Exhibit 10.15
LORRO, INC. AND LORRO MFG. INC.
EXCLUSIVE MANUFACTURING AGREEMENT
THIS AGREEMENT is made and entered into this 14th day of October, 1998, by
and between LORRO MFG. INC., a Michigan corporation ("Manufacturer") and LORRO,
INC., a Michigan corporation ("Buyer").
WHEREAS, Buyer is in the business of designing, marketing and selling foam
automotive parts and desires to have Manufacturer produce those products for
it; and
WHEREAS, Buyer desires to utilize Manufacturer to produce exclusively all
of those products that Buyer requires to fulfill its requirements and
Manufacturer agrees to provide those products on the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the mutual terms and conditions
contained herein, the parties hereto agree as follows;
1. SCOPE
1.1 SCOPE. Subject to the terms and conditions of this Agreement, during
the Purchase Period defined in Section 2 below, Buyer shall utilize
Manufacturer as its exclusive source of supply for the manufacture of all
current and future foam products utilized in automotive applications
("Products") including, but not limited to, isolators, reinforcements, side
impact materials, fascia spacers, beam inserts, head impact materials, bumper
fillers and end caps. Current Products and certain currently known future
Products include the parts listed on Exhibit A. Future Products will be
supplied to the Buyer by Manufacturer at Manufacturer's sole option. Buyer
will not utilize any other supplier or manufacturer to supply it Product.
This Agreement shall not apply to production of existing parts under existing
subcontracts listed on Exhibit B attached hereto (the "Excluded Products").
1.2 ACCEPTANCE OF AGREEMENT. This Agreement consists of Sections 1 through
17 hereof, together with Exhibits referenced herein and attached hereto. All
purchases hereunder shall be made utilizing purchase orders that are submitted
pursuant to Section 4 below ("Purchase Orders"). This Agreement and those
Purchase Orders exclusively incorporate the terms and conditions set forth
herein.
2. PURCHASE PERIOD
The period during which Buyer may issue Purchase Orders under this Agreement
shall commence on the Closing Date as defined in the Asset and Stock Purchase
Agreement dated as of October 14, 1998 by and among Buyer, the Stockholders of
Buyer, Manufacturer, and American Bumper & Mfg. Co., a Michigan corporation and
expire on December 31, 2008 (the "Purchase Period"). Manufacturer shall have the
exclusive and sole option to extend this Agreement for four successive five-year
periods by giving notice to Buyer at any time.
3. PURCHASE REQUIREMENTS
3.1 ALL PRODUCTS TO BE SUPPLIED BY MANUFACTURER. During the Purchase
Period, Buyer shall purchase from Manufacturer all of its Products that Buyer
requires to fulfill its customers' orders.
4. PURCHASE ORDERS
4.1 ORDER PROCEDURE. All orders for Products submitted by Buyer shall be
initiated by written Purchase Orders sent by Buyer to Manufacturer. Each
Purchase Order shall contain at minimum the following information with
respect to Products ordered thereunder: (i) description, part number, and
quantity of Products ordered including all specifications required to build
the Products ordered; (ii) packaging, destination and routing instructions;
(iii) delivery due date(s); and (iv) Purchase Price, as defined below. The
Purchase Orders may be transmitted to Manufacturer via facsimile transmission
or e-mail. Buyer will provide to Manufacturer all customer operating plans,
customer work schedules, customer releases and any other customer provided or
other information which may be helpful to Manufacturer in scheduling its
production, forecasting its business and the like.
4.2 CANCELLATION OF PURCHASE ORDERS. Once a Purchase Order has been
submitted, Manufacturer shall not have the right to cancel such acceptance,
except in accordance with the termination provisions of this Agreement. Buyer
may not cancel a Purchase Order that has been accepted by Manufacturer without
reimbursing Manufacturer for any costs incurred by it before that cancellation
in producing the Products required to fill that Purchase Order.
5. PRICING
5.1 PURCHASE PRICE. The price of all Products (the "Purchase Price")
purchased hereunder shall be determined in accordance with the Price Schedule
attached hereto as Exhibit C. All prices are in U.S. dollars. Prices for future
Products will be negotiated by the parties based upon quotations submitted to
Buyer by Manufacturer. Such quotations shall be the minimum selling price to the
Buyer's customer for such future Products. Buyer's selling prices shall be the
basis of determining the Purchase Price paid by Buyer to Manufacturer in
accordance with Exhibit C.
5.2 CHANGES TO PURCHASE PRICE. Any increases in Purchase Prices resulting
from specification changes initiated by the Buyer or Manufacturer must be
authorized in advance in writing by authorized representatives of Buyer and
Manufacturer. Every three months, at the request of Buyer or Manufacturer,
during the Purchase Period, Buyer and Manufacturer shall review Manufacturer's
costs of producing the Products and Buyer's operating costs and, if necessary,
make appropriate changes in Exhibit A for future orders for existing Products
made hereunder.
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6. DELIVERY
6.1 TIME IS OF THE ESSENCE. Manufacturer acknowledges and agrees that time
is of the essence with respect to performance by Manufacturer hereunder. Subject
to the terms and conditions set forth herein, Manufacturer shall deliver
Products under any Purchase Order to the destination and on or before the
delivery date or dates as specified in such Purchase Order.
6.2 ROUTING. All shipment terms shall be consistent with those between
Buyer and its customer.
6.3 PACKING. All Products delivered pursuant to the terms of this
Agreement shall be suitably packed for shipment in appropriate shipping
cartons, marked for shipment at the customer's address set forth in Buyer's
Purchase Order. Manufacturer will ▇▇▇▇ all containers in accordance with
Buyer's customer's requirements.
7. PAYMENT
7.1 INVOICE. Upon a shipment of Products pursuant to a Purchase Order,
Manufacturer shall submit to Buyer an invoice showing (i) Manufacturer's name
and address; (ii) Purchase Order number; (iii) description, part number and
quantity of Products shipped; (iv) Purchase Price; (v) delivery charges; and
(vi) applicable taxes.
7.2 PAYMENT OF INVOICE. Buyer shall issue payment within forty-eight (48)
hours of receipt of payment from the Buyer's end-customer, but in no event later
than sixty (60) days following Manufacturer's shipping date.
7.3 PAYMENT IS NOT ACCEPTANCE. Payment of Manufacturer's invoice will not
constitute acceptance of the Products. Acceptance will be in accordance with
Section 8.1.
8. ACCEPTANCE AND QUALITY
8.1 INSPECTION AND ACCEPTANCE. Buyer or its customer to whom the Products
are delivered shall inspect all Products promptly upon receipt thereof and may
reject any Product that fails in any material way to meet the Buyer's customer's
specifications. Any Product not properly rejected within ten (10) business days
after receipt of that Product by Buyer or its customer to whom the Products are
delivered (the "Rejection Period") shall be deemed accepted.
8.2 REJECTION AND RETURN. In the event one of Buyer's customers rejects any
Products, it shall send notice of that rejection to Buyer who will promptly
provide such notice to Manufacturer and, together with Manufacturer, shall
review that notice and, if appropriate, agree upon corrective action. To reject
a Product, Buyer shall, within the Rejection Period, notify Manufacturer in
writing of its rejection and request a Return Material Authorization ("RMA")
number for the rejected Products. The notice of rejection shall state the reason
for the rejection, the quantity of Products rejected and the invoice number of
those Products. If Manufacturer agrees with Buyer's request for an RMA number,
Manufacturer shall provide the RMA number in writing to Buyer within five (5)
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business days after receipt of the request. Within ten (10) business days after
receipt of the RMA number, Buyer shall return to Manufacturer the properly
rejected Products, freight prepaid to Manufacturer, in its original shipping
carton with the RMA number displayed on the outside of the carton. Provided that
Manufacturer has complied with its obligations in this Section, Manufacturer
reserves the right To refuse to accept any rejected Products that do not bear an
RMA number on the outside of the carton. As promptly as possible, but no later
than ten (10) business days after receipt by Manufacturer of properly rejected
Products, Manufacturer shall, at its option and expense, either repair or
replace the Products. Manufacturer shall pay the shipping charges back to Buyer
for properly rejected Products, otherwise, Buyer shall be responsible for the
shipping charges.
9. LIMITED WARRANTY
9.1 WARRANTY. Manufacturer warrants that the Products will conform to the
specifications set forth in Exhibit A hereto and any samples and/or
descriptions provided or incorporated herein.
MANUFACTURER MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, AS TO ANY
MATTER WHATSOEVER AND EXPRESSLY DISCLAIMS THE SAME. MANUFACTURER'S TOTAL
LIABILITY SHALL BE, AT MANUFACTURER'S OPTION, TO REPAIR, REPLACE, OR PROVIDE
MONETARY REFUND FOR DEFECTIVE PRODUCTS AS SET FORTH HEREIN AND SHALL IN NO
WAY INCLUDE LIABILITY FOR SPECIAL, INDIRECT OR INCIDENTAL DAMAGES.
This warranty does not extend to any Products on which the original
identification marks have been removed or altered or to any Products which have
been modified, subjected to unusual physical or electrical stress, misuse,
neglect or accident, or repair by any party other than Manufacturer, without
Manufacturer's prior written approval.
9.2 WARRANTY REPLACEMENT. In the event any Products that are shipped to
Buyer or its customers are determined by Buyer or its customers, together with
Manufacturer, to not meet the specifications set forth in Exhibit A hereto, then
Manufacturer shall, at Manufacturer's option, either (i) repair or replace all
of those defective Products that are returned to it by Buyer, or (ii) pay for
the costs, including costs of labor, material and inspection, incurred by Buyer
in repairing or replacing those defective Products (which costs must be
specified and agreed to by the parties in advance). In either event, costs of
all work performed by Manufacturer pursuant to this warranty shall be borne
exclusively by Manufacturer.
9.3 LIMITATION OF LIABILITY TO THIRD PARTIES. In no event shall either
party be liable to the other party or to any other person for any special,
consequential, incidental or indirect damages, however caused, on any theory of
liability, and except as set forth below, or as provided in the Purchase
Agreement, nothing in this Agreement shall be construed as being for the benefit
of any third party.
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10. SPECIFICATIONS AND CHANGES THERETO
10.1 SPECIFICATIONS. The Products shall be produced to comply with Buyer's
customer's specifications.
10.2 ENGINEERING CHANGE REQUEST. All engineering change requests must be
approved in advance by Buyer, its customer and Manufacturer.
11. NONDISCLOSURE
11.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Both parties shall keep
in confidence all Confidential Information (as defined below) and shall not
disclose or make available to third parties or make use of any Confidential
Information except with the prior written consent of the non-disclosing party
or to the extent necessary in performing the tasks assigned to the parties by
this Agreement or a Purchase Order issued hereunder. Upon termination of this
Agreement, both parties agree to return to the other all Confidential
Information in written or electronic form upon request. "Confidential
Information" means any information or know-how including, but not limited to,
that which relates to research, product plans, products, services, customers,
markets, marketing plans, marketing or finances, blue prints, samples,
materials, descriptions, specifications, software programs, tooling, and
sources of supply. Confidential Information does not include information or
know-how which (i) is in the possession of the receiving party at the time of
disclosure and was not received from the other party, or (ii) prior or after
the time of disclosure becomes part of the public knowledge or literature,
not as a result of any inaction or action of the receiving party, or (iii) is
approved by the disclosing party, in writing, for release. Within ten (10)
days after any termination of this Agreement, each party shall deliver to the
other party all Confidential Information of that other party existing in any
form and any copies thereof, or destroy all Confidential Information if
requested, and certify in writing to such action.
11.2 EQUITABLE RELIEF. Manufacturer shall be entitled to injunctive relief,
in addition to such other remedies and relief that would, in the event of a
breach of any provision of this Agreement, be available to Manufacturer. In the
event of such a breach, in addition to any other remedies, Manufacturer shall
be entitled to receive from Buyer payment of, or reimbursement for, its
reasonable attorneys' fees and disbursements incurred in enforcing any such
provision.
11.3 OTHER CONFIDENTIALITY. The provisions of this Section 11 shall not be
deemed to supersede any other confidentiality, nondisclosure agreements or
noncompetition agreements that may be previously or subsequently entered into
between the parties.
12. TERMINATION BY BUYER
12.1 TERMINATION BY BUYER. In the event of Manufacturer's gross negligence
and material breach of this Agreement, Buyer and Manufacturer will attempt to
negotiate a satisfactory resolution to such breach. If the parties are unable to
resolve the issue, the dispute will be submitted to binding arbitration with the
American Arbitration Association, Commercial Arbitration Division,
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Southfield, Michigan, for arbitration by a panel of three arbitrators whose
decision shall be binding. The arbitration award maybe reduced to judgment by a
court of competent jurisdiction, if required for enforcement.
13. TERMINATION BY MANUFACTURER
13.1 DEFAULTING EVENTS BY BUYER. The occurrence of any of the following
acts or events shall constitute a material breach by Buyer of this Agreement and
shall be cause for Manufacturer's termination of this Agreement and/or any
Purchase Order issued hereunder pursuant to Section 13.2.
(A) Buyer fails to pay any invoice pursuant to the terms of Section
7. Buyer shall have thirty (30) business days to cure the breach.
(B) Buyer files a voluntary petition of bankruptcy, makes an
assignment for the benefit of creditors, or a receiver, trustee in
bankruptcy or similar officer is appointed to take charge of all or a
material part of Buyer's assets, or Buyer is adjudged bankrupt. Buyer shall
have ten (10) business days to cure the breach.
(C) Buyer fails to perform any of the other material provisions of
this Agreement or Purchase Orders issued hereunder. Buyer shall have thirty
(30) business days to cure the breach.
13.2 TERMINATION BY MANUFACTURER. In the event of Buyer's material breach
pursuant to Section 13.1, Manufacturer shall provide Buyer with written notice
of Buyer's material breach which references this Agreement, defines the
subsequent beginning of the cure period, and the specific defaulting event(s)
that is/are the basis of the breach. Should Buyer fail to cure any of the above
breaches within the time period set forth above, then Manufacturer may
terminate this Agreement upon expiration of the cure period set forth in that
notice to Buyer. If Buyer has begun correcting the breach but will not complete
correction within the specified cure period, Manufacturer may, at its sole
option, allow a reasonable period of time to complete correction of the breach.
In the event of a termination pursuant to this Section, Buyer shall be liable to
Manufacturer for the amounts determined in accordance with Section 13.3 below.
13.3 LIABILITY OF BUYER. In the event that Buyer has any liability to
Manufacturer under Section 13.2 above, the parties may agree upon the amount to
be paid Manufacturer for any such termination. If they fail to agree, Buyer will
pay Manufacturer the following amounts:
(A) The price for all Products completed (which items were delivered
or available for delivery) pursuant to the affected Purchase Order(s) and
not previously paid for; and
(B) The actual costs incurred by Manufacturer related to the
terminated portion of the Purchase Order, including: (i) Manufacturer's
actual cost of component inventory for the terminated portion of the
Purchase Order(s); (ii) Manufacturer's cost of work in process materials
including manufacturing operations completed at the time of cancellation
for the terminated portion of the Purchase Order(s), and (iii) any
cancellation charges incurred by
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Manufacturer from component suppliers for the terminated Purchase Order(s).
Notwithstanding the above, payments made under this Section 13.3 shall in
no event exceed the aggregate price specified in the terminated Purchase
Order(s) less payments otherwise made or to be made.
14. INSURANCE.
Manufacturer and Buyer shall each, at their sole cost and expense, maintain
in full force and effect products liability insurance coverage with a policy
limit of at least Five Million Dollars ($5,000,000). Manufacturer and Buyer
shall also, at their sole cost and expense, carry and maintain comprehensive
general public liability insurance, including contractual liability, automobile,
bodily injury and property damage, workmen's compensation, employer's liability
and occupational disease insurance with coverage in a form satisfactory to the
other party.
All insurance required under this Section shall be effected by valid and
enforceable policies issued by insurers of recognized responsibility
satisfactory to the other party. Upon the effective date of this Agreement, and
thereafter not less than fifteen (15) days prior to the expiration dates of the
expiring policies theretofore furnished pursuant to this Section, certificates
of the policies for such insurance shall be delivered by each party to the
other.
All policies of insurance required to be maintained by Manufacturer and
Buyer shall name Manufacturer and Buyer the other party as an additional
insured. All policies shall, contain an agreement by the insurers that they
shall not be cancelled without at lent thirty (30) days' prior written notice to
the additional insured.
15. FORCE MAJEURE
Manufacturer shall not be liable for its failure to perform any of its
obligations hereunder during any period in which such performance is delayed
by fire, flood, war, embargo, strike, riot, shortages or delays in obtaining
necessary components, or the intervention of any government authority,
provided that Manufacturer promptly notifies Buyer of the delay. If, however,
Manufacturer's performance is delayed for reasons defined above, for a
cumulative period of ninety (90) days or more from the date of Manufacturer's
notification to Buyer, then Buyer, notwithstanding any other provisions of
this Agreement to the contrary, may seek alternative, interim sources of
supply.
16. COMPLIANCE WITH LAWS
Manufacturer and Buyer each warrant that its performance under this
Agreement is in compliance with all applicable federal, state, local laws, and
ordinances now or hereafter enacted including, but not limited to all labor laws
and environmental laws.
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17. GENERAL
17.1 NOTICE. Any notices hereunder shall be in writing and personally
delivered or sent by registered mail, certified mail, postage prepaid, return
receipt requested or by facsimile or electronic transmission to the authorized
representatives of the parties designated in accordance with Exhibit D. All such
notices shall be deemed to have been given when such notice, properly addressed,
is received.
17.2 INDEPENDENT CONTRACTORS. The relationship of Manufacturer and Buyer
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other, or the
overall sales program of Buyer, or the manufacturing program of Manufacturer,
(ii) constitute the parties as partners, joint venturers, co-owners or otherwise
as participants in a joint or common undertaking, or (iii) allow either party to
create or assume any obligation on behalf of the other for any purpose
whatsoever. All financial obligations associated with Buyer's business are the
sole responsibility of Buyer, and all financial obligations associated with
Manufacturer's business are the sole responsibility of Manufacturer. All sales
and other agreements between Buyer and its customers are Buyer's exclusive
responsibility and right and shall have no effect on Manufacturer's or Buyer's
obligations or rights under this Agreement.
17.3 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
17.4 ASSIGNMENT/CHANGE OF CONTROL. Buyer shall not have the right to assign
convey, or otherwise transfer its rights and obligations under this Agreement,
including, but not limited to, upon a change of control of the Buyer, without
the prior written consent of Manufacturer.
17.5 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement in any jurisdiction shall not affect the validity, legality or
enforceability of the remainder of this Agreement in such jurisdiction or the
validity, legality or enforceability of this Agreement, including any such
provision, in any other jurisdiction, it being intended that all rights and
obligations of the parties hereunder shall be enforceable to the fullest extent
permitted by applicable law.
17.6 GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Michigan, without giving effect to the
choice of law principles.
17.7 ENTIRE AGREEMENT. The terms and conditions contained herein (or in any
other documents or exhibits referred to herein) constitute the entire agreement
and understanding between the parties hereto in respect to the subject matter
herein. No agreement or understanding varying or extending the terms and
conditions of this Agreement shall be binding upon either party hereto unless
in a written document signed by the party to be bound thereby.
17.8 HEADINGS. The headings and captions used in this Agreement are for
convenience of reference only, and shall not in any way affect the
interpretation of the provisions of this
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Agreement.
17.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement.
17.10 SURVIVAL. The provisions of Section 9 (Limited Warranty), Section 11
(Nondisclosure), and Section 12 (Indemnification) shall survive expiration or
earlier termination of this Agreement notwithstanding delivery, acceptance of
and/or payment for the Products ordered hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers the day and year first written above.
MANUFACTURER: LORRO MFG. INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Secretary and Treasurer
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BUYER: LORRO, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: President
Address: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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EXHIBITS TO EXCLUSIVE MANUFACTURING AGREEMENT
Exhibit A Description of Current Products and Currently Known Future Products
Exhibit B Excluded Products
Exhibit C Purchase Order Terms and Conditions
Exhibit D Authorized Representatives and Contact Information
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