Supply and License Agreement - SheerVision inc.
CONFIDENTIAL TREATMENT REQUEST
[*] indicates information that has been omitted pursuant to a confidential
treetment request and this information has been filed under Separate Cover with
the Commission.
[*]
SUPPLY AND LICENSE AGREEMENT
THIS IS AN AGREEMENT, ("Agreement") dated 4/7/03 ("Effective Date") between [*]
located at [*] ("[*]") and SheerVision, Inc., located at 4276 Admirable Drive,
Rancho Palos Verdes, California 91275 ("SheerVision").
WITNESSTHETH
WHEREAS, [*] distributes and sells optical products for the medical products
market; and
WHEREAS, SheerVision designs and manufactures premium quality optical products;
and
WHEREAS, [*] and SheerVision wish to enter into a relationship wherein
SheerVision develops and manufactures premium quality optical products under the
[*] label, for [*] to market and distribute.
NOW THEREFORE, in consideration of mutual promises and agreements set forth
herein, the parties agree as follows:
1. PRODUCT
SheerVision will develop and manufacture certain products for [*] under
the terms and conditions of this Agreement. The products contemplated by
this Agreement are further described in SCHEDULE A (the "Product(s)").
Products may be added or deleted from this Agreement with mutual written
agreement by [*] and SheerVision.
2. TERMS OF THIS AGREEMENT
A. PAYMENT.
(i) TERMS OF PAYMENT
Terms of payment will be net thirty (30) days from the receipt of
invoice. Notwithstanding the foregoing, for the first order placed
under this agreement, dated April 8, 2003 for 500 Products, one half
of the total invoice amount shall be paid upon the issuance of said
purchase order with the remaining balance due net thirty (30) days
from receipt of invoice.
(ii) SET OFF
[*] shall be entitled at all times to set off any amount owing to
SheerVision from [*] against any amount due or owing [*] from
SheerVision.
B. DELIVERY
FOB [*]'s USA location as listed above.
C. ADDITIONAL TERMS & CONDITIONS
[*] standard Terms and Conditions as stated above shall apply to all
transactions hereunder unless otherwise modified by this Agreement.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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SUPPLY AND LlCENSE AGREEMENT
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3. QUANTITY, PRICING AND STANDARDS OF PERFORMANCE
A. QUANTITY / ROLLING FORECAST/ ORDERS
i. There is no fixed minimum or maximum quantity per annum.
ii. The quantity of Product to be purchased during this Agreement
is based on a rolling forecast, provided for every six-month period
under this Agreement, beginning on the Effective Date. Orders will
be for a minimum of 300 Products.
iii. Orders will be placed through standard [*] purchase order. [*]
may make changes to orders up to 45 days before delivery without
penalty.
B. PRICING
The price per unit for the Products during the Term of this
Agreement is set forth in SCHEDULE A.
C. TIMING
SheerVision acknowledges that in providing the Products to [*] time
is of the essence. If SheerVision fails to provide the Products
within ten (10) days of the date specified on the monthly Purchase
Order, it will pay or credit to [*] [*] of the specified order and
[*] for each additional ten (10) days which the delivery of the
Product is delayed.
D. QUALITY
All Product delivered under this Agreement must meet all applicable
requirements to include performance specifications, workmanship
standards and suitability for its intended purpose. Product shall be
undamaged and in "new" condition. Final acceptance of all Product
shall take place at [*]'s location prior to use. Product shall
include test data where required including certification to all
applicable standards and specifications.
Products must be coded to permit tracking by batch, lot, date or
similar identifying number to allow for efficient methods of
identification once sold into the market.
E. PRODUCT SPECIFICATIONS
SheerVision will provide detailed Product specifications and will
provide Product as per those specifications, as attached in SCHEDULE
C. [*] may change specifications according to the Engineering Change
Order ("ECO") process to be mutually developed by the parties within
eight (8) weeks of the Effective Date. After completion, the ECO
process will be incorporated herein as SCHEDULE D (not yet
completed). SheerVision will notify [*] (verbally followed by
written notice within twenty-four (24) hours) if possible at the
time of ordering/release or earlier and prior to the shipment of any
specification, optical or cosmetic changes from what has been
previously agreed upon which may affect form, fit, function or
cosmetic issues. [*] will notify SheerVision (verbally followed by
written notice within twenty-four(24) hours) if the Product in its
modified form is acceptable to [*]. Any costs associated with
correcting any material received at [*]'s possession without prior
notice and approval of specification changes will be the
responsibility of SheerVision.
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F. MARKETING MATERIALS
[*] will provide marketing materials and specifications for the same
as needed. SheerVision will make all marketing materials for the
Product available in digital format to [*] including without
limitation, including images, user manuals and training materials.
G. PACKAGING AND SHIPMENT
SheerVision will ship Product to [*]'s location in accordance with
good commercial practice, acceptable to common carriers for shipment
in the specified manner and adequate to insure safe arrival of the
goods at [*]'s place of business. Individual Product packaging will
be those wooden boxes SheerVision currently provides customers.
Changes to Product packaging can be made at [*]'s request upon at
least sixty (60) days' notice and reasonable price changes to
accommodate either lower or higher costs of such packaging changes
will be subject to mutual negotiation.
H. COST REDUCTION/CONTINUOUS PROCESS IMPROVEMENT
SheerVision and [*] will conduct regular joint Product review
process to provide a basis for future cost reductions and Product
improvements. These price reductions can be implemented at any time
during the Term, upon mutual agreement of the parties. SheerVision
also agrees to pursue actively a process improvement program aimed
at reducing cycle time and improve quality. The parties will meet at
least once every 18 months under this Agreement, for the purpose of
reviewing quantities and pricing. The parties will work in good
faith to reach mutual agreements as to the foregoing.
I. COMPLIANCE WITH LAWS
SheerVision will conduct all activities under this Agreement in full
compliance with the laws and regulations of the United States as
well as those required for obtaining and maintaining CE mark
approval in the European market. SheerVision will provide [*] a copy
of its CE mark certification book.
4. WARRANTY
A. WARRANTY
SheerVision warrants that all Products delivered hereunder shall be
free from defects in workmanship, material and manufacture, of
merchantable quality, fit for their generally intended use, and
shall comply with the requirements of this Agreement, including any
drawings or specifications incorporated herein or samples furnished
by SheerVision, and, where design is SheerVision's responsibility,
be free from defects in design, for a period of 18 months after
purchase.
SheerVision warrants that it shall at all times faithfully,
industriously, and to the best of its ability, experience, and
talents, render all of the services that may be required of
SheerVision pursuant to the express and implied terms of this
Agreement.
The foregoing warranties shall constitute conditions and are in
addition to all other warranties, whether expressed or implied, and
shall survive any delivery, inspection, acceptance, or payment by
[*].
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B. FAILURE TO COMPLY
If any Product delivered hereunder does not meet the warranties
specified herein or otherwise applicable, [*] may at its option (i)
require SheerVision to correct at no cost to [*] any defective or
nonconforming Product by repair or replacement, or (ii) return such
defective nonconforming Product at SheerVision's expense to
SheerVision and recover from the SheerVision the order price
thereof, or (iii) if SheerVision has failed to correct the problem
within 30 days from the date the nonconforming Product is returned,
correct the defective or nonconforming Product itself and charge
SheerVision with the cost of such correction. The foregoing remedies
are in addition to all other remedies at law or in equity or under
this Agreement and shall not be deemed to be inclusive. All
warranties shall run to the [*] and to its customers.
C. RESPONSIBILITY
[*]'s approval of the SheerVision's Product or design shall not
relieve SheerVision of the warranties set forth herein, nor shall it
constitute a waiver by [*] of any drawing or specification
requirements for one or more of the remaining Product to be
delivered hereunder unless so stated by [*] in writing. The
provisions of this Paragraph shall not limit or affect the rights of
[*] under the Paragraph entitled "INSPECTION".
5. INSPECTION
A. INCOMING INSPECTION
All Products shall be subject to inspection and test by [*] to the
extent practicable at all times and places, including, but not
limited to, the period of manufacture and prior to final acceptance.
If inspection or test is made by [*] on SheerVision's premises,
SheerVision, without additional charge, shall provide all reasonable
facilities and assistance for the safety and convenience of [*]'s
inspectors. [*] shall notify SheerVision no less than forty-eight
(48) hours in advance of an inspection at SheerVision's location. No
inspection or test made prior to the final inspection and acceptance
shall relieve SheerVision from responsibility for defects or other
failure to meet the requirements of this Agreement or any Purchase
Order hereunder.
B. DEFECTIVE PRODUCTS - MANUFACTURER'S DEFECTS
If any Products are defective in material or workmanship or
otherwise not in conformity with the requirements of a Purchase
Order, [*] shall have the right to reject it, require its
correction, or accept it with an adjustment in price. If [*] so
requests, any Products which have been rejected or required to be
corrected shall be replaced or corrected by and at the expense of
SheerVision promptly after notice from [*]. If, after being
requested by [*], SheerVision fails to promptly replace or correct
any defective Products within its delivery schedule, [*] may in its
sole discretion, (i) by contract or otherwise, replace such Products
and charge to SheerVision the cost occasioned thereby, (ii) without
further notice, terminate this Agreement for default in accordance
with the Paragraph herein entitled "TERMINATION", or, (iii) may
require an appropriate reduction in price.
C. FINAL INSPECTION
Not withstanding any prior inspections or payments hereunder, all
Products shall be subject to final inspection and acceptance at
[*]'s location within a reasonable time after delivery. The
SheerVision shall provide and maintain a quality system which is
acceptable to [*] during the performance of a Purchase Order and for
such further period as the [*] may determine.
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SUPPLY AND LICENSE AGREEMENT
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6. ACCEPTANCE
This Agreement, along with the terms and conditions of any Purchase Order
generated by [*], is the sole Agreement between the parties covering
Product ordered by [*] when a Purchase Order is accepted by acknowledgment
or commencement of performance by SheerVision. A PURCHASE ORDER CAN BE
ACCEPTED ONLY ON THESE TERMS AND CONDITIONS. Additional terms proposed by
SheerVision will not be applicable unless accepted in a signed writing by
the [*]. No change, modification or revision of a Purchase Order shall be
effective unless in writing and signed by [*].
7. EXCLUSIVITY
SheerVision will not contract with any other party for furnishing the
Products, nor will it distribute the Products itself. Further, SheerVision
agrees that as of the Effective Date, it will not enter into any new
relationships with third parties for providing private label products
similar to the Products.
When [*] purchases 1500 or more Products per annum, [*] will become the
exclusive reseller of all SheerVision products within the applicable
market for the Products. Thereafter, SheerVision will not contract with
any other party for the distribution or manufacture of products similar to
the Products. However, SheerVision may sell similar products directly to
end users, but not to parties for resale.
8. DEVELOPMENT
[*] reserves a right of first refusal to distribute under private-label,
all new loupe products developed by SheerVision. Within eight (8) weeks of
the introduction of the new product to [*], including technical, prototype
and business plans, [*] will confirm in writing whether it will distribute
the proposed new product. If [*] rejects the proposed new product,
SheerVision. will not offer the same to a third party under terms
materially different from those offered to [*].
9. LIMITED LICENSE / NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
A. LIMITED LICENSE
[*] hereby grants to SheerVision a non-exclusive right and license to use,
solely for the purposes and duration of this Agreement, the trademarks and
logo set forth on SCHEDULE E (the "Trademark(s)"). The exact placement and
use of the Trademark(s) will be in accordance with [*]'s policies and
procedures for use of the same, as provided to SheerVision, and will be
subject to approval by [*]. The foregoing license and all right to use the
Trademark(s) will automatically terminate upon termination of this
Agreement.
B. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
Any specifications, drawings, sketches, models, samples, data, computer
programs or documentation, or technical or business information
("Information") furnished or disclosed between the parties hereunder shall
be deemed Confidential and, when in tangible form, shall be returned to
the disclosing party upon completion or termination of authorized work or
this Agreement unless otherwise indicated by the disclosing party. Unless
such information was previously known to the parties free of any
obligation to keep it confidential, or has been or is subsequently made
public, either by the parties or by a third party, it shall be held in
confidence by the parties, and shall be used only for the purposes
hereunder, and may be used for other purposes only upon such terms and
conditions as may be mutually agreed upon in writing.
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Neither party shall advertise, market or otherwise make known to others
any Information relating to the work performed under this Agreement,
including mentioning or implying the name of either party, their
subsidiaries or affiliates, except as expressly provided for herein. In
the event of a material breach of the obligations in this paragraph 12,
either party may have the right to terminate this Agreement pursuant to
paragraph 12 (b).
10. INSURANCE
SheerVision and [*] agree to maintain in force general and product
liability insurance, in amounts reasonably deemed necessary to cover the
risks hereunder.
11. INDEMNIFICATION
A. SheerVision agrees to indemnify [*], its agents, customers, successors,
and assigns against any loss, damage and liability, including costs and
expenses, including attorneys fees, for actual or alleged infringement of
any patent, copyright or trademark arising out of the use or sale by [*],
its agents or customers, of the Products. [*] shall notify the SheerVision
of any suit, claim or demand involving such infringement and shall permit
SheerVision to defend against or settle the same. If any injunction is
issued as the result of any infringement, SheerVision agrees, at [*]'s
sole option, to (i) refund to [*] the amounts paid to SheerVision
hereunder as may be reasonably attributed to the infringement, or (ii)
furnish [*] with an acceptable and non-infringing product.
B. SheerVision agrees to protect, defend, hold harmless and indemnify [*],
its agents, customers, successors and assigns from and against any and all
claims, liability and expense resulting from any alleged or claimed defect
in Products, whether latent or patent, including allegedly improper
construction and design, or from the failure of Products to comply with
specifications.
C. SheerVision further agrees that all Products supplied will be free from
liability of royalties, mechanics liens, or other encumbrances, and
SheerVision agrees to indemnify and hold [*] harmless from these
liabilities.
12. TERM AND TERMINATION
A. TERM
This Agreement will become effective as of the Effective Date and shall
remain in effect for a period of three (3) year(s) at which time it shall
Terminate automatically, or until Terminated as set forth hereunder.
B. TERMINATION UPON NOTICE
This Agreement may be terminated at any time, without cause, by either
party upon giving the other party one-hundred and eighty (180) days
written notice. In the event of termination under this paragraph,
SheerVision and [*] shall work together in good faith to minimize the
adverse impact of a disruption in the supply chain, as set forth generally
under paragraph 6 D herein.
C. TERMINATION FOR CAUSE
Both parties may terminate this Agreement with immediate effect upon
breach of any material provision of this Agreement by the other party,
after provision of notice and ten (10) days opportunity to cure said
breach.
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D. TERMINATION PHASE-OUT OBLIGATIONS
During the termination notice period the parties shall continue under
their obligations under this Agreement, and shall act in accordance with
the requirements herein to minimize the financial and operation impact of
the termination upon the other party.
i. If SheerVision initiates termination, it will continue to perform
its obligations under this Agreement and, at [*]'s request, shall increase
production of the Product in order to allow [*] to fulfill its own
manufacturing requirements during transition.
ii. If [*] initiates termination:
a) SheerVision shall immediately assess its current inventory of the
Product and raw materials and take immediate action to minimize the
financial impact on itself and, [*] including without limitation, stopping
production. SheerVision shall notify [*] in writing within ten (10) days
of the termination notice, of the total amount of inventory that can not
be used for any other purpose in a commercially reasonable manner. [*]
shall be responsible for the costs such inventory.
The extent of [*]'s responsibility by part number will be determined only
by those items set forth on SCHEDULE A. [*] shall not be responsible for
commonly used material that will be consumed in the SheerVision's normal
production for the satisfaction of other customers' requirements.
SheerVision shall, after consultation with [*], use its best efforts to
dispose of the unique inventory items by rework or restocking.
13. MISCELLANEOUS
A. APPLICABLE LAW
This Agreement shall be governed by, subject to, and construed in
accordance with the Laws of the State of New York. Jurisdiction and venue
for any and all claims or disputes arising out of the terms and conditions
of this Agreement shall lie with the courts of Westchester County, New
York, unless otherwise specified herein.
B. DISPUTES
In the event of a dispute, both parties shall negotiate in good faith to
reach an amiable settlement. If the parties, through their senior
management representatives, are unable to reach a settlement within sixty
(60) days of the commencement of discussions, then, at the request of
either party, any dispute arising out of this Agreement shall be settled
by expedited arbitration under a sole arbiter, in accordance with the
Commercial Arbitration Rules of American Arbitration Association ("AAA")
in effect at the time of the arbitration (the "Rules"), except as such
Rules may be modified herein. If there is any inconsistency between the
Rules and this Article, this Article shall govern. Awards from arbitration
shall be binding and enforceable in any court of competent jurisdiction.
All proceedings under this Article shall be held in New York City, New
York. Each party shall be given at least fifteen (15) days advance notice
of the time and place of arbitration.
C. WAIVER
Either parties' failure to enforce at any time any of the provisions of
this Agreement, to exercise any election or option provided herein, or to
not require at any time performance by the SheerVision of any of the
provisions hereof shall in no way be construed to be a waiver of such
provisions, nor in any way affect the validity of this Agreement or any
part thereof, or the right of [*] thereafter to enforce each and every
provision.
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D. INDEPENDENT CONTRACTOR STATUS
The relationship between [*] and SheerVision is that of independent
contractors, and not of employer-employee or principal-agent. SheerVision
is not the legal representative of [*], nor is [*] the legal
representative of SheerVision. Neither SheerVision nor [*] has the right
or authority to assume or undertake any obligations or make any
representation on behalf of the other, and neither shall hold itself out
as having such right to authority.
E. FORCE MAJEURE
No party shall be responsible for any failures or delays from causes
beyond its control, including, without limitation, acts of God, acts of
government, war, fires, floods, strikes, or failure by third parties (not
an Affiliate or Subsidiary) to comply with their obligations to that
party.
F. ENTIRE AGREEMENT
This Agreement along with any terms or conditions contained in a Purchase
Order issued by [*] constitutes the final and complete agreement between
the parties and supersedes all prior agreements and understandings,
whether written or oral. If there is a conflict between the terms and
conditions printed on any subsequent documents between the parties, unless
otherwise agreed to by the parties in writing, the terms of this Agreement
shall control.
G. PARTIAL INVALIDITY
In the event of a finding by any tribunal that any provision herein is
illegal or invalid or otherwise unenforceable, the remaining provisions of
this Agreement shall not be invalidated thereby and this Agreement shall
then be read as if such invalid provision were not contained herein.
H. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall constitute one
and the same Agreement.
I. HEADINGS
Headings in this Agreement are for convenience only and shall not be used
to interpret or construe its provisions.
J. AMENDMENTS
This Agreement may not be modified in any respect except by a writing
signed by both parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed the Effective Date first above written.
[*] SHEERVISION GROUP, INC.
By: /s/ [*] By: /s/ Suzanne Lewsadder
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[*] SUZANNE LEWSADDER
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Name Name
Vice President President
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Title Title
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SCHEDULE A: PRODUCT & PRICING
PRODUCT
PRIVATE LABELED FOR [*]:
A. 2.5x Galilean Loupe, regular working distance (R-2.5x)
B. 2.5x Galilean Loupe, long working distance (L-2.5x)
C. 2.5x Galilean Loupe, short working distance (S-2.5x)
D. 3.0x Galilean Loupe, regular working distance (R-3.0x)
E. 3.0x Galilean Loupe, long working distance (L-3.0x)
F. 3.5x Galilean Loupe, regular working distance (R-3.5x)
G. 3.5x Galilean Loupe, long working distance (L-3.5x)
PRICING
[*] Cost Suggested Manufacturer's List Price (SMLP)
A. [*] [*]
B. [*] [*]
C. [*] [*]
D. [*] [*]
E. [*] [*]
F. [*] [*]
G. [*] [*]
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SCHEDULE E: TRADEMARKS
[*] R-2.5X
[*]
LOUPES
[*]