Exhibit 10.1
SHELTER AGREEMENT
ALIGN TECHNOLOGY, INC.
AND
INTERNATIONAL
MANUFACTURING
SOLUTIONS OPERACIONES, S. DE R.L.
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
SHELTER AGREEMENT BETWEEN ALIGN AND IMS
TABLE OF CONTENTS / EXHIBITS
1. PRODUCTS.
1
2. COMPONENTS.
2
2.1 CUSTOMS ADMINISTRATIVE
SERVICES.
2
2.2 CUSTOMS BROKERAGE SERVICES.
2
3. EQUIPMENT.
2
3.1 COMMODATUM AGREEMENT.
2
3.2 INSTALLATION OF EQUIPMENT
3
3.3 USE OF EQUIPMENT.
3
3.4 CARE OF EQUIPMENT.
3
3.5 OWNERSHIP.
3
3.6 POSSESSION.
3
3.7 INSURANCE.
4
3.8 REPAIRS AND REPLACEMENTS.
4
3.9 TAXES.
4
4. PREMISES.
4
4.1 LOCATION.
4
4.2 PREMISES RENTAL.
4
4.3 AREA OF PREMISES.
8
4.4 PREMISES CONDITION.
8
4.5 PREMISES INSURANCE.
8
4.6 MAINTENANCE AND REPAIRS.
8
4.7 LEASE.
8
4.8 COMMUNICATIONS
8
4.9 WAREHOUSE FACILITIES.
9
5. MANUFACTURING SUPPORT
SERVICES
9
5.1 EVALUATIONS
10
5.2 PROGRAM MANAGER.
10
5.3 ADDITIONAL SERVICES.
11
5.4 SECURITY.
11
5.5 INSURANCE.
11
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
SHELTER AGREEMENT BETWEEN ALIGN AND IMS
TABLE OF CONTENTS / EXHIBITS
6. LABOR
11
6.1 EMPLOYMENT, TERMINATION AND
CONDITIONS OF EMPLOYMENT.
11
6.2 LABOR RATES.
11
6.3 OVERTIME.
12
6.4 TRAINING.
12
6.5 EMPLOYEE EXCLUSIVITY.
12
6.6 USE OF PART-TIME IMS
EMPLOYEES.
12
6.7 ALIGN PERSONNEL.
12
6.8 WORK VISAS.
12
6.9 CROSS-HIRING OF EMPLOYEES.
12
6.10 PRODUCTION REQUIREMENTS -
EMPLOYEES.
13
6.11 INVOICING AND OTHER CHARGES.
13
6.12 REIMBURSABLE EXPENSE
13
6.13 WAGE AND TAX ADJUSTMENT.
13
6.14 FORM OF PAYMENT.
14
6.15 TERMS OF PAYMENT.
14
6.16 COST REDUCTIONS; MOST FAVORED
CUSTOMER.
14
7. TECHNICAL INFORMATION.
14
7.1 IP WARRANTY.
14
7.2 PRE-EXISTING MATERIALS.
14
7.3 ALIGN NAME.
15
7.4 NON-DISCLOSURE.
15
8. REPRESENTATIONS.
15
9. TERM.
16
9.1 TERMINATION.
16
9.2 TERMINATION BY ALIGN.
17
9.3 TERMINATION AT WILL.
17
9.4 TRANSITION PERIOD.
17
9.5 ALIGN'S OBLIGATIONS UPON
TERMINATION.
18
9.6 IMS' OBLIGATION UPON
TERMINATION.
18
9.7 SURVIVAL.
18
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
SHELTER AGREEMENT BETWEEN ALIGN AND IMS
TABLE OF CONTENTS / EXHIBITS
10. RETURN OF PROPERTY.
18
11. TRANSPORTATION TO/FROM MEXICO.
18
12. CUSTOMS & DUTIES.
18
12.1 MEXICAN CUSTOMS DOCUMENTATION.
19
12.2 U.S. CUSTOMS DOCUMENTATION.
19
13. RELATIONSHIP OF THE PARTIES.
19
14. INDEMNITY GENERAL.
19
14.1 IMS' INDEMNITY.
19
14.2 ALIGN'S INDEMNITY.
19
14.3 INDEMNITY PROCEDURES.
20
15. NOTICES.
20
16. ASSIGNMENT.
20
17. WAIVER.
20
18. SEVERABILITY.
20
19. GOVERNING LAW.
20
20. FORCE MAJEURE.
21
21. COUNTERPARTS.
21
22. ENTIRE AGREEMENT.
21
23. INTERNATIONAL MATTERS.
21
24. REMEDIES.
21
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
SHELTER AGREEMENT BETWEEN ALIGN AND IMS
TABLE OF CONTENTS / EXHIBITS
EXHIBIT
DESCRIPTION
---------------------------
----------------------------------------------
Exhibit "A"
LIST OF COMPONENTS
Exhibit "B"
CROSS BORDER, CUSTOMS AND TRANSPORTATION
Exhibit "C"
COMMODATUM AGREEMENT
Annex 1 to
Exhibit "C"
EQUIPMENT USE AGREEMENT
Annex 2 to
Exhibit "C"
EQUIPMENT LIST
Exhibit "D"
PRICING MATRIX
Exhibit "E"
REQUIRED INSURANCE COVERAGE
Exhibit "F"
GUARANTY
Schedule "A"
MISCELLANEOUS
<PAGE>
ALIGN/IMS Shelter Agreement
December 22, 2005
SHELTER AGREEMENT BETWEEN ALIGN AND IMS
THIS SHELTER AGREEMENT (hereinafter,
"Agreement"), made effective this 22nd day
of December, 2005 (the "Effective Date"),
is made between ALIGN TECHNOLOGY,
INC., having its corporate headquarters at
881 Martin Avenue, Santa Clara, CA
95050 (hereinafter referred to as "ALIGN")
and INTERNATIONAL MANUFACTURING
SOLUTIONS OPERACIONES, S. de R.L. ("IMS"),
a Mexican limited liability company
having its corporate headquarters at Calle
Mayas 7710, Cd. Juarez, Chih.,
Mexico. (ALIGN and IMS are also
individually each a "Party" and, collectively,
are the "Parties").
R E C I T A L S
Whereas, ALIGN is currently operating under
an agreement dated June 3, 2002
between ALIGN and Elamex S.A. de C.V.
("Elamex") of which on July 11, 2003, all
rights and obligations of the Agreement
were assigned, with the approval of
ALIGN, from Elamex to IMS; and
Whereas, ALIGN desires to continue its
relationship with IMS and further to
engage into a new agreement with IMS which
is more representative of the way
operations between the Parties are
currently being conducted. Additionally, it
is the desire of ALIGN to allow for an
agreement which will have an extended
term and other provisions which will allow
for the long term business planning
of both Parties; and
Whereas, ALIGN will continue to have 100%
control over its core manufacturing
competencies while IMS professionals handle
the intricacies of providing and
performing the necessary functions in
Mexico, such as facilities and facility
maintenance, human resource recruiting,
management and administration, MRO
sourcing and purchasing, payroll,
accounting, Mexican accounts payable,
cross-border logistics management, customs
administration, environmental
compliance, Mexican government management,
employee medical programs, employee
transportation and cafeteria services
("Services"); and
Whereas, ALIGN is currently engaged in the
manufacturing of clear, removable
aligners which general description of
product types may be expanded from time to
time by ALIGN in order to include
additional devices and product types under the
scope of this Agreement ( the "Products");
and
Whereas, ALIGN desires to continue the
manufacturing of its Products in the
location hereinafter defined as the
Premises for distribution and sale; and
Whereas, IMS possesses and will possess at
all times during the term of this
Agreement the expertise to provide the
Premises and to perform its obligations
hereunder; and
NOW, THEREFORE, in consideration of the
mutual covenants and obligations
hereinafter set forth and for other good
and valuable consideration, the Parties
hereto agree as follows:
A R T I C L E S
1.
PRODUCTS.
IMS will continue to provide the Services
described in this Agreement to enable
ALIGN to produce the Products. As of the
Effective Date, the Shelter Agreement
previously entered into between ALIGN and
Elamex and assigned by Elamex to IMS
will terminate. The provisions of that
previously entered Shelter Agreement that
survive termination under Section 20.3 of
that agreement, including without
limitation any provisions concerning
indemnity, confidentiality, warranties and
intellectual property ownership, shall
survive such termination, except as
otherwise expressly stated herein.
Notwithstanding such survival, each party
hereby waives any claim against the other
arising out of such termination,
including without limitation any claim
under Section 10.3 of the previously
entered Shelter Agreement.
Page 1 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
2.
COMPONENTS.
ALIGN shall continue to supply and ship, or
cause to be shipped to IMS' facility
in El Paso, Texas those raw materials,
components and other expendable items,
which are to be used in the production of
Products under this Agreement
(hereinafter, collectively, the
"Components"), as listed in the attached List of
Components (Exhibit "A") which will be
changed from time to time to reflect any
changes to the Components. Prior to each
shipment of Components by ALIGN, ALIGN
shall provide IMS with all such
documentation as is reasonably required by IMS
to effect the exportation of Components
from the United States and their
importation into Mexico in accordance with
Applicable Laws (as defined herein).
For purposes of this Agreement, "Applicable
Laws" are defined as any laws,
statutes, codes, rules, regulations,
consents, decrees or other legislative,
judicial or administrative acts of any
"Government Authority". For purposes of
this Agreement, "Government Authority" is
defined as any ministry, department,
court, agency, commission, board,
institution or similar institution in Mexico
or the United States.
2.1 CUSTOMS
ADMINISTRATIVE SERVICES.
IMS shall continue to provide those
administrative services which are necessary
to affect the exportation and importation
of equipment, machinery, tools, raw
materials, packaging materials and all
other items required to manufacture the
Products, from the United States to Mexico
and, where necessary, the exportation
and importation of the Equipment as
hereinafter defined, from Mexico to the
United States or other countries as
directed by ALIGN.
2.2 CUSTOMS
BROKERAGE SERVICES.
IMS will continue to provide, with respect
to exportations from and importations
into Mexico, the services of a licensed
Mexican Customs House brokerage service.
With respect to importations to or
exportations from the United States, ALIGN
will engage a licensed U.S. customhouse
brokerage service, and IMS shall
cooperate with such service to effectuate
such importations and exportations.
The cost of brokerage services shall be
paid directly by ALIGN in the case of
U.S. brokerage services and by IMS in the
case of Mexican brokerage and charged
to ALIGN on a cost reimbursement basis as
per the attached Cross-Border, Customs
and Transportation (Exhibit "B").
3.
EQUIPMENT.
ALIGN will continue to furnish, without
charge, and deliver to IMS, at the
Premises all tools, machinery, equipment,
and such other durable goods as are
necessary to manufacture, assemble and
produce Products (hereinafter, the
"Equipment"; provided, however, that
Components are excluded from this
definition). IMS will be entitled to use
such Equipment without charge in
accordance with the purposes set forth in
this Agreement and the attached
Equipment Use Agreement (Annex 1 to Exhibit
"C").
3.1 COMMODATUM
AGREEMENT.
ALIGN will, contemporaneously with the
execution of this Agreement, execute a
Commodatum Agreement, (hereinafter, the
"Commodatum Agreement") a copy of which
is attached hereto (Exhibit "C") and made a
part hereof. The Commodatum
Agreement will address, more specifically,
the custody and care of Equipment and
shall include: (i) an Equipment Use
Agreement, attached thereto as Annex 1; and
(ii) an equipment list, attached thereto as
Annex 2, describing all Equipment
which list thereafter will be supplemented
and amended from time to time to
reflect any additions to or deletions to
such Equipment. The parties will meet
(i) monthly during the first three months
after the Effective Date of the
Agreement and (ii) and quarterly thereafter
to update the equipment list.
Page 2 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
3.2
INSTALLATION OF EQUIPMENT.
IMS will continue to coordinate and carry
out the installation of the Equipment
which ALIGN will provide to IMS pursuant to
the Commodatum Agreement from time
to time, all in compliance with the
instructions of ALIGN and the applicable
Mexican labor, hygiene, environmental, and
safety laws, and in compliance with
ALIGN's supplied guidelines. Special
outside services relating to the
installation of Equipment and other
adaptation services that may be required by
ALIGN will be paid directly by IMS and
handled as a Reimbursable Expense. All
outside services in excess of $500 U.S.
Dollars shall be subject to pre-approval
in writing by ALIGN, such approval not to
be unreasonably withheld. When the job
is executed by IMS' in-house maintenance
staff, a budget will be prepared at a
labor rate of $15.00 per hour.
3.3 USE OF
EQUIPMENT.
The Equipment provided to ALIGN, pursuant
to the Commodatum Agreement shall be
used by IMS solely in the performance of
this Agreement, as further described in
the Equipment Use Agreement.
3.4 CARE OF
EQUIPMENT.
IMS will care for, protect, and maintain
the Equipment as specified in the
Equipment Use Agreement.
3.5
OWNERSHIP.
IMS acknowledges that Equipment, Components
and Products are the sole and
exclusive property of ALIGN and its
affiliated companies. IMS shall keep
Equipment, Components and Products free and
clear of all liens, encumbrances,
security interests and claims, including
without limitation: any and all claims
of (i) any Government Authority; (ii) any
creditors of IMS, or any IMS
affiliates; or (iii) other persons
asserting claims against IMS, and/or any IMS
affiliates for any reason (collectively,
hereinafter "Liens").
IMS shall notify ALIGN within seven (7)
days of the filing or recording of any
Liens or assertion of any claims for Liens.
In accordance with Section 14.1, IMS
shall indemnify ALIGN for any and all
Losses that ALIGN may incur in obtaining
the discharge of any Liens.
The Equipment, as well as all Components,
packaging materials, Products and
other items, will remain the sole property
of ALIGN and will be returned
promptly to ALIGN at its expense, in the
condition in which it was delivered by
ALIGN to IMS, except in the case of
Equipment for normal wear and tear,
immediately upon written demand thereof or
upon the expiration or early
termination of this Agreement. If so
requested by ALIGN, Equipment, as well as
all Components, packaging materials,
Products and other items shall be returned
to ALIGN in accordance with Section 10.
3.6
POSSESSION.
IMS is not authorized to sell, loan,
pledge, or part with possession of the
Equipment, Components, packaging materials,
Products or any other item of
personal property belonging to or under the
lawful control of ALIGN, except to
deliver the Equipment to IMS and to return
the Equipment to ALIGN in accordance
with the terms of this Agreement.
Page 3 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
3.7
INSURANCE.
At Align's written request, ALIGN, at its
expense, or as a Reimbursable Expense
to IMS, will provide all insurance coverage
for Equipment, Components, Products
and other items that ALIGN provides to IMS
pursuant to this Agreement and the
Commodatum Agreement. Insurance procured by
IMS and billed to ALIGN as a
Reimbursable Expense will name ALIGN as an
additional insured party and loss
payee if available under Mexican law.
Notwithstanding the foregoing, as set
forth below in Section 3.8, the payment of
certain insurance deductibles will be
at the expense of and paid by IMS.
3.8 REPAIRS
AND REPLACEMENTS.
Some repairs and replacements relating to
Equipment, Components and Products
will be borne directly by IMS when
practical or when sourced in Mexico and be
billed by IMS as a Reimbursable Expense to
ALIGN, except for those repairs or
replacement costs, including the payment of
any insurance deductibles and
shipping and handling charges in connection
therewith, derived from damage or
loss of Equipment, Components or Products
caused by the negligent, reckless or
willful act of IMS, or any IMS affiliate,
which will be at the expense of and
paid by IMS.
3.9 TAXES.
Payment of all taxes, including VAT,
assessed on Equipment, Components,
Products, use of space in the Premises as
defined in Section 4.1 of this
Agreement and the Services in general by
any Government Authority (collectively
"Taxes") will be made by IMS and ALIGN has
no obligation, responsibility or
liability associated with Taxes under this
Agreement, provided however that
Align will reimburse IMS at cost for VAT
taxes associated with reimbursable
expenses including MRO plant requirements,
capital purchases, capital equipment
and construction as set forth in Exhibit D
- "Pricing Matrix". ALIGN shall not
be responsible or have any liability for
any: (i) interest, penalties or other
charges associated with the failure of IMS
to timely pay such Taxes; (ii)
income, gain, franchise, withholding,
self-employment and social security taxes
of IMS or any IMS affiliate; and (iii)
unemployment and workmen's compensation
insurance of IMS, or any IMS affiliate.
Upon IMS request, if any Government
Authority imposes taxes not in effect as of
the execution of this Agreement for
Services, Equipment, Products or space
under this Agreement, the parties will
negotiate in good faith to resolve the
party responsible for payment of such.
4.
PREMISES.
IMS will continue to perform all services
contemplated under this Agreement at
the Premises (defined in Section 4.1).
4.1
LOCATION.
The premises are located at Calle Mayas
7710, Parque Industrial Fernandez,
Ciudad Juarez, State of Chihuahua, Mexico
("Premises"). The Premises contain
approximately 68,292 square feet of which
Align has the sole right to use and
occupy approximately 52,416 square feet in
the areas shown on Exhibit D
(hereinafter the "Align Space").
4.2 PREMISES
RENTAL.
IMS and Elamex De Juarez S.A. De C.V.
("Elamex") are parties to a certain lease
for the Premises ("Elamex Lease") that is
set to expire on June 30, 2008
("Elamex Lease Expiration Date"). IMS is in
current negotiations with Elamex to
purchase the Premises and expects to reach
an agreement in the near future. If
for any reason IMS does not own the
Premises by May 1, 2006, IMS shall have
previously obtained an extension to the
term of the Elamex Lease from Elamex for
at least two and a half (2.5) additional
years after Elamex Lease Expiration
Date, under similar terms and pricing as
exist under the current Elamex Lease.
In addition to extending the term of the
Elamex Lease, IMS shall use best
efforts to have obtained on or before May
1, 2006 an amendment to Elamex Lease
that includes the following rights for
ALIGN:
Page 4 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
o (i) the right of
first refusal to any sale of the Premises by
Elamex;
o (ii) a right of
first refusal to use or occupy the Align Space and/
or Premises to enter into a direct lease with the Elamex to rent
or
lease the Align Space if for any reason the Elamex Lease were
to
expire or terminate;
o (iii) the right of
first refusal to use or occupy any space within
the Premises other than the Align Space, and to enter into a
direct
lease with the Elamex to rent or lease such space if for any
reason
the Elamex Lease were to expire or terminate;
o (iv) the right to
remain in possession of the Align Space pursuant
to this Agreement and use or occupy the Align Space for the
entire
term of the Elamex Lease (to be not less than five (5) years
from
the date of this Agreement), if for any reason the Elamex Lease
expires or terminates;
o
(v) the right to cause
Elamex to enter into a Recognition,
Non-Disturbance and Attornment Agreement wherein Elamex
recognizes
and accepts ALIGN's use and/or occupancy under this Agreement,
agreeing that ALIGN can directly pay Elamex for such use or
occupancy of the Align Space at the rates currently in effect
for
ALIGN under this Agreement, agreeing that ALIGN has the right
to
cure any of IMS's defaults under the Elamex Lease and further
agreeing to such other commercially reasonable protections as
ALIGN
may reasonably request;
o (vi) written
permission for ALIGN's use or occupancy of the Align
Space under this Agreement; and
o (vii) the right to receive copies
of all default notices under the
Elamex Lease.
IMS covenants and agrees that all of the
foregoing rights are hereby deemed to
be given to ALIGN by IMS, as applicable,
and that best efforts will be used to
obtain the same rights from Elamex on or
before May 1, 2006. IMS covenants and
agrees not to cause or permit a breach or
default by IMS under the Elamex Lease.
IMS further covenants and agrees not to
assign, sublease or otherwise convey any
of its right, title and interest in the
Elamex Lease without ALIGN's prior
written consent, which will not be
unreasonably withheld. ALIGN must review and
approve any agreements contemplated herein
prior to execution, including,
without limitation, any amendments or
modifications to the Elamex Lease, and any
amendments or extensions thereto. If for
any reason IMS fails to use best
efforts to obtain any of the foregoing
rights for ALIGN from Elamex or otherwise
causes or permits a breach or default by
IMS under the Elamex Lease, IMS shall
indemnify, defend and hold ALIGN, its
directors, officers, employees, agents and
any successor to ALIGN's interest in the
Align Space harmless from and against
any and all claims, judgments, damages,
penalties, fines, costs, liabilities or
losses (including, without limitation, sums
paid in settlement of claims,
attorneys' fees, consultant fees and expert
fees) which arise out of or relate
to such.
IMS agrees that the remaining square
footage of the Premises, other than the
Align Space, will only be used as
follows:
o 6,427 square feet of
the Premises will be used solely by Tecma for
its headquarters in the location shown on Exhibit D, provided
that
appropriate security measures are put in place by IMS for
restricting access to other areas of the Premises, including,
without limitation, the Align Space; and
Page 5 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
o For twelve (12)
months from the Effective Date, 10,000 square feet
of the Premises will be used solely by IMS for a warehouse
facility
in the location shown on Exhibit D ("Warehouse Space"). After
that
time, if IMS no longer desires the Warehouse Space and Align
does
not exercise its right of first refusal as herein provided to use
or
occupy the Warehouse Space, then ALIGN shall pay IMS one-half of
the
monthly base rent including occupancy costs (such as CAM,
taxes,
utilities, insurance, etc.) for the Warehouse Space. The
monthly
base rent for the Warehouse Space will be the rate per square
foot
then in effect for the Align Space). This arrangement shall be
in
effect for the remainder of this Agreement or until the parties
can
locate and agree upon another entity or party to use and/or
rent
such Warehouse Space; provided, however, IMS, at its sole cost
and
expense, shall use commercially reasonable efforts to market
the
space to third parties, including, without limitation, the hiring
of
a broker, purchasing of advertising and the like, if needed.
As of the Effective Date of this Agreement
there may be additional space within
the Align Space that is being used by IMS.
IMS will be promptly transitioning
such space to Align and will not charge
Align for use of such space until such
is completely turned over to Align.
IMS must obtain the prior written consent
of ALIGN, which shall not be
unreasonably withheld, prior to any
renting, leasing or provision of space for
use within the Premises to any other entity
or individual, other than as set
forth in this Agreement.
If IMS or its affiliate or assignee
purchases the Premises from Elamex, then:
o An affiliate or
assignee of IMS will become the owner of the
Premises. IMS, its affiliate or assignee, as applicable, will
obtain
the written consent of Align, which shall not be unreasonably
withheld, prior to any ownership change under this provision.
o IMS, as tenant, will
execute a five (5) year lease (the "Lease")
with such affiliate or assignee, as landlord, for the Premises
which
allows ALIGN to use or occupy the space within the Premises as
set
forth in this Agreement.
o IMS shall not cause
or permit a breach or default of the Lease.
o Except as
hereinafter provided, IMS shall not to assign, sublease or
otherwise convey any of its right, title and interest in the
Lease
without ALIGN's prior written consent, which shall not be
unreasonable withheld.
o ALIGN must review
and approve the Lease in writing prior to its
execution and any amendments or extensions thereto.
o Concurrent with the
execution of the Lease, ALIGN or ALIGN's
subsidiary will execute a Guaranty for the first five (5) years
of
the Lease substantially in the form attached hereto as Exhibit
F.
o Except for the
Guarantees set forth in the Exhibit F, the new Lease
will not require any additional guarantees by ALIGN or its
subsidiary.
o 51,866 square feet
of the Premises shall be provided by IMS solely
to ALIGN or its subsidiary for use or occupancy under this
Agreement.
o 6,427 square feet of
the Premises will be used solely by Tecma for
its headquarters in the location shown on Exhibit D, provided
that
appropriate security measures are put in place by IMS for
restricting access to other areas of the Premises, including,
without limitation, the Align Space.
Page 6 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
o For twelve (12)
months from the Effective Date, the Warehouse space
will be used solely by IMS for a warehouse facility in the
location
shown on Exhibit D. After that time, if IMS no longer desires
the
Warehouse Space and Align does not exercise its right of first
refusal as herein provided to use or occupy the Warehouse
Space,
then ALIGN shall pay IMS one-half of the monthly base rent
(including occupancy costs such as CAM, taxes, utilities,
insurance,
etc.) for the Warehouse Space (at the same monthly base rent
rate
per square foot then in effect for the Align Space). This
arrangement shall be in effect for the remainder of this
Agreement
or until the parties can locate and agree upon another entity
or
party to use and/or rent such Warehouse Space; provided,
however,
IMS, at its sole cost and expense, shall use commercially
reasonable
efforts to market the space to third parties, including,
without
limitation, the hiring of a broker, purchasing of advertising
and
the like, if needed.
o Rent or lease value
for the Premises in the Lease between IMS and
its affiliate or assignee shall be the same or less than the rent
or
lease value in effect as under this Agreement as of the
effective
date of such Lease.
o The amount charged
to ALIGN by IMS for use of the Align Space under
this Agreement after such purchase shall remain the same or
less
than the rent or lease value in effect as under this Agreement as
of
the effective date of the Lease.
o The Lease shall set
forth that ALIGN has the right of first refusal
during this Agreement for (i) any sale of the Premises, (ii)
any
rent or leasing of the Align Space and (iii) any use, leasing
or
renting of any space within the Premises, other than the Align
Space.
o The Lease shall set
forth that ALIGN has the right of first refusal
upon termination or expiration of this Agreement during the
initial
five (5) year term of the Lease for (i) any sale of the
Premises
(ii) any rent or leasing of the Align Space and (iii) any use,
leasing or renting of any space within the Premises, other than
the
Align Space.
o IMS must obtain the
written consent of ALIGN, which shall not be
unreasonably withheld, prior to renting, leasing or providing
space
within the Premises for use to any other entity or individual.
o The Lease shall set
forth notice and cure periods for ALIGN in the
event of a breach or default by IMS.
o The Lease shall
state that should IMS default under the Lease in
violation of this Agreement:
o The Lease will
remain in full force and effect.
o ALIGN will
have the right to remain on the Premises and use
the Align Space for the entire term of the Lease.
o Upon ALIGN'S
written request, IMS will assign all of its
right, title and interest under the Lease to ALIGN for the
entire Premises, thereby replacing IMS as tenant there
under, wherein ALIGN will directly pay landlord under the
Lease for use of the Premises at the rates currently in
effect for ALIGN under this Agreement.
o The Lease shall
state that upon written notification from ALIGN or
IMS that this Agreement has expired or been terminated that:
o The Lease will
remain in full force and effect.
o ALIGN will
have the right to remain on the Premises and use
the space for the entire term of the lease.
o Upon ALIGN'S written
request, IMS will assign all of its
right, title and interest under the Lease to ALIGN for the
entire Premises, thereby replacing IMS as tenant there
under, wherein ALIGN will directly pay landlord under the
Lease for use of the Premises at the rates currently in
effect for ALIGN under this Agreement.
Page 7 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
If for any reason IMS causes or permits a
breach or default under any of the
foregoing provisions, IMS shall indemnify,
defend and hold ALIGN, its directors,
officers, employees, agents and any
successor to ALIGN's interest in the Align
Space harmless from and against any and all
claims, judgments, damages,
penalties, fines, costs, liabilities or
losses (including, without limitation,
sums paid in settlement of claims,
attorneys' fees, consultant fees and expert
fees) which arise out of or relate to such
breach or default.
The provisions of this Section 4.2 shall
survive, to the extent applicable, any
termination or expiration of this
Agreement. During the Term of this Agreement,
IMS will provide the facility at the cost
specified in Pricing Matrix (Exhibit
"D"). All costs associated with the
Premises and performance of Services, tenant
improvements and utilities will be paid by
IMS and billed to ALIGN as a
Reimbursable Expense as per Pricing Matrix
(Exhibit "D").
4.3 AREA OF
PREMISES.
The Premises will consist of a portion of
the building with the total area
described in the Pricing Matrix which is
color coded for ease of reference
(Exhibit "D") a portion of which will be
dedicated to ALIGN for the performance
of the Services, except for the specified
sections for use solely by IMS as
referenced above. At the request of ALIGN
and with adequate notice to IMS, the
Premises may be expanded to accommodate
ALIGN growth and for additional
processes.
4.4 PREMISES
CONDITION.
IMS shall continue to keep and maintain the
Premises at all times during the
"Original Term" of this Agreement and any
"Extended Term", as those terms are
defined in Section 9, in a condition ready
and suitable for the use contemplated
under the terms of this Agreement.
4.5 PREMISES
INSURANCE.
Except as otherwise set forth in Exhibit E,
IMS will be responsible for
obtaining a policy of insurance, issued by
an insurance company authorized to
conduct business in the United Mexican
States, the provisions of which shall
protect against fire, casualty, general
liability, loss of rental and extended
coverage on and about the Premises, in
accordance with the terms of the lease,
the cost of which shall be borne by ALIGN
as per the Price Matrix attached
hereto as Pricing Matrix (Exhibit "D"). IMS
shall deliver to ALIGN a certificate
of insurance. IMS shall require the insurer
to give ALIGN 30 days written notice
before the above-described policy is
canceled or materially altered.
4.6
MAINTENANCE AND REPAIRS.
ALIGN shall pay for interior and exterior
maintenance and repairs in the amount
stated in the Maintenance line item of the
Rent section of Pricing Matrix
(Exhibit "D"), and additional maintenance
and repairs as mutually agreed by the
parties.
4.7 LEASE.
During the term of this Agreement, if IMS
does not purchase the Premises, then
IMS will be the tenant of the Premises, and
will be fully responsible for the
terms and conditions of the Master
Lease
4.8
COMMUNICATIONS.
IMS shall continue to cause the Premises to
contain such Mexican phone lines, or
other technology or information services as
may be requested in writing by
ALIGN. The charges for the expansion and
installation of such phone lines and
other data or voice services which may be
required in the future, and the
ongoing monthly service fees or toll
charges in connection therewith will be at
ALIGN's expense. All such expenses must be
approved in advance in writing.
Page 8 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
4.9 WAREHOUSE
FACILITIES.
ALIGN may require a warehousing facility in
El Paso, Texas for use in the
storage and/or distribution of the Products
as ALIGN may from time to time
determine. IMS will work closely with ALIGN
to develop a program as required
under separate agreement, when requested by
ALIGN. Staging and trans-loading in
IMS' El Paso Warehouse facilities are
included in the Services at no additional
cost when the Services are performed during
regular warehouse operating hours.
Additional fees will be charged to ALIGN at
cost plus mark up as set forth in
Exhibit D unless mutually agreed otherwise
by the parties when Services are
performed outside of the regular warehouse
operating hours.
5.
MANUFACTURING SUPPORT SERVICES AND INPLANT SERVICES.
IMS will continue to provide, at all times,
all facilities as previously
described, direct and the indirect labor
included, supervisory and
administrative personnel, human resource
management and administrative
expertise, necessary to enable the
manufacture of the Products as described
under this Agreement. All vendors and
outside contractors of IMS relating to the
Services are subject to ALIGN's approval
and such must be in writing if IMS is
going to enter into an Agreement beyond a
Purchase Order with such vendor or
outside contractor. The services of IMS
shall include, but shall not be limited
to (a) the performance of the obligations
of IMS as set forth in this Agreement
and (b) the following described
activities:
(i) IMS
assumes responsibility for all necessary or desirable
dealings with any appropriate Government Authority, in order
to authorize and expedite the performance of the Services and
other activities contemplated hereby and to obtain all
necessary permits and bonds.
(ii)
IMS will prepare and file all payroll taxes, IVA and other tax
returns concerning their operations related to this Agreement
that are required by Applicable Laws.
(iii) IMS
will perform appropriate accounting and legal services
relating to the performance of this Agreement.
(iv)
IMS will employ all personnel appropriate and necessary for
the performance of this Agreement, including, but not limited
to, the direct and indirect Employees and Salaried Personnel
requested by ALIGN.
(v) IMS will
prepare, and will be solely responsible for
preparing, payroll, record the Employees and Salaried
Personnel, as hereinafter defined, with any appropriate
Government Authority, including the Mexican Institute of
Social Security, and will perform all other obligations of an
employer under Applicable Laws, including the payment of wages
and benefits to hourly employees, (hereinafter, "Employees")
and salaried employees (hereinafter, "Salaried Personnel")
employed by IMS for purposes of performing the Services.
(vi)
During the start up of any new processes and during the Term,
IMS will administer the transport of Equipment, Components,
Products, and other items provided by ALIGN to the Premises.
(vii) IMS
shall make and keep as appropriate to the activities of
each, all records required by Applicable Laws (including
without limitation the Public Company Accounting Reform and
Investor Protection Act of 2002, aka the Sarbanes Oxley Act,
and any U.S. Food and Drug Administration regulations that may
be applicable to ALIGN or its business) concerning their
business activities under this Agreement. Such records shall
include but not be limited to those records, which are
required to be made and kept by the General Administration of
Customs of Mexico and by the United States Customs Service.
All such records shall be made in conformity with and kept for
the period(s) of time required by Applicable Laws.
Page 9 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
(viii) IMS will
purchase all items which ALIGN may, in writing,
request IMS to purchase in Mexico or in the United States, it
being agreed that IMS will be responsible for the inspection
of the quality of the items purchased and for ensuring the
conformity thereof to written specifications provided by
ALIGN.
(ix)
IMS shall keep the packaging on all Products for shipment as
they are received from ALIGN and when further shipped by IMS
such shall be in a commercially reasonable manner and in
accordance with ALIGN policy and specifications to protect
such Products from loss or damage.
(x) IMS shall
provide all Services in a professional and
workmanlike manner, in accordance with the highest industry
standards, and in accordance with Align specifications and/or
requirements that have been provided to IMS (the
"Requirements").
(xi)
IMS will provide the following In-Plant Support. Shared
resources to carry out all administrative functions related to
the operation: Human Resources Manager and Clerks, Customs
Supervisor and Clerks, MRO Buyer, Accounting and Payroll
Clerks, Nurse, Security Guards, Janitors, Cooks, and
Secretary/Receptionist. Also included are:
o Food necessary
to cover two (2) meals a day per
shift,
o janitorial
supplies,
o plant
maintenance, and
o medicines
The cost of this In-Plant Support will be billed per headcount
hour (without additional mark-up) as per Schedule "D" attached
hereto.
5.1
EVALUATIONS AND NOTICE OF DEFECTS.
ALIGN shall have the right to evaluate, at
any time, the quality, performance,
and timeliness of the Services to verify
that the Services being performed under
this Agreement meet the Requirements that
have been provided to IMS by Align and
shall provide written notice of any defects
or deficiencies, including but not
limited to the quality, performance, and/or
timeliness of the Services to IMS
(collectively the "Defects"). For such
purposes, ALIGN and its representatives
shall have at all times unrestricted access
to the Premises. In the event that
such Services do not meet the Requirements
provided by Align or ALIGN identifies
Defects, Align will provide IMS with
written notice outlining the failure to
meet the Requirements or the Defects. IMS
will have sixty (60) days cure the
issue, unless such is business critical to
Align then such cure period shall be
reduced to thirty (30) days. Unless
otherwise agreed by the parties, if the
Requirement or Defect is not cured within
the 30 to 60 day time frame stated
herein, Align may immediately terminate
this Agreement, except as otherwise set
forth herein.
Page 10 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
5.2 PROGRAM
MANAGER.
IMS or ALIGN shall employ a qualified
program manager to manage the production
activities contemplated by this Agreement.
The program manager's salary,
benefits and bonuses, should the manager be
an employee of IMS, will be a
Reimbursable Expense, as hereinafter
defined in Section 6.12, if paid by IMS,
provided that ALIGN has approved of such
salary, benefits and bonuses in advance
and in writing.
5.3 ADDITIONAL
SERVICES.
"Additional Services" shall mean those
activities provided by IMS outside the
scope of this Agreement and will be billed
to ALIGN as a Reimbursable Expense as
per Pricing Matrix (Exhibit "D"). The
Program Manager shall have the authority
to approve the provision of Additional
Services, the cost of which does not
exceed $500 (Five Hundred Dollars), legal
currency of the United States of
America, per occurrence. For all Additional
Services, exceeding $500 (Five
Hundred Dollars), legal currency of the
United States of America, per
occurrence, IMS shall secure the prior
written consent (including a detailed
description of the work to the performed
and the fees therefore) of ALIGN before
such Additional Services are provided and
any payment liability therefore is
incurred.
5.4
SECURITY.
IMS shall abide by the Security provisions
of the attached Schedule "A".
5.5
INSURANCE.
IMS shall maintain the insurance coverage
described in the attached Required
Insurance Coverage (Exhibit "E"), as well
as any other insurance required by
Applicable Law or otherwise required under
this Agreement. Each such policy
shall be provided subject to the conditions
stated in the last four sentences of
section 4.5.
6.
LABOR.
IMS will employ all direct Employees, all
indirect Employees and Salaried
Personnel including, but not limited to
administrative, labor, mechanical,
supervisory, security, and janitorial
personnel, which are necessary and
appropriate to provide the Services
required by this Agreement. All the
Employees and Salaried Personnel employed
by IMS or IMS shall be considered
"Headcount Employees." ALIGN shall pay IMS
for the Services of the Headcount
Employees as per Pricing Matrix (Exhibit
"D") ("Service Fees"). IMS shall ensure
that all such employees and IMS abide by
the Health and Safety and Hazardous
Materials provisions of the attached
Schedule "A".
6.1
EMPLOYMENT, TERMINATION AND CONDITIONS OF EMPLOYMENT.
IMS, will be responsible for employee
relations, including the recruiting,
hiring, firing, assignment, evaluation,
promotion, demotion, transfer and, other
than as required by law or elsewhere stated
in this Agreement, compensation of
Employees and Salaried Personnel and any
liabilities associated with such,
except as otherwise set forth herein. The
terms and conditions of each
Employee's and Salaried Personnel's
employment shall comply in all respects to
the requirements of the applicable laws of
the United Mexican States, including
its labor laws, regulations and all current
directives of the government of
Mexico issued there under and IMS
undertakes to keep ALIGN informed as to the
requirements for compliance.
ALIGN will reimburse IMS for all severance
payments (at cost and according to
the laws currently in place at the time of
severance in Mexico) which arise
during the original term or any extended
term of this Agreement, except when the
severance payment derives from the willful
or negligent acts of IMS. However,
such severance payments shall be made by
ALIGN only upon a showing by IMS of the
dismissal of said employees and the reasons
therefore.
Page 11 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
6.2 LABOR
RATES.
IMS will be solely responsible for the
payment and provision to the Employees
and Salaried Personnel of any and all
wages, salaries, benefits and income tax
and other withholding required by Mexican
Federal, State, and Municipal laws,
regulations, and directives. IMS shall
insure that labor rates for all Employees
and Salaried Personnel employed by IMS and
by itself shall at all times comply
with applicable laws and regulations of the
United Mexican States and with all
currently applicable directives issued by
the government of Mexico pursuant
thereto. Labor wage rates will be set using
the expertise and experience of both
ALIGN and IMS management and all final
determinations of labor rates shall be
subject to approval by ALIGN.
6.3
OVERTIME.
Overtime compensation, if applicable, will
be paid to the Employees and Salaried
Personnel in accordance with the
requirements of the labor laws of the United
Mexican States only when the requirement
for such overtime is approved by ALIGN.
6.4
TRAINING.
ALIGN will provide all Employees and
Salaried Personnel with such training and
instructions in connection with the
manufacture of the Product and perform the
Services, as is sufficient to enable each
such person to perform the work
assigned to him or her.
6.5 EMPLOYEE
EXCLUSIVITY.
IMS agrees that all Employees and Salaried
Personnel may not be used other than
for the purposes of performing the Services
contemplated by this Agreement.
6.6 USE OF
PART-TIME IMS EMPLOYEES.
To the extent that one or more individuals
employed by IMS are assigned to
provide part-time employment services at
the Premises in furtherance of this
Agreement, notwithstanding any other
provision contained herein to the contrary,
such IMS employees shall not be considered
to be Headcount Employees. However,
their cost to IMS shall be invoiced to
ALIGN, for the actual hours worked by the
part-time employees as a Reimbursable
Expense as per Pricing Matrix (Exhibit
"D").
6.7 ALIGN
PERSONNEL.
During the Original Term or any Extended
Term of this Agreement, ALIGN shall
have the right to locate at the Premises
such of its employees as it deems
appropriate. IMS shall fully cooperate with
and assist any ALIGN employee
assigned to the Premises in connection with
the performance of his or her
assigned duties. No employee of ALIGN shall
be entitled to any benefit provided
for by the labor laws of the United Mexican
States and IMS shall have no
liability for such benefits therefore to
such employees.
6.8 WORK
VISAS.
IMS shall obtain all necessary Mexican work
visas for ALIGN's designated
non-Mexican employees who may be assigned
by ALIGN to be present at the Premises
for any purpose. The visas, which shall be
legally obtained, shall be of the
type required under the circumstances by
the immigration laws of the United
Mexican States. The actual costs of
administering and obtaining such visas shall
be a Reimbursable Expense.
6.9
CROSS-HIRING OF EMPLOYEES.
IMS as one part and ALIGN as the other part
each agree that they will neither
employ nor solicit the termination of
employment by resignation of the other's
employees during the Original Term and any
Extended Term of this Agreement and
for a period of one (1) year after the
termination of this Agreement without the
prior written consent of that employer.
Page 12 of 22
<PAGE>
IMS/ALIGN Shelter Agreement
December 22, 2005
6.10 PRODUCTION
REQUIREMENTS - EMPLOYEES.
IMS shall employ only that number of
Employees and Salaried Personnel as
directed by ALIGN. To the extent that
ALIGN's production requirements
necessitate an increase in the number of
such Head Count Employees, IMS shall
consult with a designated employee of ALIGN
and the number and types of
Headcount Employees shall be increased in
accordance with the increased number
to which ALIGN agrees. To the extent that
the production requirements of ALIGN
necessitate a reduction of the number of
Headcount Employees, during the period
covered by any updated production schedule,
IMS and the designated ALIGN
employee shall confer in the manner above
described and the number of Headcount
Employees shall be reduced by the number to
which ALIGN agrees. In the event
that the circumstances described in this
Section 6.10 require the termination of
one or more persons employed in a Salaried
Personnel capacity, IMS and ALIGN
shall confer concerning such termination(s)
and the Parties shall agree as to
the method of negotiation and the estimated
severance pay anticipated.
6.11 INVOICING AND
OTHER CHARGES.
ALIGN shall pay to IMS a reimbursement of
any and all expenses incurred by IMS
in accordance with the terms of this
Agreement, plus additional percentages of
those expenses according to the schedule as
per the attached Pricing Matrix
(Exhibit "D"). All expenses are subject to
approval as described in Section 5.3.
6.12 REIMBURSABLE
EXPENSE.
The term "Reimbursable Expense" is defined
as any actual, out-of-pocket cost
incurred by IMS, including taxes, on behalf
of ALIGN for which reimbursement by
ALIGN is required. Reimbursable Expenses
shall be billed to ALIGN as per Pricing
Matrix (Exhibit "D"). IMS may be able to
recover all of the value-added taxes,
"IVA", for expenses incurred or purchases
made on behalf of ALIGN. This tax
credit, if obtained, will accrue to the
benefit of IMS.
6.13 WAGE AND TAX
ADJUSTMENT.
If, at any time during the Original Term or
any Extended Term of this Agreement,
the National Commission of Minimum Wages of
the government of Mexico decrees, by
official publication, an increase in the
minimum wage payment to minimum wage
employees, the wages of all IMS' Headcount
Employees shall be increased in
accordance with the requirements of such
official publication and in accordance
with the terms of this Agreement. Once
agreed upon by IMS and ALIGN the wages
will be adjusted accordingly and such will
be passed through to ALIGN as set
forth i
