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EXHIBIT 10.2
MANUFACTURING AGREEMENT
THIS MANUFACTURING AGREEMENT dated September 1, 1997, is made by and
among NSA POLYMERS, INC., a Florida corporation having a place of business at
0000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxx 00000 and NSA INTERNATIONAL, INC., a
Tennessee corporation having a place of business at 0000 Xxxx Xxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxx 00000 on the one hand (collectively the "Buyer") and
POLYMERS, INC., a Florida corporation (hereafter referred to as "Polymers")
having a place of business of 0000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxx on the
other hand.
W I T N E S S E T H:
WHEREAS, Buyer owns and controls technology and other assets required
for the manufacture, marketing and sale of certain sparkling water systems,
certain air filtration systems, and certain water filtration systems;
WHEREAS, Buyer presently has no manufacturing facility of its own;
WHEREAS, Buyer has determined that it is in the best interest of Buyer
to close its manufacturing facilities and to contract with Polymers for the
manufacturing and production of certain of its products;
WHEREAS, Polymers wishes to manufacture certain of the products of
Buyer for and on behalf of Buyer;
WHEREAS, the Buyer has an existing inventory of Raw Materials which it
desires to sell to Polymers; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereby agree as follows:
PART I. INTRODUCTION
SECTION 1. DEFINITIONS
1.1 "Affiliate has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
1.2 "Agreement" shall mean this document, including its Exhibits and
Purchase Orders issued hereunder.
1.3 "Days" shall mean calendar days unless otherwise specified
hereunder.
1.4 "Delivery" shall mean the delivery of Units in accordance with
Section 9 hereof.
1.5 "OEM Business" means all sales made by Polymers to entities or
individuals other than NSA International, Inc., or any of its affiliates.
1.6 "Purchase Price" shall mean the purchase price of the Units as set
forth on EXHIBIT A.
1.7 "Raw Materials" means the Buyer's existing inventory of raw
materials and component parts described on EXHIBIT B, which is attached hereto
and incorporated herein by this reference.
1.8 "Section," "Sub-Section," and/or "Exhibits" shall mean Sections,
Sub-Sections and/or Exhibits of this Agreement.
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1.9 "Technical Information" shall mean any information, whether
confidential or otherwise, which is applicable to or useful in the
demonstration, testing, use, operation, maintenance, manufacture or repair of
Units, including, by way of example only, engineering drawings, electrical or
electronic schematics, specifications, equipment and parts lists, test
procedures, and operating, maintenance, and repair procedures and instructions.
1.10 "Unit(s)" shall mean each individual product listed on EXHIBIT A
and all future modifications, replacement parts or components thereto. The term
"replacement parts," as used above shall be deemed to include, without
limitation, replacement filters, but shall exclude the HEPA filter.
PART II. PERFORMANCE
SECTION 2. UNIT ORDERS
2.1 Purchase Order(s). The actual authorization to perform work under
this Agreement will be given by Buyer in the form of a Purchase Order executed
by the Authorized Purchasing Agent as communicated to Polymers by Buyer. Buyer
will issue Purchase Orders to Polymers for Units required. Polymers shall
deliver Units to the Buyer within thirty (30) days after receipt of a Purchase
Order, subject to customary raw material and component part lead-in times and
subject to the maximum production capacity of existing molds. Such Purchase
Order(s) shall set forth a quantity of Units which Buyer requires from Polymers.
The Purchase Order is the authorization by Buyer to order materials, allocate
labor or equipment, or enter into any other commitments for the assembly of the
Unit(s). Buyer shall not be liable for any costs incurred by Polymers in its
anticipation of quantities in excess of the quantities set forth in the Purchase
Orders or in performing work in excess of that authorized by Buyer in such
Purchase Orders. Furthermore, Polymers shall fulfill such requests only when a
valid Buyer purchase order number has been issued by Buyer.
SECTION 3. DESCRIPTION OF WORK
3.1 During the term of this Agreement, Polymers agrees to manufacture
and sell to Buyer and Buyer agrees to buy its and its Affiliates entire
requirements of the Units from Polymers upon the terms and conditions set forth
in this Agreement. In the event that Polymers is unable for any reason,
including production capacity of molds, to produce a Unit or Units in sufficient
volume to satisfy the Buyer's requirements for such Units and is unable to cure
such inability within thirty (30) days plus reasonable mold development and
applicable raw material lead-in times, Buyer shall have the option to utilize
another manufacturer to manufacture the Units required in excess of Polymers
production capacity if Polymers is unable or unwilling to within a reasonable
period of time to subcontract out the manufacturing of any Units required in
excess of Polymers production capacity. Polymers and Buyer shall discuss and
agree upon mutually acceptable minimum amounts of Units to be purchased
hereunder from time to time during the term hereof.
3.2 The Units to be purchased under this Agreement are specifically
detailed and described in EXHIBIT A, which is attached hereto and incorporated
herein by reference. In the event the provisions of Section 17 hereof are
satisfied, such new product shall be added to EXHIBIT A, and shall become a
"Unit" as such term is used in this Agreement.
3.3 Polymers shall produce the Units in accordance with Section 6.
3.4 Polymers shall conduct in-process inspections, final inspection and
perform functional testing as needed to insure that the quality control levels
specified pursuant to Section 6 are satisfied.
3.5 Polymers shall package the Units in accordance with the Buyer
packaging specifications and drawings.
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SECTION 4. PRICE
4.1 The prices to be paid by Buyer for the Units are as described in
Exhibit A.
4.2 Polymers agrees and acknowledges to take all customary reasonable
steps to maintain manufacturing costs at levels consistent with or below such
costs as of the date of this Agreement. Buyer acknowledges that the prices set
forth in EXHIBIT A as of the date hereof are reasonable. However, in the event
that manufacturing costs increase as a result of increased labor costs,
materials costs, rent, custom charges, state taxes, import or export fees,
freight costs, or utility rates, Polymers shall provide Buyer documentation
supporting such cost increases in a form reasonably satisfactory to Buyer. Upon
Buyer's reasonable satisfaction and confirmation of the increased manufacturing
costs, not to exceed thirty (30) days from Buyer's receipt of such
documentation, the increased costs shall be "passed through" to Buyer on a per
Unit basis to be determined by Buyer and Polymers, with such increase to reflect
a direct pass through of such increased manufacturing costs. For the purpose of
this Section 4.2, manufacturing costs shall be examined on six (6) month
intervals, with the first such examination to occur on August 1, 1995.
4.3 In the event manufacturing costs decrease, Polymers shall inform
Buyer of such decrease and shall negotiate with the Buyer, in good faith, a
reduction in the Purchase Price of each Unit. The decreased costs shall be
"passed through" to Buyer on a per Unit basis to be determined by Buyer and
Polymers, with such decrease to reflect a direct pass through of such decreased
manufacturing costs. For the purposes of this Section 4.3, manufacturing costs
shall be reviewed on six (6) month intervals with the first such examination to
occur on August 1, 1995.
4.4 All prices are expressed and all payments shall be made in U.S.
Dollar currency.
SECTION 5. ORDERING
5.1 Buyer shall issue Purchase Order(s) for delivery of Units in
accordance with the delivery schedules set forth in EXHIBIT A, which is attached
hereto and incorporated herein by this reference. Units will be delivered within
thirty (30) days after receipt of a Purchase Order and subject to customary
lead-in times which occur as a result of raw material or component part ordering
and the maximum production capacity of existing molds. In the event that such
lead-in times change, the delivery schedule set forth in EXHIBIT A, shall
automatically, without required action by either party, be modified to indicate
the change in such lead-in times.
5.2 Buyer shall not be responsible for work performed, material
purchased or other commitments or expenses incurred by Polymers other than as
stated in the Purchase Order provided by Buyer, unless otherwise agreed to in
writing by both parties.
SECTION 6. MANUFACTURING
6.1 Polymers shall provide all parts, labor, and materials necessary to
perform Polymers' obligations.
6.2 Polymers shall manufacture each Unit to meet an outgoing quality
level which is in accordance with the specifications historically maintained by
NSA Polymers, Inc. which will be attached hereto as EXHIBIT A. It is agreed and
acknowledged by the parties hereto that current specifications are not reduced
to writing at the time of this Agreement and will be developed jointly by the
parties. Upon completion of the specifications, they will be attached hereto as
EXHIBIT A and become a part of this Agreement as if they had been attached at
the date hereof. Until such time as such specification are attached hereto,
Polymers shall manufacture the Units to maintain quality control levels
consistent to those which have been historically maintained by NSA Polymers,
Inc., on a per Unit basis.
6.3 Buyer may review Polymers' performance of the work under this
Agreement including development, fabrication and tests of the Units, the design
of the tools used to produce them, and their operation.
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6.4 To review the work, Buyer may visit the sites where Polymers
performs it. Buyer shall visit the sites during normal business hours, with
reasonable notice to Polymers.
6.5 Polymers shall notify Buyer promptly of any errors found in
drawings and specifications for any new products manufactured for Buyer in
accordance with the provisions of Section 17.
SECTION 7. PACKAGING
7.1 Packaging shall conform to the existing drawings and specifications
and any future drawings and specifications of Buyer provided that Buyer pays any
expenses and costs associated with changes to its packaging. Polymers shall be
responsible for procurement of materials, any testing required and obtaining
Buyer's approval of packaging.
7.2 All labeling and packing lists containing the purchase order
number, Unit part numbers and quantity shipped shall accompany each shipment.
SECTION 8. WARRANTIES
8.1 Polymers warrants that Units delivered to Buyer by Polymers
hereunder shall conform in every respect to all specifications described in
Section 6.2 or on EXHIBIT A and be free from defects in material and workmanship
under normal use and operation for a period of two (2) years from the date of
initial shipment to Buyer, and, provided, further, that with respect to
replaceable air filters, Polymers warrants that such replaceable filters
delivered to Buyer by Polymers hereunder shall conform in every respect to all
specifications described in Section 6.2 or on EXHIBIT A and be free from defects
in material and workmanship for a period of twelve (12) months from the date of
initial shipment to Buyer. After a period of two (2) years from the date hereof,
Polymers and Buyer shall negotiate, in good faith, a new warranty period for
each Unit, such warranty period not to be less than one (1) year.
8.2 In the event that a new product is added to the definition of
"Unit" pursuant to the terms of Section 17, such new product will not fall
within the terms and conditions of Section 8.1 and the parties will negotiate in
good faith and reasonably agree on a warranty for such new products which is
acceptable to both parties.
8.3 During the warranty periods set forth herein, Polymers shall, at
Polymers' option, either replace or repair Units manufactured in breach of the
warranties contained herein, with Units which conform to the specifications
which are part of this Agreement and in force at the time the defective Units
were originally delivered. In the case of replacement, Polymers shall deliver to
Buyer replacement Units within sixty (60) days from the date Polymers receives
the defective Units from Buyer.
8.4 If the Units are returned to Polymers for a suspected breach of
warranty, Buyer shall bear the shipping costs of returning the Units to
Polymers. If the returned Unit(s) are in breach of Polymers' warranty then
Polymers shall pay the costs of shipping repaired or replaced Units back to
Buyer's designated destination. If the returned Unit(s) are not in breach of
Polymers' warranty, Buyer shall bear the cost of shipping the returned Unit(s)
back to Buyer's designated destination.
8.5 Polymers shall not be responsible and shall have no liability for
any design or specification defect in products produced for the Buyer or arising
out of defects of tooling, molds or other equipment provided by the Buyer to
Polymers unless such defect is the result of Polymers failure to maintain the
molds, tooling, or equipment in accordance with the terms of this Agreement.
8.6 Polymers sole obligation in the event of a breach of the warranties
contained in this Section 8 is to repair or replace at Polymers' option any
defective product and to indemnify and hold harmless the Buyer from any
liability, loss, damages, costs and expenses (including, without limitation, any
court costs and attorneys' fees, both at trial and on appeal) incurred by reason
defects in violation of Polymers' warranty.
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8.7 THE WARRANTIES DESCRIBED IN THE FOREGOING SECTION 8 ARE THE SOLE
WARRANTIES OF POLYMERS AND POLYMERS HAS NOT MADE, AND HEREBY DISCLAIMS ALL OTHER
WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES
REGARDING FITNESS FOR A PARTICULAR PURPOSE OR A PARTICULAR USE.
SECTION 9. DELIVERY
9.1 Polymers shall deliver Units to Buyer F.O.B. Buyer's warehouse at
0000 Xxxx Xxxx Xxxx, Xxxx Xxxx Xxxxxxx 00000. In the event Buyer's warehouse is
no longer leased by either Buyer or Polymers, delivery shall be F.O.B. Polymers'
dock. It is the responsibility of Polymers to schedule production and delivery
of all Units ordered under this Agreement by the scheduled delivery date
contained in the Buyer Purchase Order subject to the other provisions in this
Agreement.
SECTION 10. TITLE
10.1 The risk of loss and title to the Units shall pass to Buyer upon
delivery to Buyer's warehouse in Lake Mary, Florida.
SECTION 11. ACCEPTANCE OR REJECTIONS
11.1 Polymers shall provide and maintain an inspection procedure and
quality assurance program for Units and their production processes. This
procedure shall permit Polymers to meet the level of quality described in
Section 6.3. Inspection records maintained by Polymers, including gauge
inspection, tool inspection, and equipment calibration, shall be made available
to Buyer, at a reasonable time, upon request.
11.2 Buyer may inspect and test all Units prior to acceptance or
rejection, and may refuse to accept Units which do not conform to the
specifications in this Agreement. All Units shall be subject to preliminary and
final inspection by Buyer. If, after thirty (30) working days from Delivery of
Units, Buyer has not notified Polymers of rejection, the Units shall be deemed
to be accepted by Buyer. In the event that Units are delivered to Buyer's
European subsidiaries, Buyer shall have thirty (30) working days from delivery
of the goods to such European subsidiaries' warehouse to give notice of
rejection to Polymers. The act of payment for Units shall not of itself signify
Buyer's acceptance.
11.3 If Buyer rejects any Units, Polymers shall, at Polymers'
discretion, repair, adjust, replace or refund any monies paid for any Units
which fail to meet the specifications set forth in this Agreement.
11.4 The rights granted to Buyer pursuant to this Section 11 are in
addition to and shall not be construed as a limitation upon the Warranties given
by Polymers to the Buyer in Section 8 of this Agreement.
SECTION 12. PAYMENT
12.1 Buyer will not pay Polymers for Units or charges for Units unless
the Units are produced, and the charges were incurred to fill an authorized
Purchase Order previously submitted to Polymers by Buyer.
12.2 Polymers shall submit invoice(s) to Buyer upon shipment of Units.
Invoice(s) shall be sent to:
NSA International, Inc.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxx Xxxxx
12.3 Terms of payment shall be as follows: Invoices received between
the 1st and 15th of any month will be paid by Buyer on the last business day of
such month. Invoices received between the 16th and the end of
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any month will be paid by Buyer prior to the 15th day of the next month. Any
amounts owed for Units purchased hereunder which are not paid when due shall
bear interest at a rate of ten percent (10%) per annum.
12.4 The following information is required to be clearly stated on the
invoice:
Buyer Purchase Order Number
Quantity
Terms of Payment
Unit Price
12.5 The payments described in this Section 12, fully compensate
Polymers for all work performed under this Agreement.
12.6 The Buyer shall pay to Polymers any sales or use tax which may be
assessed on any sale of the Units, and any freight, transit, handling and
insurance costs of the Units. Said payment shall be made at the time of payment
of the invoices for the Units who sale gives rise to such costs and taxes.
12.7 Cost of any services other than manufacturing which Buyer
requests Polymers to perform including without limitation, marketing, research
and development, engineering, testing and obtaining certifications from
Underwriters Laboratories for any product, shall be born by the Buyer and shall
only be performed if a mutually acceptable written work order establishing the
price for, and scope of, such services is signed by the Buyer and Polymers.
SECTION 13. UNIT REPAIR
POLYMERS SHALL REPAIR OR REPLACE THE DEFECTIVE UNITS WHICH DO NOT MEET
THE SPECIFICATION REQUIREMENTS OR ARE OTHERWISE DEFECTIVE, AND RETURN THEM TO
THE ADDRESS SPECIFIED BY BUYER.
PART III. CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY
SECTION 14. CONFIDENTIAL INFORMATION
14.1 Polymers agrees and acknowledges that as a result of this
Agreement, it shall receive and have access to information, including, without
limitation, information regarding the Unit specifications, costs of manufacture,
and pricing, and information regarding the customers of the Buyer, which is
proprietary to and a trade secret of Buyer and which is governed by this Section
14.1. Buyer agrees and acknowledges that all financial information received from
Polymers, all costs of manufacture and pricing of products which Polymers
produces, and the identity of customers and all information regarding customers
of Polymers shall be considered confidential information, which is proprietary
to and a trade secret of Polymers and which is governed by this Section 14.1.
Polymers covenants and warrants to Buyer that Polymers shall not, and Buyer
covenants and warrants to Polymers that Buyer shall not, disclose or divulge
confidential information except to the extent: (a) required by law, (b) to
protect its interests in any dispute or litigation, (c) necessary to perform its
obligations under this Manufacturing Agreement, or (d) if such information
becomes publicly available without breach of this Section 14.1.
14.2 The parties hereby acknowledge that breach of the covenants
contained in Section 14.1 will cause irreparable harm to the party whose trade
secret or confidential information is disclosed. Notwithstanding any other
provision of this Agreement, the parties may enforce the above-described
covenants and warranties by injunction, both preliminary and permanent, it being
agreed that the posting of an injunction bond of no more that $5,000 shall be
sufficient to indemnify the parties against costs of damages which might be
incurred by virtue of any temporary injunction. Nothing herein shall be
construed as prohibiting any party from pursuing any other legal or equitable
remedy available due to the breach of the provisions of this Section 14.
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14.3 Nothing in this Section 14 shall be interpreted or construed in
any manner which prevents Buyer from having its products produced by any third
party manufacturer in the event that this Agreement is terminated for any reason
or such manufacture does not violate the terms of this Agreement.
SECTION 15. INTELLECTUAL PROPERTY
15.1 The Buyer warrants and represents to Polymers that the Units
produced pursuant to this Agreement will not be a violation of, or infringement
on, any trademark, patent, trade secret or other proprietary right of any third
party.
15.2 Polymers will promptly advise Buyer if it, and Buyer will promptly
advise Polymers if it, develops a reasonable basis for believing that the
delivered material and/or items may violate any intellectual property rights of
a third party.
15.3 Buyer agrees to notify Polymers promptly in writing of any such
claim.
15.4 Buyer hereby warrants that it has the right to manufacture or have
manufactured the Units that are the subject of this Agreement.
15.5 Polymers acknowledges Buyer's exclusive ownership of the
trademarks affixed to and any patents embodied in the Units and will do nothing
at any time, during or after the term of this Agreement, which could adversely
affect their validity or enforceability, including any modification or
obliteration of the trademark or patent markings on the Units as sold. This
Agreement shall not give Polymers any right to use the NSA name and marks, or
any other trademarks of Buyer, except as specifically authorized by Buyer.
Promptly following the termination of this Agreement for any reason, Polymers
agrees to discontinue use of the NSA marks, and any other Buyer names and
trademarks and to remove, or dispose of, as Buyer shall direct, any signs or
other indicia relating to Buyer's name and trademarks to Buyer and further to
return any molds belonging to Buyer. Following termination of the Agreement,
Polymers shall not be permitted to use the NSA name or marks or any other Buyer
name or trademark in connection with any product. Polymers shall not have any
right to register any trademarks identical with or similar Buyer's trademarks.
All use of Buyer's trademarks by Polymers in connection with this Agreement
shall be subject to Buyer's control and shall inure to the benefit of Buyer.
15.6 The Buyer hereby licenses during the terms of this Agreement to
Polymers the use of the NSA trademark and NSA patents and other intellectual
property rights solely for Polymers' use in the manufacture and sale of products
to the Buyer. Any and all improvements, modifications, inventions or discoveries
by Buyer or its employees relating to the Units shall be the sole and exclusive
property of Buyer. All discoveries, improvements, inventions or modifications
relating to the Units made by Polymers shall be the sole and exclusive property
of Polymers, provided, however, that Polymers hereby grants to Buyer an
irrevocable, non-exclusive, world-wide, royalty-free license to manufacture or
have manufactured and to sell to end consumers such improvements, inventions, or
modifications.
15.7 The Buyer will, at its cost, during the term of this Agreement,
provide the following to Polymers at the manufacturing facility of Polymers
located at 0000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxx or any future manufacturing
facility of Polymers; (i) molds for all Units to be manufactured and sold under
this Agreement; (ii) tooling for all Units to manufactured and sold under this
Agreement; (iii) assembling and testing apparatus and equipment for the Units to
manufactured and sold under this Agreement. Polymers shall have possession of
the tooling, testing equipment, assembly equipment and molds owned by Buyer
listed on SCHEDULE 15.6 which is attached hereto. Polymers acknowledges that
these molds are the property of Buyer and will hold such molds in trust for the
benefit of Buyer and use such molds only pursuant to the terms of this
Agreement. Polymers shall be responsible for any and all routine maintenance
required to be performed on the molds consisting of cleaning, lubrication, and
any other customary routine maintenance required to be performed on the molds.
In the event that a mold is damaged as a result the misuse of the mold or
Polymers' failure to properly maintain such mold. Polymers shall repair or
replace such mold at no cost to Buyer. If a mold is damaged as a result of
ordinary wear
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and tear that could not be prevented by routine maintenance, Polymers shall have
no obligation to repair or replace the mold.
PART IV. NEW PRODUCTS
SECTION 16. NEW PRODUCTS
16.1 During the term of this Agreement, in the event the Buyer
identifies a potential product in Polymers' area of expertise (hereinafter
defined) not yet in existence which the Buyer feels that could be desirable or
profitable then the Buyer will provide in writing to Polymers its price,
manufacturing and other requirements with respect to that product (the "New Idea
Notice"). Polymers shall have sixty (60) days after delivery to it of the New
Idea Notice to elect to manufacture the potential product under the terms of the
New Idea Notice or other terms to which the parties are mutually agreed with
such election made by Polymers only by written election delivered to the Buyer
within the above-described sixty (60) day period. In the event of such election,
the parties shall mutually agree upon designs and specifications which shall be
attached hereto as a part of EXHIBIT A and that product shall thereafter be
considered a Unit, as such term is defined in this Agreement.
16.2 During the term of this Agreement and to the extent not prohibited
by applicable patent or other law or any applicable agreement, Buyer hereby
grants to Polymers a right of first refusal to manufacture (i) new air and water
filter products which are not set forth on EXHIBIT A, (ii) new products similar
in nature to those products set forth on EXHIBIT A, and (iii) all other products
within the following areas: plastic product manufacturing and assembly, plastic
molding, manufacture and assembly of fragrance products, chemical sales and
manufacture, and sparkling water product manufacture and assembly (hereinafter
all of the foregoing shall be considered collectively "Polymers Area of
Expertise" and each such product shall be a "New Product." Provided, however,
that nothing in this right of first refusal shall be construed or interpreted in
any way to prevent the Buyer from obtaining competitive bids from third party
manufacturers to produce any New Product.
16.3 In the event Buyer wishes to manufacture a New Product, after
obtaining competitive bids on the New Product from third party manufacturers
Buyer shall provide a written notice (the "New Product Notice") to Polymers. The
New Product Notice will contain design and product specifications and all price,
manufacturing, delivery and other material terms agreed to or offered in writing
by any third party manufacturer who has offered to manufacture that New Product
for Buyer. Polymers shall have a period of sixty (60) days from the date upon
which the New Product Notice is received to determine whether or not to exercise
its right of first refusal. If Polymers exercises its right of first refusal, it
must have the ability to produce the New Product in quality, quantity, and at
costs competitive with those specified in New Product Notice. If Polymers does
not exercise its right of first refusal, Buyer shall have the right to have the
New Product produced by a third party manufacturer on the terms specified in the
New Product Notice. If Buyer is unable to have the New Product manufactured upon
the terms set forth in the New Product Notice, Buyer shall be required to
resubmit and New Product Notice to Polymers and Polymers shall have an
additional thirty (30) days from the date of resubmittal to exercise its right
of first refusal.
16.4 If Polymer is granted the right to produce any new products for
Buyer pursuant to Sections 17.1 or 17.2, such new products shall be listed
EXHIBIT A, and shall fall within the definition of a Unit subject to the terms
of this Agreement.
16.5 During the term of this Agreement, if Polymers develops a new
product, other than products developed under contract for third parties, Buyer
shall have the right of first refusal to purchase such product. Polymers shall
submit a product description and term sheet to Buyer. Buyer shall have sixty
(60) days during which to determine whether or not it desires to purchase such
product from Polymers. If Buyer agrees to purchase such product, it will be
added to EXHIBIT A and become a Unit hereunder. If Buyer does not agree to
purchase the product as provided herein, Polymers shall not offer such product
at a lower price to any individual or entity unless it first offers such product
to Buyer at such lower price.
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SECTION 17. RAW MATERIALS
17.1 Buyer shall sell to Polymers and Polymers shall purchase from
Buyer the entire requirements of Raw Materials from Buyer's now existing
inventory which Polymers shall require for use in Polymers' business from the
date hereof until such time as Buyer's existing inventory of Raw Materials is
depleted. Buyer is not required to sell Raw Materials in excess of Polymers' own
requirements.
17.2 The price for the Raw Materials shall be Buyer's invoice cost. The
Raw Materials will be sold and billed to the Polymers F.O.B. Buyer's warehouse.
17.3 Polymers shall pay the purchase price to Seller in the following
manner: invoices received by the Polymers between the 1st and 15th of any month
will be paid no later than the last business day of the month in which such
invoices were received. Invoices received between the 16th and the end of a
month shall be paid no later than the 15th of the next month. In the event any
amounts due under this paragraph are unpaid when due, they shall bear interest
at a rate of ten percent (10%) per annum.
17.4 THE RAW MATERIALS ARE BEING SOLD AS IS AND SELLER DOES NOT WARRANT
THAT THE RAW MATERIALS ARE MERCHANTABLE OR FIT FOR ANY PARTICULAR PURPOSE.
HOWEVER, POLYMERS SHALL HAVE THE RIGHT TO REJECT ANY RAW MATERIALS WHICH ARE
DEFECTIVE, IN THE REASONABLE OPINION OF POLYMERS NOTWITHSTANDING ANYTHING HEREIN
TO THE CONTRARY.
PART V. TERM AND TERMINATION
SECTION 18. TERM OF THE AGREEMENT
18.1 The term of this Agreement shall commence on September 1, 1997 and
shall expire on August 31, 2002, provided that Buyer shall have the option to
renew this Agreement for five additional periods of one year each. Buyer shall
provide Polymers one hundred eighty (180) days notice of its intention to
exercise the extension option.
18.2 Either Buyer or Polymers may end this Agreement at any time
without further obligation to the other party pursuant to Section 20,
"CANCELLATION FOR DEFAULT."
SECTION 19. CANCELLATION FOR DEFAULT
19.1 Upon the Buyer delivering to Polymers written notice specifying
the nature of Polymers' default and the expiration of ninety (90) days following
that delivery of that notice of default without Polymers curing that default
then, and only then, shall Buyer have the right to terminate or cancel this
Manufacturing Agreement. A "default" with respect to Polymers, shall mean that
Polymers:
(a) Becomes insolvent or has a petition in bankruptcy, reorganization
or similar action filed by or against it;
(b) Is unable to produce the Units in sufficient volume as required by
this Agreement or maintain the quality control levels specified pursuant to
Section 6 of this Agreement.
(c) Has all or a substantial portion of its capital stock or assets
expropriated or attached by any government entity;
(d) Is dissolved or liquidated or has a petition for dissolution or
liquidation filed with respect to it;
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(e) Is subject to property attachment, court injunction, or court
order materially affecting its operations under this Agreement; or
(f) Materially breaches any representation, warranty, covenant or
other agreement contained in that certain Asset Purchase Agreement by and among
NSA Polymers, Inc., NSA International, Inc. and Polymers dated of even date
herewith or any document which is an exhibit thereto or defaults in the payment
of any amounts owed to NSA Polymers, Inc. as a result of such Asset Purchase
Agreement or any document which is an exhibit thereto.
19.2 Upon Polymers delivering to Buyer written notice specifying the
nature of Buyer's default and the expiration of ninety (90) days following that
delivery of that notice of default without Buyer curing that default then and
only then shall Buyer have the right to terminate or cancel this Manufacturing
Agreement. A default with respect to Buyer shall mean that NSA International,
Inc.:
(a) Becomes insolvent or has a petition in bankruptcy, reorganization
or similar action filed by or against it;
(b) Has all or a substantial portion of its capital stock or assets
expropriated or attached by any government entity;
(c) Is dissolved or liquidated or has a petition for dissolution or
liquidation filed with respect to it;
(d) Is subject to property attachment, court injunction, or court
order materially affecting its operations under this Agreement; or
(e) Fails to pay any amount due pursuant to the terms of this
Agreement, provided, however that if Buyer is in good faith contesting any
amount owed to Polymers as a result of this Agreement through appropriate
proceedings, such failure to pay shall not be considered an event of default
under this Agreement;
19.3 In the event of a default and the lapse of any applicable cure
period, the non-defaulting party may agree to continue the Agreement rather than
cancelling it. To do so, that party shall send a notice to the defaulting party
specifying the conditions under which the non-defaulting party will agree to
continue the Agreement. By agreeing to continue the Agreement in this manner,
the non-defaulting party does not waive its right to later cancel the Agreement
for default based on the event of default that is the subject of the notice.
19.4 If Polymers cancels this Agreement for default by Buyer, Buyer
shall pay Polymers all payments for work completed, if it was in response to a
Purchase Order, on the effective date of cancellation. In the event of such a
cancellation, Polymers shall have the right to offset, against payments due
pursuant to those certain promissory notes between Polymers and the Buyer in the
principal amounts of $500,000 and $4,000,000 the amounts of liquidated damages,
calculated in accordance with the provisions of Section 16 which are due from
the Buyer to Polymers, on the dates that such liquidated damages accrue pursuant
to the terms of Section 16.
19.5 If Buyer cancels this Agreement for default by Polymers Buyer
shall pay Polymers the Purchase Price for all Units and work completed in
accordance with this Agreement. Additionally, Buyer shall pay to Polymers,
Buyer's actual costs for any raw materials or components ordered in response to
a purchase order or work-in-process. Polymers shall deliver to Buyer all
documents, information, and work in process produced in performance of this
Agreement. In the event that Buyer cancels this Agreement for default by
Polymers, Buyer shall have no obligation to pay any amounts of liquidated
damages to Polymers, other than those liquidated damages which have accrued
prior to the date upon which this Agreement is terminated.
SECTION 20. CANCELLATION OF PURCHASE ORDERS
20.1 Buyer may cancel Purchase Order(s) or any portions thereof for any
reason by notifying Polymers in writing fifteen (15) days prior to the scheduled
delivery date. Cancellation shall be effective upon Polymers
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receipt of the written cancellation notice from Buyer, or thereafter upon the
date specified in such cancellation notice. Polymers shall cease operation on
subject Purchase Orders in accordance with the cancellation notice and shall
make every reasonable effort to cancel commitments for, resale of or divert
materials and/or work-in-process (with the exception of the case such resale or
diversion infringes Buyer's rights under this Agreement).
20.2 In the event of a cancellation of a Purchase Order under this
Section, Buyer will pay Polymers the Purchase Price for completed Units and
shall reimburse Polymers for its actual costs for raw materials, components, and
work-in-process as a result of the cancelled purchase order. Polymers will
deliver to Buyer all completed Units and work-in-process procured on account of
the cancelled Purchase Order(s).
SECTION 21. EXCUSABLE DELAYS
21.1 Neither party shall be in default or liable to the other for any
failure to perform directly caused by events beyond that party's reasonable
control, such as acts of nature, labor strikes, war, insurrections, riots, acts
of governments, embargoes and unusually severe weather provided the effected
party notifies the other party within ten (10) days of the occurrence. Such an
event is an Excusable Delay. THE PARTY EFFECTED BY AN EXCUSABLE DELAY SHALL TAKE
ALL REASONABLE STEPS TO PERFORM DESPITE THE DELAY. If the party is unable to
perform within a reasonable period, this Agreement shall end without any further
obligation of the unaffected party.
SECTION 22. RETURN OF MATERIALS AND RIGHT OF ENTRY
22.1 Unless otherwise notified by Buyer, within one month of the date
of expiration, termination or cancellation of this Agreement, upon payment of
all amounts owed to Polymers other than any liquidated damages accruing in the
future, Polymers shall return to Buyer all materials containing Buyer
Confidential Information or Technical Information, documents produced in the
performance of this Agreement, work-in-process, molds, parts, tools and test
equipment paid for, owned or supplied by Buyer at Buyer's expense.
22.2 In the event of termination of this Agreement by either party,
upon payment of all amounts owed to Polymers other than any liquidated damages
accruing in the future, Buyer shall have the immediate right to enter Polymers
premises and take possession of all Buyer owned tooling or property, to file a
security interest in such tooling or property or to invoke any other legal or
equitable remedy available to protect its interest in the tooling or property.
PART VI. LIABILITY AND INSURANCE
SECTION 23. LIENS, CLAIMS, AND ENCUMBRANCES
23.1 Polymers shall deliver Units, free and clear of all Liens,
Claims, or Encumbrances.
SECTION 24. LIABILITY FOR ACTS OF EMPLOYEES
24.1 Each party is solely responsible for the acts of its employees and
agents, including any negligent acts. Each party shall hold harmless, defend and
indemnify the other against all claims based on acts of its employees or agents.
24.2 Polymers shall maintain comprehensive general liability insurance
for claims for damages because of bodily injury or death and property damage
caused by or arising out of acts or omissions of its employees. Polymers shall
not cancel the insurance without notifying Buyer in writing in advance.
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SECTION 25. INSURANCE
25.1 Polymers will, at Polymers' expense, maintain product liability
insurance in such amounts, against such risks, in such form as historically
maintained by NSA Polymers, Inc.
25.2 Each such policy shall (a) name Buyer and Polymers as additional
insured parties thereunder (without any representation or warranty by or
obligation upon Buyer) (b) and provide that at least thirty (30) days prior
written notice of cancellation, amendment, or of lapse shall be given to Buyer
by the insurer.
25.3 Polymers will deliver to Buyer original or duplicate policies of
such insurance, or satisfactory certificates of insurance.
SECTION 26. RELATIONSHIPS WITH EMPLOYEES
26.1 Neither party's employees shall be considered employees or agents
of the other party. Each party shall be solely responsible for paying,
supervising, and directing the manner of work of its employees.
PART VII. GENERAL
SECTION 27. NONEXCLUSIVE AGREEMENT
27.1 This Agreement does not preclude either party from entering
similar agreements with others, or from developing, manufacturing, buying or
selling any product or service, except to the extent that the terms and
conditions of this Agreement would indicate otherwise.
SECTION 28. AMENDMENTS TO THE AGREEMENT
28.1 This Agreement may only be changed or supplemented by a written
amendment, signed by authorized representatives of each party.
SECTION 29. ASSIGNMENT OR DELEGATION
29.1 Neither party may assign its rights or delegate its obligations
under this Agreement without the prior written approval of the other party. Any
attempted assignment or delegation without such an approval shall be void.
Provided, however, that Buyer may assign this Agreement to NSA International,
Inc. or any subsidiary thereof, without being released from its obligations
hereunder.
SECTION 30. GOVERNING LAW
30.1 This Agreement shall be governed by the laws of the State of
Florida.
SECTION 31. FORUM
31.1 All disputes arising under or in connection with this Agreement
shall be determined by actions filed in the courts within the State of Florida.
SECTION 32. SEVERABILITY
32.1 If any provision of this Agreement is held to be illegal, invalid
or unenforceable, the remaining provisions shall not be affected.
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SECTION 33. EFFECT OF TITLE AND HEADINGS
33.1 The title of the Agreement and the headings of its Sections are
included for convenience, and shall not affect the meaning of the Section.
SECTION 34. NOTICE
34.1 All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then two business
days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller: Copy to:
NSA Polymers, Inc. G. Xxxxxx Xxxxxx, Esq.
0000 Xxxx Xxxxxx Xxxx Baker, Donelson, Bearman & Xxxxxxxx
Xxxxxxx, Xxxxxxxxx 00000 000 Xxxxxxx Xxxxxx, Xxxxx 0000
Attention: Xxxxxxx X. Xxxxx, Xx. Xxxxxxx, Xxxxxxxxx 00000
If to the Buyer: Copy to:
Polymers, Inc. Xxxxxx X. XxxXxxxxx, Esq.
0000 Xxxx Xxxx Xxxx Subin, Shams, Rosenbluth, Xxxxx
Xxxx Xxxx, Xxxxxxx 00000 Xxxxx & Xxxxxxx, P.A.
Attention: X. Xxxxxxx Xxxxxx 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
SECTION 35. WAIVER
35.1 Failure of either party to insist in any strict conformance to any
term herein, or in Purchase Orders issued hereunder or failure by either party
to act in the event of a breach or default shall not be construed as a consent
to or waiver of that breach or default or any subsequent breach or default of
the same or any other term contained herein.
SECTION 36. INDEMNITY
36.1 Indemnification of Polymers by Buyer. Buyer shall indemnify,
defend, and hold harmless, Polymers, its officers, directors, shareholders and
agents against and in respect of, any and all claims, losses, expenses, costs,
obligations, and liabilities, including reasonable attorney fees, incurred by
Polymers as a result of any injury to or death of any person, or damage to
property caused by any design defect or product specification in any Unit
manufactured pursuant to this Agreement or in tooling, molds or other equipment
provided by Buyer, provided, however, that Buyer shall not be required to
indemnify Polymers for any liability incurred by Polymers as a result of its
failure to maintain such tooling, molds, or other equipment as provided in this
Agreement or Polymers improper use or operation of such tooling, molds, or other
equipment.
36.2 Notice to Buyer; Opportunity to Defend. Polymers agrees to give
prompt notice to Buyer of the assertion of any claim, or the commencement of any
suit, regulatory investigation, action or proceeding in respect of which
indemnity may be sought under PARAGRAPH 38.1. Buyer may participate in, or at
its election assume the defense of any such suit, action or proceeding at
Buyer's expense. Buyer shall not be liable under PARAGRAPH 38.1 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder, which consent shall not
be unreasonably withheld.
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36.3 Indemnification of Buyer by Polymers. Polymers shall indemnify,
defend, and hold harmless, the Buyer, its officers, directors, shareholders and
agents against and in respect of, any and all claims, losses, expenses, costs,
obligations, and liabilities, including reasonable attorney fees, incurred by
Buyer as a result of (a) any injury to or death of any person, or damage to
property caused by a Unit manufactured in breach of Polymers' Warranties
contained in Section 8 or resulting from an individual's use of any Unit
manufactured in breach of Polymers' Warranties in Section 8, or (b) the actual
withdrawal and recall costs and expenses and any incidental and consequential
damages incurred by Buyer due to Polymer's manufacture of the Units in breach of
its Warranties contained in Section 8 or if a recall of Units manufactured in
breach of Section 8 is ordered by a court of competent jurisdiction or
governmental agency.
36.4 Notice to Polymers; Opportunity to Defend. Buyer agrees to give
prompt notice to Polymers of the assertion of any claim, or the commencement of
any suit, regulatory investigation, action or proceeding in respect of which
indemnity may be sought under PARAGRAPH 38.3). Polymers may participate in, or
at its election assume the defense of any such suit, action or proceeding at
Polymers' expense. Polymers shall not be liable under PARAGRAPH 38.1 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder, which consent shall not
be unreasonably withheld.
SECTION 37. AGENCY
37.1 Nothing contained herein shall be deemed to authorize or empower
Polymers or its Subsidiaries to act as an agent for Buyer or to conduct business
in the name of Buyer.
SECTION 38. SURVIVAL OF TERMS
38.1 All obligations and duties that by thus nature survive the
expiration, cancellation, or termination of this Agreement shall remain in
effect after expiration, cancellation or termination, including Section 8
(Warranties), 13 (Unit Repair Section), 14 (Confidential Information), and 15
(Intellectual Property) and shall bind the parties and their legal
representatives, successors and assigns.
SECTION 39. COMPLETE AGREEMENT
39.1 This Agreement including its Exhibits and Purchase Orders issued
under it is the complete statement of the parties' agreement, and supersedes all
previous and contemporaneous written and oral communication about its subject.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
NSA POLYMERS, INC.
By:
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Title:
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NSA INTERNATIONAL, INC.
By:
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Title:
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POLYMERS, INC.
By:
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Title:
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