Exhibit 10.5
PHOSPHOR SUPPLY AGREEMENT
This agreement (the "Supply Agreement"), entered into as of January l,
1999, by and among Spectra Science Corporation, a Delaware corporation having
its principal place of business at 000 Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxx Xxxxxx 00000 (hereinafter referred to as the "SUPPLIER"), and Technical
Graphics, Inc., a New Hampshire corporation having its principal place of
business at 00 Xxxxxxxxxxx Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxxxxx 00000
(hereinafter referred to as "TGI"),
W I T N E S S E T H:
WHEREAS, the SUPPLIER possesses unique research and manufacturing
capabilities necessary to develop and produce new, improved phosphor materials
for use in [***];
WHEREAS, in recognition of the SUPPLIER's unique capabilities with respect
to research, customized materials development, and high purity manufacturing,
TGI desires to enter into an exclusive arrangement with the SUPPLIER, and the
SUPPLIER wishes to accept such an exclusive arrangement, pursuant to which the
SUPPLIER will supply all of TGI's direct and indirect requirements during the
TERM (as defined herein) for the MATERIALS (as defined herein) pursuant to the
terms and conditions of this SUPPLY AGREEMENT; and
WHEREAS, in consideration of the exclusivity of this arrangement, the
SUPPLIER is willing during the TERM to conduct, and TGI wishes the SUPPLIER to
conduct, an ongoing research and development program with respect to the
development of new and/or improved MATERIALS (the "NEW MATERIALS") and to supply
such NEW MATERIALS to TGI and [***];
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE ONE
DEFINITIONS
1.1 "FIELD" shall mean the incorporation of phosphorescent materials as
[***].
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
1.2 "MATERIALS" shall mean fluorescent and phosphorescent materials to be
incorporated in [***].
1.3 "NET WEB FOOT" of thread shall mean one web foot of unsliced thread at
the historical TGI production yield [***] which meets the specifications to
which an order relates, without allowance for any other waste consideration.
1.4 "PRICE PER NET WEB FOOT" shall mean the price of the volume of
MATERIALS necessary to produce one NET WEB FOOT of thread.
1.5 "TERM" shall mean the three-year and nine month period commencing on
the date of this SUPPLY AGREEMENT, together with any extensions thereto pursuant
to Section 5.2 of this SUPPLY AGREEMENT.
ARTICLE TWO
EXCLUSIVE SUPPLY; PRICING
2.1 TGI shall, during the TERM, purchase from the SUPPLIER all of its
respective direct and indirect requirements for MATERIALS, subject to the terms
and conditions of this SUPPLY AGREEMENT.
2.2 The SUPPLIER will supply the MATERIALS to TGI based on projections of
specific volume requirements for specific time periods provided to the SUPPLIER
with such reasonable lead times, and upon such other usual and customary
commercial terms and conditions, as the parties shall hereafter agree. TGI shall
use its best efforts to qualify phosphors provided by the SUPPLIER. The SUPPLIER
agrees not to sell MATERIALS to any other [***] thread supplier unless and until
such third party has been approved as a supplier by [***].
2.3 TGI will provide the SUPPLIER with a supply proposal for a specific
time frame with detailed specifications outlining the actual required
characteristics of any MATERIALS to be purchased by it within a reasonable time
prior to any requested delivery date.
2.4 Such specifications shall include a specification as to the amount of
MATERIALS required in the contemplated production process for the manufacture of
a web foot of thread. The specifications will be no more stringent as to product
properties than are required to meet the [***] specifications or to meet Crane &
Co., Inc.'s paper reprocessing requirements and TGI's processing requirements.
If the SUPPLIER's MATERIALS fail to meet either of these requirements, and it is
necessary to purchase phosphor from a third party, TGI shall have the right to
purchase the replacement phosphors from a third party only until such time as
the SUPPLIER is able to meet or exceed TGI's requirements.
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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2.5 Based on such specifications, and within 30 days of the receipt thereof
by the SUPPLIER from TGI, the SUPPLIER will submit to TGI a supply proposal for
the specified quantity of MATERIALS and pricing, as follows:
(a) For [***]. SUPPLIER will xxxx TGI based upon pounds of pigment
shipped and at a price that directly relates to the percentage loading of the
pigment to the Bostik adhesive, as collectively agreed to by both the SUPPLIER
and TGI. SUPPLIER will provide forecasts of increases in the costs of materials
expected during the term of the contract, and TGI shall use its best efforts in
good faith in its initial negotiations with the [***] to pass along such price
increase under the applicable government contract. SUPPLIER may increase the
supply price for MATERIALS charged to TGI to the extent TGI is successful in
passing along such price increase under the applicable government contract. Any
product specification changes or contractual changes between TGI and the [***]
that would lead to a renegotiation between TGI and the [***] would allow for a
renegotiation between TGI and the SUPPLIER as to price and other factors.
(b) For MATERIALS or NEW MATERIALS supplied for any other purpose,
where the SUPPLIER submits a bid price greater than [***] per NET WEB FOOT of
thread, TGI shall have the right to solicit bids from other third party
suppliers, but shall not accept, in lieu of the SUPPLIER's bid, any third-party
bid which specifies a price higher than or equal to the bid submitted by the
SUPPLIER for MATERIALS of comparable quality, in TGI's reasonable judgment,
unless so directed by [***].
(c) If pre-dispersed materials are provided by the SUPPLIER to TGI,
the SUPPLIER shall be reimbursed for the cost of any carrier materials (e.g.,
Bostik, Extender varnish) that the SUPPLIER shall have reasonably deemed
necessary, and the PRICE PER NET WEB FOOT for purposes of this Section 2.5 shall
not be deemed to include the cost of such carrier material.
2.6 The SUPPLIER shall maintain a secure inventory of MATERIALS sufficient
to meet five months' requirements for TGI (based on average requirements over
prior months). In the event that the SUPPLIER is unable to manufacture and
supply MATERIALS to TGI for a continuous period of sixty (60) days or more, then
TGI may, upon thirty (30) days' written notice to the SUPPLIER, manufacture or
cause a third party to manufacture the MATERIALS, subject to the terms of this
subsection 2.7. No later than thirty (30) days after receipt of such written
notice, the SUPPLIER shall provide TGI with all formulas, synthesis procedures,
equipment lists, reagent suppliers, and other information proprietary to the
SUPPLIER which is necessary in the SUPPLIER's judgment to synthesize the
MATERIALS (collectively, the "MATERIALS KNOW-HOW"); provided, however, that:
(a) Prior to releasing any MATERIALS KNOW-HOW to TGI, the SUPPLIER
shall first have the opportunity at its option to arrange tollhouse
manufacturing through a third party of SUPPLIER's choice reasonably acceptable
to TGI;
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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(b) In the event that TGI intends to cause a third party to
manufacture and supply MATERIALS, TGI shall give the SUPPLIER notice of such
intent, and the SUPPLIER shall then negotiate directly with such third party as
to the manufacture and supply of the MATERIALS to TGI on behalf of the SUPPLIER;
(c) The use of the MATERIALS KNOW-HOW by TGI or by any third-party
supplier hereunder shall be strictly limited to manufacture for and supply of
the MATERIALS to TGI during the shorter of the period when the SUPPLIER is
unable to manufacture and supply the MATERIALS to TGI or the minimum acceptable
time period required by the third-party supplier;
(d) TGI may not provide the MATERIALS KNOW-HOW to any third party,
whether as a supplier or for any other reason, without the express written
consent of the SUPPLIER. The confidentiality provisions of Article IV of this
Agreement shall govern the use of the MATERIALS KNOW-HOW by TGI and no third
party shall be provided any MATERIALS KNOW-HOW unless it enters into a
confidentiality agreement for the benefit of the SUPPLIER on substantially the
terms set forth in Article IV hereof; and
(e) TGI's right to manufacture the MATERIALS or cause a third party to
do the same by means of the MATERIALS KNOW-HOW shall in any case not extend
beyond the earliest of (i) the termination of this Agreement for any reason;
(ii) cure by the SUPPLIER of its inability to manufacture the MATERIALS at any
time prior to termination of this Agreement; or (iii) completion of the minimum
acceptable time period required by the third-party supplier.
Notwithstanding anything to the contrary in this Section 2.6, TGI shall not,
prior to giving SUPPLIER written notice of its intent to manufacture or cause a
third party to manufacture the MATERIALS, be required to observe the cure
periods set forth above, in the event that SUPPLIER's inability to manufacture
the MATERIALS results from SUPPLIER's having been adjudged bankrupt, or having
become insolvent, or having made an assignment for the benefit of creditors, or
having been placed in the hands of a receiver or a trustee in bankruptcy.
ARTICLE THREE
DEVELOPMENT PROGRAM
3.1 The SUPPLIER hereby agrees to use commercially reasonable efforts to
conduct, on an ongoing basis throughout the TERM, research and development
activities for the purpose of developing and improving NEW MATERIALS (the
"DEVELOPMENT PROGRAM") useful to TGI in the FIELD.
3.2 The SUPPLIER shall bear the expenses of the DEVELOPMENT PROGRAM.
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3.3 The SUPPLIER shall keep TGI informed of the progress of the DEVELOPMENT
PROGRAM and the development of any NEW MATERIALS resulting therefrom to the
extent necessary for TGI to determine the suitability of any such NEW MATERIALS
for usage by TGI or its [***] in the FIELD; provided, however, that all
intellectual property rights with respect to NEW MATERIALS shall remain with the
SUPPLIER, and the terms of Article IV hereof shall be binding on TGI with
respect to any disclosures made to it with respect to NEW MATERIALS.
3.4 The provisions of Section 2.5(b) of this SUPPLY AGREEMENT shall apply
to the supply by the SUPPLIER to TGI of any NEW MATERIALS developed pursuant to
the DEVELOPMENT PROGRAM.
ARTICLE FOUR
CONFIDENTIALITY
4.1 The parties hereto each recognize and hereby acknowledge that in the
performance of this SUPPLY AGREEMENT, each party and its employees and/or agents
may have access to secret or proprietary information owned and controlled by the
other party. The parties agree that all such information acquired by one party
(hereinafter the "RECEIVING PARTY") shall remain the disclosing party's
exclusive property and the RECEIVING PARTY shall keep and have its employees
and/or agents keep any and all such information confidential and shall not copy,
publish, or disclose it to others or authorize its employees, agents, or anyone
else to copy, publish, or disclose it to others, without the disclosing party's
prior written approval.
4.2 All such tangible information shall be returned to the SUPPLIER upon
request or upon termination of this SUPPLY AGREEMENT.
ARTICLE FIVE
TERM; TERMINATION
5.1 This SUPPLY AGREEMENT shall terminate on September 30, 2002, unless the
TERM hereof shall have been extended pursuant to Section 5.2 or in the event of
earlier termination pursuant to Section 5.3
5.2 The TERM of this SUPPLY AGREEMENT may be extended by mutual consent
beyond September 30, 2002, provided that the parties have agreed upon the length
of time by which the TERM is to be extended and any changes to the PRICE PER NET
WEB FOOT to apply during the extended TERM and have provided each other written
notice of such agreement.
5.3 If either the SUPPLIER, on the one hand, or TGI, on the other hand,
shall be in default of any material obligation hereunder, or shall be adjudged
bankrupt, or become insolvent,
[*] = Information redacted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with
the Commission.
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or make an assignment for the benefit of creditors, or be placed in the hands of
a receiver or a trustee in bankruptcy, the other party may terminate this SUPPLY
AGREEMENT by giving sixty (60) days notice to the first party, specifying the
basis for termination. If within sixty (60) days after the receipt of such
notice, the party receiving notice shall remedy the condition forming the basis
for termination, such notice shall cease to be operative and this SUPPLY
AGREEMENT shall continue in full force.
5.4 Termination or expiration of this SUPPLY AGREEMENT for any reason will
not affect: (i) obligations, including the payment of any monies hereunder,
which have accrued as of the date of termination or expiration; (ii) any
materials supply requirements under Article II which have been contracted for as
of the date of termination or expiration; (iii) intellectual property rights
under Section 3.3 hereof; and (iv) confidentiality obligations under Article IV
hereof, which shall survive termination or expiration.
ARTICLE SIX
MISCELLANEOUS
6.1 Dispute Resolution. In the event of any controversy or claim arising
out of or relating to any provision of this SUPPLY AGREEMENT or the breach
thereof, the parties shall try to settle their differences amicably between
themselves. Any such controversy or claim which the parties are unable to
resolve shall initially be submitted for review and resolution by the Chief
Executive Officers of the SUPPLIER and TGI prior to the initiation by either
party of any legal action.
6.2 Severability. If any part, term, or provision of this SUPPLY AGREEMENT
shall be found invalid or unenforceable under any valid controlling law, the
SUPPLY AGREEMENT shall be construed as if the invalid or unenforceable
provisions had been deleted, and the SUPPLY AGREEMENT shall be deemed modified
to the extent necessary to render the surviving provisions enforceable to the
fullest extent permitted by law. In the event the legality of any provision of
this SUPPLY AGREEMENT is otherwise brought into question because of a decision
by a court of competent jurisdiction, the SUPPLIER, on the one hand, or TGI, on
the other hand, by written notice to and agreement with the other party, may
revise the provision in question or may delete it entirely so as to comply with
the decision of the court.
6.3 Governing Law. This SUPPLY AGREEMENT shall be construed and governed
according to the laws of the Commonwealth of Massachusetts. The courts and
authorities of the Commonwealth of Massachusetts shall have exclusive
jurisdiction over all controversies that may arise under or in relation to this
SUPPLY AGREEMENT and the execution and interpretation thereof and compliance
therewith.
6.4 Force Majeure. Neither party shall be responsible to the other for any
failure or delay in performing any of its obligations under this SUPPLY
AGREEMENT if such delay or nonperformance is caused by strike, labor stoppage,
lockout or other labor trouble, fire, flood,
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accident, act of God or of the Government, or by other cause unavoidable or
beyond the control of such party, provided that prompt notice is given of the
cause of the delay or nonperformance and diligent continuing efforts are made to
resume performance.
6.5 Nonassignability. This SUPPLY AGREEMENT shall not be assignable by
either party hereto, except to a wholly-owned subsidiary or to a successor to
all or substantially all of such party's business, without the prior written
consent of the other party.
6.6 Entire Agreement; Modification. This SUPPLY AGREEMENT constitutes the
entire understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements, written or oral, with respect
thereto. No license rights shall be created by implication or estoppel. No
modification or amendment hereof shall be valid or binding upon the parties
hereto unless made in writing and duly executed on behalf of both parties.
6.7 Waiver. No actual waiver of breach or default by a party of any
provision of this SUPPLY AGREEMENT shall be deemed or construed to be a waiver
of any succeeding breach or default of the same or any other provision.
6.8 Notices. Notices, where permitted or required hereunder, shall be
sufficiently given if sent by Certified Mail, return receipt requested and
postage prepaid, or if delivered by hand, if sent by confirmed facsimile
transmission with a copy deposited in the U.S. mails, first class and postage
prepaid, or if sent by overnight courier:
If to the SUPPLIER, to:
SPECTRA SCIENCE CORPORATION
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President
with a copy to:
Xxxxxxx X. Xxxxx, Esquire
Warner & Xxxxxxxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
If to TGI, to:
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TECHNICAL GRAPHICS, INC.
00 Xxxxxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: President
with a copy to:
Xxxxx Xxxx, Esquire
Peabody & Xxxxx
000 Xxx Xxxxxx
Xxxxxxxxxx, XX 00000
Notices so given shall be deemed to have been received by the addressee on the
fourth day after deposit as Certified Mail, on the day after dispatch by
overnight courier, and on the day of delivery by hand or the day of transmittal
by facsimile transmission.
IN WITNESS WHEREOF, the parties hereby execute this Agreement, in
triplicate, through the representatives listed below:
ACCEPTED AND AGREED TO BY:
SPECTRA SCIENCE CORPORATION TECHNICAL GRAPHICS, INC.
000 Xxxxx Xxxx Xxxxxx 00 Xxxxxxxxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
By /s/ Xxxxx X. Xxxxxxx By /s/ Illegible
----------------------------- -----------------------------
Date Signed: April/21/99 Date Signed: April 20, 1999
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