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EXHIBIT 10.27
MANUFACTURING AGREEMENT
Agreement made this 21st day of December 1994 by and between Euro-Matic
Limited, a company organized under the laws of the United Kingdom and having
its offices and principal place of business at Sinclair House, The Avenue,
Ealing, London W13 8NT England (hereinafter referred to as "Euro-Matic") and
Hedstrom Corporation, a Delaware Corporation, having a place of business at
1401 Jacobson Avenue, Ashland, Ohio U.S.A. (hereinafter referred to as
"Hedstrom").
Euro-Matic and Hedstrom are currently parties to two separate contracts dated
July 21, 1987 and April 13, 1994 respectively regarding the production of
playpen balls for both Hedstrom and Euro-Matic. All terms and conditions of the
previous contracts remain in full force and effect and are not amended by the
terms of this Agreement.
The purpose of this Agreement is to establish the terms and conditions for the
manufacture and sale of additional playpen balls by Euro-Matic to Hedstrom.
The parties agree as follows:
1. Hedstrom Corporation currently projects the required annual volume of
playpen balls to be purchased by Hedstrom from Euro-Matic at 25,000,000
balls. Euro-Matic hereby agrees to purchase the necessary equipment
(blow molder, molds and support equipment) to produce from such
equipment and make available to Hedstrom 20,000,000 80mm playpen balls
annually. Euro-Matic also agrees to produce and make available to
Hedstrom an additional 5,000,000 balls from existing equipment at
Euro-Matic's Wilson, North Carolina facility.
2. In consideration of the investment by Euro-Matic from the purchase of
the required equipment, Hedstrom agrees to purchase a minimum of
40,000,000 playpen balls from Euro-Matic during the first two years
of this agreement, beginning January 1, 1995. If for any reason
Hedstrom shall have failed to purchase at least 40,000,000 playpen
balls by the end of the initial two year period, Hedstrom agrees to pay
to Euro-Matic an amount equal to $.0065 times the difference between
the number of balls actually purchased and 40,000,000.
3. During the third and fourth years of this agreement, the purchase price
for any balls purchased by Hedstrom shall be at $.0065 per ball
less than the then existing sell price for each ball as to which
Hedstrom paid $.0065 in accordance with paragraph 2 of this Agreement,
up to the amount previously paid to Euro-Matic for the failure to meet
the agreed upon minimum 40,000,000 balls.
4. If during the two year period starting January 1, 1995, Euro-Matic
fails to make deliveries of at least an average 5,000,000 balls
per quarter, averaged over two consecutive quarters, Hedstrom's
obligation to purchase the minimum number of balls set forth in
paragraph 2 of this Agreement shall terminate.
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5. The purchase price for playpen balls to be sold pursuant to this Agreement
shall be the sum of $.068 per ball during the term of this Agreement.
Notwithstanding the foregoing, if Hedstrom and Euro-Matic agree upon a
price change for balls manufactured by Hedstrom for Euro-Matic, such
price change shall be applied to the purchase price for balls purchased
by Hedstrom pursuant to this Agreement. The playpen balls to be purchased
by Hedstrom will be made available prepacked in a polybag with 450 mixed
color balls per polybag. Terms of the sale will be FOB Wilson, North
Carolina, net at the end of the month following date of invoice.
6. Hedstrom agrees to purchase playpen balls exclusively from Euro-Matic
during the four year term of this Agreement, provided, however, if
Hedstrom's demands should be greater than Euro-Matic's contractual
obligation to supply (25,000,000 balls annually) and Euro-Matic fails to
supply the additional requirements, Hedstrom shall have the right to
purchase the excess demand from any other source.
7. Hedstrom and Euro-Matic agree that 80mm playpen balls are required by
Hedstrom, but Hedstrom agrees that on occasion it will temporarily accept
a limited quantity of 73mm, 75mm and/or 76mm playpen balls.
8. Hedstrom agrees that the $.01 royalty per ball pit ball provided for by
that certain agreement dated April 13, 1994 between the parties will be
paid on all ball pits sold regardless of whether balls were manufactured
and/or supplied by Euro-Matic or Hedstrom Corporation per Manufacturing
and Royalty Agreement dated April 13, 1994.
9. This Agreement shall automatically renew for successive one year renewal
terms following the initial four year term, provided, however, that
either party shall have the right to terminate this Agreement by giving a
written notice of cancellation not less than 90 days prior to the
commencement of any renewal term.
10. Euro-Matic warrants and agrees that it will ship good and marketable title
to balls to Hedstrom and the balls will conform to Euro-Matic's current
specifications, will be free from defects in workmanship and material and
will comply with all applicable statutes, laws, orders, rules and other
governmental regulations. These warranties shall survive inspection,
shipment and payment.
11. Euro-Matic shall indemnify and hold harmless Hedstrom from and against the
attempted imposition by any customer of Hedstrom of any claims, damages,
suits, expenses, liabilities and judgments, and from and against the
costs (including reasonable attorneys' fees and disbursements) of
defending against the same, with respect to any such claims, damages,
suits, expenses, liabilities and judgments resulting from the sole
failure of Euro-Matic to conform to Hedstrom's specifications in the
production of Products hereunder or other negligence in the production
thereof in the part of Euro-Matic.
12. This Agreement shall not be construed as creating a relationship of joint
venture partnership or principal and agent between the parties. Neither
party shall act or attempt to act or represent itself as acting directly
or by implication as agent for the other or in any manner assume or
create or attempt to assume or create any obligation on behalf of the
other.
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13. All notices and other communications from either party hereto to the other
party under this Agreement shall be in writing and addressed to such other
party at its address first written above or sent by telex, telefax or the
equivalent thereof. Either party may by notice in writing to the other,
change its address. Notices and other communications required by this
Agreement shall be sent by registered or certified mail, return receipt
requested, or the United Kingdom equivalent thereof, and shall be deemed to
have been given on the day such notice or communication was mailed.
14. This Agreement has been entered into and shall be governed, construed and
interpreted pursuant to in accordance with the laws of the State of
Pennsylvania.
15. This Agreement sets forth the entire understanding between the parties
hereto and may not be added to or modified by oral representations or
understandings. No change in the printed terms of this Agreement shall be of
any force or effect unless in writing and signed by each party.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first written above.
HEDSTROM CORPORATION EURO-MATIC LIMITED
By: /s/ James D. Braeunig By: /s/ [ILLEGIBLE]
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Title: Vice-President Title: M. Director
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