Supplier Agreement BETWEEN XStream Systems, Inc. (“XSI”) And Kimball Electronics, Inc. (“Supplier” or “Kimball”)
Exhibit 10.10
| Xxxxxxx Electronics, Inc. | ||
0000 00xx Xxxxxx
|
0000 Xxxxx Xxxxxx | |
Xxxx Xxxxx, XX 00000
|
Xxxxxx, XX 00000 |
BETWEEN
XStream Systems, Inc. (“XSI”)
And
Xxxxxxx Electronics, Inc. (“Supplier” or “Xxxxxxx”)
Document Number:
Date:
This Supply Agreement (“Agreement”) is made this 6th day of September, 2006, to be effective
as of September 6, 2006 (the “Effective Date”) by and between XStream Systems, Inc., a Delaware
corporation, with its principal place of business at 0000 00xx Xxxxxx, Xxxx Xxxxx, XX
00000, together with its affiliates (collectively, “XSI”) and Xxxxxxx Electronics, Inc., a
Delaware corporation, having its principal place of business at 0000 Xxxxx Xxxxxx, Xxxxxx, XX
00000 (“Supplier” or “Xxxxxxx”).
WHEREAS, XSI is engaged in the design, development, manufacturing, marketing and distribution
and sale of Energy Dispersive X-ray Diffraction (EDXRD) technology products;
WHEREAS, Supplier is engaged in the provision of electronics manufacturing services to third
parties;
WHEREAS, Supplier wishes, for the period set forth below in this Agreement, to manufacture and
supply, on a build-to-print basis, certain Products (defined below) to XSI, and to provide certain
Services (defined below); and
WHEREAS, XSI, during such period, desires to purchase such Products and Services from
Supplier;
WHEREAS, a parent company of Supplier, Xxxxxxx International, Inc. (“Kll”), has agreed to
provide certain financial assistance to XSI in the form of loan in the principal amount of
$2,000,000, and in exchange for which XSI has executed and provided to Kll a promissory note
(“Note”); and
WHEREAS, XSI and Supplier wish to establish the terms and conditions upon which the purchase
and sale of such Products and Services will take place.
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows;
(1) Products and Exclusivity; Services and Tooling.
Products. XSI wishes to purchase complete assemblies, and certain agreed-upon engineering
and/or manufacturing design services, and/or tooling and equipment used in connection with the
XT250 system or other EDXRD technology related products. The complete assemblies which XSI will
purchase from Supplier under this Agreement (the “Products”) will be specified by part number in
Scheduling Agreements or Discrete Purchase Orders between Supplier and XSI which reference this
Agreement. Any Scheduling Agreement or Discrete Purchase Order that references this Agreement
shall be subject to this Agreement. Scheduling Agreements and Discrete Purchase Orders must be
approved in writing (e.g., via e-mail) by both parties.
Supplier shall, during the Term, manufacture the Products exclusively for XSI and sell the Products
exclusively to XSI. Supplier shall not, whether during or after the Term, manufacture the Products
for, or sell the Products to, others. For the initial 24 months of volume production of XT250
products during the Term of this Agreement, XSI commits to purchase from Supplier 100% of XSI’s
total demand of current and future iterations of the XT250 product and other products utilizing
EDXRD technology. However, XSI’s obligation shall be subject to Supplier performing in accordance
with the Supply Agreement. XSI may utilize other manufacturers if Supplier materially breaches the
Supply Agreement and/or cannot manufacture a sufficient number of XT250s to meet XSI’s forecasted
requirements. In connection with the right of
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exclusivity, during the Term, Xxxxxxx shall have the continuing right, with reasonable notice, to
audit the books and records of XSI, for the purposes of confirming no breaches in XSI’s
obligations pursuant to Section 1. The obligations of this paragraph shall survive the termination
or expiration of this Agreement.
Services and Tooling. Supplier shall also provide and XSI will purchase certain mutually
agreed-upon Product-related engineering and/or manufacturing design services (“Services”) and
special tooling and equipment to be used solely in connection with the Products (“Tooling”). Upon
full payment of the Note, all Tooling shall be owned by XSI and, upon XSI’s request, shall be
delivered to XSI
(2a.) Pricing.
Services and Tooling. Pricing for Services shall be Supplier’s standard billing
rates. In all cases, Services and Tooling provided by Supplier to XSI will be supported by
Supplier’s quotation that is approved by XSI in writing. A description of the Services and
Tooling is described on the attached Exhibit A.
Products. For the first 480 production units of XT250 Product, XSI shall notify Supplier of
the quantity of units thereof which XSI wishes to purchase. XSI prepare and provide to Supplier a
xxxx of material (“Xxxx of Material” or “BOM”) comprising such Products. Pricing for the first 480
units of such Product will be based on the Supplier’s actual cost of the Xxxx of Material (“BOM
Cost”) +13%.
Supplier shall provide to XSI a quote with respect to the sale price of such Products, such quote
to be submitted to XSI based on the cost model format below: On a rolling, 90-day basis (or such
other period as mutually agreed by both parties), XSI shall issue a Scheduling Agreement or
Discrete Purchase Order (which shall be consistent with the terms of this Agreement) with respect
to such Products.
Savings in the BOM Cost that are achieved in collaboration between Supplier and XSI shall be shared
equally by the parties. Prior to implementing any such savings measure and sharing any such
savings, Supplier and XSI shall be entitled first to recover all of their costs and expenses
(including unrealized depreciation on affected tooling and equipment) incurred in connection with
implementing such cost saving measures.
XSI’s share of such BOM Cost savings will be passed through to XSI in the form of price reductions
on Products, and Supplier’s share of such BOM Cost savings will inure to its benefit by retaining
such savings. BOM cost reviews shall be reasonably scheduled every six months.
Pricing for Products other than XT250 shall be subject to quote by Supplier and mutual
negotiation.
Pricing per the Cost Model Format:
Xxxx of Material Cost:
|
$ | (Established Xxxx of Materials) | ||||
Other Costs:
|
% | (13% of Xxxx of Material Cost) | ||||
Sell Price:
|
$ | (Xxxx of Material Cost + Other Costs) | ||||
This cost model assumes Product being manufactured at Supplier’s Jasper, Indiana factory and
shipped FOB shipping point from Supplier’s Jasper, Indiana location to XSI, or its designated
location within the continental United States, and it further assumes that the BOM Cost includes,
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without limitation, the cost of Product packaging. This cost model may be adjusted for certain
projects that may require special processes or tooling. Supplier and XSI will agree in writing on
the deviations at the time of quote.
Engineering and/or
Manufacturing Design Services: |
Standard billing rate (currently $100/Hour) | |||
Tooling and Equipment (NRE)
|
$ | (each item defined separately, refer to Exhibit A) |
Definition of each cost model format item:
Xxxx of Material Cost:
|
Total material cost for the quoted assembly. A costed Xxxx of Material showing each part shall be provided for each assembly. Material cost to include packaging material used for transporting the finished assembly. | |
Sell Price:
|
Final sell price to XSI. The sell price is equal to the Xxxx of Materials Cost + 13%. | |
Nonrecurring (NRE) Cost:
|
Items shall be quoted individually. | |
| Typical NRE costs include: | ||
Tooling |
||
Stencils |
||
Solder wave selective pallets |
||
Special Fixtures |
||
In-Circuit Test Fixtures |
||
Functional Test Equipment |
||
Engineering and/or Manufacturing Design Services |
Other XT250 or EDXRD technology Product pricing beyond the 480 units shall be subject to requote by
Supplier and mutual negotiation.
(2 b.) Cost sharing
Due to current electronic component market conditions, Supplier reserves the right, on a
prospective basis only, effective on the first day of the immediately succeeding month, to adjust
the sale price to XSI to cover the actual variance in the Xxxx of Material Standard if the
applicable Xxxx of Material Standard changes from the Xxxx of Material Standard then in effect and
XSI has approved such price increase in writing after at least ten (10) business days’ prior to
receiving written notification by XSI. In addition, if material lead-times exceed the planned
forecasts, any “expedited” material costs will, on a prospective basis only, effective on the first
day of the immediately succeeding month, be adjusted into the sale price or added as a Nonrecurring
charge to XSI after at least five (5) business days’ prior written notification to, and written
approval of, XSI. Supplier shall diligently pursue opportunities to mitigate the cost associated
with such component cost increases, premiums, expedite costs, etc. including identifying alternate
materials, new sources or distribution channels and demonstrate to XSI’s satisfaction that such
increases in cost could not have been reasonably avoided in order to obtain authorization for the
pass-through of these costs. Supplier shall review Engineering Change Orders to determine potential
cost increases or cost savings associated with xxxx of materials and process changes. It is
understood and agreed that the approval of XSI to those matters
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described above in this Section 2(b) may not be unreasonably withheld, conditioned or delayed,
based on mutual negotiations.
Xxxx of material cost will be reviewed by Supplier and XSI on a per order basis.
(2 c) Materials:
In the event that a Product reaches end of life, or after sixty (60) days of order inactivity, or
if XSI changes the Specifications (defined in Section 9(a) hereof), thus rendering Products and/or
component parts thereof excess or obsolete (“Inactive Program”), XSI will be responsible for the
excess materials associated with these products and components as if the underlying release,
Discrete Purchase Order and/or Scheduling Agreement was terminated as outlined in Section
11 of this Agreement. For Inactive Programs, XSI shall prepay for material. The status of
Product programs shall be reviewed during periodic business reviews and an Inactive status assigned
as appropriate. When, if ever, production of a previously Inactive Program resumes per mutual
agreement, the corresponding prepaid material will be credited back to XSI at the time of received
payment for the Products.
(3) Scheduling Agreements/Discrete Purchase Orders.
If the price quote provided pursuant to Section 2 above is acceptable to XSI, XSI will issue a
Scheduling Agreement or, as an alternative, a Discrete Purchase Order, with respect to the Products
that are the subject of the price quote. If XSI issues a Discrete Purchase Order for the purchase
of Products, such Discrete Purchase Order shall indicate that it is issued under this Supply
Agreement and shall specify the types and quantities of Products to be delivered to XSI, the item
numbers and material numbers, prices, delivery dates, delivery method. If XSI releases a Scheduling
Agreement, such Scheduling Agreement shall indicate that it is issued under this Supply Agreement
and shall reflect the price, the quantities of Products which XSI anticipates purchasing, the
period over which XSI would anticipate purchasing such Products, and the planned delivery time
(days).
(4) Delivery Time.
Supplier will use commercially reasonable efforts to deliver complete Products and Services in a
timely manner. Supplier agrees to maintain a minimum 95% on-time delivery level throughout the
Term. On-time delivery for the Products is defined as five (5) days’ prior to the requested
delivery date and three days (3) after the day of the requested delivery date. Late deliveries
which are the fault of XSI’s carrier or XSI shall not be taken into account in determining
Supplier’s on-time delivery performance. Notwithstanding any provision of this Agreement,
Supplier’s obligation to fulfill a Discrete Purchase Order or Scheduling Agreement in a timely
manner shall at all times be conditional upon those finished goods and raw material inventory
authorization levels set forth in Section 7 hereof (or in a separate material authorization
agreement signed by XSI) being sufficient and adequate to meet XSI’s requested delivery schedule.
(5) Payment.
Products shall not be invoiced to XSI until shipped to XSI or its designated location within the
continental United States. Payment for Products is to be made in U.S. Dollars and is due within 30
days after the date of invoice. Payment for Products does not prevent XSI from returning defective
Product (meaning Product that fails to conform to the Product warranty described in
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Section 9), and XSI shall receive appropriate credit within 30 days after defective product is
shipped back to Kll, for defective Product for which payment has already been made.
(6) Shipping.
All deliveries of Products shall be made to XSI or its designated location within the continental
United States on an F.O.B. Supplier’s Jasper, Indiana warehouse
basis. All invoices, cartons,
packing lists, and correspondence must specify the applicable Scheduling Agreement or Discrete
Purchase Order number.
(7) Forecast of Product Purchases.
Forecasts with respect to Products which are the subject of Discrete Orders or Scheduling
Agreements will be provided by XSI to Supplier. XSI shall provide timely and reasonably accurate
twelve (12) month rolling order forecast and will update the same at least two (2) business days
prior to the first of each month. Except as the parties may otherwise agree in writing, XSI is
responsible for and authorizes Supplier to fabricate 2 weeks of finished goods inventory and to
procure up to 13 weeks of raw materials inventory (plus any necessary custom or long lead-time
components). Obsolete and excess material claims due to engineering changes, changes to the
Specifications or model changeovers shall be paid within thirty (30) days of Supplier’s written
request.
(8) Term.
The initial term of this Agreement shall be the period from the Effective Date until the three (3)
year anniversary of the Effective Date, subject to a party’s right to terminate the Agreement
pursuant to Section 10 hereof. Thereafter this Agreement shall automatically renew for successive
annual periods (each a “Renewal Term”) unless either party gives the other written notice at least
one hundred eighty (180) days prior to the end of the then current term that such party does not
intend this Agreement to renew. The Initial Term together with any Renewal Terms shall be referred
to herein as the “Term”.
(9) Quality.
(a) Quality Standards. XSI shall provide Supplier with the Xxxx of Material,
specifications, designs, quality requirements and manufacturing requirements for the Products and
packaging and testing thereof, all of which shall, once accepted in writing by Supplier, be
referred to herein as the “Release Package” or “Manufacturing Specifications” or simply as the
“Specifications.” Subject to the Warranty (described below), Supplier will manufacture the Products
in accordance with such Specifications. Supplier will demonstrate compliance with such
Specifications by maintaining records of the manufacture/assembly and testing for each Product, and
by satisfying mutually agreed-upon receiving inspection. XSI may, upon reasonable advance notice of
not less than ten (10) business days, conduct reasonable quality audits from time to time with
respect to the Products and Supplier’s manufacturing facilities and manufacturing process, and
Supplier agrees to reasonably cooperate with XSI in connection with such audits.
(b) Warranty. For a period of twelve (12) months after shipment of Product from
Supplier to XSI or its designated location within the continental United States (or after
Supplier’s
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provision of a Service, as the case may be), Supplier hereby warrants to XSI that the Products
conform to the Specifications and are free from defects in workmanship and that any Services are
performed in accordance with all standards that are agreed upon by both parties in writing) (the
“Warranty”). Furthermore, Supplier agrees to assign and
transfer to XSI any and all manufacturer
warranties Supplier receives with respect to any Product-related material, molds, jigs, tools,
dies, and production tooling for the Term of this Agreement. The Warranty is the exclusive product
warranty that Supplier extends with respect to the Products. The Warranty shall be void with
respect to any misuse, abuse, misapplication or modification of the Products. ALL IMPLIED
WARRANTIES ARE EXPRESSLY DISCLAIMED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR THE INTENDED PURPOSE.
(c) Right to Return Defective Product; Right to Repair Defective Product. Following
notice from XSI by and through its designated field service organization (a “designated field
service organization”) and Supplier’s issuance to designated field service organization of a return
material authorization (“RMA”) number, which RMA Supplier agrees to provide with respect to any
Product that designated field service organization advises is defective. Designated field service
organization shall elect to provide services on site or at XSI/final destination or receive product
returned to Supplier. For any Products that do not conform to the Warranty set forth in Section
9(b) above, Supplier shall promptly repair or replace, at its option, such Products and ship to
designated field service organization non-defective, conforming Products. Supplier will pay the
round trip shipping costs for nonconforming Products returned to Supplier. Supplier shall be given
a commercially reasonable opportunity for inspection. Designated field service organization shall
set aside, protect and hold the nonconforming Products without further processing until Supplier
has inspected and/or advised Supplier of the disposition to be made of the nonconforming Products.
In no event shall any nonconforming Products be reworked or scrapped by designated field service
organization without the express written authorization of Supplier.
(d) Recalls. XSI shall promptly notify Supplier in the event of a governmental agency
mandated Product recall. In the event of any such recall, XSI shall notify Supplier of the
conditions causing such, and/or recall affected lot numbers or serial numbers of Products.
Supplier’s responsibility under any such recall shall be limited to those Products that failed to
conform to the Warranty (“recalled Product”), the replacement of such recalled Products without
charge to XSI, and the reimbursement of any actual and verifiable costs and expenses actually
incurred by XSI as a result of the recalled Products, but not including lost profits or other
consequential damages. Supplier will pay freight charges for all recalled Product(s) from XSI’s
facility to Supplier. Replacement Product(s), if any, for recalled
Product(s) will be shipped free of
charge to XSI or its designated location within the continental United States by Supplier without
any product, freight or customs charges to XSI. Notwithstanding the foregoing, Supplier’s maximum
liability in connection with Product recalls under this Agreement shall not exceed the Product
price as described in Section 2 hereof plus One Hundred Thousand Dollars ($100,000).
(e) Product Liability Insurance. Supplier and XSI shall each maintain at all times
during the term of this Agreement general and product liability insurance with limits of not less
than two million dollars ($2,000,000) per occurrence and five million dollars ($5,000,000) annual
aggregate, it being understood that, by mutual agreement, the parties may increase such coverage
limits over time. Supplier’s product liability insurance shall name XSI as an additional
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insured (or shall provide that XSI is covered as an additional insured by virtue of Suppliers
vendors’ endorsement), and shall provide that such insurance shall not be cancelled or the
coverage reduced without at least thirty (30) days’ prior written notice (ten (10) days in the
case of cancellation for nonpayment of premium) to XSI. Each party shall, from time to time, at
the request of the other party, provide the other party with a certificate of insurance evidencing
the foregoing.
(f) Notification of Product Defects. If either party becomes aware of a defect or
potential defect in the Product that such party reasonably believes would negatively affect the
form, fit, or function of the Product or result in personal injury or property damage, that party
will promptly deliver written notice of the defect or potential defect to the other party, and each
party will provide to the other party all information and analysis related to the defect or
potential defect reasonably requested by the other party.
(g) Continuous Improvement. Supplier will seek to continuously improve its performance
in all areas, including but not limited to quality, release lead-time, and pricing. In particular,
Supplier will evaluate opportunities for cost/price reductions on items ordered and to be ordered
and communicate them promptly to XSI. Supplier will provide to XSI, upon reasonable request,
documentation evidencing the Xxxx of Material Cost.
(h) Troubleshooting. Supplier agrees during the Term of this Agreement to
support XSI with troubleshooting of field and line failures to improve XSI’s and Supplier’s overall
quality. The parties may negotiate a field services agreement (“Field Services Agreement”) that
will describe the specific terms and conditions and pricing of such services as well as services to
assist XSI in fulfilling its extended warranty obligations, if any, that it extends to its
customers.
(i) Indemnification by Supplier. Supplier will, at its sole cost and expense,
defend, hold harmless and indemnify, XSI and its parent, affiliated and subsidiary companies,
officers and employees against any and all losses, damages, liabilities, claims, costs and expenses
(including reasonable attorneys’ fees), arising out of any proceeding, claim or action which is
brought or otherwise asserted by a third party against XSI for: (a) any infringement by Supplier’s
manufacturing processes of any patent, trademark, copyright or other intellectual property right
infringement (except for any infringement caused by Supplier’s compliance with Specifications
provided by XSI); and (b) any defective workmanship of the Products that caused property damage
and/or bodily injury (including death) to such third party.
(j) Indemnification by XSI. XSI will, at its sole cost and expense, defend,
hold harmless and indemnify Supplier and its parent, affiliated and subsidiary companies, officers
and employees against all losses, damages, liabilities, claims, costs and expenses (including
reasonable attorneys’ fees) arising out of any proceeding, claim or action which is brought or
otherwise asserted by a third party against Supplier with respect to: (a) any patent, trademark,
copyright or other intellectual property right infringement caused by the Product or Supplier’s
compliance with the Specifications provided by XSI; and (b) any defect, inadequacy, or
insufficiency of the Specifications.
(10) Termination.
(a) Termination for Cause. Should XSI or Supplier materially breach this
Agreement, this Agreement and subsequent releases or purchase orders may be terminated by the
non-breaching party, provided that the non-breaching party has given the breaching party written
notice of such breach and the breaching party has failed to cure such breach within thirty
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(30) days
(ten (10) days in the event of nonpayment) following the date of receipt of such notice.
Either party may also terminate this Agreement if (i) the other party becomes insolvent or the
subject of a voluntary or involuntary proceeding in bankruptcy, or a reorganization, arrangement
or creditor composition proceeding; (ii) the other party ceases doing business as a going concern;
or (iii) the other party is the subject of a dissolution, a sale of substantially all of its
assets, a merger or consolidation, or there is a change in ownership, management or control of
such party; or (iv) a receiver, trustee or similar officer is appointed with respect to any of the
other party’s properties or business, unless the appointment of the officer is vacated or
discharged within ten days. Additionally, any default by XSI under the Note shall constitute a
material breach by XSI of this Agreement for which there is no right to cure, and in which event
Supplier may immediately terminate this Agreement for cause.
(b) Termination of Scheduling Agreement or Discrete Purchase Order: Subject to
Sections 1 and 11, XSI shall have the right to terminate this Agreement with respect to a
Scheduling Agreement or Discrete Purchase Order upon the giving of at least six (6) months’ prior
written notice to Supplier. Supplier may terminate this Agreement and/or any Scheduling Agreement
or Discrete Purchase Order with six (6) months’ written notice to XSI if Supplier has reason to
believe that XSI’s Product purchases is or shall be significantly less than volumes previously
anticipated by Supplier.
(11) Liability for Inventory Upon Termination. If XSI terminates this Agreement with
respect to a Scheduling Agreement or Discrete Purchase Order pursuant to Section 10(b) above, or if
Supplier terminates this Agreement pursuant to Section 10(a) above, XSI shall, unless otherwise
agreed to in writing by both Supplier and XSI, remit payment to Supplier for (i) any unpaid
Services, (ii) all Product-related work-in-process (at the quoted price of the Product based on
percentage completion), (iii) all finished goods Products (at the applicable quoted price thereof),
and (iv) all Product-related raw materials (at the quoted costs) affected by such termination;
provided that in the case of raw materials, such raw materials were purchased in support of XSIs’
Discrete Purchase Orders, Scheduling Agreements and rolling forecasts, including without
limitation, all non-cancelable, non-returnable materials, and all minimum package quantities. In
addition to the foregoing, XSI shall reimburse Supplier for Supplier’s non-depreciated capital
equipment and tooling that is dedicated to the affected Products; provided that such equipment and
tooling was previously described in Supplier’s quotation. Supplier will endeavor to mitigate XSI’s
liability in connection with this Section. If XSI terminates this Agreement with respect to a
Scheduling Agreement or Discrete Purchase Order pursuant to Section 10(a) or 10(b) above, Supplier
will ship all such product related raw materials, non-cancelable and non-returnable materials,
minimum package quantities, capital equipment and tooling and finished goods within 30 days of
notice.
(12) Confidentiality. Both parties acknowledge and agree that in order to fulfill the
terms and conditions of this Agreement, it may be necessary for a party to disclose, from time to
time, confidential and/or proprietary information and data of such party or persons/entities with
which such party does business (each a “Third Party”) relating to or concerning such party, Third
Party or the products, technology, business or properties of such party or Third Party, including
any projections, plans or prospects relating thereto, including without limitation the following:
(a) information and data such party discloses to the other party or that is learned by the other
party through its work with the disclosing party or its presence at the disclosing party’s
facilities,
(b) the methods of doing business, manufacturing techniques, use of materials or components,
technical information, designs, service or warranty information, pricing, sourcing, sales and
business plans of such party or Third Party, (c) the bids, forms, documents, drawings, photographs,
samples, prototypes, analyses, computations, studies, reports (oral and written),
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and other
documents prepared by such party or Third Party, and (d) all information and data that
the receiving party derives or develops from the foregoing (collectively, “Confidential
Information”).
The party receiving Confidential Information (the “Receiving Party”) agrees not to disclose
any Confidential Information of the disclosing party (the “Disclosing Party”) to any third party
except that the Receiving Party may disclose Confidential Information to a court of competent
jurisdiction or to a federal, state or local agency in response to a request/demand for such
information by such court or federal, state or local agency; provided that in the case of a
request/demand for disclosure by a court or other agency, the Receiving Party, if permitted by law,
first promptly notifies the Disclosing Party of such request so that the Disclosing Party has an
opportunity to seek a protective order.
The Receiving Party further agrees not to disclose any Confidential Information internally except,
to those persons who need to know such Confidential Information for the purposes of performing this
Agreement and who are bound by a written confidentiality agreement prohibiting the disclosure and
unauthorized use of such information. The Receiving Party shall not use any Confidential
Information of the Disclosing Party except for the purpose of performing its duties and obligations
under this Agreement. Each Party shall adopt basic security measures of the kind commonly observed
in industries that rely extensively on proprietary information. These security measures should
include physical security measures, restrictions on access by unauthorized personnel and use of
confidentiality agreements with personnel, as appropriate.
Notwithstanding the foregoing, Confidential information shall not include information or data which
(a) was in the public domain prior to being furnished to the Receiving Party; (b) was known to the
Receiving Party prior to its disclosure to the Receiving Party by the Disclosing Party; (c) is
disclosed to the Receiving Party by a third party (without any breach of any confidentiality
agreement with or obligation to the Disclosing Party) who did not unlawfully acquire or receive
such information on a confidential basis from the Disclosing Party; (d) after being furnished to
the Receiving Party, entered the public domain through no act or failure to act on the part of the
Receiving Party; or (e) is independently developed by the Receiving Party without any breach of
this Agreement.
(13) Intellectual Property. Supplier shall not acquire any rights to any of XSI’s
intellectual property. Without limiting the generality of the foregoing, all right, title and
interest in and to any inventions, innovations or ideas developed specifically relating to the
XT250 and XSI’s products utilizing EDXRD shall be solely owned by XSI.
(14) Ownership.
(a) Product
Designs; Services. All Product designs are the sole and exclusive property
and responsibility of XSI. Intellectual property developed by Supplier in the provision of the
Services for which full payment is made by XSI shall be the sole and exclusive property of XSI.
(b) Molds, Jigs, Tools and Dies. Any molds, mold drawing files, jigs, tools or dies
paid for or supplied by XSI to Supplier for use in the manufacture of the Products shall remain the
sole and exclusive property of XSI and Supplier shall have no rights therein. All such molds, mold
drawing files, jigs, tools and dies shall be used only for the purpose of manufacturing Products
and without modification or alteration unless approved in writing by XSI. Supplier shall
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maintain such molds, jigs, tools and dies in the condition in which they were received by
Supplier, reasonable wear and tear excepted.
(c) Production Tooling: Any production tooling (e.g., stencils, In Circuit Test
fixtures, Functional Test Fixtures, solder pallets, etc.) defined as NRE shall be the sole and
exclusive property of XSI and Supplier shall be responsible for repairing and/or maintaining the
condition of such tooling. XSI will be responsible to upgrade or replace such tooling only in the
event that a XSI-identified re-design of a product dictates a change to such tooling.
(d) Return of Documents, Materials and Equipment Upon Termination of Agreement.
Promptly upon the termination of this Agreement for any reason, Supplier shall return to XSI all
product design drawings and documentation, consigned raw materials and components, molds, mold
drawing files, jigs, tools and dies, and any other documents, materials or equipment provided by
XSI to Supplier under this Agreement.
(15) Electronic Communications. E-mail is an accepted method of providing notices under
this Agreement. Each party will pay its own hardware, software and transmission costs in
connection with electronic communication. In addition, each party will take appropriate
precautions to ensure that transmissions are authorized and remain confidential. The parties will
promptly notify each other of communications that appear to be incorrect or unauthorized.
(16) Dispute Resolution: The parties shall attempt in good faith to resolve any dispute,
controversy or claim arising out of or relating to this Agreement (“Dispute”) promptly by
negotiations between executives or other representatives of the parties with authority to resolve
the Dispute. If a Dispute should arise, such representatives of the parties shall meet in
person or by telephone at least once and attempt to resolve the matter. Such meeting shall
take place within ten (10) days of a written request for such meeting at a mutually agreed
time. If such representatives of the parties mutually agree to have the Dispute mediated by a
third-party mediator, the mediation shall take place in Tampa, Florida (or such other mutually
acceptable location), and the parties shall share equally the fee and expenses charged by the
mediator. In the event that the Dispute is not settled within thirty (30) days of the meeting
of representatives (or the date of mediation, as the case may be) as described above, either
party may litigate the Dispute. Any legal action or proceeding seeking to enforce the terms of
this Agreement, must be brought in the appropriate state or federal court located in
Cincinnati, Ohio. The parties hereto consent to the exclusive jurisdiction and venue of said
courts.
(17)
Notices. All notices under this Agreement shall be in writing and shall be mailed by
certified mail with return receipt requested, or via a reputable overnight courier, and shall be
addressed as follows (or sent to such other address as a party may be advised of in writing in
accordance with the terms of this Section):
If to XSI:
Technical related notices only (which may be sent via email):
XStream Systems, Inc.
0000 00xx Xxxxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, VP Engineering
0000 00xx Xxxxxx
Xxxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, VP Engineering
xxxxxxxxx@xxxxxxxxxxxxxx.xxx
11
Legal/non-technical related notices:
XStream Systems, Inc.
0000 00xx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxx, President & CEO
0000 00xx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxx, President & CEO
With copies to:
Gunster, Yoakley & Xxxxxxx, P.A.
Xxxxxxxx Point
777 South Flagler Dr., Ste. 000 Xxxx
Xxxx Xxxx Xxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxx
Xxxxxxxx Point
777 South Flagler Dr., Ste. 000 Xxxx
Xxxx Xxxx Xxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxx
If to Supplier:
Technical-related notices (which may be sent by email):
Xxxxxxx Electronics, Inc.
Attention: Xxxxxxx Xxxxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Email: xxxxxxx@xxxxxxx.xxx
Legal/non-technical related notices:
Xxxxxxx Electronics, Inc.
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxx: Vice President, Business Development
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx Xxxx: Vice President, Business Development
With a copy to:
Xxxxxxx Electronics, Inc.
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Legal Department
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Legal Department
(18)
Entire Agreement. This Agreement and all exhibits, XSI’s Discrete Purchase Orders,
and all Scheduling Agreements as submitted from time to time hereunder, constitute the entire
agreement between the parties with respect to the subject matter hereof, and supersede all prior
and contemporaneous agreements and understandings between the parties concerning the subject matter
hereof. No preprinted terms and conditions of XSI’s Discrete Purchase Orders, or of any
acknowledgement or other documents of Supplier, shall have any applicability to this Agreement.
12
(19)
Independent Contractors. At all times Supplier will be an independent contractor to
XSI. Any public statements about “partnering” between XSI and Supplier will not create a legal
partnership or fiduciary relationship between XSI and Supplier. Neither party will, or has the
authority to, act as the agent of the other.
(20) Force Majeure. Neither party shall be liable for failure to perform or for delay in
performance (other than the obligation to make payment) due to fire, flood, act of God, act of any
governmental authority which is not specific to Supplier or XSI Systems, riot, embargo, delay in
transportation, inability to obtain necessary materials or due to any cause beyond such party’s
reasonable control. In the event of delay in performance due to any force majeure event described
in this Section, the time for completion will be extended by a period of time reasonably necessary
to overcome the effect of such delay, provided that the party whose performance is delayed shall
use its best efforts to promptly overcome the effects of the force majeure event.
(21) LIMITATION OF LIABILITY. Except with respect to the indemnification obligations
described in Sections 9(i) and 9(j), the confidentiality obligations of Section 12, and XSI’s
exclusivity obligations under Section 1, notwithstanding any other provision or paragraph of this
Agreement or any purchase order to the contrary, neither party will be liable to other party for
any indirect, punitive, special, or consequential (including loss of profits, loss of or use of
data, and/or interruption of business) damages, even if such other party knows or should know the
possibility of the same, caused by the furnishing of any product, good or service or the subsequent
use or performance thereof provided under this Agreement or any purchase order.
(22) Miscellaneous. This Agreement may only be waived, amended, changed or modified by an
instrument in writing which expressly refers to this Agreement and which is signed by the party
against whom this waiver, amendment, change or modification is sought. No waiver by either party of
any breach by the other of any provision hereof shall be deemed to be a waiver of any later or
other breach thereof or as a waiver of any other provision of this Agreement. This Agreement shall
inure and be binding upon these parties, their successors and assigns, and XSI shall not transfer
or assign any interest in this Agreement without the prior written consent of Supplier. Should any
provision of this Agreement be declared invalid or unenforceable as a matter of law, such
invalidity or unenforceability shall not affect or impair the validity and enforceability of any
other provision of this Agreement or the remainder of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first
above written.
| Supplier: | ||||||||||
| Xxxxxxx Electronics, Inc. | XStream Systems, Inc. | |||||||||
By:
|
/s/ Xxxxxx X. Xxxxxxx
|
By: | /s/ Xxxxx X. Xxxx
|
|||||||
| Xxxxxx X. Xxxxxxx |
Xxxxx X. Xxxx |
|||||||||
| Printed Name | Printed Name | |||||||||
| President |
President & CEO |
|||||||||
| Title | Title | |||||||||
| September 6, 2006 |
September 14, 2006 |
|||||||||
| Date | Date |
13
