Exhibit 10.1
 
 

 
February 11, 2011
 
Dennis P. Calvert, President
BioLargo, Inc. and BioLargo Life Technologies, Inc.
16333 Phoebe Ave.
La Mirada, CA 90638

Joseph L. Provenzano, President
Odor-No-More, Inc.
16333 Phoebe Ave.
La Mirada, CA 90638

 
 
Re:
Exclusive Supply Agreement for Certain BioLargo Technologies

 
Dear Messrs. Calvert and Provenzano:
 
This letter agreement (“Agreement”) by and between Central Garden & Pet Company,
a Delaware Corporation ("Central"), on the one hand, and BioLargo, Inc., a
Delaware Corporation (“BioLargo”), its wholly owned subsidiary BioLargo Life
Technologies, Inc., a California Corporation (“BLTI”) and its wholly owned
subsidiary Odor-No-More, Inc., a California Corporation ("Odor No More" and
together with BioLargo and BLTI, the “BioLargo Parties”).

WHEREAS, Central is a leading innovator, manufacturer, distributor, marketer and
producer of quality branded consumer products for the pet and garden industry in
the United States and United Kingdom.

WHEREAS, BioLargo has developed certain technologies that are used in animal
bedding and other products to increase absorbency and eliminate odors and has
created and sold pet and animal products under the brand name "Odor-No-More"
incorporating these technologies (the technologies are collectively referred to
herein as the “BioLargo Technologies” or “BTs”, and the raw materials
incorporating those technologies are referred to herein as the “BT Products”).

WHEREAS, The E.T. Horn Company (“ET Horn”) is one of the nation’s premier
distributors of raw materials and chemicals and works with the BioLargo Parties
for manufacturing and distribution of Odor-No-More branded pet and animal
products.

 
WHEREAS, the BioLargo Parties desire to grant to Central, and Central desires to
obtain from the BioLargo Parties, the exclusive worldwide right to incorporate
one or more BioLargo Technologies or BT Products as a component of multiple
products that Central sells or intends to sell in the pet industry for the
consumer market, as set forth on the terms and conditions contained herein.
 
 
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NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Central and the BioLargo Parties agree as follows:

1.           Exclusive License and Supply:  The BioLargo Parties agree that
Central shall have the worldwide right and license to sell, market, offer for
sale, distribute, import, export and otherwise exploit products in the Pet
Supplies Industry (as defined below) that incorporate one or more BioLargo
Technologies.  Furthermore, the BioLargo Parties agree that Central shall have
the worldwide right to purchase or otherwise acquire the BioLargo Technologies
produced by at any facilities owned, controlled or operated by, either now or in
the future, either the BioLargo Parties or E.T. Horn or other third party
manufacturers of the BioLargo Parties, for incorporation into one or more
products that are sold, offered for sale, marketed, distributed or otherwise
exploited in the Pet Supplies Industry.  Other than as set forth in Paragraph
11.1 (Force Majeure) or Paragraph 9.2 (Nomination), and other than as agreed in
writing by the BioLargo Parties, Central shall not have the right to purchase
BTs or BT Products from third parties, or otherwise make or have made BTs or BT
Products.  The BioLargo Parties agree that Central's foregoing rights shall be
sole and exclusive in the Pet Supplies Industry.  The BioLargo Parties agree not
to sell, offer to sell, market, distribute or otherwise transfer any BioLargo
Technologies or BT Products to any third parties (including its own affiliates)
who sell, offer to sell, market or otherwise distribute products containing any
of the BioLargo Technologies in the Pet Supplies Industry, or who intend to do
so.  For purposes of clarification, this Agreement does not give Central the
right to manufacture or otherwise distribute products containing the BioLargo
Technologies without purchasing said products, or the BioLargo ingredients, from
the BioLargo Parties.  As used herein, the "Pet Supplies Industry" means
products for live animals, food, supplies and services, including products for
dogs and cats, including edible bones, premium healthy edible and non-edible
chews, leashes, collars, toys, pet carriers, grooming supplies and other
accessories; products for birds, small animals and specialty pets, including
food, cages and habitats, bedding, toys, chews and related accessories; animal
and household animal health and insect control products; products for fish,
reptiles and other aquarium-based pets, including aquariums, bedding, furniture
and lighting fixtures, pumps, filters, water conditioners and supplements, and
information and knowledge resources. Pet Supplies Industry shall also include
products for the veterinary markets in the event that Central, at its option,
and pursuant to written agreement between Central and the BioLargo Parties,
provides funding to the BioLargo Parties for the research and development of
products for the veterinary markets or directly engages in such research and
development.  As used herein, the Pet Supplies Industry does not include
products for equine, avian farm stock, cattle, swine, sheep or other commercial
livestock markets.
 
2.           Quantity:  The quantities of BT Products to be purchased by and
sold to Central under this Agreement will be communicated to BioLargo and/or ET
Horn by Central in accordance with paragraph 9 hereof.  There shall be no
minimum quantity that Central is obligated to take and this Agreement shall not
be interpreted as imposing “take or pay” obligations on Central.  The BioLargo
Parties will not sell, and will require that ET Horn not sell, from its plants
to any third party any remaining output of BT Products for the Pet Supply
Industry.  Notwithstanding anything herein to the contrary, Central shall have
the following “Minimum Purchase Requirements” in order to maintain the
exclusivity described in Section 1 for the Pet Supplies Industry.  In the event
that Central fails to meet a minimum purchase commitment for a given measurement
period, the BioLargo Parties shall provide Central with written notice of such
failure within thirty (30) days following the end of such measurement period and
Central shall have sixty (60) days following the end of such measurement period
to pay to the BioLargo Parties the selling price for the amount by which Central
failed to meet the applicable minimum commitment purchase amount, less the
direct cost of raw materials prior to processing associated with such shortfall
amounts.  If Central fails to deliver such payment to the BioLargo Parties
within such sixty (60) day period, the licenses granted in Section 1 with
respect to the Pet Supplies Industry shall become nonexclusive.
 
 
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Contract Period  
 
For the initial 6 months following
the date of this Letter (mark one choice):
 
 
 
 
For the next 18 month period
 
For the next 12 month period
 
For the next 12 month period
 
Thereafter
“Minimum Purchase Requirement” of BT Products
 
___             250,000 pounds* of BT Products
 
OR
 
_X_             $100,000 deposit upon Agreement execution, credited against
future orders (see Para. 10.1)
 
1,250,000 pounds of BT Products
 
2,000,000 pounds of BT Products
 
2,750,000 pounds of BT Products
 
3% increase above the prior year’s requirement

* By way of clarification, the measurement of “pounds” in this section refers to
BT Products as delivered in a non-liquid form, sold under this Agreement. To the
extent liquid BT Products, or Additional BT Products, are sold, equivalent
values shall be applied to the minimum requirements (e.g., on a per gallon
basis).

3.           Quality:  BT Products shall meet the specifications reasonably
agreed to in writing by Central and the BioLargo Parties from time to time; such
specifications shall, at a minimum, be the minimum label specification of the
product as required at the highest level of any applicable state or federal
agency standards.
 
4.           Title and Title Transfer:  All BT Products delivered under the
Agreement shall be delivered F.O.B. (Incoterms 2000) the BioLargo Parties’ or ET
Horn's plant via tank car, tank truck, ship, barge or other inland water or
marine vessel (the "Point of Delivery").  Unless the BioLargo Parties or ET Horn
otherwise consents in writing, Central shall supply and be solely responsible
for all costs associated with all tank cars, tank trucks, ships, barges and
other inland water and marine vessels required for all shipments of BT Products
purchased and sold under this Agreement and any and all incidental costs such as
insurance.  Title and risk of loss shall pass to Central at the Point of
Delivery, irrespective of whether Central, the BioLargo Parties or ET Horn owns
or has provided any tank car, tank truck, ship, barge or other inland water or
marine vessel onto which such BT Products are loaded.  As between the BioLargo
Parties and Central, (a) the BioLargo Parties shall be in control and possession
of all BT Products purchased and sold under this Agreement and responsible for
and shall indemnify and hold harmless Central for any damage or injury caused
thereby or thereto until risk of loss with respect thereto has passed to
Central, and (b) Central shall be in control and possession of all BT Products
purchased and sold under the Agreement and responsible for any damage or injury
caused thereby or thereto after risk of loss with respect thereto has passed to
Central.  In the event that BT Products are delivered to Central fail to conform
to the agreed specifications, the BioLargo Parties shall either (at Central's
option) (i) reprocess or have reprocessed such BT Products or (ii) refund the
purchase price paid by Central for the non-conforming BT Products.
 
 
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5.           Term and Termination:  This Agreement shall be in effect until
terminated in accordance with the provisions thereof.  This Agreement may be
terminated only upon the occurrence of either of the following: breach of a
material warranty or obligation by a party where that party has not taken
reasonable steps to remedy the breach within thirty (30) days of receipt of
written notification from the other party of the occurrence of such breach.
 
6.           Price:
 
6.1           The purchase prices for all BTs or BT Products to be delivered
under the Agreement shall be the actual and reasonable direct cost of material
and production of such BTs or BT Products (the “Manufacturing Costs”, further
defined below), plus a manufacturer’s margin to BioLargo, applicable to the
particular BT Product, and to be agreed in writing by the parties from time to
time using good faith negotiations, which margin shall be no less than the
manufacturer’s margin agreed upon by the Parties for the initial purchase of the
particular BT Products in question (provided that BioLargo shall negotiate in
good faith with Central to agree upon reduction in margin percentage upon
significant increase in purchase volume).  If the parties are unable to agree on
the Manufacturing Costs within ninety (90) days after the presentation of the
costs to Central, either party may refer the matter for resolution under the
Rules of Arbitration of American Arbitration Association by an arbitrator
appointed in accordance with such Rules (the “Arbitrator”).  In such case, each
party will submit its proposed price to the Arbitrator with whatever supporting
documentation may be requested by the Arbitrator (each a “Price Proposal”)
within twenty (20) days after the Arbitration has been selected.  The Arbitrator
will, within fifteen (15) days after receipt of the Price Proposals, choose one
Price Proposal or the other as is and will not make any other determination or
recommend any alternative resolution.  In making such determination, the
Arbitrator may consider all relevant evidence, including costs of comparable
manufacturing operations.  The determination of the Arbitrator will be final and
binding upon both parties.
 
6.2           Unless otherwise agreed in writing, the costs to be paid by
Central will amount to a pro-rata allocation of costs associated with the
production of BTs (or BT Products, as applicable) for the Pet Supplies Industry
only.  In addition to the actual direct cost of material, such costs
(“Manufacturing Costs”) may include: (i) manufacture and production; (ii)
freight in and freight out; (iii) depreciation; (iv) manufacturing overhead; (v)
insurance; and (vi) registration fees and expenses (including federal, state and
local fees); provided, however, that the amount of any increases in indirect
expenses to be charged or allocated to Central shall be subject to Central’s
prior agreement and substantiation relating to such cost increases will be made
available for review by Central.
 
 
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6.3           BioLargo shall make available to Central, upon request,
information relating to any component of the Manufacturing Costs charged or
allocated to Central or relating to the method of allocation used by
BioLargo.  In the event that Central disputes the reasonableness of
Manufacturing Costs when presented pursuant to Section 6.1, BioLargo shall make
available the cost information relating to such Manufacturing Costs within
thirty (30) days of any such request.
 
7.           Right of First Refusal on Sale of Odor No More:  During the term of
this Agreement, Central shall have a right of first refusal with respect to the
purchase of Odor No More and/or the "Odor No More" brand and/or its intellectual
property on the following terms:
 
7.1           If the BioLargo Parties receive an offer from a third party to
purchase or acquire all or substantially all of the assets of Odor No More,
whether by merger, asset transfer or otherwise, or the "Odor No More" brand or
the intellectual property of Odor No More, then such BioLargo Party shall
provide Central with written notice of the same ("ROFR Notice") specifying the
nature of such offer, the terms and conditions of such offer and the
consideration to be paid by such third party.  Such BioLargo Party shall provide
to Central, upon request, documentation describing the business, results of
operations, financial condition and prospects of Odor No More.
 
7.2           Central shall have a period of 15 days following receipt of the
ROFR Notice within which to elect in writing to offer to purchase Odor No More
or the "Odor No More" brand or the intellectual property of Odor No More, as
applicable, on the same terms and conditions, including the amount of
consideration to be paid, as specified in the ROFR Notice.  If Central delivers
an election notice within such 15 day period, the parties shall negotiate in
good faith a definitive binding agreement with regard to such acquisition.  In
the event the parties are unable to execute a definitive agreement within 120
days following Central's election notice, either party shall be free to abandon
negotiations regarding such acquisition.
 
7.3           In the event Central does not deliver an election notice to the
BioLargo Party within the 15 day time period referred to in Section 7.2 above,
or in the event the parties abandon negotiations regarding such acquisition
pursuant to Section 7.2 above, then for a period of 120 days such BioLargo Party
shall be free to enter into an agreement with respect to the acquisition of Odor
No More or the "Odor No More" brand or the intellectual property of Odor No
More, as applicable, by a third party on terms that are no more favorable to
such third party than the terms offered to Central.  If the terms with such
third party become more favorable than those terms offered to Central, then the
BioLargo Parties shall comply with the terms of this Section 8 and send a ROFR
Notice to Central and Central shall have the rights set forth herein.
 
8.           Right of First Offer on Additional BT Products:  During the term of
this Agreement, Central shall have a right of first offer to acquire the right
to commercialize new products based on BioLargo Technologies that the BioLargo
Parties create ("Additional BT Products"), which right shall be sole and
exclusive in the Pet Supplies Industry as set forth above, on the following
terms:
 
8.1           Upon the creation of an Additional BT Product, the BioLargo
Parties shall provide written notice to Central offering Central the right to
license such Additional BT Products on the same terms and conditions set forth
in this Agreement.  The BioLargo Parties shall provide Central with samples and
all information reasonably requested by Central, including product cost
information, in order for Central to review and determine whether it desires to
commercialize such Additional BT Products on the same terms and conditions of
this Agreement.
 
 
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8.2           Central shall have a period of 90 days following receipt of the
initial written notice from the BioLargo Parties within which to elect in
writing to license such Additional BT Products under the same terms and
conditions of this Agreement.  If Central delivers an election notice within
such 90 day period, then this Agreement shall automatically be amended to
include such Additional BT Products.  Furthermore, the BioLargo Parties agree
not to sell, offer to sell, market, distribute or otherwise transfer the
Additional BT Products to any third parties (including its own affiliates) who
sell, offer to sell, market or otherwise distribute products containing the
Additional BT Products in the Pet Supplies Industry, or who intend to do so.
 
8.3           In the event Central does not deliver an election notice to the
BioLargo Party within the 90 day time period referred to in Section 8.2 above,
then the BioLargo Parties shall be free to commercialize such Additional BT
Products directly (e.g., Internet) or indirectly (e.g., third party wholesaler
and retailers) under the "Odor No More" brand (or any other BioLargo Parties
brand of their choosing).  Other than selling the Additional BT Product under
the "Odor No More" brand (or any other BioLargo Parties brand of their
choosing), the BioLargo Parties agree not to sell such Additional BT Products to
third parties for distribution in the Pet Supplies Industry.  As clarification
of the foregoing, and without limitation thereon, the BioLargo Parties agree not
to sell, offer to sell, market, distribute or otherwise transfer the Additional
BT Products to any third parties for sale under that third party’s brand in the
Pet Supplies Industry.
 
9.           Nomination:
 
9.1                  At least sixty (60) days (120 days if the nomination
exceeds 200% of prior nomination) prior to the commencement of each calendar
quarter, Central shall provide the BioLargo Parties with written notice of its
BT Product requirements for each upcoming calendar quarter in which Central
shall purchase and the BioLargo Parties shall sell BT Products pursuant to this
Agreement.  The nomination shall, subject to Force Majeure (See Paragraph 15),
be considered firm and binding.  For greater clarity, it is understood that
Central may nominate any quantity in a calendar quarter in its sole discretion,
including no quantity at all.  The BioLargo Parties shall have no obligation to
deliver in excess of the nominated quantity for any calendar quarter.  The
BioLargo Parties shall provide at least six (6) months’ prior written notice of
each scheduled plant outage to the extent such outage effects the ability of the
BioLargo Parties to deliver BT Products to Central.  All sales to Central are
final, except as set forth in paragraph 4.
 
9.2                  The Parties acknowledge that neither the BioLargo Parties
nor ET Horn manufacture the raw materials used in the BioLargo Technologies,
including super absorbent materials (“Absorbents”), and for purposes of
supplying BT Products to Central pursuant to this Agreement, will source supply
of Absorbents from third parties.  The Parties further acknowledge that
Absorbents, used in many products around the world, are sometimes subject to
supply restrictions, variations, and factory allocations, all of which are
outside of the control of the Parties to this Agreement.  Should Central’s
nomination of its BT Products requirements exceed the amount of required
Absorbents that the BioLargo Parties are able to secure, the BioLargo Parties
shall so advise Central.  The BioLargo Parties and Central shall work together
to secure alternative sourcing for Absorbents.  In such circumstances, should
Central obtain sourcing for Absorbents, the Parties shall agree on one of the
following alternatives: (i) Central shall purchase Absorbents and deliver the
Absorbents to the BioLargo Parties for blending (the purchase costs to be
credited to Central), (ii) the BioLargo Parties shall purchase the Absorbents
from the Central’s source; or (iii) Central shall adjust its BT Products
requirements to reflect the reduced availability of the Absorbents in the
marketplace.
 
 
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10.           Payment Terms: Payment terms shall be net sixty (60) days with the
first order being Cash on Delivery (COD) assuming all quality standards are met.
 
10.1           Initial Deposit.  In the event Central elects to pay to the
BioLargo Parties an initial $100,000 deposit (“Deposit”), as set forth in
Paragraph 2, rather than commit to minimum purchases during the first six months
of the Agreement, the provisions in this Paragraph shall apply.  Central shall
pay the Deposit to the BioLargo Parties within ten (10) days of execution of
this Agreement.  Upon receipt of the Deposit, and for every order thereafter
placed by Central, the BioLargo Parties shall credit to Central ten percent
(10%) of each order, until such time as in the aggregate, the Deposit is
depleted.  For example, should the amount of Central’s first order be $400,000,
BioLargo shall credit towards the order $40,000, and the amount credited shall
reduce the remaining Deposit amount available for future credits.  Thus, $60,000
of the Deposit would remain for credit to future orders.  The Deposit shall be
nonrefundable.

11.           Enforcement of Intellectual Property Rights:
 
11.1                  General.  Each party shall promptly notify the other party
in writing of any alleged or threatened infringement of any of the intellectual
property rights covering the BTs under this Agreement of which they become
aware.  The BioLargo Parties shall use their best efforts to terminate such
infringement without litigation.  In the event Central brings an infringement
action in accordance with this Section, the BioLargo Parties shall cooperate
fully, including if required to bring such action, the furnishing of a power of
attorney, but all costs of the infringement action shall be borne by Central
(but Central shall have no obligation to pay attorney costs of the BioLargo
Parties with respect to the BioLargo Parties’ cooperation or involvement in the
infringement action).  Neither party shall have the right to settle any patent
infringement litigation under this Section in a manner that diminishes the
rights or interests of the other party without the prior written consent of the
other party.
 
11.2           Central Enforcement.  For so long as Central's license rights are
exclusive as set forth above, Central shall have the first right to bring and
control any action or proceeding with respect to infringement or enforcement of
the intellectual property rights covering the BTs under this Agreement, at its
own expense and by counsel of its own choice.  The BioLargo Parties shall have
the right to participate in such action, at its own expense and by counsel of
its own choice.  If Central fails to either terminate such infringement, enter
into a reasonable license agreement to terminate such infringement subject to
the BioLargo Parties’ rights under this Agreement, or bring an action or
proceeding with respect to infringement or enforcement of the such intellectual
property rights within (a) one-hundred and twenty (120) days following the
notice of alleged infringement, or (b) twenty (20) business days before the time
limit, if any, set forth in the appropriate laws and regulations for the filing
of such actions, whichever comes first, the BioLargo parties shall have the
right to bring and control any such action, at its own expense and by counsel of
its own choice, and Central shall have the right to be represented in any such
action, at its own expense and by counsel of its own choice.
 
 
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11.3           Recovery.  Except as otherwise agreed to by the parties in a
written agreement, any recovery realized as a result of any action or proceeding
brought by Central or the BioLargo Parties pursuant to this Section 11 shall be
(a) exclusively for the benefit of the party who brings the action or proceeding
or (b) both parties to the degree that expenses are shared in the
litigation.  If Central brings the action or proceeding by itself, BioLargo
Parties shall receive 10% of any net recovery (amount of recovery after
deduction of all out-of-pocket direct expenses in the action or proceeding paid
for by Central).
 
12.           Environmental Health & Safety:  The parties acknowledge and agree
that the BioLargo Parties shall be solely responsible for all environmental,
health and safety requirements and obligations regarding the use, handling,
storage, transportation, recycling, processing, release and disposal of all raw
materials and BTs, by-products, residuals, derivatives and wastes of any kind at
its plants and will indemnify Central from and against any claim with respect
thereto.
 
13.           Governing Law; Venue:  The Agreement shall be interpreted and the
rights, obligations and liabilities of the parties determined in accordance with
the laws of the State of California without regard to its conflict of laws
principles.  Each party hereby irrevocably consents to the exclusive
jurisdiction and venue of the federal courts sitting in San Francisco,
California unless no federal subject matter jurisdiction exists, in which case
each Party consents to exclusive jurisdiction and venue in the state courts
located in San Francisco, California.
 
14.           No Agency:  The relationship between the Parties contemplated by
the Agreement is solely that of customer and supplier.  Nothing contained in the
Agreement shall be construed to: (a) give either party the power to direct and
control the day to day activities of the other; (b) constitute the parties as
partners, joint venture partners, co-owners or otherwise as participants in a
joint or common undertaking; (c) constitute either party as the agent of the
other; or (d) allow either party to create or assume obligations on behalf of
the other.  The BioLargo Parties shall retain all liabilities arising from
ownership or operation of its plants, whether arising before or after execution
of the Agreement, including but not limited to all environmental (except as set
forth in paragraph 8 above), personnel, benefit plan, product, regulatory or
other liabilities associated with the operation of its business.
 
15.           Force Majeure:  If a party fails to observe or perform any of the
covenants or obligations imposed upon it by the Agreement and such failure shall
have been occasioned by Force Majeure, such failure shall be deemed not to be a
breach of such covenants or obligations.  "Force Majeure" shall mean acts of
God, terrorism, war, riots, natural disasters or other events beyond the
reasonable control of a party, and shall not include the lack of available
supply of Absorbents (see Paragraph 9.2).  If a party is, or may be, prevented
from or delayed in performing any of its obligations under the Agreement by an
event of Force Majeure, then such party will notify as soon as reasonably
practicable the other party of the event of Force Majeure and the likely
duration of which the performance of its obligations are likely to be delayed or
prevented.  If the BioLargo Parties cannot produce BTs as a result of Force
Majeure for a period of more than 90 days, Central shall be free to seek
alternative product and will not be deemed to have violated this
Agreement.  Once the BioLargo Parties recommence production of, or are able to
supply to Central, the BioLargo Ingredients or Identified Products, Central
shall cease purchasing the alternative product and recommence purchasing said
BioLargo Ingredients or Identified Products from the BioLargo Parties on
comparable price terms.
 
 
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16.           Warranties:
 
16.1                  Central Warranties.  Central represents and warrants to
the BioLargo Parties that: (a) it is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and is duly
licensed, authorized or qualified to do business in every jurisdiction in which
it transacts business or has an office or facility, except where such failure to
be duly licensed, authorized or qualified creates no damage to the other Party;
(b) it has the power and authority to enter into this Agreement and perform its
obligations hereunder; and (c) it has obtained all necessary approvals for
entering into and performing under this Agreement, and this Agreement has been
duly authorized, executed and delivered by it and constitutes a valid and
binding obligation of it. Central agrees to indemnify, defend and hold harmless
the BioLargo Parties and its partners, directors, officers and employees, from
and against any and all losses, claims and proceedings to the extent arising out
of any breach, or any inaccuracy of, any representation, warranty or covenant of
Central contained in this Agreement.
 
16.2                  BioLargo Warranties. The BioLargo Parties represent and
warrant to Central that: (a) it is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
licensed, authorized or qualified to do business in every jurisdiction in which
it transacts business or has an office or facility, except where such failure to
be duly licensed, authorized or qualified creates no damage to the other Party;
(b) it has all necessary rights, authorizations and licenses to provide and
deliver to Central the deliverables provided under this Agreement in accordance
with the terms hereof; (c) it has the power and authority to enter into this
Agreement and perform its obligations hereunder; (d) it has obtained all
necessary approvals for entering into and performing under this Agreement, and
this Agreement has been duly authorized, executed and delivered by it and
constitutes a valid and binding obligation of it; and (e) none of the
deliverables provided to Central under this Agreement does or will infringe or
misappropriate any third party intellectual property right and it has all
necessary rights, authorizations and licenses to provide and deliver to Central
the deliverables provided under this Agreement in accordance with the terms
hereof.  The BioLargo Parties agree to indemnify, defend and hold harmless
Central and its partners, directors, officers and employees, from and against
any and all losses, claims and proceedings to the extent arising out of any
breach, or any inaccuracy of, any representation, warranty or covenant of the
BioLargo Parties contained in this Agreement.
 
17.           Assignment:  The Agreement shall not be assignable by either party
without the prior written consent of the other party, which consent is not to be
unreasonably withheld.
 
18.           Entire Agreement.  This Agreement  and the non-disclosure
agreement in effect at the date of this signing constitute the entire agreement
of the parties pertaining to the subject matter hereof, merges all prior
negotiations and drafts of the parties with regard to the transactions
contemplated herein.  Any and all other written or oral agreements existing
other than the current non-disclosure agreement, between the parties hereto
regarding such transactions are expressly canceled.
 
 
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19.           Limitation On Remedies.  Except as otherwise expressly provided in
the Agreement, in no event shall either party be liable to the other party (even
if negligent) for any indirect, consequential, incidental or special damage or
loss, loss of production, loss of profit, loss of margin, loss of revenue, loss
of contract, loss of goodwill, or punitive damages, unless such losses result
from the gross negligence or intentional misconduct of such party.
 
20.           Marking of Patent Rights.  All products sold by Central containing
BTs shall bear trademark(s) designated by the BioLargo Parties (e.g., “BioLargo
TM”), which need not be prominently displayed (e.g., the back of the package),
or displayed in a way to disrupt the brand or product name identifying the
product, and appropriate patent marking, such as “Patent Pending” or reference
to specific issued U.S. Patents covering the products, in compliance with U.S.
law and pursuant to and in conformance with the guidelines issued from time to
time by the BioLargo Parties.
 
We look forward to working together with you on this transaction.  Please have
the BioLargo Parties indicate acceptance of the foregoing by signing the
enclosed copy of this letter in the space provided and returning it to the
undersigned.  If a signed copy of this letter is not so returned by February 25,
2011, it shall expire and become void.
 
Sincerely yours,
 
 
Central Garden and Pet Company
 
By:  /s/William E. Brown                                   
 

 
Agreed to and accepted this
16th day of March, 2011

BioLargo, Inc.

By: /s/Dennis Calvert                                   
Name: Dennis Calvert
Title: President and CEO

 
Odor-No-More, Inc.
 
By: /s/Joseph L. Provenzano                      
Name: Joseph L. Provenzano
Title: President

 
BioLargo Life Technologies, Inc.
 
By: /s/Dennis
Calvert                                                                                   
Name: Dennis Calvert
Title: President and CEO