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Exhibit 10.6
MANUFACTURING AGREEMENT
THIS AGREEMENT is entered into this 23 day of September, 1996 by and between
AGRI-LABORATORIES, LTD, a Delaware corporation (the "Company") and "SPARHAWK
LABORATORIES, INC., a Missouri corporation ("SLI") and VETERINARY LABORATORIES,
INC., a Kansas corporation ("VLI") (SLI and VLI shall jointly be referred to as
the "Manufacturer").
WHEREAS, the Company is engaged in the wholesale distribution and resale of
animal pharmaceuticals and other animal health products; and
WHEREAS, Company is in the process of filing Applications for approval of New
Animal Drugs ("NADA's") and Abbreviated Applications for the Approval of New
Animal Drugs ("ANADA's") with the Food and Drug Administration (jointly the
"Applications" or individually the "Application") under statutes regulating the
production of animal drugs, approval of which will allow the Company to
manufacture and distribute certain pharmaceutical products; and
WHEREAS, the Company and the Manufacturer agree to enter into this Agreement to
provide for the non-exclusive manufacture and supply by Manufacturer of Product
(as defined herein) as set forth herein.
NOW, THEREFORE, in consideration of the promises and covenants contained herein,
and good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 Products. "Product" shall mean the products listed on Exhibit "A" attached
hereto and incorporated herein. Exhibit "A" may be revised, from time to time,
by mutual written agreement of the parties.
1.2 Application. "Application" shall mean a NADA or an ANADA submitted to the
Food & Drug Administration ("FDA") which application requests approval of
Product as safe and effective by the FDA.
1.3 Approval. "Approval" shall mean approval of an Application by the FDA.
2. THE APPLICATION
2.1 Owner. The parties agree and acknowledge that Company is the owner of all
Applications submitted for Product and is the owner of all Approvals received
from the FDA. In no event is Manufacturer granted a license or proprietary
rights to Product by this agreement.
2.2 Application Contents. Manufacturer agrees that Company may list the
Manufacturer as manufacturer of a Product on the Company Applications and
Manufacturer will furnish a full description of its facilities, controls and
methods for manufacturing Product for inclusion on the Application. If
requested, Manufacturer agrees to provide the Company written authorization to
reference Manufacturer's master file.
2.3 Best Efforts. Each party agrees that it will use its best efforts to
complete and submit an Application for Product on a timely basis following
execution of this Agreement.
3. MANUFACTURING AGREEMENT
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3.1 Engagement. As provided herein, Company hereby appoints and engages
Manufacturer to manufacture the Product on a non-exclusive basis. Manufacturer
agrees that the manufacture of Product shall be for the exclusive benefit of
Company and agrees further that it shall not sell Product to any other purchaser
without the Company's advance written consent.
3.2 Price. Company agrees to pay to Manufacturer for the manufacture of Product
such amounts as are listed on Exhibit "B" attached hereto and made a part
hereof. Exhibit "B" may be revised, form time to time, by mutual written
agreement of the parties.
3.3 Trade Terms. Company agrees to pay all Manufacturer's invoices on a timely
basis. A timely basis shall be deemed to be thirty (30) days after date of
invoice provided invoices are received within five (5) days of date of invoice.
If invoices are not received by Company within five (5) days of date of invoice,
a timely basis for payment shall be deemed to be twenty-five (25) days after
receipt by Company of each invoice. Manufacturer agrees that Company shall
receive a discount of two percent (2%) of net invoice price if payment is made
by the Company within ten (10) days of date of invoice.
3.4 Registration. Manufacturer shall provide necessary information to the
Company to allow the Company to register Manufacturer's facility with the FDA as
a manufacturer of Product and shall provide the Company all information
necessary to comply with all reporting requirements of such a registered
manufacturer. Manufacturer shall make its premises available for inspection as
required by applicable statutes.
3.5 Quality Standards. All Product manufactured pursuant to this Agreement shall
be manufactured in compliance with the Application and shall be in compliance
with any and all requirements, ordinances and specifications of the FDA, the
Department of Agriculture, and/or any state, federal or the appropriate
government regulatory agency which shall, from time to time, regulate the
Product, The quality of the Product shall also be in compliance with general
industry standards regarding content, purity, shape, appearance, potency, shelf
life and shall comply with Company' quality standards. The Product shall also
comply with the chemical and other specifications established and/or identified
by Company as set forth on Exhibit C hereto.
3.6 Delivery. Manufacturer shall deliver Product to Company within thirty (30)
days (the "Lead Time") from Manufacturer's receipt of Company's purchase order,
provided that said purchase has been forecast pursuant to Article 8 hereof.
Manufacturer shall be responsible and pay for packaging and delivery of the
Product and for all other steps needed to transport the Product to Company.
Provided, however, the foregoing shall not restrict Manufacturer from shipping
Product to Company earlier that such Lead Time if the Product is available for
shipment and Company requests shipment prior to the Lead Time date established
herein.
3.7 Nonperformance. In the event Company's purchase order has been forecast
pursuant to Article 8 hereof and Manufacturer fails to deliver Product to
Company within the Lead Time, the product fails to comply with the terms of this
Agreement, or there has been breach of another provision of this Agreement, in
addition to other remedies,Company shall have the right to cancel outstanding
purchase orders with or without terminating this Agreement.
4. TERM OF AGREEMENT
4.1 Term of Agreement. The application of this Agreement to each particular
Product listed on
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Exhibit A shall terminate five (5) years after the particular Product has
received Approval. The application of this Agreement with respect to each
individual Product shall automatically renew for an additional five (5) year
term unless either party shall have served written notice of non-renewal to the
other party not less than ninety (90) days before the termination of the initial
five (5) year period. Notwithstanding the above, in addition to all other
remedies, either party may terminate its obligations under this Agreement by
twenty (20) day advance written notice in the event of a material breach of the
terms of this Agreement, if such breach is not cured within said period.
5. RISK OF LOSS AND INSURANCE
5.1. Risk of Loss. Unless Company elects to pick up Product from Manufacturer's
dock, Manufacturer shall bear all risk of loss or damage to the Product in
shipment to Company. Company shall bear all risk of loss of unloading, storage
and handling of Product.
5.2 Insurance. Manufacturer shall carry product liability insurance on the
Product in the amount of not less than $1,000,000.00 which insurance shall name
the Company as an additional insured and/or co-insured. Company shall be given
thirty (30) days advance written notice of any termination or cancellation of
said insurance. Manufacturer shall provide proof of insurance within ten (10)
days of the commencement of the term of this Agreement and at any time during
the term of this Agreement upon request.
6. LABELING AND PACKAGING RESPONSIBILITY
6.1 Labeling Responsibility. All labels (including private labels, i.e. those
labels containing names other than the Company's name) as specified by the
Company will be purchased and applied to all Product by Manufacturer at
Manufacturer's cost; provided that, with respect to private labels, the volume
of each private label meets minimum private label quantities as jointly
determined by Manufacturer and the Company for a twelve (12) month period. In
the event the volume of Products using private labels does not meet the
established minimum volume requirements, Manufacturer reserves the right to
invoice the Company for the cost of purchasing the private labels.
6.2 Packaging. Manufacturer shall be required to deliver the Product in finished
form, ready for sale by Company and packaged according to the Company's
specifications which are listed on Exhibit "D" attached hereto and made a part
hereof. Exhibit "D" may be revised, from time to time, by written notice from
Company, provided that such notice does not materially increase the cost of such
packaging.
7. ACCEPTANCE
7.1 Acceptance. The Product shall be received subject to Company's inspection
during a thirty (30) day period after receipt. The Product may be returned to
Manufacturer if found not to comply with the quality standards set forth in
Article 3.5 hereof. In the event that the defect is not readily ascertainable by
inspection, such Product may nonetheless be rejected by Company not later than
ten (10) day after Company has discovered the defect. All claims for defect
shall be reported in writing to Manufacturer as soon as possible. At the request
of Manufacturer, Company shall provide Manufacturer with samples of the
allegedly defective product.
8. PURCHASE FORECASTS
8.1 Annual Forecasts. Prior to the beginning of each calendar year, Company
agrees to provide
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Manufacturer with an annual forecast of Product purchases by quarter.
8.2 Quarterly Forecast. Company agrees that, at least once each ninety (90)
days, it shall provide forecasts of the quantity of Product which it anticipates
it will purchase from Manufacturer for the (90) day period thereafter.
8.3 Noncompliance with Estimates. The parties agree that Company's estimates are
only estimates. All estimates shall be made in good faith in order to facilitate
Manufacturer's manufacture and shipment of Product in compliance with this
Agreement.
8.4 Minimum Purchase. Notwithstanding Paragraph 7.3 above, Company agrees that
it will purchase the minimum of Product as set forth on Exhibit A.
9. BEST EFFORTS OF COMPANY
9.1 Marketing of Product. Company shall exert its best efforts to sell and
achieve a market for the Product.
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION
10.1 Non-Disclosure. Unless granted written permission by Company, Manufacturer
agrees not to directly or indirectly use or disclose Confidential Information
(as hereinafter defined) obtained from Company or otherwise through the
manufacturer of the Product for so long as said information retains the
characteristics of Confidential Information as defined herein.
10.2 Confidential Information. Confidential Information means any information or
compilations of information that derives independent economic value from not
being generally known or readily ascertainable by proper means. Confidential
Information includes, but is not limited to trade secrets, customer lists,
manufacturing processes and Product ingredients, formulations, specifications,
results of research and development whether complete or in process and other
information which the Company deems as confidential. However, Manufacturer is
not precluded from independently developing and marketing a particular Product
if Company fails to purchase any of such Product within two (2) years following
Approval of the Application for that Product and the listing and approval of
Manufacturer under Company's ANADA or NADA.
10.3 Documents and Tangible Items. All documents and tangible items which
contain or deal in any manner with Confidential Information are the property of
Company and shall remain the exclusive property of Company along with all
copies, records, abstracts, notes or reproductions of any kind made from or
about the documents and tangible items or the information they contain.
10.4 Account for Profits. Manufacturer agrees that if it shall violate any of
the covenants and agreements under this Article 10, Company shall be entitled to
an accounting and repayment of all profits, compensation, commissions,
remuneration or other benefit which Manufacturer has either directly or
indirectly realized on its behalf or on behalf of another and/or may realize as
a result of, growing out of or in connection with such violation. Such remedies
shall be in addition to and not in limitation of any injunctive relief or any
other remedies or rights to which Company is or may be entitled to at law or in
equity or under this Agreement.
10.5 Reasonableness of Restrictions. Each party agrees that considering their
relationship and the degree of their mutual reliance, and given the other terms
of this Agreement that the restrictions set
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forth in this Article are reasonable. Notwithstanding the foregoing, if any of
the covenants set forth in this Article shall be held to be invalid or
unenforceable, the remaining parts thereof shall nevertheless continue to be
valid and enforceable as though the invalid or unenforceable parts have not been
included herein.
11. WARRANTIES
11.1 General. Manufacturer warrants that the Product will be of merchantable
quality, free from defects in material, formulation and manufacture, fit for the
purposes for which it is produced, in compliance with Company's packaging
standards, in compliance with industry quality standards, in compliance with the
quality standards set forth in Section 3.5 hereof and in compliance with the
terms of this Agreement. Notwithstanding the foregoing. Manufacturer shall not
be responsible for recommendations for use of the Product made by Company nor
shall Manufacturer make any representation or warranty with regard to the
results to be obtained by the Product. Company assumes all risks and liability
associated with storage and handling of Product which complies at the time of
delivery to Company with the quality standards identified herein.
11.2 Investigation. Manufacturer shall promptly investigate any and all Product
complaints relating to quality, manufacture, defects in materials and
workmanship, formulations, and/or packaging for the Product. Manufacturer shall
immediately notify Company, in writing, of any Product complaints Manufacture
has knowledge of or receives. The Company shall promptly investigate any and all
complaints regarding storage and handling of the Product, and/or recommended
uses of the Product.
12 INDEMNITY
12.1 Indemnity. Manufacturer agrees to indemnify and hold harmless Company, its
officers, directors, employees, agents, members, distributors and
representatives from all actions, claims, losses, damages or expenses allegedly
arising out of any injury to person or property allegedly suffered as a
consequence of the Product's manufacture.
12.2 Company's Inspection. Manufacturer shall, from time to time, during regular
business hours, in a manner not to interfere with Manufacturer's business, grant
permission and arrange for Company to enter the premises and plants of
Manufacturer that manufacture the Product, for the purpose of inspecting such
plants, equipment and operations to assure compliance with this Agreement.
13. MISCELLANEOUS
13.1 Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto with respect to the subject matter hereof, and any
modification of this Agreement shall be in writing and shall be signed by a duly
authorized representative of each party.
13.2 Supersedes Prior Understandings. This Agreement shall be deemed to
supersede any agreement heretofore entered into by and between Manufacturer and
Company.
13.3 Governing Law. This Agreement shall be interpreted and construed, and the
legal relationships created hereby shall be construed in accordance with the
laws of the State of Missouri.
13.4. Default. No failure or omission by either of the parties hereto in
performance of any non-monetary obligation contained in this Agreement shall be
deemed a breach hereof if the same shall arise
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from any causes beyond the control, and without fault or negligence of, such
party, including, but not restricted to acts of God, acts of federal, state,
local or foreign government or any agency thereof, request of any governmental
authority or any officer, department, agency or instrumentality thereof,
shortages of supply of Product or components to manufacture product, plant shut
down by acts of any government, fire, storm, flood, earthquake, explosion,
accident, acts of the public enemy, war, rebellion, insurrection, riot,
sabotage, epidemic, quarantine, restrictions, strike, lockout, dispute with
workmen, labor shortages, transportation embargoes or failures or delays in
transportation, or exhaustion or unavailability or delays in the delivery of any
transportation facility, product or material necessary to the performance
hereof, except that all actions of Manufacturer's employees and agents are
hereby deemed to be within Manufacturer's control. In the event of breach of
this Agreement by either party, such party shall be liable for actual damages,
but shall have no liability for incidental or consequential damages.
13.5 Successors and Assigns. The Agreement shall inure to the benefit of and be
binding upon the permitted successors and permitted assigns of the parties
hereto, but is shall not be assigned in whole or in part by either party without
prior written consent of the other. Any purported assignment of this Agreement
or any interest therein without the written consent of the other shall be void.
Notwithstanding the aforementioned, Company may assign its rights and
obligations herein to any affiliate or subsidiary in which Company owns a
controlling interest.
13.6 Notices. All notices provided for by this Agreement shall be considered to
have been received if sent by certified mail, return receipt requested,
addressed as provided for herein.
COMPANY: Agri-Laboratories Ltd.
P.O. Box 3103,
St. Joseph, Missouri 64503
WITH COPY TO: Leon I. Steinberg Esq.
Maslon Edelman Borman & Brand
a Professional Limited Liability Partnership
3300 South 7th Street
Minneapolis, MN 55402
MANUFACTURER: Sparhawk Laboratories, Inc. and
Veterinary Laboratories, Inc.
12340 Santa Fe Trail Drive
Lenexa, KS 66215
Attn: Everett B. Hughes, President
13.7 Injunctive Relief. The parties agree that their respective obligations are
unique and that monetary damages may not be sufficient to compensate for an
alleged breach of this Agreement. The parties agree that each shall have the
right to injunctive relief to enjoin or enforce the provisions of this
Agreement. The right to injunctive relief and/or specific performance shall be
cumulative and shall be in addition to all other rights and remedies at law or
in equity.
13.8 Severability. If any portion or provision of this agreement shall be held
unenforceable or illegal, the illegal or unenforceable provision shall be
inoperable and the remaining provision of this Agreement shall be effective as
if such unenforceable or illegal provision were not a part hereof.
IN WITNESS WHEREOF, the parties execute this Agreement as of the date and year
first above
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written.
AGRI-LABORATORIES, LTD.
By: /s/ Dennis Feary
Its President
VETERINARY LABORATORIES, INC.
By: /s/ Everett B. Hughes
Its President
SPARHAWK LABORATORIES, INC.
By: /s/ Everett B. Hughes
Its President
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