EXHIBIT 10.40
ACCESS CONTROL SUPPLY AGREEMENT
This Access Control Supply Agreement (the "Agreement") is made and
executed this 20th day of December, 2002 between Ultrak Operating, L.P.,
("Supplier") a Texas limited partnership, whose principal office is located in
Lewisville, Texas and Pittway Corporation ("Purchaser"), a Delaware corporation
and a wholly-owned subsidiary of Honeywell International Inc., a Delaware
corporation ("Honeywell"), a Delaware corporation whose principal office is
located in Morristown, New Jersey.
RECITALS
A. Supplier is engaged in the business of designing, manufacturing,
selling and distributing access control systems.
B. Pursuant to this Agreement, Purchaser desires to purchase certain
Products (as defined in Section 2 of this Agreement) and Supplier has
agreed to sell Purchaser the Products.
AGREEMENT
In consideration of the mutual agreements and acknowledgment herein
made, the parties agree as follows:
1. RIGHTS GRANTED. Upon the terms and conditions set forth
herein, Purchaser may purchase the Products and Supplier
agrees to sell the Products to Purchaser. Supplier hereby
grants to Purchaser the non-exclusive right upon the terms and
conditions herein contained to purchase inventory, promote and
resell the Products in the Non-U.S. Jurisdictions (as defined
in the Asset Purchase Agreement dated August 8 2002 among
Honeywell, Supplier and the other parties thereto, as amended
to date).
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 Purchaser 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.
2. PRODUCTS. As used herein the term Supplier's products shall
mean those which are expressly identified in Exhibit A,
attached hereto and made a part hereof, together with those
new or additional products that Supplier and Purchaser may
expressly add in writing to this Agreement from time to time
("Products").
3. PAYMENT. Purchaser shall make payment to Supplier for 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
ACCESS CONTROL SUPPLY AGREEMENT - PAGE 1
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.
4. TERMS OF SALE.
a. The price Supplier charges to Purchaser shall be the
price Supplier may establish, from time to time, on
Supplier's international distributor price list.
Price lists shall be provided to Purchaser and the
price list in effect at the time the Products are
shipped shall control.
b. Supplier shall use commercially reasonable efforts
consistent with Supplier's practices for its other
significant customers to promptly deliver Products to
Purchaser in accordance with the terms of the
applicable purchase order. Shipment of such Products
will be made to Purchaser, to the extent commercially
reasonable, from Supplier's nearest source of such
Products.
c. 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 the Products shall
pass to Purchaser upon delivery of the Products to
the carrier for shipment.
d. All costs of shipping, transporting and/or insuring
the 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.
e. 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.
f. Upon arrival of the Products to the point of
destination, Purchaser shall inspect Products under
such shipment. Claims for shortages, incorrect
materials or invoicing errors must be made by
Purchaser to Supplier within fifteen (15) days of the
arrival of the 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 on Exhibit B attached hereto
and shall be limited to the remedies set forth on
Exhibit B.
g. Any term or condition in a purchase order which
contradicts this Agreement shall be void and the
provisions of this Agreement shall control.
ACCESS CONTROL SUPPLY AGREEMENT - PAGE 2
5. MARKETING. Purchaser shall not make any warranties or
representations whatsoever concerning the Products in
connection with the marketing or sale of Products or any with
respect to any product or service containing or utilizing the
Products, except those (a) made in writing by Supplier, or (b)
which are authorized in writing by Supplier to be made by
Purchaser.
6. WARRANTY POLICIES.
a. Supplier shall grant to Purchaser a limited warranty
in accordance with its customary product warranty
policies in effect as of the day a Product is shipped
to Purchaser (the "Limited Warranty").
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
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 PRODUCT IS SHIPPED
TO PURCHASER, SUPPLIER SHALL NOT, AND DOES NOT, GRANT
ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, BY STATUTE
OR OTHERWISE, REGARDING THE PRODUCTS, THE FITNESS FOR
ANY PURPOSE, THE QUALITY, THE MERCHANTABILITY, OR
OTHERWISE AND DISCLAIMS ANY LIABILITY WITH RESPECT TO
THE PRODUCTS.
d. In the event a Product under the Limited Warranty is
found to be defective by the Purchaser, Purchaser
shall follow the procedures shown in Exhibit B for
return or replacement of the defective 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, TO ANY PERSON, PROPERTY OR ENTITY, IN
CONNECTION WITH OR ARISING OUT OF THE FURNISHING,
PERFORMANCE OR USE OF THE PRODUCTS, WHETHER GROUNDED
IN CONTRACT, TORT (INCLUDING
ACCESS CONTROL SUPPLY AGREEMENT - PAGE 3
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 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.
7. PROCESSING OF ORDERS. Purchaser shall deliver to Supplier on
or before the first day of each calendar quarter during the
Term a nonbonding forecast of the quantity and description of
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 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 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 to coordinate
delivery time schedules with respect to orders outside the
ordinary course of business (generally involving large
projects or contracts).
8. RELATIONSHIP OF THE PARTIES The relationship of the parties to
this Agreement shall be that of independent contractors and
not as employees, agents, representatives or partners.
9. MISCELLANEOUS PROVISIONS.
a. 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
ACCESS CONTROL SUPPLY AGREEMENT - PAGE 4
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:
To Purchaser,
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
To Supplier:
Ultrak Operating L.P.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
b. For purposes of this Agreement, "Affiliate" shall
mean any other Person that directly or indirectly
controls, is controlled by, or is under common
control with, another Person. 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.
The term "Person" means any natural person, firm,
limited liability company, general partnership,
limited partnership, joint venture, association,
corporation, trust, governmental authority or other
entity.
c. 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
ACCESS CONTROL SUPPLY AGREEMENT - PAGE 5
termination of this Agreement. Supplier acknowledges
that Purchaser is engaged in the access control
business, and Supplier will use commercially
reasonable efforts to limit access to such
confidential or proprietary information to Supplier's
employees and others who need to know for purposes of
filling orders. Nothing in this Agreement shall be
construed to restrict in any manner Purchaser's
ability to engage in the access control business.
Purchaser shall not modify, translate, reverse
engineer, decompile, dissassemble, or create
derivative works of Products supplied under this
Agreement.
d. 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.
e. 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.
f. This Agreement may be executed in counterparts, both
of which will constitute one and the same instrument.
g. 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.
h. 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.
i. The provisions set forth in Sections 6, 9, 11, 12, 14
and 15 shall survive the termination of this
Agreement.
10. 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 10.
ACCESS CONTROL SUPPLY AGREEMENT - PAGE 6
11. GOVERNING LAW/VENUE. 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.
Subject to the limitations set forth in Section 12 below, 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.
Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 9(a).
Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner
permitted by law.
12. 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
ACCESS CONTROL SUPPLY AGREEMENT - PAGE 7
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 12 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 12 of this Agreement. This Section 12
shall survive the signing, delivery and termination of this
Agreement.
13. 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 Supplier is
unable to remove such causes within thirty (30) days, the
Purchaser may, upon written notice, terminate this Agreement.
14. SHIPMENTS AFTER TERMINATION. The obligations of Supplier to
deliver and Purchaser to purchase any 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.
15. 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 Purchaser may assign this
Agreement in whole or in part or any of its rights hereunder
ACCESS CONTROL SUPPLY AGREEMENT - PAGE 8
without Supplier's consent to one or more of its Affiliates or
to any purchaser of Purchaser's closed circuit television
products business; and provided further, however, that in the
event Supplier shall sell or transfer the assets or business
of Supplier which produces the Products or sells the Products
to Purchaser, Supplier shall cause the buyer or transferee of
such assets or business to assume the obligations of Supplier
hereunder.
ACCESS CONTROL SUPPLY AGREEMENT - PAGE 9
IN WITNESS WHEREOF the parties have executed this Agreement on the date
first set forth above.
SUPPLIER
ULTRAK OPERATING, L.P..
By: Ultrak GP, Inc., its sole General Partner
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxxxx, Senior Vice President
Chief Financial Officer & Secretary
PURCHASER
PITTWAY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
Assistant Secretary
ACCESS CONTROL SUPPLY AGREEMENT
EXHIBIT A
PRODUCT AND PRICE LIST
EXHIBIT A
EXHIBIT B
PRODUCT RETURN/REPAIR POLICY
1. Purchaser will test and confirm the defective or non-operational status
of Products.
2. Within fifteen (15) days or receipt, Purchaser will notify Supplier
about any claim for shortages, incorrect materials or invoicing error,
or the occurrence of defective or non-operational 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 Product.
3. Supplier will either send a replacement Product or credit the price
after checking the contents returned under the RA#. The replacement
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 Products to
the Purchaser.
4. Purchaser will ship the defective or non-operational 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 Products returned in each shipment.
6. Upon receipt of the returned Product, Supplier will test the Product to
verify the defective or non-operational status and communicate such
results to the Purchaser.
EXHIBIT B
