Exhibit 10.8
MANUFACTURING REQUIREMENTS AGREEMENT
This Agreement is made and entered into in Warminster, Pennsylvania, this
28th day of January, 1993 by and between Adelaide Holdings, Inc., a Nevada
Corporation with offices located at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxxxxxx
00000 (hereinafter "Adelaide") and Premier Design, Ltd., a Pennsylvania
Corporation with offices located at 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000 (hereinafter "Premier").
WHEREAS, Premier is the designer and manufacturer of proprietary products
through its manufacturing affiliate; and
WHEREAS, Adelaide holds a U.S. Patent to a certain food vending machine
dispensing hot french fried potatoes (hereinafter "AVM-93 machine"), which it
desires to market in quantities to its affiliates and distributors; and
WHEREAS, Adelaide has need for refining its machine and arranging for a
manufacturing requirements supplier for its machine; and
WHEREAS, Premier has the abilities to refine and manufacture for Adelaide
its machine at a reasonable cost and in required quantities; and
WHEREAS, Premier is willing to accept an exclusive Requirements
Manufacturing Agreement to refine, revise and manufacture a marketable machine
at a reasonable cost according to terms and conditions hereinafter described.
NOW THEREFORE, with the foregoing incorporated herein, the parties
intending to be legally bound hereby as follows:
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AWARD OF CONTRACT AND PATENT PROTECTION
1. Adelaide hereby awards to Premier the exclusive requirements
manufacturing rights to its patented vending machine and to all revisions
thereto up to Premier's ability to provide machines. Adelaide will provide to
Premier details of its Patent. The Patent will remain the property of
Adelaide. Premier will protect Adelaide from Patent disclosure, except as may
be necessary to accomplish its manufacturing responsibilities.
COST OF DEVELOPMENT
2. Adelaide and Premier will share the initial cost of development
(ICD) as to the first $150,000.00 of development costs. Adelaide will advance
payment of $75,000.00 to Premier promptly.
Excess development costs, if any, over $150,000.00 will be reimbursed
to Premier by payment at the rate of $500.00 per machine up to the first 200
production machines or $100,000.00 whichever is less. Development costs as
itemized by Premier, will include all design, engineering and initial
manufacturing costs projected over the initial 500 production machines, or
over a lesser number, as may be determined by Premier.
MACHINE PRICING AND TIME OF DELIVERY
3. (A) The first 500 production machines will be priced per machine
at a cost to Adelaide not to exceed $7,000.00 plus $500.00 reimbursement of
excess development costs, if any, up to 200 machines or $100,000.00 whichever is
less.
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As revisions occur and standards in the manufacturing process achieved,
Premier will reduce the cost of machines and if possible before the first 500
production machines are completed. Premier will, from time to time, keep
Adelaide informed as to all progress and costs.
After the development phase (500 initial production machines or less)
Premier shall be paid per machine its manufacturing cost plus twenty (20%)
percent overhead/profit.
(B) Time is considered to be of the essence of this Agreement. Premier
will exercise its best efforts to deliver a prototype machine not later than
April 15, 1993 and to deliver initial production machines not later than June
15, 1993. It is understood however that Premier may require up to an additional
sixty (60) days thereafter for delivery of initial production machines, which
later delivery if required, will not be considered late. Delays occasioned by
applications for certifications (para. 10 (B)) shall not be counted in the times
for delivery.
DEVELOPMENT, MANUFACTURING PROCEDURES
4. Premier will have the exclusive right to develop, design, revise
and standardize manufacturing procedures as to all components and sheet metal to
be incorporated into the machine and will have proprietary rights to its work.
Adelaide will style and approve all language and logo identifications, colors,
decals and labels, collectively referred to as "appearance features".
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5. All development, design and manufacturing features and processes
shall remain the proprietary property of Premier and shall not be disclosed
other than as may be necessary. Any patentable concepts arising from its
development, design and manufacturing efforts shall at the option of Adelaide be
patented jointly in the names of Adelaide and Premier with the understanding
that so long as this Agreement exists, no royalties shall inure to either party
from the use of these patented features. In the event of termination of this
Agreement, Premier shall be entitled to reasonable compensation for use of its
patented processes.
6. The exclusive manufacturing right shall include the right to
sub-contract for the manufacturing of components and/or for assembly work. If
and when Premier considers it necessary to establish regional facilities to
perform component manufacture or assembly work, it shall arrange for the same
after consultation with Adelaide. Regardless of sub-contracting, the machine
cost shall remain at manufacturing cost plus twenty (20%) percent
overhead/profit, in conformity with paragraph 3 hereof.
7. In addition to development, design and manufacture of the machine,
Premier will provide after-market components and service parts and will make
available to Adelaide and its distributors an available parts/price list for
parts. Premier will maintain a ready inventory of parts to reasonably
accommodate the need of Adelaide and its distributors. An operating-service
manual shall be developed jointly by Premier and Adelaide for use with the
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machine and Adelaide shall provide at its cost a technical representative to
become familiar with the operating and service features of the machine so as to
be available to Adelaide, its distributors and machine operators.
PROCEDURES FOR THE SALE OF MACHINES
8. Premier will sell and deliver working machines to Adelaide or its
designated distributors in response to written purchase orders containing
delivery destination designations. Terms to be FOB Warminster, PA with one-third
(1/3) of price be paid with the order and the balance (including freight costs)
paid five (5) days prior to announced delivery to the common carrier.
9. Prices for the manufactured unit and after market parts may from
time to time change upon sixty (60) days prior to written announcement to
Adelaide and its authorized distributors.
INDEMNITY - CERTIFICATIONS
10. (A) Upon acceptance of the machine for sale by Adelaide or by its
authorized distributors, Premier shall be relieved of all liablility, direct or
collarteral which is not shown to have been caused by the design or
manufacturing of Premier. Adelaide shall hold Premier and its affiliates
harmless from all manner of demand, claim, suit or judgment including reasonable
attorney's fees and costs. Premier shall be required to give prompt notice to
Adelaide if it seeks indemnification under this paragraph.
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(B) Adelaide, at its cost, will be responsible for filing applications
and obtaining the required approvals and certifications prior to public use of
the machine or from time to time thereafter as may be reasonably required.
Premier will cooperate with Adelaide in obtaining approvals from:
1) Underwriters Laboratory's electrical certification (UL);
2) Qualification to the standards of the National Automated Merchandising
Association (NAMA); and 3) All other federal, state or local governmental
agencies having concern with a food vending machine. Premier will use its best
efforts to build machines in compliance with the standards of Underwriters
Laboratory and the National Automated Merchandising Association.
MISCELLANEOUS
11. This Agreement may not be terminated by either party so long as
Premier provides the machines as required by Adelaide, its successors as
assigns.
12. Any unresolved dispute shall be resolved by Commercial Arbitration
in accordance with the then applicable rules of the American Arbitration
Association. In the event a hearing is required, the same shall be conducted in
Philadelphia, PA. This Agreement shall be interpreted in accordance with
Pennsylvania law. The Arbitration shall, if appropriate, award reasonable
attorney's fees and costs to the prevailing party as part of its Decision/Award.
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13. Adelaide represents that its present Patent is valid, held
unassigned and is not subject to known claims of infringement.
14. Adelaide shall provide to Premier a right of first refusal to
participate in the development and manufacture of any subsequent product
developed by Adelaide arising from the relationship established in this
Agreement.
15. This Requirements Manufacturing Agreement sets forth all of the
agreements, terms and conditions, covenants, representations and understandings
between the parties with respect to the subject matter herein. No assignment,
subsequent amendment, modification or waiver of any of the provisions shall be
effective unless in writing signed by the parties hereto.
16. Notices, if required under this Agreement shall be given in
writing by certified mail, return receipt requested as follows:
TO: ADELAIDE HOLDINGS, INC.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, XX 00000
ATTENTION: Xx. Xxxx X. Xxxx, President
WITH COPY TO:
Xxxxx Xxxxxxx, Esquire
TRALINS AND ASSOCIATES
0 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, XX 00000
TO: PREMIER DESIGN, LTD.
000 xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
ATTENTION: Xx. Xxxxx X. Xxxxxxx, President
WITH COPY TO:
Xxxxxx X. Xxxxx, Esquire
XXXXXX X. XXXXX, PROFESSIONAL CORPORATION
Packard Building - 24th Floor
000 Xx. 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in two (2) originals by their duly authorized officers on the day and year first
above written.
WITNESS: ADELAIDE HOLDINGS, INC.
/s/ Xxxxx Xxxxxxxxx BY: /s/ []Illegible]
--------------------------------- ---------------------------------
PREMIER DESIGN, LTD.
/s/ X. Xxxxx [Illegible] BY: /s/
--------------------------------- ---------------------------------
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AMENDMENT
TO
MANUFACTURING REQUIREMENTS AGREEMENT
This Amendment to the Manufacturing Requirements Agreement of 28 January 1994,
is made this 30th day of December 1994, by and between Tasty Fries, Inc.
("TFI"), formerly known as ADELAIDE HOLDINGS, INC., and PREMIER DESIGN, LTD.
("PDL").
WITNESSETH
WHEREAS, the parties above mention entered into a Manufacturing Requirements
Agreement dated 28 January 1993 (hereinafter called the "MRA"), wherein TFI
contracted with PDL to refine and finish its French Fries Vending Machine/AVM-93
and make it manufacturable and ready for marketing; and
Whereas, PDL engaged in extensive engineering and design studies of the AVM-93,
as a result of which it was determined that the unit could not be made reliable
and manufacturable. These conclusions were confirmed to TFI on or about 27
February 1994 in an Engineering Survey of the AVM-93.
WHEREAS, as a result of this conclusion TFI and PDL agreed that PDL would
endeavor to design a completely new machine using state of the art electronics,
engineering and design features that would be acceptable to TFI; and
WHEREAS, PDL proceeded to develop in its professional capacity a reliable,
commercially manufacturable French Fries Vending Machine, said machine bearing
no significant conceptional, mechanical, electrical or engineering similarity to
the AAVEM-93, save that it is designed around the dehydrated potato pellets
specified by TFI; and,
(1)
WHEREAS, PDL has advised TFI that it is now prepared to make a series of
pre-production units (ten, in all) to be used, under PDL's supervision, for Beta
Site Testing; and,
WHEREAS, all of the above as proceeded without the parties having amended the
original MRA of 28 January 1993, they now desire to reduce to a written form the
premises upon which they have proceeded with the development of the new, PDL
developed French Fries Vending Machine.
NOW THEREFORE, incorporating the foregoing history herein, the parties intending
to be legally bound hereby amend, clarify and, where appropriate, supersede the
28 January 1993 MRA in the following particulars:
(1) PDL agrees to provide the Ten (10) Beta Site Test units at a cost
of Thirty Five Thousand Dollars ($35,000.00) per unit payable under the
following agreed terms per the 28 January 1993 MRA.
PDL agrees that it will field test the French Fries Vending Machines for
TFI and, upon the results being deemed satisfactory to TFI, is prepared to
engage in the manufacture of this French Fries Vending Machine exclusively for
TFI.
It is understood that the first Five Hundred (500) units to be
manufactured will be sold to TFI at a price of Seven Thousand Dollars per unit
(generally in accordance with paragraph 3 (A) of the MRA but without the
additional provision for "development costs" amortization). Premier Design Ltd.
Agrees to commence delivery of production units within 180 days after receipt of
purchase order. Payment for machines from Tasty Fries, Inc. to PDL will be in
accordance with the original MRA.
Minimum order for French Fries Machines is One Hundred (100) units per
month. From time to time, PDL and TFI may choose to amend the Minimum Order
Quantity.
After Five Hundred (500) units the price for the machines will be cost
plus 20%.
(2)
(2) The parties agree that any Patents (US and Foreign) obtained on
the French Fries Vending Machine and/or any aspects thereof, shall be held in
the joint names of TFI and PDI. It is agreed, however, that prior to TFI's name
being added to the Patents (currently on Application), PDL will provide TFI with
an audited accounting of the development costs.
Subsequent to receipt of same, TFI will tender to PDL a sum equal to
Twenty Five Per Cent (25%) thereof; subsequent payments to be made within a
twelve month period of an additional Twenty Five Per Cent (25%) (50% of total
development cost.) It is understood that Tasty Fries has a credit toward
payment of development costs in the amount of Thirty-Seven Thousand Five Hundred
(37,500.00) Dollars.
During the life of the Patents, no Royalties for the use of the
technology will pass from TFI to PDL or from PDL to TFI. However, should the
parties, jointly, elect to license any part of the Patented technology to a
third party for their own use, than, any Royalties earned from such Licensing
shall be shared equally by PDL and TFI.
(3) PDL agrees that, it will, in conjunction with TFI seek independent
bids on the manufacture of the French Fries Vending Machine. At the same time,
PDL will commence a cost evaluation to determine savings to be achieved through
molding, extruding and casting.
(4) The parties further agree that should a manufacturer provide a bid
that the parties deem proper and economical, PDL has the right to purchase units
from said bidder/manufacturer and to add its Twenty Per Cent (20%) xxxx-up to
said price for sale to TFI. At all times, PDL remains responsible for Quality
Control on all units delivered to TFI.
(5) PDL asserts that it is in the process of obtaining UL and NAMA
certification of the French Fries Vending Unit, and, that its development
responsibilities will not have been fulfilled until such certifications have
been obtained.
(3)
(6) Such interest as either party may hold in the Patents, as and when
issued, is not assignable without the prior written consent of the other party.
(7) It is agreed that TFI can not license any manufacturer to build
the French Fry Vending Machine (Domestic or International) without written
consent from PDL.
(8) In all regards other than as may be modified hereby, amended or be
inconsistent herewith, the MRA of 28 January 1993 is reaffirmed.
(9) Notices, if required, shall be given in writing by Certified Mail,
Return Receipt Requested, as follows
TO: Tasty Fries, Inc.
000 Xxxxxx Xxxxxxx - Xxxxx Xxx
Xxxx Xxxx, XX 00000
ATT: Xxxxxx X. Xxxxx, President
TO: Premier Design, Ltd.
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
ATT: Xxxxx X. Xxxxxxx, President
(4)
IN WITNESS WHEREOF, the parties have signed this amendment on the date first
hereinabove written.
WITNESS: /s/ Xxxx X. Xxxxxx TASTY FRIES, INC.
----------------------------
BY: /s/ Xxxxxx X. Xxxxx (SEAL)
/s/ -------------------------------
---------------------------- XXXXXX X. XXXXX
PRESIDENT
BY: /s/ Xxxx X. Xxxx (SEAL)
-------------------------------
XXXX X. XXXX
CHAIRMAN OF THE BOARD
PREMIER DESIGN, LTD.
BY: /s/ Xxxxx X. Xxxxxxx (SEAL)
-------------------------------
XXXXX X. XXXXXXX
PRESIDENT
(5)
