CHARTER CUSTOMER AGREEMENT BETWEEN PELION SYSTEMS, INC. AND COLORADO MEDTECH, INC.
Exhibit 10.3
CHARTER CUSTOMER AGREEMENT BETWEEN PELION SYSTEMS, INC.
AND COLORADO MEDTECH, INC.
Parties
This
agreement is entered into on October , 2001 between Pelion Systems, Inc., located at 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000 (“Pelion”) and Colorado MEDtech,
Inc., located at 0000 Xxxxxxxx Xxxxxx, Xxxxx X, Xxxxxxxx, XX 00000 (“CMED”).
Pelion Responsibilities
Pelion agrees to provide CMED with Pelion-CFM 1.2, which includes both software and services to make CMED capable of designing,
implementing and sustaining a Collaborative Flow ManufacturingTM environment. The Pelion-CFM 1.2 solution
includes the following:
1. Pelion will provide the expertise, training and software
tools to assist CMED in meeting the objectives outlined in Schedule A.
2. A
non-exclusive, nontransferable, site license to use Pelion-CFM 1.2 software solution.
3. Collaborative Manufacturing FlowTM (“CFM”) training.
4. Pelion-CFM 1.2 software application training.
5. Reference material for both the CFM implementation and the Pelion-CFM software.
6. Implementation project coordination and leadership.
7. Implementation Schedule.
CMED Responsibilities
CMED recognizes that a successful CFM implementation requires
significant participation by it’s management and employees. CMED agrees to provide the following:
1. A Project Team with key representatives from Materials, Manufacturing and Manufacturing Engineering.
2. A Project Team Leader with appropriate authority to implement Pelion-CFM 1.2.
3. Attendance at CFM implementation training sessions and meetings by appropriate Project Team members.
4. Adherence to the mutually agreed upon Implementation Schedule.
Charter Customer Terms
During and after the
Implementation, Pelion may ask CMED to provide references to other customer prospects and/or investor prospects. CMED agrees to not unreasonably decline such requests. After the implementation, CMED agrees to let Pelion bring customer prospects into
their factory from time to time, as long as the visit is scheduled in advance with CMED factory management.
Pricing and Payment Terms
Pelion-CFM 1.2
| List Price |
$ |
244,000 |
| |
| Charter Customer Discount |
|
40 |
% | |
| Charter Customer Price |
$ |
146,800 |
| |
| |
|
|
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Payment Terms
| Upon Contract Signing |
25 |
% |
$ |
36,700 | ||
| RFI Assembly Line Labor Reduction (1 person) |
12.5 |
% |
$ |
18,350 | ||
| Obsolete Inventory Reduction—not to exceed two weeks after identification of obsolete inventory. |
12.5 |
% |
$ |
18,350 | ||
| Inventory Reduction * |
37.5 |
% |
$ |
55,050 | ||
| Line Live of the PLC line |
12.5 |
% |
$ |
18,350 | ||
| |
| |||||
| $ |
146,800 |
* |
Inventory Reduction Payment Schedule |
Actual inventory levels will be determined by physical inventory count. Pelion has established a target Inventory level of $155,000 (“Target”) based on demand and other inputs from Customer.
An inventory reduction goal (“Reduction Goal Amount”) will be established by subtracting the Target from Actual. The Reduction Goal Amount will added to this contract as Schedule B. Pelion will be paid $11,010 ( 1/5 of 37.5%) each time
there is a 20% reduction in Customer inventory against the Reduction Goal Amount. All inventory amounts are exclusive of finished goods inventory, if any.
Customer will provide Pelion with an accurate inventory report from the MRP system each Friday, once the Reduction Goal Amount has been established, that shows Actual on-hand inventory. If an
incremental 20% reduction has been achieved, Pelion will provide an invoice the following Monday with payment due by Friday of the same week in which the invoice is submitted.
Parties agree that all of the inventory calculations have been determined based on a nominal demand of six (6) RFI units produced per day. Should the demand change
sufficiently to warrant a change in Target inventory levels, Parties agree to renegotiate, in good faith, all payment terms tied to inventory levels.
Integration With Customer MRP System
Pelion agrees to integrate Pelion-CFM 1.2 with
CMED’s Syteline MRP system at no additional charge.
Software Maintenance and Support
Pelion will provide software upgrades and phone support for a period of one year after Implementation Completion as part of the initial
price of Pelion-CFM 1.2. CMED may continue receiving software upgrades and phone support by entering into Annual Maintenance Agreements for subsequent years within sixty (60) days of the end of each maintenance term. The cost of a One-year
Maintenance Agreement is equal to 15% of the initial cost of Pelion-CFM 1.2.
Pelion Property
Pelion retains sole ownership of all intellectual property rights including the source code, the object code and all Pelion published
documentation. CMED will take reasonable measures to protect Pelion’s intellectual property rights.
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Confidentiality
Each party will (a) maintain the Confidential Information of the other party in strict confidence during the term of this Agreement and for a period of three (3) years
thereafter; (b) treat the Confidential Information of the other party as it treats its own Confidential Information; (c) disclose such Confidential Information only to its employees, independent contractors and consultants as is reasonably required
in connection with this agreement.
Warranties and Disclaimers
Pelion represents and warrants that services will be performed in a good and workmanlike manner, consistent with applicable industry standards. Except as otherwise provided
herein, all products and services provided by Pelion hereunder are provided “AS IS” and Pelion makes no warranty or guarantee, express or implied, with respect thereto.
Limitation of Liability
IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER, SUFFERED BY THE OTHER PARTY OR ANY THIRD PARTY, INCLUDING, WITHOUT LIMITATION, LOST PROFITS, DATA LOSS, BUSINESS INTERRUPTIONS OR OTHER ECONOMIC LOSS ARISING
OUT OF THE PERFORMANCE OR NON-PERFORMANCE OF OBLIGATIONS HEREUNDER OR ANY USE OF OR FAILURE TO BE ABLE TO USE THE BUNDLED PRODUCT. Each party’s total aggregate liability for any damages arising out of or related to this Agreement will not
exceed the fees paid by CMED hereunder.
Governing Law
All questions concerning the validity and operation of this Agreement and performance of the obligations imposed upon the parties hereunder shall be governed by the
substantive laws of the State of Colorado.
Agreed to by:
| PELION SYSTEMS, INC. |
COLORADO MEDTECH, INC. | |||||||
| Signature: |
|
Signature: |
| |||||
| Name: |
|
Name: |
| |||||
| Title: |
|
Title: |
| |||||
| Date: |
|
Date: |
| |||||
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SCHEDULE A
| Calendar |
Actions |
Outcomes | ||
| Week 1/ |
—Understanding of transformation —Define team players —Establish daily meeting time with entire team and leads —Establish metrics for program process improvements —Establish methodology for comprehensive
understanding of CFM by CMED personnel |
—Master plan defined | ||
| Week 1,2/ (MILESTONE #1) |
—Product definition —Part master —BOMs —Software Install —Identify all material that exists in-house or on-order for the SSM, RFI, and Eagle |
—Item master extracted from Syteline, loaded into Pelion CFM —BOMs extracted from Syteline, loaded into Pelion CFM —Accurate BOMs with slow moving and obsolete materials identified —Place all obsolete material in stores | ||
| Week 3/ |
—Demand —Process relationship, including Yield, Rework, Scrap % —SOEs: times by product by process
—TAKT time —Effective hours
by process —Kanban Establish material strategy ABC analysis Identify Kanban candidates Develop pull chains |
—Daily demand by product —Product syncs —Product syncs loaded into Pelion CFM —Manage daily updates with Syteline —Times by product by process —Pull chains by component —Effective hours by process —Data loaded into Pelion CFM | ||
| Week 4/ (MILESTONE #2) |
—Resources requirements —Balancing tools —Operational definition —Daily demand staffing —Response
definition —Operational method sheets |
—Line design output Paper
design Sequencing points defined Facility rearrangement plan —Kanban output Bin sizing Material presentation —Staffing
requirements | ||
| Week 5/ |
—Facility rearrangement —Lean Flow mentoring training —Collaborative Kanban Key supplier set-up —Software
training |
—Daily measurements defined: linearity & flow
rate —Daily planning, sequencing —Kanban management —Kanban inventory / MRP management (end of life, slow moving, obsolete) —Train-the-trainer —Process management | ||
| Week 6/ (MILESTONE #3) |
—Line Live |
—Facility operating in lean flow environment | ||
| Week 7/ |
—CMED “solo” |
—CMED independent | ||
| Week 8/ |
—Process certification —Preferred Supplier Day |
—Project validation and completion —Key suppliers introduced to Collaborative Kanban | ||
| Continuing Support |
—PLC Implementation Support |
—Metric to validate institutionalization of CFM within CMED | ||
| Recommended Resources |
Process Team Manufacturing Manager Manufacturing Engineer Shop Floor Personnel QA Finance |
Product Team Planner
Buyer Scheduler QA Design Engineer Material Handlers |
||
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