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Exhibit 10.25
ATTACHMENT I
AMENDED AND RESTATED AGREEMENT
Recitals
This amended and Restated Agreement is effective as of the 1ST day of January
2000, by and between Walter Kidde Portable Equipment, Inc., a Delaware
corporation (successor by merger to Nighthawk Systems, Incorporated, a Colorado
corporation), whose principal place of business at 1394 South Third Street,
Mebane, North Carolina 27302 ("Kidde"), and SigmaTron International, Inc., a
Delaware corporation, whose principal place of business is at 2201 Landmeier
Road, Elk Grove Village, Illinois 60007 ("SigmaTron").
WHEREAS, Kidde is a designer, manufacturer and seller of proprietary
devices that detect indoor levels of carbon monoxide gas; and
WHEREAS, SigmaTron is an independent contract manufacturer of
electronic components, printed circuit board assemblies and turnkey electronic
products; and
WHEREAS, Kidde and SigmaTron are parties to an Amended and Restated
Agreement effective as of November 15, 1996 (The "1996 Agreement"); and
WHEREAS, Kidde and SigmaTron wish to amend and restate the 1996
Agreement in its entirety to provide the following terms and conditions of their
business arrangement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the sufficiency of which is
hereby acknowledged, Kidde and SigmaTron agree to amend and restate the 1996
Agreement in its entirety as follows:
1. DEFINITION OF CO DETECTORS; TERM OF AGREEMENT;
(a) This Amended and Restated Agreement provides for the
manufacture and assembly by SigmaTron of the models of devices
that detect indoor levels of carbon monoxide gas set forth on
Exhibit A to this Agreement and all comparable or replacement
models now and hereafter designed, manufactured or sold by
Kidde (all such models and products shall be referred to
collectively as "CO DETECTOR" and singly as a "CO DETECTOR").
A comparable or replacement model is defined as a CO detector
that utilizes similar sensing technology, assembly equipment
and tooling to manufacture as the models listed on EXHIBIT A.
Kidde shall amend EXHIBIT A as comparable and replacement
models are released and obsolete models discontinued.
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(b) This Agreement, shall have a term expiring January 1, 2002, or
after the production of 3 million finished CO detectors,
commencing on the effective date of the contract, whichever
comes first; provided that this Agreement shall automatically
renew for successive terms of one (1) year each, unless either
party provides the other with written notice of its election
not to renew, not less than 120 days prior to the expiration
of the then current term. (The initial term and any renewal
term(s) shall be collectively referred to as the "TERM".)
2. PURCHASE AND DELIVERY OF CO DETECTORS:
(a) Kidde Safety shall issue to SigmaTron a firm
commitment monthly schedule ("FIRM ORDER PERIOD") no
later than TWO week(S) prior to the start of the
production month based on the Kidde Master Production
Schedule (MPS). In addition to this firm monthly
schedule, Kidde will provide SigmaTron with a monthly
rolling three-month forecast ("FORECAST") to support
SigmaTron's procurement of long lead-time material
items. Upon SigmaTron's receipt and approval of MPS,
SigmaTron agrees to manufacture and Deliver and Kidde
shall be obligated to accept Delivery and pay the
Price (as defined in Section 5) for the CO Detectors
to be Delivered during the Firm Order Period. In turn
SigmaTron agrees to load into their MRP system and
pursue commitments on all parts, components and
packaging as required to fulfill the Kidde
requirements. Schedule adjustments will be submitted
and discussed by Kidde and SigmaTron as product
demand changes and materials issues arise. IF KIDDE
DIRECTS SIGMATRON TO PUSH OUT THE PRODUCTION
SCHEDULED DURING THE "FIRM ORDER PERIOD" FOR MORE
THAN TWO (2) MONTHS, DUE TO REASONS NOT CAUSED BY
SIGMATRON, KIDDE WILL REIMBURSE SIGMATRON AT THE RATE
OF 1% PER MONTH OF THE MATERIAL COST OF THE RAW
COMPONENTS IN STOCK FOR STOCK QUANTITIES EQUAL TO
VOLUME OF THE DELAYED UNITS AND IN EXCESS OF AGREED
SAFETY STOCK LEVELS.
(b) Delivery shall be deemed to occur upon the delivery
by SigmaTron to Kidde's designated common carrier of
finished CO Detectors packaged for sale to the
ultimate user, F.O.B. SigmaTron's Del Rio, Texas
warehouse. ("Delivery"). Kidde will provide shipping
instructions to SigmaTron in advance. Except for
Deliveries either made to satisfy Kidde's obligations
described in the last sentence of Section 2(a) or
otherwise directed by Kidde, SigmaTron will ship in
full truck quantities only.
(c) All Kidde owned machinery and equipment, tooling,
test chambers and fixtures to be utilized in
SigmaTron's manufacture and assembly of CO Detectors
(the "KIDDE EQUIPMENT") shall be delivered to Del
Rio, Texas by Kidde at Kidde's expense. Where
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practicable, Kidde will conspicuously mark each item
of Kidde Equipment prior to delivery to SigmaTron
with the following statement; "This equipment is
owned by Kidde." SigmaTron agrees it shall not
remove, modify or cover any such statement. Kidde
shall be responsible to insure the Kidde Equipment
against property damage in an amount not less than
the replacement cost thereof, which insurance shall
comply with the terms of the second and third
sentences of Section 12 hereof. Said insurance shall
cover the Kidde Equipment whether located in the
United States or Mexico and whether located at the
facilities of SigmaTron or a third party, such as an
approved vendor. All non-recurring charges for
tooling, testing and agency certification shall be
paid for by Kidde.
3. EXCLUSIVITY:
(a) Subject to Sections 3(b), 3(c) and 17(k) below, Kidde
shall purchase from SigmaTron all of Kidde's
requirements for CO Detectors for resale in North
America.
(b) If at any time during the Term, Kidde's anticipated
demand for any month during the Firm Order Period or
the Forecast Period is greater than 300,000 CO
Detectors, or if Kidde's proposed aggregate purchases
for the Firm Order Period and Forecast Period (taken
together) is greater than 1,200,000 CO Detectors,
Kidde may request that SigmaTron provide assurances
that it has the capacity to meet Kidde's
requirements. If SigmaTron's assurances to Kidde do
not satisfy Kidde in Kidde's reasonable discretion
that SigmaTron has the capacity to meet Kidde's
requirements, Kidde may obtain a second supplier to
provide to Kidde CO Detectors to meet the excess
demand only for the period of such excess demand.
(c) Kidde's obligation to purchase CO Detectors from
SigmaTron shall not apply to indoor carbon monoxide
gas detectors manufactured by a third party that is
owned or acquired by Kidde or Williams PLC during the
Term. (d) SigmaTron will manufacture CO detector
exclusively for Kidde.
4. STORAGE AND RISK OF LOSS:
SigmaTron shall store all CO Detectors in its Del Rio, Texas
warehouse. The risk of loss for CO Detectors shall be the
responsibility of SigmaTron until Delivery to Kidde's carrier
has been completed. SigmaTron agrees to provide security for
the CO Detectors stored in its Del Rio, Texas warehouse
consistent with SigmaTron's past practices.
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5. PRICE; PAYMENT:
(a) Kidde agrees to pay Sigmaton for each CO Detector
Delivered to Kidde hereunder a purchase price
("PRICE") determined in accordance with a separate
agreement (the "Side Agreement") dated January 1,
2000; the terms of which have been agreed upon
between the parties.
(b) Prices in the Side Agreement are quoted in U.S.
dollars F.O.B. SigmaTron's warehouse Del Rio, Texas.
(c) Prices are quoted on the basis that any taxes arising
under the federal, state or local laws of Mexico
relating to SigmaTron's manufacture of CO Detectors
in Mexico and any customs duties relating to the
transfer of property from Mexico to the United States
are the responsibility of SigmaTron and that all
other property, sales, use or other taxes assessed on
the manufacture, storage or sale of CO Detectors are
the responsibility of Kidde; provided, however, that
SigmaTron is responsible for taxes assessed on its
manufacturing operation in Mexico. The party
responsible for any such duties or taxes shall cause
to be filed all returns and reports required in
connection with such duties or taxes and shall
indemnify and hold the other party harmless with
respect to such duties or taxes, as the case may be.
(d) Payment shall be received by SigmaTron on or before
60 days after the date of SigmaTron's delivery of
invoices with detailed cost support documentation to
Kidde. SigmaTron shall issue invoices daily as CO
Detectors are shipped to Kidde designated location.
Kidde will not be required to pay invoices in 60 days
if it has not received cost support documentation
from SigmaTron within 30 days of invoice. KIDDE
AGREES TO PAY A 1% PER MONTH PENALTY ON ALL INVOICES
NOT PAID WITHIN 60 DAYS, ASSUMING THAT SIGMATRON HAS
MET ALL INVOICE DOCUMENTATION REQUIREMENTS. THE 1%
PENALTY SHALL NOT APPLY TO SPECIFIC INVOICE PAYMENT
TERMS THAT MAY BE AGREED TO SEPARATELY BY KIDDE AND
SIGMATRON.
6. CHANGE NOTICES; OBSOLETE INVENTORY;
(a) Kidde may request changes of the models or to
specifications for CO Detectors by delivering to
SigmaTron a change notice ("Change Notice")
describing the changes and the proposed effective
date of such changes. Any increase or decrease in the
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Bill of Material Cost of, or direct labor time
required for, implementation of the changes shall be
reflected in the Price for the affected CO Detectors
set in accordance with the formula set forth in the
Side Agreement. Kidde shall issue any Change Notice
that may be required as a result of a change in
Exhibit A.
(b) Implementation of a Change Notice may create obsolete
or surplus inventory of CO Detectors, components,
materials or supplies, whether in stock (including
Safety Stock, as defined in Section 10), subject to
orders not cancelable by SigmaTron without penalty,
or not otherwise useable by SigmaTron in the ordinary
course of business (all such inventory of CO
Detectors, components, materials or supplies shall be
referred to as "Obsolete Inventory"). Kidde shall
purchase from SigmaTron:
(i) all Obsolete Inventory to the extent that it
would have been used by SigmaTron to fill
orders to be Delivered for the current month
and during the Firm Order Period beginning
as of the first day of the month following
the effective date of the Change Notice;
(ii) all Obsolete Inventory for orders beyond the
Firm Order Period that were purchased by
SigmaTron with Kidde's written approval and
(iii) all Safety Stock that becomes Obsolete
Inventory.
(c) Kidde shall purchase Obsolete Inventory from
SigmaTron as follows:
(i) Kidde shall pay SigmaTron the Price for:
(a) all finished CO Detectors scheduled
to be Delivered for the current
month and during the first two
months of the Firm Order Period
beginning as of the first day of
the month following the effective
date of the Change Notice; and
(b) all finished CO Detectors held as
Safety Stock.
(ii) Kidde shall pay SigmaTron 108% of the
current Bill of Material Cost for:
(a) a maximum of 110% of all finished
CO Detectors scheduled to be
Delivered during the third month of
said Firm Order Period;
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(b) all raw material CO Detector kits held as Safety
Stock; and
(c) all Obsolete Inventory for orders beyond the Firm
Order Period purchased with Kidde's written approval.
(d) SigmaTron shall invoice Kidde for Obsolete Inventory
within 15 days after notification to Kidde of its
exposure or as soon thereafter as is practicable.
7. APPROVED VENDOR LIST:
(a) SigmaTron shall procure all components, materials and
supplies necessary for the assembly and manufacture
of CO Detectors from such third parties as have been
approved in advance by Kidde as described in Kidde's
approved vendor list ("AVL"). SigmaTron will not
procure any components, materials or supplies for any
model of CO Detector prior to receiving Kidde's final
bill of material, include AVL, for that model. Kidde
may change the AVL in its sole discretion and such
changes shall be effective as directed by Kidde.
SigmaTron and Kidde agree that any such changes that
result in a change of model or specification shall be
treated as a Change Notice in accordance with Section
6.
(b) SigmaTron shall not substitute any component,
material or supply without Kidde's prior written
consent, which consent may be withheld in the
exercise of Kidde's sole discretion. Should SigmaTron
become aware of opportunities for the realization of
savings in component costs or direct labor costs,
SigmaTron shall inform Kidde in writing. Kidde shall
conduct such investigation as it may desire and shall
decide, in the exercise of its sole discretion,
whether or not to proceeded so as to take advantage
of the suggestion. Any cost savings realized because
of changes initially suggested to Kidde by SigmaTron
shall be shared by Kidde and SigmaTron on a 50/50
basis for the first 12 months after the commencement
of the costs savings realization. Thereafter, the
benefit of all such cost savings shall be enjoyed by
Kidde solely.
(c) Kidde may inspect SigmaTron's accounting and
purchasing records related to SigmaTron's purchase of
components, materials and supplies necessary for the
assembly and manufacture of CO Detectors, during
SigmaTron's regular business hours, at SigmaTron's
Elk Grove Village offices, upon two (2) business days
notice to SigmaTron. All such records are SigmaTron's
Confidential Information subject to all provisions of
Section 11 of this Agreement.
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8. ACCEPTANCE, TESTING AND REJECTION:
(a) The basic acceptance criteria shall be conformance to
the drawings, specifications and test criteria
specified by Kidde.
(b) SigmaTron shall conduct all quality assurance,
burn-in and tests required by Kidde for each CO
Detector and conform each CO Detector to requirements
of Underwriter's Laboratories ("UL") or other
approval authority as specified by Kidde. All tests
shall be conducted by SigmaTron at its plant that has
been dedicated to the final assembly and testing of
CO Detectors. SigmaTron further agrees that said
plant and its warehouse in Del Rio, Texas should be
available for inspection by Kidde and UL as desired.
Such inspections shall be conducted only during
regular business hours and subject to compliance with
SigmaTron's reasonable security requirements.
(c) Kidde may reject lots of CO Detectors based on its
reasonable quality control methods of testing
individual units. In the event of such rejection,
SigmaTron shall be responsible for the freight cost
for shipping the rejected units back to SigmaTron and
for the cost of retesting any lots so rejected.
(d) SigmaTron agrees that its Mexican manufacturing
operations will at all times maintain its ISO 9002
certification.
9. WARRANTY:
(a) The parties acknowledge that Kidde is solely
responsible for the design and specifications of CO
Detectors. SigmaTron warrants to Kidde that each CO
Detector has been subjected to and passed all tests
defined in Section 8 (b), and will function in
accordance with drawings, specifications and test
criteria when delivered. SigmaTron further warrants
to Kidde that each CO Detector will be free from
defects in workmanship for a period of five years
from the date of manufacture. SigmaTron will stamp a
manufacture date code on each CO Detector in order to
create a reference date for such purpose. SigmaTron
does not warrant the functionality of the design or
specifications of any CO Detectors and does not
warrant any components, materials or supplies against
defects unless the defects are readily discoverable
upon inspection and Kidde required tests. These
warranties shall not apply and SigmaTron is not
responsible for defects in any CO Detector that has
been subject to improper handling, misuse, accident,
negligence, exposure to casualty or the elements, has
been
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operated in excess of conditions specified for the CO
Detector or has been altered or repaired in an
unauthorized manner. These warranties are not
assignable by Kidde.
(b) The parties agree that Kidde shall be solely
responsible for any warranty service of CO Detectors.
To the extent that a CO Detector is returned to Kidde
by its customer because it is defective and the
defect resulted from a breach by SigmaTron of its
warranty as set forth in Section 9 (a) above or
SigmaTron's failure to use components, materials or
supplies from the AVL, Kidde shall be credited with
the full Price paid to SigmaTron for the defective CO
Detector plus Kidde's reasonable out-of-pocket costs
associated with the return and handling of the
defective CO Detector not to exceed $3.00 per
returned CO Detector. A CO Detector shall not be
considered defective for purposes of this credit
unless Kidde has returned it to SigmaTron for
inspection and verification. No defective CO Detector
so returned to SigmaTron shall be resold to Kidde as
a new unit.
(c) Unless the claim is primarily attributable to
SigmaTron within the meaning of the following
sentence, Kidde shall indemnify and hold SigmaTron
harmless from any losses, claims (including product
liability claims) and costs, including court costs
and attorney's fees, which arise from claims of third
parties based upon the use, sale, design,
specifications, or operation of CO Detectors supplied
to Kidde. SigmaTron shall indemnify and hold harmless
Kidde from any losses, claims, liabilities and costs,
including court cost and attorney's fees, which arise
from claims of third parties which are primarily
attributable to SigmaTron, namely arising out of a
breach by SigmaTron of its warranty as set forth in
Section 9(a) above or a failure by SigmaTron to use
components, materials or supplies from the AVL. The
foregoing indemnities shall be limited to $5,000,000
per claim. In the event a third party proceeds
against both SigmaTron and Kidde in an action that
may result in indemnification rights under either of
the first two sentences of this Section 9(c), each of
SigmaTron and Kidde shall defend itself in that
action and cooperate in the defense to the fullest
extent possible without adversely affecting its
interests, and SigmaTron and Kidde agree not to
assert cross-claims in the resulting arbitration,
mediation or litigation. The preceding sentence shall
not be construed as a waiver of the right to assert
any claim against the other in a different action. If
Kidde and SigmaTron cannot agree as to which
indemnification applies, that question shall be
resolved by arbitration pursuant to Section 17 (h).
(d) NOTWITHSTANDING SECTION 13(f) BELOW, KIDDE'S REMEDIES
UNDER SECTION 9(b) FOR SIGMATRON'S
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BREACH OF WARRANTY ARE EXCLUSIVE OF ALL OTHER
WARRANTIES EXPRESS OR IMPLIED, AND SIGMATRON HEREBY
SPECIFICALLY DISCLAIMS ANY EXPRESS OR IMPLIED
WARRANTY OF ANY TYPE, INCLUDING WITHOUT LIMITATION
THE WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR USE OR PURPOSE.
10. SAFETY STOCK;
(a) In recognition of the potential for unexpected
fluctuations in Kidde's customer's demands for CO
Detectors, when requested in writing by Kidde to do
so, SigmaTron agrees to keep in its Del Rio, Texas,
warehouse an inventory equal to 20,000 units of
finished CO Detectors and 30,000 complete raw
material CO Detector kits (collectively, "SAFETY
STOCK"). Prior to Delivery, the Safety Stock shall be
owned by SigmaTron. SigmaTron shall bear the risk of
loss with respect to Safety Stock prior to Delivery.
Kidde may request delivery of Safety Stock as
follows:
(i) finished CO Detectors may be requested at
any time with no lead time constraints.
SigmaTron shall Deliver the requested CO
Detectors within 48 hours after SigmaTron's
receipt of Kidde's request;
(ii) finished CO Detectors assembled from the raw
material kits shall be Delivered by
SigmaTron to Kidde within 5 weeks of Kidde's
request.
(b) Kidde shall pay SigmaTron the Price for CO Detectors
Delivered from Safety Stock.
(c) Any depletion in required levels of Safety Stock
shall be replenished by SigmaTron as soon as
reasonably possible. Deliveries of CO Detectors from
Safety Stock are in addition to Deliveries scheduled
for any Firm Order Period.
11. CONFIDENTIALITY:
(a) During the course of their business relationship
described in this Agreement, each party may disclose
to the other party confidential and proprietary
information, including without limitation financial
information, (all of such information being referred
to herein as "Confidential Information"), the
unauthorized disclosure of which may adversely affect
the competitive advantage of the disclosing party.
Therefore, each of Kidde and SigmaTron hereby agrees
that it shall maintain the Confidential Information
of the other party in strictest confidence and use
such Confidential Information only to
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fulfill its obligations to the other party under this
Agreement or as otherwise permitted under this
Agreement and shall not disclose Confidential
Information to any third party without the prior
written consent of the owner; provided however, that
either party may disclose Confidential Information of
the other to lenders, accountants, counsel, and other
third parties with a duty of confidentiality to the
disclosing party, as long as such disclosing party
take reasonable efforts to require such third parties
to keep such information confidential. Upon the
termination of this Agreement, each party shall
return or destroy any Confidential Information
received from the other party upon request.
(b) Confidential Information does not include matters:
(i) which are or become generally known to the
public;
(ii) independently developed by the recipient
(provided that the recipient has not used
the Confidential Information of the
disclosing party);
(iii) independently developed by a third party
without breach of a confidentiality
obligation to the disclosing party; or
(iv) required to be disclosed pursuant to order
of court or other governmental authority so
long as the party being required to make the
disclosure gives prompt notice thereof to
the other party prior to such disclosure (if
possible).
(c) Each party acknowledges that a breach or threatened
breach of its obligations hereunder may cause
irreparable damage to the other party not adequately
compensated by monetary damages. Therefore, each
party agrees that the non-breaching party shall have
the right to obtain, without the necessity of bond,
equitable remedies including without limitation
specific performance and injunctive relief, upon
application.
(d) SigmaTron's Confidential Information may constitute
material non-public information which may be
important to an investor in making a decision to
purchase or sell securities in SigmaTron. Until such
time as Confidential Information is made public,
Kidde agrees not to utilize such information in
purchasing or selling securities of SigmaTron and to
use reasonable efforts not to disclose any portion of
such information to a third party who might trade on
the Confidential Information or disclose it to
others.
(e) The provisions of this Section 11 shall survive the
expiration or termination of the Term of this
Agreement for five (5) years.
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12. INSURANCE:
Each party agrees that all times during the Term of this
Agreement it shall carry property damage and general liability
insurance (including without limitation product liability and
business liability) coverage in an amount no less that
$5,000,000 per occurrence and $5,000,000 overall. Each party
shall name the other party as additional insured under such
policy and shall deliver to the other party a Certificate of
Insurance as proof of such coverage status within ten days of
the effective date of this Agreement and within ten days of
the renewal date of such insurance coverage. Each policy will
also provide that no change or cancellation will be effective
without 30 days written notice to such additional insured.
13. DEFAULT AND REMEDIES; TERMINATION:
(a) Either party may declare the other party in default:
(i) if the defaulting party defaults in any
payment to the non-defaulting party and such
failure continues unremedied for a period of
twenty (20) days after the date of receipt
by the defaulting party of written notice
specifying the default in reasonable detail;
or
(ii) if the defaulting party defaults in its
performance of any other term or condition
of this Agreement, or of any MPS issued
pursuant to this Agreement, and such default
continues unremedied for a period of thirty
(30) days after the date of receipt by the
defaulting party of written notice
specifying the default in reasonable detail;
or
(iii) if the defaulting party files a petition in
bankruptcy, has a petition in bankruptcy
filed against it and such petition is not
dismissed within 90 days, makes an
assignment for the benefit of creditors,
suffers foreclosure of all or substantially
all of its assets or seeks the appointment
of a receiver for all or substantially all
of its assets.
(b) In the event of a default hereunder, the
non-defaulting party may, by thirty (30) days prior
written notice to the defaulting party, terminate
this Agreement and all or any of the privileges,
permissions and rights granted to the defaulting
party hereunder or in connection herewith in whole or
in part. The effective date of termination will be
the date therefor stated in any termination notice
given hereunder, which date will not be before the
expiration of any applicable cure period provided for
herein. Any
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such termination will not affect the liability of
either party for any breach arising prior to such
termination.
(c) Upon the expiration of the Term or in the event of an
unremedied event of default by Kidde (and the
expiration of any cure periods), SigmaTron ,may
exercise any one or more of the following remedies,
in addition to any other remedies available to it
hereunder:
(i) all inventory, components and materials
(including the Safety Stock), either in
stock, on order and not cancelable by
SigmaTron without penalty, or not useable by
SigmaTron in the ordinary course of its
business, may be treated by SigmaTron as
Obsolete Inventory under Section 6;
(ii) SigmaTron may terminate its obligations to
manufacture and assemble CO Detectors
exclusively for Kidde;
(iii) SigmaTron may sell to third parties any
inventory, components or materials in
SigmaTron's possession, including without
limitation, finished CO Detectors produced
on or before the date SigmaTron declares
Kidde in default and Safety Stock (as
finished goods or in the form then retained
by SigmaTron), free of claim by Kidde and on
any terms and conditions (including without
limitation price) determined by SigmaTron;
or
(iv) SigmaTron shall be entitled to hold
shipments of CO Detectors required to be
Delivered to Kidde until SigmaTron receives
full payment therefore.
(d) Upon expiration of the Term or in the event of an
unremedied event of default by SigmaTron (and the
expiration of any cure periods), SigmaTron will
complete all work in process and then make available
for removal by Kidde all Kidde equipment, all such
Kidde Equipment to be in good condition and repair,
ordinary wear and tear accepted and free of all liens
and encumbrances created by or due to SigmaTron.
(e) Except as provided in Section 9 above, the remedies
provided for in this Agreement are not exclusive and
shall be in addition to any other remedies available
to the non-defaulting party, at law or in equity.
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14. ASSIGNMENTS; CHANGE OF CONTROL
(a) Neither party may assign its rights or obligations
hereunder without the prior written consent of the
other party, which consent may be withheld in the
sole discretion of such party.
(b) In the event that all or substantially all of Kidde's
assets or a change in control of Kidde is to be
effected by a merger, consolidation, reorganization,
or a sale of capital stock of Kidde, Kidde shall give
notice to SigmaTron of such pending event so that
SigmaTron may attempt to enter into a requirements
contract similar to this Agreement with the third
party acquirer, to become effective upon the
consummation of the sale. If SigmaTron is not able to
execute a mutually acceptable agreement with the
third party, the terms of this Agreement shall bind
said third party, at SigmaTron's option, for a period
of 12 months after consummation of the sale or the
remainder of the term, whichever is the first to
expire. SigmaTron will exercise its option, if at
all, by giving written notice to Kidde not later than
30 days after the occurrence of a meeting among
Kidde, SigmaTron and the third party commencing the
negotiation of such an agreement. SigmaTron agrees to
make its representative available for such meeting
upon three days' prior written notice.
(c) In the event that all or substantially all of
SigmaTron's assets or a change in control of
SigmaTron is to be effected by a merger,
consolidation, reorganization, or a sale of capital
stock of SigmaTron, SigmaTron shall give notice to
Kidde of such pending event. Upon occurrence of such
pending event, Kidde may at its option terminate this
Agreement upon 30 days written notice.
15. PROJECT MANAGERS:
Each party shall appoint an individual to act as its project
manager for this Agreement. Each project manager shall be
primarily responsible for technical and service liaison with
the other party for all elements of this business
relationship. Initially, Kidde appoints Robert J. Strople as
its project manager and SigmaTron appoints Gary R. Fairhead as
its project manager. Each party shall have the right to change
its project manager at any time by written notice sent to the
other party.
16. PROPRIETARY RIGHTS:
(a) The parties acknowledge that the design and
specifications of CO Detectors, the know-how
associated with the components of CO Detectors and
all of Kidde customer lists are proprietary to Kidde.
Nothing in this Agreement shall be construed as
granting to
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SigmaTron or conferring on SigmaTron any rights by
license or otherwise to Kidde patents, trademarks,
copyrights or other proprietary rights except as
necessary for SigmaTron to perform its obligations
under this Agreement or exercise its right to sell
finished CO Detectors under Section 13(c) of this
Agreement.
(b) (i) Kidde shall, at its own expense, defend,
indemnify and hold SigmaTron harmless from
any loss, liability or expense (including
court costs and attorney's fees) resulting
from any actual or alleged infringement or
other violation of any patent, trademark,
copyright or other proprietary right of any
third party to the extent that such
infringement is based on SigmaTron's
production for Kidde of CO Detectors in
accordance with specifications provided by
Kidde to SigmaTron under this Agreement.
(ii) If Kidde is not able to procure from the
person or persons claiming infringement the
right for SigmaTron to continue production
of the affected CO Detectors on such terms
as are mutually acceptable by the parties,
Kidde shall purchase from SigmaTron each of
the following that results from the
inability of SigmaTron to use the infringing
goods (all such inventory of CO Detectors,
components, materials or supplies, whether
in stock (including Safety Stock), subject
to orders not cancelable by SigmaTron
without penalty, or not otherwise useable by
SigmaTron in the ordinary course of its
business is herein called "Infringing
Obsolete Inventory"):
(a) all Infringing Obsolete Inventory
to the extent that it would have
been used by SigmaTron to fill
orders to be Delivered for the
current month and during the Firm
Order Period beginning as of the
first day of the month following
the date on which SigmaTron was
required to cease production of the
infringing product;
(b) all Infringing Obsolete Inventory
for orders beyond the Firm Order
Period that were purchased by
SigmaTron with Kidde's written
approval; and
(c) all Safety Stock that becomes
Infringing Obsolete Inventory.
(iii) Kidde shall purchase Infringing Obsolete
Inventory from SigmaTron as follows:
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(a) Kidde shall pay SigmaTron the Price
for:
1. all finished CO Detectors
scheduled to be Delivered
for the current month and
during the first two months
of the Firm Order Period
beginning as of the first
day of the month following
the date on which SigmaTron
was required to cease
production of the infringing
product; and
2. all finished CO Detectors
held as Safety Stock.
(b) Kidde shall pay SigmaTron 108% of
the current Bill of Materials Cost
for:
1. 110% of all finished CO
Detectors scheduled to be
Delivered during the third
month of said Firm Order
Period;
2. all raw material CO Detector
kits held as Safety Stock;
and
3. all Infringing Obsolete
Inventory for orders beyond
the Firm Order Period
purchased with Kidde's
written approval.
(iv) SigmaTron shall invoice Kidde for Infringing
Obsolete Inventory within 15 days after
notification to Kidde of its exposure or as
soon thereafter as practicable.
(c) Kidde represents to SigmaTron that Kidde has received
no notice of any claim and is aware of no threatened
claim that any CO Detector infringes or violates any
patent, trademark, copyright or other proprietary
right of any third party. Kidde agrees that they
shall immediately notify SigmaTron when Kidde has
knowledge that such claim or threatened claim has
been asserted with respect to any CO Detector
manufactured by SigmaTron.
17. MISCELLANEOUS:
(a) Effect of Headings: The headings contained in this
Agreement are to facilitate reference only, do not
form a part of this Agreement and shall not in any
way affect the construction of interpretation hereof.
(b) Non-waiver: The failure of either party to enforce or
exercise any provision, right or option under this
Agreement shall not prejudice
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any other right which that party may otherwise have
under this Agreement, at law or in equity.
(c) Notices: Any notice, request, instruction, invoice or
other document required or permitted to be given
hereunder shall be in writing and addressed as
follows (or to such different address as has been set
forth in a notice to the other party):
SigmaTron International, Inc.
2201 Landmeier Road
Elk Grove Village, IL 60007
Facsimile: 847/956-8082
Attn: Gary R. Fairhead, President
With a copy to:
Henry J. Underwood, Jr.
Defrees & Fiske
200 South Michigan Avenue
Suite 1100
Chicago, IL 60604
Facsimile: 312/939-5617
Robert J. Strople
Vice President of Global Operations
Walter Kidde Portable Equipment, Inc.
1394 South Third Street
Mebane, NC 27302
Facsimile: 919/563-4582
With a copy to:
Mark Adcock
Moore & Van Allen, PLLC
Bank of America Corporate Center
100 North Tryon Street, Floor 47
Charlotte, NC 28202
Facsimile: 704/331-1159
Notices so given shall be deemed delivered one
business day after machine confirmation of facsimile
transmission if sent via facsimile, or on the next
business day if sent via recognized overnight
courier, all fees prepaid.
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(d) Release of Publicity: Neither party shall, without
first securing the written consent of the other party
hereto, advertise or release any publicity regarding
the existence of this Agreement or its contents. As a
public company, SigmaTron is required to give notice
to the public of all of its material agreements and
any changes thereto. Kidde acknowledges that this
Agreement is material to SigmaTron and consents to
the issuance of a press release announcing the
execution of this Agreement. In addition, if
SigmaTron is required by applicable regulatory
requirements to announce publicly other aspects of
its business relationship with Kidde or this
Agreement, Kidde shall respond reasonably and
promptly to SigmaTron's requests for approval of the
content of announcements.
(e) Applicable Law: This Agreement and all matters
connected with the performance hereof shall be
construed, interpreted, applied, and governed in all
respects according to the laws of the State of North
Carolina notwithstanding any conflicts of law rules
that may provide otherwise.
(f) Modification of Agreement: This Agreement, the
Guaranty and the Side Agreement set forth the entire
understanding and agreement between the parties on
the subject matter hereof and merges and supersedes
all previous communications, negotiations,
warranties, representations, purchase orders and
agreements, either oral or written, with respect to
the subject matter hereof, including without
limitation the 1996 Agreement, and no addition to or
modification of this Agreement shall be binding on
either party hereto unless reduced to writing and
duly executed by the party to be charged.
(g) Severability: If any term or provision of this
Agreement is found to be illegal or unenforceable
then, notwithstanding such partial invalidity, the
remaining portions of this Agreement shall remain in
full force and effect.
(h) Arbitration:
(i) Except as provided in subsection (ii), any
dispute, controversy, difference or claim
arising out of, relating to or in connection
with this Agreement, shall be finally
settled by arbitration in accordance with
the Commercial Arbitration Rules of the
American Arbitration Association then in
effect by three arbitrators appointed in
accordance with such rules. Each of the
arbiters shall be a member of the Bar of the
State of North Carolina, actively engaged in
the practice of law, or retired judge from
the Superior Court, Court of Appeals or
Supreme Count of North
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Carolina. The arbiters shall have power to
grant equitable remedies in addition to
imposing monetary damages. The arbiters'
award shall be final and binding. Judgment
upon the award rendered by the arbiters may
be entered in any court having jurisdiction
thereof. The arbitration shall take place in
Charlotte, North Carolina or such other
place as the parties may agree. The
arbitration shall include (x) a provision
that the prevailing party in such
arbitration shall recover its costs of the
arbitration and reasonable attorney's fees
from the other part, and (y) the amount of
such costs and fees.
(ii) Notwithstanding subsection, (i) either
party, if it believes that it is entitled to
injunctive relief file a civil action in any
court having jurisdiction seeking injunctive
relief. Any claim or demand for monetary
damages shall, however, be governed
exclusively by the provisions for
arbitration set forth in subsection (i).
(i) Independent Contractors: Each of Kidde and SigmaTron
will perform its work under this Agreement as an
independent contractor and not as an agent or
employee of the other. Subject to the terms and
conditions of this Agreement, each party shall at its
sole discretion, choose the means to be employed and
the manner of carrying out its obligations hereunder.
(j) Use of Standard Forms: Either party may use its
standard purchase order or invoice forms during their
course of their business relationship. However, the
preprinted terms and conditions of such form shall
not be binding upon the parties, their intention
being that the terms and conditions of their business
relationship shall be governed by this Agreement.
(k) Force Majeure: Neither party hereto will be liable
for any failure to perform any obligation under this
Agreement, or for delay in such performance, to the
extent such failure to perform or delay is caused by
circumstances beyond its reasonable control,
including without limitation fire, storm, flood,
earthquake, explosion, accident, war, rebellion,
insurrection, sabotage, restrictions, labor disputes
or shortages, transportation embargoes, delays in
transportation, shortages of materials due to
circumstances beyond reasonable control, shortages of
fuels or power, acts of God, acts of any government
or any agency thereof, and judicial action. Any
suspension of performance by reason of this Section
17(k) will be limited to the period during which the
cause of suspension exists and will apply only to the
extent that the party whose performance is affected
by such event uses reasonable efforts to minimize the
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effect of any failure to perform or to minimize the
period of any delay. In the event of any such event
excusing or delaying the performance of SigmaTron,
Kidde shall be permitted to purchase CO Detectors
from other sources of supply until thirty (30) days
after Kidde's receipt of written notice from
SigmaTron that the force majeure event no longer
exists.
(l) Non-Compete:
(i) In consideration of Kidde's covenants
hereunder and so long as Kidde is not in
default hereunder, including without
limitation, in default of Kidde's obligation
to pay, SigmaTron agrees (and agrees to
cause any affiliate of SigmaTron) as
follows:
A. during the Term, to manufacture any
device that detects indoor levels
of carbon monoxide gas exclusively
for Kidde;
B. during the Term and for one year
after either expiration of this
Agreement by its own terms or early
termination of this Agreement by
Kidde in accordance with the
provisions of Section 13(e) hereof,
not to produce, manufacture,
assemble or sell its own brand of
carbon monoxide detector
("SigmaTron Detector");
C. during the Term and for two years
after the termination of this
Agreement by Kidde as a direct
result of an unremedied event of
default by SigmaTron hereunder, not
to produce, manufacture, assemble
or sell a SigmaTron Detector;
D. during the Term and for three
months after either the expiration
of this Agreement by its own terms
or early termination of this
Agreement by Kidde in accordance
with the provisions of Section
13(e) hereof, not to provide
services as a contract manufacturer
to any other person or entity for
the production, manufacture,
assembly or sale of any product
that has as its primary purpose the
detection of carbon monoxide levels
("Contract Manufacturing
Services"); and
E. during the Term and for one year
after the termination of this
Agreement by Kidde as
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<PAGE> 20
a direct result of an unremedied
event of default by SigmaTron
hereunder, not to provide Contract
Manufacturing Services.
Notwithstanding the foregoing, SigmaTron shall be
immediately released from its obligations under this
subsection (i) if SigmaTron terminates this Agreement
as a direct result of an unremedied event of default
by Kidde.
(ii) Each of SigmaTron and Kidde agrees, for
itself and its affiliates, that it will not
solicit any employees of the other party or
its affiliates for employment for a period
of two years following any expiration or
termination of this Agreement.
(iii) Each party agrees that the foregoing
restrictions shall apply to any activity in
any part of the world. Each party
acknowledges that the manufacture and
distribution of carbon monoxide detectors is
a worldwide market and further acknowledges
that the geographic scope, functional scope
and duration of each of the foregoing
restrictions are reasonable. In light of the
fact that damages for a breach of any such
restrictions might be difficult to
ascertain, each party agrees that the
non-breaching party shall be entitled to
injunctive relief in the event of an
unremedied breach by the other party of any
of the foregoing restriction, in addition to
whatever remedies at law may be available to
the non-breaching party in connection with
such breach.
(m) Consequential Damages: Neither party shall be liable
to the other or any third party for loss of profits,
or indirect, special, incidental, or consequential
damages.
(n) Right of Set-Off: Each party is entitled to set off
against amounts it may owe to the other party amounts
owed to it by the other party in connection with this
Agreement or any other agreement between them.
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IN WITNESS WHEREOF, the parties have caused this Amended and Restated Agreement
to be executed by their respective duly authorized officers effective as of the
date first above written.
Walter Kidde Portable Equipment, Inc. SigmaTron International, Inc.
By: /s/ Robert J. Strople By: /s/ Gary R. Fairhead
-------------------------------- ---------------------------------
Name: Robert J. Strople Name: Gary R. Fairhead
Title: Vice President of Global Title: President and Chief Executive
Operations Officer
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