TOLL PROCESSING AGREEMENT
This Agreement ("Agreement") made this 1st day of December,
1999, by and between PRC-DeSoto Canada, Inc., a corporation with
a principal mailing address of 0000 Xxxxxxxxx Xxxxxxxxx,
Xxxxxxxxxxx, Xxxxxxx X0X 0XX ("PRC") and Luminart International,
Inc., a Nevada corporation, with a principal mailing address of
Xxxx Xxxxxx Xxx 0000, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000 ("LI").
WITNESSETH:
WHEREAS, LI desires to engage PRC to toll produce the
products listed on the attached Exhibit A (the "Products") for
LI; and
WHEREAS, PRC desires to toll produce the Products for LI;
NOW, THEREFORE, for and in consideration of the foregoing
and the terms and conditions contained in this Agreement, the
parties agree as follows:
1. Condition Precedent
LI shall provide PRC with a current Material Safety
Data Sheet ("MSDS") and a Canadian Domestic Toxic Substances List
("DSL") for each of the Products or ingredients of the Products
listed on Exhibit. LI shall provide PRC with all hazard
communication information for the safe mixing, packaging,
shipping and labeling for the Products.
2. Formulae and Other Information
(A) LI shall provide PRC with the formulae for the
Products and other information necessary to enable PRC to
manufacture the Products with each LI Purchase Order for the
Products. LI has the right to amend its formulae prior to the
products being manufactured by PRC. Any ingredients of the
Products no longer required because LI has amended its formulae
will be shipped to LI or, at the option of LI, disposed at LI
cost.
(B) LI shall provide PRC with reasonable access to
LI's technical personnel on a continuing basis, which personnel
will provide advice regarding the manufacture of the Products as
requested by PRC. LI's personnel will, if requested by PRC,
travel to PRC's plant for initial scale-up or problem solving at
LI's sole expense.
(C) PRC shall manufacture the Products in accordance
with the formulae provided to PRC by LI as of the time of
manufacture. PRC may, however, change LI's manufacturing
procedures to adapt the formulae to PRC's processing equipment so
long as LI has given its prior approval and such change does not
lower the quality of the Products. PRC shall not be responsible
for failure, or costs associated with any batch made with the
amended formulae of the Products. Any new formulae and
information for products not listed on the attached Exhibit A
(the "Products") must be approved by PRC to ensure compatibility
with PRC's manufacturing processes and/or PRC's processing
equipment.
3. Production, Schedules and Shipping
(A) All LI purchase orders for the Products shall be
for full batch quantities. A batch will yield approximately 275
6.5-ounce cartridges filled with Product. All orders will be
considered complete with the actual yield quantity per batch.
(B) PRC shall manufacture up to two (2) full batches
of Product, if both of the same color, per business day.
(C) LI shall give PRC notice of a desired release of
Products at least ten (10) business days prior to the date
Products are requested to be shipped. The period may be extended
if more than two (2) batches are requested.
(D) PRC shall make Products available on the earlier
of the desired release date or ten (10) business days after all
ingredients for the batch(es) are available to PRC.
(E) LI shall take delivery of all Products yielded
from each batch on the release date, FOB PRC Plant, Mississauga,
Ontario, Canada. LI will be responsible for all transportation
charges.
4. Ingredients Study and Control
(A) LI shall be responsible for the purchase and
supply of all ingredients required to process Products other than
plastic components of the cartridge as listed on the attached
Exhibit B (the "Plastics"). LI shall provide PRC with an
Approved Supplier and Material List, as well as WHMIS conforming
MSDS for all ingredients except Plastics.
(B) LI shall be responsible for the purchase and
supply of all packaging necessary to properly ship the Products.
(C) PRC shall purchase and pay for all Plastics
required to package the Products. PRC shall ensure that it has
enough Plastics in its inventory to produce the Products to meet
desired delivery dates as set by this Agreement.
(D) PRC shall maintain inventory records. In all
cases where discrepancies exist between PRC and LI inventory
records, PRC records will be the sole basis of consideration.
PRC inventory records will be made available to LI upon written
request.
(E) Upon receiving purchase orders for Products from
LI, PRC shall perform purchasing functions, including review of
inventories, obtaining quotes and determining minimum ingredients
and quantities required to fill purchase orders. PRC will
forward a Purchase Requisition to LI for approval and payment by
LI.
(F) Upon receiving LI payment for requisitioned
ingredients, PRC shall issue its Purchase Order to the supplier
of ingredients. PRC shall receive ingredients ordered and pay
the supplier for the goods received on a timely basis. PRC
agrees that the ingredients referenced herein once purchased and
paid for by LI become the sole property of LI, and that PRC holds
these ingredients on behalf of LI for production of LI's
Products.
(G) PRC shall store and maintain all ingredients in
suitable conditions. Any aged, obsolete and/or discontinued
ingredients for reasons beyond PRC's control will be returned to
LI, or disposed of at LI's cost, based on the prior decision of
LI.
5. Prices and Payment Terms
(A) The prices for the Products manufactured under
this Agreement are set forth on the attached Exhibit A and shall
be valid for the term of this Agreement.
(B) RC shall determine actual yield quantity from the
batch manufactured and advise LI of the total amount required to
ship Products to LI.
(C) LI will wire transfer required payments to PRC's
bank account. Upon acknowledgment of receipt of said payments,
PRC will ship the Products to LI and issue an invoice clearly
marked as "Paid In Full".
(D) LI shall pay all fees arising out of the
transportation or sale of the Products.
6. Term and Termination
(A) This Agreement shall continue and be in full force
for an initial term of five (5) years, commencing on the 1st day
of December, 1999, and ending on the last day of November, 2004.
Thereafter, this Agreement shall automatically renew for
successive terms of twelve (12) calendar months, however, after
its initial term either party may terminate this Agreement at any
time, with or without cause, by giving the other party ninety
(90) days advance written notice.
(B) In the event one party defaults in the performance
of its duties and obligations under this Agreement, the non-
defaulting party shall give written notice to the defaulting
party specifying the basis of the default. If the defaulting
party does not correct or cure, or commence to correct or cure
the default within thirty (30) days after notice of same, the
non-defaulting party may terminate this Agreement effective as of
the day notice of default was initially given by giving written
notice.
(C) Either party may terminate this Agreement upon
seven (7) days advance written notice to the other in the event
that bankruptcy or receivership proceedings are filed against or
by the other party, or if either party makes a general assignment
for the benefit of its creditors.
(D) Within the thirty (30) day period following the
termination or expiration of this Agreement, or of LI's written
notification that it has ceased sales of one or more Products
under this Agreement, PRC shall ship to LI, FOB California
facility, all ingredients purchased by PRC exclusively for the
production of the Products, as well as all finished Products then
stored at PRC's facility.
7. Quality Control and Other Records
(A) LI shall provide PRC in writing all required
quality control specifications and/or tests for all ingredients
required to make the Products. If no testing is specified, LI
shall assume all responsibilities for the quality of the
ingredients not tested and any batch non-conformance. Test
methods shall be agreed upon beforehand by PRC and LI to ensure
their compatibility with PRC's capabilities.
(B) PRC shall perform required and agreed upon
tests of ingredients and maintain records of its quality test for
a minimum of ten (10) years.
(C) PRC shall return to the supplier all non-
conforming ingredients for credit. LI shall not be responsible
for expenses associated with non-conforming ingredients.
(D) LI shall provide to PRC written quality control
specifications and specify test methods for the Products. The
test method shall be agreed upon beforehand by both parties to
ensure their compatibility with PRC's capabilities.
(E) PRC shall ensure that all the Products meet the
specified quality requirements and keep its quality control
records for a minimum of ten (10) years relating to the
production, testing and shipping of the Products.
8. Confidentiality
PRC agrees to maintain in strictest confidence all
information provided by LI in connection with this Agreement,
including, but not by way of limitation, LI's information
relating to its products, financial condition, business plans,
customer identities, technical information, and similar
information, and to hold in trust and use such information only
as needed to fulfill PRC's obligations for LI's sole benefit.
PRC shall not use such information for its own benefit, publish
or otherwise disclose it to other, or permit its use to the
detriment of LI, and shall carefully restrict access to such
information to those of its employees who clearly require it in
order for PRC to fulfill its obligations under this Agreement,
and who have executed confidentiality agreements consistent with
PRC's obligations under this Agreement. Upon termination of
PRC's obligations under this Agreement, PRC shall return to LI
all copies of all information provided by LI to PRC, including
partial copies and derivative works of such information.
9. Limitation on Use
PRC shall use the proprietary information provided to
it by LI only in connection with the manufacture and production
of the Products under this Agreement. It is expressly understood
and agreed, however, that PRC may manufacture and sell solvent
blends not based upon or derived from proprietary and/or patented
information for itself or for third parties. Except as provided
in this Agreement, PRC shall have no right to disclose or use
proprietary of LI and no license is granted or implied under this
Agreement.
10. Hazard Communication
LI shall supply all label information, MSDS, and
other documentation for the Products necessary for compliance
with all applicable Hazard Communication Standards, the Emergency
Planning and Community Right-to-Know legislation and any other
applicable federal, provincial, state and local laws or
regulations.
11. Warranty and Disclaimer
(A) LI warrants that the Products manufactured
under this Agreement shall meet the specifications and quality
control parameters furnished by LI as of the time of
certification. PRC will retain a sample for each batch of
Product in accordance with LI's instruction for a period of one
(1) year from the date of production and then will forward such
retained samples to and at LI's expense, or at the option of LI
and with a written request from LI, PRC will dispose of the
retained sample and will xxxx XX for the reasonable and necessary
costs of disposal in compliance with applicable regulations.
(B) LI agrees that it is familiar with the
characteristics, qualities and potentialities of the Products.
LI warrants that the formulae and other information supplied to
PRC under this Agreement do not infringe upon any patents or
other rights of any third party. LI agrees to disclose to PRC,
prior to the commencement of manufacture, information concerning
the hazards and potential hazards of the raw materials, Products,
by-products, and waste and shall disclose any further information
concerning such hazards as it becomes aware during the term of
this Agreement.
12. Limitation of Liability
(A) LI shall inspect and test the Products upon
receipt. LI shall notify PRC of any defects in conformance
within ten (10) business days after receipt and LI and PRC shall
discuss the corrective actions.
(B) With PRC's agreement, LI may return non-
conforming Products to PRC at PRC's expense. PRC shall have a
reasonable time in which to cure the non-conformity, replace the
non-conforming Products, or refund the purchase price of the non-
conforming Products at the sole election of LI. If non-
conforming Products are returned to PRC, then in no event shall
PRC be liable to LI or any third party for indirect, incidental,
or consequential damages arising from LI's use or intended use of
such non-conforming Products.
(C) LI shall be liable for the use of the Products,
either alone or in combination with another substance. Except
for acts or omissions by PRC in the production, testing or
handling of the Products, or the selection and purchase of
materials, PRC shall not be liable, and LI assumes full
liability, for personal injury and property damage resulting from
or connected with LI's or any third party's use, treatment,
storage, possession, transportation, handling, further
manufacture, or resale of any of the Products, either alone or in
combination with any other substance from and after LI's receipt
and acceptance of Products from PRC.
13. Indemnification
(A) Subject to Xxxxxxx 00, XXX shall indemnify,
defend, and hold harmless LI for claims, actions, losses, damages
and expenses, including costs and reasonable attorneys fees,
arising out of PRC's negligence relating to any of the Products
manufactured and produced under this Agreement, for Products
which were not produced in accordance with the specifications
provided by LI, and for breach of this Agreement specifically
including, without limitation, PRC's misuse of LI's formulae or
information under this Agreement and the misuse of LI's labels,
MSDS', or other documentation.
(B) LI shall indemnify, defend, and hold harmless
PRC from and against all claims, actions, losses, damages, and
expenses, to include costs and reasonable attorneys fees, arising
out of LI's negligence or breach of this Agreement, or otherwise
relating to any of the Products received from PRC and accepted by
LI under this Agreement.
14. Insurance
(A) During the term of this Agreement, LI agrees to
maintain in full force and effect, at its own expense, Commercial
General Liability Insurance, including, but not limited to,
coverage for products liability and completed operations,
independent contractors, and broad form contractual liability,
written on an "occurrence" basis, insuring PRC and LI for injury
to persons or damage to property arising out of the manufacture,
storage, handling, shipment or use of the Products or raw
materials. The insurance shall provide combined single limits or
not less than $1,000,000.00 per occurrence and $1,000,000
aggregate. Upon written request of PRC, LI will provide proof of
such insurance.
(B) During the term of this Agreement, PRC agrees to
maintain in full force and effect, at its own expense, Commercial
General Liability Insurance, including, but not limited to,
coverage for products liability and completed operations,
independent contractors, and broad form contractual liability,
written on an "occurrence" basis, insuring PRC and LI for injury
to persons or damage to property arising out of the manufacture,
storage, handling, shipment or use of the Products or raw
materials. The insurance shall provide combined single limits or
not less than $1,000,000.00 per occurrence and $1,000,000.00 in
the aggregate. Upon written request of LI, PRC will provide
proof of such insurance.
(C) If, during the term of this Agreement, PRC
transports the Products and raw materials in its owned, borrowed,
leased or otherwise controlled vehicles, PRC agrees to maintain
in full force and effect, at its own expense, Comprehensive
Automobile Liability Insurance insuring LI and PRC for injury to
persons or damage to property arising out of the use of such
vehicles to transport the Products or raw materials. The
insurance shall comply with all applicable laws.
15. Force Majeure
(A) Either party shall be excused for any inability
to perform, or for a delay in performance, when the inability or
delay is due to any cause beyond its reasonable control,
including, but not limited to, an act of God, storm, flood,
earthquake, labor strike or other labor work stoppage, equipment
failure, rebellion, riot, sabotage, fire, explosion, or
government act or regulation.
(B) The affected party shall promptly notify the
other party of the occurrence of such a cause and specify its
reasonable efforts to remove the cause or its inability to
perform, or delay in performance, provided, however, the affected
party shall not be required to settle a labor dispute against its
own best judgment.
(C) In the event PRC is prevented by force majeure
from supplying the full quantities of the Products ordered by LI
under this Agreement, PRC may allocate its production capacity
among LI, itself, and its other customers as it determined
reasonable. In such event, PRC shall incur no liability for not
supplying the full quantities requested by LI.
16. Notices
Any notices required or permitted under this
Agreement shall be in writing and delivered personally or sent by
prepaid certified mail duly addressed or sent via facsimile
message machine as follows:
To PRC: PRC-DeSoto Canada, Inc.
0000 Xxxxxxxxx Xxxx.
Xxxxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Fax: (000) 000-0000
To LI: Wm. Xxxxxxx Xxxxxxxx
President/CEO
Luminart International, Inc.
P. X. Xxx 0000
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Or to such other address as either party may hereafter furnish in
writing to the other party.
17. Independent Contractors
PRC is an independent contractor engaged by LI to
perform services under this Agreement. Neither party is hereby
authorized to act as an agent of the other for any purposes
whatsoever.
18. Headings
The headings appearing in this Agreement have been
inserted for the purposes of convenience and ready reference.
They do not purport to and shall not be deemed to define, limit
or extend the scope or intent of the provisions to which they
appertain.
19. Governing Law
This Agreement shall be governed and construed in
accordance with the laws of the State of California.
20. Waiver
The failure of either party at any time to enforce
any provision of this Agreement, to exercise its rights under any
provision, or to require a certain performance of any provision,
shall in no way be construed as a waiver of such provision, nor
in any way affect the validity of this Agreement or the right of
the party thereafter to enforce each and every provision.
21. Severability
If any provision of this Agreement shall be held
unenforceable or invalid, the remaining provisions shall continue
in force.
22. Assignment
Neither party shall assign its rights or obligations
under this Agreement without the prior written consent of the
other.
23. Arbitration
Any controversy or claim arising out of, or relating
to, this Agreement or a breach hereof shall be settled by
arbitration in accordance with the rules then obtained from the
American Arbitration Association.
24. Entire Agreement
This Agreement constitutes the entire understanding
between the parties and supersedes all other agreements between
the parties with respect to the subject matter of this Agreement.
There are no understandings, representations, or warranties of
any kind, express or implied, not expressly set forth in this
Agreement. No modification of this Agreement shall be effective
unless in writing and signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day, month, and year first above written.
PRC-DeSOTO CANADA, INC.
By: /s/ Xxxx Zibula
Xxxx Zibula, Business Manager
LUMINART INTERNATIONAL, INC.
By: /s/ Wm. Xxxxxxx Xxxxxxxx
Wm. Xxxxxxx Xxxxxxxx, President
