Exhibit 10.8
Transform Pack International, Inc.
Form 10-KSB 2001
File No. 000-31727
TILIA / TRANSFORM PACK EXCLUSIVE SUPPLY AGREEMENT
This TILIA-TRANSFORM PACK EXCLUSIVE SUPPLY AGREEMENT
("Agreement") is entered into as of April 1, 2001 ("Effective
Date") by and between the Parties,
Tilia International, Inc. ("Tilia"), a Xxxx Island
corporation, having a place of business at 000 Xxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx, XXX, 00000
And
Transform Pack Inc. ("Transform Pack"), a Canadian
corporation having a place of business at 000 Xxxx Xxxxxxxxx,
Xxxxxxx, Xxx Xxxxxxxxx, Xxxxxx EIE IC8,
And the parties agree as follows:
ARTICLE I
BACKGROUND
1.1 Tilia is engaged in the business of developing vacuum
technology for food preservation ("Vacuum Technology").
1.2 Tilia desires to engage the services of Transform Pack as a
manufacturer of spice films ("Spice Films").
1.3 Transform Pack desires to provide the manufactured Spice
Films to Tilia.
ARTICLE 2
DEFINITIONS
2.1 "Information" means formulas, materials, protocols,
drawings, specifications, samples, models, processes, procedures,
instructions, technology, data, reports, and all other technical
or commercial information, data and documents.
2.2 "Confidential Information" means all Information disclosed
to one Party by the other Party relating to Vacuum Technology
and/or Spice Film Manufacture, as well as any other matter
relating to the business of Tilia, provided the material is
clearly marked "Confidential."
2.3 "Territory" means worldwide.
2.4 "Field of Use" means the worldwide retail sales of finished
Spice Films in a retail package.
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2.5 "Spices" means spices and spice blends as specified by Tilia
and agreed to by Transform Pack and purchased by Transform Pack
from third party suppliers as specified by Tilia for use by
Transform Pack in fulfilling Transform Pack's obligations under
this Agreement.
2.6 "Packaging Film" shall mean custom pre-printed plastic film
or other custom packaging material as specified by Tilia that
complies with the specifications and requirements of Transform
Pack.
2.7 "Spice Films" means the product using Transform Pack's
technology in meeting the specifications of both Tilia and
Transform Pack, which technology, includes but not limited to,
Transform Pack's latest modifications, improvements and
technology, and all of Transform Pack's related technology,
including, but not limited to, technology relating to the
affixing of the Spices to films and packaged ready for sale
and/or distribution by Tilia or its designee to the Field of Use.
2.8 "Spice Film Application Process" means all work conducted by
Transform Pack for Tilia under this Agreement using Transform
Pack's technology, including but not limited to Transform Pack's
latest application, modifications, improvements and other
technology to manufacture Spice Films.
ARTICLE 3
SCOPE OF WORK AND EXCLUSIVE GRANT TO TILIA
3.1 The exclusive rights and services provided by Transform Pack
for Tilia for the Field of Use include (1) the use of the Spice
Film Application Process to facilitate the purchase of finished
Spice Film for the purpose of resale and marketing and (2) any
other services related to the business of Tilia, as requested by
Tilia and agreed to by Transform Pack.
3.2 Transform Pack hereby grants to Tilia the exclusive right to
sell, offer to sell, use and distribute Spice Films in the Field
of Use for the Territory. During the period that this Agreement
is exclusive, Transform Pack shall not sell, offer to sell, use,
or distribute, or allow third parties to do the same using
Transform Pack technology, any product in the Field of Use that
includes a spice or spices or Spices affixed to a film or other
flat carrier material.
3.3 Transform Pack shall maintain reasonable records concerning
the performance of this Agreement as directed by Tilia from time
to time and in accordance with industry standards.
3.4 Upon written agreement by the Parties, Transform Pack may
produce Spice Films for others for the Field of Use upon payment
of a royalty or license fee, or both, to be paid to Tilia at a
rate and period agreed to by the Parties. Tilia may provide such
a written agreement at its sole discretion.
ARTICLE 4
COMPENSATION
4.1 (a) For the exclusive rights granted by Transform Pack to
Tilia under this Agreement, Tilia will compensate Transform
Pack in accordance with this Agreement and/or any other
agreed price formula agreed to between the parties in
accordance with purchase orders placed by Tilia with
Transform Pack from time to time.
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(b) The Tilia purchase order will show the price and
quantity required and the production of the Spice Films
shall be in accordance with any agreed to time-table that
shall be subject to quality control standards and other
specifications acceptable to both parties.
4.2 In exchange for the exclusive rights granted to Tilia
hereunder, Tilia shall purchase Spice Films from Transform Pack
in an amount at or in excess of an Annual Minimum, the Annual
Minimum being one and three-quarter million dollars ($1.75
million) in Year 1, three and one-half million dollars ($3.50
million) in Year 2, and five and one-half million dollars ($5.50
million) in Year 3. The Annual Minimum requirement shall
commence with the date of receipt of the first order of Spice
Films by Tilia. Accordingly the First Annual Year Period shall
extend for one year from said first date of receipt by Tilia of
the first order of Spice Films. Subsequent Annual Year Periods
shall extend from the expiration of the prior one-year Annual
Period.
4.3 In the event that Tilia does not meet the Annual Minimum in
any Annual Year Period, Tilia may maintain its exclusive rights
hereunder upon making a cash payment of twenty-five percent (25%)
of the difference outstanding between the amount purchased by
Tilia in the Annual Year Period and the Annual Minimum for that
year.
4.4 Stand By Letter of Credit: In order to assist Transform Pack
in the advance purchase of Spices and Packaging Film, Tilia will
establish a Standby Letter of Credit to be used by Transform Pack
in obtaining its own loan to purchase advance quantities of
custom Spices and Packaging Film.
ARTICLE 5
PRODUCTION OF SPICE FILMS
5.1 Lead Time. 60-day lead time required on all orders, up to 5
million - 6" x 8" sheets per month.
5.2 Technology. Transform Pack shall offer to Tilia the use of
Transform Pack technology, including any developments, and later
modifications and improvements available for making the Spices
Films. By way of example, Transform Pack is presently developing
a dissolvable film for use with the Spice Film and this newest
technology shall be made available to Tilia through the Spice
Film Application Process in the event that such process becomes
commercial viable.
5.3 Inventory Insurance. Transform Pack shall purchase insurance
against loss for any inventory purchase by Transform Pack for
work under this Agreement.
5.4 Product Liability Insurance. Transform Pack shall maintain a
product liability insurance policy naming both Transform Pack and
Tilia as insureds. The insurance policy shall be in an amount
sufficient to meet any potential claim against either or both
Transform Pack and Tilia, but not less than two million dollars
per occurrence, and with a deductible that is reasonable for the
Field of Use. The policy shall not be modified or cancelled by
Transform Pack without notice to Tilia. Transform Pack shall make
this and all other required insurance policies available for
Tilia's inspection.
Notwithstanding the purchase of product liability insurance, it
is understood that Transform Pack shall not be responsible for
any errors or omissions with respect to (1) the identification of
the contents on the Packaging Film or (2) errors in the Spice mix
preparation, except for Packaging Film or Spice mix preparation
which were furnished or specified at least in part by Transform
Pack.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 Transform Pack represents and warrants that Transform Pack
has the right to enter into this Agreement, to carry out its
obligations under this Agreement.
6.2 Tilia represents and warrants that it has the right to enter
into this Agreement, to carry out its obligations under this
Agreement
6.3 Transform Pack represents and warrants that a responsible
agent for Transform Pack has read this Agreement and understands
the contents of this Agreement.
6.4 Tilia represents and warrants that a responsible agent of
Tilia has read this Agreement and understands the contents of
this Agreement.
6.5 Transform Pack represents and warrants that any process that
it uses to manufacture the Spice Films does not infringe upon or
misappropriate the intellectual property rights of any third
party.
6.6 Product Warranties. Transform Pack represents and warrants
to Tilia that all Spice Films supplied in connection with this
Agreement shall be of merchantable quality, for the purpose
intended by this Agreement and free from defects in material and
workmanship and shall be manufactured and provided in accordance
and conformity with the specifications and in compliance with
this Agreement and the purchase order issued by Tilia. Transform
Pack represents and warrants that it shall comply with all
present and future statutes, laws, ordinances and regulations
relating to the manufacture and supply of Spice Films provided
hereunder, including, without limitation, those enforced by the
United States Food and Drug Administration and International
Standards Organization Rules 9,000 et seq.
ARTICLE 7
INTELLECTUAL PROPERTY
7.1 Transform Pack recognizes that trademarks used on or
relative to the Spice Films are the property of Tilia or the
supplier of the Spices. Transform Pack shall take all practical
steps to ensure that the intellectual property in the trademarks
remains vested in Tilia and any supplier.
ARTICLE 8
CONFIDENTIAL INFORMATION
8.1 The parties shall execute a Confidentiality Agreement as
outlined in Schedule "A" hereto. The provisions of the
Confidentiality Agreement shall be binding on and also for the
benefit any partner, joint venture or other form of joint
business arrangement entered by Transform Pack, when notice of
which is provided to Tilia in writing.
ARTICLE 9
TERM AND TERMINATION
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9.1 This Agreement shall continue for three (3) years from the
Effective Date.
9.2 This Agreement may be extended by mutual written agreement
of the Parties for any additional term agreed upon by the
Parties.
9.3 Upon extension of the agreement, new Annual Minimums and/or
Compensation Rates may be set by mutual written agreement of the
Parties.
9.4 Tilia, without prejudice to any (ight or remedy Tilia may
have due to any failure of Transform Pack to perform Transform
Pack's material obligations or due to a material breach by
Transform Pack under this Agreement, may, at any time, with
cause' terminate the performance of work under this Agreement, by
providing sixty (60) days written notice to Transform Pack
identifying the extent to which performance of the work is
terminated, and the date upon which termination of work becomes
effective; provided, however, that this Agreement shall not be
terminated if the specified breach or default is remedied or
cured within said sixty (60) days after notice of breach or
default is provided. Termination shall take effect upon
expiration of said sixty (60) day period.
9.5 Transform Pack, without prejudice to any right or remedy
Transform Pack may have due to any failure of Tilia to perform
Tilia's material obligations under this Agreement, may, at any
time, with cause, terminate the performance of work or due to a
material breach by Tilia under this Agreement by providing sixty
(60) days w(itten notice to Tilia of the date upon which
termination of work is to become effective; provided, however,
that this Agreement shall not be terminated if the specified
breach or default is remedied or cured within said sixty (60)
days after notice of breach or default is provided. Termination
shall take effect upon expiration of said sixty (60) day period.
9.6 In the event of termination, each Party shall immediately
discontinue use of the Confidential Information received from the
other Party, and within thirty (30) days after termination, each
Party shall provided to the other Party a certification that the
originals and all copies of such Confidential Information,
regardless of form, have been returned to the disclosing Party or
else destroyed, except that, with written permission of the
disclosing party, the receiving Party may retain one (1) copy for
archival purposes.
9.7 Article 8 of this Agreement entitled "Confidential
Information" shall survive termination of this Agreement for any
reason whatsoever.
9.8 This Agreement may be terminated after sixty (60) days by
the solvent party if Transform Pack or Tilia becomes insolvent,
files for bankruptcy or enters into receivership or dissolution,
or assigns all its assets for the benefit of creditors, unless
such event is cured in said sixty (60) day period.
9.9 Termination of this Agreement shall not release either Party
from the payment of any sum then or thereafter owing to the other
Party.
ARTICLE 10
GENERAL PROVISIONS
10.1 Dispute Resolution. Disputes that arise between the Parties
concerning implementation, interpretation, or enforcement of this
Agreement shall first be discussed between senior executives of
Tilia and Transform Pack, before any mediation, arbitration, or
court proceeding is initiated.
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10.1.1 If any dispute between Tilia and Transform Pack
concerning the implementation, interpretation or enforcement of
this Agreement is not resolved by discussion or mediation, the
Parties agree to binding arbitration in accordance with the then
current commercial rules of the American Arbitration Association.
The arbitration shall be held in San Francisco, California using
U.S. and California law without use of conflict of law
principles. Any decision of the arbitrator can be enforced in a
court of competent jurisdiction in San Francisco, California.
10.2 Notices. All communications relating to and notices required
under this Agreement shall be directed as follows:
10.2.1 Communications and Notices to Transform Pack shall be
sent to:
Xxxx Xxxxx
President
Transform Pack Inc.
X.X. Xxx 0000
Xxxxxxx, Xxx Xxxxxxxxx
Xxxxxx E I C 8T6
10.2.2 Communications and Notices to Tilia shall be sent to:
Xxxx Xxxx
Vice President -Business Development
Tilia, Inc.
000 Xxxxxx Xxxxxx -0xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx
XXX00000
10.3 Integration. This Agreement contains the entire agreement of
the Parties. All other promises, inducements, representations or
agreements, other than as expressly set forth herein related to
the subject matter hereof, whether written or oral, are expressly
superseded hereby and are of no further force or effect.
10.4 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of Tilia and Transform Pack and their
successors, subsidiaries and assigns. Neither party may assign
this Agreement without the written consent of the other, except
to an entity that acquires the part of the business of the
assigning Party relating to this Agreement.
10.5 Amendment. This Agreement cannot be altered, amended or
modified in any respect, except by a writing duly signed by both
Parties.
10.6 Choice of Law. This Agreement shall be construed under, and
interpreted in accordance with, the laws of the State of
California without use of conflict of law provisions.
10.7 No Strict Construction. The normal rule of construction to
the effect that any ambiguities are to be resolved against the
drafting Party shall not be employed in the interpretation of
this Agreement.
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10. 8 Execution. This Agreement may be executed in
counterparts by the Parties, each of which shall be deemed an
original, and which together shall constitute one and the same
instrument, having the same force and effect as if a single
original had been executed by all the Parties.
10.9 Force Majeure. Neither Party shall be liable to the other
Party for nonperformance or delay in performance of any of its
obligations under this Agreement due to causes reasonably beyond
its control, including fire, flood, strikes, labor troubles, or
other industrial disturbances, unavoidable accidents,
governmental regulations, riots, and insurrections. Upon the
occurrence of such a force majeure conditions, the affected party
shall immediately notify the other Party with as much detail as
possible and shall promptly inform the other party of any further
developments. Immediately after the cause, is removed, the
affected Party shall perform such obligations with all due speed,
unless the Agreement is previously terminated in accordance with
Article 9 Term and Termination above.
10.10 Process Consistency. Transform Pack shall refrain from
making any major change in the Spice Film Application Process
without first obtaining Tilia's written consent.
10.11 This Agreement is~ not intended to create any
partnership, joint venture, or any relationship of principal and
agent as between the Parties. Neither Transform Pack nor any
agent or employee of Transform Pack shall represent itself to be
an agent of, or in partnership with, Tilia for any purpose, nor
shall either or both have any right or authority to bind Tilia in
any respect or for any purpose.
10.12 Headings. The heading of Articles in this Agreement
shall serve only reference purposes and for convenience and are
not binding or intended to limit or expand the breadth of the
provisions thereunder.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
signed by their duly authorized representatives as of the
Effective Date.
Transform Pack Inc.
Dated: June 25, 2001 By: /s/ Xxxx Xxxxx, President
Tilia, Inc.
Dated: July 11, 2001 By: /s/ Xxxx Xxxx, Vice President
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