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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 14, 1998
Bionutrics, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-22011
NEVADA 86-0760991
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2425 E. CAMELBACK RD., SUITE 650 85016-4214
PHOENIX, AZ 85016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 508-0112
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Registrant hereby amends its Current Report on Form 8-K for August 14,
1998, filed on August 31, 1998, solely to add certain exhibits required by Item
7 of Form 8-K.
Item No. 7 Exhibits
99.1 TECHNOLOGY AGREEMENT DATED AS OF AUGUST 14, 1998, BETWEEN AC
HUMKO CORP. AND BIONUTRICS ENTITIES*
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99.2 EXCLUSIVE SUPPLY AGREEMENT DATED AS OF AUGUST 14, 1998,
BETWEEN AC HUMKO CORP. AND BIONUTRICS ENTITIES*
* A portion of the exhibits as noted therein has been redacted
pursuant to a request for confidential treatment filed with
the Commission. The omitted information has been filed
separately.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: Bionutrics, Inc.
October 13, 1998
by /s/ George E. Duck, Jr.
---------------------------
George E. Duck, Jr.
Vice President, Finance
Secretary and Treasurer
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EXHIBIT INDEX
99.1 TECHNOLOGY AGREEMENT DATED AS OF AUGUST 14, 1998, BETWEEN AC
HUMKO CORP. AND BIONUTRICS ENTITIES*
99.2 EXCLUSIVE SUPPLY AGREEMENT DATED AS OF AUGUST 14, 1998,
BETWEEN AC HUMKO CORP. AND BIONUTRICS ENTITIES*
* A portion of the exhibits as noted therein has been
redacted pursuant to a request for confidential treatment
filed with the Commission. The omitted information has been
filed separately.
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Exhibit 99.1
TECHNOLOGY AGREEMENT
This TECHNOLOGY AGREEMENT (this "Agreement") is made and entered into
effective as of August 14th, 1998, (the "Effective Date"), by and between
Bionutrics, Inc., a Nevada corporation, with a place of business at 2425 E.
Camelback Road, Suite 650, Phoenix, Arizona 85016 ("Bionutrics"); Bionutrics
Health Products, Inc., a Delaware corporation, with a place of business at 2425
E. Camelback Road, Suite 650, Phoenix, Arizona 85016 ("BHP"); Nutrition
Technology Corporation, a Nevada corporation with a place of business at 2425 E.
Camelback Road, Suite 650, Phoenix, Arizona 85016 ("NTC"); InCon Technologies,
Inc., a Delaware corporation with a place of business at 2425 E. Camelback Road,
Suite 650, Phoenix, Arizona 85016 ("InCon"); LipoGenics, Inc., a Delaware
corporation, with a place of business at 2425 E. Camelback Road, Suite 650,
Phoenix, Arizona 85016 ("LipoGenics"); and Bionutrics International, Ltd., a
British Virgin Islands corporation, with a place of business at 2425 E.
Camelback Road, Suite 650, Phoenix, Arizona 85016 ("Bionutrics International");
(collectively the "Bionutrics Entities"); and AC Humko Corp., a Delaware
corporation, with a place of business at 7171 Goodlett Farms Parkway, Memphis,
Tennessee 38018 ("ACH").
W I T N E S S E T H :
WHEREAS, Bionutrics and ACH are entering into a Stock Purchase
Agreement, certain Bionutrics Entities will enter into a Supply Agreement with
ACH, and certain Bionutrics Entities will enter into an Agreement for Purchase
and Sale of Assets in connection with this Technology Agreement with ACH;
In consideration of the payment hereunder, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Bionutrics Entities, the Bionutrics Entities, jointly and
severally, and ACH agree as follows.
1. DEFINITIONS.
(a) "Intellectual Property" shall refer to all intellectual property
rights, including but not limited to, all Patents, Trade Secrets, Copyrights,
and Trademarks, owned by the Bionutrics Entities, whether solely or jointly,
that are used or can be used within the ACH Field of Use.
(b) "Patents" shall refer to (i) all patents, together with any foreign
counterpart patents or foreign counterpart patent applications, as well as any
reissued and reexamined patents and extensions corresponding to the patents that
are used or can be used within the ACH Field of Use, (ii) all patent
applications, as well as any related continuation, continuation in part, and
divisional applications and patents issuing therefrom and any respective foreign
counterpart foreign patent applications or foreign patents issuing therefrom
that are used or can be used within the ACH Field of Use; provided, however, the
foreign counterpart patents and foreign counterpart patent applications shall be
limited to North America. The Patents include, but are not limited to, the
patents and patent applications listed on Exhibit 1 (which include the Joint
Subject Matter Patents).
(c) "Joint Subject Matter Patents" shall refer to those Patents that
include claims directed to both (i) the ACH Field of Use; and (ii) the
Bionutrics Field of Use. As to all present patents and patent
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++ The notation [*] herein indicates information omitted pursuant to a
request for confidential treatment filed with the Commission. The confidential
information has been filed separately with the Commission.
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applications listed on Exhibit 1, the parties hereby agree that the patents and
patent applications that are not listed under the heading "Joint Subject Matter
Patents" are not Joint Subject Matter Patents and are therefore within the scope
of the assignment in Section 2(a).
(d) "Trade Secrets" shall refer to all secret, confidential or
non-public information or know-how owned by the Bionutrics Entities, whether
solely or jointly, including but not limited to, information, ideas, concepts,
improvements, discoveries, inventions, applications of products and services,
results of investigations, studies or experiments products, processes,
compositions, samples, formulas, computer programs, computer hardware designs,
computer firmware designs, and servicing, marketing or manufacturing methods and
techniques that are used or can be used within the ACH Field of Use. The Trade
Secrets include, but are not limited to, the Trade Secrets listed on Exhibit 2.
(e) "Copyrights" shall refer to all works of authorship owned by the
Bionutrics Entities, whether solely or jointly, or authored by the Bionutrics
Entities, whether solely or jointly that are used or can be used within the ACH
Field of Use. The Copyrights include, but are not limited to, the Copyrights
listed on Exhibit 3.
(f) "North America" shall refer to United States of America, Canada,
and Mexico.
(g) "Trademarks" shall refer to the trademarks, service marks, and
trade names, and the goodwill associated with such trademarks, service marks,
and trade names, listed on Exhibit 4.
(h) The "ACH Field of Use" shall refer to the processing in North
America of rice, rice bran, rice bran protein, rice bran oil, and other
rice-derived products (including but not limited to such processes as crushing,
stabilization, extraction, dewaxing, degumming, caustic refining and
deodorization), but excluding any processing steps following deodorization. The
ACH Field of Use expressly excludes processing steps involving [*].
(i) The "Bionutrics Field of Use" shall refer to all technology not
included within the ACH Field of Use, including all compositions of matter
(including formulations, compounds, foodstuffs and dietary supplements), methods
for treating/preventing diseases and processes not included in the ACH Field of
Use.
(j) "Tocols" shall refer to tocotrienols, tocopherols and mixtures
thereof.
(k) "Rice Bran Oil Distillate" shall refer to all rice bran oil
distillate that is not a Bionutrics Distillate.
(l) "Bionutrics Distillate" shall refer to rice bran oil distillate
that is produced using either (i) the [*] processes that are claimed in [*] or
(ii) the [*] processes that are described and claimed in [*].
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(m) "Clearesterol" shall refer to any [*] fraction [*].
(n) "Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with, any
other Person. A Person shall be deemed to control a corporation or similar legal
entity if such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such corporation or
similar legal entity, whether through the ownership of voting securities, by
contract or otherwise.
(o) "Person" shall mean any natural person, firm, partnership,
association, corporation, limited liability company, company, trust, entity,
public body or government.
2. ASSIGNMENT OF RIGHTS TO ACH.
(a) The Bionutrics Entities, individually and jointly, agree to assign
and transfer and hereby assign and transfer to ACH all of the right, title and
interest in and to all of the Intellectual Property, including but not limited
to, the Patents (excluding the Joint Subject Matter Patents), the Trade Secrets,
the Copyrights, and the Trademarks, including the right to sue for all past,
present, and future infringements and misappropriation, including damages, of
such Intellectual Property, in North America.
(b) The Bionutrics Entities, individually and jointly, agree to assign
and transfer and hereby assign and transfer to ACH an undivided joint and equal
interest in and to all of the Joint Subject Matter Patents. The Bionutrics
Entities and ACH hereby agree as follows with respect to their respective rights
and duties as to the Joint Subject Matter Patents:
(i) ACH shall have the exclusive rights as to all claims that
cover the ACH Field of Use. The Bionutrics Entities shall have no right
to grant any license, release, or immunity from suit as to the ACH
Field of Use, and the Bionutrics Entities shall have no right to make,
use, offer to sell, sell the patented invention within the ACH Field of
Use or import the patented invention within the ACH Field of Use. [*]
(ii) ACH shall have the exclusive right to sue in the name of
ACH (or if so required by the law of the forum, to bring suit in the
name of one or all of the Bionutrics Entities or join one or all of the
Bionutrics Entities as a party plaintiff with ACH) for all past,
present, and future infringement, including damages, of such Joint
Subject Matter Patents within the ACH Field of Use. Whenever such suit
is brought by ACH as provided above, ACH shall notify the Bionutrics
Entities in writing of such suit. The Bionutrics Entities shall have
the right, in any such suit brought by ACH, to be represented at their
own expense by counsel of their own selection; provided, however, that
ACH shall have control over such suit and any settlement of such suit,
except that ACH shall not enter into or agree to an order, consent
judgment, or the like that invalidates any of the claims of the Joint
Subject Matter Patents. The Bionutrics Entities
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shall fully cooperate with ACH in the bringing of such suit, including
making their employees available as needed for such suit.
(iii) The Bionutrics Entities shall have the exclusive rights
as to all claims that cover the Bionutrics Field of Use. ACH shall have
no right to grant any license, release, or immunity from suit as to the
Bionutrics Field of Use, and ACH shall have no right to make, use,
offer to sell, sell the patented invention within the Bionutrics Field
of Use, or import the patented invention within the Bionutrics Field of
Use. [*]
(iv) The Bionutrics Entities shall have the exclusive right to
sue in the name of the Bionutrics Entities (or if so required by the
law of the forum, to bring suit in the name of ACH or join ACH as a
party plaintiff with the Bionutrics Entities) for all past, present,
and future infringement, including damages, of such Joint Subject
Matter Patents within the Bionutrics Field of Use. Whenever such suit
is brought by the Bionutrics Entities as provided above, the Bionutrics
Entities shall notify ACH in writing of such suit. ACH shall have the
right, in any such suit brought by the Bionutrics Entities, to be
represented at its own expense by counsel of its own selection;
provided, however, that the Bionutrics Entities shall have control over
such suit and any settlement of such suit, except that the Bionutrics
Entities shall not enter into or agree to an order, consent judgment,
or the like which invalidates any of the claims of the Joint Subject
Matter Patents. ACH shall fully cooperate with the Bionutrics Entities
in the bringing of such suit, including making employees available as
needed for such suit.
(v) In the event that a suit involves issues as to both the
ACH Field of Use and the Bionutrics Field of Use, both parties shall
have the right to control the litigation as to their specific Fields of
Use. In the event that a suit is filed under Section 2(b)(i) - (iv),
the party not controlling the suit shall have no financial
responsibility for the suit beyond the expense of its own counsel.
(c) Subject to the terms of Section 2(f), the Bionutrics Entities
hereby agree to assign and transfer, and do hereby assign and transfer to ACH,
all right, title and interest in and to all Intellectual Property, including but
not limited to, the Patents (excluding the Joint Subject Matter Patents), the
Trade Secrets, and the Copyrights, developed, conceived, reduced to practice, or
acquired, whether by purchase or license, by any of or all of the Bionutrics
Entities for ten (10) years after the Effective Date of this Agreement,
including the right to sue for all past, present, and future infringements and
misappropriation, including damages, of such Intellectual Property, in North
America.
(d) Subject to the terms of Section 2(f), the Bionutrics Entities
hereby assign and transfer and do hereby assign and transfer unto ACH an
undivided joint and equal interest in and to all of the Joint Subject Matter
Patents developed, conceived, reduced to practice, or acquired, whether by
purchase or license, by any of or all of the Bionutrics Entities for ten (10)
years after the Effective Date of this Agreement. The Bionutrics Entities and
ACH hereby agree that Section 2(b)(i) - (v) shall also govern with respect to
their respective rights and duties as to the Joint Subject Matter Patents under
this Section 2(d).
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(e) The division of rights as to the Joint Subject Matter Patents in
this Section 2:
(i) shall not be construed to provide any of the Bionutrics
Entities with any right, claim, or cause of action against ACH or its
Affiliates arising out of the sale of products resulting from the
processing of rice, rice bran, rice bran oil, lecithin, waxes, rice
bran protein, Rice Bran Oil Distillates or any other rice-derived
products using any processing steps up through and including
deodorization such as crushing, stabilization, extraction, dewaxing,
degumming, caustic refining and deodorization.
(ii) shall be construed as absolutely and unconditionally
allowing the use and sale by ACH and its Affiliates of rice bran oil,
lecithin, waxes, rice bran protein, Rice Bran Oil Distillates or any
other rice-derived products produced by ACH or its Affiliates using the
Joint Subject Matter Patents or Intellectual Property,
(iii) shall be construed as allowing third parties acquiring
such rice bran oil, lecithin, waxes, rice bran protein, Rice Bran Oil
Distillates or any other rice-derived products produced by ACH or its
Affiliates using the Joint Subject Matter Patents or Intellectual
Property to use and sell such rice bran oil, lecithin, waxes, rice bran
protein, Rice Bran Oil Distillates or any other rice-derived products
without claims and causes of action asserted by the Bionutrics
Entities.
(iv) If a third party acquires such rice bran oil, lecithin,
waxes, rice bran protein, Rice Bran Oil Distillates or any other
rice-derived products produced by ACH or its Affiliates and such third
party either modifies or uses such rice bran oil, lecithin, waxes, rice
bran protein, Rice Bran Oil Distillates or any other rice-derived
products in such a way that it infringes the Bionutrics Entities Field
of Use, then the Bionutrics Entities shall have no claim, cause of
action, or remedy against ACH or its Affiliates for inducing such
alleged infringement or for ACH's sale of such rice bran oil, lecithin,
waxes, rice bran protein, Rice Bran Oil Distillates or any other
rice-derived products; provided, however, the Bionutrics Entities shall
retain all rights and remedies against any third parties for such third
party's allegedly infringing acts.
(f) As to Intellectual Property within the scope of Sections 2(c) and
(d) involving stabilization processes within the ACH Field of Use, the
Bionutrics Entities agree that all such Intellectual Property is hereby assigned
and transferred to ACH as set forth in Sections 2(a) and 2(b). As to such
Intellectual Property regarding stabilization processes, the Bionutrics Entities
shall disclose such Intellectual Property as set forth in Section 7 herein. As
to such Intellectual Property regarding stabilization for which there are rights
outside the ACH Field of Use, neither ACH nor the Bionutrics Entities shall file
a patent application anywhere in the world without the agreement of the other
party. As to any other Intellectual Property within the scope of Sections 2(c)
and (d) involving processing steps in the ACH Field of Use after stabilization
up to and through deodorization, the assignments contemplated under Sections
2(c) and (d) shall be subject to the following terms: All right, title and
interest in and to such Intellectual Property will remain in the Bionutrics
Entities. The Bionutrics Entities shall disclose such Intellectual Property as
set forth in Section 7 herein and provide ACH with the opportunity to acquire
the exclusive rights to such Intellectual Property within the ACH Field of Use.
The parties shall negotiate confidentially in good faith the price or
consideration for the transfer of such Intellectual Property. If ACH and
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the Bionutrics Entities are unable to agree as to the consideration, then the
Bionutrics Entities shall not use or disclose such Intellectual Property to any
third party.
(g) This Agreement is being entered in connection with and ancillary to
the Supply Agreement entered into by the parties on the Effective Date.
3. PAYMENT. In consideration of the assignment and representations and
warranties herein, the Company agrees to pay the Bionutrics Entities Two Million
Dollars ($2,000,000.00) by wire transfer at the time of the Closing. Such amount
shall be wire transferred to the following account in accordance with the
following wire transfer transactions:
[*]
Payment to such account in accordance with the foregoing instructions shall
constitute payment to all Bionutrics Entities and ACH shall not be responsible
for the application of such amount among the Bionutrics Entities.
4. REPRESENTATIONS AND WARRANTIES. The Bionutrics Entities represent
and warrant that:
(a) the Bionutrics Entities are legally free to make and perform this
Agreement, that the Bionutrics Entities have no obligation to any other person
or entity that would affect or conflict with any of their obligations hereunder,
and that the complete performance of the Bionutrics Entities' obligations
hereunder will not violate any law, regulation, order or decree of any
governmental or judicial body or contract by which any of the Bionutrics
Entities is bound;
(b) the patents and patent applications listed on Exhibit 1 are the
only patents or patent applications for which the Bionutrics Entities own or
have filed, jointly or solely, that relate to the ACH Field of Use;
(c) the Bionutrics Entities have not transferred to any third party, by
assignment, mortgage, security interest, license, or otherwise, any of the
rights or title in and to any of the Intellectual Property; and
(d) the Bionutrics Entities have full legal and equitable title to the
Intellectual Property.
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5. THE BIONUTRICS ENTITIES' COVENANT.
(a) The Bionutrics Entities, in order to induce ACH to enter into this
Agreement, expressly covenant and agree that during the Excluded Period, the
Bionutrics Entities will not, and the Bionutrics Entities will cause their
Affiliates not to, directly or indirectly, own, manage, operate, join, control
or participate in with any business, individual, partnership, firm or
corporation, which engages in any business that provides services within the ACH
Field of Use in North America. As used in this Section 5, "Excluded Period"
shall mean the term of this Technology Agreement, but commencing only upon the
Closing Date of the transfer of assets pursuant to the Agreement for Purchase
and Sale of Assets.
(b) Notwithstanding the restrictions contained in Section 5(a), the
Bionutrics Entities or any of their Affiliates may own an aggregate of not more
than 2.5% of the outstanding stock of any class of any corporation engaged in a
business within the ACH Field of Use, if such stock is listed on a national
securities exchange or regularly traded in the over-the-counter market by a
member of a national securities exchange, without violating the provisions of
Section 5(a), provided that none of Sellers or their Affiliates have the power,
directly or indirectly, to control or direct the management or affairs of any
such corporation and are not involved in the management of such corporation.
(c) The Bionutrics Entities further expressly covenant and agree that
for a period of two years from and after the Closing Date, the Bionutrics
Entities will not, and the Bionutrics Entities will cause their Affiliates not
to (1) engage or employ, or solicit or contact with a view to the engagement or
employment by any person who is (or in the twelve months prior to the Closing
Date has been) an officer or employee of NTC; or (2) canvass, solicit, approach
or entice away or cause to be canvassed, solicited, approached or enticed away
from ACH any person who or which is (or in the twelve months prior to the
Closing Date has been) a customer or client of NTC.
(d) To the extent that any part of this Section 5 may be invalid,
illegal or unenforceable for any reason, it is intended that such part shall be
enforceable to the extent that a court of competent jurisdiction shall determine
that such part, if more limited in scope, would have been enforceable, and such
part shall be deemed to have been so written and the remaining parts shall as
written be effective and enforceable in all events.
(e) The Bionutrics Entities and ACH agree and acknowledge that the
limitations as to time, geographical area and scope of activity to be restrained
as set forth in this Section 5 do not impose any greater restraint than is
necessary to protect the legitimate business interests of ACH. The Bionutrics
Entities and ACH further agree and acknowledge that, in the event of a breach or
threatened breach of any of the provisions of this Section 5, ACH shall be
entitled to immediate injunctive relief, as any such breach would cause ACH
irreparable injury for which it would have no adequate remedy at law. Nothing
herein shall be construed so as to prohibit ACH from pursuing any other remedies
available to it hereunder, at law or in equity for any such breach or threatened
breach.
(f) The Bionutrics Entities hereby represent to ACH that they have read
and understand, and agree to be bound by, the terms of this Section. The
Bionutrics Entities acknowledge that the geographic scope and duration of the
covenants contained in this Section are the result of arm's-length bargaining
and are fair and reasonable in light of (i) the nature and wide geographic scope
of the operations of NTC,
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(ii) the Bionutrics Entities' level of control over and contact with NTC
business and operations in all jurisdictions where same are conducted, (iii) the
fact that the NTC business is conducted throughout the geographic area where
competition is restricted by this Agreement, and (iv) the amount of
consideration that the Bionutrics Entities are receiving in connection with the
Agreement and the amount of the goodwill for which ACH is paying. It is the
desire and intent of the parties that the provisions of this Agreement be
enforced to the fullest extent permitted under applicable law, whether now or
hereafter in effect and therefore, to the extent permitted by applicable law,
the parties hereto waive any provision of applicable law that would render any
provision of this Section 5 invalid or unenforceable.
(g) From and after the Effective Date of this Agreement, none of the
Bionutrics Entities will directly or indirectly use in any manner any trade
name, trademark, service mark or logo listed on Exhibit 4 or any word or logo
that is similar in sound or appearance.
6. ACH'S COVENANT.
(a) ACH, in order to induce The Bionutrics Entities to enter into this
Agreement, expressly covenants and agrees with Bionutrics that during Excluded
Period, ACH will not, and ACH will cause their Affiliates not to, directly or
indirectly, own, manage, operate, join, control or participate in or with any
business, individual, partnership, firm or corporation, other than the
Bionutrics Entities, which engages in any business that markets or sells
Clearesterol in North America. As used in this Section, "Excluded Period" shall
mean [*] but in no event shall the Excluded Period extend beyond the term of
this Technology Agreement. In addition, the Excluded Period shall commence upon
the Closing Date of the transfer of assets pursuant to the Agreement for
Purchase and Sale of Assets. The covenant is this Section 6 shall only run in
favor of Bionutrics and shall not be assignable or transferable to a third
party.
(b) Notwithstanding the restrictions contained in Section 6(a), ACH or
any of its Affiliates may own an aggregate of not more than 2.5% of the
outstanding stock of any class of any corporation (other than the Bionutrics
Entities) engaged in a business that markets or sells Clearesterol in North
America, if such stock is listed on a national securities exchange or regularly
traded in the over-the-counter market by a member of a national securities
exchange, without violating the provisions of Section 6(a) provided that none of
ACH or its Affiliates have the power, directly or indirectly, to control or
direct the management or affairs of any such corporation and are not involved in
the management of such corporation.
(c) To the extent that any part of this Section may be invalid, illegal
or unenforceable for any reason, it is intended that such part shall be
enforceable to the extent that a court of competent jurisdiction shall determine
that such part, if more limited in scope, would have been enforceable, and such
part shall be deemed to have been so written and the remaining parts shall as
written be effective and enforceable in all events.
(d) ACH agrees and acknowledge that the limitations as to time,
geographical area and scope of activity to be restrained as set forth in this
Section 6 do not impose any greater restraint than is necessary to protect the
legitimate business interests of the Bionutrics Entities. ACH further agrees and
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acknowledges that, in the event of a breach or threatened breach of any of the
provisions of this Section 6, the Bionutrics Entities shall be entitled to
immediate injunctive relief, as any such breach would cause the Bionutrics
Entities irreparable injury for which it would have no adequate remedy at law.
Nothing herein shall be construed so as to prohibit the Bionutrics Entities from
pursuing any other remedies available to it hereunder, at law or in equity for
any such breach or threatened breach.
(e) ACH hereby represents to the Bionutrics Entities that it has read
and understands, and agrees to be bound by, the terms of this Section 6. ACH
acknowledges that the geographic scope and duration of the covenants contained
in this Section 6 are the result of arm's-length bargaining and are fair and
reasonable in light of the nature and wide geographic scope of the operations of
ACH, (ii) ACH's level of contact with the business and operations of Bionutrics
Entities in all jurisdictions where same are conducted, (iii) the fact that the
ACH business is conducted throughout the geographic area where competition is
restricted by this Agreement, and (iv) ACH's access to Bionutrics Intellectual
Property, including Trade Secrets, granted in this Agreement. It is the desire
and intent of the parties that the provisions of this Agreement be enforced to
the fullest extent permitted under applicable law, whether now or hereafter in
effect and therefore, to the extent permitted by applicable law, the parties
hereto waive any provision of applicable law that would render any provision of
this Section 6 invalid or unenforceable.
7. FURTHER ACTS AND COOPERATION. At the request of ACH, the Bionutrics
Entities, individually or jointly as may be requested by ACH, shall execute any
and all papers and perform all lawful acts that ACH may deem necessary or
appropriate to further evidence or carry out the transactions contemplated in
this Agreement including, without limitation, such acts as may be necessary for
the preparation, filing, prosecution, and maintenance of applications for United
States letters patent and foreign letters patent, the assignment of United
States letters patent and foreign letters patent (including but not limited to
those patents identified on Exhibit 1 and assigned under Section 2(a)), or for
United States and foreign copyright, on the Intellectual Property. The
Bionutrics Entities shall also assist and fully cooperate in every way, at ACH's
expense, in securing, maintaining, and enforcing, for the benefit of ACH or its
designee, patents, copyrights or other types of proprietary or intellectual
property protection for the Intellectual Property in any and all countries. In
addition, the Bionutrics Entities shall disclose and provide to ACH all
documents bearing, embodying or disclosing the Intellectual Property so as to
allow ACH to practice and protect such Intellectual Property. With respect to
Intellectual Property within the scope of Sections 2(c) and (d), the Bionutrics
Entities shall make disclosures of the current status and details of any such
Intellectual Property, including any projects, developments, or research within
the ACH Field of Use, every six months. These disclosures shall take place in
status meetings to be scheduled by ACH. ACH shall notify the Bionutrics Entities
of such status meetings. If no status meeting takes place for six months or
longer because ACH fails to schedule such meetings, the Bionutrics Entities will
not be in default of this provision. Once ACH notifies that no status meeting
has taken place for six months, the next status meeting shall take place
promptly but no later than thirty (30) days after such notice.
8. RESTRICTIONS ON TRADE SECRETS AND CONFIDENTIAL INFORMATION.
(a) During the term of this Agreement and thereafter, each of the
Bionutrics Entities agrees not to disclose to others, use, copy or permit to be
copied, except with the express written approval of
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<PAGE> 10
ACH, its successors, assigns or nominees, any of the Trade Secrets assigned
hereunder without the prior written consent of ACH.
(b) As to disclosures by the Bionutrics Entities of Intellectual
Property involving processing steps in the ACH Field of Use after stabilization
up to and through deodorization described in Section 2(f) and as to any
disclosures by ACH of confidential information or trade secrets regarding the
ACH Field of Use other than the Trade Secrets or developed, conceived, reduced
to practice, or acquired, whether by purchase or license, by ACH or its
Affiliates during the term of this Agreement, (collectively referred to in this
Section 8 as "Confidential Information"):
(i) ACH and the Bionutrics Entities agree to hold such Confidential
Information owned by the other party in the strictest confidence and shall
exercise due care to prevent the unauthorized disclosure of such information or
its use for any unauthorized purpose.
(ii) ACH and the Bionutrics Entities shall only disclose the
Confidential Information of the other party to their employees and officers (and
consultants, attorneys, and accountants) who have a need to have access to such
for the purposes of this Agreement, but shall not disclose the same to any
employee or officer who may use such for any other purpose. ACH and the
Bionutrics Entities shall require each employee and officer who is granted
access to such information to agree to abide by the terms of this Section 8.
(iii) ACH and the Bionutrics Entities agree that such Confidential
Information and any developments materially derived therefrom are and shall
remain the sole property of the party disclosing such Intellectual Property (the
"Disclosing Party") or the party owning such Intellectual Property in the case
of Intellectual Property acquired by ACH pursuant to Section 2(f)) .
(iv) Confidential Information shall exclude information that:
(1) is disclosed in a printed or online publication available
to the public, is described in an issued patent anywhere in the world,
is otherwise in the public domain at the time of disclosure, or becomes
publicly known through no wrongful act on the part of the party (or its
Affiliates) receiving the Confidential Information (the "Receiving
Party");
(2) is already known to the Receiving Party at the time of the
disclosure or becomes known to or lawfully available to the Receiving
Party through disclosure by a third party who has not received the
Confidential Information, directly or indirectly, from the Disclosing
Party under an obligation of secrecy;
(3) is disclosed to third parties by the Disclosing Party
without an obligation of confidence being imposed on such third
parties;
(4) is subsequently developed by or for the Receiving Party
without use of the Confidential Information by the Disclosing Party;
and
(5) the Disclosing Party expressly authorizes in writing shall
not be considered
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<PAGE> 11
Confidential Information.
(v) If a Disclosing Party discloses information it believes is
Confidential Information, the Disclosing Party shall specifically designate
materials bearing the confidential information "CONFIDENTIAL." If a Disclosing
Party discloses orally to the Receiving Party information the Disclosing Party
believes is confidential, the Disclosing Party shall within thirty days of such
disclosure reduce such information to writing and provide such writing to the
Receiving Party marked CONFIDENTIAL.
(f) If any portion of Confidential Information is required to be
disclosed to a governmental regulatory agency or commission, or is otherwise
required to be disclosed by law or regulation, subpoena, civil investigative
demand or similar process, the Receiving Party will inform the Disclosing Party
of such disclosure requirement as soon as practicable after notice of such
requirement is received and will further inform the Disclosing Party which
Confidential Information is required to be disclosed. The Disclosing Party shall
then be completely responsible for seeking any protective order to protect the
confidentiality of the Confidential Information. In the event that the
Disclosing Party is unable to obtain a protective order satisfactory to the
Disclosing Party, after the exhaustion of all applications for writs of mandamus
and all interlocutory appeals from the denial of such a protective order, the
Receiving Party shall have the right to disclose the specific Confidential
Information that is required to be disclosed in the particular proceeding.
9. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter of this Agreement and
supersedes all prior discussions between them, and neither of the parties shall
be bound by any modification of this Agreement, other than as expressly provided
in this Agreement or as duly set forth on or subsequent to the date hereof in
writing and signed by a duly authorized representative of the party to be bound
thereby. No oral explanation or oral information by either party hereto shall
alter the meaning or interpretation of this Agreement. This Agreement
incorporates the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements, documents, or other
instruments with respect to the matters covered hereby. The failure of either
party to enforce at any time any provision of this Agreement shall not be
construed as a waiver of such provision. Neither shall the waiver by either
party of a breach by the other party of any provision of this Agreement
constitute a continuing waiver of other breaches of the same provision or a
waiver of any breach of any other provision of this Agreement.
10. ASSIGNMENT. The obligations of this Agreement shall be binding upon
the parties hereto, their successors, assigns, and legal representatives. This
Agreement shall only be assignable or transferable by either ACH or the
Bionutrics Entities in connection with a merger or a sale of all or
substantially all of the assets of a party to which this Agreement relates;
provided, however, ACH may assign this Agreement any or all to its Affiliates;
and provided further, the sale or transfer of substantially all of the business
of ACH related to the Intellectual Property shall be deemed to constitute a sale
of all or substantially all of the assets of ACH for purposes of satisfying the
provisions of this Section 10. In the event of such an assignment or transfer,
the assignor or transferor shall advise the assignee or transferee of the
existence of this Agreement and the obligations hereunder, and such assignee or
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<PAGE> 12
transferee to whom such assignment or transfer has been made shall
unconditionally and without restriction expressly assume and succeed in writing
to all obligations and rights of the assigning party or parties under this
Agreement from and after the date thereof or from and after the date thereof by
executing an agreement memorializing such assumption and succession to such
obligations and rights and shall provide a copy of such agreement to the other
party or parties to this Agreement. Except as set forth in this Agreement, this
Agreement shall not be assignable by any party hereto without the express
written consent of the other parties hereto. Nothing in this Agreement shall be
construed as prohibiting ACH from transferring, assigning, licensing or
sublicensing any or all of its rights in and to the Intellectual Property that
is being assigned to ACH under Section 2 of this Agreement.
11. SEVERABILITY. Should any clause, sentence, term or paragraph of
this Agreement be declared by a court of competent jurisdiction to be invalid,
unenforceable, or void, such decision shall not have the effect of invalidating
or voiding the remainder of this Agreement, and the parties hereto hereby agree
that the part or parts of this Agreement so held to be invalid, unenforceable,
or void shall be deemed to have been stricken, and the remainder of this
Agreement shall have the same force and effect as if such part or parts had
never been included herein.
12. TERM. This term of this Agreement shall become effective on the
Effective Date and shall remain in effect throughout the life of the Patents and
such Patents as may be granted from any applications assigned under this
Agreement, and throughout the life of any other patents now or hereafter covered
by this Agreement.
13. GOVERNING LAW AND FORUM.
(A) CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, AND
INTERPRETED IN ACCORDANCE WITH THE PROVISIONS OF, THE LAW OF THE STATE OF
TENNESSEE, WITHOUT REFERENCE TO PROVISIONS THAT REFER A MATTER TO THE LAW OF ANY
OTHER JURISDICTION.
(B) FORUM SELECTION CLAUSE. THE BIONUTRICS ENTITIES (FOR THEMSELVES,
THEIR SUCCESSORS, AND ASSIGNS) AND ACH HEREBY IRREVOCABLY AGREE THAT ANY AND ALL
CLAIMS FOR RELIEF ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT (ALL OF WHICH ARE REFERRED
TO AS THE "CLAIMS"), WHETHER SUCH CLAIMS SOUND IN CONTRACT, TORT OR OTHERWISE,
AT LAW OR IN EQUITY, UNDER STATE OR FEDERAL LAW, WHETHER BY STATUTE OR COMMON
LAW, SHALL BE BROUGHT EXCLUSIVELY IN THE STATE OR FEDERAL COURTS LOCATED IN THE
JURISDICTION IN WHICH THE HEADQUARTERS OF THE DEFENDANT IN SUCH SUIT IS THEN
LOCATED. FOR EXAMPLE, AS OF THE EFFECTIVE DATE, ANY CLAIMS BROUGHT AGAINST ACH
SHALL BE BROUGHT EXCLUSIVELY IN MEMPHIS, TENNESSEE, AND ANY CLAIM BROUGHT
AGAINST BIONUTRICS SHALL BE BROUGHT EXCLUSIVELY IN PHOENIX, ARIZONA.
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<PAGE> 13
14. LIMITATIONS OF LIABILITY.
(a) IN NO EVENT SHALL ACH BE LIABLE TO ANY OR ALL OF THE BIONUTRICS
ENTITIES FOR ANY CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES BASED UPON BREACH
OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY, TORT OR ANY OTHER
LEGAL THEORY. SUCH EXCLUDED DAMAGES INCLUDE, BUT ARE NOT LIMITED TO, LOST
PROFITS, EVEN IF ACH HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(b) IN NO EVENT SHALL THE BIONUTRICS ENTITIES BE LIABLE TO ACH FOR ANY
CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES BASED UPON BREACH OF WARRANTY,
BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY, TORT OR ANY OTHER LEGAL
THEORY. SUCH EXCLUDED DAMAGES INCLUDE, BUT ARE NOT LIMITED TO, LOST PROFITS,
EVEN IF THE BIONUTRICS ENTITIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
16. NOTICES. Wherever under this Agreement one party is required or
permitted to give notice to the other party, such notice shall be in writing and
shall be delivered personally, sent by facsimile transmission, sent by
nationally recognized express courier or sent by certified, registered, first
class mail. Any such notice shall be deemed given when actually received when so
delivered personally, by facsimile transmission or by express courier, or if
mailed, on the fifth day after its mailing, postage prepaid to the recipient
party addressed as follows:
If to AC HUMKO:
AC HUMKO Corporation
7171 Goodlett Farms Parkway
Memphis, Tennessee 38018-4909
901-381-3066 (FAX)
Attention: Dennis W. Koerner
with a copy to: Vinson & Elkins, L.L.P.
1001 Fannin
2300 First City Tower
Houston, Texas 77002
713-615-5234 (FAX)
Attention: James B. Rylander
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<PAGE> 14
If to BIONUTRICS ENTITIES:
Bionutrics, Inc.
2425 E. Camelback Road
Suite 650
Phoenix, Arizona 85016
602-508-0115 (FAX)
Attention: Ronald H. Lane
with a copy to:
Friedman Siegelbaum L.L.P.
399 Park Avenue
20th Floor
New York, New York 10022
212-980-6991 (FAX)
Attention: J. Robert Horton
Either party may change its address by a notice given to the other
party in the manner set forth above.
EXECUTED as of the date first written above.
BIONUTRICS, INC.
By: /s/ Ronald H. Lane
Name: Ronald H. Lane
Title: President and Chief
Executive Officer
BIONUTRICS HEALTH PRODUCTS, INC.
By: /s/ Ronald H. Lane
Name: Ronald H. Lane
Title: President
NUTRITION TECHNOLOGY
CORPORATION
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<PAGE> 15
By:
Name: Michael Wells
Title: President
LIPOGENICS, INC.
By: /s/ Ronald H. Lane
Name: Ronald H. Lane
Title: Vice President
INCON TECHNOLOGIES, INC.
By:
Name: John Palmer
Title: Chairman and CEO
AC HUMKO CORP.
By: /s/ Wayne Briesemeister
Name: Wayne Briesemeister
Title: Vice President
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<PAGE> 16
EXHIBIT 1
PATENTS
<TABLE>
<CAPTION>
COUNTRY # STATUS
- ---------------------------------------------------------------------
<S> <C> <C>
United States [*] [*]
- ---------------------------------------------------------------------
</TABLE>
Joint Subject Matter Patents
<TABLE>
<CAPTION>
COUNTRY # STATUS
- ---------------------------------------------------------------------
<S> <C> <C>
United States [*] [*]
- ---------------------------------------------------------------------
Canada [*] [*]
- ---------------------------------------------------------------------
United States [*] [*]
- ---------------------------------------------------------------------
United States [*] [*]
- ---------------------------------------------------------------------
United States [*] [*]
- ---------------------------------------------------------------------
Canada [*] [*]
- ---------------------------------------------------------------------
Mexico [*] [*]
- ---------------------------------------------------------------------
United States [*] [*]
- ---------------------------------------------------------------------
United States [*] [*]
- ---------------------------------------------------------------------
United States [*] [*]
- ---------------------------------------------------------------------
United States [*] [*]
- ---------------------------------------------------------------------
</TABLE>
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<PAGE> 17
EXHIBIT 2
TRADE SECRETS
Proprietary information and know-how associated with:
- - the design and operation of the Monroe, Louisiana processing plant
- - rice bran oil extraction, degumming and dewaxing processes
- - the manufacture of Bionutrics Distillate Products including
Clearesterol, P25 etc. (including the deodorization process)
- - protein extraction and concentration from rice bran
- - rice bran procurement, handling and stabilization
- - the production of Rice Bran Oil Distillate and Derivative Products
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<PAGE> 18
EXHIBIT 3
COPYRIGHTS
Federal copyright rights in any reports, tables, drawings,
compilations, data and other writings owned by any of the Bionutrics Entities
within the ACH Field of Use.
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<PAGE> 19
EXHIBIT 4
TRADEMARKS
Common law rights in the name "Nutrition Technology Corporation", "Nutrition
Technology Corporation, Inc." and other like designations used by NTC in
identifying itself in business dealings with third parties.
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<PAGE> 1
Exhibit 99.2
EXCLUSIVE SUPPLY AGREEMENT
THIS EXCLUSIVE SUPPLY AGREEMENT ("Agreement"), entered into as of the
14th day of August, 1998 ("Effective Date"), is by and among BIONUTRICS, INC., a
Nevada corporation, with a place of business at 2425 E. Camelback Road, Suite
650, Phoenix, Arizona 85016 ("Bionutrics, Inc.") (together with any and all of
its Affiliates, "Bionutrics"); BIONUTRICS HEALTH PRODUCTS, INC., a Delaware
corporation, with a place of business at 2425 E. Camelback Road, Suite 650,
Phoenix, Arizona 85016 ("BHP"); INCON TECHNOLOGIES, INC., a Delaware corporation
with a place of business at 2425 E. Camelback Road, Suite 650, Phoenix, Arizona
85016 ("InCon"); (collectively the "Bionutrics Entities"); and AC HUMKO CORP., a
Delaware corporation, with a place of business at 7171 Goodlett Farms Parkway,
Memphis, Tennessee 38018 ("Humko").
INTRODUCTION
WHEREAS, as of the Effective Date, Humko has purchased certain common
stock and warrants of Bionutrics in a Stock Purchase Agreement and certain
technology from Affiliates and/or subsidiaries of Bionutrics, Inc., in a
Technology Agreement, and in consideration for the purchase of such stock,
warrants and such technology, the respective Bionutrics Entities agreed to enter
into this Agreement; and
WHEREAS, Humko, Bionutrics and various subsidiaries of Bionutrics,
intend to enter into an Agreement for Purchase and Sale of Assets after the date
hereof (upon terms agreeable to the parties thereto), which will provide (in
addition to other matters) for the purchase of substantially all or part of (at
the option of Humko) the assets of Nutrition Technology Corporation used in
connection with its business, and, as a condition to Humko's entering into any
such Agreement for Purchase and Sale of Assets, Humko has required Bionutrics to
enter into this Agreement, and Humko will not enter into such Agreement for
Purchase and Sale of Assets unless Bionutrics has entered into this Agreement;
and
WHEREAS, as a condition to Bionutrics' entering into such Technology
Agreement and Agreement for Purchase and Sale of Assets, Bionutrics has required
Humko to enter into this Agreement to supply Bionutrics and its Affiliates and
subsidiaries with Bionutrics Products, Bionutrics Distillate Products, Rice Bran
Oil Distillate, Derivative Products and Rice Bran Products, as defined herein;
and
WHEREAS, Bionutrics and its Affiliates and subsidiaries, including but
not limited to BHP and InCon, desire to purchase from Humko Bionutrics Products,
Bionutrics Distillate Products, Rice
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<PAGE> 2
Bran Oil Distillate, Derivative Products and Rice Bran Products, as defined
herein, for use by or for Bionutrics or any of its subsidiaries or Affiliates;
NOW, THEREFORE, in consideration of the premises and covenants set out
below, the sufficiency of which is acknowledged by the parties, Humko and
Bionutrics agree as follows:
1. DEFINITIONS.
A. As used in this Agreement, the terms "Humko," "Agreement,"
"Effective Date," and "Bionutrics" shall have the meanings indicated above.
B. As used in this Agreement, all other capitalized terms shall have
the meanings assigned such terms below:
"Affiliate" will have the meaning assigned to such term in the
Technology Agreement.
"Bionutrics Distillate" shall refer to [*].
"Bionutrics Distillate Products" will mean [*].
"Bionutrics Plants" will mean the manufacturing plants of Bionutrics
wherever located.
"Bionutrics Products" will mean all products produced, marketed, or
sold by the Bionutrics Entities, or produced, marketed or sold for the
Bionutrics Entities, or produced, marketed or sold by others for the Bionutrics
Entities, wherein each such product is produced, in whole or in part, from
Bionutrics Distillate, Rice Bran Oil Distillate, or Rice Bran Products.
The "Commissioning Date" shall mean the date determined solely by Humko
that (i) the Equipment is fully operational and producing the Bionutrics
Distillate, Rice Bran Oil Distillate, and Rice Bran Products described in the
Specifications, and (ii) all Bionutrics Products produced by the Equipment
conforms in all respects to the Specifications, but in no event shall the
Commissioning Date occur, subject to the terms of Section 10, later than six (6)
months following
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<PAGE> 3
the date that the assets purchased in connection with the Agreement for Purchase
and Sale of Assets are acquired by Humko.
"Confidential Information" shall have the meaning assigned to such term
in Section 13 hereof.
"Derivative Products" will mean products produced from the further
processing of Rice Bran Oil Distillate, including (but not limited to)
concentrated Tocol-containing fractions thereof.
"Distillate" will mean the [*] in the process of edible rice oil
refining that is isolated and collected.
"Equipment" will mean all equipment used in the production of the
Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative Products
and Rice Bran Products by Humko.
"Humko Plants" will mean the facilities of Humko (or third parties
under contract with Humko) at which Rice Bran Oil Distillate, Bionutrics
Distillate Products, and/or Rice Bran Products are produced wherever located.
"Intellectual Property" shall have the same meaning ascribed to that
term in the Technology Agreement.
"Price" will mean the price set forth in Exhibit A for Bionutrics
Distillate Products ordered and delivered in accordance with this Agreement.
"Rice Bran Oil Distillate" shall refer to all rice bran oil Distillate
that is not a Bionutrics Distillate.
"Rice Bran Products" shall refer to any products derived from the
processing of rice bran other than Rice Bran Oil Distillate and Bionutrics
Distillate, including but not limited to, carbohydrates, proteins, fibers, and
oils.
"Specifications" will mean the specifications and requirements for the
Bionutrics Distillate Products and the Rice Bran Oil Distillate set forth on
Exhibit B or as may otherwise be agreed by the parties during the Term of this
Agreement. The specifications and requirements for Rice Bran Products and
Derivative Products will be agreed to by the parties during the Term of this
Agreement, as appropriate.
"Technology Agreement" shall mean the Technology Agreement of even date
herewith by and among Humko, Bionutrics, Inc., and various Affiliates and
subsidiaries of Bionutrics, Inc.
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<PAGE> 4
"Term" will have the meaning assigned to such term in Section 2 hereof.
"Tocols" shall refer to tocotrienols, tocopherols and mixtures thereof.
2. TERM. The term of this Agreement (the "Term") shall be for twenty years
from the Effective Date, unless terminated earlier by either party
pursuant to the terms of this Agreement.
3. SUPPLY, PRODUCTION AND SHIPPING.
A. During the Term, but only after the Commissioning Date and subject to
Section 10:
(i) BIONUTRICS DISTILLATE PRODUCTS. [*]. The Price for Bionutrics
Distillate Products shall be set according to Exhibit A.
(ii) RICE BRAN PRODUCTS. In the event that Bionutrics desires to
obtain any Rice Bran Product for any Bionutrics Product during
the Term of this Agreement, Bionutrics shall first offer to
Humko the right to supply all of Bionutrics' requirements for
such Rice Bran Product for any such Bionutrics Product. This
right of first refusal shall operate as set forth in this
Section 3.A.(ii):
(a) [*]
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<PAGE> 5
(b) If, after Humko and Bionutrics discuss Humko's supplying
of requirements of such Rice Bran Product to Bionutrics, Humko
is unwilling or unable to supply such Rice Bran Product to
Bionutrics at Humko's established market price and terms, then
Bionutrics shall be free to contract with such third party for
its requirements of such Rice Bran Product and Bionutrics
shall no longer owe Humko any obligation with respect to
Bionutrics' requirements for such Rice Bran Product; provided,
however, the terms and provisions of Section 3.A.(ii)(c) shall
be applicable to such Rice Bran Product.
(c) In contracting with such third party for its requirements
of such Rice Bran Product, this Agreement shall not be
construed to grant to Bionutrics or any such third party, and
Humko expressly negates and reserves, any rights to use any of
the Intellectual Property in North America with respect to the
processing of, or providing of, any Rice Bran Product to
Bionutrics. Bionutrics expressly covenants not to use in North
America the Intellectual Property with respect to any Rice
Bran Product.
(iii) RICE BRAN OIL DISTILLATE THROUGH AUGUST 31, 2000. For the
period from the Commissioning Date through August 31, 2000,
Humko will sell and deliver to Bionutrics, and Bionutrics will
purchase and take from Humko, all of Humko's entire output of
Rice Bran Oil Distillate, [*]. The price for the Rice Bran Oil
Distillate referred to in this Section 3.A(iii) shall be as
shown on Exhibit D.
(iv) RICE BRAN OIL DISTILLATE AFTER AUGUST 31, 2000. [*].
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<PAGE> 6
To the extent that Bionutrics cannot obtain its requirements
of Rice Bran Oil Distillate after August 31, 2000 from Humko,
Humko grants to Bionutrics a limited, nonexclusive,
nontransferable license to use the Intellectual Property to
import Rice Bran Oil Distillate from outside North America but
only to produce Derivative Products in Bionutrics' own
facilities (or the facilities of its subsidiaries and
Affiliates). This Agreement shall not be construed to grant to
Bionutrics or any other party, and Humko expressly negates and
reserves, any rights to use any of the Intellectual Property
with respect to the production of Rice Bran Oil Distillate.
Bionutrics expressly covenants not to use the Intellectual
Property to produce the Rice Bran Oil Distillate in North
America.
(v) DERIVATIVE PRODUCTS AFTER AUGUST 31, 2000. In the event that
Humko is no longer willing or able to supply all of its
production of Rice Bran Oil Distillate to Bionutrics, and
Humko is processing any or all of such Rice Bran Oil
Distillate into Derivative Products, Humko shall have the
option to supply Bionutrics with Bionutrics' needs for
Derivative Products. Price to Bionutrics for Derivative
Products will be the market price for Rice Bran Oil Distillate
plus a toll processing fee. Such toll processing fee will be
determined by two experts, one each selected by Humko and
Bionutrics, but in the event that the two experts so chosen
cannot agree, the toll processing fee shall be determined by a
third expert chosen jointly by the former two experts. Humko
reserves the right to market any or all of its Rice Bran Oil
Distillate and Derivative Products to third parties.
(vi) It is understood that prior to the date hereof, Bionutrics may
have been purchasing or acquiring the Bionutrics Distillate
Products, Rice Bran Oil Distillate and Rice Bran Products from
other parties, but from and after the date hereof, Humko shall
be the exclusive supplier to Bionutrics of all Bionutrics
Distillate Products, Rice Bran Oil Distillate and Rice Bran
Products used by Bionutrics in the Bionutrics Products
(subject to any exclusions specified under Section 3.A.(i)-(v)
above); provided, however, until the Commissioning Date,
Bionutrics may continue to purchase or acquire the Bionutrics
Distillate Products, Rice Bran Oil Distillate, and Rice Bran
Products from other parties to fulfill its production
requirements in accordance with its normal course of business.
Notwithstanding the foregoing, Bionutrics may not enter into
any long term contracts for the supply of Bionutrics
Distillate Products, Rice Bran Oil Distillate, or Rice Bran
Products if the end of the term of any such contracts occurs
after January 1, 1999, except as provided in Section 10.
B. REQUIREMENTS PRIOR TO COMMISSIONING DATE. Unless agreed otherwise in
writing, until the Commissioning Date, Humko shall have no obligation to deliver
the Bionutrics Distillate Products, Rice Bran Oil Distillate, and Rice Bran
Products. Upon the occurrence of the
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<PAGE> 7
Commissioning Date, Humko will notify Bionutrics and begin supplying Bionutrics
with its requirements of Bionutrics Distillate Products, Rice Bran Oil
Distillate and Rice Bran Products used by Bionutrics in the Bionutrics Products.
On or before the Commissioning Date, Bionutrics will provide to Humko an initial
order of its requirements of Bionutrics Distillate Products, Rice Bran Oil
Distillate and Rice Bran Products used by Bionutrics in the Bionutrics Products
for the time period prior to the Commissioning Date (the "Initial Period"). This
order shall contain all of the terms set forth below in Section 3.D.
C. REQUIREMENTS AFTER COMMISSIONING DATE.
(i) (1) REQUIREMENTS OF BIONUTRICS DISTILLATE PRODUCTS. By January 15
of each calendar year during the term of this Agreement, Bionutrics shall notify
Humko in writing with a good faith projection of its requirements of Bionutrics
Distillate Products for use in Bionutrics Products for the one year period
commencing on April 1 of the same calendar year (the "Applicable One Year
Period"). Such notification of requirements shall contain all of the terms set
forth below in Section 3.D. By February 15 of the same calendar year, Humko
shall notify Bionutrics if Humko's capacity is insufficient to meet such
requirements. In the event Humko so notifies Bionutrics, Bionutrics shall be
obligated to purchase Humko's capacity but as to Bionutrics' requirements in
excess of such capacity for that Applicable One Year Period, [*]. If Humko
notifies Bionutrics by March 15 of the same calendar year that Humko can deliver
all such requirements for the Applicable One Year Period, then, unless otherwise
agreed to in writing by Bionutrics, Humko shall be obligated to, subject to
Section 10, and will sell such requirements to Bionutrics. In addition, unless
otherwise agreed to in writing by Humko, Bionutrics shall be obligated to
purchase its good faith projection of its requirements of Bionutrics Distillate
Products for the following calendar year as set forth in the projection to the
extent that Humko has obligated itself to produce any of same in accordance with
the foregoing provisions. During the Applicable One Year Period for which such
requirements have been agreed upon by Humko and Bionutrics pursuant to this
Section 3.C(i)(l) above, the parties will work in good faith in the event that
Bionutrics desires to modify the original shipping and delivery dates for the
quantities of the Bionutrics Distillate Products ordered and required to be
produced by Humko.
(2) REQUIREMENTS OF RICE BRAN PRODUCTS (pursuant To Section 3.A.
(ii)(a)). By January 15 of each calendar year during the Term of this Agreement,
Bionutrics shall notify Humko
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<PAGE> 8
in writing with a good faith projection of its requirements of Rice Bran
Products, if any, for use in Bionutrics Products for the Applicable One Year
Period. Such notification of requirements shall contain all of the terms set
forth below in Section 3.D. By February 15 of the same calendar year, Humko
shall notify Bionutrics if Humko's capacity is insufficient to meet such
requirements. In the event Humko so notifies Bionutrics, Bionutrics shall be
obligated to purchase Humko's capacity but as to Bionutrics' requirements in
excess of such capacity for that Applicable One Year Period, Bionutrics shall be
free to contract with third parties for its additional requirements of such Rice
Bran Products that Humko is unable to supply for that Applicable One Year
Period, subject to the following provisions of this Section 3.C.(i)(2). [*]. If
Humko notifies Bionutrics by March 15 of the same calendar year that Humko can
deliver all such requirements for the Applicable One Year Period, then, unless
otherwise agreed to in writing by Bionutrics, Humko shall be obligated to,
subject to Section 10, and will sell such requirements to Bionutrics; however,
as to any additional capacity that Humko may have to produce any such Rice Bran
Products, Humko may freely contract to sell such additional capacity to third
parties for the Applicable One Year Period. In addition, unless otherwise agreed
to in writing by Humko, Bionutrics shall be obligated to purchase its good faith
projection of its requirements of Rice Bran Products for the following calendar
year as set forth in the projection to the extent that Humko has obligated
itself to produce any of same in accordance with the foregoing provisions.
During the Applicable One Year Period for which such requirements have been
agreed upon by Humko and Bionutrics pursuant to this Section 3.C.(i)(2) above,
the parties will work in good faith in the event that Bionutrics desires to
modify the original shipping and delivery dates for the quantities of any such
Rice Bran Products ordered and required to be produced by Humko.
(ii) If during any Applicable One Year Period, Bionutrics desires to
purchase additional amounts of the Bionutrics Distillate Products or Rice Bran
Products, Bionutrics shall notify Humko during the Applicable One Year Period as
set forth herein. First, Bionutrics will notify Humko of Bionutrics' anticipated
needs for the Bionutrics Distillate Products and Rice Bran Products in addition
to its requirements previously set forth from time to time. Without limiting the
generality of the foregoing, Bionutrics will provide to Humko, on a quarterly
basis, and not later than the 15th day of the month beginning each quarter
during each Applicable One Year Period during the Term, a good faith estimate of
Bionutrics' anticipated additional needs (if any) of the Bionutrics Distillate
Products and Rice Bran Products for use in Bionutrics Products during the
remaining time in the Applicable One Year Period. Although Bionutrics' failure
to provide such a quarterly estimate shall not be deemed a breach of this
Agreement, Humko shall have the right to offer any excess capacity
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of Rice Bran Products for sale to third parties based on the last estimate
provided to Humko of Bionutrics' anticipated needs of Rice Bran Products. To the
extent Humko notifies Bionutrics that Humko can meet such additional annual or
quarterly requirements, then such orders shall become firm commitments as if
such orders had been originally included in the applicable order made pursuant
to Section 3.C.(i).
D. Each order for the Initial Period and the Applicable One Year
Periods shall specify the following minimum information: (i) the Bionutrics
Distillate Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran
Products ordered, (ii) the quantities of the Bionutrics Distillate Products,
Rice Bran Oil Distillate, Derivative Products and Rice Bran Products ordered,
(iii) the delivery destination of each of the Bionutrics Distillate Products,
Rice Bran Oil Distillate, Derivative Products and Rice Bran Products ordered if
other than FOB the applicable Humko Plant, (iv) the shipment date for the
quantities of the Bionutrics Distillate Products, Rice Bran Oil Distillate,
Derivative Products and Rice Bran Products ordered (which shall not be less than
thirty (30) working days from the applicable date of the purchase order subject
to Section 10), (v) the desired delivery date of each of the Bionutrics
Distillate Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran
Products ordered, and (vi) special freight arrangements, if any, which shall be
at the sole cost and expense of Bionutrics.
E. Humko will deliver the Bionutrics Distillate Products, Rice Bran Oil
Distillate, Derivative Products and Rice Bran Products in amounts necessary to
fill all of Bionutrics' orders (subject to this Section 3 and Section 10).
Unless specified otherwise on Bionutrics' orders, all deliveries will be FOB the
Humko Plants specified in Bionutrics' order. Humko will specify delivery of the
Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative Products
and Rice Bran Products to designated Bionutrics Plants via common carriers
mutually acceptable to Bionutrics and Humko. Bionutrics shall be responsible for
all outbound freight costs. Bionutrics will instruct all agreed upon trucking
companies to submit freight charges directly to Bionutrics for payment. Except
with respect to the delivery procedures for products covered in Exhibit E, Humko
will arrange for all transportation required to transport products shipped by
Humko under this Agreement to the applicable destination in accordance with the
instructions given by Bionutrics. Humko will inform Bionutrics if Humko is
unable to arrange transportation with agreed upon trucking companies for any
purchase order and offer alternatives to Bionutrics if available. Humko will
provide Bionutrics with adequate, timely shipping information. Bionutrics shall
be responsible for tracking and managing freight from time of shipment to
delivery to the applicable destination. Title to and risk of loss of all
products shipped by Humko under this Agreement shall transfer from Humko to
Bionutrics (or the applicable subsidiary and/or Affiliate of Bionutrics) at the
time of delivery at the applicable Humko Plant to the freight carrier designated
in the applicable purchase order. If Bionutrics notifies Humko of discrepancies
between shipping and receiving weights or volume, the parties will negotiate in
good faith to determine appropriate corrective action and any adjustments
necessary to compensate Bionutrics for any shortages confirmed by such
discrepancies.
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F. Nothing contained in this Agreement will be deemed to constitute
Bionutrics as a guarantor of any minimum level of purchases Bionutrics
Distillate Products, Derivative Products or Rice Bran Products.
G. In the event that Bionutrics elects to discontinue producing
Bionutrics Products during the term of this Agreement, Humko shall have the
option, exercisable in its sole discretion, to provide any or all of the other
ingredients used in Bionutrics' production of other products produced by
Bionutrics. If such other ingredients meet the specifications provided by
Bionutrics, such other ingredients shall be sold and delivered by Humko, and
purchased by Bionutrics, in accordance with the applicable terms of this
Agreement. The price for such other ingredients shall be negotiated and agreed
to by Bionutrics and Humko prior to the sale of such ingredients by Humko to
Bionutrics. Notwithstanding the foregoing, Bionutrics shall not be entitled to
purchase from any other supplier any products similar to the Bionutrics
Distillate Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran
Products in order to fulfill the needs of Bionutrics except according to the
terms of Section 3.A.(ii) (Rice Bran Products), 3.A(iv) (Derivative Products),
3.C(i) and (ii) (Bionutrics Distillate Products and Rice Bran Products), or
Section 10.
H. Bionutrics acknowledges that Humko is not granting to Bionutrics any
express or implied license to use any trademark or tradename owned by Humko, and
Humko acknowledges that Bionutrics is not granting to Humko any express or
implied license to use any trademark or tradename owned by any of the Bionutrics
Entities except those listed in Exhibit 4 of the Technology Agreement.
4. EQUIPMENT AND MATERIALS.
A. Subject to and in accordance with the other terms of this Agreement,
Humko will supply all production capacity (inclusive of all equipment and
facilities) and all raw materials, and will maintain an inventory of the
Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative Products
and Rice Bran Products, each in quantities deemed necessary or appropriate by
Humko to ensure uninterrupted production and delivery of the Bionutrics
Distillate Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran
Products.
B. Humko will pay all taxes on all equipment, facilities, materials,
and inventory (prior to its sale to Bionutrics) required for the performance of
Humko's obligations under this Agreement.
5. PRODUCT SPECIFICATIONS. All the Bionutrics Distillate Products, Rice
Bran Oil Distillate, Derivative Products and Rice Bran Products will be produced
and delivered in conformance with the Specifications and the terms and
conditions of this Agreement.
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6. WARRANTIES, REMEDIES, AND LIMITATIONS OF LIABILITY.
A. Humko will perform all of its obligations under this Agreement in
such a manner and consistent with its other activities so that the Bionutrics
Distillate Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran
Products meet the Specifications as required under this Agreement.
B. Humko represents and warrants that:
(1) The Bionutrics Distillate Products, Rice Bran Oil
Distillate, Derivative Products and Rice Bran Products will conform to
the Specifications.
(2) All the Bionutrics Distillate, Rice Bran Oil Distillate,
Derivative Products and Rice Bran Products will be produced in
compliance with all applicable Federal, state, and local laws and
regulations and industry standards, including, by way of example only
and not limitation, the Food, Drug, and Cosmetic Act and as required by
all applicable Federal, state, and local laws and regulations
pertaining to the manufacture, storage, or distribution of the
Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative
Products and Rice Bran Products.
C. THE FOLLOWING STATES HUMKO'S ENTIRE LIABILITY, AND BIONUTRICS' SOLE
AND EXCLUSIVE REMEDY, WITH RESPECT TO BREACH OF ANY WARRANTY BY HUMKO. WITH
RESPECT TO ANY CLAIMS THAT THE BIONUTRICS DISTILLATE PRODUCTS, RICE BRAN OIL
DISTILLATE, DERIVATIVE PRODUCTS OR RICE BRAN PRODUCTS DO NOT CONFORM TO THE
SPECIFICATIONS AND WARRANTIES HEREIN. BIONUTRICS' SOLE AND EXCLUSIVE REMEDY
SHALL BE TO REQUIRE HUMKO EITHER (I) TO PROMPTLY REPLACE SUCH BIONUTRICS
DISTILLATE PRODUCTS, RICE BRAN OIL DISTILLATE, DERIVATIVE PRODUCTS OR RICE BRAN
PRODUCTS WITHOUT ANY ADDITIONAL CHARGE OR (II) TO REFUND THE PRICE PAID BY
BIONUTRICS FOR SUCH BIONUTRICS DISTILLATE PRODUCTS, RICE BRAN OIL DISTILLATE,
DERIVATIVE PRODUCTS OR RICE BRAN PRODUCTS. HUMKO, AT ITS COST, WILL SHIP ANY
SUCH REPLACEMENT OF BIONUTRICS DISTILLATE PRODUCTS, RICE BRAN OIL DISTILLATE,
DERIVATIVE PRODUCTS OR RICE BRAN PRODUCTS PURSUANT TO BIONUTRICS' SHIPMENT
INSTRUCTIONS.
EXCEPT FOR THE WARRANTIES MADE IN THIS SECTION 6, HUMKO MAKES NO
WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO BIONUTRICS PURCHASING
ANY BIONUTRICS PRODUCT OR WITH RESPECT TO THE BIONUTRICS DISTILLATE PRODUCTS,
THE RICE BRAN OIL DISTILLATE, DERIVATIVE PRODUCTS OR THE RICE BRAN PRODUCTS
PROVIDED HEREUNDER, AND HUMKO HEREBY
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DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT. IN
ADDITION, HUMKO EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, TO ANY
THIRD PARTIES, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
D. AS A CONDITION PRECEDENT TO ANY WARRANTY CLAIMS HEREUNDER,
BIONUTRICS WILL AFFORD HUMKO PROMPT AND REASONABLE OPPORTUNITY TO INSPECT ALL
BIONUTRICS DISTILLATE PRODUCTS, RICE BRAN OIL DISTILLATE, DERIVATIVE PRODUCTS
OR RICE BRAN PRODUCTS AS TO WHICH ANY CLAIM IS MADE THAT SUCH BIONUTRICS
DISTILLATE PRODUCTS, RICE BRAN OIL DISTILLATE, DERIVATIVE PRODUCTS OR RICE BRAN
PRODUCTS DO NOT CONFORM TO THE SPECIFICATIONS AS FOLLOWS: AT HUMKO'S OPTION, AND
AS A CONDITION TO ANY WARRANTY CLAIMS HEREUNDER, BIONUTRICS WILL ALLOW HUMKO TO
TAKE CONTROL OF SUCH BIONUTRICS DISTILLATE PRODUCTS, RICE BRAN OIL DISTILLATE,
DERIVATIVE PRODUCTS OR RICE BRAN PRODUCTS AND DIRECT THEIR DISPOSAL. UPON
RECEIPT OF SHIPPING INSTRUCTIONS FROM HUMKO, BIONUTRICS WILL RETURN TO HUMKO, AT
HUMKO'S COST, ALL THE BIONUTRICS DISTILLATE PRODUCTS, RICE BRAN OIL DISTILLATE,
DERIVATIVE PRODUCTS OR RICE BRAN PRODUCTS ALLEGEDLY NOT CONFORMING TO THE
SPECIFICATIONS; PROVIDED, HOWEVER, IN THE EVENT THAT IT IS SUBSEQUENTLY
DETERMINED THAT SUCH BIONUTRICS DISTILLATE PRODUCTS, RICE BRAN OIL DISTILLATE,
DERIVATIVE PRODUCTS OR RICE BRAN PRODUCTS DO IN FACT CONFORM TO THE
SPECIFICATIONS, BIONUTRICS SHALL REIMBURSE HUMKO FOR ALL SUCH SHIPPING COSTS
INCURRED BY HUMKO.
7. INVOICE AND PAYMENT.
A. As soon as reasonably practicable after shipment or pick-up of the
Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative Products
and Rice Bran Products ordered by Bionutrics pursuant to this Agreement, Humko
will send an invoice on Humko's usual form to Bionutrics for such Bionutrics
Distillate Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran
Products. The invoice will set forth the quantities of the Bionutrics Distillate
Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran Products
delivered in accordance with this Agreement and the applicable price for such
Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative Products
and Rice Bran Products (determined in accordance with Exhibits A and D hereto
and elsewhere herein).
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B. Bionutrics will pay all correct invoices for the Bionutrics
Distillate Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran
Products ordered by and delivered to Bionutrics in accordance with this
Agreement. The terms of payment are net 15 days. For any invoices containing
invoicing errors, such dates, with respect to the incorrect portions of the
invoice only, are extended until the invoicing errors are corrected and a new
invoice, with respect to the incorrect portions on the original invoice, is
sent.
C. All payments required to be made under this Agreement shall bear
interest from the due date until paid at the rate per annum equal to the lesser
of (i) the maximum rate permitted by applicable law and (ii) (a) the prime rate
of interest published by the banking institution in which Humko has deposited
the most significant portion of its deposited funds plus five percent (5%), or
(b) fifteen percent (15%) per annum.
8. QUALITY CONTROL.
A. As reasonably requested by Bionutrics, Humko will submit samples of
the Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative
Products and Rice Bran Products to Bionutrics at no cost to Bionutrics.
B. In the event there is any actual or threatened recall or withdrawal
of any the Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative
Products and Rice Bran Products or any actual or threatened litigation, claim,
or governmental proceeding involving the quality or safety of any the Bionutrics
Distillate Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran
Products, the parties will cooperate in good faith with one another to address
such matters.
9. RISK OF LOSS. Humko assumes all risk of loss or damage to all the
Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative Products
and Rice Bran Products prior to delivery to Bionutrics in accordance with orders
placed by Bionutrics pursuant to Sections 3.D and 3.E and other applicable terms
of this Agreement.
10. FORCE MAJEURE, HUMKO'S OPTION AND DEFAULT.
A. Notwithstanding anything to the contrary contained in this
Agreement, delays by Humko in the performance or non-performance of its
obligations under this Agreement will be excused if due to any cause beyond
Humko's reasonable control, including, by way of example only and not
limitation, acts of God, governmental laws, rules, or regulations, wars, fires,
the elements, labor troubles, interruption or shortage of transport facilities,
or inability to obtain raw material or packaging supplies.
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<PAGE> 14
B. At any time and from time to time, Humko may, at its sole option,
upon nine (9) months written notice to Bionutrics and for reasons other than as
set forth in Section 10.A: (i) choose not to supply the requirements, or any
portion thereof, of Bionutrics Distillate Products or Rice Bran Products as
required by this Agreement to Bionutrics under this Agreement for any period of
time or (ii) choose not to supply its output, or any portion thereof, of the
Rice Bran Oil Distillate (subject to the terms of Sections 3.A(iii) and (iv)) or
Derivative Products, or any portions of such requirements or output, to
Bionutrics under this Agreement for any period of time. The exercise of such
option by Humko shall, at Bionutrics sole option, excuse Bionutrics' obligation
to purchase the supply or requirements, as the case may be, of the applicable
Bionutrics Distillate Products or the Rice Bran Products or the output, as the
case may be, of the Rice Bran Oil Distillate or Derivative Products to the
extent the exercise of such option by Humko impacts the supply or requirements.
To the extent that Humko has exercised its option to no longer supply
Bionutrics' requirements of Bionutrics Distillate Products, Humko grants to
Bionutrics a limited, nonexclusive, nontransferable license to use the
Intellectual Property to import Bionutrics Distillate from outside North America
to produce Bionutrics Distillate Products in its own facilities (and the
facilities of its subsidiaries and Affiliates). To the extent that Humko has
exercised its option to no longer supply Bionutrics with its requirements of any
Rice Bran Product, Bionutrics shall be free to contract with third parties for
its additional requirements of such Rice Bran Product. This Agreement shall not
be construed to grant to Bionutrics, and Humko expressly negates and reserves,
any rights to use any of the Intellectual Property with respect to the
production of Rice Bran Oil Distillate in North America. Similarly, this
Agreement shall not be construed to grant to Bionutrics or any third party
supplying Bionutrics with such Rice Bran Product, and Humko expressly negates
and reserves, any rights to use any of the Intellectual Property with respect to
the processing of such Rice Bran Products or such Bionutrics Products in North
America to Bionutrics. Bionutrics expressly covenants not to use in North
America the Intellectual Property with respect to the production of any Rice
Bran Products or such Bionutrics Products.
C. If either party defaults in the performance of its obligations under
this Agreement, the non-defaulting party immediately will notify the defaulting
party of such default and the time to cure such default, which time will be five
days in the case of a failure to pay amounts due for the Bionutrics Distillate
Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran Products
(but only given twice per calendar year), and 30 days for all other defaults,
after the defaulting party receives such notice of the default; provided,
however, if such non-monetary default is curable but requires work to be
performed, acts to be done or conditions to be remedied which, by their nature,
cannot be performed, done or remedied, as the case may be, within such 30-day
period, then no default shall be deemed to have occurred if the defaulting party
commences same within such 30-day period and thereafter diligently and
continuously prosecutes the same until completion. Subject to the foregoing
provisions of this Section 10.C., any default by either party under this
Agreement shall entitle the other party to all remedies available at law or in
equity including, without limitation, the right to terminate this Agreement upon
notice to the defaulting party. The termination of this
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Agreement in whole or in part pursuant to this Section 10.C. will not relieve
either party from the obligations in this Agreement which survive termination.
Each of the following shall also constitute a default under this Agreement:
(1) the entry of an "Order for Relief" naming a party as a "Debtor"
under Title 11 of the United States Code or upon the entry of a decree
or order by a court having competent jurisdiction in respect to any
petition filed or action respecting a party directly involved in a
reorganization, arrangement, creditors' composition, readjustment,
liquidation, dissolution, bankruptcy, or similar relief under any other
present or future United States or other statute, law or regulation,
whether or not resulting in the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official,
and any such decree or order is in effect for a period of thirty (30)
consecutive days;
(2) the making by a party of an assignment for the benefit of
creditors, or the admission by such party in writing of its inability
to pay its debts generally as they become due, or the taking of action
by a party in furtherance of any such action; or
(3) as expressly provided elsewhere in this Agreement.
D. During any force majeure event under Section 10.A., or default by
Humko, Bionutrics, as its sole and exclusive remedy, may remove any or all of
the impacted part of the Bionutrics Distillate Products, Rice Bran Oil
Distillate, Derivative Products and Rice Bran Products business from Humko and
obtain such Bionutrics Distillate Products, Rice Bran Oil Distillate, Derivative
Products and Rice Bran Products from any other supplier during the applicable
period of such force majeure event or the period of such default; provided,
however, when the period covered by such force majeure events or Humko's
exercise of the option contained in Section 10.B., or when such default is cured
by Humko, Bionutrics shall, upon ninety (90) days written notice, cease
purchasing the Bionutrics Distillate Products, Rice Bran Oil Distillate,
Derivative Products and Rice Bran Products or any products similar thereto from
other suppliers and shall continue purchasing the Bionutrics Distillate
Products, Rice Bran Oil Distillate, Derivative Products and Rice Bran Products
solely from Humko under this Agreement. This Agreement shall not be construed to
grant to Bionutrics, and Humko expressly negates and reserves, any rights to use
any of the Intellectual Property with respect to the production of Bionutrics
Distillate, Rice Bran Oil Distillate and Rice Bran Products in North America.
Similarly, this Agreement shall not be construed to grant to Bionutrics or any
third party supplying Bionutrics with such Bionutrics Distillate Products, Rice
Bran Oil Distillate or Rice Bran Products, and Humko expressly negates and
reserves, any rights to use any of the Intellectual Property with respect to the
processing of, such Bionutrics Distillate Products, Rice Bran Oil Distillate or
Rice Bran Products or such Bionutrics Products in North America to Bionutrics.
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<PAGE> 16
E. No failure by any party to exercise any right given in this
Agreement or to insist on strict compliance by the other party of any obligation
under this Agreement will constitute a waiver of the party's right to later
demand exact compliance with the terms of this Agreement.
11. INDEMNIFICATION. Bionutrics will defend, indemnify, and hold harmless
Humko and its parents, subsidiaries, Affiliates, successors, and assigns, and
their respective officers, directors, employees, agents, and contractors from
and against (i) any and all claims, demands, liabilities, losses, damages, cost,
or expenses (including reasonable attorneys' fees), including by way of example
only and not limitation for death, personal injury, property damage, or
otherwise to the extent based on, arising out of, or in any way related to
Bionutrics' or its parents', subsidiaries', Affiliates', successors', or
assigns', or their respective officers', directors', employees', agents', or
contractors' failure to perform its obligations under this Agreement, or any
negligent act, misfeasance, malfeasance, non-feasance or strict liability by
Bionutrics or its parents, subsidiaries, Affiliates, successors, or assigns, or
their respective officers, directors, employees, agents, or contractors, and
(ii) any and all fees (including reasonable attorney's fees), costs, and
expenses incurred by Humko or its parents, subsidiaries, Affiliates, successors,
or assigns, or their respective officers, directors, employees, agents, or
contractors in the investigation, correction, or defense against any and all
such losses, claims, or threatened claims; except to the extent any such claim
for loss, cost, expense, damage, or liability is the direct result of the acts
or negligence of Humko or its parents, subsidiaries, Affiliates, successors, or
assigns, or their respective officers, directors, employees, agents, or
contractors. If Humko receives notice of any claim for which it considers
Bionutrics responsible under this Section 11, Humko promptly will inform
Bionutrics in writing.
12. NOTICES. Any notice or other communication required or permitted in
this Agreement will be in writing and sent by overnight delivery or registered
or certified mail, return receipt requested, with postage and all other charges
prepaid. All notices will be addressed to the respective party at the address
below or to such other address as the party may designate in writing. Notices
will be deemed effective upon delivery or the first good faith reasonable
attempt to deliver during regular business hours.
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If to Bionutrics: Bionutrics, Inc.
2425 E. Camelback Road, Suite 650
Phoenix, Arizona 85016
Attention: Ronald H. Lane
Telecopy No.: 602-508-0115
With copies to: Friedman Siegelbaum LLP
399 Park Avenue, 20th Floor
New York, New York 10022-4689
Attention: J. Robert Horton
Telecopy No.: 212-980-6991
If to Humko: AC Humko Corp.
7171 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy No. 901-381-3066
Attention: Dennis W. Koerner
With copies to: Vinson & Elkins L.L.P.
2500 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Telecopy No.: 713-615-5234
Attention: James B. Rylander
13. CONFIDENTIALITY.
A. Except for the proper exercise of any rights granted or reserved
under other provisions of this Agreement, and except for any other
confidentiality provisions set forth in any other agreement or instrument
involving Bionutrics (or any of its Affiliates or subsidiaries) and Humko,
Bionutrics (and its Affiliates and subsidiaries) will take such precautions as
it normally takes with its own confidential or proprietary information to keep
confidential and not to publish or otherwise disclose to a third party without
the prior written consent of Humko, except as permitted or anticipated in this
Agreement, any information of a proprietary nature furnished by Humko in
connection with this Agreement, including by way of example only and not
limitation technology, marketing strategy, specifications, product information,
data, inventions, processes, know-how, sales force information, sales data,
plans, trade secrets, call lists, customer lists, business information, adverse
reaction reports, and this Agreement (collectively called "Confidential
Information") without
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the prior written consent of Humko except, subject to Section 13.C below, to the
extent that such Confidential Information is required to be disclosed for
purposes of complying with governmental laws and regulations.
B. Bionutrics will disclose Confidential Information of Humko only to
those of its employees that have a need for access to it in order to enable
Bionutrics to perform under this Agreement; provided, however, that Bionutrics
has first advised all persons who receive any of the Confidential Information of
its confidential nature, and provided, further, that Bionutrics has first
obtained assurances from all such persons that they will abide by the terms and
conditions of this Confidentiality Agreement as if such persons were parties
hereto.
C. Nothing in this Section 13 will prevent disclosure or use of
Confidential Information that is required to be disclosed by applicable law or
regulation or by order of a court or regulatory body having competent
jurisdiction, and (a) Bionutrics, in writing and in advance of any disclosure,
makes the requesting entity aware of Bionutrics' obligations of confidentiality
in this Agreement, and (b) Bionutrics provides timely written notice to Humko in
advance of any disclosure to the court, regulatory body, or other entity so as
to permit Humko to address with the requesting party any concerns of Humko
regarding such requested disclosure.
D. After the effective date of the termination or expiration of this
Agreement, and within 30 days following receipt of a written request from Humko,
Bionutrics will return to Humko its tangible Confidential Information.
E. The provisions of this Section 13 will apply during the Term of this
Agreement and for five years following the Term.
14. SALE, TRANSFER, ASSIGNMENT, AND CHANGES IN MANAGEMENT.
A. This Agreement will bind and inure to the benefit of the parties and
their successors and assigns except that none of the Bionutrics Entities will
have any right whatsoever to make any assignment of any of its respective rights
or obligations without the written approval of Humko. No sale, assignment,
transfer, conveyance, or encumbrance, whether by law or otherwise, will be of
any force or effect unless such written approval will have been first obtained.
B. No person, firm, or corporation will succeed to any of the rights of
a party under this Agreement by virtue of any voluntary or involuntary
proceeding in bankruptcy, receivership, attachment, execution, or assignment for
the benefit of creditors, or other legal process.
15. SEVERABLE CONDITIONS. If any provision of this Agreement is held to be
void, invalid, or unenforceable, such provision will be construed as severable
and will not in any way
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affect or render void, invalid, or unenforceable any other provision of this
Agreement, and this Agreement will be carried out as if such void, invalid, or
unenforceable provision was not a part of this Agreement.
16. WAIVER AND MODIFICATION. The terms of this Agreement may not be
altered, waived, modified, or discharged except by an express declaration in
writing on behalf of the parties by duly authorized officers and referring
specifically to this Agreement, and no separate oral or other written agreement
which may be made between any of the parties' employees will in any way modify
this Agreement. Furthermore, any waiver of the requirements of this Section 16
likewise must be explicit and in a writing signed by a duly authorized
representative of each party.
17. SURVIVAL. All of party's rights and privileges provided under this
Agreement, to the extent they are fairly attributable to events or conditions
occurring or existing on or prior to the expiration or termination of this
Agreement, will survive the expiration or termination and be enforceable by the
party and its successors and assigns.
18. GOVERNING LAW AND FORUM.
(A) CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, AND
INTERPRETED IN ACCORDANCE WITH THE PROVISIONS OF, THE LAW OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO PROVISIONS THAT REFER A MATTER TO THE LAW OF ANY
OTHER JURISDICTION.
(B) FORUM SELECTION CLAUSE. THE BIONUTRICS ENTITIES (FOR THEMSELVES,
THEIR SUCCESSORS, AND ASSIGNS) AND HUMKO HEREBY IRREVOCABLY AGREE THAT ANY AND
ALL CLAIMS FOR RELIEF ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT (ALL OF WHICH ARE REFERRED
TO AS THE "CLAIMS"), WHETHER SUCH CLAIMS SOUND IN CONTRACT, TORT OR OTHERWISE,
AT LAW OR IN EQUITY, UNDER STATE OR FEDERAL LAW, WHETHER BY STATUTE OR COMMON
LAW, SHALL BE BROUGHT EXCLUSIVELY IN THE STATE OR FEDERAL COURTS LOCATED IN THE
JURISDICTION IN WHICH THE HEADQUARTERS OF THE DEFENDANT IN SUCH SUIT IS THEN
LOCATED. FOR EXAMPLE, AS OF THE EFFECTIVE DATE, ANY CLAIMS BROUGHT AGAINST HUMKO
SHALL BE BROUGHT EXCLUSIVELY IN MEMPHIS, TENNESSEE, AND ANY CLAIM BROUGHT
AGAINST THE BIONUTRICS ENTITIES SHALL BE BROUGHT EXCLUSIVELY IN PHOENIX,
ARIZONA.
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<PAGE> 20
19. LIMITATIONS OF LIABILITY.
(a) IN NO EVENT SHALL HUMKO BE LIABLE TO ANY OR ALL OF THE BIONUTRICS
ENTITIES FOR ANY CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES BASED UPON BREACH
OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY, TORT OR ANY OTHER
LEGAL THEORY. SUCH EXCLUDED DAMAGES INCLUDE, BUT ARE NOT LIMITED TO, LOST
PROFITS, EVEN IF HUMKO HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
(b) IN NO EVENT SHALL THE BIONUTRICS ENTITIES BE LIABLE TO HUMKO FOR
ANY CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES BASED UPON BREACH OF WARRANTY,
BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY, TORT OR ANY OTHER LEGAL
THEORY. SUCH EXCLUDED DAMAGES INCLUDE, BUT ARE NOT LIMITED TO, LOST PROFITS,
EVEN IF THE BIONUTRICS ENTITIES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
20. DESCRIPTIVE HEADINGS. The descriptive headings of the Sections in this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
21. COUNTERPARTS. This Agreement may be executed in two original
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument representing the agreement
of the parties.
22. RIGHT TO ENTER INTO AGREEMENT. The parties warrant and represent that
they have the capacity and right to enter into this Agreement. Each party is an
independent contractor in the performance of its respective obligations under
this Agreement.
23. ENTIRE AGREEMENT AND EXHIBITS. The conditions set forth in Humko's
standard Purchase Order, a current copy of which is attached as Exhibit C,
constitute additional terms and conditions of this Agreement. In the event that
any of the terms of Exhibit C are deemed to be conflicting or inconsistent with
the terms of this Agreement, the terms of this Agreement will prevail. This
Agreement supersedes all former agreements, understandings, communications, and
negotiations between the parties relating to any and all of the matters for
which provision is made under this Agreement. The following Exhibits are
incorporated by reference: Exhibit A - Price; Exhibit B - Specifications;
Exhibit C - Humko's Standard Purchase Order; Exhibit D - Pricing for Distillate
Products; and Exhibit E - Delivery and Invoice Procedures.
[Signature Page follows]
-20-
<PAGE> 21
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties by their duly authorized respective officers as of the date noted above.
BIONUTRICS, INC.
By: /s/ Ronald H. Lane
Ronald H. Lane
President and Chief Executive Officer
BIONUTRICS HEALTH PRODUCTS, INC.
By: /s/ Ronald H. Lane
Ronald H. Lane
President
INCON TECHNOLOGIES, INC.
By:
John Palmer
Chairman and Chief Executive Officer
AC HUMKO CORP.
By: /s/ Wayne Briesemeister
Wayne Briesemeister,
Vice President
[Signature Page]
-21-
<PAGE> 22
EXHIBIT A
Price for Bionutrics Distillate Products
The Price for Bionutrics Distillate Products shall be as follows:
A. For the [*], the price to be paid by Bionutrics or other Bionutrics Entities
to Humko shall be [*].
B. For [*] derived from[*], the price to be paid by Bionutrics or other
Bionutrics Entities to Humko shall be [*].
-22-
<PAGE> 23
EXHIBIT B
SPECIFICATION
PRODUCT: RICE BRAN OIL DISTILLATE
Description [*]
- -----------
<TABLE>
<CAPTION>
Chemical Property Typical Analysis
- ----------------- ----------------
<S> <C>
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
PRODUCT: BIONUTRICS DISTILLATE
<TABLE>
<CAPTION>
Chemical Property Typical Analysis
- ----------------- ----------------
<S> <C>
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
-23-
<PAGE> 24
EXHIBIT C
HUMKO's Standard Purchase Order
DIST: ACCTS PAYABLE - RECEIVING - REQUISITIONER
CHARGE ACCOUNT:
REQUESTED BY: DEPT. MANAGER'S APPROVAL:
<TABLE>
<S> <C>
AC HUMKO DATE:____________________________
CORP.
P.O. BOX 343 IMPORTANT
MEMPHIS, TN 38101
ALL NUMBERS LISTED IN BLOCK BELOW MUST APPEAR ON ALL
INVOICES, SHIPPING NOTICES AND PACKAGES. SHOW
DESTINATION OF SHIPMENT ON INVOICES.
VENDOR: PURCHASE ORDER
NO. ACH -
REQUISITION NO.___________________________________
PAGE_____________________________________________
SHIP TO: AC HUMKO CORP. TERMS____________________________________
7171 GOODLETT FARMS PARKWAY
MEMPHIS, TN 38018 F.O.B.___________________________________
ATTN:
INVOICE TO: AC HUMKO CORP. TAXABLE__________________________________
P.O. BOX 343
MEMPHIS, TN 38101 SHIP TO ARRIVE___________________________
ATTN: ACCOUNTS PAYABLE
</TABLE>
<TABLE>
<CAPTION>
QUANTITY ITEM NO. DESCRIPTION PRICE
<S> <C> <C> <C>
CONFIRMATION - DO NOT DUPLICATE
INCLUDE STATE/LOCAL SALES TAX ON INVOICE
</TABLE>
BUYER_______________________________ BY__________________________________
AUTHORIZED SIGNATURE
THIS PURCHASE ORDER IS SUBJECT TO SELLER'S ACCEPTANCE OF THE TERMS AND
CONDITIONS APPEARING ON THE REVERSE SIDE. ACKNOWLEDGEMENT OF THIS ORDER SHOULD
BE DIRECTED TO RECEIVING LOCATION.
THIS PURCHASE ORDER IS SUBJECT TO SELLER'S
ACCEPTANCE OF THE FOLLOWING TERMS AND CONDITIONS
DEFINITIONS Except as this order provides to the contrary, the unqualified word
"Buyer" means "AC HUMKO CORP." or a subsidiary of Buyer acting through a
purchasing department of Buyer. The word "goods" as used herein shall mean the
products, articles, materials and equipment described on the face hereof. The
word "Order" shall mean this Purchase Order.
ACCEPTANCE Seller's acceptance of this Order or shipment of goods pursuant to
this Order, whichever shall occur first, shall constitute Seller's agreement to
the terms and conditions set forth on the face and back of this Purchase order.
Notwithstanding Buyer's act of accepting and paying for any goods, no other
terms, whether or not contained in any bid, estimate, acknowledgment,
confirmation or invoice given by Seller shall in any way modify or supersede any
of the terms of this Order or otherwise be binding on Buyer unless accepted by a
written instrument signed by an authorized representative of Buyer.
QUALITY All goods must conform to specifications furnished by Seller and
approved by Buyer or furnished by Buyer and identified on the face of, or
attached to this Order. Seller acknowledges the receipt of a copy of any such
specifications furnished by Buyer. Seller warrants that all goods have been
tested for their safety and will be of merchantable quality and in compliance
with federal, state and local health and safety laws, rules and regulations
applicable to such goods. Seller warrants that all goods will be of good
material and workmanship and free from defect and suitable for their intended
use in or with food products. Seller warrants that no food, drug, device or
cosmetic contained in any shipment will, at the time of shipment or delivery, be
adulterated or misbranded within the meaning of the Federal Food, Drug and
Cosmetic Act ("FDA Act"), as amended, including the Food Additives Amendment of
1958, or as promulgated by the United States Department of Agriculture
(hereinafter collectively called "the Acts") and regulations promulgated under
the Acts, or within the meaning of any applicable state or municipal law which
has substantially similar definitions of adulterations and misbranding, and
shall generally conform to the requirements of the Acts, and, where applicable,
such shipments are in compliance with the Federal Insecticide, Fungicide, and
Rodenticide Act.
REJECTION Payment for goods delivered hereunder shall not constitute acceptance
thereof. Buyer reserves the right to inspect and test such goods and to reject,
and return to Seller at Seller's expense, goods (a) delivered in excess of the
quantity ordered, (b) which do not conform to specifications, (c) which in any
way violate the FDA Act or local law, or (d) which are in any way defective. No
defective or rejected goods shall be replaced except upon the receipt of written
instructions from Buyer. In the event that Buyer receives goods whose defect or
nonconformity is not apparent on examination, Buyer reserves the right to
require replacement, as well as payment of damages. Nothing contained in the
Order shall relieve in any way the Seller from the obligation of testing,
inspection and quality control.
PRICES This Order must not be filled at prices higher than specified herein, or,
if Order is unpriced, at prices higher than last charged or quoted. Seller
agrees that any price decrease in effect at time of shipment will apply to this
Order. Seller warrants that the prices for the goods sold to Buyer hereunder are
not less favorable than those extended to any other customer for the same or
similar goods during the term of this Order. In the event that Seller reduces
its prices for such goods during the term of this Order. Seller agrees to reduce
the prices hereof correspondingly. Seller warrants that prices shown on this
Order shall be complete, and no additional charges of any type shall be added
without Buyer's express written consent. Such additional charges include, but
are not limited to, shipping, packaging, labeling, custom duties, taxes,
storage, insurance, boxing and crating. Any cash discount periods will be
calculated from receipt of invoice or receipt of acceptable goods, whichever
occurs later, and not from the date of invoice. On invoices returned for
correction, the cash discount period will be calculated from receipt of the
corrected invoice.
SHIPPING Unless indicated to the contrary on the face hereof, all shipment shall
be made F.O.B. destination, freight prepaid. Seller shall be obligated to
deliver all goods to a carrier for shipment by carrier to Buyer. Seller owns
goods in transit and shall bear the risk of loss until the goods are received by
Buyer. Claims for loss and/or damage to goods shall be filed by Seller. Seller
shall be responsible for paying all carriers' freight charges. All shipping
documents must carry the lot number, product identification, purchase order
number and the designated receiving dock. Each unit must be tagged with the
shipper's name, description of the goods, purchase order number, lot number,
receiving dock and product department (if applicable). Delivery shall not be
deemed complete until the goods have been actually received and accepted by
Buyer. All deliveries must be on weekdays during normal business hours to the
address indicated on the face hereof, unless otherwise agreed to by Buyer.
DELIVERY Time is of the essence of this order, and if delivery of goods is not
completed by the time promised, Buyer reserves the right, without liability and
in addition to other rights and remedies, to terminate this Order by notice
effective when received by Seller as to goods not yet shipped and to purchase
substitute items and charge Seller with any loss incurred.
TERMINATION Buyer may terminate this Order or any part thereof without cause.
Upon receipt of notice of such termination, Seller shall immediately stop all
goods in process, and shall immediately cause any of its suppliers or
subcontractors to cease such goods in process. Seller shall be paid a reasonable
termination charge consisting of a percentage of the Order price reflecting the
percentage of goods in process prior to the notice of termination, plus actual
direct costs resulting from termination. Seller shall not be paid for any goods
processed after receipt of the notice of termination, nor for any costs incurred
by Seller's suppliers or subcontractors which Seller could reasonably have
avoided. Seller shall not unreasonably anticipate the requirements of this
order. Buyer may also terminate this Order or any part hereof for cause in the
event of any default by the Seller, or if Seller fails to comply with any of the
terms and conditions of this Order. Late deliveries, deliveries of products
which are defective or which do not conform to this order, and failure to
provide Buyer with adequate assurances of future performance shall all be causes
allowing Buyer to terminate this Order for cause. In the event of termination
for cause, Buyer shall not be liable to Seller for any damages sustained by
reason of the default which gave rise to the termination.
CHANGES Buyer shall have the right at any time to make changes in drawings,
designs, specifications, materials, packaging, time and place of delivery and
method of transportation. If any changes cause an increase or decrease in the
cost or the time required for performance of this Order, an equitable adjustment
shall be made and this Order shall be modified in writing accordingly. Seller
agrees to accept any such changes subject to this paragraph.
CONFIDENTIALITY Seller shall consider all information furnished by Buyer,
including the existence of this Order, to be confidential and shall not disclose
any such information to any other person, or use such information itself for any
purpose other than performing this Order, unless Seller obtains written
permission from Buyer. Upon the expiration or earlier termination of this
agreement or upon Buyer's request, Seller agrees promptly to return to Buyer all
documents or other tangible materials containing and/or embodying any of the
information (including, without limitation, all copies, reproductions, summaries
and notes of the contents thereof), regardless of the person causing the same to
be in such form, and Contractor will certify that all such information has been
returned to Buyer or disposed of in a manner approved by Buyer.
FORCE MAJEURE Neither party shall be liable to the other for the consequences of
any force majeure providing, however, if Seller at any time becomes unable duly
and timely to perform this Order for a period of 10 days or more. Buyer shall be
entitled to terminate this Order for cause, in whole or part, as provided above.
INFRINGEMENT Seller warrants that the use, consumption or sale of goods pursuant
to this Order does not and will not infringe any patent, trademark, trade name
or copyright and there is no unauthorized use of proprietary rights of another
party. Seller agrees that upon receipt of notification to promptly assume all
responsibility for defense of any suit or proceeding which may be brought
against Buyer or its agents, customers or vendors for alleged patent
infringement or unauthorized use, as well as for any alleged unfair competition
resulting from similarity in design, trademark or appearance of goods furnished
hereunder, and Seller further agrees to indemnify Buyer, its agents, vendors and
customers against any and all expenses, losses, royalties, profits and damages,
including court costs and attorney's fees resulting from any such suit or
proceeding, including any settlement.
INDEMNIFICATION Seller shall defend, indemnify and hold Buyer harmless against
all damages, claims, or liabilities and expenses (including attorney's fees)
arising out of or resulting in any way from any defect in the goods purchased
hereunder, from any act or omission of Seller, its employees, agents or
subcontractors, or from Seller's breach of warranty. Seller agrees to furnish
Buyer, upon request, with certificates of insurance showing Seller is adequately
insured against such risks specified above, and that the premiums for such
insurance are fully paid.
LEGAL WARRANTIES In accepting this Order, Seller warrants (if applicable) that
the goods to be furnished hereunder were or will be produced in compliance with
(a) the provisions of the Equal Opportunity clause prescribed by Executive Order
11246, as amended by Executive Order 11373 and 12906 as implemented by Title 41,
Code of Federal Regulations, Section 60-1.4, (b) title 41, Section 60-1.8, Code
of Federal Regulations, as pertains to non-segregated facilities, (c) the
Vietnam Era Readjustment Assistance Act of 1974, relating to affirmative action
for qualified disabled veterans and qualified Vietnam Era veterans, as
implemented by Title 41, Code of Federal Regulations, Chapter 60, Part 60-250,
(d) the provisions of Section 503 of the Rehabilitation Act of 1973, relating to
affirmative action for the handicapped, as implemented by Title 41, Code of
Federal Regulations, Chapter 60, Part 60-741, (e) the provisions of Executive
Order 11625 and Section 211 of Public Law 95-507, relating to assistance to
minority business enterprises, as implemented by Federal Acquisition
Regulations, Title 48, Code of Federal Regulations, Chapter 1, Part 52, (f) the
provisions of Executive Order 12138, relating to opportunities for women-owned
businesses, as implemented by Federal Acquisition Regulations, Title 48, Code of
Federal Regulations, Chapter 1, Part 52, (g) all applicable requirements of
Section 6, 7 and 12 of the Fair Labor Standards Act as amended and of
Regulations and Orders of the United States Department of Labor issued pursuant
to Section 14 thereof and Section 1 of the Walsh-Healy Public Contracts Act, and
(h) the provisions of Title 32, United States Code, Section 1352 with respect to
lobbying.
HEAVY METALS WARRANTY Seller certifies, with respect to each good sold hereunder
which is a packaging material (but not including glass), that heavy metals
defined as silver, arsenic, barium, selenium, lead, mercury, cadmium and
hexavalent chromium are not intentionally introduced into Buyer's packages,
packaging components, adhesives, labels, inks, dyes and stabilizers, and with
respect to lead, mercury, cadmium and hexavalent chromium, the incidental level
of these four metals is less than 100 parts per million. Seller certifies, with
respect to each good sold hereunder which is a glass packaging material, that
heavy metals defined as silver, arsenic, lead, mercury, cadmium and hexavalent
chromium are not intentionally introduced into Buyer's packages, packaging
components, adhesives, labels, inks, dyes and stabilizers, and with respect to
lead, mercury, cadmium and hexavalent chromium, the incidental level of these
four metals is less than 100 parts per million.
PROPOSITION 65 Seller agrees that to the extent applicable, each good sold to
Buyer hereunder will comply in all respects with the requirements of the
California Safe Drinking Water and Toxic Enforcement Act of 1986 (hereinafter
"Proposition 65") and the regulations thereunder, as amended from time to time
and represents and warrants that no exposure to a chemical determined thereunder
to cause cancer or reproductive toxicity shall occur from any such good within
the meaning of Proposition 65 and the regulations thereunder, unless Seller
gives Buyer written notice of such fact and the amount that the level of the
chemical in such good exceeds the levels established pursuant to Proposition 65.
ASSIGNMENT No part of this Order may be assigned or contracted by Seller without
the prior written approval of Buyer.
SETOFFS All claims for money due or to become due from Buyer shall be subject to
deduction or setoff by the Buyer by reason of any counterclaim arising out of
this or any other transaction with Seller.
WAIVER Buyer's failure to insist on performance of any terms or conditions
herein or to exercise any right or privilege or Buyer's waiver of any breach
hereunder shall not thereafter waive any other terms, conditions, or privileges,
whether of the same or similar type.
GOVERNING LAW This Order shall be governed and construed by the substantive
federal and state law of the state of Tennessee as it applies to contracts made
and to be performed wholly within such state.
ENTIRE AGREEMENT This Order, and any documents referred to on the face hereof,
constitute the entire agreement of the parties.
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<PAGE> 25
EXHIBIT D
PRICING FOR RICE BRAN OIL DISTILLATE
The price is [*], FOB applicable Humko Plants. The following discount scale
shall apply to distillate that contains [*]:
<TABLE>
<CAPTION>
[*] DISCOUNT
--- --------
<S> <C>
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
-25-
<PAGE> 26
EXHIBIT E
DELIVERY AND INVOICE PROCEDURES
(DISTILLATE PRODUCTS)
DELIVERY
Humko shall notify Bionutrics when distillate is available for pick up
at one of the Humko Plants. Bionutrics shall arrange to pick up distillate at
the specified location within 2 working days of said notification.
INVOICING
Invoices shall be calculated on the basis of pricing in Exhibit D. The [*] shall
be determined by procedures mutually agreed to by the parties.
-26-
