Exhibit 10.42
[Confidential treatment has been
requested as to portions marked “[***]” pursuant to a
request for confidential treatment previously filed with the
Securities and Exchange Commission. Omitted portions have been
filed separately with the Securities and Exchange
Commission.]
SUPPLY AGREEMENT
This Supply Agreement
(“Agreement”) is made and entered into and effective as
of October 31, 2005 (the “Effective Date”) by and
between Digirad Corporation, a Delaware corporation
(“Digirad”), and QuickSil Inc., a California
corporation (“QuickSil”).
WHEREAS, on or about June 28,
1999, QuickSil and Digirad entered into a Development and Supply
Agreement under which QuickSil has supplied [***] for
Digirad’s nuclear gamma cameras; and
WHEREAS, the parties wish to
continue their relationship under the terms and conditions of this
Agreement, and intend this Agreement to supersede the 1999
Development and Supply Agreement and all other agreements between
them.
NOW, THEREFORE, in consideration of
the mutual promises and covenants contained herein and other good
and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
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(a)
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“
Product(s) ” shall mean a [***] manufactured by
QuickSil hereunder in accordance with the terms and conditions of
this Agreement.
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(b)
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“
Performance Specifications and Acceptance Criteria ”
shall mean the performance specifications and acceptance criteria
for the Products set forth in Exhibit A attached hereto
and incorporated herein by reference.
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(c)
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“
Product Quantity ” shall mean the number of tested
[***] that meet the Performance Specifications and Acceptance
Criteria.
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(a)
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Supply of
Products . Pursuant to
the terms and during the Term of this Agreement, QuickSil shall
manufacture and supply Products to Digirad and Digirad shall
purchase from QuickSil such Products in the Product Quantity
requested by Digirad in accordance with the provisions of this
Agreement. Digirad reserves the right to purchase Products from
manufacturers other than QuickSil.
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(b)
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Product
Performance Specifications and Acceptance Criteria
. QuickSil shall test all Products
to be delivered to Digirad for compliance with the Performance
Specifications and Acceptance Criteria set forth in
Exhibit A , and shall deliver to Digirad only Products
that meet the Performance Specifications and Acceptance
Criteria.
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(c)
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Product
Non-Conformance . If
Digirad determines that any shipment of Products from QuickSil does
not conform to the Performance Specifications and Acceptance
Criteria applicable at its plant as specified in
Exhibit A , Digirad shall give QuickSil notice thereof
(including a sample from such shipment and copies of the results of
any testing supporting Digirad’s determination) within [***]
after receipt thereof, in the case of non-conformities that may be
ascertained by the exercise of reasonable diligence (which shall
not include laboratory testing or other chemical analysis), and
within [***] days after discovery thereof, in the case of other
non-conformities. If QuickSil confirms such non-conformity, it
shall promptly so notify Digirad in writing thereof. If QuickSil
does not confirm such non-conformity, it shall promptly so notify
Digirad in writing thereof, and the parties shall promptly submit
the disputed shipment for testing to an independent testing
laboratory or other independent third party expert whose decision
shall be mutually binding on the parties. The expenses of such
testing or other investigation shall be borne by QuickSil if the
non-conformity is confirmed, and otherwise by Digirad.
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If any Products delivered by
QuickSil hereunder do not conform to the Performance Specifications
and Acceptance Criteria for any reason, QuickSil shall [***]. In
addition, at Digirad’s option and sole discretion,
(i) [***] (ii) [***].
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(d)
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Forecasts
and Purchase Orders .
Digirad shall notify QuickSil on a [***] basis of its projected
requirements for Product Quantity for [***]. [***]. On a quarterly
basis, Digirad will submit a purchase order [***].
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(e)
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Delivery of
Product . QuickSil shall
provide Digirad with expected order lead-times for the Products,
and Digirad shall place purchase orders for the Products with
delivery due dates consistent with QuickSil’s quoted order
lead-times. Unless specifically accepted by Digirad, in no case
shall QuickSil’s lead-time quotations to Digirad [***].
QuickSil will make reasonable efforts to deliver Products [***].
All costs of manufacturing Products to meet delivery due dates on
Digirad purchase orders placed within the QuickSil order lead-times
shall be the responsibility [***].
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(f)
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Supply of
[***] . Digirad shall
supply to QuickSil the [***].
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(g)
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Conformance
to Specifications and Laws . All Products supplied or delivered to Digirad
under this Agreement shall be in compliance with (i) the
Performance Specifications and Acceptance Criteria, (ii) all
proper and accurate marking and label requirements under applicable
laws, regulations and statutes; and (iii) all federal, state
and local laws, rules and regulations.
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(h)
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Title, Risk
of Loss and Damage .
Title and risk of loss shall pass to Digirad [***].
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(i)
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Price . Prices for products are detailed on
Exhibit B attached hereto and shall remain firm for
[***] after the Effective Date. [***].
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(j)
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Payment for
Products . QuickSil shall
invoice Digirad for Digirad’s purchases at the time of each
shipment. Such invoices shall be payable [***] from shipment of
Products to Digirad.
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(k)
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Technology
Transfer . In the event
that either (i) QuickSil has an insolvency event (as defined
in 6(b)(ii) below), (ii) QuickSil fails to produce the number
of Products ordered by Digirad and meeting the Performance
Specifications and Acceptance Criteria for more than sixty days
(60) in any calendar year, or (iii) QuickSil is acquired
by or merged into any company that, as determined by Digirad in
good faith, competes with Digirad in the nuclear medicine imaging
market, then Digirad shall receive a royalty-free, non-exclusive
license to all of the technology used in the Products and all
necessary information, data, know how, procedures, schematics, and
specifications needed to produce the Products. The parties will
take all actions and make all necessary assignment to facilitate
such transfer of rights and information.
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(l)
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Manufacturing Changes . QuickSil shall make appropriate changes to the
manufacturing process or manufacturing location with advance
written notification of such changes to Digirad and Digirad’s
consent thereto, which shall not be unreasonably
withheld.
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(m)
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Reliability . QuickSil warrants and represents that all
Products shipped to Digirad will comply with the Performance
Specifications and Acceptance Criteria.
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(c)
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QuickSil hereby
grants Digirad a royalty free, non-exclusive, non-transferable
license [***] and any improvements or modifications for internal
use only and expressly limited to the specific application field of
building [***] for use with Digirad’s nuclear gamma cameras.
This license shall be limited to the Term of this Agreement, in
accordance with paragraphs 4 (a), 6 (b), and 6 (c). Except for the
license so granted, QuickSil expressly retains for all purposes all
rights to the [***] utilized [***], and QuickSil expressly retains
the rights (including all patent rights, copyrights, trade secrets
rights and other intellectual property rights) to the
[***].
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(a)
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Noncompete . Digirad will have exclusive rights to [***] in
the [***]. The period of exclusivity shall initially run from
[***].
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In order to aid in the fulfillment
of the goals of the contract, both Digirad and QuickSil are
conveying to each other and will in the future convey proprietary
corporate information which each party has a significant interest
in keeping protected and confidential. As a result, Digirad and
QuickSil agree that:
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(a)
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The information
furnished by one patty shall not be used by the other party for any
purpose, except to fulfill the obligations to the other party under
this Agreement and such information will be kept confidential by
the receiving party and shall not be disclosed to any third party;
provided, however, that any such information may be disclosed to a
receiving party’s affiliates, officers and employees who need
to know such information for the purpose of fulfilling the
obligations hereunder. The one exception to this requirement is
defined in Section 4(b), in which Digirad and QuickSil will
disclose process technology to a second source [***].
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(b)
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The term
“information” as used in the here above paragraphs
and
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