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Exhibit 10.13
MANUFACTURING AGREEMENT
THIS AGREEMENT, dated as of September 1, 1996, is made and entered into
by SeaMED Corporation ("Seller") and Coinstar, Inc., a Delaware corporation
("Buyer").
Seller and Buyer agree as follows:
SECTION 1. DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
following specified meanings:
1.1 "BUYER'S PLANT" means Buyer's plant located in Bellevue, Washington
or such other location in the United States as Buyer may specify for delivery of
any Product.
1.2 "CUSTOMER" means any customer of Buyer, any subsequent owner,
operator or user of any Product and any other Person that has or acquires an
interest in any Product.
1.3 "ORDER" means Buyer's purchase order for Products.
1.4 "DOCUMENTATION" means Specifications and/or Inspection Procedures.
1.5 "INSPECTION PROCEDURES" means detailed inspection procedures for
Product quality assurance and to assure compliance with Specifications in the
form delivered to Seller.
1.6 "LOT" means the number of Products to be delivered for acceptance
testing at the end of each week pursuant to firm delivery dates under an Order.
1.7 "PERSON" means any individual, corporation, partnership, trust,
association or other entity.
1.8 "PURCHASED PRODUCT" means Product purchased by Buyer in accordance
with the acceptance procedures under Section 4.1.
1.9 "PRODUCT" means the Coinstar, Inc. Jefferson-1000 Self Service Coin
Machine (and any spare parts or components of the same) manufactured or to be
manufactured by Seller, as more particularly described in the Specifications.
1.10 "SELLER'S PLANT" means Seller's plant where it manufactures or
will manufacture Products, currently located at 00000 X.X. 00xx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000.
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1.11 "SPECIFICATIONS" means the specifications for each Product in the
form delivered to Seller, as may be changed from time to time pursuant to
paragraph 2.1.
1.12 "TERM" means the period commencing with the date of this Agreement
and ending on the anniversary of the date of this Agreement. Thereafter, the
Agreement shall continue automatically for subsequent one (1) year terms. Either
party can terminate this Agreement by giving written notice to the other more
than thirty (30) days prior to the end of any one (1) year term.
1.13 "TOOLING" means Buyer purchased tooling set forth in Exhibit A, as
the same may be amended from item to time.
1.14 "WARRANTY PERIOD" means, with respect to each Purchased Product,
the period ending upon the expiration of *
SECTION 2. PRODUCT CHANGES; TOOLING
2.1 CHANGES TO DOCUMENTATION. Seller shall revise the Documentation
only in accordance with the change control procedures set forth in Exhibit B.
Buyer shall be the owner of all Documentation and all associated patent,
copyright, trade secret and other proprietary rights.
2.2 TOOLING. Seller shall hold the Tooling for use in the manufacture,
assembly and testing of the Products. Buyer shall bear the cost of
manufacturing, preventative maintenance and normal wear repairing of all
Tooling. Buyer shall be the owner of all Tooling (and Seller shall place a
permanent marking on all Tooling showing Buyer's ownership and shall execute and
deliver any and all documents as Buyer may reasonably request to vest, evidence
or give public notice of Buyer's ownership). Seller shall deliver any and all
Tooling to Buyer promptly on request and in any event at the end of the Term in
good operating condition and state of repair, ordinary wear and tear excepted,
together with any and all related specifications, drawings, manuals,
documentation and records (e.g., pertaining to the operation, maintenance and
repair of the Tooling).
2.3 BUYER SUPPLIED COMPONENTS. Buyer will supply the coin counting
mechanism and sheet feeder to Seller for assembly into the Product. Any parts
inventory of such Buyer supplied components shall remain the sole and exclusive
property of Buyer.
SECTION 3. PURCHASE AND SALE OF PRODUCTS
3.1 PRODUCTION PRODUCTS. Seller shall manufacture, sell and deliver to
Buyer such Products as Buyer may order from Seller during the Term.
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* Information omitted and filed separately with the SEC pursuant to request for
confidential treatment under Rule 406 under the Securities Act of 1933, as
amended.
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3.2 ORDERS; DELIVERY SCHEDULE. Each of Buyer's Orders for Products
shall be submitted to Seller substantially in the form of the purchase order
attached as Exhibit C or such other form as may be utilized by Buyer for
ordering Products under this Agreement. Each Order shall contain a description
of the Products ordered, specify the shipping destination (if any at that time),
specify the quantity of Products ordered and specify the dates on which each
ordered Product is to be made available to Buyer for acceptance testing with
respect to the first three month period covered by the Order schedule, along
with a forecast of when additional Product will be acceptance tested for the
remaining quarters covered by the Order. No less than ninety (90) days prior to
any such forecasted quarter, Buyer will supply Seller with a definitive schedule
for Product acceptance testing timing and quantities for such quarter. The
definitive quantity may vary from the forecasted quantity by plus or minus
thirty percent (30%). Time is of the essence in this Agreement. If one or more
Lots is not made available for delivery and acceptance testing in accordance
with the definitive schedule provided by Buyer ("Short Lot(s)"), and the
reason(s) for such delay are within the reasonable control of Seller, and Seller
fails to ensure that, within eight (8) weeks from the date of the first Short
Lot, the cumulative number of Products in Lots actually made available for
acceptance testing and delivery is again equal to the number required through
that date under the definitive schedule, Seller shall be in material breach of
this Agreement and Buyer may terminate this Agreement and all or part of any
outstanding Orders at any time thereafter. Upon such termination, Buyer shall
pay Seller an amount equal to Seller's Burdened Costs (as defined in Section
3.5.2 below) for raw materials which are purchased by Seller (or for which
Seller has then placed noncancelable purchase orders) specifically for the
manufacture of such Products and which are returned to Seller's suppliers, sold
or otherwise disposed of as directed by Buyer.
3.3 PURCHASE PRICE. As full compensation for the Products and the
performance of Seller's obligations under this Agreement, Buyer shall pay Seller
the price for each Product as established in each Order. Buyer requested changes
to (a) the Documentation or (b) to ordering components for subassemblies
resulting in a quantity less than the total purchase quantity for such Products
under such Order, may cause an increase or decrease in underlying materials
costs, and therefore in the price of Products.* The parties will work together
to ensure that the mechanics and documentation of implementing price changes
occur in an efficient manner for both Buyer and Seller.
3.4 PAYMENT. Seller shall issue its invoice for the price of a Product
upon Buyer's approval of the Product pursuant to paragraph 4.1. Buyer shall pay
Seller the amount due under each of Seller's invoices within thirty (30) days
after Buyer's receipt of the invoice. Seller shall promptly furnish Buyer with
such documentation and information as Buyer may reasonably request to verify the
amount due under any of Seller's invoices.*
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* Information omitted and filed separately with the SEC pursuant to request for
confidential treatment under Rule 406 under the Securities Act of 1933, as
amended.
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3.5 CANCELLATION OF ORDERS.
3.5.1 Buyer may not cancel any Order as it applies to Products
scheduled for delivery within ninety (90) days after Buyer gives Seller notice
of the cancellation.
3.5.2 Buyer may cancel any Order as it applies to Products
scheduled for delivery more than ninety (90) days after Buyer gives Seller
notice of the cancellation; provided that, with respect to canceled Products
scheduled for delivery more than ninety (90) but less than three hundred sixty
five (365) days after Buyer gives Seller notice of the cancellation, Buyer shall
agree to pay Seller an amount equal to Seller's Burdened Costs (as defined
below) for raw materials which are purchased by Seller (or for which Seller has
then placed noncancelable purchase orders) specifically for the manufacture of
such Products and which are returned to Seller's suppliers, sold or otherwise
disposed of as directed by Buyer. Seller's "Burdened Costs" shall equal the
difference between the amount paid by Seller for such materials plus a handling
charge of * plus any xxxx back by Seller's suppliers for taking less than
amounts ordered with respect to Product Orders and the amount of any refund,
credit, allowance or compensation received by or on behalf of Seller for such
return, sale or other disposition. Seller shall furnish Buyer such receipts,
documents and other information as Buyer may reasonably request to verify
Seller's net Burdened Costs under this Agreement.
3.5.3 No cancellation shall relieve Buyer or Seller of any of
their respective obligations under this Agreement as to any Products not
canceled. If Buyer purports to cancel all or any part of any Order for Seller's
breach or default and it is determined that Seller was not in breach or default
that would permit such cancellation, then such cancellation shall be deemed to
have been a cancellation pursuant to this paragraph and the rights and
obligations of the parties shall be determined accordingly.
3.6 SPARE PARTS. Seller will produce and sell and provide Buyer with
spare parts for the Products, which are configured and tested to the current
Product Specifications pursuant to Orders for such spare parts. * On Orders for
spares that provide for future delivery to Buyer, Seller will reasonably
accommodate Buyer's requests, as necessary, to delay delivery or utilize some
portion of such spares in future Product manufacturing.
SECTION 4. ACCEPTANCE, DELIVERY AND SHIPMENT
4.1 ACCEPTANCE. Delivery of Products to Buyer shall be deemed to have
occurred upon acceptance of each lot of Products under any Order in accordance
with the following acceptance procedure. Seller shall notify Buyer when a
particular Product Lot is ready for acceptance testing. Buyer will promptly
inspect all or a portion of such Product Lot at Seller's Plant. Buyer may
conduct a statistical sampling of each such Lot of Products. If five percent
(5%) or more of the lot fails to comply with the warranties set forth in
paragraph 7.1, then Seller shall repair the nonconforming Products at Seller's
Plant using Seller's labor, tools and materials,
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* Information omitted and filed separately with the SEC pursuant to request for
confidential treatment under Rule 406 under the Securities Act of 1933, as
amended.
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all at Seller's expense. However, if Seller will not be able to make, or does
not make, such required repairs within a reasonable time, Buyer may, at its
option, repair the noncomplying Products and charge Seller the reasonable cost
of the repair. Even if a Product Lot is accepted, Seller shall remain
responsible to correct nonconformities in any Product in such Lot under
paragraph 7.2.
4.2 STORAGE OF COMPLETED PRODUCTS. Accepted Product lots shall be
stored in a clean and safe condition by Seller at Seller's Plant or any other
mutually acceptable location until Buyer requests shipment of individual
Products to Buyer's Plant. Seller shall retain all risk of loss with respect to
such stored Products until shipment. Once accepted pursuant to Section 4.1,
Buyer shall retain all right, title and interest in and to such Products. Seller
shall execute any and all documents reasonably required in order to protect
Buyer's ownership interest in all accepted and delivered Products. Seller shall
maintain general liability and any other insurance reasonably required to insure
against loss or damage of any nature to the Products and Tooling in amounts
equal to the full insurable value thereof. At Buyer's request, Seller shall
provide a certificate evidencing the above required insurance coverage.
4.3 SHIPMENT. Upon Buyer's request, Seller shall properly xxxx and
otherwise identify each accepted Product for shipment to Buyer's Plant. Buyer
shall arrange and pay for all transportation, handling, transit insurance,
duties, governmental inspections and other requirements for delivery of the
Products in accordance with this Agreement. Shipments shall be F.O.B. Seller's
Plant.
4.4 PACKAGING. Seller shall properly package the Purchased Products
according to Buyer's instructions for protection against damage or deterioration
that may result from shipment, handling, storage or other cause.
4.5 SCHEDULE. Seller shall make the Products available for Buyer's
acceptance testing in accordance with the schedule set forth in the applicable
Order, as revised and updated as described in Section 3.2. However, Seller shall
not be liable for delays in delivery due to causes which are not reasonably
foreseeable, which are beyond Seller's control and which cannot be overcome by
the exercise of reasonable diligence; provided that Seller gives Buyer prompt
written notice of the circumstances giving rise to the delay, the anticipated
duration of the delay and the action being taken by Seller to overcome or
mitigate the delay. The specified delivery date shall be extended by the period
of any such delay.
SECTION 5. INSPECTION
5.1 SELLER'S PLANT. Seller's Plant and all Tooling shall be subject to
inspection by Buyer at any time during normal business hours upon twenty-four
(24) hours prior notice. Seller shall provide Buyer with safe and sufficient
access for such inspection.
5.2 BY SELLER. Seller shall perform such detailed inspections and tests
of each Purchased Product as are necessary to ensure that such Product complies
with the requirements of this Agreement. Without limiting the generality of the
foregoing, Seller shall:
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(a) comply with the Inspection Procedures applicable to each
Purchased Product;
(b) inspect and test all materials and components to be
incorporated in any Purchased Product on receipt in order to assure material and
component quality; and
(c) keep and maintain complete and adequate records of all
inspections and tests performed on Purchased Products, and make such records
available to Buyer for examination, copying and audit.
5.3 BY BUYER. All Products shall at all times be subject to inspection
and testing by Buyer upon 24 hours prior notice to Seller. Seller shall provide
Buyer with safe and sufficient access, equipment and facilities for any such
inspection or tests prior to delivery. No acceptance of any Products shall be
construed to result from any inspection, test or delay or failure to inspect or
test by Buyer prior to final inspection and test of such Products by Buyer.
Buyer shall be afforded a reasonable opportunity to inspect each Product for
damage at its specified destination. No inspection, test, delay or failure to
inspect or test, or failure to discover any defect or noncompliance by Buyer
shall relieve Seller of any of its obligations under this Agreement or impair
Buyer's right to reject defective or noncomplying Products or any other right or
remedy afforded to Buyer.
SECTION 6. COMPLIANCE WITH LAWS AND STANDARDS
6.1 GENERAL. Seller shall comply (and shall ensure that all Products
and Seller's subcontractors and suppliers of every tier comply) with all
applicable laws, ordinances, rules, regulations, orders, licenses, permits and
other requirements, now or hereafter in effect, of any governmental authority.
Seller shall furnish such documents as may be required to effect or evidence
such compliance. All laws, ordinances, rules, regulations and orders required to
be incorporated in agreements of this character are incorporated in this
Agreement by this reference.
6.2 INDUSTRY STANDARDS. Seller shall produce all Products in accordance
with, and shall ensure that each Product complies with, the following
requirements as now or hereafter in effect:
(a) Federal Communications Commission ("FCC") Class "A"
Standard agency approvals; and
(b) Underwriters Laboratory ("UL") Standard 751 agency
approvals.
Seller shall provide Buyer with such specifications, testimony and other
assistance as Buyer may reasonably request in connection with the listing,
approval, registration or satisfaction of similar requirements of any trade
association or other organization, as the same may apply to the Product.
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SECTION 7. WARRANTY
7.1 WARRANTY. Seller warrants to Buyer that*
7.2 CORRECTION OF NONCOMPLIANCE. If at any time during the Warranty
Period Buyer notifies Seller of any failure to comply with the warranty set
forth in paragraph 7.1, Seller shall promptly correct such noncompliance (e.g.,
by repair or replacement of the noncomplying Product) and remedy any damage to
the Product resulting from such failure.* If Buyer rejects any Products that do
not comply with the warranty set forth in paragraph 7.1, Seller shall have a
reasonable time to correct the noncompliance. If Seller fails to correct the
noncompliance within a reasonable time, Buyer may cancel the Order as it applies
to the noncomplying Products only without any cost, obligation or liability to
Buyer with respect to such noncomplying Products and without prejudice to any
other rights or remedies of Buyer with respect to such noncompliance (e.g., as
to damages or cover).
7.3 SELLER'S FAILURE TO CORRECT NONCOMPLIANCE. If during the Warranty
Period Buyer requests Seller to correct any Product that does not comply with
the warranty set forth in paragraph 7.1 and Seller thereafter fails to correct
the noncompliance or otherwise comply with the requirements of paragraph 7.2, or
indicates its inability or unwillingness to comply, then Buyer may perform (or
cause performance of) the correction or otherwise achieve compliance by the most
expeditious means available to it (by contract or otherwise) and charge to or
otherwise recover (for example, by offset against the compensation otherwise
payable to Seller under this Agreement) from Seller all reasonable costs thereof
that are associated with the direct repair of the Product. Buyer's rights to
perform corrections, achieve compliance and recover the costs thereof from
Seller shall not be interpreted or construed as obligating Buyer to make any
correction or otherwise achieve compliance. Further, Seller's obligations
(including warranty) shall not be limited or reduced in any way because of any
corrections performed or caused to be performed by Buyer or Buyer's rights to
perform the same. However, Seller will have no obligation for damage to a
Product where such damage is caused by the efforts of Buyer or Buyer's
representative in correcting the noncompliance.
7.4 RESPONSE TIME. Seller shall use its best efforts to perform such
warranty service by a qualified service technician within* from the time that
Seller receives the defective Product part, assuming material availability. If
the claim is not within Seller's warranty obligations under this paragraph 7,
Seller shall immediately notify Buyer and, at Buyer's option, shall either
return such Product part to Buyer or shall perform the required service under
paragraph 7.5 as directed by Buyer.
7.5 SERVICE NOT COVERED BY WARRANTY. In the event that any Product
requires repair or other service that is not covered by Seller's warranty
obligations under this paragraph 7 (e.g., after expiration of the Warranty
Period), Seller shall provide such service *. Seller shall use its best efforts
to complete such repairs within *.
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* Information omitted and filed separately with the SEC pursuant to request for
confidential treatment under Rule 406 under the Securities Act of 1933, as
amended.
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*
SECTION 8. ADDITIONAL OBLIGATIONS OF SELLER
8.1 PROPRIETARY NATURE OF PRODUCTS. The Documentation, Tooling and
Products involve valuable patent, copyright, trade secret and other proprietary
rights of Buyer. Accordingly, Seller shall not, without Buyer's prior written
consent:
(a) sell any Product to any Person other than Buyer;
(b) manufacture any Product except for sale to Buyer under
this Agreement;
(c) deliver or disclose any Documentation, Tooling, or any
confidential or proprietary information of or relating to Buyer (e.g., whether
of a technical, financial, business, trade secret or other nature) to any Person
other than Buyer; or
(d) use any Documentation or Tooling for any purpose other
than the manufacture of Products for sale to Buyer under this Agreement.
8.2 COMPONENT SPECIFICATIONS. Seller shall provide upon request from
Buyer a complete list of all pans and components used in the Product and the
manufacturers of such parts and components, specifically noting which parts or
components are available only from the manufacturer listed. Seller shall ensure
that all Products and pertinent parts and components of all Products are
serialized and otherwise identified in accordance with any reasonable
requirements specified by Buyer.
8.3 PRODUCT DEFECT NOTIFICATION. Seller shall immediately notify Buyer
by fax or telephone of any material or recurring defect, deficiency or
nonconformity discovered with respect to any Product or any similar product
manufactured by Seller.
8.4 MODIFICATION. Seller shall not modify or authorize any modification
affecting fit, form or function of any Product, or which would be significant
with respect to requirements of any governmental authority, without the prior
written consent of Buyer. Seller shall promptly disclose in writing to Buyer all
potential modifications (including, but not necessarily limited to, alterations,
improvements and enhancements), methods, applications, inventions, ideas and
know-how relating to the Product, or any similar product manufactured by Seller,
obtained, developed or made by Seller during the Term.
SECTION 9. MISCELLANEOUS
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* Information omitted and filed separately with the SEC pursuant to request for
confidential treatment under Rule 406 under the Securities Act of 1933, as
amended.
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9.1 NOTICES. Any notice, request, authorization, direction or other
communication under this Agreement shall be given in writing and be delivered in
person or by first-class U.S. mail, properly addressed and stamped with the
required postage, to the intended recipient as follows:
If to Seller: SeaMED Corporation
00000 X.X. 00xx Xxxxxx
Xxxxxxx, XX 00000
Attention: President
If to Buyer: Coinstar, Inc.
00000 XX 00xx Xx., Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Either party may change its address specified above by giving the other party
notice of such change in accordance with this paragraph.
9.2 INDEPENDENT CONTRACTOR. Seller is an independent contractor, not an
agent or representative of Buyer. Seller shall not have any right, power or
authority to enter into any agreement for or on behalf of, or incur any
obligation or liability of or to otherwise bind Buyer. This Agreement shall not
be interpreted or construed to create an association, joint venture or
partnership between the parties or to impose any partnership obligation or
liability upon either party.
9.3 NONWAIVER. The failure of either party to insist upon or enforce
strict performance by the other party of any provision of this Agreement or to
exercise any right under this Agreement shall not be construed as a waiver or
relinquishment to any extent of such party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same shall be
and remain in full force and effect.
9.4 SURVIVAL. Paragraphs 6, 7 and 8.1 (and all provisions of this
Agreement which may reasonably be interpreted or construed as surviving the
completion, expiration, termination or cancellation of this Agreement) shall
survive the completion, expiration, termination or cancellation of this
Agreement.
9.5 ENTIRE AGREEMENT. This Agreement and all outstanding purchase
orders from Buyer to Seller for Product set forth the entire agreement, and
supersede any and all prior agreements, of the parties with respect to the
Products. Buyer shall not be bound by, and specifically objects to, any term,
condition or other provision which is different from or in addition to the
provisions of this Agreement (whether or not it would materially alter this
Agreement) and which is proffered by Seller in any quotation, invoice, shipping
document, acceptance, confirmation, correspondence or otherwise, unless Buyer
specifically agrees to such provision in a written instrument signed by Buyer.
The rights, remedies and warranties afforded to Buyer pursuant to any provision
of this Agreement are in addition to and do not in any way limit any
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other rights, remedies or warranties afforded to Buyer by any other provisions
of this Agreement, by any of Seller's subcontractors or suppliers of any tier or
by law.
9.6 AMENDMENT. No change, amendment or modification of any provision of
this Agreement shall be valid unless set forth in a written instrument signed by
the party to be bound thereby.
9.7 SUCCESSORS AND ASSIGNS. Neither party shall assign (voluntarily, by
operation of law or otherwise) this Agreement or any right, interest or benefit
under this Agreement without the prior written consent of the other party;
provided, however, that either party may assign this Agreement or any of its
rights, interests or benefits in this Agreement without such consent to any
entity which is wholly owned or controlled by, which owns or controls or which
is under common control with the assigning party. No assignment with or without
such consent shall relieve or release either party of any of its obligations
under this Agreement. Subject to the foregoing restriction on assignments, this
Agreement shall be fully binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors, assigns and legal
representatives.
9.8 APPLICABLE LAW. This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of Washington, except to the
extent such laws may be preempted by the laws of the United States of America.
Seller shall not commence or prosecute any suit, proceeding or claim to enforce
the provisions of this Agreement, to recover damages for breach of or default
under this Agreement, or otherwise arising under or by reason of this Agreement,
other than in the courts of the State of Washington or the District Court of the
United States, Western Division, State of Washington. Seller irrevocably
consents to the jurisdiction of the courts of the State of Washington with venue
laid in King County and of the District Court of the United States, Western
Division, State of Washington.
9.9 FORCE MAJEURE. Neither party shall be liable for any failure to
perform or delay in performing any of its obligations hereunder when such
failure or delay is due to one or more of the following circumstances: any
natural catastrophe, fire, war, riot or civil unrest, or any act, regulation,
restriction, order or intervention of any governmental authority. Upon the
occurrence of such circumstance(s), the affected party shall immediately notify
the other party, keep the other party informed of any further developments and
use all commercially reasonable efforts to overcome the force majeure event.
Immediately after such condition is removed the affected party shall perform
such obligation with all due speed.
IN WITNESS WHEREOF the parties hereto have executed this Agreement on
the day and year first above written.
Seller:
SeaMED Corporation
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By /s/ Xxxxxx Xxxx
V.P. of Operations
Coinstar, Inc.
By /s/ [unreadable]
V.P. Operations
