MANUFACTURING AGREEMENT
Exhibit
10.1
This
MANUFACTURING AGREEMENT ("Agreement''') is entered into as of this 16th day
of October, 2006 by and between Sumeeko
Industries Co., Ltd.,
a
Taiwanese corporation with a place of business at 00, Xxxxx Xxxx, Xx-Xx
Xxxxxxxxxx Xxxxxxxx, Xxxxxxxxx Xxxxxx 831, Taiwan, ROC ("Manufacturer"),
Encompass
Holdings, Inc.,
a
Nevada corporation with a place of business at 0000 Xxxxxxxx Xxx. Suite 110.
Reno. Nevada, USA ("Encompass"), and Aqua
Xtremes, Inc.,
and
its subsidiary, Xtreme
Engines, Inc.,
each of which is a corporation organized in the State ofNevada, USA,
with
a place of business at 0000 Xxxxxxxx Xxx, Xxxxx 000, Xxxx, Xxxxxx. XXX
("Purchaser").
RECITALS
| A. |
Purchaser
is engaged in the business of designing, developing, marketing and
selling
proprietary private watercraft ("PWC") such as the Xboardt'".
as
well as other proprietary products utilizing a rotary engine (the
"Products").
|
| B. |
Purchaser
desires to outsource production of the Products to a manufacturer
that can
produce the Products at a quality, price and on delivery terms acceptable
to Purchaser.
|
| C. |
Manufacturer
is a manufacturer of PWC and is capable ofproducing Products for
Purchaser
at a quality, price and on delivery terms acceptable to Purchaser.
|
| D. |
Purchaser
and Manufacturer desire to enter into this Agreement for the purpose
offormalizing the terms and conditions under which Purchaser agrees
to
purchase Products from Manufacturer and Manufacturer agrees to produce
them for Purchaser.
|
AGREEMENT
NOW.
THEREFORE, in consideration of the mutual tenns and conditions contained
in this
Agreement, the parties hereto agree as follows:
| 1. |
DEFINITIONS
|
| 1.1 |
"Affiliate
or Affiliates" shall mean any corporation. film, partnership, or
other
entity, whether de jure or de factor, that directly or indirectly
owns. is
owned by. or is under common ownership with a party to this Agreement
to
the extent of at least 50 percent of the equity having the power
to vote
on or direct the affairs of the entity and any person, firm, partnership,
corporation, or other entity actually controlled by. controlling,
or under
common control with a party to this Agreement.
|
| 1.2 |
"Business
Practices" includes information relating to intellectual property.
business plans. financial information, Products. services. manufacturing
|
1
processes
and methods, costs, sources of supply, advertising and marketing
plans, customer lists, sales, profits, pricing methods, personnel and
business relationships.
| 1.3 |
"Confidential
Information" includes, but is not limited to, all information proprietary
to Purchaser, whether or not reduced to writing or other tangible
medium
of expression, and whether or not patented, patentable, capable of
trade
secret protection, or protected as unpublished or published work
under the
United States COPYIight Act of 1976 as amended. Confidential Information
also includes information relating to the Intellectual Property and
Business Practices of Purchaser. Confidential Information also includes
comparable information that Purchaser may receive or has received
from
others Purchaser does business with. Confidential Information does
not
include information which (1) was already known to Manufacturer or
its
Affiliates prior to the Effective Date, (2) becomes generally available
to
the public, other than through a breach ofthis Agreement, or (3)
is
furnished to Manufacturer by a third party who is lawfully in
possession
of such information and who lawfully conveys this information.
|
| 1.4 |
"Effective
Date" shall mean May 26, 2005.
|
| 1.5 |
"Forwarder"
shall mean a freight company designated by Purchaser that shall have
responsibility for managing all transportation logistics for the
Products.
|
| 1.6 |
"Intellectual
Property" includes information relating to research and development,
inventions, discoveries, developments, improvements, methods and
processes, know-how, drawings, blueprints, specifications, product
briefs,
algorithms, computer programs and software, compositions, works,
concepts,
designs, ideas, prototypes, models, samples, screens. molds, lists,
patents, copyrights, trademarks, trade names, trade secrets, formulae,
writings, notes, and patent, trademark, and copyright applications.
|
| 1.7 |
"Molds"
shall mean all molds, patterns, dies, tools, plates, stamps and all
related materials used in
the
manufacture of the Products or any component thereof.
|
| 1.8 |
"Products"
shall mean the Xboard" PWC as well as other proprietary products
utilizing
a rotary engine that Manufacturer is authorized to produce pursuant
to one
or more valid written purchase orders or sample request forms from
Purchaser.
|
| 1.9 |
"Purchaser
Assets" shall mean Molds. Trademarks and Confidential Information.
|
| 1.10 |
"Trademarks"
shall mean trademarks, copyrights, trade names, symbols. logos, slogans,
trade dress, designs. design rights. style names and components thereof.
now or hereafter owned, licensed or controlled by Purchaser or any
subsidiaries or affiliates thereof and any other intellectual
|
2
property
rights which are now or hereafter owned, licensed or controlled by
Purchaser or which Purchaser has the right to use in connection with
the
manufacture, use and sale of the Products, together with the goodwill
associated
therewith.
| 2. |
ADDITIONAL
CONSIDERATION TO TOOL UP MANUFACTURING
|
| 2.1 |
As
an additional inducement (beyond the prices paid for Products manufactured
pursuant to this Agreement) for Sumeeko to contribute and make necessary
investments relating to tooling up a new manufacturing plant to
manufacture the Products for Purchaser, Encompass shall, immediately
upon
execution of this Agreement, issue to Sumeeko a stock certificate
representing one hundred thousand (100,000) shares of its Series
C
preferred stock, which shall be convertible to ten million (10,000,000)
shares of Encompass's common stock. The conversion of the Series
C
preferred shares to common shares shall occur no earlier than one
year
from the date this Agreement is executed by the parties and is subject
to
the terms and conditions applicable to Encompass's Series C preferred
stock.
|
| 2.2 |
Encompass
hereby agrees to amend its Articles of Incorporation to specify that
one
member of its Board of Directors may be designated by Sumeeko.
|
|
2.3
|
Sumeeko
will have full voting privileges except when it relates to issues
that are
related to this contract.
|
| 3. |
AGREEMENT
FOR EXCLUSIVE MANUFACTURE AND
SUPPLY
|
| 3.1 |
For
the limited purpose of manufacturing Products exclusively for Purchaser
as
provided in the Agreement, Purchaser hereby appoints Manufacturer
as
Purchaser's exclusive worldwide manufacturer of the
Products.
|
| 3.2 |
For
the limited purpose of manufacturing Products exclusively for Purchaser
as
provided in this Agreement, Purchaser hereby grants to Manufacturer
an
exclusive, worldwide, non-assignable and revocable license to use
the
Trademarks in the manufacturer of the Products.
|
| 3.3 |
Subj
ect to the terms of this Agreement, Manufacturer shall manufacture,
pack
and deliver the Products for sale to Purchaser strictly in accordance
with
the processes, specifications, technical information, drawings, samples
and quality standards furnished or approved in writing by Purchaser.
The
Products shall be manufactured for and sold only to Purchaser.
Manufacturer expressly acknowledges that Purchaser may purchase,
and shall
have the right to purchase, the Products from persons other than
Manufacturer, if Manufacturer is unable to maintain a timely supply
of
Products, at a reasonable price,
|
| 3.3.1 |
For
purposes of this Section 3.3, the word "timely" shall mean a date
within
30 days ofthe Estimated Time of Product Delivery under Section 5.4
|
3
| 3.3.2 |
For
purposes of this Section 3.3, the phrase "reasonable price" shall
mean a
price for a Product less than or equal to an amount 100 percent of
Manufacturer's actual cost of raw materials, labor and administrative
overhead for the Product plus Manufacturer's average gross profit
margin
for all products it manufactures.
|
| 3.4 |
Manufacturer
shall only ship the quantity of the Products stipulated in the applicable
purchase order from Purchaser or such other quantity as may be agreed
in
writing by Purchaser and Manufacturer. Each purchase order issued
by
Purchaser to Manufacturer shall constitute a separate contract. If
Manufacturer produces Products at any time in excess of the amounts
set
forth in each such purchase order, Manufacturer will notify the Purchaser
of same. Purchaser may then, at its election, amend said purchase
order
and purchase the excess production, or roll into next open purchase
order.
If there are no additional open orders a plus or minus 10% quantity
will
be accepted.
|
| 3.5 |
Purchase
orders typically shall specify an order quantity for a one-year period
and
further specify monthly draw down quantities that must be delivered
against the purchase order ("Monthly Draw Downs"), unless an alternative
arrangement is made.
|
| 3.6 |
Manufacturer
shall not manufacture or supply any Products or goods whatsoever
using any
Confidential Information or bearing any of the Trademarks for any
person
other than Purchaser. Manufacturer also shall not at any time manufacture
or sell (or assist others in manufacturing or selling) any Products
or
other goods which bear a trademark, trade name, trade dress, logo
or other
xxxx or design which, in the sole opinion of Purchaser, infringes
or is
confusingly or deceptively similar to any ofthe Trademarks, or is
likely
to be confused with or regarded as similar to the Products or to
infringe
any copyright or other intellectual property rights of Purchaser.
|
| 3.7 |
The
Purchaser has the right to inspect the facilities of or review any
supplier from which any raw material or component used in manufacture
of
the Products being purchased. Notwithstanding any such inspection
or
review Purchaser or its designees may make of any supplier. Manufacturer
shall retain sole responsibility for the quality of the Products
produced
hereunder. Aqua Xtremes will not circumvent the relationship between
the
manufacturer and its' sub-suppliers during the term of this agreement.
|
| 4. |
SAMPLES
AND INSPECTION
|
| 4.1 |
During
the term of this Agreement. Purchaser may request Manufacturer to
produce
samples of any new Product to be manufactured and Manufacturer shall
deliver such samples to Purchaser in accordance with the time schedule
mutually agreed upon by Purchaser and Manufacturer.
|
| 4.2 |
For
any samples requested by Purchaser, Purchaser shall pay Manufacturer
the
actual cost of manufacturing
such
samples.
|
4
| 4.3 |
Manufacturer
shall strictly comply with Purchaser's instructions in the manufacture,
finishing and packing of samples.
|
| 4.4 |
Purchaser
and/or its authorized representative shall have the right at any
time to
visit any places under the control of Manufacturer (or its permitted
sub-contractors) in order to inspect the manufacture of sample Products
or
sample Product components.
|
| 4.5 |
Unless
and until Purchaser has given written approval for shipment of the
samples
following final inspection, or in the event that Purchaser has rejected
such samples after inspection, Manufacturer will not supply any of
the
samples to any person whatsoever at any
time.
|
| 4.6 |
Any
new products and or prototypes made by the manufacturer will automatically
be available to them as an additional product under this agreement.
|
| 5. |
ORDER
PLACEMENT AND CONFIRMATION PROCEDURES
|
| 5.1 |
Manufacturer
shall not commence manufacture of a Product until Purchaser has authorized
production pursuant to a purchase order signed by an authorized
representative of Purchaser.
|
| 5.2 |
Manufacturer
acknowledges that neither Purchaser's receipt nor approval of the
production confirmation samples nor any other provision contained
in this
Agreement shall require Purchaser to place any purchaser order for
the
Products.
|
| 5.3 |
Any
and all orders for Products shall be made by Purchaser issuing its
own
purchase order to Manufacturer, which purchase order shall be in
the form
attached hereto as Exhibit A. In the event of any conflict between
the
terms of the purchase order and this Agreement, the terms of this
Agreement shall govern.
|
| 5.4 |
The
Manufacturer shall confirm to Purchaser the Estimated Time of Product
Delivery to designated Forwarder ("ETD") for each Monthly Draw Down
within
ten business days of receipt of the purchase order. All terms, other
than
the acceptance itself of such purchase order or amendment thereto,
contained in Manufacturer's order confirmation form, or other document
used by Manufacturer to communicate its acceptance, shall be subject
to
Purchaser's acceptance. Any purchase order or amendment thereto shall
be
governed by the terms of this Agreement and such purchase order or
amendment thereto.
|
| 5.5 |
Purchaser
reserves the tight to cancel or change orders up to the date that
is One
Hundred Twenty (120) days prior to the confilmed ETD for a Monthly
Draw
Down. If Purchaser cancels or changes an order. Purchaser's liability
shall be limited to the following costs incurred by Manufacturer
as of the
date the order is canceled or changed, if any:
|
| (a) |
The
cost of raw materials.
|
| (b) |
The
cost of work in progress.
|
5
| 5.6 |
Changes
and cancellations of orders are subject to the written approval of
the
Manufacturer under the following circumstances:
|
| 5.6.1 |
If
the changes or cancellations change the order quantity by more than
20
percent and involve Monthly Draw Downs scheduled between 121 and
210 days
after the date ofthe purchase order; or
|
| 5.6.2 |
If
the changes or cancellations change the order quantity by more than
50%
and involve Monthly Draw Downs scheduled between 211 days and 360
days
after the date of the purchase order.
|
| 6. |
PRICE,
PAYMENT AND INVOICES
|
| 6.1 |
The
price for any new Product to be produced by Manufacturer shall be
agreed
in writing by Purchaser and Manufacturer prior to issuance of any
applicable purchase order. After such agreement, the price for that
style
of the Product shall remain film and unchanged until otherwise agreed
upon
by Purchaser and Manufacturer in writing.
|
| 6.2 |
All
payments will be in United States Dollars unless otherwise agreed
by
Purchaser and Manufacturer in writing.
|
| 6.2.1 |
For
shipments to the United States, unless otherwise specified in a particular
purchase order or agreed upon in writing by Purchaser and Manufacturer,
payment for the Products shall be by wire funds transfer or other
payment
method agreed to by the parties within fifteen (15) calendar days
after
presentation by Manufacturer ofdocumentation specified in this Subsection
6.2.1
and Section 6.4. Manufacturer acknowledges and agrees that documentation
specified by Purchaser may include an inspection certificate issued
by
Purchaser or its designee.
|
| 6.2.2 |
For
shipment to countries other than the United States, unless otherwise
specified in a particular purchase order or agreed upon in writing
by
Purchaser and Manufacturer, payment for the Products shall be by
wire
funds transfer or other payment method agreed to by the parties within
seven (7) calendar days after presentation by Manufacturer of
documentation specified in this Subsection 6.2.2 and Section 6.3.
Manufacturer acknowledges and agrees that documentation specified
by
Purchaser may include an inspection certificate issued by Purchaser
or its
designee.
|
| 6.3 |
Within
10 days of placing a purchase order, Purchaser shall secure its payments
under Section 6.2 by having a bank issue a standby letter of credit
in an
amount equal to
three
months of production which will be monitored and adjusted accordingly.
Payment shall be made to the manufacturer 10 days after receipt of
all
facsimile or electronic applicable
|
6
shipping
documents by the purchaser. The original shipping document will be mail to
purchaser after manufacturer received all payment.
| 6.4 |
Manufacturer
shall render to Purchaser invoices and other documentation requested
by
and acceptable to Purchaser evidencing title and the price of the
Product.
Shipment shall also be accompanied by such other documents as may
be
required according to instruction of Purchaser for exporting the
Products
from the country of origin and thereafter entering it into the commerce
of
the destination country.
|
| 6.5 |
The
price for any Product as agreed in Section 6.1 is exclusive of applicable
duties, tariffs, VAT, excise, sales, use and similar taxes. Purchaser
shall be liable for and pay all such applicable taxes invoiced by
Manufacturer.
|
| 6.6 |
Manufacturer
shall not pay any commission or other form of payment in respect
to any
order for the Products to any person without the prior written consent
of
Purchaser.
|
| 7. |
SHIPMENT,
DELIVERY AND TITLE
|
| 7.1 |
The
Products shall be sold CIF destination port designated by Purchaser,
unloaded. CIF shall mean Cost, Insurance and Freight, as defined
in
INCOTERMS 2000 ("INCOTERMS"). Title shall not pass to Purchaser until
a
Forwarder's Cargo Receipt has been issued by Purchaser or Purchaser's
designee, or in the case of airfreight shipments, an air waybill.
|
| 7.2 |
Manufacturer
shall strictly comply with Purchaser's instructions in the manufacture,
finishing and packing of Products.
|
| 7.3 |
All
purchase orders must be delivered to the Purchaser by the mutually
agreed
delivery date, as specified in Purchaser's purchase order or delivery
will
be considered late. For purchase orders held at Purchaser's request,
on
time delivery will be measured by the date originally set for shipment
and
wiII
be
invoiced as of that date.
|
| 7.4 |
Manufacturer
shall immediately notify Purchaser of any event which might delay
delivery
of the Products ordered. Manufacturer acknowledges that time is of
the
essence.
|
| 7.5 |
Late
deliveries will result in one of the following consequences:
|
| (a) |
Manufacturer
shall prepare within seven (7) calendar days of the late delivery
a
written correction action plan and shall provide a copy of same to
Purchaser to review and approve.
|
| (b) |
The
Manufacturer and Purchaser shall discuss and mutually agree upon
any
course of action which may incur additional cost in resolving a late
delivery
|
| 8. |
PRODUCTION
SCHEDULES AND DOCUMENTATION
|
7
| 8.1 |
The
Manufacturer will follow all shipping and documentation instructions
from
Purchaser.
|
| 8.2 |
The
Manufacturer will submit all required shipping documents, including,
but
not limited to, the Ocean Xxxx of Lading (or Air Waybill), Commercial
Invoice, Packing List, and Certificate of Origin. within three business
days after the Products covered by the purchase order have been shipped.
|
| 8.3 |
Purchaser
or its designee will issue a Certificate of Inspection only if all
documents submitted are correct and in order. unless Purchaser elects
to
waive this requirement.
|
| 8.4 |
The
Manufacturer is expected to ship each order complete with the exact
quantity by size as listed on Purchaser's purchase order.
|
| 9. |
INSPECTIONS
AND DEFECTIVE PRODUCTS
|
| 9.1 |
Purchaser
and Manufacturer acknowledge that the first 5,000 units of Product
production shall be considered prototypes and involve joint cooperation
and inspection of all components and finished Products.
|
| 9.2 |
For
units 5,00 I -10,000 of Product production, joint inspection shall
also
occur. During production of units 5,00 I -10,000, final Product
specifications will be certified by Purchaser and Manufacturer, and
the
final quality assurance documents will be created and agreed to by
the
parties.
|
| 9.3 |
For
units 10,001 and beyond:
|
| 9.3.1 |
Manufacturer
shall provide Purchaser, or its designees, with access to all paJis
of
Manufacturer's factory and any other facilities used by Manufacturer
for
production, packaging, storage and delivery of the Products to enable
Purchaser or its designees to inspect and monitor the manufacture
of the
Products.
|
| 9.3.2 |
Each
production purchase order will be filled only by Products that meet
the
proper specifications outlined in the specification sheets given
to the
Manufacturer by Purchaser. The quality standards set forth
shall
conform to both the Manufacturers and Purchaser's Quality Assurance
Manual.
|
| 9.3.3 |
The
Purchaser will have an inspector or representative on site at the
Manufacturer facility during the initial production until the proper
quality systems are in place and functional. Both the Purchaser and
Manufacturer will sign off when this requirement has been fulfilled.
Following this Purchaser inspector. or an inspector designated by
Purchaser, must sign and issue the Purchaser Final Inspection Report
for
each purchase order prior to shipment. The signature by Purchaser
|
8
or
its
designee on the Final Inspection Report shall not constitute
a waiver of any rights under this Agreement or provided
by law and shall not bind Purchaser should it subsequently
determine that the Products do not conform to the quality
standards or other specifications of the Products.
| 9.3.4 |
Immediately
upon discovery of any defects in the Products non-conformance with
Purchaser's specifications and/or quality standards, Manufacturer
shall
notify Purchaser of such defects, non-conformance or quality problems
in
writing. The defective Products shall, at the option of Purchaser,
be
destroyed in a manner approved in writing by Purchaser.
|
| 9.3.5 |
Manufacturer
shall provide to Purchaser, on a quarterly basis, a written report
describing the nonconforming Products produced during that quarter.
|
| 9.3.6 |
Purchaser
reserves the right to claim damages from the Manufacturer on all
customer
returned nonconforming Products. This means that any parts within
the
product that do not conform to the agreed upon xxxx of material
specifications and drawings as required will be considered a
non-conforming component. Purchaser and Manufacturer shall work to
improve
the non-conforming component first before any claim charged to each
other.
Part with minor defect but no effect function will not be considered
a
non-conforming component.
|
| 10. |
WARRANTIES
AND DEFECTIVE PRODUCTS; INDEMNIFICATION; INSURANCE
|
| 10.1 |
Manufacturer
warrants and represents that the Products: (a) are free from defects
in
materials and workmanship, and conform strictly to the approved samples,
any related Confidential Information and all other applicable
specification; and (b) contain all warnings necessary for the proper
and
safe use of the Products, as provided by the Purchaser.
|
| 10.2 |
Manufacturer
agrees to protect, defend, indemnify and hold Purchaser harmless
from all
claims, suits, liabilities, damages and expenses (including attorneys'
fees) arising from, connected with or related in any way to the
manufacture of the Products or resulting from the breach of any of
the
warranties or representations in this Agreement.
|
| 10.3 |
Manufacturer
agrees to protect, defend, indemnify and hold harmless Purchaser
from all
claims, suits. liabilities. damages and expenses (including attorneys'
fees) arising from, connected with or with respect to violation of
any
license. law or regulation by Manufacturer within the county of when
the
Products are manufactured.
|
| 10.4 |
Manufacturer
further agrees (without limiting any of Manufacturer's obligations
or
liabilities under this Agreement) to procure and maintain at
Manufacturer's sale cost and expense at all times. with a reasonable
|
9
insurance
carrier acceptable to Purchaser and in a form acceptable to Purchaser.
a property insurance policy in an amount equal to the full replacement
cost of the Molds and equipment which are used to produce the
Products.
| 10.5 |
Manufacturer
further
agrees
(without limiting any of Manufacturer's obligations or liabilities
under
this Agreement) to procure and maintain liability insurance with
limits of
not less than Two Million United States Dollars (USD $2,000,000)
combined
single limit bodily injury and property damage which insurance shall
have
an endorsement naming Purchaser as an individual insured, and be
in a form
and issued by a company reasonably acceptable to the Purchaser.
|
| 10.6 |
Manufacturer
shall be responsible for Purchaser's losses or damages to Purchaser
Assets, including damages caused directly or indirectly by employees
of
Manufacturer and their agents and including damages caused during
periods
of strikes or other labor unrest.
|
| 10.7 |
The
warranties and representations of this Section 10 will survive the
termination of this Agreement with respect to all Products produced
by
Manufacturer prior to the termination of this Agreement.
|
| 11. |
MOLDS,
ETC.
|
| 11.1 |
Manufacturer
agrees (i) not to sell, transfer possession or otherwise dispose
of any
Mold used in manufacturing the Products without the prior written
consent
of Purchaser or its representative. (ii) to use such Molds solely
for the
manufacture of the Products ordered by Purchaser, and (iii) not to
reproduce such molds, unless authorized in writing by Purchaser,
except
when reproduction is necessary to manufacture the Products to fulfill
Purchaser's orders, in which case Manufacturer shall notify Purchaser
in
writing.
|
| 11.2 |
Purchaser
Assets shall at all times remain the exclusive property of Purchaser,
and
Purchaser shall at all times retain all lights in and title to Purchaser
Assets. At no time may Purchaser Assets be used as collateral or
security
by Manufacturer and Manufacturer is expressly prohibited from granting
any
mortgage, lien, security, or other interest in Purchaser Assets to
any
person or entity, nor may Manufacturer transfer all or any interest
in or
license or
sublicense
any Purchaser Asset. Under no circumstances shall any Purchaser Assets
be
used to satisfy any debts or obligations of the Manufacturer. Manufacturer
shall be fully responsible for the maintenance and security of Purchaser
Assets and will use its best efforts to assure that Purchaser Assets
are
at all times secure and freely available to Purchaser to use as Purchaser
may detelmine. Purchaser Assets used by Manufacturer under this Agreement
shall be deemed to be held in trust for Purchaser.
|
| 11.3 |
Manufacturer
agrees
that Purchaser and its authorized representatives shall be entitled
to
enter upon any premises of Manufacturer where any Purchaser Assets,
samples. or Products or other property of Purchaser are
|
10
thought
to be located and may peaceably recover possession of any such items
located there, if
the
Manufacturer is in breach of any of the terms of this
Section II. Purchaser acknowledges, however, that possession of certain
unamortized
Molds
financed by Manufacturer, may not be recovered
by Purchaser unless Purchaser first pays Manufacturer the unamortized
cost of the Molds paid by Manufacturer.
| 11.4 |
Manufacturer
agrees to comply with Purchaser's Product Costing Procedures (attached
hereto as Exhibit C), as in effect from time to time (subject to
change by
mutual agreement) of the parties.
|
| 12. |
TRADEMARKS
|
| 12.1 |
Manufacturer
hereby acknowledges (i) the validity of the Trademarks, (ii)
that
Purchaser has at all times had, and shall continue to have, the exclusive
right, title and interest in and to the Trademarks, (iii) that neither
this Agreement nor performance of any services by Manufacturer hereunder
shall confer on Manufacturer by right, title or interest in or to
the
Trademarks, and (iv) that Manufacturer does not have any permission
to and
will not adopt, use, register, or attempt to register as a trademark,
trade name, business name or corporate name or part thereof, whether
during the continuance ofthis Agreement or after its termination,
any
word, symbol or emblem cont1icting with or identical or similar to
any of
the Trademarks.
|
| 12.2 |
Manufacturer
agrees that any use of the Trademarks by Manufacturer shall be to
the
advantage of Purchaser. Manufacturer shall not do or cause to be
done any
act impairing or likely to impair any part of Purchaser's right,
title and
interest in and to the Trademarks, or detrimental to the reputation
and
goodwill of Purchaser or the Products.
|
| 12.3 |
Manufacturer
acknowledges that the sale and/or distribution of the Products and/or
use
of any of the Trademarks, except as herein agreed, may result in
immediate
irremediable damage to Purchaser, and Manufacturer further acknowledges
that Purchaser may have no adequate remedy for such damage. In the
event
of such failure, Purchaser shall be entitled to equitable relief
by way of
temporary, preliminary and permanent injunction.
|
| 12.4 |
Manufacturer
agrees to use its best efforts to protect the Trademarks. If any
of the
Trademarks is infringed, Purchaser may take such action as Purchaser
may
deem appropriate, and upon request Manufacturer shall at Purchaser's
expense cooperate fully in any such action. Manufacturer further
agrees to
notify Purchaser immediately of any instance in which any person
other
than Purchaser requests Manufacturer to manufacture products using
any of
the Trademarks or any name, trademark logo or design identical to
or
confusingly similar to those used by Purchaser, and of any circumstance
which suggests that any person may be wrongfully using any such name,
trademark. logo or design. Manufacturer shall not take any action
with
respect to any such request or use unless directed in writing to
do so by
Xxxxxxxxx.
|
00
| 00. |
INTELLECTUAL
PROPERTY
|
| 13.1 |
All
Intellectual Property conceived, made, created, developed, or reduced
to
practice by Manufacturer (whether alone or with others, whether or
not
during normal business hours) in the course of or in connection with
Manufacturer's performance under this Agreement. shall be the property
of
Purchaser. All Intellectual Property shall be Confidential Information.
Manufacturer
shall promptly and fully disclose to Purchaser all Intellectual property
during the term of this Agreement and for one year after the completion
or
termination of this Agreement. Manufacturer shall maintain throughout
the
term of this Agreement up-to-date notebooks or other records of
Intellectual Property. Such records shall be considered Confidential
Information and shall be the sole property of Purchaser.
|
| 13.2 |
Manufacturer
agrees to assign and hereby assigns to Purchaser, without additional
consideration, Manufacturer's full right, title and interest in and
to all
Intellectual Property conceived, made, created, developed, or reduced
to
practice by Manufacturer (whether alone or with others, whether or
not
during normal business hours) in the course of or in connection with
Manufacturer's performance under this Agreement. Manufacturer agrees
not
to file any patent, trademark, or copyright applications relating
to the
Intellectual Property, except with prior written consent of Purchaser.
To
the extent applicable, all copyrightable works that Manufacturer
creates
and that qualify as Intellectual Property shall be considered "works
made
for hire" as defined by the copyright laws of the United States.
To the
extent such copyrightable works are not deemed "works made for hire"
Manufacturer agrees to assign and hereby assigns to Purchaser without
additional consideration, all copyrights in such copyrightable works.
Manufacturer agrees that, during the term of this Agreement and subsequent
to the completion or termination of this Agreement, Manufacturer
will, at
Purchaser's request and expense, execute all applications for United
States and foreign patents, trademarks. copyrights, or other rights,
and
will otherwise provide assistance (including but not limited to the
execution and delivery of instruments of further assurance or
confirmation) to assign Intellectual Property, copyrights and Trademarks
to Purchaser and to permit Purchaser to enforce any patents, trademarks,
copyrights, or other rights in and to Intellectual Property, Manufacturer
warrants to Purchaser that it shall secure such agreements with its
employees and/or permitted subcontractors as are necessary to can)'
out
the provisions of this Section.
|
| 13.3 |
Notwithstanding
Sections 13.1
and
13.2,
Purchaser
agrees to allow Manufacturer to use Intellectual Property and Confidential
Information conceived, made. created, developed or reduced to practice
by
Manufacturer in the course of or in connection with Manufacturer's
pcrfonnance under this Agreement, so long as the use of such Intellectual
Property or Confidential Information is pre-approved in writing by
Purchaser and Purchaser determines that its use by Manufacturer would
not
be detrimental to Xxxxxxxxx.
|
00
| 00. |
CONFIDENTIAL
INFORMATION AND NON-DISCLOSURE
|
| 14.1 |
Manufacturer
acknowledges that during the course of its relationship, Purchaser
may
disclose or Manufacturer may learn of Purchaser's Confidential
Information. Manufacturer agrees to take reasonable steps to protect
Purchaser's Confidential Information. Manufacturer agrees to not:
(
1) use, except as required by the normal and proper course of performing
under this Agreement, (2) disclose, (3) copy, or (4) allow access
to,
Purchaser's Confidential Information without the express prior written
consent of Purchaser. These restrictions will continue to apply as
long as
the confidential nature of the information is maintained.
|
| 14.2 |
Manufacturer
shall make its employees, agents, principals, and independent contractors
aware of the confidentiality obligations of this Agreement and
Manufacturer shall require its employees, agents, principals, and
independent contractors to execute confidentiality agreements in
form and
substance satisfactory to Purchaser undertaking an obligation of
confidentiality comparable to that provided in this Agreement.
|
| 14.3 |
Manufacturer
agrees to return to Purchaser promptly upon the termination of this
Agreement, or at any other time when requested, Purchaser's property,
including but not limited to all Confidential Information, media
containing such Confidential Information and copies thereof.
|
| 14.4 |
Manufacturer
(including its principals and employees) represents and warrants
that
entering into and performing under this Agreement does not conflict
with
any prior obligation to third parties. Manufacturer agrees not to
disclose
to or use on behalf of the other, any confidential or proprietary
information belonging to a third party (including prior employers,
employees and customers) unless written authorization from the third
party
is first obtained in form and substance satisfactory to Purchaser.
|
| 15. |
NONCIRCUMVENTION
COVENANT
|
Manufacturer
acknowledges that Purchaser intends to resell the Products they order
to
customers of Purchaser. Manufacturer further acknowledges that Purchaser
would suffer material and irreparable injury if Manufacturer were to
sell
the
Products to customers of Purchaser or any affiliate of such customers.
Manufacturer
therefore agrees not to engage in any sales activities with any customers
of Purchaser or any affiliate of such customers during the term this
Agreement
remains in etTect and or for a period of three (3) years thereafter.
13
| 16. |
FORCE
MAJEURE, ETC.
|
If
Manufacturer is materially inhibited from performing any of its obligations
under this Agreement by act of God or governmental action, Manufacturer shall
immediately notify Purchaser, giving full particulars of the circumstances
in
question. Manufacturer shall then be relieved of the liability to Purchaser
for
failure to perform such obligations but shall nevertheless use its best efforts
to resume full performance thereof without avoidable delay.
| 17. |
TERM
AND TERMINATION
|
| 17.1 |
This
Agreement is effective as of the Effective Date and shall continue
in full
force and effect until terminated by any party as provided in this
Agreement. Sections 1,9-13,17-19,21-22,26,28 and 30-31 shall survive
any
termination of this Agreement.
|
| 17.2 |
Purchaser
or Manufacturer shall have the right to terminate this Agreement
and any
purchase order for cause at any time by giving thirty (30)
days' notice in writing to Manufacturer or Purchaser (or immediately
as
provided in Section 16.2 (iii)) if any ofthe following events occur:
|
| (i) |
if
Manufacturer or Purchaser commits a significant breach of any of
the terms
of this Agreement and fails toremedy the same within Sixty (60) days
of
being notified by the other party of the breach;
|
| (ii) |
If
Manufacturer shall sell or transfer a significant portion of its
assets,
or if any person competing or likely to compete with the Products
acquires
direct or indirect control of Manufacturer or Purchaser;
|
| (iii) |
Immediately
upon filing or petitioning by Manufacturer or Purchaser or its creditors
or any other eligible party for Manufacturer's or Purchaser's liquidation,
bankruptcy, reorganization, compulsory composition, or dissolution,
or if
Manufacturer or Purchaser is unable to pay any debts as they become
due or
has explicitly or implicitly suspended payment of any debts as they
become
due (except debts contested in good faith), or if any assignment
is made
for the benefit of Manufacturer's or Purchaser's creditors, or if
a
trustee or receiver has been appointed for Manufacturer or Purchaser
or
any of its assets. or if the creditors of Manufacturer have taken
over its
management, or if any relevant financial institutions have suspended
Manufacturer's or Purchaser's clearing house privileges. or if any
material or significant part of Manufacturer's or Purchaser's undertaking,
property, or assets shall be intervened in, expropriated, or confiscated
by action of any government.
|
| 18. |
CONSEQUENCES
OF TERMINATION
|
| 18.1 |
On
the termination of the Agreement for any reason, Manufacturer shall
immediately:
|
14
| (i) |
Stop
manufacturing, distributing, selling or in any way dealing with any
Products bearing the Trademarks, or any carton, container, packing
or
wrapping material, or advertising, promotional, or display material
pertaining thereto. except as consented to by Purchaser in writing;
and
|
| (ii) |
Upon
receipt of a written request from Purchaser promptly sell to Purchaser,
at
the Manufacturer's cost, raw materials, packing materials or components
and semi-finished Products held by or on behalf of Manufacturer or
under
the control of Manufacturer at the date of termination.
|
| 18.2 |
Sixty
(60)
days
before the expiration of this Agreement and/or five (5)
days
after Manufacturer's receipt of notice of earlier termination,
Manufacturer shall furnish Purchaser with a statement showing the
number
and description of the Products in its possession or under its control.
Purchaser reserves the right to take a physical inventory of the
Products
to verify such inventory and Manufacturer agrees to allow Purchaser's
authorized representatives on its premises to carry out such inventory.
This right shall also extend for 90 days beyond the termination of
this
Agreement. Such physical inventory may be undertaken during regular
business hours by Purchaser without advance notice to Manufacturer.
|
| 18.3 |
Upon
termination of this Agreement, all Molds and equipment shipped in
and used
in the manufacturing of the Products shall be deemed owned by Purchaser,
and Purchaser has the right upon giving reasonable notice to take
possession of such Molds and equipment. Purchaser acknowledges, however,
that possession of certain unamortized Molds financed by Manufacturer,
may
not be recovered by Purchaser unless Purchaser first pays Manufacturer
the
unamortized cost of the Molds paid by Manufacturer.
|
| 18.4 |
The
termination of this Agreement shall not affect the respective rights
and
liabilities of each of the parties hereto which accrued prior to
such
termination. Notwithstanding Section 17.1 above, after the termination
of
this Agreement, if Purchaser so elects, the parties shall continue
to be
bound by the terms herein until Manufacturer completes any outstanding
Purchase order(s) which had commenced prior to the notice of Termination,
|
| 19. |
COMPLIANCE
WITH LOCAL LAWS; CHINA
FACTORIES
|
Manufacturer
warrants that all manufacturing processes used by Manufacturer during
the term of this Agreement shall be in full compliance with all applicable
laws
and
regulations then in force at the place of manufacture. Whenever registration
or recordal of this Agreement with governmental or other authorities
is
required to preserve the rights of Purchaser, Manufacturer shall give prompt
notice
to
Purchaser of such requirement and shall cooperate with them in effecting
such
registration or recordal. Manufacturer agrees to submit to applicable
authorities
a letter of authorization or other form as required by the laws and
15
regulations
of China. Purchaser will provide the letters of authorization to all such
Manufacturers.
| 20. |
CURRENCY
|
All
payments required under this Agreement shall be made in United States Dollars
("USD").
| 21. |
NOTICES
|
All
notices to be sent to any party shall be in writing and either is (i) e-rnailed
to the following e-mail addresses; (ii) dispatched by telefax, or (iii) mailed
by Federal Express prepaid to the parties at the following street addresses:
|
If
to Manufacturer:
Xxxx
Xxxx
Chief
Executive Officer
Sumeeko
Industries Co., Ltd.
00,
Xxxxx Xxxx
Xx-Xx
Xxxxxxxxxx Xxxxxxxx
Xxxxxxxxx
Xxxxxx 831
Taiwan,
ROC
Fax:
000 0 000 0000
E-mail:
xxxx@xxxxxxx.xxx
|
If
to Purchaser:
Xxxxxx
Xxxxxx
Chief
Executive Officer
Aqua
Xtremes, Inc.
0000
Xxxxxxxx Xxx, Xxxxx 000
Xxxx,
XX 00000
XXX
Fax:
000.000.0000
e-mail:
xxxxxxx@xxxxxxxxxxx.xxx
|
or
to
such other address as may have been notified in writing by one party to the
other in accordance with this Section. Any notice sent bye-mail or telefax
shall
be deemed received on the following business day in the location of the
recipient. Any notice sent by airmail shall be deemed to have been received
fifteen (15) days after mailing.
| 22. |
ASSIGNMENT
|
Neither
party may assign in whole or in part its rights or obligations hereunder to
the
other party without the prior written consent of the other party.
| 23. |
NO
PARTNERSHIP OR AGENCY
|
Nothing
in this Agreement shall be deemed to constitute a partnership between the
parties or to make Manufacturer an agent of Purchaser for any purpose.
Manufacturer shall have no authority to bind Purchaser or to contract in the
name of or create any liability of Purchaser.
| 24. |
SUB-CONTRACTORS
|
Manufacturer
agrees that it shall be responsible for the actions or omissions to act of
any
sub-contractor used by it in connection with any of the Products or with
satisfying any of Manufacturer's responsibilities under this Agreement.
16
| 25. |
WAIVER
|
The
failure of any party to enforce any term or provision hereof shall not be
construed
to be a waiver of such term or provision and shall in no way affect the
right
of
such party thereafter to enforce such term or provision or any other term
or
provision hereof
| 26. |
GOVERNING
LAW, ARBITRATION
|
This
Agreement shall be governed by and construed and interpreted in accordance
with
and under the laws of the State ofNevada, USA. Ifa dispute arises under this
Agreement or with respect to its interpretation or enforcement, it shall be
decided finally by three arbitrators in an arbitration proceeding conducted
in
accordance with the rules of the American Arbitration Association applicable
to
commercial arbitrations. The arbitrators shall be appointed as follows: one
by
Purchaser, one by Manufacturer, and the third by said two arbitrators, or if
they cannot agree, then the third arbitrator shall be appointed by the American
Arbitration Association. The arbitration shall take place in Reno. Nevada and
the decision of a majority of the arbitrators shall be conclusively binding
upon
the parties and final, and shall be enforceable as a judgment in any court
of
competent jurisdiction. Each xxxxx shall pay the expenses of its arbitrator,
witnesses, and counsel. and the expenses of the third arbitrator shall be shared
equally, unless otherwise directed in the discretion of the arbitrators. This
Agreement and/or any judgment or arbitration decision arising therefrom shall
be
valid or enforceable in the USA or Manufacturer's home country or in any other
country where Manufacturer its Affiliates or their assets may be located,
without further defense or set-off of any kind that might be available under
local law or otherwise.
| 27. |
FURTHER
REPRESENTATIONSAND
WARRANTIES
|
Each
party represents and warrants to the other that: (a) it has full power and
authority
to enter into and to discharge its responsibilities under this Agreement,
(b)
that
if it has not affixed its corporate seal hereto, it is not required to do so
under applicable law in order that this Agreement be fully binding thereon
and
(c) the making and performance of this Agreement does not violate any applicable
provision of law or violate any other agreement to which it is a party.
| 28. |
ENTIRE
AGREEMENT
|
This
Agreement and the Exhibits attached hereto contain the entire understanding
of
the parties and supersede all prior written and oral agreements. understandings
or commitments made by the parties with respect to the subject matter hereof.
If
any provision of this Agreement shall be found void or unenforceable under
the
laws of any jurisdiction, such provision shall be re-written such that it will
be enforceable to the maximum extent possible under such laws. Any such
invalidity or unenforceability shall not affect the remaining provisions of
the
Agreement or the interpretation of this Agreement under the laws of any other
jurisdiction.
17
| 29. |
AMENDMENT
|
This
Agreement may be amended only in a writing signed by both parties.
| 30. |
HEADINGS/COUNTERPARTS
|
The
section headings in this Agreement are solely for the purpose of aiding in
the
location of subject matter and shall not be given any weight in its
construction, This Agreement may be executed in one or more counterparts, all
of
which shall be deemed originals.
Facsimile
transmission of any signed original document, and retransmission of any signed
facsimile transmission, will be the same as delivery of an original. At the
request of any party, the parties will confirm facsimile transmitted signatures
by signing an original document.
| 31. |
GOVERNING
LANGUAGE
|
The
Agreement has been written and executed in English. In the event any translation
of this Agreement into another language is made, the English language version
of
this Agreement shall govern in case of any conflict.
18
IN
WITNESS WHEREOF, the parties have executed this MANVFACTVRING AGREEMENT as
of
the date first above written.
|
By:
/s/ Xxxxxx
Xxxxxx
Xxxxxx
Xxxxxx
Chief
Executive Officer
EXTREME
ENGINES, INC.
By:
/s/ Xxxxxx
Xxxxxx
Xxxxxx
Xxxxxx
Chief
Executive Officer
|
SUMEEKO
INDUSTRIES CO., LTD.
By:
/s/ Xxxx
Xxxx
Xxxx
Xxxx
Chief
Executive Officer
AQUA
XTREMES, INC.
By:
/s/ Xxxxxx
Xxxxxx
Xxxxxx
Xxxxxx
Chief
Executive Officer
|
19
EXHIBIT
A
FORM
OF AQUA XTREMES, INC. PURCHASE ORDER
20
EXHIBIT
B
PRODUCTION
STANDARDS
Non-Discrimination.
Purchaser will seek business partners that do not discriminate in hiring
and
employment practices on grounds of race, color, national origin, gender,
religion, or political or other options.
Working
Hours/Overtime.
Purchaser will seek business partners who do not require more than 60 hour
work
weeks on a regularly scheduled basis, except for appropriately compensated
overtime in compliance with local laws, and we will favor business partners
who
use 48 hour work weeks as their maximum normal requirements.
Forced
or Compulsory Labor.
Purchaser will not work with business partners that use forced or other
compulsory labor, including labor that is required by means of political
coercion or as punishment for holding or for peacefully expressing political
views, in the manufacture of its Products. Purchaser will not purchase materials
that were produced by forced prison or other compulsory labor and will terminate
business relationships with any sources found to utilize such
labor.
Fair
Wages.
Purchaser will seek business partners who share our commitment to the betterment
of wage and benefit levels that address the basic needs of workers and their
families so far as possible and appropriate in light of national practices
and
conditions. Purchaser will not select business partners that pay less than
the
minimum wage required by local law or that pay less than prevailing local
industry practices (whichever is higher).
Child
Labor.
Purchaser will not work with business partners that use child labor. The
term
"child" generally refers to a person who is less than 14 years of age, or
younger than the age for completing compulsory education if that age is higher
than 14. In countries where the law defines "child" to include individuals
who
are older than 14, Purchaser will apply that definition.
Freedom
of Association.
Purchaser will seek business partners that share its commitment to the right
of
employees to established and join organizations of their own choosing. Purchaser
will seek to assure that no employee is penalized because of his or her
non-violent exercise of this right. Purchaser recognizes and respects the
right
of all employees to organize and bargain collectively.
Safe
and Healthy Work Environment.
Purchaser will seek business partners that strive to assure a safe and healthy
workplace and that do not expose workers to hazardous
conditions.
21
