EXHIBIT 10.24
SUPPLY AGREEMENT
This agreement, made and entered into to be effective as of the 27 day of
January, 2004 by and between:
American Metal Filter Company
0000 Xxxxxx Xxxxxx, Xxxxx X
Xxxxxxxx Xxxx, XX 00000
A corporation organized under the laws of the state of CALIFORNIA hereinafter
referred to as CONTRACT MANUFACTURER (CM); and
Allergy Free LLC
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
A company organized under the laws of the state of CA, hereinafter referred to
as BUYER.
WITNESSETH
WHEREAS, CM will manufacture the BUYER'S Aller-Pure Gold filter developed and
patented by the BUYER described in Exhibit A and
WHEREAS, BUYER desires to purchase the CM's products for resale to customers;
and
WHEREAS, the parties desire to enter into a supply agreement governing their
relationship;
NOW, THEREFORE, in consideration of the mutual terms and conditions set forth
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
1.0 PRODUCT
1.1 Products: The Products covered by this Agreement are those products
set forth and attached hereto in Exhibit A ("Products"),
manufactured by or for CM.
1.2 Ownership Rights: BUYER was the inventor of the product and CM is
solely the outsource manufacturer of the BUYER'S discovery. BUYER
owns all rights to the PRODUCT and reserves right to have the
PRODUCT manufactured by other manufacturers if the CM does not meet
the terms of this agreement. BUYER will notify CM providing 90 days
notice any intent to move said manufacturing.
2.0 ORDERS;
2.1 BUYER shall make purchases by submitting firm purchase orders to CM.
BUYER will submit quarterly forecasts to CM.
3.0 SHIPPING AND DELIVERY
3.1 Shipping: CM shall ship all Products at CM's expense to AF San
Diego.
3.2 Delivery: CM shall ship all Products for which it has received a
firm purchase order within twentv one (21) days of order receipt. CM
agrees that time is of the essence regarding its delivery of
Products.
3.3 Returns: BUYER will inspect all incoming product. CM agrees to
provide full credit for all product not meeting BUYER'S quality
specifications. BUYER agrees to notify CM a detailed accounting for
all defects by class within ten (10) days of each receipt.
4.0 PRICE AND PAYMENT TERMS
4.1 Price and Price Increases: Pricing detailed in Exhibit A shall be
firm through June 30, 2004. Both parties agree to review pricing on
June 30, 2004 to determine if CM's original cost estimates were
appropriate and to negotiate changes to the pricing structure in
good faith based upon actual material costs and operational
efficiencies. In no case should the resulting increase/decrease in
price exceed 10%. These prices shall remain firm through Dec. 31,
2004. Pricing for subsequent periods will be reviewed no later than
November 15 for the effective subsequent calendar year and will be
firm for that 12 month period.
4.2 Payment Terms: Payment terms shall be NET- 30 days from the date of
receipt of an accurate Invoice. BUYER shall not be in breach of this
Agreement unless payment from the BUYER is more than fifteen (15)
days overdue.
4.3 Raw Material Acquisition: CM agrees to acquire BUYER's usable raw
materials at BUYERS cost from BUYER. BUYER will extend payment terms
where BUYER will pay 50% of every invoice and will issue an equal
amount of credit towards the balance owed by the CM.
5.0 USE OF BUYERS MANUFACTURING EQUIPMENT: Exhibit B
5.1 Use of Equipment: CM will use BUYER's manufacturing equipment for
BUYER's product only.
5.2 Preventive Maintenance (PM): CM will conduct quarterly preventive
maintenance on all equipment used by CM and owned by BUYER. CM will
make all PM records available for BUYER. BUYER retains the right to
inspect BUYER's equipment on a periodic random basis not to exceed
four times in a 12-month period.
5.3 Transportation of Manufacturing Equipment: CM agrees to at CM's
expense, pack and transport all manufacturing equipment from BUYER's
facility in Houston, TX to CM's California location. All equipment
will be inventoried and labeled with both parties signing off on the
value and condition of each piece. A loading inventory log will
exist with initials from a representative of each party. CM must
provide BUYER with a receipt log matching the initial loading log.
6.0 TERM AND TERMINATION
6.1 Term: The initial term of this Agreement shall be from the effective
date first set forth above for a term of 24 months. After the
expiration of the initial term, either party may terminate the
Agreement upon ninety (90) days prior written notice.
6.2 Termination: Notwithstanding the foregoing, this Agreement may be
terminated for cause at any time as follows:
(i) In the event of material default or material breach of the
terms of this Agreement by either party, written notice
thereof may be given to the defaulting party. Thereafter, the
defaulting party shall have thirty (30) days to cure said
breach. In the event that said breach has not been cured
within said thirty (30) day period, the non-defaulting party
may terminate this Agreement on or within a reasonable period
after the expiration of the cure period.
(ii) In the event of nationalization, expropriation, liquidation or
bankruptcy of, or an assignment for the benefit of creditors
or insolvency of either party.
7.0 PROCEDURES OF TERMINATION
7.1 Procedures: Upon the termination of this Agreement, except for cause
pursuant to Section 6.2 (ii), CM shall continue to honor BUYERS
orders for Products up to the effective date of termination and for
a period of sixty (60) days thereafter, provided such orders are no
greater than ten percent (10%) above the quantities established
during the sixty (60) days prior to the date of the notice of
termination, and BUYER shall pay for all such Products on the terms
and conditions of this Agreement. When the termination of this
agreement occurs all of BUYERS
machinery will be returned to BUYER at CM's cost to a San Diego
location and all money owed to CM will be paid in full upon BUYER'S
receipt of equipment. BUYER agrees to purchase at CM's cost raw
materials that were purchased specifically for BUYER'S product
excluding the frame rails- not to exceed a thirty-day supply of
materials.
7.2 Survival: The right and duties of each party under this Agreement
and the Exhibits hereto in respect of performance prior to
termination shall survive and be enforceable in accordance with the
terms of this Agreement.
8.0 CONFIDENTIALITY
The parties expressly agree to hold as confidential ("Confidential
Information") the existence and terms of this Agreement as well as any
information which is designated in writing by the disclosing party as
confidential, provided such information is clearly marked as confidential,
and the disclosing party obtains a signed receipt or agreement from the
receiving party acknowledging that such information is confidential. In
the event Confidential Information is exchanged according to these
guidelines, the other party will retain such information in confidence for
a period of two (2) years following the termination of this Agreement. The
transmittal of such information is and shall be upon the express condition
that the information is to be used solely to effectuate this Agreement;
and the receiving party shall not use, publish or disclose said
information, in whole or in part, for any purpose other than that stated
herein. CM expressly acknowledges and agrees that BUYER'S customer names,
address and key contacts are and shall be the Confidential Information of
BUYER. Notwithstanding the foregoing, the above restrictions on disclosure
and use shall not apply to any information which the party can show by
written evidence, was known to it at the time of receipt, or which may be
obtained from third parties who are not bound by a confidentiality
agreement, or which is in the public domain.
9.0 MISCELLANEOUS
8.1 Force Maieure: The obligations of either party to perform under this
Agreement shall be excused during each period of delay if such delay
arises from any cause or causes which are reasonably beyond the
control of the party obligated to perform, including, but not
limited to, the following: acts of God, acts or omissions of any
government, or any rules, regulations or orders of any governmental
authority or any officer, department, agency or instrumentality
thereof; fire, storm, flood, earthquake, insurrection, riot,
invasion or strikes. The affected party shall use its best efforts
to remedy the effects of such force majeure. Any force majeure shall
not excuse performance by the party, but shall postpone performance,
unless such force majenre continues for a period in excess of ninety
(90) days. In such event, the party seeking performance may cancel
its obligations hereunder.
8.2 Assignment: Neither this Agreement nor any right or obligation
hereunder is assignable or transferable by either party in whole or
in part without the prior written consent of the other party which
shall not be unreasonably withheld, and any such purported
assignment without such consent shall be void, except that either
party shall have the right to assign this Agreement and its rights
and obligations hereunder, without obtaining the prior written
consent ofthe other party, to any entity (other than a competitor of
the other party hereto) with which the assigning party (a) merges,
(b) sells a substantial part of its assets or businesses, or (c)
sells a substantial part of its assets or business relating to the
Products.
8.3 Notices: Any notice required by this Agreement shall be in writing
and shall be deemed sufficient if given personally or by registered
or certified mail, postage prepaid, or by any nationally recognized
overnight delivery service, addressed to the party to be notified at
the address set forth in the initial paragraph of this Agreement.
Either party may, by notice to the other, change its address for
receiving such notices.
8.4 Entire Agreement: This Agreement, including exhibits, constitutes
the entire agreement between the parties relating to the subject
matter hereof and cancels and supersedes all prior agreements and
understandings, whether written or oral, between the parties with
respect to such subject matter.
8.5 Existing Obligations: CM warrants that the terms of this Agreement
do not violate any existing obligations or contracts of CM. CM shall
protect, defend, indemnify, and hold harmless BUYER from and against
any claims, demands, liabilities or actions which are hereafter made
or brought against BUYER and which allege any such violation.
8.6 Modifications, Waiver: No amendment, modification or claimed waiver
of the terms of this Agreement shall be binding on either party
unless reduced to writing and signed by an authorized officer of the
party to be bound. In ordering and delivery of the Products, the
parties may employ their standard forms, but nothing in those forms
shall be construed to modify or amend the terms of this Agreement
8.7 Relationship of the Parties: This Agreement does not constitute
either party as the agent or legal representative of the other for
any purpose whatsoever.
8.8 Public Announcements: Except as may be required by law, CM shall not
issue or cause to be issued any press release or public announcement
or otherwise disclose the existence of this Agreement or the
transactions contemplated hereby except as and to the extent that
BUYER and its parent jointly agree, in writing.
8.9 Governing Laws: This Agreement shall be governed by and construed in
accordance with the laws of the State of California
8.10 Insurance: CM to add BUYER as an additional insured and increase
liability insurance to $5,000,000 BUYER to add CM to liability
policy
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives.
Allergy Free LLC
By: ____________________________
Title: ____________________________
Date: ____________________________
American Metal Filter Company
By: ____________________________
Title: ____________________________
Date: ____________________________
