Document:

ex10-1.htm

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 CEOexh101mar232011.htm

  

  

 

  

 

EXHIBIT 10.1

 

CHARMING SHOPPES, INC.

2010 STOCK AWARD AND INCENTIVE PLAN

STOCK APPRECIATION RIGHTS AGREEMENT

 

Agreement dated as of March 29, 2011,  (the “Grant Date”) between CHARMING SHOPPES, INC. (the “Company”) and  Anthony M. Romano (the “Employee”).

 

1. Grant of SAR; Consideration; Employee Acknowledgments.

 

The Company hereby confirms the grant, under the Company’s 2010 Stock Award and Incentive Plan (the “Plan”), to the Employee on the Grant Date of a stock appreciation right (the “SAR”) with respect to 400,000 shares of the Company’s common stock, par value $.10 per share (the “Shares”).  The SAR represents the right to receive, at exercise, a number of Shares with a then Fair Market Value equal to the appreciation in value of the Shares over the base amount.  The base amount is $_________ per share, which is the Fair Market Value of a Share on the Grant Date (the “Base Amount”).

 

The Employee shall be required to pay no consideration for the grant of the SAR except for his or her agreement to provide services to the Company prior to exercise and his or her agreement to abide by the terms set forth in the Plan, this Stock Appreciation Rights Agreement (the “Agreement”), and any Rules and Regulations under the Plan.  The Employee acknowledges and agrees that (i) the SAR is nontransferable, except as provided in Section 9 hereof and in the Plan, (ii) the SAR is subject to forfeiture in the event of Employee’s termination of employment in certain circumstances, as specified in Section 7 hereof, and (iii) sales of Shares will be subject to the Company’s policies regulating trading by employees, including any applicable “blackout” or other designated periods in which sales of Shares are not permitted.

 

2. Incorporation of Plan by Reference.

 

The SAR has been granted to the Employee under the Plan.  All of the terms, conditions and other provisions of the Plan are hereby incorporated by reference into this Agreement.  Capitalized terms used in this Agreement but not defined herein shall have the same meanings as in the Plan.  If there is any conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan shall govern.  The Employee hereby accepts the grant of the SAR, acknowledges receipt of the Plan, and agrees to be bound by all the terms and provisions hereof and thereof (as presently in effect or hereafter amended), and by all decisions and determinations of the Board or Committee under the Plan.

 

3. Date When Exercisable.

 

(a) This SAR may be exercised only if and to the extent that it has become exercisable as specified in this Agreement.  Subject to Sections 6 and 7 below, and all other terms and conditions of this Agreement, this SAR shall become exercisable as follows:

 

 

  

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Vesting Date

	
Exercisable SAR

	  	  
	
First Anniversary of the Grant Date

	
25%

	
Second Anniversary of the Grant Date

	
25%

	
Third Anniversary of the Grant Date

	
25%

	
Fourth Anniversary of the Grant Date

	
25%

(b) The number of Shares with respect to which the SAR may be exercised shall be cumulative but shall not exceed 100% of the Shares subject to the SAR.  If the foregoing schedule would produce fractional Shares, the number of Shares for which the SAR becomes exercisable shall be rounded to the nearest whole Share.  The SAR shall expire at 5:00 p.m. on the day before the seventh anniversary of the Grant Date, unless the SAR terminates on an earlier date as provided herein.

 

4. Method of Exercise.

 

(a) The SAR may be exercised, to the extent the SAR is then vested and exercisable, by delivery to and receipt by the Secretary of the Company at 3750 State Road, Bensalem, Pennsylvania 19020, of a written notice, signed by the Employee, specifying the portion of the vested SAR that the Employee wishes to exercise.  Simultaneous with or as soon as practicable after the receipt of such notice, the Company shall deliver to the Employee a number of whole Shares that will be determined by dividing the Stock Appreciation by the Fair Market Value of a Share on the date of exercise, less applicable tax withholding.  “Stock Appreciation” shall mean the amount that results from multiplying (i) the number of Shares as to which the SAR is exercised by (ii) the amount by which the Fair Market Value of a Share on the date of exercise exceeds the Base Amount.  Only whole Shares will be delivered pursuant to the exercise of the SAR.

 

(b) Upon exercise of the SAR, the Company will deliver a stock certificate for the Shares to be delivered, with any requisite legend affixed.  Such exercise may include instructions to the Company to deliver Shares due upon exercise of the SAR to any registered broker or dealer designated by the Committee in lieu of delivery to the Employee.  Such instructions must designate the account into which the Shares are to be deposited.  The method of exercise and related matters governed by this Section 4 shall be subject to Rules and Regulations adopted by the Committee and in effect at the time the Employee’s notice of exercise is received by the Company; such Rules and Regulations may vary from or limit the procedures specified in this Section 4, and may specify other methods of exercise.  Upon exercise of any portion of the SAR, the exercised portion of the SAR shall terminate and cease to be outstanding.

 

(c) If, on the date on which the vested SAR will terminate according to its terms, the Employee has not given the Company written notice of exercise, and if the Stock Appreciation amount is a positive number, then the outstanding vested portion of the SAR shall be automatically exercised and taxes shall be withheld as described in Section 5 below.

 

  

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5. Tax Withholding.  The Company will withhold from the Shares to be delivered upon the exercise of the SAR a sufficient number of such Shares to satisfy the mandatory federal, state and local tax withholding obligations relating to the SAR exercise.  The Shares withheld will be valued at the Fair Market Value on the date of exercise, determined in such manner as may be specified under the Plan.

 

6. Change of Control Provisions; Definitions.

 

(a) The following provisions shall apply in the event of a Change of Control:

 

(i) In the event of a Change of Control at a time when the Employee is employed by the Company or any of its subsidiaries, if the acquiring company does not convert the Employee’s outstanding SAR to a stock appreciation right with respect to the stock of the acquiring company (or the parent of the acquiring company, if the acquiror is a subsidiary) that has the same economic value, vesting provisions and other terms as the Employee’s outstanding SAR, the outstanding SAR shall become fully vested and exercisable immediately prior to the occurrence of such Change of Control.

 

(ii) In the event of a Change of Control at a time when the Employee is employed by the Company or any of its subsidiaries, if the acquiring company converts the Employee’s outstanding SAR to a stock appreciation right with respect to the stock of the acquiring company (or the parent of the acquiring company, if the acquiror is a subsidiary) that has the same economic value, vesting provisions and other terms as the Employee’s outstanding SAR, and if the Employee’s employment is terminated as a result of a Qualifying Termination which occurs upon or within 24 months following the Change of Control, the outstanding SAR shall become fully vested and exercisable on the date of the Qualifying Termination (to the extent that it is not already vested).

 

(iii) Exercise after a Change of Control.  In the event of the Employee’s termination of employment upon or after a Change of Control, the vested outstanding SAR shall be exercisable for the applicable time period described in Section 7(a)(ii), (iii), (iv), (v) or (vi), or the scheduled expiration date of the SAR, as set forth in Section 3(b) above, if earlier.  In the event of involuntary termination of the Employee’s employment for Cause, the SAR shall immediately terminate.

 

(iv) Other Actions.  Notwithstanding anything in this Agreement to the contrary, in the event of a Change of Control, the Committee shall make such adjustments and take such other actions with respect to the outstanding SAR as the Committee deems appropriate pursuant to Section 10(c) of the Plan.  Without limiting the foregoing, in the event of a Change of Control, the Committee may require that the Employee surrender the outstanding SAR for cancellation in exchange for payment by the Company, in cash, Shares or other property, as determined by the Committee, in an amount equal to the amount, if any, by which the then Fair Market Value of a Share exceeds the Base Amount, multiplied by the number of Shares subject to the outstanding SAR, on such terms as the Committee determines.  If the per share Fair Market Value of the Shares does not exceed the Base Amount of the SAR, the Company shall not be required to make any payment to the Employee upon surrender of the SAR.

 

 

  

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(b) Definitions of Certain Terms.  For purposes of this Agreement, the following definitions shall apply:

 

(i) “Beneficial Owner,” “Beneficially Owns,” and “Beneficial Ownership” shall have the meanings ascribed to such terms for purposes of Section 13(d) of the Exchange Act and the rules thereunder, except that, for purposes of this Section 6, “Beneficial Ownership” (and the related terms) shall include Voting Securities that a Person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants, options or otherwise, regardless of whether any such right is exercisable within 60 days of the date as of which Beneficial Ownership is to be determined.

 

(ii) “Cause” shall mean:  (1) the Employee’s willful and continued failure to substantially perform his or her duties with the Company (other than any such failure resulting from a Permanent Disability), after a written demand for substantial performance is delivered to the Employee that specifically identifies the manner in which the Company believes that the Employee has willfully failed to substantially perform his or her duties, and after the Employee has failed to resume substantial performance of his or her duties on a continuous basis within 30 calendar days of receiving such demand; (2) the Employee’s willfully engaging in conduct (other than conduct covered under (1) above) which is demonstrably and materially injurious to the Company, monetarily or otherwise; or (3) the Employee’s having been convicted of a felony.  For purposes of this subparagraph, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the action or omission was in the best interests of the Company.

 

(iii) “Change of Control” means and shall be deemed to have occurred if:

 

(1) any Person, other than the Company or a Related Party, acquires directly or indirectly the Beneficial Ownership of any Voting Security of the Company and immediately after such acquisition such Person has, directly or indirectly, the Beneficial Ownership of Voting Securities representing 50 percent or more of the total voting power of all the then-outstanding Voting Securities; or

 

(2) those individuals who as of Grant Date constitute the Board or who thereafter are elected to the Board and whose election, or nomination for election, to the Board was approved by a vote of at least two-thirds of the directors then still in office who either were directors as of Grant Date or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or

 

(3) there is consummated a merger, consolidation, recapitalization or reorganization of the Company, a reverse stock split of outstanding Voting Securities, or an acquisition of securities or assets by the Company (a “Transaction”), other than a Transaction which would result in the holders of Voting Securities having at least 80 percent of the total voting power represented by the Voting Securities outstanding immediately prior thereto continuing to hold Voting Securities or voting securities of the surviving entity having at least 60 percent of the total voting power represented by the Voting Securities or the voting securities of such surviving entity outstanding immediately after such Transaction and in or as a result of which the voting rights of each Voting Security relative to the voting rights of all other Voting Securities are not altered; or

 

 

  

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(4) there is implemented or consummated a plan of complete liquidation of the Company or sale or disposition by the Company of all or substantially all of the Company’s assets other than any such transaction which would result in Related Parties owning or acquiring more than 50 percent of the assets owned by the Company immediately prior to the transaction.

 

(iv) “Good Reason” shall mean, without the Employee’s express written consent, the occurrence of any one or more of the following:

 

(1) A material diminution of the Employee’s authorities, duties or responsibilities as President and Chief Executive Officer of the Company;

 

(2) A material change in the geographic location at which the Employee must perform services; for purposes of this Agreement, a material change means the Company requires the Employee to be based at a location which is at least 50 miles farther from the Employee’s then current primary residence than is the Employee’s then current office location;

 

(3) A material diminution by the Company in the Employee’s base salary as in effect on the Grant Date or as the same shall be increased from time to time; or

 

(4) A material breach by the Company of this Agreement or any written severance agreement in effect, including the term sheet covering the Employee’s compensation referenced in Section 2.16(d) of the Severance Agreement dated as of February 10, 2009, as amended between the Employee and the Company.

 

Notwithstanding the foregoing, the Employee shall not have Good Reason for termination if, within 60 days after the date on which the Employee gives a Notice of Termination, the Company corrects the action or failure to act that constitutes the grounds for termination for Good Reason as set forth in the Employee’s Notice of Termination.  If the Company does not correct the action or failure to act, the Employee must terminate his or her employment within 30 days after the end of the cure period, in order for the termination to be considered a Good Reason termination.The existence of Good Reason shall not be affected by the Employee’s temporary incapacity due to physical or mental illness not constituting a Permanent Disability. 

 

(v) “Notice of Termination” means a written notice which (1) shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated, and (2) shall be provided by the Employee within 30 days after the event giving rise to the termination of employment by the Employee for Good Reason.

 

 

  

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(vi) “Qualifying Termination” means the occurrence of any one or more of the following events (as evidenced by a Notice of Termination):

 

(1) A termination of the Employee’s employment by the Company for reasons other than Cause, as evidenced by a Notice of Termination delivered by the Company to the Employee; or

 

(2) A termination by the Employee for Good Reason, as evidenced by a Notice of Termination delivered by the Employee to the Company.

 

(vii) “Permanent Disability” means the complete and permanent inability by reason of illness or accident to perform the duties of the occupation at which the Employee was employed when such disability commenced.

 

(viii) “Person” shall have the meaning ascribed for purposes of Section 13(d) of the Exchange Act and the rules thereunder.

 

(ix) “Related Party” means (1) a majority-owned subsidiary of the Company; or (2) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any majority-owned subsidiary of the Company; or (3) a corporation owned directly or indirectly by the shareholders of the Company in substantially the same proportion as their ownership of Voting Securities; or (4) if, prior to any acquisition of a Voting Security which would result in any Person Beneficially Owning more than ten percent of any outstanding class of Voting Security and which would be required to be reported on a Schedule 13D or an amendment thereto, the Board approved the initial transaction giving rise to an increase in Beneficial Ownership in excess of ten percent and any subsequent transaction giving rise to any further increase in Beneficial Ownership; provided, however, that such Person has not, prior to obtaining Board approval of any such transaction, publicly announced an intention to take actions which, if consummated or successful (at a time such Person has not been deemed a “Related Party”), would constitute a Change of Control.

 

(x) “Retirement” means the voluntary termination of the Employee’s employment by the Employee on or after the date the Employee has attained the age of 62, immediately after which the Employee is not employed by the Company or any subsidiary.

 

(xi) ”Voting Securities” means any securities of the Company which carry the right to vote generally in the election of directors.

 

 

 

  

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7. Termination of Employment.

 

(a) This SAR shall terminate and no longer be exercisable at the earlier of (i) the scheduled expiration date of the SAR, as set forth in Section 3(b) above, or (ii) the earliest time specified below at or following a termination of employment of the Employee.  In the event of termination of employment before a Change of Control, the SAR shall be exercisable as follows:

 

(i) The SAR shall terminate at the time of the involuntary termination for Cause of the Employee’s employment with the Company and its subsidiaries, in which event the SAR shall no longer be exercisable.

 

(ii) The SAR shall continue in effect until the expiration of three months after the voluntary termination of the Employee’s employment with the Company and its subsidiaries, other than on account of Retirement.  During such three month period, this SAR shall be exercisable only to the extent that it was exercisable at the date of the Employee’s termination of employment.  The SAR shall terminate at the end of such three-month period.

 

(iii) The SAR shall continue in effect until the expiration of one year after the involuntary termination of the Employee’s employment with the Company and its subsidiaries, other than for reasons of Cause or  Permanent Disability.  During such one-year period, this SAR shall be exercisable to purchase the number of Shares as to which the SAR was exercisable at the date of the Employee’s termination of employment, plus the number of additional Shares (if any) as to which the SAR would have become exercisable on the next two anniversaries of the Grant Date (following the date of termination) pursuant to Section 3(a) in the absence of a termination (but disregarding any other event occurring prior to that date) but shall be exercisable for no other Shares.  The SAR shall terminate at the end of such one-year period.

 

(iv) The SAR shall continue in effect until the expiration of one year after the Employee’s voluntary termination of employment upon Retirement.  During such one year period, this SAR shall be exercisable to purchase the number of Shares as to which the SAR was exercisable at the date of Retirement, plus the number of additional Shares (if any) equal to the product of (i) the number of Shares as to which the SAR would have become exercisable on the next vesting date pursuant to Section 3(a) after the date of Retirement in the absence of a termination (but disregarding any other event occurring prior to that date), and (ii) a fraction, the numerator of which shall be the number of full and partial months that the Employee has been employed by the Company or any of its subsidiaries between the Grant Date and the date of Retirement and the denominator of which shall be the number of full or partial months between the Grant Date and the next vesting date pursuant to Section 3(a) after the date of Retirement, but shall be exercisable for no other Shares.  The SAR shall terminate at the end of such one-year period.

 

(v) The SAR shall continue in effect until the expiration of one year after the Employee’s death if the Employee dies while employed by the Company or any of its subsidiaries, during which one-year period this SAR shall be exercisable in full. The SAR shall terminate at the end of such one-year period.

 

 

  

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(vi) The SAR shall continue in effect until the expiration of one year after the termination of the Employee’s employment with the Company and its subsidiaries by reason of the Employee’s Permanent Disability, during which one-year period this SAR shall be exercisable in full.  The SAR shall terminate at the end of such one-year period.

 

(b) Any portion of the SAR that is not exercisable at the date of termination of employment and that does not become exercisable pursuant to Section 7(a) or Section 6 shall terminate as of the Employee’s termination date.  Notwithstanding anything in this Agreement to the contrary, in no event may the SAR be exercised after the expiration date of the SAR as set forth in Section 3(b).

 

(c) Except as provided in Section 8, an Employee shall not be deemed to have terminated employment for purposes of this Section 7 if his or her employment terminates with the Company but thereafter continues with one of the Company’s subsidiaries or terminates with a subsidiary but thereafter continues with the Company or another subsidiary.

 

8. Limits on Transfer of SARs; Beneficiaries.

 

No right or interest of a participant in this SAR shall be pledged, encumbered or hypothecated to or in favor of any third party or shall be subject to any lien, obligation or liability of the Employee to any third party.  This SAR shall not be transferable to any third party by the Employee otherwise than by will or the laws of descent and distribution, and this SAR shall be exercisable, during the lifetime of the Employee, only by the Employee; provided, however, that the Employee will be entitled to designate a beneficiary or beneficiaries to exercise his or her rights under this SAR upon the death of the Employee, in the manner and to the extent permitted by the Committee under Rules and Regulations adopted by the Committee under the Plan, and the Committee may permit transfers otherwise to the extent permitted under the Plan.

 

9. Clawback Policy; Recoupment.

 

Notwithstanding anything in this Agreement to the contrary, this Agreement shall be subject to the applicable provisions of any Company clawback policy approved by the Board or the Committee and applicable to the Executive, as such policy may be in effect from time to time.

 

10. Investment Representation.

 

Unless, at the time of any exercise of this SAR, the issuance and delivery of Shares hereunder to the Employee is registered under a then-effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and complies with all applicable registration requirements under state securities laws, the Employee shall provide to the Company, as a condition to the valid exercise of this SAR and the delivery of any certificates representing Shares, appropriate evidence, satisfactory in form and substance to the Company, that he or she is acquiring the Shares for investment and not with a view to the distribution of the Shares or any interest in the Shares, and a representation to the effect that the Employee shall make no sale or other disposition of the Shares unless (i) the Company shall have received an opinion of counsel satisfactory to it in form and substance that such sale or other disposition may be made without registration under the then-applicable provisions of the Securities Act, the related rules and regulations of the Securities and Exchange Commission, and applicable state securities laws and regulations, or (ii) the sale or other disposition of the Shares shall be registered under a currently effective registration statement under the Securities Act and complies with all applicable registration requirements under state securities laws.  The certificates representing the Shares may bear an appropriate legend giving notice of the foregoing restriction on transfer of the Shares, and any other restrictive legend deemed necessary or appropriate by the Committee.

 

 

  

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11. Miscellaneous.

 

This Agreement shall be binding upon the heirs, executors, administrators and successors of the parties, and the term “Company” shall include any successors of Charming Shoppes, Inc. by merger or otherwise as determined by the Company.  This Agreement constitutes the entire agreement between the parties with respect to the SAR, and supersedes any prior agreements or documents with respect to the SAR.  No amendment, alteration, suspension, discontinuation or termination of this Agreement which may impose any additional obligation upon the Company or materially impair the rights of the Employee with respect to the SAR shall be valid unless in each instance such amendment, alteration, suspension, discontinuation or termination is expressed in a written instrument duly executed in the name and on behalf of the Company and, if such amendment materially impairs the rights of the Employee, by the Employee.

 

 

	 	 CHARMING SHOPPES, INC.
	 	 
	 	 BY:________________________________
	 	 Colin D. Stern
	 	 Executive Vice President
	 	 
	 	 
	 	 EMPLOYEE:
	 	 ________________________________________
	 	 Anthony M. Romano
	 	 

 

 

      

 

  

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