EXHIBIT 10.23
INVENTORY MANAGEMENT SERVICE AGREEMENT
between
TANISYS TECHNOLOGY, INC.
12201 Technology Blvd.
Austin, TX 78727
U.S.A.
and
SIEMENS COMPONENTS, INC.
10950 North Tantau Avenue
Cupertino, CA 95014
U.S.A.
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INDEX TO AGREEMENT:
BASIC AGREEMENT: SIEMENS - TANISYS
ATTACHMENT A: Products
ATTACHMENT B: Siemens Fiscal Calendar Cutoff Dates
ATTACHMENT C: Cost Basis and Pricing Structure
ATTACHMENT D: Compaq-specific Warehouse Requirements
ATTACHMENT E: EDI Agreement
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INVENTORY MANAGEMENT SERVICE AGREEMENT
This agreement is made effective November 1, 1996 between Tanisys Technology,
Inc. 12201 Technology Blvd., Austin, TX 78727, U.S.A (TANISYS) and Siemens
Components, Inc. 10950 North Tantau Avenue, Cupertino, CA 95014 (SIEMENS).
In consideration of the mutual covenants and agreements set forth below, the
parties agree as follows.
1. TANISYS WILL PROVIDE THE FOLLOWING:
a) Inventory receiving and dispatching including notification to SIEMENS in
case of shipping damage.
b) Storage area in a warehouse facility located at the TANISYS manufacturing
facility at 12201 Technology Blvd. Suite 130, Austin Texas.
c) On demand delivery service to locations of SIEMENS, SIEMENS customers,
or any other location which SIEMENS requires. See Attachment D for
details of customers.
d) Inventory reports to SIEMENS via EDI per Article 11 below, and per
Attachment E.
e) Insurance per Article 16 below, if so required by SIEMENS.
f) All licenses and permits required to comply with all applicable U.S.
federal, state and local laws and regulations, for services rendered.
g) TANISYS will make shipments to locations as stated above in accordance
with SIEMENS' releases, provided per the EDI daily shipment instructions
as generated by SIEMENS.
h) TANISYS will deviate from the above planned shipments only upon receipt
of a telephone call request confirmed by FAX signed by an authorized
SIEMENS representative. TANISYS agrees to document to the best of their
ability any such deviations and to report the actual shipments made,
via EDI daily 856 Ship Notice/Manifest.
i) Deliveries by TANISYS to SIEMENS customers may require SIEMENS-generated
ASNs to SIEMENS customers. SIEMENS will retrieve from the SIEMENS
mailbox, each morning or as required, the Receiving Advice
(EDI 861) from SIEMENS customers covering shipments made by TANISYS on
behalf of SIEMENS.
2. SIEMENS WILL PROVIDE THE FOLLOWING:
a) Payment for the services performed in each calendar month during the term
of this Agreement will be made to TANISYS within thirty (30) calendar days
of SIEMENS' receipt of invoice from TANISYS. All amounts in this
Agreement are in U.S. dollars.
b) Monthly service charges shall be as agreed and documented in Attachment C
"Cost Basis and Pricing Structure".
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3. TERMINATION AND DISCRETION:
a) This Agreement may be terminated by SIEMENS for any reason in its sole
discretion upon thirty (30) days advance written notice to TANISYS. Such
termination will be with no cost or obligation to SIEMENS, except for
SIEMENS' obligation to remove all of its product from the premises of
TANISYS within thirty (30) days after such termination. SIEMENS further
agrees to bear the cost of storage, packing and moving.
b) This Agreement may be terminated by TANISYS for any reason at its sole
discretion upon ninety (90) days advance written notice to SIEMENS.
4. TERMINATION FOR CAUSE:
If for any reason SIEMENS, in its sole opinion, determines that TANISYS is
not performing this Agreement in a satisfactory manner, including but not
limited to, not delivering product according to SIEMENS requests, delivering
short or wrong quantities, losing inventory, failure to report in a timely
manner, or failure to complete billings or receipts in a timely manner;
SIEMENS will give TANISYS written notice of such default and TANISYS will
have ten (10) days to cure the default after receipt of the written notice.
If not cured, SIEMENS may immediately terminate this Agreement without
further notice. If SIEMENS so terminates the Agreement, TANISYS will
immediately return to SIEMENS whatever parts remain in TANISYS' inventory or
direct the inventory to be shipped to a successor firm or any other location
as SIEMENS requires.
5. RELATIONSHIP BETWEEN PARTIES:
a) This Agreement is not intended to and does not create any employer/
employee relationship between the parties. TANISYS is and shall remain
an independent contractor providing a service to SIEMENS. TANISYS agrees
that in the context of the service it is rendering to SIEMENS that it will
not claim or represent that it is operating or doing business as a SIEMENS
sales office, nor will it purport to pledge the credit of, or enter into
any contract for, or on behalf of SIEMENS.
b) This Agreement does not convey, nor shall TANISYS claim, any property
interest in SIEMENS' corporate name, trademarks, trade names or patents,
or other proprietary rights. TANISYS shall indemnify and hold SIEMENS
harmless from all claims, demands, suits, and actions for damages to
property or persons, including legal or attorney's fees incurred by
SIEMENS made by any third party resulting from TANISYS' negligence or
willful misconduct in providing these services. This obligation to
indemnify shall survive the termination of this Agreement.
c) Neither SIEMENS nor TANISYS shall be liable for failure to perform any
obligation under this Agreement if such failure is caused by circumstances
not directly under such party's reasonable control, including, but not
limited to, failures resulting from acts of God, acts of public
authorities, war and war measures, strikes, fires, failures or delays of
suppliers or carriers, inability to obtain materials or supplies, demand
for products within the forecast period over available supply, regulations
under Agreements between governments or any interruption for any reason in
the manufacture of products by suppliers.
6. TANISYS WILL ALSO DO THE FOLLOWING:
a) TANISYS agrees to provide and maintain, without expense to SIEMENS, a
suitable place of business with adequate facilities including a monitored
security alarm system and sufficient personnel for the timely receiving
and delivery of the products to SIEMENS' customers. "Products" for
purposes of this Agreement shall include those referred to in Attachment
A "Products" and such others as SIEMENS may decide to add into its
shipments under the terms
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of the Agreement. TANISYS shall provide secure and segregated areas for
consigned and finished goods conspicuously marked as SIEMENS areas.
b) TANISYS shall maintain and use its facilities in such a manner as to
ensure proper care for SIEMENS products, including at a minimum, proper
temperature and humidity controls, proper anti-static equipment, and
proper facilities to permit incoming, outgoing or other inspection of
product. TANISYS shall maintain and use its facilities to ensure prompt
handling of orders and shipments, careful attention to customer
complaints, and servicing for all products covered by this Agreement.
c) TANISYS shall maintain records of inventory, shortages, receiving and
shipments of products and make such records available to SIEMENS or its
representatives upon request during normal business hours to make certain
that all of the requirements of this Agreement such as facilities,
personnel and record integrity are being met.
7. PRODUCTS:
a) TANISYS agrees to coordinate shipment of product to specified customers
upon notification and approval by SIEMENS.
b) SIEMENS shall not be required to provide TANISYS any products.
c) SIEMENS may issue revisions to Attachment A from time to time to keep
TANISYS informed of current products to be delivered.
8. TITLE AND SHIPMENT RESPONSIBILITIES:
a) SIEMENS may withdraw any product with reasonable notice of 24 hours to
TANISYS.
b) Inventories will be subject to verification and audit by SIEMENS or its
designated representative. All inventory shrinkage at TANISYS will be
charged directly to TANISYS and invoiced accordingly to TANISYS.
c) SIEMENS retains title in all products while in the TANISYS warehouse.
d) Notwithstanding (b) above, but subject to Articles 16 and 17 below,
SIEMENS will bear risk of loss for the inventory (except for losses
attributable to the willful or negligent act of TANISYS) until it is
signed for by SIEMENS' customer.
e) All shipments from SIEMENS to TANISYS will be made such that SIEMENS
pays freight costs. SIEMENS is responsible for filing any freight
claims that might arise. All deliveries from TANISYS to SIEMENS'
customers will be made by TANISYS at SIEMENS' customer's or SIEMENS
direct expense, as instructed by SIEMENS.
9. INVENTORY:
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a) TANISYS will maintain the inventory of products furnished by SIEMENS and
will cooperate with SIEMENS in periodic reviews of inventory based on
daily, weekly and monthly inventory report submissions.
b) Upon request by SIEMENS, TANISYS will complete cycle count verification
and audit within 24 hours of request, and will submit to SIEMENS a
written reconciliation including historical activity for identified
variances within 3 working days of the request.
10. RETURNS:
TANISYS, under this Service Agreement, shall bear responsibility for returns
as outlined below.
a) In the event of damaged or functional rejects by SIEMENS' customers,
TANISYS will accept returns, provided that such returns are authorized by
SIEMENS.
b) TANISYS shall make an evaluation as to the reason for product failure. In
case of a manufacturing defect caused by TANISYS in assembly, TANISYS
shall rework or replace at TANISYS' expense any defective product and
will ship at TANISYS' expense such replacement product to SIEMENS'
customer. Additional services rendered by TANISYS for rework, test and
repair for other than TANISYS' processed activity will be available to
SIEMENS as per Attachment F.
c) Any product deemed by TANISYS to have failed due to SIEMENS component
failure shall be transferred to scrap inventory, and recorded as such in
TANISYS' inventory, until advised by SIEMENS as to disposition.
11. REPORTS:
a) TANISYS will provide same-day notification to SIEMENS of shipments to
SIEMENS customers' location by product and ident number. In addition,
TANISYS shall submit a shipment report, by product and ident number, no
later than the Monday following the end of the SIEMENS fiscal month. The
report shall provide a listing of shipments during that month, identified
by part number, product ident number (BNR), ASN number and date, quantity
shipped and balance of product held by as inventory. (See Attachment B:
SIEMENS Fiscal Month Ending Dates).
b) Daily transmissions shall occur via EDI 846 transactions for SIEMENS'
defined stock, including but not limited to on-hand consigned quantities
of loose parts, work in process (WIP), rework, scrap, finished stock,
cumulative to-date shipments, "red flag" critical issues, and running
perpetual inventory listings.
c) TANISYS will work with SIEMENS to track performance indicators such as
data integrity and timeliness of data entry. Through continuous
improvement and a team-oriented problem solving approach, SIEMENS and
TANISYS will ensure the quality of service expected in this Agreement.
12. ASSIGNMENT:
TANISYS shall not delegate any duties or assign any rights under this
Agreement or any interest herein without SIEMENS prior written consent, which
may be granted or withheld at the sole discretion of SIEMENS; otherwise such
may, at SIEMENS' option, be deemed to be a termination of this Agreement by
TANISYS. The merger or consolidation of TANISYS, or any other transaction
effecting a substantial change in the ownership or control of TANISYS, shall
be deemed at SIEMENS' option an
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assignment requiring prior written consent by SIEMENS. This Agreement may be
assigned by SIEMENS to such other corporations as may be incorporated in
North America and deemed by SIEMENS to be the appropriate corporation(s) to
succeed TANISYS.
13. DURATION AND TERMINATION:
a) This Agreement shall commence on the date first written above and unless
terminated, in accordance with the terms hereof, shall remain in effect
until December 31, 1997. Either party may decline to renew this Agreement
with or without cause (in the sole discretion of that party) by giving
at least ninety (90) days' prior written notice of that party's election
to decline to renew. If no such notice is given, this Agreement shall
be deemed to be renewed and extended on a yearly basis. Neither party
makes any promise nor is under any obligation, expressly or implied, to
renew this Agreement upon its expiration.
b) If TANISYS should become insolvent or take or have brought against it
bankruptcy proceedings or if a distress or analogous process is levied
against all or part of its property, or if a receiver for their property
or a substantial part thereof shall be appointed, SIEMENS may at its
option terminate this Agreement by giving notice of its election to do so
and such termination shall be effective on the date notice is given.
c) Upon termination of this Agreement, TANISYS agrees to return to SIEMENS
and SIEMENS shall accept return of any and all SIEMENS, inventory of those
SIEMENS products which were listed on TANISYS, last daily inventory
report, inclusive of receipts and shipments made after the previous
days' closing date. TANISYS agrees that, upon such termination, it will
ship such inventory FCA shipping point, freight collect to SIEMENS as
SIEMENS shall direct.
d) Acceptance of any order from or the shipment of any product to TANISYS
after termination shall not be construed as a renewal or extension of
the Agreement nor as a waiver of any termination notice.
14. CONFIDENTIALITY:
14.1 "Confidential Information" shall mean all such technical information as
well as know-how (given orally, in writing or in other tangible form)
necessary for the manufacture of Products, which one party shares with
the other. "Confidential Information" includes the specification
necessary for the procurement of the components required for the
manufacture of Products, with the exception of DRAMs, as defined in
Attachment A.
14.2 The parties undertake to keep secret, even after termination of this
Agreement, Confidential Information furnished hereunder insofar as, and
as long as, it has not otherwise lawfully come into the public domain or
the party which disclosed the information has not consented in writing
that it may be disclosed to third parties.
14.3 The parties further agree that it will only use Confidential Information
supplied under this Agreement for purposes set forth in this Agreement.
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14.4 Information shall not be subject to the above confidentiality provisions
to the extent that a party can demonstrate that the information
- is known to or is in the possession of that party before transmission by
the other party;
- became legally available to that party from a source other than the other
party or is in or passed into the public domain other than by reach of
this Agreement;
- is developed independently by that party;
- the disclosure of which is expressly authorized by the other party.
14.5 Except as required by law, neither party shall disclose the existence
of this Agreement, including insurance coverage and values thereunder,
except as mutually agreed.
15. SCOPE OF AGREEMENT:
a) This Agreement supersedes and cancels any previous understanding or
agreement between the parties relating to the Services to be provided.
There are no other inventory management or warehousing terms and
conditions, representations or undertakings, except those set forth in this
Agreement. No other agreement or understanding purporting to modify or
supplement this Agreement, nor any promises made by a party's
representative shall be binding upon that party unless confirmed in
writing by a duly authorized representative of that party.
b) The failure of a party to enforce at any time any of the provisions of
this Agreement, or any right with respect thereto, shall not be construed
as a waiver of such provisions or rights or any other provision or right.
c) This Agreement becomes binding only when executed by both parties.
16. INSURANCE:
a) TANISYS may at SIEMENS' request procure and maintain comprehensive general
liability insurance including property damage with limits of not less
than $XXXXXX (XXXXXX Dollars) Property Coverage with A+ rated companies,
which covers both the Manufacturing Agreement Section 11 and this
Agreement. In such case, SIEMENS shall be an additional named insured
in all such policies. TANISYS shall provide current certificates of
such insurance. Under no conditions may such insurance be modified,
canceled and/or replaced without thirty (30) days advanced written
notice to SIEMENS. SIEMENS reserves the right to carry such general
comprehensive liability insurance concurrent with existing SIEMENS
insurance policies in effect.
b) TANISYS shall be fully liable for any and all damages caused due to breach
of this section.
17. SECURITY INTEREST and WAREHOUSE RECEIPT:
a) Upon TANISYS receiving products and signing a "Warehouse Receipt" for any
given shipment, the quantity and description thereon will be deemed an
absolute indication that TANISYS has accepted risk of loss for that
quantity of that item. The only exception will be that TANISYS will be
allowed until the close of business twenty-four (24) hours after receipt
of any given shipment to advise in writing (by FAX) as to any
discrepancies at the carton level; within forty-eight (48) hours at the
partnumber and ident number detail level.
All such notifications are to include:
1) Packing List number (or similar identification)
2) Number of cartons received
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3) Nature of discrepancy
4) Date shipped from SIEMENS.
b) There will be no requirement for SIEMENS to prove negligence in order to
obtain reimbursement, if any product, or any portion thereof, is, for any
reason whatever, subsequently found to have been lost, stolen or damaged
while under the control of TANISYS.
c) TANISYS shall not, under any circumstances, pledge as collateral any
SIEMENS product in any undertaking, and/or hypothecate any of the products
entrusted in its care.
d) TANISYS shall complete and forward daily all inventory transactions,
receipts, and ASN activity detail to SIEMENS via EDI, Internet or FAX
within one (1) hour of the close of TANISYS' normal business day (no
later than 5:00 P.M. Central Standard Time).
18. NOTICES:
All notices required to be made thereunder shall be given by (a) Registered
or first-class mail, return receipt requested, or (b) Telecommunications -
EDI, Internet or FAX. Notices given under clause (a) shall be deemed to be
given on the fifth day after mailing. Notices given under clause (b) shall
be deemed to be given when transmitted unless transmitted after ordinary
business hours of the party to be noticed, in which case it shall be deemed
to be given on the next business day.
19. ARBITRATION:
19.1 SIEMENS and TANISYS shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiation
between executives who have authority to settle the controversy. The
executive will be at the CEO, CFO or COO level and will not have had
direct responsibility for administration of this Agreement. Either party
may give the other written notice of any dispute not resolved in the
ordinary course of business. Within fifteen (15) days after delivery of
the notice the party receiving the notice shall submit to the other a
written response.
The notice and response shall include a statement of the party's positions
regarding the matter in dispute, a summary of arguments in support, and
the name and title of the executive who will represent that party and any
other person who will accompany that executive. Within 30 days after
delivery of the initial notice, the designated executives shall meet at a
mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary to attempt to resolve the dispute. All
reasonable request for information made by one party to the other shall
be honored in a timely fashion.
All negotiations conducted pursuant to this Section 19 (and any of the
party's submissions in contemplation hereof) shall be kept confidential
by the parties and shall be treated by the parties and their respective
representatives as compromise and settlement negotiations for purposes
of the Federal Rules of Evidence and any similar state rules.
19.2 If any matter in dispute arising under this Agreement has not been
resolved within sixty (60) days after delivery of the notice or if the
parties fail to meet within thirty days (30) days, the matter will be
submitted to binding arbitration. Either party may initiate binding
arbitration as contemplated herein.
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Either party (the claimant) may give written notice to the other
(respondent) of its intention to arbitrate, which notice shall contain
a statement setting forth the nature of the dispute, the amount involved,
if any, and the remedy sought, and file with the appropriate office of the
American Arbitration Association three copies of the notice and three
copies of the arbitration provision of this Agreement, together with the
appropriate filing fee as provided in the Schedule on page 21 of the AAA
Commercial Rules as Amended and Effective on November 2, 1993.
The AAA shall give notice of such filing to the respondent which may file
an answering statement in duplicate with the AAA within ten days after
notice from the AAA, in which event the respondent shall at the same time
send a copy of the answering statement to the claimant. If a counterclaim
is asserted, it shall contain a statement setting forth the nature of the
counterclaim, the amount involved, if any, and the remedy sought. If a
counterclaim is made, the appropriate fee shall be forwarded to the AAA
with the answering statement. If no answering statement is filed within
the stated time, it will be treated as a denial of the claim. Failure to
file an answering statement shall not operate to delay the arbitration.
19.3 The AAA Commercial Arbitration Rules, as modified or revised by the
provisions herein, shall govern these proceedings. The arbitration shall
be conducted by three arbitrators, one selected by each party and the
third selected by those two arbitrators. After the arbitrators are
selected, the parties agree to try in good faith to settle the dispute by
mediation administered by the American Arbitration Association under its
Commercial Mediation Rules.
19.4 The place of the arbitration proceedings shall be San Francisco,
California if TANISYS initiates the arbitration and in Austin, Texas if
SIEMENS initiates the arbitration. The decision of the arbitration panel
shall be rendered in writing.
19.5 The parties agree that procedural rules will be those of the State in
which the arbitration is to occur, as amended by this Agreement. In
addition, the parties agree that discovery will take place informally
to the extent possible through document production, interrogatories
limited to identification of witnesses and documents and no more than
five (5) depositions per side.
20. SUBSTANTIVE LAW:
All disputes shall be settled in accordance with the provisions of this
Agreement and all other Agreements regarding its performance, in accordance
with the substantive law of the State identified in Section 19.4 (except for
its conflict of laws provision) without reference to other law. The United
Nations Convention on contracts for the International Sale of Goods of
April 1, 1980 shall not apply.
21. LIMITATION OF LIABILITY:
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES THAT RESULT FROM PERFORMANCE UNDER THIS AGREEMENT, EVEN
IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
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IN WITNESS THEREOF, the parties hereto have caused this Service Agreement to
be executed by their duly authorized representatives as of the date first
written above.
TANISYS TECHNOLOGY, INC. SIEMENS COMPONENTS, INC.
/s/ Gary W. Pankonien /s/ Kleinjan Du Preez
_________________________________ _________________________________
By By
GARY W. PANKONIEN KLEINJAN Du PREEZ
_________________________________ _________________________________
Printed Name Printed Name
PRESIDENT & CHIEF OPERATING OFFICER DIRECTOR, MEMORY PRODUCTS
_________________________________ _________________________________
Title Title
11/20/96 11/20/96
_________________________________ _________________________________
Date Date
/s/ Joe O. Davis /s/ Christiane Walter
JOE DAVIS CHRISTIANE WALTER
_________________________________ _________________________________
Printed Name Printed Name
CHIEF FINANCIAL OFFICER DIRECTOR CORPORATE CONTROLLING
_________________________________ _________________________________
Title Title
11/20/96 11/21/96
_________________________________ _________________________________
Date Date
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