Exhibit 10.30
SUPPLIER AGREEMENT
This Supplier Agreement is entered into as of December 27. 2002, by IEC
Electronics' Corp. with its principal place of business at Newark, NY, and the
Arrow CMS Distribution Group of Arrow Electronics, Inc. ("Arrow CMS") with its
principal place of business at 25 Hub Drive, Melville, New York 11747.3509.
The Customer and Arrow CMS hereby agree as follows:
1. PRINCIPAL BUSINESS TERMS
1.1 Loan and Security Agreement. Arrow CMS has developed a financing
program for certain of its customers with the participation of Suntrust Bank,
Atlanta (the "Bank"). Pursuant to such financing program, Arrow CMS has induced
the Bank to provide Customer with a loan. The terms and conditions of such loan
are set forth in a Loan and Security Agreement, as well as other related
documents (collectively, the "Loan Agreement"), between Customer and the Bank.
Customer understands and agrees that the effectiveness of such Loan Agreement,
and the closing of the loan are conditioned upon Customer's agreement to the
terms and conditions set forth in, and its execution of, this Supplier
Agreement.
1.2 Customer's Requirements. Arrow CMS agrees to sell to Customer and
Customer agrees to buy from Arrow CMS all of Customer's requirements for the
products for which Arrow CMS is, or may become during the term hereof, an
authorized distributor, other than products which Customer purchases from
another source at the express direction of its customer ("Customer's
Requirements"). Customer shall prepare and submit to Arrow CMS, at the end of
each calendar quarter, a certificate signed by, Customer's President certifying
Customer's compliance with this Section 1.2. Customer shall provide Arrow a
detailed breakdown of any material requirement offered by a supplier on the
approved vendor list for which Arrow is an authorized distributor, and customer
desires to place the order with a supplier other than Arrow, prior to Purchase
Order commitment. Arrow shall respond within 24 hours of receipt and will either
agree to meet the terms proposed or approve the Purchase Order placement with
the proposed supplier. Customer shall submit a monthly report detailing all
material dollars spent for Arrow CMS franchised parts to be provided by not
later than the first Friday following the end of the monthly period. The report
is to include; component cost, quantity, PO date and supplier confirming
delivery date for all transactions occurring during the preceding month.
1.3 Minimum Sales. Arrow CMS and Customer estimate that Customer's
Requirements will equal at least $6.8 million annually. Therefore, in addition
to the foregoing covenant regarding Customer's Requirements, Customer covenants
and agrees to make, for each period listed below; the following minimum level of
purchases from Arrow CMS, such purchases to be made by any of Customer's
locations, facilities or divisions worldwide. Any invoice not paid within its
terms, as reflected in Arrow CMS's records, will not be included for purposes of
achieving the applicable minimum level of sales. The following amounts' are "Net
Sales Billed", which means sales net of returns and discounts, as reflected in
Arrow CMS' internal records.
Minimum Level of Net Sales Billed ("Minimum Sales"):
For the 1st Quarter ending 3/28/03 $1,500,000
For the 2nd Quarter ending 6/27/03 $1,500,000
For the 3rd Quarter ending 9/26/03 $1,800,000
For the 4th Quarter ending 12/26/03 $2,000,000
Should Customer exceed its Minimum Sales in any given quarter, such excess
may be carried forward for up to three quarters for purposes of meeting Minimum
Sales in those quarters. Customer and Arrow agree to redefine 2004 minimum sales
levels no later than the end of Quarter 4 2003 and 2005 minimum sales (degree)
levels no later than the end of Quarter 4 2004. Customer purchases exceeding the
specified minimums, for any given quarter, shall not be governed by this
Supplier Agreement.
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1.4 Usual Business Relationship. It is not the intention of this Supplier
Agreement or of the financing program to modify the way in which Customer and
Arrow CMS have customarily done business. Except as expressly set forth herein,
the normal business relationship between Customer and Arrow CMS shall continue
substantially unchanged with respect to pricing, delivery, payment terms,
product availability and the like. Except as expressly set forth herein the
terms and conditions under which purchases and sales have usually been
transacted between Arrow CMS and Customer shall continue to govern purchases by
Customer from Arrow CMS during the term of this Supplier Agreement.
1.5 Credit Limits. In the event that Arrow impose a credit limitation upon
the customer which limits the customer's purchases to a specific dollar amount
outstanding and the customer has purchase requirements exceeding this credit
limit, then provided that Customer is not in default of any payment obligation
to Arrow, Customer may purchase from any other source at the discretion of the
Customer. Such purchases are not governed by this supplier agreement.
2. TERM
This Supplier Agreement shall begin as of the date first above written and
shall expire On December 27, 2005 unless extended in accordance with the terms
of this Supplier Agreement Any right of Customer to pre-pay the loan Or to
terminate the Loan Agreement shall not affect this Supplier agreement.
3. CUSTOMER'S COVENANTS, WARRANTIES AND REPRESENTATIONS
Customer hereby represen1s, warrants and covenants to Arrow CMS that it has
the right and power to enter into this Supplier Agreement and the Loan Agreement
and that any required consents to this Supplier Agreement or to the Loan
Agreement have been obtained, that neither the execution and delivery of the
Supplier Agreement nor of the Loan Agreement will result in a breach by Customer
or constitute a default by Customer under any agreement, instrument, or order to
which it is a party or by which it is bound, and that this Supplier Agreement,
the Loan Agreement and all other instruments required by either to be executed
and delivered are, or when delivered will be, legal and binding instruments
enforceable in accordance with their terms. The representations and warranties
made herein shall survive the execution and delivery of the Supplier Agreement
and the Loan Agreement.
4. DEFAULT AND REMEDIES
4.1 Customer's Default. Customer's failure to achieve Minimum Sales during
any period, as measured at the end of such period, throughout the term of this
Agreement shall be an event (degree) of default. An event of default shall also
occur if Customer shall breach any other term, warranty, representation or
covenant of this Supplier Agreement, or if Customer shall be in default of any
loan document evidencing a loan in excess of $500,000 including, without
limitation, any loan document entered into with Keltic Financial Partners, LP,
or if Customer shall become bankrupt, insolvent, or take steps leading to its
cessation as a going concern, and any such default shall Continue beyond thirty
(30) days after notice to Customer specifying the nature of the default. Any
default under the Loan Agreement constitutes a default under this Supplier
Agreement. Upon the occurrence of any event of default, or any event which with
notice or the passage of time, or both, may become an event of default, Arrow
CMS may, without incurring any liability to Customer, notify the Bank of such
event of default before notifying' Customer. Arrow CMS shall not have any
liability to Customer as a result of any action taken or not taken by the Bank,
01;' by Arrow CMS. with respect to the loan evidenced by the Loan Agreement.
4.2 Arrow CMS's Remedies. Upon Customer's default, Arrow CMS may
exercise any or all of the following remedies, which are cumulative and not
exclusive of any rights or remedies which Arrow CMS or the Bank, or any
successor of either, would otherwise have 'under any applicable agreement or
other document, at law, or in equity:
(i) Notify the Bank of Customer's default, and of the resulting
default under the Loan Agreement, thereby enabling the Bank to raise the
interest 1"ate to the default rate of interest,' and/or to declare the loan, the
note and all accrued interest thereon, and all other obligations of Customer
under the Loan Agreement, immediately due and payable;
(ii) Should the default be with respect to achievement of Minimum Sales for
any period, add the amount of the period's shortfall to the Minimum Sales for
the next period or periods; (iii) Should the default be with respect to
achievement of Minimum Sales for any period, extend the term of this Supplier
Agreement by one (1) calendar quarter for each period for which Minimum Sales
are not achieved; (iv) Modify Customer's credit limit Or payment terms with
Arrow CMS; and/or (v) Cease or limit the supply of products from Arrow CMS to
Customer.
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5. AUDIT
During the term of this Agreement and for one (1) year thereafter, after
the close of each calendar quarter and upon reasonable advance notice to
Customer; Arrow CMS (or such auditors as .Arrow CMS may select) shall have the
rig1'\t to examine, copy or make extracts from any and all books and records of
Customer and conduct other audit procedures relating to Customer's performance
under this Agreement, or regarding any matter affecting the subject matter of
this Agreement. Any such examination shall be conducted at Customer's offices
during normal business hours. Except that Customer shall not be required to
disclose information expressly protected by confidentiality agreements with
other parties.
6. CONFIDENTIALITY
It is understood and agreed that the existence and terms of this Supplier
Agreement, and of the Loan Agreement, are confidential, and no news release,
advertisement or public announcement; or denial or confirmation of the same,
concerning any part of the subject matter of this Supplier Agreement or of the
Loan Agreement shall be made by either party hereto without the prior written
consent of the other party in each instance. Each party agrees not to disclose
the existence or terms of this Supplier Agreement, or of the Loan Agreement, to
anyone in its organization other than those with a need to know, and only
provided that any such individual shall be bound by a similar obligation of
confidentiality. Further, the parties hereto acknowledge that, during the term
'hereof, they may become aware of confidential, secret or proprietary
information pertaining to the other party and its operations (including, without
limitation, information with respect to bidding, pricing, suppliers and
customers, or lists thereof, research, development and engineering, and internal
operations, inventory control, data processing, technical data, and other
procedures and systems) and that disclosure of such information would materially
and adversely affect the affected party. Each party hereto agrees to maintain
such confidentiality and secrecy and not to disclose any such information to any
person, firm or other entity, or to utilize the same in any manner or form,
except as may be expressly required or permitted by the terms and conditions of
this Supplier Agreement. Notwithstanding anything to the contrary, the
confidentiality provisions set forth in this Section 6 shall survive any
expiration or termination of this Agreement.
7. MISCELLANEOUS
7.1.1 Governing Law; Dispute Resolution. This Supplier Agreement shall in
all respects be governed by and construed in accordance with the laws of the
State of Georgia, excluding that body of laws known as conflict of laws. The
prevailing party in any legal action or proceeding to enforce this Supplier
Agreement shall be entitled to recover from the non-prevailing party its
reasonable attorneys' fees, and related costs and disbursements, incurred in
connection with such proceeding or the enforcement of this Supplier Agreement.
Both parties agree to waive trial by jury.
7.2 Force Majeure. Nonperformance under this Supplier Agreement will be
excused, and neither party will bear any resulting liability to the other, to
the extent that such performance is rendered commercially impracticable or
delayed by an act of God or any other cause beyond the reasonable control of the
nonperforming party.
7.3 Relationship of Parties. The parties are and shall be independent
contractors to one another, and nothing herein shall be deemed to cause this
Supplier Agreement to create an agency, partnership, joint venture or any other
relationship between the parties.
7.4 Binding Effect; Assignability. This Supplier Agreement shall be binding
upon, and shall inure to the benefit of, the parties> Successors and assigns.
Notwithstanding the foregoing, Customer may not assign, delegate or otherwise
transfer any of its rights or obligations under this Supplier Agreement without
Arrow CMS's prior written approval in each instance, which may be withheld in
Arrow CMS's absolute discretion.- Customer shall not sell all Or substantially
all of its assets that relate to the business to which this Supplier Agreement
is included, unless the purchaser thereof assumes all of Customer's rights and
obligations under this Supplier Agreement.
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7.5 Notices. Notices or other communications under this Supplier Agreement
shall be in writing and shall be effective whether delivered personally or by
overnight courier, or mailed, postage prepaid, by certified or registered mail
to each party at the address set forth below (or to such other address as either
party may from time to time provide the other):
Arrow Electronics, Inc.
Arrow CMS Distribution Group
35 Upton Drive
Wilmington, MA 01887
Attention: Kevin D. Wholey
With a copy to: Joseph Sabia
Arrow Electronics, Inc.
25 Hub Drive
Melville, NY 11747
Attention: David 1. Corcoran, Vice President, Credit
And a copy to:
Arrow Electronics, Inc.
25 Hub Drive
Melville, NY 11747
Attention: Glenn Moore, Manager, Contracts & Proposals
7.6 Entire Agreement: Amendment; Severability; and Waiver. This Supplier
Agreement represents the entire agreement between the parties concerning the
subject matter hereof, and may not be modified except in a writing signed by
both parties. This Supplier Agreement supersede~ .all proposals Or quotatio11S,
oral or written, and all negotiations, conversations, or discussions between or
among the parties relating to the subject matter of this Supplier Agreement. Any
waiver of any provision of this Supplier Agreement must be in writing and signed
by the party alleged to have waived such provision, and any single waiver shall
not operate to waive subsequent Or other defaults. The unenforceability of any
provision of this Supplier Agreement shall not affect the remaining provisions
or any portion~ thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplier Agreement
to be executed by their duly authorized representatives as of the day and year'
first above written.
IEC ELECTRONICS CORP.
By: /s/W. Barry Gilbert
-------------------
Name: W. Barry Gilbert
Title: Chairman
ARROW ELECTRONICS, INC. Arrow CMS Distribution Group
By:
Name:
Title:
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