EXHIBIT 10.28
DISTRIBUTION AGREEMENT
THE SINGING MACHINE CO. INC.
&
ARBITER GROUP PLC
(UNITED KINGDOM)
THIS DISTRIBUTION AGREEMENT is made the 1st day of April 2003.
BETWEEN :-
(1) THE SINGING MACHINE CO. INC., incorporated in United States of America,
with registered office address at 6601 Lyons Road, Building A-7,
Coconut Creek, Florida 33073, United States of America ("the
Supplier"); and
(2) ARBITER GROUP PLC, with registered office address at Wilberforce Road,
London, United Kingdom ("the Distributor").
NOW IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires:-
"FORCE MAJEURE" means, in relation to either
party, any circumstances beyond the
reasonable control of that party
(including, without limitation, any
strike, lock-out or other form of
industrial action).
"INTELLECTUAL PROPERTY" means any patent, copyright,
registered design, trade mark or other
industrial or intellectual property
right subsisting in the Territory in
respect of the Products, and
applications for any of the foregoing.
"INVOICE VALUE" means the sums invoiced by the
Supplier to the Distributor in respect
of any Products, less any applicable
value added tax or other taxes, duties
or levies, excluding the amounts of
transport or insurance.
"PRODUCTS" means Home Karaoke Systems CD+Graphics
software formats, CD karaoke players
as well as Cassette tape and DVD
karaoke players, under the label of
"The Singing Machine" set out in The
Singing Machine Catalogue under the
cover of SCHEDULE 1 to this Agreement
and future models from the Supplier
under the same criteria.
"RESTRICTED INFORMATION" means any information
which is disclosed to The Distributor
by the Supplier or to the Supplier by
the Distributor pursuant to or in
connection with this Agreement
(whether orally or in writing, and
whether or not such information is
expressly stated to be confidential or
marked as such).
"TERRITORY" means United Kingdom and Ireland.
"TRADE MARKS" REGISTERED TRADEMARK OF "THE
SINGING MACHINE" AND "KARAOKE VISION",
whether or not the same have been duly
registered in the Territory.
"US DOLLARS" means the lawful currency of the
United States of America.
1.2 The headings in this Agreement are for convenience only and shall not
affect its interpretation.
2. APPOINTMENT OF DISTRIBUTOR
2.1 The Supplier hereby appoints the Distributor as its sole and exclusive
distributor for the sale of all Singing Machine Products in the
Territory and the Distributor agrees to act in that capacity subject to
the terms and conditions of this Agreement. SMC also agrees not to
supply other Karaoke related products to anybody else within the
territory.
3. SUPPLY OF THE PRODUCTS
3.1 The Distributor shall for the Products to be supplied hereunder, be
responsible for:
3.1.1 ensuring the accuracy of the purchase contracts issued to the
Supplier;
3.1.2 providing the Supplier with any information which is necessary
in order to enable the Supplier to fulfill the order and to
comply with the labeling, marketing and other applicable legal
requirements in the Territory; and
3.1.3 obtaining any necessary import licenses, or other requisite
documents, and paying all applicable customs, duties and taxes
in respect of the importation of the Products into the
Territory and their resale in the Territory.
3.2 The Distributor agrees to pay for artwork that the Supplier provides on
behalf of the Distributor for packaging, owner's manuals, website
and/or promotional materials to be used in relation to the Products, if
different from the Supplier's standard packaging:-
3.2.1 developed films and/or colour separations or printing proofs
for the aforesaid materials and/or for the aforesaid purposes;
3.2.2 the Distributor agrees to provide appropriate and accurate
legal markings and descriptions required by the applicable
laws and rules in the Territory in respect to clause 3.2
above.
3.3 For the avoidance of doubt, all the Intellectual Property rights in
respect of the packaging, manuals, website and materials mentioned in
clause 3.2 above shall belong to the Distributor. The Distributor
undertakes not to use it for any other products without the consent of
the Supplier.
3.4 The Distributor shall defend and indemnify the Supplier against any
claim, loss, damages, liability and costs or expenses which the
Supplier may incur arising out of any errors or omission in or in the
infringement of Intellectual Property rights of any third party arising
out of the packaging, manuals, website and materials mentioned in
clause 3.2 above including without limitation such loss, liability and
costs incurred as a result of defending or settling a claim alleging
such liabilities.
3.5 The Supplier shall indemnify the Distributor against any claims,
liability, cost or expense which the Distributor may incur arising out
of the use of cassette deck mechanism, CD deck mechanism, DVD player
etc., without appropriate licenses.
4. PAYMENT FOR THE PRODUCTS
4.1 All of the Products to be supplied by the Supplier pursuant to this
Agreement shall be sold on F.O.B. (free on board) China and/or Hong
Kong basis in US Dollars, and as such the Distributor shall, in
addition to the Invoice Value, be liable for arranging and paying all
costs of transport and insurance.
4.2 Unless otherwise agreed in writing in an individual purchase contract
entered into between the parties hereto in respect of the Products,
payment by the Distributor and accepted by the Supplier shall be made
by Letter of credit and D/A, (documents against payment), interest for
Distributor's account.
5. MARKETING OF THE PRODUCTS
5.1 The Distributor shall use its best endeavours to promote and maximize
the sale of the Products throughout the Territory through its own
channels and through third party customers, who is in the Distributor's
opinion qualified.
5.2 In connection with the promotion and marketing of the Products, the
Distributor shall make it clear, in all dealings with customers and
prospective customers, that it is acting as distributor of the
Products.
5.3 The Distributor shall use its best endeavours to provide the Supplier
with a sale and marketing plan inclusive of advertising, promotion and
selling materials on an annual basis to be revised every 12 months.
5.4 The Distributor agrees not to manufacture or act as distributor for any
goods of the same description as the Products unless a prior written
consent shall have been granted by the Supplier.
5.5 The Distributor agrees not to produce or distribute other products
bearing the Supplier's labels and Trade Marks without prior approval of
the Supplier.
5.6 The Distributor agrees not to sell Products via their website unless
shipments of these sales are made within the Territory.
5.7 Prices shall be agreed upon at the beginning of each year by both the
Supplier and the Distributor and such prices shall be quoted in US
Dollars.
5.8 The Distributor shall obtain written packaging design approval from the
Supplier.
6. SUPPORT AND TRAINING
6.1 The Supplier shall at its own cost from time to time provide the
Distributor with such catalogues, brochures and up to date information
concerning the Products as the Supplier may consider appropriate or as
the Distributor may reasonably require in order to assist the
Distributor with the sale of the Products in the Territory, and the
Supplier shall endeavour to answer as soon as possible any technical
enquiries concerning the Products which are made by the Distributor or
its customers.
7. AFTER SALES SERVICE
7.1 The Supplier agrees to provide spare parts for the products of the
Distributor's choice in the equivalent value of 1% of the total annual
Invoice Value free of charge provided that the Distributor shall be
responsible to pay all costs and expenses in respect of arranging for
and/or transporting such spare parts to be delivered to the Territory.
8. INTELLECTUAL PROPERTY
8.1 Subject to clause 3.3, the Distributor hereby covenants with the
Supplier that unless with a prior written consent of the Supplier, the
Distributor shall not make use of and/or take advantage of the
Intellectual Property rights of the Supplier during the term of this
Agreement.
9. TECHNICAL AND PATENTS IMPROVEMENTS
9.1 Subject to clause 3.3, all Intellectual Property rights arising from or
incidental to any enhancements, improvements or extensions to the
Products or any part thereof, whether designed or invented by the
Supplier or the Distributor, shall belong to the Supplier, whether or
not the same have been duly registered in the Territory.
10. WARRANTIES AND LIABILITY
10.1 The Distributor shall be responsible to give the Supplier up-to-date
and accurate information and advice on the specifications,
requirements, laws and regulations relating to the manufacturing, sale,
distribution and safety of the Products in the Territory.
11. FORCE MAJEURE
11.1 If either party is affected by Force Majeure it shall forthwith notify
the other party of the nature and extent thereof. Neither party shall
be deemed to be in breach of this Agreement, or otherwise be liable to
the other, by reason of any delay in performance, or non-performance,
of any of its obligations hereunder to the extent that such delay or
non-performance is due to any Force Majeure of which if has notified
the other party; and the time for performance of that obligation shall
be extended accordingly.
12. DURATION AND TERMINATION
12.1 This Agreement shall deem to have commences on April 1, 2003 for a term
of 5 years (April 1, 2003 to March 31, 2008) and during the term of
this Agreement, either party may terminate this Agreement by giving to
the other not less than 6 months written notice expiring at or at any
time after the end of that period.
The agreement will be automatically extended for one year unless either
the Distributor or the Supplier notifies the other in writing six
months prior the end of the then current contract term that it does not
intend to renew the agreement.
13. NON-COMPETITION
13.1 The Distributor hereby covenants with the Supplier that neither the
Distributor nor any of its subsidiaries shall, in any country or
territory outside of the Territory engage in the sales, marketing,
distribution and manufacturing of the Products, either on its own
account or in conjunction with any person, firm or company, during the
term of this Agreement, save and except with the prior written approval
from the Supplier.
14. CONFIDENTIALITY
14.1 The Distributor and the Supplier shall at all times during the
continuance of this Agreement and after its termination use its best
endeavours to keep all Restricted Information confidential and
accordingly not to disclose any Restricted Information to any other
person and not use any Restricted Information for any purpose other
than the performance of the obligations under this Agreement. Provided
that the Intellectual Property rights under clause 3.3 are not in any
way restricted by this clause.
14.2 Any Restricted Information may be disclosed by the Distributor to any
customers or prospective customers; any governmental or other authority
or regulatory body, or any employees of the Distributor or of any of
the aforementioned persons, to such extent only as is necessary for the
purposes contemplated by this Agreement, or as it required by law and
subject in each case to the Distributor using its best endeavours to
ensure that the person in questions keeps the same confidential and
does not use the same except for the purposes for which the disclose is
made.
15. TERMINATION
15.1 Either party shall be entitled forthwith to terminate this Agreement by
written notice to the other if:
15.1.1 that other party commits any breach of any of the provisions
of this Agreement and, in the case of a breach capable of
remedy, fails to remedy the same within 30 days after receipt
of a written notice giving full particulars of the breach and
requiring it to be remedied;
15.1.2 an encumbrancer takes possession or a receiver is appointed
over any of the property or assets of that other party;
15.1.3 that other party goes into liquidation (except for the
purposes of amalgamation or reconstruction and in such manner
that the company resulting therefrom effectively agrees to be
bound by or assume the obligations imposed on that other party
under this Agreement); and
15.1.4 that other party ceases, or threatens to cease, to carry on
business.
15.2 The rights to terminate this Agreement given by this clause shall be
without prejudice to any other right or remedy of either party in
respect of the breach concerned or any other breach.
16. OBLIGATIONS AFTER EXPIRY/TERMINATION
16.1 The parties hereto agree that the following clauses shall, where
applicable, continue to bind the parties hereto upon the expiry or
sooner determination of this Agreement:-
16.1.1 Intellectual Property (clauses 3.3 and 8);
16.1.2 Technical and Patents Improvement (clause 9); and
17. GOVERNING LAW
17.1 This Agreement shall be governed by and construed in accordance with
U.S.A. law and the parties hereto agree to submit to the non-exclusive
jurisdiction of the United State of America courts as regards any claim
or matter arising under this Agreement.
18. COMMUNICATION
18.1 Each communication under this Agreement shall be made in writing but,
unless otherwise stated, may be made by telex, fax or letter. Each
communication or document to be delivered to any party under this
Agreement shall be sent to that party at the telex number, fax number
or address, and marked for the attention of the person (if any), from
time to time designated by that party for the purpose of this
Agreement. The initial telex number, fax number, address and person (if
any) so designated by each party are set out in SCHEDULE 2 to this
Agreement.
18.2 Any communication under this Agreement shall be deemed to have been
received (if sent by telex or fax) on the day of dispatch or (in any
other case) when left at the address required by clause 18.1 or seven
days after being sent by prepaid registered post addressed to that
address.
19. ILLEGALITY
19.1 If any term or provision in this Agreement shall be held to be illegal
or unenforceable, in whole or in part, under any enactment or rule of
law, such term or provision or part shall to that extent be deemed not
to form part of this Agreement but the validity and enforceability of
the remainder of this Agreement shall not be affected.
20. INDEPENDENT LEGAL ADVICE
20.1 The parties hereto are aware that each of them shall have the right to
seek independent legal advice before entering into this Agreement.
IN WITNESS WHEREOF the parties hereto have signed this Agreement on the day and
year first above written.
THE SINGING MAHCINE CO. INC. ARBITER GROUP PLC.
/s/ Edward Steele /s/ Andrew Landesberg
- ------------------------------------ -------------------------------
By: Edward Steele By: Andrew Landesberg
Title: CEO Title: Managing Director
/s/ /s/
- ------------------------------------ -------------------------------
Signature Signature
Name of Witness: John Steele Name of Witness: Maria Hall
Personally Known:
[notary seal]
/s/ Marian McElligott
April 10th , 2003