EXHIBIT 10.4
CERTAIN INFORMATION HAS BEEN OMITTED FROM EXHIBIT 10.4. THIS EXHIBIT 10.4 AS
INDICATED BY '***,' PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT, AND HAS
BEEN FILED SEPARATELY WITH THE COMMISSION.
EXCLUSIVE SUPPLY AGREEMENT
--------------------------
This agreement ("Agreement") is entered into as of October 1, 1998 (the
"Effective Date"), between Sears, Roebuck and Co., a New York corporation
whose principal offices are at 3333 Beverly Road, Hoffman Estates, Illinois
60179 (Sears"), and Jore Corporation, a Montana corporation whose principal
offices are at 45000 Highway 93 South, Ronan, Montana 59864 ("Jore").
RECITALS
--------
WHEREAS, Jore is engaged in the manufacture and sale of certain tools
and parts therefor;
WHEREAS, Jore represents that it has rights to the trademark SPEED-LOK
(the "Mark") for use with Quick Connector power tool bits and bit drivers;
WHEREAS, Jore (or its principal shareholder) is the owner of all right,
title and interest in and to certain patents (including U.S. Patent No.
5470180), patent applications, unfiled invention disclosures, trade secrets
and/or know how now in existence or hereinafter developed covering the Quick
Connector power tool bits and bit drivers produced by or on behalf of Jore
(the "Patent Rights");
WHEREAS, Sears is engaged in the sale and distribution of a wide range
of products through various distribution channels under various trademarks,
service marks, trade dress and trade names owned by Sears (the "Sears Marks");
WHEREAS, Jore wishes to grant to Sears, and Sears wishes to enjoy,
certain rights to purchase certain products from Jore, including power tool
bits and drivers, and to sell such products throughout the world subject to
the terms of the Agreement; and
WHEREAS, Jore wishes to grant to Sears, and Sears wishes to enjoy, the
exclusive right to sell products using the Mark subject to the terms of this
Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the premises and mutual covenants
of the parties herein contained and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties agree as follows.
1. GRANT OF RIGHTS
---------------
Subject to the terms and conditions of the Agreement, Jore hereby
grants to Sears and Sears affiliates and subsidiaries, and those parties set
forth in Exhibit A (the "Purchasing Parties") the following:
(a) SPEED-LOK Trademark
(1) *** Jore grants to Sears the exclusive right to sell
through all channels, including the Internet, products
bearing the SPEED-LOK trademark;
(2) *** Jore grants to Sears a non-exclusive right to
sell through all channels, including the Internet,
products bearing the SPEED-LOK TRADEMARK;
(3) Notwithstanding the above, the parties to this
Agreement understand that ***. Jore agrees to
fully indemnify Sears for any liability which may
arise out of the use of the SPEED-LOK mark pursuant to
this Agreement. In the event Jore incurs liability
due to the superior trademark rights of a third
party, it shall have the right to terminate
Sears' license to use the SPEED-LOK trademark.
(b) Jore Products
(1) *** Jore grants to Sears the exclusive right to
sell, through all channels, including the Internet,
SPEED-LOK products utilizing Quick Connectors (the
"Authorized Products") listed in Exhibit B hereto.
The Authorized Products may be updated from time to
time to include improvements to and new products based
on such SPEED-LOK Quick Connector products;
(2) *** Jore grants to Sears a non-exclusive right to
sell through all channels, including the Internet, the
Authorized Products; and
2
(3) A license, as described in 1 (b) 1 and 1 (b)
2 above, with respect to new SPEED-LOK
products not listed in the current Exhibit B
for the term of *** years measured from the
date of first shipment, and renewable for
*** year upon agreement by both parties.
2. SUPPLY OF AUTHORIZED PRODUCTS; ANNUAL QUANTITIES
(a) Jore agrees to timely provide the Purchasing Parties the
amounts of the Authorized Products indicated in purchase orders submitted by
the Purchasing Parties to Jore from time to time (such amounts are
hereinafter referred to as the "Sears Orders");
(b) the Purchasing Parties shall collectively purchase a minimum of
*** and *** of products from Jore each year (the "Minimum Annual Purchase").
The products comprising the Minimum Annual Purchase shall include, but are
not limited to, Authorized Products supplied to the Purchasing Parties
pursuant to this Agreement, products counting toward the Minimum Annual
Purchase shall also include products ordered by the Purchasing Parties from
Jore that are not Authorized Products. It is expressly agreed that if the
Minimum Annual Purchase is not met in any year in which this Agreement is in
effect, and/or if the Purchasing Parties submit no purchase orders to Jore in
any year, such failure to meet the Minimum Annual Purchase or to submit
purchase orders shall not be considered a material breach of this Agreement.
Jore's sole and exclusive remedy in such event shall be as set forth in
Section 6 hereof.
(c) Jore must give Sears prompt notice of any anticipated delays in
delivery of, or inability to deliver, the Authorized Products. Subject to
paragraph 14, if Jore (i) is unable to or fails to timely fill the Sears
Orders, (ii) fails to give prompt notice of any anticipated delays or
inability to deliver, or (iii) otherwise breaches any term of this Agreement
which results in Sears not having Authorized Products to sell and such breach
remains uncured after 30 days written notice from Sears, then Sears shall be
deemed to have the right and license (including a license of the Patent
Rights and the Mark) to engage third party manufacturers to produce the
Authorized Products, and apply the Mark thereto, for the Purchasing Parties
to sell, and neither Sears not such third party manufacturers shall be liable
to Jore for any royalties or payment for the exercise of such rights. The
right and license granted in this paragraph 2(c) shall continue until Jore
shall demonstrate, to Sears' reasonable satisfaction, that it is again in
a position to timely supply Authorized Products to Sears. Further, except as
provided in this paragraph 2(c), Sears shall not manufacture or second source
copies of Authorized Products.
3. PRICE
The Prices shall be firm and not subject to change for a period of
***, from the Effective Date of this Agreement. Thereafter Jore may adjust
the Prices no more frequently than once *** as set forth hereafter, but in no
event shall Prices change for purchase orders that have already been
submitted to Jore. Prices are subject to adjustment annually solely to
reflect changes in the cost of the metals which are the primary raw materials
used in the Authorized
3
Products. The price adjustment, if any, shall be based on the specific raw
material content of the authorized Products. The adjustment shall be equal to
not more than *** of any increase or decrease in the average cost of said raw
materials greater than *** over the prior years' average cost. The "average
cost" shall be calculated by using the prices of said raw materials quoted in
the Wall Street Journal (or similar reliable source acceptable to Sears) on the
first business day of January, April, July and October for the calendar
year preceding the calendar year the adjustment is to take effect. Jore must
notify Sears no later than November 1 of an upward price adjustment to be
effective as of the following January 1. Any increases shall be effective for
orders received on or after January 1 of each year. It is agreed that the
Prices shall not exceed the lowest price charged by Jore to any other
customer for the same or similar products.
4. SALE AND PROMOTION OF AUTHORIZED PRODUCTS
It is expressly agreed that Sears may, in its discretion, in addition to
its use of the Mark, advertise, promote and market the Authorized Products
under the Sears Marks or any other trademark, trade name or other designation
other than the Mark.
5. PRODUCT QUALITY
Jore shall produce the Authorized Products in conformance with its
quality control and any additional requirements requested by Sears in its
reasonable discretion (hereafter "Quality Standards"). Jore shall conduct
such inspection and testing as are necessary to ensure that the Authorized
Products conform with the terms of this Agreement and with the Quality
Standards. Jore may alter the design or specifications of any model of the
Authorized Products or deviate from such design or specifications for the
purpose of improving product quality or safety or to conform to the
requirements of a governmental body or standard setting agency, and Jore may
substitute equivalent materials or components for unavailable materials and
components. Notwithstanding the foregoing, unless previously agreed in
writing by the parties, (i) no alteration or deviation that decreases the
performance qualities of the Authorized Products shall be made unless such
alteration or deviation is necessary to improve the safety of the Authorized
Products or to bring the Authorized Products into conformance with the
requirements of a governmental body or standard setting agency, and (ii) Jore
shall notify Sears in advance in writing of any alterations in the design or
specifications of any Authorized Products and of any changes in materials or
components.
6. FAILURE TO MEET MINIMUM ANNUAL PURCHASE: AUDIT RIGHT
During the term of this Agreement, if the total orders placed for a
calendar year by the Purchasing Parties (the "Total Orders") do not meet or
exceed the Minimum Annual Purchase (the "Required Amount"), than as Jore's
sole and exclusive remedy, it may terminate this agreement after sixty (60)
days written notice from Jore to Sears. Notwithstanding the foregoing, Sears
shall have the right to pay to Jore, as a credit against future purchases,
before the termination of the sixty (60) day written notice term, the amount
by which the Total Orders for the year in question fall short of the Required
Amount and thereby retain its rights under this agreement. Jore shall have no
further
4
remedies against Sears in the event that the Required Amount is not met. Jore
shall have no rights under this Section 6 if Jore is unable to or fails to
timely supply the amounts stated in the Sears Orders as set forth in Section
2. It is expressly agreed that Jore shall permit Sears to inspect Jore's
relevant sales records at anytime during the term of this Agreement upon two
(2) days notice to determine the quantity of Total Orders from the Purchasing
Parties.
7. QUALITY CONTROL
(a) Sears acknowledges the importance to Jore of its reputation and
goodwill and to the public of maintaining high, uniform standards of quality
in the products sold under the Mark. Sears therefore agrees to maintain and
follow standards of quality as may be set by Jore in Jore's reasonable
discretion from time to time with respect to advertising and marketing using
the Mark or manufacture by third parties pursuant to paragraph 2(e). To
determine whether Sears is complying with this Agreement and the quality
standards set forth herein, Jore shall have the right to request samples of
Sears use of the Mark for inspection. Sears agrees to cooperate with Jore for
purposes of such inspection.
(b) Jore acknowledges the importance to Sears of Sears reputation
and goodwill and to the public of maintaining high, uniform standards of
quality in the products sold under the Sears Marks. Jore therefore agrees to
maintain and follow standards of quality as may be set by Sears in Sears
reasonable discretion from time to time with respect to packaging of the
Authorized Products using the Sears Marks. In addition, Jore agrees to obtain
prior written approval from Sears for any proposed packaging and/or labeling
incorporating any Sears Marks before using such packaging and/or labeling.
8. RIGHT OF FIRST REFUSAL
Jore agrees that before it enters an agreement, pursuant to a bona fide
offer, to sell or transfer (i) the Patent Rights, or (ii) the Mark (items
(i) and (ii) being collectively referred to as the "Authorized Product
Rights") to a third party, Jore will offer to Sears, in writing, a sixty (60)
day option (the "Initial Option") to purchase such Authorized Product Rights
from Jore on substantially the same terms and for the same consideration as
Jore is willing to sell or transfer such Authorized Product Rights to such
third party subject only to any bona fide security interests. Jore agrees
that if Jore further negotiates with such third party after the Initial
Option expires and if such negotiations result in Jore offering such third
party the opportunity to purchase any Authorized Product Rights on terms
more favorable to such third party (the "Revised Terms"), before entering a
binding agreement with such third party, Jore shall again offer to Sears, in
writing, a sixty (60) day option to purchase such Authorized Product Rights
from Jore on substantially the same terms and for the same consideration as
contained in the Revised Terms. In the event that Sears does not exercise its
option rights under the Section 8, Jore may sell the Authorized Product
Rights only on terms no more favorable than the terms previously offered to
Sears.
5
9. ENFORCEMENT OF RIGHTS
(a) Jore retains the exclusive right to take action at its own
expense, against third party infringements or apparent infringements,
including past infringements of the Patent Rights and/or the Mark.
(b) Sears shall notify Jore of any third party infringements or
apparent infringements of the Patent Rights and/or the Mark, of which Sears
has any actual knowledge or notice.
(c) with respect to any such infringement actions taken against
third party infringements or apparent infringements, Jore and Sears shall
cooperate fully, with good faith and due diligence in prosecuting and
settling such infringement claims.
(d) In the event of any recovery or settlement, Jore shall be
entitled to reimbursement of its expenses, and Sears shall be entitled to
expenses, and the balance of any recovery shall belong to Jore.
(e) At all times during which Sears has exclusive rights under
Section 1(a) hereof, if Jore does not promptly act to stop a third party
infringement, Sears may, at its election, terminate pursuant to paragraph
10(b) hereof.
10. TERM AND EARLY TERMINATION
(a) Unless otherwise terminated pursuant to the provisions of this
Section 10, this Agreement shall remain in full force and effect for the
period commencing on the Effective Date and ending at the close of business
five (5) years thereafter, and shall automatically renew for consecutive one
year terms thereafter unless Sears gives written notice of cancellation at
least sixty (60) days prior to the end of any such term.
(b) In the event that either party fails to comply with any of the
provisions hereof, the non-defaulting party shall notify the defaulting party
in writing of such failure and the defaulting party shall have twenty (20)
calendar days in which to take corrective action. In the event that such
correction is not timely made to the reasonable satisfaction of the
non-defaulting party, the non-defaulting party may, at its option, elect to
terminate this Agreement.
(c) Notwithstanding any other provision hereof to the contrary,
either party may terminate this Agreement immediately if any other party
becomes insolvent; admits in writing its insolvency or its inability to pay
its debts as they become due; is unable to, or does not, pay its debts as
they become due; makes or proposes an assignment for the benefit of
creditors; convenes or proposes to convene a meeting of its creditors, or any
class thereof, for purposes of effecting a moratorium upon or extension or
composition of its debts; proposes any such moratorium, extension or
composition; commences or has filed against it any bankruptcy, reorganization
or insolvency proceedings, or any other proceeding under the applicable law
for the relief of debtors, provided,
6
in the case of any proceeding filed against such party, that the proceeding
is not dismissed within thirty (30) days after the commencement thereof; or
any receiver, trustee or custodian is appointed to take possession of, or any
levy or execution is placed upon, all or any substantial portion of the
assets of such party, and such receiver, trustee, custodian, execution or levy
is not released or discharged within ten (10) days after the appointment,
execution or levy; and the terminating party shall have such additional
remedies for default as may be available at law or in equity regardless of
whether it terminates this Agreement.
11. INTEGRATION
-----------
This Agreement, including the Universal Terms and Conditions previously
signed by the parties (attached hereto as Exhibit C), is intended as the
complete, final and exclusive statement of the terms of the agreement between
Jore and Sears with relation to the subject matter hereof, and supersedes all
prior oral and written agreements, understandings, commitments and practices
between the parties. In the event of a conflict between the terms of the
Agreement and the Universal Terms and Conditions, the terms of this Agreement
shall control.
12. AMENDMENTS
----------
Except as otherwise expressly provided herein or in the Universal Terms
and Conditions, no modification to or amendment of the Agreement may be made
except in a writing signed by both parties.
13. INDEPENDENT CONTRACTOR RELATIONSHIP
-----------------------------------
The relationship created hereunder shall be that of seller-purchaser.
Jore and Sears shall be independent contractors hereunder, and this Agreement
does not create in any manner or for any purpose whatsoever an
employer-employee or a principal-agent relationship between Jore and Sears.
14. FORCE MAJEURE
-------------
Neither of the Parties shall be liable for delay in the performance of
the Agreement arising from any of the following matters: (a) acts of God, or
public enemy or war; (b) acts of government, or regulations or restrictions
imposed by law or by court action; (c) acts of persons engaged in subversive
activities or sabotage; (d) fires, floods, explosions, or other catastrophes;
(e) epidemics or quarantine restrictions; (f) freight embargoes, or
interruptions of transportation; or (g) strikes, labor stoppages or other
industrial actions; and the time for performance by any party so affected
shall be extended by the period of any such delay.
7
15. NO ASSIGNMENT OF RIGHTS
-----------------------
On and after the date of this agreement Jore shall not assign or grant a
security interest in any Authorized Product Rights relating to the Authorized
Products, without the express written consent of Sears. As of the date of
this agreement the only assignments or security interests in the Authorized
Products Rights are set forth in Exhibit D hereto.
16. NOTICES
-------
All notices required or permitted to be given hereunder shall be given
in writing and shall be sent by certified or registered mail (postage
prepaid), express courier or facsimile with mail confirmation. Notice to:
Seller shall be addressed at: Jore Corporation
45000 Highway 93 South
Ronan, Montana 59864
Attention: Matthew Jore
Purchaser shall be addressed at: Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, Illinois 60179
Attention: Jim Tessier
with copy to: Sears, Roebuck and Co.
3333 Beverly Road
Hoffman Estates, Illinois 60179
Attention: Law Department
Such notices shall take effect upon receipt by the party being notified;
provided, however, that such notice shall be deemed to have been received
upon the expiration of (i) ten days from the date of posting, or (ii) 48
hours from the time of facsimile transmission.
17. CONSTRUCTION OF AGREEMENT
-------------------------
It is understood that this agreement shall not be construed as an
assignment of the Mark nor of the Patent Rights from Jore to Sears.
8
IT WITNESS WHEREOF, the parties have executed and delivered this
Agreement, in one or more counterparts, as of the Effective Date, by their
respective duly authorized officers.
JORE CORPORATION SEARS, ROEBUCK AND CO.
By: /s/ Michael Jore By: Robert L. Mettler
------------------------------- ---------------------------------
Name: Name: Robert L. Mettler
-------------------------- ----------------------------
Title: Title: President, Merchandising
-------------------------- ----------------------------
Full Line Stores
9
EXHIBIT A
PURCHASING PARTIES
Sears Full Line Stores
Sears Hardware Stores
Orchard Supply Hardware
Orchard Hardware & Garden
Sears Dealers Stores
Parts America Stores
Sears Service Centers
Sears Canada
Sears Mexico
Catalog
QVC
Industrial Sales
Direct Response TV
Sears Website
Sears International Marketing, Inc.
10
EXHIBIT B
CURRENT LIST OF AUTHORIZED PRODUCTS
26172 SPEED-LOK Drill Bit/Compact Screwdriver Set
26173 SPEED-LOK Drill Bit w/Driver Combo
26174 SPEED-LOK D/DR Combo w/Power Screwdriver Set
26177 SPEED-LOK Power Bit Set
26199 SPEED-LOK 7/16" Quick Connector
26205 SPEED-LOK 1/4" Quick Connector
26269 SPEED-LOK 4 Pc Drill Bit Set w/Quick Connector 7/16" Shank
26178 SPEED-LOK 30-piece High Torque Set with Quick Connector
26183 SPEED-LOK 6-piece Woodboring Set with Quick Connector
26184 SPEED-LOK 7-piece Masonry Set with Quick Connector
11
EXHIBIT C
UNIVERSAL TERMS AND CONDITIONS
ATTACHMENT
12
March 5, 1996
All Vendors of Sears, Roebuck and Co.
Re: UNIVERSAL TERMS AND CONDITIONS
Dear Sears Trading Partner:
It is Sears policy to obtain written agreements with all of its vendors
that set out the terms and conditions governing their relationships with
Sears. This policy ensures that vendors understand Sears expectations and
requirements. In addition, it helps Sears fulfill its commitment to purchase
quality merchandise that is safe and complies with Sears specifications and
with the laws of the United States and other countries where merchandise is
produced and delivered.
Attached is a copy of Sears Universal Terms and Conditions which sets
forth the basic terms and conditions to which every Sears vendor must agree.
The Universal Terms and Conditions replaces the "boiler plate" printed on
Sears form contracts. The following are some of the features of the Universal
Terms and Conditions:
- There are no references to price or quantity of merchandise, rather
these are "generic" terms and conditions that apply with every vendor
relationship and supplement other agreements and documents. It is
anticipated that vendors and Sears buyers will also negotiate separate
purchase orders, specification sheets or other documents with specific
commitments relating to the respective merchandise and relationship.
- There is no term or limit. Once executed, these terms remain in effect
for all purchases between the parties. However, if the vendor is
purged from Sears system due to inactivity, a new Universal Terms and
Conditions must be executed before an order may be placed with such
vendor.
We are requesting that you sign and return two (2) copies of this document in
order do business with Sears. Upon receipt, Sears will execute and return one
(1) copy back to you.
If you have any questions regarding the Universal Terms and Conditions
or the process described above, please call your Sears buyer contact.
Sincerely,
/s/ David L. Giomerri
---------------------
David L. Giomerri
Vice President
SEARS CODE OF CONDUCT
- --------------------------------------------------------------------------------
Sears, Roebuck and Co. associates are required to follow the Sears Code of
Business Conduct. As a Sears vendor/source you are expected to support the
proper business conduct. The complete Code can be found in the Vendor
Information Guide (call 1-800-HELP510, if you do not have a copy).
The following areas are key to Sears relations with vendors:
1. Sears associates may not accept free travel on a vendor's aircraft. Sears
will reimburse the vendor for the cost of travel.
2. Sears associates must charge Sears for their travel and lodging expenses.
3. Sears associates may not accept gifts in excess of $25.00.
4. Acceptance of vehicles, appliances, other merchandise or the free use of
such items from an individual or organization that conducts business or
seeks to do business with Sears is clearly improper.
5. Hospitality which may include meals, sporting events, or conference
facilities provided in the context of bona fide business meetings that
are customary in the trade are acceptable and permitted.
Sears associates are not permitted to accept anything of value offered to
them in an attempt to influence their business judgment.
If you are being influenced to violate these or any other ethical issue, you
are to call our Ethics Assist Line 1-800-8ASSIST, Resolutions Manager
708-286-6030, Policy Manager 708-286-3131, or the VP of Policy and Ethics
708-286-2902.
As a vendor for Sears, Roebuck and Co., we agree to the spirit of Sears Code
of Conduct and promise to report to Sears any violation or attempt to violate
this code.
JORE CORPORATION
----------------------------------------
Name of Vendor
By MIKE JORE - VICE PRESIDENT
--------------------------------------
Name and Title
45000 HWY 93 S RONAN, MT 59864
----------------------------------------
Address
6/21/96
----------------------------------------
Date
- --------------------------------------------------------------------------------
UNIVERSAL TERMS AND CONDITIONS
The terms and conditions contained herein ("Agreement") shall be effective
for all merchandise sold by the undersigned vendor ("Seller") to Sears,
Roebuck and Co. ("Sears") and shipped on or after , 199 . This
Agreement shall supersede all other agreements, communications and
understandings between the parties that are inconsistent with the terms
hereof. Nothing contained herein shall be construed as a commitment by Sears
to purchase, or by the Seller to supply, any quantity of merchandise.
Seller and Sears hereby agree as follows:
DEFINITIONS - The following terms as in this Agreement herein shall have the
meanings described below:
- The term "Merchandise" shall mean the goods provided to Sears by Seller,
including all packaging, tags, labels, hangers and containers used in
connection therewith, all parts relating to such goods provided to Sears
and all literature (including owner manuals and training materials)
pertaining to such goods, if applicable, whether or not any of such
items are set forth separately on invoices to Sears.
- The term "Purchase Order" shall mean any written or electronic order for
specified quantities of Merchandise at stated prices; any written
agreement for selling assistance or payments to be provided by Seller
(including any agreement for advertising, point of sale or promotional
services or funding); and any other written agreements, correspondence
or other documentation between Seller and Sears relating to the purchase
of Merchandise to the extent such documentation is not expressly merged
into or superseded by a written agreement between Sears and Seller
specifying that the terms of this Agreement do not apply; provided that
for purposes of determining all monetary obligations between Sears and
Seller, any Purchase Order which may be issued and accepted shall be
deemed to be a single installment in the partial performance of one and
the same agreement and transaction between Sears and Seller.
- The term "Specification" shall mean all, and any part, of the detailed
description of Merchandise agreed upon by Seller and Sears or contained
in the Vendor Guide (as defined below).
VENDOR INFORMATION GUIDE - All of the terms and conditions contained in the
applicable Sears Vendor Information Guide supplied to Seller by Sears, as it
may be amended from time to time (the "Vendor Guide"), are incorporated by
reference in this Agreement and shall be deemed a part hereof.
CODE OF CONDUCT - Seller acknowledges that Seller is aware of Sears Code of
Business Conduct (as set forth in the Vendor Guide)(the "Code of Conduct")
and that Sears associates are required to follow the Code of Conduct, Seller
shall support the Code of Conduct and shall not take any action which may
cause a Sears associate to violate the Code of Conduct. Seller shall report
to Sears any violation of or attempt to violate the Code of Conduct.
PRICES AND QUANTITIES - Seller shall ship only the quantities of Merchandise
ordered by Sears in the applicable Purchase Order. Seller shall not make any
substitutions without Sears prior written approval. Seller shall bill Sears
for the Merchandise at the price specified in the applicable Purchase Order.
The price shall include all costs of packing Merchandise and all costs of
shipping Merchandise to the "F.O.B. point" or other delivery point specified
in the applicable Purchase Order, including (i) local freight to the "F.O.B.
point" or other delivery point, (ii) all duties and taxes (including excise
and withholding taxes) payable in any country where production or delivery
takes place, (iii) any commissions to selling agents, and (iv) other
incidental charges, whether or not such charges are itemized separately on
invoices to Sears.
ESTIMATES OR FORECASTS - Any estimates or forecasts of Sears future needs for
Merchandise which may be provided to Seller by Sears are for long range
planning purposes only and shall not in any way represent a commitment of
Sears. Sears shall have no responsibility for any actions taken by Seller
based on such estimates or forecasts.
SPECIFICATIONS - All Specifications shall be in writing. By agreeing to
and/or using any Specification or any design, product modification or other
manufacturing or production suggestion, whether originating with Sears or
elsewhere. Seller adopts as its own, accepts full responsibility for, and
relieves Sears of all responsibility for such Specification, design,
modification or suggestion.
PACKAGING, LABELING, SHIPPING AND BILLING - Seller shall be responsible for
providing adequate packaging, tagging, labeling, packing, shipping and
billing. Seller shall comply with all packaging, tagging, labeling, packing,
shipping and billing requirements reasonably requested by Sears and/or
established by applicable laws, regulations, carrier tariffs and
classifications. For Merchandise to be shipped to Sears from a point of
origin within the United States, Seller shall deliver Merchandise to the
designated carrier on or before the "ship date(s)" specified in the
applicable Purchase Order. For Merchandise to be shipped to Sears from a
point of origin outside the United States, Seller shall deliver Merchandise
in accordance with the delivery terms specified in the applicable Purchase
Order, and such delivery shall be made on or before the "ready date(s)"
specified in the Purchase Order. Seller shall ship all Merchandise in full
packs and full shipments in accordance with Sears requirements and Purchase
Order.
RISK OF LOSS - All risk of loss or damage to Merchandise shall remain with
Seller until delivery of such Merchandise in accordance with the delivery or
purchase terms specified by Sears in the applicable Purchase Order.
MANUFACTURING - Upon Sears request, Seller shall provide Sears with specific
information as to the location(s) and method(s) of manufacturing Merchandise.
Seller shall obtain written approval from Sears prior to effecting any
changes in the location(s) or method(s) of manufacturing Merchandise, and
Seller shall be fully responsible for all costs and/or delays resulting from
such changes. Upon reasonable notice and during regular business hours,
Sears, its designated representatives and/or any independent inspectors
approved by Sears may inspect any production facilities at which any
Merchandise or any components or piece goods for Merchandise are being
produced (including any facilities of Seller, its subcontractors and
suppliers) and any and all Merchandise at any stage of production or delivery
(including at the delivery point specified in the applicable Purchase Order).
Sears may require Seller to have Merchandise inspected prior to its shipment
to the United States, such inspection to be ?? at Seller's sole
expense, by an independent inspector approved by Sears. Any inspection, any
documentation thereof, and/or any ?? actions taken by Seller with
respect to any Merchandise shall not be deemed an acceptance of any
Merchandise, or a waiver of any nonconformities or defects in any Merchandise
and shall not excuse any failure by Seller to deliver Merchandise in
accordance with the terms of this Agreement and the applicable Purchase
Orders.
PARTS - Seller shall sell to Sears and any all parts shown on Merchandise
parts lists for a period of at least ten (10) years after the date such
Merchandise is last produced by Seller, provided, however, that if Seller
discontinues manufacturing or supplying any part shown on any Merchandise
parts list, Seller shall give Sears at least ninety (90) days prior written
notice of such discontinuance and Seller shall promptly fulfill any and all
orders placed by Sears within such 90-day period. The price of parts shall be
specified on the applicable Purchase Orders, but in no event shall Seller
charge Sears a price greater than the lowest price charged by Seller to any
other customer for the same or similar parts sold on substantially similar
terms.
SERVICE - Seller shall provide Sears with all available information relating
to Merchandise, including product specifications, parts lists and all
training materials, service manuals and instructions developed by Seller.
Seller authorizes Sears to reproduce such training materials, service manuals
and instructions without payment of any royalties or other fees to Seller.
Seller authorizes Sears to provide repair and maintenance services for all
Merchandise sold to customers, and Sears may advertise that it is authorized
to provide such services. Sears shall provide such repair and maintenance
services in conformance with reasonable standards and guidelines. Sears may
use independent subcontractors or licensees to provide such repair and/or
maintenance services.
WARRANTIES - Seller represents and warrants that all Merchandise shall (i)
conform to the Specifications for such Merchandise, (ii) be merchantable,
(iii) be free from defects in workmanship, materials and packaging, (iv) be
free from defects in construction and design, (v) be fit and sufficient for
the purpose for which it is intended and/or which is stated on any packaging,
labeling or advertising, and (vi) be equivalent in materials, quality, fit,
finish, workmanship, performance and design to any samples submitted to and
approved by Sears. Seller represents and warrants that all patents,
trademarks, trade names, trade dress, copyrights, trade secrets and other
proprietary rights (other than proprietary rights owned by Sears) used by
Seller in connection with Merchandise and/or the development or manufacture
of Merchandise are owned by Seller or that Seller has been properly
authorized by the owner of such proprietary rights to use such rights in
connection with such Merchandise. The provisions of this Section shall
survive the termination of this Agreement and any other agreements between
the parties relating to Merchandise.
LEGAL REQUIREMENTS - Seller represents and warrants that all Merchandise has
been or shall be produced, packaged, tagged, labeled, packed, shipped and
invoiced in compliance with the applicable requirements of federal, state and
local laws, regulations, ordinances and administrative orders and rules of
the United States and all other countries in which Merchandise is produced or
delivered. In addition, Seller represents and warrants that Seller and all
subcontractors and agents involved in the production or delivery of
Merchandise strictly adhere, and shall continue throughout the term of this
Agreement to strictly adhere, to all applicable laws, regulations and
prohibitions of the United States and all countries in which Merchandise is
produced or delivered with respect to the operation of their production
facilities and their other business and labor practices, including laws,
regulations and prohibitions governing the working conditions, wages, hours
and minimum age of the work force. Seller further represents and warrants
that Merchandise has not been and shall not be produced or manufactured, in
whole or in part, by convict or forced labor. Seller shall provide Sears with
any guaranty of compliance in such form as Sears may designate, with respect
to Merchandise, as required or permitted under any law, rule or regulation of
the United States and any other countries where Merchandise is produced or
delivered.
ANTIDUMPING - Seller warrants that all sales of Merchandise to Sears are or
shall be made at no less than fair value under the United States Antidumping
Law. As long as Merchandise is not subject to a United States antidumping
investigation on the date of this Agreement (as first set forth above),
Seller warrants that it shall indemnify Sears for all antidumping duties
deposited on such Merchandise which is (i) sold prior to the date of
publication of the International Trade Administration's preliminary
determination of sales at less than fair value, and (ii) exported before the
date of publication of the International Trade Administration's final
determination of sales at less than fair value. Seller also warrants that it
shall indemnify Sears for any expenses (including reasonable attorneys' fees)
and administrative costs incurred by Sears in its participation in any United
States antidumping proceeding involving such Merchandise.
ELECTRONIC PROCESSING - Unless otherwise agreed to by Sears, the parties
shall process Purchase Orders and other related documents (including
invoices and ship notices) and installment payments and advances in respect
of all monetary obligations between Sears and Seller electronically, through
electronic data interchange ("EDI"), either directly or through a third party
provider satisfactory to both parties. Each party shall be responsible for
its own costs, including the costs of any provider with which it contracts.
All EDI transactions shall be in accordance with standards approved by the
Accredited Standards Committee X 12 (ASCX12), and in accordance with the
instructions and procedures in the applicable Vendor Guide. Each EDI invoice
(or ship notice, in the absence of an invoice) shall contain an appropriate,
agreed upon code, symbol or statement affirming Seller's compliance with all
applicable requirements of the Fair Labor Standards Act, as amended, and of
the regulations and orders of the United States Department of Labor
issued pursuant thereto. All electronic fund transfers and wire transactions
shall be in accordance with National Automated Clearing House Association
(NACHA) rules, and in accordance with the instructions and procedures
established by Sears from time to time. Neither party shall be liable to the
other for any special, incidental, exemplary or consequential damages arising
from or as a result of any delay, omission or error in the electronic
transmission or receipt of any documents, even if the other party has been
advised of the possibility of such damages.
SEARS IDENTIFICATION - If Sears directs Seller to mark or label any
Merchandise with a trade name, trademark, logo or service mark owned by or
licensed to Sears ("Sears Identification"), such marking or labeling shall be
limited to the indicated quantities of such Merchandise and shall be done in
accordance with Sears specific instructions. Seller shall not sell or
otherwise dispose of any Merchandise bearing any Sears Identification
(including any rejected Merchandise) to anyone other than Sears without first
obtaining Sears express written consent and then removing all Sears
Identification prior to such sale or disposal. Sears may elect, but shall
have no obligation, to purchase from Seller any surplus labels, packaging or
other materials bearing Sears Identification. Seller shall have no interest
or rights in any Sears Identification except as expressly granted in this
Agreement. The provisions of this Section shall survive the termination of
this Agreement and of any other agreements between the parties relating to
Merchandise.
DEFENSE - Seller shall defend all allegations asserted in any claim, action,
lawsuit or proceeding (even though such allegations may be false, fraudulent
or groundless) against Sears and/or its officers, directors, employees,
licensees, agents, distributors and independent contractors which contain any
allegations of liability arising out of any actual or alleged (i)
infringement of any patent, trademark, trade name, trade dress, copyright,
trade secret or other proprietary right in connection with Merchandise, or
any unfair competition involving Merchandise, (ii) death of or injury to any
person, damage to any property, or any other damage or loss, by whomsoever
suffered, resulting or claimed to have resulted in whole or in part from any
actual or alleged defect in Merchandise, whether latent or patent, including
actual or alleged improper construction and/or design of Merchandise.
or actual or alleged failure of Merchandise to comply with any specifications
or samples or with any express or implied warranties of Seller, or any claim
of strict liability in tort relating to any Merchandise, (iii) violation by
Merchandise in its manufacture, possession, use or sale, of any federal,
state or local laws, regulations, ordinances or administrative orders or
rules of the United States or any other country in which Merchandise is
produced or delivered, (iv) defect involving the packaging, tagging,
labeling, packing, shipping and/or invoicing of Merchandise, (v) failure to
warn or inadequate warnings and/or instructions with respect to any
Merchandise, and/or (vi) display, assembly or installation of Merchandise.
Seller shall use counsel satisfactory to Sears in the defense of such
allegations. The obligations of Seller under this Section (collectively,
"Defense Obligations") shall survive the termination of this Agreement and of
any other agreements between the parties relating to Merchandise.
INDEMNITY -- Seller shall hold harmless and indemnify Sears and Sears
officers, directors, employees, licensees, agents, distributors and
independent contractors from and against any and all claims, demands,
actions, lawsuits, proceedings, liabilities, losses, costs and expenses
(including reasonable attorneys' fees and disbursements incurred by Sears in
any claim, demand, action, lawsuit or proceeding between Seller and Sears
and/or between Sears and any third party or otherwise) arising out of any
actual or alleged (i) infringement of any patent, trademark, trade name,
trade dress, copyright, trade secret or other proprietary right in connection
with Merchandise, or any unfair competition involving Merchandise, (ii) death
of or injury to any person, damage to any property, or any other damage or
loss, by whomsoever suffered, resulting or claimed to result in whole or in
part from any actual or alleged defect in Merchandise, whether latent or
patent, including actual or alleged improper construction and/or design of
Merchandise, or actual or alleged failure of Merchandise to comply with any
specifications or samples or with any express or implied warranties of
Seller, or any claim of strict liability in tort relating to any Merchandise,
(iii) violation by Merchandise in its manufacture, possession, use or sale,
of any federal, state or local laws, regulations, ordinances or
administrative orders or rules of the United States or any other country in
which Merchandise is produced or delivered, (iv) defect involving the
packaging, tagging, labeling, packing, shipping and/or invoicing of
Merchandise, (v) failure to warn or inadequate warnings and/or instructions,
and/or (vi) display, assembly or installation of Merchandise. The obligations
of Seller under this Section are unconditional and shall not be affected or
limited in any way by express or implied warranties made by Sears to its
customers; provided, however, that Seller shall not be obligated for
warranties made by Sears in excess of Seller's express or implied warranties.
The obligations of Seller under this Section (collectively, "Indemnity
Obligations") shall survive the termination of this Agreement and of any other
agreements between the parties relating to Merchandise.
INSURANCE -- Seller shall obtain and maintain, at its expense, a policy or
policies of Commercial General Liability Insurance covering liabilities
relating to Merchandise, including products and completed operations
coverage, with a broad form Vender's Endorsement naming Sears, in such
amounts and with such companies and containing such other provisions
satisfactory to Sears. All such policies shall provide that the coverage
thereunder shall not be terminated without at least thirty (30) days prior
written notice to Sears. Certificates of insurance evidencing such coverage
shall be submitted in advance of or concurrent with the execution of this
Agreement by Seller and upon each policy renewal. Approval of any of Seller's
insurance policies by Sears shall not relieve Seller of any obligations
contained herein, including Seller's defense and indemnity obligations set
forth above, even for claims in excess of Seller's policy limits. If at any
time Seller does not provide Sears with the certificates of insurance
required hereunder or if, in Sears opinion, such policies do not provide
adequate protection for Sears, Sears will so advise Seller, and if Seller
does not furnish evidence of acceptable coverage within fifteen (15) days
thereafter, Sears shall have the right to (i) immediately terminate this
Agreement and/or any other agreements between the parties relating to
Merchandise or any part of Sears obligations under such agreements, or cancel
all or any outstanding orders for Merchandise, upon written notice to Seller,
and/or (ii) withhold making any installment payment or advance in respect of
any Sears monetary obligations which may be outstanding under this Agreement
until evidence of acceptable coverage is provided.
SEAR REMEDIES -- Any Merchandise which (i) is not produced, sold, shipped
and/or delivered in compliance with the terms of this Agreement and the
applicable Purchase Order(s), (ii) is delivered in excess of the quantities
specified, in broken packs or partial shipments, or in packages or
assortments other than as specified, (iii) allegedly violates any federal,
state or local laws, regulations issued pursuant to such laws, or any
governmental administrative orders, rules or regulations, of the United
States or any other country in which Merchandise is produced or delivered, or
(iv) allegedly infringes any patent, trademark, trade name, trade dress,
copyright, trade secret or other proprietary right, or allegedly involves any
unfair competition, may be rejected by Sears and abandoned, returned or held
at Seller's expense and risk. Sears right to reject and return or hold
Merchandise at Seller's expense and risk shall, without limiting such right,
extend to Merchandise sold to Sears hereunder which is returned by Sears
customers for any reason entitling Sears to reject such Merchandise. Sears
may, at its option, require Seller to replace any nonconforming Merchandise
or grant Sears a full refund or credit (collectively, "Refund Credit"). Sears
may also charge to Seller all direct and indirect costs incurred by Sears as
a result of any nonconforming Merchandise or delivery, or an administative
fee in an amount reasonably related to such costs whether or not the
Merchandise is rejected by Sears (collectively, "Return Costs"). All Refund
Credits, Return Costs, Defense Obligations, Indemnity Obligations and other
monetary obligations owing by Seller to Sears under this Agreement
(collectively, "Seller's Monetary Obligations"), may at Sears option, be
deducted and recouped from any monetary obligations which may be owing by
Sears at any time pursuant to this Agreement.
CANCELLATION -- Sears shall have the right immediately to terminate this
Agreement and/or any other agreements between the parties relating to
Merchandise or any part of Sears obligations under such agreements, or cancel
all or any outstanding orders for Merchandise if (i) Sears reasonably
believes that Seller does not have Merchandise which conforms to the terms
hereof, and is ready for shipment in the specified quantities and at the
delivery dates specified, (ii) it is alleged that Merchandise infringes any
patent, trademark, trade name, trade dress, copyright, trade secret or other
proprietary rights, (iii) it is alleged that Merchandise was manufactured or
to be sold to Sears in violation of any federal, state or local laws,
regulations, ordinances or administrative orders or rules of the United
States or any country in which the Merchandise is produced or delivered, (iv)
Seller shall refuse to furnish appropriate guaranties to protect Sears as
permitted by any law, rule or regulation, (v) Seller shall fail to maintain
the insurance required hereunder or fail to produce the evidence thereof,
(vi) a petition is filed either by or against Seller in any bankruptcy or
insolvency proceeding (to the extent permitted by law), or if any property of
Seller passes into the hands of any receiver, assignee or creditor, and/or
(vii) Seller commits a material breach of this Agreement or any other
agreement between the parties relating to Merchandise. For any imported
Merchandise which is subject to a customs embargo or quota restriction, Sears
may cancel any Purchase Order or delay any installment payment or advance in
respect of Sears monetary obligations to Seller, if any, under this Agreement
until the embargo is lifted or necessary quota becomes available.
RECOUPMENT AND SET-OFF -- Sears and Seller acknowledge and agree that Sears
monetary obligations to Seller under this Agreement shall at all times be net
of Seller's Monetary Obligations, and any installment payment or advance made
by Sears to Seller in respect of any Purchase Order
--------------------------- ILLEGIBLE PARAGRAPH ---------------------------
CONFIDENTIALITY -- Any customer lists and/or other information concerning any
of Sears customers (collectively, "Customer Information") are the sole and
exclusive property of Sears. Seller shall not use, reproduce or disclose,
directly or indirectly, to any third party at any time any customer
information. Upon demand by Sears, Seller shall deliver to Sears immediately
all copies of Sears customer information in Seller's possession. In addition,
Seller shall hold in strict confidence and shall not use in any manner,
except in connection with the performance under this Agreement and other
agreements between the parties relating to Merchandise, all information with
respect to Specifications, sales, pricing, inventory, operations, plans and
programs. The provisions of this Section shall survive the termination of
this Agreement and of any other agreements between the parties relating to
Merchandise.
ASSIGNMENT -- Seller shall not assign (by contract, operation of law or
otherwise) its rights or obligations under this Agreement or under any other
agreement between the parties relating to Merchandise, or grant a security
interest in or pledge as collateral any interest herein or therein, except
with Sears prior written consent; provided, however, Seller may assign its
right to receive the installment payments or advances from Sears in respect
of any monetary obligations of Sears to Seller under this Agreement, subject
to the terms and conditions contained herein. Any factor or permitted
assignee, secured creditor or pledgee of Seller shall acquire such interest
subject to all of Sears recoupments, set-offs, claims and defenses and all of
the terms and conditions contained herein, and Seller shall notify any such
factor, assignee, secured creditor or pledgee of such fact. Sears shall have
no obligation to make payments to anyone other than Seller unless and until
Seller (i) notifies Sears in writing of the assignment of such installment
payments or advances along with the name and address of the person to whom
such installment payments or advances should be sent, (ii) obtains a separate
Sears accounts payable number for such installment payments or advances, and
(iii) uses such accounts payable number on every invoice which Sears is to pay
directly to the third party. Seller retains responsibility for all allegedly
misdirected installment payments or advances which result from Seller's
failure to comply with the terms and conditions hereof. This Agreement and
all Purchase Orders issued and accepted between Sears and Seller shall be
deemed a series of installments in one and the same transaction and deemed to
constitute a single "contract" between Sears and Seller within the meaning of
Section 9-318(1) of the Uniform Commercial Code as in effect in the State of
Illinois.
WAIVER -- No right of either party under this Agreement may be waived except
as expressly set forth in a writing signed by the party waiving such right.
No waiver of any provision shall be implied by a party's failure to enforce
any of its rights or remedies herein provided, and no express waiver shall
affect any provision other than that to which the waiver is applicable and
only for that occurrence.
MODIFICATION AND SEVERABILITY -- If any provision of this Agreement is held
to be invalid, illegal or unenforceable by a court of competent jurisdiction,
than such provision shall be deemed modified to the extent necessary to make
such provision enforceable by such court. The invalidity, illegality or
unenforceability of any provision herein shall not affect or impair the
enforcement of any other provision.
CUMULATIVE RIGHTS -- All rights and remedies, under this Agreement and any
other agreement between the parties relating to Merchandise. [ILLEGIBLE]
cumulative, and the exercise of any right or remedy herein provided shall be
without prejudice to the right to exercise any other right or remedy provided
for herein or therein or at law or in equity.
AMENDMENT -- This Agreement may be amended or modified only by a written
instrument signed by the duly authorized representatives of the parties
hereto.
APPLICABLE LAW AND JURISDICTION -- This Agreement shall be construed and
enforced in accordance with the internal laws of the State of Illinois,
without regard to its conflict of law principles. The rights and obligations
of the parties hereto shall not be governed by the provisions of the United
Nations Convention on Contracts for the International Sale of Goods. This
Agreement shall not be effective until it has been received and executed by
Sears in Hoffman Estates, Illinois. The federal and/or state courts of
Illinois shall have personal and subject matter jurisdiction over, and the
parties each hereby submit to the venue of such courts with respect to, any
dispute arising pursuant to this Agreement or pursuant to any other
agreements between the parties relating to Merchandise, and all objections to
such jurisdiction and venue are hereby waived. Seller consents to service of
process permitted under Illinois law or by certified mail, return receipt
requested.
IN WITNESS WHEREOF, Seller and Sears have each caused this Agreement to be
executed by its duly authorized representative as of the date written below
and such execution evidences each party's acceptance of and agreement with
the terms and conditions set forth herein.
SEARS, ROEBUCK AND CO. SELLER
By: /s/ illegible JORE CORPORATION
------------------------------------- ------------------------------------
(Signature)
Title: BUYER By: /s/ Michael Jore
---------------------------------- --------------------------------
Title: Vice President
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EXHIBIT D
EXISTING SECURITY INTERESTS AND ASSIGNMENTS
RELATING TO AUTHORIZED PRODUCT RIGHTS
1. Coast Business Credit, a division of Southern Pacific Bank
13