<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
DECEMBER 17, 1999
CELERITY SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-23279 52-2050585
- ----------------- ---------------- -------------------
(State or Other (Commission File (IRS Employer
Jurisdiction of Number) Identification No.)
Incorporation)
1400 Centerpoint Boulevard
KNOXVILLE, TENNESSEE 37932
----------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, including
area code: (865) 539-5300
----------------------------------------------
(Former Address, if changed since last report)
- --------------------------------------------------------------------------------
<PAGE>
THIS FORM 8-K CONTAINS FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS INVOLVE
VARIOUS RISKS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
EXPRESSED IN SUCH FORWARD LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES
INCLUDE, BUT ARE NOT LIMITED TO: CELERITY SYSTEM INC.'S ("CELERITY") HISTORY OF
LOSSES AND NEED FOR FINANCING, MARKET DEMAND FOR CELERITY'S PRODUCTS, SUCCESSFUL
IMPLEMENTATION OF CELERITY'S PRODUCTS, COMPETITIVE FACTORS, THE ABILITY TO
MANAGE CELERITY'S GROWTH AND THE ABILITY TO RECRUIT ADDITIONAL PERSONNEL AND
OTHER RISKS DETAILED FROM TIME TO TIME IN CELERITY'S FILINGS WITH THE SECURITIES
AND EXCHANGE COMMISSION ("COMMISSION"), INCLUDING BUT NOT LIMITED TO, THOSE
DESCRIBED UNDER THE CAPTION "DESCRIPTION OF BUSINESS - RISK FACTORS" IN
CELERITY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER 31,
1998, CELERITY'S REGISTRATION STATEMENT ON FORM S-3 (REGISTRATION NO. 333-81099)
AND CELERITY'S CURRENT REPORTS ON FORM 8-K FILED WITH THE COMMISSION.
Item 5: OTHER EVENTS
The following disclosure is qualified in its entirety by the Lease
and Manufacturing Agreement, attached as Exhibits 99.1 and 99.2, respectively.
LEASE
On December 17, 1999, Celerity entered into a Lease Agreement with
Andy Charles Johnson, Raymond Perry Johnson and Tommy F. Griffin. Pursuant to
the terms of the lease, Celerity will occupy approximately 7,420 square feet
of office and warehouse space at 122 Perimeter Park Drive, Knoxville,
Tennessee. The term of the lease will be from January 15, 2000 to January 14,
2003, with an option to renew for an additional three-year period. Monthly
lease payments will average approximately $5,000 per month plus utilities and
certain other maintenance expenses. Celerity intends to pursue a settlement
of its outstanding obligations under its prior lease. No assurance can be
given that a settlement will be reached at all or on terms satisfactory to
Celerity.
MANUFACTURING AGREEMENT
As of November 30, 1999, Celerity entered into a Manufacturing
Agreement with Primax Electronics, Ltd ("Primax") and Global Business Group,
Ltd. ("Global"). Pursuant to the terms of the Agreement, Global/Primax will
manufacture Celerity's T 6000 digital set top box. Celerity has placed a
purchase order for 47 units for testing and pre-production acceptance. The term
of the Agreement is for two years, and is automatically renewed for one-year
terms. Either party may terminate the Agreement at any time, for any reason,
upon 90 days advance notice.
THREATENED LITIGATION
There is no pending litigation against Celerity; other than a claim
for approximately $6,000 and claims of Celerity's landlord as described in
Celerity's prior filings with the Securities and Exchange Commission,
although certain creditors have threatened litigation if not paid. Celerity
is seeking to make arrangements with creditors. There can be no assurance
that any claims, if made, will not have an adverse effect on Celerity.
Item 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Lease, dated December 17, 1999, between Andy
Charles Johnson, Raymond Perry Johnson, Tommy F.
Griffin. and Celerity.
99.2 Manufacturing Agreement, dated November 30, 1999,
between Celerity, Primax and Global.
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 29, 1999
CELERITY SYSTEMS, INC.
By: /s/ Kenneth D. Van Meter
-------------------------------------
Kenneth D. Van Meter
President and Chief Executive Officer
<PAGE>
EXHIBIT 99.1
LEASE
THIS LEASE, made and entered into this 17th day of December 1999 by and
between Andy Charles Johnson, Raymond Perry Johnson, Tommy F. Griffin of Knox
County Tennessee, hereinafter called Landlord, and Celerity Systems, Inc., a
Delaware Corporation, hereinafter called Tenant.
WITNESSETH, That Landlord, in consideration of the rents hereinafter
reserved, and the covenants and agreements hereinafter expressed to be kept,
performed and fulfilled by Tenant, does by these presents rent and lease unto
Tenant, and Tenant does take for a period of three (3) years beginning on the
15th day of January 2000 and ending on the 14th day of January 2003, the
following described premises, situated in Knox County, Tennessee, and
particularly described as follows:
Being approximately 7420 sq. ft. of office and warehouse space located
in the building at 122 A and B Perimeter Park Drive in Knoxville, Tennessee as
shown on the attached floor plan marked Exhibit A.
TO HAVE AND TO HOLD said premises, with all rights, privileges and
appurtenances thereto belonging, unto Tenant, for and during the term as
hereinbefore provided, and Landlord covenants with Tenant to keep Tenant in
quiet possession of said premises during the term of this lease, provided Tenant
shall pay the rent and keep and perform the covenants and agreements as
hereinafter provided.
1. Tenant hereby covenants and agrees to pay rental at the
annual rate of Sixty Thousand ($60,000.00) Dollars payable in equal month
installments on the FIRST day of each and every month, in advance, without
demand, at the office of Landlord or his designated agent. PENALTY CLAUSE: if
the rental as set out above is not paid within ten days after the due date a
late, charge equal to 5% of the monthly rent shall be assessed against the
Tenant and shall be due and payable on demand.
2. Tenant shall pay for janitorial service, water, gas, heat,
electricity, air-conditioning and other utilities used on said premises unless
otherwise expressly stated herein.
3. Tenant further agrees that said premises shall be used for
office and light assembly and for no other purpose.
4. Neither this lease nor any interest therein, whether legal,
or equitable, shall be mortgaged, pledged, hypothecated, assigned or transferred
by Tenant, voluntarily or by operation of law, without the consent in writing of
Landlord. Any assignment, receivership,
<PAGE>
bankruptcy or other such proceedings by or against Tenant whether voluntarily or
involuntarily, shall at the option of the Landlord constitute a forfeiture of
this lease, and no court or officer thereof shall have the right or power to
transfer this lease, or any interest therein, without consent in writing of
Landlord. Tenant agrees that he will not sublet said premises or any part
thereof without the consent in writing of Landlord.
5. Landlord agrees to keep in good repair the roof, gutters,
downspouts, sidewalks and structural potions of the buildings, but nothing more.
Structural defects resulting from Tenant use shall be repaired at Tenant's
expense. Landlord assumes no responsibility to Tenant or third party in case of
non-repair of said roof, gutters, downspouts, structural portions and sidewalks,
or for any damage resulting from such non-repair, until Tenant has notified
Landlord of such non-repair and until landlord has had a reasonable length of
time thereafter in which to make repairs. All other repairs to lease premises
including, but not limited to, plumbing, writing, heating and air-conditioning
equipment*, light fixtures, light tube and bulb replacement, doors, windows,
floor coverings, locks, key replacement and broken glass are to be at Tenant's
expense. At the end of the term or upon forfeiture declared, Tenant agrees to
deliver leased premises peaceably to Landlord in good order and condition as
they now are, reasonable wear and tear or loss by fire (not the fault of Tenant,
his agents or assigns) excepted. Tenant agrees upon termination of this lease by
forfeiture or otherwise, to pay for all damages done to leased premises by
Tenant, his agents, servants, or assigns, which have not been properly repaired,
and further agrees to remove all rubbish and litter from the premises and to
leave the floors in a clean condition. *See Paragraph 21.
6. Tenant may not make decorations, alterations, additions and
improvements on or to the leased premises without the consent in writing of the
Landlord. All such decorations, alterations, additions and improvements made
shall become and be the property of Landlord and shall remain and be surrendered
with the premises as a part thereof upon the termination of this lease by
forfeiture or otherwise. However, any trade fixtures placed on said premises by
Tenant, not actually becoming a part of the realty, may be removed by the Tenant
during the term of this lease or at the termination thereof, provided Tenant has
fully complied with all the provisions of this lease and provided any damages
resulting therefrom shall be repaired at the expense of Tenant.
7. If at any time the leased premises, or the building of which
the leased premises are a component part, should be damaged by fire or other
major casualty not the fault of Tenant, and if the cost of repairing the damage
should not exceed 25% of the value of the building, then the Landlord shall as
soon as practicable repair the damage caused by said fire or other casualty. If
however, the damage should exceed 25% of the value of the building, then
Landlord shall have the option of either restoring said premises as set out
above, or terminating this lease as of the date of fire or other casualty. If
the damage should render the leased premises uninhabitable, the rental from the
date of fire, or other major casualty, not the fault of Tenant, to the date of
the completion of the restoration of the premises shall be abated, such
abatement being proportionate to the loss of occupancy sustained. If the damage
is so extensive as to amount practically to the total destruction of leased
premises, either Tenant or Landlord shall
-2-
<PAGE>
have the right to cancel this lease by giving written notice within 90 days
after the date of damage, and the rental shall be apportioned to the date of the
damage.
8. Tenant covenants and agrees that he will not do or permit to
be done on leased premises anything that will increase the rate of fire
insurance on the premises or contents. If because of any act or omission on the
part of the Tenant the rate of fire insurance on said premises is increased,
Tenant agrees to pay on demand such increase. Tenant covenants and agrees to
comply with all laws, regulations and ordinances of the Federal, State and
Municipal governments and their Departments applicable to the leased premises,
and to comply with the requirements of the Board of Fire Underwriters.
9. Tenant covenants and agrees to maintain the leased premises
in a safe and non-negligent manner and agrees to keep the snow and ice off the
sidewalk in front of the premises. Tenant covenants and agrees that he will
indemnify and save harmless the Landlord and Landlord's agent from any and all
fines, judgments, suits, claims, demands and actions of any kind against
Landlord by reason of any breach, violation or nonperformance of any laws,
regulations or ordinances by the Tenant. Tenant shall protect, indemnify and
hold harmless the Landlord and Landlord's agent against all claims by third
persons for injuries, whether to person or property, occurring on the leased
premises. Tenant agrees to purchase and maintain insurance in a reputable
company during the period of the lease providing protection to Landlord,
Landlord's agents and Tenant in the amounts and against the liabilities as
follows:
a. Public liability insurance with limits of not less than
$1,000,000 for each occurrence. Combined Single Limit for bodily injury and
property damage. Said insurance should also cover personal injury, products
coverage, and the contractual liability of the Tenant under this section of the
lease, and contain a 30 day notice of cancellation clause.
b. Plate glass insurance covering all plate glass in the
premises in the amount of actual value of replacement.
c. The Landlord and Tenant agree to carry fire and extended
coverage on their respective property and interest in the demised premises and
mutually release each other from any claims for losses or damage which may be
covered by the Standard Tennessee Form of Fire and Extended Coverage Insurance.
Original policies or certificate of insurance will be filed with the Agent for
the Landlord, and ten days prior to expiration of policies, renewal certificates
or binders will be delivered Landlord's Agent.
10. Landlord reserves the right to control the size, character
and location of any signs that Tenant may desire to place upon said premises,
and may require Tenant to remove any sign which in the judgment of Landlord may
be either objectionable or dangerous. Landlord, in person or by Agent, shall
have the right at all reasonable times to enter the premises to inspect same or
to make such repairs, additions or alterations as Landlord deems necessary for
the
-3-
<PAGE>
preservation of said building or for safety, or to show the premises to
prospective Tenants or purchasers.
11. Tenant has examined the premises before signing this lease
and is satisfied with the condition thereof, excepting only as may hereinafter
be specifically provided. Tenants act of taking possession shall be conclusive
evidence against Tenant that the premises were in good order and satisfactory
condition when Tenant took possession thereunder. No promise of Landlord to
alter, remodel, improve, repair, decorate or clean the premises or any part
thereof and no representation respecting the condition of the premises or the
building has been made by Landlord or his Agent or Tenant, except as the same is
contained herein or made a part hereof.
12. No waiver by Landlord at any time or any forfeiture for the
breach of any covenant by Tenant shall impair the right of Landlord to rely upon
such forfeiture for any subsequent breach, and acceptance by the Landlord of a
potion of all of rent past due shall not constitute a waiver of the forfeiture
or of the breach of any covenant or condition or of any damages due Landlord by
Tenant. No waiver of any of the provisions of this lease shall be binding upon
landlord unless in writing, signed by him or his authorized agent.
13. In the event that Tenant shall not pay the rent within ten
days after same becomes due, or shall violate or fail to perform any of the
covenants, agreements, or conditions of this lease, or shall abandon the
premises or leave them vacant, or discontinue using premises for purpose
provided herein, the landlord shall have the right, at his option, immediately
to terminate this lease as fully as though the term thereof had expired, by
mailing a written notice addressed to Tenant at the premises, which shall be
immediately binding upon Tenant; and Landlord, by himself or his Agents may
re-enter said premises by summary proceedings, by force, or otherwise, take
possession thereof, and remove all persons and property therefrom, and Tenant
shall not thereby be released from the rent past due, or from the payment of
damages for the breach of this lease by Tenant, which damages including
reasonable attorney's fee, Landlord shall have the right to recover. If Landlord
shall rightfully seek to obtain possession of leased premises, and shall be
obstructed therein by Tenant, his agents or assigns, and suit shall result in
which suit Landlord is successful, Tenant shall pay to the Landlord a reasonable
attorney's fee and cost incurred by Landlord in prosecuting said suit. Landlord
shall have a lien upon all fixtures and other property of Tenant found in said
premises to secure the payment of rentals, damages, attorney's fees and costs
due Landlord by Tenant.
14. Should Tenant occupy said premises after the termination of
this lease, such occupancy shall in no event constitute a renewal of this lease,
but shall be a month to month agreement subject to and in accordance with the
terms of this lease. During the month to month agreement, either party can
cancel this agreement by giving the other party 30 days advance written notice
from the date the rent is paid to.
15. If the whole or any part of demised premises shall be taken
or condemned by a competent authority for any public or quasi-public use or
purpose, then, and in that event, the term of this lease shall cease and
terminate from the date when the possession of the part so
-4-
<PAGE>
taken shall be required for such use or purpose, and without apportionment of
the award. The current rental however, shall in any case be apportioned.
16. If unsuccessful legal action is taken for any reason by
Tenant against Landlord or Landlord's agent then Tenant shall pay all attorney
fees and costs resulting therefrom.
17. Whenever either party desires or is required to give any
notice to the other party hereunder, such notice shall not be deemed to have
been duly given unless in writing and forwarded by registered mail addressed as
follows:
To the Landlord at (address) Tate and McCallie, Inc., Post
Office Box 51608, Knoxville, Tennessee 37950.
To the Tenant at (address) Celerity Systems, Inc., 122 A
Perimeter Park Drive, Knoxville, TN.
18. The burden of any commercial lease rental tax which may be
hereinafter lawfully imposed by government authority shall be borne by Tenant.
19. Tenant agrees to pay annually its pro rata share of any
increase in property taxes and fire insurance premium levied against the
premises over and above the property taxes and insurance premiums paid for the
year 2000. Tenant shall pay the pro rata share of any increase in taxes and fire
insurance premiums within thirty (30) days after the Landlord has presented
Tenant with evidence of payment of taxes and insurance premiums.
20. The rear 3920 sq. ft. of warehouse space will be available
not later than February 1, 2000. The second month's rental will be prorated
according to the date Tenant occupies the rear warehouse space based on $1500.00
per month.
21. Landlord will maintain the HVAC system for the first year of
the lease except for normal monthly maintenance which shall be paid by Tenant.
Starting the second year of the lease, Tenant's maximum cost for HVAC
maintenance will be $500.00 per year not including normal monthly maintenance.
Tenant must obtain Landlord's approval for all HVAC maintenance expenditures
above $500.00 per year. Tenant will maintain the landscaping. Landlord will pay
for major parking lot repairs.
22. Tenant will pay landlord the first month's rental when this
lease is signed. In addition, when the lease is signed, Tenant will pay Landlord
a $20,000 non refundable security deposit which will be used as the last four
month's of the original lease term. Landlord has the right to apply said sum
towards any previous month's rent in the event of an earlier default by Tenant.
23. Tenant has the option to renew this Lease for a three year
period from January 15, 2003 thru January 14, 2006 under the same terms and
conditions of the original lease except
-5-
<PAGE>
the rental will be $5,450 per month. Tenant must notify Landlord in writing by
July 15, 2002 of their desire to exercise said option.
24. If Tenant exercises the first option, then Tenant has an
additional three year option to renew from January 15, 2006 thru January 14,
2009 under the same terms and conditions of the original lease except the
rental will be $5,940.50 per month. Tenant must notify Landlord in writing by
July 15, 2004 of their desire to exercise said option.
It is agreed by all parties that the rents herein mentioned
shall be paid through Tate and McCallie, Inc. or their assigns, who shall retain
a 3% commission as their Agency fee on all rents accruing under this lease,
including any extension thereof or the term of any option mentioned herein. It
is understood that Tate and McCallie, Inc. is acting solely in the capacity of
Agent for Landlord to whom Tenant must look as regards all covenants, agreements
and warranties herein contained, and said Tate and McCallie, Inc. shall never be
liable to Tenant as regards any matters which may arise by virtue of this lease.
IN WITNESS WHEREOF, the parties have hereunto signed their names and
affixed their seals the day and year first above written.
LANDLORDS TENANT:
/s/ Andy Charles Johnson CELERITY SYSTEMS, INC.
- ------------------------
ANDY CHARLES JOHNSON
BY:/s/ Kenneth D. Van Meter
/s/ Rayond Perry Johnson ------------------------
- ------------------------ President/CEO
RAYMOND PERRY JOHNSON
/s/ Tommy F. Griffin
- -----------------------
TOMMY F. GRIFFIN
-6-
<PAGE>
If for 3 years or more lease must be acknowledged and placed of record.
STATE OF TENNESSEE
COUNTY OF KNOX
Personally appeared before me Raymond Johnson, Andy Johnson, Tommy
Griffin, a Notary Public in and for said County the within named bargainor
______________________ with whom I am personally acquainted, and who
acknowledged that _____________ he executed the within instrument for the
purposes therein contained.
Witness by hand and official seal at office, this 20th day of December 1999.
My commission expires 2-27-2002
/s/ Terri Lynn Gingrich
-----------------------
Notary Public
STATE OF TENNESSEE
COUNTY OF KNOX
Personally appeared before me Raymond Johnson, Andy Johnson, Tommy
Griffin, a Notary Public in and for said County the within named bargainor
_______________________ with whom I am personally acquainted, and who
acknowledged that __________________ he executed the within instrument for the
purposes therein contained.
Witness by hand and official seal at office, this 20th day of December 1999.
My commission expires 2-27-2002
/s/ Terri Lynn Gingrich
-----------------------
Notary Public
STATE OF
COUNTY OF
On this the ____ day of ___________________19__, before me appeared
____________________to me personally known, who being by me duly sworn, did say
that is the _______________________ President of the _________________________
and that the seal affixed to said instrument is the corporate seal of said
corporation and that said instrument was signed and sealed in behalf of said
corporation by authority of its Board of Directors, and said acknowledged said
______________________________ instrument to be the free
act and deed of said corporation.
Witness by hand and official seal at office, this ___ day
of ______________19____.
My commission expires_____________________________________________Notary Public
-7-
<PAGE>
STATE OF TENNESSEE
COUNTY OF KNOX
On this the 17th day of December 1999, before me appeared Kenneth D.
Van Meher to me personally known, who being by me duly sworn, did say that is
the President of the Celerity Systems, Inc. and that the seal affixed to said
instrument is the corporate seal of said corporation and that said instrument
was signed and sealed in behalf of said corporation by authority of its Board of
Directors, and said President acknowledged said instrument to be the free act
and deed of said corporation.
Witness by hand and official seal at office, this 17th day of December 1999.
My commission expires 3-27-02
/s/ D Moseley
--------------
Notary Public
-8-
<PAGE>
Exhibit 99.2
GLOBAL / PRIMAX
GLOBAL BUSINESS GROUP, LTD PRIMAX ELECTRONICS
285A CROOKED STICK DRIVE 6F, 159 KANG NING STREET
ALPHARETTA, GEORGIA 30004 HSI CHIH, TAIWAN, ROC
TELEPHONE: 770-740-0733 TELEPHONE: 886-2-2695-3073
FAX: 770-740-0535 FAX: 886-2-2695-7064
E-MAIL: [email protected] E-MAIL: [email protected]
- --------------------------------------------------------------------------------
MANUFACTURING AGREEMENT
This Agreement is entered into on November 30, 1999 between Celerity Systems a
USA corporation ("Buyer") and Primax Electronics, Ltd., a Republic of China
corporation and Global Business Group, Ltd. a Georgia, USA corporation
("Supplier").
The parties agree as follows:
1. MASTER AGREEMENT: Supplier agrees to manufacture Celerity T 6000 Turn Key
Unit in accordance to the specifications provided. Product will be
manufactured according to the terms of this agreement.
2. CONFORMANCE OF SPECIFICATIONS: Supplier shall manufacture the product in
accordance with the current specifications provided and with any updates to
the specifications and other requirements reasonably provided by the buyer
from time to time.
3. TESTING AND PRE-PRODUCTION ACCEPTANCE: Supplier will deliver 47 units per
specifications outlined in Buyer's form of Purchase Order.
4. PRICE: Price is FOB Plant starting at $550 each. Price to be reduced with
joint efforts for redesign. Subject to the foregoing, prices will be
determined by each Purchase Order.
4.1 The price of the product may be changed by Supplier if Buyer
requests changes to the specification and such changes cause an
increase in the cost to manufacture the product or if component
costs increase beyond reasonable variations in pricing. Any price
changes will be based upon mutual agreement of the parties and with
advance notice to the Buyer of no less than 30 days.
5. Orders, Forecasts and Cancellation:
5.1 Purchase Orders: To order the product under this agreement, Buyer will
issue purchase orders to the Supplier which state the quantity of the
product and the delivery schedule. Supplier will provide sufficient
agreed upon production capacity to meet all Buyer orders up to a
maximum number of units provided in the most recent forecast. Supplier
efforts may include, but not limited to the addition of manufacturing
equipment.
5.2 Forecasts: Each Quarter the Buyer will provide Supplier with 1 Year
rolling forecast of purchase requirements. All orders for delivery
within 90 days are considered firm. Orders beyond 90 will not be firm
and will be subject to change. Supplier will ship the product within
(90) days of receipt of Buyer purchase order or on a shorter interval
if mutually agreed to. Any component lead time longer than 90 days will
be carried in inventory with the written consent of the Buyer and Buyer
is liable for this stock.
<PAGE>
6. Inspection, Quality Control and Testing:
6.1 Quality Control: Supplier will manufacture Products in accordance with
the specifications, standards of quality control and test procedures
required by Buyer and will also require its suppliers' to meet such
specifications and standards. Buyer or its representative may inspect
Supplier's facilities during normal business hours where the product is
manufactured by giving Supplier reasonable advance notice
6.2 Product Testing: Buyer, Buyer's customers, or their representatives,
may inspect and test all products delivered under this Agreement for
conformance with the specifications within thirty (30) days from the
receipt of the product and Buyer may reject products which do not
conform to the Specifications. If products are rejected by Buyer,
Supplier shall have the right to demonstrate full compliance to the
Specifications and shall make the products comply with the
Specification within (30) days after Buyer's notice of rejection.
7. Tooling and Equipment:
7.1 Tooling Orders: Buyer may request Supplier to build tooling for use in
manufacture of the product by issuing a purchase order for such
tooling.
7.2 Buyer Delivered Tools: Buyer may provide Supplier with tools and
equipment for use in performance of this agreement. Such tools and
equipment shall be identified with complete specifications.
8. PACKAGING AND SHIPPING: Supplier shall package the product and place with a
carrier designated by Buyer or a carrier mutually agreed to by Buyer and
Supplier. Packaging will comply with the requirements given in the
Specifications, or if none are given, then with industry standards for such
products. Supplier will be responsible for complying with all importation
packaging and marking specifications and meeting port of entry requirements
and for all costs related to packaging, marking and meeting port of entry
requirements. As between Supplier and Buyer, risk of loss will pass to Buyer
upon commencement of shipping.
9. Payment Terms and Taxes:
9.1 Payment terms: Buyer will submit payment for the product with the
Purchase Order in accordance with the Purchase Order Terms and
Conditions.
9.2 Buyer shall be responsible for payment of all applicable taxes on the
products purchased, specifically excepting those related to normal
business activities of Supplier, such as real estate, income taxes and
corporate taxes.
10. DELIVERY OF PRODUCTS: Delivery of the Product ordered under this agreement
shall be FOB Suppliers Plant. If for any reason Supplier is unable to make
complete delivery on the delivery date specified in the Buyer Purchase
Order, Supplier shall notify Buyer ten (10) days in advance of the delivery
date or earlier
<PAGE>
as soon as the delay becomes evident, and shall explain the reason for the
delay and state the date on which delivery can be made. If the delay in
delivery is unacceptable to Buyer, Supplier will use its best efforts to
provide the product on a revised schedule acceptable to Buyer. Supplier
shall bear all additional costs in providing the Product to Buyer on the
revised schedule, including but not limited to use of overtime labor and/or
air shipments. If no acceptable revised date can be made, Buyer may cancel
such orders at no cost or penalty to Buyer. However, if the original delay
was caused by factors under Buyer control, Buyer will pay all additional
costs in meeting the delivery schedule.
11. REPRESENTATIONS AND WARRANTIES: Supplier represents and warrants to Buyer as
follows
11.1 All products manufactured and delivered under this agreement will
comply with the specifications and will be free from all defects in
workmanship and materials for a period of six (6) months from receipt
of product.
11.2 Product manufactured and delivered under this Agreement will be good
and marketable, free all liens, security interests, encumbrances or
other rights of any third party.
12. LIMITATION ON LIABILITY: NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, EVEN IF EITHER PARTY IS ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.
13. CONFIDENTIAL INFORMATION: This agreement under the terms of the Bilateral
Non-Disclosure Agreement between the parties
14. OWNERSHIP OF INTELLECTUAL PROPERTY: Supplier shall retain any and all right,
title and interest in and to the patents and patent applications and any
continuation or divisional of such patents and and patent applications held
or owned by Supplier used in the manufacture and redesign of the product.
Buyer shall retain and own all right, title and interest in and to the
patents and patent applications and any continuation or divisions of such
patents or patent applications and other intellectual property held or owned
at any time by Buyer.
15. Term and Termination:
15.1 Term: This Agreement shall begin on the date of execution and shall
continue for an initial term of two (2) years. Thereafter, it shall be
automatically renewed for subsequent terms of one (1) year each, unless
either party gives written notice of its intent not to renew at least
ninety (90) days prior to the expiration of the initial or any
subsequent term.
15.2 Termination: Either party may terminate this agreement at any time, for
any reason of its own, with 90 days advance notice.
15.3 Obligations Upon Termination: Supplier shall stop manufacture of the
product except as permitted by Buyer in writing or with respect to
pending orders, as required. Subject to and according to the terms of
terms of this agreement, upon termination Buyer shall pay for any
completed Product, Inventory or work in process covered by Purchase
Order. Supplier shall use its
<PAGE>
best efforts to mitigate the inventory of product or components and
shall assist Buyer in the orderly transition of the termination.
15. Survival: Sections 11, 12, 13, 14, 15, 16, 17 and 18 shall survive
termination of this agreement.
16. Indemnification:
16.1 Supplier agrees to indemnify, hold harmless and defend Buyer and their
customers from any and all damages, costs and expenses incurred in
connection with a claim that Supplier's intellectual Property or any
component part used by Supplier in the manufacture of the Product,
infringes the patent, copyright, or other intellectual property right
of any third party, or in connection with a claim which, if true, would
constitute a breach of Supplier warrantees under this agreement.
Provided, however, that Supplier shall not be responsible to the extent
that Buyer's use in combination with any third Party hardware or
software products gives rise to such claim.
16.2 Buyer agrees to indemnify, hold harmless and defend Supplier and its
vendors from any and all damages, costs and expenses incurred in
connection with a claim that Specifications of Products infringe the
patent, copyright or other intellectual property right of any third
party.
17 COMMUNICATION: All communication will be in the English language.
18 General
18.1 Governing Law: This agreement shall be construed and controlled under
the laws of United States of America and the state of Georgia.
18.2 Relationship: Supplier shall at all times act as an independent
contractor and shall be solely responsible for any and all employee
taxes. Nothing in this agreement shall be construed creating a
partnership, joint venture or agency relationship. Supplier has no
authority to make, assume or create any representation, warranty,
agreement, guarantee, claim or settlement on behalf of Buyer with
respect to the Product, Specifications or otherwise.
18.3 Entire Agreement: This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this
Agreement and supersedes all prior and contemporaneous agreements or
communications. It shall not be modified except by written agreement
dated subsequent to the date of this Agreement and signed on behalf of
Supplier and Buyer by their respective duly authorized representatives.
No waiver of any provision of this Agreement shall constitute a waiver
of any prior, concurrent or subsequent breach of the same or any other
provisions hereof and no waiver shall be effective unless made in
writing and signed by an authorized representative of the waiving
party.
18.4 Government Approvals: The parties agree to comply with all laws and
regulations applicable to their respective activities in connection
with this agreement, including, without limitation, all labor and
environmental requirements. Supplier shall obtain and maintain in
effect, any government approvals, authorizations required for
performance of all of the terms and conditions of this Agreement.
<PAGE>
Supplier shall obtain, maintain and arrange for the safety site
certifications required in connection with the product manufactured
for the Buyer. Buyer agrees to pay reasonable costs associated with
securing such approval by safety agencies. Supplier shall defend,
indemnify and hold Buyer harmless from all claims, costs, expenses,
fines, fees and damages arising out of any claim, brought against
Buyer based on Supplier's performance under this Section 18.4.
18.5 Customs Documents: Supplier shall cooperate with Buyer to provide
documents regarding Product manufacture that may be required.
18.6 Force Majeure: Neither party shall be liable for any delay or non
delivery of products caused by the occurrence of any material shortages
affecting suppliers generally, Acts of God or War. If such delays
continue for a period of sixty (60) days, Buyer shall have the right to
cancel any pending purchase orders for Products so delayed, without any
penalty or liability to Buyer.
18.7 Agency: Primax Electronics, Ltd. submits to jurisdiction in the state
of Georgia and appoints Global Business Group, Ltd. as its agent for
service of process.
PRIMAX ELECTRONICS, LTD. CELERITY SYSTEMS
/s/ Brian Yang /s/ Kenneth D. Van Meter
- ----------------------- ------------------------
BY BY
- --------------------------- ------------------------
Brian Yang Kenneth D. Van Meter
Vice President President and CEO
December 16, 1999 12/24/1999
- --------------------------- ----------
Date Date
GLOBAL BUSINESS GROUP, LTD.
/s/ Dale W. Olson
BY
- ----------------------------
Dale W. Olson
President
December 16, 1999
- ---------------------------
Date
