Entry into a Material Definitive Agreement, Creation of
Item 1.01 Entry Into a Material Definitive Agreement
On September 4, 2007, the Registrant ("NIMS") executed a Product Development and Supply Agreement (the "Agreement") with Sing Lin Technologies Co. Ltd., a company based in Taiwan ("Sing Lin").
Pursuant to the Agreement, NIMS consigned to Sing Lin the development and design of the second generation of the Ever-Rest(II) ™ and the Sleepec (the "Products") using certain technology.
NIMS must pay Sing Lin $150,000 within five business days of execution of the Agreement; $150,000 upon approval by NIMS of the product prototypes and $100,000 upon approval of the product sample. These amounts are to be applied toward tooling development and other tooling costs and represent the estimated tooling costs. Additional tooling costs will be paid by NIMS, if approved in advance by NIMS. Tooling funded by NIMS will be property of NIMS.
Under the Agreement, NIMS grants Sing Lin for the term of the agreement, the exclusive distribution rights, for the Products in certain countries in the Far East, including, Taiwan, China, Japan, South Korea, Malaysia, Indonesia and certain other countries. Sing Lin has agreed not to sell the Products outside its geographic areas in the Far East.
NIMS has agreed to purchase, Products with an estimated cost of $2.2 million in the first calendar year after acceptance of the final Products, Products with an estimated cost of $3.5 million in the succeeding calendar year and Products with an estimated cost of $7.5 million in the following calendar year.
The Agreement commences as of September 3, 2007 and has a term that extends three years from the acceptance of the first batch of production units by NIMS. Thereafter, the Agreement automatically renews for successive one year terms unless either party sends the other a notice of non-renewal.
In the event of termination or expiration of the Agreement, Sing Lin has agreed to sell certain hardware and software to NIMS, so that NIMS can continue to sell the Products to its customers.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off Balance Sheet Arrangement of a Registrant.
The contents of Item 1.01 is hereby incorporated by reference.
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