PRIVATE LABEL MANUFACTURING AGREEMENT
This Private Label Manufacturing Agreement is entered into as of
January 8, 2004 by and between Sionix Corporation, a Nevada corporation
("Sionix") and EPD Wearnes (USA) Inc. ("EPD").
RECITALS:
A. Sionix is engaged in the design and development of water treatment
equipment and systems for drinking water and wastewater treatment for
municipalities, and industries;
B. EPD manufactures water filtration systems and components; and
C. Sionix wishes to engage EPD to manufacture certain of its filter
products for Sionix under a private label arrangement, in accordance with the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, warranties
and representations contained herein, the parties hereby agree as follows:
ARTICLE 1. CERTAIN DEFINITIONS
Certain of the terms referred to in this Agreement shall be defined as
set forth in this Article 1.
1.1 PRIVATE LABEL PRODUCTS. The term "Private Label Products" shall
mean all filtration systems, products and components set forth in Exhibit A of
this Agreement.
1.2 SPECIFICATIONS. The term "Specifications" means the specifications
for the Private Label Products set forth in Exhibit B, as such specifications
may be changed from time to time by mutual written agreement of the parties.
1.3 TERRITORY. The term "Territory" means the geographical areas
specified on Exhibit C to this Agreement.
ARTICLE 2. MANUFACTURING AND SUPPLY
2.1 PURCHASE AND SUPPLY. Subject to the other terms and conditions set
forth herein, EPD shall manufacture the Private Label Products in accordance
with the Specifications, and shall supply Sionix with Private Label Products,
and Sionix shall purchase the Private Label Products from EPD, at such prices as
may be agreed between the parties from time to time, and which shall be set
forth on purchase orders. Sionix is under no obligation to purchase a minimum
quantity of Private Label Products under this Agreement.
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2.2 ORDER PROCEDURE. Sionix shall, from time to time, submit purchase
orders to EPD for the quantities of Private Label Products desired. Such
purchase orders shall constitute the only authorization for EPD to provide
Private Label Products to Sionix.
2.3 DELIVERY. EPD shall deliver the Private Label Products in the
quantities and on the dates specified in Sionix's purchase orders, F.O.B.
shipping point via Sionix's designated freight carrier, third party direct xxxx.
2.4 CHANGES. Sionix shall have the right to make changes to purchase
order quantities and delivery dates, provided the changes are not within the
Firm Lead-Time as established under Section 2.6.
2.5 SUPPLY RISK MANAGEMENT. In order to minimize supply risk to Sionix,
in the event of a material interruption in supply of the Private Label Products,
whether because of natural disaster, labor problems, or inability of EPD to
supply the Private Label Products on a timely basis, EPD grants to Sionix a
non-exclusive, royalty-free license to manufacture the Private Label Products,
or sublicense a responsible third party to do the same. Upon such occurrence,
EPD shall immediately provide to Sionix written detailed information and
technical assistance sufficient for Sionix or a third party to manufacture the
Private Label Products, including, but not limited to:
1) approved raw material vendor list,
2) raw material specifications,
3) quality control procedures and,
4) detailed manufacturing instructions
(collectively the "Detailed Manufacturing Instructions")
Sionix shall reimburse EPD for labor costs actually incurred by EPD in
training any third party to manufacture the Private Label Products under this
Section. If EPD can resume supplying Private Label Products to Sionix's
requirements, Sionix or a third party shall discontinue manufacturing the
Private Label Products following production restart, where EPD warrants that EPD
has the capacity and capability of satisfying Sionix's full demand for Private
Label Products. In such case the manufacturing license with Sionix and any
sublicense with a third party shall terminate and all Detailed Manufacturing
Instructions shall be promptly returned to EPD. Sionix and any sublicensee shall
hold all Detailed Manufacturing Instructions as confidential information under
this Agreement.
2.6 FIRM LEAD-TIME. Firm lead-time for Private Label Products shall be
as set forth on the purchase order applicable to such products.. Sionix may not
make changes to purchase orders within the Firm Lead-Time without the consent of
EPD. Should EPD not have Private Label Products in the quantities ordered, ready
for shipment on the requested purchase order date, where Sionix has provided the
Firm Lead-Time stated above, then if expedited freight is required by Sionix to
meet production needs, EPD shall be financially responsible for any incremental
shipping cost associated with such expedited freight.
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2.7 PRODUCT QUALITY. EPD shall be responsible for all product quality
issues and must be able and capable of answering specific technical questions
related to the Private Label Products.
2.8 EXCLUSIVITY. EPD hereby grants to Sionix the exclusive right to
market, distribute and sell its filters, including the Private Label Products
(collectively, the "Exclusive Products"), in the Territory for drinking water
processing, industrial and commercial water processing , and related testing or
treatment (the "Exclusive Market"). Exclusivity will remain in effect for a
period of one year from the date of this agreement. At the end of the one year
period EPD and Sionix together will review actual and prospective sales to
determine if exclusivity will remain in effect. If it is agreed by both Sionix
and EPD that in the existence of an active and potentially profitable market,
Sionix has not made all reasonable attempts to present the products and pursue
sales, Exclusivity shall be forfeit. During the term of this Agreement, EPD
shall not (i) appoint or engage any other distributor, agent or sales
representative to sell or distribute the Exclusive Products in the Territory for
the Exclusive Market, or (ii) sell, distribute or otherwise deliver Exclusive
Products to customers in the Territory or who are likely to re-sell the
Exclusive Products in the Territory to the Exclusive Market. EPD shall use its
best efforts to prevent its distributors or sales agents from selling or
distributing Exclusive Products in or to the Exclusive Market in the Territory,
directly or indirectly. Without the prior written approval of Sionix, EPD shall
not manufacture, market, sell, distribute, or otherwise dispose of Private Label
Products except on behalf of Sionix in accordance with the terms of this
Agreement.
2.9 CAPACITY. EPD is an independent contractor and is not authorized to
waive any right or to incur, assume or create any debt, obligation, contract, or
release of any kind whatsoever in the name of or on behalf of Sionix.
2.10 REPURCHASE OF CERTAIN ITEMS. In the event that EPD purchases raw
materials or components for the purpose of manufacturing Private Label Products
under this Agreement, and such materials or components are not utilized within a
reasonable time thereafter, then upon demand by EPD Sionix shall purchase such
raw materials and components from EPD for an amount equal to EPD's actual cost
plus overhead specifically applicable to such materials and components.
2.11 TERMS OF PAYMENT. The terms of payment shall be Net 45 days.
Special terms if needed shall be mutually agreed upon and stated on individual
purchase orders.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF EPD
EPD represents and warrants to Sionix as follows:
3.1 AUTHORITY. EPD has all the requisite right, legal capacity and
authority, corporate or otherwise, to enter into, deliver, and perform this
Agreement, to manufacture the Private Label Products and to consummate the
transactions contemplated herein. This Agreement has been duly and validly
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authorized by all necessary action, corporate or otherwise, which authorizations
remain in full force and effect, and no other proceedings are required for the
authorization, delivery, or performance of this Agreement by EPD. This Agreement
constitutes a legal, valid, and binding obligation of EPD enforceable in
accordance with its terms.
3.2 CONSENTS. No authorizations, consents, licenses, or approvals of
any public body or authority of California or of any other jurisdiction is
necessary for the execution, delivery, or performance of this Agreement by EPD.
3.3 NO VIOLATIONS. Neither the execution and delivery of this
Agreement, nor consummation by EPD of the transactions contemplated herein, nor
compliance with any of the provisions hereof, will conflict with or result in a
breach or violation of, a default under, any of the terms, conditions, or
provisions of any note, license, lease, or other agreement or other instrument
or obligation to which EPD is a party or by which it is bound;
3.4 LICENSES. EPD holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of its business, and has not
violated, and is not in violation of, any applicable statutes, laws, ordinances,
rules and regulations of all federal, state and local governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over it or
over any part of its operations.
3.5 DISCLOSURE. There is no fact which materially and adversely affects
this Agreement or the business prospects, conditions, affairs, or operations of
EPD or Sionix, or any of their respective properties or assets, which has not
been fully described in this Agreement or in any written materials delivered to
Sionix.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SIONIX
Sionix represents and warrants to EPD as follows:
4.1 AUTHORITY. Sionix has all the requisite right, legal capacity and
authority, corporate or otherwise, to enter into, deliver, and perform this
Agreement, and to consummate the transactions contemplated herein. This
Agreement has been duly and validly authorized by all necessary action,
corporate or otherwise, which authorizations remain in full force and effect,
and no other proceedings are required for the authorization, delivery, or
performance of this Agreement by Sionix. This Agreement constitutes a legal,
valid, and binding obligation of Sionix, enforceable in accordance with its
terms.
4.2 CONSENTS. No authorizations, consents, licenses, or approvals of
any public body or authority of California or of any other jurisdiction are
necessary for the execution, delivery, or performance of this Agreement by
Sionix.
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4.3 NO VIOLATIONS. Neither the execution and delivery of this
Agreement, nor consummation by Sionix of the transactions contemplated herein,
nor compliance with any of the provisions hereof, will conflict with or result
in a breach or violation of, a default under, any of the terms, conditions, or
provisions of any note, license, lease, or other agreement or other instrument
or obligation to which Sionix is a party or by which it is bound;
4.4 LICENSES. Sionix holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of its business, and has not
violated, and is not in violation of, any applicable statutes, laws, ordinances,
rules and regulations of all federal, state and local governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over it or
over any part of its operations.
4.5 DISCLOSURE. There is no fact which materially and adversely affects
this Agreement or the business prospects, conditions, affairs, or operations of
EPD or Sionix, or any of their respective properties or assets, which has not
been fully described in this Agreement or in any written materials delivered to
EPD.
ARTICLE 5. PRIVATE LABELING; PROPRIETARY TECHNOLOGY
5.1 LABELING OF PRODUCTS. EPD shall place Sionix data plate, labels,
logos and artwork supplied by Sionix on the Private Label Products and on
associated manuals, blueprints and specification sheets, in the size, format and
location specified by Sionix (the "Sionix Marks"). Sionix hereby grants EPD a
limited license to utilize and reproduce the Sionix Labels for the Private Label
Products manufactured under this Agreement. EPD shall not use the Sionix Marks
for any other purpose, without the prior written consent of Sionix. Upon
expiration or termination of this Agreement, the foregoing limited license shall
automatically be terminated without further action by either party hereto.
5.2 PROPRIETARY RIGHTS. It is understood and agreed that all patents
and patent rights, designs, plans, engineering details, technical data, and
other proprietary rights in and with respect to the Sionix Private Label
Products and their underlying technology and designs are and will remain
exclusively the property of EPD. During the term of this Agreement Sionix shall
not, directly or indirectly, obtain or attempt to obtain any right, title, or
interest in or to the patents, designs or other proprietary rights owned or used
by EPD. Sionix shall no action to jeopardize, limit, or interfere in any manner
with EPD's ownership of and right to utilize its patents, designs, or other
proprietary rights.
ARTICLE 6. OPERATIONS
6.1 PACKAGING. Sionix shall furnish EPD with sufficient quantities of
product cartons, inserts, instructions for use and labels to permit EPD to
package and label the Sionix Private Label Products prior to shipment.
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6.2 PRODUCT REJECTION. Any Sionix Private Label Products delivered to
Sionix or a customer of Sionix by EPD which do not conform to the Specifications
shall be promptly replaced by EPD in accordance with its warranty obligations as
set forth on Exhibit D.
6.3 FACILITIES AND PERSONNEL. EPD represents and warrants that it has,
and agrees that throughout the term of this Agreement that it will maintain, the
facilities, equipment, and competent personnel necessary to assure the proper
and prompt manufacture and delivery of Sionix Private Label Products, while
maintaining Sionix's quality standards for materials and workmanship. EPD shall
permit Sionix and its prospective customers to visit and inspect any EPD
facility at which the Private Label Products or components thereof are
fabricated or stored, during regular business hours, upon at least 24 hours
notice. EPD may impose reasonable restrictions on such inspections, including
identification of all visitors and confidentiality agreements.
6.4 SIONIX ASSISTANCE IN OBTAINING SUPPLY CONTRACTS. EPD represents and
warrants that it has the ability to obtain all supplies and materials necessary
to perform its obligations hereunder. However, when requested by EPD, and when
feasible for Sionix to do so, Sionix shall assist EPD in negotiating agreements
with Sionix's current suppliers, sub-suppliers, and subcontractors for continued
materials supply to, or performance of contract work for, EPD.
6.5 QUALITY ASSURANCE PROGRAMS. EPD shall implement and maintain
quality assurance programs and testing that are approved by Sionix in order to
maintain Sionix's quality standard for materials and workmanship.
6.6 EPD REPORTS AND ASSISTANCE. EPD shall maintain complete and
accurate manufacturing records with respect to the Sionix Private Label
Products, in accordance with accepted industry standards. EPD shall ensure that
all Sionix Private Label Products are manufactured, packaged, labeled and sold
to Sionix in accordance with all applicable laws, rules and regulations.
ARTICLE 7. WARRANTIES AND INDEMNIFICATIONS
7.1 PRODUCT WARRANTY. EPD warrants the Private Label Products in
accordance with the Warranty set forth on Exhibit D hereto. ,
7.2 EPD INDEMNIFICATION. EPD shall indemnify, defend, and hold Sionix
harmless from and against any claims, demands, causes of action or suits
(including reasonable attorneys' fees) that the Private Label Products infringe
any United States patent or the proprietary rights of others.
7.3 SIONIX INDEMNIFICATION. Sionix shall indemnify, defend, and hold
EPD harmless from and against any claims, demands, causes of action or suits
(including reasonable attorneys' fees) arising out of or relating to any breach
of this Agreement by Sionix.
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ARTICLE 8. PROPRIETARY AND CONFIDENTIAL INFORMATION
8.1 CONFIDENTIAL INFORMATION. EPD and Sionix each agrees not to
disclose information of the other acquired hereunder or in connection herewith
except as authorized in writing. EPD and Sionix shall each keep, and shall
require its officers, directors, employees, independent contractors, and
suppliers to keep, confidential such information, including but not limited to
all manuals, customer lists, copyrighted materials, technical or business
information, manufacturing techniques, software and other proprietary
information. EPD will not disseminate confidential information to any person or
entity other than those employees, officers, and directors of EPD who are
directly involved in the manufacturing of Private Label Products. Each party
will use the same degree of diligence and effort to protect the confidential and
proprietary information of the other party from disclosure to third parties as
it uses to protect its own confidential and proprietary information.
8.2 RIGHTS TO INJUNCTIVE AND EQUITABLE RELIEF. The parties hereto
mutually agree that the obligations under this Article 8 are of a special and
unique character which gives them a peculiar value and that each party cannot be
reasonably or adequately compensated in damages in an action at law in the event
the other party breaches such obligations. Therefore, the parties agree that
each shall be entitled to injunctive and other equitable relief without bond or
other security in the event of such breach or threatened breach in addition to
any other rights or remedies they may possess.
ARTICLE 9. TERM AND RENEWAL
9.1 TERM. This Agreement shall be effective for the period commencing
on the date hereof and ending on the second anniversary of the date hereof,
unless sooner terminated in accordance with the provisions of Article 9.
9.2 RENEWAL. After the expiration of the initial period set forth in
Section 9.1, this Agreement shall be automatically renewed for successive
additional one-year periods if neither party has notified the other prior to the
expiration of the initial term or any renewal term of such notifying party's
intention not to renew this Agreement.
ARTICLE 10. DEFAULT, TERMINATION, AND EXPIRATION
10.1 EVENTS OF TERMINATION. Either party may terminate this Agreement
at any time upon thirty days notice to the other party upon the occurrence of
any of the following:
(i) If the other party breaches any term or condition
of this Agreement and such breach is not cured within the foregoing
thirty day notice period; or
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(ii) If at any time the other party shall file
bankruptcy, generally not pay its debts as they become due or shall
admit in writing its inability to pay its debts, or shall make a
general assignment for the benefit of creditors.
10.2 EFFECT ON RIGHTS AND TERMINATION PAYMENTS. Termination of this
Agreement by either party shall not act as a waiver of any breaches of this
Agreement and shall not act as a release of either party from any liability for
breaches of this agreement.
10.3 UNFILLED ORDERS. Termination of this Agreement shall cancel all
unfilled orders for Private Label Products. Termination shall not be deemed
waived if EPD ships Private Label Products at Sionix's request to avoid imposing
hardship on any of Sionix's customers.
10.4 PROHIBITION ON FURTHER USE OF NAME. Upon termination or expiration
of this Agreement, EPD shall immediately discontinue the use of any trade names,
trademarks, symbols or designations associated with Sionix or the Private Label
Products.
10.5 RETURN OF PRODUCT MATERIALS AND PROPRIETARY INFORMATION. In the
event of termination or expiration of this Agreement, EPD shall immediately
return to Sionix all labels, inserts, manuals, parts identification data,
instructions, catalogs, descriptions, price lists, order forms, technical data
and designs, and other similar materials that bear the Sionix Marks. Following
such termination or expiration, Sionix shall refrain from use of proprietary
designs of EPD, and shall not manufacture proprietary products of EPD.
ARTICLE 11. GENERAL PROVISIONS
11.1 NOTICES. All notices, demands, requests, consents, approvals or
other communications (collectively "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and may be personally served, given by fax, or deposited in the United States
mail, registered or certified, return receipt requested, postage prepaid,
addressed as set forth below or such other address as such party shall have
specified most recently by written notice.
To Sionix: Sionix Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
To EPD: EPD (Wearnes) USA Inc.
00000 Xxxx Xxxxx
Xxxxxx Xxxxxxxxx, XX 00000
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11.2 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute but one and the same instrument.
11.3 GOVERNING LAW. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the laws of the State of
California applicable to agreements made and to be performed wholly within the
State of California.
11.4 ENTIRE AGREEMENT. The terms of this Agreement are intended by the
parties as a final expression of their agreement with respect to such terms as
are included in this Agreement and may not be contradicted by evidence of any
prior or contemporaneous agreement. The parties further intend that this
Agreement constitutes the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial proceeding,
if any, involving this Agreement.
11.5 MODIFICATIONS AND AMENDMENTS. This Agreement may not be modified,
changed or supplemented, nor may any obligations hereunder be waived or
extensions of time for performance granted, except by written instrument signed
by the party to be charged or by its agent duly authorized in writing or as
otherwise expressly permitted herein.
11.6 WAIVERS AND EXTENSIONS. No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof or of any other agreement or provision herein
contained. No extension of time for performance of any obligations or acts shall
be deemed an extension of the time for performance of any other obligations or
acts.
11.7 ATTORNEYS' FEES. Should either party institute any action or
proceeding to enforce this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement or of any provision hereof, or
for a declaration of rights hereunder, the prevailing party in any such action
or proceeding shall be entitled to receive from the other party all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
in connection with such action or proceeding.
11.8 FURTHER ASSURANCES. The parties agree to do such further acts and
things and to execute and deliver such additional agreements and instruments as
the other may reasonably required to consummate, evidence or confirm the
agreements contained herein in the manner contemplated hereby.
11.9 ASSIGNMENTS. This Agreement and the rights, duties, and
obligations hereunder may not be assigned or delegated by any party without the
prior written consent of the other party. Any assignment of rights or delegation
of duties or obligations hereunder made without the written consent of the other
party hereto shall be void and be of no effect. Notwithstanding the foregoing,
Sionix may assign its rights or delegate its duties hereunder to any affiliated
person or entity which controls, is controlled by, or is under common control
with Sionix.
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11.10 SUCCESSORS AND PERMITTED ASSIGNS. This Agreement and the
provisions hereof shall be binding upon each of the parties, their successors
and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first written above.
SIGNATURE PAGE FOLLOWS THIS PAGE.
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SIGNATURE PAGE
Sionix Corporation
By:
------------------------------------
EPD Wearnes (USA) Inc.
By:
------------------------------------
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EXHIBIT A
PRIVATE LABEL PRODUCTS
1. Pressure Filtration Systems in packaged and component form.
2. Water Pretreatment equipment including but not limited to Clarifiers
(incline plate and tube type), Flocculation and Sedimentation and
Flotation equipment as well as strainer and screening devices.
3. Ion exchange equipment
4. Back wash water reclamation equipment including but not limited to
Static mixers, flash mixers, Decant pumps and controls.
5. Pressure vessels configured for contact vessels, contact media and
filtration media.
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EXHIBIT B
SPECIFICATIONS
EXHIBIT C
TERRITORY
1. The Middle East, including, without limitation, Afghanistan, Oman,
Azerbaijan, Pakistan, Bahrain, Qatar, Cyprus, Saudi Arabia, Iraq,
Syria, Iran, Tajikistan, Israel, Turkey, Jordan, United Arab Emirates,
Xxxxxxxxxx, Xxxxx, Xxxxxx, Xxxxxxx
0. Africa
3. Oceania
4. Non Exclusive right to pursue sales in Central and South America.
5. Non Exclusive right to pursue sales in North America, except for those
areas currently covered by an appointed distributor of EPD.
6. Non exclusive right to pursue sales in India.
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EXHIBIT D
WARRANTY
EPD warrants its products to be free from defects in materials and workmanship
under normal conditions of service, from date of delivery, for the following
periods of time:
FILTER SYSTEMS: 20 Years Prorated, Steel and Composite* Tanks Only
10 Years Prorated, Internal and External Non-Electrical Components
First 3 Years - 100% Tank & Internal Components
First Year Only - On Site Warranty
ELECTRONIC: First Year Only - 100% on Electrical Components
PRO RATA SCHEDULE
TANKS COMPONENTS
Years Discount % Years Discount % Years Discount %
4 70 11 35 2 80
5 65 12 30 3 75
6 60 13 25 4 70
7 55 14 20 5 60
8 50 15 15 6 50
9 45 16 10 7 40
10 40 17-20 5 8 30
9 20
10 10
This limited warranty shall repair or replace defects arising only from normal
usage and does not cover damage or failure resulting from shipping,
installation, misuse, abuse, neglect, alteration, modification, abnormal working
conditions, water damage to electrical components or repairs by other than EPD.
EPD shall in no event be liable to Sionix for indirect or consequential damages
of any kind or character.
*EPD Composite Tanks are pressure vessels and to be exposed to vacuum greater
than 4 in.Hg. will be considered improper operation and warranty will be void.
Call EPD or your distributor for vacuum relief application.
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