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MANUFACTURING AND CONSULTING AGREEMENT
Dated as January 16, 1995
BETWEEN
BARON TECHNOLOGIES, LTD.
AND
ELECTRONICS ASSOCIATES, INC.
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TABLE OF CONTENTS
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Page
SECTION 1 Definitions...............................................................
SECTION 2 General Agreement.........................................................
2.1. Exclusive License.........................................................
2.2. Procedures................................................................
SECTION 3 Manufacturing Contract....................................................
3.1. The Manufacturing Contract................................................
SECTION 4 [Manufacturing] Consulting
Fees of EA................................................................
SECTION 5 Term of Agreement, Renewal, Insolvency Event,
Material Breach Noncompliance, Noncompete.................................
5.1. Term of Agreement.........................................................
5.2. Insolvency Event..........................................................
5.3. Material Breach...........................................................
5.4. Noncompliance.............................................................
5.5. Covenant Not to Compete...................................................
5.6. Continuing Obligations....................................................
SECTION 6 Covenants of the Parties..................................................
6.1. Confidential Information..................................................
6.2. Licenses..................................................................
6.3. Governmental Filings......................................................
6.4. Indemnification...........................................................
SECTION 7 Miscellaneous Provisions..................................................
7.1. Entire Agreement; Amendment...............................................
7.2. Notices...................................................................
7.3. Governing Law.............................................................
Page
7.4. Captions..................................................................
7.5. Benefit; No Third-Party
Beneficiaries.............................................................
7.6. Construction..............................................................
7.7. Waiver....................................................................
7.8. Non-Business Days.........................................................
7.9. Counterparts..............................................................
7.10. Exhibits and Schedules...................................................
7.11. Limitations on Assignment................................................
7.12. Survival of Representations..............................................
7.13. No Joint Venture, Etc.....................................................
7.14. Severability.............................................................
7.15. Dispute Resolution........................................................
7.16. Waiver of Specific Performance...........................................
7.17. Jurisdiction..............................................................
(ii)
MANUFACTURING AND CONSULTING AGREEMENT
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This MANUFACTURING AND CONSULTING AGREEMENT, dated as of the
16th day of January 1995 (this "Agreement"), by and between BarOn Technologies,
Ltd., a corporation duly organized and existing under the laws of Israel, with
offices at Gutwirth Science Park, Technion City, Haifa 32000 Israel (together
with all of its subsidiaries, hereinafter "BarOn") and Electronics Associates,
Inc., a corporation duly organized and existing under the laws of the State of
New Jersey in the United States of America, with offices at 185 Monmouth
Parkway, West Long Branch, New Jersey 07664 (hereinafter "EA").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, BarOn is a designer and developer of technology for
pen-based computer inputting devices and other computer technology and the owner
of proprietary rights related to BarOn Technical Information (as hereinafter
defined);
WHEREAS, EA is a contract electronic manufacturing company
specializing in electronic products, subassemblies and systems;
WHEREAS, EA is willing to provide consulting services to
BarOn in its preparation for production of various products which are currently
in the research and development phase of BarOn and for the production thereof;
WHEREAS, BarOn is interested in solidifying an ongoing
business relationship with a reliable and established contract manufacturer;
WHEREAS, EA is interested in becoming, for the term of this
Agreement, the manufacturer of the hardware elements needed by BarOn for the
present and future sale of its products; and
WHEREAS, subject to the terms and conditions set forth in
this Agreement, BarOn wishes to grant to EA a right of first refusal to the
manufacture of certain Assemblies (as hereinafter defined) and EA wishes to be
granted and, from time to time, to exercise such right to manufacture such
Assemblies for BarOn to BarOn's Specifications.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged the parties hereto, intending to be
legally bound, hereby agree and covenant as follows:
SECTION 1 Definitions
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For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Affiliate" means, with respect to any Person, any other
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Person that, directly or indirectly, controls, is controlled by or is under
common control with such Person.
"Assemblies" or "Unit" means all hardware and electronic
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elements of present or future products developed by BarOn which are to be
manufactured for BarOn for its own demand and/or as a result of products ordered
pursuant to its Customer Contracts.
"Authorized Representative" means, with respect to a Party,
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such person or persons as may be designated as such in writing by such Party to
the other Party.
"BarOn Technical Information" shall have the meaning set
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forth in Section 6.1(a).
"CERCLA" means the Comprehensive Environmental Response,
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Compensation and Recovery Act 42 U.S.C. ss. 9601, et seq.
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"Consulting Fee" shall have the meaning set forth in
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Section 4.
"Cost of Components" shall have the meaning set forth in
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Section 2.2(e).
"Customer Contract" shall have the meaning set forth in
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Section 2.2(a).
"Environmental Laws" means all federal, state, local and
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foreign laws, statutes, rules, regulations, ordinances, codes, judicial or
administrative orders, requirements, standards, guidelines, and the like
(including any future amendments thereto) (collectively "laws"), relating to
pollution, worker and public health and safety, or the protection of the
environment, including but not limited to CERCLA, RCRA, the Federal Water
Pollution Control Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42
-- ---
(2)
U.S.C. ss. 1857 et seq., the Occupational Safety and Health Act of 1970, 29
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U.S.C. ss. 651 et seq., and the Toxic Substances Control Act, 15 U.S.C. ss. 2601
-- ---
et seq., and including but not limited to all laws relating to the releases,
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use, manufacture, storage, treatment, transportation, discharge, disposal, or
other handling of hazardous materials, hazardous substances, or wastes. The term
"Environmental Laws" shall also include Liabilities and duties arising under any
state or federal common law in connection with any of the foregoing.
"Expiration Date" shall have the meaning set forth in
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Section 5.1(a).
"Initial Term" shall have the meaning set forth in
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Section 5.1(a).
"Liabilities" means liabilities, debts or obligations,
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whether accrued, absolute, contingent or otherwise, known or unknown.
"Manufacturing Contract" shall have the meaning set forth in
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Section 2.3.
"Party" shall mean either BarOn or EA.
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"Permits" means all permits, licenses, orders, approvals,
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registrations and any other authorizations of any federal, state, local or
foreign governmental, regulatory or judicial body or authority.
"Person" means a natural person, a corporation, a
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partnership, a trust, a joint venture, any governmental authority or any other
entity or organization.
"Purchase Order" means a purchase order, signed by an
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Authorized Representative of BarOn, which may be substantially similar to a
purchase order delivered to BarOn by one of its customers, containing the
following information:
a. purchase order number
b. Assemblies Number or Unit Numbers, names and quantities
c. desired delivery schedules
d. Unit Price and Total Price
e. shipping instructions
f. bill of materials
g. terms of payment
"Purchase Order Proposal" means a proposal submitted by BarOn
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to EA relating to the quantity and type of Assemblies BarOn requires for its own
account or
(3)
to fulfill its obligations under a Customer Contract, which will include the
bill of materials and all terms of conditions requested by BarOn.
"RCRA" means Resource Conservation and Recovery Act, 42
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U.S.C. ss. 6901, et seq.
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"Right" means any right or benefit of any nature whatsoever.
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"Total Price" means the respective Unit Price for each
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Assembly multiplied by the number of such Units, subject to the limitation set
forth in Section 3.1(b).
"Unit Price" has the meaning set forth in Section 3.1(a),
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subject to the limitation set forth in Section 3.1(b).
SECTION 2 General Agreement
_________ _________________
2.1. Mutual Obligations. Subject to compliance by EA with the
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terms and conditions set forth in this Agreement, BarOn hereby, for the term of
this Agreement, grants to EA a right of first refusal to enter into
manufacturing agreements with BarOn for the manufacture of Assemblies for
BarOn's own needs and as required by it in order to fulfill BarOn's obligations
under its Customer Contracts all in accordance with the procedures set forth in
2.2 hereof.
2.2. Procedures. The following shall be the procedures for
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processing an order to deliver any of BarOn's products to one of its customers
(a "Customer Contract"):
(a) Each time BarOn receives a Customer Contract, BarOn
shall submit to EA a Purchase Order Proposal reflecting the terms of the
Customer Contract (a "Purchase Order Proposal").
(b) Within 15 business days of receiving the Purchase
Order Proposal, EA (which for purposes of fulfilling its manufacturing and
consulting obligations under this Agreement, shall include through subsidiaries
and Affiliates, including through its wholly-owned subsidiary, Tanon
Manufacturing, Inc.) shall either (i) submit to BarOn a quotation for the work
required by the Purchase Order Proposal, with the Unit Price based on 140% of
EA's Cost of Materials, indicating any special requirements to be included in
the terms of any Purchase Order which may be issued related to the work
described in the Purchase Order Proposal, or (ii) notify BarOn that
(4)
EA either (A) does not have the technical capability to manufacture the
Assemblies, or (B) EA cannot manufacture the necessary quantity of the
Assemblies within the time period required under the Purchase Order Proposal.
(c) If EA submits a quotation in response to the
Purchase Order Proposal, BarOn shall, within 15 business days thereafter, either
(i) accept such quotation, and issue a Purchase Order to EA for the manufacture
of such Assemblies, or (ii) notify EA that BarOn intends to solicit written
quotations for the manufacture of the Assemblies under the Purchase Order
Proposal. If BarOn elects to solicit written quotations it shall, within 15 days
of its notifying EA of its intention to do so, either issue a Purchase Order to
EA for the manufacture of such Assemblies (i.e. if BarOn was unable to find any
acceptable "more competitive" quotation), or, submit to EA a quotation BarOn has
deemed "more competitive" than EA's terms. A quotation shall not be deemed "more
competitive" than EA's quotation unless the price is more than 10% below the
price in the Purchase Order Proposal to EA, includes delivery times in
quantities as large or larger in the same time or sooner than those in the
Purchase Order Proposal to EA, and includes quality and quality control
specifications at least as stringent as those in the Purchase Order Proposal to
EA or as regularly practiced by EA. If BarOn indicates that it has received and
intends to accept a "more competitive" quotation, EA shall have the right to
match the terms of such quotation (i.e. such that EA's revised proposed Unit
Price is not more than 10% greater than the previously "more competitive"
quotation) and upon notifying BarOn of its intention to do so, BarOn shall issue
a Purchase Order to EA on such terms. If EA fails to match such "more
competitive" quotation within 10 days of being notified of such quotation, BarOn
may issue a Purchase Order to such third party manufacturer on the terms
rejected by EA.
(d) If EA has notified BarOn that EA does not possess
the technical capability to manufacture the Assemblies subject to the Purchase
Order Proposal, BarOn shall have the right to have the Assemblies required under
such Purchase Order Proposal manufactured by a third party.
(e) If EA has notified BarOn that EA does not possess
the manufacturing capacity to manufacture the Assemblies required by the
Purchase Order Proposal within the time frame required by the Purchase Order
Proposal, BarOn shall have the right to have such Assemblies required under such
Purchase Order Proposal to be manufactured by a third party manufacturer,
provided however, that BarOn shall use its best efforts to permit EA to
manufacture up to the number of Assemblies which EA notifies BarOn it can
manufacture.
(5)
(f) If, notwithstanding EA's notification to BarOn of
its ability to manufacture all or a portion of the Assemblies under the Purchase
Order Proposal, BarOn in good faith and on substantial grounds believes that EA
is not able to do so, or if BarOn determines that it is otherwise desirable (or
if the amount EA has determined it cannot manufacture is less than a commercial
quantity for a third party manufacturer), BarOn shall have the right to have up
to 30% of the Assemblies under such Purchase Order Proposal manufactured by a
third party manufacturer (with 70% of such Assemblies being manufactured by EA).
(g) In the event that BarOn's obligation is for the
supply of parts of one of BarOn's products, all of the foregoing provision shall
apply mutatis mutandis for such parts.
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(h) Whenever a Purchase Order is required hereunder,
such Purchase Order shall contain such terms as the Parties may mutually agree,
it being intended that the Purchase Order should reflect the terms of the
Purchase Order Proposal, and such other or additional terms as the parties may
mutually agree.
(i) BarOn's needs for Assemblies not in relation to
Customer Contracts shall be processed in the same manner as set forth above.
SECTION 3: Manufacturing Contract.
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3.1 The Manufacturing Contract. Each time BarOn issues EA a
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Purchase Order, BarOn and EA, or one of their designated Affiliates, shall enter
into a manufacturing contract (the "Manufacturing Contract") reflecting the
terms and conditions set forth in the accepted Purchase Order, including such
additional or other terms as the Parties may mutually agree. In the absence of a
Manufacturing Contract, the accepted Purchase Order shall be deemed to be the
Manufacturing Contract.
(a) The Manufacturing Contract shall indicate the cost
of such materials to be incurred by EA in the manufacturing process for the
Assemblies required under the accepted Purchase Order (the "Cost of Materials")
and all other information included in the Purchase Order, including the Total
Price. The initial Unit Price to be paid by BarOn to EA for each Assembly shall
be determined by multiplying the Cost of Materials for all of the Assemblies
under the Purchase Order by 140% of the Cost of Materials (which will equal the
Total Price), and dividing the result by the number of Assemblies under the
Purchase Order (to equal the initial Unit Price).
(6)
(b) With respect to each Manufacturing Contract: (i)
once every six (6) months; and (ii) at the time of renewal of such Purchase
Order or relevant Customer Contract, an Authorized Representative of BarOn may
solicit from independent third party manufacturers bids for the relevant
Assembly. If BarOn elects to seek competitive quotation it shall, within 15
business days of its notifying EA of its intention to do so, submit to EA a bid
BarOn has deemed "more competitive" than EA's terms. If BarOn shall not submit a
"more competitive" quotation within such time, EA shall continue to manufacture
the Assemblies under the terms set forth in (a) above. If BarOn indicates that
it has received and intends to accept a "more competitive" quotation, EA shall
have the right to match the terms of such quotation, (i.e. to adjust its price
such that the third party manufacturer bid is not priced more than 10% less than
EA's price), and upon notifying BarOn of its intention to do so, EA shall
continue to manufacture the Assemblies, subject to such new terms. If EA fails
to match such "more competitive" quotation within 10 days of being notified of
such quotation, BarOn may enter into a Manufacturing Contract with such third
party manufacturer on the terms rejected by EA (if such terms are modified, EA
shall have the right again to match such terms, as modified, as set forth
above). A quotation shall not be deemed "more competitive" than EA's bid unless
it is priced more than 10% below EA's quotation, includes delivery times in
quantities as large or larger in the same time or sooner than those in the
original Purchase Order Proposal, and includes quality and quality control
specifications at least as stringent as those in the original Purchase Order
Proposal.
(c) Notwithstanding the procedure set forth in
paragraph (a) of this Section 3, at any time and from time to time, EA or BarOn
may identify a supplier who is able to supply a component to EA at a cost which
is lower than the cost of such component listed in the Cost of Materials. In
such case, EA shall order the part from such supplier, and shall substitute such
part in the list of materials listed in the Manufacturing Contract, and adjust
the price by subtracting 140% of the cost of the replaced part from 140% of the
replacement part, for all Assemblies utilizing such less expensive parts.
SECTION 4 Manufacturing Consulting Fees of EA
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4.1 EA agrees to become BarOn's manufacturing consultant based
on its manufacturing experience by performing various consulting services as
BarOn may from time to time request, including, without limitation:
(i) the evaluation, as to suitability, dependability,
etc., of any other manufacturer with whom BarOn may be interested in doing
business;
(7)
(ii) assistance with regard to any other manufacturing
contracts into which BarOn may enter;
(iii) assistance with obtaining the best available
price on certain components utilizing EA's purchasing and sourcing departments.
(iv) subject to the acceptance by other manufacturers,
supervision over the quality assurance programs of other manufacturers with whom
BarOn has contracted;
(v) any of the activities of EA listed in the preamble
of this Agreement.
(vi) assistance with acquiring a second contract
manufacturer in those cases where EA will not do all of the manufacturing;
(vii) assistance with the compliance by BarOn with any
United States regulatory requirements; and
(viii) acting as a troubleshooter for BarOn's
manufacturing activities.
(Services listed in iii, vii and viii about shall be utilized only if all or
some of the manufacturing is carried out by a manufacturer other than EA.
4.2 With respect to any such services provided by EA, BarOn shall pay
to EA for the term of this Agreement an amount equal to three percent (3%) of
the cost of manufacturing; provided that such amount shall not apply to any
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manufacturing done by EA and its Affiliates. In addition, BarOn shall promptly
pay to EA any out-of-pocket expenses incurred by EA during the performance of
their services; provided, that such out-of-pocket expenses are approved in
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advance by BarOn.
(8)
SECTION 5 Term of Agreement, Renewal, Insolvency Event, Material Breach,
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Breach, Noncompliance, Noncompete
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5.1. Term of Agreement.
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(a) Unless otherwise provided herein, this Agreement shall
continue in effect for an initial term the ("Initial Term") from the date of
this Agreement until the date that is three (3) years from the date of this
Agreement (the "Expiration Date"), unless extended in accordance with the
provisions of paragraph (b) below.
(b) Notwithstanding the foregoing, BarOn, at its option,
shall have the right to request that EA extend and renew this Agreement for a
period not to exceed one (1) year upon written notice given to EA at least one
hundred and twenty (120) days prior to the end of the Initial Term and any
subsequent term and EA shall use its best efforts to comply with such request.
EA shall, upon its receipt of a notice of extension from BarOn, use all
commercially reasonable efforts to retain the services of those employees who
are then employed by EA in connection with its performance of its obligations
hereunder and who are required by EA to enable it to fulfill its obligations
hereunder during such extension, but EA shall not be liable to BarOn for failure
to deliver Assemblies hereunder to the extent that EA's failure arises as a
consequence of the departure of any of such employees subsequent to the date
that is three (3) years from the date of this Agreement.
5.2. Insolvency Event. If either BarOn or EA (i) makes a general
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assignment for the benefit of creditors or becomes insolvent; (ii) files an
insolvency petition in bankruptcy; (iii) petitions for or acquiesces in the
appointment of any receiver, trustee or similar officer to liquidate or conserve
its business or any substantial part of its assets; (iv) commences under the
laws of any jurisdiction any proceeding involving its insolvency, bankruptcy,
reorganization, adjustment of debt, dissolution, liquidation or any other
similar proceeding for the release of financially distressed debtors; or (v)
becomes a party to any proceeding or action of the type described above in (iii)
or (iv) and such proceeding or action remains undismissed or unstayed for a
period of more than sixty (60) days, then the other Party may by written notice
terminate this Agreement with immediate effect.
(9)
5.3. Material Breach.
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Each of BarOn and EA shall (except as provided in Section
7.1) have the right to terminate this Agreement for default upon the other's
failure to comply in any material respect with the material provisions of
Sections 5.2, 5.5 (right to terminate only on the part of BarOn) and 6 of the
Agreement.
5.4. Noncompliance. BarOn shall have the right to contract another
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manufacturer any discontinue specific Purchase Order placed with EA or its
Affiliate and any related Purchase Order upon EA's failure to comply in any
material respect with any of the material terms and conditions of such Purchase
Order. Within a reasonable period after such noncompliance, BarOn shall give
written notice of its intention to seek another manufacturer, which notice shall
set forth the act of noncompliance which forms the basis for such Purchase Order
termination. If EA fails to correct such noncompliance to the reasonable
satisfaction of BarOn within thirty (30) days after receipt of the notification
or if the same reasonably cannot be corrected or remedied within thirty (30)
days, then BarOn immediately may terminate such Purchase Order without the
requirement of any payment to EA except with respect to payments required in
connection with Assemblies shipped by EA and accepted by BarOn prior to the date
of such termination, including, without limitation, any compensation,
reimbursement, damages, loss of prospective profit or anticipated sales,
expenditures or investments. With respect to any inventory related to such
Assembly, BarOn shall purchase such inventory according to terms and conditions
negotiated in good faith between EA and BarOn.
5.5. Covenant Not to Compete. EA or any affiliate therefor shall
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not, directly or indirectly, own, manage, operate or control or participate in
the ownership, management, operation or control of, or become associated in any
capacity with, or have any financial interest in [or lend its name or any
combination thereof ] to, any enterprise, firm or corporation which is engaged
in the sale or distribution of Restricted Products (as hereinafter defined) .
"Restricted Products" shall mean products in competition with the
products currently being sold, or currently under development, by BarOn.
(10)
5.6. In view of the intimate relations hereunder created between
the parties, the parties hereby specifically agree that all intellectual
property including any inventions, patents or patent applications developed by
EA (or any EA employee) whether alone or together with BarOn during the term of
this Agreement and for two (2) years following its termination, which may
enhance, improve or otherwise complement BarOn's products shall be assigned,
royalty free, to BarOn on a fully paid up basis.
5.7. Continuing Obligations. No termination of this Agreement,
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whether on the Expiration Date or otherwise, shall serve to terminate
obligations of the Parties hereto under the confidentiality provisions of
Section 6, and such obligations shall survive any such termination.
SECTION 6 Covenants of the Parties
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6.1. Confidential Information.
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(a) All information concerning the Specifications, Quality
Assurance Standards and any other information relating to the design of the
Assemblies (the "BarOn Technical Information") shall hereafter be deemed to be
the sole and exclusive property of BarOn.
(b) All BarOn Technical Information and business information
relating to the conduct of BarOn's business which EA may receive from BarOn,
directly or indirectly, whether by oral or written communication or by
observation, shall be treated and regarded as confidential, proprietary and
trade secret information. EA shall keep this information strictly confidential
and secret and shall not divulge, communicate or transmit this information to
third parties, nor utilize this information in any commercial manner, except for
the limited purposes of producing Assemblies solely and exclusively for BarOn
under this Agreement. EA shall restrict disclosure of such information only to
such directors, officers and employees of EA who require such information in
connection with the performance of their duties. EA shall take whatever action
may be necessary, including legal proceedings, to prevent its directors,
officers and employees from using or disclosing such information without BarOn's
written permission except for the purposes
(11)
specifically set forth herein. The foregoing disclosure and use
restrictions shall not apply to any portion of such information which:
(i) at the time of disclosure to EA is, or thereafter
becomes, through no violation of this Agreement, part of the
public domain;
(ii) corresponds in substance to that which has been
furnished to EA by others not under a then-binding
confidentiality obligation to BarOn;
(iii) corresponds to that which is independently
developed by EA for application in areas other than the
manufacture of Assemblies ; or
(iv) is required to be disclosed by law.
The obligations of confidentiality and limits on use of information shall
survive the termination or expiration of this Agreement.
(c) BarOn acknowledges that it may have access, through
observation, or otherwise, to certain specifications used by EA in the
production of products and other information relating to EA's customers, other
than BarOn (the "EA Technical Information"). All EA Technical Information and
business information relating to the conduct of EA's business concerning the
Assemblies, which is observed by, or is otherwise disclosed to, BArOn, its
employees, representatives and/or agents, shall be treated and regarded as
confidential, proprietary and trade secret information. BarOns shall keep this
information strictly confidential and secret and shall not divulge, communicate
or transmit this information to third parties, nor utilize this information in
any commercial manner. BarOn shall restrict disclosure of such information only
to such directors, officers and employees of BarOn who require such information
in connection with the performance of their duties; provided those duties are
related to this Agreement. BarOn shall take whatever action may be necessary,
including legal proceedings, to prevent its directors, officers and employees
from using or disclosing such information without EA's written permission except
for the purposes specifically set forth herein. The foregoing disclosure and use
restrictions shall not apply to any portion of such information which:
(12)
(i) corresponds in substance to that developed or known
by BarOn before its observation by, or disclosure to, BarOn;
(ii) at the time of observation by, or disclosure to,
BarOn, is or thereafter becomes, through no violation of this
agreement, part of the public domain;
(iii) corresponds in substance to that which has been
furnished to BarOn by others not under a then-binding
confidentiality obligation to EA; or
(iv) is required to be disclosed by law.
The obligations of confidentiality and limits on use of such information shall
survive the termination or expiration of this Agreement.
(d) EA hereby acknowledges and certifies that, to the best
of its knowledge, all information concerning BarOn Technical Information,
Specifications, Quality Assurance Standards and any other business or technical
information relating to the Assemblies is
proprietary to BarOn.
The provision of this section 6.1 shall apply to EA's affiliated as well and EA
is undertaking full responsibility for a breach committed by any of its
affiliated.
6.2. Licenses. EA shall obtain and maintain all necessary federal,
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state and/or local Permits which may be required to be obtained by it in
connection with the performance of its obligations hereunder, and shall
otherwise comply with all applicable federal, state or local laws or regulations
applicable to its performance hereunder.
6.3. Governmental Filings. EA shall keep all records and reports
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required to be filed by it with governmental agencies in connection with the
performance of its obligations hereunder, and EA shall make its facilities and
Assemblies available at reasonable business hours for inspection by
representatives of the same.
6.4. Indemnification.
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(13)
(a) EA hereby agrees to defend, hold harmless and indemnify
BarOn in respect of any Damages incurred or suffered by BarOn as a consequence
of:
(i) all Liabilities, including any product liability,
resulting from any Claims asserted by a third person in
connection with the manufacture of the Assemblies or the testing
performed by EA;
(ii) any breach of any of EA's covenants herein; and
(iii) all Liabilities arising under the Environmental
Laws in connection with the manufacture and testing of the
Assemblies by EA.
(b) BarOn hereby agrees to defend, hold harmless and
indemnify EA with respect to any Damages incurred or suffered by EA as a
consequence of:
(i) all liabilities resulting from any Claim asserted
by a third person against EA that any product manufactured by EA
according to BarOn's specifications is in an alleged infringement
of such third parties patent rights.
(c) If BarOn or EA, or any of their successors or assigns
(each, an "Indemnified Party") believes that it has suffered or incurred any
Damages which are the subject of an indemnification obligation hereunder, it
promptly shall give notice to the other party, or its successors or assigns, as
the case may be (the "Indemnifying Party"), in writing, describing in reasonable
detail the facts and circumstances giving rise to the claim for indemnification,
the Damages suffered or incurred, including the amount of such Damages, if
known, or as estimated, the method of computation of such Damages, and the
provisions of this Agreement relating to such claim for indemnification. The
failure of an Indemnified Party to give notice in the manner provided herein
shall not relieve the Indemnifying Party of its obligations under this Section,
except to the extent that the Indemnifying Party actually is prejudiced by such
failure to give notice.
Upon receipt of a notice of a claim for indemnification, the Indemnifying
Party shall promptly pay to the Indemnified Party the amount of such
(14)
damages in accordance with and subject to the provisions of this Section;
provided, however, that no such payment shall be due during any period in which
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the Indemnifying Party is contesting in good faith either its obligation to make
such indemnification or the amount of Damages payable, or both; and provided
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further that (i) in the case of estimated Damages, the Indemnifying Party shall
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not be required to provide indemnification in excess of the amount of such
Damages as it reasonably determines are due from time to time and, (ii) in the
case of Damages resulting from third party Claims, the Indemnifying Party shall
not be required to provide indemnification until the Liability to the
third-party claimant has been determined finally by settlement or by the
judgment of a court of competent jurisdiction and all appeals therefrom have
been exhausted.
(d) If any Claim is instituted by a third party with respect
to which an Indemnified Party intends to, or may be entitled to, seek
indemnification hereunder, the Indemnified Party promptly shall notify the
Indemnifying Party of such Claim. The Indemnifying Party shall control, through
counsel of its choosing, the defense of any such third party Claim, and may
compromise or settle the same in its own discretion without consultation with or
consent of the Indemnified Party. The Indemnifying Party shall permit the
Indemnified Party to participate at its own expense in the defense of any such
Claim through counsel chosen by the Indemnified Party, subject, however, to the
right of the Indemnifying Party to control fully the defense of such Claim.
Notwithstanding anything contained herein to the contrary, however, BarOn shall
control, through counsel of its choosing, the defense of all third-party Claims,
regardless of whether they are brought against EA or BarOn, or both, which
allege or seek to enforce any limitation on, or which seek any Damages as a
consequence of, EA's or BarOn's use of any of the BarOn Technical Information;
provided that BarOn may compromise or settle the same at its own disposition.
- --------
BarOn shall permit EA to participate at its own expense in the defense of any
such Claim through counsel chosen by EA, subject, however, to the right of BarOn
to control fully the defense of such Claim.
(e) At no time may an Indemnifying Party assert as a defense
to its obligation to provide indemnification as set forth in this Section that
the Indemnified Party or any of its employees or agents, including any former
employees of the Indemnifying Party who may
(15)
become employees of the Indemnified Party, had any knowledge of the matter to
which the claim for indemnification relates, or conducted any investigation
relating thereto prior to the date hereof, and each party hereby irrevocably
waives all such defenses.
SECTION 7 Miscellaneous Provisions
- --------- ------------------------
7.1. Entire Agreement; Amendment. This Agreement and the Exhibits
---------------------------
and Schedules appended hereto embody and constitute the entire understanding
between the Parties with respect to the transactions contemplated herein, and,
all prior agreements, understandings, representations and statements, oral or
written, are merged into this Agreement. Neither this Agreement nor any
provision hereof may be waived, modified, amended, discharged or terminated
except by an instrument signed by the Party against whom the enforcement of such
waiver, modification, amendment, discharge or termination is sought, and then
only to the extent set forth in such instrument.
7.2. Notices. All notices, demands, requests, or other
-------
communications which may be or are required to be given, served or sent by
either Party to the other Party pursuant to this Agreement, shall be in writing
and shall be hand delivered, sent by express mail or other overnight delivery
service or mailed by registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telex or telecopy, addressed as
follows:
(i) if to EA:
Electronic Associates, Inc.
185 Monmouth Parkway
West Long Branch, New Jersey 07764
Telecopier No. (908) 571-0583
--------------
Telephone No. (908) 229-1100
--------------
Attn: Mr. Jules M. Seshens
with a copy (which shall not constitute notice) to its counsel:
Richard P. Jaffe, Esq.
Mesirov Gelman Jaffe
Cramer & Jamieson
(16)
1735 Market Street
Philadelphia, PA 19103-7598
Telecopier No. (215) 994-1111
Telephone No. (215) 994- 1046
----
(ii) if to BarOn:
BarOn Technologies Ltd.
Gutwirth Science Park
Technion City,
Haifa 32000 Israel
Telecopier No. 011 972 4 228 881
Telephone No. 011 972 4 226 388
Attn: Dr. Ehud Baron
with a copy (which shall not constitute notice) to its counsel:
Steven G. Tepper, Esq.
Arnold & Porter
399 Park Avenue
New York, New York 10022
Telecopier No. (212) 715-1399
Telephone No. (212) 715-1140
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request, or communication which shall be mailed, sent,
delivered, telefaxed or telexed in the manner described above, or which shall be
delivered to a telegraph company, shall be deemed sufficiently given, served,
sent or received for all purposes at such time as it is delivered to the
addressee (with the return receipt, the delivery receipt or, with respect to a
telex or telefax, the answerback being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
7.3. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of Israel, without giving effect
to the conflicts of laws provisions thereof.
(17)
7.4. Captions. The captions in this Agreement are inserted for
--------
convenience of reference only and in no way define, describe or limit the
scope or intent of this Agreement or any of the provisions hereof.
7.5. Benefit; No Third-Party Beneficiaries. This Agreement shall
-------------------------------------
be binding upon and shall inure to the benefit of the Parties hereto and their
permitted assigns. This Agreement is entered into solely for the benefit of the
Parties hereto, and the provisions of this Agreement shall be for the sole and
exclusive benefit of such Parties. Nothing herein contained shall be deemed to
create any third party beneficiaries or confer any benefit or Rights on or to
any Person not a party hereto, and no Person not a party hereto shall be
entitled to enforce any provisions hereof or exercise any rights hereunder.
7.6. Construction. As used in this Agreement, the masculine shall
------------
include the feminine and neuter, the singular shall include the plural and the
plural shall include the singular, as the context may require. This Agreement
shall be deemed to have been drafted by both EA and BarOn and shall not be
construed against either Party as the drafts person hereof.
7.7. Waiver. Neither the waiver by either of the parties hereto of
------
a breach of or a default under any of the provisions of this Agreement, nor the
failure of either of the Parties, on one or more occasions, to enforce any of
the provision of this Agreement or to exercise any right or privilege hereunder
shall thereafter be construed as a waiver of any subsequent breach or default of
a similar nature, or as a waiver of any such provisions, Rights, or privileges
hereunder.
7.8. Non-Business Days. If any obligation of a party hereto falls
-----------------
due on a Saturday, Sunday or a legal holiday recognized by the United States
Government or the State of New York, then such obligation shall automatically be
postponed until the next business day.
7.9. Counterparts. To facilitate execution, this Agreement may
------------
be executed in any number of counterparts, each of which shall
constitute an original but together shall be construed as one and same
document.
(18)
7.10. Exhibits and Schedules. Each Exhibit hereto is
----------------------
incorporated by reference and made a part of this Agreement.
7.11. Limitations on Assignment. This Agreement shall not be
-------------------------
assignable by either Party hereto, whether by written instrument or by operation
of law, without the written consent of the other Party; provided that BarOn may
assign this Agreement in whole or in part to one or more separate corporations
formed by BarOn or any of its Affiliates for the purpose of performing any
obligations of BarOn hereunder, it being understood that such assignment shall
become effective only when EA has received written notice of such assignment
from BarOn together with a written confirmation by the assignee, reasonably
satisfactory in form and substance to EA, that such assignee agrees to, and
agrees to be bound by, all of the terms and conditions of this Agreement. Upon
the effectiveness (i) of any such assignment by BarOn, the assignee shall be
deemed to be "BarOn" for all purposes hereunder with the same effect as if it
were the original signatory hereto; provided, however, that no such assignment
-------- -------
shall, without the written consent of EA hereto, relieve BarOn from any of its
liabilities hereunder.
7.12. Survival of Representations. Each of the representations and
---------------------------
warranties made herein shall, for a period of [three (3) years], survive the
expiration or earlier termination of this Agreement and any and all
investigations and inquiries by BarOn and EA made prior to such expiration or
termination in connection with this Agreement and the transactions contemplated
hereby; provided, however, that the expiration of such period shall have no
-------- -------
effect on any action or proceeding that is pending as of the date of such
expiration.
7.13. No Joint Venture, Etc. Nothing contained herein shall be
---------------------
deemed to create any joint venture or partnership between the Parties hereto or
a license granted by BarOn for any of its technology, and, except as is
expressly set forth herein, neither Party shall have any right by virtue of this
Agreement to bind the other Party in any manner whatsoever.
7.14. Severability. If any provision of this Agreement is held
------------
to be illegal, invalid, or unenforceable under present or future laws effective
while this Agreement remains in effect, the legality, validity and
enforceability of the remaining provisions shall not be affected thereby,
(19)
and in lieu of each such illegal, invalid or unenforceable provision there shall
be added automatically as a part of the document a provision that is legal,
valid, and enforceable, and is similar in terms to such illegal, invalid or
unenforceable provision as may be possible while giving effect to the benefits
and burdens for which the parties have bargained hereunder.
7.15. Dispute Resolution. The Parties shall follow these
------------------
dispute-resolution processes in connection with all disputes, controversies or
claims, whether based on contract, tort, statute, fraud, misrepresentation or
any other legal theory (hereinafter collectively "Disputes"), except as
otherwise noted, arising out of or relating to this Agreement:
(i) the Parties will attempt to settle all Disputes
through good-faith negotiations;
(ii) if those attempts fail to resolve the Dispute to
the satisfaction of both Parties within forty-five (45) days of the
date of initial demand for negotiation, then each Party shall
nominate a senior officer of the rank of Vice President or higher
as its representative. These representatives shall meet in person
and alone (except for one assistant) and shall attempt in good
faith to resolve the Dispute. This meeting shall be a required
prerequisite before either Party may seek resolution of the Dispute
as provided below; and
(iii) where the Parties cannot resolve the Dispute to
the reasonable satisfaction of both Parties after the meeting
required under paragraph (ii) above, the Dispute shall be settled
by binding arbitration conducted in Camden, New Jersey in
accordance with the then-current Commercial Arbitration Rules of
the American Arbitration Association ("AAA"). Any such arbitration
shall be heard by a panel of three arbitrators, one chosen by
BarOn, one by EA and the third chosen by the arbitrators appointed
by BarOn and EA. A majority decision of two of the three
arbitrators shall be deemed sufficient for judgment to be rendered.
Each Party shall bear its own expenses, and the Parties shall
equally share the filing and other administrative fees of the AAA
and the expenses of the arbitrators. Any award of the arbitrators
shall be in writing, shall
(20)
state the reasons for the award (including any findings of fact and
conclusions of law) and shall explain the breakout of any damages
awarded. Judgment upon an award may be entered in any court having
competent jurisdiction. Notwithstanding the foregoing provisions of
this paragraph (iii), but subject to paragraphs (i) and (ii) of
this Section 7.15, either Party may apply to a court of competent
jurisdiction for injunctive or other equitable relief without
breach of this Arbitration provision.]
7.16. Waiver of Specific Performance. Accordingly, EA waives
------------------------------
its right to seek specific performance or injunctions to prevent BarOn
from manufacturing or have the unit being manufactured for it by a third
party.
(b) To the fullest extent permitted by applicable law, BarOn hereby
irrevocably and unconditionally agrees that any suit, action or
proceeding with respect to this Agreement, or any action or
proceeding to execute or otherwise enforce any judgment in respect
of a breach thereof, brought by BarOn against EA or any of its
property shall be brought in the United States, and by execution
and delivery of this Agreement, BarOn irrevocably submits to the
nonexclusive jurisdiction of such court. In addition, [BarOn hereby
irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue
in any suit, action or proceeding arising out of or relating to
this Agreement, brought in any such court, and hereby irrevocably
waives any claim that any such suit, action or proceeding brought
in any such court has been brought in an inconvenient forum.]
7.17. Jurisdiction. (a) To the fullest extent permitted by
------------
applicable law, EA hereby irrevocably and unconditionally agrees that any suit,
action or proceeding with respect to this Agreement, or any action or proceeding
to execute or otherwise enforce any judgment in respect of a breach thereof,
brought by EA against BarOn or any of its property shall be brought in Israel,
and by execution and delivery of this Agreement, EA irrevocably submits to the
exclusive jurisdiction of such court.
(21)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
ELECTRONICS ASSOCIATION, INC.
By: /s/ JULES SESHENS
----------------------------
BARON TECHNOLOGIES, LTD.
By: /s/ EHUD BARON
----------------------------
(22)