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EXHIBIT 10.3
PRODUCT DEVELOPMENT AGREEMENT
AGREEMENT made July 28, 1997 between CRYSTAL MEDICAL PRODUCTS, INC., an
Illinois corporation ("Crystal") and SRC, INC., a California corporation ("SRC")
and W. XXXXX XXXXXX ("Xxxxxx"). SRC and Xxxxxx are referred to herein as
"Developer."
WHEREAS, Crystal is in the business of developing and marketing
products to detect various pathogens in food products for use by the food
manufacturing industry; and
WHEREAS, Developer has submitted to Crystal a proposal dated March 22,
1997 (the "Proposal"), a copy of which is attached hereto as Exhibit A and
incorporated herein by reference, for the development and pre-production
manufacturing of certain pathogen detection equipment (the "Equipment"); and
WHEREAS, Crystal wishes to engage Developer to develop the Equipment
(the "Project"), and Developer wishes to develop the Equipment for Crystal.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
promises contained herein, agree as follows:
1. The Project and Delivery. Crystal hereby engages Developer
as an independent contractor to develop specifications for the Equipment
described in the Proposal and to deliver to Crystal 10 complete prototypes, a
plastic injection molded tool and 2,000 cartridges, and manufacturing
transferrable documentation, all as more fully described in the Proposal and in
accordance with the Final specifications. Developer shall also deliver all tools
or fixtures for assembly, Source Codes, and Validation of source.
2. Specifications. Developer shall commence work upon
execution of this Agreement and shall within 45 days submit draft specifications
for the Equipment for review and revision by Crystal. Within 30 days after
submission of the draft, Developer shall submit final specifications reflecting
Crystal's comments. Upon approval by Crystal of the final specifications,
Developer shall proceed with the balance of the Project as described in the
Proposal.
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3. Term. The first prototype shall be delivered to Crystal
within seven months of the date hereof, and the balance of the Equipment shall
be delivered within eight months of the date hereof. Crystal may terminate the
Agreement at any time on 30 days' prior written notice, and Developer shall be
paid the portion of their fee that has accrued through the date of termination.
4. Reports. Developer shall submit to Crystal a detailed
monthly report of its progress, which report shall be due prior to each monthly
fee payment.
5. Fees. Crystal shall pay Developer an initial deposit of
$282,520.38 upon execution of this Agreement, receipt of which is hereby
acknowledged by Developer, which deposit shall cover fees through August 20,
1997. Thereafter, fees will be due in advance on the first day of each month,
commencing August 21, 1997, in six monthly payments in the amount of
$105,945.14. A seventh and final payment of $211,890.28 shall be due upon
completion of the Project and delivery in accordance with paragraph 1 hereof.
6. Expenses. Developer shall pay all expenses required to
complete the Project, except as follows:
a. Crystal shall reimburse Developer for reasonable
travel expenses incurred in connection with the Project for travel upon prior
written approval of Crystal.
b. Crystal shall reimburse Developer (or make direct
payments at Developer's request) for material expenses approved in advance by
Crystal from time-to-time, which expenses shall not exceed $286,750.00 in the
aggregate.
7. Independent Contractor. Developer is an independent
contractor and is not a partner, agent or employee of Crystal. The parties agree
that Xxxx X. Xxxxxxxx ("Xxxxxxxx") is the principal of SRC, Inc. and shall
perform all services required of SRC, Inc. under this Agreement. Xxxxxxxx, SRC
and Xxxxxx shall be jointly and severally liable under this Agreement. Crystal
shall allocate payments among the principals of Developer pursuant to
Developer's written request.
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8. Patent Indemnity. Developer agrees at its own cost to
defend any claim, suit or proceeding brought against Crystal on the issue of
infringement of any United States copyright or patent by the Equipment as
supplied by Developer to Crystal, provided Crystal notifies Developer promptly
in writing of any such claim, suit or proceedings.
9. Rights in Project. All know-how, ideas, techniques, formula
and concepts developed in connection with the Project shall be the property of
Crystal and Developer shall have no right, title or interest therein. Developer
agrees, at Crystal's request and Crystal's cost, to execute all U.S. and foreign
patent applications and fully to assign to Crystal the whole and entire right,
title and interest in and to such patent applications and patents which Crystal
may decide to file or has obtained on Developer's ideas, designs, discoveries,
inventions or improvements in connection with the Project, and to assist Crystal
in the prosecution of such patent applications and in the enforcement and
maintenance of the patents granted thereon, whether or not after termination of
this Agreement. In all cases, such execution of patent applications and
assignments and assistance shall be provided at no cost to Crystal, except that
Crystal shall reimburse Developer for the Developer's costs or expenses
necessarily incident to Crystal's request, pursuant to this provision, and
provided further that Crystal agrees to pay Developer $100.00 at the time that a
U.S. patent is executed and assigned by Developer.
10. Restriction. Developer agrees that it will not, during the
term of this Agreement and for a period of one year thereafter, develop
Equipment similar to the Project for itself or for any competitor of Crystal. In
the event of any actual or threatened violation of such restriction, Crystal
shall be entitled, in addition to any other remedy, to preliminary and permanent
injunctive relief.
11. Disclosure. Developer has executed confidentiality and
non-disclosure agreements with Crystal with respect to the subject matter
hereof, and Developer reaffirms its obligations thereunder. All books, records,
and materials used by Developer in connection with the Project pursuant to this
Agreement shall at all times remain the property of Crystal and upon termination
of this Agreement, irrespective of the time, manner or cause of said
termination, Developer will surrender to Crystal all such lists,
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books and records, together with all Equipment and other materials purchased for
this Project.
12. Representations and Warranties. Developer represents and
warrants to Crystal that Developer has the expertise necessary to execute the
Proposal and will perform this Agreement in accordance with all governmental
safety and other applicable regulations, and it understands and acknowledges
that the materials involved in the Project are experimental in nature and have
not been subject to governmental or other reviews for safety. Developer
represents and warrants to Crystal that Xxxxxxxx and Xxxxxx will devote
substantially their full time to this Project during the term hereof, and that
they will hire sufficient staff and procure sufficient equipment to diligently
prosecute completion of the Project in accordance with this Agreement.
13. Notice. All notices required to be given under this
Agreement shall be in writing, and shall be delivered to the addressee in person
or mailed by certified mail, return receipt requested:
If to Crystal, addressed to:
Xxxxxx Xxxxxxx, C.P.A.
Xxxxxxx, Xxxxx & Company
000 Xxxxxx Xxxxxx, 000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
If to Developer, addressed to:
or to such other address as a party shall have designed by notice given in
accordance with this paragraph.
14. Binding Agreement. This Agreement shall inure to and shall
be binding upon the parties hereto, and the successors and assigns of Crystal
and the successors, heirs and personal representatives of Developer. This
Agreement may not be assigned
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by Developer. SRC, Xxxxxx and Xxxxxxxx shall be jointly and severally liable
hereunder.
15. Governing Law. This Agreement has been negotiated and
executed within the Commonwealth of Pennsylvania, and the law of that state
shall govern its construction and validity.
16. Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof.
No change, addition or amendment shall be made except by written agreement
assigned by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
CRYSTAL MEDICAL PRODUCTS, INC.
By:/s/Xxxxxx Xxxxxxx 7/28/97
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SRC, INC.
By:/s/Xxxx X. Xxxxxxxx 7/18/97
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/s/ W. Xxxxx Xxxxxx 7/18/97
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W. XXXXX XXXXXX
/s/ Xxxx X. Xxxxxxxx 7/18/97
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XXXX X. XXXXXXXX
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