Contract For the Supply of Uncooled Imaging Modules



 
Exhibit 10.17

 
CONTRACT 
FOR THE SUPPLY OF 
MicroIRTM IMAGING MODULES 
 
between 
 
FLIR Systems AB 
Rinkebyvagen 19 
Danderyd 
Sweden 
 
and 
 
BAE SYSTEMS 
Information and Electronic Systems Integration Inc. 
2 Forbes Road 
Lexington, Massachusetts 02421-7306 
United States of America 
 

Page 1 








 
CONTRACT FOR
THE SUPPLY OF MicroIRTM IMAGING MODULES 
 
This is a Contract (“The Contract”) by and between FLIR Systems AB, (hereinafter called the “Buyer”),
having a place of business at Rinkebyvagen 19, Danderyd, Sweden, BAE SYSTEMS Information and Electronic Systems Integration Inc. (hereinafter called the “Seller”), having a place of business at 2 Forbes Road, Lexington, MA 02421-7306,
United States of America. The Buyer and the Seller may be collectively referred to herein as the “Parties”, and each may be referred to herein as a “Party”. The Contract replaces and supercedes the contract for the supply of
MicroIRTM Mictobolometer Modules between the Buyer and Sanders, a Lockheed Martin Company, IR Imaging Systems
that was entered into on 9 November, 2000 and all Amendments thereto. 
 
WHEREAS, on 14 September, 1999 the Parties or their predecessors entered into a Cooperative Development Agreement for the purpose and object of designing and providing improved and lower cost modules for, and producing thermal
imaging systems based on, MicroIRTM IMAGING MODULES, (hereinafter defined), developed by the Seller, and

 
WHEREAS, the Buyer and the Seller or their predecessors have
previously entered into contracts for the manufacture and sale of uncooled imaging modules; and 
 
WHEREAS, the Buyer seeks to purchase MicroIRTM IMAGING MODULES
for the purpose of application to products of the Buyer, 
 
NOW,
THEREFORE, the Buyer and the Seller agree as follows: 
 
The Seller
shall sell, and the Buyer shall purchase MicroIRTM IMAGING MODULES, in accordance with the Terms and Conditions
herein set forth. The Contract is executed in duplicate originals, of which one shall remain with the Buyer and the other with the Seller. The Contract shall become effective as of the later date set forth hereunder. 
 
IN WITNESS WHEREOF, the Buyer and the Seller have caused this contract to be
executed by their duly authorized representatives as of the day and year last written below. 
 

	 BAE SYSTEMS
 Information and Electronic Systems Integration Inc.
	 	 	 	 FLIR Systems AB

	
	 by
	 	 /s/    Michael P. Mawn        

	 	 	 	 by
	 	 /s/    Arne Almerfors        


	 Title
	 	 Manager of Contracts

	 	 	 	 Title
	 	 Man. Dir


	 Date
	 	 26 June 2002

	 	 	 	 Date
	 	 2002 07 04



 
In consideration of the
exclusivity granted by the Seller to FLIR Systems AB hereunder, and in further consideration of the mutual benefits to be derived from the performance of this Contract, FLIR Systems, Inc., as parent corporation of FLIR Systems AB, hereby agrees to
be bound by the provisions of Article 3, EXCLUSIVITY, hereof. 
 

	
	 by
	 	 /s/    Arne Almerfors        


	 Title
	 	 Exec. Vice President


	 Date
	 	 2002 07 04



 

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CONTRACT INDEX

 

	 ITEM

	  	 	  	 PAGE


	
	 COVER
	  	 1

	
	 SIGNATURE PAGE
	  	 2

	
	 CONTRACT INDEX
	  	 3

	
	 TERMS AND CONDITIONS
	  	 
	
	 PREAMBLE
	  	 	  	 4

	
	 ARTICLE 1  
	  	 DEFINITIONS
	  	 4

	
	 ARTICLE 2  
	  	 DELIVERABLE ITEMS AND PRICES, OPTION, ACCEPTANCE TESTING; DELIVERY SCHEDULE, JUST-IN-TIME SCHEDULING, SHIPMENT AND
TRANSFER OF TITLE; SELLER’S INVOICES AND BUYER’S PAYMENTS; NO SET OFF
	  	 5

	
	 ARTICLE 3  
	  	 EXCLUSIVITY
	  	 7

	
	 ARTICLE 4  
	  	 EXPORT LICENSES
	  	 10

	
	 ARTICLE 5  
	  	 EXCUSABLE DELAYS
	  	 10

	
	 ARTICLE 6  
	  	 WARRANTY
	  	 10

	
	 ARTICLE 7  
	  	 LIQUIDATED DAMAGES
	  	 12

	
	 ARTICLE 8  
	  	 LIMITATION OF LIABILITY
	  	 12

	
	 ARTICLE 9  
	  	 NOTICES
	  	 13

	
	 ARTICLE 10
	  	 ASSIGNMENT
	  	 13

	
	 ARTICLE 11
	  	 COMPLIANCE WITH U. S. A. LAW
	  	 13

	
	 ARTICLE 12
	  	 CONFIDENTIALITY
	  	 14

	
	 ARTICLE 13
	  	 ADVERTISING
	  	 14

	
	 ARTICLE 14
	  	 LAW
	  	 14

	
	 ARTICLE 15
	  	 ARBITRATION
	  	 14

	
	 ARTICLE 16
	  	 TERMINATION AND CANCELLATION
	  	 14

	
	 ARTICLE 17
	  	 LANGUAGE
	  	 15

	
	 ARTICLE 18
	  	 CONFIGURATION MANAGEMENT; BUYER’S PARTICIPATION IN PRODUCTION AND INSPECTION SYSTEM AUDITS; RELEASE OF
INFORMATION
	  	 15

	
	 ARTICLE 19
	  	 GENERAL
	  	 16

	
	 EXHIBIT A
	  	 MicroIRTM IMAGING MODULE SPECIFICATION and INTERFACE CONTROL DOCUMENTS
	  	 A1

	
	 EXHIBIT B
	  	 ACCEPTANCE TEST PROCEDURE
	  	 B1

	
	 EXHIBIT C
	  	 CONTRACT DELIVERY SCHEDULE
	  	 C1

	
	 EXHIBIT D
	  	 BUYER FURNISHED DATA
	  	 D1


 

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TERMS AND
CONDITIONS 
 
PREAMBLE 
The Contract consists of the Cover Page, the Signature Page and the Index, plus the Terms and Conditions in the Articles hereinafter set forth. If any
supporting data such as a Statement of Work, a work performance schedule, specifications, drawings or other such documents are applicable to The Contract, they are provided herein as the Exhibits identified in the Index. Conflicts, if any, among the
following parts of The Contract shall be resolved by taking them in this order of precedence: (i) the Terms and Conditions; and (ii) the Exhibits. 
 
Article 1    DEFINITIONS. 
 
1.1    The Buyer as used herein shall mean FLIR Systems AB 
 
1.2    The Seller as used herein shall mean BAE SYSTEMS Information and Electronic Systems Integration
Inc. 
 
1.3    MicroIRTM IMAGING MODULE as used herein shall mean the SIM300 H/L devices described in the Specification set forth in Exhibit A, attached, or any later or modified version of such technical Specification on which the parties shall mutually
agree in writing and consisting of a microbolometer focal plane array in a vacuum package with external electronics. 
 
1.4    SURVEILLANCE AND PERIMETER SECURITY SYSTEMS as used herein shall mean imaging cameras or observation systems used to detect
intrusion, or to otherwise provide protection or security at the facilities where such systems are located. Weapon- and vehicle-mounted systems are excluded from this definition. 
 
1.5    THERMOGRAPHY as used herein shall mean the use of thermal imaging systems to determine the
radiometric temperature of items and portions of items in an imaged scene without direct physical contact to those items. Such information, often displayed as a picture or pseudo-color picture, is used in a wide variety of industrial applications.

 
1.6    FIREFIGHTING MARKET as used herein
shall comprise all industrial, municipal, State, Provincial and National Government (but not military) entities engaged in fire fighting, fire prevention, fire suppression and remediation operations in which the equipment is man-portable and is
designed to perform at external case temperatures exceeding 70 degrees Centigrade. 
 

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	Article 2	 	DELIVERABLE ITEMS AND PRICES, ACCEPTANCE TESTING; DELIVERY SCHEDULE, JUST-IN-TIME SCHEDULING, SHIPMENT AND TRANSFER OF TITLE; SELLER’S INVOICES AND BUYER’S
PAYMENTS, NO SET OFF. 

 
2.1 DELIVERABLE ITEMS, AND PRICES 
 
The items to be delivered hereunder are identified in Table 2.1-1, below. 
 
TABLE 2.1-1 DELIVERABLE ITEMS 
 
MicroIRTM IMAGING MODULES 
 

	 SIM300 Low

	 	 SIM300 High


	 Unit Price

	  	 Quantity

	  	 Extended Price

	 	 Unit Price

	  	 Quantity

	  	 Extended Price


	 [**]
	  	 First [**]
	  	 [**]
	 	 [**]
	  	 First [**]
	  	 [**]

	 [**]
	  	 Next [**]
	  	 [**]
	 	 [**]
	  	 Next [**]
	  	 [**]


 
All U. S. A. taxes are
included in the prices in Table 2.1-1. All taxes, duties, fees or assessments of any nature levied against the Seller by any governmental authority except the U. S. A. in connection with The Contract shall be the responsibility of the Buyer, and
shall be paid by the Buyer directly to the governmental authority concerned. Prices do not include freight and insurance charges associated with transportation beyond the FCA point, which shall be paid by the Buyer. 
 
2.1.2 OPTION 
 
The Buyer shall have the option, exercisable by no later than [**], to
increase the quantity of SIM 300 Low MicroIRTM IMAGING MODULES ordered hereunder by [**] units at a unit price
of [**]. Should the Buyer exercise this option, deliveries thereunder shall commence in the last month of the scheduled delivery shown in Exhibit C hereto. The Buyer shall specify the rate of delivery which shall be no fewer than [**] units per
month nor more than [**] units per month. 
 
2.2 ACCEPTANCE TESTING 
 
Prior to delivery of the MicroIRTM IMAGING MODULES hereunder, the Seller shall perform on each
unit Acceptance Tests described in the document Uncooled Imaging Module Acceptance Test Procedure set forth in Exhibit B hereto, and each unit shall be required to pass the test. The tests may be witnessed on a non-interference basis by designated
employees of the Buyer. Whether or not so witnessed, the tests shall be considered as the final acceptance tests on the units, and the Seller shall prepare, and either certify and deliver with the units, copies of the test data, or make such data
available to Buyer on Seller’s web site. The Seller when requested by the Buyer, shall provide approximate dates for scheduled acceptance testing of units, and shall coordinate with the Buyer any visits for the purpose of witnessing tests.

 
2.3 DELIVERY
SCHEDULE; JUST-IN-TIME SCHEDULING; SHIPMENT AND TRANSFER OF TITLE. 
 
2.3.1 DELIVERY
SCHEDULE. 
 
The Seller shall deliver the Items
hereunder to the Buyer in accordance with the Contract Delivery Schedule, Exhibit C hereto. 
 

[**]    Information omitted pursuant to 17 C.F.R. (S) 240.24b-2 
 

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2.3.2 JUST-IN-TIME SCHEDULING. (Base quantity) 
 
The Buyer may elect to increase the quantity of units scheduled for any month by up to 15% of the units scheduled for such month 
 
In the event of increases, the cumulative impact of such increases shall not
operate to increase the quantities shown for any month in the Contract Delivery Schedule by more than 30%, provided that the cumulative acceleration in any two consecutive months shall not exceed 15% of the scheduled deliveries. 
 
Any such increases in delivery schedule shall require four months written
notice in advance in the case of schedule acceleration and three months written notice in advance in the case of schedule deceleration. 
 
2.3.3 CONVERSION 
 
The Buyer may require the conversion of up to 25% of the SIM300 low units scheduled for any month in the original contract
delivery schedule, to SIM300 high units for delivery in the same month. Any such change shall require six months written notice in advance. Seller shall exert its best efforts to reduce the lead time for any such conversion if Buyer so requests.

 
2.3.4 SHIPMENT
AND TRANSFER OF TITLE. 
 
All Shipments by the Seller hereunder shall be made FCA Logan International Airport, Boston, Massachusetts, U.S.A., in accordance with the definition and provisions of the term “FCA” set forth in INCOTERMS, except
that the Buyer shall be responsible hereunder to obtain all necessary export licenses. Title to the MicroIRTM
IMAGING MODULES deliverable hereunder shall pass to the Buyer at the FCA point, i. e., on delivery to the carrier at Logan International Airport, Boston, Massachusetts, U.S.A. 
 
2.4 SELLER’S INVOICES AND
BUYER’S PAYMENTS. 
 
2.4.1 INVOICES. The Seller shall submit invoices to the Buyer upon shipment of the items listed in Table 2.1-1 hereof, in the amount determined by multiplying the Unit Price by the number of Units shipped. The Seller
shall calculate any amounts due to the Buyer pursuant to Article 7, “Liquidated Damages”, hereof, on a quarterly basis and issue a credit to the Buyer, if due. The Buyer shall pay to the Seller the amount of each Seller’s invoice
within 60 days of the date of the invoice. The Seller shall transmit this invoice to the address set forth below: (i) by telefax on the date of the invoice; and (ii) by mail or express delivery service on the date of the invoice or on the next
business day thereafter. The package shall contain an original and three copies of the invoice and any attachments required hereunder. 
 

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FLIR Systems AB 
BOX 3, S-182 11 
Danderyd 
Sweden 
 
Attention: Ms. Åsa Skärebo, Accounting Department. 
Telephone: 46 8 753
25 18 
FAX: 46 8 753 07 17 
 
2.4.2 PAYMENTS. 
 
The Buyer shall make payment to the Seller by wire transfer of U. S. Dollars to the account set forth below. 
 
Citibank, NY, 111 Wall Street, New York, NY,
10043 
ABA Routing No: [**] 
Payee Name: BAE SYSTEMS 
Account No: [**] 
By Order of (————)
(Customer) 
Reference (————) (BAE SYSTEMS Invoice No.) 
 
2.5 NO SET-OFF. 
 
The Buyer shall not set off any amount owed by the Seller or any of its
affiliated companies to the Buyer against any amount owed by the Buyer to the Seller under The Contract. 
 
Article 3 EXCLUSIVITY 
 
3.1 During the period of delivery of the MicroIRTM IMAGING MODULES ordered hereunder, the Buyer shall have limited exclusivity in the commercial marketplace, as defined in this Article 3, with respect to the marketing of Infrared Thermal Imaging
Systems containing MicroIRTM IMAGING MODULES therein. 
 
3.2 During the period of performance hereof, the Seller agrees not to provide
or to deliver uncooled microbolometer technology or MicroIRTM IMAGING MODULES or uncooled microbolometer
detector arrays or any information similar thereto, to any of the following companies; provided that the Seller shall have the right to sell to or to cooperate with any company in connection with any military or space program 
 
[**] 
 
[**] 
 

[**]    Information omitted pursuant to 17 C.F.R. (S) 240.24b-2 
 

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[**] 
 
 
[**] 
 
 
[**] 
 
 
[**] 
 
 
[**] 
 
 
[**] 
 
 
[**] 
 
 
[**] 
 
 
[**] 
 
 
[**] 
 
 

 

	[**]	 	Information omitted pursuant to 17 C.F.R. (S) 240.24b-2 

 

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[**] 
 
[**]

 
[**] 
 
[**] 
 
[**] 
 
3.3 The Buyer shall have exclusivity (a) which shall be limited to the
industrial/commercial marketplace for THERMOGRAPHY; however, (b) the Seller shall have the right to sell into the FIREFIGHTING MARKET. 
 
3.4 The Buyer shall have the non-exclusive right to sell to all other markets, except that the Buyer shall have no right to and shall not, without the
prior written consent of the Seller, sell products which include the Seller’s MicroIRTM IMAGING MODULES
where [**] 
 
3.5 The Buyer shall not, without the prior written
consent of the Seller, sell or otherwise provide to any person or organization MicroIRTM IMAGING MODULES that
are not part of a camera or system of the Buyer, except for repair or replacement. 
 
3.6 Except for contracts existing on 14 September, 1999, the Buyer agrees not to start any negotiations or cooperation or to take deliveries of uncooled infrared focal plane arrays from any source, provided that Buyer may
acquire no more than two uncooled infrared cameras from any one camera supplier for the sole purpose of evaluating and/or comparing the quality and performance of its products against the products of its competitors. The Buyer shall inform the
Seller of any such acquisition and, to the extent not precluded by contract, the Buyer shall share the results of such comparisons with the Seller. 
 
3.7 The Buyer shall not sell products which include MicroIRTM IMAGING MODULES for any of the following fields of use (which are excluded from the License Agreement between the Seller and Honeywell, Inc.): 
 
[**] 
 

[**]    Information omitted pursuant to 17 C.F.R. (S) 240.24b-2 
 

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[**]

 
[**] 
 
[**] 
 
Article 4 EXPORT LICENSES 
 
The Buyer is advised that the MicroIRTM IMAGING MODULES deliverable under The Contract are controlled in Category XII of the U. S. Munitions List in the International Traffic in Arms
Regulations (ITAR). As such, the export of the deliverable items hereunder requires approval from the United States Government. The Buyer shall obtain or cause to be obtained all necessary export approvals from the U.S. Government. In addition, the
Buyer shall, with respect to exports from Sweden of products containing Seller’s MicroIRTM IMAGING MODULES
treat such re-exports in a manner that is in full compliance with applicable U. S. laws and regulations. 
 
Any impact on the Seller due to delay in obtaining an Export License by the Buyer shall be negotiated by the parties not later than fifteen (15) days following scheduled delivery. 
 
Article 5 EXCUSABLE DELAYS 
 
The Seller shall not be liable for delays in delivery due to causes beyond the
Seller’s control and without the Seller’s fault or negligence, including, but not limited to: acts of God; natural disasters, fire, floods, explosions or earthquakes; epidemics or quarantine restrictions; serious accidents; any act of
civil or military authority; war, insurrection or riot; and labor disputes; providing that in such cases the Seller exercises due diligence in promptly notifying the Buyer in writing of any known or anticipated delay, and recommences the performance
of its obligation on cessation of the delay. 
 
Whatever the cause
of any known or anticipated delay, the Seller shall be responsible for informing the Buyer of the reason therefor, and when the Seller expects to proceed with its obligations. 
 
In the event of any such delay, the date of delivery or performance hereunder shall be extended by a period equal to the time
loss by reason of such delay. In the event the Seller’s production is curtailed for any of the above reasons, the Seller may allocate its production among its various customers in a commercially fair and reasonable manner. 
 
Article 6 WARRANTY 
 
6.1 The Seller warrants that MicroIRTM IMAGING MODULES (hereinafter, the “goods”) delivered under The Contract shall be free from defects in material and workmanship under
normal use and service, for a period of 15 months after delivery of the goods to the FCA point. 
 


	[**]	 	Information omitted pursuant to 17 C.F.R. (S) 240.24b-2 

 

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6.2 The Seller warrants that goods delivered under The Contract shall be in conformity with the Uncooled
Imaging Module Specification set forth in, Exhibit A, hereto, for a period of 90 days after delivery of the goods to the FCA point, except as follows: 
 

	 	(a)	 	The vacuum life shall be warranted for a period of five years from the day of delivery of any item, provided that no warranty of vacuum life shall apply unless the
module is operated in an environment that has an ambient temperature of [**] and/or is stored at a temperature between the minimum storage temperature and [**]. 

 

	 	(b)	 	The MicroIRTM IMAGING MODULE
performance under normal use and service shall be such that for [**] months after delivery there shall be no more than [**] new unsubstituted nonoperable pixels (NOP). A nonoperable pixel is defined as one that produces a signal that differs by more
than [**] from the median of the signal from each of its [**] nearest neighboring pixels when imaging an object having a temperature of [**] and operating in an ambient environment with a temperature of [**]. 

 
6.3 If, during the warranty periods of paragraphs 6.1. and 6.2 hereof, (i) the
Seller is notified promptly in writing upon delivery of any defect described therein in the goods, including a detailed description of such defect; (ii) such goods are returned to the Seller transportation prepaid; and (iii) the Seller’s
examination of such goods discloses to the Seller’s satisfaction that such goods are defective and such defects are not caused by accident, abuse, misuse, neglect, alteration, improper installation, repair or alteration by someone other than
the Seller, improper testing, or use contrary to any instructions issued by the Seller, then within eight weeks after the arrival of the returned defective goods at the Seller’s plant the Seller shall (at its sole option) either repair or
replace such goods. The Seller shall return any goods repaired or replaced under this warranty to the Buyer transportation prepaid. Prior to any return of goods by the Buyer pursuant to this Article, the Buyer shall afford the Seller the opportunity
to inspect such goods at the Buyer’s location. In any event, the Seller shall issue a Return Material Authorization to the Buyer prior to any return of goods to the Seller by the Buyer. 
 
6.4 With respect to the time of notice of a defect, the following special
provisions shall apply: 
 

	 	(a)	 	If a defect is discovered during the first 90 days of the initial warranty period, and if the Buyer has not delivered the item in question, incorporated into the
Buyer’s product, to a customer of the Buyer, the Buyer and the Seller shall proceed as in paragraph 6.3, above. If a warranted defect is confirmed and the item is repaired or replaced under the warranty, the item returned by the Seller to the
Buyer shall bear the warranty for an new initial period in accordance with paragraph 6.1 or 6.2, as applicable. 

 

	 	(b)	 	If a defect under paragraph 6.1 is discovered after the first 90 days of the initial warranty period, or if the Buyer has delivered a defective item, incorporated
into the Buyer’s product, to a customer of the Buyer, the Buyer and the Seller shall proceed as in paragraph 6.3, above. If a warranted defect is confirmed and the item is repaired or replaced under the warranty, the warranty period for the
item shall be extended by the amount of time between the Buyer’s notice of defect and the Seller’s return of the item to the Buyer at the FCA point. 

 
6.5 The foregoing warranty constitutes the Seller’s exclusive liability, and the exclusive remedy of the Buyer, for any
breach of any warranty or other nonconformity of the goods covered by The Contract. 
 


	[**]	 	Information omitted pursuant to 17 C.F.R. (S) 240.24b-2 

 

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6.6 THIS WARRANTY IS
EXCLUSIVE, AND IN LEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHICH ARE HEREBY EXPRESSLY DISCLAIMED. 
 
6.7 PRODUCT SUPPORT (not covered by WARRANTY) 
 
Seller agrees to provide product support and to supply spare parts to Buyer
for the MicroIRTM IMAGING MODULE during the Term of this Agreement and for a period of five (5) years from the
date of delivery of the last MicroIRTM IMAGING MODULE ordered hereunder. Seller shall provide a price list for
such evaluation and repair or replacement concurrent with the first production delivery called for in the Contract Delivery Schedule, Exhibit C hereto, and shall update such price list periodically. 
 
Article 7 LIQUIDATED DAMAGES. 
 
The Seller guarantees delivery of the MicroIRTM IMAGING MODULES in
accordance with the Contract Delivery Schedule set forth in Exhibit C hereto. It is agreed by the parties that if actual damages arise by reason of the Seller’s delay in delivery, such damages would be difficult to determine accurately.
Therefore, beginning with deliveries scheduled for July, 2001, the Seller agrees that in the event that the delivery of MicroIRTM IMAGING MODULES is delayed for more than one full calendar week beyond a grace period of three (3) weeks after such
guaranteed delivery time for other than excusable causes as defined in Article 5, “Excusable Delays” hereof, the Seller shall pay to the Buyer as fixed, agreed and liquidated damages for each additional full calendar week beyond said grace
period in making delivery, one-quarter of one percent (0.25%) of the Contract Unit price of the delayed MicroIRTM IMAGING MODULE per full calendar week of delay, and the Seller shall be liable for the amount thereof; PROVIDED, that the
Seller’s liability under this Article is limited to two and three-tenths percent (2.3.%) of the Contract Unit price of such delayed MicroIRTM IMAGING MODULE. Seller’s payment of liquidated damages, as herein provided, shall be the
Buyer’s sole remedy for delays due to causes for which the Seller is responsible under this Contract. 
 
Article 8 LIMITATION OF LIABILITY 
 
8.1 The total liability of the Seller for any and all claims, whether in contract, warranty, tort or otherwise, arising out of, connected with or resulting from the performance or non-performance of The Contract, or from the
manufacture, sale, delivery, resale, repair, replacement or use of any product or the furnishing of any service, shall not exceed the unit price of the product or service that gives rise to the claim. This liability limitation specifically applies
to, but is not limited to, those liabilities of the Seller that may arise from claims under the provisions of Article 6 of The Contract entitled “Warranty” and Article 7 of The Contract entitled, “Liquidated Damages”. Except as
to title, any such liability shall terminate upon expiration of the warranty period for the last warranted Item delivered hereunder. 
 
8.2 IN NO EVENT SHALL THE SELLER BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM THE SELLER’S PERFORMANCE OR
FAILURE TO PERFORM UNDER THE CONTRACT, OR THE FURNISHING, PERFORMANCE, OR USE OF ANY GOODS OR SERVICES SOLD PURSUANT HERETO, WHETHER DUE TO A BREACH OF CONTRACT, BREACH OF WARRANTY, THE NEGLIGENCE OF THE SELLER, OR OTHERWISE. 
 

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Article 9 NOTICES

 
9.1 Any notice, request, or correspondence of either the Buyer
or the Seller to the other with reference to The Contractor shall be in the English language. 
 
9.2 Buyer’s address for notices from the Seller shall be as follows: 
 
FLIR Systems AB 
BOX 3, S-182 11 
Danderyd 
Sweden 
 
  Attention:  Mr. Arne Almerfors 
Managing Director 
  Telephone: 46 8 753 25 10 
FAX: 46 8 753 07 17

 
9.3 Seller’s address for notices from the Buyer shall be as
follows: 
 
BAE SYSTEMS

Information and Electronic Systems Integration Inc. 
2 Forbes Road 
Lexington, MA 02421-7306 
 
  Attention: Mr. John J. Ainley 
Contracts
Manager, M/S 112 
  Telephone: 781-863-3767 
FAX: 781-863-4893 
 
Article 10 ASSIGNMENT 
 
10.1 Neither the Buyer nor the Seller may assign its rights under The Contract without the prior written consent of the other, and any purported
assignment without such consent shall have no force or effect. Such consent shall not be unreasonably withheld. 
 
10.2 Such consent shall not be required in the case where the assignment is to be made to a successor-in-interest to that part of the business of the assignor that includes The Contract, provided that
the successor-in-interest agrees to be bound by the obligations hereunder of the assignor. 
 
Article 11 COMPLIANCE WITH U.S.A. LAW 
 
The parties’ performance under The Contract shall comply with the federal, state and local laws and regulations of the U. S. A. 
 

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Article 12 CONFIDENTIALITY

 
The Buyer and the Seller agree that The Contract and performance
hereunder will be kept confidential and will be dealt with in accordance with each party’s usual procedures relating to proprietary information. No publicity will be released by either the Buyer or the Seller without the prior written consent
of the other. 
 
Article 13 ADVERTISING 
 
Neither the Buyer nor the Seller shall make use of the other’s name for
publicity purposes, and neither shall use any information or news contained in or connected with The Contract unless the other has given its written consent. 
 
Article 14 LAW 
 
The Contract shall be governed by the laws of the Commonwealth of Massachusetts and of the United States of America as to all matters of interpretation, performance and remedies insofar as such law is
existent and can or will be applied in the jurisdiction in which either the Buyer or the Seller may seek adjudication of any such matter. 
 
Article 15 ARBITRATION 
 
In the event that disputes arise under the terms of The Contract on which there is continuing disagreement for more than thirty (30) days, either the
Buyer or the Seller may elect by a thirty (30) days Notice in writing, to submit the matter to Arbitration. If the dispute is not settled within said thirty (30) day period of such Notice, the following shall apply to such Arbitration which shall be
the exclusive mechanism for resolution of disputes hereunder should the Buyer and the Seller be unable amicably to resolve such disputes. 
 

	 	(a)	 	The Arbitration shall be conducted in London, England. 

 

	 	(b)	 	The Arbitration shall be conducted under the Rules of Conciliation and Arbitration of the International Chamber of Commerce. 

 

	 	(c)	 	The costs of the Arbitration shall be distributed equally between the Buyer and the Seller, and each shall otherwise bear its own additional or other expenses and
fees. 

 

	 	(d)	 	The Decision of the Arbitration Tribunal shall be binding on the Buyer and the Seller, and such Decision shall be enforceable in any Court having jurisdiction of the
party against whom any such decision or award is granted. 

 
Article 16 TERMINATION AND CANCELLATION 
 
16.1 The
Contract may be terminated, as hereinafter provided, by either party for material breach or default of the terms or conditions hereof. In the event of such termination a sixty-day Notice in writing 
 

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setting forth the breach or default shall be provided; however, should the party receiving the Notice
correct said breach or default complained of during said sixty-day period, then the Notice shall be considered null and void as if the same had not been sent. 
 
16.2 The Contract shall be automatically canceled in the event of bankruptcy, voluntary or involuntary winding up, the appointment of a receiver of the
assets or business, making of an assignment for the benefit of creditors, or the termination of the operation of the business of either the Buyer or the Seller. Any such cancellation shall be considered a material breach of contract. 
 
16.3 In the event of termination or cancellation of The Contract for any
reason, the obligations of the Buyer and the Seller to comply with the terms and conditions of The Contract shall continue up to the effective date of such termination. 
 
16.4 Termination or cancellation of The Contract shall not affect obligations of confidentially assumed hereunder by either
the Buyer or the Seller. 
 
Article 17 LANGUAGE 
 
The English Language shall be used in all communications between the Seller
and the Buyer relating to The Contract. 
 
Article 18 CONFIGURATION MANAGEMENT; BUYER’S PARTICIPATION IN PRODUCTION AND INSPECTION SYSTEM AUDITS; RELEASE OF INFORMATION. 
 
18.1 CONFIGURATION MANAGEMENT. The Seller shall maintain a configuration management system for control of changes in the
MicroIRTM IMAGING MODULE. Subject to paragraph 18.3, below, the Seller shall provide copies of all Engineering
Change Orders (ECOs) to the Buyer as they are approved by the Seller’s Configuration Review Board (CRB). The Seller shall forward minor changes (class II ECO’s) to the Buyer in the Seller’s format for the Buyer’s information. The
Seller shall forward major changes (class I ECO’s) to the Buyer for approval. The Seller shall classify class I ECO’s as “Routine” or “Urgent”. “Routine” ECO’s shall be approved within 60 calendar days of
the date sent. If the Buyer fails to respond within this time, the Seller may assume the Buyer’s approval. For “Urgent” ECOs, the disposition time limit shall be 20 calendar days. 
 
The Seller shall at its option prepare and submit proposals for equitable
adjustment of the contract price, delivery and other terms for any ECO activity arising from Buyer-initiated changes, including those due to the needs of the Buyer’s vendors. The Seller shall include rough-order-of-magnitude estimates of price
impact with the initial technical proposals, and follow with formal price proposals if the Buyer decides to go forward. 
 
18.2 BUYER’S PARTICIPATION IN PRODUCTION AND
INSPECTION SYSTEM AUDITS. 
 
The Buyer may, during the period of performance of The Contract, participate in inspections and conduct on-site audits of the Seller’s procedures that govern the production and inspection thereunder. The Buyer shall make
arrangements with the Seller in advance of such participation and conduct of audits. The activities shall be conducted on a non-interference basis at reasonable and mutually accepted times and intervals. The Seller should provide sufficient details
concerning status of work in progress 
 

Page 15 








and vendor material deliveries for the Buyer to determine the integrity of the Contract Delivery Schedule.
The Seller shall provide suitable office arrangements for one on-site resident Buyer representative. If the representative is a foreign national, special restrictions on access will apply. 
 
18.3 RELEASE OF INFORMATION. The Seller shall not, in connection with the
activities identified in this Article, be required to divulge information about its MicroIRTM IMAGING MODULES for
which U. S. Government regulations require export approval. 
 
On
or before 30 May 2002, the Buyer shall provide to the Seller the data and software listed in Exhibit D hereto for potential use and sale in Seller’s uncooled microbolometer products. All data shall be provided in the English language.

 
Article 19 GENERAL 
 
19.1 The headings and titles to and within the Articles of The Contract are
inserted for convenience only and shall not be deemed a part hereof or affect the construction or interpretation of any provision hereof. 
 
19.2 No cancellation, modification, amendment, deletion, addition or other change in The Contract or any provision hereof or waiver of any right or remedy
herein provided, shall be effective for any purpose unless specifically set forth in writing and signed by the Buyer and the Seller. No waiver of any right or remedy in respect of any occurrence or event on one occasion shall be deemed a waiver of
such right or remedy in respect of such occurrence or event on any other occasion. 
 
19.3 The Buyer may use its standard purchase order forms in the administration of The Contract. The Buyer and the Seller agree that such use is only for the administrative convenience of the Buyer and that no provisions on
the face or reverse of such forms or the Buyer’s attachments thereto shall have any effect on The Contract or the subject matter of the purchase order except as required to identify The Contract and the purchase order. 
 
19.4 The Contract contains the entire agreement between the Parties concerning
production and delivery of MicroIRTM IMAGING MODULES in the quantities described herein, and supersedes any previous
understanding, commitment or agreement, oral or written, with respect thereto. 
 
* * * 
 

Page 16 








 
EXHIBIT A

 
MicroIRTM IMAGING MODULE 
SIM300
L&H PHASE I SPECIFICATION 
 
[**]

 

[**]    Information omitted pursuant to 17 C.F.R. (S) 240.24b-2 
 

Page A1 








 
EXHIBIT B

 
MicroIRTM IMAGING MODULE 
SIM300
H&L PHASE I ACCEPTANCE TEST PROCEDURE, 
[**] 
 
 
 

[**]    Information omitted pursuant to 17 C.F.R (S) 240.24b-2 
 

Page B1 








 
EXHIBIT C

CONTRACT DELIVERY SCHEDULE 
 

	 Year

	 	 Month

	 	 L

	 	 Cum L

	 	 H

	 	 Cum H


	
	 	 	 TOTALS
	 	 [**]
	 	 	 	 [**]
	 	 
	
	 2001
	 	 Sept
	 	 [**]
	 	 [**]
	 	 	 	 
	 	 	 Oct
	 	 [**]
	 	 [**]
	 	 	 	 
	 	 	 Nov
	 	 [**]
	 	 [**]
	 	 	 	 
	 	 	 Dec
	 	 [**]
	 	 [**]
	 	 	 	 
	 	 	
	 	
	 	
	 	
	 	

	 2002
	 	 Jan
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Feb
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Mar
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Apr
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 May
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Jun
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Jul
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Aug
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Sept
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Oct
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Nov
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Dec
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	
	 	
	 	
	 	
	 	

	 2003
	 	 Jan
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Feb
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Mar
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Apr
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 May
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Jun
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Jul
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Aug
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Sep
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Oct
	 	 [**]
	 	 [**]
	 	 [**]
	 	 [**]

	 	 	 Nov
	 	 	 	 	 	 [**]
	 	 [**]

	 	 	 Dec
	 	 	 	 	 	 [**]
	 	 [**]

	 	 	
	 	
	 	
	 	
	 	

	 2004
	 	 Jan
	 	 	 	 	 	 [**]
	 	 [**]

	 	 	 Feb
	 	 	 	 	 	 [**]
	 	 [**]

	 	 	 Mar
	 	 	 	 	 	 [**]
	 	 [**]

	 	 	 Apr
	 	 	 	 	 	 [**]
	 	 [**]

	 	 	 May
	 	 	 	 	 	 [**]
	 	 [**]



[**]    Information omitted pursuant to 17 C.F.R. (S) 240.24b-2 
 

Page C1 








 
EXHIBIT D

 
BUYER FURNISHED DATA 
 
[**] 
 

[**]    Information omitted pursuant to 17 C.F.R. (S) 240.24b-2 
 

Page D1 








EXHIBIT D BUYER FURNISHED DATA, cont’d. 
 
[**] 
 

[**]    Information omitted pursuant to 17 C.F.R(s) 240.24b-2 
 

Page D2