CONFIDENTIAL EXECUTION COPY
PURCHASE AND SALE CONTRACT
BETWEEN
GIVEN IMAGING LTD.
AND
PEMSTAR, INC.
FOR THE
PURCHASE AND SALE OF
M2A(TM) CAPSULE ASSEMBLY AND TESTING LINES
YOQNEAM, ISRAEL
AUGUST 25, 2001
CONFIDENTIAL
TABLE OF CONTENTS
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ARTICLE 1.
DESCRIPTION OF CONTRACT...............................................2
1.1 Entire Agreement and Modifications...........................2
1.2 Conflicting Provisions.......................................2
1.3 Definitions..................................................3
1.4 Interpretation...............................................7
1.5 Negotiation of this Sale Contract............................8
1.6 Non-Exclusive Engagement.....................................8
ARTICLE 2.
SCOPE OF WORK.........................................................8
2.1 Scope of Work................................................8
2.2 Purchase Orders..............................................8
2.3 Seller's Responsibilities....................................9
2.4 Buyer's Responsibilities....................................10
2.5 Design Data.................................................11
2.6 Design and Review of Process................................11
2.7 Sub-Contractors and Suppliers...............................12
2.8 Training....................................................12
ARTICLE 3.
COMPLETION AND TRANSFER..............................................12
3.1 Delivery Schedule...........................................13
3.2 Testing.....................................................14
3.2.1 Provisional Tests..................................14
3.2.2 Performance Tests..................................14
3.3 Final Acceptance............................................15
3.4 Passing of Title; Risk of Loss..............................15
ARTICLE 4.
COMPENSATION.........................................................16
4.1 Purchase Price..............................................16
4.2 Payment Terms...............................................17
4.3 Taxes.......................................................18
ARTICLE 5.
CONTRACT CHANGES; FORCE MAJEURE......................................18
5.1 General.....................................................18
(i)
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5.2 Product Changes.............................................18
5.3 Changes at Request of Seller................................19
5.4 Force Majeure...............................................20
ARTICLE 6.
LIQUIDATED DAMAGES...................................................20
6.1 Delay in Achievement of Final Acceptance....................20
6.2 Failure to Achieve Performance Guarantees...................21
ARTICLE 7.
WARRANTY.............................................................21
7.1 Warranty Terms..............................................22
7.2 Defects.....................................................22
7.3 Intellectual Property Infringement..........................22
7.4 Supplier Warranties.........................................23
7.5 Express Warranties..........................................23
ARTICLE 8.
INDEMNIFICATION......................................................23
8.1 Indemnification.............................................23
8.2 Procedure...................................................24
ARTICLE 9.
TERM; CANCELLATION AND TERMINATION ..................................25
9.1 Term........................................................25
9.2 Termination by Buyer........................................25
9.3 Termination by Seller.......................................26
9.4 Right to Terminate for Force Majeure........................26
9.5 Right to Terminate for Delay in Notice to Proceed...........27
9.6 Measures to be Taken by Seller on Termination...............27
ARTICLE 10.
CONFIDENTIAL AND PROPRIETARY INFORMATION; COMPETITION................27
10.1 Title to Work Product.......................................27
10.2 Confidential and Proprietary Information....................28
10.3 Publicity...................................................29
10.4 Non-Solicitation of Employees...............................30
10.5 Non-Competition; Non-Interference...........................30
10.6 Enforceability and Severability.............................30
10.6 Equitable Relief............................................31
ARTICLE 11.
GOVERNING LAW, JURISDICTION..........................................31
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11.1 Governing Law and Submission to Jurisdiction................31
11.2 Dispute Notification Procedure..............................31
11.3 Adjudication................................................31
11.4 Arbitration.................................................32
11.5 No Special Damages..........................................33
11.6 Duty of Continued Performance...............................33
ARTICLE 12.
MISCELLANEOUS........................................................33
12.1 Relationship of the Parties.................................33
12.2 Binding Effect on Successors and Assignees..................34
12.3 Notices.....................................................34
12.4 Not for Benefit of Third Parties............................35
12.5 Section Headings and Subheading.............................35
12.6 No Waiver...................................................35
12.7 Good Faith and Fair Dealing.................................35
12.8 Severability................................................35
12.9 Counterparts................................................35
12.10 Further Assurances..........................................35
PURCHASE AND SALE CONTRACT
FOR M2A(TM) CAPSULE ASSEMBLY AND TESTING LINES
This
Purchase and Sale Contract is dated as of August 25, 2001 between
Given Imaging Ltd., a company organized under the laws of Israel (hereinafter
referred to as "BUYER"), and PEMSTAR, Inc., a Minnesota company with principal
offices in Rochester, Minnesota (hereinafter referred to as "SELLER").
WITNESSETH:
WHEREAS, Buyer desires to purchase from Seller, and Seller agrees to
sell to Buyer, assembly and testing lines for the production of Buyer's
proprietary M2A Capsule (as hereinafter defined), which is subject to patents
and patent applications in the United States and other jurisdictions and has
been approved by the U.S. Food and Drug Administration for commercial
distribution in the United States; and
WHEREAS, Buyer is not in the business of manufacturing such assembly
and testing lines, and Seller is one of the companies capable of manufacturing
such assembly and testing lines;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants set forth herein, Buyer and Seller, intending to be legally bound,
agree as follows:
ARTICLE 1.
DESCRIPTION OF CONTRACT
1.1 ENTIRE AGREEMENT AND MODIFICATIONS
This
Purchase and Sale Contract between Buyer and Seller (together with
the Schedules and Exhibits attached hereto, hereinafter referred to as
this "SALE CONTRACT") sets forth the full and complete understanding of
the parties as of the date hereof, and supersedes any and all
agreements and representations, written or oral, made or dated prior
thereto. No amendment, supplement or other modification to this Sale
Contract shall be effective unless pursuant to a change order under
Article 5 or otherwise in writing and signed by authorized
representatives of both parties to this Sale Contract.
1.2 CONFLICTING PROVISIONS
1.2.1 In the event either party becomes aware of any conflict
between this document and the Schedules or Exhibits attached
hereto or between any of such Schedules and Exhibits, it shall
notify the other party of such conflict in writing. Seller
shall proceed with all Work not subject to such conflict until
the parties have resolved such conflict.
1.2.2 In the event of any conflict between this document and any
Schedule or Exhibit attached hereto, the terms and provisions
of this document shall
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prevail and, in the event of any conflict between this Sale
Contract or the Product Specifications and the Plans and
Specifications, this Sale Contract and the Product
Specifications shall prevail.
1.3 DEFINITIONS
Unless the context otherwise requires, the following definitions shall
apply to this Sale Contract:
"AFFILIATE" means any person directly or indirectly controlled by or
under common control with Seller. For purposes of this definition,
"control" shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, by contract
or otherwise.
"APPLICABLE LAW" means any code, law, rule, regulation, ordinance,
decision, decree, directive, instruction or other requirement or
restriction issued by or emanating from any government authority of the
United States or any state thereof in which Seller's Facility is
located, which has the force of law or with which a party is otherwise
required to comply, including measures which apply directly or
indirectly to any party or to any Production Line or to the rights and
obligations of either of the parties arising under this Sale Contract,
whether applicable at the date hereof or in the future. For the
avoidance of doubt, Applicable Law includes the Quality System
Regulations.
"BUYER'S CONTACT" means ▇▇▇▇▇▇ ▇▇▇▇▇, Vice President Operations, or any
other individual designated from time to time thereafter in writing by
Buyer to Seller who shall be authorized to receive communications from
Seller and with whom Seller may consult at all reasonable times.
"BUYER DELAY" means any delay or failure by Buyer (i) to provide any
data or information with respect to (A) the Product Specifications
within two (2) working days or (B) the Plans and Specifications within
seven (7) working days, in either case, of a reasonable written request
from Seller for such data or information, (ii) to obtain customs
clearance for any Production Line within five (5) working days from the
day such Production Line arrives at Tel-Aviv International Airport and
(iii) to comply with any of its other obligations under this Sale
Contract to the extent that, in each case, such delay or failure
prevents Seller from performing its obligations under this Sale
Contract.
"BUYER-DIRECTED PRODUCT CHANGE" is defined in Section 5.2.1.
"BUYER'S FACILITY" means the (i) facility of Buyer located in Yoqneam,
Israel or any other location in Israel in which the Production Lines
(other than the Standby Production Lines) are to be installed by Seller
or (ii) any other facility of Buyer
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located outside Israel designated by Buyer and agreed to by Seller,
which agreement shall not be unreasonably withheld, delayed or
conditioned.
"BUYER INFORMATION" is defined in Section 2.5.
"CHANGE IN LAW" shall mean the adoption, amendment or repeal of, or
change in the interpretation or application of, any Applicable Law
pertaining to the design, testing, production, control or quality
assurance of the M2A Capsule after the date of this Sale Contract.
"CHANGE ORDER" is defined in Section 5.1.
"CLAIMS" is defined in Section 8.1.1.
"CONFIDENTIAL INFORMATION" is defined in Section 10.2.1.
"DEFECT" is defined in Section 7.2.1.
"DOLLAR" or "$" means the legal tender of the United States of America.
"EQUIPMENT" means all apparatus, equipment, machinery and parts and
other materials required for the assembly and operation of any
Production Line (including all special maintenance tools).
"EXPERT" is defined in Section 11.3.1.
"FDA QUALITY SYSTEM REGULATIONS" means the regulations of the U.S. Food
and Drug Administration applicable to the methods and documentation of
the design, testing, production, control, quality assurance, labeling
and packaging of the M2A Capsule set forth in 21 C.F.R. Part 820
(2001).
"FINAL ACCEPTANCE" means, for any Production Line, Buyer's written
confirmation in accordance with Section 3.3 that each of the conditions
set forth therein have been satisfied for such Production Line in
accordance with this Sale Contract.
"FORCE MAJEURE" means all circumstances beyond the control of the
parties the consequences of which could not reasonably have been
remedied, and which prevent, totally or partially, the performance of
this Sale Contract. The following events, the list of which is not
exhaustive, constitute events of Force Majeure provided that they
comply with the foregoing conditions: (i) any physical consequence of
such natural elements as lightning, drought, fire, earthquake, volcanic
eruption, landslide, flood, storm, cyclone, typhoon, tornado or
exceptionally torrential rain; (ii) explosion, fire or destruction of
machinery, of plant and of any facilities whatsoever; (iii) acts of
declared or undeclared war, invasion, armed conflict or acts committed
by a foreign enemy, blockade, embargo, revolution, rioting,
insurrection, civil commotion, terrorist acts or sabotage; and (iv)
strikes, protest or demand actions, slow-down in work or other
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trade union disturbances, PROVIDED, HOWEVER, that (A) the issuance by
the United States State Department or any other governmental authority
of any other country of any travel advisory with respect to Israel
shall not constitute an event of Force Majeure and (B) events described
in clause (iv) with respect to Seller's Facility shall not entitle
Seller to claim Force Majeure and with respect to Buyer's Facility
shall not entitle Buyer to claim Force Majeure.
"FULLY-AUTOMATED PRODUCTION LINE" means each fully-automated assembly
and testing line for the manufacture of the M2A Capsule ordered by
Buyer from Seller hereunder.
"GUARANTEED FINAL ACCEPTANCE DATE" means, for each Production Line,
thirty (30) days after the date specified in the Milestone Schedule for
Final Acceptance of such Production Line, as such date may be extended
by a Change Order pursuant to Article 5.
"IMPORT TAXES" means any value added tax and any customs duties, import
taxes or other like taxes or fees levied by Israel on the importation
of any Production Line.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" are defined in Article 8.
"INTERNATIONAL QUALITY STANDARDS" means the standards and requirements
of each of the (i) ISO 9001of the International Standards Organization,
(ii) the Medical Devices Directive of the European Union and (iii) EN
46001 of the European Union.
"LCIA" is defined in Section 11.4.
"LIEN" means any charge, lien, hypothecation, pledge, security
interest, title retention or other preferential right of any kind
having the effect of security, or which otherwise encumbers any
tangible or intangible property.
"M2A CAPSULE" means the Buyer's proprietary single-use, disposable
color in-vivo video M2A(TM) capsule used in connection with its
proprietary wireless imaging system, as more fully described in the
Product Specifications.
"MILESTONE SCHEDULE" is defined in Section 3.1.
"PERFORMANCE GUARANTEES" means, for each Semi-Automated Production Line
and Fully-Automated Production Line, the guarantees set forth in
Schedule 1 for such Production Line.
"PERFORMANCE TESTS" shall mean the tests of each Production Line to be
carried out in accordance with the procedures set forth in Schedule 3
to determine whether such Production Line is capable of achieving the
Performance Guarantees.
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"PLANS AND SPECIFICATIONS" means (i) the technical requirements for the
design, engineering and manufacturing of the Production Lines and (ii)
the aggregate of all designs, specifications, plans and drawings
prepared by Seller, or obtained by Seller from any Supplier in
connection with the procurement of any Equipment, under this Sale
Contract.
"PRODUCTION LINE" means any Semi-Automated Production Line or
Fully-Automated Production Line.
"PRODUCT SPECIFICATIONS" means the preliminary description and
specifications for the M2A Capsule to be provided by Buyer to Seller,
as modified or supplemented from time to time by a Change Order in
accordance with Article 5.
"PROVISIONAL ACCEPTANCE" means, for any Production Line, Buyer's
written confirmation in accordance Section 3.2.1 that the Performance
Tests have demonstrated that such Production Line is capable of
achieving the Performance Guarantees.
"PROVISIONAL TESTS" shall mean the preliminary tests of each Production
Line to be carried out in accordance with the procedures set forth in
Schedule 3 to determine whether such Production Line is capable of
achieving the Performance Guarantees.
"PURCHASE ORDER" means a purchase order, substantially in the form of
Exhibit A, issued by Buyer to Seller for the purchase by Buyer from
Seller of any Production Line under this Sale Contract.
"PURCHASE PRICE" means, for each Production Line, the total firm fixed
lump sum price for such Production Line set forth in Section 4.1, as
adjusted by Change Orders pursuant to Article 5.
"SALE CONTRACT" is defined in Section 1.1 and shall include
modifications made pursuant to a Change Order under Article 5 or
otherwise in writing signed by authorized representatives of each of
parties to this Sale Contract..
"SELLER-REQUESTED PRODUCT CHANGE" is defined in Section 5.1.
"SELLER'S CONTACT" means ▇▇▇▇▇ ▇▇▇▇▇▇▇, Executive Director, Precision,
Testing and Automation, or any other individual designated from time to
time in writing by Seller to Buyer who shall be authorized to receive
communications from Buyer and with whom Buyer may consult at all
reasonable times.
"SELLER'S FACILITY" means (i) the facility of Seller located in
Rochester, Minnesota in which each Production Line is to be assembled
and the Standby Production Lines are to be stored or (ii) such other
facility in any other location designated by Seller and agreed to by
Buyer in its sole discretion.
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"SEMI-AUTOMATED PRODUCTION LINE" shall mean each semi-automated
assembly and testing line for the manufacture of the M2A Capsule
ordered by the Buyer from the Seller hereunder.
"STANDBY PRODUCTION LINE" is defined in Section 2.2.3.
"SUPPLIER" means any person who has an agreement for the performance of
any part of the Work or procurement of all or any portion of the
Equipment or Services, including each tier of subcontractor and
sub-supplier.
"TAXES" means all taxes, assessments, charges, duties, fees, levies or
other governmental charges, including all Israeli and non-Israeli and
U.S. and non-U.S. federal, state, local and other income, franchise,
profits, sales, use, occupation, property, excise, severance, windfall
profits, stamp, license, payroll and other taxes, assessments, charges,
duties, fees, levies or other governmental charges of any kind
whatsoever (whether payable directly or by withholding and whether or
not requiring the filing of a tax return), all estimated taxes,
deficiency assessments, additions to tax, penalties and interest and
shall include any liability for such amounts as a result either of
being a member of a combined, consolidated, unitary or affiliated group
or of a contractual obligation to indemnify any person or other entity.
"WARRANTIES" means the warranties specified in Article 7.
"WARRANTY PERIOD" is defined in Section 7.1.
"WORK" is defined in Section 2.1.
"WORK PRODUCT" is defined in Section 10.1.1.
1.4 INTERPRETATION
Unless the context requires otherwise, the following rules of
interpretation shall apply to this Sale Contract:
(a) words singular or plural in number shall be deemed to include
the other and pronouns having a masculine or feminine gender
shall be deemed to include the other;
(b) any reference to this Sale Contract or any other agreement or
any schedule, exhibit or attachment hereto or thereto shall
mean this Sale Contract or such other agreement and all such
schedules, exhibits and attachments as amended, supplemented
or otherwise modified;
(c) any reference to any person shall include any natural person,
corporation, company, partnership, joint venture, trust or
other entity and permitted
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successors and assigns thereof and, in the case of any
government authority, any person succeeding to its functions
and capacities; and
(d) any reference to days, weeks, months or years shall mean
calendar days, months or years and any reference to working
days shall mean, in the case of any obligation of Seller, any
day other than a Saturday and Sunday and any other day on
which banks are closed for business in Rochester, Minnesota
and, in the case of any obligation of Buyer, any day other
than a Friday and Saturday and any other day on which banks
are closed for business in Israel.
1.5 NEGOTIATION OF THIS SALE CONTRACT
Seller represents and warrants that the factual statements and
information provided by Seller to Buyer in writing prior to the date
hereof with respect to its experience and qualifications in design
engineering, procurement and manufacturing, taken as a whole, are true
and correct in all material respects as of the date hereof and do not
omit any material fact necessary in order to make such factual
statements and information, taken as a whole, not materially misleading
as of the date hereof.
1.6 NON-EXCLUSIVE ENGAGEMENT
Buyer is entering into this Sale Contract with Seller on a
non-exclusive basis and reserves the right, in its sole discretion, to
enter into contracts with any other person with respect to the design
engineering, procurement, manufacturing, installation and testing of
assembly and testing lines or other facilities for the manufacturing of
its M2A Capsule.
ARTICLE 2.
SCOPE OF WORK
2.1 SCOPE OF WORK
Seller shall design, engineer, manufacture, deliver, install and test
each Production Line and procure all Equipment in connection therewith
as required to achieve Provisional Acceptance and Final Acceptance and
in compliance with (i) the FDA Quality System Regulations and other
Applicable Law, (ii) the International Quality Standards and (iii) all
licenses and permits applicable to the parties or the design,
engineering, manufacturing or export of any Production Line under
Applicable Law (the provision of the foregoing services, hereinafter
referred to as the "WORK").
2.2 PURCHASE ORDERS
Buyer may issue a Purchase Order, substantially in the form of Exhibit
A hereto, for Production Lines under this Sale Contract as follows:
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2.2.1 Buyer shall be deemed to have issued a Purchase Order for the
first Semi-Automated Production Line to be installed by Seller
at Buyer's Facility effective August 27, 2001.
2.2.2 Buyer may issue a Purchase Order for the first Fully-Automated
Production Line to be installed by Seller at Buyer's Facility
at any time prior to December 31, 2004.
2.2.3 Buyer may issue an unlimited number of Purchase Orders for
additional Production Lines within twelve (12) weeks prior to
the expiration of the term of this Sale Contract in the case
of any additional Semi-Automated Production Line and within
thirty-six (36) weeks prior to the expiration of the term of
this Sale Contract in the case of any additional
Fully-Automated Production Line. Subject to the provisions of
Article 5 with respect to Change Orders, the Product
Specifications and Plans and Specifications for any such
additional Production Line shall be the same as those for the
first, Semi-Automated Production Line or, as the case may be,
the first Fully-Automated Production Line. Any such Purchase
Order shall specify whether the Production Line being ordered
is to be installed by Seller at Buyer's Facility or stored by
Seller at Seller's Facility (any such Production Line to be
stored at Seller's Facility, a "STANDBY PRODUCTION LINE").
2.3 SELLER'S RESPONSIBILITIES
2.3.1 Without limiting the other obligations of Seller under this
Sale Contract, Seller shall perform the following tasks:
(a) prepare all technical requirements for the design,
engineering and manufacturing of Production Lines
capable of producing M2A Capsules in compliance with
the Product Specifications and the FDA Quality System
Regulations and other Applicable Law, the
International Quality Standards and the following
design criteria:
(i) each Production Line must have a foreseeable
life span of at least seven (7) years after
Final Acceptance; and
(ii) each Production Line must be capable of
reliable operation under the following
operating conditions with respect to Buyer's
Facility: (A) freestanding 20 centimeter
concrete floors; (B) a daily average
temperature range of 15.5 to 26.0 degrees
Celsius and (C) a daily average relative
humidity range of 35% to 75%;
(b) prepare all designs, specifications, plans and
drawings for the assembly and construction of the
Production Lines;
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(c) engineer and manufacture each Production Line in
accordance with the Plans and Specifications and the
provisions of this Sale Contract and procure all
Equipment required for such purpose;
(d) (i) deliver each Production Line (other than any
Standby Production Lines) F.O.B. to Buyer and install
such Production Line at Buyer's Facility, in each
case as provided in Section 3.2.2 and (ii) store each
Standby Production Line at Seller's Facility;
(e) supervise the Provisional Tests and Performance
Tests, including arranging for any representatives of
Suppliers to be present during such tests as required
for system adjustments, and procure all components
necessary to manufacture M2A Capsules during such
tests and any testing equipment necessary to carry
out such tests;
(f) obtain and maintain, at its sole cost and expense,
all licenses and permits required by Applicable Law
in connection with the performance of the Work and
comply with the requirements of such (A) licenses and
permits and (B) the FDA Quality System Regulations
and other Applicable Law;
(g) provide for Buyer's review and approval the
deliverables required as a condition to Final
Acceptance of any Production Line and other
documentation with respect to such Production Lines
as is reasonably requested by Seller; and
(h) provide to Buyer a bi-monthly report on the fifteenth
(15th) and last day of every month, detailing the
progress in the performance of the Work in the
preceding period of such month in a format reasonably
acceptable to Buyer.
2.4 BUYER'S RESPONSIBILITIES
2.4.1 Buyer shall, subject to the terms and conditions of this Sale
Contract:
(a) provide to Seller within four (4) weeks of the
Purchase Order for the first Semi-Automated
Production Line, the following: (i) the software for
the system to capture and record the image from the
M2A Capsule and any algorithms necessary for
alignment of the image and (ii) the software for the
one-time programmable system for the Application
Specific Integrated Circuit (ASIC);
(b) provide to Seller (i) within four (4) weeks of the
Purchase Order for the first Semi-Automated
Production Line, 20 kits of Component Parts for the
M2A Capsule, (ii) within six (6) weeks of such
Purchase Order, three hundred (300) such kits and
(iii) within
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fourteen (14) weeks of such Purchase Order three
hundred (300) such kits;
(c) expeditiously review all designs, specifications,
plans and drawings and other proposals submitted by
Seller for review by Buyer in accordance with this
Sale Contract;
(d) arrange for transportation to Buyer's Facility and
customs clearance in Israel for each Production Line
delivered by Seller to in accordance with Section
3.2.2(a);
(e) provide 2000 square feet at Buyer's Facility for the
installation and testing of each Production Line to
be installed therein; and
(f) provide for the interconnections for air pressure,
electrical power and water supply and any other
utilities as required for the operation and
maintenance of each Production Line to be installed
at Buyer's Facility.
2.5 DESIGN DATA
In performance of its obligations hereunder, Seller shall be entitled
to rely on the Product Specifications and other data and information
provided by Buyer to Seller, PROVIDED that Buyer shall have no
liability to Seller for the Product Specifications or any other data or
information that Buyer may have provided to Seller or may hereafter
provide to Seller in connection with any Change Order or otherwise (the
"BUYER INFORMATION"). Seller's sole remedy in respect of any change to
or the insufficiency of any Buyer Information shall be to a Change
Order in respect of the Product Specifications, to which Seller shall
be entitled as provided in Article 5.
2.6 DESIGN AND REVIEW OF PROCESS
2.6.1 The Plans and Specifications shall be subject to inspection
and review by Buyer and its representatives. Seller shall
submit draft Plans and Specifications to Buyer and incorporate
changes requested by Buyer into the Plans and Specifications
in a manner satisfactory to Buyer.
2.6.2 All other Work shall be subject to inspection and review by
Buyer or its representatives at the discretion of Buyer upon
reasonable prior notice to Seller. Seller shall furnish all
reasonable assistance required in connection with any such
inspection or review.
2.6.3 No inspection or review by Buyer or its representatives prior
to Final Acceptance of any Production Line shall constitute
either (i) an approval, endorsement or confirmation of any
kind or (ii) an acknowledgment by
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Buyer that any component or part of such Production Line
satisfies the requirements of this Sale Contract.
2.7 SUB-CONTRACTORS AND SUPPLIERS.
2.7.1 Seller may subcontract any portion of the Work to any
Supplier, PROVIDED that, (i) Seller shall remain responsible
for management and oversight of the Work and liable to Buyer
for any Work so subcontracted and (ii) all subcontracts are
assigned in accordance with Applicable Law to Buyer or its
designee on terms and conditions reasonably acceptable to
Buyer. Seller shall provide Buyer with such information
concerning Suppliers as Buyer may request from time to time.
2.7.2 Seller shall promptly pay each of its subcontractors, vendors
and materialmen for all labor, materials and equipment,
regardless of any dispute between Seller and Buyer, and shall
promptly inform Buyer of any dispute that could reasonably be
expected to result in creation of a Lien against any
deliverables hereunder (including, without limitation, any
Equipment or Production Line or portion thereof). Seller shall
use commercially reasonable efforts to settle any such
dispute, and shall be responsible for discharging any such
Liens, at its sole cost and expense.
2.7.3 Seller agrees that it shall be fully responsible to Buyer for
the acts and omissions of Suppliers and of persons directly or
indirectly employed by them, as it is for the acts or
omissions of persons directly or indirectly employed by
Seller, in connection with the performance of any part of the
work or the procurement of any equipment.
2.7.4 Nothing contained herein shall create any contractual
relationship between any Supplier and Buyer, and Buyer shall
have no obligation to pay or cause payment to be made to any
Supplier.
2.8 TRAINING
Seller shall be responsible for training Buyer's regular operating
personnel at Buyer's Facility to provide all information necessary for
efficient and proper operation of the Production Lines, including
start-up, shutdown, operation, maintenance and repairs, and emergency
procedures. Training will consist of classroom and on-the-job
(hands-on) operational instruction as necessary. Seller shall design
and submit to Buyer a training procedure and schedule for each of the
Semi-Automated Production Lines and the Fully-Automated Production
Lines within fifteen (15) days of Provisional Acceptance of the first
such Production Line. Seller promptly shall incorporate Buyer's
comments into the training procedures and schedules and shall be
required to complete such training to Buyer's satisfaction prior to
Final Acceptance of any Production Line.
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ARTICLE 3.
COMPLETION AND TRANSFER
3.1 DELIVERY SCHEDULE
Seller shall commence the Work with respect to each Production Line
upon issuance of a Purchase Order in respect thereof under Section
2.2.1 and shall prosecute the Work continuously and with due diligence
in accordance with the following schedule (the "MILESTONE SCHEDULE"),
subject to adjustment only by a Change Order.
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Milestone Milestone Date
(from issuance of
Purchase Order)
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FIRST SEMI-AUTOMATED PRODUCTION LINE:
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Final Plans and Specifications to Buyer Eight (8) weeks
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Provisional Acceptance Date Sixteen (16) weeks
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Final Acceptance Twenty (20) weeks
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EACH ADDITIONAL SEMI-AUTOMATED PRODUCTION LINE:
----------------------------------------------------------------------------------------
Provisional Acceptance Date Nine (9) weeks
----------------------------------------------------------------------------------------
Final Acceptance Twelve (12) weeks
----------------------------------------------------------------------------------------
FIRST FULLY-AUTOMATED PRODUCTION LINE:
----------------------------------------------------------------------------------------
Final Plans and Specifications to Buyer Eight (8) weeks
----------------------------------------------------------------------------------------
Provisional Acceptance Thirty-five (35) weeks
----------------------------------------------------------------------------------------
Final Acceptance Forty (40) weeks
----------------------------------------------------------------------------------------
EACH ADDITIONAL FULLY-AUTOMATED PRODUCTION LINE:
----------------------------------------------------------------------------------------
Provisional Acceptance Thirty (30) weeks
----------------------------------------------------------------------------------------
Final Acceptance Thirty-six (36) weeks
----------------------------------------------------------------------------------------
Seller shall take such steps as shall be necessary to ensure compliance
with the Milestone Schedule, including increasing its labor force, the
number of shifts, overtime operations or the length of the work week,
but in any such case, Seller
13
shall not be entitled to any additional payment or be relieved of its
obligation to complete the Work in accordance with the Milestone
Schedule.
3.2 TESTING.
3.2.1 PROVISIONAL TESTS. When any Production Line has been
physically completed in accordance with the Plans and
Specifications, Seller shall carry out the Provisional Tests
on such Production Line at Seller's Facility in the presence
of Buyer at a mutually agreed time. If the Provisional Tests
for any Production Line demonstrate to Buyer's satisfaction
that such Production Line has achieved the Performance
Guarantees, Provisional Acceptance for such Production Line
shall be deemed to have occurred on the date of Buyer's
written confirmation thereof substantially in the form of
Exhibit B hereto. If the Provisional Tests demonstrate that
any Production Line has not achieved the Performance
Guarantees, Seller shall perform such Work as is necessary to
achieve Provisional Acceptance and the foregoing testing
procedure shall be repeated until Provisional Acceptance of
such Production Line has been achieved. The achievement of
Provisional Acceptance shall not relieve Seller of any of its
other obligations under this Sale Contract, including its
obligation to achieve in a timely manner Final Acceptance or
its obligations arising under Article 7 hereof.
3.2.2 PERFORMANCE TESTS.
(a) Upon Provisional Acceptance of any Production Line,
Seller shall deliver such Production Line (other than
any Standby Production Line) to Buyer F.O.B.
Minneapolis St. ▇▇▇▇ International Airport, at the
loading dock of a carrier designated by Buyer. Seller
shall be responsible for packaging such Production
Line for transportation to Buyer's Facility. Buyer
shall be responsible for transportation of such
Production Line from such airport to Buyer's Facility
and for customs clearance and Import Taxes payable in
respect of such Production Line.
(b) Upon delivery of any Production Line (other than any
Standby Production Line) to Buyer's Facility, Seller
shall install such Production Line in Buyer's
Facility, in coordination with Buyer. Seller shall
carry out the Performance Tests for any such
Production Line at Buyer's Facility in the presence
of Buyer at a mutually agreed time. In the case of
any Standby Production Line, Seller shall carry out
the Performance Tests at Seller's Facility in the
presence of Buyer at a mutually agreed time.
If any Production Line is not ready for the
Performance Tests in the opinion of Buyer, Seller
shall perform such Work as is necessary to
14
prepare such Production Line for the Performance
Tests until such Production Line is ready for the
Performance Tests, in the opinion of Buyer. If any
Production Line does not achieve the Performance
Guarantees to Buyer's satisfaction, Seller shall
perform such Work as is necessary to achieve the
Performance Guarantees and the foregoing testing
procedure shall be repeated until Provisional
Acceptance of such Production Line has been achieved
in accordance with this Section 3.2.1.
(c) The successful completion of the Performance Tests
shall not relieve Seller of its obligations to
achieve Final Acceptance or its obligations arising
under Article 7 hereof.
3.3 FINAL ACCEPTANCE
3.3.1 Final Acceptance for any Production Line shall occur upon
Buyer's written confirmation, substantially in the form of
Exhibit C, that each of the following conditions has been
satisfied with respect to such Production Line in accordance
with this Sale Contract, as determined by Buyer:
(a) the Performance Tests have demonstrated that such
Production Line has achieved the Performance
Guarantees;
(b) All special tools necessary for the operation and
maintenance of the such Production Line have been
furnished to Buyer;
(c) Buyer has received all Plans and Specifications for
the Production Lines and "as-built" drawings for each
Production Line;
(d) Buyer has received operation and maintenance manuals
and other documentation necessary to support the
operation, maintenance and repair of such Production
Line and such documentation shall be in compliance
with the FDA Quality System Regulations and the
International Quality Standards;
(e) Seller has completed the training program required by
Section 2.8 to the satisfaction of Buyer; and
(f) Seller has performed all other terms of and delivered
all items required by this Sale Contract.
3.3.2 The achievement of Final Acceptance with respect to any
Production Line shall not relieve Seller of any of its
obligations arising under Article 7.
15
3.4 PASSING OF TITLE; RISK OF LOSS
3.4.1 All right, title and interest in, and the risk of loss or
damage to, each Production Line shall pass to Buyer, upon
delivery of such Production Line to Buyer in accordance with
Section 3.2.2(a). Prior to such time, Seller shall be
obligated to replace, repair or reconstruct such Production
Line, including the components and parts thereof, which is
lost, damaged or destroyed by any cause (other than the
negligence or willful misconduct of Buyer). From and after
such time, Buyer shall assume the risk of physical loss or
damage to such Production Line, except for such loss or damage
which is caused by Seller or its representatives or for which
Seller has responsibility under Articles 7 or 8 of this Sale
Contract, including any loss or damage which is caused by any
defect or deficiency in the packaging of such Production Line
for transportation to Buyer's Facility.
3.4.2 Seller covenants that it shall promptly discharge, at its sole
cost and expense, any Liens filed or maintained against any
Production Line or any component or part thereof, either by
Seller or anyone claiming by, through or under Seller for or
on account of any Equipment procured or supplied by Seller.
ARTICLE 4.
COMPENSATION
4.1 PURCHASE PRICE
4.1.1 Seller shall accept as full and complete payment for all of
each Production Line the following fixed lump sum Purchase
Price:
(a) FIRST SEMI-AUTOMATED PRODUCTION LINE:
One Million Five Hundred Eighty-two Thousand Five
Hundred Fifty Dollars ($1,582,550);
(b) EACH ADDITIONAL SEMI-AUTOMATED PRODUCTION LINE:
Nine Hundred Twelve Thousand Six Hundred Fifty-five
Dollars ($912,655);
(c) FIRST FULLY-AUTOMATED PRODUCTION LINE:
Two Million Eight Hundred Nineteen Thousand Seven
Hundred Ten Dollars ($2,819,710); and
(d) EACH ADDITIONAL FULLY-AUTOMATED PRODUCTION LINE:
16
Two Million Two Hundred Seven Thousand Seven Hundred
Eighty Dollars ($2,207,780).
4.1.2 The parties acknowledge and agree that the Purchase Price for
each Production Line is the entire compensation payable by
Buyer to Seller for the completion of the Work with respect to
such Production Line in every detail in accordance with the
terms of this Sale Contract other than the storage of any
Standby Production Line by Seller at Seller's Facility.
4.1.3 Buyer shall reimburse Seller on a monthly basis for the
reasonable costs of the storage of any Standby Production Line
at Seller's Facility.
4.2 PAYMENT TERMS
4.2.1 The Purchase Price for each Production Line shall be payable
in installments upon the achievement of each of the milestones
set forth below in an amount equal to the percentage set forth
opposite such milestone multiplied by the Purchase Price for
such Production Line:
--------------------------------------------------------------------------------
Milestone Percentage of
Purchase Price
--------------------------------------------------------------------------------
Purchase Order 30%
--------------------------------------------------------------------------------
Provisional Acceptance 30%
--------------------------------------------------------------------------------
First Semi-Automated Production Line:
--------------------------------------------------------------------------------
o Achievement of Performance Guarantees at 3,000 12%
M2A Capsules per Month
--------------------------------------------------------------------------------
o Final Acceptance 28%
--------------------------------------------------------------------------------
Final Acceptance all other Production Lines 40%
--------------------------------------------------------------------------------
4.2.2 Buyer shall pay the initial installment of the Purchase Price
for each Production Line upon its issuance of the Purchase
Order for such Production Line.
4.2.3 Seller shall submit an invoice for the each subsequent
installment of the Purchase Price upon achievement of the
relevant milestone set forth in Section 4.2.1 and shall submit
an invoice for the storage costs of any Standby Line within 10
working days of the end of every month. Buyer shall pay the
undisputed portion of any such invoice within thirty (30) days
17
after Buyer's receipt thereof. All payments hereunder shall be
made in Dollars.
4.2.4 Any dispute with respect to any invoice which is not resolved
by mutual agreement shall be resolved in accordance with
Article 11.
4.3 TAXES
Each party shall be responsible and liable for the timely payment of
any and all Taxes imposed on or with respect to the properties, income
and operations of the such party in connection with the performance of
its obligations hereunder and the payment of any amounts hereunder.
ARTICLE 5.
CONTRACT CHANGES; FORCE MAJEURE
5.1 GENERAL
Buyer and Seller may at any time agree on a change in the Work or to
the Product Specifications, the Milestone Schedule, the Purchase Price,
the Performance Guarantees or the Warranties with respect to any
Production Line only by a written amendment to this Sale Contract,
executed by each of Buyer and Seller, substantially in the form of
Exhibit D (a "CHANGE ORDER"). Seller shall not undertake a change in
the Work other than pursuant to a Change Order.
5.2 PRODUCT CHANGES
5.2.1 Buyer may at any time change the Product Specifications (a
"BUYER-DIRECTED PRODUCT CHANGE"). Buyer also shall provide
Seller with such additional specifications necessary to design
and engineer the first Semi-Automated Production Line (i) with
respect to the M2A Capsule, as is reasonably requested by
Seller in writing by September 26, 2001 and (ii) with respect
the deliverables described in Section 2.4.1(a), as is
reasonably requested by Seller in writing within fifteen (15)
days of Buyer's delivery of such deliverables, PROVIDED that
such time periods shall be extended day-for-day for any delay
or failure by Buyer to provide such additional specifications
to the extent such failure or delay constitutes Buyer Delay
(any such additional description or specifications, a
"SELLER-REQUESTED PRODUCT CHANGE" and, together with a
Buyer-Directed Product Change, a "PRODUCT CHANGE").
5.2.2 Buyer and Seller shall consult (at no charge to Buyer)
concerning the cost and impact of implementing any such
Product Change promptly following notice from Buyer to Seller
of a Buyer-Directed Product Change or the provision by Buyer
to Seller of a Seller-Requested Product Change. Seller shall
promptly prepare (at no charge to Buyer) a detailed written
estimate relating to the Product Change, including (i) all
relevant drawings and
18
specifications, all in a format and level of detail sufficient
to allow Buyer to compare readily the existing Work and the
Work as it would be affected by such Product Change, (ii) the
cost of such Product Change and the consequent effect thereof
on the Purchase Price for the affected Production Lines,
including a ▇▇▇▇ of materials; (iii) the effect such change
will have on the Milestone Schedule for the affected
Production Lines and (iv) the effect such change will have on
Seller's ability to comply with any of its obligations under
this Sale Contract, including the Performance Guarantees and
Warranties.
5.2.3 Seller agrees that any changes in the Work as a result of a
Product Change shall be performed on the basis of a lump sum
reimbursement in an amount agreed to in advance by Buyer and
Seller, taking into consideration any savings or costs not
incurred by Seller due to such change, in the form of an
adjustment to the Purchase Price for the affected Production
Lines. If the parties reach agreement on the matters listed in
the estimate provided by Seller pursuant to Section 5.2.2,
Buyer shall issue a Change Order that reflects the nature of
their agreement with respect to such matters, including any
change to the Purchase Price and, in the case of a
Buyer-Direct Product Change only, to the Milestone Schedule.
Seller shall be entitled to an adjustment to the Milestone
Schedule in respect of any Seller-Requested Product Change
only to the extent Seller is entitled to a Change Order due to
any Buyer Delay in respect of such Seller-Requested Product
Change pursuant to Section 5.3.
5.2.4 In the event Buyer and Seller do not agree on the terms of a
Change Order for any Product Change within thirty (30) days of
notice from Buyer to Seller of a Buyer-Directed Product Change
or the provision by Buyer to Seller of a Seller-Requested
Product Change, either party may commence proceedings under
Section 11, PROVIDED that, notwithstanding any such
proceedings, Seller shall proceed with the performance of its
obligations under this Sale Contract and the Product
Specifications shall be deemed for all purposes of this Sale
Contract to have been modified by such Product Change.
5.3 CHANGES AT REQUEST OF SELLER.
5.3.1 Seller also shall be entitled to request a Change Order to the
extent that any (i) Change in Law, (ii) event of Force
Majeure, (iii) Buyer Delay or (iv) relocation of Buyer's
Facility outside Israel (it being understood that Seller shall
have the obligation to mitigate the impact of such
circumstances to the extent reasonably possible) has a
material adverse effect on the ability of Seller to comply
with the Milestone Schedule or materially increases the cost
of its performance of the Work.
19
5.3.2 In the event that Seller considers that a Change Order is
warranted, it shall notify Buyer in writing within twenty (20)
days of when the circumstances giving rise to such a claim
could reasonably have been known to Seller. Such notice shall
include Seller's proposal for any adjustment to the Milestone
Schedule or Purchase Price for the affected Production Lines.
Should Seller fail to notify Buyer of the circumstances giving
rise to such a claim within such period, Seller shall be
deemed to have waived its right to a Change Order and Buyer
shall be discharged from all liability in connection with any
such claim. Seller shall keep full records relative to any
such claim and shall keep Buyer informed of outstanding
claims, on a monthly basis.
5.3.3 In the case of any Change in Law or relocation of Buyer's
Facility, the Milestone Schedule or the Purchase Price, or
both, with respect to the affected Purchase Lines shall be
adjusted equitably to take account of the additional,
justified direct costs and delays caused by such Change in Law
or relocation of Buyer's Facility. In the case of any event of
Force Majeure or Buyer Delay, the Milestone Schedule with
respect to the affected Purchase Lines shall be adjusted
day-for-day for the delay caused by such event of Force
Majeure or Buyer Delay but the Purchase Price shall not be
adjusted.
5.3.4 In the event Buyer and Seller do not agree on the terms of a
Change Order requested by Seller under this Section 5.3,
either party may immediately commence proceedings under
Section 11, PROVIDED that Seller shall proceed with the
performance of this Sale Contract notwithstanding any such
dispute.
5.4 FORCE MAJEURE
Neither Seller nor Buyer will be responsible for the total or partial
non-fulfillment of its obligations under this Sale Contract where such
non-fulfillment is caused by the occurrence of Force Majeure. Any party
affected by a Force Majeure shall:
(a) notify, without delay and as soon as physically possible, the
other party of the occurrence and, subsequently, the
termination of the circumstance and, if necessary, invite it
to negotiate the settlement of the consequences of the Force
Majeure in accordance with the provisions of this Sale
Contract, indicating in such notice, insofar as possible, the
probable duration and consequences of the circumstance; and
(b) use its best efforts to reduce and overcome within a
reasonable time, the effects of the event of Force Majeure
which affect the performance of its obligations.
20
ARTICLE 6.
LIQUIDATED DAMAGES
6.1 DELAY IN ACHIEVEMENT OF FINAL ACCEPTANCE
6.1.1 If any Production Line does not achieve Final Acceptance by
the Guaranteed Final Acceptance Date other than as a result of
a default by Buyer hereunder, the parties agree that the Buyer
will suffer loss and damage. Since the actual damages that
would be suffered would be impossible to ascertain precisely,
the parties agree that Seller shall pay Buyer liquidated
damages, not as a penalty, in an amount of Two Thousand Five
Hundred Dollars ($2,500) for each day from the Guaranteed
Final Acceptance Date to the date of Final Acceptance in the
case of the first Semi-Automated Production Line and One
Thousand Dollars ($1,000) in the case of each other Production
Line, PROVIDED that the maximum aggregate liability of Seller
for liquidated damages under this Section 6.1 shall in no
event exceed Two Hundred Fifty Thousand Dollars ($250,000) in
the case of the first Semi-Automated Production Line and One
Hundred Thousand Dollars ($100,000) in the case of each other
Production Line.
6.1.2 Payment of liquidated damages under this Section 6.1 shall be
the sole and exclusive liability of Seller and the sole and
exclusive remedy of Buyer for the failure of any Production
Line to achieve Final Acceptance by the Guaranteed Completion
Date, subject to Buyer's right to exercise its remedies under
Section 6.2 and to terminate this Sale Contract in accordance
with Article 9.
6.2 FAILURE TO ACHIEVE PERFORMANCE GUARANTEES
6.2.1 If any Production Line does not achieve the Performance
Guarantees by the Guaranteed Final Acceptance Date other than
as a result of a default by Buyer hereunder, the parties agree
that the Buyer will suffer loss and damage. Since the actual
damages that would be suffered would be impossible to
ascertain precisely, the parties agree that Seller shall pay
Buyer, at Buyer's option, exercised in its sole discretion,
liquidated damages, not as a penalty, in an amount determined
by multiplying (i) the percentage by which the actual capacity
of such Production Line is less than the Performance Guarantee
with respect thereto set forth in Section 1(a) of Schedule 1
in the case of each Semi-Automated Production Line and Section
2(a) of Schedule 1 in the case of each Fully-Automated
Production Line by (ii) the Purchase Price for such Production
Line.
6.2.2 If Final Acceptance has been achieved for any Production Line
except for the failure of such Production Line to meet the
Performance Guarantees by the Guaranteed Final Acceptance
Date, then upon payment of all
21
liquidated damages due under Section 6.2.1, the Performance
Guarantees shall be deemed to have been amended to reflect the
actual levels of performance of such Production Line
demonstrated by the Performance Tests and Seller shall have no
further liability with respect to such Production Line.
ARTICLE 7.
WARRANTY
7.1 WARRANTY TERMS
Seller covenants and warrants that (i) all Work with respect to each
Production Line will be accomplished in a good and workmanlike manner
in accordance with good engineering and manufacturing practice and in
compliance in all respects with the Technical Requirements and the
Plans and Specifications, the International Quality Standards and all
licenses and permits applicable to any Production Line and Applicable
Law in effect on the date of Final Acceptance of such Production Line
and the terms and conditions of this Sale Contract, (ii) all Equipment
constituting all or any portion of any Production Line will be new
(unless otherwise agreed by Buyer in writing) and of a quality required
by the FDA Quality System Regulations and the International Quality
Standards and (iii) the Work in respect of each Production Line shall
in every respect be free from Defects and fit for operation in
accordance with the FDA Quality System Regulations and the
International Quality Standards. The warranty described in this Section
7.1 shall be effective for each Production Line for a period of one (1)
year from Final Acceptance of such Production Line.
7.2 DEFECTS
7.2.1 The term "DEFECT" in this Article 7 shall mean any failure of
any part of the Work to comply with or conform to the
requirements of this Sale Contract but shall not include any
damage arising from Buyer's negligence or willful misconduct
or from the effects of normal wear and tear.
7.2.2 If Seller or Buyer shall discover any Defect in the Work
during the Warranty Period, then Seller, after discovery by
it, or upon written notice from Buyer, shall promptly commence
to correct, and diligently prosecute to completion the
correction of, such Defect, at the cost and expense of Seller
and to the reasonable satisfaction of Buyer by, at Seller's
option, redesigning, repairing and/or replacing the defective
Work. Seller shall use its best efforts to cause the
correction of any such defect to be accomplished within sixty
(60) days with minimal interference with the operation or
maintenance of Buyer's Facility and the Production Line.
22
7.2.3 All costs and expenses incidental to such corrective action,
including removal, disassembly, reinstallation,
reconstruction, re-testing, repair and replacement of
equipment or systems which may have been damaged by such
Defect, and re-inspection as may be necessary to correct the
Defect or demonstrate that the previously defective Work
complies with or conforms to the requirements of this Sale
Contract, shall be borne by Seller. Should Seller fail to
commence correction promptly or fail to prosecute diligently
to completion the necessary redesign, repair, replacement and
tests, Buyer may perform or cause to be performed the same at
Seller's expense.
7.3 INTELLECTUAL PROPERTY INFRINGEMENT
If use of any Work Product or Licensed Product is claimed to infringe,
misappropriate or misuse any patent, trade secret, trademark, copyright
or other proprietary rights, Seller shall defend such claim and shall
indemnify and hold harmless Buyer from any final award or judgement in
respect of such claim and shall, if required, procure the necessary
licenses to use the infringing Work Product or Licensed Product, or,
with Buyer's prior written approval, replace the same with
substantially equal but non-infringing Work Product or Licensed Product
or modify the same to be non-infringing; PROVIDED, HOWEVER, that any
such substituted or modified Work Product or Licensed Product shall
meet all the requirements and be subject to all the provisions of this
Sale Contract, and that such replacements or modifications shall not
modify or relieve Seller of any of its obligations under this Sale
Contract. Buyer shall give Seller prompt written notice of any suit and
shall provide such information and assistance reasonably necessary for
the defense thereof. The indemnity set forth in this Section 7.3 shall
survive the delivery and Final Acceptance of any Production Line and
the expiration of any Warranty Period hereunder.
7.4 SUPPLIER WARRANTIES
In each case where Seller obtains warranties from its Suppliers that
are more favorable than the Warranties contained in this Sale Contract,
Seller shall assist Buyer, if necessary, in enforcing any such
warranties for the benefit of Buyer.
7.5 EXPRESS WARRANTIES
THE EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 7 ARE EXCLUSIVE AND NO
OTHER WARRANTIES OF ANY KIND, WHETHER STATUTORY, ORAL, WRITTEN, EXPRESS
OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, SHALL APPLY. BUYER'S EXCLUSIVE
REMEDIES AND SELLER'S OBLIGATIONS ARISING OUT OF OR IN CONNECTION WITH
DEFECTIVE EQUIPMENT, MATERIAL, OR WORKMANSHIP, WHETHER BASED ON
WARRANTY, CONTRACT,
23
TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, SHALL BE THOSE STATED IN THIS
CONTRACT.
ARTICLE 8.
INDEMNIFICATION
8.1 INDEMNIFICATION
8.1.1 Seller (an "INDEMNIFYING PARTY") agrees to indemnify fully and
hold harmless Buyer and its Affiliates, including their
principals, stockholders and other direct or indirect equity
holders, and Buyer's and such Affiliates' respective
directors, officers, agents and employees ("INDEMNIFIED
PARTIES"), from and against any and all claims, demands,
suits, causes of action, proceedings, judgments, damages,
costs, expenses and liabilities (including reasonable
attorneys' fees and costs) made by third parties against such
Indemnified Parties (collectively "CLAIMS") (i) for bodily
injury, property damage or other liability to the extent such
Claims arise from the negligent acts or omissions of Seller,
its employees, officers, agents or Suppliers, (ii) on account
of any violation of laws, codes, ordinances or regulations to
be complied with by Seller, its employees, officers, agents or
Suppliers, or (iii) arising from any Defect or (iv) in respect
to any demand by Suppliers for non-payment of amounts due as a
result of furnishing Equipment or services to Seller.
8.1.2 Buyer (an "INDEMNIFYING PARTY") agrees to indemnify fully and
hold harmless Seller and its Affiliates, including its
principal, its stockholders, respective directors, officers,
agents and employees ("INDEMNIFIED PARTIES"), from and against
any and all Claims (i) for bodily injury, property damage or
other liability to the extent such Claims arise from the
negligent acts or omissions of Buyer, its employees, officers,
agents or anyone acting on Buyer's behalf, (ii) on account of
any violation of laws, codes, ordinances or regulations to be
complied with by Buyer, its employees, officers, agents or
anyone acting on Buyer's behalf or (iii) with respect the
design and specifications (including the Product
Specifications) of the M2A Capsule or the use of any M2A
Capsule to the extent such Claim does not arise from any
Defect.
8.2 PROCEDURE
Promptly after receipt by an Indemnified Party of any claim or notice
of the commencement of any action or administrative, arbitral or legal
proceeding or investigation as to which the indemnity provided for in
Section 8.1 may apply, the Indemnified Party shall notify the
Indemnifying Party of such fact. The Indemnifying Party shall have the
right to assume the defense thereof with counsel designated by the
Indemnifying Party and satisfactory to the Indemnified Party; PROVIDED,
HOWEVER, that if the defendants in any such action include both the
24
Indemnified Party and the Indemnifying Party and the Indemnified Party
shall have reasonably concluded that there may be legal defenses
available to it and/or other Indemnified Parties which are different
from or additional to those available to the Indemnifying Party, the
Indemnified Party or Parties shall, at the expense of the Indemnifying
Party, have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such action on
behalf of such Indemnified Party or Parties.
ARTICLE 9.
TERM; CANCELLATION AND TERMINATION
9.1 TERM.
This Sale Contract shall become effective as of the date hereof upon
its execution and delivery by the parties hereto and, unless terminated
earlier in accordance with this Article 9, shall remain in effect until
December 31, 2004 or, if a Purchase Order for the first Fully-Automated
Production Line is issued prior to December 31, 2004, three (3) years
from the date of the Purchase Order, PROVIDED, HOWEVER, that if a
Purchase Order for any Production Line is outstanding at the time the
term of this Sale Contract would otherwise expire in accordance with
this Section 9.1, the term of this sale Contract shall be automatically
extended until such Production Line achieves Final Completion or this
Sale Contract is terminated in accordance with this Article 9.
9.2 TERMINATION BY BUYER
If, for any reason other than the occurrence of Force Majeure or the
default of Buyer:
(a) Seller fails to commence the Work for any Production Line
within fifteen (15) days on receipt of a Purchase Order for
such Production Line;
(b) Seller (i) fails to show reasonable progress toward
achievement of Provisional Acceptance of any Production Line
and thereafter fails to remedy such failure within ten (10)
days written notice thereof by Buyer or (ii) abandons the Work
for twenty (20) consecutive days (by "abandon" the parties
mean the complete cessation of the Work, without justification
or, if justification exists, then without giving notice to
Buyer within five (5) days of such cessation);
(c) Seller fails to achieve Final Acceptance of any Production
Line within ten (10) working days of the Guaranteed Acceptance
Date for such Production Line;
(d) Seller commits any other material breach of this Sale Contract
and Seller thereafter (i) fails to remedy such breach within
ten (10) days after written notice of such breach by Buyer or
(ii) if such breach is capable of being
25
remedied but cannot be remedied within such ten (10) day
period by Seller acting diligently, fails to diligently pursue
a remedy or fails to remedy such breach within twenty (20)
days after such written demand by Buyer; or
(f) Seller becomes insolvent or bankrupt.
then, upon the occurrence of any such event, Buyer may either (i)
cancel any outstanding Purchase Order or (ii) terminate this Sale
Contract, in either case, upon written notice to Seller. In the event
of any such cancellation or termination, Buyer shall have the right to
finish the Work with respect to any outstanding Purchase Order, itself
or with the assistance of third parties. No amount shall be payable by
or to Seller in connection with any such termination. In the event
Seller disputes the basis for Buyer's cancellation of any Purchase
Order or termination of this Contract under this Section 9.2, Seller
shall cease to perform the Work under this Sale Contract, and Seller's
sole remedy shall be to refer the dispute for resolution in accordance
with Article 11. In the event that Seller prevails in any such dispute,
Buyer's termination shall be deemed to be a termination by Seller under
Section 9.3 and Seller shall only be entitled to the payments set forth
in Section 9.3.
9.3 TERMINATION BY SELLER
If, for any reason other than the occurrence of Force Majeure (in the
case of clause (a) only) or the default of Seller:
(a) Buyer commits a material breach or default of its obligations
hereunder (other than its payment obligations) and thereafter
(i) fails to remedy such breach or default within thirty (30)
days after written demand by Seller precisely identifying the
breach or default or (ii) if (A) Buyer begins to pursue a
remedy within such thirty (30) day period or (B) such breach
cannot be cured within such period by Buyer acting diligently,
Buyer thereafter fails to diligently pursue a remedy or fails
to remedy such breach within sixty (60) days after such
written demand by Seller; or
(b) Buyer fails to make any payment when due to Seller pursuant to
this Sale Contract (other than a disputed payment) and Buyer
does not make such payment within thirty (30) days after
notice by Seller precisely identifying the outstanding
payment;
then, upon the occurrence of any such event, Seller may terminate this
Sale Contract. Should Seller so terminate this Sale Contract, it shall
be compensated for the Work performed on the basis of the percentage of
the Purchase Price for any Production Line equal to the percentage of
the Work with respect thereto which has been appropriately completed in
accordance with this Sale Contract at the time of termination, plus the
reasonable cost of (i) Equipment which has been procured and cannot,
using commercially reasonable efforts, be returned to the
26
Supplier thereof, PROVIDED that all right, title and interest in any
such Equipment shall be transferred to Buyer, free and clear of all
Liens, (ii) demobilization of staff employed by Seller in connection
with this Sale Contract and (iii) the reasonable cancellation costs of
Suppliers.
9.4 RIGHT TO TERMINATE FOR FORCE MAJEURE
Either party may terminate this Sale Contract immediately upon written
notice to the other party if, as the result of the occurrence of an
event of Force Majeure, the performance by either party of its
obligations under this Sale Contract is delayed so that the Guaranteed
Final Acceptance Date of any Production Line is postponed by more than
three (3) months.
In the event either party so elects to terminate this Contract for
Force Majeure, Seller shall be compensated as provided in Section 9.3,
PROVIDED, HOWEVER, Buyer shall have the right to adjust (i) the
Purchase Price or (ii) the Guaranteed Final Acceptance Date for any
Production Line, pursuant to a Change Order within thirty (30) days of
receipt of Seller's notice to terminate. If a Change Order is executed
by each of the parties during such thirty (30) day notice period, this
Sale Contract shall continue in full force and effect.
9.5 RIGHT TO TERMINATE FOR DELAY IN NOTICE TO PROCEED
In the event that Buyer has not issued the Notice to Proceed for the
first Semi-Automated Production Line on or before January 1, 2002, then
either party may terminate this Sale Contract by written notice to the
other party and Seller shall not be entitled to any compensation
hereunder.
9.6 MEASURES TO BE TAKEN BY SELLER ON TERMINATION
Notwithstanding any other provision of this Sale Contract to the
contrary, in the event Buyer provides written notice to Seller that it
is suspending the Work (or any portion thereof) or terminating this
Sale Contract for any reason, Seller shall (i) immediately suspend
performance of the Work on the date and to the extent specified in the
written notice, (ii) place no further orders or subcontracts except as
may be necessary for performance of that portion of the Work that has
not been so suspended or terminated, (iii) to the extent reasonably
practicable and as requested in the written notice, suspend all orders
and subcontracts to the extent that they relate to the performance of
the portion of the Work so suspended or terminated and (iv) take such
action as may be necessary or as Buyer may reasonably direct for
protection of personnel and the protection and preservation of any
Production Line and other property which is in the possession of Seller
and in which Buyer has or may acquire an interest under this Sale
Contract. After receiving the foregoing notice of suspension or
termination, as the case may be, Seller shall submit to Buyer, within
twenty (20) days after receiving such notice,
27
an itemized list of all action taken or intended to be taken as a
result of such suspension or termination.
ARTICLE 10.
CONFIDENTIAL AND PROPRIETARY INFORMATION; COMPETITION
10.1 TITLE TO WORK PRODUCT
10.1.1 Notwithstanding anything to the contrary set forth herein, all
right, title and interest in, to and under any Production
Line, Equipment or other deliverables, work product,
documents, data, items or services or any part thereof
(including, without limitation, the Plans and Specifications)
furnished by Seller or any Supplier under this Sale Contract
(collectively, the "WORK PRODUCT") is and shall be the
exclusive property of Buyer, except for Seller's proprietary
building blocks and software for which Seller has obtained a
patent (collectively, the "LICENSED PRODUCT").
10.1.2 Buyer shall be entitled to use all such Work Product for any
purpose. Seller hereby assigns all right, title and interest
in all Work Product to Buyer. Seller agrees to take all
actions necessary, at Buyer's expense, as may be requested by
Buyer to perfect Buyer's exclusive ownership of the Work
Product and to require each Supplier to execute and deliver to
Buyer such instruments of assignment with respect to the Work
Product created, developed, or otherwise acquired by such
Suppliers. Seller further shall, and shall require each
Supplier to, at Buyer's expense, take such actions and
cooperate with Buyer in the preparation, execution, filing and
prosecution of all trademark, patent and copyright
applications in connection with the registration or protection
of Buyer's ownership rights in the Work Product.
10.1.3 Seller hereby grants to Buyer an irrevocable, perpetual,
royalty-free, non-exclusive, transferable, worldwide, fully
paid license to retain and use the Licensed Product solely in
connection with the design, engineering, manufacturing,
operation and maintenance of each Production Line during and
after the term of this Sale Contract. Seller shall, at Buyer's
expense, execute all documents and take such actions as Buyer
shall reasonably request to perfect the license to granted by
Seller to Buyer under this Section 10.1.3, and Buyer shall be
entitled to grant a sub-license to retain and use the Licensed
Product to any person or entity involved in the design,
engineering, manufacturing, operation or maintenance of any
Production Line during and after the term of this Sale
Contract.
10.2 CONFIDENTIAL AND PROPRIETARY INFORMATION
10.2.1 Neither party shall disclose to third parties or use any trade
secrets or other proprietary information regarding the
business affairs, finances,
28
technology or processes of the other Party (including, without
limitation, the Buyer Information) or related to this Sale
Contract or the parties' relationship prior thereto
(collectively, "CONFIDENTIAL INFORMATION"), without the
express written consent of the other party. This Section
10.2.1 shall not apply to information that was already in the
possession of one party prior to receipt from the other
strictly for the purposes of this Agreement, that is now or
hereafter becomes a part of the public domain through no fault
of the party wishing to disclose or use such information, or
that corresponds in substance to information heretofore or
thereafter furnished by third parties without restriction on
disclosure. Each party receiving Confidential Information will
indemnify the disclosing party from any and all losses,
damages, costs and expenses (including, without limitation,
attorneys' fees) arising out of or related to the receiving
party's breach or threatened breach of its obligations under
this Section 10.2.1.
10.2.2 Any party required by law, rule, regulation or order to
disclose information that is otherwise required to be
maintained in confidence pursuant to Section 10.2.1, or where
disclosure is required in connection with the assertion of any
claim or defense in judicial, administrative or arbitral
proceedings involving a party, may make disclosure
notwithstanding the provisions of Section 10.2.1; PROVIDED,
HOWEVER, that the party making the disclosure shall
immediately notify the other party of the requirement and the
terms thereof prior to the submission and shall cooperate to
the maximum extent practicable to minimize the disclosure of
the information. The party disclosing such information shall
cooperate with the other party in any efforts by such other
party to obtain proprietary or confidential treatment for such
information by the third party to whom the information is
disclosed and/or to seek protective orders limiting the
dissemination and use of the information. The other party
shall bear all costs of such efforts and any cooperation by
the disclosing party. This Sale Contract does not alter the
rights of either party to object to the rule, regulation or
order requiring the disclosure.
10.2.3 Each party also may disclose Confidential Information to those
of its employees who need to know such Confidential
Information in order for the receiving party to perform its
obligations hereunder, PROVIDED THAT, such employees are
advised of the confidential nature thereof. Seller may
disclose Confidential Information to any Supplier only if such
Supplier executes and delivers to Buyer an agreement in form
and substance acceptable to Buyer protecting such Confidential
Information from unauthorized use and disclosure. Seller
further agrees to require those of its employees with material
knowledge of the Product Specifications to execute and deliver
to Buyer a confidentiality agreement in form and substance
reasonably satisfactory to Buyer.
29
10.2.4 Seller agrees that it will not undertake, authorize or
otherwise permit the disassembly, reverse engineering or
de-compiling of any Confidential Information, in whole or in
part.
10.3 PUBLICITY.
Neither Buyer nor Seller shall, without the approval of the other
party, issue any press releases or otherwise make any public statements
with respect to the transactions contemplated by this Sale Contract,
except as may be required Applicable Law or by obligations pursuant to
any listing agreement with any national securities exchange so long as
such party has used reasonable best efforts to obtain the approval of
the other party prior to issuing such press release or making such
public disclosure.
10.4 NON-SOLICITATION OF EMPLOYEES
Seller shall not, and shall cause its Affiliates to not, during the
term of this Sale Contract and for a period of five (5) years from the
date of such termination, knowingly solicit for employment any of the
officers or directors of Buyer whom Seller meets in the course of
negotiating or performing the terms of this Sale Contract, PROVIDED
THAT, this Section 10.4 shall not preclude Seller or its affiliates
from soliciting for employment or hiring any such employee who (i)
responds to a general solicitation through a public medium or general
or mass mailing by or on behalf of Seller or any of its affiliates that
is not targeted at employees of the Buyer or (ii) contacts Seller or
its affiliates directly on such individual's own initiative.
10.5 NON-COMPETITION; NON-INTERFERENCE.
10.5.1 In consideration of the amounts payable by Buyer to Seller
hereunder, Seller agrees that for a period of ten (10) years
from the date of this Agreement, Seller shall not, and shall
cause its Affiliates to not:
(a) within any jurisdiction worldwide, directly or
indirectly own, manage, operate, control, be employed
by or participate in the ownership, management,
operation or control of, or be connected in any
manner with, the manufacturing of in-vivo
gastrointestinal swallowable devices. For these
purposes, ownership of securities of one percent (1%)
or less of any class of securities of a public
company shall not be considered to be competition
with the Seller;
(b) solicit for Seller or any person other than Buyer the
business of manufacturing of in-vivo gastrointestinal
swallowable devices of any person which is a customer
or client of Buyer or any of its affiliates or in any
way interfere with the business relationship
30
between Buyer or any of its affiliates and any such
person in any way engaged in such business.
10.6 ENFORCEABILITY AND SEVERABILITY
It is the desire and intent of the parties to this Sale Contract that
the provisions of this Article 10 shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If any particular
provisions or portion of this Article 10 shall be adjudicated to be
invalid or unenforceable, this Article 10 shall be deemed amended to
delete therefrom such provision or portion adjudicated to be invalid or
unenforceable, such amendment to apply only with respect to the
operation of such provision in the particular jurisdiction in which
such adjudication is made.
10.7 EQUITABLE RELIEF.
The parties agree that money damages alone would not be a sufficient
remedy for a breach of the confidentiality obligations set forth in
this Article 10. Accordingly, in addition to all other remedies of law
or in equity that the disclosing party may have, such party shall be
entitled to specific performance and injunctive or other equitable
relief arising from any breach or threatened breach of this Article 10
in accordance with Section 11.5.
ARTICLE 11.
GOVERNING LAW, JURISDICTION
11.1 GOVERNING LAW AND SUBMISSION TO JURISDICTION
This Sale Contract shall be governed by and interpreted in accordance
with the laws of the State of
New York without regard to the conflicts
of laws provisions thereof.
11.2 DISPUTE NOTIFICATION PROCEDURE
Subject to Section 11.5, in the event a dispute arises between Buyer
and Seller arising out of or relating to this Sale Contract, including
any question regarding its existence, validity or termination, the
aggrieved party shall promptly notify the other party to this Sale
Contract of the dispute.
11.3 ADJUDICATION
11.3.1 In the event that the parties are unable to resolve any
dispute to their mutual satisfaction within ten (10) days
after delivery of a notice under Section 11.2, then either
party may give notice of its intention to refer the dispute to
one expert appointed by the agreement of the parties. In the
event that the parties are unable to agree on the appointment
of one person to act as expert within five (5) days of such
notice, either party may
31
request the Chairman of the Standing Committee of the Centre
for Expertise of the International Chamber of Commerce to
propose the name of an expert and the nomination so made shall
be final and conclusive upon the parties (the person appointed
to act as expert pursuant to this Section 11.3.1, the
"EXPERT"). The place of the expert proceedings shall be
New
York,
New York.
11.3.2 Within ten (10) days of the appointment of the Expert, the
party who initially issued the notice of intention to refer
the matter to the Expert shall submit to the Expert and to the
other party the following documents in English:
(a) a description of the dispute;
(b) a statement of that party's position; and
(c) copies of relevant documentary evidence in support.
11.3.3 Within ten (10) days of receipt of the above documents, the
other party shall submit the to the Expert and the other party
the following documents in English:
(a) a description of the dispute;
(b) a statement of that party's position; and
(c) copies of relevant documentary evidence in support.
11.3.4 The Expert may call for such further documentary evidence and
interview such persons as he or she deems necessary in order
to reach a decision.
11.3.5 The Expert shall act as an independent expert and not as an
arbitrator. The Expert shall reach a decision and give notice
to the parties of the decision within thirty (30) days of
receipt of the documents provided under Section 11.3.2 and
11.3.3. The decision of the Expert shall be binding and final
unless any party issues a notice, within ten (10) days of the
decision, of its intention to refer the matter to arbitration
in accordance with Section 11.4. In such case, the Expert's
decision shall remain binding unless revised or reversed by an
arbitration award.
11.3.6 The costs of engaging the Expert shall be borne equally by
Seller and Buyer, PROVIDED that each party shall bear its own
costs of preparing the materials for and making presentations
to the Expert. The terms of remuneration of the person
appointed to act as the Expert shall be mutually agreed upon
by Buyer, Seller and such person. In the event of
disagreement, the remuneration of the Expert shall include
reimbursement for reasonable expenses and a daily fee in
accordance with the daily fee
32
established from time to time for arbitrators under the
administrative and financial regulations of the International
Centre for Settlement of Investment Disputes.
11.3.7 Any person who has been appointed as an Expert may not
subsequently be appointed to act as an arbitrator in an
arbitration relating to the same or any similar dispute
between the parties.
11.4 ARBITRATION
Subject to Section 11.5, any dispute in respect of which:
(a) an Expert has not been appointed within thirty (30) days of
the notice given by either party of its intention to refer the
dispute to an expert, or the Expert has failed to deliver a
decision to the parties within the period required by Section
11.2.5;
(b) any party has issued a notice under Section 11.2.5 challenging
the decision of the Expert; or
(c) any party has failed to comply with the decision of the
Expert;
shall be referred to and finally resolved by arbitration under the
Rules of the London Court of International Arbitration (the "LCIA) by
one (1) arbitrator appointed by the LCIA. The place of the arbitration
shall be
New York,
New York. The arbitrator shall be a lawyer
qualified, as may be appropriate, in the field of intellectual property
and shall be a national of the United States of America. The
arbitration shall be conducted in the English language. The arbitrator
shall have full power to open up review and revise any decision of the
Expert. No party shall be limited in the arbitration proceedings to the
evidence or arguments previously put before the Expert to obtain the
decision of the Expert. The award rendered by the arbitrator shall be
final and binding on Buyer and Seller and judgment may be entered in
accordance with applicable law in any court having jurisdiction
thereof.
11.5 NO SPECIAL DAMAGES
Neither party shall be liable to the other party for any consequential,
indirect or special damages.
11.6 DUTY OF CONTINUED PERFORMANCE
Seller shall proceed diligently in accordance with Buyer's direction
with performance of this Sale Contract pending final resolution of any
claim, dispute or other matter in question arising out of, or relating
to this Sale Contract, or the interpretation or breach thereof, and
Buyer shall continue to make payment of all
33
sums which are due and payable to Seller in accordance with this Sale
Contract and which are not related to the dispute.
ARTICLE 12.
MISCELLANEOUS
12.1 RELATIONSHIP OF THE PARTIES
The parties acknowledge and agree that the relationship between them
(including, without limitation, their relationship with any Supplier)
is solely that of independent contractors. Neither party, nor their
respective employees, agents or representatives, have any right, power
or authority to act or create any obligation, express or implied on
behalf of the other party. None of Seller, any Suppliers or their
respective agents or employees shall be deemed to be the servants,
employees or agents of Buyer.
12.2 BINDING EFFECT ON SUCCESSORS AND ASSIGNEES
12.2.1 This Sale Contract shall be binding upon and shall inure to
the benefit of the parties hereto and their respective
successors and permitted assigns.
12.2.2 Neither party hereto shall assign or convey any of its right,
title or interest under this Sale Contract without the prior
written consent of the other party hereto provided, however,
that without any such consent, Buyer or its respective
successor may assign any or all of its right, title or
interest hereunder to (i) any person, corporation, trust
company, association or other business entity as security in
connection with obtaining or arranging financing for its
business or operations; or (ii) any person, corporation,
trust, company or other business entity in order to enforce
any security assignment described in (i) above.
12.2.3 Unless otherwise agreed by the parties hereto in a separate
writing, no assignment permitted by Section 11.6.2 shall
relieve the assigning party from any of its obligations under
this Sale Contract.
12.3 NOTICES
Regular communications not specifically covered by the requirements of
this Sale Contract shall be between Seller's Contact and Buyer's
Contact. All notices to be given under this Sale Contract shall be
effective upon receipt and shall be in writing and delivered personally
or by recognized courier service or given by facsimile transmission,
with hard copy by any other method permitted by this Section 12.3 at
the following address or such other address as may hereafter be
designated, in writing, by any party to the other in accordance with
this Section 12.3.
34
If to Buyer:
Given Imaging Ltd.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Attn: Chief Operating Officer
Fax: + (▇▇▇ ▇) ▇▇▇ ▇▇▇▇
If to Seller: PEMSTAR Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America 55901
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇-▇▇▇) ▇▇▇-▇▇▇▇
12.4 NOT FOR BENEFIT OF THIRD PARTIES
This Sale Contract and each and every provision thereof is for the
exclusive benefit of the parties hereto and not for the benefit of any
other party.
12.5 SECTION HEADINGS AND SUBHEADING
All section headings and subheadings are inserted for convenience only
and shall not affect any construction or interpretation of this Sale
Contract.
12.6 NO WAIVER
No waiver by a party of any breach or default by the other party of its
obligations hereunder shall be deemed or construed to be a consent or
waiver to or of any other breach of default in the performance by such
other party of the same or any other obligations of such other party
hereunder. The giving of a waiver by a party in any one instance shall
not limit or waive the necessity to obtain such party's waiver in any
future instance. No waiver of any rights under this Sale Contract shall
be binding unless it is in writing signed by the party waiving such
rights.
12.7 GOOD FAITH AND FAIR DEALING
The parties agree to deal fairly and to act in good faith in the
performance or enforcement of this Sale Contract.
12.8 SEVERABILITY
In the event that any of the provisions of this Sale Contract, or
portions or applications thereof, are held to be unenforceable or
invalid by any court of competent jurisdiction, Buyer and Seller shall
negotiate an equitable adjustment in the provisions of this Sale
Contract with a view toward effecting the purposes of this Sale
Contract, and the validity and enforceability of the remaining
provisions, or portions or applications thereof, shall not be affected
thereby.
35
12.9 COUNTERPARTS
This Sale Contract may be executed in any number of counterparts and by
the parties hereto on separate counterparts, each complete set of
which, when so executed and delivered by all parties, shall be an
original, but all such counterparts shall together constitute but one
and the same instrument.
12.10 FURTHER ASSURANCES
If either party reasonably determines that any further instruments or
any things are necessary or desirable to carry out the terms of this
Sale Contract, the other party will execute and deliver all such
instruments and assurances and do all such things as the first party
reasonably deems necessary or desirable to carry out the terms of this
Sale Contract, provided that Buyer shall not be required to incur any
material cost or expense in connection therewith.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
36
IN WITNESS WHEREOF, the parties hereto have entered into this Sale
Contract on the day and year first hereinabove written.
GIVEN IMAGING LTD.
By: /s/ Zvi ▇▇▇-▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
Zvi ▇▇▇-▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Vice President, Vice-President
Chief Financial Officer Business Development
PEMSTAR, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Vice-President
SCHEDULE 1
PERFORMANCE GUARANTEES
1. SEMI-AUTOMATED PRODUCTION LINES: Each Semi-Automated Production Line
shall demonstrate the following:
a. capacity to manufacture 10,000 M2A Capsules per month,
operating two shifts of eight (8) hours each per day,
inclusive of any downtime, five (5) days per week, PROVIDED,
HOWEVER, that in the case of the first Semi-Automated
Production Line, such Production Line shall be deemed to have
achieved this performance guarantee for a period not exceeding
30 days after all of the other conditions of Final Acceptance
have been satisfied to the extent such Production Line
demonstrates a capacity to manufacture 3,000 M2A Capsule per
month;
b. operation with a maximum of 15 direct operators; and
c. uptime exceeding 80%.
2. FULL-AUTOMATED PRODUCTION LINES: Each Fully-Automated Production Line
shall demonstrate the following:
a. capacity to manufacture 75,000 M2A Capsules per month,
operating two shifts of eight (8) hours each per day,
inclusive of any downtime, five (5) days per week;
b. operation with a maximum of 15 direct operators; and
c. uptime of line exceeds 80%.
3. ALL PRODUCTION LINES: All Production Lines shall demonstrate the
following:
a. construction and workmanship in compliance with the FDA
Quality System Regulations and other Applicable Law, the
International Quality Standards and the other requirements of
the Sale Contract;
b. operation in compliance with the FDA Quality System
Regulations and other Applicable Law, the International
Quality Standards and the other requirements of the Sale
Contract; and
c. production of M2A Capsules in compliance with Product
Specifications, the FDA Quality System Regulations and other
Applicable Law, the International Quality Standards and the
other requirements of this Sale Contract, with M2A Capsules
operating in
"live" mode for no more than 60 seconds in total until
packaged for shipment.
SCHEDULE 2
PROVISIONAL TESTS
To demonstrate its capability to achieve the Performance Guarantees and
Provisional Acceptance, each Production Line shall demonstrate the following:
1. Completion of all construction and workmanship in compliance with the
FDA Quality System Regulations and other Applicable Law, the
International Quality Standards and the other requirements of this Sale
Contract;
2. Operation and completion of the assembly and testing procedures for M2A
Capsules in compliance with the FDA Quality System Regulations and
other Applicable Law, the International Quality Standards and the other
requirements of this Sale Contract;
3. Repeated and reliable production of M2A Capsules in compliance with
Product Specifications, the FDA Quality System Regulations and other
Applicable Law, International Quality Standards and the other
requirements of this Sale Contract, as evidenced by the production of a
minimum of 25 consecutive M2A Capsules;
4. Production of M2A Capsules in compliance with Product Specifications,
the FDA Quality System Regulations and other Applicable Law, the
International Quality Standards and the other requirements of this Sale
Contract at a rate in a continuous one (1) hour period of operation,
such that the capacity to manufacture the number of Capsules required
by the Performance Guarantees can be mathematically proven; and
5. Production of M2A Capsules in compliance with Product Specifications,
the FDA Quality System Regulations and other Applicable Law,
International Quality Standards and the other requirements of this Sale
Contract during a continuous two (2) hour period of operation during
which uptime exceeds 90%.
SCHEDULE 3
PERFORMANCE TESTS
To demonstrate its capability to achieve the Performance Guarantees and Final
Acceptance, each Production Line shall demonstrate the following:
1. Completion of installation in compliance with the FDA Quality System
Regulations and other Applicable Law, the International Quality
Standards and the other requirements of this Sale Contract;
2. Operation and completion of the assembly and testing procedures for M2A
Capsules in compliance with the FDA Quality System Regulations and
other Applicable Law, the International Quality Standards and the other
requirements of this Sale Contract; and
3. Production of M2A Capsules in compliance with Product Specifications,
the FDA Quality System Regulations and other Applicable Law, the
International Quality Standards and the other requirements of this Sale
Contract at a rate, speed and uptime, and with a labor efficiency, in a
continuous eight (8) hour period of operation, such that the capacity
of such Production Line to achieve the Performance Guarantees can be
mathematically proven.
EXHIBIT A
FORM OF PURCHASE ORDER
[Letterhead of Buyer]
__________, 20__
PEMSTAR, Inc
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America 55901
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
RE: BUYER'S PURCHASE ORDER NO. ___
We refer to the
Purchase and Sale Contract (the "SALE CONTRACT") dated
of August 25, 2001 between Pemstar, Inc. ("SELLER") and Given Imaging, Ltd.
("BUYER"). Capitalized terms not otherwise defined herein are defined in the
Sale Contract. Pursuant to Section 2.2.1 of the Sale Contract, Buyer hereby
orders, and authorizes and releases you to proceed with all of the Work in
respect of, one (1) [Semi-Automated Production Line] [Fully-Automated Production
Line] to be [installed by Seller at Buyer's Facility] [stored by Seller at
Seller's Facility as a Standby Production Line]. The Milestone Schedule for such
Production Line is as follows:
---------------------------------------------------------------------------------------
Milestone Milestone Date
---------------------------------------------------------------------------------------
[Final Plans and Specifications to Buyer]
---------------------------------------------------------------------------------------
Provisional Acceptance Date
---------------------------------------------------------------------------------------
Final Acceptance
---------------------------------------------------------------------------------------
GIVEN IMAGING, LTD.
By:
-------------------------------
Name:
Title:
CONFIDENTIAL
EXHIBIT B
FORM OF PROVISIONAL ACCEPTANCE CERTIFICATE
[Letterhead of Buyer]
__________, 20__
PEMSTAR, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America 55901
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
RE: BUYER'S PURCHASE ORDER NO. ___
We refer to the
Purchase and Sale Contract (the "SALE CONTRACT") dated
as of August 25, 2001 between PEMSTAR, Inc. ("SELLER") and Given Imaging, Ltd.
("BUYER"). Capitalized terms not otherwise defined herein are defined in the
Sale Contract.
Pursuant to Section 3.2.1 of the Sale Contract, Buyer hereby confirms
that the Production Line subject to the foregoing Purchase Order has met the
requirements for Provisional Acceptance under the Sale Contract as of
__________, 20__ .
GIVEN IMAGING, LTD.
By:
-------------------------------
Name:
Title:
EXHIBIT C
FORM OF FINAL ACCEPTANCE CERTIFICATE
[Letterhead of Buyer]
__________, 20__
PEMSTAR, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America 55901
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
RE: BUYER'S PURCHASE ORDER NO. ___
We refer to the
Purchase and Sale Contract (the "SALE CONTRACT") dated
as of August 25, 2001 between PEMSTAR, Inc. ("SELLER") and Given Imaging, Ltd.
("BUYER"). Capitalized terms not otherwise defined herein are defined in the
Sale Contract.
Pursuant to Section 3.3 of the Sale Contract, Buyer hereby confirms
that the Production Line subject to the foregoing Purchase Order has met the
requirements for Final Acceptance under the Sale Contract as of __________, 20__
.
GIVEN IMAGING, LTD.
By:
-------------------------------
Name:
Title:
EXHIBIT D
FORM OF CHANGE ORDER
[Letterhead of Buyer]
__________, 20__
PEMSTAR, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America 55901
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
RE: BUYER'S PURCHASE ORDER NO. ___
We refer to the
Purchase and Sale Contract (the "SALE CONTRACT") dated
as of August 25, 2001 between PEMSTAR, Inc. ("SELLER") and Given Imaging, Ltd.
("BUYER"). Capitalized terms not otherwise defined herein are defined in the
Sale Contract. Pursuant to Article 5 of the Sale Contract, Buyer is issuing a
Change Order with respect to the Production Line subject to the foregoing
Purchase Order as follows:
DESCRIPTION OF CHANGE IN WORK
[Specify or attach]
MILESTONE SCHEDULE FOR CHANGE ORDER
[Specify or attach.]
PRICE FOR CHANGE IN WORK
[Specify or attach.]
CHANGE IN MILESTONE SCHEDULE
[Specify milestone] from __________ , 20 __ to _________, 20__
CHANGE IN CONTRACT PRICE:
From $__________ to $_________
Please indicate your acceptance and agreement to this Change Order as
of the date hereof by executing one original of this Change Order and returning
it to Buyer.
GIVEN IMAGING, LTD.
By:
-------------------------------
Name:
Title:
ACCEPTED AND AGREED TO:
PEMSTAR, INC.
By:
-----------------------------------------
Name:
Title: