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Exhibit 10.41
AMENDED AND RESTATED AGREEMENT
This Amended and Restated Agreement is effective as of the 15th day of
November, 1996, by and between Nighthawk Systems, Incorporated, a Colorado
corporation, whose principal place of business is at 0000 Xxxxxxxxxx Xxxxxxxxx,
Xxxxxxxx Xxxxxxx, XX 00000 ("NSI") and SigmaTron International, Inc., a
Delaware corporation, whose principal place of business is at 0000 Xxxxxxxxx
Xxxx, Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000 ("SIGMATRON").
RECITALS
WHEREAS, NSI is a designer, manufacturer and seller of proprietary
devices that detect indoor levels of carbon monoxide gas; and
WHEREAS, SigmaTron is an independent contract manufacturer of
electronic components, printed circuit board assemblies and turnkey electronic
products; and
WHEREAS, pursuant to the Agreement, dated as of June 9, 1995, by and
between NSI and SigmaTron (the "1995 Agreement"), SigmaTron agreed to
manufacture and assemble carbon monoxide gas detectors exclusively for NSI in
exchange for NSI's commitment to purchase all of its requirements for such
detectors from SigmaTron; and
WHEREAS, NSI and SigmaTron wish to amend and restate the 1995
Agreement in its entirety to provide the following terms and conditions of
their business arrangement.
WHEREAS, Xxxxxx Xxxxx Portable Equipment, Inc. (the "Guarantor"), of
Mebane, North Carolina, wishes to guarantee unconditionally all of NSI's
obligations under the restated and amended agreement.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the sufficiency of which
is hereby acknowledged, NSI and SigmaTron agree to amend and restate the 1995
Agreement in its entirety as follows:
1. DEFINITION OF CO DETECTORS; TERM OF AGREEMENT:
(a) This Amended and Restated Agreement provides for the
manufacture and assembly by SigmaTron of the models of devices
that detect indoor levels of carbon monoxide gas set forth on
Exhibit A to this Agreement and all comparable or replacement
models now and hereafter designed, manufactured or sold by NSI
(all such models and products shall be referred to
collectively as "CO DETECTORS" and singly as a "CO DETECTOR").
A comparable or replacement model is defined as a CO detector
that utilizes similar sensing technology, assembly equipment
and tooling to
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manufacture as the models listed on Exhibit A. NSI
shall amend Exhibit A as comparable and replacement models are
released and obsolete models discontinued. If at any time
during the Term, NSI plans to design, manufacture or sell a CO
detector that is not a replacement of or comparable to CO
Detectors, SigmaTron shall have the right to submit to NSI a
bid to manufacture and assemble such CO detector and to match
any competing bid received by NSI for the manufacture and
assembly of such CO detector. NSI shall provide SigmaTron
with such information as necessary to enable SigmaTron to
formulate its bids and a reasonable time in which to respond
to any competing bid. Should NSI determine that SigmaTron is
unable to match such bid, then NSI shall be free to accept the
competing bid, free of claim by SigmaTron hereunder. If NSI
accepts SigmaTron's bid for said CO detector, said CO detector
shall be added to Exhibit A to this Agreement and shall be
considered "CO Detectors" hereunder.
(b) Subject to termination pursuant to Sections 1(c) and 13 below
and subject to the last sentence of this subparagraph, this
Agreement shall be for an initial period which shall expire on
June 9, 1998. Each party shall give the other party a notice
of its desire regarding renewal or nonrenewal at least 6
months before the expiration of the initial period (or a
renewal period), whereupon the parties shall negotiate the
terms and conditions applicable during the renewal period, to
be effective upon expiration of the current period. (The
initial and any renewal period shall be referred to as the
"TERM"). If after such negotiations, the terms and conditions
are not acceptable to a party, then the party for whom the
terms and conditions are not acceptable, in its sole
discretion, may cause the Agreement to terminate (without
liability by reason of such termination) by delivery of a
written notice to that effect, in which case the initial
period or renewal period shall not expire until six months
after receipt by the other party of such notice.
(c) The parties acknowledge that, during the course of their
relationship, issues may arise as to the terms and conditions
of this Agreement and other aspects of their working
relationship. The parties agree to meet, upon ten days' prior
written notice, no less often than once per quarter to discuss
their business relationship. At the meeting, either party may
give to the other party written notice of an unresolved
concern relating to this Agreement, which notice shall specify
the nature of the concern and the notifying party's suggested
resolution. The recipient of such notice shall provide the
notifying party a written response within 15 days of
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receipt of the notice. If the response is not
acceptable to the notifying party in its sole discretion, the
notifying party shall have the right to terminate this
Agreement upon no less than 6 months' prior written notice, by
giving written notice of termination within 15 days after
receipt of the recipient's written response.
2. PURCHASE AND DELIVERY OF CO DETECTORS:
(a) NSI shall order CO Detectors from SigmaTron by executing and
delivering to SigmaTron a Master Production Schedule ("MPS").
On or before the first day of each month during the Term, NSI
will deliver to SigmaTron a MPS specifying NSI's requirements
and schedule for Delivery (as defined in Section 2(c)) for the
next succeeding three-month period (the "FIRM ORDER PERIOD")
and a forecast of orders for the nine-month period following
the Firm Order Period provided on a monthly basis (the
"FORECAST PERIOD"). Within thirty days thereafter, SigmaTron
will deliver to NSI a written acknowledgement of receipt and
approval of the MPS. Subject to Section 2(b), the quantities
and schedule for Delivery during the Firm Order Period may not
be amended by NSI without the prior written consent of
SigmaTron. Upon SigmaTron's receipt and approval of a MPS,
SigmaTron agrees to manufacture and Deliver and NSI shall be
obligated to accept Delivery and pay the Price (as defined in
Section 5) for the CO Detectors to be Delivered during the
Firm Order Period. Further, NSI shall be obligated, every
Monday, to accept Delivery of and pay the Price pursuant to
Section 5 for, at a minimum, all units of CO Detectors
completed during the prior calendar week in accordance with
the MPS.
(b) NSI may reschedule the quantity of CO Detectors to be
Delivered during each month of a Firm Order Period only as
follows:
Month in Permitted
Firm Order Variance
Period
(+) (-)
------------- ----------------
[S] [C] [C]
1st 0 0
2nd 0 15%
3rd 10% 30%
Any variations beyond the permitted variances shall be subject
to written acceptance by each of the parties. Neither party
will be
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obligated to accept a variance beyond a permitted variance.
(c) Delivery shall be deemed to occur upon the delivery by
SigmaTron to NSI's designated common carrier of finished CO
Detectors packaged for sale to the ultimate user, F.O.B.
SigmaTron's Del Rio, Texas warehouse ("DELIVERY"). NSI will
provide shipping instructions to SigmaTron in advance. Except
for Deliveries either made to satisfy NSI's obligations
described in the last sentence of Section 2(a) or otherwise
directed by NSI, SigmaTron will ship in full truck quantities
only.
(d) All NSI owned machinery and equipment, tooling, test xxxxxxxx
and fixtures to be utilized in SigmaTron's manufacture and
assembly of CO Detectors (the "NSI EQUIPMENT") shall be
delivered to Del Rio, Texas by NSI at NSI's expense. Where
practicable, NSI will conspicuously xxxx each item of NSI
Equipment prior to delivery to SigmaTron with the following
statement: "This equipment is owned by Nighthawk Systems,
Incorporated." SigmaTron agrees it shall not remove, modify
or cover any such statement. NSI shall be responsible to
insure the NSI Equipment against property damage in an amount
not less than the replacement cost thereof, which insurance
shall comply with the terms of the second and third sentences
of Section 12 hereof. Said insurance shall cover the NSI
Equipment whether located in the United States or Mexico and
whether located at the facilities of SigmaTron or a third
party, such as an approved vendor. All non-recurring charges
for tooling, testing and agency certification shall be paid
for by NSI.
3. EXCLUSIVITY:
(a) Subject to Sections 3(b) and 3(c) below, NSI shall purchase
from SigmaTron all of NSI's requirements for CO Detectors for
resale in North America.
(b) If at any time during the Term, NSI's anticipated demand for
any month during the Firm Order Period or the Forecast Period
is greater than 300,000 CO Detectors, or if NSI's aggregate
purchases for the Firm Order Period and Forecast Period (taken
together) is greater than 2,000,000 CO Detectors, NSI may
request that SigmaTron provide assurances that it has the
capacity to meet NSI's requirements. If SigmaTron's
assurances to NSI do not satisfy NSI in NSI's reasonable
discretion that SigmaTron has the capacity to meet NSI's
requirements, NSI may obtain a second supplier to provide to
NSI CO Detectors to meet the excess
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demand only for the period of such excess demand.
(c) NSI's obligation to purchase CO Detectors from SigmaTron shall
not apply to indoor carbon monoxide gas detectors manufactured
by a third party that is acquired by NSI, Guarantor or
Xxxxxxxx Holding P.L.C. during the Term.
4. STORAGE AND RISK OF LOSS:
SigmaTron shall store all CO Detectors in its Del Rio, Texas
warehouse. The risk of loss for CO Detectors shall be the
responsibility of SigmaTron until Delivery to NSI's carrier has been
completed. SigmaTron agrees to provide security for the CO Detectors
stored in its Del Rio, Texas warehouse consistent with SigmaTron's
past practices.
5. PRICE; PAYMENT:
(a) NSI agrees to pay SigmaTron for each CO Detector Delivered to
NSI hereunder a purchase price ("PRICE") determined in
accordance with a separate agreement (the "Side Agreement")
dated November 15, 1996, the terms of which have been agreed
upon between the parties.
(b) Prices in the Side Agreement are quoted in U.S. dollars F.O.B.
SigmaTron's warehouse Del Rio, Texas.
(c) Prices are quoted on the basis that any taxes arising under
the federal, state or local laws of Mexico relating to
SigmaTron's manufacture of CO Detectors in Mexico and any
customs duties relating to the transfer of property from
Mexico to the United States are the responsibility of
SigmaTron and that all other property, sales, use or other
taxes assessed on the manufacture, storage or sale of CO
Detectors are the responsibility of NSI; provided, however,
that SigmaTron is responsible for taxes assessed on its
manufacturing operation in Mexico. The party responsible for
any such duties or taxes shall cause to be filed all returns
and reports required in connection with such duties or taxes
and shall indemnify and hold the other party harmless with
respect to such duties or taxes, as the case may be.
(d) Payment shall be received by SigmaTron on or before 60 days
after the date of SigmaTron's delivery of invoices to NSI.
SigmaTron shall issue invoices to NSI for CO Detectors upon
Delivery of CO Detectors.
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(e) NSI will pay SigmaTron a late payment fee at a rate equal to 1
1/2% per month on any sum not received by SigmaTron on or
before 60 days after the date of delivery of SigmaTron's
invoice.
6. CHANGE NOTICES; OBSOLETE INVENTORY:
(a) NSI may request changes of the models or to specifications for
CO Detectors by delivering to SigmaTron a change notice
("Change Notice") describing the changes and the proposed
effective date of such changes. Any increase or decrease in
the Xxxx of Material Cost of, or direct labor time required
for, implementation of the changes shall be reflected in the
Price for the affected CO Detectors set in accordance with the
formula set forth in the Side Agreement. NSI shall issue any
Change Notice that may be required as a result of a change in
Exhibit A.
(b) Implementation of a Change Notice may create obsolete or
surplus inventory of CO Detectors, components, materials or
supplies, whether in stock (including Safety Stock, as defined
in Section 10), subject to orders not cancelable by SigmaTron
without penalty, or not otherwise useable by SigmaTron in the
ordinary course of its business (all such inventory of CO
Detectors, components, materials or supplies shall be referred
to as "OBSOLETE INVENTORY"). NSI shall purchase from
SigmaTron:
(i) all Obsolete Inventory to the extent that it would
have been used by SigmaTron to fill orders to be
Delivered for the current month and during the Firm
Order Period beginning as of the first day of the
month following the effective date of the Change
Notice;
(ii) all Obsolete Inventory for orders beyond the Firm
Order Period that were purchased by SigmaTron with
NSI's written approval; and
(iii) all Safety Stock that becomes Obsolete Inventory.
(c) NSI shall purchase Obsolete Inventory from SigmaTron as
follows:
(i) NSI shall pay SigmaTron the Price for:
(a) all finished CO Detectors scheduled to be
Delivered for the current month and during
the first two months of the Firm Order Period
beginning as of
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the first day of the month following the
effective date of the Change Notice; and
(b) all finished CO Detectors held as Safety
Stock.
(ii) NSI shall pay SigmaTron 108% of the current Xxxx of
Material Cost for:
(a) a maximum of 110% of all finished CO
Detectors scheduled to be Delivered during
the third month of said Firm Order Period;
(b) all raw material CO Detector kits held as
Safety Stock; and
(c) all Obsolete Inventory for orders beyond the
Firm Order Period purchased with NSI's
written approval.
(d) SigmaTron shall invoice NSI for Obsolete Inventory within 15
days after notification to NSI of its exposure or as soon
thereafter as is practicable.
7. APPROVED VENDOR LIST:
(a) SigmaTron shall procure all components, materials and supplies
necessary for the assembly and manufacture of CO Detectors
from such third parties as have been approved in advance by
NSI as described on NSI's approved vendor list ("AVL").
SigmaTron will not procure any components, materials or
supplies for any model of CO Detector prior to receiving NSI's
final xxxx of material, including AVL, for that model. NSI
may change the AVL in its sole discretion and such changes
shall be effective as directed by NSI. SigmaTron and NSI
agree that any such changes that result in a change of model
or specification shall be treated as a Change Notice in
accordance with Section 6.
(b) SigmaTron shall not substitute any component, material or
supply without NSI's prior written consent, which consent may
be withheld in the exercise of NSI's sole discretion. Should
SigmaTron become aware of opportunities for the realization of
savings in component costs or direct labor costs, SigmaTron
shall inform NSI in writing. NSI shall conduct such
investigation as it may desire and shall decide, in the
exercise of its sole discretion, whether or not to proceed so
as to take advantage of the
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suggestion. Any cost savings realized because of changes
initially suggested to NSI by SigmaTron shall be shared by NSI
and SigmaTron on a 50/50 basis for the first 12 months after
the commencement of the cost savings realization. Thereafter,
the benefit of all such cost savings shall be enjoyed by NSI
solely.
(c) SigmaTron shall invoice NSI for SigmaTron's share of such cost
savings within 5 days after the end of each month for which
SigmaTron is entitled to share in cost savings.
(d) Any effect that cost savings may have on Price shall be
processed in a Change Notice under Section 6.
(e) NSI may inspect SigmaTron's accounting and purchasing records
related to SigmaTron's purchase of components, materials and
supplies necessary for the assembly and manufacture of CO
Detectors, during SigmaTron's regular business hours, at
SigmaTron's Elk Grove Village offices, upon two (2) business
days notice to SigmaTron. All such records are SigmaTron's
Confidential Information subject to the provisions of Section
11 of this Agreement.
8. ACCEPTANCE, TESTING AND REJECTION:
(a) The basic acceptance criteria shall be conformance to the
drawings, specifications and test criteria specified by NSI.
(b) SigmaTron shall conduct all quality assurance, burn-in and
tests required by NSI for each CO Detector and conform each CO
Detector to requirements of Underwriters' Laboratories ("UL")
as specified by NSI. All tests shall be conducted by
SigmaTron at its plant that has been dedicated to the final
assembly and testing of CO Detectors. SigmaTron further
agrees that said plant and its warehouse in Del Rio, Texas
shall be available for inspection by NSI and UL as desired.
Such inspections shall be conducted only during regular
business hours and subject to compliance with SigmaTron's
reasonable security requirements.
(c) NSI may reject lots of CO Detectors based on its reasonable
quality control methods of testing individual units. In the
event of such rejection, SigmaTron shall be responsible for
the freight cost for shipping the rejected units back to
SigmaTron and for the cost of retesting any lots so rejected.
(d) SigmaTron agrees that its Mexican manufacturing operations
will
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obtain ISO 9000 certification no later than July 1, 1997.
9. WARRANTY:
(a) The parties acknowledge that NSI is solely responsible for the
design and specifications of CO Detectors. SigmaTron warrants
to NSI that each CO Detector will meet NSI's applicable
specifications and will function in accordance with those
specifications when Delivered. SigmaTron further warrants to
NSI that each CO Detector will be free from defects in
workmanship for a period of five years from the date of
manufacture. SigmaTron will stamp a manufacture date code on
each CO Detector in order to create a reference date for such
purpose. SigmaTron does not warrant the functionality of the
design or specifications of any CO Detector, and does not
warrant any components, materials or supplies against defects
unless the defects are readily discoverable upon inspection.
These warranties shall not apply and SigmaTron is not
responsible for defects in any CO Detector that has been
subject to improper handling, misuse, accident, negligence,
exposure to casualty or the elements, has been operated in
excess of conditions specified for the CO Detector or has been
altered or repaired in an unauthorized manner. These
warranties are not assignable by NSI.
(b) The parties agree that NSI shall be solely responsible for any
warranty service of CO Detectors. To the extent that a CO
Detector is returned to NSI by its customer because it is
defective and the defect resulted from a breach by SigmaTron
of its warranty as set forth in Section 9(a) above or
SigmaTron's failure to use components, materials or supplies
from the AVL, NSI shall be credited with the full Price paid
to SigmaTron for the defective CO Detector plus NSI's
reasonable out-of-pocket costs associated with the return and
handling of the defective CO Detector not to exceed $3.00 per
returned CO Detector. A CO Detector shall not be considered
defective for purposes of this credit unless NSI has returned
it to SigmaTron for inspection and verification. No defective
CO Detector so returned to SigmaTron shall be resold to NSI as
a new unit.
(c) Unless the claim is primarily attributable to SigmaTron within
the meaning of the following sentence, NSI shall indemnify and
hold SigmaTron harmless from any losses, claims (including
product liability claims) and costs, including court costs and
attorneys' fees, which arise from claims of third parties
based upon the use, sale, design, specifications, or operation
of CO Detectors.
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SigmaTron shall indemnify and hold harmless NSI from any
losses, claims, liabilities and costs, including court costs
and attorneys' fees, which arise from claims of third parties
which are primarily attributable to SigmaTron, namely arising
out of a breach by SigmaTron of its warranty as set forth in
Section 9(a) above or a failure by SigmaTron to use
components, materials or supplies from the AVL. The foregoing
indemnities shall be limited to $5,000,000 per claim. In the
event a third party proceeds against both SigmaTron and NSI in
an action that may result in indemnification rights under
either of the first two sentences of this Section 9(c), each
of SigmaTron and NSI shall defend itself in that action and
cooperate in the defense to the fullest extent possible
without adversely affecting its interests, and SigmaTron and
NSI agree not to assert cross-claims in the resulting
arbitration, mediation or litigation. The preceding sentence
shall not be construed as a waiver of the right to assert any
claim against the other in a different action. If NSI and
SigmaTron cannot agree as to which indemnification applies,
that question shall be resolved by arbitration pursuant to
Section 17(h).
(d) NOTWITHSTANDING SECTION 13(e) BELOW, NSI'S REMEDIES UNDER
SECTION 9(b) FOR SIGMATRON'S BREACH OF WARRANTY ARE EXCLUSIVE
OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND SIGMATRON
HEREBY SPECIFICALLY DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY
OF ANY TYPE, INCLUDING WITHOUT LIMITATION THE WARRANTY OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE.
10. SAFETY STOCK:
(a) In recognition of the potential for unexpected fluctuations in
NSI's customers' demands for CO Detectors, when requested in
writing by NSI to do so, SigmaTron agrees to keep in its Del
Rio, Texas, warehouse an inventory equal to 20,000 units of
finished CO Detectors and 30,000 complete raw material CO
Detector kits (collectively, "SAFETY STOCK"). Prior to
Delivery, the Safety Stock shall be owned by SigmaTron.
SigmaTron shall bear the risk of loss with respect to Safety
Stock prior to Delivery. NSI may request delivery of Safety
Stock as follows:
(i) finished CO Detectors may be requested at any time
with no lead time constraints. SigmaTron shall
Deliver the requested CO Detectors within 48 hours
after SigmaTron's receipt of NSI's request;
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(ii) finished CO Detectors assembled from the raw material
kits shall be Delivered by SigmaTron to NSI within 5
weeks of NSI's request.
(b) NSI shall pay SigmaTron the Price for CO Detectors Delivered
from Safety Stock.
(c) Any depletion in required levels of Safety Stock shall be
replenished by SigmaTron as soon as reasonably possible.
Deliveries of CO Detectors from Safety Stock are in addition
to Deliveries scheduled for any Firm Order Period.
11. CONFIDENTIALITY:
(a) During the course of their business relationship described in
this Agreement and for three years thereafter, each party
shall disclose to the other party confidential and proprietary
information, including without limitation financial
information, (all of such information being referred to herein
as "Confidential Information"), the unauthorized disclosure of
which may adversely affect the competitive advantage of the
disclosing party. Therefore, each of NSI and SigmaTron hereby
agrees that it shall maintain the Confidential Information of
the other party in strictest confidence and use such
Confidential Information only to fulfill its obligations to
the other party under this Agreement or as otherwise permitted
under this Agreement and shall not disclose Confidential
Information to any third party without the prior written
consent of the owner; provided however, that either party may
disclose Confidential Information of the other to lenders,
accountants, counsel, and other third parties with a duty of
confidentiality to the disclosing party, as long as such
disclosing party takes reasonable efforts to require such
third parties to keep such information confidential. Upon the
termination of this Agreement, each party shall return or
destroy any Confidential Information received from the other
party upon request.
(b) Confidential Information does not include matters:
(i) which are or become generally known to the public;
(ii) independently developed by the recipient (provided
that the recipient has not used the Confidential
Information of the disclosing party);
(iii) independently developed by a third party without
breach of
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a confidentiality obligation to the disclosing party;
or
(iv) required to be disclosed pursuant to order of court
or other governmental authority so long as the party
being required to make the disclosure gives prompt
notice thereof to the other party prior to such
disclosure (if possible).
(c) Each party acknowledges that a breach or threatened breach of
its obligations hereunder may cause irreparable damage to the
other party not adequately compensated by monetary damages.
Therefore, each party agrees that the non-breaching party
shall have the right to obtain, without the necessity of bond,
equitable remedies including without limitation specific
performance and injunctive relief, upon application.
(d) SigmaTron's Confidential Information may constitute material
non-public information which may be important to an investor
in making a decision to purchase or sell securities in
SigmaTron. Until such time as Confidential Information is
made public, NSI agrees not to utilize such information in
purchasing or selling securities of SigmaTron and to use
reasonable efforts not to disclose any portion of such
information to a third party who might trade on the
Confidential Information or disclose it to others.
12. INSURANCE:
Each party agrees that at all times during the Term of this Agreement
it shall carry property damage and general liability insurance
(including without limitation product liability and business
liability) coverage in an amount no less than $5,000,000 per
occurrence and $5,000,000 overall. Each party shall name the other
party as additional insured under such policy and shall deliver to the
other party a Certificate of Insurance as proof of such coverage
status within ten days of the effective date of this Agreement and
within ten days of the renewal date of any such insurance coverage.
Each policy will also provide that no change or cancellation will be
effective without 30 days' written notice to such additional insured.
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13. DEFAULT AND REMEDIES; TERMINATION:
(a) Either party may declare the other party in default:
(i) if the defaulting party defaults in any payment to
the non-defaulting party and such failure continues
unremedied for a period of twenty (20) days after the
date of receipt by the defaulting party of written
notice specifying the default in reasonable detail;
or
(ii) if the defaulting party defaults in its performance
of any other material term or condition of this
Agreement, or of any MPS issued pursuant to this
Agreement, and such default continues unremedied for
a period of thirty (30) days after the date of
receipt by the defaulting party of written notice
specifying the default in reasonable detail; or
(iii) if the defaulting party files a petition in
bankruptcy, has a petition in bankruptcy filed
against it and such petition is not dismissed within
90 days, makes an assignment for the benefit of
creditors, suffers foreclosure of all or
substantially all of its assets or seeks the
appointment of a receiver for all or substantially
all of its assets.
(b) In the event of a default hereunder, the non-defaulting party
may, by thirty (30) days prior written notice to the
defaulting party, terminate this Agreement and all or any of
the privileges, permissions and rights granted to the
defaulting party hereunder or in connection herewith in whole
or in part. The effective date of termination will be the
date therefor stated in any termination notice given
hereunder, which date will not be before the expiration of any
applicable cure period provided for herein. Any such
termination will not effect the liability of either party for
any breach arising prior to such termination.
(c) Upon expiration of the Term or in the event of an unremedied
event of default by NSI (and the expiration of any cure
periods), SigmaTron may exercise any one or more of the
following remedies, in addition to any other remedies
available to it hereunder:
(i) all inventory, components and materials (including
the Safety Stock), either in stock, on order and not
cancelable by SigmaTron without penalty, or not
useable by SigmaTron in the ordinary course of its
business, may be
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(ii) treated by SigmaTron as Obsolete Inventory
under Section 6;
SigmaTron may terminate its obligations to
manufacture and assemble CO Detectors
exclusively for NSI;
(iii) SigmaTron may sell to third parties any inventory,
components or materials in SigmaTron's possession,
including without limitation, finished CO Detectors
produced on or before the date SigmaTron declares NSI
in default and Safety Stock (as finished goods or in
the form then retained by SigmaTron), free of claim
by NSI and on any terms and conditions (including
without limitation price) determined by SigmaTron; or
(iv) SigmaTron shall be entitled to hold shipments of CO
Detectors required to be Delivered to NSI until
SigmaTron receives full payment therefor.
(d) Upon expiration of the Term or in the event of an unremedied
event of default by SigmaTron (and the expiration of any cure
periods), SigmaTron will complete all work in process and then
make available for removal by NSI all NSI Equipment.
(e) Except as provided in Section 9 above, the remedies provided
for in this Agreement are not exclusive and shall be in
addition to any other remedies available to the non-defaulting
party, at law or in equity.
14. ASSIGNMENT; CHANGE OF CONTROL; GUARANTY:
(a) Neither party may assign its rights or obligations hereunder
without the prior written consent of the other party, which
consent may be withheld in the sole discretion of such party.
(b) In the event that all or substantially all of NSI's assets or
a change in control of NSI is to be effected by a merger,
consolidation, reorganization, or a sale of capital stock of
NSI, NSI shall give notice to SigmaTron of such pending event
so that SigmaTron may attempt to enter into a requirements
contract similar to this Agreement with the third party
acquiror, to become effective upon the consummation of the
sale. If SigmaTron is not able to execute a mutually
acceptable agreement with the third party, the terms of this
Agreement shall bind said third party, at SigmaTron's option,
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for a period of 12 months after consummation of the sale.
SigmaTron will exercise its option, if at all, by giving
written notice to NSI not later than 30 days after the
occurrence of a meeting among NSI, SigmaTron and the third
party commencing the negotiation of such an agreement.
SigmaTron agrees to make its representative available for such
meeting upon three days' prior written notice.
(c) In the event that all or substantially all of SigmaTron's
assets or a change in control of SigmaTron is to be effected
by a merger, consolidation, reorganization, or a sale of
capital stock of SigmaTron, SigmaTron shall give notice to NSI
of such pending event. Upon occurrence of such pending event,
NSI may at its option terminate this Agreement upon 30 days
written notice.
(d) All of NSI's obligations under this Agreement shall be
unconditionally guaranteed by Xxxxxx Xxxxx Portable Equipment,
Inc. pursuant to the terms of a Guaranty Agreement in such
form as is reasonably acceptable to SigmaTron.
15. PROJECT MANAGERS:
Each party shall appoint an individual to act as its project manager
for this Agreement. Each project manager shall be primarily
responsible for technical and service liaison with the other party for
all elements of this business relationship. Initially, NSI appoints
Xxxx X. Xxxxxx as its project manager and SigmaTron appoints Xxxxxxx
X. Xxxxxxxx as its project manager. Each party shall have the right
to change its project manager at any time by written notice sent to
the other party.
16. PROPRIETARY RIGHTS:
(a) The parties acknowledge that the design and specifications of
CO Detectors, the know-how associated with the components of
CO Detectors and all of NSI's customer lists are proprietary
to NSI. Nothing in this Agreement shall be construed as
granting to SigmaTron or conferring on SigmaTron any rights by
license or otherwise to NSI's patents, trademarks, copyrights
or other proprietary rights except as necessary for SigmaTron
to perform its obligations under this Agreement or exercise
its right to sell finished CO Detectors under Section 13(c) of
this Agreement.
(b) (i) NSI shall, at its own expense, defend, indemnify and
hold SigmaTron harmless from any loss, liability or
expense (including court costs and attorney's fees)
resulting from any actual or alleged infringement or
other violation of any
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patent, trademark, copyright or other proprietary
right of any third party to the extent that such
infringement is based on SigmaTron's production for
NSI of CO Detectors in accordance with specifications
provided by NSI to SigmaTron under this Agreement.
(ii) If NSI is not able to procure from the person or
persons claiming infringement the right for SigmaTron
to continue production of the affected CO Detectors
on such terms as are mutually acceptable by the
parties, NSI shall purchase from SigmaTron each of
the following that results from the inability of
SigmaTron to use the infringing goods (all such
inventory of CO Detectors, components, materials or
supplies, whether in stock (including Safety Stock),
subject to orders not cancelable by SigmaTron without
penalty, or not otherwise useable by SigmaTron in the
ordinary course of its business is herein called
"Infringing Obsolete Inventory"):
(a) all Infringing Obsolete Inventory to the
extent that it would have been used by
SigmaTron to fill orders to be Delivered for
the current month and during the Firm Order
Period beginning as of the first day of the
month following the date on which SigmaTron
was required to cease production of the
infringing product;
(b) all Infringing Obsolete Inventory for orders
beyond the Firm Order Period that were
purchased by SigmaTron with NSI's written
approval; and
(c) all Safety Stock that becomes Infringing
Obsolete Inventory.
(iii) NSI shall purchase Infringing Obsolete Inventory from
SigmaTron as follows:
(a) NSI shall pay SigmaTron the Price for:
1. all finished CO Detectors scheduled
to be Delivered for the current
month and during the first two
months of the Firm Order Period
beginning as of the first day of the
month following the date on which
SigmaTron was required to cease
production
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of the infringing product; and
2. all finished CO Detectors held as
Safety Stock.
(B) NSI shall pay SigmaTron 108% of the current
Xxxx of Material Cost for:
1. 110% of all finished CO Detectors
scheduled to be Delivered during the
third month of said Firm Order
Period;
2. all raw material CO Detector kits
held as Safety Stock; and
3. all Infringing Obsolete Inventory
for orders beyond the Firm Order
Period purchased with NSI's written
approval.
(iv) SigmaTron shall invoice NSI for Infringing Obsolete
Inventory within 15 days after notification to NSI of
its exposure or as soon thereafter as practicable.
(c) NSI represents to SigmaTron that NSI has received no notice of
any claim and is aware of no threatened claim that any CO
Detector infringes or violates any patent, trademark,
copyright or other proprietary right of any third party. NSI
agrees that it shall immediately notify SigmaTron when NSI has
knowledge that such claim or threatened claim has been
asserted with respect to any CO Detector.
17. MISCELLANEOUS:
(a) Effect of Headings: The headings contained in this Agreement
are to facilitate reference only, do not form a part of this
Agreement and shall not in any way affect the construction or
interpretation hereof.
(b) Non-waiver: The failure of either party to enforce or
exercise any provision, right or option under this Agreement
shall not prejudice any other right which that party may
otherwise have under this Agreement, at law or in equity.
(c) Notices: Any notice, request, instruction, invoice or other
document required or permitted to be given hereunder shall be
in
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writing and addressed as follows (or to such different address
as has been set forth in a notice to the other party):
SigmaTron International, Inc.
0000 Xxxxxxxxx Xxxx
Xxx Xxxxx Xxxxxxx, Xxxxxxxx 00000
Facsimile: 847/956-8082
Attn: Xxxx X. Xxxxxxxx, President
with a copy to:
Xxxxx X. Xxxxxxxxx, Xx.
Xxxxxxx & Xxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: 312/939-5617
Xxxx Xxxxxx
President
Nighthawk Systems, Incorporated
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, XX 00000
Facsimile: 719/598-8550
Notices so given shall be deemed delivered one business day
after machine confirmation of facsimile transmission if sent
via facsimile, or on the next business day if sent via
recognized overnight courier, all fees prepaid.
(d) Release of Publicity: Neither party shall, without first
securing the written consent of the other party hereto,
advertise or release any publicity regarding the existence of
this Agreement or its contents. As a public company,
SigmaTron is required to give notice to the public of all of
its material agreements and any changes thereto. NSI
acknowledges that this Agreement is material to SigmaTron and
consents to the issuance of a press release announcing the
execution of this Agreement. In addition, if SigmaTron is
required by applicable regulatory requirements to announce
publicly other aspects of its business relationship with NSI
or this Agreement, NSI shall respond reasonably and promptly
to SigmaTron's requests for approval of the content of
announcements.
(e) Applicable Law: This Agreement and all matters connected with
the performance hereof shall be construed, interpreted,
applied,
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and governed in all respects according to the laws of the
State of Colorado notwithstanding any conflicts of law rules
that may provide otherwise.
(f) Modification of Agreement: This Agreement, the Guaranty and
the Side Agreement set forth the entire understanding and
agreement between the parties on the subject matter hereof and
merges and supersedes all previous communications,
negotiations, warranties, representations, purchase orders and
agreements, either oral or written, with respect to the
subject matter hereof, including without limitation the 1995
Agreement, and no addition to or modification of this
Agreement shall be binding on either party hereto unless
reduced to writing and duly executed by the party to be
charged.
(g) Severability: If any term or provision of this Agreement is
found to be illegal or unenforceable then, notwithstanding
such partial invalidity, the remaining portions of this
Agreement shall remain in full force and effect.
(h) Arbitration: Any controversy or claim arising out of a breach
of this Agreement shall be settled by binding arbitration in
Denver, Colorado. Said arbitration shall be conducted in
accordance with the commercial arbitration rules of the
American Arbitration Association then in force. One
arbitrator shall be selected to settle the controversy or
claim. The arbitrator shall be a person experienced in
negotiating and consummating contract manufacturing
agreements, and a written opinion shall be issued specifying
the basis for the decision, which may include injunctive
relief, specific performance or other remedies in the nature
of equitable remedies. A judgment upon the award entered by
the arbitrator may be entered by any court having jurisdiction
thereof. The parties will share equally the costs of any
arbitration proceeding.
(i) Independent Contractors: Each of NSI and SigmaTron will
perform its work under this Agreement as an independent
contractor and not as an agent or employee of the other.
Subject to the terms and conditions of this Agreement, each
party shall at its sole discretion, choose the means to be
employed and the manner of carrying out its obligations
hereunder.
(j) Use of Standard Forms: Either party may use its standard
purchase order or invoice forms during the course of their
business relationship. However, the preprinted terms and
conditions of
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such form shall not be binding upon the parties, their
intention being that the terms and conditions of their
business relationship shall be governed by this Agreement.
(k) Force Majeure: Neither party hereto will be liable for any
failure to perform any obligation under this Agreement, or for
delay in such performance, to the extent such failure to
perform or delay is caused by circumstances beyond its
reasonable control, including without limitation fire, storm,
flood, earthquake, explosion, accident, war, rebellion,
insurrection, sabotage, restrictions, labor disputes or
shortages, transportation embargoes, delays in transportation,
shortages of materials due to circumstances beyond reasonable
control, shortages of fuels or power, acts of God, acts of any
government or any agency thereof, and judicial action. Any
suspension of performance by reason of this Section 17(k) will
be limited to the period during which the cause of suspension
exists and will apply only to the extent that the party whose
performance is affected by such event uses reasonable efforts
to minimize the effect of any failure to perform or to
minimize the period of any delay.
(l) Non-Compete:
(i) In consideration of NSI's covenants hereunder and so
long as NSI is not in default hereunder, including
without limitation, in default of NSI's obligation to
pay, SigmaTron agrees (and agrees to cause any
affiliate of SigmaTron) as follows:
A. during the Term, to manufacture any device
that detects indoor levels of carbon monoxide
gas exclusively for NSI;
B. during the Term and for one year after either
expiration of this Agreement by its own terms
or early termination of this Agreement by
either party in accordance with the
provisions of Section 1(c) hereof, not to
produce, manufacture, assemble or sell its
own brand of carbon monoxide detector
("SigmaTron Detector");
C. during the Term and for two years after the
termination of this Agreement by NSI as a
direct result of an unremedied event of
default by SigmaTron hereunder, not to
produce, manufacture,
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assemble or sell a SigmaTron Detector;
D. during the Term and for three months after
either the expiration of this Agreement by
its own terms or early termination of this
Agreement by either party in accordance with
the provisions of Section 1(c), not to
provide services as a contract manufacturer
to any other person or entity for the
production, manufacture, assembly or sale of
any product that has as its primary purpose
the detection of carbon monoxide levels
("Contract Manufacturing Services"); and
E. during the Term and for one year after the
termination of this Agreement by NSI as a
direct result of an unremedied event of
default by SigmaTron hereunder, not to
provide Contract Manufacturing Services.
Notwithstanding the foregoing, SigmaTron shall be immediately
released from its obligations under this subsection (i) if
SigmaTron terminates this Agreement as a direct result of an
unremedied event of default by NSI.
(ii) Each of SigmaTron and NSI agrees, for itself and its
affiliates, that it will not solicit any employees of
the other party or its affiliates for employment for
a period of two years following any expiration or
termination of this Agreement.
(iii) Each party agrees that the foregoing restrictions
shall apply to any activity in any part of the world.
Each party acknowledges that the manufacture and
distribution of carbon monoxide detectors is a
worldwide market and further acknowledges that the
geographic scope, functional scope and duration of
each of the foregoing restrictions are reasonable.
In light of the fact that damages for a breach of any
such restrictions might be difficult to ascertain,
each party agrees that the non-breaching party shall
be entitled to injunctive relief in the event of an
unremedied breach by the other party of any of the
foregoing restrictions, in addition to whatever
remedies at law may be available to the non-breaching
party in connection with such breach.
(m) Consequential Damages: Neither party shall be liable to the
other
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or any third party for loss of profits, or indirect, special,
incidental, or consequential damages.
(n) Right of Set-Off: Each party is entitled to set off against
amounts it may owe to the other party amounts owed to it by
the other party in connection with this Agreement or any other
agreement between them.
IN WITNESS WHEREOF, the parties have caused this Amended and Restated
Agreement to be executed by their respective duly authorized officers, under
seal, effective as of the date first above written.
Nighthawk Systems, Incorporated SigmaTron International, Inc.
By: By:
------------------------ ------------------------
Name: Name: Xxxx X. Xxxxxxxx
------------------------
Title: Title: President and Chief
------------------------ Executive Officer
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