Document:

InVision Letter Contract

Exhibit 10.49

***Text Omitted and Filed

Separately

 Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), and

240.24b-2

 

 

 

 

 

 

 

 

 

February 19, 2002

 

Ms. Dana Piper

InVision Technologies, Incorporated

7157 Gateway Boulevard

Newark, CA  94560

 

Subject:  Letter Contract Number

DTFA01-02-C-00023

 

Dear Ms. Piper:

 

This document is an undefinitized letter contract under the provisions

of the Federal Aviation Administration Acquisition Management System, and

constitutes an authorization for you to commence work on the enclosed proposed

contract, stand-alone explosives detection systems (SA EDS), subject to the

conditions noted below.  This letter

contract is valid if, and only if, the InVision accepts the following

conditions.

 

(a)  The parties hereby agree to

the terms and conditions specified per the enclosed proposed contract for

explosives detection systems, on an unpriced basis.

 

3.2.4-22  Limitation

of Government Liability (April 1996)

 

(a)          In performing this contract, InVision is

not authorized to make expenditures or incur obligations exceeding  $176,300,000 dollars.

 

(b)         The maximum amount for which the Government shall be liable

if this contract is terminated is 

$176,300,000 dollars.

 

(End of clause)

 

 

(b)  Expenditures above that amount are not

authorized, and are at InVision’s own risk.

 

(c)  Work is authorized to begin at the date of

InVision acceptance of this letter.

 

(d)  This authorization is subject to the FAA

cost principles described in Part 3.3.2 of the FAA Acquisition Management System.

 

(e)  When the contract for this project is

definitized, it will be an indefinite delivery/indefinite quantity, firm

fixed-price contract with incentives. 

The CLINs will include CLINs for (1) reimbursed actual ramp-up costs not

to exceed $4,000,000; and (2) technical assistance to transfer the technology

on a time and materials basis.

 

1

 

ESCROW ACCOUNT REQUIREMENT

 

The FAA has a mandate to acquire and install airport security

equipment throughout the country.  It is

essential that the FAA have the ability to acquire and maintain the systems in

the event InVision goes out of business, or cannot supply and maintain the

equipment acquired under this contract. 

Therefore, InVision shall establish an escrow account to include all

necessary software (installation disks and documentation) source and object

code, and related hardware drawings (level 3) for the equipment and its

peripheral equipment ordered under this contract.  InVision shall ensure that the escrow is updated and kept current

with the product baseline and any engineering change proposals provided under

this contract as modified.  InVision

shall coordinate this effort with the FAA and provide a copy of the account

document for FAA review and concurrence.

 

The escrow account shall be established within sixty (60)

days from contract award, and the final agreement shall be completed no later

than five (5) days after FAA concurrence of account.  The account shall include the same information for subcontractors.

 

(End of Provision)

 

DATA RIGHTS TRANSFER

 

In the event that the Government transfers title to the

SA-EDS acquired under this contract to a third party, the license document

titled InVision Software License shall apply to the transferee.  Government data rights under this contract

are as detailed in Section I clauses 3.5-13, “Rights in Data — General” and

3.5-18 “Commercial Computer Software — Restricted Rights.”  No data rights of the Government shall be

extinguished via transfer of title of supplies delivered under this

contract.  Additionally, the Government

shall not be liable for any patent or copyright infringement resulting from

such title transfer.  [The Software

License is stated in Enclosure 1 paragraph (1)(e).]

 

(End of Provision)

 

 

(f)  In the event of contract termination,

calculation of payments due under this authorization will be accomplished under

the provisions of clause:

 

3.10.6-1           Termination

for Convenience of the Government (Fixed Price)
                        (October 1996)

 

(g)  The work authorized by this letter is

described in Enclosures (1) through (4).

 

(h)  The Contracting Officer’s Technical

Representative is Ed Ocker, telephone number is 703-796-7104.

 

(i)  You are obligated to furnish cost or pricing

information if such information is requested by the Contracting Officer.

 

(j)  The following terms and conditions are

necessary for proper execution of this letter contract:

 

1.                                       InVision must adhere to the Quality

Assurance Surveillance Plan (QASP) when definitized, and all schedules and

milestones contained therein.  Enclosure

(1) provides additional information regarding the QASP.

2.                                       InVision is responsible to address and

correct any deficiencies and non-compliance with any technical requirement(s)

revealed as a result of Government technical testing.  Any deficiencies identified by Government technical testing which

were not included in the 

 

2

QASP

will be added to it, and shall be remedied by the vendor at no cost to the

Government.*

3.                                       Items authorized under this letter contract

are prescribed in Enclosure (4). 

InVision must adhere to the schedule contained therein.  The first 100 units are required to be

delivered by June 28, 2002, in accordance with the schedule contained therein.

4.                                       Not later than  the date InVision receives delivery orders for 400 units,

identified as March 7, InVision shall deliver all Intellectual Property

rights in accordance with the License Agreement set forth in Enclosure (1).

 

(k)               Subject to negotiation of specific terms

consistent with Enclosure (1), the InVision shall:

 

(i)                               Deliver to the Transportation

Security Agency (TSA) all Technology reasonably necessary for a qualified third

party to manufacture, test, evaluate, and operate the SA EDS products purchased

herein. As used herein, “reasonably necessary” means the standard manufacturing

procedures, training and tools used by InVision to train its workers and

contract manufacturers to ramp up the manufacture, test, evaluation, and

operation of the SA EDS products purchased herein.

(ii)                            Grant to the TSA, for a two

year term, a  non-revocable,  non-exclusive, royalty-bearing right and

license with right to sublicense, to make, have made, use, sell, offer for sale,

and import the SA EDS products.

(iii)                         Deliver to the TSA all

technology InVision regarding the manufacture, operation, and test of any

improvement that is incorporated in the SA EDS products in accordance with the

QASP.

(iv)                        Grant to the TSA, for a two

year term, a non-revocable, non-exclusive, royalty-bearing right and license,

with right to sublicense, to make, have made, use, sell, offer for sale, and

import the products referred to in this section (k).

(v)                           Propose a cooperative research

agreement with the FAA Technical Center for the research, engineering,

development, test and evaluation of Improvement and including but not limited

to Quadrupole Resonance subject to this section (k) not later than sixty days

(60) after this Letter Contract.

 

 

(l)                 A definitized delivery order contract for [...***...] units is expected to be completed no

later than  April 15, 2002.  The parties have committed to the following

milestones:

 

	

  Date

  	

   

  	

  Commitment Milestone

  	

   

  	

  Approx Government Funding Obligation

  
	

  February 19

  	

   

  	

  Letter Contract and Delivery Order for 100 units

  	

   

  	

  $

  	

  [...***...]

  
	

  February 19

  	

   

  	

  Delivery Order for additional 300 parts kits

  	

   

  	

  $

  	

  [...***...]

  
	

  February 19

  	

   

  	

  Manufacture Ramp up costs not to exceed

  	

   

  	

  $

  	

  [...***...]

  
	

  February 19

  	

   

  	

  Delivery Order for Technical Data Package (TDP),

  facilitation and factory training NTE

  	

   

  	

  $

  	

  [...***...]

  
	

  March 7

  	

   

  	

  Delivery Order for all units scheduled for

  production and delivery July-Sept, 2002 (300)

  	

   

  	

  $

  	

  [...***...]

  
	

  March 7

  	

   

  	

  Delivery Order for additional 100 parts kits

  	

   

  	

  $

  	

  [...***...]

  
	

  April 8

  	

   

  	

  TDP Delivered I.A.W. License Agreement

  	

   

  	

   

  
	

  April 15

  	

   

  	

  Delivery Order for all units scheduled for

  production and delivery Oct-Dec, 2002 ([...***...])

  	

   

  	

  $

  	

  [...***...]

  
	

  TOTAL

  	

   

  	

   

  	

   

  	

  $

  	

  [...***...]

  

* To be definitized with Contract Number

DTFA01-02-C-00023.

 

* Confidential Treatment Requested

 

3

 

The parties must adhere to the milestones above to preserve

the above pricing, to allow InVision to order the long lead items, identified

below, needed to meet this schedule.

 

	

  Product

  	

   

  	

  Volume Thresholds

  
	

   

  	

   

  	

  1-100

  	

   

  	

  101-400

  	

   

  	

  401+

  
	

  CTX 5500

  	

   

  	

  $

  	

  [...***...]

  	

   

  	

  $

  	

  [...***...]

  	

   

  	

  $

  	

  [...***...]

  
	

  CTX 2500

  	

   

  	

  $

  	

  [...***...]

  	

   

  	

  $

  	

  [...***...]

  	

   

  	

  $

  	

  [...***...]

  
	

  CTX 5500 Parts Kit

  	

   

  	

  $

  	

  [...***...]

  	

   

  	

  $

  	

  [...***...]

  	

   

  	

  $

  	

  [...***...]

  
	

  CTX 2500Parts Kit

  	

   

  	

  $

  	

  [...***...]

  	

   

  	

  $

  	

  [...***...]

  	

   

  	

  $

  	

  [...***...]

  

 

All units are configured with powered inclined entrance conveyor and

exit slide.  The above prices will be

further reduced by an amount equal to 75% of actual BOM savings.

 

(m)  The Government reserves the right to

terminate negotiations at any time. 

Contract termination is discussed in condition (f) above.

 

(n)  Accounting data:

 

Purchase Request No.:  0202229

 

	

  Acct

  	

   

  	

  Region

  	

   

  	

  Appr

  	

   

  	

  Lim

  	

   

  	

  CCntr

  	

   

  	

  Progel

  	

   

  	

  Objc

  	

   

  	

  Project#

  	

   

  	

  Acct 

  Total

  

 

TO BE INSERTED IN DELIVERY ORDER 1

 

Please sign below to signify acceptance of this letter contract and the

enclosures, and return three (3) originally signed copies to the undersigned.  If you have questions, I can be reached at

(703) 796-7118.

 

	

  Sincerely,

  
	

   

  
	

  /s/ Kimberley

  T. Branch

  
	

   

  
	

  Kimberley T. Branch

  
	

  Contracting Officer

  

 

 

 

Enclosure(s)

(1)  Additional Terms and

Conditions

(2)  Screening Information

Request DTFA01-02-R-00808

(3)  Quality Assurance

Surveillance Plan

(4)  Delivery Order (DO) # 1

 

 

 

 

	

  /s/ Sergio

  Magistri

  	

   

  	

     02/20/02

  
	

  InVision Technologies, Inc.

  	

   

  	

  Date

  

 

* Confidential Treatment

Requested

 

4

 

ENCLOSURE 1

ADDITIONAL TERMS AND

CONDITIONS

 

 

Explosive Detection System (EDS) products provided under these

contracts are an essential tool for the national defense against terrorism and

other threats.  It is important that the

InVision develops and delivers products that meet the Government’s

requirements.  It is also important the

InVision continue to develop a continuous improvement program that decreases

the false alarm rates experienced by products in the field.  To that end, the Government intends to use a

series of incentive fees/penalty assessments, incentive bonuses and performance

bonuses.  These are set forth in the

following Paragraphs.

 

1.             LICENSE:  The Department of Transportation and the

Transportation Security Agency (TSA) require the following:

 

(a)           Definitions

 

(1)           “Technology”

means, as of the Effective Date, technical information, conceptions, ideas,

innovations, discoveries, inventions, processes, machines, formulae, equipment,

compositions of matter, tolerances, design criteria, blueprints, drawings,

procedures, know-how, show-how, methods, techniques, systems, designs,

production systems and plans, software (in source and object code), firmware,

documentation, data, programs and information (irrespective of whether in human

or machine-readable form) and works of authorship, whether or not patentable,

copyrightable, or susceptible to any other form of legal protection, that  are used by InVision in the the  manufacture, use, testing, quality control,

shipping, installation, operation, service and repair of  the EDS Products, any component or assembly

thereof, but excluding the Operating Software. 

Technology does not include commercial software that InVision installs

in EDS Products under license without right of sublicense.

 

(2)           “Intellectual

Property” means all proprietary and/or legal rights owned or controlled by

InVision (“InVision”)  and used in the ,

manufacture, use, testing, quality control, shipping installation, operation,

service and repair of the EDS Products, of components or assemblies thereof,including

all trade secrets, know-how, copyrights, mask works and patents and

applications thereof, and any other form of right by which InVision may

effectively exclude another person or entity from performing any of the acts

specified in this definition.  Intellectual Property includes U.S. Patents 5,182,764 and

5,367,552.  Intellectual Property will

be considered controlled by InVision if InVision has the right to grant sublicenses

or rights equivalent thereto without accounting to a third party.  Intellectual Property does not include

commercial software that InVision installs in EDS Products under license

without right of sublicense.

 

(3)          

“EDS Products” means explosive detection system products of the model and

version being acquired pursuant to this SA-EDS Contract .

 

(4)          

“Improvement” means any beneficial modification of the Technology affecting

form, fit or function and relating to any improvements in manufacture, use,

testing, quality control, shipping, installation, operation, service and repair

of an EDS Product or component or system thereof, designed, developed or

acquired by InVision at any time after the Effective Date.

 

(5)            “Operating Software” means the

software portion of the EDS Products, whether embedded or on a disk or tape or

other media.

 

(6)            “Effective Date” means the date,

identified as March 7, that the TSA definitizes delivery orders for at least

400 explosive detection systems under Contract Number DTFA01-02-C-00023, i.e.,

SA-EDS Contract.

 

 

5

 

(b)           Purpose

 

(1)           The

purpose of the technology license is to place the TSA in position to have EDS

Products, components and systems thereof made for it by one or more

sublicensees selected by the TSA.

 

(2)           The

purpose of this technology license is also to maintain consistency in the

configuration and manufacturing of the installed base of EDS Products.

 

(3)           The

technology license is not intended to replace InVision as a primary supplier of

EDS Products, components and systems, and Improvements thereof, but it is

intended to permit TSA to create one or more “second sources” for EDS Products,

components and systems, and for the installation, repair and service thereof

during the term of the definitized contract.

 

(4)           The

technology license is not intended to impair InVision’s ability to provide the

maximum number of EDS Products and meet the delivery schedule under the

definitized contract.

 

(c)           License

 

(1)           Not

later than thirty (30) days after the Effective Date, InVision will deliver all

of the Technology to the TSA and/or to a contractor designated by the TSA.  The method and form of delivery will be

specified in the definitized contract.*

 

(2)           InVision

will use all commercially reasonable efforts to provide to:

 

(i)            TSA

or it’s desginee all “Technology” documented as of the Effective Date,

including but not limited to the product guides, product manuals, bills of

materials, vendor lists, part and assembly drawings, diagrams, manufacturing

procedures, work instructions and check lists then currently being used by

InVision in the manufacture, use, testing, evaluation, quality control,

installation, operation, training, service and repair of EDS Products and

components or assemblies thereof.

 

(ii)           A

technology-transfer contractor designated by TSA sufficient technical

assistance to permit such contractor to understand and document currently

undocumented technology relating to proper calibration and operation of the EDS

Products;

 

(iii)          TSA

or it’s designee, technical services of qualified engineers for up to                 total hours, at a rate of

$               per hour, to provide

additional assistance as requested by TSA or its designee.*

 

(3)           InVision

will grant the TSA a non-revocable, nonexclusive, royalty-bearing license, with

the right to grant sublicenses, under all Intellectual Property to make, use,

sell, offer for sale, import, copy, display and distribute EDS Products,

components and assemblies thereof commencing on the Effective Date and

terminating upon the termination of the definitized contract.  Provided, however, that after the

termination date TSA will continue to have the right to operate all EDS

products manufactured pursuant to this license.

 

(d)           Improvements

 

(1)           Any

performance features incorporated in the EDS Products manufactured by InVision

pursuant to the QASP will be transferred as part of the Technology escrowed in

accordance with the Contract and licensed as part of Intellectual Property

without any additional license fee or royalty. 

InVision will provide all commercially reasonable efforts to deliver the

technology, on the same terms as the initial technology license, see paragraph

1(c).

 

* To be definitized by the Contracting

Officer.

 

 

6

 

 

(2)           InVision

will license any Improvement to the TSA in the same manner and time used

previously used in accordance with this license agreement.

 

(3)           TSA

will promptly disclose in writing and provide to InVision all Improvements made

by the TSA or its designated contractors and sub-licensees, their employees,

agents and assignees.  InVision and TSA

will negotiate a royalty to TSA for the rights to Improvements made by TSA or

sub-licensees.

 

(e)           Operating

Software License

 

(1)           InVision

will grant TSA a perpetual, non-exclusive, license to use the Operating

Software, in object code and firmware form only, in connection with TSA’s use

of the manufactured EDS Product. 

InVision retains all right, title and interest in the Operating

Software, and all improvements, modifications and upgrades (if any) to the

Operating Software.  This license may

not be transferred except in connection with the transfer of the EDS Product

itself.  TSA shall not decompile or

disassemble all or any portion of the software portion of the EDS Product.  Except to a designated manufacturing

contractor or sublicensee, TSA may not sub-license, distribute or disclose all

or any portion of the software to any third party without InVision’s express

prior written consent.  TSA agrees that

it shall not exceed, nor permit others to exceed, the scope of the license

granted herein.

 

(f)            Ownership

and Proprietary Treatment

 

(1)           InVision

will warrant that it owns or controls all Technology and Intellectual Property.

 

(2)           All

Technology is designated by InVision as proprietary and will be received in

confidence by the TSA and by its designated contractors or sub-licensees and

will be treated by them as confidential, proprietary information.  The usual exceptions will apply to

obligations of confidentiality.

 

(3)           InVision

will retain ownership of all Technology and Intellectual Property.  The TSA and its designated contractors will

use the Technology and Intellectual Property solely as provided in the

definitized contract and will return or destroy all proprietary Technology

prior termination of the definitized contract.

 

(g)           Sublicense

 

(1)           InVision

will grant TSA the right to transfer the Technology, and sublicense the

Intellectual Property, to designated manufacturing contractors or sub-licensees

subject to all of the terms and conditions of this   license agreement. 

Provided, however, that TSA will not transfer technology or grant a

sublicense to the following competitors of InVision:

 

1.             [...***...]

2.             [...***...]

3.             [...***...]

4.             [...***...]

5.             [...***...]

6.             [...***...]

7.             [...***...]

8.             [...***...]

9.             [...***...]

10.           [...***...]

 

(2)           Within

five (5) days of a grant of a sublicense, TSA will provide InVision a copy of

the sublicense agreement.

* Confidential Treatment

Requested

 

7

 

(3)           Sub-licensee

will not compete, directly or indirectly, against InVision for the manufacture

and installation of any CT-based explosive detection equipment and systems

during the term of this license agreement and three years thereafter.

 

(h)           Consideration

 

(1)           The

TSA will pay or cause to be paid to InVision a royalty for each EDS Product

made, in whole or in part, by a contractor (other than InVision) designated by

the TSA.  The royalty will be $[...***...] per CTX 5500DS and $[...***...] per CTX 2500.  TSA will pay the royalties monthly for

sub-licensee manufactured EDS Products for that month.

 

(2)           The

TSA will pay or cause to be paid to InVision a royalty for each Improvement

retrofitted on an installed EDS Product by a contractor (other than InVision)

designated by the TSA.  The royalty to

be negotiated will be a fixed dollar amount per Improvement retrofit.

 

(3)           The

royalty for each EDS Product and retrofitted Improvement will be the total

consideration for the rights granted. 

No additional  royalty will be  due for maintenance services rendered,

repairs made or parts replaced by the TSA or its designated contractor.

 

(i)            Guarantees,

Liabilities and Indemnities

 

(1)           InVision

will guarantee that the licensed Technology will be in compliance with

paragraph 1(c)(2) of this agreement.

 

(2)           InVision

expressly disclaims all liability and responsibility for the sub-licensee’s use

of the Technology and EDS Products built to the extent that there are defects

in the sub-licensee’s manufacturing and performance.

 

(3)           InVision

expressly disclaims all other warranties, including without limitation the

implied warranties of merchantability and fitness for a particular purpose.

 

(4)           InVision

is under a continuing duty to refine its Technology to correct errors and

omissions when discovered at no cost to the Government.

 

(5)           InVision

will not be liable for damage or injury caused by or defects in EDS Products

made by any party other than InVision.

 

(6)           TSA

will seek recovery for damages, injuries and costs arising from TSA’s

sub-licensee’s failure to manufacture EDS Products in accordance with

InVision’s Technology.

 

(j)            Termination

 

(1)           The

Government may terminate the license on advance written notice to

InVision.  Upon termination, TSA shall

(1) promptly pay all accrued and unpaid fees and royalties; (2) immediately

cease to use the Technology and return or destroy, at InVision’s option, all

copies of the Technology, provided, however, that this provision does not apply

to Technology incorporated in an EDS Product for which such royalty is fully paid

or will be paid upon completion of manufacture.

 

(2)           In

the event a contractor designated by the TSA materially breaches the terms of

the license under InVision’s Technology and Intellectual Property, InVision may

request the TSA to terminate such contractor.

* Confidential Treatment

Requested

 

8

 

(k)           Non-Disclosure

 

(1)           Each

party shall keep in confidence all Proprietary Information of the other party

and will not directly or indirectly disclose to any third party or use for any

purpose other than the performance of its obligations under this Agreement, any

Proprietary Information it receives from the other party.  Each party shall use reasonable care to

protect the other party’s Proprietary Information, in no event less than the

same degree of care it would employ with respect to its own information of like

importance that it does not desire to have published or disseminated.  Each party may make Proprietary Information

of the other party available to those of its employees, agents or contractors

who have a need to know such information for purposes of this Agreement and who

are subject to binding use and disclosure restrictions at least as protective

as those set forth herein.

 

(2)           Exclusions.  The obligation of confidentiality shall not

apply to any information or data which can be proven by the receiving party:

(i) to be publicly known through no wrongful act on the part of Licensee, its

employees or agents; (ii) to be known to Licensee at the time of disclosure; or

(iii) to be rightfully received by Licensee from a third party; or (iv) to have

been approved for release by prior written authorization from Licensor.

 

(l)            Parts and

Service

 

(1)           During

the term of this technology and license agreement, TSA or its sublicensee  may manufacture or have manufactured  parts provided that such manufacture does

not impair the ability of InVision’s suppliers to provide InVision’s needed parts

to perform this Contract as definitized.

 

(2)           During

the term of this technology and license agreement, InVision shall have a first

right of refusal to perform installation and first-year maintenance and repairs

on the licensed EDS Products.

 

 

2.             LICENSE FEE

 

                Upon licensing to

the Government, the InVision shall receive a 

$[...***...] fee for each and

every CTX 5500DS machine, and a $[...***...]

fee for each and every CTX 2500 machine, manufactured by TSA or its

sublicensees, in accordance with the terms and conditions of this license

agreement.

 

 

3.             INCENTIVES

 

                The QASP is the

vehicle the Government will use to monitor InVision performance and adherence

to schedule to meet the technical requirements that are identified as “not

compliant” in the InVision’s proposal. 

The QASP includes incentive fees and penalty assessments expressed in a

monetary value for each technical element identified. If the vendor exceeds

schedule AND meets performance requirements, the incentive fees applies.  If the vendor does not meet schedule OR

performance requirements, the incentive fee is no longer available under this

contract and the penalty assessments apply.

 

 

4.             PRICE

REDETERMINATION/AUDITS

 

	

  3.2.2.3-8

  	

   

  	

  Audit and Records (April 1996)

  
	

  3.2.2.3-25

  	

   

  	

  Price Reduction for Defective Cost or Pricing Data

  (April 1996)

  
	

  3.2.2.3-29

  	

   

  	

  Integrity of Unit Prices (April 1996)

  
	

  3.2.4-23

  	

   

  	

  Contract Price Definitization (April 1996)

  
	

  3.2.4-24

  	

   

  	

  Payments of Allowable Costs Before Definitization

  

* Confidential Treatment

Requested

 

 

9

 

5.             FIRST RIGHTS OF THE

GOVERNMENT

 

(a)           By

accepting this letter contract and any subsequent contract thereof or Delivery

Order arising under this contract, InVision 

guarantees that all explosive detection systems manufactured by or on

behalf of InVision , whether pursuant to a sub-contract, joint venture or other

type of legally binding agreement, regardless of machine type, model and/or

nomenclature as stated within Section B of this contract, shall be first

offered to the FAA or its agent’s for sale or lease and the FAA shall have the

right of first refusal for all such EDS machines regardless of quantity, prior

to any other customers of manufactures. 

Provided, however, that InVision is not obligated to offer to the FAA

the following units that have been ordered or allocated to other customers:

                (b)           This right of first refusal does not

include [...***...] CTX 2500’s, [...***...] CTX 5500’s, [...***...] CTX 9000’s, for a total of [...***...] units backlogged (ordered and

committed) for InVision’s customers.

 

 

6.             DEFENSE PRIORITY

AND ALLOCATION REQUIREMENT

 

The TSA is seeking approval for use of, as a minimum, a DO rated order

certified for national defense use.  It

is anticipated that the approval will be forthcoming very quickly.  Once approved, the InVision shall follow all

the requirements of the Defense Priorities and Allocations System regulation

(15 CFR 700).

 

 

7.             GENERAL CONTRACTOR

 

It is anticipated that the Government will award a contract to a

General Contractor for the administration and management of the Explosive

Detection Systems Program.  The

Government reserves the right to “assign” this contract to the General

Contractor for performance and execution of the contract with InVision becoming

a Government-directed  resource for the

General Contractor.  InVision shall

execute at a minimum a liaison agreement with the General Contractor, shall

remain responsible for all performance requirements contained in this contract,

and shall work with the General Contractor to assure successful deployment of

acceptable EDS products.

 

 

8.             PRODUCT

IMPROVEMENT/TECHNOLOGY ENHANCEMENT

 

Clause 3.10.5-1 “Product Improvement/Technology Enhancement” from FAA’s

Acquisition Management System is included in, and made a part of, this

contract.

 

* Confidential Treatment

Requested

 

10InVision DO1

Exhibit 10.50

 

***Text Omitted and Filed Separately

Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4) and 240.24b-2.

 

Delivery Order

DTFA01-02-23002

Contract

DTFA01-02-C-00023

 

 

DELIVERY ORDER DO#2

Under Contract No.

DTFA01-02-C-00023

 

The purpose of this Delivery Order is to order 100 Explosives Detection

Systems (EDS), establish a delivery schedule for the 100 units and order 300

parts kits known as long lead time items and to order the TDP and manufacture

ramp-up, in accordance with Contract number DTFA01-02-C-00023.   Items authorized under this Delivery Order

are prescribed herein.

 

1.               Section B

 

The Contractor shall provide the following supplies and services in

accordance with the terms and conditions of this letter contract.  The following line item(s) will be ordered

in accordance with the contract amounts set forth below.

 

	

  CLIN

  	

   

  	

  TITLE

  	

   

  	

  QUANTITY

  	

   

  	

  UNIT PRICE

  	

   

  	

  TOTAL

  
	

  RF-01

  	

   

  	

  EDS Products Royalty Fee

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

  RF-01-25

  	

   

  	

  EDS Products Royalty Fee (CTX 2500)

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

  RF-01-55

  	

   

  	

  EDS Products Royalty Fee (CTX 5500DS)

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

  RF-01B

  	

   

  	

  Technical Data Package (TDP) Facilitation and

  factory training

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

  RU-01

  	

   

  	

  Manufacture Ramp Up

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

  00A1A

  	

   

  	

  Parts Kits for SA EDS Unit (CTX-2500) w/powered

  incline conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

  0001A

  	

   

  	

  Pass Through SA EDS Unit (CTX-2500) w/powered

  incline conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

  00A6A

  	

   

  	

  Parts Kits for SA EDS Unit (CTX-5500) w/powered

  incline conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

  0006A

  	

   

  	

  Pass Through SA EDS Unit (CTX-5500) w/powered

  incline conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

   

  	

   

  	

  TOTAL ORDERED

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  $176,300,000

  

 

TBD:  To Be Determined at

contract definitization.

 

 

2.               Funding: 

Funding in the amount of $176,300,000 is hereby authorized under this

Delivery Order, under the provisions set forth below:

 

3.2.4-22 Limitation of Government Liability (April 1996)

 

(a)          In performing this contract, the Contractor

is not authorized to make expenditures or incur obligations exceeding

$176,300,000 dollars.

 

(b)         The maximum amount for which the Government shall be liable

if this contract is terminated is $176,300,000 dollars.

 

(End of clause)

 

Expenditures

above that amount are not authorized, and are at InVision’s own risk.

* Confidential Treatment Requested

 

3.  Section C

 

The Contractor shall deliver the supplies and services associated with

the above CLINs in accordance with the Statement of Work in Contract

DTFA01-02-C-00023.

 

 

4.  Section F

 

The CLINS are to be delivered to the following locations (TBD locations

will be supplied upon completion of FAA site surveys.

 

	

  ITEM NO.

  	

   

  	

  SUPPLY/SERVICE

  	

   

  	

  QTY

  	

   

  	

  DATE OF

  DELIVERY

  	

   

  	

  PLACE OF

  DELIVERY

  	

   

  	

  PLACE OF

  ACCEPTANCE

  
	

  RF-01B

  	

   

  	

  TDP License

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

  [...***...]

  	

   

  	

  [...***...]

  
	

  0001A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-2500) w/powered inclined conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0001A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-2500) w/powered inclined conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0001A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-2500) w/powered inclined conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0001A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-2500) w/powered inclined conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0001A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-2500) w/powered inclined conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0001A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-2500) w/powered inclined conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0001A

  	

   

  	

  Total  Production Units

  	

   

  	

  [...***...]

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  0006A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-5500) w/powered incline conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0006A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-5500) w/powered incline conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0006A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-5500) w/powered incline conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0006A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-5500) w/powered incline conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0006A

  	

   

  	

  Pass Through SA EDS

  Unit (CTX-5500) w/powered incline conveyor and baggage exit slide/conveyor

  	

   

  	

  [...***...]

  	

   

  	

  By [...***...]

  	

   

  	

   

  	

   

  	

  FOB ORIGIN

  
	

  0006A

  	

   

  	

  Total Production Units

  	

   

  	

  [...***...]

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

* Confidential Treatment

Requested

 

 

 

b.  Period of

Delivery

 

The period of delivery for this order is from the date of award through

June 28, 2002.

 

 

5. Section G

 

a)  The

following administration data applies to this order:

 

Contracting Officer

 

                   Federal Aviation Administration

                   Kimberley T. Branch, ASU-360

                   590 Herndon Parkway, Suite 120

                   Herndon, VA  20170-5232

                   Telephone (703) 796-7118

                   Fax (703) 707-5675

 

Contracting

Officer’s Technical Representative (COTR)

 

                   Federal Aviation Administration

                   Ed Ocker, AAR-600

                   590 Herndon Parkway, Suite 120

                   Herndon, VA  20170-5232

                   Telephone (703) 796-7104

                   Fax (703) 707-5675

 

Quality

Reliability Officer (QRO)

 

                   Federal Aviation Administration

                   Quality Reliability Officer (QRO)

                   Lindsey Humphrey, ASU-200

                   7151 Gateway Boulevard

                   Newark, CA  94560

                   Telephone (510) 739-2516

                   Fax (510) 739-6400

 

b.             This

Delivery Order is funded in the amount of 

$176,300,000.  This amount is

considered the contract ceiling.  Unless

modified by the Contracting Officer in writing, the Contractor may not exceed

this 

 

 

ceiling except at its own risk (see clause in

Contracting Officer’s letter dated February 19, 2002 — Limitation of Government

Liability (Apr 1996

 

c.             The

Contractor shall submit to the FAA Contracting Officer the serial numbers/ID

numbers for each system delivered under this Delivery Order, at least one week

prior to, but no later than, delivery of the system.

 

 

6.  Section H —

Special Terms and Conditions

 

The following terms apply to this Delivery Order, number

DTFA01-02-23001 only.

 

(1)          In the event the Contractor fails to meet the delivery

schedule as provided herein, such failure will be considered in accordance with

the Termination for Default clause (AMS 3.10.6-4(1996)).

 

(2)          The Contractor shall execute and perform all terms and

conditions of the License Agreement contained in the Letter Contract under

which this Delivery Order is executed. 

Failure to adhere to the licensing agreement may result in the

Government terminating the contract for default pursuant to the Termination for

Default clause (AMS 3.10.6-4(1996)).

 

(3)           Payment Terms:

 

For CLIN 0001A, 0006A Production Units.

 

For units 1 through 100:

 

Up to 40% of the CLIN price at the time of order, but not to exceed the

actual costs of long lead items.

 

70% of the CLIN price at satisfactory completion of Factory Acceptance

Test (minus any previously paid long-lead items).  Satisfactory completion includes a signed form FAA-256,

Inspection Report of Material and/or Services.

 

30% of the CLIN price at satisfactory completion of Site Acceptance

Test, or 20% upon satisfactory completion of the Site Acceptance Test if the

contractor is responsible for training, but not later than 90 days after

successful completion of the Factory Acceptance Test.  Satisfactory completion includes a signed form FAA-256,

Inspection Report of Material and/or Services.

 

10% of the CLIN price when the unit is fully operational, i.e., at the

completion of Initial Operator Training, if the contractor is responsible for

training.

 

For CLIN 00A1A, 00A6A Production Units.

 

InVision will submit a request for payment / invoice for actual costs

incurred consistent with the quantities identified in Delivery Order #1.

 

7.  Defense

Priority and Allocation Requirement

The TSA is seeking approval for use of, as a minimum,

a DO rated order certified for national defense use.  It is anticipated that the approval will be forthcoming very

quickly.  Once approved, the Contractor

shall follow all the requirements of the Defense Priorities and Allocations

System regulation (15 Code of Federal Regulations Part 700).

 

END OF DELIVERY ORDER

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