EXHIBIT 10.57
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EXHIBIT E
PURCHASE AND DISTRIBUTION AGREEMENT NO._______
This Agreement is made this ___ day of ________, 1996 between General
Electric Company acting on behalf of its GE Medical Systems business including
corporate affiliates worldwide ("Buyer") and Positron Corporation, a Texas
corporation ("Seller").
Whereas Seller has experience and expertise in manufacturing positron
emission tomography ("PET") scanners and related cyclotron systems.
Whereas Buyer wishes to have Seller use its expertise to manufacture such
scanners and cyclotrons for Buyer in accordance with the following requirements
of Buyer:
. Purchase Specifications #46-______, Revision ________, dated _______
and attached to this Agreement as Attachment A.
. Supplier Quality Plan QCP ________, Revision ________, dated _______
and attached to this Agreement as Attachment B.
Now therefore Seller and Buyer agree as follows:
1. GENERAL
(a) Scope. This Agreement, including all attachments, states the terms on
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which Seller will sell to Buyer, and Buyer will purchase from Seller, the PET
scanners and related cyclotron systems which will be manufactured in strict
compliance with Attachment A and B ("Products"). Also included are any
applicable spare parts, service tools, manuals and software licenses, which,
collectively with Products, are referred to below as "Items". This Agreement
also includes provisions includes generally to "PET
Products," which term, as used in this Agreement, means:
(i) the products described in Attachment A.
(ii) any other advanced medical imaging device dedicated to the
use of coincidence detection of high energy radiation from positron emitters by
a contiguous, 360 degree array of detectors; and
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(iii) cyclotron systems dedicated to use with medical imaging
devices.
PET Products do not include, among other items, imaging devices that may use
other imaging technologies in whole or in part, such as devices that may use, or
combine PET features with, any of the following: X-rays, magnetic resonance
imaging, combine tomography, ultrasound or coincidence or other detection of
high energy or radiation from positron emitters by one or more nuclear cameras,
including single photon emission computed tomography (including high energy
SPECT) and planar nuclear medicine (including whole body applications). PET
Products also do not include cyclotron systems that may be used with devices
other than medical imaging devices.
(b) EXCLUSIVITY. As long as Seller fulfills its obligations in all
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material respects under this Agreement and subjects to the expectations in
paragraph (c) below, until the end of the initial term of this Agreement
referred to in Section 2, Buyer will, and will cause all of its subsidiaries and
affiliates (i.e., those controlled by GF. Medical Systems) to, procure
exclusively from Seller the Products and those related parts that are identified
on Attachment A as "Exclusive Parts."
(a) EXCLUSIVITY EXCEPTIONS. Paragraph (b) above will be suspended,
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however, with respect to any Product or Exclusive Part at any time when a
determination is made that:
(i) the features, functions, quality, and reliability of such
Product or Exclusive Part, taken as a whole, are materially inferior to a
competitive alternative (and if such circumstances continue for any Product or
Exclusive Part for more than 12 months notice thereof from Buyer to Seller,
Buyer may terminate its commitments under paragraph (b) with respect to such
Product or Exclusive Part);
(ii) the availability (including quantity and timeliness of
delivery) of such Product or Exclusive Part from Seller is inadequate to meet
the requirements set forth in the most recent forecast delivered at least ninety
(90) days prior to such determination by Buyer pursuant to Section 3(a), or
Seller is unable to fulfill on schedule any purchase order accepted by Seller
prior to such determination;
(iii) such Exclusive Part is available more quickly from another
source and speed is important to Buyer's customer; or
(iv) doing so is necessary to comply with a written commitment
of
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Buyer made in the ordinary course of business prior to the date of this
Agreement.
In the event of such a suspension, Buyer may make alternative arrangements for
the procurement of such Product or Exclusive Part for the briefest, commercially
reasonable period, regardless of whether it extends past the time when the
circumstances giving rise to the suspension cease to exist. If Buyer believes
that circumstances described in this paragraph (c) exist, it may request an
acknowledgement thereof from Seller. If Seller declines to acknowledge within 10
days or denies such circumstances exist, then Buyer may either make its own
determination (by notice to Seller), which Seller may dispute pursuant to
Section 24, or refer the issue to a neutral person of suitable stature and
business experience (the "Neutral") for a determination. The Neutral will be
selected as promptly as possible, and in any event within 20 days form the date
Seller receives notice from Buyer that it wishes to refer the issue to the
Neutral by agreement of the parties or in the absence of agreement, by the
Center for Public Resources, Inc. The parties will cooperate to instruct and
enable the Neutral to make a determination within 10 days after selection.
Either party may dispute the determination of the Neutral pursuant to Section
24, but if the Neutral determines that the circumstances described in this
paragraph (c) exist, than Buyer shall be entitled to rely on such determination,
and paragraph (b) will be suspended, until final resolution of such dispute
pursuant to Section 24.
(d) PET Product Restriction. As long as Seller fulfills in all material
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respects its obligations under this Agreement, until the end of the initial term
of this Agreement referred to in Section 2(a), Buyer will not, directly or
indirectly through any subsidiary or affiliate controlled by it (i.e.,
controlled by GE Medical Systems), engage in the design, engineering or
manufacture of PET Products, except during any period when paragraph (b) above
is suspended with respect to Products and Buyer is unable to obtain PET Products
form any other suitable source on commercially reasonable terms.
(e) Certain Entities. Nothing in this Agreement will restrict, or impose
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on Buyer any obligations with respect to, procurement, sales or other activities
(i) relating to services of any kind or to products or parts other than PET
Products and Exclusive Parts, (ii) conducted through any entity acquired after
the date hereof if less than 15% of its revenues are derived from activities
prohibited by paragraph (d) or (iii) conducted through joint ventures, licenses
or other entities in which Buyer does not own a 100% equity interest; provided
that on request from Seller, with respect to a joint venture or other entity
owned more than 50% but less than 100% by Buyer. Buyer will use commercially
reasonable efforts (without being required to incur any expense) to persuade any
other owners thereof to agree that the entity will abide by
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some or all of the terms of this Agreement. Seller confirms that it does not
currently own, and will not acquire during the term of the restriction in
paragraph (d) above, more than 50% but less than 100% of the equity that derives
more than 15% of its revenues from activities prohibited by paragraph (d).
(f) Documents. If a conflict exists between this Agreement and its
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attachments, the order of precedence will be:
1. This Agreement
2. Attachments D and E (Pricing Schedules)
3. Attachment A (Purchase Specification(s))
4. Attachment B (Purchased Material Quality Requirements 100.003 (MFG)
5. Attachment F (Buyer's Standard Conditions of Purchase)
6. Attachment C (Payment Schedule)
7. Attachment G (Definitions)
8. Attachment H (EMC Product Certification Requirements)
9. Attachment I (Non-Warranty Service Support Pricing)
(g) Changes. The parties may modify this Agreement as it applies to a
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specific purchase order release as long as the modification is in writing and
signed by both parties.
2. TERM
(a) Initial Term. Unless earlier terminated as provided herein, the term
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of this Agreement is from __________, 1996 through June 30, 2001. Buyer will
issue purchase order releases in accordance with Section 5 no later than June
30, 2001 and request delivery no later than December 31, 2001.
(b) Extensions. Buyer may extend the term of this Agreement for an
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additional two year period ending on June 30, 2003 except as otherwise
specifically provided below. Buyer must notify Seller in writing of its
intention to extend the term by March 31, 2001.
3. QUANTITIES AND COMMITMENTS
(a) Forecast. Buyer will provide Seller from time to time, but in any
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event at least once a calendar quarter, a forecast of its requirements of
Products and Exclusive Parts, which forecast will be non-binding and create no
obligation for Buyer or Seller.
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(b) Marketing Commitment. As long as Seller fulfills in all material
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respects its obligations under this Agreement and subject to the exceptions in
paragraph (d) below. Buyer will make the Products available for sale through its
sales representatives in the United States and in such other countries where
Buyer has qualified personnel to sell, install and service the Products. More
specifically, subject to the foregoing, Buyer will (i) assign catalog numbers to
the Products, (ii) list them in its price book, (iii) distribute to customers
sales brochures which describe the features and functions of the Products, (iv)
dedicate at least five full-time equivalent employees (three of which shall be
dedicated full-time to the sale of PET Products) and one full-time product
manager to selling Products or related support functions (considering, for
purposes of determining the number of full-time equivalents, only those
employees who devote at least 50% of their time, on average, to such activities
which employees shall be considered only to the extent of the percentage of
their time which they so devote). (v) promote the Products at trade shows where
PET products are customarily displayed, (vi) issue quotations to sell the
Products on Buyer's standard conditions of quotation, (vii) offer standard
financing and lease arrangements to assist customers to procure the Products and
(viii) include Products in educational programming offered by Buyer where
appropriate, such as Buyer's "Training in Partnership" (TIP TV) continuing
education program; provided that Buyer may vary any of the foregoing if, after
consultation with Seller, Buyer reasonably determines that market conditions
require or permit different marketing or sales efforts without materially
reducing sales below the level of sales which could be achieved if Buyer
continued to comply with the foregoing. Except as stated in this paragraph,
Buyer has no other obligation to promote the Products. Buyer in its sole
discretion may elect to undertake additional efforts. Buyer in its sole
discretion may reject any order received from a customer for any reason,
including price, terms, credit-worthiness, manner of sale or other reasons;
provided that Buyer shall provide Seller with written notice that Buyer has
received and rejected such order.
(c) Purchase Commitment. Buyer's purchase commitment to Seller consists
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only of purchase order releases issued under Section 5.
(d) Marketing Exceptions. Notwithstanding other provisions of this
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Agreement, Buyer shall not be obliged to devote any efforts to marketing or
selling a Product made by Seller, if Buyer is not then obliged to procure such
Product exclusively from Seller by reason of Section 1(c)(i) or (ii), or if sale
of the Product would violate any applicable law or regulation, would pose a
danger to any person, would infringe the intellectual property rights of any
person or would be manifestly unreasonably for any reason of similar
significance.
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4. PRICING; LICENSE
(a) Fixed Prices and Terms. The prices and payment terms specified on
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Attachment D for Products and Attachment E for spare parts and service tools are
firm for items ordered through purchase order releases issued by Buyer no later
than December 31, 1997 which request delivery no later than June 30, 1998 and,
at Buyer's request, include bar code labeling and packing in accordance with
Buyer's Directives 46-268564P1 and 46-315789P1. Thereafter, prices will be
negotiated in accordance with the following principles:
(i) Negotiated prices will be reasonably based on actual labor
and material cost increases/decreases incurred by Seller which affect the
Products. Seller will provide Buyer written documentation of these changes.
(ii) Negotiated prices will take into account real and
anticipated improvements in productivity and efficiency.
(b) Ad Hoc Prices and Terms. Buyer may from time to time request that
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Seller agree to sell, in connection with a specified transaction or series of
transactions, Products or other Items at prices or on terms that differ from
those referred to in paragraph (a) above. Seller has no obligation to agree to
such terms, but if it does agree, it may not thereafter withdraw or modify such
agreement.
(c) Price Reductions. Seller will offer Products and Exclusive Parts
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to Buyer at prices and upon terms no less attractive than those offered by
Seller to any other purchasers (whether customers or distributors) for
substantially similar products and parts, except for unusual transactions
involving, in Seller's judgment, special terms or circumstances, including but
not limited to transactions which provide Seller an economic benefit derived
other than through the payment of the sales price of the Product or Exclusive
Part to Seller. If Seller offers Products or Exclusive Parts to any purchaser at
prices or upon terms that are more attractive than those offered to Buyer,
unless the exception set forth in the first sentence of this Section 4(c)
applies, Seller shall immediately notify Buyer of such prices and terms in
writing, and the prices and terms set pursuant to paragraph 4(a) above shall be
modified accordingly.
(d) Cost Reductions. Buyer and Seller plan a continuing effort to
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achieve reductions in Product cost by utilizing cost-effective design, lower
cost components that use new technology, productivity improvements, and
automation of the main manufacturing process. To assist each other in this
effort, Seller expects to provide
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Buyer with cost data required to determine the feasibility and potential savings
from alternative actions, and Buyer will provide Seller with its expertise and
assistance in selecting and procuring raw materials and components for Products.
The goal of the cost reduction program is to reduce Product prices by at least
10% annually for the term of the Agreement. This paragraph creates no binding
obligations, however.
(e) License. Seller hereby irrevocably grants a paid-up worldwide license
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for Buyer and its agents and contractors to use in the operation, maintenance
and repair of the Products and Exclusive Parts and in the manufacture, use and
sale of other related parts, any existing or future patents, know-how or other
technology under which Seller may grant such a license for such purpose. Upon
delivery of any Product and receipt by Seller of the purchase price then due,
Seller hereby irrevocably grants to Buyer and its customers a paid-up worldwide
license to use in the operation, maintenance and repair of such Product any
software or similar technology which is normally furnished by Seller to a
customer at the time a Product is delivered; it understood that this sentence
creates no obligation with respect to any software upgrades or other licenses
that are normally granted by Seller in a separate transaction after delivery of
a Product or Exclusive Part for additional consideration.
(f) License Outside of PET Products. Seller irrevocably grants a paid-up
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worldwide license for Buyer and its agents and contractors to use any patents,
know-how or other technology transferred by Buyer to Seller pursuant to the
Acquisition Agreement dated July 15, 1996 (the "Acquisition Agreement") between
them, in fields other than PET Products.
5. PURCHASE ORDER RELEASES
(a) Contents. Purchase order releases for Products, Exclusive Parts, spare
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parts and service tools may consist of hard copies of Attachment F, electronic
messages as set forth in Section 20 or other written communications from Buyer
which state specific delivery requirements. The releases will be processed as
follows:
(i) Buyer and its affiliated entities will issue individual
purchase order releases which reference the number of this Agreement and state
delivery dates and quantities to be released for delivery within the lead times
specified in Attachments D and E. Regardless of form, every purchase order
release will be deemed to include Buyer's Standard Conditions of Purchase
located on Attachment F.
(ii) The shipping documents prepared by Seller will reference
the
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applicable purchase order release number. The return goods (RG) number will also
be referenced on parts returned for repair or exchange.
(iii) As Buyer's business requirements are further defined, it
may change the quantities and delivery dates on individual purchase order
releases without penalty as long as Buyer notifies Seller of the changes in
accordance with the lead times specified on Attachments D and E.
(b) Initial Orders. Buyer hereby releases to Seller, and Seller hereby
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accepts, the purchase order attached hereto as Exhibit ___.
6. DOCUMENTATION
(a) Customer Copies. Seller will deliver with each unit of Product sold
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hereunder a manual containing all applicable drawings, schematics, software
license(s) and documentation, spare parts list, theory of operation, service
troubleshooting diagnostics, and instructions necessary for the installation,
operation, maintenance and repair of the Product in a format similar to what
Buyer provided to Seller for such Product or its predecessor upon execution of
this Agreement, or at Seller's option, in another format acceptable to Buyer.
(b) Buyer's Copy. Seller will provide Buyer at no additional charge a
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complete set of reproducible master copies of the documentation described in
paragraph (a) above, which Buyer may reproduce without charge. If a change in
the Product requires a change in the documentation, Seller will promptly notify
Buyer of the change and provide a revised reproducible master copy without
charge.
(c) Installed Base Documentation and Manual Updates. Seller agrees to
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deliver all Field Modification Instructions, ("FMIs") Release Notes, and
updates to the Operator's Manual and/or Service and Maintenance Manual including
all software and hardware release and/or modification documentation to the
installed base without charge.
7. TRAINING
On request of Buyer, Seller will provide personnel and equipment to
adequately train Buyer's personnel at Seller's facility with respect to the
installation, operation, maintenance and repair of the Product. Any such
training will be scheduled at regular intervals or with reasonable notice. The
training will
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be at no cost to Buyer except that Buyer will be responsible for travel and
living expenses incurred by its personnel.
If Seller provides training at Buyer's facility, Buyer will pay the
reasonable travel and living costs incurred by Seller's personnel to conduct the
training as long as Buyer has received and approved a cost estimate in advance.
8. TRANSPORTATION
Seller will make shipments using a carrier approved by Buyer. Additional
terms relating to transportation, insurance, risk of loss and title are
contained in Attachment F.
9. INVOICES/PAYMENT
(a) Contents: Seller's invoices will contain at least the purchase order
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release number, item number on the release, invoice quantity, unit of measure,
unit price and total invoice amount.
(b) Payment. If an invoice is consistent with this Agreement, including
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the payment terms referred to in Section 4, Buyer will settle the invoice in
timely fashion after receiving both the proof of shipment and the invoice.
However, if the schedule for payments by Buyer to Seller corresponds to the
schedule for payments to Buyer from its customer, and such customer delays its
payment, then Buyer may similarly delay its payment to Seller, provided that
Buyer may not delay any payment under this sentence by more than 5 days unless
the customer's delay is attributable to dissatisfaction with Products or Items
for which Seller may be responsible. Payments to Seller shall be in U.S. dollars
unless Seller otherwise agrees.
10. WARRANTY/REPAIR
(a) Terms. Seller warrants that the Products provided in accordance with
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the terms and conditions of this Agreement shall conform in all material
respects to the specifications set forth on Attachment A, and shall be free from
defects in material and workmanship for a period of twelve (12) months from the
date of Buyer's customer's acceptance (either expressly or through the
customer's use of the Product) of title to the Product.
(b) Service. Seller agrees that Product warranty includes service support
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as
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defined in Attachment G.
(c) Returns. Buyer may return in-warranty defective Products with advance
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notice to Seller. Advance notification shall also be required prior to return of
spare parts, service tools, and optional features.
(d) Freight/Risk of Loss. The transportation charges incurred in
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connection with the return of a defective in-warranty item to Seller's facility
or authorized service center pursuant to paragraph (b) above shall be paid by
Seller. Risk of loss passes to Seller when the item is delivered to the carrier.
(e) Repair. Unless Buyer elects to return a warranty item for credit only,
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Seller will test and repair or replace any returned in-warranty defective item
within 30 calender days after receiving it or such other time agreed on by Buyer
and Seller. Items under warranty will be repaired at no cost to Buyer, and items
out-of-warranty will be repaired or replaced at the prices listed in Attachment
F.
(f) Credit. Seller will promptly refund or credit Buyer for any payment
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Buyer made for an item which becomes defective during the warranty period and is
not repaired or replaced under warranty. Buyer may elect to take such credit on
any open invoices of Seller.
(g) Product Locator System. For Product tracking purposes. Seller agrees
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to be in compliance with Buyer's Product Locator System Supplier Requirements.
11. REPLACEMENT PARTS/TOOLS
(a) Field Replaceable Units, ("FRUs"). All FRUs (spare parts), including
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special tools for analyzing, performing preventive maintenance, and repairing
the system, shall be defined by Seller and Buyer by analyzing whether it is more
profitable to repair or replace in the field or return to Seller for repair or
replacement. Special tools are tools other than Fluke 87 multimeter, Tektronix
2232 oscilloscope and FACOM 2039 toolcase.
(b) FRU Policy. Seller's FRU policy shall be in compliance with Direction
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46-017383 (FRU System Functional Requirements).
(c) Duration. Seller, or Seller's designee, will maintain the capability
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of repairing and selling spare parts, service tools and instruments necessary to
effectively
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service all Product(s) furnished hereunder for at least ten (10) years from the
date of the last shipment of product(s) to Buyer.
(d) Testing. Seller will test all spare parts using the same test
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plan/procedure as Seller uses for the spare parts it sells to its own customers
or a mutually acceptable alternative test plan/procedure.
(e) Replacement Pool Cost/Size. The replacement pool carried by Seller
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shall be at Seller's expense. The size of the pool shall be mutually determined
by Buyer's Engineering/Service Engineering department and Seller. The size will
be dependent on the turn-around time, installed base projections, and repair
source locations.
(f) Buyer Stock Orders. For Buyer stock orders, delivery lead time of
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Seller's replacement parts shall be 30 days.
(g) Priority 1's. Seller agrees to be able to provide delivery of any
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spare part or service tool indicated as priority 1 on Attachment E to any
location in the United States within 24 hours of notification of an inoperable
Product (priority 1) in the field.
(h) Spare Parts List. Seller shall provide in Attachment E, the list of
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all spare parts and special tools of Product(s) including for each part the
following information:
. Reference number
. Description
. List Price
. Price to Buyer
. If repairable (repair price if out of warranty)
. MTBF (mean time between failure)
. Initial stock quantity
(i) International Spare Part Depots. Seller agrees that Buyer may, on a
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one-time basis per location, purchase a complete set of spare parts stock, as
listed in Attachment E, for its two (2) international spare parts depots at a
discount of thirty-five percent (35%) of the list price.
(j) Planned Maintenance Parts List. The list of spare parts and special
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tools dedicated to Planned Maintenance shall appear on a separate list in
Attachment E and shall comply with paragraph (k).
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(k) Transportation. All spare parts and service tools listed in Attachment
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E will be shipped using Buyer's approved carriers with transportation charges
collect, except that Seller will prepay and ▇▇▇▇ Buyer for UPS delivery. Seller
agrees to list authorized prepaid transportation charges as a separate line item
on the invoice.
12. REPAIRS/GENERAL
(a) Repair Method. Seller agrees to provide repaired spare parts which
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meet the original specifications listed on Attachment ___. Any spare part that
the customer will view shall be repaired to like-new condition.
(b) Test/Repair Method. The method for testing and repairing shall be
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provided by the Seller for review by the Buyer. Changes or additions shall be
made after mutual agreement by both Buyer and Seller.
(c) Seller's Packaging. Seller agrees that the shipping container on
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repairable parts shall be sturdy enough to withstand several cross-shipments
(i.e., the destination of the refurbished part will be designed and communicated
to Seller by Buyer's personnel. The defective part will be returned in the same
package).
(i) Electro Static Discharge (ESD) packaging protection will
be provided for all static sensitive devices, assemblies and subassemblies
ordered as spare parts by Buyer.
(ii) All devices, assemblies and subassemblies provided or
purchased by Buyer will be adequate/packaged to prevent damage during shipment.
(d) Repair History. Before Seller begins repairs, Seller shall consult the
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repair history for installation date and warranty coverage information. This is
to help highlight any repeat failures and identify repair billing.
13. QUALITY/SAFETY
(a) Reporting. Seller will furnish to Buyer any reports of quality and
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safety issues related to Seller's Product(s). A report stating the Seller's
course of action should be returned within one (1) week of notification. It is
expected that the Seller will keep Buyer's Product(s) Manager involved
throughout the resolution process.
(b) Installed Base Upgrades. The cost, including materials and
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documentation,
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to upgrade a Product due to a quality or safety problem shall be provided by
Buyer at no charge to Seller if such Product was shipped on or prior to the date
of this Agreement and by Seller at no charge to Buyer if shipped thereafter.
(c) Purchased Material Quality Requirements. Seller acknowledges that
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compliance with Attachment B, Purchase Material Quality Requirements (PMQR),
procedure 100.003MFG, is a requirement of this Agreement. Said PMQR serves to
ensure that acceptable quality processes are documented and enforced as part of
Seller's standard operating procedure in the absence of Seller's formal
certification to EN46001 standards. Seller agrees that Buyer formally audit
Seller's facility for compliance to PMQR 100.003MFG until Seller has been
formally registered and certified as compliant with EN46001 standards.
(d) Service Product Quality.
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(i) The quality goal for all Products at the time of
installation at a customer location is zero Dead On Arrival parts ("DOA"). This
number is calculated monthly by Buyer for each Product as the number of Code 20
parts minus the number of No Defect Found ("NDF") parts. A Code 20 part is one
that fails within 7 calendar days after installation at a customer location. An
NDF part is a Code 20 part whose defect is attributable to a cause for which the
Seller is not responsible or whose defect the Seller is unable to duplicate.
Seller will report all repairs (whether NDF or not) to Buyer in a manner
satisfactory to Buyer's needs.
(ii) If the number of DOAs exceeds zero for a single Product
type, Seller will at Buyer's request submit a corrective action plan which at a
minimum contains analysis to the first root cause(s) and specific actions taken
or planned to correct the problem.
(e) Delivery.
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(i) The delivery goal for all Products is 100% on-time and
complete delivery. This rate will be calculated periodically by Buyer as the
number of deliveries during a rolling 3 month period which arrive at their
destination point within 7 calendar days prior to the schedule delivery date
divided by the total number of deliveries during the same period.
(ii) If on-time delivery falls below 98% and the trend is
negative, Buyer and Seller will hold discussions to develop a corrective action
plan.
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(f) Field Modification Instruction ("FMI") Process. Seller agrees that
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compliance with Buyer's FMI process is a requirement of this Agreement. Seller
will make every reasonable effort to comply with Buyer's FMI process. Seller
agrees to develop and submit to Buyer for Buyer's approval its FMI process
compliance implementation plan no later than six (6) months after the date
hereof.
(g) Effect. Nothing in this Section will prevent Buyer from exercising any
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other rights that may be available under this Agreement or applicable law.
14. NON-WARRANTY SERVICE SUPPORT
(a) Coordination. All Product service support shall be coordinated through
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Buyer for all of Buyer's customers. At the request of Buyer, Seller shall
provide service support to non-warranty Products pursuant to the terms of this
Section.
(b) Pricing. Prices for various non-warranty service options are shown in
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Attachment I.
(c) Purchaser's Service Agreements. Seller shall perform, in the capacity
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of a subcontractor of Purchaser, all services to be provided by Purchaser to its
customers pursuant to the terms of the service contracts set forth on Attachment
J hereto, at a cost to Purchaser to be determined by mutual agreement between
Seller and Purchaser, which cost shall in no event exceed the amount to be
received by Purchaser from its customers pursuant to the terms of the relevant
service contract in consideration for such services. Furthermore, Seller shall
also perform such services in the future at the Purchaser's request, pursuant to
service contracts that may be entered into by Purchaser in the future, on
commercially reasonable terms and conditions to be negotiated by the Seller and
the Purchaser.
15. REGULATORY COMPLIANCE
(a) General. Seller will comply with all applicable laws and regulations
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in furnishing Products or other items listed in a Purchase Order. These laws may
include U.S. medical device laws, labor laws, employment opportunity laws,
environmental laws and product safety laws, as well as applicable laws of any
other country to which Buyer has informed Seller the Products may be delivered.
See the "Governmental Compliance" section of the Standard Conditions of Purchase
in Attachment F.
(b) Product Certification. Seller will maintain at its expense U.L., IEC,
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CSA
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and MHW or equivalent listings acceptable to Buyer for all Products. Seller will
also ensure that its Products comply with applicable electro-magnetic product
standards from time to time in effect: current standards are listed in
Attachment H.
(c) Product Certification Schedule. Seller and Buyer agree that in the
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event that a regulatory certification is required, the Seller and the Buyer
shall work together to agree upon a reasonable schedule for the receipt thereof,
which Seller will then be required to meet.
(d) Certification Notification. Seller will provide Buyer with the
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certifying agencies' formal notifications of certification of Buyer's Product.
(e) Supplier Certification. Seller will notify Buyer in writing if Seller
----------------------
is qualified as a small business, small disadvantaged business or women-owned
small business as defined in 48 CFR 52.219-8 and 52.219-13.
(f) Small Business Plan. If Seller qualifies as a small business, small
-------------------
disadvantaged business or women-owned small business as defined in 48 CFR
52.219-8 and 52.219-13. Buyer's purchases under this Agreement exceed $500,000
in any 12 month period, Seller will adopt and implement a small business and
small disadvantaged business subcontracting plan which complies with 48 CFR
52.219-9.
(g) Buyer Assistance. If requested by Seller, Buyer will share with Seller
----------------
its experience and insights with regard to obtaining regulatory certifications.
Buyer is not obliged to incur any out-of-pocket expense in connection with any
such assistance, and will have no liability in connection therewith, and no such
assistance will derogate from Seller's obligations hereunder.
16. INSTALLATION OF PRODUCT
(a) Installation. Buyer will install, calibrate, and perform customer
------------
performance testing of Products. An installation is considered complete when
Buyer receives the customer's written acceptance of performance results.
(b) Installation Equipment. Seller agrees to provide all necessary tools
----------------------
and equipment for Buyer to completely install Products at no additional charge
to Buyer.
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EXHIBIT E
17. NEW PRODUCTS
(a) First Right of Review. Seller agrees that during the term of this
---------------------
Agreement. Seller will offer to Buyer, in writing, the right to market and sell
any new PET Product, which is developed during the term of this Agreement, no
later than Seller offers such PET Product to a third party or Seller begins
marketing and selling such PET Product itself. The right granted to Buyer
pursuant to the preceding sentence shall not otherwise limit the right of Seller
to market and sell any new PET Product developed by Seller during the term of
this Agreement. In addition, during the term of this Agreement, upon request by
Buyer, Seller shall inform Buyer of the development of any new PET Products,
provided, however, that Seller may require Buyer to maintain the confidentiality
of information regarding such new PET Products.
(b) Response Time. Buyer will have three (3) months from the date of
-------------
receipt of Seller's written offer to respond in writing to Seller's offer, and
six (6) months to develop a sourcing agreement.
18. INDEMNITY
Seller shall handle all claims and defend any suit or proceeding brought
against Buyer or its customers so far as based on any claim that the manufacture
or furnishing of the Product under this Agreement, or the use or sale of the
Product constitutes infringement of any U.S. patent or copyright or foreign
counterparts of U.S. patents or copyrights; if notified promptly in writing and
given information, assistance and exclusive control of defense of such claim,
suit or proceeding (all at Seller's expense), and Seller shall indemnify and
save Buyer and its customers harmless from and against any actual expense or
liability arising out of such claim, suit or proceeding; provided, that, the
foregoing shall not apply to the extent that Buyer may be obligated to indemnify
Seller with respect to such infringement pursuant to the Acquisition Agreement.
Seller shall indemnify and hold harmless Buyer from and against any actual
expense or liability arising out of a claim, suit or proceeding against Buyer
for product liability associated with Products purchased by Buyer pursuant
hereto.
19. CHANGES IN PURCHASE SPECIFICATIONS
(a) Process. Buyer or Seller may propose reasonable changes in Attachment
-------
A by submitting proposed changes to the other party's contract manager on the
PVR or SCN form appended to Attachment A. If Buyer is proposing the changes, it
will
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EXHIBIT E
indentify those changes which it deems mandatory to make the Product(s) suitable
for its use and Seller will respond in writing to Buyer's contract manager
within 30 calendar days with the following information:
(i) Lead time required to implement changes.
(ii) Impact of proposed changes on pricing of Products. Exclusive
Parts, parts and tools.
(iii) Impact of proposed changes on raw material, work in process and
finished goods.
Within no more than 10 calendar days after Buyer receives Seller's response to
Buyer's proposed changes or receives the changes proposed by Seller, the parties
will begin negotiations to agree on the changes to Attachment A and any related
changes to price and delivery schedules.
(b) Buyer Approval. Seller may not make any engineering change to a
--------------
Product sold to Buyer affecting form, fit, function, reliability,
serviceability, performance, functional interchangeability or interface
capability without obtaining Buyer's written approval at least 120 (or 30 with
respect to changes required for safety or regulatory reasons) calendar days
before the change is implemented, which approval shall not be unreasonably
withheld or delayed.
(c) Cost Reduction. If Buyer or Seller proposes a change which reduces
--------------
Seller's costs of providing an item to Buyer. Seller will pass on the cost
reduction to Buyer for all items shipped to Buyer after the change is
implemented.
20. ELECTRONIC DATA INTERCHANGE
(a) Access. Buyer may in its sole discretion permit, but may not require,
------
Seller to have on-line access to designated computer systems of Buyer in order
to facilitate Seller's ability to perform its obligations under this Agreement.
If such access is granted, Seller will give Buyer the name of Seller's employees
who will have access to Buyer's computer systems, and Buyer will provide a
separate user indentification code for each person. If such access is desired by
Seller and granted by Buyer, Seller will at its own expense provide and
maintain any hardware, telecommunications services and software not furnished by
Buyer which are needed to communicate reliably with Buyer's computer systems.
Buyer may terminate Seller's
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EXHIBIT E
access to Buyer's computer network at any time.
(b) Use Restrictions. Seller will ensure that (i) computer access is
----------------
limited to its employees with a legitimate business need, and (ii) its employees
with access agree to keep any information so obtained strictly confidential, to
use such information only to perform Seller's contract obligations to Buyer, and
to cease accessing Buyer's computer systems when no longer required to perform
work under this Agreement. Seller will promptly notify Buyer if it becomes aware
of any unauthorized access to Buyer's computer systems or unauthorized use of
the information on the systems.
(c) Legal Effect. Any document properly transmitted by computer access
------------
will be considered a writing in connection with this Agreement. Electronic
documents will be considered signed by a party if they contain an agreed upon
electronic indentification symbol or code. Electronic documents will be deemed
received by a party when accessible by the recipient on the computer system.
21. MANUFACTURING ASSISTANCE
Should Seller notify Buyer that Seller is unable to supply Buyer with
Products or Exclusive Parts pursuant to this Agreement, Buyer agrees to inform
Seller of the purchase orders that exist as of the date of notification. Seller
agrees to use its commercially reasonable efforts to assist Buyer in the
fulfillment of its obligations under such purchase orders, until such time as
Buyer is able to procure an acceptable alternative source for such Products or
Exclusive Parts. Buyer agrees to use its commercially reasonable efforts to
procure an acceptable alternative source as soon as possible after Buyer's
receipt of notice of such inability to perform.
22. TERMINATION
(a) Market Conditions. Buyer may cancel any open purchase order release in
-----------------
whole or in part upon 60 calendar days written notice to Seller, if Buyer
determines that its market for Products does not support the quantities it has
ordered from Seller. If such cancellation occurs, the parties will negotiate a
settlement of any costs relating to work in process, inventory or other
commitments which Seller made to fill the canceled order. Buyer's maximum
liability in any event will not exceed its material commitments stated in
Attachment C for the cancelled items. Furthermore, Buyer may terminate this
Agreement without liability (i) if Seller becomes insolvent or makes any
assignment for the benefit of creditors or becomes subject to any federal or
state receivership, reorganization, liquidation or bankruptcy case or proceeding
(voluntary or
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EXHIBIT E
involuntary), but if involuntary, only if such case or proceeding is not
dismissed within ninety (90) days after the date instituted, or (ii) if there is
a change of control of Seller by merger or other operation of law or otherwise.
(b) Seller's Breach. If Seller materially breaches this Agreement, Buyer
---------------
may cancel any open purchase order release in whole or in part upon written
notice to Seller. If Seller fails to correct the breach within 30 calendar days
after receiving notice, Buyer may then terminate this Agreement without
liability except for the price of any items previously delivered and accepted by
Buyer. A material breach includes without limitation failure to comply with
Attachments A and B or delivery schedules.
(c) Buyer's Breach. If Buyer materially breaches this Agreement, Seller
--------------
may cancel any open purchase order release in whole or in part upon written
notice to Buyer. If Buyer fails to correct the breach within 30 calendar days
after receiving notice, Seller may then terminate this Agreement (other than
Section 1(d), which shall survive for the period stated therein) without
liability except for the price of any items previously delivered and accepted by
Seller. A material breach includes, without limitation, failure to comply with
Attachments D and E, including payment terms.
(d) Survival of Termination. Seller's obligations set forth in Section
-----------------------
[1)(a)] shall survive termination of this Agreement; provided, however, that
such obligations shall not survive if this Agreement is terminated pursuant to
Section 22(c).
23. CONTRACT MANAGER/NOTICES
(a) Managers. Each party will appoint a contract manager as the point of
--------
contact for all matters relating to performance of this Agreement.
(b) Addresses. Any notice required under this Agreement will be sent by
---------
fax or first-class mail to:
Buyer GE Medical Systems
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:____________ .W-______
Fax ▇▇▇-▇▇▇-▇▇▇▇
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EXHIBIT E
Seller ______________________
______________________
______________________
Attention: ___________
Fax:__________________
24. DISPUTE RESOLUTION
(a) Mediation. If a dispute arises between the parties which cannot be
---------
resolved by negotiation, Buyer and Seller agree to participate in at least four
hours of mediation before pursuing any other legal remedies such as commencing
litigation. The mediation shall be conducted by the New York office of United
States Arbitration & Mediation. Inc. or another mutually acceptable service with
the costs of the mediator equally split by the parties. Mediation involves each
side of a dispute sitting down with an impartial person to attempt to reach a
voluntary settlement, with no formal court procedures or rules of evidence and
with the mediator having no power to render a binding decision or force an
agreement on the parties.
(b) Arbitration Proceedings. If the matter has not been resolved pursuant
-----------------------
to the foregoing procedures, the matter shall be referred to arbitration
conducted in accordance with the provisions of the Federal Arbitration Act (9
U.S.C. (S)(S) 1-16), and in accordance with the Center for Public Resources,
Inc.'s Rules (the "Rules of Arbitration") for Non-Administered Arbitration of
Business Disputes, by a single arbitrator selected in accordance with such Rules
of Arbitration. The arbitrators to be selected under this paragraph shall,
unless the parties mutually agree otherwise, be a person: (i) who meet the
qualification set forth in Rule 7 of the Rules of Arbitration: and (ii) who has
past experience in settling complex litigation involving claims relating to
matters similar to those set forth in this Agreement. Any discovery that may be
permitted will be limited to (i) 60 days, (ii) single depositions of no more
than three individuals per side who are directly involved and (iii) a single,
reasonable request for directly relevant documents.
(c) Rejection: Court Proceedings. At any time within 30 days after a final
----------------------------
resolution of a dispute through arbitration as provided above, either party (the
"Rejecting Party") may, by notice to the other, reject the decision of the
arbitrator. If neither party rejects the arbitral decision within such 30 day
period, it shall become valid, binding, enforceable and irrevocable, except as
provided by law. If the arbitral decision is rejected, it shall have no force or
effect, except as provided below, and either party may commence an action to
resolve such dispute in the Commercial
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EXHIBIT E
Division (or, if recourse to such division is not available for any reason, in
the appropriate division) of the New York State court in New York County (the
"Court"). The parties submit to the exclusive jurisdiction of the Court for this
purpose, agree not to pursue trial of a dispute in any other court, waive any
right to trial by jury, and stipulate that discovery shall be limited, to the
extent permitted by the Court, to an additional round of discovery as described
above in paragraph (b). Evidence obtained in the arbitration proceeding,
including the transcript thereof, will be admissible as evidence in the Court,
but no evidence that indicates the result of the arbitration shall be admissible
in the Court, and no delay occasioned by the arbitration proceedings will be
used to the prejudice of any in Court proceedings. If the ultimate resolution of
the dispute in the Court and any appeal therefrom (an "Ultimate Resolution") is
not materially more favorable, taken as a whole, to the Rejecting Party than the
arbitral decision, then the Rejecting Party shall, within 3 days from the date
of such Ultimate Resolution, reimburse the other party for all of its out-of-
pocket costs and attorneys fees for the arbitration, the Court proceeding and
any appeal therefrom. If the Ultimate Resolution is materially more favorable to
the Rejecting Party, then each party will bear its own costs and attorney's
fees, subject to any allocation by the Court or appellate court, and any
allocation of costs (but not the decision on the merits) in the arbitral
decision will be given effect. For purposes of this paragraph (c), an Ultimate
Resolution which involves solely the grant of damages, costs and/or attorney's
fees shall not be deemed materially more favorable to the Rejecting Party
unless, as applicable (i) the net aggregate amount of such damages, costs and/or
attorney's fees awarded to the Rejecting Party in the Ultimate Resolution
exceeds 110% of the net aggregate amount of damages, costs and/or attorney's
fees awarded to the Rejecting Party in the arbitral decision, or (ii) the net
aggregate amount of such damages, costs and/or attorneys' fees assessed against
the Rejecting Party in the Ultimate Resolution is less than 85% of the net
aggregate amount damages, costs and/or attorney's fees assessed against the
Rejecting Party in the arbitral proceeding.
(d) Place of Arbitration. Any arbitration proceedings hereunder shall be
--------------------
conducted in New York City or at such other location as the parties may agree.
(e) Judgments. Any arbitration award hereunder shall be final and binding
----------
upon the parties, and judgement may be entered thereon, upon the application of
either party, by any court having jurisdiction.
(f) Expenses. Each party shall be entitled to be reimbursed by the other
--------
party for costs and expenses incurred in connection with commencing any
action under this Section, including reasonable attorneys' fees and arbitrators'
fees, if and to the extent
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EXHIBIT E
determined by the arbitrator or arbitrators arbitrating any such action.
(g) Equitable Remedies. Notwithstanding anything else in this Section to
------------------
the contrary, Buyer and Seller shall be entitled to seek any equitable remedies
available under applicable law from any court of competent jurisdiction, and the
order or judgment of any such court shall be binding in any arbitration
proceeding pursuant to this Section.
(h) Damages. No party shall seek, and no arbitrator or Court shall
-------
be authorized to award, any punitive, exemplary, statutorily-enhanced or other
similar damages in excess of compensatory damages relating to any matter under,
arising out of, in connection with or relating to this Agreement in the
arbitration or Court proceedings set forth herein or in any other forum. The
parties intend that this agreement with regard to dispute resolution be valid,
binding, enforceable and irrevocable.
25. GENERAL MATTERS
(a) The relationship between Buyer and Seller is that of independent
contractors. Neither party will do anything which has the effect of creating an
obligation by the other party to a third party. If one party breaches this
commitment, it indemnifies the other party for all damages and costs the injured
party incurs which arise from the breach.
(b) Seller and Buyer will consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement and will not issue any such press release or make any such public
statement before such consultation, except as may be required by law or any
listing with a national securities exchange.
(c) This Agreement becomes effective when it is signed by an authorized
representative of each party and will be governed by New York law. It may later
be modified only by a writing signed by the contract managers for both parties.
POSITRON CORPORATION GENERAL ELECTRIC COMPANY
By ___________________________ By ____________________
Title ________________________ Title _________________
Date _________________________ Date __________________
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