Exclusive Manufacturing Agreement

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 mark 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 ...