Exhibit 10.1
INTRAOP MEDICAL INC. AND CDS GROUP CORPORATION.
MANUFACTURING SERVICES AGREEMENT
THIS AGREEMENT (the "Agreement") is effective as of September 5, 2002_(the
"Commencement Date"), by and between Intraop Medical Inc., a Delaware
corporation, having a principal place of business at 0000 Xx Xx Xxxx Xxxxxxxxx,
Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxxxx 00000 ("CUSTOMER") and CDS Group Corporation
a Delaware corporation, doing business in California as Delaware Ontario
Technologies Corporation, and having its principal place of business at 0000
Xxxxxxxxxx Xxxxx, Xxxxxxx XX 00000 ("MFGR)
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt adequacy and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. TERM
The initial term of this Agreement shall commence on the Commencement
Date and shall continue for three (3) years until September 6,_2005_ unless
sooner terminated by mutual agreement of the parties or otherwise in accordance
with this Agreement. Upon the expiry of the initial term, this Agreement will
remain in effect and automatically renew for successive one-year terms.
Notwithstanding the foregoing, the term of this Agreement shall automatically
extend to include the term of any purchase order issued hereunder (a "Purchase
Order").
2. PRICING
2.1 Pricing. During the term, CUSTOMER shall have the right to purchase
from MFGR the products (as described on Exhibit A, the " Product" or "Products")
specified in a CUSTOMER Purchase Order delivered to MFGR. The pricing structure
for the Product(s) is set forth on Exhibit A attached hereto.
2.2 Cost Adjustments. Any projected cost increases and reductions of
the xxxx of materials will be promptly communicated to CUSTOMER by MFGR and the
final price will be adjusted according to Exhibit A. MFGR shall provide cost
visibility in the form of an itemized report on major assemblies at time of
invoicing. MFGR will further share with CUSTOMER any realized cost savings from
more efficient manufacturing methods developed by the CUSTOMER , strategic
purchasing agreements with critical vendors, and in-house fabrication so as to
help reduce the overall Product cost. The percentage of cost reduction sharing
will be negotiable.
2.3 Exclusions from Price. Prices do not include (a) export licensing
of the Product or payment of broker's fees, duties, tariffs or other similar
charges; (b) taxes or charges imposed by any taxing authority upon the
manufacture, sale, shipment, storage, "value add" or use of the Product which
MFGR is obligated to pay or collect; and (c) setup, tooling, or non-recurring
engineering activities (collectively "NRE Charges"). The shipment costs are the
responsibility of the CUSTOMER or CUSTOMER's customer and are not included in
the unit price. Any charges for these items shall be separately itemized on
invoices.
3. PAYMENT TERMS
Standard payment terms for the completed Product are net sixty (60)
days after the date of invoice as defined by the special terms attached hereto
as Exhibit A. Payment terms for Excess Inventory and Service Parts are net
thirty (30) days as defined in Sections 4.2.d and 4.2.e of this Agreement.
Payment shall be made in U.S. Dollars.
4. PURCHASE ORDERS/FORECAST
4.1 Purchase Orders.
CUSTOMER will issue to MFGR a specific Purchase Order for each Product
to be delivered pursuant to this Agreement. Each Purchase Order shall be in the
form of a written or electronic communication and shall contain the following
information: (i) a description of the Product by part number; (ii) the quantity
of the Product; (iii) the delivery date or shipping schedule; (iv)
transportation instructions, (v) sales price for the Product as set forth on
Exhibit A. Each Purchase Order shall provide a serial number for billing
purposes, and may include other instructions and terms as may be appropriate
under the circumstances, provided that, no such additional terms shall
materially alter the terms set forth in this Agreement without the mutual
written consent of both parties.
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4.2 Forecast; Minimum Buys; Excess and Obsolete Inventory.
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(a) General Planning and Procurement Process. - On the date
this Agreement is executed and on the first business day of each calendar
quarter thereafter, CUSTOMER shall provide MFGR with Purchase Orders and/or
forecasts covering a minimum period of three (3) months. Significant changes in
scheduled delivery with revised Purchase Orders from one three (3) month period
to another will be negotiated between the parties. There shall be no
restrictions on changes in order quantity or cancellation of orders that have
scheduled delivery of more than one hundred eighty (180) days.
(b) Nine Month Forecast. On the Commencement Date and on the
first business day of each calendar quarter thereafter, CUSTOMER shall provide
MFGR with an additional quarterly, rolling nine (9) month forecast (the
"Forecast") covering nine (9) months immediately following the Purchase Order
Period. The Forecast shall not create any liability for either MFGR or CUSTOMER
except that of any long lead-time manufactured parts or sub assemblies ("
Components ") for which the Forecast would require procurement activity. Prior
written approval by the CUSTOMER is required before procurement of Components
may occur based solely on Forecasts, and the CUSTOMER will be held liable for
the cost of Components purchased.
(c) Increase in Product Orders. MFGR shall use its reasonable
commercial efforts to accommodate increases in Product quantity beyond those
projected in the Forecasts and Purchase Orders.
(d) Excess and Obsolete Inventory. MFGR shall advise CUSTOMER
in writing of any excess or obsolete Components in its inventory and the
Delivered Cost of such Components. For the purpose of this Agreement, "Delivered
Cost" shall mean MFGR's quoted cost of Components as stated on the xxxx of
materials plus a materials margin equal to percentages defined in Exhibit A.
CUSTOMER shall be invoiced for obsolete inventory quarterly with payment due net
30 days. Inventory that goes unused due to lack of orders for a period of one
hundred eighty (180) days may be invoiced to the CUSTOMER with payment due
pursuant to the terms of Section 3 of this Agreement.
(e) Service Stock Components. Service stock Components will be
manufactured and stocked by MFGR and and sold to the CUSTOMER at the cost of the
Component plus fees for handling and stocking as defined in Exhibit A. CUSTOMER
will provide MFGR with forecasts for service stock levels to facilitate MFGR's
inventory planning of materials in conjunction with Product Purchase Orders.
Minimum service stock levels for MFGR shall be defined by CUSTOMER. CUSTOMER
will be invoiced for materials as they are consumed or until such time they are
not longer useable by manufacturing for new production. CUSTOMER will be billed
for any special packaging and shipment. An annual review of service stock
material will be done by MFGR and CUSTOMER in order to make adjustments to
service stock levels and for identifying no longer used inventory.
5. DELIVERY AND ACCEPTANCE, AND DUTIES
5.1 Delivery. All Product shipments shall be F.O.B. MFGR's facility of
manufacture and freight collect, and shall be documented to meet CUSTOMER
requirements. Title to and risk of loss or damage to the Product shall pass to
CUSTOMER upon MFGR's tender of the Product to CUSTOMER's carrier. MFGR shall
xxxx, pack, package, crate, transport, ship and store Product to ensure (i)
delivery of the Product to its ultimate destination in safe condition, (ii)
compliance with all requirements of the carrier and destination authorities, and
(iii) compliance with any special instructions of CUSTOMER. MFGR shall use
reasonable efforts to deliver the Products on the agreed-upon delivery dates and
shall use reasonable efforts to notify CUSTOMER of any anticipated delays;
provided, however that MFGR shall not be liable for any failure to meet CUSTOMER
delivery dates and/or any failure to give notice of anticipated delays.
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5.2 Test Equipment. MFGR shall be responsible for calibrating and
maintaining all assembly fixtures and test equipment that is transferred to
and/or owned by MFGR under this Agreement.
5.3 Acceptance. Acceptance of the Product shall occur at MFGR's
facility in accordance with mutually acceptable criteria and special provisions
defined in Exhibit A. Acceptance shall be based solely on whether the Product
passes a mutually agreeable acceptance test procedure or inspection designed to
demonstrate compliance with the specifications set forth on Exhibit B (the
"Specifications"). A particular delivered Product cannot be rejected based on
criteria that were unknown to MFGR or based on test procedures that MFGR does
not conduct or approve. Once a Product is accepted, all Product or Component
returns shall be handled in accordance with Section 7 (Warranty). Prior to
returning any rejected Product, CUSTOMER shall obtain a Return Material
Authorization ("RMA") number from MFGR, and shall return such Product in
accordance with MFGR's written instructions. CUSTOMER shall specify the reason
for such rejection in all RMA's. In the event a Product is rejected, MFGR shall
have a reasonable opportunity to correct any defect which led to such rejection
5.4 Duties. The principle duties and responsibilities of both parties
shall be as set forth in Exhibit B and/or as defined in other sections of this
Agreement.
6. CHANGES
6.1 General. CUSTOMER may upon sufficient notice make changes within
the general scope of this Agreement. Such changes may include, but are not
limited to changes in (i) drawings, plans, designs, procedures, Specifications,
test specifications or xxxx of materials ("BOM") and (ii) methods of packaging
and shipment. All changes other than changes in quantity of Products to be
furnished shall be requested pursuant to an Engineering Change Order ("ECO"). If
any such change causes either an increase or decrease in MFGR's cost or the time
required for performance of any part of the work under this Agreement (whether
changed or not changed by any ECO) the Prices and/or delivery schedules shall be
adjusted in a manner which would adequately compensate the parties for such
change
6.2 Engineering Charges. MFGR will amortize non-recoverable engineering
("NRE") costs to the price of the Product when implementing one time engineering
changes. The amortization schedule, dollar amount to be amortized and the number
of units of Product over which NRE cost will be amortized shall be mutually
agreed by CUSTOMER and MFGR. Upon agreement of the parties, MFGR shall adjust
the price to the formula provided in Exhibit A, and then add on the NRE
amortization.
6.3 ECO Requests for Change. Within five (5) business days after an ECO
is received from the CUSTOMER, MFGR shall advise CUSTOMER in writing (i) of any
change in Prices or delivery schedules resulting from implementation of the ECO
and (ii) the delivered cost of any finished Product, work-in-process or
Component rendered excess or obsolete as a result of the ECO (collectively the
"ECO Charge).
6.4 ECO Implementation. In the event CUSTOMER desires to proceed with
an engineering change after receiving the ECO Charge estimate for such change
pursuant to Section 6.3, it shall so notify MFGR. In the event MFGR does not
receive written confirmation of CUSTOMER's desire to proceed with the
engineering change within thirty (30) days after MFGR provides CUSTOMER with the
ECO Charge estimate, the ECO shall be deemed cancelled. CUSTOMER shall be
informed of ECO status with monthly reports, which will show status of approval
and Product effectivity.
Any increases in cost of the Products resulting from such ECO shall be deemed a
part of CUSTOMER's ECO Charge liability as defined in Section 6.3 of this
Agreement. Similarly, any parts made obsolete or excess as a result of such an
ECO shall be deemed part of CUSTOMER's obsolete inventory liability as defined
in Section 4.2(d) of this Agreement.
6.5 Product Change Approval. CUSTOMER must approve all changes that
affect form, fit, function or Specifications of the Product. MFGR may suggest
changes to the manufacturing specifications of the Products. Any such suggested
changes shall be made in writing and shall clearly set forth the nature of the
change, the necessity for the change, and any projected cost or manufacturing
schedule impact. CUSTOMER shall approve or reject the suggested changes in its
sole discretion. CUSTOMER shall use its best efforts to respond to all MFGR
recommendations within two (2) weeks of receipt.
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6.6 Subcontractors. CUSTOMER reserves the right to disapprove of any
subcontractor selected to perform any test, manufacture, or rework of the
Products.
7. WARRANTY
7.1 MFGR Warranty. MFGR's warranty period is for one (1) year from date
of manufacture and is limited to correction of defects in MFGR workmanship. For
the purpose of this Section 7.1, "workmanship" shall mean manufacture in
accordance with IPC-A-610, Class 2 or CUSTOMER's workmanship standards set forth
in the Specifications. MFGR shall, at its option and at its expense, repair,
replace or issue a credit for Product found defective during the warranty
period. In addition, MFGR will pass on to CUSTOMER all manufacturers' Component
warranties to the extent that they are transferable, but will not independently
warrant any Components.
7.2 RMA Procedure. MFGR shall concur in advance on all Products to be
returned for repair or rework. CUSTOMER shall obtain a Returned Material
Authorization ("RMA") number from MFGR prior to return shipment. All returns
shall state the specific reason for such return, and will be processed in
accordance with MFGR's Authorized Returned Material Procedure, a copy of which
is available from MFGR upon request. The price of parts returned to and not
replaced by MFGR shall not be deducted by CUSTOMER from amounts invoiced to
CUSTOMER by MFGR, unless authorized by MFGR.
7.3 Exclusions from Warranty. This warranty does not include Products
that have defects or failures resulting from (a) CUSTOMER's design of Products
including, but not limited to, design functionality failures, Specification
inadequacies, failures relating to the functioning of Products in the manner for
the intended purpose or in the specific customer's environment; (b) accident,
disaster, neglect, abuse, misuse, handling, testing, storage or installation
including handling in accordance with static sensitive electronic device
handling requirements; (c) alterations, modifications or repairs by CUSTOMER or
third parties designated by CUSTOMER or (d) defective CUSTOMER-provided test
equipment or test software. CUSTOMER bears all design responsibility for the
Product.
7.4 Remedy. THE SOLE REMEDY UNDER THIS WARRANTY SHALL BE THE REPAIR,
REPLACEMENT OR CREDIT FOR DEFECTIVE PARTS AS STATED ABOVE. THIS WARRANTY IS IN
LIEU OF ANY OTHER WARRANTIES EITHER EXPRESS OR IMPLIED, INCLUDING
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
8. TERMINATION/CANCELLATION
8.1 Termination for Cause. Either party may terminate this Agreement or
a Purchase Order hereunder for default if the other party materially breaches
this Agreement; provided, however, no right of termination due to default shall
accrue until ninety (90) days' after the defaulting party is notified in writing
of the material breach and has failed to cure or give adequate assurances of
performance within the ninety (90) day period after such notice of material
breach. Notwithstanding the foregoing, the cure period for payment-related
defaults shall be thirty (30) days.
8.2 Termination for Convenience. CUSTOMER may terminate this Agreement
hereunder for any reason upon one hundred twenty (120) days' prior written
notice to MFGR. In addition, CUSTOMER may terminate a Purchase Order hereunder
for any reason upon ninety (90) days (before scheduled shipment) prior written
notice to MFGR. MFGR may terminate this Agreement for any reason upon three
hundred sixty five (365) days' written notice to CUSTOMER.
8.3 Termination by Operation of Law. This Agreement shall immediately
terminate should either party (a) enter into or file a voluntary petition,
arraignment or proceeding seeking on order for relief under the bankruptcy laws
of its respective jurisdiction; (b) enter into a receivership of any of its
assets or (c) enter into a dissolution or liquidation of its assets or an
assignment for the benefit of its creditors.
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8.4 Consequences of Termination.
a. Termination for Reasons other than MFGR's Breach. In the
event this Agreement or a Purchase Order hereunder is terminated for any reason
other than (i) a termination under Section 8.1 resulting from a breach by MFGR
or (ii) a termination under Section 8.3 (including but not limited to a force
majeure or termination for convenience), CUSTOMER shall pay MFGR, termination
charges equal to (1) the unpaid contract price for all finished Product existing
at the time of termination; (2) MFGR's actual out-of-pocket costs incurred, but
not yet paid by CUSTOMER, to the date of such termination (including labor and
Components) for all work in process under this Agreement and (3) CUSTOMER'S
Excess Inventory liability pursuant to Section 4.2(d).
b. Termination Resulting From MFGR's Breach. In the event
CUSTOMER terminates this Agreement or any Purchase Order hereunder as a result
of (i) a breach by MFGR under Section 8.1, CUSTOMER shall pay MFGR, termination
charges equal to (1) MFGR's actual out-of-pocket cost (including labor and
Components) for all finished Product and work in process; and (2) CUSTOMER'S
Component Liability pursuant to Section 4.2(d); provided, however, that for the
purposes of this subsection only, CUSTOMER's Component Liability shall be
calculated using "actual cost" rather than "Delivered Cost."
c. MFGR Cooperation upon Termination. Upon termination of this
Agreement for any reason, MFGR shall use its best efforts to assist CUSTOMER in
transitioning its manufacturing requirements to a third party. All documentation
and tooling owned by the CUSTOMER in possession of the MFGR shall be returned to
the CUSTOMER within thirty (30) days after termination. Electronic file copies
of jointly owned manufacturing records and documentation such as Device History
Records, System Level Costed Xxxx of Material and Approved Vendor List shall
also be turned over to the CUSTOMER within thirty (30) days of termination or
upon written request by the CUSTOMER at any time during the period of the
Agreement.
d. Survival of Certain Sections. Sections 7 (Warranty), 12
(Confidentiality and Non-Solicitation of Employees), and 13 (Limitation of
Liability) shall survive termination of this Agreement for any reason.
9. REGULATORY REQUIREMENTS
9.1 CUSTOMER shall be solely responsible for fulfilling all filings,
registrations and attendant requirements of both federal and local governments
relative to the Products. CUSTOMER will define and execute a quality system
audit of MFGR regularly on a twelve (12) month schedule. Audits will be a
minimum of half-day duration, and will assess compliance of operational systems
of MFGR to the FDA cGMP requirements so CUSTOMER can maintain their U.S.A -FDA
(Food and Drug Administration) registration. Audit or corrective action notice
reports will be supplied to MFGR within five (5) business days following each
audit. MFGR will have five (5) business days to correct or respond to the
reports findings. Audit or corrective action reports requiring capital and/or
substantial manpower investments over and above that required to maintain MFGR's
current ISO 9001:2000 quality system will be jointly reviewed and an agreed
course of action will be implemented.
9.2 CUSTOMER shall be solely responsible for obtaining and maintaining
FDA approval, the labeling of the Product, determining the safety, efficacy and
performance of the Product, and determining the Product's fitness and
performance for any particular use. Any and all decisions to sell and/or market
the Product to any consumer for use shall rest solely with the CUSTOMER.
10. QUALITY
10.1 Quality Control. MFGR shall manufacture, test and inspect the
Product to ANSI IPC 610, Class 2. MFGR's quality system shall at all times be in
full compliance with international standards ISO 9001:2000 and EN46002 as they
apply to medical products. MFGR shall support CUSTOMER in maintaining CUSTOMER'S
U.S.A. - FDA (Food and Drug Administration) registration as it pertains to
manufacturing of Class 2 medical devices.
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CUSTOMER shall be responsible for (i) QSR 820.30 regarding design
controls, design development and planning, design review, design verification,
design validation, design transfer, design changes, design history file, (ii)
specifications for proper identification and labeling and (iii) QSR 820.170 and
820.200 for installation and servicing.
10.2 Cosmetic Requirements. The cosmetic requirements of the Product
shall be in accordance with mutually acceptable industry standards if not
otherwise stated on Product engineering drawings supplied by the CUSTOMER.
10.3 Specifications. Neither party shall make any change to the
Specifications, to any Components described therein, or to the Products
(including, without limitation, changes in form, fit, function, design,
appearance or place of manufacture of the Products or changes which would affect
the reliability of any of the Products) unless such change is made in accordance
with Section 6.1 and MFGR's ECO procedure. Notwithstanding the foregoing, MFGR
shall be permitted to make changes in its manufacturing process at any time with
prior written notice to CUSTOMER, so long as such changes do not affect the
form, fit, function or other Specifications of the Products.
10.4 Document Control. CUSTOMER shall promptly after the Commencement
Date deliver to MFGR all documentation necessary for manufacture and testing of
the Product. MFGR shall control CUSTOMER's documentation and at its discretion
transfer the form from CUSTOMER's List of Materials ("LM") into MFGR's BOM. MFGR
and CUSTOMER will have joint responsibility for maintaining control of all
Product documentation. MFGR will have the ownership and change control of their
operational method sheets ("OMS") used during manufacturing and will provide
same to CUSTOMER upon request for the sole purpose of review and approval.
CUSTOMER will not disclose the OMS to a third party without the prior written
consent of MFGR. The LM/BOM, and part fabrication and assembly drawings will be
owned by CUSTOMER and will be controlled by the ECO process. The test procedures
will be owned by CUSTOMER and controlled by the ECO process.
10.5 Component Specifications. Component Specifications shall include,
but shall not be limited to: (i) detailed electrical, mechanical, performance
and appearance specifications for each model of Product, (ii) the BOM, (iii)
tooling specifications, along with a detailed description of the operation
thereof, (iv) art work drawings, (v) Component Specifications, and (vi) supplier
cross references.
10.6 Quality of Components. MFGR shall use in its production of
Products such Components of a type, quality, and grade specified by CUSTOMER to
the extent CUSTOMER chooses to so specify, and shall purchase Components only
from vendors appearing on CUSTOMER's approved vendor list ("AVL"); provided,
however, that in the event MFGR cannot purchase a Component from a vendor on the
AVL for any reason, MFGR shall be able to purchase such Component from an
alternate vendor, subject to CUSTOMER's prior written approval, which approval
shall not be unreasonably withheld or delayed.
10.7 Quality Specifications. MFGR shall comply with the quality
specifications set forth in its Quality Manual, incorporated by reference
herein, a copy of which is available from MFGR upon request. MFGR agrees to
comply with CUSTOMER quality requirements as set forth in Exhibit B and any
unique requirements specified by CUSTOMER on any Purchase Order with appropriate
price adjustments negotiated as required.
10.8 Inspection of Facility. Upon reasonable advance written notice,
CUSTOMER may inspect the Products and Components held by MFGR for CUSTOMER at
MFGR's facilities during MFGR's regular business hours, provided that such
inspection does not unduly affect MFGR'S operations. CUSTOMER and its
representatives shall observe all security and handling measures of MFGR while
on MFGR's premises. CUSTOMER and its representatives acknowledge that, except
for MFGR's negligence or willful misconduct, their presence on MFGR's property
is at their sole risk.
11. CONFORMITY TO ALL LAWS
11.1 Duties of MFGR. MFGR shall manufacture all Products in a good and
workmanlike manner and will comply with all applicable FDA cGMP requirements,
ISO 9001:2000 and EN 46002 standards, as amended, pertinent to the services it
performs in manufacturing the Products pursuant to the design specifications of
the CUSTOMER. Compliance with the federal Food, Drug and Cosmetic Act is limited
to the GMP requirements as provided in Section 9.2 of this Agreement. MFGR shall
comply with the environmental laws applicable in the manufacturing of the
Product.
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11.2 Duties of CUSTOMER. CUSTOMER shall be solely responsible for all
registrations, filings and other regulatory requirements of both the federal,
state and local laws, including but not limited to the requirements of the
federal Food, Drug and Cosmetic Act, as amended, including regulations relating
thereto. All responsibilities for functional design and/or patent rights reside
with CUSTOMER. MFGR is solely responsible for the manufacture and practices
thereof, of CUSTOMER's Product.
12. CONFIDENTIALITY AND NON-SOLICITATION OF EMPLOYEES
12.1 Definitions. For the purpose of this Agreement,
(a) "Confidential Information" means information (in any form or media)
regarding a party's customers, prospective customers (including lists of
customers and prospective customers), methods of operation, engineering methods
and processes (include any information which may be obtained by a party by
reverse engineering, decompiling or examining any software or hardware provided
by the other party under this Agreement), programs and databases, patents and
designs, billing rates, billing procedures, vendors and suppliers, business
methods, finances, management, or any other business information relating to
such party (whether constituting a trade secret or proprietary or otherwise)
which has value to such party and is treated by such party as being
confidential; provided, however, that Confidential Information does not include
information that (i) is lawfully known to the other party without obligation of
confidentiality prior to receipt from the disclosing party hereunder, which
knowledge shall be evidenced by written records, (ii) is or becomes in the
public domain through no breach of this Agreement, or (iii) is received from a
third party without breach of any obligation of confidentiality; and provided
further, that Confidential Information specifically includes information
provided by CUSTOMER to MFGR regarding the manufacture of the Product.
(b) "Person" shall mean and include any individual, partnership,
association, corporation, trust, unincorporated organization, limited liability
company or any other business entity or enterprise.
(c) "Representative" shall mean a party's employees, agents, or
representatives, including, without limitation, financial advisors, lawyers,
accountants, experts, and consultants.
12.2 Obligation of Confidentiality.
(a) In connection with this Agreement, each party (the "Disclosing
Party") may furnish to the other party (the "Receiving Party") or its
Representatives certain Confidential Information. During the term of this
Agreement and for a period of three (3) years after termination of this
Agreement, the Receiving Party (i) shall maintain as confidential all
Confidential Information heretofore or hereafter disclosed to it by the
Disclosing Party, (ii) shall not, directly or indirectly, disclose any such
Confidential Information to any Person other than those Representatives of the
Receiving Party whose duties justify the need to know such Confidential
Information and then only after each Representative has agreed in writing to be
bound by this Confidentiality Agreement and clearly understands his or her
obligation to protect the confidentiality of such Confidential Information and
to restrict the use of such Confidential Information and (iii) shall treat such
Confidential Information with the same degree of care as it treats its own
Confidential Information (but in no case with less than a reasonable degree of
care).
(b) The disclosure of any Confidential Information is solely for the
purpose of enabling each party to perform under this Agreement, and the
Receiving Party shall not use any Confidential Information disclosed by the
Disclosing Party for any other purpose.
(c) Except as otherwise set forth in this Agreement, all Confidential
Information supplied by the Disclosing Party shall remain the property of the
Disclosing Party, and will be promptly returned by the Receiving Party upon
receipt of written request therefore.
(d) If the Receiving Party or its Representative is requested or become
legally compelled to disclose any of the Confidential Information, it will
provide the Disclosing Party with prompt written notice. If a protective order
or other remedy is not obtained, then only that part of the Confidential
Information that is legally required to be furnished will be furnished, and
reasonable efforts will be made to obtain reliable assurances of
confidentiality.
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12.3 Non-Solicitation of Employees. During the term of this Agreement
and for a period of two (2) years thereafter, neither party shall directly or
indirectly solicit or recruit (or attempt to solicit or recruit) any of the
other party's key employees without such party's prior permission, however
employees will be free to apply for job openings at such party which have been
advertised to the general public.
13. LIMITATION OF LIABILITY
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT,
CONSEQUENTIAL, INCIDENTIAL OR SPECIAL DAMAGES, OR ANY DAMAGES WHATSOEVER
RESULTING FROM LOSS OF USE, DATA OR PROFITS, EVEN IF SUCH OTHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THIS SECTION
SHALL NOT PREVENT A PARTY FROM INCURRING THE LIABILITIES SET FORTH IN SECTION 8
(TERMINATION). IN NO EVENT WILL MFGR BE LIABLE FOR COSTS OF PROCUREMENT OF
SUBSTITUTE GOODS BY CUSTOMER. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
14. FORCE MAJEURE
14.1 Force Majeure Event. For purposes of this Agreement, a "Force
Majeure Event" shall mean the occurrence of unforeseen circumstances beyond a
party's control and without such party's negligence or intentional misconduct,
including, but not limited to, any act by any governmental authority, act of
war, natural disaster, strike, boycott, embargo, shortage, riot, lockout, labor
dispute, civil commotion.
14.2 Notice of Force Majeure Event. Neither party shall be responsible
for any failure to perform due to a Force Majeure Event provided that such party
gives notice to the other party of the Force Majeure Event as soon as reasonably
practicable, but not later than five (5) days after the date on which such Party
knew or should reasonably have known of the commencement of the Force Majeure
Event, specifying the nature and particulars thereof and the expected duration
thereof; provided, however, that the failure of a party to give notice of a
Force Majeure Event shall not prevent such party from relying on this Section
except to the extent that the other party has been prejudiced thereby.
14.3 Termination of Force Majeure Event. The party claiming a Force
Majeure Event shall use reasonable efforts to mitigate the effect of any such
Force Majeure Event and to cooperate to develop and implement a plan of remedial
and reasonable alternative measure to remove the Force Majeure Event; provided,
however, that neither party shall be required under this provision to settle any
strike or other labor dispute on terms it considers to be unfavorable to it.
Upon the cessation of the Force Majeure Event, the party affected thereby shall
immediately notify the other party of such fact, and use its best efforts to
resume normal performance of its obligations under the Agreement as soon as
possible.
14.4 Limitations; Termination. Notwithstanding that a Force Majeure
Event otherwise exists, the provisions of this Section 14 shall not excuse (i)
the obligation to pay money in a timely manner for Product actually delivered or
other liabilities actually incurred that arose before the occurrence of the
Force Majeure Event causing the suspension of performance; or (ii) any late
delivery of Product, equipment, materials, supplies, tools, or other items
caused solely by negligent acts or omissions on the part of such party. Should a
Force Majeure Event prevent a party's performance under this Agreement for a
period in excess of thirty (30) days, then the other party, in its sole
discretion, may elect to terminate this Agreement by written notice thereof to
the other party.
15. INSURANCE
Each party agrees to maintain during the term of this Agreement (a)
workers' compensation insurance as prescribed by the law of the state in which
the respective party is performing services; (b) employer's liability insurance
with limits of at least $500,000 per occurrence; (c) comprehensive automobile
liability insurance if the use
Page 8
of motor vehicles is required, with limits of at least $1,000,000 for bodily
injury and property damage for each occurrence; (d) comprehensive general
liability insurance, including blanket contractual liability and broad form
property damage, with limits of at least $1,000,000 combined single limit for
personal injury and property damage for each occurrence; and (e) comprehensive
general liability insurance endorsed to include products liability and completed
operations coverage in the amount of $1,000,000 for each occurrence. Each party
shall furnish to the other party certificates or evidence of the foregoing
insurance indicating the amount and nature of such coverage and the expiration
date of each policy. Each party agrees that it, its insurer(s) and anyone
claiming by, through, under or in its behalf shall have no claim, right of
action or right of subrogation against the other party and the other party's
affiliates, directors, officers, employees and customers based on any loss or
liability insured against under the insurance required by this Agreement.
16. CREDIT LIMIT/FINANCIAL ASSURANCES
In the event CUSTOMER exceeds the credit limit as defined in Exhibit A;
or has any outstanding invoice for more than ninety (90) days, MFGR shall have
the right to stop shipments of Product to CUSTOMER until CUSTOMER makes a
sufficient payment to bring its account within the credit limit provided.
17. MANUFACTURING LICENSE
(a) Subject to the terms, conditions and restrictions set forth herein,
and MFGR's full compliance with its obligations under this Agreement, CUSTOMER
grants to MFGR an exclusive, paid-up, royalty-free, worldwide license for the
term of this Agreement to all of CUSTOMER's patents, licenses, trademarks, trade
names, inventions, copyrights, know-how or trade secrets relating to the origin,
design, manufacture, assembly, programming, operation, function, configuration,
electrical wiring, installation, testing or service of the Product (the
"Intellectual Property Rights") to manufacture, assemble and test the Product to
be purchased by CUSTOMER pursuant to the terms and conditions of this Agreement.
During the term of this Agreement, CUSTOMER agrees not to assert its patent or
other rights against MFGR in a manner that would affect MFGR's ability to
perform its obligations under this Agreement. MFGR agrees to use the
Intellectual Property Rights licensed hereunder solely for the purpose of
assembly, manufacture and testing of the Product, and for matters directly
relating thereto. Subject to the terms, conditions and restrictions of this
Agreement, CUSTOMER shall provide to MFGR prompt and complete access to all
Intellectual Property Rights of CUSTOMER which relate to the manufacture,
assembly and testing of the Product.
(b) Nothing in this Agreement shall be construed to grant MFGR any
right of license (i) with respect to any of CUSTOMER's products other than the
Product or (ii) to grant MFGR any right to manufacture any other product or
device incorporating the Intellectual Property Rights (or any portion thereof),
or (iii) except as provided in subsection (a) above, to grant MFGR any right to
use the Intellectual Property Rights or any portion thereof or (iv) to
sublicense, assign or transfer any rights furnished hereunder by CUSTOMER to
MFGR to any party other than a subsidiary, parent or affiliate of MFGR. MFGR
agrees that it will not use the license granted by CUSTOMER hereunder in any
manner inconsistent with the provisions of this Section 17. The license granted
to MFGR pursuant to this Section 17 shall terminate in its entirety immediately
upon termination of this Agreement pursuant to Section 8 above.
18. MISCELLANEOUS
MFGR and CUSTOMER acknowledge and agree that the manufacturing
relationship set forth in this Agreement shall be exclusive for three (3) years
from the date of this Agreement or fifteen (15) systems, whichever first occurs,
so long as MFGR can meet the mutually agreed to order schedule and performance
criteria of CUSTOMER and shall be a non-exclusive relationship thereafter. MFGR
acknowledges and agrees that CUSTOMER may elect, at any time, to use one or more
alternate suppliers to manufacture the Product if MFGR is unable to meet its
obligations under this Agreement.
18. 2 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of California, without reference to
conflict of laws principles.
Page 9
18. 3 Jurisdiction. For any dispute arising out of or in connection
with this Agreement, the parties hereby consent to the personal and exclusive
jurisdiction of and venue in the state and federal courts within Santa Xxxxx
County, California.
18.4 Integration Clause. This Agreement (including the Exhibits and
Schedules to this Agreement) constitutes the entire agreement of the parties,
superseding all previous agreements, written or oral, covering the subject
matter of this Agreement. This Agreement shall not be changed or modified except
by written agreement, specifically amending, modifying and changing this
Agreement, signed by MFGR and CUSTOMER.
18. 5 Severability. In the event that any provision or provisions of
this Agreement shall be invalid, the remainder of this Agreement shall remain in
full force and effect. The parties agree to replace such invalid provision or
provisions with valid ones which will have an economic effect as close as
possible to the invalid provision or provisions.
18. 6 Order of Precedence. All quotations, Purchase Orders,
acknowledgments and invoices issued pursuant to this Agreement are issued for
convenience of the Parties only and shall be subject to the provisions of this
Agreement and the Exhibits hereto. When interpreting this Agreement, precedence
shall be given to the respective parts in the following descending order: (a)
this Agreement; (b) Schedules and Exhibits to this Agreement; and (c) if
Purchase Orders are used to release Product, those portions of the Purchase
Order that are not pre-printed and which are accepted by MFGR. The parties
acknowledge that the preprinted provisions on the reverse side of any such
quotation, Purchase Order, acknowledgment or invoice shall be deemed deleted and
of no effect whatsoever. No modification to this Agreement, the Exhibits or any
Purchase Order shall be valid without the prior written consent of MFGR and
CUSTOMER.
18.7 Assignment. Neither this Agreement nor any rights or obligations
hereunder shall be transferred or assigned by either party without the written
consent of the other party, which consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, this Agreement may be assigned by
CUSTOMER to any corporation controlling, controlled by or under common control
with its parent corporation or to any successor to substantially all the
business of the CUSTOMER.
18.8 Notices. Wherever one party is required or permitted or required
to give written notice to the other under this Agreement, such notice will be
given by hand, by certified U.S. mail, return receipt requested, by overnight
courier, or by fax and addressed as follows:
If to Buyer: with a copy to:
Intraop Medical, Inc. TBD
0000 Xx Xx Xxxx Xxxxxxxxx
Xxxxx 000
Attn: President
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Seller: with a copy to:
CDS Group Corporation TBD
0000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: President
Phone: (000) 000-0000
Fax: (000) 000-0000
Page 10
All such notices shall be effective upon receipt. Either party may
designate a different notice address from time to time upon giving ten (10)
days' prior written notice thereof to the other party.
18. 9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument.
18. 10 Relationship of the Parties. The relationship of CUSTOMER and
MFGR established by this Agreement is solely that of independent contractors,
and nothing in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other, (ii)
constitute the parties as joint venturers, co-owners or otherwise as
participants in a joint or common undertaking, or (iii) make either party an
agent of the other for any purpose whatsoever
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written by their duly authorized
representatives
CDS Group Corporation INTRAOP MEDICAL INC.
d/b/a
Delaware Ontario Technologies Corporation
Signed Xxxxx X. Xxxxxxxx Signed Xxxxxx X. Goer
----------------------------------- --------------------------------
Name: Xxxxx Xxxxxx Xxxxxxxx Name: Xxxxxx X. Goer
----------------------------------- --------------------------------
Title: V.P. Sales Title: President & CEO
----------------------------------- --------------------------------
Page 11
EXHIBIT A - PRICING & SPECIAL TERMS
MFG AGREEMENT COVERAGE: MOBETRON product and/or its accessories (Ref. Exhibit B)
[* * *]
*** Certain information in this Exhibit has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
9/17/02
EXHIBIT B
1. PRODUCT DEFINITION
[* * *]
2. RESPONSIBILITIES OF MFGR
MFGR shall use the CUSTOMER Product design documentation to procure, fabricate,
stock, assemble, inspect, test and package for shipment the Product in
conformity with the Specifications listed.
MFGR will do all final assembly and testing at the MFGR facility in _Fremont_,
California so as to provide opportunity for the CUSTOMER to monitor conformance
to this Agreement and inspect quality of the processes for manufacturing.
MFGR shall be responsible for generating its own internal manufacturing
documentation (Operational Method Sheets, Work Instructions, Bills of Materials,
Work Orders, Inspection Records) for controlling the manufacturing of the
Product.
MFGR shall assign a Program Manager to assist in the cross functional
coordination of activities necessary for manufacturing the Product and
supporting the CUSTOMER.
MFGR shall provide to the CUSTOMER regular status reports on the progress,
scheduled delivery dates, and problems of manufacturing. Regular coordination
and program review meetings should be held with the CUSTOMER.
MFGR shall provide cubical space within the manufacturing center and computer
network connection to the manufacturing files relating to the Product so the
CUSTOMER technical staff can provide effective support to manufacturing.
MFGR shall control the CUSTOMER documentation in a secure Document Control
center and limit distribution and access to the documentation to only those that
are directly involved with manufacturing the Product.
MFGR shall maintain "as built" configuration records to the revision level for
all assemblies used in the manufacture of the Product. The configuration records
shall be included in the DHR (device history record) along with test records and
other documents pertinent to defining the configuration of a particular serial
numbered Product.
3. RESPONSIBILITIES OF CUSTOMER
CUSTOMER shall be responsible for the design of the Product. All specifications,
engineering drawings and documentation necessary for fabrication and system
level testing of the Product will be developed by CUSTOMER and supplied to MFGR.
and/or its vendors.
CUSTOMER shall make available technical expertise and support to MFGR in
resolving problems, training, testing, and development of tooling relating to
manufacturing of the Product.
CUSTOMER shall be responsible for maintaining the Product design documentation
in such a way as to make manufacturing the Product easier and more cost
effective over time. Suggestions by MFGR to the CUSTOMER for changes to the
Product design or documentation will be evaluated in a timely manner and
incorporated to a mutually agreed to schedule.
*** Certain information in this Exhibit has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.
CUSTOMER's engineering representative shall be required to sign off and approve
disposition of material that is classified by MFGR's MRB (material review board)
as obsolete, repair, or use-as-is. Rework of material to meet specifications
will not require CUSTOMER approval.
4. CUSTOMER QUALITY REQUIREMENTS
The following Quality Requirements shall be adhered to by MFGR during
the manufacture of said Product. Additional requirements may be added to Product
Purchase Orders. . Additional quality requirements added to Product Purchase
Orders could result in additional cost to the MFGR. Any additional cost would be
the responsibility of the CUSTOMER
QR 1. FIRST ARTICLE INSPECTION - First Article Inspection and report
shall be performed by the CUSTOMER and shall include evidence of all drawing
dimensions and notes unless otherwise specified.
QR 2. SOURCE INSPECTION MFGR shall notify CUSTOMER Quality Assurance 48
hours in advance prior to shipment to allow CUSTOMER to verify and accept
Product at the MFGR's premises. In addition, this inspection may include any
in-process inspections, test witnessing or review of test data as specified on
the CUSTOMER Purchase Order.
QR 3. CHANGE IN PRODUCTION OR SERVICE MFGR and supplier contractors and
consultants shall notify the initiator of CUSTOMER Purchase Order and CUSTOMER
Quality Assurance of any changes in the Product or service so that CUSTOMER may
determine whether the changes may affect the quality of the Product.
QR 4. QUALITY PRE-ASSESSMENT QUESTIONNAIRE - Questionnaire shall be
completed by MFGR and returned to CUSTOMER Quality Assurance within seven days
of receipt. CUSTOMER Quality Assurance will review and evaluate the systems,
organization and quality provisions of MFGR upon receipt of the completed
questionnaire.
QR 5. SITE VISIT AND ASSESSMENT -CUSTOMER may perform a site visit at
MFGR's facility to review and evaluate the systems, organization and quality
provisions of MFGR before supplier approval is granted. Prior to the actual
visit and assessment, a notification letter shall be sent to MFGR by CUSTOMER
Quality Assurance coordinating the date, time, names of visitors and the purpose
of the visit. In addition, follow-up or routine visits may also be required by
CUSTOMER personnel.
QR 6. ISO 9000 QUALITY SYSTEM -MFGR shall have a documented quality
system compliant to the applicable ISO 9000 standard (ISO 9001 or 9002).
QR 8. QUALITY PROGRAM (MINIMUM REQUIREMENTS) -MFGR shall have a quality
program consisting of documented quality and inspection procedures, a documented
calibration control program traceable to NIST standards and production
travelers/work orders with lot traceability to operator, process, equipment, and
materials used to produce theComponents.
QR 9. TOOLING - Tooling manufactured by a supplier for fabricating
CUSTOMER parts shall be marked with the CUSTOMER Component Number and Revision
of that Component that is being fabricated by the tool. MFGR shall maintain
records showing the number of cycles the tooling has been operated. Tool design
drawings shall be supplied to, and approved by, CUSTOMER, if requested. Tooling
that is paid for by CUSTOMER shall be returned toCUSTOMER, if requested.
QR 10. WORKMANSHIP CRITERIA -MFGR workmanship criteria shall be
expressed in documented standards, or by means of identified and approved
representative samples. Training records and personnel certifications (i.e.
welding certs) shall be maintained by MFGR. A copy of the workmanship criteria,
if requested, shall be supplied to CUSTOMER for review.
QR 12. CERTIFICATE OF COMPLIANCE - A certificate of compliance shall be
provided by MFGR with each lot sent to CUSTOMER. The certificate should include
CUSTOMER Component Number and Revision, CUSTOMER Purchase Order Number,
Quantity, Signature of Authority, and a statement that the part/service supplied
meets all of the Purchase Order and drawing requirements, and that appropriate
material and inspection records are on file.
QR 13. MARKING AND PACKAGING - Components shall be marked, or bulk
bagged and tagged, with supplier Component Number and Revision in accordance
with CUSTOMER drawing requirements, and preferably identified by CUSTOMER
Component Number and Revision. The MFGR shall package the Components in a manner
that will prevent the Components from being scratched or damaged from shipping,
or contaminated by particulates from packaging, as specified by the Purchase
Order, if applicable.
QR 14. LOT CONTROL NUMBERS -MFGR shall have a system and procedures in
place for identifying each lot of Components with a unique control number to
assure control and traceability of materials used in the manufacturing process.
QR 20. TEST DATA -MFGR shall prepare written test procedure(s) that
have defined acceptance criteria and be approved byCUSTOMER. A copy of the test
data shall be provided by MFGR with each lot delivered toCUSTOMER.
[SIX PAGES OF TECHNICAL AND PROPRIETARY INFORMATION HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED INFORMATION.]
EXHIBIT C
[TWO PAGES OF CONFIDENTIAL COST AND PRICING INFORMATION HAVE BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED INFORMATION.]
