Document:

Prepared by R.R. Donnelley Financial -- Charter Customer Agreement

 Exhibit 10.3 
  
 CHARTER CUSTOMER AGREEMENT BETWEEN PELION SYSTEMS, INC. 
 AND COLORADO MEDTECH, INC. 
  
 Parties 
  
 This
agreement is entered into on October            , 2001 between Pelion Systems, Inc., located at 1455 Dixon Avenue, Suite 300, Lafayette, CO 80026 (“Pelion”) and Colorado MEDtech,
Inc., located at 1811 Lefthand Circle, Suite B, Longmont, CO 80501 (“CMED”). 
  
 Pelion Responsibilities 

 
 Pelion agrees to provide CMED with Pelion-CFM 1.2, which includes both software and services to make CMED capable of designing,
implementing and sustaining a Collaborative Flow ManufacturingTM environment. The Pelion-CFM 1.2 solution
includes the following: 
  
 1.  Pelion will provide the expertise, training and software
tools to assist CMED in meeting the objectives outlined in Schedule A. 
  
 2.  A
non-exclusive, nontransferable, site license to use Pelion-CFM 1.2 software solution. 
  
 3.  Collaborative Manufacturing FlowTM (“CFM”) training.

  
 4.  Pelion-CFM 1.2 software application training. 
  
 5.  Reference material for both the CFM implementation and the Pelion-CFM software. 
  
 6.  Implementation project coordination and leadership. 
  

7.  Implementation Schedule. 
  
 CMED Responsibilities 
  
 CMED recognizes that a successful CFM implementation requires
significant participation by it’s management and employees. CMED agrees to provide the following: 
  
 1.  A Project Team with key representatives from Materials, Manufacturing and Manufacturing Engineering. 
  
 2.  A Project Team Leader with appropriate authority to implement Pelion-CFM 1.2. 
  
 3.  Attendance at CFM implementation training sessions and meetings by appropriate Project Team members. 
  
 4.  Adherence to the mutually agreed upon Implementation Schedule. 
  
 Charter Customer Terms 
  
 During and after the
Implementation, Pelion may ask CMED to provide references to other customer prospects and/or investor prospects. CMED agrees to not unreasonably decline such requests. After the implementation, CMED agrees to let Pelion bring customer prospects into
their factory from time to time, as long as the visit is scheduled in advance with CMED factory management. 
  
 Pricing and Payment Terms

  
 Pelion-CFM 1.2 
  
 
	 List Price
 	  	 $
 	 244,000
 	  
 
	 Charter Customer Discount
 	  	  
 	 40
 	 %
 
	 Charter Customer Price
 	  	 $
 	 146,800
 	  
 
	  	  	 
	 
	 

 
 

 Page 1 of 4 

  
 Payment Terms 
  
 
	 Upon Contract Signing
 	  	 25
 	 %
 	  	 $
 	 36,700
 
	 RFI Assembly Line Labor Reduction (1 person)
 	  	 12.5
 	 %
 	  	 $
 	 18,350
 
	 Obsolete Inventory Reduction—not to exceed two weeks after identification of obsolete inventory.
 	  	 12.5
 	 %
 	  	 $
 	 18,350
 
	 Inventory Reduction *
 	  	 37.5
 	 %
 	  	 $
 	 55,050
 
	 Line Live of the PLC line
 	  	 12.5
 	 %
 	  	 $
 	 18,350
 
	  	  	  	  	  	 
	 

	  	  	  	  	  	 $
 	 146,800
 

 
 

	*
	 
	Inventory Reduction Payment Schedule 
 

  
 Actual inventory levels will be determined by physical inventory count. Pelion has established a target Inventory level of $155,000 (“Target”) based on demand and other inputs from Customer.
An inventory reduction goal (“Reduction Goal Amount”) will be established by subtracting the Target from Actual. The Reduction Goal Amount will added to this contract as Schedule B. Pelion will be paid $11,010 ( 1/5 of 37.5%) each time
there is a 20% reduction in Customer inventory against the Reduction Goal Amount. All inventory amounts are exclusive of finished goods inventory, if any. 
  
 Customer will provide Pelion with an accurate inventory report from the MRP system each Friday, once the Reduction Goal Amount has been established, that shows Actual on-hand inventory. If an
incremental 20% reduction has been achieved, Pelion will provide an invoice the following Monday with payment due by Friday of the same week in which the invoice is submitted. 
  
 Parties agree that all of the inventory calculations have been determined based on a nominal demand of six (6) RFI units produced per day. Should the demand change
sufficiently to warrant a change in Target inventory levels, Parties agree to renegotiate, in good faith, all payment terms tied to inventory levels. 
  
 Integration With Customer MRP System 
  
 Pelion agrees to integrate Pelion-CFM 1.2 with
CMED’s Syteline MRP system at no additional charge. 
  
 Software Maintenance and Support 
  
 Pelion will provide software upgrades and phone support for a period of one year after Implementation Completion as part of the initial
price of Pelion-CFM 1.2. CMED may continue receiving software upgrades and phone support by entering into Annual Maintenance Agreements for subsequent years within sixty (60) days of the end of each maintenance term. The cost of a One-year
Maintenance Agreement is equal to 15% of the initial cost of Pelion-CFM 1.2. 
  
 Pelion Property 
  
 Pelion retains sole ownership of all intellectual property rights including the source code, the object code and all Pelion published
documentation. CMED will take reasonable measures to protect Pelion’s intellectual property rights. 
 

 Page 2 of 4 

  
 Confidentiality 
  
 Each party will (a) maintain the Confidential Information of the other party in strict confidence during the term of this Agreement and for a period of three (3) years
thereafter; (b) treat the Confidential Information of the other party as it treats its own Confidential Information; (c) disclose such Confidential Information only to its employees, independent contractors and consultants as is reasonably required
in connection with this agreement. 
  
 Warranties and Disclaimers 
  
 Pelion represents and warrants that services will be performed in a good and workmanlike manner, consistent with applicable industry standards. Except as otherwise provided
herein, all products and services provided by Pelion hereunder are provided “AS IS” and Pelion makes no warranty or guarantee, express or implied, with respect thereto. 
  
 Limitation of Liability 
  
 IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR ANY INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER, SUFFERED BY THE OTHER PARTY OR ANY THIRD PARTY, INCLUDING, WITHOUT LIMITATION, LOST PROFITS, DATA LOSS, BUSINESS INTERRUPTIONS OR OTHER ECONOMIC LOSS ARISING
OUT OF THE PERFORMANCE OR NON-PERFORMANCE OF OBLIGATIONS HEREUNDER OR ANY USE OF OR FAILURE TO BE ABLE TO USE THE BUNDLED PRODUCT. Each party’s total aggregate liability for any damages arising out of or related to this Agreement will not
exceed the fees paid by CMED hereunder. 
  
 Governing Law 
  
 All questions concerning the validity and operation of this Agreement and performance of the obligations imposed upon the parties hereunder shall be governed by the
substantive laws of the State of Colorado. 
  
 Agreed to by: 
  
 
	 PELION SYSTEMS, INC. 
 	 	  	 	 COLORADO MEDTECH, INC.
 
	 
	 Signature:
 	 	 
	 	  	 	 Signature:
 	 	 

	 
	 Name:
 	 	 
	 	  	 	 Name:
 	 	 

	 
	 Title:
 	 	 
	 	  	 	 Title:
 	 	 

	 
	 Date:
 	 	 
	 	  	 	 Date:
 	 	 

 
  
 

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 SCHEDULE A 
  
 
	
	
	
	
	

	 Calendar
 	  	 Actions
 	  	 Outcomes
 
	
	
	
	
	

	 
	 Week 1/
 	  	 —Understanding of transformation
 —Define team players
 —Establish daily meeting time with entire team and leads
 —Establish metrics for program process improvements
 —Establish methodology for comprehensive
understanding of CFM by CMED personnel
 	  	 —Master plan defined
 
	
	
	
	
	

	 
	 Week 1,2/
  
  
  
  
 (MILESTONE #1)
 	  	 —Product definition
 —Part master
 —BOMs
 —Software Install
 —Identify all material that exists in-house or on-order for the SSM, RFI, and Eagle
 	  	 —Item master extracted from Syteline, loaded into Pelion CFM
 —BOMs extracted from Syteline, loaded into Pelion CFM
 —Accurate BOMs with slow moving and obsolete materials identified
 —Place all obsolete material in stores
 
	
	
	
	
	

	 
	 Week 3/
 	  	 —Demand
 —Process relationship, including Yield, Rework, Scrap %
 —SOEs: times by product by process

—TAKT time
 —Effective hours
by process
 —Kanban
 Establish material strategy
 ABC analysis
 Identify Kanban candidates
 Develop pull chains
 	  	 —Daily demand by product
 —Product syncs
 —Product syncs loaded into Pelion CFM
 —Manage daily updates with Syteline
 —Times by product by process
 —Pull chains by component
 —Effective hours by process
 —Data loaded into Pelion CFM
 
	
	
	
	
	

	 
	 Week 4/
 (MILESTONE #2)
 	  	 —Resources requirements
 —Balancing tools
 —Operational definition
 —Daily demand staffing
 —Response
definition
 —Operational method sheets
 	  	 —Line design output
 Paper
design
 Sequencing points defined
 Facility rearrangement plan
 —Kanban output
 Bin sizing
 Material presentation
 —Staffing
requirements
 
	
	
	
	
	

	 
	 Week 5/
 	  	 —Facility rearrangement
 —Lean Flow mentoring training
 —Collaborative Kanban
 Key supplier set-up
 —Software
training
 	  	 —Daily measurements defined:
     linearity & flow
rate
 —Daily planning, sequencing
 —Kanban management
 —Kanban inventory / MRP management (end of life, slow moving, obsolete)
 —Train-the-trainer
 —Process management
 
	
	
	
	
	

	 
	 Week 6/
 (MILESTONE #3)
 	  	 —Line Live
 	  	 —Facility operating in lean flow environment
 
	
	
	
	
	

	 
	 Week 7/
 	  	 —CMED “solo”
 	  	 —CMED independent
 
	
	
	
	
	

	 
	 Week 8/
 	  	 —Process certification
 —Preferred Supplier Day
 	  	 —Project validation and completion
 —Key suppliers introduced to Collaborative Kanban
 
	
	
	
	
	

	 
	 Continuing
 Support
 	  	 —PLC Implementation Support
 	  	 —Metric to validate institutionalization of CFM within CMED
 
	
	
	
	
	

	 
	 Recommended Resources
 	  	 Process Team
 Manufacturing Manager
 Manufacturing Engineer
 Shop Floor Personnel
 QA
 Finance
 	  	 Product Team
 Planner

Buyer
 Scheduler
 QA
 Design Engineer
 Material Handlers
 
	
	
	
	
	

 
  
 

 Page 4 of 4Prepared by R.R. Donnelley Financial -- Charter Customer Agreement

 Exhibit 10.4 
  
 CHARTER CUSTOMER AGREEMENT BETWEEN PELION SYSTEMS, INC. 
 AND NISSAN FORKLIFT 
  
 date 
  
 Parties 

 
 This agreement is between Pelion Systems, Inc., located at 1455 Dixon Avenue, Suite 300, Lafayette, CO 80026
(“Pelion”) and Nissan Forklift, located at 240 N. Prospect Street, Marengo, IL 60152 (“Customer”). 
  
 Pelion
Responsibilities 
  
 1.  Provide Customer with a non-exclusive, nontransferable, site license to use
Pelion-CFM 1.2 software solution. 
  
 2.  Pelion-CFM 1.2 software application training. 

 
 3.  Reference material for Pelion-CFM software. 
  
 4.  Deliver Demand Manager module by June 30, 2002. 
  
 Customer Responsibilities 
  
 1.  Provide Pelion with monthly written reports, for a
period of six (6) months, that provide feedback on usability, functionality, problems and desired enhancements. 
  
 2.  Provide periodic phone references to prospective Pelion customers. 
  
 3.  Allow a maximum of six (6) factory tours over the twelve month period starting from the date of this agreement, provided that such tours are scheduled with Customer Factory Management in advance. 

 
 4.  Provide necessary computer hardware with minimum requirements defined as: 
  
 Pricing and Payment Terms 
  
 Pelion-CFM 1.2 
  
 
	 List Price
 	  	 $
 	 244,000
 	  
 
	 Charter Customer Discount
 	  	  
 	 40
 	 %
 
	 Charter Customer Price
 	  	 $
 	 146,800
 	  
 

 
  
 Payment Terms 
  
 
	 Upon Contract Signing
 	  	 25
 	 %
 	  	 $
 	 36,700
 
	 Upon completion of MRP integration.
 	  	 25
 	 %
 	  	 $
 	 36,700
 
	 Upon installation of CFM 1.2 at Customer site
 	  	 25
 	 %
 	  	 $
 	 36,700
 
	 Upon installation of Demand Manager
 	  	 25
 	 %
 	  	 $
 	 36,700
 

 
 

 Page 1 of 3 

  
 Integration With Customer MRP System 
  
 Integration with Customer’s MRP system will be provided by Pelion at no charge. Typical integration fees range from $10,000-$20,000. 
  
 Software Maintenance and Support 
  
 Pelion will provide software upgrades and phone support for a period of one year after Implementation Completion as part of the initial price of Pelion-CFM 1.2. Customer may continue receiving software upgrades and phone support by
entering into Annual Maintenance Agreements for subsequent years within sixty (60) days of the end of each maintenance term. The cost of a One-year Maintenance Agreement is equal to 15% of the initial cost of Pelion-CFM 1.2. 
  
 Pelion Property 
  
 Pelion retains sole ownership of all intellectual property rights including the source code, the object code and all Pelion published documentation. Customer will take reasonable measures to protect Pelion’s intellectual
property rights. 
  
 Confidentiality 
  
 Each party will (a) maintain the Confidential Information of the other party in strict confidence during the term of this Agreement and for a period of three (3) years thereafter; (b) treat the
Confidential Information of the other party as it treats its own Confidential Information; (c) disclose such Confidential Information only to its employees, independent contractors and consultants as is reasonably required in connection with this
agreement. 
  
 Warranties and Disclaimers 
  
 Pelion represents and warrants that services will be performed in a good and workmanlike manner, consistent with applicable industry standards. Except as otherwise provided herein, all products and
services provided by Pelion hereunder are provided “AS IS” and Pelion makes no warranty or guarantee, express or implied, with respect thereto. 
  
 Limitation of Liability 
  
 IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER, SUFFERED BY THE OTHER PARTY OR ANY THIRD PARTY, INCLUDING, WITHOUT LIMITATION, LOST PROFITS, DATA LOSS, BUSINESS INTERRUPTIONS OR OTHER ECONOMIC LOSS ARISING OUT OF THE
PERFORMANCE OR NON-PERFORMANCE OF OBLIGATIONS HEREUNDER OR ANY USE OF OR FAILURE TO BE ABLE TO USE THE BUNDLED PRODUCT. Each party’s total aggregate liability for any damages arising out of or related to this Agreement will not exceed the fees
paid by CUSTOMER hereunder. 
  
 Governing Law 
  
 All questions concerning the validity and operation of this Agreement and performance of the obligations imposed upon the parties hereunder shall be governed by the substantive laws of the State of
Colorado. 
 

 Page 2 of 3 

  
 Agreed to by: 
  
 
	 PELION SYSTEMS, INC. 
 	 	  	 	 Customer
 
	 
	 Signature:
 	 	 
	 	  	 	 Signature:
 	 	 

	 
	 Name:
 	 	 
	 	  	 	 Name:
 	 	 

	 
	 Title:
 	 	 
	 	  	 	 Title:
 	 	 

	 
	 Date:
 	 	 
	 	  	 	 Date:
 	 	 

 
  
 

 Page 3 of 3

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