Exhibit 10.10(a)
CONSIGNMENT AGREEMENT
BY AND BETWEEN
JET AVIATION TRADING, INC.
("CONSIGNEE")
AND
JET AVIONICS SYSTEMS, INC.
("OWNER")
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
CONSIGNMENT AGREEMENT
THIS AGREEMENT is made this lst day of October, 1996, and effective as
of October 3, 1996, between JET AVIATION TRADING, INC., having its principal
place of business at ▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (hereinafter
referred to as the "CONSIGNEE") and JET AVIONICS SYSTEMS, INC., having its
principal place of business at ▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(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,
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(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 I - 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:
(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
OWNER: S.T.
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CONSIGNEE: /s/
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held 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
OWNER: S.T.
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CONSIGNEE: /s/
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under FAR 21, Sub 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
OWNER: S.T.
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CONSIGNEE: /s/
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entry of an order for relief in any bankruptcy, whether 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.
▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to OWNER: Jet Avionics Systems, Inc.
▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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
OWNER: S.T.
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CONSIGNEE: /s/
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part thereof) may be severed from this Agreement 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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
NAME: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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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/ ▇▇▇▇▇▇ Taoz
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NAME: ▇▇▇▇▇▇ Taoz
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TITLE: President
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DATE: October 1, 1996
OWNER: S.T.
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CONSIGNEE: /s/
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EXHIBIT "A"
INVENTORY
SEE DOCUMENTS ATTACHED HERETO AND MADE A PART HEREOF
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