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Exhibit 10.3
CONSIGNMENT AGREEMENT
BY AND BETWEEN
JET AVIATION TRADING, INC.
("CONSIGNEE")
AND
JET AVIONICS SYSTEMS, INC.
("OWNER")
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INDEX
PREAMBLE
ARTICLE 1 DEFINITIONS
ARTICLE 2 SUBJECT MATTER
ARTICLE 3 TERM OF AGREEMENT
ARTICLE 4 DELIVERY
ARTICLE 5 ACCEPTANCE AND STORAGE
ARTICLE 6 TITLE AND RISK
ARTICLE 7 INSURANCE/INDEMNIFICATION
ARTICLE 8 SELLING PRICE
ARTICLE 9 CONDITIONS OF SALE
-Standard Conditions of Sale
-CONSIGNEE to Comply with Laws
ARTICLE 10 REMUNERATION
ARTICLE 11 PARTS IMPROVED OPTION
ARTICLE 12 TAXES
ARTICLE 13 WARRANTY OF TITLE
ARTICLE 14 MATERIAL CERTIFICATION
ARTICLE 15 OWNER'S RIGHT OF ACCESS
ARTICLE 16 TERMINATION FOR
INSOLVENCY
ARTICLE 17 INCOMPLETE SALES AT
TERMINATION
ARTICLE 18 REGISTRATION OF OWNER'S
INTEREST
ARTICLE 19 FORCE MAJEURE
ARTICLE 20 CONFIDENTIALITY
ARTICLE 21 APPLICABLE LAW
ARTICLE 22 BROKERS AND FINDERS
ARTICLE 23 ASSIGNMENT
ARTICLE 24 NOTICES
ARTICLE 25 ALTERATIONS
ARTICLE 26 EXHIBITS
ARTICLE 27 SEVERABILITY
ARTICLE 28 HEADINGS
ARTICLE 29 NON-EXCLUSIVITY
ARTICLE 30 COUNTERPARTS
EXHIBIT A INVENTORY
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CONSIGNMENT AGREEMENT
THIS AGREEMENT is made this 1st day of October, 1996, and effective as
of October 3, 1996, between JET AVIATION TRADING, INC., having its principal
place of business at 1170 N.W. 163rd Drive, Miami, FL 33169, (hereinafter
referred to as the "CONSIGNEE") and JET AVIONICS SYSTEMS, INC., having its
principal place of business at 1170 N.W. 163rd Drive, Miami, FL 33169
(hereinafter referred to as the "OWNER").
PREAMBLE
WHEREAS:
(a) The OWNER owns various spare commercial aircraft parts
(hereinafter the "Inventory") which it desires to sell; and,
(b) The CONSIGNEE is in the business of selling spare commercial
aircraft parts and aircraft engine parts; and,
(c) The OWNER is desirous of appointing the CONSIGNEE as the
exclusive consignee of the Inventory for the purpose of the
repair and sale thereof; and,
(d) The CONSIGNEE has represented to the OWNER that it has the
staff, facilities and financial security to carry out its
proposed obligations as set out below.
NOW, THEREFORE, in consideration of the premises and material
covenants herein contained, the parties hereto agree as follows:
OWNER: S.T.
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CONSIGNEE:/s/
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ARTICLE 1 - DEFINITIONS
(a) AGREEMENT - shall mean this Agreement and any exhibits and/or
amendments attached hereto.
(b) CURRENT LIST PRICE - shall mean the manufacturers current list price
as published from time to time by the manufacturer of the Inventory.
(c) INVENTORY - shall mean the spare commercial aircraft parts consigned
to CONSIGNEE for sales as listed in attached Exhibit "A" as amended
from time to time.
ARTICLE 2 - SUBJECT MATTER
OWNER may, at its sole discretion from time to time, upon prior
written notice, deliver to CONSIGNEE Inventory being the property of OWNER on
consignment for sale by CONSIGNEE. Each item of Inventory delivered to
CONSIGNEE hereunder shall be added to Exhibit "A" attached hereto, and such
Exhibit "A" shall automatically be amended to constitute the Inventory for the
purposes of this Agreement. The failure of the parties, as a result of mistake,
neglect or inadvertence, to amend Exhibit "A" hereto shall not affect the
validity of this Agreement which shall cover all Inventory delivered by OWNER
to CONSIGNEE during the term of this Agreement even absent an appropriate
amendment to Exhibit "A" to reflect such delivery.
ARTICLE 3 - TERM OF AGREEMENT
This Agreement shall remain in force for a period of one (1) year,
commencing upon the execution of this Agreement, unless terminated prior to the
expiration date of the Agreement by either party giving a minimum of thirty
(30) days prior written notice to the other or by termination due to the breach
of any of the terms and conditions of this Agreement by either party hereto
OWNER: S.T.
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CONSIGNEE:/s/
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(hereinafter referred to as the "Term"). This Agreement may be extended for an
additional year by CONSIGNEE if it is not then in default hereunder.
Upon termination, the Inventory held by the CONSIGNEE shall be
returned to OWNER or to a facility at OWNER's direction. The expenses of such
return, shall be borne by, (a) the party providing the notice of termination,
unless the termination results from breach of this Agreement by the other party
(in which case, all return expenses shall be borne by the party in breach of
this Agreement); or, (b) the party in breach of this Agreement; or, (c)the
CONSIGNEE upon the expiration of this Agreement.
ARTICLE 4 - DELIVERY
OWNER shall deliver to CONSIGNEE at CONSIGNEE's facility at a mutually
agreed upon schedule, the Inventory specified in Article 2 hereof and shall be
responsible for payment of all costs incurred incident to such delivery.
ARTICLE 5 - ACCEPTANCE AND STORAGE
CONSIGNEE shall accept the Inventory and shall provide free of charge
to OWNER secure and proper storage at CONSIGNEE's warehouse in Miami or at such
other place as may be mutually agreed in writing between OWNER and CONSIGNEE.
CONSIGNEE will segregate the Inventory from all other goods held in the custody
of CONSIGNEE, and shall maintain a correct and up-to-date listing thereof.
CONSIGNEE shall maintain a suitably clean and neat place of business
for the storage and sale of the Inventory.
OWNER: S.T.
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CONSIGNEE:/s/
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ARTICLE 6 - TITLE AND RISK
(a) Title to any item of Inventory shall pass from OWNER to
CONSIGNEE immediately upon the delivery of any such item of
Inventory by CONSIGNEE to CONSIGNEE's customer, F.O.B.
CONSIGNEE's premises, after an offer by such customer to
purchase any such item of Inventory, has been accepted by
CONSIGNEE.
(b) Risk of loss or damage to any item of Inventory shall pass
from OWNER to CONSIGNEE immediately upon delivery of such
item to CONSIGNEE's facility.
ARTICLE 7 - INSURANCE/INDEMNIFICATION
CONSIGNEE shall be required to insure OWNER's interest in any
Inventory held by CONSIGNEE and OWNER shall not be required to reimburse
CONSIGNEE for the amount of any premium paid in respect of any insurance
effected by CONSIGNEE.
ARTICLE 8 - SELLING PRICE
The prices at which the respective items of Inventory may be offered
by CONSIGNEE for sale shall be their fair market value as determined by
CONSIGNEE in good faith by comparison to Current List Price and according to
prevailing market conditions at the time of sale(s).
ARTICLE 9 - CONDITIONS OF SALE
STANDARD CONDITIONS OF SALE
Any loss sustained or any expenditure incurred by CONSIGNEE arising
out of the operation or enforcement of the sale of an item or items of
Inventory shall be for CONSIGNEE's account and shall not be recoverable from
OWNER nor made deductible from any money payable to OWNER under the terms and
conditions of this Agreement.
OWNER: S.T.
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CONSIGNEE:/s/
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Notwithstanding the above, in the event that an item of Inventory sold
by CONSIGNEE is rejected by CONSIGNEE's customer within a reasonable period of
time, CONSIGNEE may, at its option, accept return of such item for customer
credit. The returned item of Inventory shall be returned to stock and any
remuneration previously paid to OWNER in accordance with Article 10 hereof
shall be debited from OWNER's proceeds at the next reporting period following
such return.
CONSIGNEE TO COMPLY WITH LAWS
In relation to each sale of an item of Inventory, CONSIGNEE's customer
shall be responsible for obtaining any required authorization such as an Export
License, Import License, or any other required Government authorization,
including without limitation of the foregoing, any present or future rules,
regulations, provisions or requirements of the United States Government, or any
other government instrumentality or authority which prohibits or restricts the
sale or export of goods, services, data or know-how to certain countries.
CONSIGNEE's customer shall issue or make application for (as the case
may be) any requisite license, authority or permit in its own name and shall
not directly, or by implication, use the name of OWNER in any such issue or
application, except as where required by law, without OWNER's prior written
consent.
ARTICLE 10 - REMUNERATION
CONSIGNEE shall be entitled to retain by way of remuneration for the
services rendered by it to OWNER, an amount equivalent to a percentage of the
Net Sales Price of each item of Inventory sold by the CONSIGNEE pursuant to
this Agreement as follows:
OWNER: S.T.
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CONSIGNEE:/s/
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(a) Seventy-Five (75%) percent of the Net Sales Price to OWNER
and Twenty-Five (25%) percent of the Net Sales Price to
CONSIGNEE. The Net Sales Price is the Gross Sales Price less
any costs involved if any item of Inventory is required to be
overhauled, certified or modified in order to be sold, as
outlined in Article 11 herein. All payments to OWNER by
CONSIGNEE will be made as set forth in subparagraph 10(d)
hereof via company check in good bank funds to the following:
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(b) CONSIGNEE shall be responsible for any bad debts, (except
where OWNER has given prior written approval to terms of sale
for promotional purposes) and all administration and selling
expenses incurred by CONSIGNEE including, but not being
limited to, warehousing, advertising, sales promotion,
inspection, preparation for shipment, sales analysis,
performance reports and accountancy.
(c) "Gross Sales Price" shall mean the actual sales price less
any rebates, discounts or allowances, including the cost of
freight out, charged to the customer of CONSIGNEE.
(d) CONSIGNEE shall prepare, at its cost and provide to OWNER a
monthly report which shall be delivered to OWNER no later
than the tenth day of the next succeeding month and which
shall reflect each sale of the OWNER'S Inventory held
OWNER: S.T.
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CONSIGNEE:/s/
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by CONSIGNEE, the gross amount of the sale, and the name of
the purchaser which may be identified with a vendor number
for the convenience of the parties. Payment for such sales
shall be due five days after submittal of the report but, in
any event, no later than the fifteenth (15th) day of the
month next succeeding the month which the report covers.
(e) No later than the first anniversary of the execution date
hereof, CONSIGNEE shall pay to OWNER the amount of $225,000
less the amount of payments previously made to OWNER
hereunder for sales of Inventory under this Article.
(f) Upon the execution hereof, the CONSIGNEE shall honor OWNER's
subscription for 600,000 shares of the CONSIGNEE's Common
Stock. Such shares will be issued upon delivery of OWNER'S
promissory note in the principal amount of $175,000 payable
together with accrued interest at the Applicable Federal Rate
for demand obligation in effect at the date this Consignment
Agreement is executed, as determined by the Internal Revenue
Service, per annum, upon demand. After the OWNER has received
$500,000 in payments from CONSIGNEE hereunder, CONSIGNEE may
apply the next monies due OWNER hereunder to the unpaid
principal and interest due on said promissory note. (g) If
CONSIGNEE shall have made an initial public offering of
equity securities during the term hereof and shall have
raised at such offering net proceeds to CONSIGNEE of
$5,000,000 or more, then CONSIGNEE shall pay to OWNER in
exchange for all
OWNER: S.T.
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CONSIGNEE:/s/
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remaining Inventory the sum of $675,000 less all payments
previously made to OWNER hereunder.
ARTICLE 11 - PARTS IMPROVED OPTION
CONSIGNEE agrees to repair and/or overhaul the Inventory as may be
required in its opinion to put the Inventory in such a condition as to render
it saleable. Costs incurred in repairing and/or overhauling the Inventory shall
be deducted by CONSIGNEE in accordance with Article 10 hereof.
ARTICLE 12 - TAXES
Taxes imposed by any Federal, State or Local taxing authority within
the United States and payable as a result of any sale, use, delivery, storage,
or transfer of goods shall be borne by CONSIGNEE. All taxes imposed upon or
measured by the net income or gross revenues of OWNER shall be the
responsibility of OWNER.
ARTICLE 13 - WARRANTY OF TITLE
OWNER warrants that all Inventory consigned to CONSIGNEE under this
Agreement shall have marketable title, free and clear of all liens, claims and
encumbrances whatsoever. Further, OWNER warrants that it shall defend such
title forever to CONSIGNEE and CONSIGNEE's third party customer(s).
ARTICLE 14 - MATERIAL CERTIFICATION
OWNER certifies the following to CONSIGNEE:
(a) Each item of Inventory covered by this Agreement was produced
by a manufacturer holding an FAA Approved Production
Inspection System issued under FAR 21, Sub
OWNER: S.T.
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CONSIGNEE:/s/
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Part F, or by a manufacturer holding an FAA Production
Certificate issued under FAR 21, Sub. Part G. Each item of
Inventory was manufactured by the prime manufacturer or its
approved manufacturing/supplier source holding one of the
following agreements/approvals; (i) a Fixed Quantity
Licensee/Consignment Agreement, or; (ii) an FAA/PMA Licensee
Agreement, or; (iii) written approval for Direct Ship
Authority from the prime manufacturer. None of the items of
Inventory have been subjected to severe stress or heat (as in
major aircraft, engine failure, accident or fire); and,
(b) The Inventory shall be sold by CONSIGNEE in an "as is"
condition and OWNER makes no warranties, guarantees or
representations of any kind, either express or implied,
statutory or otherwise, except as set forth herein, with
respect to the Inventory or any other equipment or parts
delivered by OWNER to CONSIGNEE hereunder including any items
of Inventory overhauled/repaired or recertified in accordance
with Article 11 hereof; and
(c) OWNER shall certify and supply all applicable records, data
and certification identifying back-to-birth records for life
limited and/or time controlled items of Inventory, where
applicable; and,
(d) All serialized and non-serialized items of Inventory
(rotable, repairable and.or engine) will be accompanied with
traceability to a commercial aviation regulated source,
OWNER: S.T.
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CONSIGNEE:/s/
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(e) In accordance with ATA Specification 106 and Federal Aviation
Regulation ss.21.321 Sub. Part L, all Airworthy items of
Inventory which are Class II products will be accompanied by
FAA or airworthiness releases.
(f) Each rotable, repairable and/or engine items of Inventory
that is certified airworthy will be accompanied by its
teardown/work report; and,
(g) Airworthiness release certificates, where applicable, will
identify the FAA repair station number and the signature of
the approving inspector, as well as all other pertinent
information.
ARTICLE 15 - OWNER'S RIGHTS OF ACCESS
CONSIGNEE shall allow any duly authorized representative of OWNER the
right of free and unrestricted access during normal business hours to all
Inventory held by CONSIGNEE and shall provide all reasonable facilities for
inspection and audit of the said Inventory and of CONSIGNEE's records relative
to the receipt, storage and sale thereof. In the event that such audit
discloses a deficiency in the quantity of the Inventory, then CONSIGNEE shall
have the right of substitution of a part that is of equal or greater value or
shall be liable to pay compensation to OWNER at the minimal sales price for
such item(s) as previously agreed upon between the parties and in accordance
with Article 8 herein.
ARTICLE 16 - TERMINATION FOR INSOLVENCY
CONSIGNEE hereby waives its right to assume or reject this Agreement
in the event that it is adjudicated a bankrupt unless it assumes this Agreement
within thirty (30) days of such adjudication which shall be determined by the
entry of an order for relief in any bankruptcy, whether
OWNER: S.T.
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CONSIGNEE:/s/
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voluntary or involuntary. CONSIGNEE further expressly consents to OWNER being
granted relief from the automatic stay provision under the Bankruptcy Code, 11
U.S.C. ss.362, thirty (30) days after the aforesaid entry of an order for
relief, unless within such time an order has been entered by the bankruptcy
court permitting CONSIGNEE to assume this Agreement and, in connection with
such assumption, curing any defaults of CONSIGNEE pursuant to the terms of this
Agreement.
ARTICLE 17 - INCOMPLETE SALES AT TERMINATION
OWNER will allow CONSIGNEE ninety (90) days from the date of receipt
of notice of termination to complete the deliveries of items(s) which were sold
prior to the receipt of notice of termination pursuant to Article 16 hereof.
ARTICLE 18 - REGISTRATION OF OWNER'S INTEREST
CONSIGNEE shall do all acts and things necessary, give all consents
and sign all documents required to be given or signed at OWNER's reasonable
request so as to ensure that OWNER's right to and interest in the Inventory is
protected as against the present or potential claims of any third party,
including but not limited to those of CONSIGNEE's creditors, mortgagees,
financiers, security holders and CONSIGNEE's related/associated companies,
businesses or individuals, AND FURTHER the said acts and things shall include,
but not be limited to any consents, statements or duly completed documents or
forms required to register OWNER's interest in the Inventory in any State or
Federal registry of interest in corporate, business or individual property,
assets, stock in trade, shares or any other interest in property of any kind
howsoever held. This obligation shall continue throughout the Term hereof and
any holding over.
OWNER: S.T.
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CONSIGNEE:/s/
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ARTICLE 19 - FORCE MAIEURE
Neither OWNER nor CONSIGNEE shall be liable for damages for any delay
or failure to perform their respective obligations under this Agreement which
are due to causes beyond their control, including but not restricted to, acts
of God, acts of public enemies, acts of the Government, whether legal or
illegal, fires, floods, epidemics, quarantine restrictions, industrial
disputes, lockouts, strikes, work slow-downs, freight embargoes, or unusually
severe weather, provided however, that the party seeking to rely on such causes
shall, within seven (7) days, notify the other party in writing of the cause of
any such delay and such party shall make all reasonable efforts to reduce the
effect of such delay on the operation of this Agreement.
ARTICLE 20 - CONFIDENTIALITY
Each party agrees (except with the prior written consent of the other
party):
(a) not to disclose details of this Agreement to any third
parties other than its financial and legal advisers; and,
(b) to maintain confidentiality of all information exchanged
between the parties, including pricing information and other
proprietary knowledge, held as confidential between OWNER and
OWNER's suppliers and CONSIGNEE and CONSIGNEE's customers,
and not to use such for the benefit of any third party.
Such confidentiality shall survive the Term of this Agreement.
ARTICLE 21 - APPLICABLE LAW
The provisions of this Agreement and all rights and obligations
hereunder shall be governed by and construed in accordance with the laws of the
State of Florida.
OWNER: S.T.
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CONSIGNEE:/s/
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Both parties hereby agree that this Agreement shall be deemed to have
been made in the County of Dade, Florida, and that any suit, action or
proceeding arising out of or relating to this Agreement may be instituted in
any State or Federal court having its situs within the County of Dade, Florida
and each party hereby waives the personal service of any and all process and
consent that all such service of process may be made by certified mail, return
receipt requested, directed to the address set forth herein for each party. Any
such notice shall be effective and shall be deemed to have been given when
received at, or after refusal to receive, at the addresses set forth herein or
at such other substitute addresses provided in accordance with this Article.
ARTICLE 22 - BROKERS AND FINDERS
CONSIGNEE and OWNER each agree that there are no third parties
involved as brokers and finders in this transaction. OWNER indemnifies
CONSIGNEE from liability for any fees, commissions or other claims made,
including all legal costs, due to such claims caused by the indemnifying party.
ARTICLE 23 - ASSIGNMENT
This Agreement shall not be assigned in whole or in part by either
party hereto without the prior written consent of the other party.
ARTICLE 24 - NOTICES
All notices or requests under this Agreement shall be in writing and
shall be deemed to have been adequately given when received by the party to
whom such notice or request is given. Notices may be delivered personally, by
first class mail, postage prepaid, by reputable courier or by facsimile
transmission and shall be addressed as follows:
OWNER: S.T.
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CONSIGNEE:/s/
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If to CONSIGNEE: Jet Aviation Trading, Inc.
1170 N.W. 163rd Drive
Miami, FL 33169
If to OWNER: Jet Avionics Systems, Inc.
1170 N.W. 163rd Drive
Miami, FL 33169
or to such other address as either party may designate, from time to time, by
written notice to the other party.
ARTICLE 25 - ALTERATIONS
This Agreement shall be effective only when duly signed by both
parties hereto. It contains the entire understanding between the parties and
may not be changed, modified or altered, nor any of its provisions waived,
except by an agreement in writing signed by the parties hereto. All prior
agreements or understandings between the parties in connection with the subject
matter of this Agreement are superseded hereby and the waiver of any term of
condition herein by either party shall not be deemed a waiver of any subsequent
term or condition hereof.
ARTICLE 26 - EXHIBITS
Any Exhibits to this Agreement or side letters or referring to this
Agreement and duly agreed to by both parties in writing shall automatically
become a part of this Agreement and unless specifically stated otherwise, the
provisions of this Agreement shall prevail in the event of any inconsistency.
ARTICLE 27 - SEVERABILITY
In the event that any provision of this Agreement is rendered void,
invalid, or unenforceable in a certain jurisdiction, then such provision (or
part thereof) may be severed from this Agreement
OWNER: S.T.
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CONSIGNEE:/s/
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without affecting the remaining provisions hereof, as long as such severance
does not have a material adverse affect on the performance of this Agreement.
ARTICLE 28 - HEADINGS
The headings to the clauses of this Agreement are for the purpose of
reference only and in no way define, limit or describe the scope of intent of
this Agreement.
ARTICLE 29 - NON-EXCLUSIVITY
The relationship of OWNER and CONSIGNEE under this Agreement is
non-exclusive. Both parties reserve the right to enter into agreements with
other parties for the provision of similar or identical services at any time
during the Term of this Agreement. Further, nothing herein shall authorize
either party to hold itself out as acting for or on behalf of the other party.
ARTICLE 30 - COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall constitute an original but all of which taken
together shall constitute one and the same instrument. A facsimile signature on
any counterpart hereto shall be deemed an original for all purposes.
IN WITNESS WHEREOF, the parties hereto by their duly authorized
officers have executed this Agreement as of the day and year first above
written.
FOR: JET AVIATION TRADING, INC.
BY:/s/ Joseph J. Nelson
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NAME: Joseph J. Nelson
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TITLE: President & C.E.O.
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DATE: October 1, 1996
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OWNER: S.T.
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CONSIGNEE:/s/
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FOR: JET AVIONICS SYSTEMS, INC.
BY:/s/ Sharon Taoz
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NAME: Sharon Taoz
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TITLE: President
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DATE: October 1, 1996
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OWNER: S.T.
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CONSIGNEE:/s/ ST
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EXHIBIT "A"
INVENTORY
SEE DOCUMENTS ATTACHED HERETO AND MADE A PART HEREOF
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