"[ ]" INDICATES THAT
THE CONFIDENTIAL
SUPPLY AGREEMENT PORTION HAS BEEN
OMITTED AND FILED
BETWEEN SEPARATELY WITH
THE COMMISSION
ISS-NAGANO GmbH,
XXXXXXXX. 00
00000 XXXXXXX
- HEREINAFTER CALLED "ISS" -
AND
XXXXXX XXXXX XxxX
POSTFACH 10 60 50
70049 STUTTGART
- HEREINAFTER CALLED "BOSCH" -
WHEREAS Bosch is currently developing a new Common Rail Diesel Injection System
which shall be introduced into the market in 1996;
WHEREAS this new Injection System uses a high pressure sensor to measure and
control the system pressure;
WHEREAS ISS Inc., San Xxxx, USA - hereinafter called "ISS Inc." through its
strategic alliance with Nagano Keiki Seisakusho Ltd., Otaku, Japan - hereinafter
called "Nagano" - has developed such high pressure sensor elements which are
currently produced for automotive and industrial applications also by ISS;
WHEREAS ISS and Bosch entered into a Development Agreement on May 18, 1995 for
the development, mass production, application and test of a high pressure sensor
for these new Common Rail Diesel Fuel Injection Systems on the basis of the
existing ISS XKP- and HVP-product family;
WHEREAS ISS is prepared to manufacture for and to supply to Bosch such newly
developed high pressure sensors;
WHEREAS Bosch is willing to purchase such sensors from ISS;
NOW, therefore in consideration of the mutual agreements herein contained it is
agreed by and between ISS and Bosch as follows:
1. DEFINITIONS
As used in this Agreement the following terms shall have the meanings set
forth below:
(i) "CR" means the new Common Rail Diesel Injection System currently
developed by Bosch.
(ii) "PRODUCTS" means high pressure sensors for CR as described in the
drawing (with the components as specified therein) and in the detailed
technical and performance specifications attached hereto as
APPENDIX 1, including its improvements and/or design changes as
specified in Section 1.l of the Development Agreement ((iii) below).
(iii)"DEVELOPMENT AGREEMENT" means the Development Agreement between ISS
and Bosch of May 18, 1995.
2. GENERAL RULES
This Agreements sets forth the general terms and conditions of the sale by
ISS and the purchase by Bosch of the Products and shall apply to all such
purchases and sales.
3. SUBJECT MATTER
3.1 During the term of this agreement ISS, using the best of its design and
manufacturing knowledge, will design and manufacture Products in
accordance with the specifications and the quality standards as attached
in APPENDIX 1 and referred to in SECTION 5 and will sell and ship the
Products as will be ordered from time to time by Bosch. ISS has the
right to propose and will propose to Bosch process or component
modifications which, to the best of ISS knowledge, will improve the
efficiency, quality or yield of the manufacturing process. Bosch will
examine such proposal and, within reasonable amount of time, will have
the right to either accept or refuse them. Once accepted by Bosch in
writing, the modification will become integral part of the Products.
3.2 ISS will manufacture and supply the Products in accordance with Bosch's
requirements as set out in SECTION 3.1 above and will make design and
styling changes as mutually agreed upon in writing.
3.3 If so required by Bosch, ISS shall place or affix trademarks and/or
tradenames of Bosch or its customers on the Products and their packaging
in the design and at the location as designated by Bosch to ISS.
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ISS agrees not to sell or otherwise dispose of such marked Products to
any person other than Bosch or designated by Bosch. Any necessary
tooling charges for affixing trademarks on the Products based on Bosch
specification will be borne by Bosch, and such toolings will become the
property of Bosch.
4. MARKETING
During the term of this Agreement, ISS shall manufacture and supply the
Products, which form the result of the common development work by the
parties to Bosch only as set out in the Development Agreement.
Competitive conditions (price, quality, meeting of delivery deadlines,
technical performance etc.) provided, RB is willing to procure its
demand of the Products but at least a part of its demand with ISS, for a
period ending at least December 31st, 1999.
APPENDIX 2 shows the expected yearly demand until December 31st, 1999.
The figures quoted in APPENDIX 2 constitute a non-binding forecast based
on the best knowledge of Bosch; they do not represent binding orders.
Due to circumstances beyond the control of Bosch the volumes may
decrease.
5. QUALITY
Bosch and ISS shall cooperate closely to ensure that the Products
conform with the specifications and satisfy the quality standards as
hereinafter. Accordingly, ISS will design the Products, buy the
components and produce and ship the Products in accordance with the
quality management system requirements and specifications of the Bosch
Quality Assurance Guide for Suppliers (APPENDIX 3). ISS intends to
comply with ISO 9000 quality principles at a later date. ISS,
particularly, will use a documentation and traceability system capable
to determine the manufacturing conditions under which the Products have
been produced. In case of rejects of Products due to their
nonconformity to Bosch specification ISS will, notwithstanding the
respective warranty provisions, provide Bosch upon request a
manufacturing report stating the results of the quality controls and the
root causes and the corrective actions to be taken.
ISS agrees to allow Bosch on request to inspect quality control and
production activities of ISS associated with the design and production
of said Products. Such information shall be deemed confidential.
6. PRODUCT LIABILITY
6.1 ISS shall bear the product liability risk and undertakes to hold Bosch
harmless against product liability claims by third parties, unless Bosch
on its own responsibility issues instructions which have not been agreed
upon with ISS. If such an instruction is a contributing factor to
damages arising in connection with product liability, the legal
provisions apply.
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6.2 ISS is obliged to take all measures necessary with regard to product
liability, particularly with regard to faultless design, manufacture,
instructions and after sales product observation, and to keep Bosch
continuously informed regarding these measures and any changes made
thereto. Bosch is entitled to check these measures to the extent
necessary in each case.
6.3 In case of defects in the Products which may necessitate a recall
campaign, Bosch shall keep ISS at all times fully informed about all
relevant facts and both parties shall negotiate and determine in good
faith the actions to be taken. It is understood that Bosch shall have
the ultimate decision as to the necessity of a recall campaign. ISS
shall negotiate a fair and mutually acceptable reimbursement of Bosch's
recall expenses, based on the principle that the reimbursement shall be
Proportional to the degree of ISS's responsibility.
6.4 ISS shall subscribe for a General Liability Insurance, including a
Product Liability Insurance and recall coverage with a limit of
liability of 5 million DM each and shall provide evidence thereof to
Bosch. ISS shall inform its insurance company expressly that ISS is
supplier to the Automotive Industry.
7. PRICES AND TERMS
7.1 Prices and delivery terms shall be set out in annual agreements
effective for a calendar year, taking into account the price projection
as per ANNEX 4.
7.2 If necessary, the parties will negotiate in good faith price adjustments
at least 3 months before a new annual agreement comes into force. In
case the parties cannot agree on a price adjustment, the prices of the
previous annual agreement shall remain in force.
8. HANDLING BOSCH DEPARTMENT
Price agreements HoW Purchasing Dept. (HoW/EKF)
Calls by HoW Material Planning Dept.
(HoW1/ALP)
Shipment to Xxxxxx Xxxxx XxxX
Homburg Plant
Bexbacher Xxxxxxx 00
00000 Xxxxxxx/Xxxx
Invoices to HoW Controlling Accounting Dept.
(HoW/WIR)
Coordination HoW/EKF
Quality assurance HoW1/QSG5
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9. DELIVERY
9.1 Orders for quantities of Products will be made by schedules consisting
usually of fixed orders and non-binding order forecasts. In order to
organize the manufacturing of Products, Bosch grants to ISS a production
and material release for a defined period of time to be mutually agreed
upon by both parties. The fixed orders and the production and material
releases shall constitute binding commitments upon ISS to manufacture,
sell and ship the Products within the specified schedule in accordance
to this Agreement.
If Bosch's demand for the products reduces completely or to a
significant extent due to circumstances beyond the control of Bosch and
if ISS has committed to commercially reasonable quantities of material
for the production of the products covered by Bosch's fixed orders and
production and material releases, Bosch shall reimburse ISS the cost for
such appropriately ordered material upon evidence, provided, however,
such materials cannot be cancelled or rescheduled subsequent to the
receipt of an abrupt reduction or cancellation of orders by Bosch which
do not originate from a defect in the products.
Title to these goods shall pass to Bosch subsequently to such
reimbursement.
9.2 Supply Assurance:
In order to guarantee a steady and punctual supply of the Products ISS
agrees to keep a minimum stock of Products at ISS's expense. The volume
of products in this minimum stock shall cover Bosch's demand for the
Products in one month and the volume of components in this minimum stock
shall cover Bosch's demand in one month, especially for the
sensor-subassembly, the printed circuit board and the connector. The
calculation of such minimum volumes stock shall be based on the figures
as stated in SECTION 9.1 above.
Following termination of this Agreement Bosch will be entitled to
purchase the pressure sensor-subassembly, the ASIC, the connector and
the sensor element itself for Bosch's own CR application from ISS at
fair market prices.
10. INSPECTION PRIOR TO DELIVERY
10.1 Prior to delivery all Products shall be tested and inspected by ISS at
ISS's factory so as to ensure that the Products are in accordance with
the specifications.
10.2 Bosch reserves the right to inspect at its own expense all Products at
ISS's factory before delivery. Bosch will provide sufficient notice
prior to any inspection.
11. INCOMING INSPECTION
As soon as this is feasible in the normal course of business, Bosch
shall conduct an incoming spot-check inspection of the Products. Bosch
will give notice of any failings
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immediately on discovery; to this extent the supplier waives the rights
to object those complaints as being late.
If due to defects or failures a 100% inspection is necessary, ISS shall
bear the costs. If defects can be narrowed to specific lots this will
cover those lots only.
12. WARRANTY
12.1 ISS hereby warrants that the Products to be delivered and sold hereunder
will meet the agreed specifications and quality standards and will be
merchantable and free from defects in material and workmanship.
12.2 If the Products are found to be defective during the warranty period,
Bosch may at its option ask ISS for replacement of such products free of
all charges and shipping costs to Bosch, or to the enterprises of its
service organization, or may ask for refund of the purchase price. In
case defectiveness will be discovered during or after installation of
the Product in Bosch's products, ISS will bear the costs Bosch incurs
for discovering the defect or for repairing the Bosch product.
12.3 If, on the basis of provisions of law and/or contractual agreements with
its customers or with enterprises of its service network, Bosch is
required to pay incidental expenses such as, for instance, transport
charges, cost of materials, cost of labour, ISS will also bear those
costs. However, if such incidental expenses, taken as a whole, would
operate to threaten the existence of ISS, then Bosch and ISS will
negotiate in good faith a fair and reasonable amount ISS has to pay for
such incidental costs.
12.4 The warranty period is 36 months following the first registration of the
vehicle equipped with the Bosch CR System containing the Product.
13. MACHINERY AND EQUIPMENT
Bosch agrees to purchase from ISS and ISS agrees to sell to Bosch its
machinery and equipment used for production of the HVP-Version of the
Products. Such machinery and equipment as well as the purchase
consideration therefor not exceeding 2.4 million USD and payable in
installments will be specified and agreed upon separately. Title to
those machinery and equipment shall pass to Bosch in proportion to the
purchase consideration actually paid. Bosch offers to attend the
installation of the machinery and equipment and to provide appropriate
inputs; however, ISS has the final responsibility to assure the Products
meet the agreed quality requirements. Bosch will make such machinery
and equipment available to ISS on the basis of a contract of loan as set
out in APPENDIX 5. Notwithstanding other provisions of such loan
contract, ISS shall be entitled to manufacture high pressure sensors for
non-CR use on such machinery and equipment. Prior to any such
production with reference to the utilization of capacity for non-CR
applications, ISS has to get RB's written consent, such consent not to
be withheld if any
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such production will cover surplus capacity of the machinery and
equipment not needed for any production for Bosch.
Bosch hereby grants to ISS the option to purchase such machinery and
equipment on December 31st, 1999 at a purchase price equivalent to the
book value of the machinery and equipment (according to linear
depreciation ending five years after complete installation of such
machinery and equipment) at that date. Notice to exercise such option
shall be given until December 31st, 1998.
In case ISS does not exercise its option, Bosch is prepared to reimburse
to ISS engineering costs related to such machines and equipment at an
amount equal to the depreciated value of an initial amount of 400,000
USD on December 31st, 1999; depreciation method: linear; depreciation
period: five years, starting with complete installation of such
machinery and equipment.
14. PROPRIETARY RIGHTS
14.1 If the Products are used as stipulated, ISS is liable for claims arising
as a result of the infringement of proprietary rights, applications for
proprietary rights and/or of copyrights (proprietary rights). ISS shall
hold Bosch and the parties purchasing from Bosch harmless against all
claims arising from the use of such proprietary rights. This shall not
apply if ISS has manufactured the Products on the basis of drawings,
models or other comparable descriptions provided by Bosch and did not
know or was not bound to know that proprietary rights were infringed as
a result.
14.2 Both parties to this Agreement undertake to inform each other without
delay of risks of infringement and alleged cases of infringement which
became known to them.
14.3 If required by Bosch, ISS will inform Bosch concerning the use of
published or unpublished proprietary rights held by ISS, as well as of
applications for such proprietary rights and of licenses issued for
proprietary rights related to the Contract Products.
15. FORCE MAJEURE
If any Party to this Agreement cannot perform its obligations out of
this Agreement because of an event of Force Majeure, it shall notify the
other Party in writing within undue delay about the occurrence of such
an event and provide accurate supporting evidence thereof.
Force Majeure shall mean any of the following:
Earthquake, storm, flood, fire or other acts of nature, epidemic, war,
riot, public disturbance, strike or lock-out, government actions or
other events beyond the control of the Parties and where their
occurrence is unpreventable and unavoidable.
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If an event of Force Majeure occurs, neither Party may be responsible
for any damage, incurred cost or losses which the other Party may
sustain by reason of such failure or delay of performance. The Party
claiming Force Majeure shall adopt measures to minimize or remove the
effects of Force Majeure and within the shortest possible time attempt
to resume the performance of obligations affected by the event of Force
Majeure. If the consequences of such an event cannot be remedied within
ninety days from the occurrence, both Parties shall through
consultations decide whether to modify or terminate the Agreement
according to the effects of the event of Force Majeure on the
performance of this Agreement.
16. TERM OF AGREEMENT/TERMINATION
16.1 This Agreement comes into force upon signature by both parties and is
concluded for an indefinite period of time. It may be terminated at the
end of a calendar year, observing a period of written notice of six
months; however, such ordinary termination is not possible before
December 31st, 1999.
16.2 Bosch is entitled to terminate this Agreement at any time without
observing a notice period, if the requirements of Bosch for the Products
decrease substantially due to reasons beyond the control of Bosch or if
the Development Agreement is terminated prematurely.
16.3 The right to terminate this Agreement for extraordinary reasons without
complying with the period of notice as a result of a serious breach of
duty by one of the parties remains unaffected. The overrun of delivery
deadlines by more than 2 months shall be regarded as a serious breach of
duty.
16.4 Regardless of the reason for the termination of this Agreement, all
outstanding credits and liabilities resulting from previous orders
accepted prior to the date of termination shall continue to remain in
force.
17. CONFIDENTIALITY
17.1 Either party shall keep strictly confidential and secret towards third
parties the existence of this Agreement, related working results arising
from this Agreement as well as technical and commercial information
obtained from the other party under this Agreement as long and as far as
this information is not in the public domain or unless the disclosing
party waived further secrecy in writing. This obligation of
confidentiality terminates five years after expiration of this Agreement.
17.2 ISS Inc. and Nagano, to the extent they have a need to know information
arising from this Agreement as well as technical or commercial
information received from RB for the purposes set forth above, shall not
be deemed third parties provided they abide by the obligations of this
Agreement. Insofar, ISS shall be fully responsible to ensure that the
obligations of this Agreement are respected by ISS Inc. and Nagano.
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17.3 Neither party hereto may, without the prior written consent of the other
party, disclose or publish the name of the other party or the contents
of this Agreement in any advertisement, publicity release or the like.
18. MISCELLANEOUS
18.1 All prior negotiations between the parties are merged in this Agreement.
This Agreement including all its annexes constitutes the entire
agreement between the parties with respect to the subject matter hereof,
and there are no understandings, representations or warranties of any
kind except as expressly set forth therein, notwithstanding sections 4.2
to 4.4 of the Development Agreement.
18.2 Changes and additions to this Agreement - including this Article 18 as
well as any additional agreement must be made in writing in order to
become legally effective.
18.3 If one of the provisions of this Agreement becomes invalid, this shall
not affect the contract's remaining provisions. Instead of the
provision that has become invalid, a new provision shall come into
effect which shall come as near as possible to the business aims of both
parties. The same applies with regard to agreement loopholes.
19. APPLICABLE LAW/PLACE OF JURISDICTION
This Agreement shall be governed by the substantive laws of Germany to
the exclusion of the provisions for conflict of laws and international
conventions relating to the sale of goods.
Place of jurisdiction shall be Stuttgart/Germany.
Dresden, 04.11.1996 Stuttgart, 22.10.1996
ISS-NAGANO GMBH XXXXXX XXXXX XXXX
/s/ XXXXXXX XXXXX /S/ XXXXX X. XXXXXXXX
------------------------ --------------------------
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Nagano Keiki Seisakusho Ltd., Tokyo, Japan, and ISS Inc. read and approve
the conditions herein and are prepared to sell and deliver the sensor
subassembly and printed circuit board and, after establishment of the relevant
production lines to be accomplished not later than Dec. 31, 1997, also the
Products to Bosch at the terms and conditions as stipulated hereinabove in order
to ensure timely fulfillment of this agreement, in case ISS is prevented from
doing so.
Tokyo, 11.18.1996 San Xxxx, 11.11.1996
Nagano Keiki Seisakusho Ltd. ISS Inc., San Jose, CA., USA
/s/ SHIGERU MIYASHITO /s/ XXXXXX XXXXX
----------------------------------- ----------------------------------------
APPENDIX 1: Product Specification and Model Drawing
APPENDIX 2: Delivery Forecast
APPENDIX 3: Quality Assurance Guide for Suppliers
APPENDIX 4: Price Projection
APPENDIX 5: Loan Contract
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CONFIDENTIAL
TREATMENT
REQUESTED
APPENDIX 1
[ ]
CONFIDENTIAL
TREATMENT
REQUESTED
APPENDIX 2
[ ]
CONFIDENTIAL
TREATMENT
REQUESTED
APPENDIX 3
[ ]
CONFIDENTIAL
TREATMENT
REQUESTED
APPENDIX 4
[ ]
CONFIDENTIAL
TREATMENT
REQUESTED
APPENDIX 5
[ ]
