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Exhibt 10.11
RESEARCH, DEVELOPMENT AND SUPPLY AGREEMENT
between
EPIR TECHNOLOGIES, INC.
and
SUN ENERGY SOLAR, INC.
Effective
Date: November 1, 2007
TABLE OF CONTENTS
Page (s)
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2
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ARTICLE
2.SCOPE OF AGREEMENT
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3 |
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ARTICLE
3.TERM AND TERMINATION
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3.1.Term.
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3.2.Voluntary
Termination
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3.3.Termination
for Cause
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3 |
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3.4.Termination
for Force Majeure
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4 |
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3.5.Effects
of Termination
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4 |
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3.6.Survival
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ARTICLE
4.LEGAL POSITION OF THE PARTIES
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4 |
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4.1.Public
Announcements
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4.2.Independent
Contractors
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5 |
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4.3.No
Affirmative Obligation
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5 |
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ARTICLE
5.OBLIGATIONS OF EPIR
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5.1.Development.
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5.2.Marketing
Support
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5.3.Technical
Support
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ARTICLE
6.OBLIGATIONS OF SESI
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7 |
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6.1.Scheduled
Payments
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6.2.Marketing
And Technical Support
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6.3.Promotion
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ARTICLE
7.PURCHASE AND SUPPLY OF PRODUCT.
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8 |
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7.1.Grant
Of Exclusivity, Obligation To Supply Energy Products
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7.2.Obligation
to Supply.
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7.3.Inspection
And Certification
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9 |
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7.4.Packaging
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9 |
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ARTICLE
8.FORECASTS, ORDERS, AND CAPACITY
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8.1.Forecasts,
Order Limits And Capacity .
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8.2.Purchase
Orders.
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10 |
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ARTICLE
9.PRICE
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9.1.Purchase
Price Of The Energy Products .
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11 |
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ARTICLE
10.SHIPMENT AND INVOICING
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10.1.Delivery
Terms And Partial Shipments.
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11 |
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10.2.Exporter
Of Record.
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12 |
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10.3.Export
Costs And Documents.
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12 |
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10.4.Foreign
Corrupt Practices Act.
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12 |
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10.5.Energy
Product and Services Payment Terms.
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12 |
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10.6.Default
In Payment Obligations.
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13 |
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| ARTICLE 11.ACCEPTANCE OF ENERGY
PRODUCT |
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11.1.Energy
Product Conformity.
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11.2.Remedies
For Non Conforming Energy Product.
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14 |
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ARTICLE
12. PRODUCTION OF Energy Products
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12.1.Production.
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12.2.Testing.
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12.3.Permits
And Licenses.
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12.4.Regulatory
Requirements.
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12.5.Changes
In Manufacturing.
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ARTICLE
13.TRADEMARKS
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ARTICLE
14.REPRESENTATIONS AND WARRANTIES
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16 |
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14.1.Mutual
Representations.
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16 |
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14.2.EPIR
Warranties.
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16 |
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14.3.Disclaimer
Of Warranties.
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16 |
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14.4.SESI
Warranties.
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17 |
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14.5.Disclaimer
Of Warranties.
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17 |
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| ARTICLE
15.LIMITATION OF LIABILITY, WAIVER OF SUBROGATION |
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15.1.Limitation
Of Liability.
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15.2.Waiver
Of Subrogation.
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ARTICLE
16.INDEMNIFICATION
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16.1.SESI
Indemnification.
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16.2.EPIR
Indemnification.
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16.3.Indemnitee
Obligations.
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ARTICLE
17.INSURANCE
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17.1.SESI
Insurance.
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17.2.EPIR
Insurance.
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ARTICLE
18.INTELLECTUAL PROPERTY
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19 |
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18.1.Definition
Of Intellectual Property.
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18.2.Existing
Intellectual Property.
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19 |
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18.3.Joint
Patent Rights Developed During The Term.
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18.4.Prosecution
Of Joint Patent Rights.
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18.5.Licenses
And Transfers Of Joint Patent Rights.
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18.6.Enforcement
Of Joint Patent Rights.
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21 |
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18.7.Disclaimer.
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18.8.Confidentiality.
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22 |
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ARTICLE
19.NONDISCLOSURE AND PUBLICITY
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22 |
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19.1.Confidentiality.
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22 |
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19.2.Third
Party Disclosure.
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19.3.Litigation
And Governmental Disclosure.
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24 |
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19.4.Limitation
Of Disclosure.
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24 |
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19.5.Publicity
and SEC Filings .
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24 |
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ARTICLE
20.FORCE MAJEURE
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24 |
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| ARTICLE 21.
MISCELLANEOUS |
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21.1.Entire
Agreement
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25
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21.2.No
Waiver
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25
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21.3.Assignment
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21.4.Governing
Law
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21.5.Headings
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21.6.Counterparts
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21.7.Remedies
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21.8.Notices
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26 |
RESEARCH, DEVELOPMENT AND SUPPLY AGREEMENT
THIS
AGREEMENT (HEREINAFTER REFERRED TO AS THE
“AGREEMENT”) IS DATED AS OF THIS 1st DAY OF
NOVEMBER, 2007 (THE “EFFECTIVE DATE”), AND IS
ENTERED INTO BY AND BETWEEN:
EPIR
Technologies, Inc., a corporation incorporated under the laws
of the state of Illinois and having its main place of business
at:
590
Territorial Drive
Unit
B
Bolingbrook,
IL 60440
represented
by:
Sivalingam
Sivananthan, President
(hereafter
referred to as “EPIR”), as the first
party,
AND
Sun
Energy Solar, Inc., a company incorporated under the laws of
the state of Delaware and having its main place of business
at:
6408
Parkland Drive
Suite
104
Sarasota,
Florida 34243
represented
by:
Carl
Smith, Chief Executive Officer
(hereafter
referred to as “SESI”), as the second
party,
Jointly
referred to hereafter as the “Parties” and
referred to severally as a “Party”.
PREAMBLE
Whereas,
EPIR will develop New Technologies and Energy Products (as
those terms are defined herein) that are, or will be,
identified and defined by a Technology Development Board
(“TDB”) which will be constituted by the Parties
as set forth in Exhibit A of this Agreement;
Whereas,
subject to the terms and conditions herein, EPIR will develop
the necessary manufacturing processes for the Energy
Products;
Whereas,
SESI is developing products that will require the use of
Energy Products as critical elements thereof and is also
developing distribution channels to sell Energy Products and
SESI Products incorporating Energy Products (as those terms
are defined herein);
Whereas,
SESI will provide Scheduled Payments to EPIR that shall be
specifically allocated by EPIR to the research, development
and creation of mass manufacturing for the New Technologies
and Energy Products; and
Whereas,
the Parties intend to collaborate for their mutual benefit and
in the interest of the market to promote and sell compatible
and innovative products and solutions to their
customers.
NOW
THE PARTIES HERETO AGREE AS FOLLOWS:
As
used herein the following terms, as including initial capital
letters, shall have the following meanings:
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1.1.
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“EPIR”
shall mean EPIR Technologies, Inc., an Illinois
corporation.
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1.2.
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“Energy
Products” shall mean the products that are defined by the
TDB, funded by SESI and developed by EPIR under this Agreement,
including but not limited to one or more versions of photovoltaic
solar cells meeting the Product Specifications.
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1.3.
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“Firm
Purchase Order” is defined in Section 8.1.6.
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1.4.
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“Forecast”
is defined in Section 8.1.1.
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1.5.
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“Minimum
Purchase Commitment” is defined in Exhibit C.
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1.6.
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“New
Technology”, or “New Technologies” when referring
to the plural, shall mean any and all improvement, development,
discovery, computer program, device, trade secret, method,
know-how, process, technique or the like, whether or not written or
otherwise fixed in any form or medium, regardless of the media on
which contained, conceived of, created or reduced to practice
during the course of performing this Agreement, whether or not
patentable or copyrightable.
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1.7.
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“Product
Price Listing” shall mean a price listing for a Product or
Energy Product in a form substantially as set forth in Exhibit E
hereof.
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1.8.
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“Product
Specifications” shall mean, for each Energy Product,
characteristics of such Energy Product as are agreed to by the
TDB. Such characteristics shall include, without
limitation, the part number, dimensions and minimum performance
criteria, in a level of detail at least sufficient to aid in the
marketing, use and sale of the Energy Product or the SESI Product
into which the Energy Product is incorporated. The
performance criteria may include, but not be limited to, solar to
electrical energy conversion rates, operating temperature ranges,
necessary operating environment parameters, resistance to the
elements, energy storage capacities, impedance measurements,
interface with any power or control sources and/or rated voltage
and current outputs.
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1.9.
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“RMA”
is defined in Exhibit G.
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1.10.
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“Scheduled
Payments” shall mean the payments listed in
Exhibit A-1.
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1.11.
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“SESI”
shall mean Sun Energy Solar, Inc., a Delaware
corporation.
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1.12.
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“SESI
Products” shall mean products manufactured by SESI or on
SESI’s behalf, which incorporate one or more Energy
Products.
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1.13.
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“TDB”
shall mean the Technology Development Board, the constitution,
duties and other pertinent aspects of which are set forth in
Exhibit A hereof.
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ARTICLE 2.
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SCOPE OF AGREEMENT
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The
scope of this Agreement is to: (i) establish the general,
technical and business rules of the relationship between the
Parties; (ii) define the strategic intent and purposes of the
Agreement; and (iii) set forth the respective obligations of
the Parties under this Agreement. Each Schedule
and/or Exhibit to this Agreement contains important
representations and obligations of the Parties and forms an
integral part of this Agreement. Any and all
Schedules and/or Exhibits to this Agreement are incorporated
into this Agreement by this reference.
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ARTICLE 3.
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TERM AND TERMINATION
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3.1.
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Term . This Agreement is effective on the Effective
Date and shall expire on the 31st day of October, 2017
(“Initial Term”), unless terminated earlier according
to the provisions of this Article. Upon the expiration
of the Initial Term, this Agreement shall automatically renew for
subsequent one (1) year periods (each a “Renewal Term”)
unless terminated, in writing, by a duly authorized representative
of Each Party, at least one hundred and eighty (180) days prior to
the expiration of the Initial Term or the then-current Renewal
Term. The Initial Term, together with the Renewal Terms
(if any), are referred to in this Agreement as the
“Term”.
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3.2.
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Voluntary Termination . Either Party may terminate
this Agreement with one year’s advance written notice to the
other Party.
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3.3.
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Termination for Cause . Either Party may terminate
this Agreement for cause if the other Party fails to cure its
material breach of the Agreement. To terminate under
this section, the nonbreaching party shall give notice to the
breaching party of the breach, in such detail that the breaching
party will be able to identify the nature of the
breach. Except with respect to a failure to make a
payment required under this Agreement, the breaching party will
then have three months from the date of such notice to cure the
breach to the nonbreaching party’s reasonable
satisfaction. If the breach is a failure to make a
payment required under this Agreement, the breaching party will
have five (5) business days from the date of receipt of such
notice to make payment of the full amount due. If the
breaching party fails to cure the breach to the nonbreaching
party’s reasonable satisfaction within the applicable cure
period, the nonbreaching party may terminate the agreement
immediately upon further notice to the breaching
party. The failure of SESI to make any Scheduled
Payment, to pay for Energy Products ordered by SESI, or to make any
other payment required under this Agreement, shall be deemed to be
a material breach of this Agreement.
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3.4.
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Termination for Force Majeure . Upon the occurrence
of any of the events listed in Article 20, such that a period of
nonperformance of the nonterminating party for reasons of Force
Majeure exceeds ninety (90) calendar days, either party may
immediately terminate this Agreement upon written notice to the
nonterminating party.
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3.5.
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Effects of Termination . Scheduled Payments which
were due to be paid to EPIR prior to the effective date of
termination shall continue to be due to EPIR, and SESI shall have
no obligation to pay Scheduled Payments which would have fallen due
after the effective date of termination. Except in the
event of EPIR’s termination for SESI’s material breach,
EPIR shall process in the ordinary course of business all Firm
Purchase Orders confirmed by EPIR prior to receipt of the written
notice of termination, and EPIR shall have no further obligation to
supply Energy Products to SESI. Termination of this
Agreement shall not excuse SESI from making payment of any amount
owed to EPIR, including payments for Energy Products shipped by
EPIR prior to the effective date of termination.
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3.6.
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Survival . Upon termination or expiration of this
Agreement, all rights and obligations of the Parties which, by
their nature, must survive the expiration or termination of this
Agreement to give effect to their intent shall so survive,
including without limitation, the provisions of:
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Article 3, Section 3.6,
effects of termination;
Article 3, Section 3.7,
survival;
Article 16, relating to
indemnification;
Article 18, relating to
intellectual property; and
Article 19, relating to
the Confidential Information of either party.
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ARTICLE 4.
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LEGAL POSITION OF THE PARTIES
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4.1.
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Public Announcements . Upon execution of the
Agreement by both Parties, SESI will be authorized to make public
announcements about the relationship and the activities of the
Parties under this Agreement. Any and all public
announcements made by SESI will be reviewed and approved by EPIR
prior to their release. The initial public announcement
by SESI will include the following statements:
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“Sun
Energy Solar, Inc. has formed an alliance with EPIR
Technologies, Inc. The Parties are working
together to develop enhanced photovoltaic (PV) solar cells,
materials research for advanced excapsulates, interconnects
associated with PV solar cells, and cost effective
manufacturing of PV materials that can be seamlessly
integrated into higher efficiency renewable solar
systems. Using novel technologies in the field of
fabrication of semiconductor epitaxial layers onto custom
composite substrates and deposition processes, the Parties aim
to have the state-of-the-art renewable energy products
available for mass distribution within 12-24
months.”
Upon
execution of the Agreement by both Parties, EPIR will be
authorized to publicly announce the relationship and the
activities of the Parties under this Agreement. Any
and all public announcements made by EPIR will be reviewed and
approved by SESI prior to their release. The
initial public announcement by EPIR will include the following
statements:
“EPIR
Technologies, Inc. has formed an alliance with Sun Energy
Solar, Inc. to develop and distribute products using
novel technologies in the field of fabrication of
semiconductor epitaxial layers onto custom composite
substrates and deposition processes for enhanced photovoltaic
(PV) solar cells, materials research for advanced encapsulates
and interconnects associated with PV solar cells and cost
effective manufacturing of PV solar cells that can be
seamlessly integrated into higher efficiency solar
systems. Using novel technologies in the field of
fabrication of semiconductor epitaxial layers onto custom
composite substrates and deposition processes, the Parties aim
to have the state-of-the-art renewable energy products
available for mass distribution within 12-24
months.”
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4.2.
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Independent Contractors . In performing their duties
under this Agreement, the relationship between SESI and EPIR shall
be that of independent contractors. The Parties to this Agreement
shall not be considered partners, joint venturers, agents or legal
representatives of each other for any purpose, nor shall either
Party accept contractual or other legal commitments (for or on
behalf of the other Party) with regard to third
parties.
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4.3.
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No Affirmative Obligation . Nothing in this
Agreement shall be construed as creating any obligation on the part
of either Party to enter into any business relationship with any
party other than the Parties specifically identified
herein.
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ARTICLE 5.
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OBLIGATIONS OF EPIR
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Subject
to the terms and conditions of this Agreement, EPIR will: (i)
use commercially reasonable efforts to develop Energy Products
using New Technologies that will be identified and defined by
the TDB, using the procedure set forth in Exhibit B hereof;
(ii) use commercially reasonable efforts to supply Energy
Products using New Technologies in quantities that are
consistent with SESI’s forecasted demand under this
Agreement; (iii) support SESI’s efforts in the marketing
and promotion of the SESI Products; (iv) refer any and all
inquires for purchase of the Energy Products or SESI Products
received from third parties to SESI; and (v) inform SESI of
any inquiries received by EPIR from third parties who or are
interested in engaging EPIR to develop photovoltaic solar
cells and related technologies.
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5.1.1.
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EPIR
will use commercially reasonable efforts to develop Energy Products
using the New Technologies that are identified and approved by the
TDB under the terms and conditions of this
Agreement. The TDB must develop Product Specifications
for an Energy Product prior to EPIR being obligated to supply such
Energy Product.
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5.1.2.
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Notwithstanding
anything to the contrary in this Agreement, EPIR shall not be
required to undertake any research or development work under this
Agreement that would not be fully funded by Scheduled Payment
received by EPIR prior to the commencement of such
work.
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5.2.
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Marketing Support . Upon execution of this
Agreement, EPIR shall appoint a marketing contact
(“EPIR’s Marketing Contact”), who is named in
Exhibit A-2 (“Company Contacts”) (which is attached
hereto and forms an integral part of this Agreement), to support
the relationship of the Parties established in this
Agreement.
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5.2.1.
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The
TDB shall determine a fair and reasonable quantity of samples to be
provided by EPIR to SESI for sales and marketing
purposes. The TDB shall define the terms and conditions
for the provision of such samples, including the cost obligations
of the parties in connection with the samples.
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5.2.2.
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EPIR
shall provideSESI with the user and maintenance documentation for
the Energy Products within thirty (30) days of any written request
by SESI to obtain such documentation.
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5.2.3.
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Through
the TDB, EPIR shall keep SESI informed of any modifications and/or
upgrades of the Energy Products which may be required after EPIR
has provided either documentation or a prototype to SESI, as per
Section 5.1.1 and 5.1.2 above.
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5.2.4.
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EPIR
will invite SESI representatives to attend any events that showcase
the Energy Products.
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5.2.5.
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EPIR
shall allow SESI, upon written request by SESI, to develop
collateral materials that include technical photographs and/or
video footage of the EPIR facility. EPIR shall have the
sole right to approve or disapprove any and all collateral
materials, such approval not to be unreasonably
withheld. SESI hereby grants and agrees to grant EPIR a
perpetual, non-exclusive, irrevocable, royalty-free license to
reproduce, distribute, make derivative works of, display and
otherwise use any collateral materials developed by SESI relating
to the Energy Products or New Technologies.
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5.3.
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Technical Support . Upon execution of this
Agreement, EPIR shall appoint a technical contact
(“EPIR’s Technical Contact”) who is named in
Exhibit A-2 to support this Agreement.
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5.3.1.
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Upon
SESI’s reasonable request, EPIR shall provide technical
assistance to SESI to support the integration of the Energy
Products into SESI Products, packages, systems and solutions and
the migration to the next generations of SESI
Products. EPIR shall provide technical assistance to
SESI at no additional cost for each Energy Product
developed.
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5.3.2.
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EPIR
shall, upon SESI’s reasonable request, provide SESI with
training sessions that may be required to familiarize SESI with the
Energy Products.
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ARTICLE 6.
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OBLIGATIONS OF SESI
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SESI
shall support EPIR’s efforts by: (i) providing the
Scheduled Payments that are set forth within Exhibit A-1
hereto; (ii) develop distribution channels for the SESI
Products; (iii) integrate, promote, market and sell the
Energy Products and the SESI Products; and (iv) inform EPIR of
any inquiries received by SESI from third parties who or are
interested in engaging the Parties in connection with the
development or use of photovoltaic solar cells and related
technologies.
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6.1.
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Scheduled Payments . SESI shall pay EPIR the
Scheduled Payments set forth in Exhibit A-1 within three (3) days
of the dates set forth on Exhibit A-1 without deduction or
setoff. All such payments are
non-refundable. Any payment due under this Section 6.1
not received by the dates set forth in Exhibit A-1 shall bear
interest at the lesser of (a) the maximum rate permitted by law,
(b) Prime, as reported in the Wall Street Journal as of the date of
the nonpayment, plus 2%, or (3) 1.5% per month on the outstanding
balance compounded monthly. Without limiting any other
remedy available to EPIR under this Agreement or otherwise, EPIR
shall have the right to halt research and development work during
any period in which SESI has any Scheduled Payments outstanding and
past due.
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If
the Agreement is extended past the Initial Term in accordance
with Article 3 (Term and Termination), SESI shall
continue to make bi-annual Scheduled Payments as set forth in
Exhibit A-1. The amount of such payments shall be
set at the same level as the last Scheduled Payment listed in
Exhibit A-1, unless otherwise agreed to in writing by the
Parties.
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6.2.
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Marketing And Technical Support . SESI shall appoint
a marketing contact (“SESI’s Marketing Contact”)
and a technical contact (“SESI’s Technical
Contact”) to support the relationship established in this
Agreement.
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6.2.1.
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SESI
shall use commercially reasonable efforts to effectively promote
and market the Energy Products and the SESI
Products. SESI shall attain the annual sales goals
developed by the TDB for each Energy Product and SESI
Product.
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6.2.2.
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Upon
EPIR’s reasonable request, SESI shall provide technical
support to EPIR with respect to the development of the Energy
Products. Said technical support shall be limited to the
dimensions, features and aesthetic conditions that may be required
to sell the SESI Products and the Energy Products.
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6.2.3.
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Through
the TDB, SESI shall keep EPIR properly informed of any
modifications and/or upgrades to Energy Products that may be
necessary to satisfy a large customer’s purchase
requirements.
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6.2.4.
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SESI
shall train its sales force and distribution channels on the Energy
Products using training materials that are mutually agreeable to
the Parties. All costs and expenses arising from
SESI’s employees’ participation in such trainings shall
be paid by SESI.
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6.2.5.
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SESI
shall conduct, and shall cause its employees to conduct, its
marketing obligations in a manner that will reflect favorably on
the Energy Products and on the goodwill and reputation of SESI and
EPIR. SESI shall take all action necessary to prevent
and avoid deceptive, misleading or unethical
practices.
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6.2.6.
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SESI
shall provide any required maintenance of an Energy Product after
the expiration of the EPIR warranty set forth in Exhibit
G.
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6.2.7.
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SESI
shall be responsible for the integration of the Energy Products
into SESI Products.
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6.3.
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Promotion . SESI shall promote the Energy Products
and the SESI Products. Following are channels that SESI
shall utilize to promote the Energy Products and the SESI
Products:
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Newspapers (articles
& paid advertisements)
Magazines (trade &
other)
Video News
Releases
Trade
associations
Trade shows and
exhibitions
SESI’s Web
site
SESI’s show
rooms
SESI press
releases
Other mutually approved
medias
Nothing
in this Agreement shall in any way limit EPIR’s right,
in its sole discretion, to also market and promote the New
Technologies and Energy Products, subject to the exclusivity
grant in Section 7.1 below.
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ARTICLE 7.
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PURCHASE AND SUPPLY OF PRODUCT
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7.1.
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Grant Of Exclusivity, Obligation To Supply Energy
Products . Subject to the terms and conditions of
this Agreement, during the Term SESI agrees to purchase its
photovoltaic solar cells exclusively from EPIR, unless the TDB
determines that photovoltaic solar cells are not compatible with a
particular SESI product offering. EPIR agrees to supply
photovoltaic solar cells exclusively to
SESI. Notwithstanding the foregoing, if SESI fails to
meet any annual sales goals established by the TDB, then, upon
thirty (30) days’ written notice to SESI, EPIR shall be
relieved of its exclusive supply obligation.
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7.2.
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Obligation to Supply . Subject to the terms and
conditions of this Agreement, EPIR shall supply SESI with Energy
Products ordered by it in accordance with this Agreement;
provided , however , that EPIR’s obligation to
supply Energy Products to SESI shall take effect only after
(i) the Parties have agreed upon SESI’s funding for
establishing EPIR’s manufacturing facilities, and (ii) the
Parties establish SESI’s Minimum Purchase Commitment, as
described in Exhibit C. Once these conditions have been
met, EPIR shall use commercially reasonable efforts to deliver the
quantities of Energy Products set forth in SESI’s Forecast,
subject to the terms and conditions of this Agreement.
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7.3.
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Inspection And Certification . SESI shall be
responsible for the inspection and certification of any and all
Energy Products received from EPIR.
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7.3.1.
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SESI
shall inspect each shipment of Energy Products from EPIR in order
to confirm that the quantities and types of Energy Products
received by SESI correspond exactly with the quantities and types
of Energy Products that were ordered.
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7.3.2.
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SESI
shall certify each shipment of Energy Products from EPIR in order
to confirm that the Energy Products are free from defects in
material and workmanship upon delivery.
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7.3.3.
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SESI
shall notify EPIR, in writing, within ten (10) business days from
the date of receipt of Energy Products by SESI if there is any
discrepancy between the type and quantities of Energy Products
ordered versus the types and quantities of Energy Products
delivered.
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7.3.4.
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SESI
shall notify EPIR, in writing, within thirty (30) business
days from the date of receipt of Energy Products by SESI if there
is a material defect in material and/or workmanship of any Energy
Product delivered such that the Energy Product does not comply with
the EPIR warranty set forth in Exhibit G.
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7.4.
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Packaging . EPIR shall
ship Energy Products to SESI in packaging that will adequately
protect the Energy Products from damage that may be caused during
normal transit.
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ARTICLE 8.
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FORECASTS, ORDERS, AND CAPACITY
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8.1.
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Forecasts, Order Limits And Capacity
.
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8.1.1.
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No
later than the first day of each calendar month during the Term,
SESI shall provide a good faith written rolling forecast by month
to EPIR (“Forecast”). Said Forecast shall
outline the quantities and types of Energy Products that SESI
expects to purchase in each month during the subsequent 12-month
period. The quantities of Energy Products for the first
six calendar months of each Forecast will be firm. The
quantities of Energy Products for the remaining six months in each
Forecast will be non-binding good faith estimates for planning
purposes only.
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8.1.2.
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In
the event that SESI recognizes that the non-binding portion of a
Forecast that has been submitted is substantially inaccurate, SESI
shall submit a revised Forecast as quickly as
possible. EPIR shall not be obligated to supply Energy
Products in excess of the quantity contained in the then-current
binding Forecast.
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8.1.3.
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Subject
to the terms and conditions of this Agreement, EPIR shall use
commercially reasonable efforts to fulfill a Firm Purchase Order
within ten (10) days of the delivery date set forth in the
Firm Purchase Order.
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8.1.4.
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Notwithstanding
anything to the contrary in this Agreement, EPIR agrees to use
commercially reasonable efforts to increase the production of
Energy Products if it becomes apparent based on SESI’s
Forecasts that SESI’s demand for the Energy
Products will exceed EPIR’s capacity to produce the Energy
Products. The parties understand and agree that
EPIR’s efforts to increase such production may be constrained
by the Parties’ ability to attract additional sources of
funding apart from the Scheduled Payments listed in Exhibit
A-1.
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8.1.5.
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SESI
shall notify EPIR in writing at least ninety (90) days in advance
of any significant increases in demand that SESI anticipates and
shall amend its Forecast to reflect such anticipated
change. SESI expects that demand for the Products shall
increase steadily over the Term as certain regulatory approvals to
sell the Products are obtained, and as the distribution channels
evolve and mature.
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8.2.1.
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SESI
shall order Energy Products by submitting purchase orders to EPIR
specifying the quantity and type of Energy Products ordered and the
requested delivery date, which date must be at least sixty
(60) days after the date of the Purchase Order (each, a
“Purchase Order”). SESI must submit Purchase
Orders for delivery in each calendar month for at least that number
of Energy Products that are forecasted for delivery in the binding
portion of the Forecast for such month. The Purchase
Orders shall be signed or otherwise authorized by an authorized
representative of SESI. Within ten (10) business days
after the receipt of a Purchase Order, EPIR shall provide a
confirmation of receipt of such Purchase Order setting forth the
delivery date that EPIR will meet, which date may not be more than
thirty (30) days after the requested delivery date set forth
in SESI’s Purchase Order. EPIR may accept a
portion of a Purchase Order to the extent the quantity of Energy
Products ordered exceeds the amount Forecast for delivery in the
applicable month. Upon SESI’s receipt of the
confirmation, such Purchase Order shall become a “Firm
Purchase Order.” No Purchase Order shall be
binding on EPIR until it becomes a Firm Purchase
Order.
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8.2.2.
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SESI
may modify or cancel a Firm Purchase Order only after obtaining
EPIR’s written consent to such cancellation. In
the event that SESI modifies or cancels a Firm Purchase Order
without EPIR’s written consent, EPIR shall be entitled to
charge SESI the following amounts for ordered and canceled Energy
Products: (i) the established price of the finished Energy Products
(which shall be delivered to SESI), and (ii) a fee equal to that
portion of EPIR’s cost for manufacturing the partially
manufactured Energy Products (which shall be delivered to SESI if
SESI requests) which had been actually sustained by EPIR as of the
date EPIR is notified of the modification or cancellation plus 10%
(together, the“Cancellation Fee”). To the
extent of any conflict between statements made in the Purchase
Orders submitted by SESI and this Agreement, this Agreement shall
control.
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9.1.
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Purchase Price Of The Products .
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9.1.1.
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The
price to be paid by SESI to EPIR for any and all Energy Products
shall be determined in accordance with Exhibit D
hereto.
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9.1.3.
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Within
sixty (60) days from the date that a Energy Product is available to
sell, EPIR shall provide SESI with a Product Price Listing in a
form set forth in Exhibit E hereto. The Product Price
Listing will include pertinent Energy Product information
including, but not limited to the following: part number,
dimensions, and basic performance data. EPIR shall
provide an updated Product Price Listing to SESI within thirty (30)
days from the date that any new pricing becomes
available.
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9.1.4.
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At
SESI’s reasonable request, EPIR shall provide any and all
data necessary to audit the pricing of Energy
Products.
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ARTICLE 10.
|
SHIPMENT AND INVOICING
|
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10.1.
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Delivery Terms And Partial Shipments . EPIR shall
ship Energy Products to SESI via UPS Ground at SESI’s
expense. SESI shall provide EPIR with its UPS account
information whereby all shipments from EPIR to SESI shall be
billed. The Products shall be delivered to SESI’s
Sarasota, Florida location or to the location designated by SESI in
the corresponding Purchase Order. Energy Products shall
remain the responsibility of EPIR until they are picked up by UPS,
and title to and risk of loss for the Energy Products shall pass to
SESI upon EPIR’s delivery to UPS. EPIR shall
ensure that the proper amount of insurance covering damage or loss
to the Products during shipping is assessed to each shipment, and
insurance charges shall be paid by SESI.
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If,
in the Purchase Order confirmation, EPIR indicates expected
dates for shipment that would result in partial shipments,
SESI may request, within five (5) days of SESI’s receipt
of EPIR’s notice of partial shipments that EPIR hold
delivery until shipment is complete. If no such
request is received, EPIR may ship in accordance with the
Purchase Order confirmation and SESI will be deemed to have
agreed to accept the partial shipments.
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10.2.
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Exporter Of Record . SESI shall be the exporter of
record for any Energy Product shipped out of the United States, as
SESI remains the owner of such Energy Product. SESI warrants that
all shipments of any Energy Product exported from the United States
will be made in compliance with all applicable United States export
laws and regulations and all applicable import laws and regulations
into the country of deportation.
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10.3.
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Export Costs And Documents . SESI shall be
responsible for any costs applicable to the exportation of Energy
Product from the United States. SESI shall select and
pay the freight forwarder who shall solely be SESI’s agent.
SESI and its freight forwarder shall be responsible for preparing
and filing documents such as the Shipper’s Export Declaration
and any other applications required for the export. EPIR shall
cooperate with SESI by providing reasonable assistance in preparing
and filing any necessary documents to support SESI’s import
and export applications.
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10.4.
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Foreign Corrupt Practices Act . SESI acknowledges it
is not the agent of EPIR and represents and warrants that it has
not, and covenants that it will not, pay anything of value to any
government employee in connection with the resale, if any, of the
Energy Products or the sale of the SESI Products.
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10.5.
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Energy ProductEnergy Product and Services Payment Terms
. EPIR shall invoice SESI for each Energy Product that
is purchased and delivered under this Agreement. The
stated due date of each such invoice shall be within thirty (30)
days following the date of SESI’s receipt of the invoiced
Energy Product. EPIR shall also invoice SESI for any
additional amounts owed, including but not limited to, amounts owed
for private labeling, customization of product, facility expenses,
labor expenses, and any other EPIR service expenses (if any) on a
monthly basis, in arrears, which invoices shall set forth in
reasonably specific detail the description of the costs therefor.
SESI shall pay all amounts invoiced on or before the stated due
date of the applicable invoice, provided that on the date of such
invoice EPIR shall have (a) sent by facsimile such invoice to
SESI to such facsimile number as most recently requested in writing
by SESI for such purpose, and (b) deposited the original of
such invoice in the United States mail, first class postage prepaid
and addressed to SESI at such address as most recently requested in
writing by SESI for such purpose. Payments shall be made
in U.S. dollars by check delivered to EPIR, or by wire transfer.
Each invoice shall be payable by SESI in accordance with the terms
noted above.
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Any
payment due under this Section 10.5 not received within the
times noted above shall bear interest at the lesser of
(a) the maximum rate permitted by law, or (b) 1.5%
per month on the outstanding balance compounded
monthly.
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10.6.
|
Default In Payment Obligations . In addition to all
other remedies available to EPIR in the event of a SESI default, if
SESI fails to make payments as required of amounts due under this
Agreement (other than amounts contested by SESI in good faith),
EPIR may suspend Energy Product shipments to SESI
until the amount due (other than amounts
contested by SESI in good faith) is paid in full, revoke the
foregoing terms of payment, place the SESI account on a letter of
credit basis, and/or require prepayment for any and all future
shipments of Product until the balance of any and all unpaid
invoices (other than amounts contested by SESI in good faith) is
paid in full. Failure by SESI to make payment for
amounts due shall be cause for termination of the Agreement
pursuant to Section 3.4, and repeated failures to make payment for
invoiced amounts when due shall be a material breach of this
Agreement by SESI.
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ARTICLE 11.
|
ACCEPTANCE OF ENERGY PRODUCT
|
|
11.1.
|
Energy Product Conformity . Within thirty (30) days
following the date of SESI’s receipt of a Energy Product,
SESI shall have the right to determine whether the Energy Product
conforms to the Product Specifications established by the TDB for
such Energy Product. EPIR and SESI shall comply with the
quality control procedures set forth in Exhibit F
hereto. Notwithstanding the foregoing, if SESI has
conducted a mutually agreed upon standard testing procedure on
three (3) separate units of the Energy Product in question, and if
all three of the tested units of the Energy Product fail to meet
the Product Specifications, then SESI may in good faith request in
writing, within the time period specified in Section 7.2.4, an
additional time to perform additional testing. Upon such
request, such period shall be extended for fourteen (14) days so
that SESI may perform such additional testing.
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11.1.1.
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If
SESI fails to notify EPIR within thirty days, as extended by the
fourteen-day period for additional testing (if so indicated) by
Section 11.1 above, that any Product or Energy Product does not
conform to its Product Specifications, then SESI shall be deemed to
have accepted such Energy Product and waived its right to revoke
acceptance.
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11.1.2.
|
If
SESI believes any Energy Product does not conform to its Product
Specifications, it shall give written notice to EPIR specifying the
manner in which such Product or Energy Product fails to meet the
Product Specifications. If EPIR agrees with
SESI’s assessment, EPIR shall repair, replace or refund the
defective Energy Product according to it obligations under the
Energy Product warranty.
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11.1.3.
|
If
the Parties dispute whether any Product is conforming or
non-conforming, the disputed Product will be submitted to a
mutually acceptable laboratory or consultant for resolution, whose
determination of conformity or non-conformity, and the cause
thereof of non-conformity, shall be binding upon the Parties. The
non-prevailing party shall bear the costs of such laboratory or
consultant.
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11.2.
|
Remedies For Non Conforming Energy Product
.
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11.2.1.
|
In
the event EPIR agrees or a mutually acceptable laboratory or
consultant selected pursuant to Section 11.1.3 finds that any
Energy Product is non-conforming or the laboratory determines that
the shipment of Energy Product is non-conforming, EPIR shall
repair, replace or refund such non-conforming Energy Product
according to its obligations under the Energy Product
warranty.
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11.2.2.
|
In
the event the laboratory determines that the E
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