EXHIBIT 10.20
DISTRIBUTION AGREEMENT
This agreement is entered into this 26 January 2000 by and between
Rockford Corporation with headquarters at 546 South Rockford Drive, Tempe,
Arizona 85281, U.S.A. (hereinafter "Rockford"), and Ezcony Trading Corporation,
an importer, located in the Colon Free Trade Zone, Panama (hereinafter
"Distributor"). Both parties agree as follows:
1. Rockford hereby appoints the Distributor as its sole distributor for the
products manufactured by Rockford and its Rockford Fosgate product lines
(hereinafter "Products"), only within the following sales territory; Brazil,
Paraguay, Argentina, Chile, Peru, Bolivia, Uruguay, Colombia, Ecuador, Surinam,
Panama, Costa Rica, Nicaragua, Honduras, El Salvador, Guatemala, Belize, Guyana,
all of the Caribbean, including Dominican Republic, Jamaica, Haiti, St. Martin,
and Mexico (hereinafter "Territory"); and Rockford hereby agrees not to appoint,
or permit sales by, any other distributors or dealers of the Products in the
Territory. The distributor agrees not to sell the Products to any other
distributors, dealers or consumers for the purpose of selling the products
outside the Territory. Distributor may not sell the Products outside the
Territory or by using the Internet or other electronic media. This would be
considered transshipping and would be grounds for immediate termination.
Distributor will be permitted to advertise that they are the authorized
distributor of Rockford products on the Internet but may not take orders or
make sales directly via the Internet. Further, Distributor may advertise that
he is the authorized distributor for the above mentioned territory in American
Airlines' and COPA Airlines' in-flight magazines and must include the disclaimer
"subject to authorized distribution territory."
All advertisements must be pre-approved by Rockford. Distributor agrees that no
advertisements will contain pricing and or be directed toward the end user.
Distributor acknowledges that these restrictions are reasonable in light of
Distributor's warranty obligations within the Territory and lack of
authorization to provide warranty service outside the Territory.
2. Direct orders or inquires for the Products received by Rockford from third
parties within the Territory will be conveyed at the earliest possible moment to
the distributor, who will be left the discretion to decide if they desire a
shipment from Rockford to the third party, or whether they wish to transact such
business by selling from their stock. At no time will Rockford ship directly to
a third party without a written request from the Distributor. In either case of
such a sale, the responsibility for warranty repair of the Products remains the
Distributor's throughout the life of the Product sold by Distributor.
3. In consideration of this exclusive appointment by Rockford to sell the
Products in the Territory, the Distributor, during the continuance of this
Agreement, hereby agrees not to import, handle or sell goods which are identical
or similar to the Products, either directly or indirectly, if such other
products would or might compete or interfere with the sale of the Products by
the Distributor pursuant to the terms of this Agreement, except any such
identical or similar goods that are handled and brought to Rockford's attention
before this Agreement is signed. Rockford acknowledges that at the time of
signing of this agreement, Distributor currently imports, handles and/or sells
Aiwa, Pioneer and Sony mobile electronics products.
4. The distributor agrees to purchase the Products from Rockford in a volume of
USD Four Million Six Hundred Thousand (US$4,600,000.00) in the calendar year
2000 beginning at the execution date of this agreement. Future purchase goals
will be set on an annual basis. Unless
Exhibit 10.20 - Page 1
negotiated, only those products purchased that do not exceed a net discount of
thirty percent (30%) (including rebates) will count towards purchase goals.
Due to the transition from previous distributors to Ezcony Trading Corp., not
all authorized sales territories listed in this agreement will be open to
distributor for soliciting of sales until April 1, 2000 or such date that the
prior distributor's final termination date. Therefore, a separate goal of
US$350,000 will be established for the first calendar quarter for the year 2000
(January, February & March).
5. The Distributor hereby agrees to serve Rockford during the continuance of
this Agreement diligently and faithfully and to use its best endeavors to extend
and promote the sale of the Products in the Territory, and to submit sales
reports on market conditions at regular intervals, at least semi-annually. The
warranty repair of the Products will be the responsibility of the Distributor
throughout the life of all Products sold by Distributor.
6. Rockford hereby agrees to provide the Distributor with an adequate supply of
publicity and technical literature on the Products; and the distributor agrees
to carry out his local advertising and sales promotion efforts at his own cost.
7. All the purchases by the Distributor from Rockford shall be conducted through
a formal written purchase order or written inquiry form with all the necessary
information furnished thereon. The currency used in purchasing shall be US
Dollars only; and the prices shall be the same as established by Rockford's then
effective export price lists. Terms of payment for all purchases shall be 75
days from invoice date. The distributor agrees to pay Rockford accordingly.
8. This Agreement shall be effective as of 26 January, 2000 and will continue
without termination through December 31, 2000 and shall be automatically renewed
upon expiration for additional one year periods, unless and until a new
Agreement is signed by both Parties or either Party gives 30 days written notice
of termination. Such termination shall create no liability for direct,
consequential, or other damages.
9. Rockford and the Distributor are acting as independent contracting parties in
entering into this Agreement, and neither shall act as the agent or
representative of the other nor have the power to bind the other in any way in
dealing with third parties.
10. All of Rockford and Hafler trade names, trademarks, logotypes and trade
dress or styles shall at all times be and remain the sole property of Rockford.
Rockford grants to Distributor a non- exclusive, nontransferable, terminable
license to use the marks associated with the Products, as listed on Exhibit A
(the "Licensed Marks") during the term of this Agreement and solely in
connection with its sale of the Products in the Territory. Rockford reserves all
rights not expressly granted to Distributor in this Agreement. This Agreement
does not grant to Distributor any rights in trademarks, service marks, logos or
other designs other than Licensed Marks. Upon termination of this Agreement by
either party, the Distributor shall immediately cease all use of the Licensed
Marks.
To assure that the production, appearance, and quality of each of the Licensed
Marks are consistent with Rockford's reputation for high quality, and with the
goodwill associated with its reputation and the Licensed Marks, and to insure
the preservation of the Licensed Marks and Rockford's rights in them,
Distributor will: (1) use the Licensed Marks only in connection with the
promotion and sale of the Products and only in the forms that Rockford approves
in writing, without any changes or modifications; (2) comply with all other
instructions issued by Rockford, in its sole discretion, to maintain the quality
of the Licensed Marks; (3) use appropriate legends, markings, and notices as
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Rockford directs to give notice to the consuming public of Rockford's right,
title, and interest in the Licensed Marks; (4) not use markings, legends, or
notices on or in association with the Licensed Marks unless Rockford approves in
writing; and (5) not register any of Rockford and Hafler trade names as Internet
domains.
Distributor acknowledges that any violation of this section will result in
irreparable harm to Rockford and will give Rockford the right immediately to
terminate this Agreement and the license to use the Licensed Marks.
Distributor acknowledges that Rockford is the owner of the Licensed Marks, of
all other Rockford and Hafler trade names, trademarks, logotypes and trade dress
or styles, and of the goodwill associated with all such marks. Distributor's use
of the Licensed Marks will inure to the benefit of Rockford. Distributor will
not, at any time, acquire any rights in the Licensed Marks by virtue of its use
of the Licensed Marks.
Distributor will not use all or part of any Rockford trade name or trade mark,
or any Licensed Mark, as part of its corporate name. Distributor also will not
register or otherwise use any Internet domain name that uses all or part of any
Rockford tradename or trade mark, or any Licensed Mark, or that might lead
Internet users to believe that a site is associated with Rockford.
Nothing in this Agreement transfers to Distributor any right, title, or interest
in and to the Licensed Marks, or any other Rockford and Hafler trade names,
trademarks, logotypes and trade dress or styles, other than as specifically
granted in this Agreement. Distributor acknowledges that this license terminates
upon termination of this Agreement.
11. Should any dispute arise between Rockford and the distributor as to the
interpretation or application of this Agreement, it shall be subject to the laws
then in force in the State of Arizona, United States of America, where the
Agreement originated. Disputes will be resolved by arbitration in Maricopa
County, Arizona, U.S.A., under the then current Rules for Commercial Arbitration
of the American Arbitration Association. The decisions of the arbitrators are
final and may be enforced in any court with jurisdiction over the parties.
12. Rockford Corporation shall export all Products (commodities, technology or
software) in accordance with Export Administration Regulations of the Bureau of
Export Administration, United States Department of Commerce. Distributor shall
not participate in any re-export or release of Products contrary to U.S. law.
This shall not affect compliance with Distributor's local laws and regulations.
IN WITNESS WHEREOF, Rockford and the distributor have by persons duly
authorized, executed this Agreement at Tempe, Arizona on the aforesaid 26
January, 2000.
Signed by: /s/ Enrique Lacs
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Print Name: Enrique Lacs
Title: V.P. Operations
Exhibit 10.20 - Page 3
ADDENDUM TO DISTRIBUTION AGREEMENT
This shall serve as an addendum to the Distribution Agreement between Rockford
Corporation and Ezcony Trading Corporation. The parties hereby agree to the
following additional terms and conditions and these shall form an integral part
of the Distribution Agreement.
TERRITORY: The Territory specifically excludes Puerto Rico and Venezuela.
TERMS OF DELIVERY: Delivery terms shall be Ex Works Grand Rapids, Michigan or
Gilbert, Arizona USA (as defined in the latest version of I.C.C. Incoterms).
Rockford shall pay inland freight to either Laredo, Texas or Miami, Florida.
PRICING: Rockford shall provide Ezcony with an 18% export discount from its then
effective export price list except on source units and CD Changers which will
receive a 14% export discount.
REBATE: An additional 7% Volume Rebate will be paid by Rockford to Ezcony in
the form of a credit memo upon Ezcony achieving the following purchase goals
from Rockford:
January- March 31, 2000 USD 350,000.00
April 1 - June 30, 2000 USD 750,000.00
July 1- Sept. 30, 2000 USD 1,500,000.00
October- Dec. 31, 2000 USD 2,000,000.00
January- March 31, 2000 USD TBD
For Distributor:
By: /s/ Enrique Lacs
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Title: V.P. Operations
Exhibit 10.20 - Page 4