.
a) Thomson shall have the right at any time to contact and obtain
information concerning Distributor or its business from financial,
lending, and credit institutions.
Transportation and Shipment
14. a) Shipments will be made to Distributor's warehouse by Thomson via an
economical mode of transportation and weight range as determined by
Thomson.
Any premium freight expense incurred because of a variance from the
economical mode and/or weight range on a shipment will be handled as
follows:
(1) If the variance is made at the request of the Distributor, the
Distributor will be charged for the premium cost over what the
normal cost for the shipment would have been if the most
economical mode and weight range had been employed.
(2) If the variance is made at the request of Thomson, the premium
cost will be absorbed by Thomson.
(3) All premium freight costs for customer drop shipments will be paid
by the Distributor if requested by Distributor. The premium will
be calculated as the difference between the freight expense of
shipping to the Distributor's warehouse using the most economical
mode of transportation and weight range, and the actual customer
drop shipment freight expense.
b) Orders and inquiries concerning shipping and requests for return
authorizations should be addressed to the Thomson Channel Sales Manager.
Forecasting/Acceptance of Orders
15. Distributor shall use its best efforts to provide a rolling 4 month
forecast for Products on a monthly basis to Thomson. The forecast shall
become firm sixty (60) days prior to shipment. All orders for Product are
subject to acceptance by Thomson and must be placed thirty (30) days in
advance of requested ship date. All sales and shipments will be deemed
made pursuant to the terms and conditions set forth herein and not
pursuant to any terms and conditions contained in Distributor's purchase
orders or elsewhere. Neither the acceptance of an order nor the shipment
of any part of an order by Thomson shall require that Thomson complete
shipment of that order. Thomson reserves the right, in its sole
discretion, to allocate its inventories and production in any way deemed
by it to be desirable but will exercise reasonable commercial efforts to
supply Product ordered by Distributor for which Distributor has provided
a forecast pursuant to this Section.
Trademarks and Trade Names
16. a) No right in the trademarks or the trade names owned by Thomson or
affiliated companies, or licensed by Thomson or affiliated companies from
others, is conferred upon Distributor. Such trademarks or trade names may
not be used in any manner contrary to the established policies of
Thomson. Upon expiration or termination of the Distributor Agreement, any
and all use of such trademarks and trade names in the conduct of
Distributors business shall be discontinued.
b) Distributor will comply with the following provisions concerning the
use of such trademarks and trade names.
(1) Not use or permit Distributor's customers to use any trademark or
trade name owned or licensed by Thomson or others except in
connection with the sale of Product to which such trademark or
trade name relates. The use of Thomson names or trademarks is
prohibited in connection with: 1) the sale of Products assembled
or sold by others than Thomson even though components made by
Thomson may be included in such products, and 2) any Product which
is modified or altered from the condition as shipped by Thomson.
(2) Not use or permit customers to use any such trademarks or trade
name as part of a corporate or business name or to use or register
such trademark or trade name as a domain name or any part thereof.
(3) Not use or permit customers to use any such trademark or trade
name in any manner which may mislead or confuse the public as to
the origin of the Products, or cause Distributor or its customers
to be identified with such trade names or trademarks or with the
manufacturer of any Products purchased by Distributor from Thomson
for resale, except as the distributor or customer of such
Products.
(4) Not remove, alter, or deface or permit Distributor's customers to
remove, alter, or deface any trademarks or trade names placed upon
Products.
(5) For the duration of this Agreement and thereafter Distributor will
do nothing that will in any way infringe, impair or lessen the
value of such trademarks or trade names, or do anything that will
tend to prejudice the reputation or sale of the Products.
Financial Matters
17. a) Distributor agrees to promptly provide to Thomson detailed, audited
financial statements certified by a Certified Public Accountant and such
other reports, data and information relating to Distributor's financial
status and activities as Thomson may request from time to time.
b) Thomson reserves the right at all times, either generally or with
respect to any specific order by the Distributor, to vary, change, limit
or eliminate the amount or duration of credit, if any, to be allowed the
Distributor.
c) Distributor agrees that payment shall be made promptly upon the due
date thereof of all sums that shall become due to Thomson in accordance
with the terms of sale extended by Thomson from time to time. Distributor
further agrees not to make any set-offs, offsets, or deductions of any
kind from any payments coming due to Thomson hereunder unless Distributor
has received an official credit memorandum upon Thomson's standard form
authorizing such deduction. In the event Distributor makes a set-off,
offset, or deduction from any amount due to Thomson without previously
obtaining such authorization from Thomson, Distributor shall be in
default of payment, and Thomson shall have the right to pursue whatever
remedies are available to Thomson under this Agreement, including but not
limited to Sections 13 and 20, as well as any other remedies available at
law or equity.
d) Distributor agrees to furnish to Thomson, at Thomson's request, a
detailed reconciliation of Thomson's statements of account with
Distributor's records, listing all differences, and showing the net
amount Distributor acknowledges to be due to Thomson. All claims by
Distributor for credits must be filed promptly by Distributor in
accordance with Thomson procedures and programs. Thomson shall have the
right to reject any such claims by Distributor which are not submitted in
compliance with such procedures and programs. In addition, Thomson shall
have the right to reject any such claims by Distributor which arise
during the Term of this Agreement but which are submitted by Distributor
to Thomson more than 90 days after the Term expires or terminates.
Distributor hereby certifies that Distributor will not knowingly submit
inaccurate or false claims to Thomson and will exercise its best efforts
to verify the accuracy of such claims prior to submission to Thomson. At
any time during the Term of this Agreement or upon its expiration or
termination, if Thomson and Distributor cannot agree upon the net balance
due, either party shall have the right to submit the matter to a mutually
agreeable, independent CPA firm for resolution. If the parties cannot
agree upon such a firm, then either party may have the American
Arbitration Association appoint such a firm. All costs associated with
such arbitration and CPA firm shall be allocated between the parties in
proportion to the correctness of their respective positions as determined
by the CPA firm.
Term and Termination
18. The term of this Agreement (hereinafter "Term") will commence on January
1, 2004; and will automatically expire on December 31, 2005. Prior to the
expiration of this Term, this Agreement may be terminated as follows:
a) By either Distributor or Thomson at any time with or without
cause, upon one hundred twenty (120) days prior written notice, in
which event Distributor shall immediately discontinue handling the
Products covered by this Agreement.
b) By Thomson any time upon written notice for:
(1) Any assignment or attempted assignment by Distributor of
any interest in this agreement without Thomson's prior
written consent;
(2) Any sale, transfer, or relinquishment, voluntary or
involuntary, by operation of law or otherwise, of any
material interest in the direct or indirect ownership of
Distributor's business or any material change in
Distributor's management, without prior written approval
from Thomson;
(3) Distributor's insolvency, or delinquency for over fifteen
days (15) in the payment of Distributor's account with
Thomson, or a composition among Distributor's creditors,
or the filing of a voluntary or involuntary petition in
bankruptcy, or the appointment of a referee, trustee,
conservator, or a receiver for a substantial portion of
Distributor's assets;
(4) Submission by Distributor to Thomson of false or
fraudulent reports or statements, including, without
limitation, claims for any refund, credit, rebate,
incentive, allowance, discount, reimbursement or other
payment by Thomson;
(5) The execution of any security agreement that impairs
Thomson's rights as a creditor, including renewing or
creating a security interest in favor of any party other
than Thomson in Distributor's inventory of Thomson
Products or proceeds from sales of any Products sold to
Distributor by Thomson, without the express prior written
consent of Thomson;
(6) A change in the nature of Distributor's business,
including, but not limited to, a change in the lines or
brands of Products handled by Distributor, or companies
affiliated with Distributor through ownership, the
probable effect of which is, in Thomson's judgment, to
adversely affect or conflict with Distributor's ability to
fully and effectively promote and sell Thomson Products;
or
c) By either Distributor or Thomson at any time upon a breach by the
other party of a material term or condition of this Agreement and failure
to cure the breach within 10 days after notice of such breach.
Reappointment
19. This Agreement automatically expires on the date set forth in Section 18.
If Thomson decides to reappoint Distributor, Thomson will advise
Distributor in writing no later than one hundred twenty (120) days prior
to the expiration of the Term of this Agreement. In the event Thomson
elects to reappoint Distributor, the terms and conditions set forth
herein shall continue to apply unless and until both parties sign a new
agreement.
Termination or Expiration
20. In the event this Agreement is terminated, whether by Distributor or by
Thomson, or it expires, Distributor shall cease to be an authorized
Thomson Distributor. Distributor agrees to return and Thomson agrees to
accept all Thomson Products which are in Distributor's stock in new
condition and in original packaging and which are free and clear of all
liens and encumbrances.
Distributor's sale back to Thomson of Products will facilitate the
liquidation of Distributor's indebtedness, if any, to Thomson at that
time. The prices that will apply to all such purchases and sales shall be
the most recent Thomson prices to distributors, in addition, Distributor
will sell to Thomson, at Thomson's request and at prices to be agreed
upon, all signs, displays and current sales promotion materials bearing
Thomson's current trademarks which were purchased by Distributor from
Thomson to further Distributor's business of distributing Products.
Further, in the event of termination or expiration of this Agreement:
a) All amounts owing by Distributor shall become immediately due and
payable (notwithstanding prior terms of sale);
b) All unshipped orders shall be canceled without liability of either
party to the other;
c) NEITHER THOMSON NOR DISTRIBUTOR SHALL BE LIABLE TO THE OTHER FOR
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING
BUT NOT LIMITED TO: i) LOSS OF PROFITS OR ANTICIPATED SALES, ii)
LOSS OF GOODWILL, OR iii) INVESTMENTS, LEASES, OR OTHER
EXPENDITURES OR COMMITMENTS;
d) Distributor shall turn over to Thomson in accordance with its
instructions, originals or copies of all of Distributor's sales,
product and service records, customer lists and other records and
data relating to sales and service of Thomson Products;
e) Distributor shall take whatever action is reasonably required by
Thomson to comply with applicable bulk sales laws; and
f) Distributor shall promptly take whatever other action is required
of Distributor under this Agreement.
Product Safety
21. Distributor agrees to, at all times, conduct Distributor's business in a
manner consistent with and complementary to Thomson's dedication to
unequivocal compliance with the letter and spirit of the Federal Consumer
Product Safety Act and all other federal and state laws designed to
protect the health, safety or welfare of consumers.
To this end, Distributor agrees to assign and authorize an appropriate
individual in Distributor's organization to interface with Thomson and
carry out positive action by Distributor to implement such product safety
actions as may be deemed necessary by Thomson, in its sole discretion,
including without limitation, recalls, inventory holds and similar
matters.
Distributor also agrees to undertake the following responsibilities:
a) To promptly provide Thomson with a list of any Products covered by
this Agreement, which, while in Distributor's inventory, become
damaged by "Force Majeure". Such list shall be by model and serial
numbers; and
b) To retain possession of and title to such Products until Thomson
has inspected them and to give Thomson the right of first refusal
to purchase such Products;
c) With products containing a picture tube, maintain a complete
record of such Thomson Products sold by Distributor (including
model and serial number, name and address of the purchaser and
date of purchase) other than Thomson products shipped directly to
a purchaser by Thomson, and furnish such data to Thomson upon
request, in order to facilitate the locating of such Products.
As used above, "Force Majeure" means Acts of God, war, insurrection,
civil commotion, fire, flood, earthquake, wind, storm, explosion, and
similar occurrences.
Release
22. In consideration of Thomson appointing Distributor under this Agreement,
Distributor hereby releases Thomson, its predecessors, parent
subsidiaries, affiliates, officers and employees, from all claims,
demands, contracts and liabilities, if any, existing as of the date of
Distributor's execution of this Agreement, which are in any way related
to the purchase, sale, distribution or marketing of Products.
Relationship of Parties
23. During the Term hereof, the relationship between Thomson and Distributor
is solely that of vendor and vendee. This Agreement shall not be
construed or interpreted as creating, and the relationship between the
parties shall not be that of, a partnership, co-partnership, franchise,
or joint venture. Under no circumstances will Distributor's organization
or its agents or employees be deemed agents or representatives of Thomson
for any purpose whatsoever, and Distributor shall have no right to enter
into any contracts or commitments in the name of, or on behalf of,
Thomson or to bind Thomson in any respect whatsoever. It is expressly
understood that the relationship between Thomson and Distributor is not
that of franchisor and franchisee.
Headnotes
24. Marginal headnotes are for ready index purposes only and are not to be
construed as interpretations of this Agreement.
Applicable Law
25. All transactions between Distributor and Thomson shall be deemed to take
place in the State of Indiana. All such transactions and all questions of
construction, interpretation and performance of this Agreement and any
amendments and supplements hereto shall be governed by the laws of the
State of Indiana. The federal and state courts located in Indiana shall
have exclusive jurisdiction and venue concerning any and all matters and
disputes related to or arising out of this Agreement, or the relationship
between the parties or any transaction between the parties premised upon
or related to this Agreement. Notwithstanding the foregoing, should
either party seek relief or a remedy with respect to property located in
another state, the state and federal courts located in such other state
may also have jurisdiction as may be necessary to effect such remedy or
relief. Should any provision of this Agreement in any way violate any
law, such provision shall be deemed deleted but the remainder of the
Agreement shall remain in full force and effect.
Waiver
26. The waiver of any right or requirement in this Agreement by either party
shall not be construed as a waiver of the same right or requirement at a
subsequent time or as a waiver of any other right or requirement herein
contained.
Notices
27. Any notice given under this Agreement shall be deemed to have been
sufficiently given when sent by United States registered or certified
mail addressed to the parties as follows:
Thomson Inc.
P. 0. Box 1976
Indianapolis, IN 46206-1976
ATTN: Vice President
Strategic Channel Marketing & Sales
6809 Corporate Drive
Indianapolis, IN 46278 ATTN:
or as subsequently changed by notice duly given. The date of mailing
shall be deemed the date on which notice has been given.
Assignment
28. Thomson reserves the right to assign this Agreement to its parent
company, an affiliate, subsidiary, or successor.
Any attempted assignment by Distributor will be void and cause for
termination as provided in Section 18.b.1 above.
Entire Agreement
29. This Agreement represents the only understanding between Thomson and
Distributor concerning the subject matter hereof. This Agreement
terminates and supersedes all prior Distributor's appointments or
agreements, if any, between the parties hereto and their predecessors.
This Agreement may not be extended, supplemented or modified in any way
except by a document in writing signed by Distributor's authorized
representative and, in the case of Thomson, by Vice President, Strategic
Channel Marketing & Sales.
Thomson Inc.
By: /s/Carter M Fortune By: /s/Stephen B. Atkinson
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Stephen B. Atkinson
Vice President
Title: CEO, Commercial Solutions, Inc. Strategic Channel Marketing & Sales
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Date: 1/12/2004 Date: 1/12/2004
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ATTACHMENT A
PRODUCTS
Such RCA and GE branded consumer electronics products as designated by Thomson
from time to time subject to specific purchase qualifications/requirements on
select models.