Master Manufacturing Agreement – Digital Angel Corp.

A.

Customer is in the business of designing, manufacturing and selling
electronic products for military market and providing related systems and
services.

B.

Supplier is a company engaged in the manufacture of electronic devices and
has a long-term experience and technical expertise in the manufacture of
electronic cards and box-building.

C.

Customer desires to subcontract to Supplier the manufacture of certain
electronic devices, as well as certain related services including sourcing,
procurement, certain testing, maintenance and repair.

D.

The Parties therefore wish to establish the terms and conditions of a
long-term manufacturing agreement and thereby agree, for each product listed
under Appendix A as revised and updated from time to time (the
“Products”), on the terms and conditions of (i) transfers by Customer to
Supplier of certain technical data relating to the products (ii) the overall
Product manufacturing applicable by Supplier and related supply process to
Customer, and (iii) the services to be provided by supplier in relation to the
Products, also listed under Appendix A (the “Services”).

1.1

The purpose of this agreement (the “Agreement”) is to set forth the terms and
conditions for the manufacture and supply by Supplier to Customer of Products
and Services listed in Appendix A against purchase orders which may be placed by
the Customer, now and then. It is expressly agreed that time shall be of the
essence, in accordance with the agreed lead-times.

1.2

The terms of this Agreement shall apply to all orders of Products and
Services placed in accordance with the terms contained herein by the Customer
and by any entity directly or indirectly controlling, controlled by, or under
common control with the Customer (the “Affiliates”). Affiliates or the Customer
are intended to qualify as direct and indirect beneficiaries of this Agreement
as if signatories hereof. The term “the Customer” shall therefore include, for
the purposes of this Agreement, The Customer and any and all Affiliate of the
Customer placing an order for Products or Services with Supplier. As of today,
Affiliates are: Orolia Sas, Kannad Sas and McMurdo Ltd.

1.3

All Products and Services supplied to Customer by Supplier shall conform to
the technical specifications, manufacturing and supply rules and methods as
described in the warranty Section 9 and more generally to all terms and
conditions contained and referred to in this Agreement.

2.1

A list of all Manufacturing Files and Information already provided or made
available to Supplier by Customer on or before the execution of this Agreement
is set out under Appendix B. For the purpose of this Agreement the term
“Manufacturing Files Information” shall mean all information and data provided
by Customer with respect to the Product and Testing; it shall exclude Supplier153s
manufacturing processes. Supplier acknowledges that all Manufacturing Files and
Information supplied or made available to it under this Agreement are and shall
at all times remain the exclusive property of, and fully owned by Customer and
supplied and made available to Supplier exclusively for the purpose of this
Agreement. Supplier further recognizes that it or any third party shall not
acquire any ownership or other right whatsoever on any of these manufacturing
files and information, including through the passing of time, and that upon
termination or expiration of this Agreement for any reason whatsoever, the same
shall be returned to Customer in accordance with Article 14 below.

2.2

A list of all specialist tools already provided or made available to Supplier
by Customer on or before execution of this Agreement is set out under Appendix
B. Supplier acknowledges that all tools supplied or made available to it under
this Agreement are and shall at all times remain the exclusive property of, and
fully owned by Customer and are supplied and made available to Supplier
exclusively for the purpose of this Agreement. Supplier further recognizes that
it or any third party shall not acquire any ownership or other right whatsoever
on any of these tools, including through the passing of time, and that upon
termination or expiration of this Agreement for any reason whatsoever, the same
shall be returned to Customer in accordance with Article 14 below. It is the
responsibility of Supplier to maintain and calibrate such tools at Supplier153s
cost for a mutually agreed life. Such tools must be clearly marked with
Customer153s name and asset number.

2.3

Manufacturing of Products by Supplier under this Agreement shall be subject
to the prior issuance by Customer, for each Product, of a product and process
qualification. The products for which Supplier has already obtained such
qualification on or before the execution of this Agreement are set out under
Appendix A.

2.4

In the event that new products would be manufactured by Supplier in
accordance with Article 10 below, Customer shall provide Supplier with the
specifications and Manufacturing Files and Information of such new product and
with the necessary specialist tools.

2.5

The use of specialist tools may comprise the use of test software as
indicated in Appendix B. Nothing herein shall construe as granting to Supplier
any right or such test software through the authorized of the tools under this
Agreement. Such test software shall be treated as strictly confidential and
Supplier shall be responsible for recording revision of all test software and
regularly backing-up.

2.6

It may, from time to time, be mutually agreed in writing that Supplier shall
develop and supply under its full responsibility some testing tools. In such
case, Supplier shall transfer to Customer all the intellectual property rights
pertaining to the tool, software, data or other related material upon conception
as outlined in clause 10.3

3.1

For the purpose of manufacturing the Products hereunder, Supplier will source
parts from approved vendors or manufacturers, as specified by Customer in the
Bill of Materials or Approved Vendor List (“BOM or “AVL”) that Customer will
supply as part of the Manufacturing File and Information. Certain BOM and list
of approved vendors or manufacturers are already indentified under Appendix B.

3.2

Except as otherwise agreed in writing between the Parties, Supplier shall be
responsible to any third party supplier for the acquisition and supply of any
component and for the payment thereof. It is agreed that, while the Supplier
will totally be responsible for Supplier Controlled Components, Supplier will
only manage the relationship, the purchasing, procurement, incoming inspection
for Customer Controlled Components as expressly identified as such in Appendix
D.

4.1

Customer will issue purchase order for Products under this Agreement
according to a frozen shipment schedule described in Appendix C. Supplier will
launch procurements according to this schedule and Lead Times and as per rules
described in said Appendix C, as needed for the proper fulfillment of the
purchase orders within the agreed Lead Times.

4.2

All purchases orders placed by Customer shall be made in writing, sent either
by mail, by telecopy or by e-mail (confirmed by telecopy) to Supplier Planning
Services and shall include for each Product or Products so ordered:

–

Customer purchase order reference,

–

The exact Product reference and identification,

–

The applicable technical revision level indicator,

–

The applicable purchase price, and,

–

The delivery terms and conditions including as to delivery date and place.

4.3

In order to constitute binding orders between the Parties, purchase orders
shall be subject to confirmation by Supplier, within a number of days, depending
on whether there was a forecast, as indicated in Appendix C, elapsing from
receipt by Supplier of the relevant Customer purchase order. Supplier shall
confirm orders in writing. A written acknowledgement of receipt (or also
referred to as “purchase order confirmation”) shall be addressed to Customer
Scheduling Department and shall confirm quantities, price, delivery date and
place according incoterms for the Products ordered within 5 working days at the
maximum for un-forecasted Purchase Orders. Unless a written purchase order
confirmation is sent to Customer Scheduling department within said time period,
purchase orders shall be deemed accepted and confirmed by Supplier upon expiry
of said confirmation period. Any modification to the terms and conditions shall
only be accepted if confirmed in written form by both Parties. Supplier has the
obligation to accept any purchase orders issued by Customer in accordance with
this Agreement and covered by forecast.

4.4

Only purchase orders confirmed in accordance with Article 4.3 above will
trigger the manufacturing process by Supplier for the relevant products. This
Agreement shall in no manner constitute a general authorization, whether express
or tacit, granted by Customer to Supplier, to manufacture Products, or parts
thereof, in advance of actual purchase orders so confirmed. Customer shall in no
manner have an obligation to purchase finished Products from Supplier other than
under a purchase order accepted as set forth above.

4.5

During the regular Monitoring Committee meetings, once per month during the
qualification process and then, once per quarter, Supplier shall advise Customer
in writing and documented of any excess or obsolete Components in its inventory
and their Delivered Cost (the “E&O List”). For the purpose of this
Agreement, “Delivered Cost” shall mean Supplier153s standard cost of Components as
stated on the bill of materials plus Supplier material overhead (MOH) costs.
Within ten (10) business days of receiving Supplier153s E&O List, Customer
shall advise Supplier of any Component on the E&O List that believes is not
excess or obsolete. After Receiving Supplier153s E&O List, Customer shall
issue to Supplier an Order for all obsolete Components and pay in accordance
with Article 8 of this Agreement. For the purpose of this Section, the phrased
“obsolete Component” shall mean any component which is confirmed as being an
obsolete Component by Customer (based on the Supplier153s MRP information) because
it will not be used to manufacture Customer153s Product (whether as a result of an
ECN or otherwise), and the term “excess Component” shall mean any Component
which is not required to meet Customer153s 12 months Forecast to which such
Component was initially ordered. Supplier shall report any non expected events:
Concession, waiver, yields below standard, fails during FQC (Final Quality
Control),166

4.6

Supplier undertakes to maintain at all times during this Agreement and under
its own responsibility a safety stock of Products and/or a minimum stock of
components as indicated in Appendix C.

4.7

The stock of production components under Customer ownership shall be kept
under the custody of the Supplier, at the Customer153s own cost and Supplier153s
risk. Supplier will not source any such components from third-party suppliers
until such inventory is fully consumed.

5.1

Supplier shall deliver the Products DDP (INCOTERM 2010 of the ICC) a location
in the UK (to be confirmed by MoD)

5.2

Supplier acknowledges that time of delivery is of essence and that forecasts
provided to Supplier will be established on the basis of delivery programs and
obligations in force between Customer and its own clients. Delivery in due time
(as per Appendix C) by Supplier is therefore an essential obligation under this
Agreement and Supplier acknowledges that Customer153s decision to contract with
Supplier was based on the latter153s ability to supply the Products in accordance
with Customer153s needs and constraints.

5.3

Supplier shall inform, by written notice (i.e. email, confirmed via fax), as
soon as reasonably possible Customer of any late deliveries or risk thereof and
provide Customer with an explanation of the reasons for such failure, the
measures taken by Supplier to remedy such delay, as well as the next possible
date of delivery. In case of failure to make a delivery on the contractually
requested delivery date (as outlined in Appendix C), Supplier shall be liable
for the late delivery penalties as outlined in Appendix C.

5.4

Delivery delays in delivery exceeding five (5) working days beyond the
mutually agreed written contractual date of delivery shall render the Supplier
be liable for liquidated damages. When no due date has been agreed, the delivery
Lead-Times in Appendix C shall apply. The liquidated damages shall be calculated
on the price of the delayed Products not delivered on the mutually agreed
delivery date. The liquidated damages shall be one percent (1%) of the second
calendar week and two percent (2%) for the third and two (2%) for the fourth
week of delay of the price of delayed Products not delivered on the mutually
agreed delivery date up to a maximum of five (5) percent of the price of delayed
Products not delivered on the mutually agreed date. In the event that the
Products are not delivered after week four (4), it has been agreed that the
liquidated damages scheme would re-start based on the mutually agreed
re-acknowledgment delivery date. Supplier shall be obliged to notify a
re-acknowledgement date as soon as it become aware of a potential delay that
would go beyond four (4) weeks delay. The possibility to make partial deliveries
shall be mutually and agreed between the parties in advance.

5.5

Packaging and shipping shall be made in accordance with the standards and
specifications set out in Appendix E, and more generally so as to protect the
Products from any defects that may result from the transport. Packing slips will
be attached to any Product delivery and, where applicable, will include the
serial number of the Product and any relevant identification element.

5.6

Transfer of ownership and risks of the Products shall pass to Customer on
delivery in accordance with the agreed incoterms.

5.7

Supplier undertakes to comply with health, safety and environmental rules and
regulations applicable to the manufacturing of the Products accordingly, inform
Customer (For this article, Customer is Signature Industries Ltd) that contains
a substance or a material, which could pollute the environment or may be
dangerous or hazardous for human health or the security of persons, even if such
risk may only arise after a wrongful use or manipulation of the Product.

5.8

The Products sold are verified by the Supplier in its factory as being
compliant with the terms and conditions of this Agreement and with Customer
specifications. Supplier shall send Customer a certificate of internal
acceptance proving that all mutually agreed tests have been successfully passed.

6.1

Technical specifications applicable to the Products are given by the
technical revision level indicator provided in each purchase order. Technical
modification requirements regarding the Products or its components shall be
addressed by Customer to Supplier in accordance with article 11 below.

6.2

The Products shall be manufactured in accordance with (a) the applicable
technical standards and the procedure described in the Manufacturing Files and
Information provided to Supplier upon execution of this Agreement or
subsequently thereafter, and more generally in accordance with (b) Customer BOM
information as per Appendix B, (c) the certifications as provided in Appendix F,
(d) applicable industry standards. In particular, Supplier shall proceed with
all controls and tests described in such files.

6.3

Supplier is currently ISO 9001-2008 certified and shall during the term of
this Agreement be and remain ISO certified and maintain management quality
criteria described in the Quality Assurance Agreement attached hereto as
Appendix F. Supplier further undertakes to maintain during the term of this
Agreement the certificates listed in Appendix F. Supplier shall also maintain
during the term of this agreement its business continuity plan as described in
said Appendix F. Without prejudice to the provisions of Article 6.4, Supplier
shall allow visits or operational related audits of its manufacturing and
inventory site by either Customer or Customer153s clients, upon Customer153s prior
notification, during normal business days and hours, at conditions that will be
mutually agreed beforehand.

6.4

Upon advance reasonable prior written notice from Customer and subject to the
execution of an appropriate nondisclosure agreement by external auditors, if
any, to comply with Supplier153s confidentiality rules, Supplier shall provide
such auditors, as Customer may from time to time designate in such notice, with
reasonable access, during normal business days and hours, to the manufacturing
and inventory sites of Supplier for the purpose of performing audits to verify
the nature, quality and quantity of any and all components, elements or
sub-assemblies used to manufacture the Products, to examine the manufacturing
process, tests and controls performed by Supplier, the performance of the
specialist tools used, and more generally, any element in relation with the
quality of the Products. Supplier shall provide to such auditors any reasonable
additional assistance on site that they reasonably require, at no cost to
Customer nor such auditors. Customer and its representatives acknowledge that
their presence on Supplier153s property is at their sole risk. If the audit
performed by Customer reveals any deficiencies, concerns and/or recommendations,
both Parties shall, upon written request to that effect sent by Customer, review
and carry out remedial action in accordance with the corrective action.

6.5

Customer shall have the right to reject any Product in accordance with
Article 9 (“Warranty”) not compliant with the agreed requirements and
specifications (such as without limitation, manufactured in violation of the
applicable technical specifications set out in the manufacturing files or
otherwise applicable).

6.6

Supplier shall keep all records and documentation necessary to bring evidence
of activities and results obtained in relation to Products manufacturing. When
appropriate, on specific Customer153s request, some documentation in relation with
controls and tests carried out such as, management reviews, corrective and
preventive actions reviews and plans, process qualifications, will be kept by
Supplier for a period of time mutually agreed upon by the Parties and Supplier
hereby authorizes Customer to obtain, upon first demand, copies of such
documentation.

7.1

Supplier shall provide the Services described in Appendix A, in accordance
with the service levels and specifications set out in Appendix H.

7.2

The Services shall be ordered through a purchase order or through a
formalised authorisation form.

8.1

Supplier will supply the Products and Services to Customer in accordance with
the prices set out in Appendix C.

8.2

Invoices shall be directly addressed by the Supplier, to the Accounting
Department as indicated in the order. Each invoice shall be expressed in the
currency stipulated in the order.

8.3

Payment shall be made following invoice and Thirty (30) days net of receipt
of relevant undisputed invoice and delivery of compliant Products and Services.

9.1

Supplier warrants that the Products shall, during the mutually agreed
warranty period (hereinafter referred to as “the Warranty Period”), be a) free
from defects in manufacturing process, workmanship and, in the event of a
Supplier Controlled Material (subject to the provision hereinafter with regards
to Customer Controlled Material), material and b) compliant with the Customer
specifications and the requirements contained in or referred to in this
Agreement. The Products shall be manufactured in conformity with such applicable
specifications. With respect to Customer Controlled Material included in the
Products, Supplier warrants that the incoming inspection has been performed by
Supplier with all due care and skill and in accordance with industry standards
in order to ensure that the Customer Controlled Material comply with Customer
specifications and the needs and requirements of this Agreement.

9.2

The Warranty Period applicable to the Products shall be thirty six (36)
months commencing on the date of manufacture in accordance with the Product date
code. Supplier shall, at its option and its expense, either repair or replace
any defective Products during the Warranty Period, at no cost for Customer.
Replacement shall be made within a commercially reasonable number of days of the
date of return of the defective Product or within that number of days as agreed
under relevant purchase order. Any repaired or replaced Product shall be
warranted as set forth in this Article for a period equal to the greater of (i)
the balance of the applicable warranty period relating to such Product or (ii)
ninety (90) days after it is received by Customer. All returns shall state the
specific reason for such return.

9.3

Supplier shall pay all transportation costs (including freight costs and
packaging fees) for returns of the Products to Supplier pursuant to this Article
9 and for the shipment of the repaired or replacement Products to Customer, and
shall bear all risk of loss and damage to such Products while in transit.

9.4

Exclusions from Warranty. The warranty will not cover defects or failures
resulting from (a) Customer153s design of Products and (b) if and to the extent
the defect is due to neglect, abuse, misuse, accident improper handling,
testing, storage or installation including improper handling in accordance with
static sensitive electronic device handling requirements of the concerned
Product by Customer, its agents or its clients, (c) alterations, modifications
or repairs by Customer or third parties, unless in agreement with Supplier or
(d) defective Customer-provided test equipment or test software.

10.1

In the event Customer desires to subcontract to Supplier the manufacture of
new products, Customer shall provide Supplier with initial manufacturing data
and with the necessary specialist tools enabling Supplier to evaluate the
initial investment required to initiate such manufacturing.

10.2

Customer shall, after agreement by the Parties on the price per unit for the
supply of any new product as well as the initial investment required to be paid
by Customer, where applicable, provide Supplier with the complete specifications
and information (industrial files) in connection with this new product.

10.3

The Parties acknowledge that all Intellectual Property Rights owned by the
other party prior to the date of this Agreement shall remain the property of
that party (Background intellectual Property Rights). No intellectual property
rights shall be transferred under this Agreement except for the intellectual
property rights in new products, manufacturing files, software (if applicable),
specifications, documentation, tools and other material created or modified and,
if so agreed between the Parties, paid for by Customer under this Agreement
pursuant to Customer153s request and specifications (hereafter referred to as
“Materials”), such Intellectual Property Right shall vest in Customer absolutely
upon creation (or upon payment if such payment is agreed between the Parties).

10.4

The Supplier undertakes not to retain copies of the Material following the
expiry or termination of this Agreement without the prior written consent of
Customer.

10.5

All intellectual property rights developed by Customer shall always remain
vested in Customer.

10.6

Should the Supplier be the developer of such Material, then Supplier shall
transfer to Customer all the intellectual property rights pertaining to the
Material upon their conception. Such intellectual property rights shall be
transferred to Customer for all countries and for the entire duration of the
intellectual property rights. The intellectual property rights so transferred
include, in particular, any modification, upgrades, enhancements or changes to
the Material, which Customer may carry out, or have carried out by Supplier or a
third party and the rights to reproduce, commercially use and distribute the
Material.

11.1

Supplier shall inform Customer of any changes to the production process, the
production location, the production line, the technology, sub-contractors or
suppliers used. Upon notification, Customer shall have the right to proceed to
any verification in this respect and obtain from Supplier initial samples. Any
notified modification, shall in order to be carried out, be subject to the prior
written approval of Customer.

11.2

Customer shall have the right to request from Supplier certain technical
modification requirements regarding the Products. Within one week from
Customer153s written request, Supplier shall provide Customer with an estimate of
the time and cost to carry out such modifications, which shall, in any case, be
subject to written authorization by Customer. Supplier will take all necessary
actions to implement such modifications according to Customer153s requirements.

11.3

Supplier shall not modify the Products, its components or technical
specifications or bring modifications to the manufacturing process without the
written prior approval of Customer. Supplier shall be responsible for the
implementation of such modifications, including the implications of these
modifications on the related inventory. The parties shall mutually agree the
date of implementation of approved modifications.

11.4

The procedure for the above possible changes (“engineering change
notification” or “ECN”) is described in Appendix G.

11.5

Supplier shall provide end of life (“EOL”) services for a period identified
in Appendix H and starting from last production run, including maintenance of
equipment, know-how and required materials. Customer will advise of Product
discontinuance with a minimum notice period identified in said Appendix H prior
to the last production run, along with a firm forecast. Customer is responsible
for minimizing inventory exposure and lifetime buys of parts during this period.
No lifetime buys will be purchased without prior written consent from Customer,
these parts will become Customer153s property upon receipt, and will be invoiced
accordingly. Supplier will negotiate phased deliveries of lifetime buys as per
the rules under Appendix H, proactively monitor component life cycles and advise
Customer accordingly. Any relevant EOL/PCN information that Supplier receives
from parts vendors must be promptly relayed to Customer. Lifetime buys resulting
from component EOL will be handled as for Product EOL described above.

12.1

This Agreement shall become effective as of the date of 11th of July 2011
(“Effective Date”) and by execution by both Parties and, unless earlier
terminated as provided herein, shall continue in effect for a period of two (2)
years. Upon expiry of the initial term, this Agreement shall continue from year
to year until one Party terminates the Agreement in accordance with Article 13.

13.1

Customer may, in case of a breach of obligation relating to a specific order
and in the event such breach has not been remedied within thirty (30) days
following the written notice to do so, terminate the correspondent order only
and decide, at its own discretion, to pursue the Agreement.

13.2

Either Party may terminate this Agreement immediately and automatically in
writing, without any advance or prior notice, upon the occurrence of the
following events: (i) to the extent permitted by law, in the event that the
other undergoes a bankruptcy proceedings or otherwise becomes insolvent or is
stuck by any other bankruptcy-related judicial procedure, or (ii) enter into or
file a petition, arrangement or proceeding seeking an order for relief under the
bankruptcy laws of its respective its respective jurisdiction; (iii) enter into
a receivership of any of its assets or (iv) enter into a dissolution or
liquidation of its assets or an assignment for the benefit of its creditors.

13.3

Either Party may terminate this Agreement for convenience, at any time by
written notice given (i) to Supplier at least six months prior to the date on
which such termination is to become effective in the which such termination is
to become effective in the case Customer is the terminating Party and (ii) to
Customer at least six months prior to the date on which such termination is to
become effective in the case Supplier is the terminating Party, subject to the
provision in Article 8.1

13.4

Upon expiration or termination of this Agreement for any reason, unless
otherwise instructed by Customer, Supplier shall return to Customer all
documents, specialist tools and material provided by Customer within thirty (30)
days of expiration or termination on mutually agreed costs in accordance with
the mutually agreed Incoterms 2010. Upon expiration or termination of this
Agreement for any reason, unless otherwise instructed by Supplier, Customer
shall return to Supplier all Supplier Confidential Information within thirty
(30) days of expiration or termination on mutually agreed costs in accordance
with the mutually agreed Incoterms 2010.

13.5

Except in the event of termination for breach of the Supplier either of the
order or of the Agreement as outlined in 13.1, In the event of the termination
of this agreement, Customer shall (subject to any other agreement of the Parties
at the time) be required:

a)

To purchase from Supplier the ordered and finished Products which at the date
of termination have been manufactured by Supplier (and which have not already
been paid for by Customer), and

b)

To pay Supplier for the components or other raw materials ordered by Supplier
solely for the performance of its obligations hereunder including Work in
Progress corresponding to a purchase order issued by Customer, up to level
mutually agreed by the Parties during their last Monitoring Committee meeting
for the purchase price including material overhead of such components or raw
materials.

13.6

In case of termination, Supplier shall provide Customer with commercially
reasonable support and assistance necessary for the transfer by Customer of the
manufacturing of the concerned Products to another supplier. The costs for such
support shall be mutually agreed between the parties.

13.7

In the event Customer terminates this Agreement or any Order hereunder as a
result of a breach by Supplier, Customer shall purchase:

a)

The contract price for all finished Products existing at the time of
termination;

b)

Components pursuant to Article 4.7 and

c)

Customer Controlled Components

13.8

The provisions of Articles 2, 8, 9, 13, 14, 15, 16, 19, 20 and 21 shall
survive any termination or expiration of this Agreement.

14.1

Specifications applicable to the Products, Services, designs, drawings,
technical data, samples, financial data and any other information whatsoever,
provided to the Supplier by Customer under this Agreement (“Confidential
Information”) shall be considered as strictly confidential during the term of
this Agreement and for a period of four (4) years thereafter.

14.2

Confidential Information may be subject to specific requirements from
Customer, as will be then notified and discussed with Supplier.

14.3

Customer shall keep Supplier153s Confidential Information received under this
Agreement strictly confidential during the term of this Agreement and for a
period of four (4) years thereafter, provided such Confidential Information has
been marked as confidential at the time of its disclosure or, if disclosed
orally or visually, has been reduced in writing and marked as confidential
within fifteen (15) days following the disclosure.

14.4

The Receiving Party shall not obligated to maintain in confidence: (i)
Confidential Information which is, or subsequently may become, within the
knowledge of the public generally or which is in the public domain, through no
fault of the Receiving Party, (ii) Confidential Information which the Receiving
Party can show was previously known to it as a matter of record at the time of
receipt; (iii) Confidential Information which may be obtained lawfully from a
third party who as obtained the Confidential Information through no fault of the
Receiving Party, (iv) Information that was independently develop by either Party
without recourse to the Confidential Information or (v) which is required to be
disclosed pursuant to the requirement of a government or regulatory agency or by
operation of law.

14.5

Supplier acknowledges that neither this Agreement not the purchase orders
under this Agreement shall confer upon Supplier any license rights or
intellectual property rights with regard to the Products or any Confidential
Information. Unless otherwise stated in the termination provisions of this
Agreement, Supplier shall not manufacture, assemble or repair any Product and
supply any Services, after termination or expiration of this Agreement, without
the prior written consent of Customer.

14.6

Customer acknowledges that, unless otherwise stated in this Agreement,
neither this Agreement nor receipt of any Confidential Information from Supplier
shall confer upon Customer any license rights or intellectual property rights
with regard to Supplier153s Confidential Information.

15.1

Supplier shall defend, indemnify and hold Customer harmless from any and all
third party demands, actions, causes of action, proceedings, suits, judicial,
tax or similar official assessments, liabilities, claims, damages, settlements,
judgments, interest, costs and expense, of every kind, arising out of based on
any actual or alleged infringement, in relation to any Products, of any patents,
copyrights, trade secrets, or other intellectual property rights, unless
Supplier can evidence that the infringement claim results from the use by
Supplier of Manufacturing File and Information provided by Customer under this
Agreement, provided Customer gives Supplier notice of the claim as set forth
below, allows Supplier sole control of the defence or settlement of the claim,
and reasonably cooperates with Supplier in such defence or settlement, at
Supplier153s cost.

15.2

Customer shall defend, indemnify and hold Supplier harmless from any and all
third party demands, actions, causes of action, proceedings, suits, judicial,
tax or similar official assessments, liabilities, claims, damages, settlements,
judgments, interest, costs and expense, of every kind, arising out of based on
any actual or alleged infringement, in relation to the use of Manufacturing File
and Information provided to Supplier hereunder, of any patents, copyrights,
trade secrets, or other intellectual property rights, provided Supplier gives
Customer notice of the claim as set forth below, allows Customer sole control of
the defence or settlement of the claim, and reasonably cooperates with Customer
in such defence or settlement, at Customer153s cost.

15.3

Each Party shall immediately notify the other upon learning of any existing
or potential infringement. In the case of any alleged infringement by Products
or Services, Supplier undertakes, within a reasonable time period, not to exceed
three months and at its own cost, to procure the right for Customer or its
clients to continue using and selling Products or to modify, in accordance with
article 11 above, the Products so as to be non-infringing and substantially
equivalent in functionality. In the case of any alleged infringement by the
Manufacturing File and Information provided to Supplier by Customer hereunder,
Customer undertakes, within a reasonable time period, not to exceed three months
and at its own cost, to procure the right for Supplier to continue using them
for the purpose of this Agreement or to modify them so that they become
non-infringing.

16.1

In no event shall either party be liable for any indirect, consequential,
incidental, punitive or special damages whatsoever resulting from loss of use,
data or profits, even is such other party has been advised of the possibility of
such damages. For the purpose of this section, both lost profit and damages
resulting from value added to the Product by Customer after the delivery by
Supplier shall be considered consequential damages.

16.2

In no event shall either party153s liability per year for all claims for direct
damages arising out of or relating to this Agreement exceed 5,000,000.

16.3

The limitations set forth in this Article shall apply where the damages arise
out of or relate to the Agreement.

16.4

Notwithstanding the foregoing, the exclusions and limitations set forth
herein shall not apply to limit (i) Customer153s obligation to pay the agreed
price in accordance with the terms and conditions set forth in this Agreement
(including pursuant with Article 4.7); (ii) a Party153s obligation to indemnify
the other Party against third party153s claim for personal injury or death; or
(iii) actual damages required to be paid to any third party as a result a any
third party right infringement claim (pursuant Article 15).

17.1

This Agreement or any rights hereunder may not be assigned or otherwise
transferred by any Party without the prior written consent of the other Party;
provided, however, that either party may, upon prior notice to the other party,
assign this Agreement in all or in part without such other party153s prior or
subsequent consent, (i) to any Affiliate or the parent or its holding company of
the assigning party and (ii) to the buyer of all or part of the assigning153s
assets, Products or Product lines to which this Agreement applies.

17.2

For the purpose of this Agreement, the term “assign” shall include, without
limitation, a sale, merger, spin off, contribution or any other method of
disposal of assets or business, or any other transfer of control by operation of
law or otherwise, whether total or partial.

17.3

Customer shall have a right, upon reasonable prior written notice, to access,
during normal business days and hours, to the manufacturing sites of Supplier in
which Products or Services for Customer are being performed, for the purpose of
performing any reasonable audit in order to verify that Supplier has done all
commercially reasonable efforts, within each site concerned, to isolate the
manufacturing of the Products (including teams, processes, lines) from the
manufacturing of the competitor153s products.

18.1

Supplier shall appoint, within fifteen (15) days of the date of execution of
this Agreement, the following key personnel for the purpose of ensuring the
proper application of this Agreement:

i)

Customer account Manager

ii)

Quality Manager

iii)

Material & planning Responsible (for the Project)

iv)

Engineering Responsible (for the Project)

–

And shall provide Customer with all information to contact directly such
person, and both Parties agree to pay attention to providing (including updates)
and using such information in order to avoid inadvertent disclosure of any
sensitive information.

–

Both parties agree to handle a Monitoring Committee at least once a quarter.

18.2

Each Party shall also appoint one representative responsible for the general
administration of this Agreement and who shall act as the contact point under
this Agreement for any matter relating thereto, including, without limitation,
for settlement of disputes as per Article 19.2. Such representatives shall co
chair the Monitoring Committee described below.

18.3

For the purpose of ensuring adequate monitoring of the manner in which the
obligations set forth in this Agreement are discharged by the Parties, the
Parties shall, within fifteen (15) days of the execution hereof, establish a
contract monitoring committee (the “Monitoring Committee”). The Monitoring
Committee shall be in charge of reviewing, assessing and addressing any
operational or other issue identified in the course of implementing this
Agreement, and make any appropriate written suggestion to the Parties in
relation thereto. The Monitoring Committee shall have no decision-making
authority of its own. Minutes of its meetings shall be kept and circulated by
the hosting Party. The other Party may, where appropriate, comment on these
minutes if it considers that they do not accurately reflect positions expressed
during any meeting.

19.1

This Agreement shall be exclusively construed and enforced in all respects in
accordance with the laws of England, without regard to its conflicts of law
provisions.

19.2

If a dispute arises in relation to any aspect of this Agreement, the
representatives of Customer and Supplier responsible for administration of this
Agreement shall first consult and discuss in good faith in an attempt to come to
an agreement in relation to the disputed matter, within a reasonable period of
time (having due regard for the nature of the dispute and the operational
necessity for its resolution) but in no case exceeding thirty (30) days from the
date that either Party informs the other in writing that such a dispute exists.
If the Parties fail to resolve the dispute at that level within such resolution
period, the dispute shall be escalated to the respective responsible company
members of senior management within each Party for resolution, within fifteen
(15) days of the end of the first resolution period. If the dispute remains
unresolved at the end of such second resolution period, then the dispute shall
be finally submitted to the commercial courts of Zurich, Switzerland to which
the Parties hereby attribute full and exclusive jurisdiction for the purpose
hereof.

20.1

In the event that an event of force majeure (an “Event of Force Majeure”)
arises, the Agreement will be suspended for so long as its performance may be
substantially hindered or prevented by said Event of Force Majeure. Event of
Force Majeure means any event beyond the Party153s control being unforeseeable and
occurring without such Party153s negligence or willful misconduct including, but
not limited to, any act by any governmental authority, act of war or natural
disaster, boycott, embargo, lockout, riots or civil commotion, terrorism, or the
failure of the Vendor to timely deliver due to an Event of Force Majeure.

20.2

If one Party is unable to perform its duties and obligations under this
Agreement as a direct result of the effect of an Event of Force Majeure, that
Party shall give written notice to the other of the inability, setting out full
details of the reasons therefore and the expected date at which such inability
shall cease.

20.3

In case the agreement is suspended or substantially hindered or prevented for
more than three (3) months as a result of such an Event of Force Majeure, the
Parties hereby mutually agree that the party not experiencing the Event of Force
Majeure shall have the right to terminate the Agreement, but such termination
shall be subject to the requirements of Section 13.5 above.

21.1

No amendment or alteration of this Agreement shall be effective unless in
writing and signed by the duly authorised representatives of each Party.

21.2

This Agreement and Appendices hereto constitute the entire agreement the
Parties and supersede any prior oral or written agreement between the Parties
with respect to the subject matter hereof.

21.3

Nothing herein contained shall be construed as constituting or be deemed to
constitute a partnership or joint venture between the Parties hereto. All
Supplier employees, agents and contractors are employees, agents and contractors
of Supplier and shall in no event be deemed employees, agents or contractors of
Customer. Supplier is responsible without limitation for their administrative
and social management.

21.4

Any failure by one of the Parties to this Agreement to exercise any of its
rights hereunder shall not be deemed a waiver of such rights. No extension of
time for, or waiver of performance of, any obligation of any party hereto shall
be effective unless it is made in writing signed by the Party granting such
extension or waiver. Unless specifically stating otherwise, no waiver shall
constitute or be construed as a waiver of any subsequent breach or
non-performance.

21.5

In the event that any provision of this Agreement shall be held by a court or
other authority of competent jurisdiction to be invalid or unenforceable, the
remaining provisions of this Agreement shall remain in full force and effect and
shall be construed so as to best carry out the intentions of the Parties upon
the execution and delivery of this Agreement. The Parties shall then meet as
soon as practicable with a view to establishing new terms valid and enforceable
in accordance with applicable rules, so as to reflect as closely as possible the
intention initially expressed by the Parties in respect of the provisions so
held invalid or unenforceable.

21.6

Without prejudice to Article 18, any notices hereunder shall be made by
certified mail return receipt requested, by e-mail or fax and confirmed by
certified mail return receipt requested, by nationally recognized overnight
courier service or by personal deliver, and will be deemed effective upon
receipt, to:

–

If Customer, to:

. Mike Cook, Managing Director: mcook@signatureindustries.com

.

.

–

If to Supplier, to:

. John Boston, Managing Director: john.boston@cil-uk.co.uk

.

.

.

–

All such notices shall be effective upon receipt. Any Party hereto may, by
notice in writing served as set forth above, designate a different address or a
different or additional person to whom such notices or communication are
hereafter to be sent.

21.7

Unless specifically stated otherwise in this Agreement, time periods provided
herein in “days” shall be calculated as “working” days.

For Customer:

For Supplier:

Date: 7 July 2011

Date: 11 July 2011

Signed: / Mike Cook /

Signed: / John Boston /

Name Mike Cook

Name John Boston

Title Managing Director

Title Managing Director