Manufacturing Support Services Agreement

MANUFACTURING SUPPORT SERVICES AGREEMENT


THIS MANUFACTURING AND SERVICES AGREEMENT (the "Agreement") is dated as of _______ ___, 1996 by and between Tridex Corporation, a Connecticut corporation ("Tridex"), and Magnetec Corporation, a Connecticut corporation ("Magnetec").


WHEREAS, Magnetec and Tridex have entered into an Asset Purchase Agreement dated as of July __, 1996 under which Magnetec has agreed to sell to Tridex all of the assets used exclusively in the conduct of the ribbon business (the "Ribbon Business"); and


WHEREAS, Tridex has not yet obtained a facility separate from the Magnetec facility suitable for the conduct of the Ribbon Business, and Magnetec, with its existing manufacturing facility and shipping, receiving, accounting and related support capability at that facility, can provide the space and support services required by Tridex, as the owner of the Ribbon Business assets, for the operation of the Ribbon Business; and


WHEREAS, upon completing the acquisition of the Ribbon Business assets, Tridex will employ the individuals now employed by Magnetec who are directly involved in the manufacturing of the Ribbon Business products and the individual who supervises Ribbon Business manufacturing and related operations; and


WHEREAS, Tridex desires to obtain space within Magnetec's facility and manufacturing support and related services necessary for the conduct of the Ribbon Business, and Magnetec is willing to furnish or make such services and space available to Tridex in connection with the transfer of the Ribbon Business assets;


NOW, THEREFORE, in consideration of the mutual promises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:


1. Staffing; Management Supervision and Control by Tridex.


(a) After the date of this Agreement, no Magnetec employees will engage directly in the manufacturing operations of the Ribbon Business. As of the date of this Agreement, Tridex shall offer full time employment to the individuals listed on Schedule 4(a), and such individuals shall cease to be employed by Magnetec. Tridex shall offer such individuals cash compensation equal to their cash compensation paid by Magnetec and benefits substantially equivalent to their benefits provided by Magnetec. Only these individuals employed by Tridex for the Ribbon Business shall be permitted to operate Ribbon Business equipment.


(b) Tridex shall maintain managerial supervision and control of the Ribbon Business manufacturing operations and shall exercise final approval authority over all Tridex purchase orders and Tridex checks prepared by Magnetec in connection with the manufacturing support services rendered hereunder. The Ribbon Line Supervisor will supervise the Ribbon Business manufacturing line employees and serve as day-to-day on-site representative of Tridex for Ribbon Business matters.


(c) The Ribbon Line Supervisor, or another Tridex employee (as designated by Tridex in writing to Magnetec), shall: (i) forecast annual materials requirements; (ii) develop material requirements planning ("MRP") data for input to Magnetec's automated manufacturing and inventory control systems; (iii) develop a production schedule and determine quantities and delivery dates required for periodic materials requirements; (iv) issue Tridex purchase orders for delivery of such materials in the appropriate quantities on the delivery dates; (v) supervise Tridex employees engaged in the manufacturing operations of the Ribbon Business; (vi) collect Ribbon Business receivables; (vii) authorize payment of invoices; and (viii) supervise third-party payroll service and provide Tridex federal taxpayer identification number for payroll purposes.


2. Insurance. Tridex agrees to obtain and maintain all necessary insurance, including but not limited to, property, casualty, liability and workers' compensation with respect to the Ribbon Business and the Tridex employees engaged in Ribbon Business operations at Magnetec's facility. Tridex shall provide proof of coverage upon request by Magnetec.


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3. Space Provided. Magnetec hereby agrees to provide Tridex approximately ____ square feet of factory floor space and ____ total square feet of stockroom and finished goods warehouse space. Space provided to Tridex shall be clearly marked as separate areas designated for the Ribbon Business.


4. Ribbon Business Products Sold to Magnetec. Tridex agrees to sell Ribbon Business products to Magnetec at prices no higher than ten percent (10%) below the lowest price paid by any other customer of Tridex for the same products. This price is subject to annual adjustment upon the mutual agreement of the parties hereto, with annual increases not to exceed five percent (5%) of then current prices.


5. Tridex Manufacturing Facility. Tridex agrees to use commercially reasonable efforts to obtain its own manufacturing facility suitable for the conduct of the Ribbon Business and to relocate the Ribbon Business assets to such facility.


6. Manufacturing Support Services Provided by Magnetec. Effective upon the dat ...