MANUFACTURING SUPPORT SERVICES AGREEMENT
THIS MANUFACTURING AND SERVICES AGREEMENT (the "Agreement") is dated as of
September 28, 1996 by and between Tridex Corporation, a Connecticut corporation
("Tridex"), and Magnetec Corporation, a Connecticut corporation ("Magnetec").
WHEREAS, Magnetec and Tridex have entered into an Asset Transfer Agreement
dated as of July 31, 1996 under which Magnetec has agreed to transfer to Tridex
all of the assets used exclusively in the conduct of the ribbon business (the
"Ribbon Business"); and
WHEREAS, Tridex has not yet obtained a facility separate from the Magnetec
facility suitable for the conduct of the Ribbon Business, and Magnetec, with its
existing manufacturing facility and shipping, receiving, accounting and related
support capability at that facility, can provide the space and support services
required by Tridex, as the owner of the Ribbon Business assets, for the
operation of the Ribbon Business; and
WHEREAS, upon completing the acquisition of the Ribbon Business assets,
Tridex will employ the individuals now employed by Magnetec who are directly
involved in the manufacturing of the Ribbon Business products and the individual
who supervises Ribbon Business manufacturing and related operations; and
WHEREAS, Tridex desires to obtain space within Magnetec's facility and
manufacturing support and related services necessary for the conduct of the
Ribbon Business, and Magnetec is willing to furnish or make such services and
space available to Tridex in connection with the transfer of the Ribbon Business
assets;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
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1. Staffing; Management Supervision and Control by Tridex.
(a) After the date of this Agreement, no Magnetec employees will
engage directly in the manufacturing operations of the Ribbon Business. As of
the date of this Agreement, Tridex shall offer full time employment to the
individuals listed on Schedule 4(a), and such individuals shall cease to be
employed by Magnetec. Tridex shall offer such individuals cash compensation
equal to their cash compensation paid by Magnetec and benefits substantially
equivalent to their benefits provided by Magnetec. Only these individuals
employed by Tridex for the Ribbon Business shall be permitted to operate Ribbon
Business equipment.
(b) Tridex shall maintain managerial supervision and control of the
Ribbon Business manufacturing operations and shall exercise final approval
authority over all Tridex purchase orders and Tridex checks prepared by Magnetec
in connection with the manufacturing support services rendered hereunder. The
Ribbon Line Supervisor will supervise the Ribbon Business manufacturing line
employees and serve as day-to-day on-site representative of Tridex for Ribbon
Business matters.
(c) The Ribbon Line Supervisor, or another Tridex employee (as
designated by Tridex in writing to Magnetec), shall: (i)forecast annual
materials requirements; (ii)develop material requirements planning ("MRP") data
for input to Magnetec's automated manufacturing and inventory control systems;
(iii) develop a production schedule and determine quantities and delivery dates
required for periodic materials requirements; (iv) issue Tridex purchase orders
for delivery of such materials in the appropriate quantities on the delivery
dates; (v)supervise Tridex employees engaged in the manufacturing operations of
the Ribbon Business; (vi)collect Ribbon Business receivables; (vii) authorize
payment of invoices; and (viii)supervise third-party payroll service and provide
Tridex federal taxpayer identification number for payroll purposes.
2. Insurance. Tridex agrees to obtain and maintain all necessary insurance,
including but not limited to, property, casualty, liability and workers'
compensation with respect to the Ribbon Business and the Tridex employees
engaged in Ribbon
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Business operations at Magnetec's facility. Tridex shall provide proof of
coverage upon request by Magnetec.
3. Space Provided. Magnetec hereby agrees to provide Tridex approximately
2,200 square feet of floor space including, to the extent practicable,
manufacturing, stockroom, finished goods warehouse, and shipping and receiving
space. Space provided to Tridex shall, to the extent practicable, be clearly
marked as separate areas designated for the Ribbon Business.
4. Ribbon Business Products Sold to Magnetec. Tridex agrees to sell Ribbon
Business products to Magnetec at prices no higher than ten percent (10%) below
the lowest price paid by any other customer of Tridex for the same products.
This price is subject to annual adjustment upon the mutual agreement of the
parties hereto, with annual increases not to exceed five percent (5%) of then
current prices.
5. Tridex Manufacturing Facility. Tridex agrees to use commercially
reasonable efforts to obtain its own manufacturing facility suitable for the
conduct of the Ribbon Business and to relocate the Ribbon Business assets to
such facility.
6. Manufacturing Support Services Provided by Magnetec.
Effective upon the date first written above (the "Effective Date"),
Magnetec will provide the following services to Tridex for the conduct of the
Ribbon Business:
(a) Purchasing and Manufacturing Processing Services: receive at the
Magnetec receiving dock materials ordered by Tridex for Ribbon Business
operations; generate list of goods received and cross-check against vendor's
packing list and Tridex purchase order; spot inspect such materials upon
receipt; store materials in the Magnetec stockroom in a separate area designated
for the Ribbon Business; move materials to manufacturing area according to
manufacturing schedule; and move finished goods to a separate area designated
for Ribbon Business finished goods.
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(b) Sales Order Processing and Customer Billing Services: promptly
after the date hereof, notify all Ribbon Business customers to submit orders to
Tridex in care of Magnetec Sales Department; receive and, after acceptance of
order by Ribbon Line Supervisor (as defined below), enter customer orders into
order processing system, including scheduling shipment date; generate shipping
documents; package and prepare finished goods for shipment; ship finished goods
and generate invoice on Tridex form.
(c) Accounts Payable Processing Services: promptly after the date
hereof, notify Ribbon Business suppliers to submit invoices to Tridex in care of
Magnetec Accounts Payable; match suppliers invoices with Tridex purchase orders
and receiving department records and enter verified invoices onto accounts
payable system; and prepare Tridex checks to suppliers for signature by Tridex
authorized signatory. (Tridex will in all cases make the final decision
regarding payment of any invoice submitted by a Ribbon Business supplier.)
(d) Payroll Processing Services: maintain Ribbon Business employee
files, including hours worked and payroll records. (Using the Tridex employer
identification number, Tridex will establish with a third party payroll service
provider a separate payroll for all Ribbon Business employees, including the
Ribbon Line Supervisor. Tridex will be solely responsible for all Ribbon
Business wages, salaries, insurance and other benefits, and all withholding or
other taxes due thereon.)
(e) Accounting and Data Processing Services: establish within the
Magnetec accounting system separate accounts for all activity of the Ribbon
Business; provide Tridex with a monthly trial balance, detailed general ledger
and subledgers for all transactions. (All general ledger accounts will be
controlled by Tridex. Tridex will provide a Ribbon Business cash receipt journal
to Magnetec on a monthly basis to update the accounts receivable on the Ribbon
Business records maintained by Magnetec.)
7. Tridex Payments to Magnetec. Magnetec shall xxxx Tridex in arrears, as
of the last day of Magnetec's accounting month, for manufacturing support
services provided, and Tridex shall pay
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Magnetec no later than thirty (30) days after the date of the invoice, the
following amounts:
(a) For Magnetec's occupancy costs, Tridex shall pay Magnetec a flat
fee of $3,300 per month, and for Magnetec's overhead directly attributable to
manufacturing, Tridex shall pay Magnetec 9.6% of the monthly revenue of the
Ribbon Business, subject to annual adjustment upon the agreement of both
parties;
(b) For Magnetec's overhead attributable to general and administrative
expenses (e.g., expenses incurred to provide order processing, customer billing
and accounting services), Tridex shall pay Magnetec a flat fee of $8,509 per
month, subject to annual adjustment upon the agreement of both parties;
(c) For Magnetec's fixed employment costs for sales employees, Tridex
shall pay Magnetec 2.4% of the monthly revenue of the Ribbon Business; and
(d) For other costs incurred and paid by Magnetec on behalf of Tridex
which are not included in Section 7(a) - (c) but are directly related to the
conduct of the Ribbon Business, including but not limited to sales commissions
paid on Ribbon Business sales, temporary labor, the direct cost of engineering
labor costs, benefits, and manufacturing equipment maintenance and repair,
Tridex shall reimburse Magnetec for the actual cost of such services. Tridex
shall reimburse Magnetec for the full cost of such goods or services, when all
such goods or services have been or will be used for the Ribbon Business.
8. Magnetec Payments to Tridex. During the term of this Agreement, Magnetec
may request and Tridex may, to the extent available, provide the services of the
Tridex employee filling the position of Ribbon Line Supervisor (the "Ribbon Line
Supervisor"). Magnetec shall pay Tridex for the services of the Ribbon Line
Supervisor, to the extent they are requested by and provided to Magnetec, at an
hourly rate calculated by dividing the weekly salary paid to the Ribbon Line
supervisor by forty (40).
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9. Goodwill of Common Customers. Magnetec has invested substantial time,
effort and expense in developing its goodwill and reputation for providing to
its customers quality printer products, including Ribbon Business products, at
competitive prices. Magnetec will continue to sell printers to such customers,
many of whom are and will be Ribbon Business customers. As a material inducement
to Magnetec to enter into this Agreement, Tridex agrees not to take any action
during the term of this Agreement which is intended to have, or which would have
a reasonable likelihood of having, a material adverse effect on the relationship
of Magnetec with its customers or end users of its products.
10. Liabilities; Disclaimer. In furnishing the other party with services as
herein provided, Tridex, Magnetec and their respective officers, directors,
employees or agents (collectively, "Representatives") shall not be liable to the
other party or its respective Representatives, creditors or shareholders for any
action or failure to act except willful malfeasance, bad faith or gross
negligence in the performance of their duties or reckless disregard of their
obligations and duties under the terms of this Agreement. The provisions of this
Agreement are for the sole benefit of Tridex, Magnetec and their respective
Representatives and will not, except to the extent otherwise expressly stated
herein, inure to the benefit of any third party. Neither Tridex nor Magnetec
makes any express or implied warranty or representation with respect to the
quality of the services provided hereunder.
11. Term. The term of this Agreement shall begin on the date hereof and
continue for two (2) years, unless terminated sooner by the mutual agreement of
the parties.
12. Status of Relationship. Magnetec shall be deemed to be an independent
contractor and, except as expressly provided or authorized in this Agreement,
shall have no authority to act for or bind Tridex.
13. Notices. All notices, xxxxxxxx, requests, demands, approvals, consents,
and other communications which are required or may be given under this Agreement
will be in writing and will
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be deemed to have been duly given if delivered personally or sent by registered
or certified mail, return receipt requested, postage prepaid to the parties at
their respective addresses set forth below:
If to Magnetec:
Magnetec Corporation
0 Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: President
If to Tridex:
Tridex Corporation
00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
14. Confidentiality. Tridex and Magnetec hereby agree to hold, and cause
their respective employees, agents and authorized representatives to hold, in
strict confidence, all information concerning the other party furnished pursuant
to this Agreement.
15. No Third Party Beneficiaries. This Agreement is solely for the benefit
of the parties hereto and shall not be deemed to confer upon any third party and
right, remedy or claim in excess of those existing without reference to this
Agreement.
16. Access to Information. During the term of this Agreement and for one
(1) year thereafter, Tridex shall afford to Magnetec and its authorized
representatives, agents and employees, and Magnetec shall afford to Tridex and
its authorized representatives, agents and employees, access during normal
business hours to all records, books, contracts and other data, including but
not limited to corporate, financial, accounting, personnel and other business
records, related to the Ribbon Business.
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17. No Assignment. This Agreement shall not be assignable except with the
prior written consent of the other party to this Agreement.
18. Applicable Law. This Agreement shall be governed by and construed under
the laws of the State of Connecticut applicable to contracts made and to be
performed therein.
19. Section Headings. The section headings used in his Agreement are for
convenience of reference only and will not be considered in the interpretation
of construction of any of the provisions thereof.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
21. Amendments. This Agreement may be amended or modified only by a written
instrument signed by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument by their duly authorized officers as of the date first
above written.
TRIDEX CORPORATION
By:______________________________________
Title:___________________________________
MAGNETEC CORPORATION
By:______________________________________
Title:___________________________________
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