EXHIBIT 10.16
LMIC, INC.
PRODUCTION SERVICES AGREEMENT
This Production Services Agreement ("Agreement") is made and entered into
this 24th day of January, 2005 (the "Effective Date") by and between (i) LMIC,
Inc., a Delaware corporation with its principal place of business at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("LMIC" or "Manufacturer"), and
(ii) Aldeburgh LLC, a Delaware corporation with its principal place of business
at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Aldeburgh" or "Buyer"),
who, intending to be legally bound, agree as follows:
1. INTRODUCTION
1.1. Aldeburgh markets and sells one or more products that LMIC has the
capacity to manufacture and in connection with which LMIC can provide a suite of
related services.
1.2. The parties wish to enter into this Agreement to provide for certain
terms under which LMIC will manufacture Aldeburgh's product(s) in quantities
ordered by Aldeburgh and in accordance with specifications and bills of
materials provided or approved by Aldeburgh, and Aldeburgh will pay for the
products it orders from Aldeburgh. Manufacturer agrees to manufacture or provide
and sell to buyer the following goods: One Million Units (1,000,000) of cellular
phones of various types, and accessories according to Schedule A (the "goods")
over a period of two (2) years. Buyer and manufacturer shall also protect the
locking codes of the phone within reasonable means to assure the locked phone
will be protected from unauthorized use. Manufacturer may source assembled
phones directly from the supply chain at any time through-out the time of this
contract.
2. SCOPE OF RESPONSIBILITIES
2.1. Specifications. The parties shall mutually agree upon a schedule for
delivery to LMIC of (a) the drawings and all product, testing, and quality
specifications ("Specifications"), and (b) listing of materials designated by
manufacturer and part number ("▇▇▇▇ of Materials"), for each Aldeburgh product
("Product") to be manufactured by LMIC in accordance with this Agreement. LMIC
expressly agrees that the Specifications and ▇▇▇▇(s) of Materials shall be
considered Confidential Information of Aldeburgh for purposes of Section 8.
2.2. LMIC Production Capability. Upon receipt and approval of the
Specifications and ▇▇▇▇ of Materials for a Product, LMIC shall create production
processes for the manufacture of quantities of the Product ordered by Aldeburgh
in accordance with Section 3.1 or forecasted in accordance with Section 3.6.
2.3. Verification of Production. In accordance with a mutually agreed upon
schedule, LMIC shall deliver to Aldeburgh a quantity of each Product, that is
sufficient to enable Aldeburgh to verify that the Product meets the applicable
Specifications and ▇▇▇▇ of Materials. Aldeburgh shall subject the delivered
quantity of the Product to the testing and analysis procedures that Aldeburgh
deems appropriate to verify that the Product satisfies the Specifications and
▇▇▇▇ of Materials. If the Product as delivered fails to satisfy the
Specifications or the ▇▇▇▇ of Materials, Aldeburgh shall so notify LMIC, and
LMIC shall adjust its manufacturing process and provide a replacement quantity
of the Product for testing and analysis. The process shall continue until
Aldeburgh determines that the Product provided by LMIC satisfies the
Specifications and ▇▇▇▇ of Materials.
2.4. Specification Changes. The parties acknowledge and agree that the
Specifications and ▇▇▇▇ of Materials for each Product are subject to change at
any time and from time to time. Aldeburgh shall request any changes to the
Specifications and/or the ▇▇▇▇ of Materials for any Product in writing as far in
advance as reasonably practicable, and LMIC shall promptly advise Aldeburgh of
the time within which an order for quantities of the Product meeting the
modified Specifications and/or ▇▇▇▇ of Materials could be filled and any change
in price for the Product. The parties shall mutually agree in writing, as
promptly as practicable, upon a schedule for implementation of the necessary
adjustments to LMIC's production processes to enable LMIC to manufacture the
Product so as to meet the changed Specifications and/or ▇▇▇▇ of Materials;
provided, however, that unless expressly set forth to the contrary in any such
written agreement no change in the Specifications or ▇▇▇▇ of Materials for any
Product shall be applicable to orders for the Product already accepted by LMIC
in accordance with Section 3.2. LMIC shall thereupon implement the necessary
adjustments in accordance with such schedule, and the parties shall follow the
procedure set forth in Section 2.3 for verifying that the Product produced by
LMIC satisfies the changed Specifications and/or ▇▇▇▇ of Materials.
2.5. Manufacturing. LMIC will manufacture and test the Products in
accordance with the Specifications, Bills of Materials, and Purchase Orders
accepted under Section 3.2, and will maintain manufacturing and test records in
accordance with reasonable industry standards. As set forth in ATTACHMENT A, all
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components and other materials and equipment required in connection with such
manufacture and testing will be acquired or supplied by LMIC pursuant to the
Specifications and Bills of Materials, except for such components, other
materials, or equipment that may be supplied by Aldeburgh ("Consigned
Materials"). LMIC will use commercially reasonable efforts, based upon forecasts
submitted to LMIC in accordance with Section 3.6, to manufacture units of the
Products to fulfill Aldeburgh's orders for the Products in a timely manner. If
at any time after acceptance of any order in accordance with Section 3.2, LMIC
learns that any components or other materials may not be procured or received in
sufficient time to permit LMIC to fulfill the order within the time set forth in
the order, LMIC will give Aldeburgh prompt notice and will work diligently with
Aldeburgh to minimize any resulting delay. In instances where LMIC is procuring
the cellular phones directly from the supply chain, LMIC will make best efforts
to secure reasonable quantity of overage for rapid replacement of returned units
within 2 (two) to 5 (five) business days.
3. ORDERS AND FORECASTS
3.1. Orders. Aldeburgh will submit orders to LMIC so that its requirements
for quantities of the Products are updated on a rolling basis as follows:
Aldeburgh's initial order under this Agreement shall set forth the quantity of
each Product to be purchased by Aldeburgh during 24 full calendar months
following the date of the order and shall specify delivery dates no earlier than
15 days after the date of the order. Thereafter, between the first and tenth day
of each month, Aldeburgh shall issue an order setting forth the quantity of the
Products to be delivered during the one month of the rolling one month period.
Each order shall identify (a) the quantity of the Products required, (b) the
proposed delivery date, (c) the address to which the shipment shall be
delivered, and (d) any other applicable shipping or special instructions.
3.2. Acceptance. All orders for the Products submitted by Aldeburgh in
accordance with Section 3.1 shall be subject to acceptance in writing by LMIC at
its principal place of business and shall not be binding until the earlier of
such acceptance or shipment, and in the case of acceptance by shipment, only as
to the portion of the order actually shipped. All orders placed by Aldeburgh in
accordance with Section 3.1 shall be accepted unless LMIC notifies Aldeburgh
within three (3) business days after receipt of an order that the delivery
schedule cannot be met. In such event, LMIC will furnish Aldeburgh with a
revised delivery schedule, and unless Aldeburgh rejects the revised delivery
schedule within one (1) business day after receipt, such revised delivery
schedule shall be deemed accepted. As an extended service, LMIC may furnish
alternative manufactures, in which Aldeburgh can meet buyers' needs of delivery.
3.3. Controlling Terms. The terms and conditions of this Agreement will
apply to each order accepted or shipped by LMIC hereunder. Legal terms and
conditions on Aldeburgh's form of purchase order or other business forms will
not apply to any order notwithstanding LMIC's acknowledgment or acceptance of
such order.
3.4. Fulfillment. Subject to Section 2.5, LMIC shall fill each order in
accordance with its terms. All orders shall be shipped F.O.B. New York. Title
and risk of loss with respect to each shipment shall pass from LMIC to Aldeburgh
upon delivery of the shipment by LMIC to a carrier for transport to the location
specified in the order. Issues relevant to order fulfillment, including but not
limited to methods for packaging and shipment of the Products, shall be mutually
agreed upon by the parties. Manufacturer shall deliver goods to Buyer according
to Attachment C. If buyer's inspection discloses defects or adjustments,
Manufacturer shall have a reasonable time to correct such defects and make such
adjustments as are necessary. Buyer shall also reserve the current model of
color flip phone as Buyer exclusive for 120 days in the US market starting from
the first date of receipt by buyer.
3.5. Cancellations and Change Orders. LMIC reserves the right to cancel
any orders placed by Aldeburgh and accepted by LMIC as set forth above, or to
refuse or delay shipment thereof, if Aldeburgh fails to make any payment as
provided in this Agreement or otherwise fails to comply with the terms and
conditions of this Agreement. Aldeburgh shall be entitled to change or cancel
orders accepted by LMIC only in accordance with the procedures set forth in
ATTACHMENT B. Before canceling any orders, LMIC should notify Aldeburgh of
intentions of cancellation.
3.6. Forecasts. To assist LMIC in organizing an adequate supply of the
Products to fill Aldeburgh's orders, Aldeburgh will submit rolling, non-binding,
6 (six) month forecasts to LMIC. Forecasts will be updated on a rolling basis as
follows: Aldeburgh's initial nonbinding forecast under this Agreement shall set
forth the quantity of the Products to be purchased by Aldeburgh during the first
two full calendar quarters following any period covered by Aldeburgh's initial
order placed in accordance with Section 3.1. Thereafter, between the first and
tenth day of each subsequent month, Aldeburgh shall submit revised nonbinding
forecasts for the next month covered by the preceding forecast and a new
nonbinding forecast for the next subsequent calendar quarter.
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4. LIMITED WARRANTY AND DISCLAIMER
4.1. Compliance with Specifications. LMIC warrants that all units of the
Products shall be manufactured and assembled in accordance with the applicable
Specifications and ▇▇▇▇ of Materials and shall be free from defects in materials
and workmanship for twelve (12) months after the date of delivery to Aldeburgh.
4.2. Exclusions. The foregoing warranty does not apply to any
nonconformity or defect which is attributable to any component or material
obtained by LMIC from a third-party or consigned to LMIC by the Aldeburgh, or
which results from (a) repair or modification of a unit of any Product by anyone
other than LMIC, or (b) any damage to or misuse or incorrect use of a unit of
any Product.
4.3. Notification and Replacement. If, during the applicable twelve (12)
month warranty period, any unit of a Product received by Aldeburgh does not
conform to the applicable Specifications or ▇▇▇▇ of Materials or contains or
otherwise exhibits any defect in materials or workmanship, Aldeburgh shall give
LMIC prompt written notice of the nonconformity or defect. Likewise, if LMIC
discovers or has reason to believe that any shipment of a Product fails to
conform to the applicable Specifications or ▇▇▇▇ of Materials or contains or
otherwise exhibits any defect in materials or workmanship, LMIC shall promptly
notify Aldeburgh. In each case, LMIC's sole obligation, and Aldeburgh's
exclusive remedy shall be (a) repair or replacement the nonconforming or
defective units of the Products, without charge, with a substitute shipment that
satisfies the warranty set forth herein, or (b) use by LMIC of commercially
reasonable efforts to procure repair or replacement of procured components or
materials in accordance with manufacturers' warranties, or (c) at LMIC's sole
option, acceptance of return of the nonconforming or defective units of the
Product and refund to Aldeburgh of all amounts actually paid by Aldeburgh to
LMIC for such nonconforming or defective units. Any nonconforming or otherwise
defective unit(s) of any Product shall be returned to LMIC at LMIC's request and
expense.
4.4. Disclaimer. THE LIMITED WARRANTY SET FORTH HEREIN IS EXCLUSIVE AND IN
LIEU OF, AND LMIC HEREBY DISCLAIMS, ALL OTHER WARRANTIES REGARDING THE PRODUCTS
MANUFACTURED FOR ALDEBURGH HEREUNDER, EXPRESS AND IMPLIED, INCLUDING WITHOUT
LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS OF THE PRODUCTS
FOR A PARTICULAR PURPOSE. IN PARTICULAR, LMIC DOES NOT WARRANT ANY COMPONENTS OR
OTHER MATERIALS THAT MAY BE USED OR INCLUDED IN THE MANUFACTURE OF THE PRODUCTS.
5. ADDITIONAL SERVICES
LMIC has the capacity to provide a variety of services that are
complementary to the manufacturing services to which this Agreement relates.
Such services may include (a) non-recurring engineering services, including but
not limited to product design, creation and modification of bills of materials,
engineering drawing packages, work instructions, fabrication documents and
drawings, and survey documents; (b) prototyping services, including but not
limited to fabrication and testing of prototype products; (c) storage and
warehousing services; (d) maintenance, repair and replacement services, (e)
asset management, and (f) other related services tailored to meet Aldeburgh
needs. Aldeburgh may request additional services not otherwise provided for in
this Agreement at any time before or after the Effective Date, and such
additional services will be described in an Attachment to this Agreement that
shall be mutually agreed upon and signed by the parties.
6. PAYMENTS
6.1. Product Price. For each shipment of the Products ordered by Aldeburgh
and shipped to the address(es) specified in Aldeburgh's order, Aldeburgh shall
pay to LMIC the prices determined in accordance with ATTACHMENT C, which are
exclusive of charges for taxes, shipping and insurance. Prices on ATTACHMENT C,
which assume that LMIC will be able to order components and other raw materials
and schedule production in the most efficient manner possible based upon
reasonably accurate forecasts, shall be effective and applicable to orders
placed and shipped within the 6 (six) month period immediately following the
Effective Date, subject to intermediate adjustments resulting from any of the
following: (a) mutually agreed upon changes to the Specifications, (b)
significant changes in quantities of the Products ordered from month to month,
(c) acceleration of delivery dates in accordance with Paragraph 2 on ATTACHMENT
B, and (d) any other significant unanticipated event, including but not limited
to shortages of and significant price increases for components and other
materials. Not less than ninety (90) days before the expiration of the 6 (six)
month period beginning on the Effective Date and each subsequent 6 (six) month
period LMIC shall meet and confer with Aldeburgh regarding any adjustments to
the prices for the Products.
6.2. Additional Services. Aldeburgh shall pay LMIC mutually agreed upon
prices for all additional services requested by Aldeburgh and performed by LMIC
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in accordance with the provisions of Section 5 and any related Attachment(s) to
this Agreement.
6.3. Taxes. All amounts payable in accordance with Section 6.1 and Section
6.2 are exclusive of all federal, state, municipal or other governmental excise,
sales, value-added, use, personal property and occupational taxes, excises,
withholding obligations and other levies now in force or enacted in the future
and, accordingly, the amount of all payments hereunder is subject to an increase
equal to the amount of any tax LMIC may be required to collect or pay in
connection with this Agreement other than any tax on the net income of LMIC.
6.4. Payment Terms. Aldeburgh will provide a full Irrevocable,
Transferable Letter of Credit (LOC) from an "Acceptable US Bank," for full value
of the purchase order as indicated in Attachment C. This LOC will be issued
together with the purchase order. Manufacturer retains the right to not execute
on the purchase order without this valid letter of credit.
7. PROPRIETARY RIGHTS
7.1. Aldeburgh Materials. Aldeburgh retains all patent, copyright, trade
secret and other proprietary rights in and to the Products and the related
Specifications and Bills of Materials, and subject to the provisions of Section
7.2, LMIC hereby assigns to Aldeburgh all proprietary rights of any nature that
it may obtain in any of the foregoing. LMIC hereby agrees to execute any
documents or instruments reasonably necessary to enable Aldeburgh to secure or
perfect any proprietary rights that are assigned to Aldeburgh hereby. Aldeburgh
hereby grants to LMIC, during the term of this Agreement, a nonexclusive, paid
up license under Aldeburgh's proprietary rights to perform LMIC's obligations
under this Agreement. Aldeburgh represents and warrants that the Products, the
specifications and any other materials provided to LMIC by Aldeburgh, and LMIC's
exercise of the rights granted herein, will not infringe or misappropriate any
patent, copyright, trade secret or other proprietary right of any third party.
If telephones are made to the special specification of buyer, then for a 120
days after the first shipment to buyer, LMIC will not sell same phone to other
customer for resale in United States.
7.2. LMIC Tools and Know-How. Aldeburgh acknowledges that LMIC has
developed or may develop in the course of performing this Agreement, and may use
for Aldeburgh's benefit in performance of its obligations under this Agreement,
manufacturing processes, procedures, software applications, scripts, design
elements, equipment, products and know-how that are proprietary to LMIC and/or
third parties ("Manufacturing Know-How"). LMIC, on behalf of itself and its
licensors, retains all patent, copyright, trade secret and other proprietary
rights in and to such Manufacturing Know-How, and nothing in Section 7.1 or
elsewhere in this Agreement shall be construed to transfer to Aldeburgh any
patent, copyright, trade secret or other proprietary right therein; provided,
however, that LMIC hereby grants to Aldeburgh a perpetual, nonexclusive,
worldwide, paid up license under LMIC's proprietary rights, with rights to
sublicense, to make, use, sell, offer for sale, export and otherwise exploit the
Products. LMIC represents and warrants that the manufacturing processes,
procedures, software applications, scripts, design elements, equipment, products
and know-how that are proprietary to LMIC, and Aldeburgh's exercise of the
rights granted herein, will not infringe or misappropriate any patent,
copyright, trade secret or other proprietary right of any third party.
7.3. Indemnification. Each party (an "indemnifying party") shall indemnify
and defend the other party (an "indemnified party") against, and otherwise hold
it harmless from, any and all costs, liabilities, damages, losses and expenses
arising out of any claim that the exercise by the indemnified party of any
rights granted by the indemnifying party in Section 7.1 or Section 7.2 infringes
any patent, copyright, trade secret or other proprietary right of any third
party. Each party's obligations under this Section 7.3 are conditioned upon (a)
receipt by the indemnifying party of prompt written notification from the party
claiming indemnification of any claim to which this indemnification may apply,
and (b) cooperation by the indemnified party, at the indemnifying party's
request and expense, with efforts to defend or settle the claim. An indemnifying
party shall have sole control of the defense and settlement efforts subject to
the indemnified party's right to participate therein at its own expense.
8. CONFIDENTIAL INFORMATION
The parties acknowledge and agree that each party will be disclosing
confidential information to the other party, including but not limited to,
disclosure of the Specifications and ▇▇▇▇(s) of Materials, manufacturing
processes, know-how, business strategies, ideas, concepts and financial
information (the "Confidential Information"). Each party agrees that it shall
hold the Confidential Information of the other party in strict confidence, shall
not disclose it to others or use it in any way, commercially or otherwise,
except for purposes of performing its obligations under this Agreement. Each
party further agrees to take commercially reasonable steps to protect the
confidentiality of the other party's Confidential Information. Notwithstanding
this Section 8, the term "Confidential Information" shall not include any
information which (a) is or becomes part of the public domain through no fault
of the receiving party, (b) is obtained by the receiving party from any third
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party which is under no obligation to protect the confidentiality thereof, or
(c) can be established by the receiving party with reasonable documentary
evidence to have been independently developed by the receiving party without
reliance on the other party's Confidential Information.
9. TERM AND TERMINATION
9.1. Term. The term of this Agreement shall commence upon the Effective
Date and shall remain in effect until terminated in accordance with Section 9.2
or Section 9.3.
9.2. Termination for Cause. This Agreement may be terminated by either
party in the event that the other party has not performed any material
obligation or has otherwise breached any material term of this Agreement (a)
immediately upon receipt of written notice thereof if the breach or
nonperformance is incapable of cure, or (b) upon the expiration of thirty (30)
days (or any longer cure period authorized by the nonbreaching party with
respect to any individual breach) after receipt of written notice thereof if the
breach or nonperformance is capable of cure and has not then been cured.
Aldeburgh shall be responsible for purchase at the full unit value of all
quantities of Product(s) that are finished or in process as of the date of the
notice of termination.
9.3. Termination Without Cause. This Agreement may be terminated by either
party, without cause, upon 3 (three) months prior written notice to the other
party; provided, however, that this Agreement shall remain in effect with
respect to any orders accepted by LMIC prior to the expiration of such 3 (three)
month period until all units of the Products subject to such orders have been
accepted by Aldeburgh in accordance with Section 3.2.
9.4. Disposition of Inventory Upon Termination. Upon termination of this
Agreement for any reason, Aldeburgh and LMIC agree to cooperate to dispose of
existing inventory of and orders for components and other materials in an
economical and efficient manner. Disposition of materials upon termination of
this Agreement shall be as set forth in ATTACHMENT A.
10. LIMITATION OF LIABILITY
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOSS OF
PROFITS OR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES
INCURRED BY THE OTHER PARTY AND ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT FOR ANY CAUSE OF ACTION OF ANY KIND, WHETHER BASED UPON BREACH OF
CONTRACT OR TORT (INCLUDING NEGLIGENCE), EVEN IF THE OTHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL LMIC'S TOTAL
LIABILITY TO ALDEBURGH ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT FOR
ANY CAUSE OF ACTION OF ANY KIND, WHETHER BASED UPON BREACH OF CONTRACT OR TORT
(INCLUDING NEGLIGENCE) EXCEED THE TOTAL AMOUNTS PAID BY ALDEBURGH TO LMIC IN
CONNECTION WITH THE PARTICULAR UNIT(S) OF THE PRODUCTS OR THE PARTICULAR LMIC
SERVICE(S) IN CONNECTION WITH WHICH THE LIABILITY AROSE.
11. GENERAL PROVISIONS
11.1. Assignment. Neither this Agreement nor any rights granted hereby may
be assigned by either party without the prior written consent of the other
party. Any attempt by either party to assign any rights, duties or obligations
without the requisite consent of the other party shall be void and without force
or effect.
11.2. Modification. This Agreement can only be modified by a written
agreement duly signed by persons authorized to sign agreements on behalf of
Aldeburgh and of LMIC, and variance from the terms and conditions of this
Agreement in any written notification given by either party shall have no force
or effect.
11.3. Severability. If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
11.4. Relationship of the Parties. For purposes of this Agreement, LMIC
and Aldeburgh will be and shall act as independent contractors, and neither
party is authorized to act as an agent or partner of, or joint venturer with,
the other party for any purpose. Neither party by virtue of this Agreement shall
have any right, power, or authority to act or create any obligation, express or
implied, on behalf of the other party.
11.5. Export. Each party and its employees and agents shall comply fully
with all applicable laws, rules and regulations, including, but not limited to,
the United States Export Administration Act, any regulations promulgated
thereunder by the United States Department of Commerce's Bureau of Export
Administration, and any regulations of the United States Department of
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Treasury's Office of Foreign Assets Control, relating to the export and reexport
of units of the Products and any related technical data.
11.6. Notices. All notices shall be in writing and shall be deemed to be
delivered when deposited with a recognized international express courier
service, or when sent by facsimile transmission promptly confirmed by return
transmission. All notices shall be directed to LMIC or Aldeburgh at the
respective addresses first set forth above or to such other address as either
party may, from time to time, designate by notice to the other party.
11.7. Governing Law. This Agreement, and any and all tort claims that may
arise out of or in connection with this Agreement, the Products and any related
services will be governed by the laws of the State of Maryland. The parties
hereby expressly exclude the applicability of the Convention on Contracts for
the International Sale of Goods and that body of law known as conflicts of laws.
11.8. Dispute Resolution. Any controversy or claim between the parties
arising out of or relating in any way to this Agreement will be resolved by
arbitration in either ▇▇▇▇▇▇▇▇▇▇ or Prince Georges County, Maryland, under the
administration of the American Arbitration Association and subject to its
Commercial Arbitration Rules. The award of the arbitrators will be final and
binding upon the parties. Judgment upon the award may be entered in any court
having jurisdiction.
11.9. Force Majeure. Neither party shall be liable for any damages or
penalty for any delay in performance of, or failure to perform, any obligation
hereunder or for failure to give the other party prior notice thereof when such
delay or failure is due to the elements, acts of God, delays in transportation,
delays in delivery by vendors or other causes beyond that party's reasonable
control.
11.10. No Waivers. No express or implied waiver by either party of any
event of default hereunder shall in any way be, or be construed as, a waiver of
any future or subsequent event of default.
11.11. Survival. The respective rights and obligations of the parties
under Sections 6, 7, 8, 10, 11.7, 11.8 and 11.11 shall survive the termination
of this Agreement.
11.12. Titles and Captions. Titles and captions contained in this
Agreement are inserted for convenience or reference only, shall not be deemed to
be a part of this Agreement for any other purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
11.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
11.14. Entire Agreement. The parties acknowledge that this Agreement,
together with each Attachment hereto that is executed by both parties, sets
forth the complete, exclusive and integrated understanding of the parties which
supersedes all proposals or prior agreements, oral or written, and all other
prior communications between the parties relating to the subject matter of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
LMIC, INC. (LMIC) ALDEBURGH, LLC (ALDEBURGH)
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President and COO Title: Vice President
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Date: January 25, 2005 Date: January 25, 2005
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ATTACHMENT A
MATERIALS MANAGEMENT AND PROCUREMENT
The supply of components and other materials and equipment necessary to
manufacture and test Products under this Agreement shall be as set forth below:
1. Materials Supply. Unless specifically agreed otherwise, LMIC shall supply
or acquire all components and other materials and equipment ("Materials")
necessary to manufacture and test Products under this Agreement. LMIC will
supply or acquire only those Materials from only those vendors as are set
forth in the Specifications and Bills of Materials or are otherwise
approved in writing by the Aldeburgh. Subject to Paragraph 2 below, LMIC
will use commercially reasonable efforts to procure specified Materials so
as to be able to deliver Products as specified by the Aldeburgh in
accordance with delivery schedules set forth in orders accepted under
Section 3.2.
2. Exceptional Materials Requirements. LMIC will place orders for Materials
only as necessary to fulfill requirements of purchase orders accepted under
Section 3.2, except as follows:
a. Safety Stock. To minimize the risk of shortages and create an
available stock for spares, LMIC shall upon request by Aldeburgh
maintain a stock of Materials or Products, or both ("Safety Stock") in
quantities mutually agreed in writing, which shall be reviewed no less
than quarterly. Safety Stock will be designated and used exclusively
for fulfillment of Aldeburgh orders. LMIC shall charge, and Aldeburgh
shall pay, for safety stock in addition to a monthly carrying charge
on the on-hand Safety Stock equal to one percent (1%) of LMIC's cost
for the Safety Stock.
b. Long-Lead Materials. LMIC and Aldeburgh shall agree upon and maintain
a list of Long-Lead Materials, which shall be reviewed upon the
receipt of each Aldeburgh forecast and updated as necessary. Upon
receipt of forecasts, LMIC shall promptly notify Aldeburgh of the
quantities and cost of Long-Lead Materials and the schedule by which
they must be ordered in order to meet forecasted requirements
("Long-Lead Notice"). Unless specifically instructed in writing
otherwise within five business days, LMIC shall order Long-Lead
Materials in accordance with the Long-Lead Notice.
c. Minimum Quantity Materials. LMIC and Aldeburgh shall agree upon and
maintain a list of Minimum Quantity Materials, which shall be reviewed
no less than monthly and modified as necessary. Unless specifically
agreed otherwise in writing, in order to promote efficiency, LMIC will
purchase sufficient quantities of components to enable standard
packaging or kitting for automated placement (e.g., LMIC will purchase
full reels of taped-and-reeled components).
3. Disposition of LMIC-Supplied Materials. Upon termination of this Agreement,
LMIC will make reasonable efforts to return, stop shipment of, or allocate
to existing purchase orders any Materials supplied by LMIC. Aldeburgh shall
pay LMIC for all shipping and insurance, return, restocking, cancellation,
minimum quantity, or other fees or charges imposed by vendors, plus an
administrative charge not to exceed twenty percent (20%) of all returned or
reallocated Material. Aldeburgh shall purchase all unused portions of
minimum quantity purchases, including but not limited to unused portions of
full reels, and all Materials supplied by LMIC that cannot be returned or
allocated to other existing purchase orders. Materials shall be purchased
at a price equal to LMIC's documented cost plus twenty percent (20%),
except that Safety Stock shall be purchased at a price equal to LMIC's
documented cost plus ten percent (10%).
4. Consigned Materials. Aldeburgh may consign Materials to LMIC. Materials to
be consigned shall be set forth in Annex 1 to this Attachment, or as may
otherwise be agreed in writing from time to time. Aldeburgh agrees that all
Consigned Materials shall be delivered to LMIC in sufficient time and in
sufficient quantities, and in such condition and packaging, as to enable
LMIC to readily use the materials and to fulfill orders for the applicable
Products in accordance with Specifications and delivery dates. Inventory of
Consigned Materials shall not exceed maximum levels agreed between LMIC and
Aldeburgh. Delivery of non-conforming Consigned Materials may result in
delayed delivery dates and additional charges for loss of available
capacity.
5. Handling Charges. Consigned Materials shall be subject to a handling fee
equal to Three Percent (3%) of the cost to purchase the Consigned
Materials, plus One Percent per month in excess of two that any Consigned
Materials remain in LMIC's possession. In accordance with Section 4,
premium charges shall apply in the event of late delivery, delivery in such
condition that the Material is defective or not readily usable, or excess
inventory levels.
6. Letter of Authorization. At Aldeburgh's option, to facilitate efficient
flow of Consigned Materials, Aldeburgh shall provide a letter of
authorization, in a form mutually agreed upon by the parties, to each
vendor of Consigned Materials, advising vendor that LMIC is authorized to
request and receive technical information, and information about shipments
and deliveries, for Consigned Materials. Unless otherwise mutually agreed
upon in writing, LMIC shall not be authorized to negotiate pricing for,
place or change orders or schedules for, or initiate or agree to any
engineering changes in, Consigned Materials, and each letter of
authorization shall expressly set forth these limitations on LMIC's
authority.
7. Documentation. Immediately upon receiving confirmation of any order for
Consigned Materials, Aldeburgh shall provide LMIC with such documentation
as LMIC may reasonably require to enable it to plan for and receive
delivery of Consigned Materials. Documentation provided to LMIC for each
order shall include, at a minimum (a) vendor name, (b) vendor part numbers
and descriptions, (c) a vendor contact person, (d) Aldeburgh contact
person, (e) delivery schedule, and (f) any updates as they become
available. LMIC shall notify Aldeburgh of any additional documentation that
may be required in connection with any order, and Aldeburgh shall promptly
furnish such documentation to LMIC.
8. Receipt. LMIC shall receive all deliveries from vendors of Aldeburgh
Consigned Components and shall follow all product inspection and delivery
confirmation procedures provided to LMIC by Aldeburgh in writing.
9. Title. Title to the Consigned Materials shall transfer from the vendor to
Aldeburgh as set forth in the applicable procurement agreement, and LMIC
shall acquire no title or interest in or to the Consigned Materials and no
liability to the Aldeburgh for unused quantities thereof. Upon termination
of this Agreement, LMIC shall ship promptly at Aldeburgh's expense and
risk, and Aldeburgh shall accept, all unused Consigned Materials.
10. Storage and Handling. LMIC will exercise reasonable care in storage and
handling of the Consigned Materials and will use them solely for purposes
of performing its obligations to Aldeburgh under the Services Agreement.
ACCEPTED AND AGREED TO:
LMIC, INC. (LMIC) ALDEBURGH, LLC (ALDEBURGH)
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President and COO Title: Vice President
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Date: January 25, 2005 Date: January 25, 2005
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ANNEX 1
ALDEBURGH CONSIGNED COMPONENTS
ATTACHMENT B
ORDER CHANGE AND CANCELLATION
Orders may be changed or cancelled only in a writing signed by both parties (a
"Change Order"), and each Aldeburgh request to change or cancel an order shall
identify the particular order to which the change relates. 1.
1. Increases in Ordered Quantities of the Products. LMIC shall use
commercially reasonable efforts to accept requests by Aldeburgh for
increases in the quantities ordered by Aldeburgh; however, LMIC shall not
be in violation of this Agreement in connection with its inability to
supply quantities of a Product during any month that (a) materially exceed
the most recent forecast for such month submitted to LMIC in accordance
with Section 3.6, or (b) are otherwise inconsistent with Aldeburgh's
ordering history under this Agreement. A premium charge shall be added to
the contract price for all quantities of the Products that are ordered and
delivered in any month in excess of the quantities initially ordered for
such month.
2. Acceleration of Scheduled Delivery Date(s). LMIC recognizes the business
necessity and reality of accelerated delivery dates, and shall use
commercially reasonable efforts to accept requests by Aldeburgh for
acceleration of the delivery date(s) for Products ordered by Aldeburgh;
however, LMIC shall not be in violation of this Agreement in connection
with its inability to supply quantities of a Product during any month that
(a) materially exceed the most recent forecast for such month submitted to
LMIC in accordance with Section 3.6 or (b) are otherwise inconsistent with
Aldeburgh's ordering history under this Agreement. A premium charge may be
added to such contract price for all quantities of the Products delivered
on a mutually agreed upon accelerated delivery date.
3. Postponement of Scheduled Delivery Date. LMIC recognizes the business
reality and necessity of postponing delivery dates, and shall take
commercially reasonable steps to accommodate requests for postponement of
delivery dates, subject to the following conditions: (a) All work that is
completed, is in process, or is scheduled for completion no more than 30
days after receipt of a request for postponement shall be delivered
according to schedule, but may be shipped to LMIC's warehouse facility
("LMIC Warehouse") or to an alternative site as instructed by Aldeburgh.
All shipments shall be F.O.B. New York and shall be by common carrier or by
LMIC vehicles. All title and risk of loss shall pass to Aldeburgh at the
F.O.B. point. Aldeburgh shall be responsible for payment of the contract
price for such quantity of the Products in accordance with the scheduled
delivery date and shall, in addition, pay all applicable warehouse charges.
(b) Aldeburgh may postpone for up to 60 days any quantities that have not
been completed or are not in progress and are scheduled for delivery
between 31 and 120 days after LMIC's receipt of the rescheduling request,
and may postpone as requested any quantities scheduled for delivery more
than 120 days after LMIC's receipt of the rescheduling request. LMIC shall
take commercially reasonable steps to postpone orders it has placed for
components and other materials related to such quantities. Aldeburgh will
be responsible for paying all carrying costs of existing inventory of
materials and components relating to the postponed quantities and of such
materials and components shipped to LMIC despite its postponement efforts,
as well as any other fees, charges, or materials costs incurred by LMIC in
connection with its efforts to postpone shipments of materials and
components relating to the postponed quantities.
4. Cancellations. The parties agree to cooperate to minimize the occurrence of
and the costs associated with order cancellations. Aldeburgh acknowledges
and agrees that each order becomes non-cancellable thirty (30) days before
the EARLIEST Scheduled delivery date of the CANCELLED qUANTITY and that it
shall be responsible for the full unit value of such cancelled order.
COMPANY ALSO ACKNOWLEDGES AND AGREES THAT IT SHALL BE RESPONSIBLE FOR THE
FULL UNIT VALUE OF ALL WORK THAT IS IN PROCESS OR COMPLETED AS OF LMIC'S
RECEIPT OF NOTICE OF CANCELLATION. In the event of any cancellation, LMIC
shall use commercially reasonable efforts to (a) cancel orders it has
placed for components and other materials required to manufacture the
quantities of any Product subject to cancellation, (b) reallocate
applicable components and materials to the manufacture of other products so
as to minimize cancellation charges, and (c) return any applicable
components or other materials that cannot be so reallocated. In connection
with any order cancellation, Aldeburgh shall be responsible for all
cancellation charges, as follows:
i. Payment to LMIC of fees for storage of, and/or of monies to purchase
at LMIC's documented cost plus a fifteen percent (15%) handling
charge, all applicable components and other materials designated by
the vendor as non-cancellable or non-returnable; (3) paying LMIC for
storage of, or for purchasing from LMIC at LMIC's documented cost plus
a fifteen percent (15%) handling charge, all applicable components or
other materials that have been designated by the vendors as
non-cancellable or non-returnable;
ii. Payment to LMIC of costs incurred by LMIC for return or cancellation
of applicable components and materials, including but not limited to
shipping and insurance charges, cancellation charges, restocking fees,
minimum quantity charges, or other fees, charges, or price changes
imposed by vendors; and
iii. Payment to LMIC of a fee equal to (i) fifteen percent (15%) of the
non-material portion of the contract price applicable to the cancelled
quantities if notice of cancellation is received by LMIC more than
sixty (60) days before the earliest scheduled delivery date of the
cancelled quantity, and (ii) thirty percent (30%) of the of the
non-material portion of the contract price applicable to the cancelled
quantities if notice of cancellation is received by LMIC between
thirty (30) and sixty (60) days before the earliest scheduled delivery
date of the cancelled quantity.
ACCEPTED AND AGREED TO:
LMIC, INC. (LMIC) ALDEBURGH, LLC (ALDEBURGH)
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President and COO Title: Vice President
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Date: January 25, 2005 Date: January 25, 2005
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ATTACHMENT C
PRODUCT DESCRIPTION AND PRICING
Product Description
The products in this agreement include one million (1,000,000) units of
various types of cellular phones.
Cellular Phones:
Two samples of each new models introduced will be provided for inspection
and approval by the Buyer. Pricing of each new model will be compatible to
equivalent features models available in the market. All phones will have the
necessary FCC approvals.
1. Low cost unit features:
a. Standard voice call features
b. SMS for standard short messages
c. Candy Bar style
d. Black and white LCD screen with text only capabilities
e. Target price: $20-$25.
f. Target available date: 3Q 2005
2. Standard black and white unit features:
a. Standard voice call features
b. SMS
c. WAP
d. Able to interface with the PocketSurfer
e. Push-to-talk with Fast Chat in the future
f. Flip design
g. Black and white LCD screen with graphics capabilities
h. Target price: $40-$45, initial (February 2005) price $50.00
i. Target available date: February 2005
3. Standard Color unit features:
a. Standard voice call features
b. SMS
c. WAP
d. Built-in Bluetooth, able to interface with the PocketSurfer
e. Push-to-talk with Fast Chat
f. Flip design
g. Color screen with graphics capabilities
h. Target price $60-65
i. Target available: March 2005
4. High end camera phone features:
a. Standard voice call features
b. SMS
c. WAP
d. Built-in Bluetooth, able to interface with the PocketSurfer
e. Push-to-talk with Fast Chat
f. Camera with no flash
g. Flip design
h. Color screen with graphics capabilities
i. Target price $100+
j. Target available: April 2005
Cellular Phones Accessories:
All accessories are priced separately, ordered separately but can be
packaged together.
1. Extra Battery (All phones are shipped with one battery)
2. Extra AC recharger (All phones are shipped with one AC recharger)
3. Ear piece
4. Leather Case or Holster
5. Car Charger
6. SIM Card Reader
7. Blank 32K SIM cards (No SIM cards are included with the phone)
Delivery Schedule and Pricing
May 15, 2005 (buyer accepts early & partial delivery)
Qty Description Unit Price Extended Price
50,000 Standard BW flip phone 46.00 2,300,000.00
50,000 Leather Case for BW phone 1.00 50,000.00
5,000 Car Charger for BW phone 0.75 3,750.00
5,000 Extra battery from phone manufacturer 3.00 15,000.00
150,000 Standard Color flip phone 62.00 9,300,000.00
150,000 Leather Case for Color phone 1.00 150,000.00
15,000 Car Charger for color phone 0.75 11,250.00
15,000 Extra battery from phone manufacturer 3.00 45,000.00
200,000 32K Blank SIM card 1.00 200,000.00
Total $12,075,000.00
Shipping and handling charges will be billed separately. This is estimated to be
around $2.50 per phone for air freight and around $0.50 per phone for ocean
freight.
Total Cellular Phones Shipped by End of May
Standard BW phones: 50,000
Standard Color phones: 150,000
Remaining phones to ship in 2005 and 2006: 800,000 units
ACCEPTED AND AGREED TO:
LMIC, INC. (LMIC) ALDEBURGH, LLC (ALDEBURGH)
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President and COO Title: Vice President
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Date: January 25, 2005 Date: January 25, 2005
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