SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement") is made as of July 11, 1997, by and
between Connectivity Products Incorporated, a Delaware corporation with an
office at 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
("Seller"), and Anicom, Inc., a Delaware corporation with an office at 0000 X.
Xxxxx Xxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxx 00000 ("Anicom, Inc." and, together
with Anicom's subsidiaries, "Parent").
BACKGROUND
A. The parties hereto are executing this Agreement in connection with the
closing of an Asset Purchase Agreement between Parent and Seller, dated as of
July 11, 1997, pursuant to which Parent is purchasing substantially all of the
assets of the Energy Electric Cable Division of Seller (the "Business").
B. Parent is engaged in the business of distributing wire and cable products.
C. Energy Electric Cable, a division of Seller ("Seller Division" and, together
with Seller, "Supplier"), is engaged in the business of manufacturing and
supplying wire and cable products.
D. Distributor and Supplier acknowledge the importance of having both a reliable
supply and a reliable demand for wire and cable products and, accordingly, the
parties are desirous of entering into an agreement whereby Supplier will
manufacture and supply to Distributor and Distributor shall purchase such
products on the terms and conditions set forth herein.
E. Accordingly, in consideration of the foregoing and the mutual covenants and
undertakings contained herein, the parties hereby agree as follows:
1. Definitions.
1.1 "Acknowledged Delivery Date" has the meaning given such term in Section 5.3
hereof.
1.2 "Annual Fee Settlement" has the meaning given such term in Section 5.4
hereof.
1.3 "Annual Order Amount" means the dollar amount that Distributor shall
purchase from Supplier of the Products during each Annual Period, which amounts
are set forth in Schedule A hereto, as may be adjusted as set forth herein.
1.4 "Annual Period" means each of the twelve month periods ending July 11, 1998,
1999, 2000, 2001 and 2002.
1.5 "Base Period" has the meaning given such term in Section 3.1 hereof.
-1-
1.6 "Change of Control" has the meaning given such term in Section 11.2 hereof.
1.7 "Claim" has the meaning given such term in Section 14.1 hereof.
1.8 "Excess Order Amount" has the meaning given such term in Section 3.2 hereof.
1.9 "Information" has the meaning given such term in Section 10.1 hereof.
1.10 "Low Voltage Products" means sound, security, IMSA cable products, fire
alarms, plenum and non-plenum.
1.11 "Other Products" means coaxial cable, specialty FEP products, control and
instrumentation cable, and such other industrial products as manufactured by
Supplier other than Low Voltage Products.
1.12 "Minimum Order Amount" means the minimum dollar amount of Products that
Distributor must purchase from Supplier in a given Annual Period, which amount
shall be equal to ninety percent (90%) of the Annual Order Amount for such
Annual Period.
1.13 "Order" has the meaning given such term in Section 4.1 hereof.
1.14 "Payment Due Date" has the meaning given such term in Section 5.2 hereof.
1.15 "Products" means, collectively, the Low Voltage Products and Other
Products.
1.16 "Purchase Price" has the meaning given such term in Section 4.2 hereof.
1.17 "Qualified Vendor" means those vendors that supply the full range of
products supplied by Supplier, is of comparable or greater size to Supplier,
sells comparable or greater quantities of Products as Supplier and sells
products of comparable quality as Supplier's products.
1.18 "Term" has the meaning given such term in Section 2.2 hereof.
2. Agreement and Term.
2.1 During the term of this Agreement, Supplier will sell to Distributor and
Distributor shall purchase from Supplier the Products in accordance with the
terms and conditions set forth in this Agreement. Supplier agrees to fill
Distributor's orders for the Products in accordance with the terms of this
Agreement.
2.2 The term of this Agreement shall be five (5) years, commencing on the date
hereof, unless earlier terminated pursuant to Section 11 (the "Term"). Any
renewal or extension of this Agreement may only be effected by a written
agreement of the parties hereto. Neither party shall be obligated to renew or
extend the duration of this Agreement upon the expiration of the Term.
-2-
3. Quantities.
3.1 During each Annual Period, Distributor agrees to purchase from Supplier the
Annual Order Amount of Products, as set forth on Schedule A hereto under the
caption "Annual Order Amount"; provided, that the sole remedy for Distributor's
failure to purchase such amounts shall be as set forth in Section 3.3 below. For
purposes of this Agreement, Products are deemed to be purchased in an Annual
Period if the earlier of the following dates fall within such Annual Period: (i)
the Acknowledged Delivery Date or (ii) the date on which the Products are
shipped. As an inducement to Distributor's agreement to the foregoing, Supplier
represents and warrants that the Division purchased at least $13 million in Low
Voltage Products from Supplier during the twelve months prior to the date of
this Agreement (the "Base Period") based upon prices comparable to those prices
at which Distributor currently purchases comparable products (the "Division
Purchases"); provided, however, that the parties acknowledge that the Division
Purchases including amounts attributable to sales by Signal Sales Corp. which
have been annualized based on results realized since its acquisition by
Supplier. If this representation is not true, each of the Annual Order Amounts
will be adjusted by multiplying them by a fraction equal to the actual dollar
amount of purchases of Low Voltage Products by the Division from Supplier during
the Base Period, valued at prices comparable to those currently paid by
Distributor for comparable products, divided by $13 million.
3.2 Notwithstanding anything to the contrary herein, to the extent that
Distributor purchases from Supplier in any given Annual Period an amount
exceeding the Annual Order Amount (the "Excess Order Amount"), Distributor shall
be entitled to a corresponding dollar for dollar reduction in the next Annual
Period's Annual Order Amount, such reduction to be applied against the product
category in which the Excess Order Amount occurs.
3.3 In the event that Distributor fails to purchase the Minimum Order Amount in
any given Annual Period, as Distributor's sole obligation, and Supplier's sole
remedy, for Distributor's failure to purchase any amount required pursuant to
Section 3.1 or 3.3 of this Agreement, Distributor shall pay to Supplier a fee
equal to * .
3.4 For purposes of this Agreement, in determining whether Distributor has met
the Minimum Order Amount, in addition to Products purchased in an Annual Period,
Distributor shall be credited for all Orders placed by Distributor pursuant to
Section 4.1 during the corresponding Annual Period, but for which Products
ordered were (i) rejected by Distributor pursuant to Section 6 below, or (ii)
not purchased by Distributor because the Purchase Price for such Products
ordered by Distributor is more than five percent (5%) higher than the current
written price quote of two separate Qualified Vendors for a substantially
identical product in the same quantity as the amount ordered from Supplier and
Supplier fails to lower such Purchase Price in accordance with Section 4.3. If
Distributor is credited for an Order pursuant to clause (i) of the first
sentence of this paragraph in a given Annual Period and such rejected Product is
delivered in the next Annual Period, Distributor shall not receive credit for
such Product in the next Annual Period. Other than as set forth in clauses (i)
and (ii) of the first sentence of this paragraph, in determining whether
Distributor has met the Minimum Order Amount, Distributor
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-3-
shall not be credited for any Orders placed by Distributor within the applicable
Annual Period which are not paid by Distributor on or before the corresponding
Payment Due Date.
3.5 To the extent that any Orders are placed by any subsidiaries of Parent
pursuant to this Agreement, Parent hereby guarantees payment by such subsidiary
in accordance with the terms of this Agreement and agrees that it will sign such
other documentation as may be reasonably requested by Supplier in order to
further evidence such guarantee of payment. In reliance on the foregoing, the
parties agree that any Orders placed by any subsidiary of Parent shall be
included as Orders placed by Distributor for purposes of this Agreement.
Notwithstanding the foregoing, in the event that any of the companies set forth
on Schedule B to this Agreement shall become subsidiaries of, or acquired by,
Distributor (in each case, an "Acquired Company"), and such Acquired Company is
then subject to a supply agreement with Supplier that is not terminable at will
and is not binding on the successor in the case of a change of control of the
Acquired Company, then the Annual Order Amount for each period following such
acquisition or change of control shall be increased by an amount (an
"Acquisition Increase") equal to 50% of the dollar amount of Products purchased
by the Acquired Company during the twelve months prior to the acquisition or
change of control; provided that any such Acquisition Increase shall take effect
90 days after the effective date of the acquisition or change of control and the
Annual Order Amount shall be increased for the Annual Period in which the
acquisition or change of control occurs by an amount equal to the Acquisition
Increase multiplied by a fraction equal to the number of days remaining in such
Annual Period following the 90th day after the acquisition or change of control
divided by 365.
4. Orders; Price.
4.1 Distributor may place orders for the Products with Supplier by electronic
transmission, by written memorandum, by use of a written purchase order, or by
such other method as mutually agreed to between the parties (collectively
referred to herein as "Order" or "Orders"). Notwithstanding the foregoing,
Distributor will not place orders by electronic transmission if Supplier has not
set up a system to receive such orders; provided, however, that Supplier shall
use its commercially reasonable efforts to set up such a system as soon as
practicable and in any event, no later than the beginning of the second Annual
Period. Supplier shall accept Orders in writing or by initiation of performance.
Distributor and Supplier shall agree upon a delivery location, a delivery date,
and any other details required in order to procure the products requested by
Distributor. Except as otherwise agreed upon by the parties, Distributor may
cancel an Order or any portion thereof without charge or penalty by giving
notice to Supplier of such cancellation, which notice shall be given at least
five (5) business days prior to the date on which the Products requested in such
Order are packaged in the ordinary course of business; provided, however, that
Distributor may not cancel an Order for any Products which consist of cable
manufactured to customized specifications provided by Distributor or are
otherwise not marketable by Supplier to other persons at comparable prices. Such
cancelled Orders shall not be deemed Orders under this Agreement. Supplier
agrees that, from time to time and upon Distributor's request, Supplier will
delay or hold shipments to Distributor until Distributor notifies Supplier to
commence shipment, provided that Supplier will
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-4-
not be obligated to delay or hold shipments for more than 30 days without its
prior consent, which consent Supplier agrees not to unreasonably withhold.
4.2 The purchase price paid by Distributor for any Product (the "Purchase
Price") will be agreed upon by Supplier and Distributor; provided, however, if
Supplier generally increases its prices, Supplier will give Distributor ninety
(90) days advance written notice thereof; unless the price increase is
attributable to a cost increase for copper, in which case such price increase
will be determined in accordance with ten cent increments, or "windows", based
on the Camden copper base. For example, if the Camden copper base increased by
nine cents over the present price, no increase would be applicable; however, if
the Camden copper base then increased by an additional cent so that it increased
by ten cents or more, the price would be increased to reflect the full Camden
copper base increase. On reasonable request by Distributor, Supplier agrees to
provide Distributor with documentation substantiating any such price increase.
The failure of the parties to agree upon a Purchase Price in accordance with
this Section 4.2 shall not reduce or eliminate Distributor's obligation to
purchase Products hereunder or pay the fee provided for in Section 3.3 hereof
except to the extent otherwise provided in this Agreement.
4.3 Notwithstanding anything to the contrary herein, in the event that
Distributor receives a written price quote from at least two Qualified Vendors
to supply a product that is the functional equivalent of a Product for a price
that is at least five percent (5%) less than Supplier's then-current price quote
for that Product, Distributor shall notify Supplier of such lower price. If
Supplier has failed, within thirty (30) days from the date of the notice, to
notify Distributor that it has lowered its prices for the Products ordered such
that the Purchase Price in question is less than or equal to the price quoted by
such Qualified Vendors, Distributor may order such product in such quantities at
the lower price from such Qualified Vendors, and Distributor shall be credited
for such orders in determining the Minimum Order Amount pursuant to Section 3.4.
4.4 Within seventy-five (75) days after the end of each Annual Period, Supplier
agrees to pay Distributor an amount (the "Annual Payment") based on payments
timely made to Supplier on Orders shipped during such Annual Period (the
"Payment Amount"), determined as follows:
*
The percentages are applicable for the corresponding range of Payment Amount.
For example, * .
In determining the Annual Payment for a given Annual Period, the Payment Amount
shall also include amounts which have not been paid to Supplier if such amounts
arise from Orders shipped during the applicable Annual Period and paid after
such Annual Period but on or before the Payment Due Date for such Orders.
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-5-
5. Invoice; Payment; Shipment and Delivery.
5.1 Supplier shall invoice Distributor for Products on or after said Products
are shipped. A "correct" invoice shall contain (i) Supplier's name and invoice
date, (ii) a reference to the specific Order number and (iii) description,
price, and quantity of the products actually delivered. A correct invoice must
be submitted to the appropriate invoice address listed on the Order.
5.2 Payment for the Products purchased hereunder shall be due in full net * from
the later of the date of invoice or delivery (or, if Distributor has requested
that Supplier delay or hold a shipment pursuant to Section 4.1, payment shall be
due in full net * from the later of the date of invoice and the date of
Distributor's request to delay or hold such shipment); provided, however, that
Distributor shall not be in default of its payment obligations hereunder if
Distributor, from time to time due to unforeseen circumstances, remits such
payment to Supplier no later than * after the scheduled due date (after giving
effect to any such grace periods, the "Payment Due Date"). Notwithstanding
anything to the contrary contained herein, in no event shall Supplier be
required to ship Products to Distributor at any time that Distributor has a past
due balance (i.e., amounts not paid by the Payment Due Date), provided, however,
that such unpaid amounts are not due to a bona fide dispute. The failure of
Supplier to sell or ship Products pursuant to the immediately preceding sentence
shall not constitute a breach of this Agreement and shall in no way reduce
Distributor's liability for failure to purchase Products pursuant to Section 3.3
hereof. Products shall be shipped via surface freight F.O.B. destination, which
destination shall be within the continental United States. Charges for
transportation of the Products, including, but not limited to, those for
packing, insuring and freight shipping charges, shall be paid in accordance with
Supplier's standard terms and conditions of sale. Without limiting the
generality of the foregoing, Supplier shall pay for all transportation charges
for Orders having a weight greater than 2,500 pounds.
5.3 Supplier will use all commercially reasonable efforts to deliver the
Products to Distributor by a delivery date mutually agreed upon by the parties,
which date shall take into account any concentration of Orders in a particular
time period and Supplier's capacity to fill such Orders (the "Acknowledged
Delivery Date"). In the event that Supplier fails to deliver to Distributor at
least * of the Products ordered during an Annual Period within * after the
Acknowledged Delivery Date, Supplier will pay to Distributor a fee equal to * .
Without limiting Distributor's other rights to cancel an Order, in the event
that Supplier fails to deliver such Products within * after the Acknowledged
Delivery Date, Distributor shall have the option to cancel such Orders, and
Distributor shall be credited for such Orders as part of the Annual Order Amount
for the applicable product category but such amounts shall not be considered in
the determination of the Payment Amount.
5.4 On or before the 75th day following each Annual Period, Supplier will
prepare or cause to be prepared and delivered to Distributor a calculation of
any fees due and owing pursuant to either Section 3.3 or Section 5.3 of this
Agreement (the "Annual Fee Settlement"). If Distributor disagrees with the
Annual Fee Settlement, Distributor shall notify Supplier in writing of such
disagreement within 30 days after the date on which Distributor received the
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-6-
Annual Fee Settlement, which written notice shall specify the nature of the
dispute and shall provide in reasonable detail the facts upon which such dispute
is based. Thereafter Supplier and Distributor shall attempt in good faith to
resolve such disagreement with respect to the Annual Fee Settlement. If Supplier
and Distributor are unable to resolve any disagreement regarding an Annual Fee
Settlement within 20 days after Supplier's receipt of such notice of
disagreement, Supplier and Distributor shall submit such disagreement to
arbitration in accordance with Section 14 below.
6. Inspection and Acceptance.
All Products purchased from Supplier are subject to inspection and approval by
Distributor, notwithstanding the receipt of payment therefor. If any Product is
rejected, such Product will be held subject to Supplier's direction and expense.
Products may be rejected only for (i) failure to conform to Supplier's
specifications, which specifications have been provided to Distributor, or the
IMSA Code, or (ii) Supplier has otherwise materially breached any warranty set
forth in Section 7. Upon Supplier's receipt of rejected Products, and upon the
parties' mutual agreement: (i) Supplier shall promptly send replacement Products
to Distributor, at no additional cost to Distributor (other than the Purchase
Price) or (ii) to the extent payment has been made, Supplier shall promptly
credit Distributor for the full Purchase Price of any rejected Products.
7. Representations, Warranties and Indemnification.
Supplier warrants to Distributor that the Products sold hereunder and delivered
by Supplier do not infringe any patent rights of third parties when used for
their intended purpose and Supplier shall hold Distributor harmless from any
such claims; provided Supplier is given prompt notice of any such claim and the
full right to defend any action in connection therewith; and provided further,
however, that no such warranty is extended if and to the extent that any
Products are made in accordance with specifications or designs supplied by
Distributor. Supplier represents and warrants that the foregoing warranty is
Supplier's standard warranty and that Supplier has not given more favorable
warranty terms to any other party. In the event that Supplier offers more
favorable warranty terms for comparable products to any other party during the
Term of this Agreement, Supplier shall offer such warranty to Distributor with
respect to such Products hereunder.
8. Limited Liability.
THE WARRANTIES SET FORTH IN SECTION 7 ABOVE ARE IN LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NOTWITHSTANDING ANYTHING
TO THE CONTRARY CONTAINED HEREIN, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT,
TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING BUT NOT LIMITED TO
LOSS OF PROFITS OR REVENUE.
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-7-
9. Covenants of Seller.
Seller hereby covenants that upon the commencement of the second Annual Period,
it shall have, or shall cause Seller Division to have, made available to
Distributor for purchase hereunder coaxial cable, specialty FEP products,
control and instrumentation cable.
10. Confidential Information.
10.1 To the extent that any confidential information, which might include but is
not limited to business plans, forecasts, capacity, pricing, inventory levels,
etc., which is marked or labeled as confidential information (collectively, the
"Information"), is disclosed in furtherance of this Agreement or any Order
issued hereunder, such Information shall be so disclosed pursuant to the minimum
terms and conditions listed below; provided, however, the minimum terms and
conditions listed below shall in no way relieve the parties from any obligations
or modify such obligations previously agreed to in other agreements.
10.2 Both parties agree that the party receiving Information will maintain such
Information in confidence for a period of three years from the date of
disclosure of such Information.
10.3 Each party shall protect the other party's Information to the same extent
that it protects its own confidential and proprietary information and shall take
all reasonable precautions to prevent unauthorized disclosure to third parties.
10.4 The parties acknowledge that the unauthorized disclosure of such
Information will cause irreparable harm. Accordingly, the parties agree that the
injured party shall have the right to seek immediate injunctive relief enjoining
such unauthorized disclosure.
10.5 The provisions of this Section 10 shall not apply to information (i) known
to the receiving party at the time of receipt from the other party, (ii)
generally known or available or becomes known or available to the public through
no act or failure to act by the receiving party, (iii) furnished to third
parties by the disclosing party without restriction on disclosure, (iv)
furnished to the receiving party by a third party as a matter of right and
without restriction on disclosure, (v) furnished as required by court order or
similar governmental authority or by the imminent likelihood thereof or by
applicable law or by order of an arbitrator or (vi) is independently developed
without use or reliance on the Information and can be so proven by written
records.
10.6 Immediately upon termination of this Agreement or at the request of the
other party, each of the parties shall promptly return all materials in its
possession containing Information of the other party, regardless of who prepared
the materials.
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-8-
11. Termination.
11.1 This Agreement may be terminated at the discretion of either party hereto
upon the occurrence of any one of the following defaults by the other party by
delivery to the defaulting party of written notice of such termination
specifying the effective date of such termination therein, which date of
termination shall in no event be less than 60 days after the date of notice:
(a) Failure by any party hereto to pay an amount due hereunder when due,
provided, however, that such failure shall not give rise to termination
hereunder if (i) such party shall have remitted such amount past due within
thirty (30) days of the actual or deemed receipt of notice of failure to pay; or
(ii) such failure is due to a bona fide dispute, provided payment is made within
15 days after resolution of the dispute requiring payment; or
(b) Material breach by any party hereto of any material representation,
warranty, covenant, condition or agreement hereunder and such breach shall have
continued, if applicable, for thirty (30) days after the actual or deemed
receipt of notice to cure the same.
11.2 This Agreement may be terminated by either party (the "Terminating Party")
upon a Change of Control of the other party (the "Acquired Party") which is
entered into without the prior consent of the Terminating Party; provided that
Distributor agrees that it will not withhold such consent unless it reasonably
believes that the surviving entity following the Change of Control will not be
able to consistently deliver to Distributor the quality of Product and
responsiveness and service that Supplier provided to Distributor prior to such
Change of Control, and provided further that Supplier agrees that it will not
withhold such consent unless it reasonably believes that the surviving entity
following the Change of Control poses a greater credit risk to Supplier than
Distributor. For purposes of this Agreement, "Change of Control" means any event
or series of events by which (i) any person or group (as defined in Rule 13d-1
of the Securities Exchange Act of 1934, as amended) obtains a majority (by
voting or otherwise) of the securities ordinarily having the right to vote in
the election of directors of the Acquired Party or any parent corporation
thereof; (ii) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all, or substantially all, of the assets of
any of the Acquired Party, any parent corporation thereof or, in the case of
Seller, the Seller Division; (iii) the merger or consolidation of the Acquired
Party or any parent corporation thereof with or into another corporation or the
merger of another corporation with and into the Acquired Party or any parent
corporation thereof, as the case may be, with the effect that immediately after
such transaction any beneficial owner shall have become the beneficial owner of
such securities of the surviving corporation of such merger or consolidation
representing a majority of the combined voting power of the outstanding
securities of the surviving corporation ordinarily having the right to vote in
the election of directors; or (iv) the adoption of a plan leading to the
liquidation or dissolution of either the Acquired Party or any parent
corporation thereof.
12. Force Majeure.
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-9-
Neither party shall be liable for any failure to perform any obligation
hereunder, except for the payment of money, resulting from acts of God, fire,
flood, tornado, drought, explosion or other casualty, strikes or other labor
problems, interruptions or shortage of transport facilities, inability to obtain
raw materials or component parts, war, riot, embargo, national emergency, legal
restrictions or any other causes beyond its reasonable control, but due
diligence shall be used in attempting to eliminate such cause(s) and, upon such
elimination the parties shall immediately resume performance in accordance with
the terms of this Agreement.
13. Survival.
All obligations of the parties incurred under Sections 7, 8, and 10 shall
survive upon the termination or expiration of this Agreement.
14. Arbitration.
14.1 In the event that any controversy or claim ("Claim") shall arise under or
related to this Agreement, the parties agree to settle such Claim by binding
arbitration pursuant to the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA Rules") as in effect on the date hereof. In
all events, however, the arbitration provisions in this Section 15 shall govern
over any conflicting rules which may now or hereafter be contained in the AAA
Rules. Any judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction over the subject matter thereof. The arbitrator
shall (i) not be bound by the rules of evidence or civil procedure but rather
may consider such writings or oral presentations as a reasonable businessperson
would use in the conduct of the day-to-day conduct of affairs, and may require
the parties to submit some or all of their presentation orally or in written
form as the arbitrator may deem appropriate and (ii) have the authority to grant
any equitable and legal remedies that would be available in any judicial
proceeding instituted to resolve a contested claim. As soon as an arbitrator has
been agreed upon, a hearing date shall be set as soon thereafter as determined
by the arbitrator. Written submittals shall be presented and exchanged by both
parties as determined by the AAA Rules, including reports prepared by experts
upon whom either party intends to rely. At such time the parties will also
exchange copies of all documentary evidence upon which they will rely at the
arbitration hearing and a list of witnesses whom they intend to call to testify
at the hearing. Each party shall also make its respective experts available for
deposition by the other party prior to the hearing date. The arbitrator shall
make his award as promptly as practicable after conclusion of the hearing.
14.2 Any such arbitration will be conducted before a single arbitrator who will
be compensated for his or her services at a rate to be determined by the parties
or by the American Arbitration Association, but based upon reasonable hourly or
daily consulting rates for the arbitrator in the event the parties are not able
to agree upon his or her rate of compensation.
14.3 The American Arbitration Association, in accordance with the AAA Rules,
will have the authority to select an arbitrator from a list of arbitrators who
are partners in a nationally recognized firm of independent certified public
accountants from the management advisory services department (or comparable
department or group) of such firm or are partners
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-10-
in a major law firm acceptable to Distributor and Supplier; provided, however,
that (i) such firm cannot be the firm of certified public accountants then
auditing the books and records of either party or providing management or
advisory services for either party.
14.4 Distributor and Supplier each shall pay 50% of the initial compensation to
be paid to the arbitrator in any such arbitration and 50% of the costs of
transcripts and other normal and regular expenses of the arbitration
proceedings.
14.5 For any Claim submitted to arbitration, the burden of proof will be as it
would be if the claim were litigated in a judicial proceeding.
14.6 Upon the conclusion of any arbitration proceedings hereunder, the
arbitrator will render findings of fact and conclusions of law and a written
opinion setting forth the basis and reasons for any decision reached and will
deliver such documents to each party to this Agreement along with a signed copy
of the award.
14.7 The arbitrator chosen in accordance with these provisions will not have the
power to alter, amend or otherwise affect the terms of these arbitration
provisions or the provisions of this Agreement.
14.8 Except as specifically otherwise provided in this Agreement, arbitration
will be the sole and exclusive remedy of the parties for any Claim arising out
of this Agreement.
15. Media Releases.
Neither party will issue any press release relating to this Agreement unless
such disclosure is required by applicable law or the rules or regulations of any
securities exchange or NASDAQ; provided, however, that Supplier agrees that it,
or any of its affiliates, shall not make any such disclosure with NASDAQ (or
such other securities exchange or trading market where the securities of
Supplier or any of its affiliates are traded) without using its best efforts to
first obtain Distributor's consent thereto, and Distributor agrees that it will
promptly respond to Supplier with respect to such disclosure and will not
unreasonably withhold consent hereunder.
16. Miscellaneous.
16.1 Notices. All notices and demands of any kind which either party may be
required or desire to serve upon the other under the terms of this Agreement
shall be in writing, and shall be served either by (i) personal delivery, (ii)
overnight courier, or (iii) telecopy or facsimile, in each case at the addresses
set forth below or at such other addresses as may be designated by the parties
in writing or, if applicable, to the telecopy or facsimile number set forth
below. If by personal delivery or overnight courier, service shall be deemed
complete upon such delivery. If by telecopy or facsimile, service shall be
deemed complete at the end of the day upon which the telecopy or facsimile is
transmitted, provided a copy of the notice or demand is also sent by regular
mail.
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-11-
If to Distributor, to:
Anicom, Inc.
0000 X. Xxxxx Xxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Zavis
000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000
If to Supplier, to:
Connectivity Products Incorporated
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Zimet, Haines, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
16.2 Entire Agreement. This Agreement is the entire agreement between the
parties hereto with respect to the Products, there being no prior written or
oral promises or representations not incorporated herein.
16.3 Applicable Law. This Agreement shall be governed by the law of the State of
Michigan, applicable to contracts made and to be performed in that state,
exclusive of any conflicts of law principles.
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-12-
16.4 Amendments. No amendment or modification of the terms of this Agreement
shall be binding on either party unless reduced to writing and signed by an
authorized representative of the party to be bound.
16.5 Assignment. This Agreement shall not be assigned by either party; provided,
that Distributor may assign this Agreement in connection with any sale of all or
substantially all of its assets; and provided further that Supplier may assign
this Agreement in connection with any sale of all or substantially all of its
assets, subject to the terms and conditions set forth in Section 11.2 above.
16.6 Relationship of Parties. The relationship between Distributor and Supplier
hereunder is that of vendor and vendee. Each party shall be considered an
independent contractor, and neither party shall have any right or authority to
assume or create any express or implied obligation on behalf of the other,
except as otherwise provided herein.
16.7 Severability. In the event that any of the provisions of this Agreement or
the application of any such provisions to the parties hereto with respect to
their obligations hereunder shall be held by a court or other tribunal of
competent jurisdiction to be unlawful or unenforceable, the remaining provisions
of this Agreement shall remain in full force and effect.
16.8 Counterparts. This Agreement may be executed in counterparts, each of which
together shall be deemed an original, but all of which together shall constitute
one and the same instrument.
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-13-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
CONNECTIVITY PRODUCTS ANICOM, INC.
INCORPORATED
By:/s/ Xxxxx X. Xxxxxxxxxx By:/s/ Xxxx Xxxxxx
Its: President and CEO Its: President
-14-
Schedule A
Purchase Amounts
Year Product Target Amount Annual Order Amount
1 Low Voltage Products $ * $ *
2 Low Voltage Products $ * $ *
Other Products $ *
3 Low Voltage Products $ * $ *
Other Products $ *
4 Low Voltage Products $ * $ *
Other Products $ *
5 Low Voltage Products $ * $ *
Other Products $ *
Total Amount $ *
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-15-
Schedule B
Certain Customers
*
___________________________________
* Confidential portions omitted and filed separately with the Commission.
-16-
