PRODUCT DEVELOPMENT AND MANUFACTURING AGREEMENT
AGREEMENT made as of this 30th day of December, 1994, by and between
Kurt/DynEco Compressor Corporation, a Minnesota corporation ("Kurt/DynEco"),
Kurt Manufacturing Company, a Minnesota corporation ("Kurt"), and DynEco
International, Inc., a Minnesota corporation ("DynEco").
WHEREAS, Kurt/DynEco has technology licensed from DynEco for the
manufacture of an air compressor air end for industrial air compressors and
systems but has no manufacturing facilities and desires Kurt to manufacture
industrial air compressors and systems for purchase and resale by
Kurt/DynEco; and
WHEREAS, Kurt has extensive know-how in the design, development and
manufacture of various precision parts, components and machines and has
facilities capable of manufacturing or being adapted to manufacture air
compressor air ends and air compressor systems and has agreed to manufacture
Kurt/DynEco's requirements by an arrangement whereby Kurt is compensated; and
WHEREAS, the parties to this Agreement desire to reduce their agreement
to a writing which set forth the purpose, policy, aims and understandings
between the parties hereto and each such party agrees to promote and adhere
thereto;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants contained herein, the parties intending to be legally bound by this
Agreement, agree as follows:
A. DEFINITIONS
"INTELLECTUAL PROPERTY" means any patent, copyright, registered or
unregistered design right or trade mark, license, sublicense, know-how,
show-how or the like owned by any party hereto.
"KNOW-HOW" means any information owned by any party hereto not available
other than from such party.
"SHOW-HOW" means any information not available other than from any party
hereto, and most effectively and/or conveniently transmitted by
demonstration and/or explanation by such party.
"TECHNICAL KNOWLEDGE" means any knowledge of a party hereto which is or is
intended to be confidential and any information that is protected by any
Intellectual Property right or sufficiently secret to be either or both of
Know-how or Show-how as defined herein.
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"PROJECT" means the design, development and manufacture of air compressor
air ends and industrial air compressor systems related to the Products
contemplated by this Agreement.
"PRODUCT" OR "PRODUCTS" means industrial air compressors air ends and/or
industrial air compressor systems intended to bear the tradename or other
identification "Kurt/DynEco Compressor" and/or "Kurt/DynEco Compressor
System" or other such similar designation as designated or otherwise
described in Schedule A attached hereto.
"PROJECT INTELLECTUAL PROPERTY" means any patent, registered or
unregistered design right know-how, show-how or the like relating to the
Products or any element of or of the conduct of the project research and
development not available other than from the parties, or any of them.
"PROJECT KNOW-HOW" means the method of production of the Products and/or
Products according to information and methods devised by Kurt.
"PROJECT SHOW-HOW" means any information relating to the Products or any
element of or of the conduct of the project research and development not
available other than from the parties, or any of them, and most
effectively and/or conveniently transmitted by demonstration and/or
explanation.
"PROJECT TECHNICAL KNOWLEDGE" means any knowledge which is or is intended
to be confidential and any information that is protected by any Project
Intellectual Property right or sufficiently secret to be either or both of
Project Know-how or Project Show-how as defined herein.
"TERRITORY" means North America (the geo-political boundaries of the
United States, Canada and Mexico).
SECTION 1
INTELLECTUAL PROPERTY
1.1 Upon Kurt/DynEco disclosing Intellectual Property to Kurt in
sufficient detail to enable Kurt to design, develop and produce the Products,
Kurt shall make immediate arrangements to procure adequate production
machinery and equipment or allocate existing machinery and/or equipment for
the purpose of production of the Products and shall commence design,
development and manufacture of the Products. In the absence of any other
agreement the costs of such Product design and development shall be borne by
Kurt on behalf of itself and Kurt/DynEco.
1.2 Should Kurt deem it necessary or desirable to arrange trial runs of
the Products for evaluation of quality, such trial runs shall be conducted
without delay and all data thereon made
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available to Kurt/DynEco. In the absence of other agreement the costs of
such trial run shall be borne by Kurt on behalf of itself and Kurt/DynEco.
1.3 DynEco shall arrange for the attendance at Kurt's plant suitably
qualified technicians on a reasonable basis who shall advise and guide those
employees of Kurt so far as is necessary in or relating to the use and
application of Kurt/DynEco Intellectual Property for the development and
production of the Products.
1.4 DynEco warrants that the DynEco Intellectual Property rights are
the property of DynEco.
1.5 Subject to the provisions and/or limitations set forth in Sections
1.6, 1.7. 1.8, and 2.2 hereinafter, all of the parties shall be free to use
each and every item of Project Intellectual Property and Project Technical
Knowledge as shall result from the Project even in the event this Agreement
is terminated.
1.6 In respect of all Project Intellectual Property rights as require
registration or application for letters patent, the parties shall collaborate
to insure that: (i) all such registrations or applications are made promptly
and accurately; and (ii) all necessary payments are made and all necessary
formalities are timely complied with preserve the validity and integrity of
such rights; and (iii) neither Kurt, Kurt/DynEco or DynEco acquires superior
rights therein or thereunder.
1.7 In respect of all Project Intellectual Property rights which do not
require registration or application for grant, the parties shall collaborate
to insure that such rights vest either: (i) in Kurt, Kurt/DynEco, and DynEco
jointly; or (ii) in Kurt, Kurt/DynEco, and DynEco individually.
1.8 In respect of all Project Intellectual Property rights provided for
in Sections 1.6 and 1.7 above:
(a) each party is hereby granted unrestricted rights to use that Project
Intellectual Property without payment of any royalty or other fee for
the duration of the subsistence of that right; and
(b) each party may license any third party outside of the Territory to
use that Project Intellectual Property provided that payment of any
royalty or other fee to such party shall be shared equally with the
other parties.
1.9 No party shall cause whether directly or indirectly any
Intellectual Property of the other(s) and provided pursuant to this Agreement
to be released into the public domain without the prior written consent of
the party owning such Intellectual Property.
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1.10 In the event that any party becomes aware of or suspects any
infringement of jointly owned Project Intellectual Property rights or
Intellectual Property rights vested in any other party, then the party so
discovering or suspecting infringement shall notify the other party and all
parties shall collaborate:
(a) in the event that the Intellectual Property rights are the exclusive
property of the other provide all such nonpecuniary assistance as it
is able to;
(b) in the event that the Intellectual Property rights are jointly owned
cooperate in the taking and funding of legal advice; further, the
parties shall if so advised take such legal action as in the view of
their legal counsel is necessary to cause the alleged infringer(s) or
some of them to desist from further infringement.
SECTION 2
PRODUCT DESIGN, DEVELOPMENT AND MANUFACTURING
2.1 Kurt undertakes to design, develop and manufacture the Products for
purchase and resale by Kurt/DynEco in the Territory in accordance with the
provisions hereof and to the specification of Kurt/DynEco. In furtherance
thereof:
(a) DynEco shall prepare or have prepared general drawings in sufficient
detail to enable Kurt to produce a prototype, after testing and
work-out of which Kurt will be in position to prepare or have
prepared a final set of drawings for the production of the
Product(s);
(b) Kurt shall be responsible for constructing or procuring to be
constructed a prototype and such further prototypes as the parties
agree ought to be constructed so as to be satisfied that the final
prototype adequately demonstrates the capabilities of the Product(s)
and further settles the details of the first production or
preproduction model of the Product(s).
2.2 Kurt shall be responsible for checking, monitoring and matching the
quality of raw materials as purchased by it for the manufacture of the
Products.
2.3 (a) Kurt warrants that the Products provided shall be of
merchantable quality and that every item thereof shall be
suitable for the purposes for which it is designed to fulfil
and does fulfil.
(b) If Kurt/DynEco requires the Products to be subjected to any test
or inspection other than Kurt's usual or routine test or
inspection, Kurt/DynEco shall notify Kurt in good time and Kurt
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shall allow such special test or inspection to be carried out at
a time and place mutually convenient to both parties. Such test
or inspection may be postponed for reasonable cause at the
request of either party. Kurt shall afford all reasonable
facilities and assistance to Kurt/DynEco or its authorized agent
free of cost for such tests or inspections. The results of such
tests or inspections shall be supplied to both parties.
2.4 The volume of Products to be manufactured hereunder shall be
settled between Kurt and Kurt/DynEco from time to time taking in to account
(i) other demands upon Kurt in its other manufacturing activities and (ii)
suitable arrangements for the payment for the Products by Kurt/DynEco.
2.5 Advance notice shall be given by Kurt/DynEco to Kurt from time to
time (which shall be at least 30 days) of the quantities which Kurt/DynEco
will wish to call down and for this purpose a minimum quantity production run
with respect to air compressor airends and industrial air compressor systems,
shall be subject to mutual adjustment between the parties from time to time.
2.6 Kurt agrees that it will maintain adequate inventory control of
spare parts to insure prompt supply of needed items and that such spare parts
shall be of a high standard.
2.7 It is agreed that the Product shall be packaged by Kurt in
accordance with Kurt/DynEco's specification the cost of which shall be a part
of the Product sales price to Kurt/DynEco.
2.8 Products shall be held by Kurt in its facilities to the delivery
instructions of Kurt/DynEco. Products shall be delivered by Kurt to such
carriers as designated by Kurt/DynEco. In the absence of other agreement the
costs of such delivery shall be borne by Kurt/DynEco.
2.9 Ownership of the Products shall vest in Kurt/DynEco upon receipt of
payment therefore by Kurt.
2.10 During the term of this Agreement, neither Kurt/DynEco or DynEco or
its affiliates shall purchase any product which is a Product other than from
Kurt.
SECTION 3
PRODUCT PAYMENT
3.1 Kurt and Kurt/DynEco agree that in consideration of the obligations
undertaken by Kurt hereunder, Kurt/DynEco shall pay to Kurt the Product(s)
purchase price(s) set forth in Schedule A attached hereto and incorporated in
this Agreement, which Product(s) purchase price(s) may be revised from time
to time on
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thirty (30) days' advance written notice given by Kurt to Kurt/DynEco.
3.2 Payment arrangements shall be in accordance with prior agreement of
the parties.
SECTION 4
PRODUCT LIABILITIES
4.1 Kurt/DynEco shall be indemnified by Kurt and be held harmless from
any and all claims and liabilities for damages, losses or costs resulting
from or caused by defective Products manufactured by Kurt under this
Agreement.
4.2 Kurt shall replace free of charge any Products which prove
defective through faulty manufacture within ____________ (__) months from the
date of resale delivery to Kurt/DynEco's customer (or in the case of
Kurt/DynEco's resale of the Product to a Kurt/DynEco reseller, the delivery
of the Product to the customer of such reseller).
SECTION 5
TERM, TERMINATION AND FORCE MAJEURE
5.1 This Agreement shall endure for a period of _________ (__) years
from the date upon which a Product is first made commercially available for
resale by Kurt/DynEco.
5.2 Should the quantity called down by Kurt/DynEco in any one calendar
year fall below _____ industrial air compressor systems, Kurt shall be
entitled to terminate this Agreement by notice forthwith.
5.3 If either Kurt or Kurt/DynEco fail to observe and perform any
promise herein contained, and, where such failure is remediable, fails to so
remedy the nonobservance or nonperformance within thirty (30) days of a
written notice from the aggrieved party to do so, then the aggrieved party
may forthwith (or where the aggrieved party has given a notice as aforesaid,
on expiration thereof unremedied):
(a) in the case where Kurt/DynEco is the aggrieved party, give a written
notice that Kurt's rights (including, but not limited to those rights
granted in Section 1.8 hereof) under this Agreement are terminated;
(b) in the case where Kurt is the aggrieved party, give a written notice
that Kurt/DynEco's rights (including, but not limited to those rights
granted in Section 1.8 hereof) under this Agreement are terminated.
5.4 If either Kurt or Kurt/DynEco has a receiver appointed of its
assets, or bankruptcy proceedings are initiated, or if
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liquidation proceedings are commenced, and such proceeding is not dismissed
or otherwise vacated within sixty (60) days of initiation or commencement
thereof, the other party may forthwith by notice in writing terminate this
Agreement.
5.5 In the event of any delay affecting due performance of this
Agreement by Kurt by reason of any cause arising from acts, events, failure
of expected events, omissions, or other accidents or incidents beyond the
reasonable control of Kurt to perform, including but not limited to the
following:
(a) strikes, lockouts, shortage of labor, or any other labor trouble
(regardless of the reasonableness of the demands of labor or
management);
(b) civil commotion, riots, invasion, piracy, war, or a warlike state
(whether was be declared or not);
(c) fire, explosion, storm, flood, earthquake, fog, subsidence, severe
epidemics substantially affecting the carrying on of a business;
(d) voluntary or mandatory compliance with any directions or orders of
any person having or appearing to have authority of the government,
whether local or national, for defense or other statutory or national
purpose; or
(e) inability to obtain suitable raw materials, equipment, fuel, power,
components, or transportation;
Kurt shall be under no liability for loss or injury suffered by Kurt/DynEco
thereby, and the Agreement shall be suspended during such delay; upon the
cessation of the cause of the delay, the Agreement shall again become
operative.
SECTION 6
MISCELLANEOUS
6.1 This Agreement shall be governed by, enforced, and construed under
and in accordance with the laws of the United States of America and, with
respect to matters of state law, with the laws of the State of Minnesota.
6.2 Any notices or other communications required or permitted hereunder
solely for the purposes of effecting the agreement to incorporate shall be
sufficiently given if personally delivered to it or sent by registered mail
or certified mail, postage prepaid, addressed as follows:
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If to Kurt/DynEco Corporation to:
Kurt/DynEco Corporation
564 International Place
Rockledge, Florida 32955
Attn: Richard D. Besser, Chief Executive Officer
If to Kurt Manufacturing Company, to:
Kurt Manufacturing Company
5280 Main Street N.E.
Minneapolis, MN 55421-1594
Attn: William G. Kuban, President
If to DynEco International, Inc., to:
DynEco International, Inc.
564 International Place
Rockledge, Florida 32955
Attn: Richard D. Besser, Chief Executive Officer
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and such notice or communication shall
be deemed to have been given as of the date so delivered or mailed.
6.3 This Agreement is solely between the parties, and, except as
specifically provided, no director, officer, stockholder, employee, agent,
independent contractor, or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
6.4 This Agreement may not be assigned by any party hereto except with
the prior written consent of the other party hereto.
6.5 This Agreement represents the entire agreement between the parties
relating to the subject matter hereof. This Agreement alone fully and
completely expresses the agreement of the parties relating to the subject
matter hereof. There are no other courses of dealing, understandings,
agreements, representations, or warranties, written or oral, except as set
forth herein.
6.6 The representations, warranties, and covenants of the respective
parties shall survive the consummation of the transactions herein
contemplated.
6.7 This Agreement may be executed in multiple counterparts, each of
which shall be deemed a original and all of which taken together shall be but
a single instrument.
6.8 Every right and remedy provided herein shall be cumulative, with
every other right and remedy, whether conferred
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herein at law, or in equity, and may be enforced concurrently herewith, and
no waiver by any party of the performance of any obligation by the other
shall be construed as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time prior to the
incorporation of the corporation, this Agreement may be amended by a writing
signed by all parties hereto, with respect to any of the terms contained
herein, and any term or condition of this Agreement may be waived or the time
of performance thereof may be extended by a writing signed by the party or
parties for whose benefit the provision is intended.
IN WITNESS WHEREOF, the corporate parties to this Agreement To
Incorporate have caused this Agreement to be executed by their respective
officers, hereunto duly authorized, at Minneapolis, Minnesota on the date
above-stated.
KURT/DYNECO CORPORATION
a Minnesota corporation
By /s/ Richard D. Besser
-------------------------------------
Richard D. Besser
Chief Executive Officer
and President
KURT MANUFACTURING COMPANY
a Minnesota corporation
By /s/ W. G. Kuban
-------------------------------------
W. G. Kuban
Chief Executive Officer
and President
DYNECO INTERNATIONAL, INC.
a Minnesota corporation
By /s/ Richard D. Besser
-------------------------------------
Richard D. Besser
Chief Executive Officer
and President
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