EXHIBIT 10.9
[Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment under Rule 406 under the Securities Act of 1933, as
amended. A copy of this Exhibit with the portions intact has been filed
separately with the Securities and Exchange Commission.]
EQUIPMENT PURCHASE AND SOFTWARE LICENSE AGREEMENT
THIS AGREEMENT is made as of this 6th day of February, 1996 by and
between SELECT COMFORT CORPORATION, a Minnesota corporation (the "CUSTOMER"),
with an address of 0000 Xxxxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx
00000-0000, and XXXXX, organized under the laws of XXXXXX (the "SUPPLIER"),
with an address at XXXXXXXXXX.
WHEREAS, the Supplier is the manufacturer of certain air xxxxxxxx that
are used by the Customer in the manufacture of Customer's air sleep systems; and
WHEREAS, the Customer has acquired certain equipment and has developed
certain software and testing procedures, which equipment, software and testing
procedures are useful in testing the air xxxxxxxx sold by the Supplier to the
Customer, which testing may result in substantial savings to the Supplier; and
WHEREAS, the Supplier desires to purchase from the Customer the equipment
and to license from the Customer the software and testing procedures, all as
hereinafter described and subject to the terms and conditions of this Agreement;
and
WHEREAS, the Customer desires to obtain reasonable protection of its
proprietary and confidential information that has been developed by the Customer
at considerable expense;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. PURCHASE AND SALE OF EQUIPMENT. The Supplier hereby agrees to
purchase from the Customer, and the Customer hereby agrees to sell to the
Supplier, the equipment described on Exhibit I attached hereto and made a part
hereof, for an aggregate purchase price of $20,454.69 US Dollars, payable
immediately upon receipt of the equipment by the Supplier. Supplier hereby
acknowledges that the Customer is not the manufacturer of the equipment. The
Customer does hereby assign to the Supplier, subject to and effective only upon
receipt by the Customer of the purchase price for the equipment set forth above,
all of the Customer's rights under the original equipment manufacturer's
warranty relating to the equipment, a copy of which warranty will be included
with the equipment delivered to the Supplier. Select Comfort will provide
warranty support to XXXXX as outlined in the original equipment manufacturers
warranty. EXCEPT AS EXPRESSLY SET FORTH ABOVE, THE CUSTOMER DISCLAIMS ALL
WARRANTIES ON PRODUCTS FURNISHED HEREUNDER, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. THE EXPRESS PROVISIONS OF THIS SECTION ARE IN LIEU OF ALL
OBLIGATIONS OR LIABILITIES ON THE PART OF THE CUSTOMER FOR DAMAGES, INCLUDING
BUT NOT LIMITED TO, SPECIAL, INDIRECT, OR CONSEQUENTIAL DAMAGES ARISING OUT OF
OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THE EQUIPMENT ACQUIRED BY THE
SUPPLIER HEREUNDER.
2. GRANT OF A LICENSE FOR LIMITED USE OF SOFTWARE AND TESTING
PROCEDURES.
(a) GRANT OF LICENSE. For and in consideration of the
agreements of the Supplier set forth in this Agreement, and subject to
the fulfillment by the Supplier of all of its obligations set
forth in this Agreement, the Customer hereby grants to the Supplier a
non-exclusive, non-transferable, license to use the software and the
testing procedures described on Exhibit 2 attached hereto and made a
part hereof (the "LICENSED TECHNOLOGY") solely and exclusively to
enable the Supplier to test the air cell bladders to be sold by the
Supplier to the Customer, and for no other use or purpose of any kind.
The Supplier may not sell, lease, license or otherwise transfer any
of the Licensed Technology or any rights therein, nor otherwise use or
exploit the Licensed Technology for any use or purpose except as
expressly set forth above. Specifically, and not in limitation of the
foregoing, the Supplier acknowledges and agrees that it is not
authorized to use the Licensed Technology for the purpose of testing
any products of the supplier that may be held for sale to any party
other than the Customer.
(b) OWNERSHIP OF LICENSED TECHNOLOGY. The Supplier hereby
acknowledges and agrees that the Licensed Technology constitutes
proprietary and confidential trade secret information of the Customer,
and acknowledges and agrees that the Customer has enforceable trade
secret protection with respect to the Licensed Technology and enforceable
copyright protection in the documentation relating to the Licensed
Technology.
(c) CONFIDENTIALITY. The Supplier acknowledges and agrees that
the Licensed Technology, and all embodiments thereof in whatever form,
constitute "CONFIDENTIAL INFORMATION" as such term is used in this
Agreement. The Supplier agrees that it shall not use the Confidential
Information for any purpose other than solely and exclusively for the
purpose of testing air cell bladders to be sold to the Customer as
ordered and specified by the Customer in connection with the business
relationship between the Customer and the Supplier. The Supplier hereby
agrees that it will not at any time, whether during the term of this
Agreement or thereafter, use the Confidential Information for any use or
purpose not expressly authorized by this Agreement, and will not disclose
the Confidential Information to any person or entity not expressly
authorized by the Customer to receive such Confidential Information,
except that the Supplier may disclose the Confidential Information to any
of its employees who have a need to know such Confidential Information
solely for the purpose of enabling such employees to perform the tests of
the air cell bladders to be sold by the Supplier to the Customer, and
provided that the Supplier advises each such employee that the
Confidential Information is proprietary and confidential trade secret
information of the Customer and that such employees are obligated to
maintain the confidentiality of all such Confidential Information. Upon
the termination of the license granted hereunder for any reason, the
Supplier agrees to promptly return to the Customer all of the
Confidential Information, including all copies or other reproductions
thereof in whatever form in Supplier's possession or control.
(d) DERIVATIVES. The term "DERIVATIVES" as used in this
Agreement shall mean any software developed in part by the Supplier which
is a derivative or modification of any of the Licensed Technology. So
long as the license granted by the Customer to the Supplier pursuant to
this Agreement remains in effect, the Supplier shall notify the Customer
promptly of any Derivative of which it becomes aware, and the Supplier
shall provide any such Derivative, including all documentation and source
code relating thereto, to the Customer as soon as reasonably practicable
thereafter.
(e) RIGHTS OF INSPECTION AND AUDIT. The Supplier hereby agrees
that the Customer and its representatives shall have full access to the
premises, facilities, books, records and operations of the Supplier
during the term of the license granted hereunder for the purpose of
enabling the
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Customer to verify compliance by the Supplier with all of the terms and
conditions of this Agreement as it pertains to the operation of this
equipment and software.
(f) TERM. The license granted by the Customer to the Supplier
hereunder shall become effective upon the execution and delivery of this
Agreement by each of the parties hereto and shall continue for as long as
the Supplier continues to produce and sell to the Customer air xxxxxxxx,
subject to earlier termination as hereinafter set forth.
Upon termination of this agreement, Supplier agrees to return to the
customer, all equipment and software described in Exhibit I attached
hereto. The supplier will depreciate the equipment and software based on
a five (5) year depreciation schedule (60 equal months). If termination
of this agreement occurs prior to the full depreciation of the equipment,
the customer will issue payment to the supplier based on the balance of
the depreciation value prior to the supplier returning the equipment and
software to the customer.
(g) TERMINATION. Notwithstanding the provisions of Section
2(f) above, this Agreement and the limited license to use the Licensed
Technology granted by the Customer to the Supplier pursuant to this
Section 2 may be terminated:
(1) By either party upon the failure of the other party
hereto to perform or fulfill, at the time and in the manner herein
provided, any material obligation or condition required to be
performed or fulfilled by such party hereunder. Any such failure,
upon its occurrence, shall constitute a breach, and termination
shall be effective immediately following not less than [thirty
(30)] days after written notice thereof from the non-breaching
party; or
(2) The assignment by the supplier of its business or
substantially all of its assets for the benefit of creditors, or
the appointment of a receiver, trustee in bankruptcy or
appointment of a similar officer to take charge of all or any
substantial part of such property, or if the supplier is
adjudicated as bankrupt, and such other condition or conditions
are not corrected to the satisfaction of the customer within [ten
(10)] days following written notice thereof.
Notwithstanding the foregoing, upon any termination of this
Agreement pursuant to this Section 2(g), the obligations of the
Supplier pursuant to Section 2(c) above shall continue in full and
effect following such termination.
(h) DISCLAIMER OF WARRANTIES. THE LIMITED LICENSE GRANTED
HEREUNDER IS GRANTED "AS IS" WITHOUT ANY WARRANTY OF ANY KIND. THE
CUSTOMER DISCLAIMS ANY WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
3. MISCELLANEOUS TERMS AND CONDITIONS.
(a) ASSIGNMENT. Neither party shall have the right to assign
or otherwise transfer any of its rights or obligations under this
Agreement, except with the written consent of the other party. Any
prohibited assignment or attempted assignment shall be null and void.
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(b) ENTIRE AGREEMENT. This Agreement, including the Exhibits
attached hereto and incorporated herein by reference, constitutes the
entire Agreement of the parties with respect to the subject matter
hereof, and supersedes all previous proposals, oral or written, and all
negotiations, conversations or discussions heretofore had between the
parties related to this Agreement.
(c) AMENDMENT AND MODIFICATION. This Agreement shall not be
modified, amended, rescinded, canceled or waived, in whole or in part,
except by written amendment signed by each of the parties hereto.
(d) NOTICES. Any notice required or permitted to be given
hereunder shall be deemed sufficient if given by facsimile or by
reputable international courier, addressed as indicated below or to such
other address as the respective parties may designate by like notice from
time to time by notice so given shall be deemed to be effective upon
receipt by the addressee.
In the case of the Customer:
Select Comfort Corporation
0000 Xxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Fax Number: (000) 000-0000
Attention: Procurement Director
In the case of the Supplier:
XXXXX
XXXXX
XXXXXX
Fax Number: XXXXXX
Attention: Managing Director
[Portions of this section have been omitted pursuant to a request for
confidential treatment under Rule 406 under the Securities Act of 1933, as
amended. A copy of this Exhibit with this section intact has been filed
separately with the Securities and Exchange Commission]
(e) SEVERABILITY. In the event that any of the terms of this
Agreement are in conflict with any rule of law or statutory provision or
otherwise unenforceable under the laws or regulations of any
jurisdiction, such terms shall be deemed stricken from this Agreement,
but such invalidity or unenforceability shall not invalidate any of the
other terms of this Agreement, and this Agreement shall continue in
force, unless the invalidity or unenforceability of any such provisions
hereof does substantial violence to, or where the invalid or
unenforceable provisions comprise an integral part of, or other
inseparable from, the remainder of this Agreement.
(f) GOVERNING LAW. The English language version of this
Agreement, if it shall have been translated into any other language,
shall be the controlling version of this Agreement. This Agreement shall
be governed by and constituted in accordance with the laws of the State
of Minnesota. Each of the parties hereto hereby consents to the personal
jurisdiction of the state and federal courts located in Hennepin County,
State of Minnesota, and to the use of the English language, for the
adjudication of any claim or controversy arising under this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
SELECT COMFORT CORPORATION
By /s/
----------------------------------------------
Its Senior Vice President, Operations
--------------------------------------------
XXXXX
By /s/
----------------------------------------------
Its Managing Director
--------------------------------------------
[Portions of this signature page have been omitted pursuant to a request
for confidential treatment under Rule 406 under the Securities Act of 1933, as
amended. A copy of this Exhibit with this signature page intact has been filed
separately with the Securities and Exchange Commission]
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EXHIBIT I
January 25, 1996
DESCRIPTION QUANTITY UNIT COST TOTAL
--------------------------------------------------------------------------------
5 Station test stand including 1 13,675.25 13,675.25
schematics and 4 hand held
meters
Spare part kits 3 811.48 2,434.11
Hand held gauge connections and 8 12.25 98.00
spares
Pigtail hose connection, male 800 5.20 4,160.00
insert
Tube connections on the test 10 8.70 87.00
stand
TOTAL 20,454.36
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MANUFACTURERS LIMITED WARRANTY
for AIR LEAK TEST SYSTEM
2/1/96
All warranty claims will be processed through Select Comfort. Select Comfort
will process all warranty claims with the original equipment manufacturer on
behalf of Supplier.
The limited warranty is for one (1) year from date of the system delivery to
Select Comfort. The warranty covers all products for an entire year used under
proper conditions. There are inherent causes of component failure due to
contamination of the air supply if the proper filtering is not installed. A
clean air supply is considered a proper condition requirement. This warranty
does not imply Select Comfort will conduct service at the site of Supplier. If
for some reason the system was to fail at Supplier, the spare components that
are shipped with the initial system will get the system functioning again. The
defective parts must be returned to Select Comfort to the attention of: Xxxxx
Xxxxxxxx, who in turn will ship the defective part to the original manufacturer
for inspection, where a returns report will be generated. Based on the cause of
the failure, the part or component will be replaced, if under the one year
warranty. In no way is Select Comfort, or the original manufacturer liable for
incidental or consequential damages or production loss. Select Comfort and the
original manufacturer will help in any way possible to insure the system is
understood so servicing can be accomplished to maintain the system. The are
components that will have routine wear after a period of time such as the
connectors. All returned components will be inspected for any abuse, misuse or
improper application prior to replacing the component at the expense of the
manufacturer.
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