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Exhibit 10.16
MANUFACTURING AGREEMENT
This Agreement, effective as of the 1st day of March, 1997, by and
between Access Beyond, Inc., a Delaware corporation having its principal place
of business at 0000 Xxxxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxxxxx, Xxxxxxxx 00000-0000
(hereinafter "AB"), and Hibbing Electronics Corporation, a Minnesota corporation
having its principal place of business at 0000 Xxxx 00xx Xxxxxx, Xxxxxxx,
Xxxxxxxxx 00000 (hereinafter "Hibbing").
WITNESSETH:
WHEREAS, Hibbing is in the business of manufacturing and selling
printed circuit card products; and
WHEREAS, AB desires to purchase certain such products from Hibbing; and
WHEREAS, AB and Hibbing desire to enter into an agreement whereby
Hibbing agrees to manufacture for and sell to AB, and AB agrees to purchase from
Hibbing, certain products and whereby the parties undertake certain related
transactions on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto agree as follows:
ARTICLE
1
DEFINITIONS
For the purpose of this Agreement, the terms set forth below shall have
the following meanings:
1.1 "Affiliate" of a specific person means a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, the person specified. The term "control"
(including the terms "controlling," "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise.
1.2 "AB Inventory" means the raw material inventory in AB's possession
on the date hereof used in the manufacture of printed circuit cards, all of
which is listed in Schedule 1.2.
1.3 "AB Technology" means all proprietary technology and inventions
possessed by AB and incorporated in the Products.
1.4 "Products" means the printed circuit cards and related products
described on Schedule 1.4 annexed hereto, to be manufactured by Hibbing in
accordance with the Standards and Specifications.
1.5 "Standards and Specifications" means the written specifications
for the Products set forth in Schedule 1.5 annexed hereto.
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1.6 "Trademark" means any trademark(s) and related logo(s) that AB
selects and identifies for use on the Products.
ARTICLE
2
PURCHASE - SALE - CERTAIN LIMITATIONS
2.1 Hibbing Manufacture. Subject to the terms and conditions of this
Agreement, Hibbing agrees to manufacture and sell to AB, and AB agrees to buy
from Hibbing, all Products ordered by AB during the term of this Agreement. The
Products shall be manufactured solely by Hibbing. Hibbing may not subcontract or
sublicense the manufacture of the Products without the prior written consent of
AB.
2.2 Trademark. Hibbing shall manufacture the Products under the
Trademark, which shall be the only identifying xxxx on the Products, provided
that Hibbing shall also manufacture Products under such third party trademarks
as AB may from time to time designate. Hibbing recognizes that AB is the sole
and rightful owner of the Trademark. AB hereby grants to Hibbing the fully paid
up, nonexclusive, nontransferable right to use the Trademark solely in
connection with the manufacture of the Products for AB hereunder. This right and
license shall be strictly coterminous with this Agreement and incidental
thereto.
2.3 Special Limitations.
(a) Hibbing agrees that it shall not, during the term of this
Agreement or thereafter, market, sell or distribute the Products or any other
goods utilizing any of the AB Technology to any other person, corporation or
entity without the prior written consent of AB. Hibbing shall not sublicense any
of the rights or licenses herein granted.
(b) Hibbing recognizes and agrees that AB is the sole and
rightful owner of the AB Technology. Hibbing shall not claim any title to the AB
Technology or the Trademark or the right to use such except pursuant to this
Agreement. All intellectual property rights with respect to the AB Technology
shall be the sole property of AB, and Hibbing (at the expense of AB), during the
term hereof and at any time thereafter, agrees to execute all documents and to
perform all acts as may be reasonably required to effectuate the provisions of
this subsection 2.3(b). Hibbing agrees that it will not during the term of this
Agreement develop improvements or inventions applicable to the Products.
ARTICLE
3
PURCHASE ORDER AGREEMENTS
3.1 Purchase Orders. Orders for Products covered by this Agreement
shall be placed on AB's purchase order form (a copy of which is annexed hereto
as Schedule 3.1 and incorporated herein by reference), or by facsimile followed
by such purchase order form confirming the order. For the purposes of
calculating lead time, Hibbing shall be deemed to have received an order on the
date of the facsimile order, provided that a written confirming order is placed
within five (5) calendar days. The terms and conditions of this Agreement
replace and supersede (i) the terms and conditions on AB's purchase order form
which are stricken on Schedule 3.1, and (ii) any terms and conditions preprinted
on Hibbing's acknowledgment or invoice forms.
3.2 Purchase Order Information. Purchase orders shall contain the
following minimum information:
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(a) Products being purchased;
(b) Quantity requested;
(c) Unit price and purchase order total price;
(d) Shipping instructions, including carrier, ship to and xxxx
to addresses and requested shipping dates;
(e) reference to this Agreement.
3.3 Order Acceptance. Hibbing shall provide delivery commitments to
purchase order delivery request dates within seven (7) calendar days of receipt
of purchase order or facsimile request to place an order. Hibbing shall provide
a written acknowledgment of a purchase order within seven (7) calendar days
after Hibbing's receipt of a purchase order and, with such acknowledgment, shall
identify any limitations, corrections or conditions related to its acceptance of
the order provided they do not conflict with this Agreement, whereupon such
purchase order shall be accepted.
ARTICLE
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FORECASTS, SCHEDULES AND CANCELLATION.
4.1 Firm Orders; Forecasts. AB will provide to Hibbing firm purchase
orders for a minimum of three (3) months in advance of delivery. Further, AB
will submit a rolling six (6) month non-binding forecast to be updated monthly.
This release and forecast will identify quantity, part numbers, and expected
delivery dates for Products AB expects to order during the forecast period in
order that Hibbing may plan production and procure components for purchase
orders and the forecast period. Long lead items or allocated components, beyond
the three (3) month firm purchase order period or beyond the six (6) month
forecast, are to be covered by a separate written authorization from AB.
4.2 Rescheduling. AB may reschedule Product delivery dates on orders
that are due more than sixty (60) calendar days from the date such change notice
is provided to Hibbing. Additional rescheduling of Products may only be made
with the mutual agreement of the parties. AB agrees to pay reasonable carrying
charges agreed to by it in the event of any such additional reschedulings.
4.3 Material List. Hibbing will provide a list of materials with
lead-time greater than four (4) weeks that will be ordered to support AB's three
(3) month purchase order release window and the six (6) month forecast period.
AB will have liability for all material procured to support these firm purchase
orders and all material procured pursuant to the separate written authorizations
from AB contemplated by Section 4.1., in the event of cancellation, schedule
changes, or termination. However, Hibbing will use reasonable commercial efforts
to mitigate such liability.
4.4 Cancellation. AB may, for reasonable cause, reduce or cancel
quantities of Products. AB agrees to pay reasonable cancellation and carrying
charges. These charges may include the purchase price of all undelivered
finished goods, costs of work in process, components and materials on hand and
nonreturnable or noncancelable from suppliers, and any amortized start-up, test
or tooling costs.
ARTICLE
5
SHIPMENT
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5.1 Full Shipments. Hibbing will ship complete order releases only,
unless prior approval of a short or partial shipment is obtained from AB, within
a window of five (5) calendar days early and three (3) calendar days late.
Hibbing will direct ship to AB's customers if so instructed by AB.
5.2 Transportation. Shipment shall be F.O.B. origin. Hibbing shall
select the mode of transportation at its discretion unless otherwise instructed
in writing by AB. AB shall pay all shipping and transportation charges directly
to the carrier or freight forwarder, or to Hibbing as invoiced.
5.3 Packaging. Hibbing shall, in its discretion, package Products in a
manner adequate to ensure the probable safe delivery of products via common
carriers, unless instructed as to a specific packaging method by AB in writing.
ARTICLE
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TITLE AND RISK OF LOSS
Title and risk of loss shall pass to AB upon delivery of the Products
to the carrier or its agent at Hibbing's designated shipping point, USA. With
respect to any Products that Hibbing hand delivers, title and risk of loss will
pass to AB upon written acknowledgment of receipt by AB. All claims for shipping
damage will be resolved between AB, carriers or freight forwarders handling the
Products and the insurance companies and agents responsible for adjusting such
claims, and Hibbing will have no responsibility with respect thereto.
ARTICLE
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INSPECTION
7.1 Inspection. All Products may be inspected and tested by AB and its
customers at all reasonable times and places on a noninterference basis. If such
inspection or testing is made on Hibbing's premises, including without
limitation the premises described in Article 16 hereof, Hibbing shall provide
(at AB's expense) all reasonable facilities and assistance for such inspections
and tests. In its internal inspection and testing of the Products, Hibbing shall
use an inspection system mutually agreed upon by the parties in writing. All
inspection records relating to the Products shall be available to AB during the
performance of this Agreement upon reasonable request.
7.2 Final Inspection. Final inspection and acceptance by AB shall be
at destination unless otherwise specified in a particular order. Such inspection
shall be in accordance with AB's customary inspection procedures at the location
where the Products are received.
7.3 Effect of Inspection. No inspection (including source inspection)
tests, approval (including design approval), or acceptance of the Products shall
relieve Hibbing from responsibility for Hibbing's warranty obligations under
Article 10 of this Agreement.
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ARTICLE
8
PRICE - PAYMENT
8.1 Price.
(a) In each three (3) calendar month period during the term of
this Agreement, Hibbing shall sell the first $2.8 million of Products delivered
to AB (the "Cost Products") at a price determined under Hibbing's pricing model
for the Products taking into account materials, direct labor, manufacturing
overhead, selling, general and administrative costs, and interest in accordance
with Hibbing's customary internal cost allocation procedures, exclusive of a
profit margin component. The initial Cost Products price list is set forth in
Schedule 8.1(a)-I attached hereto and made part hereof. Hibbing reserves the
right to change the price of Cost Products at any time, but only to reflect
changes in the costs of the elements of its pricing model or in the prices or
amounts of the underlying inputs for the Products. Hibbing's pricing model is
attached as Schedule 8.1(a)-II. Hibbing shall give notice to AB of any price
change for Cost Products at least thirty (30) calendar days prior the effective
date of such change and such price change shall apply only to orders placed
after the effective date thereof; provided, however, the amount and timing of
any price changes with respect to market fluctuations in the costs of materials
attributable to allocation, availability or obsolescence must be mutually agreed
upon by the parties. Such notice shall provide sufficient detail to permit audit
by AB of the identifiable costs of manufacture of the Products. If in the first
three (3) calendar month period during the term of this Agreement, AB orders
less than $2.8 million in Cost Products, the difference shall be equally divided
among the five (5) succeeding three (3) calendar month periods during the term
of this Agreement and the resulting amount shall increase the amount of Cost
Products available for purchase by AB during each such period.
(b) Products sold by Hibbing to AB in any three (3) calendar
month period during the term of this Agreement (the first such period to
commence on the effective date of this Agreement) in excess of the Cost Products
shall be sold at the prices listed on Schedule 8.1(b) annexed hereto and made
part hereof. The price to be paid for all Products delivered hereunder in excess
of the Cost Products will be the price of the Cost Products plus Hibbing's
eleven and 36/100 percent (11.36%) profit margin component. Hibbing reserves the
right to change such price list at any time, provided, however, that Hibbing
shall give notice of any price change to AB at least thirty (30) calendar days
prior to the effective date of such change, and such price change shall apply
only to orders placed after the effective date hereof; provided, however, that
the amount and timing of any price changes with respect to market fluctuations
in the costs of materials attributable to allocation, availability or
obsolescence must be mutually agreed upon by the parties.
(c) It is AB's intention during the term of this Agreement to
procure its printed circuit board requirement from Hibbing. However, AB reserves
the right to purchase products, comparable to the Products, from alternate
suppliers in the event that there exists a strategic benefit for AB to do so
(including, without limitation, Hibbing's decision to change its price model as
permitted under subsection 16.13(d)) or in the event that AB is required by a
customer to utilize an alternate supplier. AB also reserves the right to
purchase products from an alternate supplier in the event that Hibbing's supply
of Products or Product quality fail to meet AB's standards and requirements.
(d) If Hibbing realizes a reduction in total material cost of
a Product (other than with respect to the costs of materials purchased under
Xxxxx contracts), fifty percent (50%) of such reduction shall be passed on to AB
in the form of a cost reduction on future orders of that same Product.
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8.2 Payment. AB shall pay to Hibbing any and all amounts due for the
purchase of Products within thirty (30) calendar days of the date of Hibbing's
invoice, which shall be dated no earlier than the date upon which the Product so
involves is first provided (if such Product consists of services) or is
delivered to a common carrier by Hibbing pursuant to this Agreement or hand
delivered, provided that in no event shall payment be due prior to receipt of
the Product.
8.3 Records: Audit Rights.
(a) Hibbing shall maintain for three (3) years following the
close of each calendar year accurate books and records which disclose all
pricing model information with respect to the Products.
(b) AB, at its expense, shall have the right at any time
during regular business hours, upon thirty (30) days' prior notice to Hibbing,
to examine or audit the books and accounts and records of Hibbing which pertain
to the manufacture of Products. Such books of account and records shall be made
available to AB and its accountants at the location where such books and records
are regularly maintained by Hibbing. If the examination or audit reveals an
apparent overcharge, and the parties cannot agree to a satisfactory resolution,
then the matter will be submitted to binding arbitration by a single arbitrator
experienced in financial accounting matters in Gaithersburg, Maryland
administered by the American Arbitration Association under its Commercial
Arbitration Rules then in effect, and judgment on the award rendered by the
arbitrator may be entered in any court having competent jurisdiction. The
arbitrator may award fees and expenses as part of the decision.
ARTICLE
9
TERM-REMEDIES
9.1 Term. The term of this Agreement, unless sooner terminated as
hereafter provided, shall be for an initial period of eighteen (18) months
commencing on the date hereof and continuing until August 31, 1998.
9.2 Early Termination.
(a) Either party shall have the right to terminate this
Agreement with immediate effect if:
(i) The other party fails to cure to such party's
reasonable satisfaction any material breach or violation of this Agreement
within sixty (60) calendar days after such party has given written notice
thereof; or
(ii) The other party makes an assignment for the
benefit of creditors, files a petition in bankruptcy, is adjudicated bankrupt or
insolvent, petitions or applies for a receiver or a trustee, or has any
proceedings commenced against it under any statute or regulation providing
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation and which remain undischarged for a period of sixty (60) calendar
days.
(b) AB shall have the right to terminate this Agreement if any
amount payable by Hibbing pursuant to Article 16 is not paid within thirty (30)
calendar days of the date when due.
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(c) The exercise of any right of termination under this
Article 9 shall not affect any rights which have accrued prior to termination
and shall be without prejudice to any other legal or equitable remedies to which
a party may be entitled by reason of such rights (including, without limitation,
Hibbing's rights to be paid for rescheduling and cancellation charges pursuant
to Sections 4.2 and 4.4, Hibbing's rights to be paid for Products purchased
pursuant to Section 8.2, Hibbing's rights to indemnification pursuant to Article
12 and the other indemnification provisions of this Agreement, and the
confidentiality of Hibbing's and AB's information pursuant to Article 13).
9.3 Effects of Termination. Upon termination or expiration of this
Agreement, all obligations of the parties hereunder shall terminate, except
those which expressly survive the termination or expiration of this Agreement.
9.4 Remedies. In the event of a breach of this Agreement, the
nonbreaching party may exercise any remedy allowed by law or equity; provided,
however, AB will not have the right to effect cover or the right of setoff. AB's
remedies shall be cumulative and except as provided herein, remedies herein
specified do not exclude any other remedies allowed by law or equity.
ARTICLE
10
LIMITED WARRANTIES
10.1 Limited Warranty. Hibbing warrants that all Products will upon
delivery to Hibbing's designated shipping point, USA, or upon hand delivery and
for a period of fifteen (15) calendar months thereafter: (i) be free from
defects in materials and workmanship; (ii) materially conform to the design,
specifications and drawings provided by AB; and (iii) conform to IPC 610 class
2. These warranties shall survive any inspection, delivery, acceptance and
payment.
10.2 Liability. Hibbing's liability under this warranty provision is
limited to (i) repair or replacement at Hibbing's option without cost to AB of
the defective Product or (ii) delivery of retrofit kits with installation
instructions (at no charge to AB) as necessary to make the Product conform to
AB's specifications; in each case, solely during the fifteen (15) calendar month
period following delivery of the Product to Hibbing's designated shipping point,
USA or hand delivery. Labor to remove defective parts and install replacement
parts under this limited warranty must be mutually agreed upon by Hibbing and
AB. If the parties are unable to reach agreement regarding the amount of cost of
labor described in the preceding sentence, then the matter will be submitted to
binding arbitration by a single arbitrator experienced in financial accounting
matters in Gaithersburg, Maryland administered by the American Arbitration
Association under its Commercial Arbitration Rules then in effect, and judgment
on the award rendered by the arbitrator may be entered in any court having
competent jurisdiction. The arbitrator may award fees and expenses as part of
the decision.
10.3 Warranty Claims. All warranty claims shall be made by AB,
regardless of any transfer of title or possession of the Product by AB to
customers or other parties, and AB must notify Hibbing in writing of any such
claim promptly following AB learning of any alleged breach of warranty.
10.4 Returned Products. Returned Products will be tested by Hibbing
promptly following receipt. Compliant Products will be shipped back to AB at
AB's expense and risk of loss or damage. AB will be invoiced for such testing,
on a time and material basis, for all returned products which are in compliance.
Hibbing will remain responsible for any Products returned to Hibbing for which
AB can demonstrate breach of Hibbing's limited warranty. This warranty shall not
apply to failures of any unit caused by:
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(a) Physical abuse or use not consistent with operating
instructions as provided by Hibbing or Product specification as provided by AB
or Hibbing.
(b) Modifications by other than Hibbing's personnel or agent
in any way other than approved by Hibbing, provided the warranty shall not be
voided by repair or replacement of parts or the attachment of items in the
manner described in maintenance or installation instructions provided by
Hibbing.
(c) Repair by someone other than Hibbing's personnel or agent
or in a manner contrary to the maintenance instructions provided by Hibbing.
(d) Physical abuse due to improper packaging of returns.
(e) Failed components not covered by the original
manufacturer.
(f) Design related defects.
10.5 Agencies. Hibbing makes no general warranty of compliance to any
agency such as UL, TUV, CSA, or FDA, relating to facility, processes,
workmanship, and material acquisitions in connection with the Products.
10.6 Limitations. THE WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT
ARE IN LIEU OF ANY OTHER WARRANTIES, EXPRESS, IMPLIED AND STATUTORY, INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, AND ANY AND ALL SUCH OTHER WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED
AND EXCLUDED. HIBBING IS NOT RESPONSIBLE FOR DESIGN-RELATED DEFECTS OR ANY
DAMAGE TO THE PRODUCT CAUSED BY NATURAL DISASTER OR ACT OF GOD, OR BY ACTIONS OF
PARTIES OTHER THAN HIBBING. IN NO EVENT WILL HIBBING BE LIABLE FOR MORE THAN THE
DOLLAR AMOUNT OF THE PRODUCTS ORDERED UNDER THIS AGREEMENT, INCLUSIVE OF ANY
PUNITIVE, CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES WHICH ARISE IN CONNECTION
WITH THE FAILURE OF OR DEFECTIVE PERFORMANCE OF ANY PRODUCT COVERED BY HIBBING'S
LIMITED WARRANTY OR THE BREACH OF WARRANTY BY HIBBING, EVEN IF HIBBING HAD
NOTICE OF THE POSSIBILITY THEREOF.
ARTICLE
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GOVERNMENTAL REGULATIONS
11.1 (a) Hibbing shall comply with the requirements of all applicable
laws, rules, regulations and orders of governmental or regulatory authorities
applicable to its manufacture of Products hereunder.
(b) Hibbing assumes all responsibility and the cost and
expense for all licensing, registrations, permits, and such other certificates
as may be required for its lawful manufacture of the Products hereunder.
(c) Hibbing shall observe all safety rules and other
requirements of regulatory bodies having jurisdiction over its manufacture of
the Products, and shall pay all fines and similar
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charges that may be duly and lawfully imposed or assessed by reason of Hibbing's
failure to comply with the rules, regulations, and orders of regulatory bodies
having such jurisdiction.
ARTICLE
12
INDEMNIFICATION
12.1 Hibbing Indemnity; Insurance.
(a) Hibbing will defend, indemnify and hold harmless AB, its
successors and assigns (each an "Indemnified Person") from and against any and
all actual or threatened manner of action and actions, cause and causes of
action, suits, proceedings, liabilities, losses, damages, judgments, claims,
demands, costs and expenses, including, without limitation, attorneys' fees and
expenses and court costs, regardless of whether litigation has commenced
(collectively, an "Indemnified Claim"), which any Indemnified Person may
hereafter incur, suffer or be required to pay by reason of any actual or
threatened action, claim, suit or proceeding brought by any party against any
Indemnified Person arising out of or in connection with the performance or
nonperformance by Hibbing of its obligations under this Agreement.
(b) Hibbing shall secure before commencing and shall maintain
during the performance (and after performance, as hereinafter provided) of this
Agreement, Comprehensive General Liability and Property Damage Insurance,
including Products Liability provisions with minimum Bodily Injury Liability and
Property Damage limits of $1,000,000 each occurrence, naming AB as an additional
insured. Hibbing shall furnish to AB evidence of such insurance coverage in the
form of certificates of insurance. All certificates of insurance shall stipulate
that AB will be given thirty (30) calendar days written notice prior to any
change, substitution, or cancellation. The coverage afforded by each of the
aforesaid policies of insurance to be furnished by Hibbing shall continue in
full force and effect as to all losses, claims, damages or liabilities in any
way arising out of the performance or nonperformance of this Agreement,
including those arising during the warranty period.
12.2 AB Indemnity. AB will indemnify and hold harmless Hibbing, its
successors and assigns (each an "Indemnified Person") from and against any and
all actual or threatened manner of action and actions, cause and causes of
action, suits, proceedings, liabilities, losses, damages, judgments, claims,
demands, costs and expenses, including, without limitation, attorneys' fees and
expenses and court costs, regardless of whether litigation has commenced
(collectively, an "Indemnified Claim"), which any Indemnified Person may
hereafter incur, suffer or be required to pay by reason of any actual or
threatened action, claim, suit or proceeding brought by or on behalf of AB's
customers or others against any Indemnified Person: (a) involving use of
proprietary information, infringement of patents, trademarks, copyrights or
other intellectual property rights (including, without limitation, the
Trademark), use of trade secrets, or the breach of confidentiality agreements,
to the extent that any of the foregoing is included in the AB Technology or the
Standards and Specifications or relates to the design of the Products; (b)
arising out of or in connection with any actions taken or not taken, as the case
may be, at the direction of AB (including, for example, acts taken under
subsection 2.3(b), subsections 14.3(b) and (c), and Section 15.13); (c) arising
out of or in connection with the performance or nonperformance by AB of its
obligations under this Agreement; or (d) arising out of or in connection with
the conduct by AB of its business activities on or before the effective date of
this Agreement including, without limitation, AB's performance or nonperformance
of its obligations under the Leases (as defined in Section 15.14) or the
Building Lease (as defined in Section 16.13). None of the terms in this
paragraph will be deemed to reduce Hibbing's obligations to AB pursuant to
Hibbing's limited warranty or Hibbing's performance or nonperformance of other
provisions of this Agreement.
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12.3 Liability Limitation. IN NO EVENT SHALL EITHER PARTY'S LIABILITY
UNDER THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION, INCLUDE ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR CLAIMS FOR LOSS OF BUSINESS OR
LOSS OF PROFITS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
POTENTIAL LOSS OR DAMAGE. THE LIABILITY OF HIBBING ARISING OUT OF THE SUPPLYING
OF ANY PRODUCT OR ITS USE, WHETHER BASED UPON WARRANTY, CONTRACT, NEGLIGENCE OR
OTHERWISE, SHALL NOT IN ANY CASE EXCEED THE ORIGINAL COST TO AB OF SUCH PRODUCT.
12.4 Control of Action. With respect to control over the negotiation
and defense of any actual or threatened action, claim, suit or proceeding,
including, without limitation, control as to the selection of counsel and as to
whether and on what terms to settle or otherwise resolve the same (referred to
in this Agreement as "Control of the Action") which may give rise to a right of
Indemnification under Article 12 hereof, the party entitled to indemnification
(the "Indemnitee"), at its option, may either retain Control of the Action or
relinquish Control of the Action to the other party (the "Indemnitor"). In any
case, if the Indemnitee relinquishes control to Indemnitor, Indemnitor will be
obligated to indemnify as set forth in this Agreement. Notwithstanding the fact
that Control of the Action may be relinquished to Indemnitor, Indemnitor may not
settle or compromise any Indemnified Claim (even if such settlement or
compromise only requires the payment of money, as opposed to other forms of
nonmonetary consideration) without the prior written consent of Indemnitee,
which consent may be withheld with or without reason unless such settlement or
compromise only requires the payment of money and Indemnitor offers evidence to
Indemnitee, satisfactory to Indemnitor, that Indemnitor is able to make such
payment. The Indemnitee may not settle or compromise an Indemnified Claim
without the prior written consent of the Indemnitor (which consent may not be
unreasonably withheld or delayed). In the event that Indemnitee has relinquished
Control of the Action to Indemnitor, Indemnitor will fully and promptly inform
Indemnitee of all developments in, and allow Indemnitee to participate (provided
that all costs incurred by Indemnitee in such participation will be paid by
Indemnitee) in the handling of, any such actions so relinquished, and
Indemnitee, at is option may at any time upon prior written notice resume
immediate Control of the Action previously relinquished to Indemnitee (in which
case Indemnitee will not be responsible for any costs or expenses incurred).
ARTICLE
13
CONFIDENTIALITY
13.1 Confidentiality.
(a) The parties agree that the AB Technology and other
information disclosed to Hibbing or learned by Hibbing as a consequence of or
through this Agreement, as well as financial information and manufacturing
information of Hibbing disclosed to AB or learned by AB as a consequence of or
through this Agreement, includes trade secrets, know-how and other information,
data and material of great economic and commercial value which are confidential
and proprietary and the development of which represent a substantial investment
(collectively "Confidential Information"). The parties shall cause their
respective affiliates, directors, officers and employees to: (i) hold all
Confidential Information in the strictest confidence; (ii) not use or exploit
Confidential Information except in accordance with and as contemplated by this
Agreement nor disclose it to anyone other than authorized personnel of the other
party as required for such party's performance of this Agreement; (iii) take all
precautions necessary to safeguard the confidential nature of such Confidential
Information; (iv) keep a record of employees having access to any Confidential
Information and to have all of these employees sign a non-disclosure agreement
for the direct benefit of the other party in a form acceptable
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to the other party; and (v) not sell or transfer to any person or entity any
Product or any equipment or tooling embodying the Confidential Information nor
to allow any person or entity to use it, or otherwise view or examine it, except
as otherwise provided in this Agreement.
(b) Upon termination of this Agreement, each Party shall,
without prior demand or request of the other party, promptly return any and all
Confidential Information in any media and all copies thereof in such party's
possession or control; provided, however, that if Hibbing exercises its option
to purchase the Equipment pursuant to Section 15.6, then Hibbing will also
thereby acquire rights to use the software used for testing purposes.
(c) The restrictions set forth in subsections 13.1(a) and (b)
hereof shall not apply to information that: (i) is publicly available on the
date hereof or becomes generally available other than as a result of disclosure
by such party or its employees or representatives; (ii) becomes available from a
source other than such party or its employees or representatives, provided that
source is not bound by confidentiality restrictions (and such party has made
reasonable inquiry with respect thereto); (iii) was in the possession of such
party prior to its disclosure by the other party; or (iv) is approved in writing
for public disclosure by such party.
(d) The parties' obligations under this Article 13 shall
survive termination of this Agreement. The parties agree that breach of this
Article 13 shall cause irreparable harm and shall entitle the other party, in
addition to any other remedies it may have, to obtain injunctive relief and/or
specific performance.
ARTICLE
14
AB INVENTORY
14.1 Availability. AB shall make available to Hibbing during the term
of this Agreement and on the terms and conditions set forth herein, the AB
Inventory. All AB Inventory shall remain the sole and exclusive property of AB.
Hibbing agrees that it will not use AB Inventory other than in Products sold to
AB.
14.2 No Warranty. Hibbing's limited warranty under Section 10.1 of
this Agreement will not apply to the AB Inventory or to any claims directly or
indirectly caused by, attributable to or relating to Hibbing's incorporation of
the AB Inventory into Products.
14.3 Care of AB Inventory.
(a) The AB Inventory shall be maintained by Hibbing at AB's
premises at 0000 Xxxxxx Xxxxxxx Xxxx., Xxxxxxxxxxxx, XX or any of Hibbing's
other locations. The AB Inventory in all cases shall be carefully segregated
from other goods either of the same or different character belonging either to
Hibbing or to any third party, shall be marked as AB's property, and shall be
stored in an area separate and not commingled with goods of Hibbing or of any
third party.
(b) Hibbing shall (at AB's expense) comply with all reasonable
requests and directions from AB to comply with all laws which might in any way
affect AB's ownership of AB Inventory, and shall indemnify and save harmless AB
from and against loss, damage, and expense from any levy, attachment lien, or
process involving such material arising out of Hibbing's failure to comply with
such reasonable requests and directions. Hibbing confirms that all of the AB
Inventory is, on the date hereof, present at AB's premises. Hibbing shall be
responsible for any loss or shrinkage in the
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quantity of AB Inventory whether such loss or shrinkage be through theft,
pilferage, deterioration, or otherwise, unless such loss or shrinkage is as a
result of Hibbing's compliance with the directions or requests received from AB.
(c) Hibbing shall keep at all times a complete and accurate
list of the AB Inventory, copies of which list shall be furnished AB upon
reasonable request. AB's representatives shall have access to the AB Inventory
on a noninterference basis during usual business hours and with reasonable
advance notice for the purpose of verifying such inventory or inspecting the
condition of such AB Inventory.
(d) All public charges, whether in the nature of sales,
occupational, or other taxes or assessments or license fees, which shall be
levied or assessed against such AB Inventory, or against Hibbing or AB by reason
thereof, by any federal, state, or municipal authority, shall be paid by AB.
(e) To record ownership of AB Inventory, AB may from time to
time file such U.C.C. financing statements covering AB Inventory as it
determines are necessary or desirable. For such purpose, Hibbing shall (at AB's
expense) execute and deliver to AB all such U.C.C. financing statements as AB
shall from time to time request, provided that the form and content of any such
U.C.C. financing statements are reasonably acceptable to Hibbing.
14.4 Purchase of AB Inventory.
(a) From time to time, Hibbing may (but is not obligated to)
purchase AB Inventory by withdrawing the AB Inventory from its segregated
storage area. Hibbing shall immediately notify AB by issuance of a purchase
order of each such withdrawal, specifying the items purchased. Upon each such
withdrawal and purchase by Hibbing and payment therefor pursuant to this Article
14, title to the AB Inventory so withdrawn shall pass to Hibbing.
(b) A description of and the prices for AB Inventory purchased
by Hibbing are specified in Schedule 1.2 attached hereto and made part hereof.
(c) Payment for AB Inventory purchased by Hibbing shall be
made in full within thirty (30) calendar days after the date of invoice.
(d) AB covenants to and with Hibbing that AB will be the
lawful owner at the time of sale to Hibbing of the AB Inventory, and such AB
Inventory will at such time be free from all encumbrances.
14.5 Effects of Termination.
(a) Without limiting the provisions of Article 9, upon
termination of this Agreement for any reason, if Hibbing has relocated the AB
Inventory, then Hibbing, at the request of AB, shall permit all remaining AB
Inventory at the effective date of such termination to remain in storage at
Hibbing's premises for such period as AB shall require to dispose of the same,
not exceeding thirty (30) calendar days thereafter. Hibbing shall, upon the
request and at the expense of AB, at any time or from time to time during such
thirty (30) calendar-day period, load or cause the same to be loaded on cars and
shipped from Hibbing's premises in accordance with AB's instructions. During
such thirty (30) calendar-day period, AB's representatives shall have the right
to enter Hibbing's premises during all usual business hours on a noninterference
basis and with reasonable advance notice for the purpose of dealing with the
disposition of the AB Inventory.
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(b) Upon termination of this Agreement, Hibbing's right to
withdraw and purchase AB Inventory shall immediately cease and terminate.
ARTICLE
15
CERTAIN EQUIPMENT
15.1 Right to Use Equipment. AB hereby agrees to permit Hibbing to use
the personal property described on Schedule 15 and Schedule 15.14 attached
hereto and made part hereof (hereinafter, with all attachments, replacement
parts, substitutions, additions, repairs and accessories incorporated therein
and/or affixed thereto, and proceeds, referred to as "Equipment") during the
term of this Agreement. AB shall retain the right to inspect and use the
Equipment subject to the following conditions: (i) such inspection and use may
only be during usual business hours and on a noninterference basis; (ii) Hibbing
must receive reasonable advance notice (in no event less than seventy-two (72)
hours) of such inspection or use; (iii) a Hibbing employee or representative
must be present at all times during such inspection and use; and (iv) all
provisions of this Agreement applicable to Hibbing's use of the Equipment will
apply to AB's use of the Equipment (including, without limitation, an obligation
by AB to indemnify Hibbing under Section 15.15 and to maintain the Equipment
under Section 15.3).
15.2 Use, Nature and Location of Equipment. Hibbing represents,
warrants and agrees that the Equipment will be used solely for commercial
manufacture and assembly of printed circuit cards and related activities.
Hibbing and AB agree that regardless of the manner of affixation, the Equipment
shall remain personal property and not become part of the real estate. Hibbing
and AB agree to keep the Equipment at 0000 Xxxxxx Xxxxxxx Xxxx., Xxxxxxxxxxxx,
XX 00000-0000. Hibbing shall have no right to, and shall not, remove any of the
Equipment from such location, except as Hibbing and AB may hereafter mutually
agree in writing.
15.3 Repairs. AB shall not be obligated to install, erect, test,
adjust, service or make any repairs or replacements. Hibbing shall effect and
bear the expense of all necessary repairs, maintenance, operation and
replacements required to be made to maintain the Equipment in good condition,
normal wear and tear excepted.
15.4 Operation. Hibbing shall cause the Equipment to be operated by
trained employees only, and shall pay all expenses of operation.
15.5 Indemnity. Hibbing shall indemnify and save AB harmless from any
and all injury to or loss of the Equipment from whatever cause, and from
liability or expenses (including attorneys' fees) arising out of the use or
maintenance thereof, but shall be credited with any amounts received by AB from
insurance procured by Hibbing. Damage for any loss or injury shall be based on
the then net book value of the Equipment, except as otherwise denoted on
Schedule 15.
15.6 Purchase Option. At the expiration of the original term hereof or
at earlier termination if such termination was as a result of mutual agreement
or a right by Hibbing to terminate pursuant to subsection 9.2(a), if Hibbing is
not then in default hereunder, Hibbing shall have the option to purchase all but
not less than all the items of Equipment (other than items of Equipment which
are then still subject to the Leases described in Section 15.14) upon giving
written notice to AB not less than thirty (30) calendar days prior to the
expiration of the original term hereof (or shorter period, but as soon as
reasonably practical, in the case of such early termination). The purchase price
shall be One Dollar ($1.00). Upon Hibbing's exercise of the option, AB will
deliver title to such of the Equipment free and clear of all encumbrances.
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15.7 Insurance.
(a) All risk of loss, damage to or destruction of the
Equipment shall at all times be on Hibbing. Hibbing will procure forthwith and
maintain at Hibbing's expense insurance against all risks of loss or physical
damage to the Equipment for the lesser of the net book value or the full
insurable value thereof for the life of this Agreement and such other insurance
thereon in commercially reasonable amounts and against commercially reasonable
risks as AB may specify, and shall promptly deliver each policy to AB with an
endorsement attached thereto showing loss payable to AB and providing AB with
not less than thirty (30) calendar days written notice of cancellation. Each
such policy shall be in commercially reasonable form, terms and amount and with
insurance carriers reasonably satisfactory to AB. As to AB's interest in such
policy, no act or omission of Hibbing or any of its officers, agents, employees
or representatives shall affect the obligations of the insurer to pay the full
amount of any loss.
(b) Should Hibbing fail to furnish such insurance policy to
AB, or to maintain such policy in full force, or to pay any premium in whole or
in part relating thereto, then AB, without waiving or releasing any default or
obligation by Hibbing, may (but shall be under no obligation to) obtain and
maintain insurance and pay the premium therefor on behalf of Hibbing and charge
the premium to Hibbing under this Agreement. The full amount of any such premium
paid by AB shall be payable by Hibbing within thirty (30) calendar days of
notice thereof, and failure to pay same shall constitute an event of default
under this Agreement.
(c) In the event that monies become payable under any such
policy of insurance with respect to an item of Equipment, then Hibbing will, at
its option, either (i) pay over to AB such monies up to the then net depreciated
book value thereof on AB's books of account of such item or (ii) repair or
replace such item.
15.8 Taxes. Hibbing shall comply in all material respects with all
laws, ordinances and regulations relating to Hibbing's possession, use or
maintenance of the Equipment, and save AB harmless against actual or asserted
violations, and pay all costs and expenses of every character occasioned by or
arising out of such use. Hibbing agrees that, during the term of this Agreement,
in addition to all other amounts provided herein to be paid, it will promptly
pay all taxes, assessments and other governmental charges (including penalties
and interest, if any, and fees for titling or registration, if required) levied
or assessed upon the interest of Hibbing in the Equipment or upon Hibbing's use
or operation thereof or on Hibbing's earnings arising therefrom.
15.9 Title. All Equipment shall remain personal property, and title
thereto (or, in the case of the Equipment subject to the Leases described in
Schedule 15.14, a valid leasehold interest therein) shall remain in AB
exclusively. Hibbing shall keep the Equipment free from any and all liens and
claims, and shall not do or permit any actor thing to be done whereby AB's title
or rights may be encumbered or impaired. Hibbing will not change or remove any
insignia or lettering on the Equipment, which shall conspicuously identify each
item of the Equipment by suitable lettering thereon to indicate AB's ownership.
Hibbing shall give AB immediate notice of any attachment or other judicial
process affecting the Equipment, and indemnify and save AB harmless from any
loss or damage caused thereby.
15.10 No Warranty. Hibbing acknowledges that is has inspected and is
fully familiar with the Equipment and agrees that it has bargained for a right
to use the Equipment without warranty by AB. Hibbing acknowledges that AB is not
the manufacturer or supplier of, nor a dealer in, the Equipment. AB represents
that the Equipment is in good working order and that no material maintenance has
been neglected. EXCEPT FOR THE FOREGOING, AND EXCEPT FOR THE WARRANTY OF TITLE
UNDER SECTION 15.9 AND THE WARRANTY OF TITLE TO BE GIVEN UPON EXERCISE OF THE
PURCHASE OPTION UNDER SECTION 15.6, AB MAKES NO
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WARRANTY OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, AS TO THE FITNESS,
QUALITY, DESIGN, CONDITION, CAPACITY, SUITABILITY, MERCHANTABILITY OR
PERFORMANCE OF THE EQUIPMENT OR OF THE MATERIAL OR WORKMANSHIP THEREOF, IT BEING
AGREED THAT THE EQUIPMENT IS PROVIDED "AS IS", "WHERE IS" AND "WITH ALL FAULTS"
AND THAT ALL SUCH RISKS, AS BETWEEN AB AND HIBBING, ARE TO BE BORNE BY HIBBING
AT ITS SOLE RISK AND EXPENSE. Hibbing accordingly agrees not to assert any claim
whatsoever against AB based thereon. Hibbing further agrees, regardless of
cause, not to assert any claim whatsoever against AB for loss of anticipatory
profits, consequential, special, incidental or punitive damages. No oral
agreement, guaranty, promise, condition, representation or warranty shall be
binding,; all prior conversations, agreements or representations related hereto
and/or to said Equipment are integrated herein. AB, however, will give Hibbing
the benefit of all warranties, if any, made by manufacturers or suppliers of the
Equipment to AB. Claim by Hibbing against any manufacturer or supplier of
Equipment shall not effect Hibbing's obligations under this Agreement.
15.11 Possession. AB covenants to and with Hibbing that AB is the
lawful owner (or, with respect to the Equipment subject to the Leases described
in Schedule 15.14, is the valid lessee) of said Equipment and that such
Equipment is and during the term of this Agreement will be free from all
encumbrances other than security interests held by or hereafter granted to its
lending institutions and that, subject thereto and to Hibbing's performing the
conditions hereof, Hibbing shall, subject to Section 15.1 hereof, peaceably and
quietly use the Equipment during said term without hindrance.
15.12 Performance of Obligations of Hibbing by AB. In the event that
Hibbing shall fail duly and promptly to perform any of its obligations under the
provisions of this Article 15, AB may, at its option, perform the same for the
account of Hibbing without thereby waiving such default, and any amount paid or
expense (including reasonable attorneys' fees), penalty or other liability
incurred by AB in such performance, shall be payable by Hibbing upon demand.
15.13 Further Assurances. Hibbing shall execute and deliver to AB,
upon AB's reasonable request and at AB's expense, such instruments and
assurances as XX xxxxx necessary or advisable for the confirmation or perfection
of this Agreement and AB's rights hereunder, including, without limitation,
U.C.C. financing statements.
15.14 Certain Equipment Leases.
(a) AB is the lessee under the equipment leases described in
Schedule 15.14 attached hereto and made part hereof (collectively the "Leases").
AB hereby grants to Hibbing the right to use the equipment leased under the
Leases during the Term hereof and Hibbing shall pay to AB all current
installments of regularly scheduled amounts required to be paid by AB
thereunder, when and as due. AB represents and warrants to Hibbing that, to
date, AB has performed and paid all obligations of AB under the Leases and no
event of default has occurred and is continuing under any of the Leases. During
the term of this Agreement: (i) AB will not terminate, modify or amend the
Leases without Hibbing's prior written consent (which may not be unreasonably
withheld or delayed); and (ii) AB will pay and perform all of its obligations
under the Leases. AB has provided Hibbing with true, correct and complete copies
of the Leases.
(b) Hibbing shall indemnify and hold AB harmless from any
liability or expense, including attorneys' fees, arising out of claims made,
suits or proceedings brought against AB by any party relating to Hibbing's use
or possession of the Equipment covered by the Leases other than on account of
the failure to obtain consents contemplated by this Section 15.14.
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(c) AB will (at its expense) use its best good faith efforts
to promptly obtain the consents of the lessors and any third-parties necessary
to permit the consummation of the transactions contemplated by this Article 15
(including, without limitation, the assignments contemplated by subsection
15.14(d) below). If AB is unable to obtain such consent with respect to one or
more items of said Equipment and if, as a result thereof, Hibbing's use of said
Equipment during the term of this Agreement is prevented by a proceeding or
action taken by such lessor or third party, then the provisions of this Article
15 will terminate with respect to such item or items of Equipment, and AB will
hold Hibbing harmless from any and all claims and damages (including attorneys'
fees) arising out of the failure to obtain such consents. The provisions of
Article 12 will apply to this indemnity. Without limiting the foregoing, if the
parties have complied with their respective obligations to pay and perform the
Leases, and yet a lessor or third party prevents AB or Hibbing from exercising a
purchase option contained in a Lease (a "Non-Exercisable Lease") because of the
failure to obtain a required consent, then AB agrees to promptly pay or
reimburse Hibbing for commercially reasonable amounts payable or paid by Hibbing
to acquire such Equipment that are in excess of the amounts contemplated by the
terms of the Non-Exercisable Leases.
(d) At the termination or expiration of this Agreement,
provided Hibbing is not in default hereunder, AB will assign all of its right,
title and interest in and to the Leases and the Equipment in consideration for
Hibbing's agreement to pay and perform the lessee's prospective obligations
under the Leases.
15.15 Computer.
(a) AB agrees that, for a period of nine (9) months from the
date hereof, it shall permit Hibbing to use the Hewlett-Packard computer
hardware and Growth Power software currently used by AB with the Equipment, but
no other hardware or software possessed by AB. AB agrees to maintain such
hardware and software in good working order during such nine (9) month period,
reasonable downtime for system maintenance and upgrades excepted. AB represents
that it is and will be during such nine (9) month period the lawful owner of
said hardware and licensee of said software, free of all encumbrances and with
authority to license the same to Hibbing hereunder.
(b) Hibbing may, at Hibbing's own expense, increase the disk
capacity of the computer hardware by 2Gb, but shall not make any other changes
to the hardware without the prior written consent of AB. Hibbing may not load
and run additional software on the hardware without AB's prior written consent.
If such consent is given, then, notwithstanding such consent, Hibbing shall be
responsible for any damage to AB's hardware or software. All provisions of this
Agreement relating to the care and maintenance of the Equipment shall apply
equally to AB's computer hardware and software. AB agrees that it will take
commercially reasonable steps to make at least daily archival backups of its
software and Hibbing's data) and that it will take commercially reasonable steps
to protect such backups from harm or damage. AB will make the backups available
at the end of normal business hours each day and Hibbing will be responsible for
the physical possession of backups after normal business hours.
(c) All of such computer hardware and software as well as all
of AB's data stored in such computers shall remain the sole property of AB.
Hibbing's data shall remain the sole property of Hibbing, and will be returned
promptly to Hibbing upon termination or expiration of this Section 15.15.
(d) The parties shall mutually agree on a schedule whereby
Hibbing shall cease to use AB's computer hardware and software in favor of
hardware and software to be acquired by Hibbing at its own expense. AB shall
provide reasonable assistance to Hibbing in connection with migration from AB's
system to Hibbing's. Nothing in this subsection (d) shall be deemed to extend
the twelve (12)-
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month term of this Section 15.15. At the expiration of such term, AB may remove
all of its computer hardware and Hibbing shall reasonably cooperate with and
assist AB in the removal.
(e) Any Confidential Information obtained by Hibbing pursuant
to the operation of this Section 15.15 shall be subject to the provisions of
Article 13 hereof.
ARTICLE
16
USE OF PREMISES
16.1 Premises. AB hereby licenses to Hibbing the right to use those
premises shown on the attached Schedule 16 (the "Premises"), located at 0000
Xxxxxx Xxxxxxx Xxxxxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxx Xxxxxx, Xxxxxxxx during the
term of this Agreement. Hibbing shall also have the right to use the front
entrance to the building in which the Premises are located (the "Building") for
access and egress from the Premises, as well as the loading dock on the side of
the Building, at all times.
16.2 Use Fees. Hibbing shall pay in advance on or before the first day
of each and every month during the term of this Article 16 (prorated for any
partial month's usage) an amount equal to 50% of the regularly scheduled monthly
rent (as the same may be reduced (but not increased) in contemplated
negotiations with the landlord) then payable by AB pursuant to the Lease (as
hereinafter defined).
16.3 Additional Fees. Hibbing shall also pay to AB as additional fees
the specified percentage of the total amount AB is charged for the entire
Building for each of the following:
Item Percentage
(a) Real Estate Taxes (not including 50%
special assessment)
(b) Electric and Water Utilities 50%
(c) Trash/Waste Removal 50%
(d) Grounds Maintenance/ Landscaping 50%
(e) Other Utilities and Operating 50%
Expenses (as may be agreed to in
writing)
AB shall render statements to Hibbing including copies of the bills payable by
AB, and Hibbing shall pay the required amount to AB within thirty (30) calendar
days of receipt of each statement.
16.4 Use of Premises. Hibbing shall use and occupy the Premises solely
for the manufacture and assembly of printed circuit cards and related
activities.
16.5 Care and Conditions of Premises; Signs.
(a) During the term of this Article 16, except as otherwise
provided herein, Hibbing, at its own cost and expense, shall maintain the
Premises in good order and condition including: (i) providing interior
janitorial services for the Premises; (ii) storing all garbage, trash and other
refuse in
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approved containers away from public view and removing such items on a regular
basis during the times and in a manner designated from time to time by AB; (iii)
maintaining the Premises in a clean and sanitary condition and free of insects,
rodents, vermin and other pests; (iv) performing normal and routine maintenance
and repair of all mechanical, electrical and plumbing systems, facilities and
equipment exclusively serving the Premises and all non-structural improvements
within the Premises; (v) replacing all cracked or broken glass; and (vi)
repainting and redecorating at reasonable intervals as needed. Except as
provided in the immediately preceding sentence, AB shall be responsible, at its
own expense, for maintenance of all structural and exterior portions of the
Premises. AB shall further be responsible for all maintenance and repairs to the
heating, ventilation, cooling, plumbing and electrical systems of the Premises.
AB shall not unreasonably interfere with Hibbing's business operations in
performing any repairs required under this Section 16.5. AB makes no
representations or warranties as to the condition of the Premises. Hibbing has
thoroughly examined the Premises and Hibbing does hereby accept the Premises "as
is" in its present condition.
(b) Except to the extent that AB has agreed to pay 50% of the
additional fees under Section 16.3, Hibbing covenants and agrees to keep the
Premises clean at its own expense.
(c) Hibbing shall make no changes or alterations to the
Premises without the prior written consent of AB, which shall not be
unreasonably withheld, and the prior written consent of any other party whose
consent is required for the making of changes or alterations by AB.
(d) Upon expiration or termination of this Agreement, Hibbing
shall surrender the Premises in good order and condition, ordinary wear and tear
excepted.
(e) The parties hereby agree that signs identifying Hibbing
may be installed in locations mutually agreed by the parties. Upon expiration or
termination of this Agreement, Hibbing shall remove such signs.
16.6 Liability and Property Damage Insurance; Worker's Compensation
Insurance; Damage to Premises.
(a) Hibbing shall be responsible for insuring any improvements
Hibbing makes to the Premises and all personal property maintained at the
Premises and shall maintain public liability insurance covering the Premises,
which shall name AB as an additional insured, for an aggregate amount of at
least One Million Dollars ($1,000,000.00) per occurrence. Hibbing shall also
maintain workers' compensation insurance, as required by law. Hibbing shall
provide AB with certificates or other evidence of such insurance as AB
reasonably requests.
(b) In the event the Premises are so damaged or destroyed by
fire or other casualty that they become wholly unfit for Hibbing' use thereof,
AB may, at its option, rebuild the same, or may terminate this Article 16. AB
shall have no duty to rebuild or replace any fixtures or improvements made or
installed by Hibbing.
16.7 Waiver of Subrogation. Notwithstanding the provisions of Section
16.10 hereof, in the event of loss or damage to the building, the Premises
and/or contents, each party shall look first to any first-party insurance
coverage prior to making any claim against the other party. Further, each party
shall waive subrogation over and against the other party or its insurance to the
extent permissible and to a degree that would not violate any provision of an
applicable policy of insurance purchased by the claimant party.
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16.8 Entry on Premises. Hibbing agrees that AB, its employees, agents
and other representatives shall have the right to enter into and upon said
Premises, or any part thereof, during usual business hours on a noninterference
basis and with reasonable advance notice for any purpose incident to AB's status
as tenant of the Premises under the Lease, provided that entry outside of normal
business hours will be permitted in the event of an emergency subject to prior
notice thereof to Hibbing.
16.9 Assignment and Sublease, etc. Neither Hibbing nor AB shall have
the right to assign, mortgage or encumber this Agreement or the whole or any
part of the Premises or permit the Premises or any part thereof to be used or
occupied by others without the prior written consent of Hibbing or AB, as the
case may be.
16.10 AB and Hibbing Liability. AB is exempt from any and all
liability for any damage or injury to person or property caused by or resulting
from steam, electricity, gas, water, rain, ice or snow, or any leak or flow
from, or from any other cause or happening whatsoever, except if caused solely
by AB's negligence or misconduct or breach of this Agreement or noncompliance
with the Lease. Except as provided in Section 16.7 hereof, Hibbing agrees to
indemnify and save harmless AB, its successors, assigns and agents, against and
from any and all claims by or on behalf of any person or persons, firm or firms,
corporation or corporations arising from the conduct or management of, and from
any work and thing whatsoever done by or on behalf of Hibbing or its agents,
employees, contractors or invitees in or about, the Premises. The provisions of
Article 12 will apply to the enforcement of this indemnity.
16.11 Compliance with Laws. Hibbing shall comply in all material
respects with all laws, orders, and regulations of federal, state, county and
municipal authorities, and with any direction of any public officer and
officers, pursuant to law, or any insurance company carrying any insurance on
the Premises, and any insurance inspection or rating bureau, which shall impose
any duty upon Hibbing with respect to any of its obligations hereunder relating
to the Premises or its use or occupation thereof.
16.12 Effects of Termination.
(a) Upon any termination or expiration of this Agreement or of
this Article 16, AB or its representative may re-enter the Premises by force,
summary proceedings or otherwise, and remove all persons therefrom, without
being liable to prosecution therefor; provided, however, that AB will use its
best good faith efforts to provide Hibbing with at least thirty (30) calendar
day's prior notice (other than with respect to the end of the original term
hereof) Hibbing shall pay, at the same time as the fees becomes payable under
the terms hereof, a sum equivalent to the fees under Section 16.2 and additional
fees under Section 16.3.
(b) In the event that the relation of AB and Hibbing may cease
or terminate by reason of the re-entry of AB under the terms and covenants
contained in this Agreement or by the rejectment of Hibbing by summary
proceedings or otherwise, it is hereby agreed that Hibbing shall remain liable
and shall pay in monthly payments the fees under Section 16.2 which accrue
subsequent to the re-entry by AB and Hibbing expressly agrees to pay as damages
for the breach of the covenants herein contained, the difference between the
fees under Section 16.2 and additional fees under Section 16.3 and the rent
collected and received, if any, by AB during the remainder of the unexpired
term, such difference or deficiency between the fees and additional fees herein
reserved and the fees and additional fees collected, if any, shall become due
and payable in monthly payments during the remainder of the unexpired term, as
the amounts of such difference or deficiency shall from time to time be
ascertained. Hibbing waives all rights to redeem under any law of the State of
Maryland.
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16.13 Building Lease.
(a) This Article 16 is subject to the Lease dated March 31,
1989 between Penril Corp., as Tenant, and Real Estate Income Partners III,
Limited Partnership, as Landlord (the "Landlord"), and to the Sublease dated as
of November ___, 1996 between Penril DataComm Networks, Inc., as Sublessor (the
"Sublessor") and AB as Sublessee, copies of which have been delivered to AB
(collectively, the "Building Lease"). Hibbing agrees that it will use its best
efforts to cause its employees, agents, contractors and invitees not to violate
the Building Lease.
(b) Upon termination of the Building Lease for any reason,
this Article 16 shall thereupon automatically terminate. In such event neither
party shall have any further obligation or liability to the other pursuant to
this Article 16, except that if the Building Lease is terminated directly or
indirectly as a result of an act or omission of Hibbing or AB, the other party
will be entitled to whatever rights and remedies it may under this Agreement by
law or equity, and except Hibbing shall pay, at the same time as the fees
payable under the terms hereof, a sum equivalent to the fees under Section 16.2
and the additional fees under Section 16.3 for all periods (pro rated for
partial periods) during which Hibbing remains in possession of the Premises. AB
will use its best good faith efforts to provide Hibbing with sixty (60) calendar
days' prior notice of the termination or expiration of the Building Lease.
(c) The Building Lease describes the Landlord's and
Sublessor's duties. AB is not obligated to perform the Landlord's or Sublessor's
duties. If the Landlord or Sublessor fails to perform, Hibbing shall send AB a
notice. Upon receipt of the notice, AB shall then promptly notify the Landlord
and the Sublessor and demand that the Building Lease agreements be carried out.
(d) If AB terminates the Building Lease or if the Landlord's
or Sublessor's consent to this Article 16 is required but is not obtained and,
in either such case as a result thereof, Hibbing's use of the Premises during
the first twelve (12) calendar months of the term of this Agreement is prevented
by a proceeding or action taken by the Landlord or Sublessor, then: (i) AB will
hold Hibbing harmless from any and all claims and damages (including attorneys'
fees) arising out of or in connection with such proceeding or action and for
costs and expenses incurred by Hibbing to relocate its operations from the
Premises under expedited circumstances earlier than at the scheduled expiration
of this Agreement (the provisions of Article 12 will apply to this indemnity);
and (ii) at Hibbing's option, Hibbing may upon written notice to AB either (A)
terminate this Agreement with immediate effect (but otherwise in accordance with
the provisions of Article 9) or (B) adjust Hibbing's price model under
subsection 8.1(a) to include an eleven and 36/100 percent (11.36%) profit margin
applicable to purchase orders received on and after such notice.
(e) The provisions of the Building Lease are part of this
Agreement. During the term of this Agreement: (i) AB may, without the consent of
Hibbing, modify or amend the Building Lease in any manner that does not
adversely affect Hibbing; and (ii) AB agrees to pay and perform all of its
obligations under the Building Lease. AB represents and warrants to Hibbing
that, to date, AB has performed and paid all obligations of AB under the
Building Lease and has not received a notice, and has no knowledge, that an
event of default has occurred and is continuing under the Building Lease. AB has
provided Hibbing a true, correct and complete copy of the Building Lease.
(f) Hibbing shall have no authority to contact or make any
agreement with the Landlord or the Sublessor about the Premises or the Building
Lease. Hibbing shall not pay fees, additional fees or other charges to the
Landlord or the Sublessor, but only to AB.
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16.14 Early Termination. Any provision of this Agreement to the
contrary notwithstanding, AB may terminate this Article 16 upon one hundred
twenty (120) calendar days prior written notice to Hibbing. In such event,
Hibbing shall vacate the Premises within such one hundred twenty (120)
calendar-day period and this Article 16 shall terminate on the date Hibbing
vacates, but the remainder of this Agreement shall remain in full force and
effect.
16.15 Eminent Domain. If the whole or a material part of the Premises
shall be acquired or condemned by eminent domain for any public or quasi-public
use or purpose, then and in that event, AB shall notify Hibbing thereof,
whereupon the term of this Article 16 shall cease and terminate from the date of
title vesting in such proceeding, and Hibbing shall have no claim for the value
of any unexpired term of this Article 16. In such event, the remainder of this
Agreement shall remain in full force and effect.
16.16 Abatement of Fees. No diminution, abatement reduction or set off
of fees or additional fees shall be claimed or allowed except in the event the
Premises become untenantable without the fault of Hibbing.
16.17 Subordination. Hibbing agrees that this Agreement shall be
subordinate to the Lease and to any mortgages, ground lease or other instruments
which may now or hereafter affect the Premises or any part thereof. Although no
additional instrument or act on the part of Hibbing shall be necessary to effect
such subordination, Hibbing shall execute and deliver such instruments of
subordination of this Agreement as may reasonably be requested by the Landlord
or Sublessor or by holders of said mortgages, leases or other instruments.
16.18 Hibbing's Breach. If Hibbing breaches any covenant or condition
of this Article 16, AB may, on thirty (30) calendar days' notice to Hibbing (and
after Hibbing's failure to cure said breach within such notice period), cure
such breach at the expense of Hibbing and the reasonable amount of all expenses,
including reasonable attorney's fees, incurred by AB in so doing, shall be
deemed additional fees payable on demand.
16.19 Mechanic's Liens. Each of AB and Hibbing shall, within thirty
(30) calendar days after notice from the other, remove or satisfy any mechanic's
lien for materials or labor claimed to have been furnished to the Premises on
behalf of the notified party, unless being contested in good faith.
16.20 Possession. AB covenants to and with Hibbing that AB is the
lawful lessee under said Lease and that, subject to Hibbing's performing the
conditions hereof, Hibbing shall peaceably and quietly enjoy the Premises during
said term without hindrance.
ARTICLE
17
FORCE MAJEURE
If any performance by either party shall be prevented, hindered or
delayed by reason of any cause beyond the reasonable control of such party
including, without limitation, acts of God, riots, fires, floods, unusually
severe weather, curtailment or termination of sources or supplies of energy or
power, inability to obtain or delay in obtaining materials or supplies, strikes
or other disputes involving such party or its subcontractors or suppliers, or
any other cause beyond the reasonable control of such party, whether similar or
dissimilar to those expressed hereinabove, such party shall be excused from
performance to the extent that its performance shall extend so long as the event
continues to prevent, hinder or delay the performance by such party. The party
whose performance is affected shall give the other party notice
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within fifteen (15) calendar days of the occurrence specifying the occurrence,
the performance affected and the anticipated date, if any, on which performance
can be made. However, should performance be prevented for more than ninety (90)
consecutive calendar days, either party shall be entitled at its sole option to
terminate this agreement on fifteen (15) calendar days' prior written notice to
the other party. The provisions of Sections 9.3 and 9.4 will apply to any such
termination.
ARTICLE
18
MISCELLANEOUS
18.1 Notices. Any notice required to be given under this Agreement
shall in writing and shall be deemed to have been duly given if delivered by
hand or mailed, certified or registered mail with postage prepaid or delivered
by express delivery or facsimile transmission to the respective parties at their
address set forth hereinabove or at such other address as may be hereafter
designated in writing to the other party.
18.2 Severability. If in any jurisdiction, any provision of this
Agreement or its application to any party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such jurisdiction, be
ineffective only to the extent of such restriction, prohibition or
unenforceability without invalidating the remaining provisions hereof and
without affecting the validity or enforceability of such provision in any other
jurisdiction or its application to other parties or circumstances. In addition,
if any one or more of the provisions contained in this Agreement shall for any
reason in any jurisdiction be held to be excessively broad as to time, duration,
geographical scope, activity or subject, it shall be construed by limited and
reducing it, so as to be enforceable to the extent compatible with the
application law of such jurisdiction as it shall then appear.
18.3 No Waiver. The failure or omission of either party to insist, in
any instance, upon strict performance by the other party of any term or
condition of this Agreement or to exercise any of its rights hereunder shall not
be deemed to be a modification of any term hereof or a waiver or relinquishment
of the future performance of any such term or condition by such party, nor shall
such failure or omissions constitute a waiver of the right of such party to
insist upon future performance by the other party of any such term or condition.
18.4 Assignability. This Agreement shall be binding upon and shall
inure to the benefit of the respective successors and assigns of the parties
hereto, provided, however, that neither AB nor Hibbing shall assign, transfer,
pledge or mortgage this Agreement to any person or party whatsoever (although
Hibbing may assign this Agreement in whole or in part to an Affiliate without
consent (but Hibbing may not be released from its obligations hereunder as a
result of such assignment without the consent of AB)).
18.5 Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof, and all other prior or
contemporaneous agreements of the parties with respect to said subject matter
are hereby merged into and superseded by this Agreement. This Agreement may not
be changed, modified or amended other than by a further written agreement signed
by both parties hereto.
18.6 Governing Law; Etc. This Agreement shall be governed by, and
shall be construed and interpreted in accordance with, the law of the State of
Maryland, including without limitation the Maryland Uniform Commercial Code.
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18.7 Mutual Agreement. This Agreement embodies the arms-length
negotiation and mutual agreement between the parties hereto and shall not be
construed against either party as having been drafted by it.
18.8 Headings and Counterparts. Headings are inserted for reference
purposes only and shall not affect the interpretation or meaning of this
Agreement. This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which, together, will constitute
one and the same instrument.
18.9 Disclaimer of Association. This Agreement shall not be construed
as creating a partnership, joint venture, agency or any other association which
would impose upon one party liability for the acts or omissions of the other.
18.10 Commissions and Finders' Fees. Each of the parties represents
that the negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on directly by AB with Hibbing and in such
manner as not to give rise to any claims against any of the parties hereto for a
brokerage commission, finders' fee or other like payment. Insofar as any such
claims are made which are alleged to be based on an agreement or arrangements
made by, or on behalf of, a party, such party agrees to indemnify and hold the
other parties harmless from and against all liability, loss, cost, charge or
expense, including reasonable counsel fees, arising therefrom.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above-written by their duly authorized officers.
ACCESS BEYOND, INC.
By:_____________________________________
Title:
HIBBING ELECTRONICS CORPORATION
By:_____________________________________
Title:
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LIST OF EXHIBITS AND SCHEDULES
Schedule 1.2 AB Inventory
Schedule 1.4 Products
Schedule 1.5 Standards and Specifications
Schedule 3.1 AB Form of Purchase Order
Schedule 8.1(a)-I Pricing Model
Schedule 8.1(a)-II Cost Products List
Schedule 8.1(b) Prices for Non-Cost Products
Schedule 15 Equipment
Schedule 15.14 Leases
Schedule 16 Premises
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