SHELTER SERVICES AGREEMENT
THIS SHELTER SERVICES AGREEMENT (THE AGREEMENT ) IS ENTERED INTO BY AND AMONG
ETM. A CORPORATION ORGANIZED UNDER THE LAWS OF THE Mexico, REPRESENTED By Xx.
Xxxxxxx Xxxxxxxxxxx, PRESIDENT, HEREINAFTER REFERRED TO AS ETM, NORTHPORT
INDUSTRIES, INC., A CORPORATION ORGANIZED UNDER THE LAWS OF NEVADA, UNITED
STATES OF AMERICA, WITH OFFICES AT SPUR 000 XXX XXXXXXXX XXXX, XXX XXX, XXXXX,
00000, XXXXXX XXXXXX OF AMERICA, REPRESENTED BY XX. XXXXXX XXXXXXXXX, ITS
PRESIDENT, HEREINAFTER REFERRED TO AS NORTHPORT, AND NORTHPORT DE MEXICO,
S.A. DE C.V., A LIMITED LIABILITY COMPANY ORGANIZED UNDER THE LAWS OF MEXICO,
WITH OFFICES AT ALLENDA, COAHUILA, MEXICO, REPRESENTED BY XX. XXXXXX XXXXXXXXX
HEREINAFTER JOINTLY REFERRED TO AS NORTHPORT, PURSUANT TO THE FOLLOWING
RECITALS AND CLAUSES.
RECITALS
WHEREAS, ETM designs, manufactures and sells, among other things,
automotive rubber and plastic parts are hereinafter referred to as the
Finished Products;
WHEREAS, NORTHPORT warrants that it posses, and will at all times during the
term of this Agreement possess, the expertise, along with all necessary
elements and facilities to provide the shelter services to ETM in Acuna,
Coahuila, Mexico, as set out in this Agreement; and
WHEREAS, ETM and NORTHPORT wish to enter into a relationship whereby ETM will
furnish NORTHPORT with raw materials, equipment, machinery, tools, spare parts
and components (the Goods ) to manufacture and assemble the Finished Products
in Mexico and ship them to Volkswagen in Mexico.
NOW, THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ETM and NORTHPORT agree as follows:
CLAUSES
1. SHIPMENT OF GOODS.
ETM shall, at its sole cost, ship to NORTHPORT, at the designated
location in Del Rio, Texas, United States of America, or Acuna Mexico,
the Goods necessary for the manufacture and assembly of the Finished
Products in Acuna, Coahuila, Mexico. Each shipment shall be accompanied
with the documents which NORTHPORT shall reasonably request in writing
from ETM, to enable NORTHPORT to carry out the exportation of the Goods
from the United States of America and the importation of the Goods in-
bond from the United States of America into Mexico (the Documents ).
Prior to the date hereof, NORTHPORT has delivered to ETM the form of
each of the Documents required to be delivered by ETM pursuant to this
Article 1. Immediately upon receipt of the Goods, NORTHPORT will
inspect such to verify that the Goods received are not damaged and that
such match the Goods listed in the Documents. If the Goods are damaged
or do not match the Goods listed in the Documents, NORTHPORT will
immediately notify ETM in writing of the damage or discrepancy. Upon
ETM confirming to its satisfaction that the Goods are damaged or do not
match the Goods listed in the Documents, ETM must either replace the
damaged, non-conforming or missing Goods or instruct NORTHPORT, in
writing, only to accept the undamaged, conforming Goods received. ETM
must replace the Documents so that such correspond to the Goods
accepted. ETM will be solely responsible for retrieving the damaged or
non-conforming Goods, and NORTHPORT will supply all assistance
reasonably requested by ETM in connection with such retrieval.
NORTHPORT will immediately issue a receipt for the Goods it accepts and
deliver such receipt to ETM. NORTHPORT shall provide qualified
inspectors to inspect the Goods, which inspectors will use their best
efforts to inspect the Goods, and NORTHPORT will only be responsible for
noting any damage, which a proper inspection would reveal. The risk of
loss for the Goods and Finished Products will be governed by Article 20
below.
2. IMPORTATION OF GOODS
NORTHPORT hereby covenants and agrees to carry out, from Del Rio, Texas,
United States of America, all steps which may be necessary or convenient
to import the Goods into Mexico, including but not limited to, obtaining
the corresponding permits, completing required paperwork and handling
transportation to NORTHPORT s shelter facility at Xxxxx, Xxxxxxxx,
Xxxxxx.
0. REIMBURSEMENT OF IMPORTATION EXPENSE
All reasonable and necessary expenses and fees related to the
importation of Goods into Mexico, including reasonable and necessary
transportation costs, shall be reimbursed by ETM to NORTHPORT, within
ten (10) calendar days following ETM. s receipt of written notice of
such, accompanied by detailed itemized receipts meeting all legal
requirements.
4. PREMISES
As an integral part of the shelter services provided by NORTHPORT to
ETM,. NORTHPORT shall furnish Five Thousand square feet (5,000sq. ft.)
of fully constructed industrial space, ready to accept all Goods and to
commence the manufacture and assembly of the Finished Products, located
at Gecamex, S.A. de C.V., Acuna, Coahuila, Mexico, and as set out in red
on the plan attached hereto as Exhibit A. acceptable to ETM
(the
Premises ) to accommodate ETM s Goods and the Finished Products and to
be used to carry out the shelter services. The Premises shall be used
by NORTHPORT and/or SUBSIDIARY to perform the services contemplated by
the Article 6 hereof, throughout the term of this Agreement and the
performance of such services shall not be relocated to another facility,
unless ETM agrees to such move in writing. Throughout the term of this
Agreement and any renewals thereof, neither NORTHPORT nor SUBSIDIARY
shall (i) permit any activity to be performed on the Premises which
would violate any applicable law, rule or regulation, or (ii)
participate with, provide service to or otherwise assist any person or
entity in the design, production or sale of any product or service at
the Premises which directly or indirectly competes with ETM or any
Finished Product. At all times during the term of this Agreement and
any renewals thereof, NORTHPORT shall have (ii) a beneficial ownership
interest in or (iii) a legally binding and enforceable lease agreement
for the Premises, which shall permit the manufacture and assembly of the
Finished Products. NORTHPORT s failure to comply with the terms of the
lease agreement, if applicable, covering the Premises, shall be a
material breach of this Agreement, if such results in an adverse effect
on the shelter services to be provided to ETM hereunder, which adverse
effect includes, without limitation, an unreasonable delay or
interference in the manufacture and assembly of the Finished Products.
NORTHPORT will furnish ETM a true and complete copy of such lease
agreement promptly following execution of this Agreement.
NORTHPORT shall be solely responsible for repairs, maintenance and
replacements to the Premises and the payment of taxes and all other
costs related to the Premises.
5. SHELTER SERVICES.
The essential purpose of this Agreement is NORTHPORT s rendering of
shelter services at the Premises to ETM. Such shelter services shall
include, but not be limited to, the following:
(A) the manufacturing and assembly of the Finished Products, subject
to the inspection and approval of ETM, in accordance with ETM s written
technical specifications and guidelines;
(B) the furnishing of the Premises upon the terms set out in Article 4
and if applicable, Article 5;
(C) providing the necessary labor, administrative control and
technical supervision;
(D) the importation of the Goods from an agreed location in Del Rio,
Texas, United States of America to the Premises in Mexico and the
exportation of the Finished Products to an agreed location in Del Rio,
Texas, United States of America.
(E) the administrative, legal, accounting, customs and other support
required for the rendering of the shelter services.
Such shelter services shall be provided at no additional cost to ETM
through NORTHPORT s own personnel and technical expertise and,
therefore, NORTHPORT shall not be able, in the performance of its
manufacture and assembly obligations hereunder, to use the services of
any unrelated subcontractor or any other entity without the prior
written authorization of ETM.
6. REPRESENTATIONS AND WARRANTIES.
NORTHPORT and SUBSIDIARY, on the one hand, and ETM on the other hand,
irrevocably and unconditionally represent and warrant to each other as
follows:
A. Each of NORTHPORT and SUBSIDIARY has all requisite corporate power
and authority to enter into this Agreement and to perform its
obligations described herein. This Agreement and the attachments
hereto, and each of the agreements described herein, when executed and
delivered will constitute the valid, binding and enforceable obligations
of each of NORTHPORT and SUBSIDIARY and their execution and delivery by
each of NORTHPORT and SUBSIDIARY and the consummation of the
transactions contemplated hereby and thereby have been duly authorized
by all requisite corporate action of each of NORTHPORT and SUBSIDIARY.
B. ETM has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations described herein. This
Agreement and the attachments hereto, and each of the agreements
described herein, when executed and delivered will constitute the valid,
binding and enforceable obligations of ETM and their execution and
delivery by ETM and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate
action of ETM.
C. The execution and delivery of this Agreement and the transactions
contemplated hereunder are not a violation or breach of, do not conflict
with, or constitute a default under any note, debt instrument, security
agreement, mortgage, lease or any other contract or agreement to which
either NORTHPORT or SUBSIDIARY is a party and will not require any
authorization, consent, approval, exemption or other action by or notice
to any court, arbitrator, department, commission, board, bureau, agency,
authority, instrumentality or other body, whether federal, state,
municipal, foreign, or other.
D. The execution and delivery of this Agreement and the transactions
contemplated hereunder are not a violation or breach of, do not conflict
with, or constitute a default under any note, debt instrument, security
agreement, mortgage, lease or any other contract or agreement to which
ETM is a party and will not require any authorization, consent,
approval, exemption or other action by or notice to any court,
arbitrator, department, commission, board, bureau, agency, authority,
instrumentality or other body, whether federal, state, municipal,
foreign, or other.
E. There is no litigation, suit, proceeding, claim, charge, grievance
or investigation pending or, to the best of knowledge of NORTHPORT or
SUBSIDIARY, threatened against NORTHPORT or SUBSIDIARY involving the
property or conduct of NORTHPORT or SUBSIDIARY s business before any
court, governmental agency or other tribunal, nor is there, to the best
of NORTHPORT s or SUBSIDIARY s knowledge, any basis or ground for any
such litigation, suit, proceeding, action, claim, charge, grievance or
investigation. There is no outstanding order, writ, injunction or
decree of any court, administrative agency or governmental body or
arbitration tribunal against or affecting the conduct of NORTHPORT s or
SUBSIDIARY s business.
F. There is no litigation, suit, proceeding, claim, charge, grievance
or investigation pending or, to the best of ETM s knowledge, threatened
against ETM involving the property or conduct of ETM s business before
any court, governmental agency or other tribunal, nor is there, to the
best of ETM s knowledge, any basis or ground for any such litigation,
suit, proceeding, action, claim, charge, grievance or investigation
which, in each case, could have a material adverse effect on ETM s
ability to perform its obligations under this Agreement and the
documents and instruments contemplated hereby. There is no outstanding
order, writ, injunction or decree of any court, administrative agency or
governmental body or arbitration tribunal against or affecting the
conduct of ETM s business.
G. NORTHPORT has no knowledge or information, of:
1) the presence on or under the Premises of any Hazardous
Substance;
2) any spills, releases, discharges, treatment, storage or
disposal of Hazardous Substances or other substances for which a
discharge permit is required that have occurred or are presently
occurring on, onto or under the Premises or any properties
adjacent thereto;
3) any spills, release, discharges or disposal of Hazardous
Substances or other substances for which a discharge permit is
required that have occurred or are presently occurring off the
Premises as the result of any construction, operation or use of,
or improvement to or conditions on or under the Premises; or
4) the presence of polychlorinated biphenyls ( PCB s) on or
under the Premises.
H. NORTHPORT and SUBSIDIARY represent and warrant that the Premises
are not subject to any Mexican federal, state or local environmental
lien, proceeding, claim, liability or action for the cleanup, removal,
or remediation of Hazardous Substances from the Premises and NORTHPORT
has not received any statements warning of any such action.
I. Neither NORTHPORT nor SUBSIDIARY has knowledge or information of
any asbestos or underground tanks on the Premises.
J. In connection with any construction on or operation, condition or
use of the Premises, or any improvements thereon or thereunder,
NORTHPORT and SUBSIDIARY represent that as of the date of this
Agreement, neither NORTHPORT nor SUBSIDIARY has knowledge or information
of any failure to comply with any Mexican federal, state or local
environmental laws, ordinances, regulations or administrative or
judicial orders relating to the use, generation, recycling, reuse, sale,
handling, transport, treatment, storage or disposal of any Hazardous
Substance.
K. The term Hazardous Substances as used herein shall mean any and
all substances, wastes and materials which are classified or defined as
hazardous materials, wastes or substances under any applicable Mexican
federal, state or local laws, ordinances, rules, regulations and norms.
L. ETM has and will continue to provide NORTHPORT, throughout the
term of this Agreement and extensions thereof, the necessary information
and documentation with respect to the Goods and chemicals furnished to
NORTHPORT by ETM to be used in the manufacture and assembly of the
Finished Products on the Premises, so that NORTHPORT may ensure
compliance with all Mexican environmental laws, regulations and norms.
M. As of the date hereof, NORTHPORT, SUBSIDIARY and the Premises,
have all the registrations, permits, authorizations and licenses
necessary to carry out the activities and provide the shelter services
hereunder, in accordance with all applicable legal provisions in force.
N. NORTHPORT and SUBSIDIARY s statements and warranties contained in
this Agreement, as well as in all its exhibits, certificates or other
written statements made hereunder or in connection with the transaction
and operation herein contemplated, are exact, correct and complete, and
none of such statements and warranties, considered individually or as a
whole, constitute false or misleading statements or warranties.
7. INVENTORY AND RECORDS ON GOODS.
NORTHPORT, at its expense, agrees to manage and maintain proper
inventory and records on all the Goods and Finished Products, so as to
ensure compliance at all times with all necessary Mexican and United
States laws and regulations. At ETM s written request, NORTHPORT shall
immediately provide detailed, accurate and updated listings covering the
Goods and Finished Products. ETM shall at any and all times have the
right to attend at the Premises and to physically inspect the Goods and
Finished Products. This service does not include complete physical
inventories which shall be at ETM s expense.
8. COMPLIANCE WITH THE LAW.
At all times during the term of the Agreement (including the initial
term and extensions thereof), NORTHPORT, SUBSIDIARY and the Premises
shall be in compliance with and shall, to the extent it is within its
control, use its best efforts to ensure that ETM is fully informed and
in compliance with all United States, and Mexican laws or regulations
which directly or indirectly affect performance of the obligations of
NORTHPORT, SUBSIDIARY or ETM under this Agreement, whether such be of
international, federal, state, county or municipal origin. Such laws
and regulations shall include, but not be limited to, the following:
A. Customs laws and regulations;
B. Transportation laws and regulations;
C. Tax laws and regulations;
D. Environmental standards, laws and regulations;
E. Labor laws and regulations;
F. Zoning laws and regulations;
G. Corporate laws and regulations; and
H. Sanitation and hygiene laws and regulations.
I. Currency exchange laws and regulations.
Failure by NORTHPORT or SUBSIDIARY to comply with any laws or
regulations shall be a material breach of this Agreement. ETM,
following ten (10) calendar days written notice to NORTHPORT is entitled
to receive and shall be provided with copies of permits, certificates
and other documents evidencing NORTHPORT s compliance with laws and
regulations. ETM shall be responsible for compliance with its
obligations under the laws and regulations of the United States.
9. PERSONNEL SUPPLIES BY NORTHPORT.
NORTHPORT hereby agrees to provide all the qualified personnel which may
be necessary for the manufacture and assembly of the Finished Products
at the Premises, including, without limitation, the personnel listed in
Exhibit B attached hereto and made a part hereof for all purposes.
NORTHPORT agrees that ETM following thirty (30) days written notice,
may, at ETM option reduce its direct labor work force by up to five
percent (5%) per month for up to four (4) consecutive months. ETM
agrees to give NORTHPORT thirty (30) days written notice for each
reduction. NORTHPORT reserves the right to reduce the amount of
indirect labor dedicated to ETM by a corresponding percentage.
NORTHPORT agrees to be responsible for all costs associated with the
work force reductions contemplated in this paragraph.
Any additional personnel required by ETM will be supplied by NORTHPORT
following ETM s written request for, and approval of, such. The cost of
said additional personnel will be reimbursed by ETM to NORTHPORT in
accordance with the terms of this Agreement.
10. PERSONNEL SUPPLIED BY ETM.
ETM hereby agrees to supply NORTHPORT with the technical support
personnel which NORTHPORT and ETM agree are necessary or convenient to
train Mexican personnel supplied by NORTHPORT, to supervise the
installation of the equipment supplied by ETM, to begin operations and
to thereafter at ETM s sole discretion monitor from time to time all
ongoing operations. ETM shall be solely responsible for all salaries,
expenses, taxes and other costs related to ETM s personnel. ETM shall
indemnify, defend and hold NORTHPORT harmless against any claims or
liabilities arising from ETM s personnel, including but not limited to
substitute employer or Mexican tax claims. ETM shall be solely
responsible for paying for all government fees payable to secure the
immigration papers required for ETM s personnel, as well as all
professional costs and expenses related thereto.
11. COMPENSATION OF EMPLOYEES.
The parties agree that ETM shall be solely responsible for the
compensation of the employees it provides, in accordance with Article 10
above. As to the personnel mentioned in Article 9 above and upon
establishment to ETM s satisfaction of the classes, numbers,
classifications and qualifications of wage and salary employees,
NORTHPORT shall be solely responsible for employee relations, including
the hiring and firing of such, provided however, that ETM shall have the
right to veto the proposed employment of any applicant and to require
the termination of any employee who has been allocated to ETM s
operations. Except for the reductions in force contemplated by the
second Paragraph of Article 10, which reductions shall not obligate ETM
to reimburse NORTHPORT or SUBSIDIARY for any applicable labor severance
payments, in the event ETM requires the termination of an employee for
any reasons other than for cause, as defined under Mexican Federal Labor
Law, ETM shall pay or reimburse NORTHPORT for any severance labor
termination payment for such employee, but only to the extent that such
payment relates to such employee s employment by NORTHPORT on behalf of
ETM. In the event ETM requires the termination of an employee for
cause, as defined by Mexican Federal Labor Law, and such termination
results in NORTHPORT having to pay severance or other related
termination payments, by reason of a settlement, Court Order or
otherwise, then ETM and NORTHPORT agree to equally share such severance
and other related termination payments. NORTHPORT shall be solely
responsible for paying any severance labor termination payments or
portions thereof required to be paid for any reason arising out of any
employee s tenure prior to being assigned to ETM s operation or after
such employees assignment to ETM s operation has been terminated
(hereinafter excluded tenure ). Accordingly, the parties agree that
ETM s liability to pay or reimburse NORTHPORT for any severance labor
termination payments with respect to an employee with an excluded tenure
that affects the amount of severance labor termination payment shall be
limited to an amount equal to a fraction of the total payment determined
as follows: The numerator of the fraction shall be the total number of
days worked by the employee while assigned solely to ETM s operations
and the denominator shall be the total number of days worked by the
employee applicable in the calculation of the labor termination
severance payment. NORTHPORT shall make reasonable efforts to minimize
any severance labor termination payments required by Mexican law or
collective or individual labor contracts. NORTHPORT shall be solely
responsible for obtaining, supervising and administrating the personnel
referred to in Article 9 and paying the employees allocated to ETM s
operations any and all wages, salaries, overtime, benefits in cash or in
kind, as well as all other payments required by Mexican, federal, state
and municipal laws and regulations. Without limiting the foregoing, all
personnel mentioned in Article 9 shall be employees of NORTHPORT and not
ETM s provided, however that NORTHPORT shall not remove key personnel
without consulting with ETM prior to such removal.
12. PAYROLL, SOCIAL SECURITY AND TAXES.
To the extent it is required by law, ETM agrees to prepare and file, for
its non-Mexican personnel only, all required Mexican payroll taxes,
including but not limited to income tax, social security, retirement
fund (SAR), and NATIONAL WORKERS HOUSING FUND (INFONAVIT) fees, as well
as any other applicable taxes or fees required under Mexican laws and
regulations. At ETM s request, NORTHPORT agrees to provide all
necessary information and assistance in preparing and filing the above-
referenced payroll taxes, provided ETM agrees to reimburse NORTHPORT for
any reasonable costs or expenses related to providing such information
and assistance.
13. WORKING PERMITS.
ETM agrees to pay for, at its expense, all necessary working permits for
its designated foreign personnel who will render technical or other
services at the Premises. At ETM' request, NORTHPORT will provide
assistance with respect to all Mexican immigration matters and with
respect to obtaining all necessary working permits for ETM s designated
foreign personnel who will render technical or other services at the
Premises. All reasonable costs and expenses incurred by NORTHPORT in
providing the assistance will be reimbursed to NORTHPORT by ETM within
ten (10) calendar days following written notice of such, accompanied by
detailed itemized receipts meeting all legal requirements.
14. EMPLOYER-EMPLOYEE RELATIONSHIP.
NORTHPORT shall immediately notify ETM of any disputes between NORTHPORT
and its workers and/or the Mexican taxing authorities, if such disputes
or disagreements may result in having ETM s Goods or Finished Products
being subjected to seizure or liens, mortgages, attachments or
encumbrances of any nature or which may in any way delay or interfere
with the manufacture and assembly of the Finished Products.
NORTHPORT s responsibilities for labor claims or lawsuits include,
without limitation, fulfilling any obligation derived from the Federal
Labor Law, Social Security Law, INFONAVIT Law, Income Tax Law, State and
Federal Payroll Tax Laws, Sanitation Laws, Environmental Laws, as well
as any other pertinent laws or regulations in force in Mexico from time
to time.
NORTHPORT s obligations under these provisions shall extend to the
personnel provided by NORTHPORT pursuant to Article 9 and to any
subcontractor hired by NORTHPORT with ETM s written permission to
perform any work contemplated herein which shall remain in force and
survive the termination of this agreement.
NORTHPORT recognizes, acknowledges and confirms that there shall be no
labor relationship between ETM and NORTHPORT s personnel who directly or
indirectly are involved in the shelter services performed by NORTHPORT
under this Agreement and, therefore, NORTHPORT shall indemnify and hold
ETM harmless from any and all costs, expenses, claims or liabilities
whatsoever including, without limitation, lawsuits brought against ETM,
including substitute employer claims or lawsuits by NORTHPORT s
personnel or by any governmental or other entity.
15. COMPENSATION.
In consideration for the services rendered pursuant to the terms of this
Agreement, ETM agrees to pay NORTHPORT a service fee. The service fee
shall be based on an hourly wage formula which takes into account (I)
the total number of full-time employees (One (1) full-time employee
shall mean a person employed for forty five (45) hours per week, who is
required to work forty two and one half (42.5) hours per week, eight and
one half (8.5) hours, five (5) days a week, Monday through Friday) and
(ii) the number of square feet at the premises allocated to ETM s
operations, as further described and in the manner set forth in Exhibit
C, attached hereto and incorporated herein for all purposes. Any
overtime, holiday work or shifts, other than the normal shift required
in writing by ETM, shall also be paid by ETM at one and three quarters
(1.75) times the hourly rate.
In the event that, for any reason whatsoever ETM fails to provide the
Goods necessary to assemble and manufacture the Finished Products, ETM
shall be required to continue paying the down time fee described below,
even if workers are unable to assemble and manufacture Finished Products
because of the lack of such Goods. The down time fee shall be based
considering eighty percent (80%) of an hourly wage formula which takes
into account (i) the total number of full-time employees employed at the
time of the work stoppage (One (1) full-time employee shall mean a
person employed for forty five (45) hours per week, who is required to
work forty two and one half (42.5) hours per week, eight and one half
(8.5) hours, five (5) days a week, Monday through Friday) and (ii) the
number of square feet at the premises allocated to ETM s operations.
One year from the date hereof, and every year thereafter, the service
fee shall be increased by the percentage increase, if any, in the
Producer Price Index for July of the preceding year, provided, however,
the increase to the Shelter Service Fee based on the Producer Price
Index shall not exceed six percent (6%) per year. The Producer Price
Index as used herein shall mean the index presently known as the
Producer Price Index for Finished Goods, U.S. Average (1982-1984=100)
published in the Monthly Labor Review and in the Survey of Current
Business.
ETM and NORTHPORT agree to negotiate production rates by product in
standard labor hours. Further, ETM and NORTHPORT agree to employ their
best efforts to reduce costs (the Reduction ) and improve quality of
the Goods. To that end, ETM and NORTHPORT agree that improvements shall
be measured against the standard production hours per year and agree
that the first 1% of the amount of the Reduction shall be equally shared
50% by ETM and 50% by NORTHPORT.
16. PURCHASES BY NORTHPORT.
In addition to the service fee set forth above and the other items
described in this Agreement, ETM agrees to reimburse NORTHPORT for
reasonable and necessary expenses related to the purchase of shipping
and packing supplies and any other supplies, materials, equipment, spare
parts and other items, purchased on ETM s behalf under written purchase
orders approved in writing by ETM. Any items not paid for up front,
shall be reimbursed by ETM following ten (10) calendar days written
notice of such costs, accompanied by detailed invoices meeting all legal
requirements.
17. FORM OF PAYMENT.
All payments due NORTHPORT by ETM pursuant to the terms of this
Agreement shall be made in United States dollars. Payments shall be
made no later than ten (10) calendar days after detailed invoices from
NORTHPORT, which meet all legal requirements, are received by ETM. For
purposes of the above, receipt of an invoice via facsimile shall be
sufficient. Any invoices sent via facsimile shall be followed by a hard
copy, but the date of receipt via facsimile shall be considered the date
of receipt. Late payments shall bear interest at the rate of the prime
rate, as published in the Wall Street Journal, plus two points. In no
event, however, shall such interest rate exceed that allowed by
applicable International, Mexican, United States, or Texas law.
18. INSURANCE OF PREMISES.
NORTHPORT shall, at its cost, obtain and maintain in full force and
effect insurance coverage issued by a United States or Mexican insurance
company, which shall be acceptable to ETM and which insurance coverage
shall be upon such terms and in such amount as shall be reasonably
required by ETM, to protect NORTHPORT and ETM, to the extent of its
respective interest, if any, as named insured, against fire, theft,
third party liabilities and such other standard risks in and about the
Premises, as shall be reasonably required by ETM. NORTHPORT shall
provide ETM with certified copies of such insurance policies. Such
policies shall contain a clause to the effect that ETM will be notified
thirty (30) calendar days prior to the lapse of such policies. In the
event such policies are in danger of lapsing, ETM may step in and
directly pay for such insurance policies or, at ETM s sole option,
declare this to be a material breach of this Agreement. NORTHPORT will
immediately reimburse and be responsible for reimbursing ETM for such
amounts expended.
19. EQUIPMENT INSURANCE.
Unless ETM chooses to provide insurance covering its Goods and Finished
Products, NORTHPORT shall provide and maintain, in full force and
effect, insurance with such insurer as shall be acceptable to ETM to
cover ETM s Goods, and Finished Products, in an amount equal to the
replacement value thereof or such other amount as ETM shall direct in
writing, with such other terms as ETM shall require. The coverage shall
begin when the Goods are received by NORTHPORT from ETM in Del Rio,
Texas, United States of America, and shall continue until such time the
Goods and Finished Products are returned to ETM by NORTHPORT in Del Rio,
Texas.
The provider of the insurance shall provide the other party with
certified copies of the corresponding insurance policies. Such policies
shall name each of the parties as named insured as their respective
interests shall appear, and shall contain a clause to the effect that
both parties will be notified thirty (30) calendar days prior to the
lapse of such policies. In the event such policies are in danger of
lapsing, the party not providing the insurance may step in and directly
pay for such insurance policies. In such cases, the provider of the
insurance, as set forth herein, will be responsible for reimbursing the
other party for such amounts expended. The cost for said insurance will
be reimbursed by the provider of the insurance to the other party within
ten (10) calendar days notice of such accompanied by detailed invoices
evidencing such costs and meeting all legal requirements.
20. RISK OF LOSS.
The Risk of Loss for the Goods and Finished Products shall at all times
be in the hands of the party hereto who has physical control of such, in
accordance with the terms hereof. Therefore, NORTHPORT will bear the
risk of loss at all time while the Goods and Finished Products are in
Mexico and while in NORTHPORT s control in the United States. ETM shall
bear the risk of loss while the Goods and Finished Products are in its
control in the United States.
21. INDEMNITY.
Each of NORTHPORT and SUBSIDIARY covenants and agrees to indemnify and
hold ETM, its subsidiaries and affiliates and each of their respective
officers, directors, shareholders, employees, harmless from and against
any loss, expense, damage or injury suffered or sustained by such
persons by reason of (a) the inaccuracy or breach of any representation,
warranty covenant or agreement of NORTHPORT or SUBSIDIARY contained in
this Agreement, or (b) any acts, omissions or alleged acts or omissions
by NORTHPORT, Subsidiary and/or NORTHPORT s or SUBSIDIARY s employees or
agents working for the benefit of ETM (other than acts, omissions or
alleged acts or omissions of such employees or agents taken or failed to
have taken at the express written direction of ETM) or otherwise arising
out of NORTHPORT s or SUBSIDIARY s performance of this Agreement or
NORTHPORT s or SUBSIDIARY s activities on behalf of ETM. Without
limiting the generality of the foregoing, NORTHPORT covenants and agrees
to indemnify and hold ETM, its subsidiaries and affiliates and each of
their respective officers, directors, shareholders and employees,
harmless from (i) liens, encumbrances, assessments, penalties, duties,
and fines of any United States or Mexican federal, state or local
agencies or offices, including any fees or other amounts due in
connection with all the Mexican and foreign employees of NORTHPORT or
SUBSIDIARY, with respect to any demand or suit for payment of wages,
fringe benefits, or any other amounts paid or incurred except as
otherwise specifically provided herein, (ii) any claims, damages, and
costs (including reasonable attorney s fees) made by employees of
NORTHPORT or SUBSIDIARY regarding personal injury and those made by any
other individuals (except employees of ETM) who may suffer injury at the
Premises or in Mexico (except for injury to the extent caused in whole
or partly by ETM) (a) and (iii) claims, damages and costs (including
reasonable attorney s fees) to the extent attributable to the prior,
present or future existence of Hazardous Substances on, in or near the
Premises.
The indemnity provided for hereunder shall include, but not be limited
to, any judgment, award, settlement, reasonable attorneys fees and
similar advisors, penalties, fines, and such other costs or expenses
incurred in connection with the defense of any actual or threatened
action, proceeding or claim.
ETM covenants and agrees to indemnify and hold NORTHPORT, its
subsidiaries and affiliates and each of their respective officers,
directors, shareholders, employees, subsidiaries and affiliates harmless
from and against any loss, expense, damage or injury suffered or
sustained by such persons by reason of the inaccuracy or breach of any
representation, warranty, covenant or agreement of ETM contained in this
Agreement, or (b) any acts, omissions or alleged acts or omissions by
ETM and/or ETM s employees or agents (other than NORTHPORT, SUBSIDIARY
or any of their respective agents) or otherwise arising out of ETM s
performance of this Agreement. without limiting the generality of the
foregoing, ETM covenants and agrees to indemnify and hold NORTHPORT, its
subsidiaries and affiliates and each of their respective officers,
directors, shareholders, employees, subsidiaries and affiliates harmless
from liens, encumbrances, assessments, penalties, duties, and fines of
any United States or Mexican federal, state or local agencies or
offices, including any fees or other amounts due in connection with all
employees of ETM, with respect to any demand or suit for payment of
wages, fringe benefits, or any other amounts paid or incurred except as
otherwise specifically provided herein, and further covenants and agrees
to indemnify and hold NORTHPORT, its officers, directors, shareholders,
employees, subsidiaries and affiliates harmless from any claims,
damages, and costs (including reasonable attorney s fees) made by ETM s
employees regarding personal injury and those made by any other
individuals (except employees of NORTHPORT) who may suffer injury at the
Premises or in Mexico (except for injury to the extent caused in whole
or in part by NORTHPORT).
The indemnity provided for hereunder shall include, but not be limited
to, any judgment, award, settlement, reasonable attorneys fees and
similar advisors, penalties, fines, and such other costs or expenses
incurred in connection with the defense of any actual or threatened
action, proceeding or claim.
22. FREE BAILMENT AGREEMENT.
ETM, as Xxxxxx, will give by way of free bailment to NORTHPORT or to
NORTHPORT s subsidiary Gecamex, S.A. de C.V., as Bailee, the Goods and
Finished Products. The Bailment Agreement shall be executed in two
versions, one in English and the other in Spanish, substantially in the
form of Exhibits D1 and D2 attached hereto.
23. USE.
NORTHPORT warrants that the Goods, Equipment and finished Products to be
provided by ETM on bailment shall be used by NORTHPORT and SUBSIDIARY
solely for the performance of this Agreement.
24. OWNERSHIP AND MAINTENANCE.
The Goods and the Finished Products shall remain the sole property of
ETM and title thereto shall at all times remain in the name of ETM. All
equipment, machinery and tooling included in the Goods ( Equipment )
shall be returned to ETM, at ETM s expense, in the same condition as
originally received, except for normal wear and tear, as soon as
reasonably possible following written demand therefor or termination of
the Agreement. The Goods, Equipment and Finished Products shall at all
times be free and clear of all liens, encumbrances, security interests
and claims including, without limitation, any and all claims of
creditors of NORTHPORT or SUBSIDIARY and, as the case may be, of the
owner of the Premises and of the creditors of such owner and of the
claims of any governmental authorities or other persons or entities.
NORTHPORT agrees to provide maintenance and/or repairs on the Equipment
by qualified persons, if ETM so instructs. Save and except in those
circumstances where ETM directs NORTHPORT in writing to proceed with the
maintenance and/or repairs without meeting the following requirements,
NORTHPORT shall deliver to ETM a detailed written statement outlining
the maintenance and/or repairs to be performed and the cost thereof, and
NORTHPORT shall only commence performing such maintenance and/or repairs
once it has received ETM s written authorization. ETM shall reimburse
NORTHPORT for the cost of such maintenance and/or repairs, which cost
shall not exceed the amount set out in the above detailed written
statement, following ten (10) calendar days written notice, accompanied
by detailed invoices meeting all legal requirements. ETM agrees to
supply NORTHPORT with all spare parts needed to maintain the Equipment,
at ETM s sole cost and expense.
In no event shall NORTHPORT fail to return the Equipment within thirty
(30) calendar days written demand, except for cases in which such return
is not possible because of causes not attributable to NORTHPORT.
25. SHIPMENT AND TRANSPORTATION OF FINISHED PRODUCT.
NORTHPORT shall ship from the Premises all Finished Products that have
been approved by ETM s quality control personnel or NORTHPORT s quality
control personnel at the Premises, approved by ETM in writing, to the
designated location within Del Rio, Texas. All reasonable and necessary
expenses and fees related to the transportation of the Finished
Products, as described above, will be reimbursed by ETM to NORTHPORT,
within ten (10) calendar days following written notice of such
accompanied by detailed itemized receipts meeting all legal
requirements.
26. DEFECTIVE FINISHED PRODUCTS.
NORTHPORT shall ensure that the Finished Products meet the written
specifications of ETM and conform to the samples provided by ETM. In
the event NORTHPORT supplies Finished Products that do not comply with
ETM s written specifications and samples and such failure is
attributable to NORTHPORT and not ETM, at ETM s election, ETM may either
cause NORTHPORT to replace such at its sole cost and expense, as soon as
reasonably possible or reject such defective Finished Product and
receive an appropriate reduction in the amount of the shelter fee
payable pursuant to Article 16 of this Agreement. In no event shall
NORTHPORT be responsible for any defective Finished Products which were
inspected and approved by ETM s quality control personnel.
27. MEXICAN AND UNITED STATES FORMALITIES AND DUTIES.
NORTHPORT shall provide at its cost all documentation necessary or
required by the parties to export the Finished Products from Mexico and
import them into the United States. ETM shall be responsible for
reimbursing NORTHPORT for any United States duties assessed on the
Finished Products and for any United States or Mexican broker fees, any
Mexican export taxes, any additional United States government or other
fees. Any reasonable and necessary expenses shall be reimbursed by ETM,
following ten (10) calendar days written notice of such accompanied by
detailed invoices meeting all legal requirements. NORTHPORT shall be
solely responsible for handling exportation from Mexico and importation
into the United States, and shall be listed on all United States import
documentation as Importer of Record.
28. TERM.
This Agreement shall be effective for an initial term of sixty (60)
months commencing on the date hereof. Notwithstanding the foregoing in
this article, ETM shall have the option to buy out NORTHPORT at any time
after the expiration of the forty-eighth month from the date of this
Agreement provided that: (I) ETM notifies NORTHPORT in writing at least
one hundred eighty (180) calendar days prior to the date when ETM wants
to exercise this option; and (ii) ETM pays NORTHPORT a price based on
associated lease termination cost and employee severance cost not to
exceed U.S. $78,000.00 .
The term of this Agreement will automatically be extended for separate
consecutive one (1) year terms, under the same terms hereof, unless ETM
notifies NORTHPORT in writing at least one hundred eighty (180) calendar
days prior to the expiration of the initial term or an extension term,
as the case may be, of its desire to terminate this Agreement.
29. EXIT FEES.
Upon any termination of this Agreement, ETM shall be entitled to recover
its Equipment, Goods and Finished Products. ETM shall directly remove
the Goods, Equipment and Finished Products from the Premises or if
instructed by ETM in writing, NORTHPORT shall remove the Goods,
Equipment and Finished Products from the Premises for export or other
lawful disposition and ETM shall be solely liable for any costs
associated with removing the Goods Equipment and Finished Products from
the Premises, including damage to the Premises, arising from such
removal, as well as transportation, handling and other charges. Such
charges and costs shall be reimbursed by ETM to NORTHPORT, if incurred
by NORTHPORT, and provided that such charges and costs have been agreed
to in writing by ETM prior to their being incurred, following ten (10)
calendar days written notice of such, accompanied by detailed invoices
meeting all legal requirements and evidence of any such costs or
damages.
30. EARLY TERMINATION.
ETM may immediately terminate this Agreement without any responsibility
or liability of any kind, (I) if NORTHPORT files a petition for
bankruptcy or is placed in receivership, (ii) if the Premises are closed
for operation for more than sixty (60) working dates for any reason,
(iii) if the Premises are closed for operation for more than one hundred
twenty (120) working days because of acts of God or force majeure (in
cases of acts of God or force majeure, which result in the Premises
being closed for operation, within thirty (30) working days of such
occurrence, NORTHPORT will notify ETM as to whether or not it plans to
re-open the Premises for operation within such one hundred twenty (120)
working day period. If NORTHPORT is unable or decides not to re-open
the Premises within one hundred twenty (120) working days, ETM may
immediately terminate this Agreement). Failure by NORTHPORT to provide
the above mentioned notification within thirty (30) calendar days shall
constitute a material breach of this Agreement by NORTHPORT, and (iv) if
NORTHPORT or SUBSIDIARY commits a material breach of this Agreement or
if any of the representations and warranties of NORTHPORT or SUBSIDIARY
were inaccurate when made or become inaccurate during the term of this
Agreement or during any renewal hereof (v) if a dispute or disagreement
pursuant to Article 14 will result in ETM s Goods, Equipment or Finished
Products being subject to seizure or liens, mortgages, attachments or
encumbrances of any nature or which will in any way delay or interfere
with the manufacture and assembly of the Finished Products, and (vi) if
the quality or quantity of the Finished Products produced is not
acceptable to ETM in its sole reasonable discretion. In those
circumstances where NORTHPORT commits a material breach and ETM
terminates this Agreement, ETM s termination of this Agreement shall in
no way prejudice its right to pursue any other legal or equitable
relief.
NORTHPORT may immediately terminate this Agreement without any
responsibility to ETM, (i) if ETM files a petition for bankruptcy or is
placed in receivership, or (ii) if ETM commits a material breach of this
Agreement. In those circumstances where NORTHPORT terminates this
Agreement, NORTHPORT s termination of this Agreement shall in no way
prejudice its right to pursue any other legal or equitable relief.
In the event this Agreement is terminated for any cause attributable to
ETM, ETM warrants and agrees that it will pay NORTHPORT in full and
complete satisfaction of any and all claims of NORTHPORT or SUBSIDIARY
related to such termination, a compensatory fee based on associated
lease termination cost, employees severance cost and payment of all
outstanding invoices.
31. RELATIONSHIP BETWEEN THE PARTIES.
NORTHPORT and SUBSIDIARY shall act at all times as independent
contractors and not as a partners, joint venturers, subsidiaries,
affiliates, agents or employees of ETM or any of its affiliates.
32. CHANGE IN OWNERSHIP.
In the event the ownership of ETM, NORTHPORT or SUBSIDIARY changes, the
other party shall receive written notice of such change in ownership
structure within ten (10) calendar days of such. Furthermore, if the
affected party determines that such change in ownership structure may
jeopardize fulfillment of the terms of this Agreement, said party may
consider such change in ownership structure a material breach as
described in Article 30 hereof. Notwithstanding anything contained in
this Article 32 to the contrary, a change in the ownership structure of
ETM, NORTHPORT or SUBSIDIARY shall only give rise to NORTHPORT s or
SUBSIDIARY s or ETM s right to consider such a change a material breach,
if such change in ownership results in a change in ownership of more
than 30% of the issued and outstanding voting securities of ETM or
NORTHPORT or SUBSIDIARY.
NORTHPORT represents and warrants to ETM that the person who execute
this Agreement on behalf of NORTHPORT and SUBSIDIARY have sufficient
authority and such authority has not been restricted, limited or revoked
as evidenced in the certificates issued by the respective Secretaries of
such corporations attached as Exhibits E1
ETM represents and warrants to NORTHPORT that the person who execute
this Agreement on behalf of ETM have sufficient authority and such authority
has not been restricted, limited or revoked as evidenced in the certificate
issued by the Secretary of ETM attached hereto as Exhibit F.
33. CONFIDENTIALITY.
Confidential information shall mean all information disclosed by ETM or
its agents, employees or representatives to NORTHPORT or SUBSIDIARY,
including but not limited to, ETM s products in production or in
development, manufacturing processes, customers, procedures, suppliers
and any other information in connection with ETM s business. Without
limiting the foregoing, confidential information includes, but is not
limited to: that information embodied in disclosures made by ETM or its
agents, employees or representatives, that which is embodied in ETM s
items delivered to NORTHPORT or SUBSIDIARY pursuant to Article 23, that
information which is embodied in ETM s samples and documentation
wheresoever created or by ETM in conjunction with the production of
ETM s Finished Products.
Without limiting the foregoing, information disclosed to NORTHPORT or
SUBSIDIARY, whether orally, visually, in writing or by way of any other
process and all products, drawings, documents, specifications and
samples supplied by ETM or its agents, employees or representatives is
considered Confidential, whether labeled as such or not.
NORTHPORT and SUBSIDIARY acknowledges that failure to keep the above-
noted confidential information confidential will be highly prejudicial
to ETM, and NORTHPORT and SUBSIDIARY shall therefore take all
precautions to keep in confidence and prevent the unauthorized
disclosing of any such confidential information and without limiting the
foregoing, NORTHPORT and SUBSIDIARY shall hold all confidential
information as defined herein in trust and confidence of ETM and,
NORTHPORT and SUBSIDIARY shall not disclose to any person or entity or
use such confidential information for any purpose other than for the
purposes contemplated under this Agreement. The obligation set out in
this Article 34 to keep the confidential information confidential shall
remain in effect during the initial term of this Agreement and any
renewal hereof and shall continue for a period of ten (10) years
following the date of termination of this Agreement.
All confidential information as defined herein is and shall remain the
property of ETM. NORTHPORT and SUBSIDIARY shall not disclose
confidential information defined herein to third parties without written
consent by ETM. NORTHPORT and SUBSIDIARY may not remove from its proper
location and/or duplicate confidential information as defined herein
without written consent by ETM.
The breach of this Article by NORTHPORT or SUBSIDIARY, during the term
of this Agreement or any renewal hereof, constitutes a material breach.
The exercise by ETM of its right to terminate this Agreement shall in no
way prejudice ETM s right to pursue any other legal or equitable
remedies.
Notwithstanding the aforesaid, the term confidential information shall
not apply to any information which might otherwise be so deemed but which:
a. is or becomes part of the public domain before, on or after the
date of this Agreement (other than as a result of the breach of this Agreement
by any of the parties hereto);
b. is properly ordered to be disclosed or released by any court of
competent jurisdiction or other administrative, judicial or quasi-judicial
tribunal; or
c. has been independently acquired from a party not subject to a
confidentiality agreement with the party who allegedly violates its
confidentiality obligation or developed by such party without violating its
respective obligations under this Agreement and without the use of
confidential information which can be substantiated by said party.
Neither NORTHPORT nor SUBSIDIARY will conduct any tours of the Premises
without the prior written consent of ETM nor permit any person not
specifically authorized in writing by ETM to attend at any time on the
Premises. Notwithstanding the foregoing, ETM understands that the owner of
the Premises and properly authorized governmental authorities may from time to
time be provided access to the Premises, with the consent of ETM.
34. MARKINGS.
ETM agrees to promptly inform NORTHPORT of changes in applicable laws
related to labeling, or marking of which it becomes aware. NORTHPORT
and SUBSIDIARY agree to promptly inform ETM of changes in applicable
laws related to labeling, or marking of which it becomes aware.
35. NOTICES.
All notices, demands, invoices and requests required under this
Agreement shall be in writing, and shall be properly given if (I) served
personally, (ii) send via overnight courier or (iii) send via facsimile,
addressed to the respective party as the case may be, at the respective
address set out in this Agreement or such other address as any party may
in writing advise. Notwithstanding the foregoing, any notices sent via
facsimile shall be followed by notice sent as set forth above but shall
be effective as of the date sent via facsimile. Until the parties shall
designate another address, their addresses shall be as follows:
to ETM, INC. ETM, Inc.
ETM S.A. de X.X.
Xxxxxxxxxxxxxxxxx 00x
00000 Xxxxxx
Xxxxxxx
Telephone 000 00 0000 000000
Fasimile 000 00 0000 4971
Attention: Xx.Xxxxxxx Xxxxxxxxxxx
To NORTHPORT or SUBSIDIARY: NORTHPORT INDUSTRIES, INC.
X.X. Xxx 0000
Xxxx 000 & Xxxxxxxx Xx.
Xxx Xxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xx. Xxxxxx Xxxxxxxxx
36. ASSIGNMENT.
This Agreement shall not be assigned by either party without the prior
written consent of the other. Subject to the foregoing, this Agreement
shall inure to the benefit of and bind the parties hereto and their
respective successors and assigns. Any attempted assignment or other
transfer contrary hereto shall be void.
37. CONFLICT OF TERMS.
Except for amendments to this agreement complying with Article 39
hereof, in the event of any conflict between the terms and conditions of
this Agreement and the terms and conditions contained in any other
document issued by ETM or NORTHPORT or SUBSIDIARY, the terms and
conditions of this Agreement shall prevail.
38. ENTIRE AGREEMENT.
This Agreement, together with the Exhibits attached hereto, constitute
the entire understanding of the parties on the subject matter hereof,
supersedes all prior writings and understandings, and may not be
modified or amended except by a writing duly executed by authorized
representatives of the parties. No modification of the terms and
conditions hereof shall be effected by the acknowledgment or acceptance
of documents containing additional or different terms and conditions.
39. WAIVER MUST BE IN WRITING.
No waiver of any of the provisions hereof shall be effective unless in
writing and signed by both parties and no waiver made shall bind either
party to a waiver of any succeeding breach of the same or any other
provisions hereof.
40. HEADINGS.
The Article headings used in this Agreement have been inserted for
convenience of reference only and do not affect the meaning or
interpretation of this Agreement.
41. SEVERABILITY.
The eventual invalidity of any clause of this Agreement shall not affect
the validity of the remaining provisions hereof which shall be construed
when possible in such a way that the purpose of this Agreement, as
intended by the parties, can be achieved in a lawful manner.
42. COUNTERPARTS.
This Agreement may be executed in any number of written counterparts,
each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
43. APPLICABLE LAW AND JURISDICTION.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS AND THE UNITED STATES OF AMERICA.
44. CONTROL BY ETM.
Notwithstanding anything contained in this Agreement to the contrary,
all matters relating directly or indirectly to the Finished Products and
the Goods, including without limitation, the manufacturing and
assembling, packaging, shipping, transporting and insuring of the
Finished Goods and the use of the Equipment shall be subject to the
absolute control of ETM. In all circumstances, to the extent possible,
and as long as such do not conflict with the terms of this Agreement,
all reasonable and legal directions and instructions issued by ETM shall
be immediately implemented and followed by NORTHPORT. Any and all duly
authorized representatives of ETM shall at all times have unrestricted
access to the Premises and the right to inspect and evaluate all aspects
of the manufacture and assembly of the Finished Products.
Northport Industries, Inc. ETM.
By: By:
Xxxxxx X. Xxxxxxxxx Xxxxxxx Xxxxxxxxxxx
Its: President Its: President
Date: Date:
