EX-99.1
2
s101454_ex99-1.htm
EXHIBIT 99.1
Exhibit 99.1
CONFIDENTIAL TREATMENT REQUESTED
SUPPLY AGREEMENT
This agreement ("Supply Agreement")
is effective as of May 21, 2015, between these parties:
Nightforce Optics, Inc. (“NIGHTFORCE” or “Buyer”),
with a place of business at 000 Xxxxx Xxxx, Xxxxxxx, XX 00000.
And
Optex Systems Inc, (“OPTEX” or “Seller”)
0000 Xxxxxxxxxxxx Xx., Xxxxxxxxxx, XX 00000.
The Supply Agreement covers existing procurement and
future product development between NIGHTFORCE and OPTEX (See also - Non-Disclosure Agreement (NDA) in Appendix A).
The purpose of the Supply Agreement is to strengthen
the relationship between NIGHTFORCE and OPTEX through increased assembly of released products at OPTEX, increased engineering discussions,
and future product development.
The following definitions apply to this
Supply Agreement:
| a. | “FOB ORIGIN” – shall mean Free on Board by the terms of the Uniform Commercial Code, from the Seller’s
facility. |
| b. | “Long-Term Production” – long-term production shall mean the total products forecasted over the initial two
years of this supply agreement. |
| c. | “New Product Introduction” (“NPI”) - shall mean the initial market offering of a newly developed additional
product from NIGHTFORCE. |
| 3. | Structure of Agreement |
| a. | If NIGHTFORCE issues a purchase order under this Supply Agreement, that purchase order shall be considered a delivery order
under this Supply Agreement and does not create a separate contract. |
| b. | This Supply Agreement supersedes any prior verbal or written understanding between the Parties. In the event of a conflict
between this Supply Agreement and its Appendices, this Supply Agreement shall prevail. |
Supply Agreement
| c. | This Supply Agreement shall not itself constitute a purchase order nor shall it compel NIGHTFORCE
to place orders with Seller. However, it is agreed that any purchase order placed with Seller by NIGHTFORCE under and as part of
this Supply Agreement, with specific reference to that effect, shall be subject to and governed by all the terms and conditions
of this Supply Agreement. |
| a. | Unit pricing is outlined in Appendix B of this Supply Agreement and shall be effective immediately
upon execution of this document, based upon FOB ORIGIN. |
| b. | All recurring, unit prices outlined in Appendix B are fixed prices for the full term of this
Supply Agreement with any additional adjustments solely permitted in accordance with the Cost Containment initiatives identified
in Section 7. |
| c. | Prices are also inclusive of any and all costs incurred by Seller to develop the product
and to industrialize the production line. |
| d. | Currency: Prices are stated in U.S. dollar currency. |
| e. | Appendix “B” contains NIGHTFORCE’s current demand and current future forecast. |
| a. | Delivery dates in NIGHTFORCE purchase orders and actual Sellers’s deliveries shall be in accordance
with total lead-time of weeks to be agreed upon. |
| b. | Purchase orders shall state the quantity of products to be manufactured and delivered during the period
covered by the purchase order, and any other unique terms beyond those contained herein as mutually agreed. NIGHTFORCE shall place
purchase orders and delivery date requirements for products and OPTEX shall manufacture and deliver products in support of same.
OPTEX shall insure a fifty percent (50%) surge capacity above the maximum production rate levels listed with a ninety (90) calendar
days’ notice by NIGHTFORCE, contingent on material availability. |
| 6. | Annual Business Review |
| a. | An Annual Business Review between Seller and NIGHTFORCE shall be conducted at the Buyer’s or
Seller’s facility, as agreed upon, as called by Buyer with a minimum of two weeks notice unless mutually agreed for a shorter
notice. The Annual Business Review shall, as a minimum, discuss the following: |
Supply Agreement
| ii. | Cost Containment Efforts |
| iv. | Other Items as necessary |
| v. | Continuous Improvement Efforts |
| vi. | Development efforts and effects on standing production orders. |
| a. | Through the Annual Business Review process, OPTEX shall identify plans to reduce labor and material costs where appropriate.
Prices for the products will be adjusted annually to reflect any such cost improvement achieved in relation to annual inflation
rates. |
| b. | Supply price variance (“PPV”) generated through OPTEX’s sole efforts with sources of materials or process
changes shall be retained by OPTEX. Supply price variances generated as a result of shared efforts between OPTEX and NIGHTFORCE
regarding material or process changes will be cause for adjusting the price of the affected items as those changes are implemented. |
| c. | Unit prices may be re—negotiated between the Parties to reflect process or material changes made by OPTEX. Upon verification
and agreement by NIGHTFORCE, prices may be adjusted when the changes are implemented. |
| a. | NIGHTFORCE will provide a firm order window of sixty
ninety (120 60 90) days and a forecast period
of twelve (12) months on a monthly rollover basis. |
| b. | In the case of order cancellation, applying only to purchase orders issued by NIGHTFORCE and accepted by Optex, NIGHTFORCE
assumes liability for the cost of: (a) non-cancelable/non-returnable material required solely to support the requirements within
the time period of OPTEX’s internal cycle time plus the lead-time of that material: and (b) any surplus material due to minimum
order quantities and minimum buys. |
| c. | NIGHTFORCE agrees to the following targets: aggregate annual minimum order values, to include open commitments upon sale, provided
that OPTEX meet the required agreed upon quality and delivery objectives for each supplied part and is not otherwise in breach
of this Supply Agreement or any purchase order released hereunder. |
2015 - $3,000,000
2016 - $3,900,000
Supply Agreement
| d. | In the event that the total 2 year minimum order value ($6,900,000) is achieved prior to the end of year 2, NIGHTFORCE’s
and OPTEX’s obligations under this Supply Agreement shall be considered satisfied and open for extension. |
| e. | If OPTEX does not receive a purchase order for the part numbers outlined in Appendix B or the actual quantities awarded are
less than the forecast in Appendix B, the Seller and Buyer agree to adjust the annual minimum order values accordingly and the
terms of the Exclusivity terms listed in Section 10. |
| f. | The parties acknowledge and agree that the quantities listed in Appendix B are solely for forecasting and planning only, and
in no event shall this be a legal binding commitment until NIGHTFORCE’s issuance of a purchase order. |
| a. | The term of this Supply Agreement shall begin on the date of last signature and remain in full force and effect for two
(2) years from that date. Buyer has the option to extend this Supply Agreement annually, which continues the forecasted
volumes for three (3) years. |
| a. | OPTEX will be the exclusive supplier to NIGHTFORCE for those products listed in Appendix B until the terms of this agreement
are met, as long as OPTEX continues to meet the required and agreed upon quality, delivery objectives, and cost targets for each
supplied part and is not otherwise in breach of this Supply Agreement or any purchase order released hereunder. |
| b. | OPTEX agrees to work exclusively with NIGHTFORCE on their markets of interest of commercial sporting optics and select military
optics. |
| c. | Optex has existing business with manufacturers of DoD/Commercial Stabilized Monoculars, DoD Standard Observation Binoculars,
and DoD/Commercial Digital spotting scopes. These products do not fall under this agreement. |
| d. | If future opportunities for OPTEX are identified which appear to be in conflict with NIGHTFORCE’S future markets of interest,
the parties agree to negotiate the addition or exclusion of that opportunity under this agreement. |
Supply Agreement
| a. | OPTEX shall provide NIGHTFORCE with one (1) year advance notice prior to discontinuing the manufacture of any products being
supplied by NIGHTFORCE under this Supply Agreement. OPTEX agrees to accept Supply orders that NIGHTFORCE may place with OPTEX for
six (6) months after the date of such advance notice with no limitation in quantity of products and with deliveries scheduled within
one year after the notice date. If capacity constraints exist, the parties will negotiate an acceptable delivery schedule. |
| a. | Seller Initiated Changes - Seller may make minor engineering, manufacturing and/or producability changes and improvements to
the product, which do not affect weight, installation, performance, interchangeability or certification of the complete product.
Such changes shall have no effect on form, fit, or function and shall not result in a change to part number, dash number, or modification/revision
level of the complete product. Any such minor product changes and improvement may be made by the Seller without NIGHTFORCE’s
approval provided they are accomplished at no cost to NIGHTFORCE. NIGHTFORCE shall be notified of all such changes. |
| b. | For the Seller initiated product changes pertaining to this Supply Agreement and related Supply orders, other than the changes
described in 11.2.a. above, Seller shall describe, through written notice to NIGHTFORCE, all change(s) and the effect of such change(s)
on the product and its intended operation and application. Should Seller elect to make design changes to the product, any cost
impact shall be borne by Seller. |
| c. | Modifications or changes where NIGHTFORCE must be notified for concurrence include, but are not limited to, the following: |
| 1. | Any change that materially alters the operation of or the procedures with respect to the use of the product; |
| 2. | Any change that would affect form, fit or function of NIGHTFORCE intended use for the product; |
| 3. | Any change affecting the price at which the product would be sold to NIGHTFORCE. |
Supply Agreement
| 4. | NIGHTFORCE will not unreasonably withhold its concurrence or agreement, as the case may be, to any Seller initiated change. |
| 5. | Mandated Changes -If the NIGHTFORCE customer changes its requirements or issues new requirements, and it is necessary that
product units ordered or to be ordered under this Supply Agreement by NIGHTFORCE be changed in order to permit delivery of the
product meeting such new requirements of the customer, the Seller shall make or cause such changes to be made in the product. The
costs of making such changes shall be borne by NIGHTFORCE. |
| 6. | Requested Changes - In the event that NIGHTFORCE requests changes or modifications to the product, Seller shall advise NIGHTFORCE
of the effect, if any, of such change on the product. Upon request of NIGHTFORCE, Seller shall offer configuration changes and
if Seller agrees to make such changes it shall promptly commence whatever action is thereafter agreed upon by the parties, provided
that Seller and NIGHTFORCE have agreed on the effect, if any, on the product specifications, delivery and price and this Supply
Agreement and any affected Supply orders are amended in writing accordingly. |
| d. | Standard Change Management Process - Any changes to be communicated to the other party will be defined on an Engineering Coordination
Memo (“ECM”) and shall be transmitted to the other party through their authorized representatives. Neither party shall
take any action to implement any such ECM until such ECM has been incorporated into this Supply Agreement or any affected purchase
order in writing by an authorized Procurement official of NIGHTFORCE. A log of all ECM activity is to be maintained by the respective
engineering organizations of the parties. A format and protocol for the ECM shall be mutually agreed between the parties. |
| e. | The effectivity of any agreed change to the product to be delivered under this Supply Agreement shall be mutually agreed in
writing between the parties. |
| f. | Seller shall support NIGHTFORCE in demonstrations by equivalence and/or requests for deviations and waivers on the product
as required. |
| 13. | Risk and Business Assessments |
| a. | OPTEX will maintain and provide a risk mitigation plan, including disaster recovery, identifying the efforts to achieve business
continuity, at no additional cost to NIGHTFORCE. |
| b. | OPTEX will perform regular business and quality assessments of all suppliers/sources used to meet the material requirements
of NIGHTFORCE product unless waived in writing by NIGHTFORCE Quality. NIGHTFORCE may request documented plans to perform and maintain
assessments and access to completed assessments. As completed assessments deem necessary, OPTEX will document a risk mitigation
plan for any sources not meeting requirements. |
Supply Agreement
| c. | Upon documented request, OPTEX will provide component traceability
on selected critical components to specific product serial numbers at no additional cost to NIGHTFORCE. Traceability may be from
either component to product or product to component. |
| a. | A dual or mixed jurisdiction shall be implemented in the event that any controversy or claim arises out of, or results from,
this Supply Agreement or the performance there of. |
| b. | If NIGHTFORCE raises issue with OPTEX the parties agree that the forum for resolution will be in a Texas state for federal
court. |
| c. | If OPTEX raises issue with NIGHTFORCE the parties agree that the forum for the resolution will be in an Idaho state for federal
court. |
| a. | This Supply Agreement may be terminated by either party at any time with 60 days written notice. |
This Supply Agreement is executed in two (2)
original copies. Any and all Appendices, Exhibits, Attachments, and/or mutually agreed Amendments to this Supply Agreement are
an integral part of this Supply Agreement.
IN WITNESS WHEREOF, the parties have caused this Supply Agreement
to be duly executed by their authorized representatives on the last signature date herein as written.
| Nightforce Optics, Inc. | Optex Systems Inc. |
| | |
| BY /s/ Xxxxx X. Xxxxxxx | BY/s/ Xxxxx Xxxxxxxxx |
| | |
| TYPED NAME Xxxxx X. Xxxxxxx | TYPED NAME_Danny Xxxxxxxxx |
| | |
| TITLE Product and Business Development Manager | TITLE CEO |
| | |
| DATE 5/26/2015 | DATE 5/21/2015 |
APPENDIX A
 | Optex Systems, Inc. |
| 0000 Xxxxxxxxxxxx Xxxxx |
| Xxxxxxxxxx, XX 00000 |
| Tel: (972) 764 - 5700 |
| Fax: (972) 764 - 5701 |
NON – DISCLOSURE AGREEMENT
No. 2014-AOC-1031
The AGREEMENT herein, dated as of 09 December
2014 is by and between Optex Systems, Inc., (hereinafter referred to as "OPTEX"), a Delaware corporation having a place
of business at 0000 Xxxxxxxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000, and Nightforce Optics Inc. (hereinafter referred to as "Nightforce")
an Idaho corporation having a place of business at 000 Xxxxx Xxxx, Xxxxxxx, XX 00000, both referred to herein collectively as "the
Parties").
WHEREAS the Parties
desire that disclosure of certain Proprietary Information (as defined below) be exchanged relating to potential mutual business
opportunities regarding collaboration on miscellaneous optical systems (the "Opportunities").
NOW THEREFORE, in
consideration of receipt of such Proprietary Information and the mutual promises made herein, the Parties agree as follows:
| 1. | The term "Proprietary Information" means all information and data relating to the Parties'
technology, products, services or other business, in whatever form such information may be disclosed, including, without limitation:
(i) product or service information, including designs and specifications, development plans, patent applications, and strategy;
(ii) marketing information, including lists of potential or existing customers or suppliers, marketing plans and surveys; (iii)
computer software, including codes, flowcharts, algorithms, architectures, menu layouts, routines, report formats, data compilers
and assemblers; and (iv) financial information, including sales, pricing and revenue information; and if applicable, (v) Government
programmatic information and information concerning all such programs and its contractors. For Proprietary Information exchanged
in relation to a Government proposal or other Government opportunity, the parties shall treat the Proprietary Information in strict
accordance with the Procurement Integrity Act. Under this Agreement, Proprietary Information shall include, but not be limited
to, derivative and residual forms of Proprietary Information, as well as proprietary information of the Parties’ client(s)
and licensors, all of which shall be treated in strict accordance with the provisions herein. |
"Proprietary
Information" shall not include information which the recipient can prove: (i) that as of the time of receipt by the recipient
is in the public domain or subsequently enters the public domain without breach of this Agreement by the recipient; (ii) that as
of the time of receipt by the recipient, is already known to or is in the possession of the recipient, and written notice of such
prior knowledge or possession is given to the disclosing party immediately after receipt; (iii) is independently developed by or
for the recipient as evidenced by the recipient's own files and records; (iv) is received in good faith by the recipient from a
third party that was lawfully in possession of the information and had the right to disclose the same; (v) is disclosed to third
parties by the disclosing party on a non-confidential basis; or (vi) that the Parties mutually agree in writing to release from
the terms of this Agreement. The burden of proof that Proprietary Information is subject to one of the above exclusions shall be
borne by the party claiming such exemption.
"Proprietary
Information" in whatever form or medium disclosed, may contain technical data or articles controlled by the U.S. International
Traffic in Arms Regulation (ITAR) 22 C.F.R Chapter I, Subchapter M, Parts 120-30. All such data is controlled by the U.S. International
Traffic in Arms Regulation; is subject to the export controls of the U.S. Government; and may not be further transferred by any
means to a foreign person [a non-U.S. Person], whether in or outside of the U.S., without an export license or other prior written
approval from the U.S. Department of State.
| 2. | Each party agrees that, for three (3) years after receipt of Proprietary Information under this
Agreement, or for the duration of a resulting contract, whichever is longer, such Proprietary Information received from the other
party: (i) will only be used for the purpose of the Opportunities; (ii) will not be disclosed to any third party without prior
written approval of the disclosing party; (iii) may only be disclosed within the receiving organization on a "need-to-know"
basis to persons who have been advised of the existence of this Agreement and agree to be bound by its terms; (iv) will be treated
with at least the same degree of care as the recipient treats its own Proprietary Information, but in no event with less than a
reasonable degree of care; (v) will be copied only to the extent necessary for the purpose of the Opportunities; and (vi) will
remain the property of the disclosing party. |
| 3. | In the event either party receives a subpoena or other validly issued administrative or judicial
process demanding confidential or proprietary information of the other party, the recipient shall promptly notify the disclosing
party and tender to it the defense of such demand. Unless the demand shall have been timely limited, quashed, or extended, the
recipient shall thereafter be entitled to comply with such demand to the extent permitted by law. If requested by the party to
whom the defense has been tendered, the recipient shall cooperate (at the expense of the requesting party) in the defense of a
demand. |
| 4. | All information to be treated as Proprietary Information shall be marked as such when it is disclosed
in written form, and, in the event information that is intended to be treated as Proprietary Information is disclosed verbally,
the disclosing party shall identify the Proprietary Information as such at the time of verbal discussions. Neither the execution
and delivery of this Agreement, nor the furnishing of any Proprietary Information by the Parties hereunder shall be construed as
granting to any other party to this Agreement, either expressly, by implication, estoppel, or otherwise, a license under any trademark,
patent, copyright or any other intellectual property right hereafter owned or controlled by the party furnishing same. |
| 5. | Each party acknowledges that unauthorized disclosure or use of the other party's Proprietary Information
could cause irreparable harm and significant injury to the other party that may be difficult to ascertain. Accordingly, each party
agrees that the other party shall have the right to seek and obtain immediate injunctive relief from breach or threatened breach
of this Agreement, in addition to any other rights and remedies it may have. |
| 6. | Each party shall return to the disclosing party the original and all copies of written information
furnished to the other upon the disclosing party's request or upon the recipient's determination that it no longer has a need for
such Proprietary Information. |
| 7. | Each party agrees not to disclose or use any Proprietary Information of the other party in any
manner, directly or indirectly, for the purpose or with the result of obtaining, for itself or any third party, an advantage, benefit
or gain, whether real or potential, over the general public, whether in connection with investing or trading in securities or for
any other purpose other than the Opportunities. Each party acknowledges that such use or disclosure of Proprietary Information
may constitute xxxxxxx xxxxxxx in violation of federal law, resulting in severe sanctions on individuals and the corporate entities
involved in xxxxxxx xxxxxxx. |
| 8. | Nothing in this Agreement is intended to, or shall be deemed to, constitute a joint venture or
partnership of any kind between, the Parties nor any separate business entity. |
| 9. | Each party shall bear its own respective costs, expenses, risks and liabilities arising from its
activities hereunder. |
| 10. | This Agreement shall become effective upon the date of execution and shall remain in force and
effect for a period of three (3) years therefrom, after which it shall automatically expire; notwithstanding the foregoing, it
may be terminated at any time by either party by giving ten (10) days notice in writing to the other party hereto. However, the
provisions set forth in Article 2 of this Agreement shall survive the expiration or other termination thereof and shall remain
in full force and effect with respect to any Confidential Information exchanged by the parties notwithstanding the expiration or
other termination of the Agreement. |
| 11. | The parties agree that, during the term of this Agreement and for a period of one (1) year thereafter,
neither party shall solicit for employment employees of the other party met or learned of through discussions related to this Agreement,
nor seek to entice, attract, or induce such employees to leave the employ of the other party, without the prior written permission
of an authorized representative of the other party. |
| 12. | The Parties agree that all obligations undertaken herein shall survive and continue after any termination
of this Agreement. |
| 13. | This Agreement is accepted in the State of Texas and its validity shall be determined under and
its terms construed in accordance with the laws of the State of Texas without regard to principles of conflicts of law. |
| 14. | This Agreement constitutes the entire understanding between the Parties with respect to the subject
matter hereof and supersedes all other understandings or representations, oral or written, relating thereto. This Agreement may
not be modified except by a written document executed by both Parties. |
IN WITNESS WHEREOF,
the Parties hereto have, through duly authorized representatives, executed this Agreement effective as of the day, month and year
set forth above.
| Optex Systems, Inc. | | Nightforce Optics Inc. |
| | | | | |
| BY: | | | BY: | |
| | | | | |
| NAME: | Xxxxx Xxxxxxxxx | | NAME: | Xxxxx Xxxxxxxxx |
| | | | | |
| TITLE: | CEO | | TITLE: | Director |
| | | | | |
| DATE: | 09 December 2014 | | DATE: | 09 December 2014 |
| | | | | |
| TEL: | (000) 000-0000 | | TEL: | (000) 000-0000 |
| | | | | |
| EMAIL: | xxxxxxxxxx@xxxxxxxx.xxx | | EMAIL: | xxxxxxxxxx@xxxxxxxxxxxxxxxx.xxx |
| | | | | |
| FAX: | (000) 000-0000 | | FAX: | (000) 000-0000 |
APPENDIX B
| CONFIDENTIAL TREATMENT REQUESTED | | | | | | | | | | | | | | | | |
| APPENDIX
B | Outstanding
Balance due on Open P.O.
(June 2015) | Jul | Aug | Sep | Oct | Nov | Dec | Jan | Feb | Mar | Apr | May | Jun | Cost Per Unit | Annual
Quantities
(After
Initial PO is met, Oct on)
| Annual
Dollar
Amounts
|
| Currently
on Order | | | | | | | | | | | | | | | | |
| | PO#s 14812
/ 15452 | | | | | | | | | | | | | | | |
| | 1115
/ 800 | | | | | | | | | | | | | | | $711,360 |
| | 831
/ 800 | | | | | | | | | | | | | | | $342,000 |
| | 926
/ 800 | | | | | | | | | | | | | | | $1,249,440 |
| | 975
/ 800 | | | | | | | | | | | | | | | $342,000 |
| | | | | | | | | | | | | | | | | |
| Under
Quotation (Pending Pricing Verification and Delivery Schedule) | | | | | | | | | | | | | | Est. | | |
| | N/A | | | | | | | | | | | | | | | $534,400 |
| | N/A | | | | $1,062,000 |
| | | | | | | | | | | | | | | | | |
| Future
Development Opportunity (To Be Supplied for Quotation) | | Estimated,
will provide firmer quantities when development is finalized | | Est. | |
| | N/A | | TBD | 1130 | TBD |
| | N/A | | TBD | 740 | TBD |
| | N/A | | TBD | 1080 | TBD |
| | N/A | | TBD | 1450 | TBD |
| | N/A | | TBD | 1130 | TBD |
The
blacked out cells on this page are being omitted pursuant to a request for confidential treatment.
