Exhibit 10a
PROPRIETARY PRODUCT MANUFACTURING AGREEMENT
This PROPRIETARY PRODUCT MANUFACTURING AGREEMENT
("Agreement") is hereby entered into and made effective
this 24th day of April, 2001 (hereinafter "Effective
Date"), by and between CYBERLUX CORPORATION
("Cyberlux"), a Nevada corporation having its
registered office at P.O. 2010, 00 Xxxxxx Xxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, and SHELBY COUNTY
COMMUNITY SERVICES, INC., an Illinois not-for-profit,
tax-exempt corporation having its registered office at
0000 Xxxx Xxxxx 0xx Xxxxxx, Xxxxxxxxxxx, XX 00000
(hereinafter "SCCS").
RECITALS:
A. WHEREAS, Cyberlux is the owner or licensee of all
right, title and interest in and to a certain new
product known as the "Cyberlux Storm Light"
(hereinafter the "Storm Light"), which new product
is described in detail in Exhibit A attached
hereto and incorporated herein by this reference;
and,
B. WHEREAS, Cyberlux intends to develop a family of
products, being referred to collectively herein as
the "Future Products"; and,
C. WHEREAS, SCCS is an Illinois, not-for-profit, tax-
exempt corporation which provides contract
manufacturing services in support of its mission,
which is to provide training and employment to
persons with handicaps and disabilities, and
D. WHEREAS, Cyberlux intends to market the product
and desires that SCCS assemble the product in
conformity to the specifications, plans, drawings,
know-how, and expertise of Cyberlux; and,
E. WHEREAS, SCCS desires to secure the exclusive
right to assemble the Storm Light, and a "Right of
Last Refusal" as described herein for the Future
Products for sale to its customers; and,
F. WHEREAS, SCCS has agreed to purchase necessary
supplies and inventory, and has further agreed to
maintain an inventory of fully assembled Storm
Lights sufficient for it to meet its assembly and
delivery obligations set forth herein; and,
G. WHEREAS, Cyberlux has agreed that, in the event of
a termination of this Agreement for any reason, it
shall purchase all inventory of SCCS related to the
assembly and delivery of the Storm Light including, but
not limited to, supplies, parts, work-in-process, and
fully assembled Storm Lights, upon the terms and
conditions set forth herein.
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NOW. THEREFORE, in consideration of TEN DOLLARS
($10.00), the recitals above, the mutual covenants and
promises hereinafter set forth, and for other good and
valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree
as follows:
1. DEFINITIONS
For purposes hereof:
1.1 "Storm Light" shall mean the product
described in Exhibit A, as may be purchased
for use by Cyberlux customers, and any
"Improvements" thereto as such term is
defined in Paragraph 1.3 below.
1.2 "Future Products" shall mean collectively
those products designed by Cyberlux for
development and sale.
1.3 "Improvements" shall mean any addition or
change in the structure, appearance,
operation, assembly, or use of the Storm
Light, which competes with or is intended to
replace, in whole or in part, the Storm
Light.
1.4 "Effective Date" shall mean the 24th day of
April, 2001.
2. EXCLUSIVE MANUFACTURER
2.1 Subject to the terms and conditions of this
Agreement, Cyberlux hereby agrees that SCCS
shall be the exclusive assembler of the Storm
Light for Cyberlux.
2.2 Subject to the terms and conditions of this
Agreement, Cyberlux hereby agrees that SCCS
shall be the exclusive agent for acquiring
inventory for Storm Light replacement parts
for the purpose of resale as replacement
parts or for any other purposes. SCCS
agrees to acquire and maintain such inventory
of replacement parts as is reasonably
directed by Cyberlux.
2.3 Subject to the terms and conditions of this
Agreement, Cyberlux grants to SCCS the right
and license to make or have made, but only
for sale to Cyberlux or a designee of
Cyberlux, the subject matter of any U.S. or
foreign patents, copyrights, trademarks,
trade names, or designs, whether or not
registered, which Cyberlux has obtained or
may obtain relating to the Storm Light.
These rights do not include the transfer or
ownership of any patent, copyright,
trademarks, trade name, design or
registration for the Storm Light.
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2.4 The rights granted in Paragraph 2.3 above
include the right to use lawfully, but only
in connection with the Storm Light and for
the benefit of Cyberlux, Cyberlux know-how
and expertise relating to the Storm Light, as
well as drawings, supporting data, market
analyses, product specifications, tooling,
software and other technical, manufacturing,
and commercial information relating to the
Storm Light. SCCS shall keep such know-how,
expertise, and information confidential as
set forth herein below.
3. MANUFACTURE OF LICENSED PRODUCTS
3.1 SCCS shall assemble and supply Storm Lights
for Cyberlux on the basis of prices,
payments, delivery arrangements and other
specific conditions to be agreed upon by the
parties in accordance with Sections 4 and 5
below.
3.2 SCCS shall assemble the Storm Light in
conformance with the plans and specifications
provided by Cyberlux. Moreover, during the
term of this Agreement SCCS shall not make
any significant changes to the Storm Light,
in design, specification or otherwise,
without first obtaining the express written
consent of Cyberlux.
3.3 SCCS agrees to assemble the Storm Light in
conformity to the plans, drawings and
specifications provided by Cyberlux. SCCS
agrees to provide Cyberlux twenty-four (24)
prototype(s) of the assembled product.
Cyberlux shall thereafter have the right to
accept or reject the prototype for failure to
comply with the plans and specifications
provided by Cyberlux. In the event Cyberlux
rejects the prototype, SCCS agrees to revise
its manufacturing process as directed by
Cyberlux so as to cause the subsequent
prototype to be in conformity to the plans,
drawings and specifications provided by
Cyberlux. Upon acceptance of the prototype,
Cyberlux shall xxxx, identify and return
twelve prototypes to SCCS to be maintained
for comparative purposes. SCCS agrees that
once Cyberlux has accepted the prototype,
SCCS shall assemble the Storm Light in
conformity to the plans and specifications
and future Storm Lights shall be of a like-
kind and quality as the prototype.
3.4 All tooling and software which Cyberlux
provides to SCCS is and shall remain the
property of Cyberlux.
3.5 Cyberlux will identify those vendors that can
produce and deliver the necessary components
and parts of the Storm Light in
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adherence to Cyberlux standards of
specifications, timeliness of service,
completeness of deliveries and reasonableness
in costs. Such vendors shall be "Cyberlux
certified vendors" and shall constitute
Cyberlux's approved vendor list, which may,
from time to time, be changed by Cyberlux.
Said vendor list shall include each Cyberlux
certified vendor's pricing schedule for all
parts and components of the Storm Light.
4. PAYMENTS
4.1 Cyberlux shall pay SCCS One Hundred and
Twelve Percent of SCCS's costs of assembling
and delivering the Storm Lights, such costs
to include, but not be limited to includes
all costs incident to the completion of the
Storm Light in finished goods form, packaged,
prepared for shipment, the costs of
purchasing necessary components and parts, as
determined by the Cyberlux certified vendor's
pricing schedule, labor, overhead and
shipping, but in no event shall such payment
to SCCS be less than One Dollar and 38/100
($1.38). In the event SCCS' costs increase
for any reason, SCCS shall notify Cyberlux
within twenty (20) Days of such increase.
SCCS shall, within thirty (30) days of
receiving written notice from Cyberlux,
provide Cyberlux with a detailed description
and breakdown of its actual costs associated
with assembling the Storm Light. The
estimated parts, components and shipping cost
per unit as of the effective date is Eleven
and 48/100 Dollars ($11.48).
4.2 Payments to SCCS shall be received within
thirty (30) days from date of shipment FOB,
Shelbyville, Illinois, and may be made by
electronic funds transfer.
4.3 In order to secure SCCS' rights under this
Agreement, Cyberlux hereby grants to SCCS a
security interest in, and therefore assigns
to SCCS (a) all of its right, title and
interest in and to any patents, copyrights,
trade names, trademarks, designs or
registrations for the Storm Lights and
Improvements to SCCS until such time as the
first shipment of product is paid by Cyberlux
at which time 4.3(a) is released from any
security interest; (b) in addition, any right
it has to the inventory of units, parts or
other goods; and (c) all accounts, including
accounts receivable; and any of the foregoing
hereafter acquired by Cyberlux as security
hereunder except as excepted in 4.3(a) above.
Cyberlux agrees to execute any further
documents SCCS deems necessary to perfect its
security interest in such property and to
carry out its intent, including UCC-1s or
other filings as applicable in the State of
Illinois, in the State of Nevada, and/or
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in the State of North Carolina. Any breach
of this Agreement by Cyberlux shall
constitute a breach of this security interest
and shall entitle SCCS to all rights and
remedies of a secured party under the UCC and
under any other applicable laws.
4.4 Profits from sales of replacement parts for
the Storm Light, if any, shall be split as
follows: forty percent (40%) to SCCS, sixty
percent (60%) to Cyberlux. For purposes of
this Paragraph 4.1, profits will be
determined by gross sales minus costs of
goods sold.
4.5 Cyberlux will provide SCCS with payment for
SCCS's percentage of profits from sales of
Replacement Parts 15 days after Cyberlux
receives payment.
4.6 In addition to the payments required above,
Cyberlux shall pay SCCS Two and 8/10 Cents
($0.028} per Battery purchased by SCCS for
installation in assembled Storm Lights.
5. INVENTORY, DELIVERY AND PACKAGING
5.1 Upon Cyberlux submitting proof that it has
orders for delivery of Storm Lights. SCCS
will order and stock components and parts in
quantities sufficient to assemble the ordered
products. SCCS shall not be required to
inventory parts, components, or assembled
units in excess of the amount of the same
SCCS determines are necessary to assemble and
deliver Storm Lights committed to sale.
5.2 SCCS can assemble, box and deliver for
initial shipment 40,000 Storm Lights within
thirty (30) days of receiving a purchase
order from Cyberlux. Thereafter, the
assembly, box and delivery for shipment shall
be done in conformity to the Schedule which
is attached hereto as Exhibit 5.2, which
demonstrates the capacity of SCCS to respond
to orders.
5.3 Cyberlux will produce and provide the design
and any identifying marks for shipping
containers and the boxing of the product.
Upon receipt, SCCS will submit said design to
one or more vendors for quotes. Upon receipt
of such quotes, SCCS will forward the same to
Cyberlux, who may accept or reject the
quotes. If the quote is accepted, such
proposed vendor shall be added to the list of
Cyberlux certified vendors, and the quote
shall become said vendor's certified vendor
pricing schedule. If Cyberlux rejects the
quote, Cyberlux shall procure quotes on its
own for the shipping containers and boxing of
the product.
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5.4 Delays in assembly or shipping caused by the
failure of Cyberlux approved vendors to
deliver parts or components of the Storm
Light, or caused by the delay of Cyberlux to
provide shipping containers and boxes shall
not be considered as a breach of this
Agreement by SCCS, and the length of any
delays occasioned herein shall be added to
the time of performance by SCCS as contained
in paragraph 5.2 above.
5.5 SCCS's obligation herein is FOB Shelbyville,
Illinois. All shipping instructions are to
be provided to SCCS by Cyberlux. All
shipping costs are to be reimbursed to SCCS
in accordance with Paragraph 4.1 hereinabove.
5.6 SCCS liability for Storm Lights shall cease
upon delivery to an approved shipping company
in accordance with the instructions provided
by Cyberlux. Upon such delivery for
shipment, Cyberlux shall bear all risk of
loss of such Storm Lights.
5.7 SCCS will provide appropriate insurance
coverage to replace any damaged or destroyed
materials, tooling or inventory where such
damage occurs while such materials, tooling
or inventory are in SCCS' possession and
under its control, ordinary wear and tear
excepted.
6. IMPROVEMENTS
6.1 Any improvements to the Storm Light shall be
subject to the terms and conditions of this
Agreement.
6.2 Any improvements which may be made to the
Storm Light by SCCS during the term of this
Agreement shall be the property of Cyberlux.
At Cyberlux's request and expense, SCCS will
cooperate with Cyberlux in obtaining patent
or other protection for such improvements, if
any.
6.3 During the term of this Agreement, Cyberlux
agrees that it shall not accept nor solicit
bids to assemble the Storm Light from any
different assemblers or manufacturers.
6.4 Cyberlux agrees and acknowledges that it may
develop and receive licenses and/or patents
for other products other than the Storm
Light. Cyberlux also agrees and acknowledges
that there may be improvements that it
intends to market. In the event Cyberlux
accepts or receives bids for the assembly of
the Storm Light, Future Products or
improvements from other assemblers,
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Cyberlux shall notify SCCS that Cyberlux is
accepting or receiving such bids. Cyberlux
shall notify SCCS if it has received a bona
fide bid that is either lower than a bid
provided by SCCS or is a bid for the Storm
Light, Future Product or Improvement upon
which SCCS has previously not provided a bid.
Thereafter, Cyberlux shall provide SCCS with
a true and correct copy of such bona fide
bid, and SCCS shall have ten (10) business
days in which to submit to Cyberlux a counter
bid. If such counter bid is equal to or less
than the bid from the different assembler,
Cyberlux agrees that it will enter into an
exclusive manufacturing agreement with SCCS
for the assembly of such Storm Lights, Future
Products or Improvements upon the terms,
conditions and prices set forth within the
counter bid. If SCCS does not submit a
counter bid within such time or such counter
bid is greater than the bid from the
different assembler, Cyberlux may submit
purchase orders on the Storm Light, Future
Product or Improvement to the different
assembler.
7. CONFIDENTIALITY
All written information and data exchanged between
the parties for the purpose of enabling SCCS to
manufacture and deliver products under this
Agreement may be subject to a Non-Disclosure
Agreement by and between the parties. Such Non-
Disclosure Agreement, if executed, shall be under
separate cover.
8. TERM AND TERMINATION
8.1 This Agreement shall continue until it is
terminated by either party, for any reason,
upon 180 days' written notice. Termination
of this Agreement for any reason shall not
affect the obligations of either party as of
the date of termination.
8.2 If, at the time of expiration or termination
of this Agreement for any reason, SCCS holds
any inventory of the Storm Light or parts
necessary for its manufacture, SCCS shall
transfer such inventory to Cyberlux within
ninety (90) days following such expiration or
termination. Cyberlux shall compensate SCCS
for such transferred inventory prior to SCCS
shipping same to Cyberlux; such compensation
shall include the cost of materials plus
shipping and handling expenses.
8.3 Subject to Paragraph 4.3 hereinabove, upon
expiration or termination of this Agreement
for any reason, all patent, trademark and
trade name rights with respect to the Storm
Light shall belong
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exclusively to Cyberlux. SCCS shall
thereafter cease all assembly of the Storm
Light.
9. INDEMNIFICATION
9.1 Cyberlux warrants and represents that it is
the owner or sole licensee of any and all patents,
trademarks, trade names and copyrights that it provides
to SCCS hereunder to assemble, sell and deliver the
products as directed by Cyberlux. Cyberlux further
represents and warrants that such patents, trademarks,
trade names and copyrights are valid and are not an
infringement of the rights of others with equal or
superior claim to such processes, ideas, designs,
patents, trademarks, trade names and copyrights.
Cyberlux shall defend at its sole cost and expense any
and all claims, demands, and actions which may be
asserted against SCCS for any and all alleged patent,
trademark or copyright infringement resulting from any
assembly, sale and delivery of the Storm Light by
Cyberlux and to indemnify and hold SCCS free, harmless
and indemnified against all such claims, demands and
actions including attorneys' fees, costs, expenses,
damages, judgments and orders relating to any such
demands, claims and actions.
9.2 Cyberlux agrees to indemnify, defend and hold
harmless SCCS and any and all of its employees,
officers, or directors from any and all liability,
suits, claims, judgments, expenses, including
reasonable attorney's fees, arising out of the acts or
omissions of Cyberlux either pursuant to this Agreement
or otherwise. Cyberlux further agrees to indemnify,
defend and hold harmless SCCS and any and all of its
employees, officers, or directors from any and all
liability, suits, claims, judgments, expenses,
including reasonable attorney's fees, arising out of
products liability claims arising from alleged defects
in the design, product specifications, blue prints,
technical drawings, or similar documents which were
provided by Cyberlux to SCCS.
10. GENERAL PROVISIONS
10.1 Nothing herein shall be construed or deemed
to create any relationship of joint venture,
partnership, master-servant or principal-
agent between the parties, and the
re1ationship between the parties shall only
be that of independent contractors. Except
as expressly provided herein, neither party
shall have authority to commit or bind the
other with respect to any person.
10.2 Any controversy or claim arising out of or
relating to this Agreement, or the breach
thereof, shall be settled by arbitration to
be held in Shelby County, Illinois and
administered by the American Arbitration
Association under its Commercial Arbitration
Rules, and judgment on the award rendered by
the arbitrator(s)
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may be entered in any court having
jurisdiction thereof. During such
arbitration, the parties agree to otherwise
continue performance in accordance with the
provisions hereof.
10.3 Neither party shall assign this Agreement or
transfer any rights or obligations hereunder
with the express written consent of the other
party, which consent will not be unreasonably
withheld.
10.4 Neither party to this Agreement makes any
warranty or representation as to the amount
of gross or net sales or profits that the
other party will derive under this Agreement.
10.5 This Agreement is not intended to benefit any
person, firm, corporation or other entity,
other than the parties hereto and their
respective successors and assigns in
interest.
10.6 This Agreement contains the entire agreement
with respect to the subject matter hereof
and, except as expressly provided to the
contrary, supersedes all prior oral or
written agreement, communications and
dealings between the parties with respect to
the subject matter hereof, all of which are
hereby merged into this agreement.
10.7 All notices required by this Agreement shall
be in writing and shall be deemed
sufficiently given on the date of delivery,
if hand delivered, or three business days
after being mailed, postage repaid, by
certified or registered mail, to the
addresses set forth below, or to such other
locations as either party may notify the
other:
All notices to Cyberlux shall be given
or addressed to:
Cyberlux Corporation
Attention: Xxxxxx X. Xxxxx
P. 0. Xxx 0000
00 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
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With a copy to:
Xxxx Xxxxx
Attorney at Law
000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
All notices to SCCS shall be given or
addressed to:
Shelby County Community Services,
Inc.
Attention: Xxxx Xxxxxx
0000 Xxxx Xxxxx 0xx Xxxxxx, X.X.
Xxx 000
Xxxxxxxxxxx, XX 00000
Telephone: 217/000-0000
Telecopier: 217/447-5202
With a copy to:
Xxxxx, Xxxxxx & Xxxxxx, Ltd.
Attention: Xxxxxxx X. Grain
000 X. Xxxxxxxx, X. X. Xxx 000
Xxxxxxxxx, XX 00000
Telephone: 618/000-0000
Telecopier: 618/532-7648
10.8 The "Whereas" paragraphs are herein
incorporated into the body of this Agreement.
10.9 The various headings or captions in this
Agreement are for convenience only and shall
not affect the meaning or interpretation of
this Agreement.
10.10 No amendments or variations of the terms
and conditions of this Employment Contract
shall be valid unless the same is in writing
and signed by all of the-parties hereto;
10.10 The waiver of a breach of any provision
of this Agreement shall not operate or be
construed as a wavier of any subsequent
breach.
10.11 If any of the provisions, or portions
thereof, of this Agreement are held to be
unenforceable or invalid by any arbitration
panel or court, the validity and
enforceability of the remaining provisions,
or
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portions thereof, will not be affected and
shall continue in full force and effect.
IN WITNESS WHEREOF; the parties have agreed to and
executed this Agreement in duplicate as of the
effective date.
Cyberlux Corporation Shelby County Community Services,
Inc.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
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Xxxxxx X. Xxxxx Xxxxxxx Xxxxxx,
President Executive Director
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