Exhibit 10.1
This Supply Agreement (this
“Agreement”) is made and entered into as of May 30, 2007 (the
“Effective Date”), by and between [Confidential treatment requested
— the omitted information has been filed separately with the Securities and Exchange
Commission], with offices at [Confidential treatment requested — the omitted
information has been filed separately with the Securities and Exchange Commission]
(“Seller”), and Security With Advanced Technology, Inc., a Colorado
corporation, with offices at 00000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxx
00000-0000 (“Buyer”).
Recitals
Whereas, Buyer wishes to
purchase from Seller, and Seller wishes to sell to Buyer, certain [Confidential treatment
requested — the omitted information has been filed separately with the Securities and
Exchange Commission], such sales and purchases to be implemented on the terms and
conditions set forth in this Agreement.
Now, Therefore, Seller and
Buyer agree as follows:
| a) |
This
Agreement shall commence on the Effective Date and shall remain in force
and effect (the “Term”) until the earlier of (i) the
fourth anniversary of the Effective Date, (ii) [Confidential treatment
requested — the omitted information has been filed separately with the
Securities and Exchange Commission], and (iii) the earlier termination of
this Agreement pursuant to Section 1.b). |
| b) |
Either
party may terminate this Agreement upon giving the other party notice of
an event of default (“Event of Default”), which will
exist with respect to a party if: |
| |
(i) |
a
decree or order is made by a court having jurisdiction over such party
adjudging it to be a bankrupt under applicable law; |
| |
(ii) |
a
decree or order is made by a court having jurisdiction over such party
appointing a receiver, or receiver-manager, who is not bound by the terms
of this Agreement, or a liquidator or trustee or assignee in bankruptcy of
such party or of its property, or directing the winding-up or liquidation
of its affairs; |
| |
(iii) |
any
other decree or order has been made by a court of competent jurisdiction by
which such party is deprived of the right to manage its undertakings and
has remained in force undischarged and unstayed for 45 business days; |
| |
A. |
institutes
proceedings to be adjudicated a voluntary bankrupt; |
| |
B. |
consents
to the filing of a bankruptcy proceeding against it; |
| |
C. |
consents
to the appointment of a receiver, liquidator or trustee or assignee in
bankruptcy or insolvency of itself or its property; or |
| |
D. |
makes
an assignment for the benefit of creditors, or admits in writing its
inability to pay its debts generally as they become due. |
| |
(v) |
such party has committed a material default in the performance of its
obligations under this Agreement, written notice has been given to such party
specifying such default and declaring the intention of the other party to
exercise its right to terminate this Agreement if the default is not duly
remedied, and |
| |
A. |
more
than 15 business days have elapsed since the expiration of such period
following the giving of such notice and such default remains unremedied,
or |
| |
B. |
in
case of a default that is not capable of being remedied, by the exercise of
reasonable diligence within the period described in Section 1.(b.)(v)A.,
the earlier of |
| |
I) |
the
day on which the party fails or refuses to act diligently to remedy the
default, and |
| |
II) |
the
day on which it becomes evident to the other party, acting reasonably, that
such default could not be remedied in a reasonably timely manner
regardless of the actions to be taken by such party. |
| c) |
In
the event this Agreement is terminated by Buyer due to an Event of Default
caused by Seller, the remaining Escrow Amount (as defined herein), if any,
shall be returned to Buyer in accordance with the terms of the Escrow
Agreement (as defined herein). In the event this Agreement is terminated
by Seller due to an Event of Default caused by Buyer, the remaining Escrow
Amount (as defined herein), if any, shall be paid to Seller as liquidated
damages in accordance with the terms of the Escrow Agreement (as defined
herein). |
The product covered by this Agreement
shall be [Confidential treatment requested — the omitted information has been filed
separately with the Securities and Exchange Commission] (“Product”).
Parties agree that Buyer [Confidential treatment requested — the omitted information
has been filed separately with the Securities and Exchange Commission].
Buyer shall maintain at least a
[Confidential treatment requested — the omitted information has been filed separately
with the Securities and Exchange Commission] supply of [Confidential treatment requested
— the omitted information has been filed separately with the Securities and Exchange
Commission] at Seller’s plant. Seller shall notify Buyer at least monthly as to the
quantity of [Confidential treatment requested — the omitted information has been
filed separately with the Securities and Exchange Commission] in inventory at
Seller’s plant.
| 3. |
PRODUCT
QUANTITY FORECASTING; PRICING; EXCLUSIVE ARRANGEMENT |
| a) |
During
the Term, Seller agrees to sell to Buyer, and Buyer agrees to buy from
Seller, Product upon the terms set forth in this Agreement. |
| b) |
During
the Term, Buyer will provide Seller with purchase orders for Product
[Confidential treatment requested — the omitted information has been
filed separately with the Securities and Exchange Commission] in advance,
with the initial [Confidential treatment requested — the omitted
information has been filed separately with the Securities and Exchange
Commission] purchase orders and pricing of Product set forth on Exhibit
A attached hereto. The purchase orders shall be issued every 60 days,
beginning 10 days from the Effective Date. All purchase orders of Buyer
shall be deemed to incorporate the terms of this Agreement. The purchase
orders issued by Buyer shall not modify or alter the terms of this
Agreement [Confidential treatment requested — the omitted information
has been filed separately with the Securities and Exchange Commission]
without the written consent of Seller. Purchase orders also shall not be
cancelled, revoked, delayed or reduced by Buyer unless consented to in
writing by Seller; provided, however, that all unfilled purchase orders
shall be cancelled on the date of termination of this Agreement pursuant
to Section 1(a). Purchase orders shall not exceed [Confidential treatment
requested — the omitted information has been filed separately with
the Securities and Exchange Commission], without Seller’s written
consent. [Confidential treatment requested — the omitted information
has been filed separately with the Securities and Exchange Commission] |
| c) |
[Confidential
treatment requested — the omitted information has been filed
separately with the Securities and Exchange Commission]. If Seller fails
to fulfill any purchase order within ninety (90) days of its requested
delivery date, Seller shall be deemed to have materially breached this
Agreement (and such default shall not be entitled to any cure period by
Seller under Section 1(b)). |
[Confidential treatment requested
— the omitted information has been filed separately with the Securities and Exchange
Commission]. Notice pursuant to this paragraph may be served by Seller via email or fax as
provided to in Exhibit C (or at such other email address as is provided by Buyer to Seller
from time to time) and not otherwise subject to the terms of paragraph 15.
Taxes, duties or other charges of any
nature imposed by any governmental authority that become payable by reason of a sale or
delivery of Product under this Agreement will be paid by Buyer.
| a) |
Seller
warrants that Product purchased hereunder [Confidential treatment
requested — the omitted information has been filed separately with
the Securities and Exchange Commission] shall conform to the
specifications set forth on Exhibit B. |
| b) |
In
the event that 2% or more of any Product shipment received by Buyer at any
time fails to conform to the specifications set forth on Exhibit B,
Buyer shall promptly notify Seller and Seller shall replace or credit
Buyer for any and all defective Product. If Seller fails to cure material
defects within 60 days of such notice, Seller shall be deemed to have
materially breached this Agreement (and such default shall not be entitled
to any cure period by Seller under Section 1.(b.)). |
| c) |
Notwithstanding
any provision of this Agreement to the contrary, the Seller warranty
contained in Section 6(a) is the only warranty extended by Seller in
connection with the Products and such warranty shall be extended to Buyer
only and not to any successive buyers, users, third parties or employees
and is in lieu of all other warranties, express or implied, including
warranties of merchantability and fitness for a particular purpose. |
| a) |
Within
three days of the Effective Date, Buyer shall deposit $1,000,000 in cash or in the
form of an irrevocable letter of credit (the “Escrow Amount”)
into an escrow account maintained by [Confidential treatment requested
— the omitted information has been filed separately with the
Securities and Exchange Commission], as escrow agent (“Escrow Agent”),
pursuant to an Escrow Agreement in the form attached hereto as Exhibit C (the
“Escrow Agreement”). |
| b) |
Payments
for Product purchased by Buyer shall be made as follows: |
| |
(i) |
50%
of the purchase price shall be paid to Buyer from the Escrow Amount upon
shipment of such Product and the remaining 50% of the purchase price shall be
paid on a net 30-day basis from the date of shipment. |
| |
(ii) |
Upon
the exhaustion of the Escrow Amount, Buyer shall then pay 100% of the purchase
price on a net 30-day basis from the date of shipment, subject to Buyer
maintaining a satisfactory credit profile. Credit terms may be withdrawn or
revised, if in Seller’s reasonable discretion, Buyer is or becomes a
credit risk. |
| c) |
[Confidential
treatment requested — the omitted information has been filed
separately with the Securities and Exchange Commission]. In the event this
Agreement is terminated upon the expiration of the Term, the remaining
Escrow Amount, if any, shall be paid to Seller. |
| d) |
In
the event that amounts due to Seller are not paid when due, then the unpaid
balance shall accrue interest at the rate of 1% per month until paid.
Invoices of Seller for Products shall bear interest as provided above if
not paid within 30 days of the date of invoice [Confidential treatment
requested — the omitted information has been filed separately with
the Securities and Exchange Commission]. |
Buyer will be solely responsible for
obtaining any permits and licenses and preparing any necessary paperwork for the export
and import of Product to Buyer’s location.
Buyer will, at its expense, defend,
indemnify and hold Seller and its Affiliates (as defined below), employees and agents
harmless from any and all Loss incurred [Confidential treatment requested — the
omitted information has been filed separately with the Securities and Exchange
Commission].
“Loss” means any liability,
demand, claim, action, cause of action, cost, damage, deficiency, penalty, fine or other
loss or expense, including all interest, penalties, reasonable attorneys’ fees and
expenses and all amounts paid or incurred in connection with any action, demand,
proceeding, investigation or claim. “Loss” shall not include any indirect,
punitive or consequential damages, including, without limitation, lost profits.
| 10. |
INDEPENDENT
CONTRACTOR |
This Agreement shall not constitute
or give rise to a partnership, joint venture or other affiliation between the parties. All
activities of Seller under the terms of this Agreement shall be carried on by Seller as an
independent contractor and not as an agent for Buyer. Seller shall have no right to
obligate or bind Buyer in any manner, and Seller agrees not to make any representation to
any person to the contrary.
| 11. |
GOVERNING
LAW; JURISDICTION |
THIS AGREEMENT WILL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
(REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS THEREOF) AS TO ALL MATTERS, INCLUDING BUT NOT LIMITED TO MATTERS OF
VALIDITY, CONSTRUCTION, EFFECT, PERFORMANCE AND REMEDIES.
The failure of either party to insist
in any one or more instances upon strict performance of any of the provisions of this
Agreement or to take advantage of any of its rights hereunder shall not be construed as a
waiver of any such provisions or the relinquishment of any such rights, but the same shall
continue and remain in full force and effect.
| 13. |
NO
THIRD PARTY BENEFICIARIES |
This Agreement is solely for the
benefit of Buyer, and its successors and permitted assigns, with respect to the
obligations of Seller under this Agreement, and for the benefit of Seller, and its
respective successors and permitted assigns, with respect to the obligations of Buyer
under this Agreement, and this Agreement shall not be deemed to confer upon or give to any
other third party any remedy, claim liability, reimbursement, cause of action or other
right.
This Agreement and all of the
provisions hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned, directly or
indirectly, including, without limitation, by operation of law, by any party hereto
without the prior written consent of the other party hereto, which consent shall not be
unreasonably withheld, except that, in any case, the assignee shall assume in writing the
obligations of the assigning party.
All notices, requests, demands,
waivers and other communications required or permitted to be given under this Agreement
shall be in writing and may be given by any of the following methods: a) personal
delivery, or b) overnight delivery service. Notices shall be sent to the appropriate party
at its address given below (or at such other address for such party as shall be specified
by notice given hereunder):
|
|
If to Seller to:
If to Buyer to:
|
[Confidential treatment requested - the omitted information has been filed separately with the Securities
and Exchange Commission]
with a copy to:
[Confidential treatment requested - the omitted information has been filed separately with the Securities
and Exchange Commission]
Security With Advanced Technology, Inc.
00000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxxx X. XxXxxxxxx
with a copy to:
Xxxxxxxxxx Hyatt Xxxxxx Xxxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxx X. Xxxxx
|
All such notices, requests, demands,
waivers and communications shall be deemed received i) in the case of personal delivery,
upon actual receipt thereof by the addressee, or ii) in the case of overnight delivery, on
the business day following delivery to the overnight delivery service.
| 16. |
CONFIDENTIAL
INFORMATION |
Except as provided below, all
information disclosed between the parties pursuant to, or relating to any provision of,
this Agreement, including information relating to third parties (including Buyer’s
customers), is deemed confidential (“Confidential Information”). A party
receiving Confidential Information (the “Receiving Party”) will not use
such information for any purpose other than for which it was disclosed and shall prevent
the disclosure to third parties of any and all Confidential Information provided that the
Receiving Party’s obligation hereunder shall not apply to information that:
| a) |
is
already in the Receiving Party’s possession at the time of disclosure
thereof; |
| b) |
is
or subsequently becomes part of the public domain through no action of the
Receiving Party; |
| c) |
is
subsequently received by the Receiving Party from a third party having no
obligation of confidentiality to the party disclosing the confidential
information; |
| d) |
is
disclosed to third parties as required by law; or |
| e) |
is
delivered to customers of Buyer’s business in the context of
understanding the nature of the sale of the business; provided that, such
communication to customers may not occur without the prior written consent
of Seller. |
Buyer shall within 45 days of the
Effective Date of this Agreement or upon first shipment of the Products by Buyer to its
customers, (whichever shall first occur) obtain and maintain during the Term of this
Agreement and for six years thereafter, at its own expense, Products Liability/Completed
Operations insurance, to cover any product defect or liability, with a minimum and
aggregate limit of $2,000,000. Such insurance will carry a deductible not to exceed
$50,000. Buyer shall cause the insurance company issuing such policy to issue a
certificate to Seller which (i) confirms that such policies have been issued and are in
full force and effect providing coverage of Seller as required by this paragraph; (ii)
states the amount of the deductible for each such policy; and (iii) confirms that before
any cancellation or material change in coverage of any such policy, the insurance company
shall give Seller thirty (30) days prior written notice of such proposed cancellation or
material change. Such insurance company shall have a rating of at least [A-:IX],
as published by Best’s Insurance Reports. Buyer shall name Seller as an additional
insured under such insurance policies.
This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, between the parties or
any of them with respect to the subject matter hereof. This Agreement may not be amended
except by an instrument in writing signed on behalf of all the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
Should any provision of this
Agreement for any reason be declared invalid or unenforceable, such decision shall not
affect the validity or enforceability of any of the other provisions of this Agreement,
which remaining provisions shall remain in full force and effect and the application of
such invalid or unenforceable provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall be valid and enforced to the fullest
extent permitted by law.
This Agreement may be executed
simultaneously in counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
| a) |
All disputes and controversies of every kind and nature between the parties
hereto arising out of or in connection with this Agreement as to the existence,
construction, validity, interpretation or meaning, performance, non-performance,
enforcement, operation, breach, continuance, or termination thereof shall be
submitted to arbitration pursuant to the following procedure: |
| |
(i) |
Either
party may demand arbitration after a controversy arises, which arbitration
shall be submitted to, and conducted under the auspices of the American
Arbitration Association, by a panel of three (3) Arbitrators (one of whom
shall be selected by Seller, one of whom shall be selected by Buyer and the
third shall be selected by mutual agreement of the arbitrators so
selected). |
| |
(ii) |
Each
party shall bear its own arbitration costs and expenses. |
| |
(iii) |
The
arbitration hearing [Confidential treatment requested — the omitted
information has been filed separately with the Securities and Exchange
Commission], and the laws of evidence of the State of Delaware shall
govern the presentation of evidence therein. |
| |
(iv) |
An
award rendered by the arbitrator(s) appointed pursuant to this Agreement
shall be final and binding on all parties to the proceeding, and judgment
on such award may be entered by any court, state or federal, having
jurisdiction. |
| b) |
The parties stipulate that the provisions hereof shall be a complete defense to
any suit, action, or proceeding in any court or before any administrative
tribunal with respect to any controversy or dispute arising under this Agreement
and which is arbitrable as herein set forth. The arbitration provisions hereof
shall, with respect to such controversy or dispute, survive the termination or
expiration of this Agreement. |
| c) |
Nothing herein contained shall be deemed to give the arbitrators any authority,
power, or right to alter, change, amend, modify, add to, or subtract from any of
the provisions of this Agreement. |
| |
d) |
The
arbitrators shall not be authorized to award punitive or consequential damages
or attorneys’ fees. Nothing in this Section shall prohibit any party
hereto from instituting litigation to enforce any final judgment, award or
determination of the arbitration. |
* * * *
IN WITNESS WHEREOF, Seller and Buyer
have executed this Supply Agreement as of the Effective Date.
|
|
|
SELLER:
[Confidential treatment requested - the omitted information has been filed
separately with the Securities and Exchange Commission]
BUYER:
Security With Advanced Technology, Inc.
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: CEO and President
|
