EXHIBIT 10.13
SUPPLY AGREEMENT
This Supply Agreement ("Agreement") dated July 1, 2002 is by and between
Stereotaxis, a Missouri corporation, having places of business at 0000 Xxxxxx
Xxxx Xxx, Xx Xxxxx, XX 00000 and Magnet Sales & Manufacturing Inc., ("Supplier),
a California corporation, having its place of business at 00000 Xxxxx Xxxxx,
Xxxxxx Xxxx, XX 00000.
In consideration of the mutual promises and consideration provided for in the
Agreement, the parties agree as follows:
1. GENERAL
1.1 DESCRIPTION OF AGREEMENT PRINCIPLES
This Agreement defines the relationship and requirements between Stereotaxis and
Supplier to ensure a consistent supply of Items that meet Stereotaxis'
Specifications. Stereotaxis may, from time to time, issue Purchase Orders to
Supplier for the purchase of Items. Supplier agrees that it shall, throughout
the term of this Agreement, sell and deliver such Items under the terms and
provisions of this Agreement. All Items delivered under this Agreement shall
comply with the requirements of this Agreement.
1.2 ENTIRE AGREEMENT
This Agreement, including any Exhibits or Attachments which are incorporated by
reference into this Agreement, sets forth the entire understanding and agreement
of the parties as to the subject matter of this Agreement and supersedes all
prior agreements, understandings, negotiations and discussions between the
parties as to the subject matter. No amendment to or modification of this
Agreement will be binding unless in writing and signed by a duly authorized
representative of each party.
1.3 ITEMS COVERED
All Items supplied to Stereotaxis by Supplier will be covered by this Agreement.
The list of Items covered by this Agreement is shown in Attachment 1. New Items
may be added to Attachment 1 upon mutual written agreement of Stereotaxis and
Supplier from time to time.
1.4 DURATION OF AGREEMENT
This Agreement commences on and as of the date of the later of the two
signatures shown in Section 13, provided each party shall have executed and
delivered one or more counterparts of this Agreement to the other (the
"Effective Date").
This Agreement will remain in effect for a term of two (2) years from the
Effective Date (the "Initial Term") unless earlier terminated in accordance with
its provisions. At any time before expiration of the Initial Term, Stereotaxis
may, at Stereotaxis' option, extend the term of this Agreement subject to all
other provisions of this Agreement for an additional period of up to 2 years, by
notifying Supplier in writing of such extension.
2. CONFIDENTIAL INFORMATION
Both Stereotaxis and Supplier have executed mutual Non-Disclosure Agreements
with respect to their respective proprietary and confidential information.
Stereotaxis has developed magnets and control systems that are its intellectual
property and proprietary to it.
Supplier has developed manufacturing and assembly methods for such Stereotaxis
designed magnets that are its intellectual property and are proprietary to it.
Stereotaxis and Supplier acknowledge such confidential and proprietary
information and agree to be bound by the Non-Disclosure Agreements that have
been signed and are in force.
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In the event that Supplier becomes unable for any reason to produce and deliver
Items per this Agreement, Stereotaxis may review and purchase from Supplier its
intellectual property (as above) at a price of [***].
3. OPERATION OF AGREEMENT
3.1 PURCHASE ORDERS
Stereotaxis will issue firm Purchase Orders for Items, providing Supplier with
sufficient lead-time to manufacture Items. Supplier will identify the lead-time
to be used for planning purposes by Stereotaxis.
Stereotaxis will provide monthly, rolling six-month delivery forecasts to be
used for the purposes of providing guidance to Supplier for scheduling its
production and procurement. This is not intended to serve as a purchase
commitment.
Stereotaxis does not commit to buy a specific volume of any part number or Item
from Supplier, except as detailed in Purchase Orders issued by Stereotaxis to
Supplier.
3.2 PURCHASE ORDER CANCELLATIONS AND SCHEDULE PUSH-OUTS
If Purchase Orders are canceled, Supplier may invoice Stereotaxis for all
reasonable materials, direct, indirect, and overhead costs incurred to the date
of cancellation with a margin of [***], plus reasonable costs for disposal
and/or destruction of items that are in completed or semi-completed form, if
applicable. Supplier shall provide Stereotaxis with a detailed breakdown of
costs incurred, and explain its efforts to mitigate these costs at notice of
Purchase Order cancellation. Stereotaxis reserves the right to physically audit
Items and WIP for which reimbursement claims have been submitted and to take
possession and ownership of Item, WIP and relevant raw materials for which it
pays reimbursement claims.
Any amount for reimbursement of costs associated with excess, obsolete or
cancelled Items shall be paid as if such claim were an invoice pursuant to
Section 5.
Purchase Order delivery schedules may be modified upon mutual written agreement.
Specific time fences will be mutually established to allow quantity changes to
be made and the charges associated with each time fence will be established.
However Stereotaxis may not delay the delivery date of items against any
Purchase Order by more than six (6) months from the original delivery dates
without incurring holding costs.
3.3. DISPOSAL OF MATERIALS RELATING TO PURCHASE ORDER CANCELLATIONS
Supplier agrees to physically dispose of all excess and obsolete Items as
directed by Stereotaxis' authorized purchasing representative. Excess and
obsolete Items that are to be delivered to Stereotaxis' facilities must be
delivered in accordance with the requirements of this Agreement and/or any
supplemental instructions provided by Stereotaxis' authorized purchasing
representative. In lieu of delivery to Stereotaxis, Stereotaxis may require that
Supplier destroy or otherwise scrap these Items so that they are non-functional.
Supplier agrees to destroy or otherwise scrap these Items in a manner that is
satisfactory to Stereotaxis and to provide Stereotaxis with a certification of
destruction and/or evidence of proper disposal of such Items. Costs for the
disposal or destruction of such Items (including costs for demagnetization if
necessary) shall be reimbursed to Supplier as in 3.2 above.
3.4 DELIVERY REQUIREMENTS
Supplier will manufacture, sell and deliver all Items to Stereotaxis for which a
Purchase Order has been issued subject to the other provisions of this
Agreement. Shipments to Stereotaxis, or to other locations specified by
Stereotaxis, by Supplier will be delivered in the correct quantities ordered by
Stereotaxis.
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
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3.5 PERFORMANCE CONSTRAINTS
Supplier is responsible for anticipating (1) any inability on its part to
perform its obligations and (2) any limitations in meeting the objectives of
this Agreement with regard to manufacturing, delivery and other required
performance. Supplier is also responsible for informing Stereotaxis when such
constraints will occur and initiating action plans to resolve them. Typical
constraints might include, but are not limited to:
(a) Quality problems
(b) Capacity/production problems
(c) Sub-tier supplier supply-chain management problems
(d) Other business issues
3.6 RESOLUTION OF PERFORMANCE CONSTRAINTS
Supplier will notify the Supplier Account Team Lead as soon as a constraint is
identified and promptly advise Stereotaxis of an action plan to resolve the
constraint without impacting Supplier's performance obligations under this
Agreement.
3.7 PACKAGING REQUIREMENTS
Supplier will have all Items packaged "ready for use" in accordance with
Stereotaxis' packaging specifications. Packaging specifications shall be
supplied by Stereotaxis for each type of shipment to be made by Supplier (for
example, via truck, via sea freight, or via airfreight). Supplier will xxxx and
identify every Item in compliance with Stereotaxis' part marking identification
specifications and requirements. In addition, Stereotaxis may require and
specify specific fit-for-use packaging for certain Items and/or deliveries.
3.8 TRANSPORTATION REQUIREMENTS
Supplier must include a valid packing slip number or package ID on each package
or shipment.
Supplier shall ship all Items "F.O.B. Origin". Stereotaxis will specify the
applicable destination point, which may be a Stereotaxis Facility or another
location. Supplier shall ship all Items in accordance with Stereotaxis' Routing
Guide, including use of approved carriers. In the absence of such a Routing
Guide, Supplier shall select appropriate carriers for shipment of Items.
Supplier shall produce and ship all Items to accomplish delivery of all Items at
the applicable destination point on time.
Stereotaxis may require, from time to time, the Supplier to ship to locations
outside of the United States of America. Supplier will prepare the export
paperwork and be the exporter of record. Supplier must utilize Stereotaxis'
preferred carriers for the export of the Items. Stereotaxis will pay the
freight charges based on Stereotaxis' rates with its preferred carriers.
Stereotaxis will be responsible for importing the goods into the destination
country.
3.9 FREIGHT AND DELIVERY COSTS
All freight and delivery costs for Items shall be specified as "Freight Prepaid"
on bills of lading, to be paid directly by Supplier and billed to Stereotaxis.
3.10 TITLE AND RISK OF LOSS
For all Items shipped Stereotaxis shall bear all risk of loss as to such Items
while in transit. For those Items where Stereotaxis has provided prior written
agreement that Supplier will ship Items using Supplier owned trucks, Supplier
shall bear all risk of loss as to all such Items while in transit and continuing
until Stereotaxis or its designee has received the Items at the specified
destination point and Stereotaxis has acknowledged receipt of the Items.
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4. QUALITY REQUIREMENTS
4.1 CERTIFICATIONS AND ACCEPTANCE TESTS
Supplier agrees to certify that Items have passed all production acceptance
tests and configuration requirements as specified by Stereotaxis and to provide
to Stereotaxis, if required, raw materials certifications for all magnet
materials used in Items, a Certificate of Conformance and documentary evidence
of passing any specified Acceptance Test Procedures.
4.2 QUALITY REQUIREMENTS DOCUMENT
Stereotaxis will develop a quality requirements document for each Item pursuant
to this Agreement, defining all quality requirements and including all
applicable elements of the Item (a "Quality Requirements Document"). Supplier
will provide reasonable assistance to Stereotaxis in its development of a
Quality Requirements Document. Supplier agrees to comply with all quality
requirements defined by such Quality Requirements Document.
4.3 QUALITY SYSTEM
Supplier's quality system must be in compliance with ISO 9000. Certification to
ISO 9000 is desired.
4.4 QUALITY PROBLEMS
Should Stereotaxis identify a quality issue or problem on a component or
subassembly and request Supplier to implement containment action on the part
failure, Supplier shall, within 3 business days after receipt of Stereotaxis'
request, deliver to Stereotaxis a documented containment plan. Stereotaxis will
review the proposed plan and will promptly notify Supplier of acceptance or
revisions to the plan. Upon acceptance of the containment plan Supplier shall
commence implementation of plan and diligently proceed with implementation of
plan to completion. Supplier will substantiate this containment plan with a
closed loop corrective action identifying a permanent fix. Additionally,
Supplier will implement a preventative action plan, as necessary, to prevent the
occurrence of a quality issue or problem on a component or subassembly.
4.5 SUPPLIER AUDITS
At its option, Stereotaxis may conduct audits to ensure a high level of quality
of parts and assemblies purchased from Supplier. Such audit may include product,
process and/or system audits.
4.6 SOURCE INSPECTION
All Items purchased under this Agreement may be subject to source inspection and
test by Stereotaxis at Supplier's facilities at any time, including during the
period of manufacture and anytime prior to Stereotaxis' final acceptance.
Supplier will provide all reasonable facilities and assistance for the safety
and convenience of Stereotaxis' inspectors at no charge to Stereotaxis. The
parties may agree to conduct source inspection and test at an alternate
location. No preliminary inspection or test shall constitute acceptance. Records
of all inspection work shall be kept complete and available to Stereotaxis
during performance under this Agreement and for such further period as
Stereotaxis may determine. Performance of source inspection does not constitute
acceptance of the Items nor waive Supplier's responsibility for any defects that
might subsequently be identified by Stereotaxis or its customers.
4.7 SUB-TIER SUPPLIER QUALITY CONTROL
Supplier agrees to provide Stereotaxis with a quality plan for the selection,
control and maintenance of its sub-tier suppliers (which shall include special
process suppliers). The quality plan will include requirements for Supplier to
conduct periodic quality testing of sub-tier supplier parts and to validate
compliance with Stereotaxis' Specifications. Supplier shall demonstrate
compliance to its quality plan by (i) establishing and maintaining an approved
supplier list of sub-tier suppliers that have passed an on-site quality audit
and (ii) confirming that there are no open corrective actions resulting from
Supplier's audit of sub-tier suppliers. Supplier will, upon Stereotaxis'
request, provide evidence that Supplier quality representatives have conducted
periodic sub-tier supplier on-site audits and have confirmed with sub-tier
suppliers that all sub-tier supplier corrective actions resulting from Supplier
quality audits are closed in a timely manner. At
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Stereotaxis' request, Supplier will ensure Stereotaxis' access to any sub-tier
supplier facility for the purpose of conducting on-site quality audits of such
sub-tier supplier.
4.8 ITEM QUALITY CONTROL
Supplier agrees to provide Stereotaxis with a quality plan that will include a
timeline showing critical milestones for the implementation of all the
requirements of the Quality Requirements Document. Periodic assessment of this
quality plan may be conducted by Stereotaxis' quality organization to ensure
conformance to requirements.
4.9 FIRST ARTICLE INSPECTIONS
First Article inspections for Items shall be conducted by Supplier in compliance
with the Quality Requirements Document.
A new component, a component with revised drawings, or components manufactured
after a change in Supplier's manufacturing location or other changes as
delineated in the Quality Requirements Document, must have a First Article of
such component evaluated and accepted by Supplier, prior to incorporation into
Items. Supplier will maintain a First Article qualifications/evidence data file
with content as defined by Stereotaxis for the components. Stereotaxis may
conduct a First Article validation on any subassembly or component at any time.
5. PAYMENT
5.1 DEPOSITS
In recognition of the complexity of the Items to be produced and the long
lead-times associated with production of Items, Stereotaxis agrees that certain
deposits shall be made upon placement of Purchase Orders and upon completion of
certain milestones. Such deposits and their application to invoices are detailed
in Attachment 2.
5.2 INVOICES
All invoices must be sent directly to Stereotaxis' Accounts Payable Department.
Invoices shall contain the following information: Purchase Order number, Item
number, description, sizes, quantities, unit prices, and extended totals in
addition to tax amounts and any other information requested. Stereotaxis'
payment of an invoice or other account does not in itself represent
unconditional acceptance of Items and Stereotaxis may revoke acceptance at any
time until final inspection and acceptance of Items. All payments made prior to
receipt, inspection, and final acceptance by Stereotaxis will be subject to
adjustment for errors, shortages, non-conformities or defects. Stereotaxis shall
not be required to elect among its remedies, including revocation of acceptance
and remedies for breach of warranty or non-conformity.
5.3 PAYMENT TERMS
Payment will be made net forty-five (45) days from receipt of invoice, in form
and substance acceptable to Stereotaxis. Supplier shall generate invoices upon
evidence being sent to Stereotaxis of satisfactory completion of Acceptance Test
Procedure on Items.
Stereotaxis may request Supplier to store completed Items until Supplier is
instructed to ship Items to locations specified by Stereotaxis.
5.4 METHOD OF PAYMENT
Stereotaxis is authorized by Supplier to make payments under this Agreement by
either check or electronic funds transfer. Supplier will provide Stereotaxis
with the required bank routing coordinates and other information that may be
required by Stereotaxis to establish electronic funds transfer capability. All
payments will be made in United States currency.
Supplier shall quote all prices in US dollars; prices for foreign manufactured
Items will not be adjusted to reflect changes in the exchange rate.
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5.5 EFFECT OF PAYMENT
The time and method of payment shall not alter the time at which title to Items
passes to Stereotaxis nor shall it preclude revocation of acceptance as
permitted by law. As to Items that are non-conforming, Stereotaxis may revoke
acceptance, recover and offset or adjust payments in respect of such Items, and
return same to Supplier, in which case title shall revert to Supplier, or
Stereotaxis may enforce any of its other remedies for non-conforming Items,
including warranty remedies.
6. PRICING FRAMEWORK
Attachment 1 contains Contract Prices for all Items.
Any remaining balance of undelivered Items on open Purchase Orders as of the
date of this Agreement will not become subject to the Contract Prices on the
Effective Date of this Agreement.
Specific circumstances may result in mutual review and mutually agreed written
changes of Agreement terms, including Contract Prices. These circumstances
include, but are not limited to:
(a) Volume increases or decreases resulting in an increase or
decrease in the value of the Agreement value of over [***]
(subsequent to completion of negotiations on the existing
prices);
(b) Addition or subtraction of Items to the Agreement increasing
or decreasing the value of the Agreement over [***];
(c) Cost reductions/savings in Supplier's performance plan; and
(d) Changes in market prices for equivalent materials and
services.
Unless otherwise indicated, prices are exclusive of all city, state and federal
taxes. Any taxes which Supplier may be required to pay or collect under any
existing or future law upon or with respect to the sale, purchase delivery,
storage, processing, use or consumption of any of the material covered hereby,
including taxes upon or measured by the receipts from the sale, thereof, shall
be for the account of Stereotaxis and Stereotaxis shall promptly pay such amount
to Supplier upon demand.
Both Stereotaxis and Supplier will separately and jointly work towards
identifying process and product changes that will reduce cost. Supplier will
participate in benefits of cost savings under Contract Prices so as to preserve
a commercially reasonable profit margin to Supplier.
7. TECHNICAL ISSUES
7.1 ENGINEERING CHANGE ORDERS
Stereotaxis may change its drawings, design, and Specifications at any time and
generate a proposed Engineering Change Order (ECO). A Stereotaxis supplier
engineer will review with Supplier all proposed ECO's that affect the form, fit,
or function of Items. Stereotaxis will provide, in writing, approved ECO's
indicating the effective dates of all changes. Unless otherwise notified,
Stereotaxis' receiving inspection will inspect to the latest revision in effect
at the time of receipt of Items.
Supplier may submit requests for engineering changes to an Item, submitting the
proposed change and reasons for change. Reasons for change may include but are
not limited to:
(a) Manufacturability of Items
(b) Cost reduction opportunities
(c) Enhanced reliability of Items
(d) Safety of manufacture, transportation or use of items
Such changes may include without limitation changes in component parts, testing
or manufacturing procedures or cosmetic changes.
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment.]
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Supplier shall request any such engineering changes via a detailed letter and
shall submit such request to Stereotaxis designated buyer who shall submit such
request to the appropriate Stereotaxis engineering personnel.
The Supplier shall not implement any changes (and Supplier shall not ship any
Items with any such changes) until written permission to proceed is given by
Stereotaxis' authorized purchasing representative and the Purchase Order is
modified accordingly.
7.2 TOOLING
Any tooling which is built or procured by Supplier and which is unique to the
Items and/or relevant to the manufacture, testing, maintenance, repair or
troubleshooting of Items and has not previously been charged to Stereotaxis
will, upon Stereotaxis' request, be sold to Stereotaxis by Supplier at [***].
Supplier agrees to provide a separate line Item quote for tooling. Stereotaxis
will, upon its agreement to a quote for tooling, pay for the tooling cost
separately. Title to any non-unique tooling shall remain with Supplier, unless
required to allow production continuation as described in Section 2.
Supplier shall not at any time use the tools (including test fixtures) furnished
by or purchased from or by Stereotaxis ("Stereotaxis tooling") for the
production of goods for persons other than Stereotaxis or in any manner other
than in performance of this Agreement without Stereotaxis' written approval.
Supplier will use commercially reasonable best efforts to maintain the
Stereotaxis tooling in good condition and repair and to provide all necessary
calibration services for the Stereotaxis tooling. Stereotaxis and Supplier agree
to execute a tooling loan agreement as set out in Attachment 3 for any
Stereotaxis tooling in Supplier's possession. Supplier will be responsible for
obtaining the requisite insurance coverage and conducting appropriate
inspections for such loaned tooling.
7.3 DESIGN CHANGES
For the term of this Agreement, Supplier will not make changes to the design of
any Item that may alter the Specifications, form, fit, function or manufacturing
process of such Items, without first submitting a detailed written description
of proposed changes to Stereotaxis' authorized representative. Supplier may make
such authorized design changes only upon obtaining prior written approval from
Stereotaxis' authorized purchasing representative and modification of Purchase
Orders relating to the Item in question.
If Stereotaxis' design changes affect the pricing, delivery, lead-time, or other
terms and conditions of this Agreement and the parties cannot agree upon
alternate terms, then Stereotaxis may remove the affected Items from this
Agreement without affecting the remaining Items.
7.4 PROCESS CHANGES
Supplier agrees to inform Stereotaxis of any process or sub-tier supplier
changes to Items, including without limitation any changes in the manufacturing
process of a sub-tier supplier, even when Specifications are being met. Supplier
must receive approval in writing from Stereotaxis before implementing such
changes.
7.5 SUPPLIER'S SUBCONTRACTS
Supplier shall not subcontract for components, processes or completed or
substantially completed Items supplied to Stereotaxis without prior written
approval from Stereotaxis. Supplier will ensure that all sub-tier suppliers of
Supplier who have access (directly or indirectly) to Stereotaxis' specifications
or internal Stereotaxis data or other Confidential Information will sign and be
governed by an Non-Disclosure Statement (NDA) that is similar in form and
substance to Stereotaxis' NDA with Supplier. Approval by Stereotaxis of a
subcontractor selected by Supplier shall not alter Supplier's obligations to
Stereotaxis.
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
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7.6 FIRST ARTICLE AND SOURCE INSPECTIONS
First Article and Source Inspections shall be conducted in compliance with the
quality provisions of this Agreement (Section 4).
7.7 PRODUCT SUPPORT
Supplier agrees to maintain capability to provide Items and technical and
service support to Stereotaxis for all of the Items for a minimum of five (5)
years from the date of final shipment of an Item to Stereotaxis. Alternatively,
the parties may agree to establish a product support period of less than five
(5) years, provided that Supplier agrees to sell to Stereotaxis as part of such
alternative a non-exclusive, irrevocable, royalty free, worldwide and
transferable license of intellectual property to make, or have made the Items,
in a form and on terms acceptable to Stereotaxis.
8. NONCONFORMANCE
8.1 SUPPLIER NON-CONFORMANCE AND CORRECTIVE ACTION
All Items are warranted to meet all applicable Stereotaxis Specifications as
stated in this Agreement (including all Attachments, technical Specifications
and manufacturing work instructions). Supplier will replace or repair defective
Items at Supplier's expense within the time period necessary to meet
Stereotaxis' production requirements. Supplier is required to use the most
expeditious manner possible to effect the corrections; at Stereotaxis' request,
in certain circumstances, Suppliers may be asked to provide new Items in lieu of
repairing a part to ensure immediate corrective action or credit for the failed
part.
Stereotaxis will notify Supplier of defects and obtain a Return Material
Authorization number from the Supplier. Stereotaxis will then return the Item to
the Supplier together with a discrepant material report ("DMR"). Supplier will
promptly respond as appropriate to meet the production or repair requirements of
Stereotaxis. A corrective action process to resolve nonconformance will be
documented and used by the parties. In addition, Supplier will participate in
continuous improvement plans and programs as defined by Stereotaxis and
Supplier.
Should any Item fail to conform to the Specifications established in this
Agreement, in addition to any other remedies in this Agreement, Stereotaxis may
purchase products comparable to the items or substitutes for Items in the open
market or from other suppliers as necessary to meet its requirements.
8.2 STEREOTAXIS NON-CONFORMANCE AND CORRECTIVE ACTION
Stereotaxis will, at its option, return at its expense Items that do not conform
to Stereotaxis' requirements due to Stereotaxis' errors. These Items will be
returned to Supplier for repair or potential rework. Stereotaxis and Supplier
will agree in advance of repairs on "standard" repair costs (labor, Items and
freight) for Items not covered under warranty.
Prior to Supplier's return of a repaired Item to Stereotaxis, Supplier will xxxx
such Item with Stereotaxis' part number, and serial number. Stereotaxis shall
bear the risk of loss or damage during transit of repaired or reworked Items
whether or not the Items meet warranty or other requirements.
8.3 WARRANTY
Supplier warrants (a) that, for a period of 12 months from delivery to
Stereotaxis, all Items delivered to Stereotaxis (i) will be free from defects in
workmanship, material, and manufacture, (ii) will comply with the requirements
of this Agreement, and (iii) to the extent design is Supplier's responsibility,
will be free from defects in design and (b) that all services will be performed
in a competent, professional and workmanlike manner, free from defects and in
accordance with the best professional practices in the industry. Supplier
further warrants that all Items purchased or repaired will consist of new
materials (not used, recycled or of such age as to impair its
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usefulness or safety, except as may be approved in advance by Stereotaxis).
These warranties are in addition to all other warranties, whether expressed or
implied, and will survive any delivery, inspection, acceptance, or payment by
Stereotaxis. If any Items delivered by Supplier do not meet the warranties
specified herein or otherwise applicable, Stereotaxis may, at its option, take
one or more of the following actions and/or any other action permitted by law or
equity:
(i) Require Supplier to correct at no cost to Stereotaxis any
defective or nonconforming Items by repair or replacement;
(ii) Return such defective or nonconforming Item at Supplier's
expense to Supplier and recover from Supplier the purchase
price thereof; or
(iii) Notify the Supplier that Stereotaxis will correct the
defective or nonconforming Item itself and charge Supplier
with the reasonable cost of such correction.
Stereotaxis' approval of Supplier's material or design will relieve Supplier of
the warranties established in this agreement. If Stereotaxis waives any drawing
or specification requirement for one or more of the Items, it will not
constitute a waiver of all requirements for the remaining Items to be delivered
unless stated by Stereotaxis in writing.
9. TERMINATION
9.1 TERMINATION BY STEREOTAXIS
This Agreement may be terminated by Stereotaxis if:
a) Supplier fails to perform its obligations to deliver Items
that meet the specifications agreed upon by Stereotaxis and
Supplier, and fails to cure such deficiencies within 30 days
of Stereotaxis' written notice;
b) Supplier fails to perform its obligations to deliver Items
within the agreed upon delivery schedule, for reasons that are
within its control, and fails to cure such deficiencies within
30 days of Stereotaxis' written notice; or,
c) Supplier fails to meet documented market prices received from
other potential suppliers that are capable of producing Items,
with terms, conditions, and specifications being materially
the same as those offered by Supplier. In this case,
Stereotaxis will provide Supplier evidence of market pricing,
name the potential competition, provide Supplier with evidence
of potential supplier's capability to produce Items, and allow
Supplier 30 days to study its own cost model in order to
respond to such pricing.
9.2 TERMINATION BY SUPPLIER
This Agreement may be terminated by Supplier if:
a) Stereotaxis fails to make payments as they become due
(provided such payments are not subject to bona fide dispute)
and fails to cure such breach of this Agreement within 30 days
of receipt of written notification by Supplier. By termination
the Agreement for this reason, Supplier does not relinquish
its rights under law to collect payments as properly due. In
this case, Supplier reserves the right to charge a financing
charge of 1.5% per month until amounts properly due are
collected.
9.3 NOTICE AND PERIOD TO CURE
Stereotaxis and Supplier shall each provide the other with notice of any of the
termination events described above and provide the other with an opportunity to
cure such default within 30 days or within such other time period as the parties
may mutually agree.
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10. AMENDMENTS AND MODIFICATIONS
Amendments or revisions to this Agreement must be in writing, signed by both
Stereotaxis and Supplier duly authorized representatives, traced by revision
numbers and attached to this original Agreement. The master copy of this
Agreement and any revisions are to be maintained by Stereotaxis and Supplier.
Captions in this Agreement are for the convenience of the parties only and shall
not affect the interpretation or construction of this Agreement. The provisions
of this Agreement (including Exhibits and Attachments) shall be construed as a
whole, each supplementing the other. In the event any provision of this
Agreement is held to be invalid or unenforceable, such provision shall be
severed from the remainder of this Agreement, and such remainder will remain in
force and effect. This Agreement, including also any Purchase Order issued for
Items, shall control over any invoice, delivery ticket, or other document issued
by Supplier, and Supplier's acceptance of this Agreement shall constitute
agreement to the terms set out in this Agreement.
11. LIABILITY
11.1 SUPPLIER ASSUMES NO LIABILITY ON USE OF ITEMS
Stereotaxis unconditionally releases Supplier, its raw material suppliers, and
other sub-tier suppliers from all liabilities that may occur in the use of Items
by Stereotaxis for whatever purpose.
SUPPLIER ASSUMES NO LIABILITY FOR CONSEQUENTIAL DAMAGES. UNDER NO CIRCUMSTANCES
SHALL SUPPLIER BE LIABLE TO STEREOTAXIS OR ANY OTHER PERSON FOR ANY SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, DAMAGES
BASED UPON USE OF ITEMS FOR WHATEVER PURPOSE, LOST GOODWILL, LOST SALES OR
PROFITS, WORK STOPPAGES, DELAY WHETHER ARISING OUT OF BREACH OF WARRANTY, BREACH
OF CONTRACT, NEGLIGENCE OF OTHERWISE, and in any case, Supplier's liability for
any and all losses and damages sustained by the Stereotaxis and others, arising
out of or by reason of this Agreement shall not exceed the original purchase
price of the products upon which liability is founded.
11.2 FORCE MAJEURE.
Failure of Supplier to deliver hereunder, or delay in making shipments, if
occasioned by fire, explosion, flood, earthquake, war, riots, insurrection,
civil disturbance, accident, storm, interruption or delay in transportation,
shortage, strike or other labor dispute, inability to obtain materials and
supplies, acts of government, any act of God, or any other causes of like or
different character beyond Supplier's control shall not subject Supplier to any
liability to Stereotaxis.
12. NOTICES
Revisions, updates or other amendments or modifications to this Agreement
(including Exhibits and Attachments) may be communicated via memos sent by mail,
fax or e-mail, or by other electronic transaction means, where authorized, to
the individuals listed below. Each party shall advise the other in writing of
any change to such party's contact persons.
All notices shall be delivered as follows:
If to Supplier:
Xxxx Xxxxx
Magnet Sales & Manufacturing Inc.
00000 Xxxxx Xxxxx
Xxxxxx Xxxx XX 00000
Phone: 000-000-0000
Fax:000-000-0000
E-Mail:xxxxx@xxxxxxxxxxx.xxx
Page 10
If to Stereotaxis
Contact Name:
Attention: Chief Financial Officer;
Attention: Messrs. Xxx Xxx and Xxxx Xxxxx
Address: 0000 Xxxxxx Xxxx Xxxxxx
Xx. Xxxxx, XX. 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-Mail:
13. ACCEPTANCE
The signature below show acceptance of this Agreement in its entirety by
Stereotaxis and Supplier.
Stereotaxis: Magnet Sales & Manufacturing Inc. (Supplier):
/s/ XXXXXX XXXXX /s/ XXXX XXXXX
Signature XXXXXX XXXXX Signature
Its CFO Its President
Dated: 6/17/03 Dated: 7-01-03
Page 11
ATTACHMENT 1
DESCRIPTION OF ITEMS AND PRICING SCHEDULE
PRICING SCHEDULE
STEREOTAXIS
ITEM NUMBER REVISION DESCRIPTION QUARTER VOLUME UNIT PRICE
------------ -------- ---------------------- ------- ------- ----------
000-000000-0 - Assy, Permanent Magnet Q4-03 [***] [***]
000-000000-0 - Assy, Permanent Magnet Q1-04 [***] [***]
000-000000-0 - Assy, Permanent Magnet Q2-04 [***] [***]
000-000000-0 - Assy, Permanent Magnet Q3-04 [***] [***]
000-000000-0 - Assy, Permanent Magnet Q4-04 [***] [***]
DELIVERY SCHEDULE FOR FIRST PURCHASE ORDER - Q4-03 & Q1-04
QTY TO DELIVER DELIVERY DATE QTY TO DELIVER DELIVERY DATE
-------------- ------------- -------------- -------------
[***] [***] [***] [***]
[***] [***] [***] [***]
[***] [***] [***] [***]
[***] [***] [***] [***]
[***] [***]
[***] [***]
The above "Description of Items and Pricing Schedule" is intended to portray a
schedule of Stereotaxis' intent of procurement and an integrated Magnetics
commitment to pricing based on that intent. Stereotaxis will place an original
Purchase Order for the Q4-03 and Q1-04 quantities and pricing for a total of
[***] magnets for a total price of [***]. As time passes and deliveries are
made, Stereotaxis intends to place additional purchase orders based on updated
forecasts and requirements, but specific purchase orders will be released to
firm those commitments. Stereotaxis will maintain purchase order commitments to
cover periods not less than the following:
Magnet material commitments for 5 months in the future and completed magnet
assembly commitments of 5 months in the future. For example when the delivery
date of the last magnet on purchase order is five (5) months away, Stereotaxis
will place a purchase order for additional magnet material to cover at least 1
more month worth of magnets. When the delivery date of the last magnet on
purchase order is three (3) months away, Stereotaxis will place a purchase order
for additional magnets to cover at least 1 more month worth of magnets. If
finished magnets are not ordered to consume the committed magnet material within
a period of four (4) months, Stereotaxis will pay for the committed material.
Stereotaxis may adjust the quantity of magnets on purchase order to correspond
to the requirements of sales orders. Deliveries may be delayed up to six (6)
months from the above schedule (i.e., deliveries could be rescheduled out
through [***]). Changes in delivery shall require a minimum of three (3) months
notice, Pricing of the magnets will correspond to the quarter in which they are
scheduled for delivery on the purchase order, provided that the quantities
ordered are within 20% of the quantities forecasted. Magnets that are scheduled
for delivery in 2005 shall be priced at the Q4-04 price in the table above.
CREDITS
Stereotaxis shall receive a credit of [***] for each complete magnet crate that
is returned to Supplier. Partial magnet crates shall be saved until a complete
crate can be assembled, at which time Stereotaxis shall receive the [***]
credit.
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
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ATTACHMENT 2
DEPOSIT AMOUNTS, SCHEDULE, AND APPLICATION OF DEPOSITS TO INVOICES
PURCHASE ORDER
VALUE DEPOSIT WHEN PAID
------------------- --------- -----------
Q4-03 and Q1-04
quantities and [***] Upon Order
pricing
APPLICATION OF DEPOSIT AMOUNTS:
Deposit amounts shall be applied to invoices for the first [***] magnets of this
agreement at a rate of [***] per magnet.
[*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.]
Page 13
ATTACHMENT 3
STEREOTAXIS OWNED TOOLING LOAN AGREEMENT WITH SUPPLIER
Stereotaxis may, at its option, loan Supplier special tooling, owned by
Stereotaxis, in order to assist in the manufacture, assembly, inspection, or
test of Items. Supplier shall be responsible for storing such tooling safely in
a manner that shall preserve its functionality. Supplier shall be responsible
for maintaining such tooling per instructions of Stereotaxis or manufacturer of
tooling as appropriate. Supplier shall be responsible for providing adequate
insurance coverage for such tooling in case of loss or damage. All such tooling
shall be clearly marked with a tag showing the part number, revision, date
received, and that it is owned by Stereotaxis.
Stereotaxis may at any time audit the condition of such loaned tooling to ensure
that it is stored and maintained in an acceptable manner.
Supplier shall reimburse Stereotaxis if such tooling is lost or damaged while in
Supplier's possession, unless damage has occurred upon use of tooling at
Stereotaxis' specific instructions.
Page 14
