EXHIBIT 10.21
AGREEMENT
This Agreement is made and entered into as of the 24th day of October,
1995, between DESA International, Inc., a Delaware corporation, which has its
principal place of business located at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxxxx 00000 (hereinafter referred to as "DESA") and XXXX Electrodomesticos,
S.A., which has its principal place of business located at Xxxxx Xxxxxx 0,
Xxxxxx, Xxxxxxxx (Xxxxxxx), Xxxxx 00000 (hereinafter referred to as "BYSE"):
WHEREAS, DESA and BYSE desire to enter into an agreement with
regard to a new line of 3 and 5 plaque vent free gas heaters
(hereinafter referred to as the "Products") per Attachment A, to be
manufactured by BYSE and introduced by DESA in the United States and
Canada in 1996. DESA and BYSE agree to the following terms and
conditions:
1. (a) The term of this Agreement will be from the execution date
of this Agreement and will continue until December 31, 1998.
(b) Neither DESA nor BYSE can renew the Agreement
unilaterally. Both companies must agree in writing for any
extension of the Agreement beyond the original three (3) year
period.
2. (a) As long as this Agreement remains in effect, DESA has
exclusive marketing rights for the Products to be sold into
the Hardware/Home Center, Hardware Distributor, Mass
Merchandiser and Hardware Cooperative channels of
distribution, directly or indirectly, under various brand
names designated by DESA.
(b) As long as this Agreement remains in effect, DESA shall
have the right to market the Products, as described above, in
the United States and Canada.
(c) In order to retain these exclusive marketing rights, DESA
must place minimum annual orders during each January through
December period of this Agreement based on the volumes
outlined in Attachment B.
(d) If BYSE markets or sells the Products itself or through
third parties, in no event will BYSE use or permit third
parties to use DESA's brand names.
(e) The "Products" refer to the models listed on Attachment C.
3. (a) On or before December 1 of each year, during the term of
this Agreement, BYSE will provide DESA with a price list
corresponding to the Products listed on Attachment C. This
price list will be for the period of the next calendar year
and will be denominated in US dollars.
(b) All Products sold to DESA hereunder shall be sold at the
prices established by the previous December 1.
(c) The prices confirmed in December shall be in effect for
twelve (12) calendar months subject only to a one time per
year adjustment based on the exchange rate between the dollar
and the peseta. For purposes of such
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adjustment, the average exchange rate for the first week
(beginning Sunday) in December of each year shall be
determined by reference to the exchange rates published in the
Wall Street Journal and then compared to the average exchange
rate for the first week (beginning Sunday) in July of the next
year, also by reference to the Wall Street Journal. If the
value of the dollar has increased or decreased relative to the
peseta less than five (5) percent during that time period
there will be no adjustment made in pricing for that year. If
the relative values have changed more than five (5) percent in
that time period, then the prices for that year can be
adjusted by the difference between such percentage change and
five (5) percent. Any adjustment will not be retroactive, but
will be for pricing for orders placed from the point in time
of the adjustment through December 1 of that year. (d) In
addition to the above referenced pricing, see Attachment F for
Purchase Volume Rebates.
4. (a) BYSE will provide DESA's requirements of the Products
F.O.B. Bilbao, Spain or CIF East Coast port in the United
States (Charleston or Savannah), with Net 60 day payment terms
at the U.S. Dollar prices listed on Attachment C.
(b) Within ten (10) days of XXXX'x advice of shipment and
invoice, DESA will secure one hundred (100) percent of each
payment with a straight Letter of Credit issued by a
commercial bank acceptable to BYSE.
(c) If DESA requires shipment to any located other than the
East Coast Port, BYSE will pay the amount it would have cost
to ship to the East Coast Port, and the difference between
such amount and the actual cost of freight to such other
location will be the responsibility of DESA.
(d) BYSE agrees to procure the insurance from an AAA rated
(highest rated) insurance company organized and operating
under the laws of the United States or Canada, and such
insurance shall provide for marine and war risk coverage and
name DESA as an additional insured.
(e) Title to and risk of loss of the Products purchased
hereunder by DESA shall pass to DESA upon delivery thereof to
the ocean carrier at the port in Spain selected by BYSE for
shipment.
(f) BYSE pricing to DESA will be equal to or less than BYSE
pricing on the Products (including but not limited to the
Corcho line) to all other BYSE customers (net of all rebates,
allowances, adjustments, etc.).
5. (a) DESA will provide annually by each December 15, a twelve
(12) month forecast for all models of Products and will
provide monthly a rolling four (4) month forecast.
(b) These forecasts will be nonbinding but consistent with the
volumes outlined in Attachment B.
6. (a) DESA will provide BYSE purchase orders based on ninety
(90) day lead times prior to shipment.
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(b) BYSE will be under no obligation to sell Products to DESA
unless DESA places firm and noncancellable purchase orders not
less than ninety (90) days prior to shipping of each order for
Products.
7. In the event BYSE decides to cease producing the Products (in
which case BYSE will provide one (1) year prior written notice
to DESA) or in the event BYSE becomes bankrupt, DESA will have
the option to purchase at fair market value all machinery,
tooling and fixtures owned by BYSE used exclusively to
manufacture the Products. In such instance, DESA may
manufacture or alternate source the Products.
8. In the event DESA ceases marketing the Products due to the
inability of BYSE and DESA to agree on pricing issues and the
subsequent impact on projected volumes due to these pricing
issues is not acceptable to XXXX, XXXX will provide BYSE six
(6) months written notice. At the end of DESA's six (6) month
notice period, BYSE may market the Products in the United
States and Canada, to the channels of distribution described
in paragraph 2, but in no event will BYSE use or allow third
parties to use DESA's brand names. DESA will comply with the
provisions of paragraph 2 of this Agreement during the six (6)
month notice period.
9. Both parties agree to work together cooperatively in order to
develop cost reductions and to further improve the performance
of the Products. DESA and BYSE will share equally in any cost
reductions regardless of the originator.
10. Product planning meetings will be held by the parties on at
least an annual basis at a time and place mutually agreed upon
by the parties.
11. The parties agree that this Agreement is not assignable and
may not be succeeded to by any third party without the express
written consent of both DESA and BYSE. Such consent will not
be unreasonably withheld.
12. The parties, in signing this Agreement, execute an
Indemnification Agreement in the form of Attachment X. XXXX
will provide liability insurance coverage of a minimum of $5
million per occurrence. BYSE will also provide annually a
Certificate of Insurance specifying: (a) a minimum of $5
million Product Liability Insurance by an insurer authorized
to write insurance in the United States; (b) DESA as an
additional name insured; (c) the applicable deductible to be
covered by BYSE; and (d) the name and address of an authorized
United States claim agent.
13. BYSE will provide complete indemnification to DESA for any and
all patent infringement liabilities that may occur from the
introduction of the Products into the United States and
Canada.
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14. DESA and BYSE will mutually develop a quality level agreement
that will be employed by both companies for purposes of
establishing Product acceptance criteria at time of receipt of
Product by DESA. An Acceptable Quality Level (AQL) agreement
will be developed and signed by appropriate Quality Assurance
supervisory personnel, as well as by an officer, of both
companies.
15. BYSE shall, at its own cost, obtain and maintain the necessary
International Approval Services (IAS) certifications for the
Products for the United States and Canadian markets.
16. (a) BYSE will provide a two (2) year warranty on the Products.
The two (2) year period will begin three (3) months from the
date of customer shipment by DESA, or on the invoice date held
by the end user, whichever is later. Refer to Attachment E for
warranty language. (b) Termination of the Agreement will not
affect Warranty obligation.
17. (a) BYSE will provide DESA with a list of recommended service
parts for the Products.
(b) Pricing for parts will correspond to the same December 1
and adjustment guidelines outlined in paragraph 3.
(c) During the term of this Agreement and for a period of
three (3) years after XXXX'x last shipment of Products to DESA
hereunder, DESA agrees to provide after sale service for the
Products in the territory marketed by DESA, and BYSE agrees to
supply DESA with a supply of replacement parts. DESA agrees to
purchase a reasonable supply of replacement parts for the
repair of Products under Warranty.
(d) DESA will balance parts inventories on an annual basis;
returning unused excess parts for a full refund of the
purchase price.
(e) Any parts purchased and found to be in excess at the end
of the three (3) year period can be returned by DESA to BYSE
for a full refund of the purchase price.
(f) If the Agreement is not renewed, DESA can return all
unused service parts for a full refund of the purchase price.
18. BYSE will indemnify DESA for the costs it incurs relating to
the following:
(a) catastrophic field failure and/or recall (defined as
greater than three (3) percent of the units sold in any year);
(b) required notification to the Consumer Product Safety
Commission (CPSC) under the 15b reporting requirements.
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19. BYSE shall, at its own cost, maintain all machinery, tooling
and equipment, used to manufacture the Products in good
working order.
Dated and agreed upon this 24th day of October, 1995.
DESA INTERNATIONAL, INC. XXXX ELECTRODOMESTICOS, S.A.
BY_________________________ BY__________________________
ITS________________________ ITS__________________________
WITNESSED BY: BY__________________________
___________________________ ITS__________________________
ITS________________________ WITNESS____________________
ATTACHMENT A
PRODUCT DRAWINGS
Product drawings will be supplied by BYSE after further Product development and
will be attached to this Agreement as Attachment A. The absence of Product
drawings at the time of the signing of this document should in no way detract
from the meaning, terms or conditions of this Agreement.
ATTACHMENT B
YEARLY VOLUMES
In order to maintain exclusive marketing rights, in the distribution channels
identified in this Agreement for the United States and Canadian markets, DESA
will comply with the provisions of paragraph 2 of this Agreement. That paragraph
refers to Attachment B and the minimum yearly order volumes outlined herein:
1st year: 20,000 Heaters
2nd year: 30,000 Heaters
3rd year: 40,000 Heaters
ATTACHMENT C
PRODUCT AND PRICE LISTING
MODEL PRICE (US$)
CIF
FOB Bilbao East Coast
Three (3) Plaque Heater - Natural 97.65 102.00
Three (3) Plaque Heater - LP 96.35 100.70
Five (5) Plaque Heater - Natural 120.00 126.30
Five (5) Plaque Heater - LP 120.00 126.30
Above prices for calendar year 1996 are based upon an exchange rate of 126
pesetas per US dollar.
ATTACHMENT D
INDEMNIFICATION AGREEMENT
This Agreement made and entered into this 24th day of October, 1995, by and
between DESA INTERNATIONAL, INC., with its principal place of business located
0000 Xxxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxx, X.X.X. ("DESA") and XXXX
Electrodomesticos, S.A. ("Seller"), with its principal place of business located
at Xxxxx Xxxxxx 0, Xxxxxx, Xxxxxxxx, (Xxxxxxx), Xxxxx.
NOW, THEREFORE, for good and valuable consideration, including the production
agreement executed by the parties on even date herewith and the mutual covenants
of the parties set forth herein, DESA and Seller agree as follows:
1. PRODUCT LIABILITY CLAIMS.
A. Seller shall indemnify, defend and hold DESA harmless from and
against any and all claims, losses, damages, judgments, costs and expenses,
including but not limited to reasonable attorney's fees, arising from,
associated with or relating to any Product or Products. This includes but is not
limited to claims involving allegations of negligence, defects in the design or
manufacture, and strict liability because a product is unreasonably dangerous.
In all events, the design, manufacture and information provided with the
Products shall be the sole responsibility of BYSE. Nothing, however, contained
herein, shall relieve DESA from responsibility for any claim, loss or damage
which is caused by any change, modification or remodeling which DESA makes in
the Product(s) without the knowledge or consent of Seller.
X. XXXX shall notify Seller within fifteen (15) days of receiving
notice of a claim hereunder. Upon receipt of notice from DESA, Seller shall
assume responsibility for the claim, including any defense thereof, and DESA
shall reasonably cooperate with Seller in any defense of the claim.
C. Without limitation of its duty to indemnify DESA, Seller agrees to
maintain in force for the life of any Product produced by Seller hereunder,
products liability insurance coverage, including broad form vendor's coverage,
for property damage and bodily injury combined, naming DESA as an additional
insured. Seller shall supply DESA with a certificate of insurance evidencing
this coverage annually. Seller's insurance shall afford minimum coverage of
$5,000,000 per occurrence.
2. NOTICE. Any notice required or permitted under the terms of this
Agreement shall be in writing in English and shall be delivered by registered
air mail, with postage fully prepaid, or telex, telefacsimile or cable. If any
notice is made by telex, telefacsimile or by cable, it shall be confirmed by air
mail. All notices required hereunder shall be sent to the addresses written
below or such other addresses as shall be provided in writing. Notice made by
letter shall be deemed to have been given ten (10) days after the date of
mailing and notice by telex or cable shall be deemed to have been given when
received.
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3. APPLICABLE LAW. This Agreement shall be construed in accordance with
the laws of the Commonwealth of Kentucky, United States of America. The parties
agree that the proper venue for any dispute arising under this agreement or the
production agreement of even date herewith shall be any federal district court
within the Western District of Kentucky.
4. BINDING EFFECT. This Agreement shall be binding upon properly
approved successors and assigns of the parties.
5. CAPTIONS. The captions of the sections of this Agreement are for
convenience only and shall not be considered or referred to in resolving
questions of interpretation.
6. ENTIRE AGREEMENT. This Agreement represents the complete
understanding of the parties with respect to Seller's duty to indemnify DESA,
and it supersedes all prior agreements and understandings between the parties
with respect to the matters set forth herein. This Agreement may not be amended
except by a writing designated as such and signed by authorized representatives
of both parties.
ATTACHMENT E
WARRANTY INFORMATION
KEEP THIS WARRANTY
Model
Serial No.
Date Purchased
Always specify model and serial numbers when communicating with the factor.
We reserve the right to amend these specifications at any time without notice.
The only warranty applicable is our standard written warranty. We make no other
warranty, expressed or implied.
LIMITED WARRANTY
VENT-FREE HEATERS
DESA International warrants this product to be free from defects in materials
and components for one (1) year from the date of first purchase, provided that
the product has been properly installed, operated and maintained in accordance
with all applicable instructions. To make a claim under this warranty the Xxxx
of Sale or canceled check must be presented.
This warranty is extended only to the original retail purchaser. This warranty
covers only the cost of part(s) required to restore this heater to proper
operating condition. Warranty part(s) MUST be obtained through authorized
dealers of this product and/or DESA International who will provide original
factory replacement parts. Failure to use original factory replacement parts
voids this warranty. The heater MUST be installed by a qualified installer in
accordance with all local codes and instructions furnished with the unit.
This warranty does not apply to parts that are not in original condition because
of normal wear and tear, or parts that fail or become damaged as a result of
misuse, accidents, lack of proper maintenance or defects caused by improper
installation. Travel, diagnostic cost, labor, transportation and any and all
such other costs related to repairing a defective heater will be the
responsibility of the owner.
TO THE FULL EXTENT ALLOWED BY THE LAW OF THE JURISDICTION THAT GOVERNS THE SALE
OF THE PRODUCT; THIS EXPRESS WARRANTY EXCLUDES ANY AND ALL OTHER EXPRESSED
WARRANTIES AND LIMITS THE DURATION OF ANY AND ALL IMPLIED WARRANTIES, INCLUDING
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE TO ONE (1)
YEAR FROM THE DATE OF FIRST PURCHASE; AND DESA INTERNATIONAL'S
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LIABILITY IS HEREBY LIMITED TO THE PURCHASE PRICE OF THE PRODUCT AND DESA
INTERNATIONAL SHALL NOT BE LIABLE FOR ANY OTHER DAMAGES WHATSOEVER INCLUDING
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.
Some states do not allow a limitation on how long an implied warranty lasts or
an exclusion or limitation of incidental or consequential damages, so the above
limitation on implied warranties, or exclusion or limitation on damages may not
apply to you.
This warranty gives you specific legal rights, and you may also have other
rights that vary from state to state.
For information about this warranty write: DESA INTERNATIONAL
0000 Xxxxxxxxxx Xxxxx
X.X. Xxx 00000
Xxxxxxx Xxxxx, XX 00000-0000
ATTACHMENT F
PURCHASE VOLUME REBATES
Should DESA issue purchase orders to BYSE for more than 20,000 units in calendar
year 1996, BYSE shall rebate to DESA the following percentages of the
incremental purchases. The rebates are always retroactive back to the 20,001
level when each successive level is attained.
Number of Units Percentage of Rebate
Up to 20,000 0
20,001 to 25,000 2
25,001 to 30,000 3
30,001 to 35,000 4
35,001 to 40,000 5
The rebate shall be paid by BYSE by February 1, 1997.
