EXHIBIT 10.36
CCTV PRODUCTS SUPPLY AGREEMENT
This CCTV Products Supply Agreement (this "Agreement"), entered into as
of this 20th day of December, 2002 by and between ULTRAK, INC., a corporation
duly organized and existing under the laws of the State of Delaware and having
its principal place of business at Lewisville, Texas (together with the
Purchaser Affiliated Entities, hereinafter referred to as "Ultrak" or
"Purchaser") and PITTWAY CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware ("Supplier") and a wholly-owned
subsidiary HONEYWELL INTERNATIONAL INC., a corporation duly organized and
existing under the laws of the State of Delaware, having its principal place of
business at Morristown, New Jersey ("Honeywell").
RECITALS:
A. Honeywell, Ultrak and certain Affiliates of Ultrak have entered into
that certain Asset Purchase Agreement dated as of August 8, 2002 (as amended to
date, the "Asset Purchase Agreement") pursuant to which Honeywell has agreed to
purchase, and Ultrak has agreed to sell, on the terms and conditions set forth
in the Asset Purchase Agreement, certain business assets of Ultrak involved in
the manufacture and sale of CCTV Products (as herein defined).
B. Following the Closing under the Asset Purchase Agreement, Ultrak
will, among other things, (v) engage in the business of designing,
manufacturing, selling and distributing access control systems, (x) act as a
systems integrator of security systems, (y) seek to sell CCTV Products to
certain Governmental Authorities, and (z) engage in the Excluded Businesses (as
herein defined), in each case in accordance with the terms of Section 6.11 of
the Asset Purchase Agreement.
C. As a condition to the Closing under the Asset Purchase Agreement and
the purchase by Honeywell of the business assets to be purchased thereunder, and
except as otherwise provided herein, (x) Honeywell requires Ultrak, and Ultrak
has agreed as an inducement to Honeywell, to purchase from Supplier and to cause
each Purchaser Affiliated Entity to purchase from Supplier, all of Ultrak's and
such Purchaser Affiliated Entities' requirements for CCTV Products and (y)
Ultrak requires Supplier, and Supplier has agreed, to supply all of Ultrak's and
each Purchaser Affiliated Entity's requirements for CCTV Products, in each case
on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties intending
to be legally bound agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein but otherwise not defined
herein shall have the meaning ascribed thereto in the Asset Purchase Agreement.
(a) "Asset Purchase Agreement" has the meaning set forth in Recital A.
(b) "CCTV Product(s)" shall mean closed circuit television, products,
equipment and systems, including, without limitation, (i) analog video products,
(ii) digital video products, (iii) cameras, domes and telemetry devices, (iv)
video management and transmission devices, (v) monitors and (vi) public address
systems and equipment.
(c) "Excluded Businesses" shall mean (i) in the United States, Canada
and Mexico, the Purchaser's police, public transport and school transport mobile
video products business, (ii) in the United States, Canada and Mexico, the
Sellers' industrial vision source business, (iii) in the United States, Canada
and Mexico, the Purchaser's consumer/do-it-yourself security business (which
includes Internet sales consistent with the Purchaser's past practice) and (iv)
the Purchaser's personal protection business. For the avoidance of doubt, the
Excluded Businesses shall not include the Purchaser's access control business.
(d) "Limited Warranty" shall have the meaning set forth in Section
9(a).
(e) "Person" shall mean any natural person, firm, limited liability
company, general partnership, limited partnership, joint venture, association,
corporation, trust, Governmental Authority or other entity.
(f) "Purchaser Affiliated Entity" shall mean any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, the Purchaser. The terms "controlled by" and "under common control with"
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract or credit arrangement, as trustee or executor,
or otherwise.
(g) "Term" shall have the meaning set forth in Section 3.
2. PURCHASE REQUIREMENTS.
(a) Subject to Section 2(b), Purchaser agrees to purchase (and cause
the Purchaser Affiliated Entities to purchase), upon the terms and conditions
set forth herein, all of the requirements of Purchaser and the Purchaser
Affiliated Entities for CCTV Products. Accordingly, and subject to Section 2(b),
in connection with Purchaser's or any Purchaser Affiliated Entities' sales or
installations of security systems that incorporate or utilize CCTV Products,
whether digital or analog, regardless of the identity of the customer and
regardless of whether Purchaser or any Purchaser Affiliated Entity is acting as
a systems integrator or designer, manufacturer, seller or distributor of access
control products and systems, Purchaser agrees that neither Purchaser nor any of
the Purchaser Affiliated Entities shall, during the Term of this Agreement,
purchase from any source other than Supplier, or otherwise acquire or
manufacture, any CCTV Products, except as otherwise permitted by this Agreement.
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(b) Purchaser shall deliver to Supplier on or before the first day of
each calendar quarter during the Term a non-binding forecast of the quantity and
description of CCTV Products anticipated to be required by Purchaser during such
calendar quarter.
(i) Orders in the Ordinary Course. Purchaser's orders in the
ordinary course of business for CCTV Products shall be filled (generally from
inventory) consistent with Supplier's customary business practices. If Purchaser
delivers to Supplier a written purchase order (including via electronic
transmission) in the ordinary course of business for CCTV Products, such order
will be deemed to be rejected by Supplier if Supplier fails to respond to
Purchaser by either filling the order or confirming in writing within five (5)
business days after receipt of such order a reasonable delivery time schedule.
(ii) Orders Outside the Ordinary Course. Supplier and Purchaser
shall cooperate with each other and use commercially reasonable efforts to
coordinate delivery time schedules with respect to orders outside the ordinary
course of business (generally involving large projects or contracts).
(iii) Any term or condition in a purchase order which contradicts
this Agreement shall be void and the provisions of this Agreement shall control.
Supplier shall use all commercially reasonable efforts to sell to
Purchaser its requirements for CCTV Products as contemplated in Section 2(a)
herein. In the event Supplier is unable to supply a CCTV Product in sufficient
quantity and within a commercially reasonable time to fulfill Purchaser's
requirements for such CCTV Product or a customer of Purchaser or a Purchaser
Affiliated Entity requests a CCTV Product not manufactured by Supplier,
Purchaser or such Purchaser Affiliated Entity may procure such CCTV Product from
an alternative source until such time as Supplier is able to meet Purchaser's or
the Purchaser Affiliated Entity's requirements for such CCTV Product within a
commercially reasonable time; provided, however, that Purchaser and each
Purchaser Affiliated Entity shall be permitted to procure CCTV Products from an
alternative source only after (i) using commercially reasonable efforts to
encourage its customer to purchase CCTV Products either manufactured by Supplier
or which Supplier is able to source within a commercially reasonable time from
third parties (including CCTV Products available through Supplier which are the
functional equivalent of the CCTV Product requested by Purchaser's or the
Purchaser Affiliated Entity's customer), and (ii) providing Supplier with
reasonable written notice (including email) that a customer of Purchaser or such
Purchaser Affiliated Entity requires CCTV Products which Supplier is unable to
manufacture or source from third parties. Such procurement from alternative
sources shall be Purchaser's sole remedy in the event Supplier is unable to
supply CCTV Products to Purchaser.
(c) Notwithstanding anything to the contrary in this Agreement, the
terms of this Agreement shall not apply with respect to the Sellers' purchase of
products in connection with the Excluded Businesses.
3. TERM.
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This Agreement is effective from the date hereof and shall continue for
an initial period of twenty-four (24) months. Upon the written consent of Ultrak
and Supplier given at least ninety (90) days prior to the end of the
then-applicable period, this Agreement shall renew for successive one (1) year
periods. The initial period and all renewal periods shall be referred to as the
"Term" of this Agreement.
4. PRICING OF CCTV PRODUCTS.
Prices for purchases of CCTV Products by Purchaser shall be as set
forth on Appendix A.
5. PAYMENT.
Purchaser shall make payment to Supplier for CCTV Products within 30
days after shipment in United States dollars by wire transfer or check written
upon a United States money center bank subject to collection; provided, however,
in the event Purchaser shall fail to honor such payment terms with respect to
any shipment by Supplier, Supplier may thereafter sell upon such shorter or
other payment terms, including shipment against letter of credit, consistent
with Supplier's credit practices then in effect.
6. SHIPMENT.
(a) Supplier shall use commercially reasonable efforts consistent with
Supplier's practices for its other significant customers to promptly deliver
CCTV Products to Purchaser in accordance with the terms of the Purchase Order.
Shipment of such CCTV Products will be made to Purchaser, to the extent
commercially reasonable, from Supplier's nearest source of such CCTV Products.
(b) Supplier shall effect shipments by any ground transportation,
vessel or airfreight of any flag at any port or airport in the country of
Supplier's plant point of shipment. The delivery terms for all shipments shall
be FOB Supplier's plant point of shipment (as defined in the Uniform Commercial
Code of the State of Delaware). Title to and risk of loss or damage to all or
any part of CCTV Products shall pass to Purchaser upon delivery of CCTV Products
to the carrier for shipment.
(c) All costs of shipping, transporting and/or insuring CCTV Products,
including all applicable stamp, duties, tariffs and similar import and export
charges, and all sales and use taxes, VAT and any other transfer taxes, shall be
paid by Purchaser.
(d) Supplier shall be responsible for all franchise, income and similar
taxes imposed on or assessed to Supplier as a result of fulfillment of its
obligations under this Agreement.
7. INSPECTION.
Upon arrival of the CCTV Products to the point of destination,
Purchaser shall inspect CCTV Products under such shipment. Claims for shortages,
incorrect materials or invoicing
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errors must be made by Purchaser to Supplier within fifteen (15) days of the
arrival of the CCTV Products to the point of destination. In the event of any
such shortages, incorrect materials or invoicing errors, Purchaser shall follow
the procedure set forth in Appendix C attached hereto and shall be limited to
the remedies set forth in Appendix C.
8. SPECIFICATIONS AND TECHNICAL DOCUMENTS.
CCTV Products to be supplied by Supplier to Purchaser under this
Agreement shall be in accordance with the specifications to be agreed by the
parties at the time of invoicing. Purchaser may provide specification
requirements for countries outside of the United States, and at Purchaser's
written request, Supplier will use its best efforts to provide assistance in
obtaining all necessary approvals (any expenses including obtaining such
approvals to be borne by Purchaser).
9. LIMITED WARRANTY.
(a) Supplier shall grant to Purchaser a limited warranty in accordance
with its customary product warranty policies in effect as of the day a CCTV
Product is shipped to Purchaser (the "Limited Warranty"). Notwithstanding
anything to the contrary in this Agreement, the Limited Warranty shall not apply
with respect to CCTV Products manufactured or acquired by Ultrak or any
Purchaser Affiliated Entity prior to the date hereof.
(b) Purchaser shall be entitled to offer, as an exclusive limited
warranty to Purchaser's customers, the Limited Warranty. Purchaser covenants and
agrees not to make or offer any other warranty with respect to CCTV Products
unless Purchaser retains full responsibility for such additional warranty.
(c) EXCEPT FOR ANY LIMITED WARRANTY TO BE GRANTED IN ACCORDANCE WITH
SUPPLIER'S CUSTOMARY PRODUCT WARRANTY POLICIES IN EFFECT AS OF THE DAY A CCTV
PRODUCT IS SHIPPED TO PURCHASER, SUPPLIER SHALL NOT, AND DOES NOT, GRANT ANY
OTHER WARRANTIES, EXPRESS OR IMPLIED, BY STATUTE OR OTHERWISE, REGARDING CCTV
PRODUCTS, THE FITNESS FOR ANY PURPOSE, THE QUALITY, THE MERCHANTABILITY, OR
OTHERWISE AND DISCLAIMS ANY LIABILITY WITH RESPECT TO CCTV PRODUCTS.
(d) In the event a CCTV Product under the Limited Warranty is found to
be defective by the Purchaser, Purchaser shall follow the procedures shown in
APPENDIX C for return or replacement of the defective CCTV Product, which shall
serve as Purchaser's exclusive remedy.
(e) LIABILITY OF EACH PARTY IN CONNECTION WITH THIS AGREEMENT SHALL BE
LIMITED TO THE RECOVERY OF DIRECT DAMAGES, AND NEITHER PARTY SHALL BE LIABLE TO
THE OTHER PARTY OR ANY PERSON OR ENTITY FOR ANY INDIRECT, SPECIAL, PUNITIVE,
EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ANY DAMAGES RESULTING FROM LOSS
OF GOODWILL, ANY PENALTIES OF ANY KIND, ANY LOSS OF PROFITS OR ANY OTHER
ECONOMIC LOSS, WHETHER OR NOT FORESEEABLE,
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TO ANY PERSON, PROPERTY OR ENTITY, IN CONNECTION WITH OR ARISING OUT OF THE
FURNISHING, PERFORMANCE OR USE OF THE CCTV PRODUCTS, WHETHER GROUNDED IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), ANY THEORY OF STRICT LIABILITY OR
OTHERWISE. A PARTY'S LIABILITY ON ANY CLAIM, WHETHER GROUNDED IN CONTRACT, TORT
(INCLUDING NEGLIGENCE), ANY THEORY OF STRICT LIABILITY OR OTHERWISE, OF ANY KIND
FOR ANY LOSS OR DAMAGE ARISING OUT OF OR IN CONNECTION WITH OR RESULTING FROM
THIS AGREEMENT OR THE PERFORMANCE OR BREACH HEREOF OR THE CCTV PRODUCTS OR THEIR
PERFORMANCE OR USE IS LIMITED SOLELY AND EXCLUSIVELY TO THE REMEDIES PROVIDED IN
THIS AGREEMENT AND NO OTHER RIGHT OR REMEDY WILL BE AVAILABLE TO ANY PERSON OR
ENTITY. FOR PURPOSES OF CLARIFICATION, THE PARTIES ACKNOWLEDGE AND AGREE THAT IN
THE CASE OF INDEMNIFICATION FOR ANY THIRD PARTY CLAIMS UNDER THIS AGREEMENT,
DIRECT DAMAGES SHALL INCLUDE ALL AMOUNTS PAYABLE IN SETTLEMENT OF SUCH CLAIM OR
TO SATISFY A FINAL JUDGMENT ENTERED THEREON.
10. GOVERNMENTAL REGULATIONS.
Purchaser shall not knowingly sell any CCTV Product to any person for
use in any country to whom or for which export or sale of such product is
restricted by any law or regulation of the United States or any agency thereof,
and Purchaser shall comply with all applicable export and sale laws in each
applicable jurisdiction.
11. CONFIDENTIALITY.
Neither Supplier nor Purchaser shall divulge to a third party any
confidential or proprietary information of the other that may have become known
as a result of the performance of this Agreement. This confidentiality
obligation shall continue for a period of five (5) years after termination of
this Agreement.
12. SHIPMENTS AFTER TERMINATION.
The obligations of Supplier to deliver and Purchaser to purchase any
CCTV Product in accordance with purchase orders exchanged prior to the
termination of this Agreement shall survive such termination of this Agreement,
and such purchase and sale shall occur in accordance with the terms and
conditions hereof.
13. CERTAIN REPRESENTATIONS OF PURCHASER.
Appendix B sets forth as of the date hereof an accurate and complete
list of (x) all bids and proposals submitted by Purchaser prior to the date
hereof to any Person involving in anyway the sale of CCTV Products and (y) all
unfilled orders for the purchase of CCTV Products in existence as of the date
hereof in respect of which Purchaser is required to make delivery on or after
the date hereof.
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14. NOTICES.
All notices, requests, demands and other communications under this
Agreement must be in writing and will be deemed to have been duly given or made
as follows: (a) if sent by registered or certified mail in the United States
return receipt requested, upon receipt; (b) if sent by reputable overnight air
courier two (2) business days after mailing; (c) if sent by facsimile
transmission, with a copy mailed on the same day in the manner provided in (a)
or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if
otherwise actually personally delivered, when delivered, and shall be delivered
as follows:
If to Purchaser:
Ultrak, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
with a copy to:
Gardere Xxxxx Xxxxxx LLP
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Supplier:
Honeywell International Inc.
Security & Fire Solutions
000 Xxxxxx Xxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xx Xxxxxxx
Facsimile: 000-000-0000
with a copy to:
Honeywell International Inc.
Security & Fire Solutions
000 Xxxxxx Xxx
Xxxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
or to such other address or to such other Person as either party may have last
designated by notice to the other party.
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15. ARBITRATION.
Supplier and Purchaser shall discuss mutually and make the best effort
to resolve any dispute under this Agreement. In the event such negotiations are
not successful within thirty (30) calendar days, all disputes, controversies or
differences which may arise between the parties hereto, out of or in relation to
or in connection with this Agreement, or the breach thereof, shall be finally
settled by arbitration. Within ten (10) calendar days after receipt of written
notice from one party that it is submitting the matter to arbitration, each
party shall designate in writing one arbitrator to resolve the dispute who
shall, in turn, jointly select a third arbitrator within twenty (20) calendar
days of their designation, with the third arbitrator to be selected in
accordance with the procedure established by the American Arbitration
Association. The arbitrators so designated shall each be a lawyer experienced in
commercial and business affairs who is not an employee, consultant, officer or
director of any party hereto or any Affiliate of any party to this Agreement and
who has not received any compensation, directly or indirectly, from any party
hereto or any Affiliate of any party to this Agreement during the two (2) year
period preceding the date of this Agreement. The arbitration shall be governed
by the rules of the American Arbitration Association; provided, however, that
the arbitrators shall have sole discretion with regard to the admissibility of
evidence. The arbitrators shall use their best efforts to rule on each disputed
issue within thirty (30) calendar days after the completion of the hearings. The
determination of the arbitrators as to the resolution of any dispute shall be
binding and conclusive upon all parties hereto. All rulings of the arbitrators
shall be in writing, with the reasons for the ruling given, and shall be
delivered to the parties hereto. Each party shall pay the fees of its respective
designated arbitrator and its own costs and expenses of the arbitration. The
fees of the third arbitrator shall be paid fifty percent (50%) by each of the
parties. Any arbitration pursuant to this Section 15 shall be conducted in
Dallas, Texas. Any arbitration award may be entered in and enforced by any court
having jurisdiction thereof and the parties hereby consent and commit themselves
to the jurisdiction of the courts of any competent jurisdiction for purposes of
the enforcement of any arbitration award. Any party may seek from any court
interim or provisional relief that is necessary to protect the rights or
property of that party, pending the appointment of the arbitrator or pending the
arbitrator's determination of the merits of the controversy. None of the parties
shall be required to use the foregoing procedures to enforce the provisions of
Section 15 of this Agreement.
16. WAIVER.
No delay or failure of any party in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude other or further
exercise thereof or the exercise of any other right, power or remedy.
17. SEVERABILITY.
If under any applicable and binding law or rule of any applicable
jurisdiction, any provision of this Agreement is held to be invalid or
unenforceable, the invalid or enforceable provision, or any portion thereof,
shall be modified to the extent required to be valid and enforceable and the
remaining provisions of this Agreement will continue to be given full force and
effect.
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18. GOVERNING LAW.
This Agreement will be construed, performed and enforced in accordance
with the laws of the State of Delaware without giving effect to its principles
or rules of conflict of laws thereof to the extent such principles or rules
would require or permit the application of the laws of another jurisdiction. The
parties expressly agree that the U.N. Convention on International Sales of Goods
shall not apply.
19. CHOICE OF VENUE.
(a) Subject to the limitations set forth in Section 15 above, the
parties agree that the venue for any action, injunctive application or dispute
determinable by a court of law arising out of or relating to this Agreement
shall be in the State of Delaware and that the Federal and state courts therein
shall have exclusive jurisdiction over the subject matter of such action and the
parties hereto. Each of the parties hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any
Delaware State court or Federal court of the United States of America sitting in
Delaware, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the transactions contemplated by
this Agreement or for recognition or enforcement of any judgment relating to
this Agreement, and each of the parties hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such Delaware State court or, to the extent permitted by law,
in such Federal court. Each of the parties agrees that a final judgment in any
such action or proceeding will be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
(b) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
20. ENTIRE AGREEMENT.
This Agreement constitutes the entire Agreement between the parties
hereto with respect to the subject matter hereof and supersedes all provisions,
negotiations, agreements and commitments in respect thereto, and shall not be
released, discharged, changed or modified in any manner except by instruments
signed by duly authorized officers or representatives of each of the parties
hereto.
21. SUCCESSORS AND ASSIGNS.
This Agreement will be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns, but will not be
assignable, by operation of law or otherwise, by any party without the prior
written consent of the other party and any purported assignment or other
transfer will be void and unenforceable; provided, however, that the Supplier
may assign this Agreement in whole or in part or any of its rights hereunder
without Purchaser's consent to one or more of its Affiliates or to any purchaser
of Supplier's CCTV Products business; and provided further, however, that in the
event Purchaser shall sell or transfer the assets or business of Purchaser which
utilizes CCTV Products or purchases CCTV Products from
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Supplier, Purchaser shall cause the buyer or transferee of such assets or
business to assume the obligations of Purchaser hereunder.
22. LANGUAGE.
This Agreement, all purchase orders and all notices required or given
hereunder or in connection with this Agreement shall be in the English language.
No translation into other language shall be taken into consideration in the
interpretation of this Agreement and the binding version of all of the foregoing
shall be the English version.
23. COUNTERPARTS.
This Agreement may be executed in counterparts, both of which will
constitute one and the same instrument.
24. FORCE MAJEURE.
Supplier shall bear no responsibility or liability for any losses
arising out of any delay, inability to perform or interruption of its
performance of obligations under this Agreement due to any acts or omissions of
the Purchaser or for events beyond its reasonable control (hereinafter referred
to as "Force Majeure") including, without limitation, acts of God, act of
governmental authority, act of the public enemy or due to war, riot, flood,
civil commotion, insurrection, labor difficulty, severe or adverse weather
conditions, lack of or shortage of electrical power, malfunctions of equipment
or software programs or any other cause beyond the reasonable control of
Supplier whose performance is affected by the Force Majeure event. Supplier
shall immediately notify the Purchaser of the onset, extent and probable
duration of such circumstances and if the Supplier is unable to remove such
causes within thirty (30) days, the Purchaser may, upon written notice,
terminate this Agreement.
25. RELATIONSHIP OF THE PARTIES.
The relationship of the parties shall be that of independent
contractors and not as employees, agents, representatives or partners.
26. DESIGNATION OF CONTACT(s).
Purchaser and Supplier each shall designate a primary and secondary
individual as its contact(s) with the other party. All contact between the
parties with respect to this Agreement shall be through the designated contacts.
Any party may replace its contact(s) with other individuals upon written
notification to the other party, provided that such individuals first comply
with the provisions of this Section 26.
27. SURVIVAL. Sections 9, 10, 11, 12, 14, 15, 16, 17, 18 and 19 shall survive
the signing, delivery and termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this CCTV
Products Supply Agreement to be signed and sealed by their duly authorized
officer or representative as of the date first above written.
Purchaser: Supplier:
ULTRAK, INC. PITTWAY CORPORATION
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------- ------------------------------------------------
Name: Xxxxx Xxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President, Chief Title: Assistant Secretary
Financial Officer and Secretary
APPENDIX A
PRICES
Purchaser and Supplier agree that prices for all sales of CCTV Products from
Supplier to Purchaser shall be as follows:
Type of Product Price
-------------------------------------- ----------------------------------------
CCTV Products currently sold under Purchaser shall pay Supplier an amount
the Ultrak brand name and any equal to (1) the Gross Margin Price and
future CCTV Products sold (2) 50% of the Excess Margin, if any.
under the Ultrak brand name
(or any successor brand names) As used herein,
("Ultrak Branded Products")
"Components Supplier" means any
third party who supplies
components or other materials
used in Ultrak Branded Products
to Supplier including all third
party suppliers who supplied the
Business with components and
parts on or prior to the Closing
Date (i.e. Hitron or LeeMAH)
"Excess Margin" means the
aggregate price for a CCTV
Product invoiced to a customer
of Purchaser (the "Invoice
Price") less (x) 10% of the
Invoiced Price and (y) the Gross
Margin Price.
"Fully Landed Cost" means
Supplier's factory cost to
manufacture a relevant CCTV
Product including (x) direct and
indirect factory labor, (y)
materials and (z) factory
overhead allocated in accordance
with Supplier's corporate
allocation policies (but,
excluding any corporate,
administrative or headquarter's
allocation).
"Gross Margin Price" means
Supplier's invoiced price from
the relevant Components Supplier
or Supplier's Fully Landed Cost,
as the case may be, divided by
0.80.
CCTV Products currently sold under Purchaser shall pay Supplier an amount equal
the Ademco Video brand name and any to Supplier's ADI Price (i.e the price at
future CCTV Products sold under the which Supplier sells the same Ademco Branded
Ademco Video brand name (or any Product to ADI.
successor brand names) whether
manufactured by Supplier or supplied
by third parties ("Ademco Branded
Products")
All other CCTV Products not Purchaser shall pay Supplier an amount equal
described above purchased by Supplier to the greater of (a) Supplier's list price
from third parties for sale for the relevant CCTV Product less 52% of
through Supplier's ADI distribution such list price or (b) Supplier's cost for
enterprise (i.e. Sony, Panasonic, such CCTV Product.
Pelco, etc.)
APPENDIX B
PRE-CLOSING BIDS AND UNFILLED PRE-CLOSING SALES
APPENDIX C
PRODUCT RETURN/REPAIR POLICY
1. Purchaser will test and confirm the defective or non-operational status
of CCTV Products.
2. Within fifteen (15) days of receipt, Purchaser will notify Supplier
about any claim for shortages, incorrect materials or invoicing error,
or the occurrence of defective or non-operational CCTV Products and
request a "Return Authorization Number" from the Supplier for the items
they would like to return for repair (hereinafter referred to as "RA#")
or replacement by e-mail to the attention of the Customer Service
Manager. This RA# is to be used for all correspondence and shipping
documents that relate to the associated CCTV Product.
3. Supplier will either send a replacement CCTV Product or credit the
price after checking the contents returned under the RA#. The
replacement CCTV Products can be shipped together with the next order
shipment by Purchaser's request. If it is necessary, Supplier can
request Purchaser an additional test or further confirmation of
operational status. Purchaser is responsible for shipping costs of
replacement CCTV Products to the Purchaser.
4. Purchaser will ship the defective or non-operational CCTV Products to
Supplier regularly. Supplier is responsible for shipping cost.
5. Purchaser will inform Supplier to the attention of the Customer Service
Manager of an itemized list of all CCTV Products returned in each
shipment.
6. Upon receipt of the returned CCTV Product, Supplier will test the CCTV
Product to verify the defective or non-operational status and
communicate such results to the Purchaser.
