MASTER MANUFACTURING AGREEMENT
THIS
AGREEMENT, effective February 10, 2010, is entered into between DIC Imaging
Products USA, LLC located at 0000 Xxxxx Xxxxx Xx., Xxx Xxxxx, XX 00000
(hereinafter referred to as “DIP”) and Ecology Coatings, Inc. located at 0000
Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx, XX 00000 (hereinafter referred to as
“ECOC”).
WHEREAS,
ECOC has developed proprietary information relating to the manufacture of UV
Coatings; and
WHEREAS,
ECOC is seeking a source of supply by having a third party manufacture such
products for ECOC as ECOC may from time to time request pursuant to the terms of
this Master Manufacturing Agreement and such other terms as to which the parties
hereto may agree in an Addendum or Addenda to this Agreement; and
WHEREAS,
DIP is willing to manufacture such products (hereinafter, “Products”) for ECOC
as may be specified in an Addendum or Addenda to this Master Manufacturing
Agreement; and
WHEREAS,
ECOC is willing to provide DIP with its detailed proprietary information and
technical assistance necessary in order to enable DIP to manufacture Products
for ECOC;
NOW,
THEREFORE, in consideration of the mutual convenants and promises hereinafter
contained, the parties agree as follows:
ARTICLE I -
DEFINITIONS
1.1 “Addendum”
or “Addenda” shall refer to a document or documents issued pursuant to this
Agreement which specifies the Product(s) which DIP may agree from time to time
to manufacture for ECOC, which contains information of the nature set forth in
Exhibit I, together with such other terms which may supplement this Agreement,
and which has been accepted and signed by each of the parties
hereto.
1.2 “Agreement”
shall mean this Master Manufacturing Agreement.
1.3. “Confidential
Information" shall mean any and all technical information made available and
disclosed by either party: (a) heretofore pursuant to the provisions of the
ECOC/DIP secrecy agreement, (b) pursuant to the provisions of this Agreement,
(c) ECOC’s Product formulas, or (d) ECOC’s customers except:
(a) information
which at the time of disclosure is in the public domain; or
(b) information
which after disclosure is published or otherwise becomes part of the
public domain through no fault of the disclosing party (but only after it is
published or otherwise becomes part of the public domain);
or
(c) information
which the receiving party can show was in its possession at the time of
disclosure by the disclosing party and which the receiving party without breach
of any obligation is free to disclose to others; or
(d) information
which was received by the receiving party after the time of disclosure by the
disclosing party from a third party which did not acquire it from the disclosing
party under an obligation of confidence and which the receiving party without
breach of any obligation is free to disclose to others; or
(e) information
which the receiving party can show by written documentation was independently
developed by it without resort to the disclosing party’s Confidential
Information.
For the
purposes of this Paragraph 1.2, specific disclosures made by the disclosing
party to the
receiving party, shall not be deemed to be within the foregoing exceptions
merely because they are embraced by general disclosures in the public domain or
in the receiving party 's possession. In addition, any combination of
features disclosed by the disclosing party to the receiving party shall not be
deemed, as to the receiving party, to be within the foregoing exceptions merely
because individual features are separately in the public domain or in the
receiving party 's possession, but only if the combination itself and its
principle of operation are in the public domain or in the receiving party 's
possession.
1.4 “Non-Conforming
Product” shall mean Product that does not meet Product specifications. The term
does not include Product having issues related to product performance or unknown
process issues identified after the product is in the market which do not result
from failure of the DIP to manufacture the Products in accordance with ECOC’s
specifications and quality control procedures set forth in the Addendum related
to the Product or to other information provided in writing by ECOC to DIP the
receipt of which is acknowledged and accepted by DIP.
1.5
“Products” shall mean those materials and formulas identified in a written
Addendum or Addenda executed by the parties including natural and obvious
modifications and extensions of those materials and formulas.
1.6 “Specifications”
shall mean the specifications and quality control procedures set forth in
writing with respect to each Product and raw materials in the applicable
Addendum for that Product or in a writing whose receipt is acknowledged and
accepted by DIP in writing which specifically states that it contains or relates
to Product specifications.
ARTICLE II -
CONFIDENTIALITY
2.1 ECOC
shall own all the intellectual property rights associated with the
Products. DIP may not: (i) copy, reproduce, modify, transmit,
broadcast, republish, upload (except into process computers, quality document
control system and ERP system for the purpose of performing the work related to
this Agreement), distribute publicly or create derivative works based on the
Products (ii) reverse engineer, decompile, deformulate, disassemble or otherwise
reproduce the Products. DIP and ECOC agree to hold in confidence and
not disclose to any third party, including affiliates, or (iii) otherwise
attempt to identify the chemical composition of any Product, unless specifically
authorized in writing by ECOC and not use except for the purposes of this
Agreement, all Confidential Information.
ECOC
shall not disclose to any party that DIP manufactures Products for ECOC unless
specifically authorized in writing, which authorization will not be unreasonably
withheld, or unless the disclosure is required by law.
ARTICLE III
-MANUFACTURE
3.1 DIP
shall manufacture Products for ECOC in conformance with Specifications as
requested from time to time by ECOC in an Addendum or Addenda which have been
accepted in writing by DIP.
3.2 DIP
shall fill orders for Products as to which an Addendum has been
accepted in writing by DIP as requested by ECOC by purchase orders submitted to
DIP from time to time. DIP shall be deemed to accept a purchase order upon the
earliest to occur of following: (i) DIP’s acknowledgement of the
purchase order by sending a confirming email to xxxxxx@xxxxxxxxxxxxxxx.xxx
within 1 business day.; (ii) any other event constituting acceptance under
applicable law. ECOC will provide DIP with a four (4) month rolling
estimate forecast of orders for each Product by the 10th of every
month. ECOC may cancel an accepted order at any time so long as ECOC
reimburses DIP for product obsolescence costs.
3.3 ECOC
will provide DIP with purchase orders 7 days prior to requested delivery
date.
3.4 DIP
will purchase and maintain a minimum of 1 month’s safety stock for raw materials
and or finished goods.
3.5 During
the term of this Agreement, if DIP desires to produce Products other than for
customers of ECOC, DIP agrees to exclusively work with ECOC to produce such
Products under mutually agreeable terms.
ARTICLE IV - PRICING &
DELIVERY STRUCTURE
4.1 The
initial pricing for each Product will be set forth as agreed by the parties in
the applicable Product Addendum. Pricing will be specified on each
purchase order. No price increases by DIP will be allowed without at
least sixty (60) days written notice to, and approval by, ECOC. In
the event that ECOC fails to approve any price increase requested by DIP, then
DIP shall be free to discontinue the manufacture of the relevant Product sixty
(60) days following the date of the notice of the proposed price increase,
without liability to ECOC. Upon completion of manufacturing
feasibility DIP shall provide ECOC a cost breakdown of its aggregate net
purchase costs of the raw materials, manufacturing tolling costs and
transportation costs for each ECOC formula that ECOC discloses to
DIP.
4.2 Shipping
terms and prices for all Products delivered will be specified on each Product
Addendum. Unless
otherwise specified, all shipments shall be F.O.B. ECOC’s customer location(s)
(Incoterms 2000). In the event of a delay in delivery which is
requested by ECOC, DIP will store the Products at ECOC’s risk and
expense. Acceptance of Products shall be subject to inspection by
ECOC and/or ECOC’s customer for timely delivery, conformity with specifications
and conformity with this Agreement. Non-Conforming Products may be
returned to DIP for correction or replacement within 30 days of ECOC’s or ECOC’s
customer’s notification of nonconformance. ECOC shall in good faith
assist DIP in reworking all nonconforming products as soon as
possible. DIP will immediately notify ECOC of each shipment to ECOC’s
customer by forwarding an email to xxxxxxxx@xxxxxxxxxxxxxxx.xxx.
4.3 Payment
terms for the first six months of this Agreement are net 60
days. Payment terms for the next three months (months 7, 8 and 9
after execution of this Agreement) are net 45 days. Thereafter
(10th
month after execution of this Agreement) payment terms are net 30
days. DIP may not withhold production based on ECOC’s failure to pay
any invoice in dispute.
4.4 Free
samples requested by ECOC to start new business will be purchased by
ECOC. Free samples requested by DIP to start new business will be
purchased by DIP, see Article 3.5. Freight costs will be paid by the
requesting party.
ARTICLE V - WASTE AND
DISPOSAL
5.1 It
is understood and agreed that any waste generated in the course of manufacture
and the disposal of such waste shall be the sole responsibility of
DIP.
ARTICLE VI – ENVIRONMENTAL
REGULATIONS
6.1 DIP
shall be responsible for compliance with all applicable federal, state and local
laws, rules, regulations and ordinances applicable to the manufacturing
process. ECOC shall be responsible for ensuring that all raw
materials and Products meet applicable Environmental laws, including country
chemical registration.
ARTICLE VII - LIABILITY AND
WARRANTY
7.1 DIP
shall assume all liability for any loss of Products and/or raw materials used to
manufacture Products which result from DIP’s failure to manufacture Products in
accordance with
Specifications,
including damages directly incurred by ECOC and/or its customer(s) as a result
of such failure. DIP shall have no liability for performance issues or product
defects which arise with respect to the Products which are
manufactured in accordance with Specifications and quality control procedures
and which do not result from the failure of Products to conform to these
Specifications.
7.2 Except
as specifically provided in this Article VII, DIP makes no warranty of any kind,
express or implied, including the warranties of merchantability and fitness for
a particular purpose, other than the warranty that the Products are in
accordance with the specifications recited in the applicable
Addendum. IN PARTICULAR, IN NO EVENT SHALL DIP BE LIABLE FOR ANY
INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES ARISING OUT OF THE USE,
OR INABILITY TO USE, THE PRODUCTS MANUFACTURED HEREUNDER, WHETHER SUCH CLAIM
ALLEGES BREACH OF WARRANTY, NEGLIGENCE OR ANY OTHER CAUSE AND WHETHER OR NOT DIP
KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGE.
7.3 ECOC
shall defend and indemnify DIP against any claims from third parties which
allege damage, loss or injury arising out of the use of the Products, unless the
damage, loss or injury is due DIP’s breach of this Agreement or the failure of
DIP to manufacture Products in conformance with applicable
Specifications.
7.4 DIP
agrees to defend, indemnify and hold ECOC harmless from and against any and all
claims, actions, demands, damages, liability, losses, fines, penalties, costs
and expenses (including reasonable attorneys’ fees) to the extent relating to or
arising out of (i) a breach of this Agreement by DIP, its employees, agents,
representatives, or contractors; (ii) the failure of DIP to manufacture Products
in conformance with Specifications; (iii) the willful misconduct of
DIP, its employees, agents, representative, or contractors; or (iv) a claim
alleging that the services provided by DIP infringe and/or misappropriate
another’s patent, trademark, copyright, trade dress, trade secret or other
intellectual property right, expect to the extent that such claims arise from
allegations that the Product itself infringes the intellectual property rights
of any third party.
ARTICLE VIII – PROPRIETARY
RIGHTS INFRINGEMENT
8.1 DIP
reserves the right to discontinue the manufacture, sale and/or use of any
material which material is alleged by a third party to constitute the
infringement of any patent, trade secret or other proprietary
right. ECOC agrees to defend, indemnify and save DIP harmless from
any cost, damages and reasonable attorney fees which it may sustain arising out
of its manufacture of Products under this Agreement, provided that ECOC is
promptly notified in writing of any allegation or complaint of infringement and
is afforded the right to take sole charge of disposal of any infringement action
with attorneys of its selection, at ECOC's expense. ECOC shall have
the right, at its expense to settle any such infringement suit, without the
consent of DIP. DIP shall, however, be solely responsible for claims
of infringement relating to its manufacturing processes.
ARTICLE IX –
CONFLICT
9.1 This
Agreement will be controlling over any terms and conditions included in any
Purchase Order form used in ordering Product, unless otherwise agreed by the
Parties in writing. In the event of a conflict between the terms of
this Agreement and the terms of any Addendum agreed to in writing by the
parties, the terms of the Addendum shall take precedence and shall
govern.
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ARTICLE X - FORCE
MAJEURE
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10.1 Neither
party shall be responsible to the other for failure to perform any of the
obligations imposed by this Agreement, provided such failure shall be
occasioned by fire, flood, explosions, lightning, windstorm, earthquake,
subsidence of soil, failure or destruction, in whole or in part, of
machinery or equipment or failure of supply of materials, discontinuity in
the supply of power, governmental interference, civil commotion, riot,
war, strikes, labor disturbance, transportation difficulties, labor
shortage or by any cause beyond the reasonable control of the party in
question.
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ARTICLE XI - ADDRESSES OF
THE PARTIES
11.1 The
addresses of the parties hereto are as set forth at the beginning of this
Agreement, but either party may change its address for the purpose of this
Agreement by notice in writing to the other party. In the event
notices, statements and payments received under this Agreement by a party hereto
are sent by certified or registered mail to the party entitled thereto at its
above address, they shall be deemed to have been given or made as of the date so
mailed; communications delivered manually, by non-certified or non-registered
mail, FAX, telex or cable shall be deemed to have been given or made when
actually received by the party entitled thereto at its above
address.
ARTICLE XII -
ASSIGNMENT
12.1 This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and the successors to substantially the entire assets and business of the
respective parties hereto. This Agreement shall not otherwise be
assignable by either party without the prior written consent of the other
party. Any and all assignments of this Agreement or of any interests
therein not made in accordance with this Article XII shall be void.
ARTICLE XIII -
CONSTRUCTION
13.1 The
validity and interpretation of this Agreement and the legal relationships of the
parties to it shall be governed by the laws of the State of Michigan, without
giving effect to their choice of laws provisions. In the event of a
dispute, the parties agree not to commence litigation prior to undertaking a
good faith attempt to resolve the dispute using alternative dispute
resolution. In the event that such dispute is not amicably resolved
following a good faith attempt by the parties to resolve the dispute by means of
alternative dispute resolution, then any disputes hereunder shall be resolved by
a court of competent jurisdiction located in the State of Michigan.
13.2 None
of the provisions in this Agreement shall be construed so as to require the
commission of any act contrary to law, and wherever there is any conflict
between any provision of this Agreement and any material statute, law or
ordinance, the latter shall prevail; but in such event the provision of this
Agreement affected shall be curtailed and limited only to the extent necessary
to bring it within the legal requirements.
13.3 This
document, including all Exhibits attached hereto, constitutes the full
understanding between the parties hereto with reference to the subject matter
hereof and no statements or understandings, oral or written made prior to or at
the execution hereof shall vary or modify the written terms hereof neither party shall
claim any amendment; modification or release from any provision hereof except by
a formal written
amendment to this Agreement which has been subscribed by both
parties.
ARTICLE XIV - TERM and
TERMINATION
14.1 If
a party shall be in breach of any obligation hereunder, the other party may give
written notice of termination by calling attention to such default, and
specifying a
termination date not less than one hundred twenty (120) days after the date of such
notice. Unless the defaulting party has remedied such default prior
to the termination date specified in such notice, this Agreement shall
automatically terminate as of said designated date. Either party may
terminate this Agreement without cause upon six (6) months prior written notice
to the other party.
14.2 Upon
commencement of this Agreement, ECOC and DIP will proceed with pre-production
feasibility to allow DIP an opportunity to approve manufacturing feasibility and
final cost quotations associated with manufacturing ECOC’s
Products. Upon completion of this assessment, ECOC may issue final
purchase orders to DIP for normal production.
DIP will
provide the labor, equipment, consumables (Raw materials, packaging supplies,
filters, etc.) and resources necessary to complete the manufacturing
feasibility. ECOC will be free to sell any Product produced during
the pre-production feasibility process to ECOC’s customer(s). In the
event such Product is not accepted by ECOC’s customer due to DIP’s failure to
manufacture Product in accordance with specifications, ECOC will have no
responsibility to reimburse DIP for the cost of consumables used in the
pre-production feasibility process. In the event such Product is not
accepted by ECOC’s customer due to a problem with ECOC’s formula, raw material
specification, failure to properly transfer the manufacturing technology, or
loss of business, ECOC will reimburse DIP for the cost of consumables used in
the pre-production feasibility process. In the event such Product is
not accepted by ECOC’s customer and a cause for the lack of acceptance cannot
readily be determined, ECOC will have no responsibility to reimburse DIP for
one-half of the cost of consumables used in the pre-production feasibility
process.
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14.3
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Any
termination of this Agreement shall
not:
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(a)
release a party from any claim of the other party accrued hereunder prior
to the effective date of such termination;
or
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(b)
release DIP from its obligations under the provisions of Article II, V, VI
and VII hereof.
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14.4 At
the end of the term or termination of this agreement, ECOC is responsible for
purchasing excess raw materials and finished product that were purchased to meet
forecast or minimum order quantity requirements.
ARTICLE XV - COMPLETE
AGREEMENT
15.1 The
nondisclosure and secrecy agreements identified in this Agreement and the
foregoing, together with and Addenda issued and accepted pursuant to this
Agreement, represent the parties’ complete understanding with respect to the
subject matter hereof, superseding all other understandings, written or oral,
relating hereto.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as
of the date first written above.
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DIC
IMAGING PRODUCTS USA, LLC
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By: /s/ Yoshi
Maruko
By: /s/ Xxxxxx X.
Xxxxxxxx
Title: President Title: CEO
EXHIBIT
I – ADDENDUM SPECIFICATIONS
Product
Description:
Finished
Product Specifications:
Raw
Material Specifications:
Product
Transfer Process Specifications:
Quality
Control Requirements:
Aggregate
Raw Material Costs:
Tolling
Costs:
Shipping
Costs:
Total
Costs:
