UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0 - 23426
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REPTRON ELECTRONICS, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 38-2081116
-------------------------- ----------------------------------
State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization
14401 McCormick Drive, Tampa, Florida 33626
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 854-2351
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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There were 6,279,498 shares of common stock issued and outstanding as of
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August 01, 2000.
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<PAGE>
REPTRON ELECTRONICS, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION Number
Item 1. Financial Statements
Consolidated Statements of Operations -- Three months
ended June 30, 2000 and June 30, 1999 and Six months
ended June 30, 2000 and June 30, 1999 3
Consolidated Balance Sheets -- June 30, 2000 and
December 31, 1999 4
Consolidated Statement of Shareholders' Equity -
Six months ended June 30, 2000 and year ended
December 31, 1999 5
Consolidated Statements of Cash Flows -- Six months
ended June 30, 2000 and June 30, 1999 6
Notes to Consolidated Financial Statements -- June 30, 2000 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of the Security
Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
<TABLE>
Three months ended Six months ended
June 30, June 30,
(Unaudited) (Unaudited)
------------------ ------------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales $ 140,880 $ 81,026 $ 263,873 $ 158,411
Cost of goods sold 117,197 70,107 220,491 137,406
--------- --------- --------- ---------
Gross profit 23,683 10,919 43,382 21,005
Selling, general and administrative expenses 18,367 13,609 34,941 26,224
--------- --------- --------- ---------
Operating earnings (loss) 5,316 (2,690) 8,441 (5,219)
Interest expense, net 2,692 2,025 5,051 4,167
--------- --------- --------- ---------
Earnings (loss) before income taxes 2,624 (4,715) 3,390 (9,386)
Income tax provision (benefit) 1,242 (1,811) 1,620 (3,605)
--------- --------- --------- ---------
Earnings (loss) before extraordinary item 1,382 (2,904) 1,770 (5,781)
Extraordinary gain on extinguishment of debt, net - 8,250 - 8,250
--------- --------- --------- ---------
Net earnings $ 1,382 $ 5,346 $ 1,770 $ 2,469
========= ========= ========= =========
Net earnings (loss) per common share - basic:
Earnings (loss) before extraordinary item $ 0.22 $ (0.47) $ 0.29 $ (0.94)
Extraordinary gain - 1.34 - 1.34
--------- --------- --------- ---------
Net earnings per common share - basic $ 0.22 $ 0.87 $ 0.29 $ 0.40
========= ========= ========= =========
Weighted average common shares outstanding -
basic 6,230,443 6,147,119 6,202,187 6,147,119
========= ========= ========= =========
Net earnings (loss) per common share - diluted:
Earnings (loss) before extraordinary item $ 0.20 $ (0.47) $ 0.26 $ (0.94)
Extraordinary gain - 1.34 - 1.34
--------- --------- --------- ---------
Net earnings per common share - diluted $ 0.20 $ 0.87 $ 0.26 $ 0.40
========= ========= ========= =========
Weighted average common shares outstanding -
Diluted 6,866,933 6,147,119 6,757,167 6,147,119
========= ========= ========= =========
The accompanying notes are an integral part of these financial
statements
</TABLE>
3
<PAGE>
REPTRON ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
ASSETS
(Unaudited)
June 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,580 $ 108
Accounts receivable - trade, less allowances
for doubtful accounts of $1,019 and $609, respectively 80,221 62,754
Inventories, net 101,335 82,553
Prepaid expenses and other 3,778 2,118
--------- ---------
Total current assets 186,914 147,533
PROPERTY, PLANT & EQUIPMENT - AT COST, NET 36,202 34,997
EXCESS OF COST OVER NET ASSETS ACQUIRED, NET 29,868 30,507
OTHER ASSETS 2,538 2,816
--------- ---------
$ 255,522 $ 215,853
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 51,407 $ 42,062
Current portion of long-term obligations 2,816 3,280
Accrued expenses 6,733 6,068
Income taxes payable 1,252 446
--------- ---------
Total current liabilities 62,208 51,856
NOTE PAYABLE TO BANK 61,224 37,413
LONG-TERM OBLIGATIONS, less current portion 81,856 79,104
DEFERRED TAX LIABILITY 842 520
SHAREHOLDERS' EQUITY
Preferred Stock - authorized 15,000,000 shares
of $.10 par value; no shares issued - -
Common Stock - authorized 50,000,000 shares
of $.01 par value; issued and outstanding,
6,275,685 and 6,167,119, respectively 63 62
Additional paid-in capital 22,401 21,740
Retained earnings 26,928 25,158
--------- ---------
49,392 46,960
--------- ---------
$ 255,522 $ 215,853
========= =========
The accompanying notes are an integral part of these financial
statements.
</TABLE>
4
<PAGE>
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands, except share data)
<TABLE>
Common Stock Additional Total
Shares Par Paid-In Retained Shareholders'
Outstanding Value Capital Earnings Equity
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998 6,147,119 $61 $21,676 $ 20,389 $ 42,126
Exercise of stock options 20,000 1 64 - 65
Net earnings - - - 4,769 4,769
--------- -- ------ -------- --------
Balance at December 31, 1999 6,167,119 62 21,740 25,158 46,960
Exercise of stock options (Unaudited) 108,566 1 661 - 662
Net earnings (Unaudited) - - - 1,770 1,770
--------- -- ------ -------- --------
Balance at June 30, 2000 (Unaudited) 6,275,685 $63 $22,401 $ 26,928 $ 49,392
========= == ====== ======== ========
The accompanying notes are an integral part of this financial
statement.
</TABLE>
5
<PAGE>
<TABLE>
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six months ended
June 30,
(Unaudited)
2000 1999
------ ------
Increase (decrease) in cash and cash equivalents:
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,770 $ 2,469
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 5,075 5,454
Extraordinary gain - (13,750)
Deferred income taxes 322 1,300
Loss on disposal of assets 25 5
Change in assets and liabilities:
Accounts receivable - trade (17,467) 1,725
Inventories (18,782) (3,552)
Prepaid expenses and other current assets (1,660) 8,251
Other assets (34) (221)
Accounts payable - trade 9,345 3,919
Accrued expenses 665 (1,682)
Deferred revenue - (70)
Income taxes payable 806 584
------- -------
Net cash provided by (used in) operating activities (19,935) 4,432
Cash flows from investing activities:
Purchases of property, plant and equipment (5,354) (1,850)
Proceeds from the sale of property - 97
------- -------
Net cash used in investing activities (5,354) (1,753)
Cash flows from financing activities:
Proceeds from exercise of stock options 662 -
Net proceeds from note payable to bank 24,398 11,324
Proceeds from long term obligations 4,000 -
Payments on long term obligations (2,299) (20,972)
------- -------
Net cash provided by (used in) financing activities 26,761 (9,648)
------- -------
Net increase (decrease) in cash and cash equivalents 1,472 (6,969)
Cash and cash equivalents at beginning of period 108 10,065
------- -------
Cash and cash equivalents at end of period $ 1,580 $ 3,096
======= =======
The accompanying notes are an integral part of these financial
statements
</TABLE>
6
<PAGE>
REPTRON ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
Six months ended
June 30,
(Unaudited)
2000 1999
Supplemental cash flow information:
Interest paid $4,596 $4,873
===== =====
Income taxes paid $ 605 $ -
===== =====
Non - cash investing and financing activities:
Goodwill, related to the 1998 Hibbing acquisition, has been adjusted
approximately $767,000 during the period ended
June 30, 1999.
Net capitalized financing costs of approximately $812,000, related to the May
1999 repurchase of convertible
subordinated bonds, have been written off during the period ended June 30,
1999.
The accompanying notes are an integral part of these financial statements
7
<PAGE>
REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Unaudited)
NOTE A -- BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and do not include all the
information and footnote disclosure required by generally accepted accounting
principles for complete financial statements. The consolidated financial
statements as of June 30, 2000, and for the three and six months ended June
30, 2000 and June 30, 1999, are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the financial position and
operating results for the interim periods. The results of operations for the
three and six months ended June 30, 2000 are not necessarily indicative of
results that may be expected for the year ending December 31, 2000. The
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto, together with management's discussion
and analysis of financial condition and results of operations, included in the
1999 Form 10-K.
NOTE B -- INVENTORIES
Inventories consist of the following (in thousands):
June 30, December 31,
2000 1999
---------- ------------
Electronic Component Distribution:
Inventories $ 61,493 $45,495
Electronic Manufacturing Services:
Work in process 12,467 12,277
Raw materials 27,375 24,781
------- ------
$101,335 $82,553
======= ======
8
<PAGE>
REPTRON ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
JUNE 30, 2000
(Unaudited)
NOTE C -- FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Reptron Electronics, Inc. is a leading electronics manufacturing supply chain
services company operating as a national distributor of electronic components,
a contract manufacturer of electronic products and display solution provider.
Our Electronic Component Distribution customers are in diverse industries'
including robotics, telecommunications, computers and computer peripherals,
consumer electronics, healthcare, industrial controls and contract
manufacturing. Our Electronic Manufacturing Services segment manufactures
electronic products according to customer design, primarily for customers in
the telecommunications, healthcare, industrial/instrumentation, banking and
office products industries. As a display solution provider, we provide
display design engineering, systems integration and turnkey manufacturing
services.
The following table shows net sales and gross profit by industry segments.
<TABLE>
Three months ended Six months ended
June 30, June 30,
(in thousands) (in thousands)
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net Sales
Electronic Component Distribution $ 84,078 $44,188 $155,895 $ 83,694
Electronic Manufacturing Services 56,802 36,838 107,978 74,717
------- ------ ------- -------
$140,880 $81,026 $263,873 $158,411
======= ====== ======= =======
Gross Profit
Electronic Component Distribution $ 16,388 $ 7,428 $ 29,650 $ 14,030
Electronic Manufacturing Services 7,295 3,491 13,732 6,975
------- ------ ------- -------
$ 23,683 $10,919 $ 43,382 $ 21,005
======= ====== ======= =======
</TABLE>
NOTE D -- EARNINGS PER SHARE
<TABLE>
The following table sets forth the computation of basic and diluted net earnings
per common share:
Three months ended Six months ended
June 30, June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator:
Net earnings (in thousands) $ 1,382 $ 5,346 $ 1,770 $ 2,469
========= ========= ========= =========
Denominator:
For basic earnings per share -
Weighted average shares 6,230,443 6,147,119 6,202,187 6,147,119
Effect of dilutive securities:
Employee stock options 636,490 - 554,980 -
--------- --------- --------- ---------
For diluted earnings per share 6,866,933 6,147,119 6,757,167 6,147,119
========= ========= ========= =========
Net earnings per common share - basic $ 0.22 $ 0.87 $ 0.29 $ 0.40
========= ========= ========= =========
Net earnings per common share - diluted $ 0.20 $ 0.87 $ 0.26 $ 0.40
========= ========= ========= =========
</TABLE>
9
<PAGE>
REPTRON ELECTRONICS, INC
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This document contains certain forward-looking statements that involve a
number of risks and uncertainties. Such forward-looking statements are
within the meaning of that term in Section 27A of the Securities Act of 1933,
as amended and Section 21E of the Securities Act of 1934, as amended.
Factors that could cause actual results to differ materially include the
following: business conditions and growth in Reptron's industry and in the
general economy; competitive factors; risks due to shifts in market demand;
the ability of Reptron to complete and integrate acquisitions; and the risk
factors listed from time to time in Reptron's reports filed with the
Securities and Exchange Commission as well as assumptions regarding the
foregoing. The words "believe", "estimate", "expect", "intend",
"anticipate", "plan" and similar expressions and variations thereof identify
certain of such forward-looking statements, which speak only as of the dates
on which they were made. Reptron undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events, or otherwise. Readers are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ
materially from those indicated in the forward-looking statements as a result
of various factors. Readers are cautioned not to place undue reliance on
these forward-looking statements.
RESULTS OF OPERATIONS
Net Sales. Total second quarter net sales increased $59.9 million, or
73.9%, from $81.0 million in the second quarter of 1999 to $140.9 million in
the second quarter of 2000. Total net sales for the first half of 2000
increased $105.5 million, or 66.6% from $158.4 million in the first half of
1999 to $263.9 million in the first half of 2000.
Electronic Component Distribution ("ECD") second quarter net sales
increased $39.9 million, or 90.3%, from $44.2 million in the second quarter
of 1999 to $84.1 million in the second quarter of 2000. Management believes
this increase resulted primarily from improved market conditions for the sale
of electronic components in the United States. Additionally, we have made
significant investments in personnel and other infrastructure which has aided
in sales growth. Sales of semiconductors, passive components and
electromechanical components accounted for 64.7%, 26.9% and 8.4%,
respectively, of second quarter 2000 ECD net sales and 71.7%, 19.5% and 8.8%,
respectively, of second quarter 1999 ECD net sales. Sales generated from the
top four ECD vendors accounted for approximately $33.8 million, or 38.9% of
second quarter 2000 ECD net sales, as compared with approximately $17.8
million or 40.2% of second quarter 1999 ECD net sales.
ECD net sales increased $72.2 million, or 86.3%, from $83.7 million in the
first half of 1999 to $155.9 million in the first half of 2000. This
increase was driven primarily by factors similar to those stated above.
Sales of semiconductors, passive components and electromechanical components
accounted for 65.2%, 26.7% and 8.1%, respectively, of first half 2000 ECD net
sales, and 72.0%, 20.0% and 8.0%, respectively, of first half 1999 ECD net
sales. Sales generated from the top four ECD vendors accounted for
approximately $62.4 million, or 38.6% of first half 2000 ECD net sales, as
compared with approximately $31.6 million or 37.7% of first half 1999 ECD net
sales.
Electronic Manufacturing Services ("EMS") net sales increased $20.0
million, or 54.2%, from $36.8 million in the second quarter of 1999 to $56.8
million in the second quarter of 2000. This increase is primarily
attributable to increased demands from within the existing customer base of
EMS. EMS transacted business with 89 customers in the second quarter of
2000. The three largest EMS customers accounted for approximately 13.6%,
11.5% and 8.6%, respectively, of second quarter 2000 EMS net sales (5.5%,
4.6% and 3.5%, respectively, of total Company second quarter 2000 net sales)
as compared to 9.2%, 7.9% and 6.5%, respectively, of second quarter 1999 EMS
net sales (4.2%, 3.6% and 2.9%, respectively, of total Company second quarter
1999 net sales). Sales from the Hibbing, Minnesota; Tampa, Florida; Gaylord,
Michigan and Fremont, California manufacturing facilities accounted for
approximately 37%, 31%, 24% and 8% respectively, of EMS second quarter 2000
net sales as compared with 45%, 26%, 29% and 0%, respectively, of EMS second
quarter 1999 net sales.
10
<PAGE>
EMS net sales increased $33.3 million, or 44.5%, from $74.7 million in the
first half of 1999 to $108.0 million in the first half of 2000. This
increase is primarily attributable to increased demand from within the
existing EMS customer base. EMS transacted business with 101 customers in
the first half of 2000. The three largest EMS customers accounted for
approximately 13.7%, 9.1%, and 8.4%, respectively, of first half 2000 EMS net
sales (5.6%, 3.7% and 3.4%, respectively, of total Company first half 2000
net sales) as compared to 7.6%, 7.2% and 6.0%, respectively, of first half
1999 EMS net sales (3.6%, 3.4% and 2.8%, respectively, of total Company first
half 1999 net sales). Sales from the Hibbing, Minnesota; Tampa, Florida;
Gaylord, Michigan and Fremont, California manufacturing facilities accounted
for approximately 38%, 32%, 23% and 7% respectively, of total EMS sales in
the first half of 2000 as compared with 40%, 30%, 30% and 0%, respectively,
of total EMS sales in the first half of 1999.
Gross Profit. Total second quarter gross profit increased $12.8 million,
or 116.9%, from $10.9 million in the second quarter of 1999 to $23.7 million
in the second quarter of 2000. The total gross margin increased from 13.5%
in the second quarter of 1999 to 16.8% in the second quarter of 2000. Total
gross profit increased $22.4 million, or 106.5%, from $21.0 million in the
first half of 1999 to $43.4 million in the first half of 2000. The gross
margin increased from 13.3% in the first half of 1999 to 16.4% in the first
half of 2000.
ECD second quarter gross profit increased $9.0 million, or 120.6%, from
$7.4 million in the second quarter of 1999 to $16.4 million in the second
quarter of 2000. The gross margin increased from 16.8% in the second quarter
of 1999 to 19.5% in the second quarter of 2000. This increase in gross
margin is due primarily to improved selling and pricing practices and
stronger electronic component market conditions experienced in the second
quarter of 2000 as compared with market conditions in the second quarter of
1999. ECD first half gross margin increased from 16.8% in the first half of
1999 to 19.0% in the first half of 2000, for similar reasons.
EMS gross profit increased $3.8 million, or 109.0%, from $3.5 million in
the second quarter of 1999 to $7.3 million in the second quarter of 2000 and
gross margin increased from 9.5% in the second quarter of 1999 to 12.8% in
the second quarter of 2000. EMS first half gross profit increased $6.7
million, or 96.9% from $7.0 million in 1999 to $13.7 million in 2000 and its
gross margin increased from 9.3% in the first half of 1999 to 12.7% in the
first half of 2000. This increase in gross margin is primarily attributable
to the better utilization of fixed costs at higher sales levels.
Additionally, Applied Instruments, Inc. ("Applied"), acquired in October,
1999, generated higher gross margins than the other EMS facilities.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased $4.8 million, or 35.0%, from $13.6 million
in the second quarter of 1999 to $18.4 million in the second quarter of 2000.
This increase is partially attributed to the Applied operating expenses of
approximately $1.0 million. The remaining increase of approximately $3.8
million is primarily attributable to increased investment in the ECD sales
channel and the increase in variable expenses associated with increased
sales. Selling, general and administrative expenses, as a percentage of net
sales decreased from 16.8% in the second quarter of 1999 to 13.0% in the
second quarter of 2000. First half selling, general and administrative
expenses increased $8.7 million or 33.2% from $26.2 million in the first half
of 1999 to $34.9 million in the first half of 2000. Applied contributed
approximately $1.8 million in selling, general and administrative expenses
during the first half of 2000. The remaining increase of approximately $6.9
million is primarily attributable to increased investment in our ECD sales
channel and variable expenses as a result of the increase in sales. First
half selling, general and administrative expenses as a percentage of net
sales decreased from 16.6% in the first half of 1999 to 13.2% in the first
half of 2000, for similar reasons.
Interest Expense. Net interest expense increased $700,000, or 32.9%, from
$2.0 million in the second quarter of 1999 to $2.7 million in the second
quarter of 2000. First half net interest expense increased $900,000, or
21.2%, from $4.2 million in the first half of 1999 to $5.1 million in the
first half of 2000. The increase is attributed to the increase in average
outstanding long term debt of $12.4 million, from $120.5 million during the
first half of 1999 to $132.9 million during the first half of 2000, as well
as an increase in our overall average interest rate from 6.9% during the
first half of 1999 to 7.6% during the first half of 2000.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Reptron primarily finances its operations through subordinated notes, bank
credit lines, capital equipment leases, and short-term financing through
supplier credit lines.
Reptron has entered into various capital lease transactions with several
leasing companies to finance capital expenditures, primarily in EMS. These
leases had an aggregate outstanding balance of $2.9 million as of June 30,
2000. The leases bear interest at rates ranging from 7.5% to 11.1% and
expire at various dates through July, 2002.
Operating activities for the second quarter of 2000 consumed cash of
approximately $5.9 million. This decrease in liquidity resulted primarily
from an increase in accounts receivable of $10.2 million and an increase in
inventory of $9.0 million. These items were offset by operating income of
$1.4 million, an increase in accounts payable of $7.6 million, an increase in
accrued expenses of $680,000 and an increase in income taxes payable of
$660,000.
Operating activities for the first half of 2000 consumed cash of
approximately $19.9 million. This use of cash resulted primarily from an
increase in inventories of $18.8 million, an increase in accounts receivable
of $17.5 million, an increase in prepaid expenses and other current assets of
$1.7 million. Offsetting sources of cash included net income of $1.8
million, an increase in accounts payable of $9.3 million, an increase in
accrued expenses of $665,000 and an increase in income taxes payable of
$806,000.
Capital expenditures totaled approximately $5.4 million in the first half
of 2000. These capital expenditures were primarily for the acquisition of
manufacturing equipment. These purchases were funded by the working capital
line of credit.
Effective June 15, 2000, our working capital bank line of credit (the
"Credit Facility") has been increased to $120.0 million. The other terms of
the Credit Facility remain materially unchanged.
Reptron believes that available cash reserves and available credit
facilities will be sufficient for Reptron to meet its capital expenditures
and working capital needs for its operations as presently conducted.
Additionally, Reptron's future liquidity and cash requirements will depend on
a wide range of factors, including the level of business in existing
operations, expansion of facilities, and possible acquisitions. Such factors
may require Reptron to obtain additional financing. While there can be no
assurance that such financing will be available in amounts and on terms
acceptable to Reptron, Reptron believes that such financing would likely be
available on acceptable terms.
Item 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
While Reptron had no holdings of derivative financial or commodity
instruments at June 30, 2000, Reptron is exposed to financial market risks,
including changes in interest rates. A majority of Reptron's borrowings bear
a fixed interest rate. However, borrowings under Reptron's Credit Facility
with a bank bears interest at a variable rate based on the prime rate or the
London Interbank Offered Rate.
12
<PAGE>
REPTRON ELECTRONICS, INC.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of the Security Holders
The annual Meeting of the Shareholders of Reptron was held on May
22, 2000. Ms. Leigh A. Lane was elected director of Reptron for a
three year term with 5,868,977 shares voting in favor, zero shares
against and 36,889 shares abstaining. Mr. Vincent Addonisio was
elected director of Reptron for a three year term with 5,869,066
voting in favor, zero shares against and 36,800 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10.1 Distribution Agreement between Applied Data Systems, Inc.
and Reptron Electronics, Inc. dated April 3, 2000
10.2 Distribution Agreement between Tyco Electronics Corporation
and Reptron Electronics, Inc. dated April 27, 2000.
b. Reports on Form 8-K
None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 11, 2000
---------------------
REPTRON ELECTRONICS, INC.
-------------------------
(Registrant)
By: /s/ Michael Branca
------------------------
Michael Branca, Chief Financial
Officer (Principal Financial
and Accounting Officer)
14
<PAGE>
Exhibit 10.1
<PAGE>
INDUSTRIAL COMPONENT PRODUCTS
DISTRIBUTORSHIP AGREEMENT
Agreement entered into, by and between Applied Data Systems, Inc., a
Maryland corporation having its principal place of business at 9140
Guilford Rd., Columbia, MD 21046 ("SUPPLIER"), and Reptron
Electronics, Inc a corporation having its principal place of business
at 14401 McCormick Drive, Tampa, FL 33626.
IT IS AGREED:
1. Appointment. SUPPLIER appoints DISTRIBUTOR on a nonexclusive
basis to serve during the term
of this Agreement as an authorized distributor of the Products
within the Territory, and DISTRIBUTOR accepts such appointment.
SUPPLIER shall be free to distribute the products within the
Territory either directly or through other distributors or
dealers.
1.1 Definition of "Products." The term "Products" shall mean all
products offered for sale by SUPPLIER generally, as set forth
and described in SUPPLIER's then current Published Price List
(Price List) as attached hereto as Exhibit A. Products may be
added to the Price List or deleted therefrom by SUPPLIER upon
sixty (60) days prior written notice to DISTRIBUTOR.
Additional Products may be added to this Agreement, including
Products specified in SUPPLIER's Price List but not approved
for distributor stocking, by mutual agreement between the
parties.
1.2 Definition of "Territory." The term "Territory" shall mean
the geographic area(s) known as North America.
2. Responsibilities of DISTRIBUTOR. DISTRIBUTOR shall use its best
efforts commensurate with its overall business, and shall devote
such management, manpower, and time as may be reasonably necessary
to conduct a mutually agreed to program to sell and to promote the
sale, lease or other distribution of the Products within the
Territory. DISTRIBUTOR shall not be prevented in any way from
selling within the Territory similar products or merchandise of
other suppliers or manufacturers. Without limiting the generality
of the foregoing:
2.1 Inventory. DISTRIBUTOR shall use its best efforts
commensurate with its overall business to maintain a
representative inventory of Products in reasonably sufficient
quantities to provide reasonably adequate and timely delivery
to DISTRIBUTOR's customers.
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2.2 Sales, Marketing and Promotion. DISTRIBUTOR shall maintain a
competent sales force to market the Products and shall,
consistent with its own business judgment, advertise or otherwise
promote the sale, lease or other distribution of the Products
(including the establishment of promotional campaigns,
advertising in trade journals and the like) within the Territory.
2.3 Training Programs. DISTRIBUTOR and its employees shall
participate, when and to the extent appropriate, in such training
programs as may be offered by SUPPLIER, to the extent that such
participation does not materially detract from the conduct of
DISTRIBUTOR's business.
2.4 Reports. DISTRIBUTOR shall send to SUPPLIER, within thirty (30)
days after the end of each calendar month and a summary at the
end of the fiscal year, a written or electronic Point of Sale
Report ("POS Reports") indicating the quantities and prices of
all Products sold by Product type, including model number, and
customer name, address and zip code and such other information
pertaining solely to DISTRIBUTOR's resales under this Agreement
as SUPPLIER may reasonably request.
SUPPLIER recognizes and respects the DISTRIBUTOR's proprietary rights
and interest in the information contained in DISTRIBUTOR's POS
Reports. SUPPLIER agrees these reports and the information contained
therein (in whatever form submitted) are and remain the property of
the distributor. SUPPLIER agrees to use its best efforts to keep
confidential and not to disclose to any Third Party the information
contained in the reports, and to restrict its availability and use to
only SUPPLIER's employees with a genuine need to know. It is not
intended that this provision should restrict SUPPLIER's use of the POS
information for market analysis or other information processing
purposes or commission payments, so long as the confidentiality of the
information is assured.
SUPPLIER agrees that in the event of termination of this Agreement by
either party, with or without cause, that upon written notice of said
termination all POS Reports and information will be returned to
DISTRIBUTOR or destroyed and upon DISTRIBUTOR's written request,
SUPPLIER shall furnish DISTRIBUTOR with written certification that
said POS Reports and information have been returned to DISTRIBUTOR or
destroyed. The information in a Point-of Sale Report shall not be
used by any of the SUPPLIER's personnel, agents or by any of the
SUPPLIER's other authorized DISTRIBUTORS to the detriment, or damage,
of the
DISTRIBUTOR or the DISTRIBUTOR's sales of any products to any of its
customers.
2.5 Audit and Inspection. Not more than twice annually, upon
reasonable prior written notice, DISTRIBUTOR shall permit
SUPPLIER, at SUPPLIER's sole cost and expense, to (i) audit those
records of DISTRIBUTOR which pertain solely and exclusively to
purchases of Products
2
under this Agreement for the previous twelve (1 2) months or
from and after the last such audit, whichever period is shorter
and which are located at DISTRIBUTOR's principal place and
branch locations of business, and (ii) perform an inventory of
all Products purchased hereunder by DISTRIBUTOR at each
location; provided, however, that such audit and inventory are
carried out at reasonable times and in a manner that will not
disrupt or otherwise materially adversely impact the conduct of
DISTRIBUTOR's business.
3. Responsibilities of SUPPLIER. SUPPLIER, at its cost and expense,
shall cooperate with and assist DISTRIBUTOR in performing its
duties under this Agreement and shall utilize its best efforts
commensurate with its overall business to promote the sale and
distribution of the Products. Without limiting the generality of
the foregoing-.
3.1 Training. SUPPLIER shall provide DISTRIBUTOR's sales
organization with all necessary and appropriate Product sales
training, support and assistance.
3.2 Literature. SUPPLIER shall furnish DISTRIBUTOR with a
reasonable supply of current price and product information
including price lists, sales literature, books, specification
sheets, catalogues, promotional plans and information and the
like as SUPPLIER may prepare for nationwide distribution and
shall also provide DISTRIBUTOR with such training, technical
and sales support and assistance (including sales forecasting
and planning assistance) as may be necessary to assist
DISTRIBUTOR in effectively carrying out its activities under
this Agreement.
3.3 Advertising, Promotion and Referrals. SUPPLIER shall use its
best efforts commensurate with its overall business, to
advertise the Products on a nationwide basis and shall take
all reasonable steps to inform the public that DISTRIBUTOR is
an authorized distributor of the Products and to encourage
customers or potential customers for the Product to order the
same from its distributors including DISTRIBUTOR and shall
refer to DISTRIBUTOR leads, orders, customers and potential
customers involving quantities of the Products customarily
handled by distributors.
3.4 Military Products. SUPPLIER shall include with any shipment
of Products which are intended for resale or other
distribution to the United States Government, ("Government
Products") or which are designated as Military Products all
information and documentation necessary or appropriate for
full and complete compliance with pertinent governmental
regulations, requirements and specifications, including,
without limitation, certificates of conformance and
traceability and any supporting paperwork. If an order for
Government or Military Products is shipped without all of the
foregoing information or documentation and such information or
documentation is not thereafter delivered to the location set
forth in the corresponding purchase order within five (5) days
after a request therefor, DISTRIBUTOR may cancel such
3
order without the payment of a penalty or charge-, provided,
however, that DISTRIBUTOR shall receive credit for any such
order to establish quantities purchased, quantity discounts
and the like, where applicable, as if such order had been
fulfilled. SUPPLIER shall ship, mark and pack all Military
Products in accordance with the relevant government
specifications. SUPPLIER shall, in accordance with such
relevant specifications, fully cooperate with DISTRIBUTOR in
the recertification of date-coded Military Products.
3.5 Quality Control. SUPPLIER shall establish and maintain
quality control procedures for product manufacturing, handling
and testing, including but not limited to electrostatic
discharge sensitivity procedures and other customary programs
as are necessary to ensure that the Products, as manufactured
and sold to DISTRIBUTOR, are of the highest quality and
reliability.
3.6 Compliance with Laws. SUPPLIER warrants that the Products,
as manufactured and sold to DISTRIBUTOR, are in full
compliance with applicable laws, standards, codes and
regulations, are duly marked and labeled and are suitable for
resale or other distribution by DISTRIBUTOR.
4. Orders; Delivery; Rescheduling; Cancellation.
4.1 Orders. DISTRIBUTOR may place written, telefaxed, telexed or
electronically transmitted purchase orders or oral purchase
orders confirmed in writing within ten (10) business days.
Such purchase orders shall describe the Products ordered, the
quantities requested, delivery dates requested, prices and
shipping instructions, where appropriate. SUPPLIER shall
acknowledge acceptance of each order in writing, by telefax,
telex, or electronic transmission at the earliest practicable
date, but in any event within ten (10) business days following
receipt thereof. In such acceptance, SUPPLIER shall confirm
DISTRIBUTOR's requested delivery date as the shipment date or
specify an alternative shipment date ("Acknowledged Shipment
Date"). If the Acknowledged Shipment Date is more than thirty
(30) days later than DISTRIBUTOR's requested delivery date,
DISTRIBUTOR, at its election, may cancel the order without the
payment of a penalty or charge.
4.2 Method of Shipping. All shipments from SUPPLIER's F.O.B.
point shall be made in accordance with DISTRIBUTOR's then
current shipping instructions. DISTRIBUTOR's shipping
instructions are subject to change upon written notice from
DISTRIBUTOR. If SUPPLIER elects to ship otherwise than in
keeping with the shipping instructions, it shall do so at its
own cost and bear all risk of loss until the shipment is
received by DISTRIBUTOR. In the absence of specific
instructions from DISTRIBUTOR, the shipping and packaging
method shall be at the discretion of SUPPLIER, provided that
SUPPLIER shall, consistent with sound business
4
practice, select a method of shipping and packaging which is
suitable for the Product. In the event of any misdelivery by
the carrier, SUPPLIER shall assist DISTRIBUTOR in tracing the
shipment and obtaining delivery of the Products.
4.3 Rescheduling and Cancellation. DISTRIBUTOR may, upon at
least thirty (30) days prior written notice, reschedule or
cancel the Acknowledged Order without cost, penalty or
additional charge to DISTRIBUTOR; provided, however, that
DISTRIBUTOR may not reschedule any order for delivery after
the termination or expiration of this Agreement unless agreed
to by SUPPLIER.
4.4 Acceptance. DISTRIBUTOR shall be deemed to have accepted
Products upon delivery to and inspection by Distributor,
unless DISTRIBUTOR notifies SUPPLIER within five (5) days
after delivery that the Products are rejected because they are
defective or do not conform to the SUPPLIER's applicable
warranty, the terms of this Agreement, DISTRIBUTOR's order, or
are otherwise non-conforming.
4.5 Early Shipments. DISTRIBUTOR shall have the right to accept
or reject any and all Products delivered prior to their
Acknowledged Shipment Date. If SUPPLIER is notified of
DISTRIBUTOR's intention to reject and return any such delivery, it
shall issue (or shall be deemed to have issued) a Return Material
Authorization within five (5) business days. The return shall be
made freight collect. If DISTRIBUTOR elects to accept any such
delivery, DISTRIBUTOR shall not become obligated to pay any
invoices submitted therefor until thirty
(30) days after the Acknowledged Shipment Date.
5. Prices. The prices for Products purchased under this Agreement
shall be as set forth in SUPPLIER's Price List in effect as of the
date of this Agreement, a copy of which is attached to this
Agreement as Exhibit A. The prices shown in Exhibit A are subject
to change upon at least sixty (60) days prior written notice from
SUPPLIER to DISTRIBUTOR.
5.1 Price Increases. Prior to the effective date of a price
increase, DISTRIBUTOR may order Products for delivery at the
prior (i.e., lower) price. All Products shipped under orders
placed by DISTRIBUTOR prior to the effective date of any price
increase shall be shipped and invoiced at the price in effect
at the time of order placement.
5.2 Price Decreases. In the event SUPPLIER decreases the price
of any Product, DISTRIBUTOR shall be entitled to a credit
equal to the difference between the price paid for the Product
by DISTRIBUTOR (less any prior credits granted by SUPPLIER on
such Product) and the new decreased price for the Product
multiplied by the quantity of such Product in DISTRIBUTOR's
inventory, and in transit to the DISTRIBUTOR on the effective
date of the decrease. Price protection will also apply to all
Products returned to DISTRIBUTOR by its customers within
5
sixty (60) days of the effective date. In order to claim such
credit, DISTRIBUTOR must submit to the SUPPLIER, within sixty
(60) days following the effective date of such price decrease
or the date DISTRIBUTOR actually receives notice thereof,
whichever occurs later, a report of the Products subject to
the price adjustments described in this Subsection. All
Products shipped after the effective date of any price
decrease shall be shipped and invoiced at the price in effect
at the time of shipment. SUPPLIER shall furnish appropriate
documentation listing part numbers, affected old cost, new
cost, etc.
5.3 SUPPLIER'S Representation. SUPPLIER represents and warrants
that the practices and policies, including any prices or
discounts extended to DISTRIBUTOR in connection with the
Products, comply with all applicable laws and are not, and
will not be, less favorable than those extended to other
purchasers of similar quantities of Products from SUPPLIER for
resale or other distribution.
5.4 F.O.B. All prices are F.O.B. SUPPLIER's domestic shipping
facility.
5.5 Sales Taxes, Export and Other Charges. DISTRIBUTOR shall be
responsible for any and all applicable sales or use taxes
pertaining to its purchase of the Products, and, if Products
are to be delivered by Supplier to points outside the domestic
United States, the cost of export packing, export duties,
licenses, and fees, if included as a separate item on the
invoices sent by SUPPLIER to DISTRIBUTOR.
5.6 Risk of Loss. DISTRIBUTOR shall assume all risk of loss and
pay all costs of insurance for the Products upon SUPPLIER's
delivery thereof to a common carrier.
6. Terms of Payment. SUPPLIER shall invoice DISTRIBUTOR upon
shipment of each order. Such invoices shall be due and payable by
DISTRIBUTOR within thirty (30) days following
DISTRIBUTOR's acceptance of the Products or DISTRIBUTOR's receipt of
the invoice, whichever is later. DISTRIBUTOR shall be entitled to a
prompt payment discount of 1% if the invoice is paid within 10 days.
7. Return of Product.
7.1 Quarterly Rotation. Within three (3) months following each
quarterly period of this Agreement determined as of the
commencement date of this Agreement, ("Contract Quarter"),
DISTRIBUTOR may return to SUPPLIER, for credit, a quantity of
Products the value of which shall not exceed 6% of the net sales
dollars invoiced by SUPPLIER to DISTRIBUTOR for all Products
purchased by DISTRIBUTOR during the
6
preceding Contract Quarter. Credit issued for such returned
Products shall equal the price paid by DISTRIBUTOR, less any
prior credits. DISTRIBUTOR may make such returns from one or
more stocking locations. The foregoing return privilege shall
be subject to the following:
7.1.1 The Products must be returned in their original unopened
packaging where feasible, or if not feasible, must
be free of damage and be in merchantable condition.
SUPPLIER agrees to furnish packaging materials when
requested by DISTRIBUTOR;
7.1.2 Prior to returning any Products, DISTRIBUTOR must obtain
a Return
Authorization from SUPPLIER, which shall be given to
DISTRIBUTOR within thirty (30) days of request by DISTRIBUTOR;
and
7.1.3 All Products returned under this Subsection 7.1 shall be
shipped F.O.B. SUPPLIER's domestic facility with
freight and shipping charges prepaid by DISTRIBUTOR.
7.2 New Products. For purposes hereof, the term "New Products"
shall mean any and all Products (i) ordered by DISTRIBUTOR
under its initial stocking order (i.e., ordered within ninety
(90) days of the date of this Agreement) or (ii) added to the
Products listed in Exhibit A and ordered within ninety (90)
days of the date of such addition.
8. Product Changes.
8.1 Discontinuance and Obsolescence. SUPPLIER reserves the right
to discontinue the manufacture or sale of, or otherwise render
or treat as obsolete, any or all of the Products covered by
this Agreement upon at least ninety (90) days prior written
notice to DISTRIBUTOR. DISTRIBUTOR may, in its discretion,
within sixty (60) days following receipt of such notice,
notify SUPPLIER in writing of its intention to return any or
all Products so discontinued or rendered obsolete which remain
in its inventory and shall receive a credit for such Products
equal to the net price paid by DISTRIBUTOR for the same,
provided that said Products are returned within sixty (60)
days of the date of DISTRIBUTOR's receipt of SUPPLIER's Return
Material Authorization, which RMA shall be promptly issued by
SUPPLIER. SUPPLIER shall pay all freight and shipping charges
in connection with any such
7
returns. Returns of Products under this Subsection 8.1 shall
not be counted as "stock rotation" for purposes of computing
the amount of Products returnable by DISTRIBUTION under
Subsection 7.l. Supplier shall promptly notify distributor of
any products that are newly designated as obsolete. Products
that are removed from standard price lists will be considered
as obsolete.
8.2 Modification of Products. SUPPLIER shall give DISTRIBUTOR at
least ninety (90) days prior written notice of all engineering
modifications that will affect Products in DISTRIBUTOR's
inventory if such changes affect form, fit, or function, or if
the modifications will preclude or materially limit the
saleability of DISTRIBUTOR's affected inventory of Products
once the engineering modifications are implemented. SUPPLIER
shall work with DISTRIBUTOR to move the affected inventory
through resale or repurchase for 90 days following such
notification. If, after the above efforts, affected Product
still remains in DISTRIBUTOR's inventory, SUPPLIER agrees to
replace it with upgraded Products within one hundred twenty
(120) days of the official public announcement of such
modification or SUPPLIER's first shipment of the modified
Product, whichever occurs first. SUPPLIER shall pay all
freight and shipping charges in connection with any such
returns or replacements. Returns of Products under this
Subsection 8.2 shall not be counted as "stock rotation" for
purposes of computing the amount of Products returnable by
DISTRIBUTOR under Subsection 7. 1.
8.3 Introduction of New Products. SUPPLIER shall give
DISTRIBUTOR at least ninety (90) days prior written notice of
the introduction of any New Products that preclude or
materially limit DISTRIBUTOR from selling any Products in its
inventory, and shall work with DISTRIBUTOR to move the
affected inventory through resale or repurchase for 90 days,
following such notification. If, after the above efforts,
affected Products still remain in DISTRIBUTOR's inventory,
SUPPLIER agrees to replace them with the New Products within
one hundred twenty (120) days of the official public
announcement of such New Products or SUPPLIER's first shipment
of the New Products, whichever occurs first. Returns of
Products under this Subsection 8.3 shall not be counted as
"stock rotation" for purposes of computing the amount of
Products returnable by DISTRIBUTOR under Subsection 7.1.
8.4 Return Material Authorization. A Return Material
Authorization shall be issued by SUPPLIER within thirty (30)
days of any request for the same by DISTRIBUTOR when required
in connection with any return request under this Agreement.
9. Warranty; Compliance With Laws.
9.1 Standard Warranty. The Products shall be covered by
SUPPLIER's standard warranty terms and provisions, copies of
which are annexed to this Agreement as Exhibit B; provided,
however, that the warranty coverage shall be no less than the
following: (i) the warranty period set forth therein shall run
for at least six (6) months following DISTRIBUTOR's shipment
of any Product to
8
its customer or one (1) year following Supplier's shipment to
Distributor, whichever is later.
(ii) SUPPLIER shall warrant the Product against defects in
material and workmanship under normal use and service and shall
repair or replace at its cost any defective Product (or issue a
credit or refund, as the case may be, based on the purchase
price paid therefor; and (iv) SUPPLIER shall pay (or refund the
amount of) all freight and shipping charges for any defective
Product returned.
Distributor shall make no warranties or representations with
respect to any product without the prior written consent of
Supplier. Distributor shall indemnify and defend Supplier and
hold harmless from and against any and all claims, losses,
liabilities, suits, actions, demands, damages, costs and other
expenses arising from any such warranty and representations by
distributor that go beyond the normal warranty of the Supplier.
9.2 Compliance With Laws. Notwithstanding anything to the
contrary contained in SUPPLIER's standard warranty terms and
provisions or elsewhere in this Agreement, SUPPLIER shall
indemnify DISTRIBUTOR against, and hold it harmless from,
any cost, loss, damage or liability (including reasonable
attorney's fees) arising from or related to the failure of
the Products, as manufactured and sold to DISTRIBUTOR, to
fully comply with all applicable laws, standards, codes,
specifications and regulations or the failure of the
Products to be suitable thereunder for resale or other
distribution by DISTRIBUTOR as contemplated by this
Agreement. The warranty and indemnification provisions of
this Agreement shall survive its termination.
10. Credits. In the event DISTRIBUTOR is entitled to a credit from
SUPPLIER hereunder, and the amount of such credit exceeds
DISTRIBUTOR's obligation to SUPPLIER at the time, SUPPLIER shall
forthwith pay the amount of such excess to DISTRIBUTOR within
forty-five (45) days unless the distributor's obligation exceeds
the credit during the 45 day period.
11. Special Purchases. SUPPLIER and DISTRIBUTOR may at any time
during the term of this Agreement enter into separate agreements
for the special purchase of other Products, including nonstandard
Products and Products in greater quantities than those set forth
in SUPPLIER's then current Published Price List, and such
agreements shall be subject to all terms and conditions hereof
unless inconsistent with the terms of such special agreements or
unless otherwise agreed.
12. Cooperative Advertising. To assist DISTRIBUTOR in advertising
and promoting the Products, SUPPLIER shall accrue into a special
advertising fund 1/2 of one percent of the net sales dollars
invoiced to DISTRIBUTOR each month. An initial fund of $
shall be established by SUPPLIER for use by the DISTRIBUTOR
during the first year of this Agreement. Amounts in such fund
shall be used by DISTRIBUTOR in connection with advertising and
other promotional efforts approved by both DISTRIBUTOR and
SUPPLIER.
9
13. Term and Termination.
13.1 Term. The initial term of this Agreement is for one (1)
year commencing on march 1, 2000, This Agreement, thereafter,
shall automatically renew and extend annually for a one (1)
year term unless either Party has given the other at least
sixty (60) days prior to the end of the term written notice of
its intention not to renew the Agreement.
13.2 Termination for Convenience. Either SUPPLIER or
DISTRIBUTOR may at any time terminate this Agreement without cause
and for its convenience by giving ninety (90) days prior written
notice to the other. Both SUPPLIER and DISTRIBUTOR represent that
they have considered the making of expenditures in preparing to
perform under this Agreement, as well as the possible losses which
might result in the event of any termination of the Agreement. In
that regard, both parties acknowledge that neither party shall in
any way be liable to the other for any loss, expense, or damage
(including special, consequential, or incidental damages) by
reason 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 solely to the
Products or services of such other party.
13.3. Events of Default. Any of the following shall constitute a
default under this Agreement:
13.3.1 DISTRIBUTOR's or SUPPLIER's failure to perform or
observe any of its obligations hereunder for a period of
sixty (60) days following written notice thereof from the
other-, or if the breach is of such a nature that it
could not reasonably be cured within such sixty (60) day
period, DISTRIBUTOR's or SUPPLIER's failure within said
sixty
(60) days to commence to cure the breach and, thereafter,
proceed with due diligence
to cure it; or
13.3.2 The assignment by DISTRIBUTOR or SUPPLIER of its
business for the benefit of creditors, or the filing of
a petition by DISTRIBUTOR or SUPPLIER 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 (60) days, or the
appointment of a receiver or similar officer to take
charge of DISTRIBUTOR's or SUPPLIER's property, or any
other act indicative of bankruptcy or insolvency.
13.4. Remedies Upon Default. In the event of any default set
forth in Subsection 13.3 above, the
non-defaulting party may, at its option:
13.4.1 Proceed by any lawful means to enforce performance
of this Agreement and to recover damages for a breach
thereof (and the breaching party agrees to bear the
other's costs and expenses, including reasonable
attorney's fees incurred in any judicial action to
enforce such performance or recover such damages if the
aggrieved party is determined to be entitled to such
relief in such action;
10
13.4.2 Terminate this Agreement for cause by written notice and
proceed by any lawful means to recover damages for breach
thereof; or
13.4.3 Avail itself of any other lawful remedy available under
law or equity.
The rights and remedies under Subsection 13.4.1, 13.4.2, and
13.4.3 above are intended to be cumulative and not exclusive, so
that the non-defaulting party can elect to pursue any one or more
of the same.
13.5 Return of Inventory.
13.5.1 In the event SUPPLIER terminates this Agreement without
cause or elects not to renew the same, or DISTRIBUTOR
terminates this Agreement for cause, SUPPLIER shall
repurchase from DISTRIBUTOR any and all unsold Products
designated by DISTRIBUTOR from its inventory at the price
paid therefor by DISTRIBUTOR, less any prior credits
granted by SUPPLIER on such Products. SUPPLIER shall pay
all freight and shipping charges in connection with such
repurchases.
13.5.2 In the event DISTRIBUTOR terminates this Agreement
without cause or elects not to renew the same or supplier
terminates with cause, SUPPLIER shall repurchase from
DISTRIBUTOR any and all unsold Products designated by
DISTRIBUTOR from its inventory at the same price as set
forth in Subsection 13.5.1 above. A 25 percent handling
charge may be deducted by SUPPLIER from the purchase price
to be paid to DISTRIBUTOR for all Products returned in
saleable condition in opened or non-original packaging.
DISTRIBUTOR shall pay all freight and Shipping charges in
connection with such repurchases.
13.5.3 Notwithstanding the foregoing, SUPPLIER shall be required
to accept only those Products which are in their original
packaging or, where not in such packaging, are undamaged
and in saleable or merchantable condition after testing
and inspection by SUPPLIER.
13.6 Outstanding Order. In the event of any termination, SUPPLIER
shall, if requested to do so by DISTRIBUTOR, honor any open
DISTRIBUTOR purchase order then outstanding.
13.7 Release. No termination of this Agreement shall affect any
obligation of either party to pay amounts due to the other
hereunder and all such payments shall be made when due.
11
14. Indemnification: Insurance.
14.1 Indemnification. SUPPLIER shall indemnify, defend and
otherwise hold harmless DISTRIBUTOR, its affiliates and its
customers, and each of them, from all cost, loss, damage,
liability, or expenses of whatsoever nature, including
attorney's fees, arising from or in any way connected with
any proceeding (legal or equitable) or claim brought or
asserted against
DISTRIBUTOR, its affiliates or its customers, and each of
them, arising from or in any way connected with the
manufacture, sale, possession or use, including
demonstration or display or warranty, of Products purchased
under this Agreement by DISTRIBUTOR or a customer of
DISTRIBUTOR, based on an allegation that the Products, or
any part thereof, or their distribution or use infringe any
patent, copyright, trademark, trade secret, or violation of
the Semiconductor Chip Protection Act, or any similar
legislation now or hereafter enacted, or like or similar
claim, if DISTRIBUTOR promptly notifies SUPPLIER of any such
proceeding or claim after it becomes known to DISTRIBUTOR
and DISTRIBUTOR provides all the assistance and cooperation
to SUPPLIER that is reasonably requested. SUPPLIER shall
not be liable to DISTRIBUTOR, its affiliates or its
customers under any provision of this Subsection 14.1 to the
extent that any claim is based upon (i) a use for which the
Product or part was not designated, or (ii) an alteration of
the Product or part, which alteration has caused the
infringement action.
15. Trademarks: Trade Names. This Agreement shall not create,
and SUPPLIER shall have no right in, or to the use of, any
trademark, trade name, logo, service mark or other mark,
identification or name of DISTRIBUTOR. DISTRIBUTOR
recognizes SUPPLIER's ownership of, and right to use,
certain trademarks, trade names, logos and other marks, and
names and acknowledges that, except as hereinafter set
forth, DISTRIBUTOR has no right in, or to use, any thereof.
Notwithstanding the foregoing, DISTRIBUTOR is hereby granted
a non-exclusive right to use SUPPLIER's trademarks, trade
names, logos and other marks and names for the purposes of
identifying itself to the public as an authorized
distributor of the Products and for advertising and
otherwise promoting the resale, lease or servicing of any
Products purchased under this Agreement.
16. Confidential Information. SUPPLIER, SUPPLIER's authorized
representatives and DISTRIBUTOR shall each receive and maintain
in confidence any and 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, customer information and resale
reports), ("Confidential Information"), which is expressly
designated and conspicuously marked confidential (except and to
the extent that disclosure of any Confidential Information is (i)
required by any law or
governmental regulation or the decree of a court having competent
jurisdiction or (ii) enters into or exists in the public domain
without the act of the party obligated to maintain such
confidentiality hereunder). Without limiting the foregoing, all
books, documents, records and other material and
12
information made known to SUPPLIER or SUPPLIER's authorized
representatives by DISTRIBUTOR pursuant to Subsection 2.4 of this
Agreement are hereby designated as confidential. This Section 16
shall survive termination or expiration of this Agreement -,'or a
period of two (2) years.
17. General.
17.01 Entire Agreement. This Agreement supersedes all prior
communications or understandings between DISTRIBUTOR 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,
solicitation or other communication from one party to the
other, the terms of this Agreement shall be controlling.
17.02 Amendment. This Agreement cannot be changed, modified or
amended unless such change, modification, or amendment is in
writing and executed by the party against which the
enforcement of such change, modification or amendment is
sought.
17.03 Governing Law. This Agreement is made in, governed by, and
shall be construed solely in accordance with, the internal
laws of the State of Florida.
17.04 Authority. Both parties represent and warrant to each
other that they have the right and lawful authority to enter
into this Agreement for the purposes herein and that there
are no other outstanding agreements or obligations
inconsistent with the terms and provisions hereof.
17.05 Paragraph Headings. Paragraph headings and numbers have
been inserted for convenience of reference only, and if
there shall be any conflict between any such headings and
numbers and the text of this Agreement, the text shall
control.
17.06 Waiver. Waiver by either party of any term or condition of
this Agreement or any breach shall not constitute a waiver
of any other term or condition or breach of this Agreement.
17.07 Notices. Notices and other communications by either party
under this Agreement shall be deemed given when delivered by
hand or deposited in the United States mail as certified
mail, postage prepaid, addressed to the chief executive
officer of the other party at its then principal place of
business as follows:
13
If to SUPPLIER:
Applied Data Systems, Inc.
9140 Guilford Rd.
Columbia, MD 21046
If to DISTRIBUTOR:
Reptron Electronics, Inc
14401 McCormick Drive
Tampa, FL 33626
17.09 Invalidity of Provisions. In the event that any term or
provision of this Agreement shall be deemed by a court of
competent jurisdiction to be overly broad in scope, duration or
area of applicability, the court considering the same shall
have the power and hereby is authorized and directed to modify
such term or provision to limit such scope, duration or area,
or all of them, so that such term or provision is no longer
overly broad and to enforce the same as so limited. Subject to
the foregoing sentence, in the event any provision of this
Agreement shall be held to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall attach only
to such provision and shall not affect or render invalid or
unenforceable any other provision of this Agreement.
17.10 Consent Not Unreasonably Withheld.' Whenever any consent,
action or authorization is required or requested of SUPPLIER
hereunder, such consent, action or authorization shall not be
unreasonably withheld or delayed.
17.11 Force Majeure. Nonperformance under this Agreement shall be
excused, and neither party shall be liable for any loss, damage,
penalty or expense, to the extent that such performance is
rendered impossible or delayed by fire, flood, act of God or the
public enemy, act of the Government, labor difficulties, riot,
inability to obtain materials or any other cause where the
failure to perform or delay is beyond the reasonable control of
the nonperforming party and without the negligence of such
party.
17.12 Relationship of Parties, The relationship between the parties
hereto shall be that of independent contractors, each being in
full control of its own business. Under no
14
circumstances shall either party have the right or authority,
expressed or implied, to act or
make any commitment on behalf of or bind the other or represent
the other as its agent in any way. Nothing contained in this
Agreement shall be construed as creating a joint venture or
partnership between SUPPLIER and DISTRIBUTOR.
AGREED TO THIS ACCEPTED THIS
1st day of March, 2000 3rd day of April, 2000
Jack Killoren Robert Olsen
1440 McCormick Drive, Tampa, FL, 33626 9140 Guilford Rd., Columbia,
MD 21046
By: /s/ Jack Killoren By: /s/ Robert Olsen
VP / marketing Operations President
15
Exhibit 10.2
TYCO ELECTRONICS CORPORATION
RELAY DISTRIBUTOR CONTRACT
THIS AGREEMENT (hereinafter referred to as "Agreement" or "Contract")
effective the 27th day of April, 2000 between Tyco Electronics
Corporation's United States Sales and Marketing Division, a Pennsylvania
corporation, with offices in Middletown, Pennsylvania ("Tyco"), and
Reptron Electronics Inc with offices in Tampa, FL, a corporation,
limited liability company, partnership or sole proprietorship (circle
correct entity), incorporated or domiciled in the state of FL
("Distributor').
WHEREAS, Tyco desires to create additional sales of Tyco's Potter &
Brumfield (P&B) relay product line within the United States through the
use of qualified non-exclusive distributors; and
WHEREAS, Distributor is, in the regular course of its business, a
distributor in the electronics industry and, as such, purchases and
stocks most of its products, including P&B Products from Tyco,
predominantly for resale to industrial electronic OEM customers; and
WHEREAS, Distributor desires to be a distributor of Tyco and to
aggressively promote P& B Products within the United States, a
geographic area of primary responsibility; and
WHEREAS, Distributor believes it has sufficient personnel, adequate
facilities, and a realistic distributor business plan and is prepared to
inventory P&B Products so that it can effectively promote the sale of
P&B Products within the United States, its geographic area of primary
responsible.
NOW, THEREFORE, in consideration of the mutual undertakings set forth
below, the parties agree:
1. Definitions
The term "Potter & Brumfield Products," "P&B Products," "Product" or
"Products" as used herein shall mean the items listed or described on
Exhibit "A" hereto and any other product, which Tyco agrees to sell to
Distributor from time to time.
2. Appointment
a) Tyco hereby appoints Distributor as a non-exclusive Relay
Distributor and Distributor accepts such appointment for each location
described on the attached Exhibit "B" ("Authorized Location(s)") for the
sale and distribution of those products listed on Exhibit "A" ("Relay
Products") and such other products as Tyco may agree to sell to
Distributor from time to time. Neither party may add Authorized
Locations without the prior written consent of the other. Distributor
will not sell P&B Products or access the Tyco's computerized information
system (the "System") out of any location that is not an Authorized
Location. Except as approved in writing by an authorized executive of
Tyco, Distributor will not knowingly resell P&B Products to or for
customers located outside of the United States.
(b) Each Authorized Location will service its geographic area of
primary responsibility (the "GAPR"). Distributor understands that its
performance will be judged solely on sales within such GAPR. However,
nothing in this Contract will prevent an Authorized Location from
selling to a customer located outside such Authorized Location's GAPR.
(c) Distributor's appointment as an Relay Distributor will be non-
exclusive and such appointment does not constitute a grant of any
specific territory, geographical area, or particular market. Tyco
reserves the right to appoint other authorized distributors and
resellers, and to sell to anyone at any time without notice or liability
to Distributor.
Relay Contract-2000.doc Page 1
10-Mar-2000
2. Term.
The term of this Contract will be one (1) year from the above effective
date, unless terminated earlier pursuant to any of its provisions. This
Contract will continue in full force and effect thereafter until
terminated by either party pursuant to any of its provisions.
3. Special Responsibilities of the Distributor.
3.1
General.Distributoracknowledgesthatithasspecialresponsibilitiesarisingou
tofits designation as a Relay Distributor, including, but not limited
to:
(a) Distributor agrees that each Authorized Location will actively
promote and develop business for P&B Products and will maintain an
inside and/or outside sales force of sufficient size to effectively do
so.
(b) Distributor agrees to obtain Tyco's prior written approval before
using any catalog copy or illustration or releasing any advertising or
news item for publication which displays the name or any of the
trademarks of P&B or Tyco, or illustrates or lists P&B Products, or
otherwise refers to Tyco and/or its relationship with Distributor. If
Tyco grants such permission, Distributor will use such material
consistent with any requirements set forth in this Contract and Tyco's
written approval.
(c) Distributor agrees that it will make a commercially reasonable
effort to sell P&B Products on the Returnable Products List in
quantities less than Tyco's standard package sizes in order to service
customers.
3.2 Reports. Distributor further agrees to furnish an annual business
plan, and such periodic inventory status reports and other sales reports
as may be reasonably requested by Tyco from time to time.
3.3 Point-of-Sale Reports.
(a) As a material part of the consideration for this Contract,
Distributor agrees to provide Tyco with monthly point-of-sale reports
for each Authorized Location, which will be used by Tyco primarily to
calculate incentive compensation for Tyco's sales personnel.
Distributor will submit its monthly point-of-sale report no later than
the fifteenth (1 5th) day of the month following the month under report
and in accordance with such procedures as Tyco may establish from time
to time. A copy of the current Tyco point-of-sale report procedure is
attached as Exhibit C. Tyco will provide Distributor with a copy of any
revised procedure not less than ninety (90) days prior to the effective
date of the new procedure.
(b) Distributor agrees to ensure that the point-of-sale information is
in a format that will allow the reports to be processed by Tyco.
(1) Distributor's obligation will not be met until complete, properly
formatted point-of-sale reports have been received and processed by
Tyco, regardless of whether initial reports submitted by Distributor
cannot be processed because they are incomplete, improperly formatted,
lost, damaged or stolen. Distributor will retain each point-of-sale
report for at least six (6) months after the date Distributor first
provides Tyco with a complete, properly formatted copy of such report.
Tyco agrees to reimburse Distributor for Distributor's out of-pocket
expenses incurred in retransmitting point-of sale reports that are not
received or processed solely as a result of Tyco's fault.
Relay Contract-2000.doc Page 2
10-Mar-2000
(2) Distributor agrees to keep Tyco current on all additions or changes
to Distributor's customer account numbers and other customer information
necessary for the processing of the point-of-sale reports.
(c) In the event Distributor fails for any reason to forward such a
report for two (2) consecutive months, Tyco will have the option, in
addition to any other rights Tyco may have as a result of such failure,
to immediately cease all bookings and shipments for or to Distributor
until such time as Distributor supplies Tyco with complete, properly
formatted point-of-sale reports for the missing months.
(d) All point-of-sale reports will be furnished by Distributor at
Distributor's own expense. These reports, regardless of their form,
will become the property of Tyco, except that Tyco may, upon request,
return any computer tapes Distributor has used to furnish the required
point-of-sale reports to Tyco.
4. Inventory, Stocking and Minimum Annual Sales Requirements.
4.1 Minimum Annual Sales. Each Authorized Location will sell the
dollar amount of P&B Products to customers within its GAPR during each
calendar year as set forth in the current Business Plan. For purposes
of calculating each Authorized Location's sales, the following criteria
will be used:
(a) P&B Products and quantities sold (less P&B Products and quantities
returned) and the customer's location will be based on the point-of-sale
reports provided to Tyco by Distributor.
(b) The price for P&B Products sold will be the actual resale price
based on the point-of-sale reports provided to Tyco by Distributor.
(c) Only sales to OEMs and other end users will be used to calculate
the minimum annual sales requirement. Sales to distributors and other
resellers, as determined by Tyco, will not be used to calculate the
minimal annual sales requirement.
4.2 Initial Purchase.
The initial purchase for Distributor will be a mixture of various P&B
Products, to be mutually agreed upon by the parties.
4.3 Stocking. Distributor will continue to purchase for stock, and
Tyco will continue to sell to Distributor (unless Tyco is prevented from
doing so by conditions beyond its control) such quantities of P&B
Products as the Distributor reasonably requires for the proper servicing
of its customers. The minimum permissible inventory level will be one
sixth of Distributor's purchases of P&B Products during the previous
twelve months. Distributor may not maintain any inventory at any
location that is not an Authorized Location or an Authorized Stocking
Location.
5. Inspections. Authorized representatives of Tyco will have the right
of reasonable inspection during normal business hours of Distributor's
stock of P&B Products, as well as Distributor's books and records
supporting or relating to point-of-sale or other reports or information
to be submitted by Distributor to Tyco pursuant to this Contract.
Distributor agrees that such inspections will be performed solely at
Tyco's option and expense, but not more than twice each calendar year
for each Authorized Location. Distributor will take such steps as may
be necessary to remedy any violations of the Contract discovered during
such inspections within thirty (30) days after notice of any violations.
Relay Contract-2000.doc Page 3
10-Mar-2000
6. Prices
6.1 Standard Prices and Terms of Sale. Except as otherwise provided in
this Section:
(a) Each Distributor order will be governed by the standard prices,
minimum orders, minimum line-item quantities, discounts, terms of
payment and other administrative requirements (hereinafter "Terms") as
set forth on the System or in the terms sheet in effect at the time that
order is shipped, including orders with shipments scheduled for future
dates.
(b) All Terms are subject to change by Tyco upon thirty (30) days prior
written notice.
6.2 Price Protection.
(a) Orders. No price increase will apply to any Distributor purchase
order with Tyco:
(1) which was received by Tyco prior to the date of the notification;
or
(2) which was received by Tyco between the date of notification and the
effective date of the increase and which is scheduled for delivery
within ninety (90) days from the effective date of such notice.
If, after the effective date of any such price increase, Distributor
makes any addition to or other change in a purchase order that would
otherwise be priced at the old price, with the exception of an
acceleration of scheduled deliveries only, that purchase order will be
priced at the new price. A reduction in the quantity ordered is
permitted, but is subject to rebelling to reflect the resulting change
in columnar pricing.
(b) Inventory. In the event of an Tyco general price decrease as to
one or more P&B Products, Tyco shall honor any corresponding credit
requested by Distributor for affected P&B Products in Distributor's
inventory which are covered by Distributor invoices dated within the
eighteen (1 8) month period immediately preceding the effective date of
the decrease. No credits for P&B Products on Distributor's shelf will
be given under any other circumstances for a price decrease.
Additionally, Tyco will not be required to honor any requested credit
unless such request: (a) is accompanied by satisfactory proof of
purchase and on-the-shelf inventory, and (b) is submitted through Tyco's
authorized sales representative so that inventory on the Distributor's
shelf can be confirmed. Credit requests will be governed by the time
limit and details on the notice issued by Tyco at the price adjustment
time. Tyco will promptly issue all credits based on a price determined
in accordance with the rules set forth in Section 9.5 after receipt and
verification of all required documentation.
6.3 Pricing Packages. Prices other than the standard prices described
on the System may be available through meeting competition requests, the
ship-and-debit program and other programs.
6.4 Rebills. In the event that Distributor decreases the total
quantity of any P&B Product scheduled for shipment in a scheduled
purchase order (for any reason other than Tyco's inability to supply the
total quantity scheduled for shipment) and that decrease alters the
appropriate columnar price for the revised total quantity, Tyco reserves
the right to reprice and rebill Distributor for all such P&B Products
shipped under the order at the price for the revised quantities.
Relay Contract-2000.doc Page 4
10-Mar-2000
6.5 Distributor's Resale Prices. Suggested resale prices are, in fact,
merely "suggested" resale prices and do not represent a policy of TYCO.
DISTRIBUTOR SHALL RESELL P&B PRODUCTS AT PRICES DETERMINED SOLELY BY
DISTRIBUTOR.
7. Orders.
7.1 Placing Orders. Distributor may place orders with Tyco via: EDI,
electronic mail, facsimile transmission, telephone, or mail, and all
orders are subject to acceptance by Tyco at its Pennsylvania facilities.
7.2 Shipments. Orders that are scheduled are also subject to the Terms
per each designated shipment and may not be scheduled for more than a
twelve (12) month period. Material may not be added to an order after
shipment has been made.
7.3 Freight. All shipments by Tyco to Distributor are made F.O.B.
shipping point.
7.4 Drop Shipping, Distributor agrees that drop shipments of P&B
Products from Tyco directly to a end user location is not in keeping
with the goal of establishing and maintaining an efficient distribution
system, and that it is Distributor's intent to provide local stocking
availability and promotion of P&B Products to end users. Drop shipping
is subject to the following rules:
(a) Shipment must be to support customer with a production "line down"
or other emergency situation.
(b) Distributor must specify the express freight carrier to be used by
Tyco. Distributor will
pay all transportation costs.
(c) Tyco reserves the right to apply any package minimum or special
handling charges
which may arise from the drop shipment.
(d) Delivery is restricted to an end user location within the
Distributor's GAPR.
7.5 Credit. Distributor must maintain a satisfactory credit standing
for continuance of its appointment. Distributor will, upon request by
Tyco, provide sufficient current financial data for Tyco to review in
making. a decision whether or not to maintain a certain line-of-credit.
For credit considerations, Tyco reserves the right to refuse to accept
new orders, to place existing orders on hold, or to require a COD
payment or other security satisfactory to Tyco prior to shipment.
7.6 Payment. Distributor will issue payments thirty (30) days from the
date of receipt of Tyco's invoices. Payment shall be in United States
dollars, which is the official currency of this
Contract.
8. Advertising & Sales Promotion.
8.1 Sales Material. Tyco will make available to Distributor reasonable
quantities of product advertisements, samples and literature.
Additional quantities will be made available for a nominal charge.
Layouts and copy will be made available to Distributor upon request for
inclusion in its own catalogs.
8.2 Trade Show Material. Tyco regularly displays at national trade
shows. A limited amount of trade show material is available for loan to
Distributor for use at local trade shows.
Relay Contract-2000.doc Page 5
10-Mar-2000
8.3 Cooperative Advertising. -Tyco will make cooperative advertising
funds available to Distributor from time to time in accordance with its
then-current cooperative advertising program.
9. Returns
9.1 General Requirements. For purposes of return authorization, the
term "Tyco" will mean Tyco's Return Material and Credit Memorandum
Department. Unless otherwise stated in this Contract, all returns of
P&B Products must meet the following requirements:
(a) An invoice number or purchase order number must be provided at the
time the return is requested.
(b) A return material authorization ("RMA") number must be obtained from
Tyco at the time the return is requested. The RMA number is valid for
sixty (60) days from the date of issue. The RMA number must clearly
appear on the outside of each shipping carton or the P&B Products
contained within will not be accepted for credit and will be returned at
Distributor's expense.
(c) P&B Products must be returned with all freight and insurance costs
prepaid. Tyco will refuse all other shipments.
(d) P&B Products must be unused and in original, unopened, unmarked (by
Distributor) and unbroken P&B packages.
(e) P&B Products shipped to Distributor less than ninety (90) days
prior to the request for return cannot be returned.
(f) P&B Products shipped to Distributor more than eighteen (18) months
prior to the request for return cannot be returned.
(g) Return requests for P&B Products in amounts of less than the line
item minimum described in the Terms, as valued under Section 9.5, will
not be accepted under any circumstances. Any items which are received
by Tyco in amounts less than the line item minimum will be kept by Tyco
without any payment or credit being given to Distributor.
9.2 Distributor Convenience Returns.
(a) Tyco will issue credit and will not assess a restocking charge if
the P&B Product appears on the Returnable Products List ("RPL") either
at the time of purchase or at the time the return is requested and if
the requirements of Section 9.1 are met.
(b) Tyco will issue credit but will assess a 15% restocking charge if
the P&B Product appears on the RPL either at the time of purchase or at
the time the return is requested, and if all the requirements of Section
9.1 are met, except for Section 9.1 (a) and (d). Tyco will not issue
credit if the P&B Product appears on the RPL and if Distributor fails to
meet any other requirement of Section 9.1 unless Tyco and Distributor
are able to agree on a significant restocking charge.
(c) Tyco will not generally issue credit for P&B Product that does not
appear on the RPL either at the time of purchase or at the time the
return is requested. If Distributor requests a return of P&B Product
that does not so appear on the RPL, and if Tyco, in its sole option,
decides to accept return of such P&B Product, then credit will not be
issued unless Tyco and Distributor are able to agree on a significant
restocking charge.
Relay Contract-2000.doc
Page 6 10-Mar-2000
(d) The RPL is set forth on the System and may be changed by Tyco from
time to time without notice.
9.3 Error Returns. Tyco will issue credit, will not assess a
restocking charge, and will pay for reasonable freight costs (including
collect shipments via a carrier authorized by Tyco) for returns
resulting from Tyco's error, as determined by Tyco, if the following
requirements are met:
(a) All errors, except for defective P&B Products, must be reported to
Tyco within ninety (90)days after shipment by Tyco. Defective P&B
Products must be reported immediately after discovery.
(b) Error returns must meet the requirements of Section 9.1 (a) and
(b). However, P&B Product may only be used or packages opened to the
extent necessary to determine Tyco's error.
(c) All defective P&B Products must be returned. If Tyco's error is
alleged to be shipment of defective P&B Product, then samples may be
required by Tyco to verify the alleged defect before an error return
will be authorized.
Returns not meeting these requirements will be treated as a "Distributor
Convenience Return".
9.4 Discontinued Items. If Distributor does not want to keep a P&B
Product that has been discontinued by Tyco, then Distributor must return
the P&B Product for credit by the date specified in the notice. If the
requirements of Section 9.1 are met, except for Section 9.1 (e) then
Tyco will, With no restocking charge to Distributor, accept discontinued
P&B Product returned within ninety (90) days from the date of the
notice. Removal of a P&B Product from the RPL does not constitute
discontinuance of that P&B Product.
9.5 Amount of Credit.
(a) For all returns the amount of credit will be the actual price paid
by Distributor to Tyco as set forth in the relevant invoice, subject to
deductions for any price protection claims previously submitted by
Distributor. If the actual price paid cannot be determined by Tyco,
then, in addition to any restocking charges, credit will be issued at
the average piece price paid by Distributor for the total quantity of
the relevant part number shipped to Distributor during the previous
eighteen (1 8)-month period or, if applicable, shorter time period.
(b) Credit for authorized returns will be allowed only for the actual
quantities received by Tyco and which Tyco's records indicate were
purchased by Distributor through the Relay Distributor Program or other
authorized source. Debit memos taken by Distributor for returns made
but not reconciled by Tyco may be subject to rebelling for
discrepancies.
10. Termination.
10.1 Basic Provision. This Contract may be terminated at anytime, with
or without cause, by Tyco or by Distributor upon thirty (30) days' prior
written notice. Each party will have the right to so terminate this
Contract in whole or as to one or more Authorized Locations.
10.2 Additional Termination Rights of Tyco.
Relay Contract-2000.doc Page 7
10-Mar-2000
(a) Tyco will have the option, in its sole discretion, to immediately
terminate this Contract or to cancel any unfilled orders by written
notice to Distributor in the following circumstances:
(1) If Distributor is a corporation or limited liability company, in
the event of insolvency, bankruptcy, dissolution, acquisition,
consolidation, merger, or criminal indictment of Distributor, or in the
event of death, insanity, disability, withdrawal or criminal indictment
of any principal stockholder active in Distributor's business affairs.
(2) If Distributor does business as a sole proprietor or partnership,
in the event of insolvency, bankruptcy, death, insanity, disability, or
criminal indictment of the proprietor of Distributor or one of its
partners, or dissolution or acquisition of Distributor's partnership or
proprietorship.
(3) If Distributor makes any material written or oral statement or
representation that is false or misleading.
(b) Except as set forth above, Tyco will give Distributor written
notice if, at any time, Distributor fails to maintain a credit standing
satisfactory to Tyco, fails to meet and comply with the Distributor
performance criteria set forth in Sections 3 or 4 or otherwise commits a
material breach of this Contract. Any such notice will set forth the
nature of Distributor's failure in reasonable detail. Tyco will have
the right to immediately terminate this Contract if Distributor does not
cure such failure within thirty (30) days after such notice.
10.3 Additional Termination Rights of Distributor. Distributor shall
have the option, in its sole discretion, to terminate this Contract or
to cancel any unfilled orders immediately by written notice to Tyco in
the event of insolvency, bankruptcy, or dissolution of Tyco, or upon the
acquisition, consolidation or merger of Tyco into any company other than
Tyco, or any of Tyco's wholly-owned subsidiaries, divisions, or
affiliated companies.
10.4 Repurchase of Stock. If this Contract is terminated by either
party for any reason, whether with or without cause, Distributor may
return P&B Products in accordance with Section 9.2. Distributor will
permit Tyco to inspect all such P&B Products at Distributor's place of
business prior to the return. If any P&B Product does not qualify for
return in accordance with Section 9.2, then Tyco has the right to
repurchase such P&B Product. If Tyco exercises its right of repurchase,
then the price will be the amount of the credit as described in Section
9.5, and Tyco will pay all reasonable freight costs.
10.5 Distributor's Right to Sell After Termination. Following
termination of this Contract, Distributor will retain the right to sell
its inventory of P&B Products, provided that Distributor continues to
submit point-of-sale reports in accordance with the requirements of
Section 3.3, does not hold itself out as an authorized distributor of
P&B Products, and otherwise complies with Section 10.7 below.
10.6 Non-Liability, Neither party will be liable to the other for
damages, liabilities or obligations including but not limited to;
special, incidental, indirect or consequential damages, in any form
whatsoever, whether based on goodwill established by Distributor or
investments made by Distributor or otherwise, upon termination of this
Contract, except for continuing obligations of the parties expressly set
forth in this Contract, including, but not limited to, those described
in Sections 11 and 12.
Relay Contract-2000.doc Page 8
10-Mar-2000
10.7 Non-Use of Trademarks. Upon any termination of this Contract,
Distributor will remove and not use any signs containing any trademark
owned by Tyco or its affiliates, and Distributor will immediately
destroy all stationery, advertising matter and other printed matter in
its possession or under its control containing such trademarks.
Distributor will not at any time after such termination use or permit to
be used any such trademarks in any manner in connection with any
business conducted by Distributor or in which Distributor may have an
interest. Distributor will immediately take all appropriate steps to
remove and cancel its listings in telephone books, web sites and other
directories, and public records, or elsewhere which contain such
trademarks. Upon termination of this Contract, Distributor will return
all Tyco owned tooling, pricing information, catalogs, product
literature, promotional and advertising literature, samples, exhibits
and all other material or information furnished by Tyco, and Distributor
will cease to represent itself as an Relay Distributor for Tyco and P&B
Products.
10.8 Effect of Termination on Pending Orders. The termination of this
Contract will cancel, as of that date, all orders that have not been
shipped and neither party will be under any obligation to the other with
respect to orders so canceled. If Distributor has already accepted firm
purchase orders from bona fide customers corresponding to Distributor's
purchase orders and the P&B Products covered therein, which orders have
been received but not shipped by Tyco prior to the termination of this
Contract, then Tyco will ship such P&B Products under such purchase
orders; provided, however, that Tyco will not be obligated to ship such
P&B Products unless it has received adequate assurances of payment by
Distributor for such shipments and assurances that Distributor will
comply with Section 10.5. Distributor will provide Tyco, upon request,
with copies of related customer orders and such other information as may
be reasonably required by Tyco to verify to the satisfaction of Tyco
such firm orders from customers of Distributor. Also, Distributor will
not be relieved of any obligations for any unpaid balances for P&B
Products shipped hereunder prior to or after termination, or any other
unpaid balances.
11. Confidentiality.
(a) Distributor shall treat as confidential, such information including
but not limited to, the prices at which it purchases P&B Products, all
information from or relating to the System and all information relating
to any of the secrets, methods, or systems used by Tyco, or any
subsidiaries or affiliates in their business.
(b) The parties agree that all trade secrets, designs, inventions,
know-how and ideas and all other business, technical, customer and
financial information that one party obtains from the other party or its
affiliates is confidential information ("Confidential Information").
The parties understand and promise that it will forever hold and protect
in strict confidence on behalf of itself, its agents and its employees,
all Confidential Information derived from the other party or its
subsidiaries and affiliates participating in this Agreement. The
parties shall at the other party's request immediately return all
documents received from the other party during the duration of this
Agreement.
12. Warranty.
12.1 Standard Warranty. Subject to the limitations set forth in
Section 12.2 below, Distributor is hereby given and is authorized to
extend Tyco's Standard Warranty. The current Standard Warranty is
described in Exhibit D. Tyco may change its Standard Warranty at any
time by written notice to Distributor.
Relay Contract-2000.doc; Page 9
10-Mar-2000
12.2 Limitations. Distributor understands and agrees that Distributor
is authorized to extend the Standard Warranty only to its initial
customer, and only with respect to P&B Products Distributor has
purchased from Tyco pursuant to the Relay Distributor Program and this
Contract, or other source authorized by Tyco, and sold to its initial
customer within eighteen (1 8) months of Distributor's purchase of such
P&B Product from Tyco. Distributor agrees to report any warranty claim
to Tyco immediately after Distributor first becomes aware of such claim.
Distributor will be solely responsible for satisfactorily resolving any
warranty claim:
(a) that is not reported to Tyco immediately after Distributor first
becomes aware of such claim; or
(b) resulting from or relating to any warranty extended by Distributor
in excess of the Standard Warranty, unless Tyco has previously
authorized Distributor in writing to offer such extended warranty to
Distributor's customer; or
(c) if Distributor modifies any P&B Product, without specific prior
written approval from Tyco.
13. Names & Trademarks. Distributor may not use the names or
trademarks owned by Tyco or any of its subsidiaries or affiliates as
part of its firm, corporate, or business name, and will not use such
names or trademarks in any way except to designate the P&B Products
purchased from Tyco in accordance with this Contract.
14. Relationship. The relationship of the parties is that of
manufacturer and distributor, and neither party will hold itself out to
be a partner, joint venturer, agent, franchisee or representative of the
other party. Neither party will have any right to enter into contracts
or commitments in the name of, or on behalf of, the other or to bind the
other in any respect whatsoever.
15. Notice. Notice to the parties under this Contract as to
termination or other Contract revisions, will be sufficiently served if
it is in writing, mailed Certified Mail Return Receipt Requested, or
sent by express courier (such as Federal Express, Emery Express, or
Purolator Courier) to the following address:
TYCO: With copy to:
Tyco Electronics Corporation Tyco Electronics Corporation
Distribution Sales & Marketing Legal Department
Mail Stop 38-41 Mail Stop 140-042
2800 Fulling Mill Road 2901 Fulling Mill Road
Middletown, Pennsylvania 17057 Middletown, Pennsylvania 17057
Attention: Director of Distribution Attention: General Counsel
Distributor:
Reptron Electronics Inc
14401 McCormick Drive
Tampa, FL 33626-3021
Attention: Mr. Jack Killoren
Such notice will take effect as of the date of mailing, hand delivery,
or delivery by. express courier.
The above addresses may be changed with notice.
Relay Contract-2000.doc Page 10
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16. Assignment and Applicable Law. Neither this Contract nor any of
the rights or obligations of either party is assignable or transferable
directly or indirectly, in whole or in part, without the prior written
consent of the other party, but Tyco may assign this Contract in
connection with a transfer of all or any part of Tyco's business
operations to any subsidiary or any affiliate of its parent. This
Contract shall be interpreted and enforced in all respects under the
laws and the courts of the Commonwealth of Pennsylvania, without regard
to its principles of conflicts of law.
17. Miscellaneous.
17.1 Separability. In the event any one or more of the provisions, or
portions thereof, contained or referenced in this Contract is found to
be invalid, illegal or unenforceable, such circumstance will not affect
any other provision hereof and this Contract will continue in full force
and effect and be construed as if such provision, to the extent that it
is invalid, illegal or unenforceable, had never been contained herein.
17.2 Waiver. The failure of either party to enforce the provisions
hereof or to exercise the rights granted hereunder, or the agreement of
the parties to waive enforcement thereof, at any time or for any period
of time, will not constitute or be construed to be a waiver of any other
failure or breach of such provision or right, or any other provision or
right of this Contract, or of the right of such party thereafter to
enforce each and every such provision or right, nor will such failure or
agreement be deemed to be an amendment to this Contract.
17.3 Conflicting Terms. The parties agree that the terms and
conditions of this Contract will prevail and govern the parties'
relationship, notwithstanding contrary or additional terms in any
purchase order, sales acknowledgment, confirmation or any other document
issued by either party effecting the purchase and/or sale of P&B
Products.
17.4 Section Headings. The section headings are merely for convenience
of reference and will have no bearing on the interpretation of this
Contract.
17.5 Exhibits. All exhibits mentioned in this Agreement are attached
and incorporated by reference.
17.6 Indemnification. Tyco shall defend, at Tyco's expense, suits or
claims brought against Distributor for personal injury or property
damage caused by a defect in P&B Products, so long as timely written
notice of such suit or claim and control of the defense is given to
Tyco, Distributor gives reasonable cooperation and assistance to Tyco in
defending any such claims, and Distributor does not enter into any
settlement of a claim without Tyco's written consent, and Tyco shall
indemnify Distributor against any resulting judgment or the reasonable
costs of settlement of such claim or suit to the extent such loss or
damage is solely caused by or results from defective product
manufactured by Tyco. This indemnity shall not apply to any claim or
suit arising from: (1) P&B Products manufactured to a design supplied by
Distributor or its mediate or immediate customer; (2) P&B Products
modified by Distributor or customer; (3) a warranty not authorized by
Tyco; (4) any claim or suit resulting from the negligence of
Distributor, its agents, officers or employees or (5) if the P&B
Products are misused or there is a failure to follow Tyco's written
product instruction.
17.7 Force Majeure. Neither party to this Agreement shall be liable
for its failure to perform any of its obligations hereunder during any
period in which its performance is delayed by events beyond its
reasonable control, which events include, but are not limited to, fire,
flood, war, embargo, strike, riot, or the intervention of any
governmental authority; provided the party suffering such delay promptly
notifies the other party of the delay.
Relay Contract-2000.doc Page 11
10-Mar-2000
17.8 Entire Contract. This Contract constitutes the entire agreement
between the parties and supersedes all prior agreements between the
parties and their predecessors, relating to the sale or distribution of
P&B Products in the United States, whether written or oral or based on a
course of dealings. Except as expressly provided herein, no future
agreements or understandings in any way modifying or supplementing this
Contract will be binding on either party unless confirmed in writing and
signed by a duly authorized executive of both parties.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Contract to be signed by their duly authorized
representatives.
Tyco Electronics Corporation
United States Sales and Marketing Division
By:
Title:
Distributor
Reptron Electronics Inc/
By: /s/ Jack Killoren
Title VP - OPS
Relay Contract-2000.doc Page 12
10-Mar-2000
