CONTRACT MANUFACTURING AGREEMENT
This Agreement is made as of the ____ of ___________, 1998, between GEN TRAK,
INC., a ________________ corporation, with its principal place of business at
5100 Campus Drive, Plymouth Meeting, Pennsylvania 19462 ("GEN TRAK") and SFP
RESEARCH, INC., a ________________ corporation, with its principal place of
business at 121 West Swannanoa Avenue, Liberty, North Carolina 27298 ("SFP").
The parties agree as follows:
1. APPOINTMENT
A. Manufacture Agreement. SFP agrees to manufacture and sell to GEN TRAK
during the Term of this Agreement (defined below) the HLA Trays and related
products manufactured by SFP as described in Exhibit "A" hereto (the "Product").
Except as provided subparagraph C of this paragraph, SFP hereby appoints GEN
TRAK as SFP's exclusive distributor worldwide of the Product. GEN TRAK hereby
accepts such appointment and undertakes to use its best efforts to sell and
promote the sale of Product.
B. Relocation of Materials. GEN TRAK shall consolidate its inventory of
immunogenetic products and reagents in Liberty North Carolina and use SFP as the
primary shipping point for its business. Any in all physical or raw material
assets transferred to SFP in Liberty, North Carolina shall be labeled separately
and distinguished for accounting and ownership purposes.
C. Sales by SFP. Notwithstanding anything herein to the contrary, and
provided that it is not in direct competition with GEN TRAK, SFP may market and
sell the Product under its own label to its existing customers as follows:
JOHN LEE - TAIWAN
LAB CORP.
METHODIST HOSPITAL
UNC HOSPITAL - CHAPPELL HILL
PITT COUNTY MEMORIAL HOSPITAL
CHARLOTTE MECKLENBURG HOSPITAL AUTHORITY
ARC BADGER
DIAGNOSTICA LONGWOOD, SA. - China
D. Relationship of Parties. The relationship between the parties is that of
vendor and purchaser (rather than principal and agent) and, accordingly, GEN
TRAK shall not be empowered by its appointment hereunder or otherwise to act for
or to bind SFP, or to make any express or implied representation or warranty on
behalf of SFP.
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2. TERM OF AGREEMENT
A. Initial Term. The Term of this Agreement shall commence on the date of
this Agreement and, unless this Agreement is earlier terminated pursuant to the
provisions hereof or otherwise, shall continue for a period of two (2) years.
(Such period, as extended as provided in subparagraph B of this paragraph, is
referred to herein as the "Term")
B. Additional Terms. Provided that it is not in default hereunder, GEN TRAK
may extend this Agreement for three (3) additional consecutive one (1) year
periods upon written notice to SFP delivered at least ninety (90) days prior to
the expiration of the then current Term.
3. ORDERS AND FORECASTS FOR THE PRODUCTS
A. 12 Month forecast. On the date of the signing of this Agreement and on
the last day of each calendar quarter during the Term, GEN TRAK will provide to
SFP a twelve (12) month rolling forecast of anticipated Product needs.
B. 60 Day Forecast. SFP will maintain an inventory of Product at its North
Carolina facility sufficient to meet projected demand for the Product as set
forth in the rolling forecast for at least sixty (60) days. SFP will be
responsible for direct shipping of the Product to GEN TRAK's customers as per
shipping orders forwarded by GEN TRAK's Order Entry/Customer Service Department.
4. PRICE AND PAYMENT TERMS
A. Purchase Price. SFP agrees to provide the Product to GEN TRAK at a price
per unit equal to the direct cost to manufacture the unit, exclusive of indirect
costs and overhead, with adjustments, if any, as may be mutually agreed to
reflect market conditions. During the Term of this agreement, this cost per unit
may only be changed by mutual agreement based on a demonstrable increase in the
cost to manufacture of SFP. The parties agree that the initial cost per unit of
the Product will be established by mutual agreement as soon as reasonably
possible and attached hereto as Exhibit "B" (the "Purchase Price").
B. Additional Consideration. GEN TRAK shall pay to SFP the following as
additional compensation here under:
i. A monthly flat fee of seven thousand, five hundred ($7,500.00)
dollars. This flat fee shall be pro rated during the first and last month of
this Agreement.
ii. An hourly fee of fifty ($50.00) dollars per hour for all additional
production hours directly related to the manufacture of the Product over one
hundred sixty (160) hours per month.
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iii. The cost of any additional staff hired to work exclusively on the
manufacture of the Product for GEN TRAK. It is acknowledge and agreed that SFP
shall be the sole employer of any such employee, and that GEN TRAK shall merely
reimburse SFP the direct cost of such employment.
C. Taxes/Risk of Loss. GEN TRAK shall be responsible for and pay all value,
excise, sales and similar taxes that may be required to be paid by reason of GEN
TRAK's purchases of the Units. Risk of loss for the Product shall pass to GEN
TRAK upon delivery to a carrier for shipment. GEN TRAK may use its standard
purchase order form to order products; provided, however, any such form shall
reference this Agreement and the terms and conditions of this Agreement will
supersede any different or additional terms on such order.
D. Expansion by SFP. It is acknowledged and agreed that to perform its
obligations here under, SFP shall be required to expand its existing physical
plant into the adjoining property. It is agreed that (i) the lease for such
property shall be in the name of and shall be the exclusive obligation of SFP,
provided, however, that GEN TRAK shall pay the monthly rental for the additional
property of four hundred fifty ($450.00) dollars; and (ii) SFP shall be
responsible, at its expense, for all improvements in the HVAC and electric
utilities, provided, however, that GEN TRAK shall pay the monthly carrying cost
of the construction mortgage necessary to make said improvements, not to exceed
$_________ per month.
E. Time of Payment. All payments will be sent by GEN TRAK to SFP Net 30,
unless otherwise mutually agreed upon. Any payment not made within said thirty
(30) day period will bear interest from the expiration of said thirty (30) day
period at the rate of one percent (1%) over the Prime Rate as reported by the
Chase Manhattan Bank of New York, or its successor.
5. MARKETING, REDISTRIBUTION
A. Promotion and Marketing.
(i) SFP acknowledges that GEN TRAK anticipates marketing the Product
and agrees that any brand name and all product packaging and all marketing,
advertising and promotion materials (collectively, the "Brand Name") shall
remain the exclusive property of GEN TRAK. SFP may not use the Brand Name in any
way without the express written consent of GEN TRAK.
(ii) GEN TRAK agrees to use its best efforts to promote and sell the
Product, at its own expense, as soon as feasible after the date of this
Agreement.
(iii) GEN TRAK will maintain an adequate sales force during the term of
this Agreement to effectively market and sell the Product and handle all
customer complaints in a professional and efficient manner.
(iv) All expenses incurred by GEN TRAK in connection with the
performance of its obligations hereunder will be borne solely by GEN TRAK
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B. Compliance. SFP will comply with all laws, regulations and orders,
including all health regulatory requirements, of any government and with all
other governmental requirements applicable to the Product and/or to the running
of a GMP production facility. GEN TRAK shall furnish SFP with such assistance
and cooperation as may reasonably be requested in connection with compliance
with such governmental requirements.
C. Trademarks. To the extent reasonably required by GEN TRAK to perform its
obligations pursuant to this Agreement, SFP grants to GEN TRAK a
non-transferable, royalty-free license, with no right to grant sublicenses, to
use during the term of this Agreement the Trademark with respect to the Product,
alone or in conjunction with any one or more trademarks of GEN TRAK, provided,
however, that such license may only be used by GEN TRAK in connection with the
sale of the Product. SFP acknowledges the validity of the Trademark and SFP's
ownership thereof.
D. Customer Service. GEN TRAK shall be responsible for all "front line"
customer services for the Product. SFP will assist with other customer services
for the products as necessary and will transmit shipping advice instructions in
a timely manner.
6. TERMINATION
A. Default by GEN TRAK. If GEN TRAK breaches a term or provision of this
Agreement, SFP shall give GEN TRAK written notice of such breach. If such breach
is not remedied within thirty (30) days of such notice, in addition to any other
right or remedy it may have under this Agreement or otherwise, SFP may:
i. Seek specific performance by GEN TRAK of its obligations hereunder in
an appropriate court, it being acknowledged and agreed that the services
provided by GEN TRAK are specific to GEN TRAK and could not be performed by any
other entity; or
ii. Terminate this Agreement by giving GEN TRAK written notice.
B. Default by SFP. If SFP breaches a term or provision of this Agreement,
GEN TRAK shall give SFP written notice of such breach. If such breach is not
remedied within thirty (30) days of such notice, in addition to any other right
or remedy it may have under this Agreement or otherwise, GEN TRAK may:
i. Seek specific performance by SFP of its obligations hereunder in an
appropriate court, it being acknowledged and agreed that the services provided
by SFP are specific to SFP and could not be performed by any other entity; or
ii. Manufacture the Product at another facility and recover as damages
from SFP all profit lost during the period prior to full operations. SFP hereby
grants to GEN TRAK all licenses, trademarks, patents, etc. required for such
production, if any; or
iii. Terminate this Agreement by giving SFP written notice.
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C. Consequential Damages. Except as provided in Paragraph B of this Article,
neither party, by reason of the termination of this Agreement, will be liable to
the other because of damages, expenditures, loss of profits, or prospective
profits of any kind or nature, sustained or arising out of such termination or
for any investments related to the performance of this Agreement or the goodwill
created in the course of the performance under this Agreement.
D. No Release. No termination of this Agreement will in any manner
whatsoever release, or be construed as releasing, any party from any liability
to the other arising out of or in connection with a party's breach of, or
failure to perform any covenant, agreement, duty or obligation contained in this
Agreement. Neither party will be relieved from any obligations vested prior to
the date of termination of this Agreement.
E. Return of Materials. Upon termination of this Agreement, all furnished
goods, materials and other assets delivered by GEN TRAK in place in North
Carolina or in the possession of SFP shall be returned by SFP, at GEN TRAK's
expense, to GEN TRAK at its offices in Plymouth Meeting, PA, or to such other
place as GEN TRAK shall designate in writing.
F. Sale/Return of Inventory. In addition to its rights under paragraph B
above, for a period of 60 days after the expiration or termination of this
Agreement, GEN TRAK may sell the inventory of Product GEN TRAK has on hand at
the time of such expiration or termination through its normal trade channels for
the Product; provided, however, that if within 10 days after such expiration or
termination SFP notifies GEN TRAK that it wishes to purchase all or part of such
inventory of Product, GEN TRAK shall sell to SFP all or part of such inventory
of Product, as desired by SFP, but in each case limited to those Units in good
and usable condition as per SFP's existing quality control standards, for an
amount equal to the cost of such inventory to SFP at the time of the purchase.
GEN TRAK shall return to SFP for credit against amounts payable by GEN TRAK to
SFP all Product, less reasonable customer samples and test samples, not sold and
paid for at the expiration of such 60 day period.
7. PRODUCT WARRANTY
A. Product Specifications. The parties agree to establish by mutual
agreement as soon as reasonably possible Product Specifications and to attach
the same hereto as Exhibit "C" (the "Product Specifications"). SFP warrants that
the Product will meet the "Product Specifications", as may be amended from time
to time, for the period of time up to and including the expiration date printed
or stamped on the product if used, stored and shipped in accordance with SFP's
instructions. With respect to any Product failing to meet the Product
Specifications, SFP will, at its option: (i) grant to GEN TRAK a credit for such
defective Product equal to the price paid therefor by GEN TRAK or (ii) provide
replacement Product. In no event will SFP be liable under this Agreement for any
failure of any Product to meet the Product Specifications due to improper use,
storage or shipment by GEN TRAK or anyone receiving the Product directly or
indirectly from GEN TRAK.
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B. Quality Control Standards. The parties agree to establish by mutual
agreement as soon as reasonably possible Quality Control and Quality Assurance
standards including manufacturing processes and to attach the same hereto as
Exhibit "D" (the "Quality Control Standards"). SFP and GEN TRAK hereby agree to
the Quality Control Standards, as may be amended from time to time. All products
delivered to GEN TRAK or to GEN TRAK's customers will be certified by SFP as
having met minimum, agreed upon performance standards. SFP will replace all
products that fail to perform to these minimum standards.
8. LIMITATIONS OF LIABILITY
EACH PARTY WILL ONLY BE LIABLE TO THE OTHER PARTY FOR DAMAGES THAT ARE DIRECTLY
ATTRIBUTABLE TO ITS MATERIAL BREACH OF THIS AGREEMENT OR ITS GROSSLY NEGLIGENT
OR INTENTIONAL ACT OR OMISSION. NOTWITHSTANDING THE FOREGOING, NEITHER PARTY
WILL BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY OR PARTIES FOR INDIRECT
DAMAGES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT LIMITATION LOST PROFITS OR
SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY GOODS SOLD OR DELIVERED TO GEN TRAK. NOTHING IN THIS AGREEMENT
WILL CREATE ANY LIABILITY OF EITHER OR BOTH PARTIES TO ANY THIRD PARTY OR
PARTIES.
9. INDEMNITY
A. Indemnity by SFP. SFP agrees to and hereby does indemnify and hold GEN
TRAK harmless from and against all claims, damages, losses, costs and expenses,
including reasonable attorneys' fees, which GEN TRAK may incur by reason of any
Product sold or furnished by SFP which result in injury, illness or death of any
person, to the extent that such claims arise out of or result from (i) product
design, (ii) manufacturing, (iii) a breach of this Agreement or, (iv) failure to
comply with the Quality Control and Quality Assurance standards including
manufacturing processes set forth in Exhibit D attached hereto, except if such
claims arise from the gross negligence or willful misconduct of GEN TRAK.
B. Indemnity by GET TRAK. GEN TRAK hereby agrees to and hereby does
indemnify and hold SFP harmless from and against all claims, damages, losses,
costs and expenses, including attorney's fees, which SFP may incur to the extent
that such claims arise out of or result from (1) the unlawful sale or other
distribution of Product by GEN TRAK or use by any purchasers, including any
improper sales by GEN TRAK to customers who are enumerated in Paragraph 1(C)
hereof, (ii) the distribution, labeling or packaging of the Products or, (iii)
failure to comply with the Quality Control and Quality Assurance standards
including manufacturing processes set forth in Exhibit D attached hereto, except
for such claims which arise out of or result from the gross negligence, or
willful misconduct of SFP.
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10. PROPRIETARY RIGHTS
A. Ownership of SFP Proprietary Rights. SFP will retain all of its rights,
title and ownership in all copyrights, trademarks, trade secrets, Patents, and
all other intellectual property embodied in the Product. Except as otherwise
expressly provided in this Agreement, GEN TRAK will have no right, title or
interest in the intellectual property embodied in the Product.
B. Ownership of GEN TRAK Proprietary Rights. GEN TRAK will retain all of its
rights, title and ownership in (i) all copyrights, trademarks, trade secrets,
Patents, and all other intellectual property embodied in the Brand Name and (ii)
all customer lists, research and other data. Except as otherwise expressly
provided in this Agreement, SFP will have no right, title or interest in the
intellectual property embodied in the Brand Name.
C. Confidential Information. Each party agrees that it will treat
accordingly all verbal and written communications from the other party which are
designated, or which should reasonably be regarded in the normal commercial
view, as constituting business secrets or propriety information ("Proprietary
Information"). Each party agrees to refrain from disclosing or making available
to any third party any of the other party's Proprietary Information without the
other party's written consent and to impose upon its employees and agents the
same obligations with respect to the other party's Proprietary Information as it
employs with respect to its own confidential information. No such obligations of
confidence will extend to information which (a) is publicly available; (b) is
independently developed by the receiving party; (c) is already in the receiving
party's possession; or (d) is rightfully received from a third party. The
provisions of this Section 12 will survive the termination of this Agreement and
for a period of five (5) years thereafter.
11. GOVERNING LAW
This Agreement shall be deemed to have been made in the Commonwealth of
Pennsylvania, and shall be construed in accordance with and governed by the laws
of Pennsylvania applicable to contracts wholly executed and performed in
Pennsylvania. All disputes under this Agreement which cannot be resolved between
the parties shall be submitted to binding commercial arbitration in accordance
with the rules of the American Arbitration Association the appertaining. The
arbitration shall be held at a mutually agreed upon site. All fees and expenses
of the Arbitrator shall be borne equally by the parties.
12. ASSIGNMENT
A. Neither this Agreement, nor any rights or obligations of GEN TRAK
thereunder shall:
1. be assigned by GEN TRAK to any person or entity, or
2. be transferred, or pass to, any person or entity by merger or
consolidation, in bankruptcy or insolvency proceedings or by operation of law or
otherwise,
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without the prior written consent of SFP, which may be withheld by SFP for any
reason or for no reason, in SFP's sole discretion. Any assignment in violation
of the foregoing shall be deemed null and void. SFP may assign or delegate any
or all of its rights or duties hereunder to any party. Notice thereof need not
be given to GEN TRAK in order to be effective; provided, however, SFP agrees to
notify GEN TRAK of any such assignment and provide information with respect
thereto to the extent necessary to enable GEN TRAK to perform its obligations
thereunder, including, without limitation, any change in the address for
placement of orders or payment of invoices for Products.
13. FORCE MAJEURE
In the event that either party is unable to carry out its obligations under this
Agreement due to Force Majeure beyond its control (including, without
limitation, acts of God; war, riot; fire; flood; explosion; labor disputes;
embargoes; or unavailability or shortages of raw material, bulk, equipment or
transport), the failure so to perform shall be excused and not constitute a
default hereunder during the continuation of the intervention of such Force
Majeure, provided, however that this provision shall not apply to the obligation
of GEN TRAK to pay for the Product as provided in Paragraph 4 hereof. The party
affected by such Force Majeure shall resume performance as promptly as
practicable after such Force Majeure has been eliminated. Notwithstanding the
foregoing, in the event either party is unable to carry out its obligations
hereunder by reason of such Force Majeure for a period of forty-five (45) days
or more, then either party may at any time thereafter during the continuance of
such Force Majeure terminate this Agreement upon notice to the other party
setting forth the circumstances of such Force Majeure.
14. OPTION TO PURCHASE.
GET TRAK shall have an option to purchase, in its sole discretion either (i)
the capital stock or (ii) all or a portion of the assets of SFP, including
usable sera inventory at fair market value, for a mutually agreed upon sum not
to exceed Seven Hundred Thousand Dollars ($700,000.00), subject to appropriate
due diligence. Said consideration to be made, upon the written exercise of the
option, in cash or stock at GEN TRAK's sole discretion, at any time during the
Term of this Agreement. Said purchase shall be consummated as soon as possible
after the exercise of the option, but in all events within ninety (90) days
after the exercise of the option.
15. MISCELLANEOUS.
A. No Agency, No Joint Venture - Independent Contractor. SFP will act as
independent contractor under the terms of this Agreement. SFP is not, and will
not be deemed to be, employee, agent, co-venturer or legal representative of GEN
TRAK for any purpose. SFP will not be entitled to enter into any contracts in
the name of, or on behalf of GEN TRAK, nor will SFP be entitled to pledge the
credit of GEN TRAK in any way or hold itself out as having authority to do so.
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B. Severability. Should any provision of this Agreement be determined by a
court having jurisdiction over the parties and the subject matter to be illegal
or unenforceable in such jurisdiction, the parties agree that such determination
shall not affect or impair the validity or enforceability of such provision in
any other jurisdiction or the validity or enforceability of any other provision.
C. Entire Agreement; Amendment. This Agreement and the Exhibits hereto set
forth and constitute the final, complete and entire agreement between the
parties hereto with respect to the subject matter hereof, supersede any and all
prior agreements, understandings, promises and representations made by either
party to the other concerning the subject matter hereof and the terms applicable
hereto and are intended as a complete and exclusive statement of the terms of
the agreement between the parties. This Agreement may not be released,
discharged, amended or modified in any manner except by an instrument in writing
signed by duly authorized officers of both parties.
D. Waiver. No waiver of any right under this Agreement will be deemed
effective unless contained in a writing signed by the party charged with such
waiver, and no waiver of any right arising from any breach or failure to perform
will be deemed to be a waiver of any future such right or of any other right
arising under this Agreement.
E. Headings. Section headings contained in this Agreement are included for
convenience only and form no part of the agreement between the parties.
F. Notices. Notice, consent, demand, approval, or other communication
required or permitted under this Agreement will be written and will be deemed to
have been given (i) when personally delivered, including confirmed delivery by
facsimile or telex, (ii) on the next day after delivery to a nationally
recognized over-night express delivery service; or (iii) on the third day after
it is mailed, postage prepaid, certified or registered mail, return receipt
requested, addressed to the following address or to such other address as the
party to be notified shall have specified to the other party in accordance with
this paragraph:
If to SFP: with a copy to:
SFP RESEARCH, INC.
121 West Swannanoa Avenue
P.O. Box 1290
Liberty, NC 27298
Attn: Stephen F. Repp
If to GEN TRAK: with a copy to:
Gen Trak, Inc. Henry A. Carpenter II, Esq.
510 Campus Drive 1513 Judith Place
Plymouth Meeting, PA 19462 Yardley, PA 19067
Attn: Arthur V. Boyce Jr.
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G. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original and all of which will constitute
together but one of the same document.
H. Authority to Enter Into and Execute Agreement. Each party represents and
warrants to the other they have the right and lawful authority to enter into
this Agreement for the purposes herein and that them are no other outstanding
agreements or obligations inconsistent with the terms and provisions hereof.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
ATTEST: SFP RESEARCH, INC.
BY:________________________
Name:______________________ Name:______________________
Title:_____________________ Title:_____________________
ATTEST: GEN TRAK, INC.
BY:________________________
Name:______________________ Name:______________________
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