EXHIBIT 10.2
SUPPLY AGREEMENT
This Supply Agreement (this "Agreement") is made the 28th day of
March, 2006, by and between Xxxxx'x Liquid Gold-Inc., a Colorado
corporation ("Purchaser"), and Keltec Dispensing Systems USA,
Inc., a Delaware corporation ("Supplier").
RECITALS
A. Purchaser currently manufactures the plastic caps and
containers listed on Exhibit A (the "Parts") for use in spray
aerosol cans and other products.
B. Purchaser is selling to Supplier certain plastic
molding machines and other equipment (the "Equipment"), as more
particularly described in an Acquisition Agreement between the
parties of even date herewith, and leasing to Supplier
manufacturing, warehouse, and office space (the "Leased Space"),
as more particularly described in a Lease between the parties
of even date herewith. Prior to this Agreement, Purchaser used
the Equipment and Leased Space to manufacture the Parts.
C. Following the sale of the Equipment and lease of the
Leased Space, Purchaser wishes to outsource to Supplier the
manufacture of the Parts. Supplier has the expertise to
manufacture the Parts and wishes to commence manufacturing the
Parts for Purchaser.
AGREEMENT
In consideration of the foregoing recitals, which are hereby
incorporated by this reference, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS.
1.1 Specific Definitions. As used herein, the following
terms shall have the meanings set forth below:
"Renewal Period" means the 12-month period immediately
following the Open Costing Period or any prior Renewal Period, if
the parties elect to renew this Agreement pursuant to Section 9.2.
"Renewal Prices" means the Prices applicable for any
Renewal Period, as agreed to by the parties.
"Initial Period" means the 12 months from Closing
date, on any business day prior to July 1, 2006. Purchaser shall
provide Seller with written notice of the desired Closing date
at least five (5) business days prior thereto and the Closing
shall occur on such date unless Seller requests a later date
that is within five (5) business days of the date Purchaser
requested. In all events the parties shall use their reasonable
efforts to select a mutually acceptable Closing date.
"Initial Requirement Estimates" means the estimates of
requirements of Purchaser for Parts for the Initial Period, as
set forth in Exhibit A hereto.
"Intellectual Property" has the meaning set forth in
Section 7.1.
"License" has the meaning set forth in Section 7.2.
"Open Costing Data" has the meaning set forth in
Section 3.2.
"Open Costing Prices" has the meaning set forth in
Section 3.2.
"Open Costing Period" means the six months immediately
following the Initial Period
"Parts" has the meaning set forth in Recital A.
"Initial Prices" means the Prices for the Initial
Period set forth in Exhibit A.
"Period" means, as applicable, the Initial Period, the
Open Costing Period, and any Renewal Period.
"Prices" means the price per Part, including, as
applicable, the Initial Prices, the Open Costing Prices, and any
Renewal Prices.
"Purchase Order" means any purchase order issued from
time to time by Purchaser to Supplier for the purchase of Parts.
"Specifications" means the specifications provided by
Purchaser to Supplier for all Parts to be supplied hereunder, as
such specifications are applicable to each such Part.
1.2 General Application and Interpretation. Unless a
clear contrary intention appears, as used herein (a) the singular
includes the plural and vice versa, (b) reference to any document
means such document as amended from time to time, (c) "include"
or "including" means including without limiting the generality of
any description preceding such term, (d) the word "or" is not
exclusive, unless otherwise expressly stated, (e) the terms
"hereof," "herein," "hereby," and derivative or similar words
refer to this entire Agreement including the Exhibit attached
hereto and incorporated herein by this reference, as the same
may be amended from time to time, and (f) headings are for
convenience only and do not constitute a part of this Agreement.
2. PRODUCTION OF PARTS.
2.1 Specifications. Supplier shall manufacture the Parts
in accordance with the mutually agreed Specifications. In the
event of any changes to the Specifications, Purchaser shall
provide 30 days written notice to Supplier of such changes to
the Specifications; provided, however, that if such changes to
the Specifications are unacceptable to Supplier, this Agreement
shall immediately terminate.
2.2 Initial Requirement Estimates. Purchaser has provided
to Supplier its Initial Requirement Estimates on Exhibit A hereto.
2.3 Open Costing Period Estimates. At least 30 days prior
to the start of the Open Costing Period, Purchaser shall provide to
Supplier an estimate of its requirements for Parts for the Open
Costing Period.
2.4 Renewal Period Estimates. If the parties agree to
renew this Agreement for any Renewal Periods, Purchaser shall
provide an estimate of its requirements for Parts for each Renewal
Period to Supplier at least 30 days prior to the start of such
Renewal Period.
2.5 Mold Maintenance. Purchaser is responsible for
purchase, repair, and maintenance of mold.
2.6 Purchase of Keltec Dispensing System Technologies.
Keltec Dispensing Systems USA, Inc., offers to SLG their entire
dispenser range from Keltec Dispensing Systems USA, Inc., for cost
price plus 3% margin (normal 35%), this through an open
calculation from Keltec Dispensing Systems USA, Inc. Xxxxx'x
Liquid Gold-Inc. intends to start and buy and use at least 1 type
of the Keltec Dispensing System dispenser ranges as soon as
possible in 2006.
3. PRICING
3.1 Initial Period Pricing. During the Initial Period,
Purchaser shall pay the Initial Prices as indicated on Exhibit A.
3.2 Open Costing Period Pricing. At least 30 days prior
to the start of the Open Costing Period, Supplier shall provide to
Purchaser a detailed summary of its costs of manufacturing the
Parts, including raw materials, utilities, labor, overhead charges,
and any other costs, including anticipated profit margin
(collectively, the "Open Costing Data"). During the 30 days
before the start of the Open Costing Period, the Parties shall
negotiate in good faith on the basis of the Open Costing Data to
adjust the Prices for the Open Costing Period (the "Opening
Costing Prices"); provided, however, that if the parties are not
able to agree on Open Costing Prices, the Prices for the Open
Costing Period shall be equal to the Initial Prices.
3.3 Renewal Period Pricing. At least 30 days prior to the
end of the Open Costing Period or any Renewal Period, in its
discretion Purchaser may provide to Supplier price quotations
received from other suppliers for the manufacture of the Parts,
as a basis for good faith negotiations regarding Renewal Prices.
The renewal product pricing will be revised through an open
costing format and adjusted to a level that is mutually agreeable
to both parties, using as a guideline a quotation provided by
Purchaser of February 2006 from a local Denver supplier. A copy of
this quote has been shared. If the parties are able to agree on
Renewal Prices for a Renewal Period, this Agreement may be
renewed pursuant to Section 9.2. If the parties are unable to
agree on Renewal Prices for any Renewal Period, this Agreement
shall terminate pursuant to Sections 9.1 or 9.2.
3.4 Cost Adjustments. Keltec Dispensing Systems USA, Inc.,
will deliver the Parts at a fixed price for the needed volumes
based on the estimates in Exhibit A for the lifetime of the
mentioned products. However, the price as determined under
sections 3.1, 3.2, and 3.3 are subject to adjustment for the
following; raw material increases and decreases will be
transferred in the purchase prices of the mentioned plastic parts
every 3 months with a +/-5% window, and will use Xxxxx-Euwid as
an index for raw material costs.
4. ORDERING, INVOICING AND PAYMENT
4.1 Purchase Orders. Monthly, Purchaser shall provide to
Supplier Purchase Orders indicating the number of Parts needed and
the time frame for delivery, including rolling forecasts and lead
times.
4.2 Invoices and Payment. Supplier shall provide weekly
invoices to Purchaser, detailing the number of Parts manufactured
and delivered during such month, and total payment due based on
the Prices then applicable. Payment terms shall be net 30 days.
5. DELIVERY OF PARTS.
5.1 On Site. Supplier shall manufacture the Parts in the
Leased Space, and shall provide delivery to Purchaser by providing
written notice to Purchaser upon the completion of all Parts in a
Purchase Order. If for any reason Supplier does not manufacture
the Parts in the Leased Space, Supplier will pay shipping costs.
5.2 Title. Title to and risk of loss or damage to the
Parts vest in Purchaser at the time Supplier delivers the Parts
to the Purchaser.
6. WARRANTY.
Supplier warrants that the Parts shall (a) conform to the
mutually agreed Specifications; (b) shall be free from defects in
material and workmanship; (c) be merchantable and fit for the
purpose for which they are intended; and (d) be without variation
and of even kind and quality. THE FOREGOING WARRANTIES ARE MADE
IN LIEU OF, AND SUPPLIER HEREBY DISCLAIMS, ALL OTHER EXPRESS OR
IMPLIED WARRANTIES PROVIDED BY LAW.
7. INTELLECTUAL PROPERTY
7.1 Ownership of Intellectual Property. Purchaser owns
all right, title, and interest in and to the technology, design,
drawings, intellectual property, tradename, trademark, patents,
and any other property interests related to the Parts (the
"Intellectual Property"). Any further inventions or improvements
made by Purchaser with regard to Parts shall inure to the benefit
of and become the property of the Purchaser.
7.2 Nonexclusive License. Purchaser grants to Supplier a
non-exclusive right and license to use the Intellectual Property
solely for the manufacture of Parts for Purchaser pursuant to this
Agreement (the "License"). Supplier may use the Intellectual
Property solely to manufacture the Parts for Purchaser.
8. ADDITIONAL SUPPLIER COVENANTS.
8.1 Capabilities. Supplier represents, warrants, and
covenants that Supplier has the equipment capabilities and
qualified personnel to timely satisfy Purchaser's requirements.
8.2 Confidentiality. Mutual information disclosed to
Supplier and Purchaser pursuant to this Agreement including the
Specifications, the Intellectual Property, and information
concerning trade secrets, research projects, costs, profits,
markets, sales, customer lists, strategies, plans for future
development, or any other information of a similar nature
(collectively, the "Confidential Information"), is proprietary
and confidential. Supplier shall keep the Confidential
Information confidential and shall take all reasonable
precautions, which shall not be less than those precautions
taken by Supplier for its own proprietary information, to prevent
any Confidential Information received by Supplier from being
divulged to third parties including officers and employees of
Supplier not having a legitimate need therefor. Notwithstanding
the foregoing, "Confidential Information" shall not include:
information presently in the public domain; information which
becomes part of the public domain except as a result of the acts
of Supplier; or information which Purchaser agrees in writing
may be disclosed. If Supplier is requested or becomes legally
compelled to disclose any of the Confidential Information,
Supplier shall provide Purchaser with prompt written notice
thereof so that Purchaser may seek a protective order or other
appropriate remedy or, if appropriate, waive compliance with the
provisions of this Agreement. If such protective order or other
remedy is not obtained, or Purchaser waives compliance with the
provisions of this Agreement, Supplier shall (a) furnish only
that portion of the Confidential Information that, upon the
advice of legal counsel, it is legally required to disclose, and
(b) exercise reasonable efforts to obtain assurance that
confidential treatment will be afforded such Confidential
Information. The foregoing confidentiality obligation shall
continue after the termination of this Agreement.
9. TERM AND TERMINATION.
9.1 Initial Term. This Agreement shall begin on the date
hereof, and unless renewed pursuant to Section 9.2, shall terminate
at the end of the Open Costing Period.
9.2 Renewal. This Agreement may be renewed for additional
12-month periods upon the mutual consent of the parties (each a
"Renewal Period"), provided that the parties have agreed to
Renewal Prices for such Renewal Period. This Agreement shall
terminate at the end of any Renewal Period unless renewed for a
subsequent Renewal Period pursuant to this Section.
9.3 Termination. In addition to the automatic
termination provisions above, this Agreement may be terminated
under the following conditions:
(a) by the parties upon mutual agreement;
(b) at Purchaser's discretion, if there is a
material breach of this Agreement by Supplier which is not cured
within seven days following notice of such breach, including
breaches related to late shipments, delivery of defective Parts
to a degree that is unacceptable to Purchaser; and breaches of
its confidentiality obligations, provided, however, that breaches
of such confidentiality obligations shall have no cure period;
(c) at Supplier's discretion, if there is a material
breach of this Agreement by Purchaser that is not cured within
seven days following notice of such breach, including breaches
related to continuous late payments for the Parts; or
(d) during any Renewal Period, by the provision of
30 days written notice by either party.
9.4 Effect of Termination. Upon termination of this
Agreement, Supplier shall (a) complete and deliver any Parts
ordered by Purchaser under any outstanding Purchase Orders;
(b) provide a final invoice to Purchaser detailing any
outstanding amounts due; (c) return all Confidential Information
relating to Purchaser in Supplier's possession or under its
control. Upon receipt of the final invoice from Supplier,
Purchaser shall promptly pay any remaining amounts due. The
License shall
immediately terminate upon termination of this Agreement, except
that Supplier shall be permitted to use the Intellectual Property
to complete any outstanding Purchase Orders.
10. MISCELLANEOUS.
10.1 Notices. All notices and other communications that
are required or permitted to be given to the parties under this
Agreement shall be sufficient in all respects if given in writing
and delivered in person, by electronic mail, by telecopy, by
overnight courier, or by certified mail, postage prepaid, return
receipt requested, to the receiving party at the address below or
to such other address as such party may have given to the other
by notice pursuant to this Section.
If to Purchaser Xxxxx'x Liquid Gold-Inc.
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
If to Supplier Keltec Dispensing Systems USA, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Notice shall be deemed given on the date of delivery, in the case
of personal delivery, electronic mail, or telecopy, or on the
delivery or refusal date, as specified on the return receipt in
the case of certified mail or on the tracking report in the case
of overnight courier.
10.2 Assignment. This Agreement may not be assigned by
Supplier without the prior written consent of Purchaser.
10.3 No Joint Venture. Nothing contained in this
Agreement shall be deemed or construed as creating a joint
venture or partnership among the parties. No party shall have
the power to control the activities or operations of another
party, and their status is, and at all times shall continue to
be, that of independent contractors with respect to each other.
No party shall hold itself out as having authority or relationship
in contravention of this Section.
10.4 Injunctive Relief; Arbitration. There is not an
adequate remedy at law for a breach of Sections 7.1, 7.2, and 8.2,
and the Purchaser shall suffer irreparable harm as a result of
such breach. Therefore, if a breach of these sections occurs, in
addition to any other rights or remedies it may have, Purchaser
shall be entitled to immediate and permanent injunctive relief.
Except for such injunctive relief, in which case relief may (but
is not obligated to be) be sought before any Federal, State, or
District court, any controversy, claim, or dispute arising under
or related to this Agreement shall be finally resolved by
arbitration in accordance with the then-effective rules of the
American Arbitration Association ("AAA") and limited discovery
shall be permitted; provided, however, that there is no
requirement that the arbitration proceed through or under the
auspices of the AAA.
10.5 Attorneys' Fees. If a party shall commence any action
or proceeding against another party in order to enforce the
provisions of this Agreement or to recover damages as a result of
the alleged breach of any of the provisions of this Agreement,
the prevailing party shall be entitled to recover all reasonable
costs in connection therewith, including reasonable attorneys' fees.
10.6 Entire Agreement; Amendments. This Agreement,
together with the Acquisition Agreement and Lease, constitutes the
entire agreement between the parties relating to the subject
matter hereof. All prior or contemporaneous agreements, whether
written or oral, among themselves or their agents and
representatives relating to the subject hereof are merged into
this Agreement. This Agreement may be altered, amended, or
revoked only by an instrument in writing signed by all the
parties hereto.
10.7 Severability. If any term or provision of this
Agreement shall, to any extent, be determined to be invalid or
unenforceable by a court or body of competent jurisdiction, the
remainder of this Agreement shall not be affected thereby, and
each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
10.8 Applicable Law. This Agreement shall be governed by
and construed according to the internal laws of the State of
Colorado. By execution of this Agreement, each party submits to
in personam jurisdiction in the State of Colorado.
10.9 Waiver. The failure of one of the parties to insist
upon the strict performance of any provision of this Agreement or
to exercise any right, power, or remedy upon a breach thereof shall
not constitute a waiver of that or any other provision of this
Agreement or limit that party's right thereafter to enforce any
provision or exercise any right.
10.10 Survival of Terms and Conditions. The terms and
conditions of this Agreement shall survive the expiration or
termination of this Agreement to the full extent necessary for
their enforcement and for the protection of the party in whose
favor they operate.
10.11 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and shall
together constitute one agreement. A facsimile, PDF, or electronic
signature to this Agreement shall be deemed an original and binding
upon the party against whom enforcement is sought.
10.12 Parties Bound by Agreement. This Agreement is binding
upon the parties hereto and upon their respective successors and
permitted assigns.
The parties have executed this Agreement as of the date above
written.
Supplier:
Keltec Dispensing Systems USA, Inc.
By:/s/ Xxxxx Kelders
Name: Xxxxx Kelders
Title: President
Purchaser:
Xxxxx'x Liquid Gold-Inc.
By:/s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: President
