exv10w3



 








Exhibit 10.3




SPECTRAL RESPONSE, INC.AND LAS VEGAS GAMING, INC.

SUBCONTRACTOR PURCHASE AGREEMENT NO. 052506-LVGI-01




Table of Contents




	 	 	 	 	 
	Article	 	Page
	 
	 	 	 	 
	1
	 	Purpose of Agreement	 	1
	2
	 	Term	 	1
	3
	 	Purchase Orders	 	1
	4
	 	Forecast and Stocking Quantity	 	1
	5
	 	Price	 	2
	6
	 	Terms and Conditions	 	3
	7
	 	Conformity Determination	 	3
	8
	 	Warranty	 	3
	9
	 	Limitation of Liability	 	5
	10
	 	Termination of Agreement	 	5
	11
	 	Force Majeure	 	6
	12
	 	Proprietary Information and Confidentiality	 	7
	13
	 	General Provisions	 	9
	 
	 	 	 	 
	Exhibits	 	 
	 
	 	 	 	 
	I
	 	Pricing	 	I-13
	II
	 	Operational Parameters	 	II-13
	III
	 	Repair and Refurbishment	 	III-15






 









 





SUBCONTRACTOR PURCHASE AGREEMENT NO. ______



THIS AGREEMENT and its Exhibits (“Agreement”) is entered into on :___, by and between
Spectral Response, Inc., a Georgia corporation (“Seller”) having a principal place of
business at 3741 Venture Dr., Suite 350, Duluth, GA. 30096 and Las Vegas Gaming, Inc. having
a principal place of business at: 4000 West Ali Baba Lane, Suite D Las Vegas, NV 89118 and
its affiliates and subsidiaries (“Buyer”).




Article 1 — Purpose of Agreement





	1.01.	 	This Agreement shall set forth the provisions under which Buyer intends to buy
and Seller agrees to sell custom-manufactured Units (“Items” or “Products”) described in Exhibit I.





Article 2 — Term



2.01. The “Initial Term” of this Agreement shall commence as of 05/25/2006, and continue
until 05/25/2007. This Agreement shall automatically continue in effect for consecutive
twelve month periods after the Initial Term unless either party shall provide to the other
written notice of termination at least one hundred eighty (180) days prior to the
termination date of the Initial Term or 90 days prior to the end of any subsequent term.




Article 3 — Purchase Orders



3.01. Seller shall confirm acceptance of all of Buyer’s purchase orders in conformance with
the terms of this Agreement within three (3) working days and acknowledge in writing within
ten (10) working days of receipt of a hard copy purchase order. Any acceptance shall be at
Seller’s option and shall be subject to the availability of materials, equipment, labor
force and similar manufacturing capabilities as determined by Seller at its absolute
discretion.



3.02. Buyer shall provide an estimated six (6) month rolling forecast to Seller of Buyer’s
anticipated purchase orders as provided in paragraph 4.01. Pricing shall be renegotiated if
bi-annual order quantities vary from the forecasts by plus or minus 20% of the amount of
such forecast. The quantities Buyer may purchase hereunder shall not be limited to the
forecast.




Article 4 — Forecast and Stocking Quantity



4.01. On a monthly basis, Buyer will provide Seller with a written six (6) month rolling
forecast of Buyer’s projected requirements, including quantities and delivery dates, for
Seller’s planning purposes (hereinafter the “Forecast”).



4.02 Once a projected requirement falls within ninety (90) days of when it would be due for
delivery to Buyer pursuant to Forecast, both the quantity and delivery date become firm, and
can only be revised upon Seller’s written approval. Notwithstanding anything to the
contrary in




 









 




this Agreement, Buyer shall be required to pay in full the amount of all orders which have become firm.



4.03. For projected requirements outside the ninety (90) day period, the quantities and
delivery dates can be decreased at Buyer’s option (subject to the terms hereof), and
increased with Seller’s approval. Seller shall not incur any internal labor costs for
requirements outside such ninety (90) day period.



4.04. Upon Buyer providing a purchase order or other commitment to Seller, Seller shall use
its best efforts to obtain any materials, components or equipment (collectively “Inventory”)
which may be necessary to meet the requirements of a Forecast, including without limitation,
items which may be unique, specially manufactured or required to be purchased in bulk.



4.05. In the event that Buyer does not meet the production quantities contained in a
Forecast, Buyer shall, within ten (10) days of notice from Seller, pay: (1) the cost of all
such remaining Inventory which was not used in the production of products for Buyer, and
Seller shall deliver such Inventory to Buyer upon such payment, (2) the cost of any “back
charges” or other third party costs incurred by Seller as a result of such reduced
production, (3) the difference between the re-calculated cost of the products (including
without limitation all direct and indirect costs) which were delivered to Buyer and the cost
which Seller has quoted to Buyer for such products, and (4) a 12.5% overhead cost
allocation, calculated by multiplying such percentage by the totals determined under items
(1), (2) and (3) of this paragraph 4.05.




Article 5 — Price



5.01. Subject to the terms of this Agreement, prices for the Products shall be as listed in
Exhibit I. Upon payment to Seller of the purchase price set forth herein, title shall vest
in Buyer.



5.02. The purchase price for any Product, together with all applicable shipping charges,
packaging charges, other special charges and taxes, shall be payable in full to Seller
within 30 days after Seller ships such Product. Buyer shall pay a late payment charge of 1.5
percent per month, or the maximum rate permitted by applicable law, whichever is less, on
any unpaid amount for each calendar month or fraction thereof that any payments are in
arrears to Seller. All costs of collection of the purchase price for any Product, including
without limitation court costs and attorney fees, shall be paid by Buyer.



5.03. In the event the costs for inventory changes by more than 1% due to circumstances
beyond Seller’s reasonable and customary control, Seller shall promptly notify Buyer who
shall have the option to either cancel the applicable purchase order and incur all costs of
Seller determined in accordance with paragraph 4.05, or pay Seller such additional costs.




Article 6 — Terms and Conditions




 









 




6.01. The operational parameters of this Agreement are defined in Exhibit II.




Article 7 — Conformity Determination



7.01. Each Item delivered must conform to Buyer’s specifications. Upon Buyer’s request each
item can be serialized per Buyer’s standard serialization procedure which will include date
code. Buyer shall notify Seller of any Item failing said conformity within the warranty
period of Article 8 including the defect and the cause of the defect within 10 days of
Buyer’s knowledge of such defect. In such event, at Seller’s option, Seller shall:



(A) Repair or replace Items returned to Seller, and return repaired or replacements Items to Buyer within ten (10) working days of receipt subject to availability of materials; or

(B) Repair Items at Buyer’s designated site within ten (10) days after receipt of notice; or

(C) Issue credit for or refund the purchase price of all Items returned by Buyer, within fifteen (15) days of receipt by Seller.



Any other corrective actions shall be acceptable only if Seller gives prior written approval.



7.02. To the degree that Buyer does not set or provide contrary specifications for Products,
Seller intends to use such industry accepted standards as it may deem reasonable, including
without limitation the IPC-A-610 standards or any other applicable industry or IPC-ANSI
standards.



7.03. Buyer may return Items supplied under this Agreement to Seller for repair or
refurbishment upon giving reasonable prior written notice to Seller. Procedures applicable
to said repair or refurbishment service shall be defined in Exhibit III. Seller agrees to
provide such repair and refurbishment service under the provisions of this Agreement, for a
period of 12 months after delivery of the last Equipment Unit to Buyer.



Buyer shall, at it sole cost, provide Seller copies of any and all software, equipment or
materials (including any required upgrades) which buyer wishes seller to use to test the
products. Any product testing shall be agreed to by mutual consent of the parties.




Article 8 — Warranty




 









 




8.01. Seller warrants that, under normal use and service, the Items shall be free from
defects in material and workmanship and shall conform to Buyer’s specifications for a period
of 6 months after shipment of such Items to Buyer. The foregoing warranty shall not be
transferable without Seller’s written approval.



8.02. If the Items fails to meet the warranties of paragraph 8.01. and Buyer gives Seller
written notice thereof during the applicable warranty period, Seller’s sole obligation shall
be to correct the failure by repair, replacement, or adjustment, as determined in Seller’s
sole discretion.



8.03. EXCEPT AND TO THE EXTENT EXPRESSLY PROVIDED IN THIS, ARTICLE 8, AND IN LIEU OF ALL
OTHER WARRANTIES, THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED
TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE, AND IN NO EVENT
SHALL ANY WARRANTIES UNDER THIS AGREEMENT EXTEND, IN WHOLE OR IN PART, TO PURCHASERS OF
BUYER’S SYSTEMS.



8.04. Buyer shall be solely responsible for the selection, use, efficiency and suitability
of the Items.



8.05. Seller shall not be liable to Buyer for the warranty provisions of this Article 8 if:



(A) Modifications are made to the Items by someone other than Seller;



(B) Attachments, features or devices are employed on the Items that are not supplied by
Seller or not approved in writing by Seller, including, but not limited to, other
components of Buyer’s Systems;



(C) A version other than the current version of the operating system software or the software
used by Seller is used on the Items; or



(D) The Items are subject to misuse or abuse.



8.06. Should a failure occur during the Warranty Period, Seller, at Seller’s option, Seller
shall make every effort to:



(A) Repair or replace Items returned to Seller, and return repaired or replacement Items to
Buyer within ten (10) days of receipt; or



(B) Repair items at Buyer’s designated site within ten (10) days after receipt; or



(C) Issue credit for or refund the purchase price of all Items returned by Buyer, within
fifteen (15) days of receipt by Seller.



Any other corrective actions shall be acceptable only if Seller gives prior written approval.




 









 




8.07. All repaired or replacement Items under these warranty provisions shall be warranted
by Seller through the remainder of the original Warranty Period or thirty (30) days,
whichever is longer.



8.08. Seller warrants that Buyer shall acquire good title to all Items, which shall be new
and contain only new material.



8.09. Seller shall not be responsible for Buyer’s field service or customer service
organizational costs.



8.10. Seller shall warranty conformance to the Buyer’s subassembly specifications. Seller
shall not warranty system compliance nor application of the products sold to Buyer.



8.11. Seller shall not be responsible for product which has been subjected to mishandling,
abuse or improper use in violation of Seller’s or Buyer’s installation and operational
instructions.



8.12. The sale of Buyer’s Systems, including the Items, to purchasers thereof shall be on
terms and conditions which shall hold Seller harmless against any and all claims of such
purchasers and which shall otherwise be consistent with the terms and conditions of this
Agreement.




Article 9 — Limitation of Liability



9.01. IN NO EVENT SHALL SELLER BE LIABLE TO BUYER OR TO CUSTOMERS OF THE BUYER FOR ANY
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE PERFORMANCE OR BREACH THEREOF, EVEN IF THE SELLER HAS BEEN ADVISED OF THE
POSSIBILITY THEREOF. SELLER’S LIABILITY, IF ANY, TO BUYER OR TO THE CUSTOMERS OF BUYER
HEREUNDER SHALL IN NO EVENT EXCEED THE TOTAL OF THE AMOUNTS PAID TO SELLER HEREUNDER BY THE
BUYER.



9.02. IN NO EVENT SHALL SELLER BE LIABLE TO BUYER OR TO CUSTOMERS OF THE BUYER FOR ANY
DAMAGES RESULTING FROM OR RELATED TO ANY FAILURE OR DELAY OF THE SELLER IN THE DELIVERY OR
INSTALLATION OF THE ITEMS OR IN THE PERFORMANCE OF ANY SERVICES UNDER THIS AGREEMENT.



9.03. Any claim arising out of or related to this Agreement must be brought no later than
one year after the cause of action has occrued.




Article 10 — Termination of Agreement




 









 




10.01. Default. In the event of a default by either party of the terms of this Agreement,
the non-defaulting party shall give the defaulting party written notice of the default and
the defaulting party shall have five (5) days to cure any monetary default and thirty (30)
days to diligently begin to cure any non-monetary default. In the event the defaulting party
should fail to cure a monetary default within such five (5) days or diligently begin to cure
a non-monetary default within thirty (30) days and diligently pursue the cure to its
conclusion, the other party shall be entitled to declare a default hereunder.



The rights and remedies given in this Agreement to a non-defaulting party shall be deemed
cumulative, and the exercise of one of such remedies shall not operate to bar the exercise
of any other rights and remedies reserved to a non-defaulting party under the provisions of
this Agreement or given to a non-defaulting party by law.



One or more waivers of the breach of any provision of this Agreement by any party shall not
be construed as a waiver of a subsequent breach of the same or any other provisions, nor
shall any delay or omission by a non-defaulting party to seek a remedy for any breach of
this Agreement or exercise the rights accruing to a non-defaulting party by reason of such
breach be deemed a waiver by a non-defaulting party of its remedies and rights with respect
to such breach.



10.02. The non-defaulting party may terminate/cancel this Agreement if an uncured default
should occur pursuant to paragraph 10.01.



10.03. In the event of any termination/cancellation of this Agreement pursuant to paragraph
1 the non-defaulting party shall have the right to:



(A) Declare all amounts owed to such party immediately due and payable;



(B) Seller shall be entitled to enter Buyer’s premises and repossess the Items, Spare Parts
and all other items supplied by Seller, for which title to which has not passed to Buyer;
and



(C) Cease performance of all of such non-defaulting party’s obligations hereunder without
liability to such for the other party.




Article 11 — Force Majeure



11.01. Neither party shall be responsible for any failure to perform due to any cause beyond
its reasonable control. These causes shall include only labor disputes, governmental
requirements and Acts of God. Upon notification, performance hereunder shall be excused
only until the conditions excusing performance cease. If an actual or potential labor
dispute delays or threatens to delay Seller’s timely performance, Seller shall immediately
notify Buyer.




Article 12 — Proprietary Information and Confidentiality




 









 




12.01. Each party may have access to or be provided with certain scientific data,
documentation and other proprietary confidential information of the other party heretofore
maintained in strictest confidence by the source party as a trade secret; and, each party is
willing to permit authorized representatives of the other party access to such confidential
information for the limited purpose of accomplishing this Agreement.



12.02. Seller may disclose to Buyer certain proprietary information, data, test results,
techniques or know-how, or permit Buyer to evaluate Seller’s products. All such technical
information (whether disclosed by Seller or ascertained by Buyer through examination and
evaluation of Seller’s products) shall be deemed confidential, proprietary, and valuable
trade secret information which is the exclusive property of Seller and is referred to herein
as “Confidential Information of Seller”.



12.03. Buyer may disclose to Seller certain proprietary information, data, test results,
techniques, or know-how or permit Seller to examine and evaluate Buyer products. All such
technical information (whether disclosed by Buyer or ascertained by Seller through
examination and evaluation of Buyer’s products) shall be deemed confidential, proprietary
and valuable trade secret information which is the exclusive property of Buyer and is
refereed to herein as “Confidential Information of Buyer”.



12.04. Buyer shall use the Confidential Information of Seller exclusively for accomplishing
this Agreement. All Confidential Information of Seller received by Buyer shall remain the
property of Seller and shall be kept confidential by Buyer and not disclosed to others
except with the prior written consent of Seller.



12.05. Seller shall use the Confidential Information of Buyer exclusively for accomplishing
this Agreement. All Confidential Information of Buyer received by Seller shall remain the
property of Buyer and shall be kept confidential by Seller and not disclosed to others
except with the prior consent of Buyer.



12.06. Each of the parties shall disclose the Confidential Information of the other party
only to such of its own employees that require the information in order to carry out this
Agreement and shall treat such Confidential Information as it would its own confidential
information. Such employees shall be notified of the proprietary nature of the Confidential
Information.



12.07. All Confidential Information disclosed in written form under this Agreement by either
party shall be clearly marked as “proprietary” or “confidential”. All Confidential
Information disclosed in any manner other that writing shall be preceded or followed by an
oral or written statement indicating that the information is confidential or constitutes
Confidential Information falling within the terms of this Agreement.



12.08. The restrictions and obligations upon the parties under this Agreement concerning
confidentiality shall expire five (5) years from the last date of this Agreement and shall
not apply to any portion of the Confidential Information of either party which:




 









 




(A) is known to the other party prior to receipt thereof under this Agreement,



(B) is disclosed without restriction to the other party in good faith by a third party who
is in lawful possession thereof and who has the right to make such disclosures;



(C) is or shall have become public knowledge, by publication or otherwise, through no fault
of the party having the obligation of confidentiality under this Agreement, or



(D) is discovered by either party completely without reference to Confidential Information
of the other party;or



(E) is transmitted by a party after receiving notification in writing from the other party
that the other party does not desire to receive any further Confidential Information.



12.09. Upon termination of the Agreement and the written request of a source party, the
recipient party shall return to the other party all written Confidential Information of the
other party or other written materials and all compilations and copies thereof received by
such party from the other, except to the degree that Seller shall deem necessary to meet any
continuing warranty or other continuing obligations of Seller hereunder.



12.10. The parties specifically acknowledge and agree that the terms and conditions of the
above restrictive covenants are reasonable and necessary for the protection of each party’s
business and Confidential Information and to prevent damage or loss to a party as a result
of any action taken by the other party not in compliance with this Agreement.



12.11. The parties hereby acknowledge and agree that any breach by either party or any of
its authorized representatives of the foregoing provisions of this Article 12 may cause the
other party irreparable injury for which there is no adequate remedy at law. Therefore, the
parties expressly agree that either party shall be entitled, in addition to any other
remedies available, to injunctive and/or other equitable relief to require specific
performance or prevent a breach under the provisions of this Agreement. However, no
liabilities shall arise from disclosure of Confidential Information not resulting from the
fault or negligence of the party to whom the information was provided hereunder.



12.12. The parties agree that the terms of this Article 12 shall be subject to the Georgia
Trade Secrets Act and that the Confidential Information of Seller and the Confidential
Information of Buyer shall be treated as a Trade Secret as provided under such Act.



12.13. Neither party shall disclose the existence or terms of this Agreement without prior
written approval of the other party. Seller shall not refer to Buyer in any promotional
literature without first obtaining the prior written consent of Buyer.




Article 13 — General Provisions




 









 




13.01. Waiver. Waiver by either party of any right under this Agreement shall be effective
only if specifically made in writing and signed by a duly authorized representative.



13.02. Headings. The headings and titles in this Agreement are for convenience only and
shall not affect the interpretation of the Agreement.



13.03. Severability. If any provision of this Agreement is found unenforceable, this
Agreement shall be interpreted so as to comply with the law while preserving as nearly as
possible the present wording and intent of the Agreement and the remaining provisions shall
remain in full force and effect. If revision or deletion of the unenforceable provision
shall be reasonably deemed to have materially altered the intent of the parties under this
Agreement, the Agreement may be terminated by either party upon written notice to the other
party, but this provision shall not permit termination for less than material reasons.



13.04. Integration. This Agreement with all Exhibits hereby incorporated by reference, and
any amendments hereto, signed by duly authorized representatives of both parties, shall
constitute the entire Agreement and understanding between the parties. This Agreement
supersedes all previous understandings, agreements and representations, oral or written. The
individuals executing this agreement acknowledge that each of them has the authority to
execute this Agreement on behalf of their respective parties.



Each party agrees to perform all further acts and execute, acknowledge and deliver any
documents reasonably necessary, appropriate or desirable to carry out the provisions of this
Agreement.



13.05. Choice of Law. This Agreement is made in Georgia and shall be governed by and
interpreted under Georgia Law.



13.06. Buyer’s Property. All drawings, dies, patterns, tooling, or other Items supplied by
Buyer (or Seller at Buyer’s expense) are the property of Buyer and shall be preserved,
normal wear and tear excepted, and returned to Buyer upon request or within thirty (30) days
of termination or expiration of this Agreement.



13.07. Infringement Indemnification. The Items will be produced by Seller in accordance with
certain specifications provided by Buyer. Buyer shall defend or settle, at its sole expense,
using an attorney approved by Seller, any cause of action or proceeding brought against
Seller which is based on a claim that the Items manufactured pursuant to the terms of this
Agreement infringe any patent, copyright or trade secret. Buyer shall indemnify and hold
harmless Seller against any and all expenses and judgments, including any award of attorneys
fees and Seller’s attorney’s fees, which they shall incur as a result of the foregoing,
provided that Seller has given Buyer prompt written notice of such cause of action or
proceeding and has provided Buyer with all reasonable cooperation and information in Seller’s possession. Seller shall be kept informed
of the status of the claim or suit.



If a claim is made that the any Items manufactured pursuant to this Agreement infringe any
patent, copyright or trade secret, or if Seller believes that a likelihood of such a claim exists,




 









 




Buyer may procure for Seller the right to continue using and selling such Items,
modify them to make them non-infringing, but still meet the specifications therefore, or
replace them with non-infringing hardware and spare parts of similar capability. If none of
the foregoing is reasonably available to Seller, Seller may remove such Items from Seller’s
premises and Buyer shall refund to Seller the purchase price thereof.



13.08. Assignment. Seller shall not assign this Agreement or its rights or obligations
hereunder without the prior written consent of Buyer.



13.09. Survival of Provisions. The following Articles of this Agreement shall survive any
termination or expiration of the Agreement: Articles 7, 8, 9, 10, 12, and sections 13.05
and



13.10. Notices. All notices, elections, solicitations of consent or approval, and other
communications hereunder shall be in writing and shall be sent by certified mail, return
receipt requested, facsimile, courier, e-mail or overnight delivery service addressed to the
parties as set forth below or to such other address which any party shall have given to the
other party for such purpose.



Each such notice shall be deemed delivered on the earlier of the following dates:

(A) on the date delivered if by personal delivery,

(B) on the date of transmission with confirmed answer back, if by electronic facsimile,

(C) on the date upon which the return receipt is signed or delivery is refused or the notice is designated by the postal authorities as undeliverable, as the case may be, if mailed and

(D) one (1) day after deposited with Federal Express or similar overnight delivery service,

(E) on the date of transmission if sent by email.



13.11. Counterparts. This Agreement may be executed in counterparts each of which shall be
deemed an original but all of which constitute one and the same instrument. In addition,
this Agreement may contain more than one counterpart of the signature page and this
Agreement may be executed by the affixing of signatures of each of the parties to one of
such counterpart signature pages and shall be read as though one, and they shall have the
same force and effect as though all of the signatories had signed a single signature page.



13.12. Binding Effect. Except as otherwise provided for herein, the Agreement shall be
binding upon and shall inure to the benefit of the respective heirs, executors,
administrators, legal representatives, and permitted successors and assigns of the parties
hereto.



13.13. Rules of Construction . The singular shall be deemed to refer to the plural and the
masculine to the feminine and neuter and vice versa as the context requires throughout the
Agreement. Every covenant, term and provision of this Agreement shall be construed simply
according to its fair meaning and not strictly for or against any party.



13.14. Binding Arbitration. If the parties should disagree as to any matter under this
Agreement, the dispute shall be arbitrated in Atlanta, Georgia, in accordance with the rules
then governing of the American Arbitration Association, using locally qualified parties.
All decisions of any arbitration proceedings shall be binding upon the parties.




 









 




IN WITNESS WHEREOF, the parties to this Agreement have executed it as of the date first
written above.




	 	 	 	 	 
	“SELLER”: SPECTRAL RESPONSE INC.


	 	 
	BY:	 	 	 
	Title:	 	 	 
	 
	DATE SIGNED:	 	 	 
	 



	 	 	 	 	 
	“BUYER” : LAS VEGAS GAMING, INC.


	 	 
	BY:	 	 	 
	Title:	 	 	 
	 
	 
	DATE SIGNED:	 	 	 



SUBCONTRACTOR PURCHASE AGREEMENT NO. ______



EXHIBIT I                    Pricing For Equipment Units



Buyer

Buyer P/N     Seller P/N     Item Description     Lead Time     Price     Qty_





 









 




***********




Notes:




SUBCONTRACTOR PURCHASE AGREEMENT NO. _____

OPERATIONAL PARAMETERS



EXHIBIT II



TITLE AND RISK OF LOSS: Title of goods and risk of loss shall be governed by the F.O.B.
terms. In the event Seller utilizes other than Buyer’s freight carrier designated under
“Mode of Transportation” below, then title to goods and all risk of loss shall remain with
Seller until Items are delivered to Buyer’s designated site.



F.O.B. ORIGIN: Duluth,GA



SALES TAX:Exempt Tax Certificate number shall appear on the face of Buyer’s written Purchase
Order.



MODE OF TRANSPORTATION:




     (A) Seller shall select the mode of shipment of the Items and the cost thereof shall be
Seller’s then current area destination charge that shall be added to the purchase price. If
Buyer desires a different mode of shipment, Buyer shall advise Seller thereof, and Buyer
shall pay Seller all costs associated with such different mode of shipment plus a premium of
5 percent of the purchase price therefor.



     (B) Unless otherwise specified and agreed, the Items shall be packaged in accordance
with Seller’s then current packaging specifications for the mode of shipment that Seller
selects, and the cost of such packaging shall be included in the purchase price.



     (C) The Items shall be delivered F.O.B. Seller’s shipping point (manufacturing facility
or staging area), and Buyer thereafter assumes all risk of loss thereof.


FREIGHT CLASSIFICATION: ___



LEAD TIME: Expressed in calendar days, will mean the number of days from the date of P.O.
placement by Buyer, to delivery at Buyer’s designated site.



PAYMENT TERMS: Net 30. Buyer to send payment to Seller net 30th day from date of receipt of
Items by Buyer.



DELIVERY PERFORMANCE:




 









 




A. Delinquency: Seller shall use its best efforts to deliver in accordance with the
schedules listed on Buyer’s Purchase Orders issued under the provisions of this Agreement.



If Seller notifies Buyer in writing within four (4) weeks of the delivery date that one of
the situations listed below has occurred, a new delivery date may be negotiated without any
penalty to the Seller:





	1.	 	The item has been placed on allocation by the manufacturer;
	 
	2.	 	The supplier notifies Seller in writing of lead time changes for the item;
	 
	3.	 	The manufacturer obsolete an item(s);
	 
	4.	 	The Seller receives a lot of material from the approved manufacturer which is unacceptable.




B. Over-shipment: Buyer will not be obligated to accept shipments in excess of the quantity
ordered. Buyer may return all excess material to Seller and debit all appropriate costs.



C. Schedule Changes:



1. Cancellation: allowable, without penalty, except as stated in Article 4, upon ninety (90)
days notice.



2. Reschedule: allowable to maximum of ninety (90) days with sixty (60) days notice;
allowable with no restrictions with one hundred twenty (120) days notice.



3. Expedite in less than normal lead-time allowable, with no hidden restrictions, or
charges to Buyer.



4. Seller to notify Buyer within five (5) working days of any delinquencies.




REPAIR AND REFURBISHMENT

SUBCONTRACTOR PURCHASE AGREEMENT NO. _____




EXHIBIT III




GENERAL TERMS:





“Items” in this Exhibit refer to repairable equipment units.




Items listed in this Exhibit will be repaired and



 









 






refurbished for a preset fee. To qualify for preset
fees, “Repair and Refurbishment” (R&R) Items must not
have been subjected to alteration, misuse, abuse and
must have components intact and free of damage. R&R
Items received by Seller from Buyer will be repaired as
necessary and brought up to the current Revision Level.



PROCEDURE:





Buyer shall notify Seller when Items require R&R
service. Buyer will prepare shipping documents,
including the:




	 	A.	 	Shipping Memorandum;
	 
	 	B.	 	Seller’s Return of Material Authorization Number (RMA), if applicable; and,
	 
	 	C.	 	Buyer’s Material Return Notice (MRN), stating the defect, and cause of defect, if known.






Seller shall repair or refurbish returned Items within ten (10) working days of receipt.



REPAIR AND REFURBISHMENT FEES:





A. Standard prices for repair and refurbishment will be based on a flat labor rate of 28.50 per hour plus cost of components.




B. All shipping charges for non-warranty repair shall be borne by Buyer.



WARRANTY:



The R&R Items shall be warranted in accordance with Article 8 of this Agreement.




SERVICE LOCATIONS (For Warranty and Out-of-Warranty R&R):



The following service locations are available for utilization by Buyer:





SPECTRAL RESPONSE, INC.

3741 Venture Drive, Suite 350

Duluth, GA 30096