EXHIBIT 10.2
SUPPLY AGREEMENT
EDISON SELECT
This Purchase Agreement is between EDISON SELECT, an Edison International
Company d/b/a EDISON SECURITY SERVICES ("EDISON"), and INTERACTIVE TECHNOLOGIES,
INC., a Minnesota corporation ("ITI").
EDISON AND ITI AGREE AS FOLLOWS:
1. PURCHASE AND SALE. This Agreement governs the purchases from ITI by Edison,
and the sale by ITI to Edison, of various electronic security products
manufactured and/or distributed by ITI and/or its affiliate, CADDX Controls,
Inc. ("CADDX").
2. TERM. The term of this Agreement shall start on the date set forth on the
signature page hereof and shall continue in full force and effect for a period
of two (2) years following January 1, 1999, unless otherwise terminated in
accordance with PARAGRAPH 24 below.
3. SOURCING.
A) Except as otherwise provided in SUBSECTIONS 3.B. and 3.C. below,
Edison shall purchase from ITI all of its requirements for electronic
security equipment for its residential security branches located in the
States of California and Washington. This sourcing requirement is
subject to a reasonable transition period. The parties will use their
good faith best efforts to complete the transition no later than
January 1, 1999.
B) Notwithstanding anything contained in SUBSECTION 3.A. to the
contrary, the sourcing requirement set forth in SUBSECTION 3.A. does
not apply to Edison Commercial (▇▇▇▇ ▇▇▇▇▇'▇ operation) or Valley Alarm
(the Fresno branch and its satellites).
C) Notwithstanding anything contained in SUBSECTION 3.A. to the
contrary, ITI acknowledges and agrees that Edison may purchase
electronic security equipment from other vendors under the following
circumstances:
i) For use in installations where more than 76 zones are
required;
ii) To service or upgrade equipment already installed in the
field by Edison or a third party;
iii) Equipment to be installed by Edison under contractual
commitments existing as of the date of this Agreement and/or
building projects existing as of the date of this Agreement;
iv) To meet a specific customer installation or product
requirement that cannot be met by product offered by ITI; or
v) If ITI is unable to meet Edison's demand for product.
4. PRICE. All prices are in U.S. dollars and F.O.B. "Destination Point" (as that
term is defined in PARAGRAPH 19 below). So long as Edison has not breached any
material obligation under this Agreement, Edison shall be entitled to purchase
and be invoiced for product from ITI at prices set forth in EXHIBIT A.
5. PRIVATE LABELING. All wall-mount keypads sold by ITI to Edison under this
Agreement shall be private labeled with such trademarks or other designations
that are owned by Edison, all in accordance with directions received by ITI from
Edison. Edison shall provide ITI with a six-month rolling forecast for ITI's use
in forecasting private label needs, which forecast shall be nonbinding except as
otherwise set forth in PARAGRAPH 6 below.
6. DEMAND FORECAST. Edison shall provide ITI each month with a six-month rolling
forecast of anticipated product needs (the "MONTHLY DEMAND FORECAST(S))"), which
Monthly Demand Forecast shall be nonbinding except as expressly stated below in
this PARAGRAPH 6. Edison agrees that it shall be bound to purchase any unique or
proprietary raw materials, components or unfinished goods required to support
the most current Monthly Demand Forecast. Notwithstanding anything contained
herein to the contrary, Edison's obligations under the second sentence of this
PARAGRAPH 6 shall survive expiration or termination of this Agreement (other
than termination based upon a material breach of this contract by ITI).
7. ELECTRONIC ORDER ENTRY. ITI will establish a system of electronic order entry
for Edison branches to order equipment from ITI. ITI will present a plan
outlining order procedures to Edison by December 15, 1998, and ITI will use its
best efforts to have the electronic ordering procedures shall be in effect no
later than January 1, 1999.
8. DISTRIBUTION. Product will be delivered to Edison from ITI's warehouse
located in Anaheim, California (or such alternate warehouse facility as ITI may
designate from time in its sole and absolute discretion). Product will be
shipped to each Edison branch on a weekly basis. Order cutoff times and delivery
days will be established on a branch-by-branch basis. ITI will present Edison
with a detailed distribution plan as soon as possible.
9. CONSIGNMENT INVENTORY.
A) The parties shall settle up by December 31, 1998, with respect to
all inventory consigned to Edison under that certain Consignment and
Security Agreement between the parties dated July 18, 1997, by
returning to ITI any excess control panel inventory and paying ITI for
the balance of all inventory consigned under that agreement.
B) Pursuant to the terms and conditions of a Consignment and Security
Agreement of even date with this Agreement, ITI agrees to consign to
Edison product equal to fifteen (15) days of demand (as forecasted by
Edison) plus 20 percent (20%) as safety stock. Edison shall provide ITI
with a seven-day demand forecast as soon as possible. ITI shall
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provide Edison with a detailed procedure for controlling consignment
inventory and the adjustment of consignment inventory as soon as
possible.
10. WESTEC PANEL REPAIR FACILITY.
A) During the term of this Agreement and subject to a reasonable
transition period (as discussed in further detail in SUBPARAGRAPH 10.D.
below), ITI shall be responsible for the repair of Westec security
equipment. Provided that Edison has timely supplied ITI with the
assistance and information called out in SUBPARAGRAPH 10.B. below, ITI
shall present Edison with a written plan for transition of the Westec
repair facility to ITI no later than December 15, 1998. ITI's plan
shall include proposed repair pricing and a proposed transition date
(consistent with the intent of SUBPARAGRAPH 10.D. below). ITI's
obligations to repair Westec products shall cease upon the expiration
or termination of this Agreement.
B) Edison shall fully cooperate with ITI in the transition of the
Westec repair facility and provide ITI with such assistance and data as
necessary to facilitate such transition, including, but not limited to,
full and complete cooperation in connection with the sourcing of repair
parts, staffing and training. Without limiting the generality of the
foregoing, Edison shall provide ITI (as soon as possible) with the
following information: (i) a ▇▇▇▇ of material for each Westec product;
(ii) an estimated field population for each Westec product; (iii) an
estimated number of units repaired, by product, over the last six
months; (iv) the existing repair pricing schedule; (v) a schedule of
all test equipment and tools used in connection with the repair
operation, including estimated value of such equipment and tools; and
(vi) an inventory of all supplies, raw materials, components and
finished goods, together with an estimated value therefor, used in
connection with the Westec repair program.
C) Edison hereby represents to ITI that (i) the Westec security
controls are no longer in production and production of all Westec
security peripherals will cease no later than February 28, 1999; and
(ii) that repair parts for Westec products will be available to ITI and
that ITI shall not be responsible to manufacture any component parts
(including plastic housings) or subassemblies for Westec products,
unless otherwise subsequently agreed to in writing between the parties.
In the event that fulfillment of ITI's obligations with respect to the
Westec panel repair facility is anticipated to result in any
extraordinary costs (E.G., the purchase of new tooling for the making
of plastic), the parties will negotiate a mutually acceptable financial
arrangement. Notwithstanding anything contained in the previous
sentence to the contrary, ITI acknowledges and agrees that the subject
repair operations may involve the assembly, from available component
parts, of various keypads in small quantities.
D) ITI will use its good faith best efforts to complete the transition
by January 2, 1999. Edison acknowledges and agrees, however, that a
successful and timely transition is wholly dependent upon the full,
complete and timely cooperation of Edison, including,
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but not limited to, the fulfillment of Edison's obligations under
SUBPARAGRAPH 10.B. above.
E) The written plan to be delivered by ITI in accordance with
SUBPARAGRAPH 10.A. above shall include a proposal regarding the
transference of related testing equipment, tools, supplies, raw
materials, components and finished goods from Edison to ITI.
F) ITI shall ▇▇▇▇ ▇▇▇▇▇▇ directly for all Westec repair activity.
Edison shall procure for ITI a list of all Westec franchisees and other
entities for whom Edison has an obligation to repair Westec security
equipment.
G) ITI acknowledges that, in the course of performing its repair
obligations under this Agreement, ITI may obtain confidential
information of the manufacturer of the subject equipment, including the
Westec product code and receiving formats. Accordingly, ITI agrees to
treat such information as strictly confidential, and shall use the same
care to prevent the disclosure of such information as ITI uses with
respects to its own confidential and proprietary information (which
shall be no less than the care a reasonable person would use under
similar circumstances).
11. PRODUCT DEVELOPMENT.
A) ITI will use its best efforts to develop, at its own cost and
expense, a hardwire input module retropack for the Westec panel
("WESTEC RETROPACK"). Edison acknowledges and agrees that ITI shall
retain all intellectual property and distribution rights to the Westec
Retropack.
B) The parties acknowledge and expect that the arrangement documented
herein will result in a mutually beneficial strategic alliance between
the parties. To that end, the parties intend to cooperate in the
development of the following features for the various security controls
covered by this Agreement: (i) proprietary user interfaces (keypads)
(I.E., proprietary look, style, shape and appearance of the plastic and
the buttons); (ii) additional programmable macro buttons; (iii) a
cancel button; and (iv) a bi-directional, full data port (E.G., RS232).
The parties acknowledge and agree that the timing and extent of such
product development activities shall conform with sound business
practices, including, but not limited to, actual and anticipated
quantities of product to be sold under this Agreement, the anticipated
duration of the relationship between the parties, and cost and price
constraints.
C) In light of the strategic alliance between the parties discussed in
SUBPARAGRAPH 11.B. above, ITI will also work with Edison to customize
owners' manuals and marketing communication materials or media that
Edison uses in the sales, service or customer support of the ITI
products covered by this Agreement. Such customization shall include,
but is not limited to, private labeling and rewriting of text to make
such documents proprietary or more user-friendly for Edison and its
customers.
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Notwithstanding anything contained in this Agreement to the contrary,
ITI shall retain final editorial control over all technical disclosures
contained in such documents and such document development activities
shall conform with sound business practices, including, but not limited
to, actual and anticipated quantities of product to be sold under this
Agreement, the anticipated duration of the relationship between the
parties, and cost and price constraints.
12. TRAINING AND SUPPORT.
A) ITI will provide Edison, at no cost to Edison, technical and sales
training at Edison's facilities as part of Edison's new product
roll-out and at such other times and locations as are mutually agreed
upon by ITI and Edison.
B) ITI will provide technical service through ITI's 800 help line from
7:00 a.m. to 8:00 p.m. CST, Monday through Friday.
C) ITI will provide Edison, at no cost to Edison, all relevant
technical documents, including product reference manuals, installation
instructions and prompt technical updates. All end-user documentation
shall be private labeled for Edison.
D) ITI customer service representatives will be available from 7:30
a.m. to 6:00 p.m. CST, Monday through Friday.
E) ITI shall supply Edison, free of charge, with 100 NX-6 demo keypads
and 200 demo keychain touchpads.
F) In consideration of roll-out expenses to be incurred by Edison and
the purchase of demonstration equipment by Edison, over and above the
demonstration equipment to be supplied by ITI pursuant to SUBPARAGRAPH
12.E. above, ITI shall rebate Edison an amount equal to one-half of one
percent (0.5%) the aggregate invoice value (excluding any amounts
invoiced for freight, taxes or other third-party charges) of all
purchases made by Edison from ITI under this Agreement during calendar
year 1999. Such rebates shall be paid by ITI within thirty (30) days of
the end of calendar year 1999.
13. RESALE OF PRODUCT. Edison shall purchase product from ITI under this
Agreement only for resale to ultimate end-users and/or authorized Edison Dealers
operating under the Edison name ("AUTHORIZED DEALERS"). Edison shall not resell
product to anyone other than a bona fide end-user and/or Authorized Dealers, and
represents to ITI that Edison does not intend to purchase product from ITI with
an intention to distribute such product to others for resale (other than
Authorized Dealers). Edison acknowledges that Edison is not the exclusive dealer
of ITI for any product or geographic area and that ITI reserves to itself the
unrestricted right to sell product in any geographic area, including Edison's
trade area, directly to any distributor, dealer, individual or entity.
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14. LICENSES AND PERMITS. Edison hereby represents to ITI that Edison has and
shall maintain during the term of this Agreement all governmental licenses or
permits necessary in connection with Edison's business operations.
15. PURCHASE ORDERS. All orders for product shall be considered accepted only if
accepted by ITI in writing or by shipment. All orders will be subject to the
terms and conditions of this Agreement.
16. PAYMENT TERMS. All amounts payable under this Agreement shall be in U.S.
dollars. Subject to written credit approval, which shall be in ITI's sole and
absolute discretion, payment terms will be NET 30 days. Invoices will be
considered past due if not paid in full thirty (30) days from the date of
receipt by Edison. If, at any time, Edison's account balance with ITI extends
beyond the date for payment specified above, ITI may, in its sole discretion,
either (i) ship product to Edison on a C.O.D., C.I.A. or other advanced payment
basis until the account is paid in full; or (ii) refuse to ship any product to
Edison until the account is paid in full.
17. INVOICE SUBMITTAL AND PAYMENT. Every invoice submitted to Edison must show
the Purchase Order number, the quantity, the description, the unit price and the
extended price charged and the invoice total dollar amount for the
product/service. The invoice should be mailed to Edison at the following
address:
Edison Select / Edison Security Services
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Accounts Payable
Invoices shall be paid within thirty (30) days after receipt by Edison, less any
amounts for incorrect or unsubstantiated charges. If rates, prices, pricing
format or pricing components are different from that stated in this Agreement,
payment may be delayed due to necessary validation the invoice.
18. TAXES, DUTIES AND TARIFFS. All prices are exclusive of any present or future
federal, state, local or other governmental taxes, duties or tariffs applicable
to the sale, transportation or use of product under this Agreement, all of which
taxes, duties or tariffs shall be paid by Edison.
19. SHIPMENT, TITLE AND RISK OF LOSS. All prices for product sold by ITI to
Edison are F.O.B. Destination. The "DESTINATION" will be any Edison branch
location located in the States of California or Washington as Edison may
designate from time to time in its sole and absolute discretion. ITI shall pay
all ground transportation fees, costs and charges, including, without
limitation, insurance, handling and loading charges; provided, however, that
Edison shall reimburse ITI for the cost of air freight in the event Edison
requests product to be shipped by air freight. Title to product and risk of loss
shall transfer to Edison upon delivery of product to the Destination.
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20. WARRANTY. ITI extends to Edison its standard warranty, as the same may
change from time to time. A copy of ITI's current standard warranty is attached
hereto as EXHIBIT B. EXCEPT AS EXPRESSLY PROVIDED IN ITI'S STANDARD WARRANTY,
ITI MAKES NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
PRODUCT OR PORTION THEREOF, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. ITI SHALL
UNDER NO CIRCUMSTANCES BE LIABLE TO EDISON OR ANY THIRD PARTY FOR SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES OF NATURE WHATSOEVER, EVEN IF ITI
SHALL HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
21. RETURNS. Returns of product to ITI shall be made in accordance with the
Distribution Plan to be delivered by ITI to Edison in accordance with PARAGRAPH
8 above.
22. CONFIDENTIALITY; PUBLICITY. Edison agrees not to disclose the terms and
conditions of this Agreement, including, but not limited to, the prices set
forth on EXHIBIT A, to any third party except, and only to the extent, as
required by law. Neither party will publicly announce or disclose the terms and
conditions of this Agreement, or advertise or release any publicity regarding
this Agreement or the existence of this Agreement, without the prior written
consent of the other party.
23. INDEMNIFICATION.
A) Edison shall indemnify, defend and hold ITI and its legal
representatives, agents, employees, divisions, subsidiaries, affiliates
and their successors and assigns, harmless from and against any loss,
claim, liability, damage or expense (including reasonable legal
expenses and costs) that ITI or they may suffer, sustain or become
subject to, as a result of any alleged act, omission or obligation of
or by Edison or Edison's agents arising out of (i) the sale,
installation, maintenance and/or monitoring of product purchased
pursuant to this Agreement; (ii) Edison's operation of its business
pursuant to this Agreement; or (iii) any alleged breach by Edison of
any provision of this Agreement. Edison will reimburse any entity
entitled to be indemnified hereunder for all expenses (including
reasonable legal expenses and costs) as they are incurred in connection
with investigating or defending any such action or claim, whether or
not in connection with pending or threatened litigation in which the
entity is a party.
B) ITI shall indemnify, defend and hold Edison and its legal
representatives, agents, employees, divisions, subsidiaries, affiliates
and their successors and assigns, harmless from and against any loss,
claim, liability, damage or expense (including reasonable legal
expenses and costs) that Edison or they may suffer, sustain or become
subject to, as a result of (i) any actual or alleged infringement of
any patent, copyright or other intellectual property right of any third
party arising out of or based upon services
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performed by ITI or product delivered by ITI under this Agreement; (ii)
any alleged or actual infringement of any patent, copyright or other
intellectual property right of any third party that arises out of or is
based upon any written materials provided by ITI to Edison pursuant to
the terms of this Agreement; and (iii) any claim for injury, damage or
other liability by any employee of ITI where such ITI employee has
attended a field call with an Edison employee or is on Edison's
premises, other than injury, damage or other liability established to
have been caused by the sole negligence of Edison. ITI will reimburse
any entity entitled to be indemnified hereunder for all expenses
(including reasonable legal expenses and costs) as they are incurred in
connection with investigating or defending any such action or claim,
whether or not in connection with pending or threatened litigation in
which the entity is a party.
24. TERMINATION. Notwithstanding anything contained in this Agreement to the
contrary, either party shall have the right to terminate this Agreement, in the
event the other party materially breaches any of the covenants, agreements,
representations or warranties set forth herein or fails to perform any
obligation of it hereunder, by giving the other party written notice indicating
its intent to terminate this Agreement together with a description of the
alleged grounds for termination. This Agreement will be deemed terminated in the
event the breaching party has not substantially cured the breach identified in
such written notice within ten (10) working days following receipt of such
notice. Notwithstanding the termination or expiration of this Agreement, each of
the parties hereto shall be required to carry out any provision hereof that
contemplates performance subsequent to such termination or expiration and such
termination or expiration shall not affect any liability or other obligation
that shall have accrued prior to termination or expiration.
25. MISCELLANEOUS.
A) The relationship between Edison and ITI shall be that of independent
contractors, and nothing contained herein shall be construed or applied
to create between Edison and ITI the relationship of principal and
agent, partners, joint ventures or employer and employee.
B) No waiver, modification or amendment of any term, condition or
provision of this Agreement shall be valid, binding or of any effect
unless made in writing, signed by both Edison and ITI, and specifying
with particularity the nature and extent of such waiver, modification
or amendment.
C) All correspondence or other notices shall be in writing and
considered delivered if sent by first class mail, postage prepaid, at
the address listed below:
Interactive Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Edison Select / Edison Security Services
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
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D) This Agreement shall be governed by and construed in accordance with
the laws of the State of California.
E) Except for actions by ITI to collect amounts owed to ITI by Edison
pursuant to the terms and conditions of this Agreement and any purchase
orders hereunder, any dispute, controversy or claim arising out of or
in connection with this Agreement shall be settled by binding
arbitration in accordance with the rules of the American Arbitration
Association, which arbitration shall take place at a location mutually
agreeable to both parties.
26. EXCLUSIVE TERMS. This Agreement, including any exhibits attached hereto or
documents expressly referred to herein, contains the entire agreement between
Edison and ITI and supersedes and cancels any and all other agreements, whether
oral or in writing, between Edison and ITI with respect to the matters referred
to herein. Any term or condition in any purchase order, confirmation or other
document furnished by Edison that is in any way inconsistent with or in addition
to the terms and conditions of the Agreement is hereby expressly rejected by
both Edison and ITI.
Entered into on December 15, 1998.
EDISON SELECT, an Edison International INTERACTIVE TECHNOLOGIES, INC.
Company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President ▇▇▇▇▇▇ ▇. ▇▇▇▇, CEO and President
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