MARKETING AND SUB-REGISTRATION AGREEMENT
THIS Marketing and Sub-registration Agreement (hereinafter referred to as
the "Agreement") is hereby entered into and made effective this 20th day of
April, 1995, by and between the following parties:
I. PARTIES
DIATECT: Diatect International, Inc., a Kansas corporation, with its
principal place of business located at Highway 36 East, Smith Center,
Kansas 66967, hereinafter referred to as "Diatect."
ORGANIC SOLUTIONS: Organic Solutions, Inc., a Texas corporation, with
its principal place of business located at 8023 Vantage Dr., Suite 600,
San Antonio, Texas 78230, hereinafter referred to as "Organic
Solutions."
II. RECITALS
1. Diatect is the owner of the following listed insecticides
registered with the Environmental Protection Agency of the United States
("EPA"), which insecticides in the aggregate are hereinafter referred to
as the "Product,"
(a) EPA No. 42850-1
(b) EPA No. 42850-2
(c) EPA No. 42850-3
2. Diatect has made arrangements with an affiliate, DSD, Inc., a
Kansas corporation, which is a registered manufacturing establishment
with the EPA, for the manufacture of the Product upon Diatect's order.
3. Organic Solutions desires and is fully authorized and able to
obtain a sub-registration of the Product from Diatect and to market and
sell the Product under sub-labels utilizing Organic Solutions' own brand
names.
4. Dialect desires and is fully authorized and able to grant sub-
registrations of its aforementioned Product labels to Organic Solutions
so that Organic Solutions can wholesale and retail product exclusively
manufactured and packaged by, or at the order of, Diatect for marketing
and resale by Organic Solutions under Organic Solutions sub-labels and
brand names.
III. NOW, THEREFORE, in consideration of the foregoing recitals and of
the terms and conditions hereinafter set forth, the parties hereto agree
as follows:
1. TERM. The term of this Agreement shall be for a period of two
years from the date hereof. This Agreement may be renewed by the
parties only by written agreement signed by both parties, which
agreement of renewal shall contain all changes and amendments agreed
upon by the party for such renewal and, further, said renewal agreement
shall be executed by the parties at least sixty (60) days prior to the
expiration of the term of this Agreement.
2. SUB-REGISTRATION. Diatect hereby grants Organic Solutions a
sub-registration for the following listed labels of its Product for a
period coextensive with the term of this Agreement:
(a) EPA No. 42850-1
(b) EPA No. 42850-2
(c) EPA No. 42850-3
Immediately following execution of this Agreement, Diatect will file the
appropriate notice of sub-registration with the EPA and provide Organic
Solutions with a copy thereof.
3. SUB-LABELS. Diatect agrees to formulate and cause to be
manufactured for sale to Organic Solutions any and all sub-labels which
can be produced under the sub-registration granted herewith. All sub-
labels and brand names desired by Organic Solutions must be submitted to
and approved by Diatect before being utilized by Organic Solutions.
Such approval by Diatect will serve to prevent sub-labeling outside of
the parameters of the sub-registration and prevent any conflicts with
brand names owned by Diatect or brand names owned by any other sub-
registrants of Diatect.
4. BEST EFFORTS PRODUCTION.
(a) This Agreement does not constitute either an "output"
contract nor a "requirements" contract. Diatect is obligated under this
Agreement to exercise only its best efforts to supply Product to Organic
Solutions. Said best efforts of Diatect shall be subject to the
exceptions of acts of God and force majeure, including, but not limited
to, hurricanes, tornados, floods, war and insurrection.
(b) Subject to the foregoing provisions regarding best
efforts, each order for Product from Organic Solutions shall be filled
and shipped F.O.B. plant within thirty (30) days of receipt of such
order, subject further to the availability of raw materials and
packaging materials. If necessary to fill such orders, Diatect will
subcontract for additional production and/or packaging capacity.
5. QUALITY CONTROL. Each production run of Product is referred to
as a "batch." Samples from each batch will be kept and maintained by
Diatect for a period of at least three years. Testing to product
standard will be performed by Diatect on at least every tenth batch, and
copies of all relevant batch tests will be supplied to Organic Solutions
in conjunction with orders received from Organic Solutions.
6. PRICING.
(a) Current pricing for Product is as follows:
EPA No. 42850-1 and EPA No. 42850-3: $1.80 per pound
EPA No. 42850-2: $1.60 per pound
(b) The above current pricing will be maintained by Diatect
during the term of this Agreement subject only to an increase or
decrease in said price in direct proportion to relevant increase or
decrease in component material costs. The price of Product does not
include packaging costs. The price of Product does include Diatect's
costs of product liability insurance. Diatect will give Organic
Solutions at least forty-five (45) days written notice of any price
increase or decrease in order that Organic Solutions can adjust its
wholesale and retail selling prices. Diatect expressly agrees to reduce
product price in the event of the occurrence of a decrease in the price
of component material(s). Further, the parties agree to undertake good
faith efforts to continually review price structures for the benefit of
both parties.
(c) Orders will be placed for truckloads of Product in the
approximate amount of forty thousand (40,000) pounds per truckload.
Subject to the provisions of Section III 4, above, each order shall be
filled, shipped, and invoiced within thirty (30) days of receipt of said
order.
(d) Invoices for orders shall be paid at net within fifteen
(15) days from invoice date.
7. MINIMUM ORDER REQUIREMENT. Organic Solutions shall order a
minimum of twelve (12) truckloads of Product per year during the term of
this Agreement. Said truckloads shall be spread out over the term of
this Agreement so that there is at least one truckload of Product
ordered during every sixty (60) day period.
8. PACKAGING.
(a) Organic Solutions will supply all packaging materials for
the Product, except that Diatect will supply the stretch wrap. Such
packaging materials to be supplied by Organic Solutions includes, but is
not limited to, bottles, pallets, boxes and other materials to meet
special packaging requests of Organic Solutions.
(b) Diatect will cause the Product to be packaged by means of
subcontracting with DSD, Inc. for said packaging. Diatect reserves the
right to subcontract said packaging of Product, or any part thereof.
(c) Unless other wise agreed in writing between these parties,
the standard containers for packaging and the relevant costs for
packaging shall be as follows:
(i) Five (5) ounce bottle . . . . . . .$ .27
(ii) Ten (10) ounce bottle . . . . . . .$ .27
(iii) Twenty (20) ounce bottle. . . . . .$ .30
(iv) Two (2) Lb. bottle. . . . . . . . .$ .33
(v) Five (5) Gal. bucket or pail. . . .$1.00
(vi) Thirty (30) pound bag . . . . . . .$1.00
9. STORAGE.
(a) Diatect will receive and store at its expense the
aforementioned packaging materials supplied by Organic Solutions in an
aggregate amount not to exceed two truckloads of such packaging
materials. For example, Diatect's storage capacity under this provision
could accommodate twenty thousand 20 oz. bottles, 48 pallets, and
several pallets of boxes. Any increase in amount of storage of
packaging materials must be negotiated with Diatect in advance.
(b) Any loss or damage to packaging materials supplied by
Organic Solutions while under the possession and control of Diatect will
be charged and billed against Diatect and reflected as a deduction on
invoices to Organic Solutions for purchase of Product.
10. REGISTRATION OF SUB-LABELS AND COMPLIANCE WITH LAWS. Organic
Solutions shall obtain and maintain at its own cost all necessary
registration and/or permits for all sub-labeled Product marketed and
sold in the respective jurisdictions (e.g., states, foreign countries,
etc.), or to government agencies (e.g., GSA). Copies of all
registrations of all sub-labels shall be provided by Organic Solutions
to Diatect prior to commencement of any marketing or sales activities in
said respective jurisdictions. Organic Solutions warrants that it will
comply with all relevant laws and regulations of the respective
jurisdictions in which Product is marketed or sold.
11. ADVERTISING. Organic Solutions shall bear all costs of the
development, distribution, and implementation of its advertising and
Product literature relating to sub-labeled Product. Diatect will
cooperate with Organic Solutions in the development of such advertising
and Product literature. All such advertising and Product literature
must receive written approval from Diatect prior to its publication,
release, distribution or any other use by Organic Solutions. Unless
otherwise agreed by these parties in writing, Organic Solutions shall
submit galley proofs of all advertising and/or Product literature to
Diatect for Diatect's approval prior to any release, publication,
distribution or commercial use of same.
12. INSURANCE. Diatect shall use its best efforts to maintain
product liability insurance on all Product and will cause Organic
Solutions to be named as a co-insured on the existing product liability
insurance policy. The primary insured on the existing product liability
insurance is DSD, Inc. Within thirty (30) days following execution of
this Agreement, Diatect will cause Organic Solutions to be furnished
with a copy of the relevant product liability insurance policy or
policies showing designation of Organic Solutions as a named insured
under said insurance.
13. SHARING OF EFFICACY DATA. The parties shall share all efficacy
data regarding the Product with each other at no cost to the other
party. Such efficacy data will include, without limitation, actual
application results from customers, field tests, and results by testing
and research organizations.
14. PROVISION OF FINANCIAL AND OTHER INFORMATION.
(a) Organic Solutions shall provide Dialect with financial
information regarding Organic Solutions for the purpose of assuring
Diatect of Organic Solutions financial capability to fulfill the terms
of this Agreement. At a minimum, Organic Solutions shall provide
Dialect with copies of quarterly financial statements of Organic
Solutions and with copies of any 10-K or 10-Q filings with the United
States Securities and Exchange Commission.
(b) Organic Solutions shall immediately give notice to
Diatect of any litigation or regulatory proceeding, or threats thereof,
known to Organic Solutions which in any way involves the Product or this
Agreement, whether or not Organic Solutions is directly involved in such
litigation or regulatory proceeds.
15. RELATIONSHIP OF THE PARTIES.
(a) The relationship of these parties is and shall be that of
independent contracting entities. Nothing contained in this Agreement
shall constitute or be construed to be or to create a partnership or
joint venture between these parties. Neither party has any ownership
right, title or interest in the other party. The parties hereto shall
be free at all times to exercise their own respective judgment as to the
manner and procedures by which they perform their obligations under this
Agreement. Nothing herein shall be deemed to prohibit any party from
engaging in any other business or occupation or from contracting with
any other entity, except as it might conflict with the terms and
conditions of this Agreement.
(b) The parties hereto understand and acknowledge that
Diatect is actively selling Product in the marketplace and that such
activity may result in direct competition between these parties from
time to time. Organic Solutions represents that it is not the intent of
Organic Solutions to disturb the market for Diatect. Organic Solutions
warrants that it will promote the Product in accordance with the highest
ethical standards of business and commerce.
16. DISPUTE RESOLUTION. Any disputes or claims arising out of or
relating to any part or provision of this Agreement or any breach of the
provisions of this Agreement, which dispute or claim cannot be resolved
by these parties within thirty (30) days of written notice thereof, shall,
upon written demand made by either party, be resolved by binding arbitration in
accordance with the rules of the American Arbitration Association. Cost and
fees of arbitration are hereby agreed to as may be awarded by the arbitrators
under and pursuant to any such arbitration proceedings. Such binding
arbitration is hereby expressly agreed by and between these parties to be the
sole and exclusive remedy for any and all disputes and for claims that may arise
between these parties under or in any way relating to this Agreement. The venue
of any and all arbitration proceedings shall be Topeka, Kansas, USA, unless
otherwise agreed by these parties in writing. The law of the State of Kansas
shall apply as the law of the jurisdiction for the purposes of the arbitration
proceedings and for the purpose of construing and interpreting this Agreement.
Any award entered by the arbitrators may be registered and entered as a binding
judgment in any court of competent jurisdiction in the United States. Any award
rendered by the arbitrators and any judgment upon an award entered by any court
of competent jurisdiction shall include all costs of arbitration, all court
costs, attorney fees, and other costs and expenses deemed payable by the
arbitrators.
17. COSTS AND EXPENSES. Each party shall bear its own respective costs
and expenses relating to the formation and to the performance of this Agreement.
18. NOTICE. Except as otherwise provided for herein, all documentary
transmissions and transactional notices required by this Agreement as well as
any other notice to any party hereto shall be given by certified or registered
mail (or equivalent), to the respective parties as required under this agreement
or otherwise, to the following addresses indicated below or to any change of
address given by a party to the others pursuant to written notice.
DIATECT: Diatect International, Inc.
Highway 36 East
Smith Center, Kansas 66967
ORGANIC Organic Solutions, Inc.
SOLUTIONS: 8023 Vantage Dr., Suite 600
San Antonio, Texas 78230
19. GENERAL PROVISIONS:
(a) Entire Agreement: This Agreement constitutes and is the entire
agreement of the parties and supersedes all other prior understanding and/or
agreements between the parties regarding the matters herein contained, whether
verbal or written.
(b) Amendment: This Agreement may be amended only in writing signed
by both parties.
(c) Assignment: No party to this Agreement shall be entitled to
assign its interest herein without the prior written approval of the other
party.
(d) Execution of Other Documents: Each of the parties agrees to
execute any other documents reasonably required to fully perform the intentions
of this Agreement.
(e) Binding Effect: This Agreement shall inure to and be binding
upon the parties hereto, their agents, employees, heirs, personal
representatives, successors and assigns.
(f) No Waiver of Future Breach: The failure of one party to insist
upon strict performance or observance of this Agreement shall not be a waiver of
any future breach or of any terms or conditions of this Agreement.
(g) Execution of Multiple Originals: Four (4) original counterparts
of this Agreement shall be executed by these parties.
(h) Governing Law: This Agreement shall be governed and interpreted
by the laws of the State of Kansas.
(i) Severability: In the event any provision or section of this
Agreement conflicts with the applicable law, such conflicts shall not affect the
provisions of the Agreement which can be given effect without the conflicting
provision.
WHEREFORE, this Agreement is hereby executed and made effect this 20th day
of April, 1995.
DIATECT INTERNATIONAL, INC.
By: /signed/
A.E. Smith, President
ORGANIC SOLUTIONS, INC.
By: /signed/
John C. Brannon