Exclusive Distribution Agreement

EXHIBIT 10.10


EXCLUSIVE
---------
DISTRIBUTION AGREEMENT
----------------------


This Distribution Agreement is made and entered into as of this 29th day of December, 1995, by and between HOME ARCADE SYSTEMS, INC., a California corporation ("Home Arcade"), and SC&T2 INTERNATIONAL, INC., an Arizona corporation ("SC&T").


RECITALS
--------


A. Home Arcade manufactures and sells products. Home Arcade's products include a steering wheel for use on video arcade games. The steering wheels, as well as any modifications thereto, are hereinafter referred to as the "Products."


B. Home Arcade desires to engage SC&T as the exclusive distributor of the Products to customers throughout the Territory, as hereinafter defined.


AGREEMENT
---------


NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties hereto agree as follows:


1. Appointment of SC&T. Subject to and in accordance with the terms and conditions of this Agreement, Home Arcade appoints SC&T as the sole exclusive distributor of the Products for Home Arcade in the Territory during the term of this Agreement, and SC&T accepts such appointment and agrees to act as the exclusive distributor of the Products in the Territory.


2. Territory. SC&T's area of responsibility shall be the territory described in Schedule A attached hereto (the "Territory"). Home Arcade will promptly forward to SC&T all leads and inquiries, from and subsequent to December 15, 1995, with respect to the Products received by Home Arcade from entities located in the Territory including, without limitation, prior customers of Home Arcade.


3. Ordering Procedures. All orders of the Products pursuant to this Agreement shall be subject to the terms and conditions set forth in this Agreement, notwithstanding the terms specified in any purchase order. Whenever SC&T desires to purchase any of the Products, it shall give to Home Arcade, at least 15 days prior to the desired shipping date of such Products, a signed written purchase order specifying the quantities and product numbers of the Products desires to be purchased and, in the case of any Products to be shipped directly to any customer of SC&T, the name and a shipping address of such customer and the name and telephone number of a contact person at such customer. Orders shall be deemed to be accepted by Home Arcade upon receipt unless, within 48 hours after receipt of an order, Home Arcade gives SC&T written notice of non-acceptance.
4. Purchase Price. The initial purchase price for each unit of any Product shall be the per unit purchase price for that product set forth on Schedule B attached hereto, as amended or superseded from time to time as provided herein. Home Arcade shall decrease the respective per unit purchase prices for any or all Products as manufacturing costs drop so as to maintain the gross profit margins of both SC&T and Home Arcade by written notice to SC&T. Home Arcade may increase prices only if the direct cost of materials or construction increase, in which case Home Arcade shall give SC&T at least 90 days' prior written notice of all price increases. The parties shall review prices of Products approximately every 90 days during the term of this agreement, in good faith, to ensure the prices remain proportionate to gross profit margins received by SC&T and Home Arcade. SC&T's price for any Product shall be the lower of the price on the date Home Arcade receives the order for that Product, or the date the Product is shipped.


5. Pricing and Responsibility for Costs. All prices for the Products to be sold hereunder are and shall be prices F.O.B. to SC&T's facility in Phoenix, Arizona (the "Facility"). Products will be shipped in full truckload quantities unless Home Arcade does not have products sufficient to meet such requirement which will cause a partial shipment to be made to meet SC&T's order requirements. The F.O.B. prices shall be determined in accordance with the provisions of Section 4 hereof. All Products shall be packaged by Home Arcade as necessary for protection against normal handling. In the absence of a separate "ship to" designation on an acknowledgment of Home Arcade of a purchase order, Home Arcade is authorized to ship the order to SC&T at SC&T's address. With respect to any Products shipped to any addresses other than the Facility, SC&T shall be responsible for (or shall receive a credit for, as the applicable case may be) the difference in freight costs, actually incurred and the cost to ship the same Products to the Facility. Upon each shipment of the Products, Home Arcade shall notify SC&T of the shipment within 24 hours after shipment.


6. Payment of Home Arcade. Except as otherwise expressly agreed in writing by Home Arcade, payment for the Products shall be made in United States dollars in an amount adequate to cover the full purchase price plus all other charges, if any, incurred by Home Arcade for the account of SC&T, and shall be due and payable within 30 days after the shipping date of such Products.


7. Warranty. Home Arcade warrants that for the period of 12 months after delivery of the Products (the "Warranty Period"), the Products (a) will, when delivered, conform to the description on the face of SC&T's purchase order relating to such Products, and (b) will be free of defects in design, materials and workmanship. Home Arcade shall, at SC&T's option, replace (F.O.B. the Facility), or issue a credit or refund to SC&T for, any nonconforming Products, provided that both (i) SC&T furnishes to Home Arcade written notice, in reasonable detail, of the nonconformity of the Products within the Warranty Period, and (ii) if Home Arcade requests, SC&T delivers the Products claimed to be nonconforming to Home Arcade, within 20 days after the notification by SC&T pursuant to subsection (i) above. A new Warranty period shall be established pursuant to this Section for any replaced products. This warranty shall extend to SC&T's customers.
2
8. Duties of SC&T. Home Arcade shall exercise no control over the management and operation of SC&T, and, except as otherwise set forth herein, SC&T shall have full discretion as to the price charged, marketing techniques used, resale, method of payment accepted and all other facets of its distribution business, including, without limitation, the selection and control of any persons or entities through which it may elect to conduct sales.


9. Representations and Warranties of SC&T. SC&T represents, warrants and agrees that it is a corporation duly organized, validly existing and in good standing under the laws of the State of Arizona, with the full right, power and authority, corporate or otherwise, to purchase, own and sell the products and to carry on its business as it is now being conducted and as intended to be conducted in accordance with this Agreement. The execution and delivery of this Agreement, the timely consummation of the transactions contemplated hereby and the full and timely fulfillment of the terms hereof have been duly and validly authorized by all necessary action on the part of SC&T, and this Agreement constitutes the legal, valid and binding obligation of SC&T, enforceable against SC&T in accordance with its terms.


10. Representations and Warranties of Home Arcade. Home Arcade represents, warrants and agrees that it is a corporation duly organized, validly existing and in good standing under the laws of the State of California, with the full right, power and authority, corporate or otherwise, to sell and own the Products and to carry on its business as it is now being conducted and as intended to be conducted in accordance with this Agreement. The execution and delivery of this Agreement, the timely consummation of the transactions contemplated hereby and the full and timely fulfillment of the terms hereof have been duly and validly authorized by all necessary action on the part of Home Arcade, and this Agreement constitutes the legal, valid and binding obligation of Home Arcade, enforceable against Home Arcade in accordance with its terms.


11. Assurance of Home Arcade. Home Arcade shall use its best efforts to manufacture, sell and deliver the Products to SC&T in sufficient quantities to meet the requirements of SC&T, provided, however, that Home Arcade shall be excused for any failure to satisfy such requirements of SC&T in the event of any force majeure or the effects thereof, pursuant to Section 22 hereof.


12. Technical Support. Home Arcade shall provide to SC&T technical support with respect to the Products. SC&T shall provide, by telephone, during SC&T's normal working hours, reasonable technical support to its customers.


13. Trademarks, Trade Names and Corporate Names. The use of any party's trademarks, symbols, trade names, corporate names or other intellectual property rights by the other party shall inure to owner's benefit and shall not give the other party any proprietary rights therein.
3
14. Nondisclosure and Limited ...