EXHIBIT 10.20 TO FORM 8-K OF LANDEC CORPORATION
SUPPLY AGREEMENT
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT ("Agreement") is made as of the 28th day of August,
1997, by and between BISSELL HEALTHCARE CORPORATION, a Michigan corporation,
d/b/a XXXXXXX(TM) XXXXXXX with offices located at 0 Xxxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxx 00000-0000 ("Buyer"), and LANDEC CORPORATION, a California corporation
with offices located at 0000 Xxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
("Seller").
PREAMBLE
Buyer and Seller have entered into an Asset Purchase Agreement dated August
28, 1997 (the "Purchase Agreement"), pursuant to which Buyer has agreed to
purchase and Seller has agreed to sell certain assets associated with the
QuickCast(R) line of casting and splinting products (the "Products"). Following
the Closing, Buyer intends to transfer the manufacture of the Products from
Seller's Menlo Park, California facility to a location selected by Buyer and,
prior to the completion of such transfer, Buyer desires that the Products
continue to be manufactured by Seller for sale to Buyer pursuant to the terms
set forth herein. All capitalized terms used in this Agreement and not otherwise
defined have the meanings set forth in the Purchase Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. Sale and Purchase Commitment.
(a) Until November 27, 1997 or such earlier date as the tube winding,
die cutting, spica assembly, kitting and related equipment used in the
manufacture of the Products is removed from the Seller's plant, Buyer shall
purchase from Seller, and Seller shall sell to Buyer, QuickCast(R) casting and
splinting kits for the products listed on the attached Exhibit A (the "Finished
Products") upon the terms and conditions set forth in this Agreement.
(b) Upon Seller's termination of manufacture and sale of the Finished
Products, until February 24, 1998 or such earlier date as the lamination
equipment is removed from Seller's plant, Seller shall sell to Buyer laminated
fabric ("Laminations") upon the terms and conditions set forth in this
Agreement.
2. Production Scheduling. Unless Buyer and Seller agree in writing on a
different delivery schedule for the Finished Products or Laminations, Seller
will provide and deliver Finished Products or Laminations to Buyer in accordance
with [monthly] Supplier Schedules, as follows:
(a) Scheduled Receipts; Finished Products. Buyer shall furnish Seller
concurrently with the execution of this Agreement and [monthly] thereafter
a Supplier Schedule for the Finished Products specifying (i) Finished
Products to be delivered to Buyer and (ii) Finished Products that Buyer
estimates will be required to be delivered through
November 27, 1997 (or such earlier date as the tube winding, die cutting,
spica assembly, kitting and related equipment used in the manufacture of
the Products is removed from the Seller's plant). The quantities of any
Finished Products specified in any Supplier Schedule for delivery are firm
purchase commitments for such Finished Products by Buyer and may not be
altered except by mutual agreement of the parties. The quantities of
Finished Products specified during the remaining period covered by the
Supplier Schedule represent only estimated requirements which may be
canceled or adjusted at any time by Buyer. The specification of quantities
of Finished Products for delivery after the term of Seller's agreement to
provide Finished Products shall not be construed as an extension or an
offer to extend the term of such agreement.
(b) Scheduled Receipts; Laminations. For periods following Seller's
termination of manufacture the Finished Products, Buyer shall furnish
Seller with [monthly] Supplier Schedules for Laminations specifying (i)
Laminations to be delivered to Buyer and (ii) Laminations that Buyer
estimates will be required to be delivered through February 24, 1998. The
quantities of any Laminations specified in any Supplier Schedule for
delivery are firm purchase commitments for such Laminations by Buyer and
may not be altered except by mutual agreement of the parties. The
quantities of Laminations specified during the remaining period covered by
the Supplier Schedule represent only estimated requirements which may be
canceled or adjusted at any time by Buyer. The specification of quantities
of Laminations for delivery after the stated term of this Agreement shall
not be construed as an extension or an offer to extend the term of this
Agreement.
(c) Material Authorizations. Seller shall obtain Buyer's prior approval
of each purchase of raw materials or supplies for use in the production of
Products or Laminations, where such purchase is in an amount in excess of
[****] Dollars ($[****]) during the term of this Agreement.
3. Time. Seller agrees that time is of the essence in meeting the delivery
dates specified by Buyer and that it will deliver Finished Products or
Laminations by the delivery dates specified by Buyer. Specified delivery dates
are the dates on which the Finished Products or Laminations must be received at
Buyer's dock. Buyer may refuse delivery of Finished Products or Laminations that
arrive prior to the delivery date specified in the Supplier Schedule. Unless
otherwise agreed in writing, Seller shall be responsible for any premium freight
charges incurred to meet the delivery dates specified in the initial Supplier
Schedule that has been delivered to Seller covering the period ending November
27,1 997, or any other Supplier Schedule accepted by Seller. Buyer shall be
responsible for any premium freight charges incurred in meeting any increases
from those reflected in the initial Supplier Schedule that are not accepted by
Seller.
4. Quantity. Buyer's acceptance of a delivery containing less than the
required quantity will not relieve Seller of its obligation to deliver the
balance of the ordered Finished Products or Laminations.
5. Price and Payment; Taxes.
(a) Prices. Buyer shall pay to Seller the price per unit identified on
Exhibit A hereto ("Prices") for the Finished Products or Laminations.
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(b) Invoices. Invoices for Finished Products or Laminations shall be
submitted to Buyer upon Seller's shipment of Finished Products or
Laminations.
(c) Taxes. Seller shall be responsible for and shall pay all federal,
state, and local income, excise, property, employment and other taxes
similar to or differing from any of the foregoing, incurred or levied for
or in connection with the manufacture, sale, and/or delivery of Finished
Products or Laminations F.O.B. Seller's Menlo Park, California facility.
6. Manufacture.
(a) Specifications. Seller shall manufacture the Finished Products or
Laminations according to existing specifications and in conformity with the
products previously provided to Buyer.
(b) Revised Specifications. If so requested by Buyer, Seller shall
cooperate with Buyer's employees and outside agencies designated by Buyer
in developing additional or revised specifications for Finished Products or
Laminations including a revised price, if appropriate. No revisions to
specifications shall be binding on Seller under this Agreement without
Seller's written approval.
7. Delivery. Seller shall deliver the Finished Products or Laminations
F.O.B. Seller's Menlo Park, California facility.
8. Quality Acceptance and Rejection; Inspection.
(a) Inspection. Buyer shall have a reasonable period of time to inspect
any shipment of Finished Products or Laminations delivered by Seller
pursuant to this Agreement. Buyer shall not be required to accept delivery
of, nor shall Buyer be responsible for payment for, any shipment that does
not conform to Finished Products or Laminations specifications.
(b) Remedies. Without limiting any other rights or remedies available
to Buyer, Buyer may exercise the rights and remedies accorded by the
Michigan Uniform Commercial Code. If Buyer rejects Finished Products or
Laminations for failure to meet specifications, Seller shall be solely
responsible for all costs associated with the handling, transporting and
disposing of any such non-conforming Finished Products or Laminations.
(c) Access to Premises. During the term of this Agreement, Buyer shall
have access to the portion of Seller's facility manufacturing Finished
Products or Laminations hereunder during ordinary business hours to
evaluate Seller's quality control procedures relating to the manufacture of
Finished Products or Laminations hereunder and to otherwise inspect the
manufacture of Finished Products or Laminations.
9. Information to be Provided by Seller. Seller will provide the following
information on:
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Each Packaging
Package List Invoice
------- ------ -------
Purchase order or agreement number X X X
Purchase order or agreement line number X X X
BHC product code X X X
Quantity per package X X
Number of packages per pallet X
Total number of packages X
Total quantity X X
Lot number or production date X X X
Date shipped X X
10. Seller's Representations and Warranties. Seller hereby represents and
warrants to Buyer as follows:
(a) Product Warranty. The Finished Products or Laminations shall be
manufactured in compliance with the Product specifications and in
conformity with the products previously provided to Buyer, and shall be
free from defects in material and workmanship. The foregoing warranty
extends to future performance of the Finished Products or Laminations and
will survive inspection, testing, acceptance and payment.
(b) Legal Compliance. Seller warrants that all Finished Products or
Laminations sold hereunder will be manufactured, labeled, packaged, shipped
and delivered, and that required notices will be given, in compliance with
all foreign law applicable to Seller and all applicable federal, state and
local laws, regulations, standards and orders. Seller agrees to furnish
upon Buyer's request written certification of such compliance. Seller
certifies that all Finished Products or Laminations sold hereunder will be
manufactured and delivered in accordance with the Fair Labor Standards Act
of 1938, as amended, and agrees to furnish written certification of such
fact upon request in a form approved by the United States Department of
Labor. Seller shall secure any and all permits and governmental fees,
licenses, and inspections necessary for the manufacture and delivery of the
Finished Products or Laminations hereunder (but excluding any such permits,
governmental fees, licenses and inspections associated with the relocation
of manufacturing, all of which are the responsibility of Buyer).
11. Indemnification. Seller agrees that it shall, at its own cost and
expense, protect, indemnify and hold harmless Buyer and Buyer's distributors,
dealers, customers, successors, and assigns from and against any and all claims,
actions, lawsuits, judgments, losses, damages, liabilities, costs and expenses,
including attorneys fees and any amounts paid in defense or settlement, which
may arise out of or in connection with any actual or alleged death or injury to
any person, damage to any property, or any other damage or loss, resulting in
whole or in part from any actual or alleged defect in the Finished Products or
Laminations delivered pursuant to this Agreement or the failure of such Finished
Products or Laminations to comply with the specifications or with the warranties
of Seller.
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Buyer may defend any such claim or suit, or may direct Seller to assume
such defense, or any part thereof. If Seller defends any such claim or suit, it
shall employ counsel reasonably satisfactory to Buyer. The defending party shall
keep the other party fully advised of the progress of such claim or suit and
permit such other party thereafter to join in its own defense or defend itself
in such claim or suit at any time. Seller shall reimburse Buyer for all
out-of-pocket costs incurred by Buyer in connection with Buyer's conduct of or
participation in any such defense, including, without limitation, attorneys
fees.
12. Insurance. Seller agrees to obtain and maintain in full force and
effect during the term of this Agreement and any renewal or extension hereof,
comprehensive general public liability insurance, including product liability
and vendor coverage, with single limit coverage of at least [****] Dollars
($[****]) for bodily injury and property damage per occurrence. Seller also
agrees to obtain and maintain fire and extended coverage insurance in an amount
sufficient to replace any tools, molds or other property of Buyer in the
possession of Seller damaged or destroyed by fire or other casualty. Upon
request, Seller will provide Buyer with certificates of insurance reflecting
such coverage. At Buyer's request, Seller shall have Buyer named as an
additional insured on all such policies and for thirty (30) day's prior written
notice to Buyer of cancellation or expiration.
13. Excusable Delay. Neither party shall be deemed in default of its
obligations hereunder for a failure to perform due to acts of God, acts of the
federal, state or local government, fires or explosions. Each party shall
provide the other with prompt notice as to the possibility of such a cause of
delay and shall use due diligence and all reasonable efforts to avoid and cure
any such cause so as to resume performance hereunder as soon as reasonably
possible.
14. Term. The term of this Agreement shall commence on the Closing Date and
shall remain in full force and effect until February 24, 1998 or such earlier
date as the last of the manufacturing equipment is removed from Seller's plant.
15. Termination. This Agreement may be terminated by either party prior to
the expiration of the term of this Agreement upon written notice to the other
party, which notice shall specify the reason for the termination and effective
date of such termination, upon or after the occurrence of any of the following
events:
(a) Breach. A breach by the other party of any of the material terms or
conditions of this Agreement which is not corrected within thirty (30) days
after receipt of written notice thereof; or
(b) Insolvency or Bankruptcy. If the other party is insolvent or
adjudicated bankrupt or the other party applies for, consents to, or
acquiesces in (i) the appointment of a receiver for substantially all of
its assets or the making of a general assignment for the benefit of its
creditors, or (ii) the filing of a voluntary or involuntary petition in
bankruptcy seeking reorganization, composition, adjustment, arrangement
with creditors, liquidation, dissolution, or similar relief under
applicable bankruptcy laws, or any other federal or state law relating to
bankruptcy or insolvency, or (iii) the filing of any answer admitting the
material allegations of such a petition by either party hereto.
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16. Survival or Rights. The expiration or termination of this Agreement
shall not terminate vested rights or release either party from any liabilities
or obligations incurred under this Agreement prior to and which by their nature
continue after such expiration or termination, except as expressly provided
herein.
17. Confidentiality. Each party agrees to maintain as secret and
confidential, and not to disclose to third parties without the prior written
consent of the other party, any confidential information of such other party.
Each party each agrees to take all reasonable care, including all reasonable
precautions suggested by the other party, to ensure that such confidential
information is not revealed to others. For purposes of this section,
"confidential information" means information that is not generally known to the
public, including, without limitation, trade secrets, technical and proprietary
information, know-how, new products, research projects and methods, sales
techniques, manufacturing techniques, financial data, product or component
pricing, business or financial plans, customer lists, and information of a
similar nature. The terms and provisions of this Section shall survive
termination of this Agreement.
18. Intellectual Property Rights. Buyer is licensing certain technology
from Seller. Seller acknowledges and agrees that all patents, copyrights,
trademarks and other proprietary rights in the Finished Products or Laminations
other than those being licensed from Seller are and at all times shall remain
the property of Buyer. Seller further acknowledges and agrees that this
Agreement shall create no right or license whatsoever in or to any copyrights,
trademarks, or proprietary information of Buyer.
19. Notice. All notices, consents, waivers, and other communications under
this Agreement must be in writing and will be deemed to have been duly given
when (i) delivered by hand (with written confirmation of receipt), (ii) sent by
telecopier, provided that a copy is mailed by registered mail, return receipt
requested, or (iii) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the other
parties) marked "personal and confidential":
If to Buyer: If to Seller:
BISSELL HEALTHCARE CORPORATION LANDEC CORPORATION
4 Xxxxxxx Court 0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxx 00000-0000 Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx Attention: Xxxx X. Xxxxxx
Telecopier: (000) 000-0000 Telecopier: (000) 000-0000
with copy to: with copy to:
Xxxxxx Xxxxxxxx & Xxxx LLP Venture Law Group
000 Xxx Xxxx Xxxxxxxx 0000 Xxxx Xxxx Xxxx
000 Xxxx Xxxxxx XX Xxxxx Xxxx, Xxxxxxxxxx 00000
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Xxxxx Xxxxxx, Xxxxxxxx 00000 Attention: Tae Xxx Xxxx
Attention: Xxxxxxx X. Xxxxxxxxxx Telecopier: (000) 000-0000
Telecopier: (000) 000-0000
20. Amendments. This Agreement may be amended only in writing making
express reference to this Agreement, signed by both of the parties hereto.
21. Entire Agreement. This Agreement, including the attachments hereto,
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings between the
parties. There are no representations, warranties, undertakings or agreements
between the parties with respect to the subject matter of this Agreement except
as set forth herein.
22. Invoices and Purchase Orders. All purchases and sales of Finished
Products or Laminations shall be governed exclusively by the terms and
conditions set forth in this Agreement (and all attachments hereto),
notwithstanding any additional, different, or conflicting terms that may appear
on any purchase order or other document.
23. Remedies; Waiver. Nothing contained in this Agreement shall preclude
any party from pursuing any remedies available at law or otherwise against any
other party arising out of a breach of one or more of the terms of this
Agreement. The waiver by any party of a breach or violation of any provision of
this Agreement shall not operate as, or be construed to be, a waiver of any
subsequent breach of the same or other provision of this Agreement.
24. Assignment. Buyer may assign this Agreement. Seller may not assign this
Agreement without the prior written consent of Buyer, provided, however that
Seller may assign this Agreement without the prior written consent of Buyer to a
person or entity that acquires all the Licensed Technology and who assumes all
of the obligations of Seller under this Agreement. Seller shall not subcontract
any of its obligations hereunder without the prior written consent of Buyer.
25. Headings. The headings contained in this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
26. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to any laws
that would otherwise govern under applicable principles of conflict of laws.
27. Severability. In the event any term or provision of this Agreement
shall be deemed to be illegal, invalid or unenforceable for any reason, such
illegality, invalidity or unenforceability will not affect any other term or
provision of this Agreement and the parties shall endeavor to replace the
illegal, invalid or unenforceable provision with a provision corresponding to
the intention of the parties hereto.
28. Binding Effect. This Agreement shall be binding upon, and shall inure
to the benefit of the parties hereto, their successors and permitted assigns.
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29. Disclaimer of Warranty. EXCEPT AS SPECIFICALLY PROVIDED IN THIS
AGREEMENT, THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, MADE BY ANY PARTY,
INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
30. Limitation of Liability.
(a) Neither party shall be liable to other for lost profits arising out
of this Agreement, the Technology License Agreement or the Asset Purchase
Agreement each of even date under any theory of damages or through
indemnification, even if a party has been advised of the possibility of
such damages.
(b) In no event shall Seller be liable to Buyer under this Agreement,
the Technology License Agreement or the Asset Purchase Agreement each of
even date under any theory of damages or through indemnification in the
aggregate for amounts greater than [****]. This limitation shall not apply
to [****].
The parties have executed this Agreement on the dates set forth below.
BISSELL HEALTHCARE CORPORATION
By /s/ Xxxxxx X Xxxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxxx, President
LANDEC CORPORATION
By /s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx, President
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Pages re Exhibit A (Product Listing and Pricing) omitted
