Exhibit No.
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10.3 Manufacturing and Consulting Agreement dated as of July 1,
1996 between the Company and BarOn Technologies, Ltd.
MANUFACTURING AND CONSULTING AGREEMENT
This MANUFACTURING AND CONSULTING AGREEMENT, dated as of the 1st day of
July 1996 (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 EA Industries, 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 07764 (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 to manufacture certain Assemblies (as
hereinafter defined) and EA wishes to be granted 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 convenant as follows:
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SECTION 1 Definitions.
For purposes of this Agreement, the following terms shall have the meanings
set forth below:
"Affiliate" means, with respect to any Person, any other 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 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, 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 forth in Section
6.1(a).
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Recovery Act, 42 U.S.C. ss. 9601, et seq.
"Consulting Fee" shall have the meaning set forth in Section 4.
"Cost of Materials" shall mean the amounts billed by suppliers to EA or its
Affiliates for components and materials incorporated in Units, including all
quantity or volume discounts.
"Customer Contract" shall have the meaning set forth in Section 2.2.
"Environmental Laws" means all federal, state, local and 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 U.S.C. ss. 1857 et seq., the
Occupational Safety and Health Act of 1970, 29 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 release, 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 Section 5.1(a).
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"Formula Price" shall have the meaning set forth in Section 3.1(a).
"Initial Term" shall have the meaning set forth in Section 5.1(a).
"Liabilities" means liabilities, debts or obligations, whether accrued,
absolute, contingent or otherwise, known or unknown.
"Manufacturing Contract" shall have the meaning set forth in Section 3.1.
"Party" shall mean either BarOn or EA.
"Permits" means all permits, licenses, orders, approvals, 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 partnership, a trust, a
joint venture, any governmental authority or any other entity or organization.
"Purchase Order" means a purchase order, signed by an 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 to EA
relating to the quantity and type of Assemblies BarOn requires for its own
account or to fulfill its obligations under a Customer Contract, which will
include the bill of materials and all terms or conditions requested by BarOn.
"RCRA" means Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901,
et seq.
"Right" means any right or benefit of any nature whatsoever.
"Total Price" means the respective Unit Price for each Assembly multiplied
by the number of such Units.
"Unit Price" has the meaning set forth in Section 3.1(a).
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SECTION 2 General Agreement.
2.1 Annual Manufacturing Rights. (a) EA shall work together with BarOn in
order to develop a full production file, manufacturing process, testing
procedures and quality control standards to be met by EA. BarOn shall supply EA
with blueprints, logos and packages and EA shall manufacture and package units
so they are ready for reshipment to BarOn's customers.
(b) Subject to compliance by EA with the terms and conditions set
forth in this Agreement, EA shall have the right to perform all manufacturing
for BarOn.
2.2. Procedures. The following shall be the procedure for 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 its subsidiaries and Affiliates,
including 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 the Formula Price, 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 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 accept such quotation,
and issue a Purchase Order to EA for the manufacture of such Assemblies.
(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 manufactured by a third party manufacturer, provided however,
that BarOn shall use its
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best efforts to permit EA to manufacture the number of Assemblies which EA
notifies BarOn it can manufacture.
(f) In the event that BarOn's obligation is for the supply of parts of
one of BarOn's products, all of the foregoing provisions shall apply mutatis
mutandis for such parts.
(g) Wherever 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.
If not changed by mutual agreement of the parties, the terms of payment shall be
net 30 days and the Unit price is f.o.b. Tanon's manufacturing facility.
(h) 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.
3.1 The Manufacturing Contract. Each time BarOn issues EA a 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
Unit Price to be paid by BarOn to EA for each Assembly shall be determined by
computing (i) the number of hours (hereinafter "Hours") of direct labor required
to manufacture the Assemblies pursuant to the Purchase Order, including all
labor required to manufacture the Assemblies, package the Assemblies, and
complete all other tasks required pursuant to the Purchase Order and this
Agreement; (ii) the labor rate (hereinafter "Labor Rate") of EA for such
services; (iii) the Cost of Materials required for such Assemblies; (iv) the
labor cost (hereinafter "Labor Cost") defined as Hours multiplied by Labor Rate;
and (v) the variable labor charge ("Variable Charge") defined as seventy percent
(70%) of the Labor Cost. The Unit Price shall equal one hundred thirty nine
percent (139%) of (Labor Cost plus Variable Charge plus Cost of Materials),
divided by the number of Assemblies under the Purchase Order. This price is
defined as the Formula Price.
(b) The Hours required for a particular Purchase Order shall be
determined by mutual agreement of BarOn and EA. If they are unable to agree on
the
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Hours, each of BarOn and EA shall appoint an expert ("Expert") who shall
have at least ten years of experience in the manufacturing of electronic
products, subassemblies and systems. A third expert shall be chosen by each of
such experts and a majority decision of the three Experts shall determine the
Hours. Each party shall bear its own expenses and the parties shall equally
share the fees and expenses of the Experts.
The Labor Rate shall initially be eleven dollars ($11) per hour and it
shall be increased on the anniversary date of the date of this Agreement to the
average hourly direct labor charge of EA at the facility providing the
manufacturing. However, in no event shall such annual increases exceed the
increase in the consumer price index for the SMSA containing such facility for
the calendar year preceding such adjustment.
(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 Formula
Price by reducing the Cost of Materials component, for all Assemblies utilizing
such less expensive parts.
(d) In addition to the manufacturing charges pursuant to the
Manufacturing Contracts and Purchase Orders, EA shall be entitled to payment for
engineering services provided to BarOn during the process of prototype
production (i.e., before volume production has begun), during changes in design
of the Assemblies, and for any engineering services resulting from changes in
the process or methods of manufacturing after volume production (i.e.,
manufacture of at least 10,000 units per month for two or more consecutive
months) has begun. Engineering services shall be billed at EA's usual and
customary charge at the time such services are provided.
SECTION 4 Manufacturing Consulting Fees of EA
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;
(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;
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(iv) subject to the consent of 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
charges to BarOn by such third party manufacturer; provided that such amount
shall not apply to any 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 its services; provided, that such out-of-pocket expenses are
approved in advance by BarOn.
SECTION 5 Term of Agreement, Renewal, Insolvency Event, Material Breach,
Noncompliance, Noncompete
5.1. Term of Agreement
(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 five (5) 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
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departure of any of such employees subsequent to the date that is five (5) years
from the date of this Agreement.
5.2. Insolvency Event. If either BarOn or EA (i) makes a general 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 ninety (90) days, then the other Party may by written notice
terminate this Agreement with immediate effect.
5.3. Material Breach. 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 with another
manufacturer for any discontinued 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,
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 at the cost of such inventory paid by EA.
5.5. Covenant Not to Compete. Neither EA nor any Affiliate of EA shall,
during the term of this Agreement, 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). These restrictions shall not apply to the officers or
directors of EA in their individual capacities.
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"Restricted Products" shall mean products in competition with the products
currently being sold, or currently under development, by BarOn.
5.6. Intellectual Property. 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
licensed, royalty free, to BarOn on a fully paid up non-exclusive basis.
5.7. Continuing Obligations. No termination of this Agreement, 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
6.1. Confidential Information.
(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 (i) the limited purposes
of producing Assemblies solely and exclusively for BarOn under this Agreement,
or (ii) other uses related to EA's position as an investor in BarOn, or the
position of EA's officers and directors as officers or directors of BarOn. 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 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;
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(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 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.
BarOn 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:
(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.
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(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 provisions of this section 6.1 shall apply to EA's Affiliates as well and EA
is undertaking full responsibility for a breach committed by any of its
Affiliates.
6.2. Licenses. EA shall obtain and maintain all necessary federal, 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 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.
(a) EA hereby agrees to defend, hold harmless and indemnify BarOn in
respect of any loss, liability, claim, obligation, damage or deficiency,
including reasonable attorney fees and expenses ("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 Claims asserted by a third
person against EA that any product manufactured by EA according to
BarOn's specifications is an alleged infringement of such third
party's patent or other intellectual property rights, and
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(ii) all Liabilities resulting from or related to any Claims
asserted by a third person against EA, asserting that the design of
any of the products manufactured by EA for BarOn is defective.
(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 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 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
further that (i) in the case of estimated Damages, the Indemnifying Party shall
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
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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 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:
EA Industries, Inc.
185 Monmouth Parkway
West Long Branch, New Jersey 07764-9989
Telecopier No. (908) 571-0583
Telephone No. (908) 229-1100
Attn.: Mr. Jules M. Seshens
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with a copy (which shall not constitute notice) to its counsel:
Richard P. Jaffe, Esquire
Mesirov Gelman Jaffe Cramer & Jamieson
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:
Avi Goldsobel, Esquire
Haifa 32000 Israel
Telecopier No. 011 972 48 253 663
Telephone No. 011 972 4320 225
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 the State of New Jersey, without giving effect to
the conflicts of laws provisions thereof.
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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 draftsman 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 the United States Government or
the Commonwealth of Pennsylvania, 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 the same document.
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
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to, and agrees to be bound by, all of the terms and conditions of this
Agreement. Upon the effectiveness 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 thereto, 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, 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
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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 Philadelphia, Pennsylvania 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 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. Pricing/Manufacturing Issues. If BarOn believes that the price to be
paid for Assemblies being manufactured by EA is not commercially reasonable, or
if BarOn would like to open a manufacturing facility or engage a third party
manufacturer for some portion of its manufacturing, it may notify EA of such a
belief and the basis for the belief. In that event the Chairman of EA and
President of BarOn shall in good faith discuss the issue and attempt to reach a
mutually acceptable agreement on such manufacturing or pricing. These
representatives shall have the authority to bind EA and BarOn to a mutually
acceptable agreement. If they are unable to agree, the provisions of Section
7.15 (ii) shall be applicable. Notwithstanding the foregoing, EA shall have no
obligation to agree to pricing or other terms inconsistent with the other
provisions of this Agreement.
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7.17. Waiver of Specific Performance. Accordingly, EA waives its right to
seek specific performance or injunctions to prevent BarOn from manufacturing or
having the unit being manufactured for it by a third party.
7.18. 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 jurisdiction of such court.
(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 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.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
EA INDUSTRIES, INC.
By:_______________________________
BARON TECHNOLOGIES, LTD.
By:________________________________
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