Designates portions of this document have been omitted pursuant to a request for confidential treatment filed separately with the Commission] SUPPLY AGREEMENT
Exhibit
10.2
[*Designates
portions of this document have been omitted pursuant to a request
for
confidential
treatment filed separately with the Commission]
This
Supply Agreement (“Agreement”)
is
entered into and effective on June 22, 2007 (the “Effective
Date”),
by
and between Grain
Enhancement, LLC, a
Delaware limited liability company
(“Company”),
and
NutraCea, a California corporation (“NutraCea”)
on the
following terms and conditions:
BACKGROUND
AND PURPOSE
A. Operating
Agreement.
NutraCea and Pacific
Advisors Holdings Limited (“Pacific
Advisors”),
a
company incorporated under the laws of British Virgin Islands have entered
into
an Operating Agreement dated as of June 22, 2007 (“Operating
Agreement”)
establishing the Company in order to produce, sell, market and otherwise
distribute SRB (defined below) throughout the Territory (defined below). The
Company has obtained a license right from Pacific Advisors to produce SRB
pursuant to a sublicense of the License Agreement between NutraCea and Pacific
Advisors dated 22, 2007 (the “License”).
B.
Facilities.
The
Company desires to purchase SRB from NutraCea until the Company completes
construction of sufficient proprietary
rice bran stabilization facilities (“Facilities”)
within
the Territory and can produce sufficient amount of SRB to meet its marketing
and distribution needs in the Territory.
AGREEMENT
1. Definitions.
As used
herein, the following terms shall be defined in the manner set forth
below:
1.1. SRB.
“SRB”
means
stabilized rice bran and derivatives as set forth in Exhibit
A
attached
hereto, supplied by NutraCea hereunder, of a grade equal to or better than
the
grade customarily utilized for human consumption, in accordance with standards
reasonably established by NutraCea from time to time.
1.2. Territory.
“Territory”
means
the Republic of Indonesia, Vietnam, Thailand, Malaysia, Singapore, Australia
and
New Zealand.
2. Quality,
Ordering; Delivery.
2.1. Sale.
NutraCea agrees to sell to Company and Company agrees to purchase exclusively
from NutraCea all of Company‘s requirements for SRB that are not produced
directly by the Company.
2.2. Delivery.
Title
and risk of loss of all SRB sold hereunder shall pass to the Company, upon
the
SRB and proper documentation being delivered to the carrier at NutraCea’s
shipping point.
2.3. Ordering.
Purchase orders for the SRB shall be submitted by the Company at least two
(2)
weeks prior to the requested delivery date. NutraCea shall acknowledge each
such
order following receipt of the purchase orders. If any terms or conditions
contained in such purchase order or acknowledgement conflict with the terms
of
this Agreement, the terms and conditions of this Agreement shall apply to the
transaction. NutraCea agrees to fill all such purchase orders on the specified
delivery date, provided that such delivery date is at least ninety (90) days
after the receipt of the order or a binding forecast.
3. Exclusive
Supply; Obligations of the Parties; Minimum Purchase
Requirements.
3.1. Exclusivity.
During
the term of this Agreement, and with the exception of all SRB produced by the
Company from its Facilities, the Company agrees that NutraCea shall be the
exclusive supplier of Company’s requirements for SRB
for use
by Company with
respect to
any
products of Company that include SRB as an ingredient (the “Products”).
3.2. Restrictions.
Except
as expressly approved in writing, Company shall not market, sell or distribute,
directly or indirectly, SRB outside of the Territory or in competition with
NutraCea in Australia and New Zealand.
3.3. Reserved
Rights.
NutraCea reserves the right, in its sole discretion, to directly or indirectly
market and sell its SRB anywhere in the world outside of the Territory, and
to
appoint value added resellers, distributors and independent sales
representatives to directly or indirectly market and sell SRB and any and all
types of value added products anywhere in the world.
3.4. Obligations
of Parties.
In
furtherance of this Agreement, Company and NutraCea, as the case may be, shall
also be responsible for the following, each of which shall constitute a material
obligation of the party hereunder:
3.4.1. Company
Compliance with Laws.
Company
shall be solely responsible for complying with applicable laws and regulations
with respect to marketing, labeling, distributing, and selling the Products
in
the Territory, in the performance of its obligations hereunder, and in any
of
its dealings with respect to the Products. Company shall also obtain all
appropriate governmental and legal permits and consents required for the market
and sale of the Products.
3.4.2. Training;
Materials.
NutraCea shall provide Company with copies of its existing SRB marketing and
business development materials and other SRB related information available
to
NutraCea that would be reasonably useful to assist Company with marketing plans
and sales training for the Products; provided, however, that such access shall
not require NutraCea to disclose any information which is confidential product
and/or proprietary information, and Company shall not use any of these materials
in Company’s marketing or promotional materials without NutraCea’s express prior
written consent,
such
consent not to be unreasonably withheld or delayed.
3.4.3. Conduct
of Business.
Company
shall: (i) conduct its business in a professional and workmanlike manner that
reflects favorably on NutraCea, the SRB and the Products and in compliance
with
all applicable laws in the Territory; (ii) take all reasonable
actions
necessary to prevent and avoid deceptive, misleading or unethical practices
with
respect to any product; (iii) make no false or misleading representations with
regard to the Products or SRB; and (iv) make no representations, warranties
or
guaranties to anyone with respect to the specifications, features or
capabilities of the SRB that are inconsistent with NutraCea’s product
literature.
3.4.4. Product
Pricing; Marketing.
Company
shall be free to unilaterally determine the prices for the Products. Company
shall not discriminate unlawfully among customers in prices, terms or in any
other manner. Company shall be solely responsible for commercializing the
Products within the Territory, and shall be solely responsible for the manner
in
which it will advertise and otherwise promote the Products. Company shall
develop sales, marketing, advertising, labeling, content, and packaging for
the
Products for distribution as set forth herein,
and
any
portion
of such
materials that contains claims regarding SRB or utilizes NutraCea trademarks
or
logos shall be subject to the prior written approval of NutraCea.
3.4.5. Forecasts.
Company
acknowledges that NutraCea must make long-term commitments for SRB materials.
As
such, NutraCea requires that Company provide good faith forecasts of the amount
of SRB that it anticipates that it will purchase under this Agreement. On or
before the fifth (5th) day of each calendar month, Company shall provide
NutraCea with the following: (i) a tentative twelve (12) month forecast of
Company’s SRB requirements for shipping during each of the next twelve (12)
months; and (ii) a firm and binding commitment of the minimum amount of SRB
that
will be purchased by Company in the next [*].
The
Company shall promptly submit a purchase order under Section 2.3 for all SRB
included in a [*]
binding
forecast.
3.4.6. Labeling.
Company
shall not sell any animal grade SRB or derivatives of such product for human
use
or consumption. Company shall label all Products containing animal grade
product as
for
animal use only and shall notify its customers of this limitation in a
reasonable manner.
3.4.7. Storage
Requirements.
Company
acknowledges and agrees that the purchased SRB is perishable and as such,
Company shall: (i) comply with all reasonable
SRB
storage requirements provided by NutraCea; and (ii) be solely responsibility
for
the quality control of SRB after its receipt of the SRB.
3.4.8. No
Sales Outside of Territory; Export Control.
Company
shall not export, directly or indirectly, any of the Products to any other
country or province outside of the Territory without the express prior written
consent of NutraCea. If such consent is provided by NutraCea, Company shall
comply with all export laws, and import and/or export directly or indirectly
to
any other country, which export shall be subject to all applicable export laws,
regulations and rules. Company shall hold NutraCea harmless and indemnify it
for
any fines, penalties or other liability (including attorneys’ fees) that result
from or arise out of Company’s failure to meet these obligations.
3.4.9. Product
Complaints; Notification.
Company
shall promptly provide to NutraCea, detailed reports of any comments and
complaints received by Company relating to problems with SRB. In addition,
Company shall notify NutraCea in writing of any legal action, claim or
proceeding involving SRB or Products no later than five (5) days after Company
learns of any such claim or proceeding.
3.4.10. Minimum
Purchase.
Company
hereby agrees that (i) within [*]
calendar
days following the date of this Agreement, Company shall place an initial
purchase order with NutraCea for at least [*]
U.S.
Dollars ($ [*])
of SRB
(the “Initial Purchase Order”) and (ii) within [*]
from
the
date of the Initial Purchase Order, Company, shall place a subsequent purchase
order with NutraCea for [*]
U.S.
Dollars ($ [*])
of SRB.
Other than the foregoing purchase order and all amounts forecast in a
[*]
binding
commitment pursuant to Section 3.4.5, Company shall not be obligated to purchase
any additional amount, or any minimum amount, of SRB under this
Agreement.
3.4.11. Supply
Obligations.
NutraCea agrees to produce and have available sufficient SRB to fill all amounts
forecast in a [*]
binding
commitment pursuant to Section 3.4.5, and to have such amounts available for
delivery to Company.
4. Prices;
Payments and Taxes.
4.1. Prices.
Until
the first anniversary of this Agreement, the purchase price of all SRB purchased
hereunder shall be [*]
U.S.
Dollars ($ [*])
per
metric ton of SRB. In the event that this Agreement is still in effect after
the
first anniversary hereof, the purchase price for all SRB sold to Company under
this Agreement shall be [*]
metric
ton of SRB (including the cost or acquiring the raw rice bran from third party
sources, but excluding general corporate overhead and other administrative
costs
not directly related to the production of the SRB). NutraCea shall provide
written notification to Company
of
price
increases after the first anniversary no less than sixty (60) days prior to
any
such price change.
4.2. Payment
of Prices and Charges.
Full
payment of all purchase orders shall be due and payable to NutraCea, in
immediately available funds, within ten (10) days by wire transfer or by check,
from the date of delivery to the shipping point as verified by the carrier
selected to transport the SRB. All prices are exclusive of shipping and handling
charges, which shall be invoiced to Company.
All
payments shall be made in United States Dollars. Company
shall
not
take any credits or offsets against amounts billed Company
by
NutraCea without NutraCea’s prior written consent.
4.3. Late
Payment.
Late
payments shall
accrue interest at a rate of [*]
percent
([*]
%)
per
month or the maximum permissible statutory rate if it is less. In the event
that
Company
fails
to
fulfill the terms of payment, NutraCea may decline to make further deliveries
and suspend its performance under this Agreement until all amounts due are
paid
by Company
in
full.
4.4. Taxes;
Withholding.
Any and
all amounts payable under this Agreement do not include any government taxes
(including without limitation sales, use, excise, and value added taxes, or
other taxes or tariffs) or duties imposed by any governmental agency that are
applicable to the export, import, or purchase of the product(s),
and
Company
shall
bear all such taxes and duties. The foregoing does not apply, however, to income
taxes payable by NutraCea to state or municipal governments of the United
States. When NutraCea has the legal obligation to collect such taxes or duties,
the appropriate amount may be added to Company’s
invoice and paid by Company
unless
Company
provides
NutraCea with a valid tax exemption certificate authorized by the appropriate
taxing authority. Any such taxes which are otherwise imposed on payments to
NutraCea shall be the sole responsibility of Company.
Company
shall
hold NutraCea harmless for any taxing authority or such other responsibility
relative to this issue. All payments by Company
specified
in this Agreement are expressed as net amounts and shall be made free and clear
of, and without reduction for, any withholding taxes, unless otherwise provided
in this Agreement. Any such taxes which are otherwise imposed on payments to
NutraCea shall be the sole responsibility of Company.
If any
applicable law requires Company
to
deduct
or withhold amounts from any payments to NutraCea under this Agreement,
Company
shall
effect such deduction or withholding, remit such amounts to the appropriate
taxing authorities and promptly furnish NutraCea with tax receipts evidencing
the payments of such amounts. NutraCea shall provide all such assistance as
Company
may
reasonably require in obtaining such withholding tax certificates.
5. Term
and Termination.
5.1. Term.
Subject
to Section 5.2 below, the term of this Agreement shall commence as of the
Effective Date and shall continue for a period of [*].
Thereafter, the term shall continue on a month to month basis until terminated
by either party in writing upon [*]
days
written notice.
5.2. Termination.
Notwithstanding the foregoing, the indicated Party shall have the right to
terminate this Agreement with immediate effect upon the occurrence of one of
the
following:
(a) If
either
Party has become insolvent or bankrupt or has resolved to dissolve or liquidate
or be acquired, the other Party may terminate this Agreement without liability
to either Party.
(b) If
either
Party has committed a material breach of this Agreement and has failed to cure
such breach within thirty (30) days following notification of such breach by
the
other Party or such breach cannot be cured, the other Party shall have a right
to terminate; provided, however, that the right to cure a breach for non-payment
of invoices shall be five (5) business days.
6. Warranties
and Indemnity.
6.1. Warranty.
[*].
Payment
for goods specified herein shall not constitute an acceptance thereof. If
determined to be non-conforming pursuant to the foregoing provisions, SRB may
be
rejected by returning it for credit or replacement at the Company’s risk, and
all handling and transportation expenses both ways will be assumed by the
Company. Except as set forth in this Agreement, neither Company nor NutraCea
makes any representations or warranties of any kind, whether express or implied
(including without limitation any implied warranty of merchantability or fitness
of the Products for a particular purpose), under this Agreement.
6.2. Claims.
Company
shall notify NutraCea upon notification of any claim made against the
Products.
6.3. Technical
Service.
At the
request of Company, NutraCea shall furnish such technical advice (at no material
cost to NutraCea) as it has reasonably available to Company with respect to
the
SRB and Products.
7. Limitation
of Liability.
7.1. Limitation.
IN NO
EVENT WILL EITHER PARTY OR ITS AFFILIATES
BE
LIABLE TO THE OTHER PARTY OR
ANY
THIRD PARTY FOR
LOST
PROFITS, DATA OR BUSINESS, OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY
OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (WHETHER IN CONTRACT,
TORT (INCLUDING NEGLIGENCE, STRICT LIABILITY OR OTHERWISE). THE
LIMITATIONS SET FORTH IN THIS SECTION WILL APPLY EVEN IF A
PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING ANY
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
7.2. Waiver.
NUTRACEA MAKES NO WARRANTIES OR REPRESENTATIONS AS TO THE PERFORMANCE OF THE
SRB, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. ALL IMPLIED WARRANTIES,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY EXCLUDED.
8. Confidentiality.
8.1. Definition.
“Confidential
Information”
means
any information or compilation of information which is disclosed by one party
hereto (“Disclosing
Party”)
to
another party (“Receiving
Party”)
hereunder, which is proprietary to the Disclosing Party and which relates to
its
existing or reasonably foreseeable business, including, but not limited to,
trade secrets and information contained in or relating to product designs,
manufacturing methods, processes, techniques, tooling, sales techniques,
marketing plans or proposals, pricing and sales information, financial
information, existing or potential customer lists and all other customer
information. Information shall be treated as Confidential Information
irrespective of its source and all information which the Disclosing Party
identifies as being “confidential” or “trade secret” shall be presumed to be
Confidential Information. Notwithstanding the above, the term Confidential
Information shall not include information:
(a) which
was
in the public domain at the time of disclosure by the Disclosing Party to the
Receiving Party;
(b) which
is
published or otherwise comes into the public domain after its disclosure to
the
Receiving Party through no violation of this Agreement, by the Receiving
Party;
(c) which
is
disclosed to the Receiving Party by a third party not under an obligation of
confidence;
(d) which
is
already known by the Receiving Party at the time of its disclosure to the
Receiving Party by the Disclosing Party as evidenced by written documentation
of
the Receiving Party existing prior to such disclosure;
(e) which
is
independently developed by the Receiving Party through persons who have not
had,
either directly or indirectly, access to or knowledge of the Confidential
Information of the Disclosing Party, as evidenced by written documentation
of
the Receiving Party; or
(f) which
is
required to be disclosed by any law or governmental regulation or produced
under
order of a court of competent jurisdiction; provided, however, that the
Receiving Party provide the Disclosing Party written notice of such request
or
order and Disclosing Party is provided with an opportunity to attempt to limit
such disclosure.
8.2. Nondisclosure.
During
the term of this Agreement and at all times thereafter, the Receiving Party
agrees to hold in strictest confidence and to never disclose, furnish,
communicate, make accessible to any person or use in any way for the Receiving
Party’s own or another’s benefit any Confidential Information or permit the same
to be used in competition with the Disclosing Party. The Receiving Party agrees
to use prudent and reasonable means to protect the Confidential Information.
8.3. Injunctive
Relief.
In the
event of any breach of this Section 8, the parties agree that the non-breaching
party will suffer irreparable harm for which money damages would be an
inadequate remedy. Accordingly, the non-breaching party shall be entitled to
seek injunctive relief, in addition to any other available remedies at law
or in
equity.
9. Miscellaneous.
9.1 Assignment.
Neither
party may assign any of its rights or obligations under this Agreement to any
third party without the other party's prior written consent; provided, however,
that either party may assign its rights and obligations hereunder without the
other party's consent to a third party that is acquiring or merging with such
party or that is purchasing all or substantially all of such party's assets
(or
the line of business) that are the subject matter of this Agreement, provided
that the assignee expressly assumes all of such party's rights and obligations
under this Agreement.
9.2. Notices.
All
notices required hereunder shall be sent by certified mail return receipt
requested, express courier with a nationally recognized courier service or
by
telex confirmed by such certified mail, to the party to be notified at its
following address or at such other address as shall have been specified in
written notice from the party to be notified.
If
to
NutraCea:
NutraCea
0000
Xxxxx 00xx
Xxxxxx,
Xxxxx 000
Xxxxxxx,
XX 00000
Attn:
Xxxx Xxxxx
With
a
copy to:
Xxxxxxxxx
Genshlea Chediak Law Corporation
000
Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
Attn:
Xxxxx Xxxxxxx
If
to
Company:
Grain
Enhancement, LLC
0000
Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attn:
President
9.3. Entire
Agreement.
The
foregoing is the parties’ entire agreement, superseding all prior oral or
written agreements and understandings with respect to the subject matter hereof.
9.4. Modification
and Amendment.
This
Agreement may be modified or amended only in writing and signed by both
parties.
9.5. Survival.
The
provisions of this Agreement that by their terms or context are intended to
survive termination of this Agreement, shall so survive the termination of
this
Agreement.
9.6. Governing
Law.
The
parties agree that this Agreement shall be governed by the laws of the State
of
California. Company and NutraCea expressly agree that any action at law or
in
equity arising under this Agreement shall be filed only in the Courts of the
State of California in a county of competent jurisdiction or the United States
District Court in a California district of competent jurisdiction. The parties
hereby consent and submit to the personal jurisdiction of such courts for the
purposes of litigating any such action.
9.7. Recovery
of Legal Fees and Costs.
In the
event any litigation is brought by either party in connection with this
Agreement, the prevailing party in such litigation shall be entitled to recover
from the other party all the costs, attorneys' fees and other expenses incurred
by such prevailing party in the litigation.
9.8. Counterparts.
This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the
same
Agreement.
9.9. Binding
Agreement.
This
Agreement shall be binding upon and inure to the benefit of each of the parties
hereto, and their respective legal successors and permitted assigns.
9.10. Waiver.
Performance of any obligation required of a party hereunder may be waived only
by a written waiver signed by the other party, which waiver shall be effective
only with respect to the specific obligation described therein.
9.11. Severability.
If one
or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so
excluded and shall be
enforceable in accordance with its terms.
9.12. Publicity.
Neither
party shall disclose
the terms
of
this Agreement without the prior written consent of the other party, except
as
may be required by applicable law, in which event, the disclosing party shall
endeavor to give the non-disclosing party prompt notice in order to allow the
non-disclosing party the opportunity to seek a protective order. Notwithstanding
any of the foregoing to the contrary, (i) the terms and conditions of this
Agreement may be disclosed by a party to bona fide potential investors,
acquirors or partners of such party in the course of such person’s due diligence
investigation of such party, where such person has entered into a written
non-disclosure agreement with such party that includes terms no less restrictive
than those included herein,
and
(ii) either party may disclose the existence of this Agreement.
9.13. Indemnification.
Notwithstanding the availability and policy limits of any insurance, each party
shall defend, indemnify and hold the other, and its subsidiaries, divisions
and
affiliates and their respective officers, directors, agents and employees,
harmless from and against any and all losses, claims, liabilities, damages
and
legal actions, including reasonable attorneys’ fees and court costs, resulting
from, arising out of, or relating to (i) any breach by the indemnifying party
of
any representation,
warranty, covenant or agreement made by of such party set forth herein; and
(ii)
the inability or failure of the indemnifying party to perform any of its
obligations under this Agreement, except where the claims or legal actions
are
the sole result of the other party’s own negligent acts or omission. This
provision shall survive the termination, completion or expiration of this
Agreement.
9.14. Further
Action.
The
parties agree to take all action necessary or useful to complete and accomplish
the intentions of this Agreement.
9.15. Relationship
of the Parties.
Nothing
contained herein shall be construed to make Company the agent of NutraCea or
NutraCea the agent of Company for any purpose, except as specifically set forth
herein, and neither party shall have any right whatsoever to incur any
obligations on behalf of or binding upon the other party, except as specifically
set forth herein. Company agrees that at all times it shall act as an
independent contractor in accordance with the terms of this Agreement, as
amended hereby, and that it shall not at any time represent orally or in writing
to any person or entity that it has any right, power or authority not expressly
granted by this Agreement.
9.16. Force
Majeure.
No
liability shall result from delay in performance, or non-performance; caused
by
circumstances beyond the control of the party affected. including, but not
limited to, an act of God, fire, flood, war, Government action, accident, labor
trouble or shortage, inability to obtain material, utilities, equipment or
transportation. Quantities so affected may be eliminated from this Agreement
without liability, but this Agreement shall remain otherwise unaffected. Any
party claiming the benefit of this Section 9 shall promptly so notify the other
party.
[SIGNATURE
PAGE TO FOLLOW]
The
authorized representatives of the parties have executed this Agreement as of
the
Effective Date.
| NutraCea: | Grain Enhancement, LLC: |
| By: ______________________________ | By: ________________________________ |
| Title:_____________________________ | Title: _______________________________ |
Exhibit
A
SRB
Stabilized
Rice Bran and the stabilized ran bran solubles and stabilized rice bran
insoluble derivatives (from stage 2 processing)
Specifications
