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EXHIBIT 10.5
PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED (DESIGNATED BY AN ASTERISK (*) AND
WHITE SPACE) AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT DATED SEPTEMBER 29, 1997.
Contract for the development, supply of samples and series delivery of an
optical imaging system for a digital Bucky
between
Teleray AG
Xxxxxxxxxxxxxxxx 0
0000 Xxxxxxxxx
Xxxxxxxxxxx
- hereinbelow referred to as "Teleray"
and
OPTISCHE WERKE G. RODENSTOCK
Precision Optics Division
Xxxxxxxxxx. 00
00000 Xxxxxx
- hereinbelow referred to as "Rodenstock"
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Preamble
Teleray requires special optics for a digital AddOn Bucky(R) in the medical
X-ray sector. The digital AddOn Bucky(R) is an X-ray picture system, which
enables X-ray pictures to be recorded directly on the examination site. This
dispenses with the need for films or memory foils which require additional
processing steps.
Rodenstock has experience in the development and construction of special optics
for various applications and will develop, supply samples and arrange series
manufacture of these imaging optics for Teleray.
Teleray and Rodenstock hereby agree as follows:
1. Definition
The term CONTRACTUAL DEVICE refers to the imaging optics for a digital AddOn
Bucky(R) specified in Annex 1 to this contract. The specifications may be
amended by joint agreement during the development phase as described in section
5.
2. Description of the device to be developed
Rodenstock shall develop the CONTRACTUAL DEVICE for exclusive use by Teleray in
compliance with the specifications. The development work shall be performed in
line with the milestones specified in section 3 and the performance dates stated
therein.
3. Milestones, performance dates
3.1 Development
Use of the optical concept defined in the feasibility study commissioned on
20.04.1995 (Teleray order No. EW 950014 = Rodenstock order No. 321/00809371) and
subsequently implemented and developed ready for series production.
Work:
- development of an optical system in compliance with the specifications
- optical and mechanical design
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- definition of a low-cost assembly technology
- project management
Delivery date:
2 months after receipt of order - see 3.4
Completion:
Clearance for sample production by Teleray.
Within two weeks of notification by Rodenstock of completion of the development
work by drawings and quality presentations, Teleray shall give written
authorization for sample production. Late authorization of sample production by
Teleray shall have the following consequences:
a) Teleray shall accept responsibility for any extra costs incurred which
must be proved by Rodenstock;
b) Teleray shall accept the resulting late performance date.
3.2 Sample manufacture
Manufacture of 12 sample lenses in compliance with the specification.
Work:
- manufacture of the mechanical and optical components
- assembly of the optical and mechanical components
- quality testing in compliance with the specifications
- environmental testing
- documentation of the characteristics as determined
- delivery of twelve specimen pieces as per the specifications.
Delivery lead time:
3 months after authorization and placing of the order for sample production by
Teleray. Rodenstock shall endeavour to respect Teleray's exceptionally tight
delivery requirement and to effect delivery in September 95, but cannot
guarantee compliance with this target see 3.4.
Completion:
Delivery of 12 sample lenses.
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Within four weeks of delivery by Rodenstock of the samples and after their
imaging quality has been demonstrated to comply with the specification, Teleray
shall give written authorization for series manufacture. The costs resulting
from late authorization of series manufacture, which must be proved by
Rodenstock, shall be borne by Teleray. Teleray shall likewise accept the
resulting late commencement of series manufacture.
3.3 Readiness for series manufacture
Work:
- Implementation of experience gained with sample production
- Preparation of a set of series drawings
- Manufacturing plans for optics, mechanicals and assembly
- Development of assembly techniques
- Development and production of special tooling etc. for manufacture and
assembly.
Delivery lead time:
- 2 months after acceptance of the samples - see 3.4.
Completion:
Handover of the assembly drawing ready for series production. Written
authorization of series manufacture to be given by Teleray.
3.4 Shortening of the dates specified in 3.1 to 3.3
By simultaneous commissioning (Teleray order No. B 9501 of 17.05.1995 Rodenstock
order No. 321/0081001) of the performance packages described in 3.1, 3.2 and
3.3, Rodenstock shall endeavour to economize the period of 2 months (see 3.3 =
readiness for series production) by working in parallel in such a way that items
3.1 to 3.3 can be completed towards the end of September 1995.
3.5 Series deliveries
Delivery lead time:
6 months after written authorization of series manufacture and special tooling.
A maximum number of 60 lenses shall be available in advance on request within
four months of written authorization of series manufacture.
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4. Price
4.1 Teleray shall pay non-recurring proportionate development costs for
the development of the contractual device as follows: [ * ] net
Payable on reaching the following milestones:
a) 35%=[ * ] when the order for sec. 3.1 is placed
b) 35%=[ * ] when half the order period has elapsed = 25.07.95
c) 30%=[ * ] on sample delivery = 29.09.95
4.2 Teleray shall make the following payment for 12 samples of the
contractual devices: [ * ] net/each
Payable on reaching the following milestones
a) 35%=[ * ] when the order for sec. 3.2 is placed
b) 35%=[ * ] when half the order period has elapsed = 25.07.95
c) 30%=[ * ] on sample delivery 29.05.95
4.3 Teleray shall pay Rodenstock a proportion of the costs of preparation
for series production and special tooling in the amount of [ * ]
payable as follows:
a) 35%=[ * ] when the order for sec. 3.3 is placed
b) 35%=[ * ] when half the order period has elapsed=25.07.95
c) 30%=[ * ] on sample delivery = 29.09.95.
4.4 For the tested CONTRACTUAL DEVICE, Teleray shall make the following
payments assuming annual delivery volumes of
200 pieces p.a. [ * ] each
600 pieces p.a. [ * ] each
800 pieces p.a. [ * ] each
When a zero series of max. 60 contractual devices pursuant to Section 3.5 is
ordered, the following price shall apply:
60 pieces [ * ] each
All prices are quoted strictly net, with no deductions, plus packaging and
insurance for transport.
Before ordering series deliveries as stipulated in section 3.5, Teleray must
put up sureties in the form of a bank guarantee representing 75% of the order
value in favour of Rodenstock, the equivalent surety for the zero series
[ * ] shall be 100%.
Any adjustment of the series price for further series deliveries, or in the
event of later commencement of series deliveries, shall be governed by the
following price indexing clause:
Prices calculated in advance and confirmed by recalculation - and possibly
corrected may undergo a maximum increase in subsequent costing periods, starting
from 01.01.97, equivalent to:
a) the effective increases (in wages and salaries) negotiated by the
contracting parties (IGM and Association of the Bavarian Metalworking Industry)
less
b) an average rationalization effect of 1 per cent
plus/minus
c) material price changes
The cost factors are: manufacturing costs: 90%
material costs: 10%
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4.5 All series deliveries shall be payable at 14 days of the date of the
invoice, net.
5. Modifications
If Teleray wishes modifications or additions to be made to the object of the
development work or specifications, Rodenstock shall ascertain whether these
modifications or additions are feasible and shall determine the extent to which
they will influence development costs and/or the performance calendar. They will
be included in the contract and specifications without amendment to the prices
and delivery lead times, if they are feasible according to the state of the art
and have no influence on development costs and the performance calendar.
If the desired modifications or additions prove impossible to implement, the two
parties may withdraw from the contract. Rodenstock shall still be entitled to
full payment, but must allow the expenditure that has been saved to be offset.
Where modifications or additions which have a significant impact on the
expenditure and/or performance timetable prove to be feasible, Rodenstock shall
submit a supplementary offer. If no agreement on that supplementary offer can be
reached within four weeks, the two parties may withdraw from the contract. In
the event of such withdrawal, Rodenstock shall still be entitled to full payment
but must allow the expenditure that has been saved to be offset.
6. Confidentiality
In respect of confidentiality, it is hereby agreed that the two parties shall
refrain from disclosing the documents, technical experience and know-how made
available to them by the other party for the performance of this contract. Said
confidentiality shall not apply to facts which correspond to the state of the
art, are in the public domain or generally known or become so known, or which
the disclosing party has lawfully received from third parties.
7. Scope of delivery
Rodenstock shall effect deliveries in compliance with the milestone plan set out
in section 3:
- development
- 12 samples
- readiness for series manufacture
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- series manufacture
In addition, the following technical documents shall be made available:
- drawings with connection dimensions
- test and verification records
Teleray shall be granted a simple right to use the results of the development.
The necessary know-how for development and manufacture and protected industrial
property rights will not be transferred.
8. Person responsible
Teleray and Rodenstock shall each appoint a responsible project manager. For
Teleray, this is Xx Xxxxxx and for Rodenstock Xx Xxxxxx.
9. Tools and fixtures
Tools and fixtures shall be invoiced proportionately and shall remain the
property of Xxxxxxxxxx.
00. Patents
10.1 Inventions made by a member of Rodenstock staff in the performance of
this contract shall be used without limitation by Rodenstock and made known to
Teleray. Notifications of protected property rights shall be made solely in the
name of Xxxxxxxxxx.
00.0 Xxxxxxxxxx shall inform Teleray of the countries in which it intends
to seek protected rights for the inventions pursuant to section 10.1. If Teleray
wishes in addition to have an invention of the kind referred to in 10.1
protected in other countries, Rodenstock shall make the application in its own
name. The costs of processing, registration and maintaining such additional
patents shall be borne by Teleray.
10.3 In respect of any inventions made jointly by personnel of Teleray and
Rodenstock, the two companies shall determine, in consultation with the
personnel concerned, the allocation and distribution of the inventors shares
between Teleray and Rodenstock. Rodenstock and Teleray shall, from time to time,
reach separate agreement as to whether, by which of them and in which countries
applications for protected rights are to be made in respect of these inventions.
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10.4 Teleray and Rodenstock shall have a non-exclusive, transferable right to
make use free of charge of protected rights based on inventions referred to in
section 10.3. If the free use of these rights is not justified in a particular
case, Teleray and Rodenstock shall reach agreement on appropriate remuneration.
10.5 The rights granted in section 10.4 shall apply beyond the expiry of this
contract for the duration of the protected rights in each particular case.
11. Respect for the protected rights of third parties
Should it transpire during the development work that the utilization of the
protected rights of third parties is necessary for the successful performance of
the works because the solution to be developed is liable to infringe protected
rights, the contracting parties shall immediately notify each other to that
effect.
The following agreement is hereby reached to avoid jeopardizing the completion
of the project:
a) Teleray shall have sole responsibility for the patent rights and for seeking
any necessary licences for the "Digital AddOn Bucky" system; costs and licence
fees shall be charged to Teleray.
b) Rodenstock shall have sole responsibility for the patent rights and for
seeking any necessary licences for the optical imaging system, regardless or the
particular use or application.
Liability for infringement of the protected rights of third parties is declined.
In particular, claims for compensation on grounds of direct or indirect
prejudice are excluded.
12. Withdrawal
Rodenstock and Teleray shall be entitled to withdraw from the contract as soon
and in so far as it emerges that the contractually agreed services cannot be
provided or can only be provided on conditions which are either unreasonable or
impossible to calculate. In the event of such withdrawal, the payments already
made shall not be refunded but further payments shall lapse.
Claims for compensation shall not be entertained.
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13. Series manufacture
Teleray undertakes, in the event of series delivery of the CONTRACTUAL DEVICE,
to procure this device solely from Rodenstock. In the event of series
deliveries, Teleray undertakes to procure the contractual device solely from
Rodenstock on appropriate price and delivery date terms; "appropriate price" in
this context means that increases must fall within the limits of the price
indexing clause set out in section 4.4 with effect from 01.01.97.
Rodenstock undertakes to supply Teleray with CONTRACTUAL DEVICES after
authorization of manufacture has been given for as long as Teleray so wishes.
Should Rodenstock no longer be able or willing to do so, Rodenstock undertakes
to assist the transition to future manufacture of the CONTRACTUAL DEVICE without
Rodenstock's participation until such time as samples show such future
manufacture to be possible. Should Rodenstock have brought such a situation
about through its own negligence, Teleray shall be entitled to ask Rodenstock to
provide this service without charge.
14. Processing
Save where otherwise specified in this contract, Rodenstock's terms and
conditions of sale (Annex 2) shall apply additionally; this shall likewise be
the case for order processing purposes.
15. Duration of the contract
15.1 This contract shall enter into force on the date when it is signed and
shall end on the expiry of three years after the commencement of series delivery
of CONTRACTUAL DEVICES. It shall be extended by two further years in each case,
save where notice of termination is given at the latest eighteen months before
its expiry date.
15.2 Each contracting party shall be entitled to terminate this agreement with
immediate effect by registered letter if the other contracting party infringes a
significant contractual obligation and if such infringement is not remedied
within sixty days despite a written warning to do so.
16. Validity
Should individual provisions of this agreement be or become legally invalid,
that shall not affect the validity of the other provisions. A provision which is
invalid shall be
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interpreted or supplemented in a manner which enables its intended purpose to be
achieved.
17. Amendments or additions
Amendments or additions to this agreement shall be valid only if they are made
in writing with the consent of both parties.
18. Place of performance, jurisdiction, law
The place of performance shall be the place of delivery in each instance.
The courts at the place where the contracting party against whom proceedings are
taken is situated shall have jurisdiction.
The law of the Federal Republic of Germany shall be deemed to apply to the
exclusion of UN commercial law.
Hitzkirch, Munich, 14 July 1995
TELERAY OPTISCHE WERKE G.RODENSTOCK
/Xxxxx Uwaeghil/ /PPA Oehman/
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Xxxxx X. Xxxxxxx/ Xxxxxxx Xxxxxx/
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The foregoing is a fair and accurate English translation of the original
contract.
September 29, 1997
SWISSRAY INTERNATIONAL, INC.
By: /s/ Xxxxx Xxxxxxx
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Title: Secretary
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