TRITON99 MANUFACTURING SERVICES AGREEMENT
1. Background and Recitals
This Agreement, effective as of February 1, 2007, is entered into between Aubrey Group Inc., a California corporation whose principal place of business is located at 6 Cromwell, Suite 100, Irvine, California 92618 (hereafter referred to as " Aubrey Group" ) and Clinical Micro Sensors Inc. dba Osmetech Molecular Diagnostics (hereafter referred to as " CMS" ) whose principal place of business is located at 757 S. Raymond St., Pasadena, CA 91105 (Aubrey Group and CMS each individually referred to as " a Party" and collectively as " The Parties" ).
Whereas, The Parties are already well familiar with one another by virtue of multiple past dialogs and written contracts and exchanges,
Whereas the focus of The Parties' relationship to date has centered on the design and development of an integrated in-vitro diagnostic (IVD) device known to each as TRITON99, which device performs electrochemical detection of nucleic acids using cartridge cassettes specially designed and developed by Aubrey Group for CMS,
Whereas TRITON99 and its cassettes are now sufficiently functional and effective to be commercialized in their present state, with future improvements and refinements contemplated; and
Whereas CMS desires to sell TRITON99 units and Aubrey Group has the familiarity, expertise, know-how and desire to manufacture the same for CMS according to CMS specifications and forecasts;
Now, therefore, in mutual consideration of the promises, terms and conditions noted herein, and in furtherance of The Parties' past, existing and future contemplated relationship together, The Parties hereby agree that Aubrey group will manufacture TRITON99 units for commercial sale of the same by CMS.
Whenever used in this Agreement with an initial capital letter, the terms defined below shall have the meanings specified:
a." Affiliate" shall mean any corporation, firm, partnership or other entity which directly or indirectly controls or is controlled by or is under common control with a Party to this Agreement. For purposes of this definition, " control" shall mean ownership, directly or through one or more Affiliates, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, fifty percent (50%) or more of the equity interests in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby a Party controls or has the right to control the Board of Directors or equivalent governing body of a corporation or other entity. b." Agreement" shall mean this TRITON 99 Manufacturing Agreement.
c." Confidential Information" shall mean, as regards to a Party (the " Receiving Party" ), all information related to TRITON99 Products, including but not limited to that which is reasonably disclosed and marked as confidential at the time of disclosure to the Receiving Party by the other Party (the " Disclosing Party" ) to the Receiving Party or to any of its employees, consultants or Affiliates, hereunder except to the extent that such information (a) as of the date of disclosure is demonstrably known to, or in the possession of, the Receiving Party or its Affiliates, as shown by written documentation, other than by virtue of a prior confidential disclosure by the Disclosing Party or its Affiliates; (b) as of the date of disclosure is in, or subsequently enters, the public domain, through no fault or omission of the Receiving Party; (c) as of the date of disclosure or thereafter is obtained by the Receiving Party from a Third Party free from any obligation of confidentiality to the Disclosing Party and rightfully in possession of such information or (d) is independently developed by or for the Receiving Party or its Affiliates without reference to or in reliance upon any of the foregoing information as demonstrated by competent written records.
d." Calendar Year" shall mean a period from January 1st until December 31st of each year.
e." Design Specifications" and all other references to specifications shall be as noted in Triton System Hardware Requirements Specification Document 123092 Revision A and Triton Processor Board Software Requirements Specification 123008 Revision B respectively and as may be modified from time to time.
f." ECO" means Engineering Change Orders.
g." Effective Date" shall mean the last date of execution of this document
h." Forecasts" shall mean the advance estimate of orders or parts anticipated for a given period.
i." NCNR" means Non-cancelable/Non-returnable.
j." NRE" means non-recurring engineering.
k." Party" or " Parties" has the meaning set forth in the first paragraph of this Agreement.
l." Price" shall mean the applicable price of TRITON99 and components thereof as set forth in Appendix A.
m." Product" shall have the same meaning as " TRITON99" , defined below.
n." Third Party" means any entity other than Aubrey Group, CMS and their respective Affiliates.
2 o." TRITON99" refers to the instrumentation and components thereof that are to be manufactured and/or supplied under this Agreement according to the specifications and parameters noted in Triton System Hardware Requirements Specification Document 123092 Revision A and Triton Processor Board Software Requirements Specification 123008 Revision B respectively and as may be modified from time to time.
p." WIP" means work in process.
This Agreement shall commence upon execution and continue in full force and effect for a period of one year. This Agreement shall automatically renew from year to year, for subsequent one-year terms unless terminated pursuant to the provisions of this Agreement.
4. Order Quantity and Pricing
CMS hereby orders and agrees to purchase from Aubrey Group and Aubrey Group hereby agrees to manufacture and deliver to CMS, fully integrated and functional Triton99 units in the quantities specified and at the prices stated in Appendix A, subject to amendment after the completion of the first pilot production run and quarterly thereafter depending on changes in Aubrey Group costs.
In addition, as part of the production orders/ forecasts CMS will order additional parts and modules to be utilized for spare parts and the Aubrey Group hereby agrees to manufacture and deliver to CMS these additional spare parts and modules at the prices stated in Appendix B subject to amendment after completion of the first pilot production run and quarterly thereafter depending on the changes in Aubrey Group costs.
Prices are firm for the quantities specified. Notwithstanding the foregoing, if a supplier increases Aubrey Group' s cost of any electronic component or part, Aubrey Group may increase its price(s) of any undelivered product upon prior notice to CMS. Whereby, if a supplier decreases Aubrey Group' s cost of any electronic component or part, Aubrey Group may decrease its price(s) of any undelivered product upon prior notice to CMS.
5. Purchase Orders/Forecasts
5.1 Purchase Orders:
CMS will provide to Aubrey Group firm purchase orders a minimum of ninety (90) days in advance of delivery (" Firm Order Period" ). Purchase orders must be in writing and submitted via hard copy, facsimile, electronic mail, or other electronics means as the parties may agree from time to time. Such purchase orders issued shall contain the following information:
a. CMS' s part number, description and revision level of product to be shipped.
3 b. The unit price and the delivery schedule.
c. Purchase orders shall allow sufficient lead-time per Aubrey Group' s sales quotation.
d. CMS' s specifications including workmanship standards and test specifications.
e. All purchase orders whether made before or after this Agreement shall be bound by the terms of this Agreement and all are incorporated herein by reference.
CMS shall schedule and maintain firm order requirements with Aubrey Group for at least a ninety (90) day period. Where possible, on a monthly basis CMS shall provide Aubrey Group with a non-binding " 12 rolling" forecast of CMS' s order requirements for ninety (90) day periods beyond the Firm Order Period. CMS shall ensure that at all times Aubrey Group is in possession of a minimum four (4) month' s projection of planned product requirements.
Request for reschedules must be made in writing, and may be submitted via hard copy, facsimile, or electronic mail. CMS agrees that any order scheduled to ship within thirty (30) days cannot be rescheduled.
A delivery may be rescheduled (whether in whole or in part) from its original agreed delivery date provided that Aubrey Group is given notice of such rescheduling no less than thirty (30) days before the original shipment date.
CMS will be responsible for costs associated with carrying products incurred by Aubrey Group to accommodate any reschedule. CMS will be charged a carrying cost at the rate of one percent (1%) per month of the value of components actually purchased by Aubrey Group for the rescheduled delivery. Aubrey Group shall use its best efforts to return to its suppliers any component parts affected by such reschedules in order to minimize any and all carrying costs to CMS under this section. Carrying costs will begin to accumulate fifteen (15) days after the original delivery date and will be billable monthly.
If such reschedule represents an acceleration or increase, Aubrey Group will make its best effort to meet the request, subject to material and capacity availability.
Aubrey Group may invoice CMS for Non-cancelables/Non-returnables (NCNR) and CMS specific component inventories that are held in its possession for longer than forty five (45) days, when CMS demands are rescheduled causing Aubrey Group' s component inventory to be in excess of that required to meet the production plan as defined by the original delivery date commitments. Any such invoices will be due and payable in accordance with the payment terms set forth in this Agreement. Upon payment in full, all component inventories shall then become Consigned inventory, owned by CMS.
CMS reserves the right to reschedule deliveries on orders that are due thirty (30) days or more from the date such change notice is given to Aubrey Group. Aubrey Group will have the right to invoice for full material costs incurred by Aubrey Group as a result of delays (longer than 5 days) caused by ECO implementation or shortages of customer-supplied components.
Orders scheduled to be shipped within thirty (30) days may not be cancelled under any circumstances. An order that is scheduled to be shipped after thirty (30) days may only be cancelled in writing by CMS, which writing must be received by Aubrey Group no later than forty-five (45) days prior to the scheduled shipment. Notwithstanding the cancellation of any order, CMS is responsible for all cancellation charges as described in 4.4.2 which will be due and payable in accordance with the payment terms set forth in this Agreement.
Upon cancellation of a Purchase Order in the Firm Order Period, CMS shall be liable as follows:
a. Finished Products are products that are ready to be shipped, shipped and/or in transit. In the event that CMS wishes to terminate any or all Finished Products specified in the Purchase Order and such termination exceeds Aubrey Group' s cancellation period, CMS shall be liable for the Price of cancelled Finished Products. Work in Process Products are products that have entered the manufacturing process but are not ready to be shipped. In the event that CMS wishes to terminate any or all Work in Process Products, then CMS shall be liable for 140% of the sum of Aubrey Group' s direct costs of materials and parts times 110%, plus direct and indirect labor hours at Aubrey Group' s standard rates.
b. For clarity: 1.4 direct materials and parts)X1.1]+ time incurred at standard ratesbr/>
c. Materials and Parts not in process: In the event that CMS wishes to terminate any or all Products specified in the Forecast or Purchase Orders and such termination exceeds Aubrey Group' s cancellation period, CMS shall be liable for materials and parts procured to support the Forecasts or Purchase Orders, but not yet in process, at an amount equal to the direct cost of the materials and parts plus 25%. Aubrey Group, however, agrees to make commercially reasonable attempts to minimize CMS' S liability by reallocating standard materials and parts to other Aubrey Group customers. Aubrey Group shall have no responsibility to attempt to reallocate any unique material that was procured solely to support CMS' s order. Aubrey Group' s time, if any, expended to reallocate standard materials and parts will be compensated to Aubrey Group by CMS at Aubrey Group' s standard rates.
5 d. Notwithstanding the cancellation of any order, CMS is also responsible for all cancellation charges, including the purchase order price of all finished goods and works in progress (WIP), component inventories on-hand, component inventories on purchase orders from Aubrey Group, supplier cancellation and other costs charged to Aubrey Group (including restocking fees). Such cancellation charges will be submitted by Aubrey Group to CMS within ten (10) days of the request for cancellation, and will be due and payable in accordance with the payment terms set forth in this Agreement.
5.5 Ordering Additional Products:
Whenever CMS wishes to purchase products not currently quoted, the following procedures are to be followed:
a. CMS shall provide Aubrey Group with a request for quote (RFQ), which incorporates CMS' s specifications for the additional products.
b. Aubrey Group shall provide CMS with a written quotation for the additional products in response to the RFQ (noting exceptions where necessary).
c. If CMS elects to purchase such products, it shall issue Aubrey Group a written purchase order for such goods that shall reference Aubrey Group' s quotation and include the specifications for the products.
d. Such additional products shall be covered under this Agreement with the issuance of said CMS purchase order and attached quote.
6. Engineering Change Orders (" ECO" )
CMS may, from time to time, request that Aubrey Group implement ECOs. The following procedures shall be followed to effect such ECOs in a timely and cost-effective manner:
CMS shall notify Aubrey Group of a proposed ECO in writing. This notification should include the appropriate documentation to support Aubrey Group' s determination of the impact of this request.
Upon notice of an ECO, Aubrey Group will make its best effort to review all costs and other impacts within one (1) week. All cost impacts and material availability issues will be mutually reviewed and agreed to with CMS prior to implementation.
Emergency ECOs will be implemented immediately at CMS' s request. CMS will be liable for all costs associated with emergency ECO implementation, particularly as it pertains to any required interruption of the production process.
7. Changes in Specifications
CMS may request, in writing, changes to any order, including changes to the relevant specifications or Product by a written Engineering Change Notice (" ECN" ). Aubrey Group shall notify CMS in writing as to the impact of each such change on the price, delivery schedule and any other terms. Such changes shall become effective only upon the signing by both parties of such documentation which incorporates the agreed upon price and terms of the