The Agreement
is by and between Reynolds Innovations Inc. (hereinafter
“RII”) and Ecology Coatings Inc. (hereinafter
“Supplier”). The effective date of this
Agreement is April 1 st ,
2009.
Whereas RII is
a manufacturer and seller of tobacco products, including
cigarettes, snus, and other smokeless tobacco products;
Whereas
Supplier has expertise and capabilities regarding coatings,
including UV curable products;
Whereas RII and
Supplier desire to discuss with one another projects, products,
needs and ideas of RII relating to coatings having application as
components of tobacco products;
Whereas RII and
Supplier deem it desirable to collaborate on a project directed
toward Supplier’s development for RII of coatings and
associated technologies for RII’s use in tobacco
products;
Now therefore,
RII and Supplier deem it mutually beneficial to engage in
collaborative activities with one another, to become parties to
this Agreement, and to agree as follows:
1.1
Defined Terms . The following terms have the
following meanings:
"Affiliate"
means, as to a party to this Agreement, any corporation, company,
partnership, joint venture or other entity which controls, is
controlled by, or is under common control with, such
party. For purposes of this definition, the term
“control” shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through
ownership of voting securities, by contract, or
otherwise.
"Confidential
Information" means (i) any proprietary information of either party
or of a third party with whom either party has an obligation of
confidence, (ii) any other information or data relating to any
aspect of the collaboration or any research project, work in
progress, tests, scientific information, technical information,
engineering information, manufacturing information, marketing plan,
business plan, proposal, financial or personnel matter relating to
either party or to a third party with whom either party has an
obligation of confidence, or (iii) the present or future products,
sales, suppliers, customers, employees, investors or business of
either party or a third party with whom either party has an
obligation of confidence; whether any of the foregoing is observed
or in oral, written, graphic or electronic form.
“Coatings” means materials capable
of being applied to components of tobacco products, and including
materials and formulations.
“Intellectual Property” means
information, concepts, ideas, discoveries, inventions (whether
conceived or reduced to practice, and whether or not patentable),
specifications, requirements, prototypical products, prototypical
product components, data, codes, programs, designs, blueprints,
sketches, graphics, drawings, photographs, developments, processes,
methods, know-how, trade secrets, patent applications, patents, and
other intellectual property of any type, and enhancements and
improvements of the foregoing.
“Receiving Party” has the meaning
set forth in Section 5.2.
2.1
Collaboration. RII and Supplier will cooperate
towards engaging in research and development efforts for the
purpose of developing Coatings and evaluating tobacco product
components having Coatings applied thereto. Details of
the types and specifications of Coatings intended to be produced by
Supplier pursuant to the collaboration, are set forth in
Attachment A , (Collaboration Activities including
Descriptions of Coatings), which is attached hereto and becomes
part of this Agreement. The content of Attachment
A may be amended in writing, by mutual consent of the
Parties.
2.2
RII’s Responsibilities . RII shall have
primary responsibility for identifying the overall goals of the
collaboration, and for evaluating Coatings provided to it by
Supplier. RII shall disclose to Supplier information,
concepts, ideas, specifications, and requirements (to the extent
available and at RII’s sole discretion) regarding RII’s
needs relating to the Coatings.
2.3
Supplier’s Responsibilities . Supplier
shall have primary responsibility for designing, manufacturing and
supplying to RII Coatings that meet specifications and requirements
set by RII and are acceptable to RII. Supplier shall
have the responsibility of providing adequate non-commercial
quantities of Coatings to RII solely for the purpose of allowing
RII to conduct evaluation of the Coatings for research and
development purposes. Supplier shall have the
responsibility of providing to RII information regarding: (i)
Coatings and the components of those Coatings, (ii) all process
conditions regarding preparation of those Coatings.
2.4
Periodic Meetings . Supplier and RII shall
arrange periodic meetings, to be held periodically at mutually
agreeable times and locations to discuss with one another the
status of the project, project timing, design review, changes
relating to the Coatings, and other relevant topics relating to the
collaboration and the Coatings.
2.5
Visit of Facilities . Representatives of either
party may, upon reasonable notice and at times reasonably
acceptable to the other party, (i) visit the facilities where the
activities relating to the collaboration are being conducted; and
(ii) consult informally, during such visits and by telephone, with
personnel of the other party performing such
activities. Each party shall bear its own expenses with
regard to any such visits, unless otherwise agreed upon in writing
by the parties. If requested by the other party, the
parties each shall cause appropriate individuals working on the
activities relating to the collaboration to be available for
meetings at the location of the facilities where such individuals
are employed at times reasonably convenient to each
party.
2.6
Supplier’s Limited Exclusivity of Efforts
. Supplier represents and warrants that, as of the
effective date of this Agreement, it is not in any way conducting
any activities with any third party relating to the development,
manufacture, supply, or sale of any Coatings for use in connection
with tobacco products or for use within the tobacco
industry. Until the later of December 1st, 2011 or
future date that the parties enter into a Commercial Agreement of
the type set forth in Attachment B (Detailed Project Stages,
Compensation, and Success Criteria), which is attached hereto
and becomes part of this Agreement, Supplier shall not,
without RII’s prior written approval, solicit orders,
initiate any orders, cooperate in the fulfillment of orders, or
conduct any activities with any third party relating to the
development, manufacture, supply, or sale of any Coatings for use
in connection with tobacco products or for use within the tobacco
industry.
2.7
RII’s Non-Exclusivity of Efforts . RII
makes no representation or warranty that, it has not entered into
any agreement with any third party (or that it will not enter into
any agreement with any third party) that obligates RII to (i)
collaborate with any third party towards the development,
manufacture, supply or sale of Coatings (or coatings of any type)
to RII, or (ii) purchase Coatings (or coatings of any type) from
any third party. During the collaboration period, RII
shall remain entitled to place orders or conduct any activities
with any third party relating to the development, manufacture,
supply, or sale of any type of coatings (including
Coatings). Nothing contained in this Agreement shall be
construed as requiring RII to (i) use any Coatings or associated
technology resulting from this Agreement or from the efforts of
Company, or (ii) stop obtaining any types of coatings from other
sources, including RII’s current source of coatings or coated
papers for use associated with tobacco product
manufacture.
SECTION 3.
COMMERCIAL ASPECTS OF COLLABORATION
3.1
Acceptance . Provided that the Coatings perform
in accordance with the specifications, meets those qualifications,
and performs in accordance with the general criteria set forth in
Attachments A , which is attached hereto and becomes part of
this Agreement, RII shall notify Supplier of its acceptance of the
Coatings.
3.2
Delivery . Supplier shall supply RII with
Coatings for evaluation pursuant to Suppliers’ consent, which
is attached hereto as Attachment B and becomes part of this
Agreement. The party may mutually agree in writing to
amend each element of Attachment B during the term of this
Agreement.
3.3
Payment Terms . Payment terms shall be those set
forth in Attachment B . In no event shall RII be
responsible for payment of more that those amounts set forth in
Attachment B , without its prior written consent.
3.4
Costs of Collaboration . Direct costs associated
with the collaboration during the development and application of
Coatings shall be but limited to the extent set forth in
Attachment B.
3.5
Further Commercial Relationship . In the event
that RII, in its sole discretion, determines that any Coatings
provided by Supplier are satisfactory for use in applications in
conjunction with any tobacco product component, the parties each
shall negotiate in good faith towards arriving at terms and
conditions of a separate Commercial Agreement to exclusively
license Supplier’s Coatings. This Commercial
Agreement would provide for RII’s or its Affiliates ability
to employ for commercial purposes any and all formulations and
technologies associates with Coatings provided by Supplier and for
Supplier's ability to be reasonably compensated for RII's
commercial use of such formulations, technologies and
materials. The ranges of Commercial costs have been
estimated by the parties in accordance set forth in, Attachment
C. (Proposed Commercial Terms of
Collaboration). Nothing contained in this Agreement
shall be construed as obligating RII to employ Coatings in
commercial applications or to enter into any type of commercial
agreement with Supplier; and any commercial relationship with
Supplier shall be at RII’s sole discretion.
SECTION 4.
INTELLECTUAL PROPERTY RIGHTS
(a) All Intellectual Property resulting
solely from RII or its representatives shall be solely owned by
RII. All Intellectual Property resulting from activities
of RII unrelated to the Coatings, this Agreement or the
collaboration contemplated thereby, whether or not those activities
involved a third party, shall be owned (as between RII and
Supplier) by RII. D
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