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EXHIBIT 10.25
GATES/ARROW
DISTRIBUTING, INC.
AND
CHAPARRAL TECHNOLOGIES, INC.
DISTRIBUTION
AGREEMENT
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DISTRIBUTION AGREEMENT
As of March 10, 1999, Chaparral Technologies, Inc., a Delaware
corporation having its principal place of business at 0000 Xxxxx Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxx 00000 ("Supplier"), and Gates/Arrow Distributing, Inc., a
Delaware corporation, having its principal place of business at 00 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxxxx, X.X. 00000, ("Gates/Arrow"), agree as follows:
1. APPOINTMENT Supplier appoints Gates/Arrow an authorized distributor of its
Products within the United States, Canada and Puerto Rico (the "Territory")
through its subsidiary, Consan, Inc, a Minnesota corporation. Supplier remains
free to distribute its Products within the territory either directly or through
other distributors or dealer. As used in this agreement, "Product" means all
products offered for sale by Supplier generally, as set forth and described in
Supplier's current price list. Products may be added to or deleted from the
price list by Supplier on thirty days prior written notice to Gates/Arrow.
2. RESPONSIBILITIES OF GATES/ARROW Gates/Arrow will use its reasonable best
efforts to:
a. maintain a competent and aggressive sales force and otherwise
promote the sale, lease or other distribution of the Products within the
Territory;
b. maintain a representative inventory of Products in reasonably
sufficient quantities to provide adequate and timely delivery to Gates/Arrow's
customers, with a goal of shipment or acknowledgement of orders within two
business days; and
c. participate in such training programs as may be offered by Supplier.
3. RESPONSIBILITIES OF SUPPLIER Supplier will use its reasonable best efforts
to:
a. furnish Gates/Arrow with current price and product information on
magnetic media (or other suitable electronic format) and with a supply of such
printed price lists, sales literatures, books, catalogues and the like as
Supplier may prepare and such training and technical and sales support
(including sales forecasting and planning assistance) as may be necessary to
assist Gates/Arrow in effectively carrying out its activities under this
Agreement;
b. advertise the Products throughout the Territory, inform the public
that Gates/Arrow is an authorized distributor of the Products, encourage
customers or potential customers for the Products to order the same from its
distributors (including Gates/Arrow), and refer to its distributors (including
Gates/Arrow), leads and orders involving quantities of Products normally handled
by distribution; and
c. establish and maintain quality control, manufacturing, handling and
testing procedures, and such other programs as are necessary to ensure that the
Products, as manufactured and sold to Gates/Arrow, are of the highest quality
and reliability, are in full compliance with all applicable laws, standards,
codes and regulations, are duly marked and labeled and are suitable for resale
or other distribution.
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4. REPORTS, REVIEWS, AND AUDITS Within fifteen business days after the end of
each month, Gates/Arrow will send to Supplier, in a mutually agreeable format,
i) a stock status report showing the month end on- hand quantities of Products
by device type and warehouse location and ii) a point of sale report showing
each sale of the Products for the month by device type, selling location,
customer name and address, and sales price.
A 12 month rolling forecast will be generated by Gates/Arrow and delivered to
Supplier quarterly. (during the third month of each calendar quarter) The
forecast will address each Product as listed on Schedule A. The forecast format
will be mutually agreed upon and will facilitate communication. The quantities
reflected should take into account opportunities and established run rates. This
will be a significant part of the quarterly review meeting.
The appropriate personnel from each party will schedule and hold quarterly
business reviews, the agenda will include the following items but not be limited
to; forecast, product level, training, quality, supplier performance and
industry/company updates.
No more than twice during any year, at reasonable times and upon reasonable
prior notice, employees of Supplier may i) conduct a physical inventory of
Products in any stocking location (or in automated facilities, observe cycle
counts and related methodology) or ii) audit such business records, located at
Gates/Arrow's corporate headquarters, as pertain solely to the purchase of
Products hereunder during any such year.
5. ORDERS; DELIVERY; RESCHEDULING; CANCELLATION;
a. ORDERS Gates/Arrow will place written, telefaxed, telexed or
electronically interchanged purchase orders (or do so verbally with written
confirmation within thirty days), which will include the Products ordered,
quantities requested, delivery dates, prices, and shipping instructions (when
necessary). Supplier will acknowledge each order in writing, by telefax, by
telex, or electronic interchange within ten business days of the receipt thereof
and will confirm the requested shipment date or specify an alternative shipment
date ("Acknowledged Shipment Date").
b. SHIPPING AND PACKING All shipments will be made F.O.B. origin in
accordance with Gates/Arrow's then current Shipping Instructions. Such Shipping
Instructions are subject to change from time to time upon Supplier's receipt of
written notice from Gates/Arrow.
c. RESCHEDULING AND CANCELLATION Gates/Arrow may reschedule the
Acknowledged Shipment Date of, or cancel, any order without cost or penalty up
to ten (10) days prior to scheduled shipment date.
x. XXXXX/ARROW'S ACCEPTANCE Gates/Arrow's acceptance of an order will
occur upon its receipt of the Products, unless Gates/Arrow notifies Supplier
within thirty business days of such receipt that the Products are defective or
do not conform to the Supplier's applicable warranty, the terms of this
Agreement, or Gates/Arrow's order.
e. EARLY SHIPMENTS Products delivered prior to their acknowledged
Shipment Date may be accepted or rejected by Gates/Arrow. If Supplier is
notified of Gates/Arrow's intention to reject any such delivery, it will issue
(or will be deemed to have issued) a Return Material Authorization within five
days. The return will be made
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fright collect. if Gates/Arrow elects to accept any such delivery, payment terms
on the related invoice will be based on the original Acknowledged Shipment Date.
6. PRICES The prices for Products will be as set forth in Supplier's Price List
in effect as of the date of this Agreement, subject to change from such date
forward upon at lest thirty days prior written notice from Supplier to
Gates/Arrow.
a. PRICE INCREASES Prior to the effective date of a price increase,
Gates/Arrow may order Products for delivery within the term at the prior (i.e.
lower) price. Products shipped under orders submitted by Gates/Arrow prior to
the effective date of any price increase will be shipped and invoiced at the
price in effect at the time of order placement.
b. PRICE DECREASES In the event Supplier decreases the price of any
Product, Gates/Arrow will receive a credit equal to the difference between the
price paid for the Product by Gates/Arrow (less any prior credits taken by
Gates/Arrow on such Product) and the new decreased price for the Product
multiplied by the quantity of such Product in Gates/Arrow's inventory, or in
transit to Gates/Arrow, on the effective date of the decrease. Price protection
will also apply to all Products returned to Gates/Arrow by its customers within
sixty days of the effective date. Gates/Arrow will submit to Supplier, within
sixty business days following the later of the effective date of such price
decrease or the date Gates/Arrow actually receives notice thereof, a list of the
Products upon which such credit is due. All Products shipped after the effective
date of any price decrease will be shipped and invoiced at the price in effect
at the of shipment.
c. SUPPLIER'S REPRESENTATION Supplier represents and warrants that its
practices and policies, including prices and discounts, comply with all
applicable laws. Such prices and discounts will not be less favorable than those
extended to other purchasers of similar quantities of Products from Supplier for
resale or other distribution.
d. TAXES AND OTHER CHARGES Gates/Arrow will pay any applicable sales or
use taxes pertaining to its purchase of the Products (and, if Products are to be
delivered to points outside the United States, the cost of packing, duties,
licenses, and fees) if included as a separate item on the invoices sent by
Supplier to Gates/Arrow.
e. TERMS Terms of payment are for the initial order under this
agreement only are net sixty (60) days from date of invoice. Thereafter, payment
terms will be two percent (2%) 10, net thirty (30) days from date of invoice.
7. RETURN OF PRODUCT
a. QUARTERLY ROTATION At any time during the first thirty (30) days
following the end of each CALENDAR quarter, Gates/Arrow may return to Supplier
for credit, a quantity of Products the value of which will not exceed ten
percent of the amount invoiced by Supplier to Gates/ARROW for all Products
purchased by Gates/Arrow during the previous quarter. Credit issued for such
returned Products will equal the price paid by Gates/Arrow for such Products,
less any prior credits taken thereon. Such returns, which may be made from one
or more stocking locations, will be shipped F.O.B. Supplier's domestic facility,
freight prepaid. Gates/Arrow must obtain a return authorization from Supplier
prior to shipment, and all Products returned must be in their original unopened
packaging, or undamaged and in merchantable condition.
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b. INITIAL PURCHASES Any and all Products ordered by Gates/Arrow on the
initial order under this Agreement may be returned for credit within sixty (60)
days of such date, subject to all of the terms and conditions of paragraph (a)
above, but will not be counted as a "stock rotation" for purposes of computing
the amount of Products returnable under paragraph (a).
8. PRODUCT CHANGES
a. OBSOLESCENCE AND MODIFICATION Supplier reserves the right to
discontinue the manufacture or sale of, or otherwise render or treat as
obsolete, any or all of the Products (or to modify the design or manufacture of
any Product so as to preclude or limit Gates/Arrow's sales of such Product) upon
at least thirty (30) days prior written notice to Gates/Arrow. Gates/Arrow may,
in its discretion, within sixty days of its receipt of such notice, notify
Supplier in writing of its intention to return any or all such Products which
remain in its inventory for a credit equal to the net price paid by Gates/Arrow
for such Products. The Products will be returned within sixty days of the date
of Gates/ARROW's receipt of Supplier's return authorization. Supplier will pay
all freight and shipping charges in connection with any such returns. Such
returns will not be counted for computing the amount of Product returnable under
paragraph 7 (a).
b. INTRODUCTION OF NEW PRODUCTS Supplier will give Gates/Arrow at least
thirty (30) days prior written notice of the introduction of any new Products
that preclude or materially limit Gates/Arrow from selling any Products in its
inventory and will work with Gates/Arrow to resell the affected Product still
remains in Gates/Arrow's inventory, Supplier will replace it with the new
Products within one hundred twenty days of the official public announcement, or
Supplier's first shipment, of such new Products, whichever occurs first. Such
returns will not be counted for computing the amount of Products returnable
under paragraph 7 (a).
9. WARRANTY The Products will be covered by Supplier's standard warranties,
copies of which are attached to this Agreement as Schedule B. The warranty
period set forth in Schedule B will begin with Gates/Arrow's shipment to its
customer, and the warranty will extend directly to Gates/Arrow's customer as if
it had purchased the Products directly from Supplier. Supplier will pay (or
refund the amount of) all freight and shipping charges for any defective
Products returned under its warranty.
10. COMPLIANCE WITH LAWS Despite anything to the contrary contained in Schedule
B or elsewhere in this Agreement, Supplier will indemnify Gates/Arrow against,
and hold it harmless from, any cost, loss, damage or liability (including
reasonable attorney's fees) arising from or related to Supplier's conduct or the
failure, or alleged failure, of the Products, as manufactured and sold to
Gates/Arrow, to fully comply with all applicable laws, standards, codes,
specifications and regulations or to be suitable for resale or other
distribution by Gates/Arrow as contemplated by this Agreement. All warranty and
indemnification provisions of this Agreement will survive the termination
hereof.
11. INTELLECTUAL PROPERTY Supplier will indemnify, defend and otherwise hold
harmless Gates/Arrow, its affiliates and its customers from all cost, loss,
damage or liability arising from any proceeding or claim brought or asserted
against Gates/Arrow, its affiliates or its customers, to the extent such
proceeding or claim is based on an allegation that the Products, any part
thereof, or their
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distribution or use infringe any patent, copyright, trademark, trade secret,
right in a mask work, or any similar claim, if Gates/Arrow notifies Supplier of
any such proceeding or claim promptly after it becomes known and provides all
the assistance and cooperation to Supplier that is reasonably requested.
Supplier will not be liable to Gates/Arrow under this paragraph to the extent
that any claim is based on a use for which the Product or part was not designed,
or an alteration of the Product by Gates/Arrow or at its direction which caused
the infringement.
12. TERM AND TERMINATION
a. TERM This Agreement is effective once signed by both parties and
until terminated in accordance with the provisions of this paragraph. Either
party may at any time terminate this Agreement without cause and for its
convenience by giving ninety days prior written notice to the other. Supplier
and Gates/Arrow represent that they have considered the making of expenditures
in preparing to perform under this Agreement. In that regard, both parties
acknowledge that neither party will in any way be liable to the other for any
loss, expense or damage (including special, consequential, or incidental
damages) by reasons of any termination of this Agreement without cause,
excepting only the then current value of equipment purchased or improvements
made by either party and dedicated to the Products or services of such other
party.
b. EVENTS OF DEFAULT Any of the following is a default under this
Agreement:
i. the assignment of this Agreement by either party without the prior
written consent of the other party;
ii. either party's failure to cure any breach of this Agreement within
sixty days following written notice thereof from the other (or, if not curable
within sixty days, if the cure is not commenced within that period and
thereafter diligently completed); and,
iii. the assignment by either party of its business for the benefit of
creditors, or the filing of a petition by either party under the Bankruptcy Code
or any similar statute, or the filing of such a petition against either of them
which is not discharged or stayed within sixty days, or the appointment of a
receiver or similar officer to take charge of either party's property, or any
other act indicative of bankruptcy or insolvency.
c. REMEDIES UPON DEFAULT In the event of either party's default, the
other party may terminate this Agreement for cause by written notice and/or
avail itself of any remedy available at law or equity.
d. RETURN OF INVENTORY In the event of any termination of this
Agreement, Supplier will repurchase from Gates/Arrow any or all unsold Products
designated by Gates/Arrow from its inventory at the price paid therefor by
Gates/Arrow, less any prior credit taken by Gates/Arrow on such Products. If
Gates/Arrow terminates this Agreement without cause, or Supplier terminates it
with cause, the price will reduced by a five percent handling charge and
Gates/Arrow will pay all freight and shipping charges (which otherwise will be
paid by Supplier). In the event of any termination, Supplier will, at
Gates/Arrow's request, honor any Gates/Arrow purchase order then outstanding.
Supplier will be required to accept only those Products which are in their
original unopened packaging or any undamaged and in merchantable condition. No
termination of this Agreement will affect any obligation of either party to pay
amounts due to the other hereunder.
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13. MARKETING COMMUNICATION To assist Gates/Arrow in advertising and promoting
the Products, Supplier will accrue into a cooperative marketing fund two percent
of the net sales dollars invoiced to Gates/Arrow each month, to be used by
Gates/Arrow for promotional efforts approved by both Gates/Arrow and Supplier.
14. NOTICES Notices under this Agreement will be deemed given when delivered by
hand or deposited in the United States mail as certified mail, postage prepaid,
addressed to the president of either party at its then principal place of
business.
15. TRADEMARKS This Agreement does not create, and neither party will have any
right in, or to the use of, any xxxx, name, style or logo of the other party.
Gates/Arrow is, however, hereby granted a nonexclusive right to use Supplier's
marks, names or logos to identify itself as an authorized distributor of the
Products and for advertising and promoting its services under this Agreement.
16. CONFIDENTIAL INFORMATION Each party will receive and maintain in confidence
all proprietary information, trade secrets or other know-how belonging to the
other (including but not limited to knowledge of manufacturing or technical
processes, financial and systems data, and customer information) provided that
any such information, secrets or know-how is expressly designated as being
confidential, except and to the extent that disclosure is required by law,
regulation or court order, or enters into the public domain through no fault of
the party obligated to maintain such confidentiality. Without limiting the
foregoing, all material and information made known to Supplier by Gates/Arrow
pursuant to paragraph 4 of this Agreement is hereby designated as confidential.
17. CREDITS In the event Gates/Arrow is entitled to a credit from Supplier which
exceeds Gates/Arrow's obligation to Supplier at the time, Supplier will promptly
pay the amount of such excess to Gates/Arrow.
18. AUTHORIZATION NOT UNREASONABLY WITHHELD Whenever any consent, action or
authorization is required or requested of either party hereunder, it will not be
unreasonably withheld or delayed. Any required return authorization will be
granted within five business days from the day it is requested.
19. FORCE MAJEURE Neither party will bear any liability to the other for any
failure or delay to the extent that it results from acts of God, labor
difficulties, inability to obtain materials or any other cause beyond such
party's reasonable control.
20. RELATIONSHIP OR PARTIES The parties are independent contractors, each in
full control of its business. Under no circumstances will either party have the
right or authority to act or make any commitment on behalf of or bind the other
or represent the other as its agent in any way.
21. PUBLICITY This Agreement is confidential within the meaning of paragraph 16.
Except as required by law, no press release or other like publicity regarding
the relationship between Gates/Arrow and Supplier, this Agreement or its
termination will be made without the other party's prior approval.
22. SOFTWARE Supplier warrants that it is the owner or licensee of all software
provided to Gates/Arrow under this Agreement (whether or not included or
embedded in any other Product), and has the authority to permit Gates/Arrow to
use or
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resell or sublicense the software to third parties. Gates/Arrow will not resell
or sublicense the software without the license agreement provided by Supplier
for that purpose and will advise Supplier of any known breach of the terms
thereof.
23. GENERAL
a. ENTIRE AGREEMENT This Agreement supersedes all prior communications
or understandings between Gates/Arrow and Supplier and constitutes the entire
agreement between the parties with respect to the matters covered herein. In the
event of a conflict or inconsistency between the terms of this Agreement and
those of any order, quotation, acknowledgment or other communication from one
party to the other, the terms of this Agreement will be controlling.
b. AMENDMENT This Agreement cannot be changed in any way except by a
writing signed by the party against which the enforcement of the change is
sought.
c. GOVERNING LAW This Agreement is made in, governed by, and will be
construed solely in accordance with, the internal laws of the State of New York.
Any action brought under or in connection with this Agreement must be instituted
in the state or federal forum covering the defending party's principal place of
business. In any such action, the prevailing party's reasonably legal fees will
be paid by the other party.
d. REFORMATION In the event any provision of this Agreement is held to
be invalid or unenforceable for any reason, such invalidity or unenforceability
will attach only to such provision and will not affect or render invalid or
unenforceable any other provision of this Agreement. Any such provision may be
reformed by a court of competent jurisdiction so as to render the same valid or
enforceable while most nearly effectuating the intent of the parties.
e. ASSIGNMENT Neither party has the right to assign this Agreement in
whole or in part without the prior written consent of the other except to
another corporation wholly- owned by or under common control with it. For
purposes hereof, an assignment includes, without limitation, a merger, a sale of
assets or business, or other transfer of control by operation of law or
otherwise.
24. SCHEDULES The indicated schedules are attached to, and are part of, this
Agreement.
Schedule A - Product price list
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Schedule B - Supplier's Standard Warranties
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Schedule C - D.O.A. Policy
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Each party has entered this Agreement by having an authorized representative
sign below:
GATES/ARROW DISTRIBUTING, INC.
BY: /s/ Xxxx Xxxx
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Xxxx Xxxx
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(NAME) (TITLE)
DATE: 3/18/99
SUPPLIER: CHAPARRAL TECHNOLOGIES, INC.
BY: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
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(NAME) (TITLE)
DATE: 3/10/99
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