EX-10.05-Manufacturing Agreement
MANUFACTURING AGREEMENT
This Agreement is made this 14th day of October, 2003, between Reclamation
Consulting & Applications, Inc. (RCAI), a Colorado corporation with its
principal place of business at 00000 Xxxxxxxxx Xxxx. Xxxxx 000, Xxxx Xxxxxx,
Xxxxxxxxxx, 00000, and North American Systems, Inc., a Nevada corporation (NAS).
RECITALS
RCAI is the owner of certain proprietary technology used in the production of
asphalt, cement and related products release agents in liquid form that are non-
toxic, non-explosive and environmentally compatible. To date, RCAI has produced
and sold its own such liquid release agents, in particular under the trademarks
and names ASA 12, KR7, and Alderox.
Pursuant to a separate non-disclosure agreement between RCAI and NAS dated July
30th, RCAI disclosed its technology to NAS for the purpose, among others, of
NAS's evaluation of its capacity and capability to produce the Alderox products
and related applications on behalf of RCAI.
As a consequence, the parties have determined that NAS has the manufacturing
capability to produce Alderox products for RCAI. RCAI desires to license its
technology to NAS for the purpose of NAS manufacturing RCAI's requirements for
Alderox products and related applications, and NAS desires to obtain a license
to use RCAI's technology to manufacture and sell the Alderox products to RCAI.
In consideration of the premises, representations and agreements contained in
this Agreement, the parties agree as follows:
Section 1. Definitions
1.1. "Alderox Products" means RCAI's asphalt, cement and related product
release agents in liquid form and any applications, the primary characteristics
of which are that they are non-toxic, non-explosive and environmentally
compatible, or related services.
1.2 "Alderox Technology" means all information acquired or developed by RCAI
relating to Alderox Products, including their formulation, ingredients,
processing or other methods of production, all of which is owned by RCAI and
currently protected as trade secrets.
1.3 "Alderox Improvements" means any improvements to the Alderox Products or
Technology acquired or developed by RCAI during the term of this Agreement
relating to current or future Alderox Products.
1.4 "Confidential Information" means
a) all information in any tangible form or medium which RCAI has disclosed
under the NDA to NAS or which it will disclose hereunder relating to Alderox
Products, Alderox Technology, or Alderox Improvements;
b) production data, technical and engineering data, test data and test
results, or the status and details of research and development of Alderox
Technology, Improvements or Alderox Products;
c) any other information in any tangible form which is disclosed by RCAI to
Alderox during the term hereof which is reasonably necessary to enable NAS to
carry out its performance of this Agreement and which is marked by RCAI as
confidential, including without limitation, information relating to business
operations or development, marketing, customer or supplier information or
regulatory approvals or compliance.
1.5 "Licensed Technology" means all Alderox Technology and any Alderox
Improvements, which are licensed to NAS hereunder.
1.6 "Effective Date" means the date first written above, subsequent to the
execution of this Agreement by an authorized representative of each party
hereto.
Section 2. License to Manufacture
2.1 During the term hereof, RCAI grants to NAS the rights to use and
practice the Licensed Technology for the sole purpose of manufacturing Alderox
Products in the types and quantities ordered by RCAI in accordance with RCAI's
requirements. Provided that NAS continues to produce and deliver RCAI's
requirements for Alderox Products, and further provided that there is agreement
on price under Section 4 hereof, RCAI will purchase its requirements from NAS.
2.2 Unless otherwise agreed by amendment hereto, RCAI retains all rights to
market, distribute and sell the Alderox Products worldwide and all rights of
ownership and use to the Licensed Technology not otherwise granted herein to
NAS.
Section 3. Disclosure of Licensed Technology and Manufacture of Product
3.1 Promptly following the Effective Date hereof, RCAI will disclose to NAS
all the Licensed Technology in its possession and in any tangible form or medium
in which it exists.
3.2 Upon receipt of the Licensed Technology, NAS will use its best efforts
produce a sample(s) of the Alderox Products which RCAI orders. Upon approval by
RCAI, NAS will commence production of the Alderox Products ordered.
3.3 NAS will not pay any license fees for the use of the Licensed Technology.
However, NAS will assume all direct costs of manufacturing which are necessary
to produce the Alderox Products ordered by RCAI, including any costs in
connection with testing or regulatory approvals that are pre-requisite to NAS's
production of the Alderox Products.
3.4 During the term hereof, RCAI will provide at its own cost technical
assistance to NAS to the extent reasonably necessary and required by NAS to use
the Licensed Technology to its fullest extent.
Section 4. Purchase of RCAI's Requirements
4. 1 NAS will supply the Alderox Products only to RCAI.
4.2 During the term hereof, NAS agrees to refrain from developing,
manufacturing or distributing any product, which directly or indirectly competes
with any Alderox Products or is based in whole or in part on the Licensed
Technology.
Section 5. Shipment, Inventory, and Inspection
5.1 Unless otherwise agreed, all Alderox Products will be manufactured and
delivered F.O.B. NAS's Salt Lake City, Utah facility or other blending
facilities. NAS will bear the costs of shipment, insurance, taxes, and any
other such charges from the time RCAI delivers the Alderox Products to the
designated NAS facility.
5.2 During the term hereof, RCAI may inspect NAS's facilities and operations,
upon reasonable notice and at reasonable intervals, for the purposes of
determining if the Licensed Technology is being used and practiced as intended.
Costs of any inspection will be born by RCAI and NAS will fully cooperate with
RCAI during any such inspection.
Section 6. Purchase orders and terms of Payment
6.1 RCAI will submit to NAS its purchase orders for Alderox Products within
30 days of the desired delivery date. Within 48 hours of NAS's receipt of
RCAI's purchase order, NAS will provide RCAI with its pricing and estimated
delivery date for the Alderox Products ordered.
6.2. Payment of NAS's invoices for Alderox Products ordered by and delivered
to RCAI will be due and payable net thirty (30) days of delivery of the ordered
Products to RCAI, F.O.B. final delivery destination. Unless otherwise agreed,
all prices will be paid in US Dollars.
6.3. NAS may make adjustments to its prices during the term hereof; however,
any increases in pricing will require ninety (90) days' prior notice to RCAI of
any such change before making them effective, and any such changes will not
adversely affect the orders for Alderox Products already accepted by NAS for
production.
6.4 In the event of late payment, RCAI will notify NAS of the reasons for
late payment and the timeframe, if any, for making payment. RCAI will use its
best efforts to make full payment or otherwise resolve the issue. Late payment
will not constitute good cause to terminate this Agreement.
Section 7. Other Obligations of NAS
NAS, as provided for herein, will use its best efforts to:
7.1 ensure the confidentiality of all of Licensed Technology and Confidential
Information disclosed hereunder and the proper use of all Licensed Technology;
7.2 obtain all regulatory approvals or comply with all regulatory
requirements required or desirable to produce the ASA 12 Products.
Section 8. Proprietary Rights/Confidentiality
8.1 NAS will refrain from any unauthorized use of the Licensed Technology or
disclosure of said Technology protected as trade secrets to any third parties.
8.2 The above obligations will apply retroactively to any part of the
Licensed Technology disclosed by RCAI to NAS prior to execution hereof. They
will continue for the duration of this Agreement and thereafter, unless and
until any part of the Licensed Technology or the Confidential Information are
proven: a) to have fallen into the public domain or do not remain secret and
substantial through no fault of the receiving party; b) to have infringed the
proprietary rights of a third party; or c) to have been independently developed
by NAS prior to RCAI's disclosure.
8. 3 NAS agrees to use at least the same standard of care as it uses in
regard to its own confidential or proprietary information to prevent
unauthorized use or disclosure of the Licensed Technology or the Confidential
Information, including, without limitation, actively educating their employees,
agents, consultants or other representatives about the confidential treatment of
said information and instituting both contractual and practical measures to
ensure that they refrain from such unauthorized use or disclosure during the
term of their employment or service and thereafter.
Section 9. Third Party Infringement/Misuse
9.1 Upon: a) the discovery by NAS; or b) notice by NAS to RCAI: i) any
third party infringement of the Licensed Technology; or ii) any third party
claim that the Licensed Technology infringes such party's proprietary rights,
RCAI will take whatever action is reasonably necessary at RCAI's expense to
prevent or prosecute said alleged infringement or defend against, negotiate,
mediate or otherwise resolve said third party's claim.
9.2 NAS will render any assistance reasonably requested or required by RCAI,
provided the expense is born by RCAI. RCAI will retain any damages or other
compensation recovered from the prosecution, settlement or defense of such
claims.
9.3 Notwithstanding Section 9.2, in the event that the costs of litigation
become overly burdensome, RCAI will not be obligated to litigate or to continue
to litigate a third party infringement claim and will notify NAS in a timely
manner of any decision not to prosecute or defend on its own. The parties may
agree to jointly prosecute or defend such claims, in which case, they will
jointly assume the expenses and fees incurred and share any damages or other
compensation which may be recovered from prosecution, defense or settlement.
Should RCAI not wish to participate in any joint prosecution or defense, the
parties may, by subsequent agreement, determine whether and to what extent NAS
may, at its election, prosecute or defend such claims.
9.4 In any event, RCAI or both parties, to the extent both are involved, will
use its or their best efforts to: a) modify the Licensed Technology or amend
this Agreement so as to fulfill the objectives hereof; and b) mitigate any
actual or potential damage to the Alderox Products which RCAI has ordered and
NAS has in production or ready for delivery.
Section 10. Warranties/Indemnities
10.1 RCAI represents, that to its best knowledge: a) the Licensed Technology
does not infringe any third party's rights; and b) the Licensed Technology,
when properly used, will result in Alderox Products which have the function and
reliability they are intended to have.
10.2 NAS warrants to RCAI that it will use its best efforts to: a) use the
Licensed Technology so as to produce all Alderox Products ordered with the
function and reliability intended; and b) deliver to RCAI all Alderox Products
free of any and all material defects in materials and workmanship.
10.3 The parties will give each other prompt notice of any alleged material
breach of these warranties. RCAI will take all reasonable measures to correct
any deficiencies in the Licensed Technology and will bear the expense of any
Alderox Products which are ordered and produced which contain such deficiencies.
Should the defects relate to the materials or workmanship, NAS will replace said
defective products at no charge. The parties' warranties will apply to third
party buyers or consumers as prescribed by the local laws of the territory in
which the Alderox Products are sold or used. In the absence of any statutory
or prescribed period, the applicable warranties will be for a period of 1 year
from the time the Alderox Products concerned are sold.
10.4 RCAI agrees to determine to what extent its product liability insurance
will cover third party claims and to otherwise procure comprehensive product
liability insurance sufficient to protect NAS from the claims of such third
party claimants for the U.S. market.
Section 11. Limitation of Liability
11.1 RCAI will have no responsibility for the workmanship or materials of the
Alderox Products manufactured by NAS or for compliance with the information
furnished to NAS in the Licensed Technology or related Confidential Information.
NAS will be liable, at its own cost, to correct or cure any such defects in
materials and workmanship, which occur under normal use or application from the
date of discovery of the defect and prompt notice to NAS to the end of any
applicable warranty period.
11.2 NAS will have no responsibility for any deficiencies in the information
provided in the Licensed Technology. RCAI will be liable, at its own cost, to
correct or cure any such deficiencies, so that the Alderox Products have the
function, and reliability they are intended to have under normal use or
application from the date of discovery of the defect and prompt notice thereof
to RCAI to the end of any applicable warranty period.
11.3 NEITHER PARTY WILL BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL DAMAGES
TO EACH OTHER ARISING FROM THE BREACH HEREOF PROVIDED EACH ONE'S OBLIGATIONS
HEREIN ARE MET.
11.4 As between each other, the foregoing warranties are in lieu of all other
warranties or conditions, express or implied. Except as provided herein, neither
party will be liable for any damages other than actual damages, such actual
damages not to exceed the total price paid for the total amount of Alderox
Products ordered with regard to which a claim of liability is made.
Section 12. Term and Termination
12.1 This Agreement will commence on the Effective Date and continue for a
period of twelve full consecutive calendar months or part thereof, beginning
with the month in which the Effective Date occurs ("Annual Period"). It will be
automatically renewed for consecutive Annual Periods, unless terminated upon
notice by either party for good cause.
12.2 This Agreement may be terminated at any time for good cause by notice of
the party claiming breach to the allegedly breaching party. Good cause means:
a) a material breach of any warranty, term, condition or covenant of this
Agreement, unless the breaching party cures the breach to the notifying party's
satisfaction within ninety (90) days of the allegedly breaching party's receipt
of the notice; or
b) a material adverse change in the Licensed Technology, because of
misappropriation which is unsuccessfully defended or for any other reason, so
that the production and/or sale of the Alderox Products are no longer
economically viable;
c) an event of insolvency of either of the parties, including a failure to
pay debts or perform obligations, admission of and/or commencement of any
voluntary or involuntary insolvency proceeding, or an assignment for the benefit
of creditors.
12.3 RCAI reserves the right to terminate the rights of NAS hereunder during
in the event that NAS is unable or unwilling for any reason to meet RCAI's
requirements for Alderox Products, and such incapacity or decision not to
produce and supply by RCAI continues for a period of thirty (30) days from the
date of NAS's notice to terminate under this Section 12.3.
Section 13. Effects of Termination
13.1 Upon termination for any reason, NAS will cease and desist to use any of
RCAI's Licensed Technology or Confidential Information. At RCAI's election,
NAS will return or certify destruction of all such information in any form or
medium in which it is embodied, together with any copies.
13.2 RCAI will pay any amounts then due and owing to NAS for orders of
Alderox Products which have been ordered by RCAI in accordance with the terms
hereof.
13.3. Notwithstanding Section 13.1 and unless termination results from misuse
of the Licensed Technology or Confidential Information, NAS will complete any
orders of Alderox Products which are in progress using said Licensed Technology,
and thereafter return or certify their destruction.
13.4 Notwithstanding Section 13.1:
a) should RCAI terminate the production rights of NAS or should NAS decide
for any reason to cease production of the Alderox Products, RCAI may resume
production or grant a license to another third party to meet its requirements;
or
b) should RCAI for any reason, including an event of insolvency as defined in
Section 12.2. b), end its business of promoting, selling, marketing or otherwise
distributing the Alderox Products, RCAI will first offer to NAS a license of all
rights to use the Licensed Technology and to produce and sell the Alderox
Products. Should NAS wish to obtain said rights, RCAI will grant said license,
subject to the parties' mutual agreement on the terms and conditions of said
license.
13. 5 In the event either party should decide not to continue its performance
as set forth in Section 13.4 hereof, neither party will be liable for any claims
of damage from the other party, provided the proper notice period is observed
and further provided each party takes reasonable measures as provided in Section
13.4 to license or otherwise enable the party which wishes to continue
production and/or sale of the Alderox Products with the rights to so continue.
13.6 All other obligations of this Agreement which by their terms survive
termination hereof will continue to remain in effect.
Section 14. Governing Law and Dispute Resolution
14.1 This Agreement will be construed in accordance with, and governed by the
laws of the state of California, without regard to its conflicts of laws rules.
14.2 In the event of any dispute arising out of or relating to this
Agreement, the parties agree to try in good faith to settle the dispute by
mediation administered by the American Arbitration Association ("AAA") under its
Commercial Mediation Rules before resorting to arbitration. Any controversy or
claim arising out of or relating to this Agreement which cannot be settled
through mediation will be settled by arbitration administered by the AAA in
accordance with its Arbitration Rules. Judgment on the award rendered by the
arbitrator shall be final and may be entered in any court having jurisdiction
thereof.
14.3 In the event the interim measures for injunctive relief under the AAA
International Arbitration Rules prove inadequate, the parties may seek
injunctive relief, specific performance or any other equitable relief from any
competent court having jurisdiction.
Section 15. General Provisions
15.1 Force majeure. Unless otherwise provided for herein, no party will be
liable for any failure or delay in its performance under this agreement due to
causes, including, but not limited to, acts of god, such as fire, flood or
earthquake, acts of civil or military authority, riots, wars, governmental
actions, labor shortage or disputes or other acts which are beyond any of the
party's reasonable control, provided the party with the delay or failure gives
notice to the other party at least within 7 days of its discovery and uses
reasonable efforts to minimize or remedy such failure or delay in performance.
15.2 Relationship of parties. Rcai and nas are neither agents nor employees
of each other, nor joint venturers. Neither has the authority to bind the
other by contract or otherwise to any obligation, other than as expressly stated
herein.
15.3 Notices. Any notices under this agreement must be in writing and may be
given by certified mail, courier, facsimile or email. In the case of facsimile
or email, confirmation must be given promptly thereafter by certified mail or
courier. Notices will be sent to each one's respective address as follows,
until otherwise notified of a change. Notices are effective upon receipt or
receipt of confirmation.
RCAI
r. Xxxxxx Xxxxxx NAS
00000 Xxxxxxxxx Xxxx. Xxxxx 000
ake Forest, CA. 92630
Fax:
email: Email:
With a copy to: With a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxxx LLP
00000 Xxxxxxxx Xxxx. #000
Xxx Xxxxxxx, XX. 00000
000 000 0000
xxxxxxx@xxx-xxx.xxx
15.4 Assignment. Neither party may assign or delegate its rights or
obligations under this Agreement, without the prior written consent of the
other.
15.5 Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations and
understandings of the parties. No amendments hereof will be binding unless
executed in writing subsequently to this Agreement by each of the authorized
representatives of the parties.
15.6 Waiver. Failure by either party to enforce any provision of this
Agreement will not be deemed to constitute a waiver of future enforcement of
that or any other provision, nor be binding unless executed in writing by the
party making the waiver.
15.7 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, all other provisions of
this Agreement will be construed to remain fully valid, enforceable and binding
on the parties.
15.8 Construction. This Agreement has been negotiated by the parties and
their respective counsel. This Agreement will be fairly interpreted in
accordance with its terms and without any strict construction in favor of or
against either party.
15. 9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be considered an original, but all of which
together will constitute one and the same instrument. IN WITNESS WHEREOF, each
of the parties hereto or its authorized representative has executed this
Agreement as of the date first written above.
RECLAMATION CONSULTING & APPLICATIONS, INC.
By:____________________
Xxxxxx Xxxxxx
President
NORTH AMERICAN SYSTEMS, INC.
By:______________________
Name:
Title:
