MANUFACTURING AGREEMENT
This Manufacturing Agreement ("Agreement") is made and entered into this
28th day of September, 2005, by and between R&D Products, LLC., a Utah Limited
Liability Company, with a place of business at 00 Xxxx 0000 Xxxxx Xx. 000,
Xxxxxxx, Xxxx 00000 ("R&D"), and Flexpoint Sensor Systems, Inc., a Delaware
corporation doing business in Utah with a place of business at 000 Xxxx 00000
Xxxxx, Xxxxxx, Xxxx 00000, ("Flexpoint"). R&D has developed a mattress having
multiple air xxxxxxxx ("Mattress") that utilizes Bend Sensors ("Sensors").
Flexpoint agrees to manufacture Sensors for R&D in accordance with the
following terms and conditions:
Article 1. Manufacture.
1.1 Quantity. Subject to the terms and conditions of this Agreement, R&D
hereby agrees to purchase from Flexpoint and Flexpoint hereby agrees to
manufacture and make available to R&D not less than the quantity and size of
Sensors necessary for R&D to manufacture the Mattresses. The quantity, size
and unit price for the Sensors required are specified in Exhibit "A" attached
hereto and incorporated herein. The Agreement and pricing schedule may be
modified to include pricing for connectors, hardware and software as agreed to
from time to time by the Parties to this Agreement.
Article 2. Inspection and Quality Controls.
2.1 Standard of Manufacture. The Sensors shall be manufactured by Flexpoint
in conformity with the best standard manufacturing practices all in accordance
with the plans and specifications as provided by R&D.
2.2 Quality Control. R&D may dispatch at its own expense, quality control
engineers or equivalent personnel to work with the quality control engineers
of Flexpoint for purposes of inspection of the initial phase of production by
Flexpoint of the Sensors. Such personnel of R&D shall have reasonable access
during normal business hours to portions of Flexpoint's plant and facilities
where the Sensors are manufactured, and shall have the right to suggest
quality control remedies with respect to the material and workmanship of the
Sensors. In addition, R&D shall have the right, during the term of this
Agreement, to send personnel at its own cost and expense to inspect the plant
and facilities of Flexpoint and to make recommendations to Flexpoint regarding
quality control of the Sensors which are being manufactured by Flexpoint,
which recommendations will not be unreasonably rejected by Flexpoint. Each
shipment of Sensors by Flexpoint to R&D will include accurate quality control
reports in the form agreed to by the parties.
Article 3. Purchase.
3.1 Purchase Price. The unit prices at which the Sensors shall be sold by
Flexpoint to R&D are listed in Exhibit "A", attached hereto and incorporated
by this reference. One year from the day and year first written above, and
each year thereafter, the parties hereto agree to adjust the prices in Exhibit
A to reflect the change in the industry standard price of a buyer similarly
situated to Flexpoint of Polyimide.
3.2 Orders. Orders from R&D shall be placed by delivery of a purchase order
to Flexpoint. Delivery dates for Sensors so ordered shall be determined by
mutual agreement. The foregoing method shall be the only method by which R&D
commits to purchase Sensors from Flexpoint and Flexpoint commits to sell
Sensors to R&D. R&D agrees to assist Flexpoint in its production planning by
providing Flexpoint each calendar quarter with a forecast of R&D's anticipated
orders during the next six (6) months. R&D's purchase from Flexpoint shall be
under the Terms and Conditions of Flexpoint's Purchase Orders, unless
otherwise agreed in writing, a copy of the Flexpoint's Terms and Conditions of
Sale is attached hereto as Exhibit "B" (the "T&C") and is incorporated herein
by this reference. In the event there is a conflict between any of the terms
of this Agreement and the terms of the T&C, the terms of this Agreement shall
prevail.
3.3 Shipping. Sensors shall be packed in accordance with R&D's packing
instructions and in accordance with R&D's specifications, which shall be
mutually agreed by R&D and Flexpoint from time to time. Prices for the
Sensors include the cost of packing. Each delivery of the Sensors to R&D must
include a packing list that contains at least R&D's Order number, the quantity
of Sensors shipped and the date of shipment and the results of any testing
performed on the Sensors pursuant to Section 3.4 of this Agreement.
(A) All purchases shall be FOB Flexpoint's Manufacturing Facility.
Risk of loss shall pass to R&D upon shipping of the Sensors by Flexpoint.
3.4 Inspection of Shipments. Within ten (10) days of receipt by R&D of any
delivery, R&D shall inspect the same and immediately notify Flexpoint in
writing of any breakage, tampering, shortage or other discrepancy. R&D shall
retain any broken or tampered products in their original packaging for
inspection by Flexpoint or its insurer.
Article 4. Payment.
4.1 Terms. Payment terms are net thirty (30) days from date of receiving
any given shipment and payment shall be made at Flexpoint's place of business.
Each invoice submitted by Flexpoint shall reference R&D's purchase order
number.
4.2 Independent Transactions. Each shipment shall be treated as a separate
transaction, but in the event of any default of R&D, Flexpoint may decline to
make further shipments without in any way affecting its rights hereunder. If,
despite any default by R&D, Flexpoint elects to continue to make shipments,
Flexpoint's action shall not constitute a waiver of any default by R&D or in
any way affect Flexpoint's legal remedies for any such default.
Article 5. Warranty.
5.1 Warranty. Flexpoint warrants each Sensor against manufacturing defects
for one (1) year from the receipt of the Sensor by R&D. Flexpoint shall,
credit the purchase price on future orders.
Article 6. Confidentiality.
6.1 Proprietary Information. All proprietary information such as know-how,
technical documentation, formularies, trade secrets and other information
obtained by Flexpoint from R&D and by R&D from Flexpoint regarding the
manufacture, software, hardware or any other component of the Mattresses
and/or the Sensors ("Confidential Information") hereunder shall be kept
confidential, and all such proprietary information and other information so
obtained by Flexpoint or R&D shall not be used otherwise than as specified in
this Agreement. Flexpoint and R&D shall not disclose to any person or entity
other than its own employees and shall develop all reasonable means of
preventing its own employees from so disclosing to others such proprietary
information and other information obtained from the other hereunder.
6.2 Guarantee of Confidentiality. The parties hereto mutually agree to
protect Confidential Information of the other party. Confidential Information
may be disclosed by either party to this Agreement only to those persons
within each party's respective organization who "need to know" such
information in order to perform their responsibilities under this Agreement on
behalf of the parties to this Agreement. Both Flexpoint and R&D will cause
each of its employees to: (a) keep in confidence all Confidential Information;
(b) not use any Confidential Information for any purpose other than the
performance of this Agreement; (c) not disclose any Confidential Information
to any third party without prior written consent of the party which is the
owner of said Confidential Information; and (d) upon request, return all of
Confidential Information, regardless of form and including, without
limitation, all copies, analyses, derivations and compilations of Confidential
Information to the party which owns the Confidential Information within
fifteen (15) days after the termination of this Agreement for any reason and
both parties shall provide verification that all Confidential Information has
been returned to the other.
6.3 Exception. The restrictions and obligations of Sections 6.1 and 6.2
above as to use and disclosure of Confidential Information and other
proprietary information will not be applicable to any information:
(A) Which is already known to the Receiving Party prior to receipt of
the information from the Disclosing Party so long as the Receiving Party has
clear and convincing evidence thereof;
(B) Which is or becomes available from another source (without the use
of proprietary information);
(C) Which is independently developed by the receiving party (without
the use of proprietary information); or
(D) Which is or becomes available to the public through no breach of
this Agreement by the receiving party.
Article 7. Non Competition.
7.1 Covenant Not to Compete. During the term of this Agreement and for
whatever period of time R&D is manufacturing the Mattress or other products
which utilize the Sensors, Flexpoint shall not compete directly or indirectly
with R&D anywhere in the world or in such smaller territory as may be
determined by a court or tribunal of competent jurisdiction, by designing,
making, selling, offering to sell the Mattress, any component thereof, or any
item useful to manufacturer the Mattresses; or any component thereof, or any
other item that is competitive therewith in the application of Flexpoint's
technology for the uses contemplated under this Agreement, or any system that
uses or employs any of R&D's Confidential Information.
7.2 Covenant Not to Compete. During the term of this Agreement R&D shall
not compete directly or indirectly with Flexpoint, nor attempt to circumvent
this Agreement by contracting with any other party to design or produce,
anywhere in the world or in such smaller territory as may be determined by a
court or tribunal of competent jurisdiction, by designing, making, selling,
offering to sell the Sensors, any component thereof, or any item useful to
manufacturer the Mattresses; or any component thereof, including Sensors,
software or hardware, or any other item that is competitive therewith in the
application of Flexpoint's technology for the uses contemplated under this
Agreement, or any system that uses or employs any of Flexpoint's Confidential
Information.
Article 8. Proprietary Rights.
8.1 Intellectual Property. All inventions, technical information and
proprietary rights conceived or reduced to practice by any one or more
employees, agents, vendors, consultants or representatives of each party prior
to this Agreement will remain the property of that party. These inventions,
technical information and proprietary rights conceived or reduced to practice
by any one or more employees, agents, vendors, consultants or representatives
of each party in conjunction with an employee, agent, vendor, consultant or
representative of Flexpoint shall be the exclusive property of that party.
(A) All R&D made inventions, technical information and proprietary
rights which are conceived pursuant to this Agreement will remain the property
of R&D.
(B) Each party shall promptly disclose to the other party all inventions
and technical information which are conceived or developed pursuant to this
Agreement and shall add them as an addition or amendment to Exhibit "A".
(C) New Flexpoint-made inventions, technical information and proprietary
rights which are conceived in relation to Flexpoint's performance under this
Agreement and are not based upon proprietary information of R&D, will remain
the property of Flexpoint. However, Flexpoint grants R&D a royalty-free,
irrevocable, non-exclusive worldwide license to make, use and sell to the
extent said proprietary information is necessary to manufacture any R&D
product for the term of this Agreement and any extensions thereto.
(D) Flexpoint shall promptly disclose to R&D all Flexpoint-made
inventions and technical information which are conceived or developed pursuant
to this Agreement and shall add them as an addition or amendment to Exhibit
"A".
(E) All jointly made inventions, technical information, Confidential
Information and proprietary rights which are conceived pursuant to this
Agreement and are not based upon R&D's proprietary information nor Flexpoint's
proprietary information, will become the joint property of Flexpoint and R&D,
and both parties shall determine the use of any such joint property.
Article 9. Term and Termination.
9.1 Term. The term of this Agreement shall be a period of five years from
the day and year first written above ("Effective Date"). This Agreement will
be renewed automatically for one or more successive one-year terms, unless R&D
or Flexpoint gives its written notice of non-renewal to the other party not
less than ninety (90) days prior to the expiration of the then current term.
9.2 Breach of Agreement. In the event of material breach of this Agreement,
R&D or Flexpoint, as the case may be, may notify the defaulting party of the
breach and give notice in writing of the non-defaulting party's intention to
terminate this Agreement. If the non-defaulting party is not, within thirty
(30) days from and after receipt of written notice of default, provided with a
plan of corrective action and/or if substantial efforts to cure the default in
accordance with the plan are not made within an additional thirty, (30) day
curative period, and such breach is not substantially corrected as provided
above, the non-defaulting party may terminate this Agreement by sending
written notice of such termination to the other party, whereupon this
Agreement shall terminate. In the event the non-defaulting party elects to
terminate this Agreement, the notice of termination must be sent to the
defaulting party within fifteen (15) days after the expiration of the ninety
(90) day period mentioned above.
9.3 Dissolution and Assignment. In the event either party (a) ceases to
function as a going concern, (b) makes an assignment for the benefit of
creditors, (c) becomes the subject of any proceeding under any applicable
bankruptcy, receivership, insolvency or similar laws instituted by or against
such party, which proceeding is not dismissed as to such party within
forty-five (45) days after it has been instituted, or (d) liquidates,
dissolves, sells substantially all of its assets, merges or consolidates, and
R&D or Flexpoint, as appropriate, is not the surviving corporation, the other
party shall have the right to terminate this Agreement by giving the other
party written notice, whereupon this Agreement shall immediately terminate and
all unused Sensors and equipment shall be returned to Flexpoint.
9.4 Termination. Any termination of this Agreement shall not relieve either
party of its obligations as to any surviving obligations of the Parties,
including but not limited to Articles 5, 6, 7 and 8, hereof or of any
obligations previously incurred pursuant to this Agreement.
Article 10. General Provisions.
10.1 Force Majeur. If the performance of this Agreement or any obligation
hereunder, is prevented, restricted or interfered with by reason of fire,
flood, earthquake, explosion or other casualty or accident; or labor disputes;
supplies or power; war or other violence; any law, order, proclamation,
regulation, ordinance, demand or requirement of any government agency; or any
other act or condition whatsoever beyond the reasonable control of the
affected party, the party so affected, upon giving prompt notice to the other
party, shall be excused from such performance to the extent of such
prevention, restriction or interference; provided, however, that the party so
affected shall take all reasonable steps to avoid or remove such causes of
nonperformance and shall resume performance hereunder with dispatch whenever
such causes are removed. Each party shall promptly notify the other in writing
within fifteen (15) days of the existence of any excusable non-performance or
any delays and the anticipated duration thereof.
10.2 Indemnification. Flexpoint shall indemnify and hold R&D and all of its
members, mutual managers, employees, agents and representatives, separately
and together, harmless for any and all claims, demands, loss, repairs,
recalls, defects, causes of action, obligations, damages and liabilities of
any kind or nature whatsoever, whether known or unknown, suspected or claimed
arising directly or indirectly out of the manufacturing of the Sensor. These
indemnity obligations of Flexpoint shall survive termination of this Contract.
10.3 Indemnification. R&D shall indemnify and hold Flexpoint and all of its
members, mutual managers, employees, agents and representatives, separately
and together, harmless for any and all claims, demands, loss, repairs,
recalls, defects, causes of action, obligations, damages and liabilities of
any kind or nature whatsoever, whether known or unknown, suspected or claimed
arising directly or indirectly out of the manufacturing of the Sensor. These
indemnity obligations of R&D shall survive termination of this Contract.
10.4 Survival. In the event any one or more of the provisions of this
Agreement is held to be unenforceable under the law of any country, state or
organization, (a) such unenforceability shall not effect any other provision
of this Agreement; (b) this Agreement shall be construed as if said
unenforceable provisions had not been contained therein; and (c) the parties
shall negotiate in good faith to replace the unenforceable provisions by such
enforceable provisions as has the effect nearest to that of the provisions
being replaced.
10.5 Non Waiver. No delay on the part of either party in exercising any of
its respective rights hereunder or the failure to exercise the same nor the
acquiescence in or waiver of a breach of any term, provision or condition of
this Agreement shall be construed to operate as a waiver of any such rights or
acquiescence thereto, except for the specific instance of delay, waiver or
acquiescence.
10.6 Assignment. This Agreement and the rights and obligations hereunder may
not be assigned by either party without the prior written consent of the other
party.
10.7 Agency. This Agreement shall not constitute a partnership agreement and
Flexpoint is not the agent of R&D and R&D is not the agent of Flexpoint.
Neither party shall have the actual or apparent right, or express or implied
authority, to assume, create or incur any liability or obligation on behalf of
the other.
10.8 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if signed by the
respective persons giving them or by their attorneys and delivered by hand, or
deposited in the mail, certified, return receipt requested, properly addressed
and postage prepaid, as follows:
If to R&D: If to Flexpoint:
R&D Products, LLC. Flexpoint Sensor Systems, Inc
Attn. Xxxxx X. XxXxxxx Attn. Xxxxx X. Xxxxx
00 Xxxx 0000 Xxxxx #000 000 Xxxx 00000 Xxxxx
Xxxxxxx, Xxxx 00000 Xxxxxx, XX 00000
With copy to:
Xxxxx X. Xxxxxxx
Xxxxxxx Xxxxxxxxx, PLC
0000 Xxxxx Xxxxxxxx Xxxxx #000
Xxxx Xxxx Xxxx, Xxxx 00000
10.9 Entire Agreement. This instrument and the Service Agreement dated
August 31, 2004 (attached hereto as Exhibit "C", any conflict between this
Agreement and the Service Agreement, the terms and conditions of this
Agreement shall prevail) that is signed by the Parties constitute the entire
agreement between the parties with respect to the transactions contemplated
herein and supersedes all previous written or oral negotiations, commitments
and writings and cannot be altered or otherwise amended except pursuant to an
instrument in writing signed by each of the parties hereto.
10.10 Governing Law. The interpretation and construction of this Agreement,
and all matters relating thereto, shall be governed by the laws of the State
of Utah without regard to Utah's Conflict of Law laws. Any judicial
proceeding brought to enforce this Agreement, or any matter related thereto,
shall be brought in the appropriate courts for Salt Lake County, State of Utah
or the appropriate United States District Court in the State of Utah. By
execution of this Agreement, each party accepts and agrees to the exclusive
jurisdiction of the aforesaid courts and irrevocably agrees to be bound by any
judgment rendered thereby in connection with this Agreement.
10.11 Authority. Each person who signs this Agreement warrants that he/she
does so with the full and legal authority to execute this Agreement on behalf
of the respective parties of this Agreement.
10.12 Attorney's fees. In the event that any action or proceeding is brought
by any party against any other party to enforce the provisions of this
Agreement, the prevailing party shall be entitled to recover its costs and
reasonable attorney fees, whether such sums are expended with or without suit,
at trial or on appeal.
10.13 Construction. This Agreement shall not be construed against the party
preparing it, and shall be construed without regard to the identity of the
person who drafted it or the party who caused it to be drafted and shall be
construed as if all parties had jointly prepared this Agreement and it shall
be deemed their joint work product, and each and every provision of this
Agreement shall be construed as though all the parties hereto participated
equally in the drafting hereof; and any uncertainty or ambiguity shall not be
interpreted against any one party. As a result of the foregoing, any rule of
construction that a document is to be construed against the drafting party
shall not be applicable.
10.14 Waiver. R&D has asked Xxxxxxx Xxxxxxxxx, PLC, Xxxxx X. Xxxxxxx to
provide attorney services in connection with the preparation of this
Agreement. The Parties acknowledge that Xxxxx X. Xxxxxxx has represented all
of the parties in prior matters and may be representing the parties in current
matters, unrelated to this Agreement.
(A) The Parties acknowledge that Xxxxx X. Xxxxxxx is representing R & D
in the preparation of this Agreement and that the Flexpoint has been advised
to seek independent representation by counsel of its own choice and that the
Flexpoint is not relying upon Xxxxx X. Xxxxxxx to act as its attorney in
connection with any matter related to this Agreement.
(B) The Parties acknowledge that they have been informed that numerous
adverse interests could arise between the parties and the application of this
Agreement.
(C) The Parties acknowledge that Xxxxx X. Xxxxxxx has informed them that
he is governed by specific rules of ethics relating to present or potential
conflicts of interests. The parties further acknowledge that a copy of the
rules has been made available for their review. The parties acknowledge that
Xxxxx X. Xxxxxxx has acted as R&D's attorney in the preparation of this
Agreement. The parties waive any conflict of interest that could be
interpreted as arising by the services provided by Xxxxx X. Xxxxxxx.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREFORE, each of the undersigned has executed this agreement on
the day and year first above written.
R&D Products, LLC, Flexpoint Sensor Systems, Inc.,
a Utah limited liability company a Delaware corporation
/s/ Xxxxx X. xxXxxxx /s/ Xxxxx X. Xxxxx
By:_____________________________ By:______________________________
Xxxxx X. xxXxxxx, Manager Xxxxx X. Xxxxx, President
Exhibit A - Quotation # 05TED0923
Exhibit B - Flexpoint Sensor Terms and Conditions of Sale
