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EXHIBIT 10.9
[MASTERPIECE LETTERHEAD]
Date: October 1, 1998
To: Charles Schweitzer
From: Maury S. Knowlton
Enclosed for your review and signature is the contract between Masterpiece Sleep
Products, Inc. and your company.
If you plan to participate in the Masterpiece project and the Las Vegas kickoff
(February 1-5, 1999), please sign and return the contract by October 15, 1998.
If you have questions about the contract, contact Bill West, Masterpiece Brand
Manager, at 630-285-9350 (extension 201) or me (extension 105).
Thank you,
MSK:jws
Enclosure
c: Edward F. Lilly
Bill West
Jeffrey D. Van Tuyle
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[MASTERPIECE LETTERHEAD]
MASTERPIECE SLEEP PRODUCTS, INC.
MANUFACTURING & SERVICING AGREEMENT
This agreement is made as of the 1st day of October, 1998, by
and between Masterpiece Sleep Products, Inc. ("Masterpiece"), an Illinois
corporation, and Sleepmaster LLC and affiliates (the "Representative"), a
Delaware corporation (the "Agreement").
WHEREAS, Masterpiece has designed and prepared specifications
for an upscale line of bedding products under the trademark "MASTERPIECE,"
WHEREAS, Masterpiece has no manufacturing, logistical or
customer service capability of its own, and Masterpiece has only limited
administrative and sales support capability;
WHEREAS, Representative is an established manufacturer of
Serta bedding products and is capable, on a sub-contracting basis, to furnish
manufacturing, logistical, customer service, administrative and sales support to
Masterpiece, and Representative desires to provide such services to Masterpiece;
NOW, THEREFORE, Masterpiece and Representative hereby agree as
follows:
1. Responsibilities of Masterpiece
(a) Product Specifications Masterpiece shall design and set all product
specifications and designate trademarks for the "MASTERPIECE" bedding line.
Representative shall be required to comply with all product specifications set
by Masterpiece, including modifications and updates thereof, and to use the
"MASTERPIECE" trademark and any other trademarks only as authorized by
Masterpiece.
(b) Customer Selection Masterpieces shall select all customers and
negotiate a definitive agreement with respect to the supply of "MASTERPIECE"
products with each customer. Masterpiece shall advise Representative of the
terms and conditions of said agreements with all customers for which
Representative shall be the subcontractor for purposes of manufacturing the
products and otherwise servicing the account.
(c) Marketing Strategy Masterpiece shall be responsible for setting
overall marketing strategies and criteria for the selection of retail accounts
to distribute the "MASTERPIECE" line. Masterpiece shall also establish the
parameters and scope, including funding, of all marketing programs, including
co-op advertising programs and such other promotional benefits to customers.
(d) Terms and Conditions of Sale Masterpiece shall be exclusively
responsible for setting prices and other terms and conditions of sale with
customers; provided, however, that the Masterpiece brand manager may authorize
in writing specific parameters within which the
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Representative may, while acting as a representative for Masterpiece, vary terms
and conditions of sale other than pricing. Representative shall not have
authority to establish pricing as Masterpiece is exclusively responsible for
setting prices.
(e) Communication With Representative Masterpiece shall communicate its
strategies, program and policies to Representative as set forth in (a)-(d) above
orally or in writing from time to time. Masterpiece shall establish a
Masterpiece brand manager to facilitate communication on these or any other
matters governed by this Agreement.
2. Representative's Responsibilities
Representative shall, in the performance of its duties under this
Agreement, do the following:
(a) Establishment of Customer Relationships
(i) Identify Potential Customers Representative shall render
advice to Masterpiece regarding the potential customers for the
"MASTERPIECE" line that would be best suited to develop the market
therefor, based on Representative's knowledge of and experience with
said potential customers.
(ii) Initial Customer Contact Upon receiving authorization
from Masterpiece, Representative shall contact a potential customer,
utilizing written materials furnished by Masterpiece, to describe the
"MASTERPIECE" product line and marketing program, and to determine the
potential customer's interest therein. Representative shall not deviate
from the provisions and other terms set forth in said materials in any
discussion or communications with a potential customer.
(iii) Evaluation of Potential Customers Representative shall
communicate promptly and fully to Masterpiece Representative's
evaluation of the customer's requirements, sales, potential,
amenability to Masterpiece's terms and conditions, and Brand Marketing
Philosophy, and recommend whether such potential customers should be
contacted by Masterpiece.
(b) Subcontracting Responsibilities
In the event Masterpiece reaches an agreement with potential customers
to handle the "MASTERPIECE" product line, Masterpiece agrees to give
Representative a right of first refusal to serve as Masterpiece's subcontractor
pursuant to the terms of this Agreement and the agreements reached between
Masterpiece and its customers. It is contemplated that Representative will
furnish at least the following services under the subcontract:
(i) Manufacturing and Product Logistics
- Manufacture and ship "MASTERPIECE" products on
order from the
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customer pursuant to the terms of Masterpiece's
contract with the customer;
- Maintain supply sources and plant inventory of
raw materials specified for "MASTERPIECE"
products in sufficient quantities to satisfy
customer needs on a timely basis;
- Produce and package "MASTERPIECE" products to
Masterpiece's specifications and to the highest
industry standards of craftsmanship;
- Provide warehousing and delivery services as
required by Masterpiece's commitments to its
various customers;
- Process return goods as required by Masterpiece's
terms and conditions of sale;
- Maintain and operate its facilities in compliance
with all applicable laws and regulations.
(ii) Administration and Customer Service
- Receive and process customer orders;
- Schedule customer deliveries;
- Prepare and send Masterpiece invoices, with
Masterpiece's remittance instructions, for
products shipped;
- Assist in collection activity;
- Process and resolve customer service issues and
warranty claims.
(iii) Sales Support
- Call on customers for purposes of assisting with
sales floor layout and sample display, providing
point-of-sale materials, providing sales force
training, and other similar activities;
- Account for and administer promotional moneys
accrued to customers under Masterpiece's
marketing programs. Masterpiece shall remit to
Representative such moneys as they are collected
from customers;
- Report to Masterpiece any customer deviations
from Masterpiece's Brand Marketing Philosophy and
Operating Policies.
3. Manufacturing and Service Fees
Masterpiece's manufacturing and service fee structure as a percentage
of sales collections
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is designed to reward the Representative for its substantial contribution to the
success of the "MASTERPIECE" program. Therefore, the manufacturing and service
fees may vary from customer to customer, and will be documented by a separate
rate sheet prepared for each customer. All compensation due hereunder shall be
payable within ten (10) days after Masterpiece receives payment from the
customer.
4. Use of "MASTERPIECE" Trademark
Representative acknowledges and agrees that Masterpiece owns all right,
title and interest in and to the "MASTERPIECE" trademark and any other
trademarks included in the product specifications of Section 1(a) hereof
(hereinafter collectively TRADEMARKS) and that Representative's use of the
TRADEMARKS inures to the benefit of Masterpiece. Representative agrees that it
will not use the TRADEMARKS except on products manufactured and sold hereunder
as specifically authorized in accordance with Section 1(a) hereof. Registration
and any other protection for the TRADEMARKS shall only be obtained by
Masterpiece in its name and at its expense. Enforcement of the TRADEMARKS by the
institution of litigation or otherwise shall be in the sole discretion of
Masterpiece, but Representative shall at its own expense cooperate with
Masterpiece in any enforcement action undertaken by Masterpiece and shall notify
Masterpiece in the event that Representative obtains information related to
potential infringement of any of the TRADEMARKS.
5. Representative as Independent Contractor
Representative shall identify itself at all times as an "Authorized
Masterpiece Representative." It is expressly agreed that Representative is not
an employee or agent of Masterpiece, and is not authorized to bind, obligate or
enter into any agreement for Masterpiece except as specifically authorized in
writing by Masterpiece. Representative is at all times during the term of this
Agreement a principal acting as an independent contractor. Without limiting the
generality of the foregoing, Representative understands and agrees that the
Representative has no authority to, and will not, directly or indirectly, sign
Masterpiece's name to any lease, contract, or agreement, or otherwise obligate
or contract for or on behalf of Masterpiece, or make any representation or give
any warranty or guarantee other than that specifically authorized in writing by
Masterpiece.
6. Termination
(a) Without Cause. Either party may terminate this Agreement at any
time, without cause, by giving ninety (90) days' prior written notice to the
other party.
(b) With Cause. Masterpiece may terminate this Agreement at any time,
for cause, immediately upon giving written notice thereof to Representative.
"Cause" shall be deemed to include any breach of this Agreement by
Representative, insolvency or any judication in bankruptcy or an assignment for
the benefit of creditors by Representative, change of ownership of the
Representative's business, or a change in the principals who own or manage
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Representative's business.
(c) Surviving Obligations. Upon expiration or termination of this
Agreement, all rights and obligations of the parties shall cease, provided that
the parties shall not be relived of (i) any pre-existing obligation to pay
moneys due, or that have become due during the period that this Agreement was in
force, and (ii) any other obligation set forth in this Agreement which is to
take effect on or after the date of expiration or termination, as the case may
be.
7. Assignment
This Agreement is entered into by Masterpiece by reason of the
confidence that it has in Representative. The Agreement is personal in nature
and is not transferable or assignable, in whole or in part, by Representative,
or by operation of law.
8. Governing Law; Venue
This Agreement, and the rights and obligations of the parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of Illinois. Venue for any action arising under this Agreement shall be in
any court of competent jurisdiction in Chicago, Illinois. The parties further
agree to a bench trial; accordingly, the parties hereby waive their right to a
trial by jury.
9. Each paragraph of this Agreement is severable, and should any court or
other governmental body of competent jurisdiction declare any provision of this
Agreement invalid or unenforceable by reason of any rule of law or public
policy, all other provisions hereof shall remain in full force and effect.
10. Waiver of Breach
Any waiver by Masterpiece of a breach by Representative of any
provision of the Agreement shall not operate or be construed as a waiver of any
subsequent breach by Representative.
11. Entire Agreement and Amendments
This instrument contains the entire agreement of the parties. It may be
change only by an agreement in writing, and if hand delivered or sent by
certified or registered mail, or by confirmed telex or telecopy, to the other
party's principal business office.
REPRESENTATIVE: MASTERPIECE SLEEP PRODUCTS, INC.
By: /s/ James P. Koscica By: /s/ Maury S. Knowlton
Title: Exec VP & CFO Title: Vice President, C.F.O.
Date: 10/01/98 Date: October 1, 1998