EXHIBIT 10.16
AGREEMENT
THIS AGREEMENT is made this 1st day of March, 2001, by and among Reliv'
International, Inc., a Delaware corporation ("Reliv'") with offices at 136
Chesterfield Industrial Boulevard, Chesterfield, Missouri and Hydron
Technologies, Inc., a New York corporation ("Hydron") with offices at 1001
Yamato Road, Suite 403, Boca Raton, Florida.
WHEREAS, Reliv' is engaged in the business of developing, manufacturing,
marketing and selling food and nutritional products;
WHEREAS, Hydron is engaged in the business of developing, formulating and
selling skin care products;
WHEREAS, Hydron has a license agreement ("NPD Agreement") with National
Patent Development Corporation dated November 30, 1989, to use certain
proprietary technology (herein referred to as the "Polymer") which Hydron
believes has beneficial effects for improving and maintaining the appearance and
condition of skin;
WHEREAS, Hydron has developed and owns certain patented skin technology
which is a delivery system that implements the licensed Polymer; and
WHEREAS, Reliv' and Hydron desire to enter into an agreement pursuant to
which Hydron will formulate, have manufactured and sell to Reliv' certain skin
care products that contain Hydron's proprietary technology according to the
mutually agreed specifications of Reliv and Hydron.
NOW, THEREFORE, in consideration of the premises and of the terms,
covenants and conditions hereinafter contained, the parties hereto agree as
follows:
1. Definitions. When used in this Agreement, each of the following terms
shall have the meaning set forth in this paragraph:
1.1 "Technology" shall mean formulas for improving and maintaining the
appearance and condition of skin and shall include, without limitation, the
composition, formula, components or ingredients of any Commercial Product.
1.2 "Patents" shall mean and include any and all patents or patent
applications, and any division or continuation in part, now existing or
hereafter prepared, filed, issued or obtained which, in whole or in part,
covers, concerns, incorporates, deals with or relates to any part of the
Technology. Without limitation, the term "Patents" includes (i) the skin
treatment preparation with United States Patent Number 4,883,659, dated
November 28, 1989 and (ii) the skin tightening formulation and method for
treating skin with United States Patent
Number 5,879,684, dated March 9, 1999 (collectively referred to herein as
the "Hydron Patents").
1.3 "Commercial Product" means only the skin care products
manufactured by or for Hydron and marketed and sold under the Reliv
trademark and formulas and utilizing the Technology and Know-How.
1.4 "Field" means articles intended for application to the human body
for cleansing, beautifying, promoting attractiveness or altering the
appearance.
1.5 "Know-How" shall mean and include all information, techniques,
methods, formulas or sources concerning or relating to: (1) applications of
the Technology to the Field or (2) any of the Commercial Products
hereunder, including without limitation, their composition, formulation,
ingredients, production, sources of supply or packaging thereof.
1.6 "Multilevel Marketing" or "MLM" shall mean and include any
organization, structure, marketing or sales method or technique or
procedure by which products are sold to consumers through a network of
independent distributors. Multilevel Marketing shall not include sales
through retail stores, or marketing programs principally intended for sales
through retail stores or catalogue sales or direct sales through media
campaigns utilizing television, radio or print advertising.
1.7 "Rights" shall mean and include any and all Patents, Know-How,
trade secrets, or other proprietary rights of any kind or nature, whether
or not patentable, relating to, or utilized in connection with, the
Technology or any of the Commercial Products.
1.8 "Polymer" shall mean the ingredient patented by National Patent
Development Corporation ("NPD") which Hydron has a license to use within
its Technology.
2. Exclusivity. Subject to and on the terms and conditions hereof, Hydron
agrees to develop and manufacture and Reliv agrees to purchase from Hydron its
requirements for Commercial Products and to market and sell such products solely
through MLM.
2.1 Reliv's rights to sell the Commercial Products or any other
products utilizing the Rights shall be exclusive during the term hereof for
Reliv's MLM business and Hydron shall not retain, sell or transfer any
right, interest or license in or to any of the Commercial Products or any
other products utilizing the Rights in the Field to any company engaged in
MLM.
2.2 Except as may be otherwise expressly provided in this Agreement,
this Agreement shall not prohibit, restrict or limit the rights of Hydron
to use or practice, produce or sell products utilizing the Rights (other
than for any other
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company engaged in MLM) or any other intellectual property rights which
Hydron may have.
2.3 Reliv does not have the right to resell the Commercial Products
other than to its independent distributors without the express written
consent of Hydron. However, Reliv shall have the power to resell the
Commercial Products to its foreign subsidiaries that promote the Reliv
business solely through MLM.
3. Product Line, Production, and Product Development.
3.1 Hydron will develop a combination of Commercial Products utilizing
the Technology and formulated to specifications approved by Reliv. The
initial Commercial Products include:
(a) A hydrating face and body bar;
(b) A daytime moisturizer;
(c) A fragile, anti-wrinkle eye cream;
(d) An anti-aging skin clarifier; and
(e) A nightime defensive cream and moisturizer.
3.2 Hydron shall arrange for the manufacture and packaging of the
Commercial Products. All of the articles shall be manufactured in
accordance with mutually agreed specifications under Good Manufacturing
Practices, shall be free of defects in workmanship or materials, shall be
free of deleterious or toxic materials and shall be suitable for human use.
The cost of all manufacturing and packaging shall be borne by Hydron.
Hydron reserves the right to reimbursement of actual storage costs from
Reliv, if any, for ingredients, components and finished goods associated
with production of the Commercial Products.
3.3 The Commercial Products shall be packaged and labeled in
accordance with Reliv's specifications and directions, and Reliv' shall be
solely responsible for label design, product names, logos, marketing and
sales programs. Reliv' shall coordinate with Hydron or Hydron's contractors
regarding the labeling and packaging of the articles and will provide the
artwork, specifications and layouts necessary to complete the labeling and
packaging for the articles.
3.4 The parties acknowledge and agree that Hydron is, and intends to
continue to be engaged in research and development in various fields. If
Hydron develops a new product for use in the Field, Hydron shall be
obligated to present such product to Reliv for inclusion in Reliv's line of
skin care products prior to offering such product to any MLM competitor of
Reliv. Hydron agrees that it will negotiate with Reliv in good faith
regarding the pricing and other terms relating to a new product Reliv is
interested in pursuing and will provide to Reliv during the
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term hereof, at Hydron's sole discretion, information concerning such
research and development of such products. All information provided by
Hydron pursuant to this paragraph shall be Confidential Information.
3.5 Any and all enhancements or improvements of or to the Commercial
Products by Hydron during the term hereof shall be incorporated in and
subject to this Agreement. Any cost increases to Hydron which result from
an enhancement or improvement to any Commercial Product which Reliv has
agreed to shall be passed to Reliv from Hydron at actual cost. Reliv shall
pay a one-time charge of up to 10% of applicable research and development
costs incurred by Hydron if such project was agreed to in advance by Reliv.
4. Ordering and Supply.
4.1 Subject to and on the terms provided herein, Hydron shall
coordinate with its suppliers and manufacturing contractors who shall
produce, package and ship to Reliv', in a timely manner and in no event
more than 75 days from the date of order, units of the Commercial Product
as ordered by Reliv' from time to time during the term hereof. Reliv' shall
submit all orders to Hydron in writing. Orders may be transmitted to Hydron
by facsimile transmission or mail. All orders shall specify the articles
and quantity ordered.
4.2 Hydron shall send a confirmation of all orders, which confirmation
shall confirm the delivery date or provide a different delivery date. Reliv
shall have the right to withdraw, without liability, an order which cannot
be substantially fulfilled by the delivery date specified in Reliv's order,
or other delivery date agreed upon by the parties, due to a material
failure on the part of Hydron.
4.3 The parties acknowledge that all units of the product shipped to
Reliv' shall be contained in mutually agreed packaging and that,
accordingly, Reliv' shall rely upon Hydron and its contractors to have
produced Commercial Products in accordance with agreed upon formulas and
specifications. Reliv shall be deemed to have accepted shipment of
Commercial Products upon delivery and initial inspection of such products.
However, the inspection of any of the goods sold hereunder or the failure
of Reliv' to inspect units of the Commercial Products shall not affect or
result in the loss by Reliv' of any rights or claims of Reliv' for breach
of warranty, non-conformance of the Commercial Products to this Agreement
or right to reject delivery or of any other rights of Reliv' at law or in
equity. If Reliv' shall, at any time after delivery of any shipment,
inspect any number of units of the shipment and determine that a number of
units of such shipment do not conform to this Agreement or are in violation
of warranties of Hydron herein, Reliv' shall be entitled to reject the
non-conforming goods and receive conforming replacements within a
reasonable period of time, not to exceed thirty (30) days. Any goods
rejected in accordance with this paragraph may be returned to Hydron by
Reliv' at Hydron's expense and Reliv' may charge
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Hydron for all expenses of unpacking, repacking, examining and reshipping
such goods if they are found to be non-conforming.
4.4 Hydron shall make full payment when due to all suppliers and
manufacturing contractors of all amounts due in connection with any and all
raw materials, components and finished goods in connection with any
Commercial Products ordered by Reliv hereunder.
4.5 To secure payment of the amounts due from Hydron under Section 6
hereof and performance of all obligations of Hydron to Reliv hereunder:
4.5.1 Hydron hereby grants to Reliv a continuing security
interest in, a lien upon, and a right of set off against, and hereby
assigns to Reliv as security, the following property and interests in
property of Hydron, whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral"): All
now owned and hereafter existing or acquired raw materials,
ingredients, packaging and work in process required to make the
Commercial Products, including without limitation, the Polymer, as
well as finished goods and all other Commercial Product inventory of
whatsoever kind and nature, wherever located, owned by Hydron and
located at the facility of any contract manufacturer.
4.5.2 Hydron shall execute and deliver to Reliv such UCC
financing statements as Reliv shall require in form satisfactory to
Reliv evidencing the grant of the security interest to Reliv in the
Collateral and shall take any and all other action and execute such
other and further documents as Reliv may reasonably require such that
Reliv shall, as Reliv shall determine, have a valid and effective
first lien on all of the Collateral to secure the obligations provided
for herein. Upon termination of this Agreement, Reliv shall
immediately release all UCC finance documents if Hydron has performed
under this Agreement.
4.5.3 At any time an Event of Default with respect to Hydron
exists or has occurred and is continuing, Reliv shall have all rights
and remedies provided in this Agreement, the Uniform Commercial Code
and other applicable law, all of which rights and remedies may be
exercised without consent by Hydron, except as such notice or consent
is expressly provided for hereunder or required by applicable law. All
rights, remedies and powers granted to Reliv hereunder, under this
Agreement, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Reliv's discretion,
alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply
to a court of equity for an injunction to restrain a breach or
threatened breach by Hydron of this Agreement. Without limiting the
foregoing, at any time an Event of Default exists or has occurred and
is continuing, Reliv may, in its
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discretion and without limitation, (i) with or without judicial
process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession
of the Collateral or complete processing, manufacturing and repair of
all or any portion of the Collateral, (ii) require Hydron, at Hydron's
expense, to assemble and make available to Reliv any part or all of
the Collateral, (iii) collect, foreclose, receive, appropriate, setoff
and realize upon any and all Collateral, (iv) remove any or all of the
Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, or (v) sell, lease,
transfer, assign, deliver or otherwise dispose of any and all
Collateral (including entering into contracts with respect thereto,
public or private sales at any exchange, broker's board, at any office
of Reliv or elsewhere) at such prices or terms that shall be
commercially reasonable, for cash, upon credit or for future delivery,
with Reliv having the right to purchase the whole or any part of the
Collateral at any such public or private sale, all of the foregoing
being free from any right or equity of redemption of Hydron, which
right or equity of redemption is hereby expressly waived and released
by Hydron. If notice of disposition of Collateral is required by law,
ten (10) days prior notice by Reliv to Hydron designating the time and
place of any public sale or the time after which any private sale or
other intended disposition of Collateral is to be made, shall be
deemed to be reasonable notice thereof and Hydron waives any other
notice. In the event Reliv institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of prejudgment
remedy, Hydron waives the posting of any bond which might otherwise be
required; provided, however, that in any event, if Hydron shall
continue to engage in the active conduct of business, Reliv shall not
take possession of, sell, foreclose or collect upon or otherwise
dispose of that amount of the Polymer in excess of the amount thereof
necessary for the production of the reasonably anticipated needs of
Reliv therefor for the term provided in Section 8.4.2.
4.6 Hydron shall at all times during the term of this Agreement
provide full and complete information to Reliv concerning the inventory,
and the location thereof, of all Polymer, raw materials, ingredients,
containers and packaging which may be used for, or which relates to the
Commercial Products.
4.7 In the event of an Event of Default with respect to Hydron,
immediately upon the written request of Reliv, and upon receipt of payment
therefor, Hydron shall sell and deliver to Reliv, and Reliv shall be
entitled to purchase, at Hydron's cost therefor, any and all of such of the
Polymer, ingredients, containers or packaging in its possession, in Reliv's
possession or held by any contract manufacturer or agent which may be
utilized for, or relates to, any of the Commercial Products; provided,
however, that if at such time Hydron shall continue to be actively engaged
in business, the amount of the Polymer which Hydron shall be obligated to
sell and deliver to Reliv shall not
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exceed the amount reasonably deemed necessary by Reliv to produce
Commercial Products for its needs during the term provided in Section
8.4.2.
4.8 Promptly, and in any event within 20 days after execution of this
Agreement, Hydron shall deliver to Reliv no less than 2,000 pounds of the
Polymer in appropriate containers for storage. At all times, and from time
to time, during the initial term, or any renewal term of this Agreement,
Hydron shall cause to be delivered to Reliv that amount of the Polymer such
that, at all times, Reliv shall have in its possession an amount equal to
the greater of (i) 2,000 pounds of the Polymer or (ii) that amount of the
Polymer necessary for the production of the needs of Reliv for the
Commercial Products for a period of 24 months based upon the average
monthly sales of Commercial Products by Reliv over the immediately
preceding six months, such determination to be made every six months during
the initial term and all renewal terms of this Agreement. Reliv shall take,
and shall be entitled to retain, physical possession of the Polymer which
Reliv has agreed to store in conditions suitable for the preservation of
the Polymer, such as in a place which has a cool and dry temperature and is
removed from any solvents and materials which could cause harm. Title to
the Polymer so held by Reliv shall remain with Hydron but shall be held by
Reliv at Reliv's risk of loss or damage. Such stored Polymer shall be
rotated from time to time from Reliv to Hydron's contract manufacturer for
production of the Commercial Products to avoid expiration of the stored
Polymer; provided that Hydron shall promptly replace with Reliv any of the
Polymer removed from Reliv's premises for use in manufacturing. In the
event of an Event of Default with respect to Hydron under Section 8.3.2
(excluding Section 8.3.2(f)) or Section 8.3.3(b) of this Agreement, Reliv
shall have the right to purchase all of the Polymer in its possession from
Hydron by making payment to Hydron at Hydron's actual cost therefore and
shall thereafter be entitled to use, sell and dispose of the Polymer as
Reliv shall determine in its sole discretion.
5. Pricing.
5.1 Reliv' shall purchase the Commercial Products from Hydron at the
prices specified on Exhibit A hereto. All prices shall be F.O.B.
manufacturer's shipping point.
5.2 Hydron shall be entitled to increase the price per unit hereunder
at any time upon 60 days prior written notice to Reliv' solely to the
extent of any actual increase in cost per unit incurred by Hydron with
respect to the price of manufacturing, packaging, or ingredients involved
with the Commercial Products.
5.3 Hydron shall decrease the price per unit hereunder to the extent
of any actual decrease in the cost per unit incurred by Hydron with respect
to the price of manufacturing, packaging or ingredients involved with the
Commercial Products or due to efficiencies in the manufacturing process.
Hydron's obligation to decrease such price per unit to the extent of any
decrease in cost is effective upon Reliv's purchase order of at least
50,000 units of a single Commercial
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Product. If a particular Commercial Product is not ordered in a quantity of
50,000 units or more per purchase order, then Hydron has no obligation
under this Section 5.3.
5.4 Reliv shall bear and shall pay or reimburse Hydron for the
one-time costs in connection with the packaging and introduction of the
Commercial Products as estimated and set forth on Exhibit B hereto. All
dies, stamps and other such materials associated with the packaging for the
Commercial Products shall be the sole and exclusive property of Reliv.
6. Minimum Purchase Requirement/Payment Terms. In order to keep packaging
costs to a minimum, Reliv shall be required to purchase a minimum amount of
30,000 units of any product ordered. Reliv shall make a down-payment of 50% of
the order amount at the time of order. The remaining 50% shall be due and
payable upon receipt of the goods by Reliv. In order to keep Reliv's finished
inventory at a reasonable level, Hydron agrees to make three separate shipments
of 10,000 units of each product when and as needed by Reliv. Reliv shall make
payment only for that amount received from Hydron. For example, assume the total
cost of 30,000 units of a product equals $300,000. Reliv shall pay 50% of the
total cost, or $150,000, upon placing the order. Thereafter, Reliv shall pay
16.67% of the total cost, or $50,000, upon receipt of each 10,000 unit shipment.
See Exhibit A. Prior to the date of delivery of an order, Hydron shall be
indebted to Reliv in the amount of any and all advance payments made by Reliv to
Hydron and, in the event of an Event of Default by Hydron, such amount shall be
and become immediately payable by Hydron to Reliv. Upon delivery of a shipment
to Reliv, Hydron's indebtedness to Reliv shall decrease by the percentage such
shipment bears to the total purchase order. Using the foregoing example, upon
receipt of the first shipment of Commercial Product, Hydron's indebtedness to
Reliv would be decreased by $50,000.
7. Payment. Hydron shall invoice Reliv' for goods shipped on the date of
shipment. Reliv' shall be obligated to pay for goods shipped upon receipt of the
goods. Any amount due for goods shipped hereunder more than twenty (20) days
from the date of invoice shall bear interest at the rate of 18% per annum.
8. Term and Termination.
8.1 The term of this Agreement shall commence on the date hereof and
expire three (3) years thereafter. Upon the expiration of the initial term
or any renewal term hereof, Reliv shall have the right to renew this
Agreement for an additional three (3) year term by giving written notice to
Hydron of such election more than sixty (60) days prior to the date of
expiration of such term or renewal term. As a condition of Reliv's right of
renewal, Reliv must have purchased and paid for a total of at least $1.5
million worth of Commercial Product in the three (3) years during the
initial term--a minimum of $300,000 in Year One, $500,000 in Year Two, and
$700,000 in Year Three. As a condition of Reliv's right of renewal for a
third three year term, Reliv must have purchased and paid for a total of at
least $2.5 million worth of Commercial Product during the first three year
renewal term--a minimum of $700,000 in Year Four, $800,000 in Year Five,
and
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$1,000,000 in Year Six. For the purpose of this automatic renewal, the
three year term commences on the date of the first order from Reliv, not
the date of this Agreement. If Reliv does not satisfy such minimum purchase
requirements, then Hydron has the right to disallow a renewal by Reliv.
8.2 This Agreement may be terminated by either party prior to the
expiration of its term or any renewal term by written notice to the other
party in the event of an Event of Default with respect to the other party;
provided the terminating party is not the cause of such Event of Default on
the part of the other party.
8.3 An Event of Default shall include:
8.3.1 With respect to either party, any material violation or
failure or refusal to perform by such party of any obligation of such
party hereunder and the failure or refusal by such party to cure such
material violation or non-performance within thirty (30) days after
notice thereof specifying the material violation or non-performance
shall have been given by the other party;
8.3.2 With respect to either party,
(a) Admission in writing of its inability to pay its debts
generally as they become due,
(b) Filing a petition for relief under any chapter of Title
11 of the United States Code or a petition to take advantage of
any insolvency under the laws of the United States of America or
any state thereof,
(c) Making an assignment for the benefit of its creditors,
(d) Consenting to the appointment of a receiver of itself or
of the whole or any substantial part of its property,
(e) Suffering the entry of an order for relief under any
chapter of Title 11 of the United States Code,
(f) Filing a petition or answer seeking reorganization under
the Federal Bankruptcy Laws or any other applicable law or
statute of the United States of America or any state thereof; or
(g) Ceasing to do business.
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8.3.3 With respect to Hydron:
(a) Three or more instances of material violation of
Hydron's warranties herein which go uncured for longer than
thirty (30) days;
(b) The failure of Hydron, or its manufacturing contractors,
to deliver Commercial Product in accordance with paragraph 4
hereof which goes uncured for longer than thirty (30) days; or
(c) Three or more instances in which Reliv' shall have
validly rejected a shipment, or some portion thereof, of
Commercial Product from Hydron, or its manufacturing contractors,
in accordance with paragraph 4.3 hereof, and such rejection goes
uncured for longer than thirty (30) days.
8.3.4 With respect to Reliv:
(a) Three or more instances in which Reliv fails to pay on
time and such failure goes uncured for longer than thirty (30)
days.
(b) Three or more instances where goods were rejected by
Reliv as being non-conforming and the rejection was not valid.
8.4 Provided Reliv shall not be in material breach of this Agreement,
in the event of an Event of Default on the part of Hydron under Section
8.3.2 (excluding Section 8.3.2(f)) or Section 8.3.3(b), whether or not
Reliv shall terminate this Agreement, immediately upon any of the foregoing
events,
8.4.1 Reliv shall have the right to manufacture (either itself or
through a third party contract manufacturer) and market the Commercial
Products.
8.4.2 Hydron thereupon grants to Reliv for the remaining life of
the contract term plus one renewal three year term, a royalty free,
worldwide right and license, under and with respect to the Hydron
Patents and all Rights, to make, have made, use and sell the
Commercial Products and any other products utilizing the Technology
and to practice and use any and all inventions in the Hydron Patents
and any and all of the Rights. Such license shall be exclusive with
respect to any and all products in the Field intended for sale by MLM.
8.4.3 Reliv shall have the immediate right to receive and use all
of the technical information delivered to the escrow agent as provided
in
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Section 13 hereof and any other technical information relating to the
Technology or the Commercial Products to which it may have access.
8.4.4 Hydron thereupon grants to Reliv, at Reliv's election and,
if necessary, at the consent of NPD, (i) an irrevocable and worldwide
right and sublicense, under and with respect to the Polymer, to make,
have made, use and sell the Commercial Products and any other products
utilizing the Technology and to practice and use any and all
inventions utilizing the Polymer in the Field for sale by MLM or (ii)
an assignment of all of Hydron's rights under the NPD Agreement, to
the extent allowed, for the purpose and to the extent of granting to
Reliv the right to make, or have made, use and sell any and all
Commercial Products which utilize the Polymer in the Field for MLM.
8.4.5 All rights of Reliv under this Section 8.4 shall survive
the expiration or termination of this Agreement for the amount of time
set forth in Section 8.4.2.
8.5 Subject to Section 8.4 and Section 18, in the event of termination
of this Agreement in accordance with Section 8.2 hereof, all rights and
obligations of the parties hereunder shall cease and terminate as of the
date of such termination; provided, however, that any and all rights of a
party which shall have accrued as of the date of such termination or of the
expiration hereof, including without limitation, any right or claim for
damages for breach of the Agreement, and any rights or obligations of a
party provided herein to survive expiration or termination hereof, shall
survive termination or expiration of this Agreement.
8.6 Neither party shall be in default hereunder or be liable for any
loss or damage for any delay in the performance of its obligations
hereunder due to causes beyond its reasonable control such as acts of God,
acts of the other party, acts of military authority, priorities, fires,
strikes, floods, hurricanes, tornadoes, epidemics, quarantine restrictions,
war, riots, delays in transportation, car shortage, or inability due to
causes beyond its reasonable control or to obtain necessary labor, material
or manufacturing facilities.
9. Shipping. Hydron shall cause all units of the Commercial Product to be
shipped to Reliv' in accordance with instructions which Reliv' shall provide to
Hydron from time to time. Hydron shall deliver all Commercial Product to the
carrier packaged in accordance with the provisions hereof with shipping
instructions in accordance with those provided by Reliv'. Reliv' shall pay all
expenses related to shipping the Commercial Product from Hydron or its
warehouses, or Hydron's manufacturing contractors, to Reliv'. Risk of loss shall
shift to Reliv' upon delivery of the Commercial Product to the carrier.
10. Representations and Warranties of Hydron. Hydron hereby warrants,
represents and covenants to Reliv' that:
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10.1 Hydron has full power, right and authority to enter into this
Agreement with Reliv and the execution and performance of this Agreement by
Hydron does not and will not, with or without the giving of notice or the
passage of time, violate or constitute a default under any contract,
agreement, commitment or license to which Hydron is a party or by which it
is bound.
10.2 None of the Commercial Product produced, sold and delivered to
Reliv' hereunder shall be adulterated or misgraded and all units of the
Commercial Product and all packaging material, specified and mutually
agreed upon by both parties, shall be free of any deleterious or poisonous
substance which may render the Commercial Products to be adulterated within
the provisions of applicable federal, state or municipal laws.
10.3 The Commercial Products will substantially conform to the
formulations, specifications and descriptions provided by Hydron and to any
and all samples thereof provided by Hydron to Reliv'.
10.4 Hydron will not alter or modify the ingredients or formulation of
any Commercial Product without written notice to and written consent of
Reliv'.
10.5 The Commercial Products, the formulation thereof, and the
manufacture and sale thereof by Hydron or by Reliv' does not and will not
violate or infringe upon any patent or other proprietary right of any
person.
10.6 Hydron has not and will not, before or during the initial or any
renewal term of this Agreement, grant a license to any third party which
shall conflict with Sections 8.4.2 and 8.4.4.
11. Representations and Warranties of Reliv. Reliv represents and warrants
to Hydron that it has the full right and authority to enter into this Agreement
with Hydron, that it has the full right, power and authority to enter into this
Agreement and that the execution and performance of this Agreement by Reliv will
not with or without the giving of notice or the passage of time, violate or
constitute a default under any contract, agreement, or commitment to which Reliv
is a party or by which it is bound.
12. Confidential Information. Each of the parties hereto agrees that, with
respect to Confidential Information in its possession as to which no
communication thereof is required for the application hereof, or Confidential
Information transmitted to it by the other party, such party will not use any
such Confidential Information for any purpose other than as expressly authorized
herein and shall not disclose, or permit its employees or agents to disclose,
such Confidential Information to any person, or to use the same. Confidential
Information of the
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other party may be used by a party hereto solely as follows: (i) for the
performance of such party's obligations under this Agreement, (ii) in connection
with the manufacture, production, sale or distribution of Commercial Products
pursuant to the terms of this Agreement or (iii) for such other purposes as the
other party may authorize in writing. Confidential Information of the other
party may be disclosed by a party solely to those employees of the party who
have a need to know the information for the purposes provided herein and who
have executed an agreement for the benefit of both of the parties, in form
satisfactory to both and consistent with the provisions hereof, prohibiting the
use or further disclosure of such Confidential Information.
13. Provision of Technical Information.
13.1 Hydron and Reliv shall enter into an escrow agreement ("Escrow
Agreement") within 45 days from the date hereof substantially in the form
of Exhibit C hereto. Immediately upon execution of this Agreement, Hydron
shall deliver to the escrow agent designated in the Escrow Agreement
complete technical information concerning each Commercial Product. Such
technical information shall include, but not be limited to:
13.1.1 The precise ingredients and formula for each of the
Commercial Products;
13.1.2 Detailed and complete information concerning all
techniques and methods of compositions, production and manufacture of
each such products and each ingredient or component thereof;
13.1.3 Detailed and complete information concerning all sources
of supply for ingredients, alternative sources of supply and
production of each Commercial Product and all ingredients and
components thereof;
13.1.4 Such other information concerning or relating to any
Commercial Product, or any component or ingredient thereof, or any
aspect of the Technology as mutually agreed upon by both parties.
13.2 All technical information provided pursuant to this paragraph and
paragraph 8.4 shall be Confidential Information hereunder and shall be
designated as such when provided to a Designated Person. The technical
information shall be used only by Reliv in performing its rights and
obligations under this Agreement including, without limitation, its rights
under Section 8.4.
13.3 A "Designated Person" shall be an independent third party
designated by Reliv and Hydron who shall have executed a confidentiality
agreement in favor of Reliv and Hydron.
14. Indemnification. Provided Reliv shall not be at fault in whole or in
part, Hydron agrees to protect, defend, hold harmless and indemnify Reliv', its
officers, directors, employees and agents from and against any and all claims,
actions, liabilities, losses, costs or expenses (including reasonable attorneys'
fees) arising out of or caused by (i) any actual or alleged infringement of any
patent or other proprietary right in connection with the manufacture or sale of
Commercial Products, (ii) any actual or alleged death or injury to any person,
damage to any property, or other damage or loss by
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whomever suffered resulting from or caused by, or claimed to result from or be
caused by, the Commercial Products or the use thereof by any person, (iii) any
actual or alleged death or injury to any person, damage to property or any other
damage or loss by whomever suffered resulting from or caused by, or alleged to
have resulted from or be caused by, any violation by Hydron of any of Hydron's
warranties herein or (iv) arising out of any actual or alleged violation by the
Commercial Products of any law, statute or ordinance or any governmental or
administrative order, rule or regulation.
15. Infringement. During the term hereof, Reliv shall protect all the
Rights in the Field for MLM from infringement. Reliv shall have the right to
initiate and prosecute any claims, demands, actions or proceedings concerning or
related to any infringement or violation of any Patent or any of the Rights
licensed hereunder in the Field for MLM. The determination whether to make any
demand or claim or to initiate any action or proceeding in order to protect the
Rights shall be within the discretion of Reliv. Reliv shall be responsible for,
and shall bear, all costs of any such claim, demand, action or proceeding and
shall be entitled to retain all proceeds thereof whether recovered by
settlement, judgment or otherwise. In addition, Hydron has the right to initiate
any action or proceeding to protect the Rights. Hydron agrees that it shall
provide to Reliv prompt notice of any infringement or violation of any of the
Patents or Rights of which it shall become aware and shall cooperate fully with
Reliv in the prosecution of any claim, demand, action or proceeding for any such
infringement or violation which it shall determine to pursue. Notwithstanding,
the foregoing, Hydron at its option shall have the right to retain its own legal
representation, at its own cost, should it have reason to believe that the
validity of its Patent rights are at risk.
16. Insurance. Hydron agrees to obtain and maintain at all times during the
term and renewal term hereof, and to pay all premiums on, a policy or policies
of insurance insuring Hydron against claims or liability for death or personal
injury caused by or resulting from the use of the Commercial Products providing
coverage of at least $3 million and $1 million per occurrence. Hydron shall
provide to Reliv' a certificate from the issuer of such insurance certifying to
the issuance of such insurance upon execution hereof and at least once each six
months during the term hereof. Such insurance shall include an endorsement
naming Reliv' as an additional insured and Hydron shall provide to Reliv' a
certificate of the insurer to such effect.
17. Patents and Other Rights.
17.1 Hydron represents and warrants to Reliv' that:
17.1.1 Hydron and NPD have entered into the NPD Agreement pursuant to
which, among other things, Hydron holds a license to make, have made, use
and sell products utilizing the Polymer, including the Commercial Products
and other products in the Field utilizing the Technology; the NPD Agreement
is in full force and effect and Hydron represents and warrants that there
has been no event of default under the NPD Agreement;
17.1.2 Hydron is the sole owner of the Hydron Patents free and clear
of all liens, claims and encumbrances;
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17.1.3 Hydron developed and, except for the Polymer as to which it
holds a license, is the sole owner of patented skin technology which is a
delivery system for skin care products, including without limitation, the
compositions and formulations that implement the Polymer, and including the
compositions and formulaes which constitute the Commercial Products;
17.1.4 Hydron is the sole owner of the Know-How and has the full
right, power and authority to manufacture or have manufactured, and to sell
to Reliv, the Commercial Products utilizing the Rights and has not entered
into any agreement, license, contract or commitment under which any rights
relating thereto have been licensed, assigned or granted to any other
person which would conflict with the Rights under this Agreement; and
17.1.5 Hydron has the full right, power and authority to grant or
assign to Reliv the licenses and rights provided for in Section 8.4 hereof.
18. Rights Upon Termination. In addition to any rights Reliv' may have
under Section 8.4, from and after the date of expiration or termination of this
Agreement for any reason, Reliv shall be entitled to sell or otherwise dispose
of any Commercial Product which shall be in Reliv's inventory or on order on the
date of such termination or expiration, provided that Reliv shall have paid any
and all amounts due to Hydron with respect to such products. Reliv shall be
obligated to purchase and take possession of all raw materials and packaging
which is unique to Reliv and was purchased by Hydron with the intention of
manufacturing the Commercial Products.
19. Equitable Remedies. Hydron acknowledges that, in the event of a
violation by it of the provisions of this Agreement, the remedies of Reliv'
hereto at law may be inadequate and Reliv' may, as a result of any such
violation, suffer irreparable harm and, accordingly, Reliv' shall have the right
to seek injunctive relief or to compel specific performance of this Agreement in
a court of competent jurisdiction, and shall be entitled to recover all costs
and expenses incurred in connection therewith including a reasonable sum for
attorneys' fees.
20. Notices. Any notice, request or other communication required or
permitted to be given under the terms of this Agreement must be given by
certified or registered mail, with proper postage fully paid, in an envelope
addressed, as follows:
If to Hydron: Terrence S. McGrath
Chief Operating Officer
Hydron Technologies, Inc.
1001 Yamato Road, Suite 403
Boca Raton, Florida 33431
15
If to Reliv': Robert L. Montgomery
President
Reliv' International, Inc.
P.O. Box 405
Chesterfield, Missouri 63005-0405
Any notice mailed in accordance with the provisions of this paragraph shall be
deemed received on the third day following the date of mailing. Any party hereto
may change the address to which notices to such party shall be given hereunder
by a proper notice of such change of address to the other party.
21. Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior written or oral, representations, inducements, agreements, contracts, or
commitments. No amendment, change, modification or addition to this Agreement
shall be made, or shall be binding upon any party hereto unless the same shall
be in writing and shall have been signed by the parties hereto.
22. Severability. Whenever possible, each paragraph of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law.
If any paragraph of this Agreement shall be unenforceable or invalid under
applicable law, such paragraph shall be ineffective only to the extent and
duration of such unenforceability or invalidity and the remaining substance of
such paragraph and the remaining paragraphs of this Agreement shall in such
event continue to be binding and in full force and effect.
23. Waivers. No failure by any party to exercise any of such party's rights
hereunder or to insist upon strict compliance with respect to any obligation
hereunder, and no custom or practice of the parties at variance with the terms
hereof, shall constitute a waiver by any party to demand exact compliance with
the terms hereof. Waiver by any party of any particular default by any other
party shall not affect or impair such party's rights in respect to any
subsequent default of the same or of a different nature, nor shall any delay or
omission of any party to exercise any right arising from any default by any
other party affect or impair such party's rights as to such default or any
subsequent default.
24. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legatees,
personal representatives and successors in interest. Neither party hereto shall
have the right to assign any right, interest or obligation under this Agreement
without the express written consent of the other party. Both parties shall have
the right to assign its rights and obligations under this Agreement to any
person or entity who shall purchase or acquire substantially all of the business
and properties of such party whether by merger, reorganization, consolidation or
sale of assets.
25. Governing Law, Jurisdiction. For purposes of construction,
interpretation and enforcement, this Agreement shall be deemed to have been
entered into under the laws of the State of Missouri and its validity, effect,
performance, interpretation, construction and enforcement shall be governed by
and subject to the laws of the State of Missouri. Any and all suits for any and
every breach of this Agreement
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may be instituted and maintained in any court of competent jurisdiction in St.
Louis, Missouri and the parties hereto consent to the jurisdiction and venue in
such courts and the service of process by certified mail to the addresses for
the parties provided for notice herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
HYDRON, INC.
By: /s/ Terrence McGrath
---------------------------
Authorized Officer
RELIV' INTERNATIONAL, INC.
By: /s/ David G. Kreher
---------------------------
Authorized Officer