EXHIBIT 10.13
CONFIDENTIAL TREATMENT REQUESTED FOR CERTAIN PORTIONS
** indicates that confidential information has been omitted and filed separately
with the SEC in an application for confidential treatment.
MANUFACTURING AND SUPPLY AGREEMENT
THIS MANUFACTURING AND SUPPLY AGREEMENT (this "Agreement") is made and entered
into on the 20th day of December 2004, by and between:
PRECISION ENGINE PRODUCTS CORP., a corporation organized and existing under the
laws of the State of Delaware, U.S.A. and having its principal office at 0000
Xxxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxx, XX 00000 X.X.X. (hereinafter referred to as
"PEPC")
And
EQUATORIAL ENTERPRISES LIMITED, a Public Limited company organized and existing
under the laws of the India and having its registered office at Equatorial
Forum, 00 Xxxxxx-Xxxx Xxxx, Xxxxxxxxx, Xxxx 000 000, XXXXX (hereinafter referred
to as "Equatorial").
BACKGROUND
1. PEPC wishes to have the Products (as defined in Section 2.4)
manufactured for it.
2. Equatorial is a precision manufacturer and wishes to make the Products
for ultimate sale to PEPC.
3. Equatorial believes that is has, and PEPC has concluded that Equatorial
has the necessary technical and managerial capability to perform as
required by this Agreement.
AGREEMENTS
The parties agree as follows:
1. GENERAL
As per the terms and conditions of this Agreement, Equatorial will
manufacture the Products for sale to PEPC and PEPC will buy the
Products from Equatorial.
2. PRE-PRODUCTION OBLIGATIONS
The parties will generally cooperate to advance the purpose of this
Agreement, which is the manufacture and supply of the Products.
2.1 Technical Information Sharing
a. While Equatorial has, on its own, developed the
general technical know-how, skill, expertise and
capability required to manufacture the Products, the
exact dimensions and mechanical properties required
by PEPC for the Products will be provided to
Equatorial by PEPC in the form of drawings and other
relevant technical information to enable Equatorial
to make the Products to PEPC's specific requirements
and specifications. PEPC may also provide to
Equatorial specifications, designs, drawings and
other information related to the purchase,
manufacture, modification and/or installation of
tooling and equipment.
b. All such information provided by PEPC shall be
considered Proprietary Information for purposes of
Section 4 and shall remain the property of PEPC and
may be used by Equatorial solely to make and sell
Products to PEPC, and not for any other purpose.
Without limiting the generality of the foregoing,
Equatorial shall not use such information provided by
PEPC, directly or
indirectly, for the purpose of developing, designing,
making, processing, testing or supplying any product
to any party other than PEPC.
c. It is, however, expressly agreed that the technical
know-how, skill, expertise and capability developed
by Equatorial without use of information provided by
PEPC or other PEPC Proprietary Information or
proprietary rights will remain Equatorial's property
and Equatorial is free to use the same as they deem
fit, subject to the express provisions of this
Agreement.
2.2 Tooling Orders
PEPC will issue tooling and equipment Purchase Orders to
Equatorial pursuant to which certain tooling and equipment
necessary for the manufacture of the Products will be
purchased/made by Equatorial and paid for, in whole or in
part, by PEPC. Such tooling and equipment ("Contract Tooling
and Equipment") will be owned by PEPC. Equatorial will
maintain a complete and accurate inventory of all Contract
Tooling and Equipment. All Contract Tooling and Equipment
shall be marked "Owned by Stanadyne- PEPC" and shall be used
by Equatorial solely to manufacture Products exclusively for
PEPC, and may not be used to make product for any other person
or entity or for any other purpose. Equatorial shall not copy
or reproduce the Contract Tooling and Equipment unless
authorized by PEPC in writing. PEPC's ownership of Contract
Tooling and Equipment shall be perpetual and in no event shall
title or other rights to the same revert to Equatorial. Upon
any expiration or termination of this Agreement, all Contract
Tooling and Equipment shall immediately be returned to PEPC,
and for such purposes Equatorial shall make the Contract
Tooling and Equipment available to PEPC for shipment from
Equatorial's plant, and shall give PEPC and its agents access
to Equatorial's facility for purposes of disassembling and
packing the same. At PEPC's request, Equatorial shall give
such notices and make (or cooperate with PEPC in making) such
recording, filings or registrations as may be appropriate to
protect PEPC's interests in the Contract Tooling and
Equipment. Equatorial will maintain the Contract Tooling and
Equipment in good order and replace worn-out Contract Tooling
and Equipment at their expense. All replacement and substitute
equipment and tooling and all repair parts and components and
normal accessions, even though paid for by Equatorial, shall
be deemed part of Contract Tooling and Equipment and shall be
owned by PEPC and otherwise subject to the terms of this
Section. PEPC and Equatorial agree that the amount to be paid
by PEPC for the Contract Tooling and Equipment is ** (U.S.
Dollars) which will be paid in three installments as follows:
** immediately after signing this Agreement; ** after
successful shipment of ** units of Product pursuant to a
purchase order already submitted to Equatorial; and the
balance of ** the items on the Product list referred to in
SCHEDULE 2.3 that are designated as the top ten priority items
have been produced and qualified. Amounts paid by PEPC to
Equatorial for Contract Tooling and Equipment are
non-refundable.
2.3 Product Qualification.
Based on its prior review and discussions with Equatorial,
PEPC has concluded that Equatorial has developed the technical
know-how, skill, expertise and capability to manufacture the
Products in accordance with the requirements of this
Agreement. However, prior to commencement of commercial
production by Equatorial, PEPC and Equatorial will agree upon
the procedures and documentation to be followed by them to
qualify each item of Product for commercial production.
Equatorial will use diligent best efforts to achieve full
qualification and commercial production capacity with respect
to all Products by January 1, 2005.
2.4 Product Definition
The products covered by this Agreement will consist of the **
listed in SCHEDULE 2.3 to this Agreement (the "Products").
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2.5 Export Licensing
Prior to commercial production and supply of Products,
Equatorial shall obtain all export licenses and permits from
the applicable governmental authorities in India that are
necessary for the manufacture and export of the Products as
contemplated by this Agreement and shall otherwise comply with
all laws and regulations applicable to its activities under
this Agreement.
3. COMMERICAL PRODUCTION AND SUPPY
Once Equatorial and the Products have been qualified for commercial
production, the following shall apply:
3.1 Supply
PEPC will purchase the Products from Equatorial from time to
time pursuant to purchase orders to be submitted by PEPC to
Equatorial on PEPC's standard form. PEPC's standard terms and
conditions of purchase, a copy of which is attached to this
Agreement as SCHEDULE 3.1, shall apply to the purchase and
sale of Products under this Agreement, and any additional,
different or contrary terms and conditions set forth in any
purchase order, acknowledgment, invoice or other instrument or
document issued by Equatorial shall not apply unless agreed to
in writing by both parties. In the event of any inconsistency
between the terms of the main body of this Agreement and the
terms of SCHEDULE 3.1, the terms of the main body of this
Agreement shall prevail. Equatorial agrees to supply PEPC with
the Products in such quantities as are required by PEPC,
subject to mutually acceptable lead time requirements, agreed
minimum and maximum quantity limits and compliance by PEPC
with the requirements of Section 3.2(f).
3.2 Prices, Shipment, Invoicing, Payment Terms
a. The prices for the Products during the initial five
(5) year term of this Agreement shall be as set forth
in SCHEDULE 2.3. Product Prices are stated in and
shall be payable by PEPC in U.S. Dollars. In the
event that PEPC renews this Agreement for additional
one (1) year terms, PEPC and Equatorial will agree to
the prices of the Products for each renewal term. The
pricing calculation, which includes a "base price"
and "upcharge component" is set forth on SCHEDULE
2.3. The "base price" is fixed for the initial 5 year
term, and the "upcharge component" will be adjusted
from time to time by mutual determination of the
parties to reflect changes in raw material costs, all
as further illustrated on SCHEDULE 2.3.
b. All Products will be shipped by marine
transportation. All shipment shall be made C.I.F.
(Incoterms 2000) the seaport of Jacksonville, Florida
or such other destination port as may be agreed by
PEPC and Equatorial. By way of confirmation, the
parties intend by the use of C.I.F. terms that:
Equatorial will deliver the goods to the seaport of
Jacksonville, Florida. Further to the same, all
carriage/freight and insurance to the port of
destination shall be Equatorial's responsibility;
however, charges related to the clearing and
forwarding, customs and taxes if any, and inland
transportation from the destination seaport to PEPC's
warehouse will be borne by PEPC.
c. Equatorial is free to use any seaport from India to
transport the goods to PEPC. Equatorial will work
with the broker of PEPC's choice, who will coordinate
with Equatorial with respect to Product being loaded
on board at the India seaport and also will be PEPC's
broker in the U.S.A.
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d. If PEPC desires the Product to be shipped by an
alternate mode of transportation and/or to an
alternate destination, the additional cost of doing
so shall be borne by PEPC.
e. Product will be packaged according to mutually agreed
upon, sea-worthy packing specifications.
f. PEPC will establish an irrevocable standby letter of
credit for a value of ** (U.S. Dollars) in favor of
Equatorial by a first class international bank.
However, payments for each shipment will be made by
PEPC by wire transfer into a designated account of
Equatorial upon receipt by PEPC of a copy of the
related xxxx of lading (no xxxx of lading shall be
presented to PEPC until the Product has been loaded
on the vessel at its departure port). Upon receipt of
payment, Equatorial will forward by courier service
the original xxxx of lading and related documents to
PEPC for the clearance of the Product. In case
payment is not made by PEPC within 45 days of receipt
of a copy of the xxxx of lading, Equatorial shall
have right to claim payment against the standby
letter of credit and upon receipt of payment by the
letter of credit bank will forward original documents
to PEPC.
g. Title to all Product shall pass to PEPC when the
Product passes the ship's rail at the port of
departure from India.
3.3 Manufacturing Standards and Quality
Equatorial shall provide and maintain a quality system for the
Products as agreed between PEPC and Equatorial. Such a quality
system shall be finalized before commencement of commercial
production of Products and Product shall not be qualified
until the related quality system is finalized and agreed upon
between the parties.
3.4 Engineering Changes
Engineering changes in Product or process will not be
implemented without prior agreement between PEPC and
Equatorial. Where PEPC requires engineering changes, PEPC will
be responsible for the purchase of all scheduled production
completed or in process at the time of the change. Any price
changes necessitated due to such engineering changes will be
based solely on the cost differential of the design variance
from the original design version and will be agreed upon by
PEPC and Equatorial prior to incorporating such changes.
3.5 Scheduling and Inventory Programs.
a. PEPC will provide to Equatorial delivery schedules
for the Products, setting forth Product quantities
and shipment dates. Once each month, PEPC will
provide to Equatorial a monthly firm schedule
delivery release for the following 3 months, together
with monthly planning forecasts for months 4 through
6. PEPC's responsibility will be limited to the firm
schedule delivery releases for the upcoming 3 months.
Planning forecasts will create no commitment of PEPC
of any kind.
b. Equatorial will maintain the agreed capacity in place
to meet the forecasted demand for Products. For
purposes of determining lead times and establishing
and maintaining capacity, the parties will assume
that PEPC will maintain an inventory of Product
sufficient in PEPC's estimation for approximately 45
days of its requirements.
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c. Equatorial will cooperate with PEPC to attain PEPC
production, inventory, or scheduling objectives for
any PEPC developed "Just In Time" or other continuous
improvement program.
d. Equatorial will commit adequate resources to support
PEPC`s peak demand of ** units of Product per year.
It is understood and agreed that production purchase
order releases will reflect actual demand from PEPC`s
end customer(s) and generally will be only a
percentage of peak demand. Production releases will
reflect the volume fluctuations experienced by PEPC's
end customer's(s') market place.
3.6 Competitiveness.
Equatorial shall make every effort to offer competitive
advantage to PEPC in price, delivery and quality during the
term of this Agreement. PEPC shall make known to Equatorial
its expectations from time to time and will cooperate with and
assist Equatorial to meet these expectations. Both parties
shall cooperate and engage in regular dialogue on all three
issues of price, quality and delivery to ensure that the
competitive advantage is retained at all times. In the event
that PEPC believes that Equatorial has failed to offer
competitive advantage in price, delivery or quality and the
parties are not able to resolve the issues through mutual,
good faith deliberations, then either party may provide
formal, written notice to the other that the deliberations
have failed and may in such written notice elect to terminate
this Agreement effective 60 days after the date of such
written notice.
3.7 Restrictive Covenant.
During the term of this Agreement, Equatorial and its
Affiliates (defined for purposes of this Agreement with
respect to either party as any entity or person controlling,
controlled by or under common control with such party) shall
not, directly or indirectly, supply ** that are competitive
with or that are substitutes for the Products to any person or
entity, anywhere in the world, other than to PEPC under this
Agreement and other than to the existing customers of
Equatorial who were on the list provided to PEPC by Equatorial
pursuant to Equatorial's letter dated December 13, 2004 to
PEPC, to whom Equatorial may supply ** on a continuing basis
consistent with prior practice and for the same, continuing
intended uses and purposes. During the term of this Agreement,
PEPC and its Affiliates (defined for purposes of this
Agreement as any entity or person controlling, controlled by
or under common control with PEPC) will comply with the terms
of that certain letter from PEPC to Equatorial dated December
10, 2004 with respect to the customer list provided to PEPC by
Equatorial, and such December 10, 2004 letter is incorporated
herein by reference. PEPC's breach of such December 10, 2004
letter shall be treated as a breach of this Agreement. During
the term of this Agreement, Equatorial shall not provide
financial, operating, engineering or other assistance of any
kind, and shall not grant licenses or similar rights to any
entity or person who engages in activities that would be
prohibited by this Section 3.7 if engaged in by Equatorial
directly.
4. CONFIDENTIALITY AND PROPERIETARY RIGHTS
4.1 Proprietary information.
a. Each party agrees not to disclose or use any
materials or information of the other party which is
marked "Confidential" or, in the case of orally
conveyed information, which is confirmed as being
confidential in writing within thirty (30) days of
conveyance, including any such materials or
information conveyed prior to execution of this
Agreement ("Proprietary Information") except as may
be necessary to further the performance of this
Agreement. Each party further
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agrees to take such steps to maintain the
confidentiality of the other party's Proprietary
Information as it takes with respect to its own
similar information.
b. The restrictions on disclosure set forth in this
Section 4.1 shall not apply to information which;
i. is already in the public domain, and/or
ii. later becomes publicly available through no
fault of the party concerned, and/or
iii. is disclosed to any party without
restrictions by a third party which is not
bound by any restrictions not to disclose
such information, and/or
iv. is independently developed without reliance
on any information disclosed by the other
party, as evidenced by written
documentation, and/or
v. a party is obligated to disclose under a
court order, subject to such confidentiality
orders, etc., as are available or obtainable
under applicable law or regulation.
h. All drawings, electronic files, pricing, sourcing,
contracts and tooling relating to the Products shall
be regarded as PEPC's Proprietary Information for
purposes of this Section 4.1 and PEPC shall be deemed
the owner of all such drawings, electronic files,
pricing, contracts and tooling relating to the
Products.
4.2 Term of the Agreement
The parties agree that, except as required by law or court
order, and except for disclosure of this Agreement to a
party's advisors and to parties conducting bona fide due
diligence reviews of a party, they will not disclose any of
the terms or conditions of this Agreement to third parties,
except that this provision shall not preclude either party
from announcing the existence of this Agreement or from
providing a general summary of the intent and purpose of this
Agreement in the form of press releases, tombstone
advertisements and similar disclosures, provided that the
other party approves the form of the press release,
advertisement or similar disclosure. Such approval shall not
to be unreasonably withheld by either party.
4.3 Survival
The provisions of this Section 4 shall survive the termination
or expiration of this Agreement.
5. WARRANTIES, DISCLAIMER OF WARRANTIES, LIMITATION OF LIABILITIES.
5.1 General Representations
Each party represents and warrants that it has full right,
power and authority to enter into this Agreement, to perform
all of its obligations hereunder, and to consummate all of the
transactions contemplated herein.
5.2 Product Warranty
Equatorial warrants to PEPC that all Product supplied under
this Agreement shall (a) be new, of the grade and quality
specified, (b) conform to the specifications, drawings,
samples or descriptions furnished by PEPC, (c) be free from
defects in workmanship and material, and (d) be free and clear
of any security interest, lien or other claim of any third
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party. Equatorial will, at its own expense and option, either
repair or replace product, which does not comply with this
warranty. PEPC shall be entitled to credit for transportation
costs incurred by PEPC and its distributors and end customers
in connection with the return of defective Product. The
warranty period shall be 180 days from date of receipt of the
Product at PEPC's plant (initially, PEPC's plant in
Tallahassee, Florida).
5.3 Disclaimer of Warranties.
Except for the warranties set forth herein, the parties hereto
disclaim all warranties of any kind, either express or
implied, including, but not limited to, all warranties of
merchantability and fitness for a particular purpose.
5.4 Indemnity
Equatorial agrees to defend, indemnify and hold PEPC harmless
from and against any and all losses, costs, damages,
liabilities, penalties, fines expenses (including attorneys'
fees) administrative proceedings, claims (including those
based upon strict liability and those asserted by a
governmental entity) or suits (collectively referred to as
"Losses") which PEPC may incur or be subject to arising from
or relating, in any way, to (1) the breach of any warranty or
any inaccurate or erroneous representation of Equatorial set
out herein, (2) Equatorial's manufacture and sale of Product,
or (3) Equatorial's negligence, misconduct or breach of this
Agreement or of applicable law; provided that with respect to
Losses that arise exclusively from a specific item of Product,
only to the extent that the Losses or the underlying cause or
circumstances giving rise to such Losses exist or arise within
180 days from date of receipt of the Product at PEPC's plant
(initially, PEPC's plant in Tallahassee, Florida).
6. TERM AND TERMINATION
6.1 Term
The initial term of this Agreement shall be five (5) years,
and thereafter PEPC and Equatorial may renew this Agreement
for one or more additional, successive one (1) year renewal
terms by written, mutual agreement. Any such renewals shall
come into force at least sixty (60) days prior to the end of
the then effective initial or 1 year renewal term. This
Agreement may be terminated as provided in Section 6.2 of this
Agreement or by mutual agreement of the parties.
6.2 Termination
This Agreement shall be terminable as provided in Section 3.6
and as follows:
a. In the event Equatorial shall be in material breach
in the performance of any provision of this Agreement
("Default") and if such Default shall not be cured
within thirty (30) days following written notice
thereof from PEPC (or if such Default is susceptible
to cure but cannot be cured within such 30 day cure
period, then if Equatorial has not promptly commenced
curing such Default within said thirty (30) day
notice period or does not thereafter proceed to cure
such Default with reasonable diligence and good faith
without interruption except for causes beyond its
control), then upon the expiration of said thirty
(30) day period (or at such time as Equatorial ceases
efforts to cure the Default or cure becomes no longer
reasonably feasible), PEPC, at its own election,
shall have the right to terminate this Agreement upon
written notice delivered to Equatorial within ten
(10) days after the end of said thirty (30) day (or
longer) period; and
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b. In the event PEPC shall be in material breach in the
performance of any provision of this Agreement
("Default") and if such Default shall not be cured
within thirty (30) days following written notice
thereof from Equatorial (or if such Default is
susceptible to cure but cannot be cured within such
30 day cure period, then if PEPC has not promptly
commenced curing such Default within said thirty (30)
day notice period or does not thereafter proceed to
cure such Default with reasonable diligence and good
faith without interruption except for causes beyond
its control), then upon the expiration of said thirty
(30) day period (or at such time as PEPC ceases
efforts to cure the Default or cure becomes no longer
reasonably feasible), Equatorial, at its own
election, shall have the right to terminate this
Agreement upon written notice delivered to PEPC
within ten (10) days after the end of said thirty
(30) day (or longer) period; and
c. By PEPC if Equatorial is declared insolvent or
bankrupt or makes an assignment for the benefit of
creditors, or a receiver is appointed or any
proceeding is demanded by, for or against the other
under applicable bankruptcy, insolvency or
receivership law of any country;
d. By Equatorial if PEPC is declared insolvent or
bankrupt or makes an assignment for the benefit of
creditors, or a receiver is appointed or any
proceeding is demanded by, for or against the other
under applicable bankruptcy, insolvency or
receivership law of any country.
Termination of this Agreement under this Section 6.2 shall be without
prejudice to any rights or remedies of the terminating party.
6.3 Effect of Termination
Upon expiration or termination of this Agreement in accordance
with Section 6.1 or Section 6.2, or by operation of law or
otherwise:
(a) The provisions of Section 2.1(b), Section 2.2,
Section 4, Section 5, this Section 6 and Section 7
shall survive such termination or expiration.
(b) Equatorial's right to use the Proprietary Information
of PEPC shall cease and Equatorial shall, as soon as
possible:
i. return to PEPC all tangible copies of PEPC's
Proprietary Information in Equatorial's
possession or control;
ii. destroy all Proprietary Information of PEPC
contained in any report, analysis, or other
document, including all copies thereof, in
Equatorial's possession or control and
certify in writing to PEPC as to such
destruction; and
iii. permanently delete and erase from any
electronic storage media any and all PEPC
Proprietary Information or copies thereof,
including, without limitation, from computer
files (including back-ups and archives),
tapes, discs and magnetic, electronic or
optical media, and certify in writing to
PEPC as to such deletion and erasure.
(c) Equatorial shall within sixty (60) days from such
termination or expiration and if requested in writing
by PEPC ship to PEPC all Product in their inventory
subject to then outstanding purchase orders placed by
PEPC;
(d) PEPC shall, consistent with the standard payment
terms set forth in this Agreement, pay Equatorial for
all Product shipped to PEPC under this Agreement and
not previously paid for; and
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(e) Equatorial shall make the Contract Tooling and
Equipment available to PEPC as required by Section
2.2.
Nothing in this Section shall relieve either party of liability for
breach of this Agreement.
7. GENERAL
7.1 Relationship of the Parties
This Agreement shall in no way be construed to constitute any
party as the joint venture partner, employee or agent of any
other party nor shall any party have the authority to bind any
other in any respect, accept service of process or other
notice on the other's behalf, or make any representation,
statement or warranty by or on behalf of the other, it being
intended that each shall remain an independent contractor
responsible only for its own actions.
7.2 Expenses
Except as otherwise provided in this Agreement, each party
shall be responsible for all costs and expenses incurred by it
in the performance of this Agreement.
7.3 Assignment
This Agreement and the rights, duties and obligations of the
parties hereto shall not be assignable, transferable or
delegable by any party hereto without the prior written
consent of the other, not to be unreasonably withheld or
delayed, and any purported assignment, transfer or delegation
without such consent shall be void and of no effect.
Notwithstanding the foregoing;
a. any party may assign this Agreement to an Affiliate,
provided that the assignment shall not constitute a
release of the assigning party and the assigning
party shall remain liable for all assigned
obligations in the event of a breach of this
Agreement by its assignee, and
b. any party may assign this Agreement to an assignee of
all or substantially all its assets and business,
provided the assignee agrees in writing to be bound
by this Agreement on the same terms as the assignor
beginning on the date of assignment, whereupon the
assignor shall be relieved from liability or
obligation under this Agreement for periods after the
date of assignment, but not with respect to prior
periods.
7.4 Governing Law: Choice of Forum
This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, U.S.A.,
without giving effect to Florida's rules of conflicts of law,
and regardless of the place or places of its physical
execution and performance. Any disputes arising from this
Agreement and not settled amicably, shall be referred to the
International Chamber of Commerce (ICC) for arbitration in
Chennai, India, in accordance with Section 7.4A. The parties
specifically agree that the United Nations Convention on
Contracts for the International Sale of Goods does not apply
to this Agreement or to any sale of product under this
Agreement.
7.4A. Dispute Resolution.
The parties shall strive to resolve amicably any and all
differences arising between or among them respecting the
interpretation of this Agreement or any part or provision
hereof or their rights and obligations hereunder by mutual
consultations. Failing such
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amicable resolution during a thirty (30) day period, and
subject to Section 7.5, any controversy, claim or dispute,
whether contractual or extra-contractual, relating to or
arising under, out of or in connection with this Agreement
(including issues of construction of the agreement to
arbitrate and the scope of arbitration) shall be finally
settled by arbitration held in Chennai, India under the Rules
of Arbitration of the International Chamber of Commerce.
Unless the parties agree to one arbitrator, there shall be
three arbitrators. The arbitrator(s) will not have authority
to award punitive damages to any party. The award of the
arbitrator(s) shall be final and binding upon the parties, and
judgment thereon may be entered in any court of competent
jurisdiction. Subject to Section 7.5, after the appointment of
the arbitrator(s), the arbitrator(s) shall have exclusive
power to consider and grant requests for provisional or
interim measures.
7.5 Equitable Relief
If any party breaches any of its obligations under Section
2.1(b), Section 2.2, Section 3.7 or Section 4, the other party
shall be entitled to equitable relief to protect its interest
therein, including but not limited to injunctive relief, as
well as money damages. Nothing in this Agreement shall limit
any party's ability to seek immediate equitable relief in such
circumstances, as it reasonably believes that its interests
hereunder and in its property may be compromised.
7.6 Partial Invalidity
If any provision of this Agreement is held to be invalid, void
or unenforceable, the remainder of the provisions shall remain
in full force and effect and shall in no way be affected,
impaired, or invalidated.
7.7 Nonwaiver
The waiver by any party of a breach by any other party of any
provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by that party. No waiver
shall be valid unless confirmed in writing and signed by the
party against whom it is to be enforced.
7.8 Captions
The captions contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.9 Force Majeure
Any party shall be excused from performance of its obligations
hereunder to the extent and for such period of time as such
performance is prevented by an act of God, fire, flood,
earthquake, transportation disruption, war, insurrection,
labor dispute or other cause beyond the reasonable control of
such party including inability to obtain parts required to
perform the work contemplated by this Agreement.
7.10 Counterparts
This Agreement may be executed in counterparts, each of which
when so executed and delivered shall constitute a complete and
original instrument but all of which together shall constitute
one and the same agreement, and it shall not be necessary when
making proof of this Agreement or any counterpart hereof to
account for any other counterpart.
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7.11 Waiver of Jury Right
The parties hereby waive their right, if any, to have any
dispute arising under this Agreement determined by a jury
proceeding.
7.12 Entire Agreement
This Agreement and the attachments hereto, together with
PEPC's letter to Equatorial dated December 10, 2004 to PEPC,
constitute the entire agreement between the parties concerning
the subject matter hereof and supersedes all prior and
contemporaneous agreements between the parties. This Agreement
may be amended only by an instrument in writing, which
expressly refers to this Agreement and specifically states
that it is intended to amend it. No party is relying upon any
warranties, representations, or inducements not set forth
herein.
7.13 Notices
All notices, consents, and other communications required or
permitted to be made under the terms of this Agreement shall
be in writing and shall be;
c. personally delivered by an agent of the relevant
party, or
d. transmitted by postage prepaid, certified or
registered mail, or
e. by reliable express mail services (e.g Federal
Express), or
f. by facsimile, confirmed by airmail,
to the parties at the address first set out above or at such
address as one party hereto may notify the other in writing.
All notices shall be effective upon receipt.
7.14 Binding Nature
This Agreement shall be binding on upon and inure to the
benefit of the parties hereto, their successors and permitted
assigns.
7.15 Compliance with Laws
Both parties will at all times conduct their activities in
compliance with all laws and regulations applicable to it,
including import, export, customs, unfair competition,
antitrust, advertising and consumer laws.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
on the day and year first above written.
PRECISION ENGINE PRODUCTS CORP.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: V.P., GM, PEPC
EQUATORIAL ENTERPRISES LIMITED
By: /s/ XXXXXXXXX X. XXXXX
------------------------
Name: XXXXXXXXX X. XXXXX
Title: Director
12
SCHEDULE 2.3
PRODUCTS AND PRICES
13
SCHEDULE 2.3
UNIT BASE PRICE OF BODIES
CASTING BODIES AS OF JUN 16, 2004
** ** **
** **
** ** **
** **
** **
** **
** **
** **
** **
** **
** **
** **
** ** **
** **
** **
** **
** **
** **
** **
** **
** ** **
** **
** **
** ** **
**
**
** ** **
** **
** **
** ** TBD
**
**
SCHEDULE 2.3
UNIT BASE PRICE FOR ** LINKED TO FOLLOWING
RAW MATERIAL PRICE AS OF JUNE 16, 2004
BASE PRICE PER METRIC TONNE PRICE PER METRIC TONNE
AS ON JUNE 16, 2004 AS ON OCTOBER 7, 2004 CHANGE
RAW MATERIAL INDIAN RUPEES INDIAN RUPEES %
-------------------------------------------------------------------------------
** ** ** **
** ** ** **
** ** ** **
** ** ** **
** ** ** **
UNIT PRICE FOR ** LINKED TO FOLLOWING
RAW MATERIAL PRICE AS OF DEC 20, 2004
% CHANGE IN PRICE OF EFFECT OF CHANGE IN RAW
MACHINED ** FOR 10% MATERIAL PRICES ON THE
CHANGE IN BASE PRICE OF PRICE OF MACHINED **
RAW MATERIAL CORRESPONDING RAW MATERIAL PRICE IN %
--------------------------------------------------------------------------------
** ** **
** ** **
** ** **
** ** **
** ** **
--------------------------------------------------------------------------------
Total **
--------------------------------------------------------------------------------
Agreed Base Price USD **
Upcharge component USD **
New price based on the upcharge USD **
SCHEDULE 3.1
STANADYNE CORPORATION
STANDARD TERMS OF PURCHASE
1. GENERAL
A. Prompt acceptance of this Purchase Order by signing and returning the
acknowledgment copy hereof is requested. Delivery or commencement of work
hereunder shall also constitute acceptance of this Purchase Order and all of its
terms.
B. This Purchase Order is the final, complete and exclusive statement of
the agreement between the parties and may not be modified, contradicted,
supplemented, explained or waived by parol evidence, Seller's acknowledgments, a
course of dealing, or in any other way except in a writing signed by an
authorized representative of Buyer. Any references in this Purchase Order to
Seller's proposal or quotation are only to describe the materials or work
covered hereby, and this Purchase Order does not constitute an acceptance of any
terms set forth therein.
C. This Purchase Order and the language set forth herein is to be interpreted
according to the Uniform Commercial Code as in effect in the state shown at the
address of Buyer.
2. PERFORMANCE BY SELLER
A. Time is of the essence for this Purchase Order, and it is essential that it
be performed and filled on the specified date(s) and that the work progress in a
timely fashion. Deliveries shall be made both in the quantities and at the times
specified in schedules furnished by Buyer. Buyer reserves the right to change
delivery schedules or direct temporary suspension of scheduled shipment(s).
Seller shall immediately give written notice to Buyer setting forth the reason
and extent of any anticipated delay in any scheduled shipment(s).
B. Seller warrants that material and work furnished hereunder shall be of the
highest grade and quality, unless otherwise specified by Buyer. Seller further
warrants that it shall meet and otherwise comply with, as appropriate, all
standards of the Occupational Safety and Health Act of 1970, as amended; Fair
Labor Standards Act of 1938, as amended; Title VII of the Civil Rights Act of
1964, as amended; Executive Order 11246, as amended by Executive Order 11375;
Section 503 of the Rehabilitation Act of 1973, as amended; Vietnam Era Veteran's
Readjustment Assistance Act of 1974, as amended; Executive Order 11625, as
amended; Motor Vehicle Safety Act, as amended; all federal, state and local
safety, health and environmental laws, as amended; and all rules, regulations,
ordinances, guidelines and other requirements related to the foregoing, all of
which are hereby incorporated by reference. At Buyer's option, any part of the
material or work not complying with the requirements hereof, expressed or
implied, may be returned, at Seller's risk and expense including transportation
both ways, for prompt correction of defects. Payment by Buyer shall not
constitute acceptance of nonconforming material or work or waive any rights of
Buyer hereunder.
C. This Purchase Order is issued to Seller in reliance on Seller's personal
performance, and Seller may not assign this Purchase Order or the partial
payment of any sums due hereunder or subcontract any substantial part of the
performance or work other than for standard commercial supplies.
D. Seller agrees to exculpate, defend, indemnify and hold harmless Buyer and its
customers from and against all claims, liabilities, lawsuits, expenses
(including attorneys' fees and other defense costs) and penalties, including
those based on Buyer's or its customer's negligence, which arise, directly or
indirectly, out of any of the following: (i) alleged defects in material,
workmanship or design of the material or work furnished hereunder; (ii)
violations of federal, state or local safety, health or environmental laws
arising out of the use or resale of material or work furnished hereunder; (iii)
personal injury or death of Seller, its agents, employees or subcontractors
and/or damage to or destruction of Seller's or its subcontractor's property
arising out of the use or resale of materials or work furnished hereunder; (iv)
the infringement by material or work furnished hereunder of any United States or
foreign patent, trademark or intellectual property right; or (v) the breach by
Seller of any of its representations, warranties or covenants hereunder.
3. CERTAIN CHARGES OR EXPENSES NEGATED; RISK OF LOSS
A. Unless otherwise specifically provided herein: (i) all material shall be
packed, marked and shipped in accordance with requirements of common carriers,
as specified by the Interstate Commerce Commission; (ii) no charges for packing,
crating, demurrage, storage or containers shall be allowed; (iii) Seller shall
pay and the price includes all applicable sales and similar type taxes other
than those which Seller is prohibited by law from assuming; and (iv) any
information or data disclosed or furnished to Buyer by Seller hereunder shall be
deemed sold as part of the price hereof, non-proprietary and free of all
restrictions whatsoever. Unless specifically instructed by Buyer, Seller shall
select the most economical transportation mode available consistent with Buyer's
delivery schedule.
X. Xxxxx in receiving invoices or statements will be just cause for withholding
payment, without loss of cash discount privileges.
C. The risk of loss for conforming goods shall be on Seller until the products
are delivered to the destination(s) specified in this Purchase Order, regardless
of whether Buyer or Seller is paying for the freight; provided, however, that
Buyer shall assume the risk of loss for conforming goods while being transported
on Buyer's vehicles. The risk of loss for nonconforming goods shall be on Seller
at all times.
4. BUYER'S PROPERTY
A. Buyer retains title to all drawings, designs, specifications, technical data
and materials, including tools, special dies and patterns furnished to Seller or
specifically paid for by Buyer for use with this Purchase Order. Said materials
shall remain the property of Buyer, shall be treated as Buyer's confidential
information, shall be used by Seller only to complete this order and shall be
returned to Buyer upon completion or termination of this Purchase Order or when
no longer required. Any copies or reproductions thereof shall be made only with
Buyer's written consent, shall be segregated and clearly identified as property
of Buyer and shall be returned to Buyer upon completion or termination of this
Purchase Order or when no longer required. Seller authorizes Buyer to sign and
file a UCC-1 Financing Statement covering the foregoing described property of
Buyer. Buyer reserves the right at any time and for any reason to demand
possession of said materials and any copies or reproductions thereof or to enter
upon the premises of Seller to reclaim possession of the same.
B. Seller assumes all risk and liability for loss or damage to said materials,
except for normal wear, and agrees to permit inspection and supply detailed
statements of inventory upon request of Buyer. Seller shall at all times cover
said materials with full fire and extended coverage insurance naming Buyer as
loss payee and furnish to Buyer evidence of said coverage upon Buyer's request.
5. WARRANTIES
A. In addition to the other warranties made herein, Seller represents and
warrants that Seller has special skills and that Buyer is relying on that skill
and the judgment of Seller to select and furnish suitable products or services.
All written or oral statements of Seller as to function, quality, suitability,
and use of the products or services are warranties of Seller. Seller represents
and warrants that all products (including packaging) and services (including
construction work) provided under this Purchase Order shall: (i) fully and
strictly conform to specifications; (ii) be free of defects; (iii) be of good
material and workmanship; (iv) be merchantable and fit for the general and
particular purposes for which they are required; and (v) be free of any liens,
claims or encumbrances of any kind. If any product or service is nonconforming
Seller shall, if Buyer requests, promptly and without charge repair or replace
the product or provide replacement service. If any specification or instruction
supplied by Buyer, regardless of the form, appears to be in conflict with any
other specifications or instructions, or otherwise appears insufficient or
unclear, it shall be the duty of Seller to request clarification from Buyer, who
shall reserve the right to determine products or services' conformity with the
specifications or instructions.
B. All goods or material received shall be subject to Buyer's inspection and
rejection. Goods or material not in conformance to Buyer's specifications will
be held for Seller's instructions at Seller's risk and, if Seller so directs,
will be returned to Seller at Seller's expense. No goods or material returned as
nonconforming shall be replaced without a new order and schedule established by
Buyer. Payment for material on this Purchase Order prior to inspection shall not
constitute an acceptance thereof, nor will acceptance remove Seller's
responsibility for latent defects or any other obligation of Seller under this
Purchase Order.
C. In addition to any and all other remedies available to Buyer, Buyer shall be
entitled to all incidental damages resulting from a breach by Seller of this
Purchase Order, including, but not limited to, all expenses reasonably incurred
in inspection, receipt, transportation, and care and custody of the goods or
material rightfully rejected, any commercially reasonable charges, expenses or
commissions incurred in effecting cover, and any other reasonable expense
incident to a delay or breach by Seller.
6. CHANGES
Buyer may at any time by written notice make changes within the general scope of
this Purchase Order. If any such change affects the time for or cost of
performance, an equitable adjustment shall be made in the delivery schedule,
purchase price, or both by agreement of the parties. All claims by Seller for
adjustment under this clause must be asserted in writing and in full within
thirty (30) days from the date of notification of the change or shall be waived.
Nothing herein shall excuse Seller from proceeding with the order as changed. No
extras shall be allowed except pursuant to this clause.
7. CANCELLATION
A. Buyer may at any time terminate this Purchase Order, in whole or in part, by
written notice, whereupon Seller shall terminate work pursuant to the terms of
such notice. Seller shall promptly advise Buyer of the quantities of applicable
work and material on hand or purchased prior to termination and the most
favorable disposition that Seller can make thereof. Seller shall comply with
Buyer's instructions regarding disposition of such work and material. All claims
by Seller based on such termination must be asserted in writing and in full
within sixty (60) days from the date of notification of the termination or shall
be waived. Buyer shall pay Seller the Purchase Order price of finished work and
the cost to Seller (excluding profit or losses) of work in process and raw
material, less: (i) the agreed value of any items used or sold by Seller with
Buyer's consent; and (ii) the reasonable value or cost (whichever is higher) of
any defective, damaged or destroyed work or material and any items sold or used
by Seller without Buyer's consent. Buyer will make no payments for finished
work, work in process or raw material fabricated or procured by Seller
unnecessarily in advance of, or in excess of, Buyer's delivery requirements. The
payment provided under this clause shall constitute Buyer's only liability in
the event this Purchase Order is terminated as provided herein. The foregoing
provisions of this clause shall not apply to any termination by Buyer for
default of Seller or under the following provisions of this clause unless a
court shall find such termination by Buyer to be improper.
B. To the extent this Purchase Order covers items normally carried in inventory
by Seller (as distinguished from items specially made to Buyer's
specifications), Buyer shall have no liability for any termination of this
Purchase Order, in whole or in part, prior to actual shipment. For any
termination made within ten (10) days after receipt by Buyer of items from
Seller, Buyer's liability shall be limited to returning said items and
reimbursing Seller for direct costs of handling and transportation.
14
C. Buyer may cancel without liability in the event of Seller's insolvency or
bankruptcy.
D. Buyer shall not be liable for failure to take delivery of
material or work or render any other performance in the event fire, accidents,
labor difficulties, governmental actions, third-party failures or any other
conditions beyond Buyer's control render it commercially impractical for Buyer
to do so.
8. GOVERNMENT CONTRACTS
If this Purchase Order is for material or work under a government contract or
subcontract, all contract provisions applicable hereto and required by law,
order, regulation or Buyer's government contract or subcontract are hereby
incorporated by reference as if fully set forth herein. Where necessary to make
the context of such provisions or clauses applicable to this Purchase Order, the
terms "Contractor", "Contract", and "Government" or "Contracting Officer" (or
terms of similar import) shall mean respectively Seller, this Purchase Order,
and Buyer.
9. NOTICE
Buyer values highly the confidence and good will of its customers and suppliers.
Buyer offers its products only on their merit, and Buyer expects its customers
to judge and purchase its products and services solely on the basis of quality,
price, delivery and service. This policy applies in all of Buyer's relationships
with its customers and suppliers.
10. BILLING AND SHIPPING INSTRUCTIONS
A. In the absence of special packing requirements, all material shall be packed,
marked and shipped in accordance with requirements of common carriers, as
specified by the Interstate Commerce Commission.
B. The Purchase Order number must be shown on all packing slips, bills of
lading, invoices and packages. Along with the Purchase Order number, the box
identification should also have the packing list number, part number, and
quantity on the box label.
C. Packing slips shall accompany each shipment, and an original xxxx of lading
or other shipping receipt shall be promptly forwarded by Seller to Buyer.
D. Invoices shall be rendered promptly to Buyer at its address as indicated.
REV. JULY, 2003
15
[STANADYNE LOGO]
December 10, 2004
Xx Xxx Xxxxx
Equatorial Enterprises Ltd.
Equatorial Forum
00 Xxxxxx-Xxxx Xxxx, Xxxxxxxxx,
Xxxx 000 000
XXXXX
Re: Confidentiality of Customer Names of Equatorial
Dear Xxx,
Precision Engine Products Corp. ("PEPC") and Equatorial Enterprises Ltd
("Equatorial") are currently negotiating a manufacturing and supply
agreement (the "Agreement") pursuant to which PEPC would purchase from
Equatorial certain **. The Agreement will prohibit Equatorial and its
affiliates from supplying ** that are competitive with or that are
substitutes for the products to be supplied to PEPC under the Agreement
to any person or entity, anywhere in the world, other than the
continuing supply of ** to existing customers of Equatorial whose names
are to be provided to PEPC ("Existing Equatorial Customers").
Equatorial has requested that PEPC sign this letter as a condition to
providing to PEPC the names of the Existing Equatorial Customers.
By signing below, PEPC agrees that it will:
1. Hold in confidence and not disclose to third parties the Existing
Equatorial Customer list to be provided to PEPC by Equatorial in
connection with the final negotiation of the Agreement; and
2. Not, unless it obtains Equatorial's prior written approval, solicit
Existing Equatorial Customers with respect to the supply of ** in a
manner that is competitive with Equatorial's existing business with
such customers, unless any such Existing Equatorial Customer is already
a customer of PEPC at the time PEPC receives the Existing Equatorial
Customer list. This letter shall not prohibit PEPC from responding to
inquiries it may receive without solicitation, with Equatorial's
concurrence.
The Agreement will not include a list of the Equatorial Customers, and
will either incorporate the provisions of this letter as continuing
obligations of PEPC or will contain similar agreements of PEPC in
substitution for the terms of this letter.
Regards,
Precision Engine Products Corp.
By: /S/ Xxxxxx Xxxxxxxx
--------------------
Name: Xxxxxx Xxxxxxxx
Title: Directors. Materials & Purchasing
Precision Engine Products Corp.
0000 Xxxxxxxxxxxx Xxxx., Xxxxxxxxxxx, XX 00000, XXX Tel. (860)
000-0000, Fax: (000) 000-0000
