PECOS PHARMACEUTICAL, INC. - S-4/A - 20040804 - EXHIBIT_10
Exhibit 10.31
Portions of this Exhibit were omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment. Such
portions are marked by a series of asterisks.
CONTRACT MANUFACTURING AGREEMENT
This is a CONTRACT MANUFACTURING AGREEMENT ("Supply Agreement"), between The
Procter & Gamble Manufacturing Company, an Ohio corporation and P&G
International Operations SA, a Swiss corporation (collectively with its
affiliates, "Supplier"), and Prestige Brands International, Inc., a Virginia
corporation, and Prestige Brands International (Canada) Corp., a Nova Scotia
corporation (collectively "Buyer"). This Supply Agreement will have an effective
date of February 1, 2001. Supplier and Buyer are sometimes collectively referred
to herein as "parties" and individually as "party."
WHEREAS, Supplier and Buyer have previously entered into an Asset Sale and
Purchase Agreement, dated as of March 30, 2000 ("Sale Agreement"), pursuant to
which Buyer purchased the Acquired Assets (as defined in the Sale Agreement),
and on the same day, Supplier and Buyer simultaneously entered into a
Transitional Services Agreement ("Services Agreement") to expire June 30, 2000
and a Transitional Supply Agreement ("Transitional Supply Agreement") to expire
January 31, 2001;
WHEREAS, pursuant to Section 6.19 of the Sale Agreement, Supplier and Buyer
agreed to negotiate in good faith a supply agreement governing the supply of
Product by Suppliers for Buyer for the period after January 31, 2001 and
incorporating the Post-Transition Supply Terms set forth on Schedule 6.19 of the
Sale Agreement;
WHEREAS, upon expiration of the Transitional Supply Agreement and in connection
with the Sale Agreement, Buyer wishes that Supplier, upon Buyer's request and
according to the terms and conditions set forth herein, continue Manufacturing
(as defined hereinafter) Products (as defined hereinafter) or, subject to
Buyer's prior written approval, which will not be unreasonably withheld,
arranging for the Contract Manufacturing (as defined hereinafter) of Products on
Buyer's behalf for the period(s) set forth herein;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements, and conditions contained herein, the parties hereto agree
as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 GENERAL. Any capitalized term used but not defined herein will
have the meaning set forth in the Sale Agreement.
1.02 "AFFILIATE" means, with respect to a Person, another Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. "Control," whether
or not capitalized, means, with respect to a Person, the ownership by another
Person of greater than 50% of the income or voting interests of such Person or
such other Person of greater than 50% of the income or voting interests of such
Person or such other arrangement as constitutes the direct or indirect ability
to direct the management, affairs or actions of such Person.
1.03 "PACKAGING MATERIALS SUPPLIERS" means those contract manufacturers
who Supply packaging materials to Supplier.
1.04 "BULK LOZENGE PRODUCT" means the oral anesthetic bulk lozenge
product produced as of the Signing Date for use in the United States and Canada
and produced for delivery non-blistered in bulk containers and set forth on
Schedule 1.03, together with any Alterations and/or Modifications.
1.05 "BUSINESS" means the manufacturing, packaging, distributing,
marketing and selling of the Products under one or more Trademarks in the United
States or Canada.
1.06 "CLOSING DATE" means March 30, 2000, the date when Buyer purchased
the Business from Supplier.
1.07 "CONTRACT MANUFACTURING" means the sourcing and warehousing of raw
and packaging materials, compounding, component preparation, production,
manufacturing, income and outgoing quality control, fabrication, filing,
inspecting, labeling, packing, packaging and/or warehousing of any Products, or
any part thereof, as well as associated activities, in accordance with the
Specifications and the terms and conditions of this Supply Agreement, in each
case, by any non-Affiliate third party pursuant to Contract Manufacturing
Agreement(s) with the Supplier or any of Supplier's Affiliates. The terms
"CONTRACT MANUFACTURE," "CONTRACT MANUFACTURER" and "CONTRACT MANUFACTURED" will
have the appropriate derivative meanings.
1.08 "CONTRACT MANUFACTURING AGREEMENT" means any purchase order,
contract, agreement or other obligation between Supplier or any of Supplier's
Affiliates and any non-Affiliate third party pursuant to which any non-Affiliate
third party Contract Manufacturers Products.
1.09 "CONTRACT PLANT" means that portion of a Contract Manufacturer's
facilities used in the Contract Manufacture of Products.
1.10 "CONTRACT WAREHOUSE" means that portion of a Contract
Manufacturer's facilities used to warehouse finished goods.
1.11 "DELIVERY DATE" means the date on Buyer's Firm Written Purchase
Order that designates the date when Supplier will have Products available for
Buyer to pick-up.
1.12 "EFFECTIVE DATE" means February 1, 2001.
1.13 "LIQUID PRODUCT" means the oral anesthetic liquid finished open
stock product produced as of the Signing Date for sale in the United States and
Canada that is set forth on Schedule 1.12, together with any Alterations and/or
Modifications.
1.14 "LOZENGE PRODUCT" means the oral anesthetic lozenge finished open
stock product produced as of the Signing Date for sale in the United States and
Canada that is set forth on Schedule 1.13, together with any Alterations and/or
Modifications.
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1.15 "MANUFACTURING" means the sourcing and warehousing of raw and
packaging materials, compounding, component preparation, production,
manufacturing, incoming and outgoing quality control, fabrication, filling,
inspecting, labeling, packing, packaging and/or warehousing of any Products, or
any part thereof, as well as associated activities, in accordance with the
Specifications and the terms and conditions of this Supply Agreement, in each
case, by Supplier or any of Supplier's Affiliates. The terms "MANUFACTURE" and
"MANUFACTURED" will have the appropriate derivative meanings.
1.16 "MATERIALS" means works in progress and raw and packaging
materials related to the Business.
1.17 "PERSON" means (as the context requires) an individual, a
corporation, a partnership, an association, a trust, a limited liability
company, or other entity or organization, including a Governmental Entity.
1.18 "PRODUCTS" means collectively, except where specifically qualified
in this Supply Agreement, the Liquid Product and the Lozenge Product SKU's of
the Business and the Bulk Lozenge Product of the Business produced as of the
Signing Date of this agreement for sale in the United States and Canada, and set
forth on Schedules 1.03, 1.12 and 1.13 respectively, whether Manufactured or
Contract Manufactured as of the effective date of this Supply Agreement,
together with any Alterations and/or Modifications. For purposes of
clarification, the term Products does not include the UltraChloraseptic product
produced and sold in the United Kingdom, liquid products topped with sample
lozenges ("Toppered Products"), special pack products or displays.
1.19 "PRODUCT CATEGORY" means the particular type of Product. For
purposes of this Supply Agreement, a Product may be categorized as one of the
following: Liquid Product, Lozenge Product or Bulk Lozenge Product as defined
herein.
1.20 "SIGNING DATE" means the date this Supply Agreement is signed.
1.21 "SKUS" means Stock Keeping Units.
1.22 "SPECIFICATIONS" means the procedures, requirements, formula(e)
and standards related to Products employed by or on behalf of Supplier as of the
Signing Date and provided to Buyer under the Sale Agreement, as amended pursuant
to this Supply Agreement.
1.23 "SUPPLIER'S PLANT" means that portion of Supplier's and Supplier's
Affiliates' facilities located in Greensboro, North Carolina and Gross Gerau,
Germany that is used in the Manufacture of Products and/or such other facilities
of Supplier or Supplier's Affiliates as may be used in the Manufacture of
Products.
1.24 "SUPPLY PERIOD" means that period commencing on February 1, 2001
and running until either party terminates pursuant to Article XV of this Supply
Agreement.
1.25 OTHER DEFINITIONS. Other terms defined in this Agreement, and the
location where they are defined, are:
2.01 SUPPLIER'S OBLIGATIONS. Subject to the limitations and conditions
of this Supply Agreement, during the applicable Supply Period, Supplier will
Manufacture, or arrange for the Contract Manufacture of, and sell to Buyer
Buyer's requirements (up to the maximum set forth in Schedule 2.02) of Products.
Except as set forth in Section 7.01 herein, Supplier will be responsible for
ensuring that all Product sold to Buyer hereunder complies with Specifications.
2.02 BUYER'S OBLIGATIONS. Subject to the limitations and conditions of
this Supply Agreement, during the applicable Supply Period, Buyer will purchase
from Supplier Buyer's requirements (up to the maximums set forth in Schedule
2.02) of Products within the applicable Product Category, at the prices set
forth on Schedule 9.01 or at such other prices as may be determined in
accordance with this Supply Agreement. Buyer will also be responsible for paying
certain other expenses, as expressly set forth elsewhere in this Supply
Agreement.
2.03 PURCHASE ORDER REQUIREMENTS. Subject in all respects to
Article III of this Supply Agreement, all Manufacturing or Contract
Manufacturing under this Supply Agreement will be covered by a written purchase
order in a form mutually acceptable to Buyer and Supplier (a "Firm Written
Purchase Order"). The terms of this Supply Agreement will govern the performance
of all firm purchase orders and, in the event of any inconsistency between this
Supply Agreement and any firm purchase order, this Supply Agreement will
prevail.
ARTICLE III
FORECASTS/ORDERS/LOCATIONS
3.01 BUYER FORECAST. Pursuant to the terms of the Transitional Supply
Agreement, Buyer will be submitting to Supplier a forecast of its requirements
of Products, by month, for the entire Transitional Supply Period. Buyer will be
providing an eighteen (18) month rolling forecast ("Forecast") that will be
updated monthly, and Buyer will continue this process of
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providing and updating the Forecast under this Supply Agreement for the Supply
Period. Such monthly updates will be provided to Supplier on the 15th of each
calendar month.
3.02 SUBSEQUENT FIRM WRITTEN PURCHASE ORDERS. In addition to the
Forecast set forth above in Section 3.01, Buyer will deliver to Supplier Firm
Written Purchase Orders for Buyer's requirements. Such Firm Written Purchase
Orders will be in the form set forth in Schedule 3.02 and for the Liquid Product
must be received twelve (12) weeks prior to the date set forth in such Firm
Written Purchase Order for delivery of such Products; and for the Lozenge
Product and Bulk Lozenge Product must be received sixteen (16) weeks prior to
the date set forth in such Firm Written Purchase Order for delivery of such
Products. Pursuant to these conditions, and to the maximums set forth in
Schedule 2.02, Supplier will manufacture and Buyer will arrange to pick-up
Products to fulfill such Firm Written Purchase Orders.
3.03 REPORTS BY SUPPLIER. If requested by Buyer, Supplier will use
commercially reasonably efforts to provide Buyer with quarterly reports on raw
materials, packing material and finished Products reflecting Manufacturing,
Contract Manufacturing, shipments, inventories, and non-binding projections
related thereto.
3.04 CHANGE TO PARTIAL OR FULL CONTRACT MANUFACTURING OR RELOCATION OF
MANUFACTURING. Unless otherwise agreed to by the parties, if Supplier shall
relocated any Manufacturing or Contract Manufacturing to facility(ies) different
from the facility(ies) currently Manufacturing or Contract Manufacturing or if
Supplier shall decide to switch from Manufacturing Products to partial or full
Contract Manufacturing of Products, Supplier will provide Buyer with six (6)
months prior written notice of such change provided that no such relocation or
change shall affect Supplier's agreements or obligations hereunder.
ARTICLE IV
MATERIALS AND EQUIPMENT; CAPACITY
4.01 SOURCES OF MATERIALS. During the Supply Period, Supplier will
source or arrange for the sourcing of all raw and packaging materials required
for Manufacturing or Contract Manufacturing Products from vendors reasonably
selected by or on behalf of Supplier consistent with Supplier's ordinary past
business practices and in quantities reasonably calculated to meet Buyer's
Orders in a cost-effective manner. Supplier agrees to maintain adequate
inventories of raw materials and componentry reasonably calculated to meet the
reasonable requirements of Buyer in a timely manner. Supplier agrees to use
commercially reasonable efforts to obtain competitive pricing.
4.02 NORMAL REPAIR AND REPLACEMENT OF EQUIPMENT. Supplier will be
responsible for all repairs and replacement of equipment or facilities used in
the Manufacture of Products at Supplier's Plant.
4.03 CAPACITY. Supplier is not required to install additional
production capacity or additional production lines to perform its supply
obligations hereunder.
4.04 MATERIAL SUPPLY. In the event that Supplier cannot, or does not,
pursuant to Sections 2.01, 15.01 or 15.02 of this Supply Agreement, continue to
produce Buyer's requirements, Supplier will use commercially reasonable efforts
to separately supply Materials
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for Buyer's use at other contract manufacturers to produce Buyer's requirements.
Notwithstanding the foregoing, Buyer's use of the Materials at another
manufacturer is subject to Section 12.02 below.
ARTICLE V
SHIPPING AND USE OF MATERIALS
5.01 SHIPPING.
(a) LIQUID PRODUCT. Buyer will arrange for the shipment of
Liquid Product in full truckload quantities (on common carriers selected by
Buyer), where possible, and at Buyer's expense (including without limitation any
duties payable in respect of any shipment) and risk of loss from the Supplier's
Warehouse or Contract Plant or Contract Warehouse (i.e., F.O.B. Supplier's
Warehouse or F.O.B. Contract Plant or Contract Warehouse). Buyer will be
responsible for all actual reasonable costs and expenses of month-to-month
storage and warehousing of Liquid Products, whether stored or warehoused at
Supplier's Warehouse, any Contract Warehouse or Contract Plant or elsewhere.
Buyer must arrange to pick up its ordered requirements from Supplier's Warehouse
or Contract Plant or Contract Warehouse on the Deliver Date specified in the
Firm Written Purchase Order.
(b) LOZENGE PRODUCT AND BULK LOZENGE PRODUCT. Supplier will
arrange for the shipment of Lozenge Product and Bulk Lozenge Product in full
seatainer quantities (on common carriers selected by Supplier), where possible,
and at Buyer's expense (including without limitation any duties payable in
respect of any shipment) from Gross Gerau, Germany to the respective port of
entry ["Port(s) of Entry"] in North America. Buyer will arrange for the shipment
of Lozenge Product and Bulk Lozenge Product in full truckload quantities (on
common carriers selected by Buyer), where possible, and at Buyer's expense
(including without limitation any duties payable in respect of any shipment) and
risk of loss from the respective port of entry Port(s) of Entry where the
Lozenge Product and Bulk Lozenge Product are delivered from Gross Gerau,
Germany. Buyer will be the importer of record for the Lozenge Product and Bulk
Lozenge Product. Buyer will be responsible for all actual reasonable costs and
expenses of month-to-month storage and warehousing of Lozenge Product and Bulk
Lozenge Product, whether stored or warehoused at the Ports of Entry, Supplier's
Warehouse, any Contract Warehouse or Contract Plant or elsewhere. Buyer must
arrange to pick up its ordered requirements from the Ports of Entry, Supplier's
Warehouse or Contract Plant or Contract Warehouse on the Delivery Date specified
in the Firm Written Purchase Order.
5.02 ORDER OF USE FOR RAW AND PACKAGING MATERIALS AND INVENTORY BY
SUPPLIER. Supplier will, and will cause any Contract Manufacturer to, use raw
and packaging materials on a first-in, first-out basis ("FIFO") consistent with
past ordinary business practices. Any Products Materials as of the Effective
Date will likewise be used first to satisfy Buyer's requirements.
5.03 COMMON CARRIER CLAIMS. All claims by or to common carriers in
connection with Products will be the responsibility of Buyer, except to the
extent any such claim by a common carrier is the proximate result of the
negligence, gross negligence or intentional misconduct of, or breach of this
Supply Agreement by, Supplier.
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5.04 PALLETS. Liquid Product will be shipped to Buyer on CHEP pallets.
Lozenge Product and Bulk Lozenge Product will be shipped to Buyer on UK pallets.
Buyer will, at its discretion, either pay Supplier for such pallets at actual
cost or establish a lease contract for such pallets directly with the applicable
third party.
ARTICLE VI
CHANGES TO SPECIFICATIONS
6.01 ALTERATIONS. During the Supply Period, Buyer may alter the
Specifications for artwork and label copy of Products ("Alterations") by
utilizing the Cost and Feasibility Process set forth below in Section 6.04 in
order to seek the necessary prior written consent of Supplier, which consent
will not be unreasonably withheld. Once an Alteration has been approved, Buyer
will provide a finished artwork directly to the Packaging Materials Suppliers
designed by Supplier. Once the artwork has been received by the Packaging
Materials Suppliers, the process to order the materials and have the materials
in the plant requires ten (10) weeks. Buyer will be responsible at the time of
consent for:
(a) providing materials required or prudent for implementation
of such Alterations, including, without limitation, artwork and cylinders;
(b) having secured from any Governmental Entity any approvals
that may be necessary in connection with any Alteration;
(c) any resulting increases in costs; and
(d) all liabilities, costs or expenses, including, without
limitation, those of third parties, arising out of or related to Alterations,
including, without limitation, those related to the failure or alleged failure
of the Alterations to comply with applicable laws and regulations, provided the
alterations are implemented by Supplier in accordance with the new
specifications; and
(e) all scrapping costs associated with any Alterations.
6.02 BUYER'S MODIFICATIONS. All changes to Specifications, including,
but not limited to, new product SKU introductions (collectively
"Modifications"), require the prior written consent of Supplier, such consent
not to be unreasonably withheld. Buyer will utilize the Cost and Feasibility
Process set forth below in Section 6.04 in order to seek the necessary prior
written consent of Supplier. Buyer will be responsible for any costs and
expenses associated with such Modifications, including, but not limited to any
testing required for such Modifications and any costs and expenses thereof.
6.03 SUPPLIER MODIFICATIONS. If Supplier initiates a change in
packaging and Buyer agrees to such change, Supplier will bear the cost of any
change parts and any cost increase or decrease in the production of the
Product(s) will be passed through to Buyer.
6.04 COST AND FEASIBILITY PROCESS. Any Modifications or Alterations
requests from Buyer are subject to Supplier's cost and feasibility determination
as to whether such modification can be accomplished ("Cost and Feasibility
Process"). Supplier will provide Buyer
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with the cost and feasibility form set forth on Schedule 6.04 for submitting
requests for such Modifications or Alterations to Supplier's Cost and
Feasibility Process. Supplier will respond to Buyer's cost and feasibility
request within four (4) weeks of receipt of the cost and feasibility form.
ARTICLE VII
QUALITY ASSURANCE
7.01 QUALITY CONTROL TESTS. Supplier will perform or cause to be
performed quality control tests and assays on raw and packaging materials and on
Liquid Product, Lozenge Product and Bulk Lozenge Product in accordance with
Specifications. Buyer will perform or cause to be performed quality control
tests associated with any sampling uses of the Bulk Lozenge Product.
7.02 STABILITY TESTS. Supplier will maintain a stability testing
program for the Products.
7.03 BUYER INSPECTIONS. Supplier will permit Buyer's designated
representatives to inspect and visit the Chloraseptic-related portion of
Supplier's Plant from time to time for the purpose of determining compliance
with this Supply Agreement. Such inspections will occur during regular business
hours after at least twenty-four (24) hours written notice to Supplier. Buyer
will not disrupt Supplier's operations. Buyer's designated representatives will
be permitted to inspect and visit from time to time any Contract Plant for the
purpose of determining Supplier's compliance with this Supply Agreement, if, and
only to the extent, Supplier obtains the applicable Contract Manufacturer's
consent.
7.04 BUYER TESTS. At Buyer's request, Supplier will cause to be sent,
at Buyer's expense, a reasonable number of Product samples to Buyer for
examination and testing, at Buyer's expense, to assure conformity with
Specifications.
ARTICLE VIII
COMPLIANCE WITH LAWS
8.01 LAWS RELATED TO MANUFACTURING. Supplier will maintain all
necessary permits, licenses and certifications necessary for the Manufacturing
of the Product. Supplier will comply with laws and regulations relating to
environmental matters, wages and hours, equal employment opportunity, tax
withholding on payrolls, working and sanitary conditions and workers'
compensation, in each case, as well as all other applicable laws, regulations,
ordinances and other rules of the federal, state or local authorities, with
respect to maintenance and operation of Supplier's Plant, except where not
material.
8.02 LAWS RELATED TO PRODUCTS. Notwithstanding Section 8.01, Buyer will
be responsible for complying in all material respects with all other laws and
regulations relating to Products (without regard to whether such Products have
been the subject of any Alteration or Additional Modification), including,
without limitation, laws relating to the registration, identification,
formulation, transportation, labeling, sale, marketing or distribution of
Products. Buyer will be responsible for conducting product recalls and for other
duties and obligations imposed by law, rule or regulation arising from or
related to Product purchased by Buyer from Supplier during the Term hereof.
Buyer will also be responsible for documentation,
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investigation and action regarding drug adverse events, reports and records, and
the like, arising from or related to Buyer's sales of the Products during the
Term hereof.
ARTICLE IX
PRICE
9.01 PRICING AND COST ASSUMPTIONS. Schedule 9.01 sets forth, by SKU,
the price Buyer will pay Supplier for Products. Schedule 9.01 also sets forth
major assumptions concerning the costs of Products (collectively "Manufacturing
Costs"). Supplier will adjust any raw materials and packaging costs on a
quarterly basis and will adjust any other manufacturing costs on an annual
basis, on or before July 1st of each calendar year. In the event of any increase
or decrease in the Manufacturing Costs (including, without limitation, cost
changes associated with any decision by Supplier to switch from Manufacturing
Products to partial or full Contract Manufacturing of Products), Supplier will
pass such increase or decrease through to Buyer, such that the price Buyer will
pay Supplier for Products will reflect such increase or decrease. In accordance
with Supplier's adjustment of these costs, Supplier will notify Buyer in writing
of any such increase or decrease in raw materials and packaging costs on a
quarterly basis, and will notify Buyer in writing of any such increase or
decrease in other manufacturing costs of an annual basis, on or before July 1st
of each calendar year. The notice will include:
(a) the reason for the increase or decrease;
(b) the date when the increase or decrease will take effect; and
(c) the amount of the increase or decrease.
Supplier will use its reasonable efforts to minimize cost increases
consistent with its ordinary past business practices; provided, however,
that this requirement will not limit Supplier's ability to switch from
Manufacturing Products to partial or full Contract Manufacturing of
Products.
ARTICLE X
PAYMENT
10.01 INVOICING AND PAYMENT. Supplier will send Buyer an invoice for
each shipment of Products. All invoices will be based upon the bill of lading
describing the Products and quantity of Products shipped to Buyer. Buyer will be
responsible for paying each invoice within thirty (30) calendar days after the
date of such invoice and payment will not be delayed pending delivery of
Products by any common carrier or resolution of any disputes between Buyer and
any common carrier regarding the shipment. Buyer will pay Supplier a late
payment charge of twelve percent (12%) per annum on any payment not received
within thirty (30) calendar days of the date of the relevant invoice; provided,
however, that Buyer will not owe any late payment charge with respect to any
disputed payment amount pending resolution of such dispute. Payment will be made
in US dollars and will be sent to the location designated in advance by
Supplier.
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ARTICLE XI
SUPPLIER'S REPRESENTATIONS, WARRANTIES AND DISCLAIMER
11.01 TITLE TO PRODUCTS. Supplier represents and warrants it will pass
to Buyer good and marketable title to Products, free and clear of all material
liens, claims, security interests and encumbrances of any kind.
11.02 COMPLIANCE WITH SPECIFICATIONS AND GMP'S. Supplier represents and
warrants the Products will be in compliance with Specifications within normal
variation at the time such Products are delivered to the common carrier for
shipment to Buyer, and will have been produced in accordance with then-current
Good Manufacturing Practices.
11.03 LIMITATION OF WARRANTIES. SUPPLIER MAKES NO WARRANTY, OTHER THAN
THE WARRANTIES SET FORTH HEREIN OR IN THE SALE AGREEMENT. THE WARRANTIES SET
FORTH HEREIN AND THEREIN ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE XII
INTELLECTUAL PROPERTY
12.01 OWNERSHIP OF INTELLECTUAL PROPERTY. All intellectual property
constituting Acquired Assets or constituting Excluded Assets shall be owned by
and will at all times be and remain the exclusive property of Buyer or Supplier
(or Supplier's Affiliates), respectively, and this Supply Agreement will not
constitute a license, except to the extent required to fulfill each party's
obligations hereunder.
12.02 LICENSE DURING SUPPLIER SUPPLY TO BUYER. Except as otherwise
agreed in writing by the parties, Supplier grants Buyer a nonexclusive license
under any applicable packaging patents owned by Supplier to use and sell
Products supplied by Supplier to Buyer under this Supply Agreement. This license
will not include any right to repackage any products using said packages
supplied under this Supply Agreement. This license will not apply to any
Products supplied under this Supply Agreement the contents of which have been
modified by Buyer. For avoidance of doubt, it is understood that Buyer will have
no rights, except as set forth in Section 12.03 herein, to make or have made
packages under Supplier's packaging patents.
12.03 LICENSE IF SUPPLIER NO LONGER SUPPLIES BUYER. In the event this
Supply Agreement is terminated pursuant to Paragraph 15.02 and Supplier no
longer supplies Product to Buyer, Supplier grants Buyer a perpetual license to
certain patents dealing with certain child resistant packaging, under the terms
set forth in the License Agreement, in the form attached as Exhibit 12.03, to be
executed concurrently with this Supply Agreement.
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ARTICLE XIII
SUPPLIER'S AND CONTRACT MANUFACTURER'S
USE OF BUYER'S PROPERTY
13.01 BOOKS AND RECORDS. During the Supply Period with respect to any
Product Category, Supplier will be permitted, at no cost to Supplier, to retain
and use any Books and Records transferred to the Buyer pursuant to the Sale
Agreement to the extent reasonably necessary for Supplier to fulfill its
obligations under this Supply Agreement with respect to such Product Category.
ARTICLE XIV
TERM
14.01 TERM. This Supply Agreement will be in effect until either party
terminates this Supply Agreement pursuant to Section 15.01 or Section 15.02.
ARTICLE XV
TERMINATION
15.01 NOTICE OF DEFAULT. In addition to any other rights or remedies
Buyer or Supplier may have under the Sale Agreement or at law or in equity, a
party not in default under this Supply Agreement (the "Non-Defaulting Party")
may terminate this Supply Agreement or any Supply Period by giving written
notice to the other party (the "Defaulting Party") of the Non-Defaulting Party's
intention to terminate this Supply Agreement or any Supply Period upon the
occurrence of either or both of the following events:
(a) a breach by the Defaulting Party of any of its obligations
hereunder; or
(b) the filing by or against the Defaulting Party of a petition
in bankruptcy, or any appointment of a receiver for the Defaulting Party or any
substantial part of its assets, or any assignment for the benefit of the
Defaulting Party's creditors.
Such notice will identify a date for termination of this Supply Agreement
or any Supply Period, which date will not be sooner than five (5) Business
Days after receipt of such notice by the Defaulting Party ("Termination
Date"). If the event on which the notice is based is not cured prior to the
Termination Date, then this Supply Agreement or any Supply Period will
terminate on the Termination Date pursuant to such notice.
15.02 TERMINATION WITHOUT CAUSE. Buyer may terminate early this Supply
Agreement or any Supply Period at any time without cause and without penalty by
giving twelve (12) months prior written notice to Supplier. Notwithstanding the
above, if Buyer terminates in this manner, Buyer will be liable for existing
inventory and Materials.
15.03 EFFECT ON OTHER AGREEMENTS/SURVIVAL OF CERTAIN PROVISIONS.
Termination of this Supply Agreement or any Supply Period will have no effect on
any other agreements between Buyer and Supplier, unless an effect is mutually
and specifically agreed in writing between the parties, and such termination
will not relieve either party of any liability to the other based on acts or
omissions prior to such termination. The following Articles and Sections will
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survive any such termination: Article XI, Article XII, and Sections 15.03,
15.04, 16.03, 16.05, 16.06, 16.07, 16.08, 16.09 and 16.10.
15.04 UNSHIPPED PRODUCTS AND MATERIALS. Upon any termination of this
Supply Agreement or any Supply Period with respect to any Product Category,
Supplier will arrange for the prompt shipment to Buyer at the address(es)
designated by Buyer pursuant to Section 5.01, and Buyer will purchase:
(a) any unshipped Products within such Product Categor(ies) as
of the Termination Date at the price(s) set forth in Schedule 9.01 as modified
pursuant to Section 9.01; and
(b) any unused but usable works in progress or Materials
exclusively related to Products within such Product Categor(ies), at actual
cost.
Buyer will be responsible for paying for the shipment of, and will bear the
risk of loss for, usable Materials and Products to the designated
location(s).
ARTICLE XVI
MISCELLANEOUS
16.01 ENTIRE AGREEMENT. This Supply Agreement constitutes the entire
agreement between Supplier and Buyer with respect to, among other things, the
Manufacture and Contract Manufacture of Products. In the event of any
inconsistency between this Supply Agreement and any subsequently-issued
document, including without limitation, an Order, this Supply Agreement will
prevail.
16.02 TAXES. Buyer and Supplier agree to pay all Taxes assessed on all
materials, excluding Products, to which each of them has title. Buyer will be
responsible for paying all taxes assessed on Products.
16.03 SUPPLIER'S EMPLOYEES AND INDEPENDENT CONTRACTOR STATUS. During the
term hereof, and for a period of two (2) years after the termination of this
Supply Agreement, Buyer will not, and will cause its Affiliates not to, without
Supplier's prior written agreement, directly or indirectly solicit for
employment or hire any employees of Supplier or Supplier's Affiliates who have
worked in connection with the performance of this Supply Agreement. Supplier is
acting pursuant to this Supply Agreement as an independent contractor.
16.04 FORCE MAJEURE. Neither party (the "Affected Party") will be liable
to the other (the "Non-Affected Party") for failure to perform any part of this
Supply Agreement if such failure results from an act of God, war, revolt,
revolution, sabotage, actions of a Governmental Entity, laws, regulations,
embargo, fire, strike, other labor trouble, insolvency or other financial
difficulty of any Contract Manufacturer or any cause beyond the Affected Party's
control. Upon the occurrence of any such event which results in, or will result
in, delay or failure to perform according to the terms of this Supply Agreement,
the Affected Party will promptly give notice to the Non-Affected Party of such
occurrence and the effect and/or anticipated effect of such occurrence. The
Affected Party will use its reasonable efforts to minimize disruptions in its
performance and to resume performance of its obligations under this Supply
Agreement as soon
12
as practicable, provided, however, the resolution of any strike or labor trouble
will be within the sole discretion of the Affected Party.
16.05 NO RIGHT OF SET-OFF. Notwithstanding any other provisions of this
Supply Agreement or any other agreement between the parties, all payments to be
made by either party under this Supply Agreement will be made free of any
set-off and will be promptly remitted to the party entitled to receive payment
hereunder.
16.06 LIMITATION. Any Action pursuant to this Supply Agreement,
including, without limitation, any Action with respect to any indemnify
obligation, must be commenced within five (5) years after the termination of
this Supply Agreement.
16.07 INDEMNIFICATION BY SUPPLIER.
(a) Subject to the terms and conditions of this Supply
Agreement, Supplier will jointly and severally defend, indemnify and hold
harmless Buyer and its affiliates and each of their respective officers,
directors, employees, shareholders, agents and representatives, and their
successors and assigns (collectively the "Buyer Indemnities") from and against
all claims, losses, liabilities, damages, costs and expenses (including without
limitation reasonable fees and expenses of attorneys incurred in investigation
or defense of any Action) (collectively "Claims") arising out of or related to:
(i) Excluded Liabilities as set forth in the Sale Agreement, (ii) any breach of
any covenant or agreement of Supplier contained in this Supply Agreement, (iii)
any negligence, gross negligence, or willful or intentional misconduct by
Supplier or any of its personnel; and (iv) any breach of any representation or
warranty of Supplier contained in this Supply Agreement;
(b) Promptly after receipt by Buyer of notice of any third-party
Action in respect of which indemnity may be sought against Supplier hereunder
(for purposes of this Section 16.07, a "Buyer's Assertion"), Buyer will notify
Supplier in writing of the Buyer's Assertion, but the failure to so notify
Supplier will not relieve Supplier of any liability it may have to Buyer, except
to the extent Supplier has suffered actual prejudice thereby. Supplier will be
entitled to participate in and, to the extent Supplier elects by written notice
to Buyer within thirty (30) days after receipt by Supplier of notice of such
Buyer's Assertion, to assume the defense of such Buyer's Assertion, at
Supplier's own expense, with counsel chosen by them which will be reasonably
satisfactory to Buyer. With respect to any such Buyer's Assertion, Buyer will
promptly provide Supplier with: (i) notice and copies of any documents served
upon Buyer; and (ii) all reasonable cooperation which Supplier deems necessary
to defend such Buyer's Assertion, including, without limitation, providing
Supplier and its outside attorneys access to any potentially relevant documents,
information, or individuals within the control of Buyer, other than any
privileged documents. If business information of Buyer other than that
pertaining to the Business is contained in such documents or information,
Supplier and Buyer will enter into appropriate secrecy commitments to protect
such documents or information. Notwithstanding that Supplier may have elected by
written notice to assume the defense of any Buyer's Assertion, Buyer will have
the right to participate in the investigation and defense thereof, with separate
counsel chosen by Buyer, but in such event the fees and expenses of Buyer (above
those which would otherwise have been incurred) and such separate counsel will
be paid by Buyer.
13
(c) Notwithstanding anything in this Section 16.07 to the
contrary: (i) Supplier will have no obligation with respect to any Buyer's
Assertion if, in connection therewith, Buyer, without the written consent of
Supplier, which consent will not be unreasonably withheld, settles or
compromises any Action or consents to the entry of any judgment; and (ii)
Supplier will not without the written consent of Buyer with respect to any Buyer
Assertion: (A) settle or compromise any Action or consent to the entry of any
judgment which does not include as an unconditional term thereof the delivery by
the claimant or plaintiff to Buyer of a duly executed written release of Buyer
from all liability in respect of such Action, which release will be reasonably
satisfactory in form and substance to counsel for Buyer, or (B) settle or
compromise any Action in any manner that, in the reasonable judgment of Buyer or
its counsel, will adversely affect Buyer other than as a result of money damages
or other money payments.
(d) Upon the payment of any settlement or judgment pursuant to
this Section 16.07 with respect to any Buyer's Assertion, Supplier will be
subrogated to all rights and remedies of Buyer against any third party in
respect of such Buyer's Assertion to the extent of the amount so paid by
Supplier.
(e) The indemnity provided for by this Section 16.07 will be
Buyer's exclusive source of recovery against Supplier with respect to matters
covered hereby.
16.08 INDEMNIFICATION BY BUYER.
(a) Subject to the terms and conditions of this Agreement, Buyer
will defend, indemnify and hold harmless Supplier and its affiliates and each of
their respective officers, directors, employees, shareholders, agents and
representatives, and their successors and assigns (collectively, the "Supplier
Indemnities") from and against all Claims arising out of or related to: (i)
Assumed Liabilities as defined in the Sale Agreement; (ii) any breach of any
covenant or agreement of Buyer contained in this Supply Agreement; and (iii) any
breach of any representation or warranty of Buyer contained in this Supply
Agreement.
(b) Promptly after receipt by Supplier of notice of any Action
in respect of which indemnity may be sought against Buyer hereunder (for
purposes of this Section 16.08, a "Supplier's Assertion"), Supplier will notify
Buyer in writing of the Supplier's Assertion, but the failure to so notify Buyer
will not relieve Buyer of any liability it may have to Supplier, except to the
extent Buyer has suffered actual prejudice thereby. Buyer will be entitled to
participate in and, to the extent Buyer elects by written notice to Supplier
within thirty (30) days after receipt by Buyer of notice of such Supplier's
Assertion, to assume the defense of such Supplier's Assertion, at its own
expense, with counsel chosen by it which will be reasonably satisfactory to
Supplier. With respect to any such Supplier's Assertion, Supplier will promptly
provide Buyer with: (i) notice and copies of any documents upon Supplier; and
(ii) all reasonable cooperation which Buyer deems necessary to defend such
Supplier's Assertion, including without limitation providing Buyer and its
outside attorneys access to any potentially-relevant documents, information, or
individuals within the control of Supplier, other than any privileged documents.
If business information of Supplier other than that pertaining to the Business
is contained in such documents or information, Supplier and Buyer will enter
into appropriate secrecy commitments to protect such documents or information.
Notwithstanding that Buyer may have elected by
14
written notice to assume the defense of any Supplier's Assertion, Supplier will
have the right to participate in the investigation and defense thereof, with
separate counsel chosen by Supplier, but in such event the fees and expenses of
Supplier (above those which would otherwise have been incurred) and such
separate counsel will be paid by Supplier.
(c) Notwithstanding anything in this Section 16.08 to the
contrary: (i) Buyer will have no obligation with respect to any Supplier's
Assertion if, in connection therewith, Supplier, without the written consent of
Buyer, settles or compromises any Action or consents to the entry of any
judgment; and (ii) Buyer will not, without the written consent of Supplier,
which consent will not be unreasonably withheld, with respect to any Supplier's
Assertion: (A) settle or compromise any Action or consent to the entry of any
judgment which does not include as an unconditional term thereof the delivery by
the claimant or plaintiff to Supplier of a duly executed written release of
Supplier from all liability in respect of such Action, which release will be
reasonably satisfactory in form and substance to counsel for Supplier; or (B)
settle or compromise any Action in any manner that, in the reasonable judgment
of Supplier or their counsel, will materially adversely affect Supplier other
than as a result of money damages or other money payments.
(d) Upon the payment of any settlement or judgment pursuant to
this Section 16.08 with respect to any Supplier's Assertion, Buyer will be
subrogated to all rights and remedies of Supplier against any third party in
respect of such Supplier's Assertion to the extent of the amount so paid by
Buyer.
(e) The indemnity provided for by this Section 16.08 will be
Supplier's exclusive source of recovery against Buyer with respect to matters
covered hereby.
16.09 DISPUTE RESOLUTION
(a) Any Action asserted by Supplier against buyer or by Buyer
against Supplier (a "Claim") arising out of or related to this Supply Agreement,
including without limitation any Claim for indemnification pursuant to Sections
16.07 and 16.08 above, hereof or any issue as to whether or not a Claim is
arbitrable, will be resolved pursuant to the procedures described in this
Section 16.09.
(b) Should any Claim arise, Supplier and Buyer will first
attempt to resolve such Claim by entering into good faith negotiations by or
among their appropriate employees or officers. Such negotiations will commence
as soon as practicable after either Supplier or Buyer has received notice from
the other party of such claim, but no later than ten (10) days after such
receipt, and will terminate thirty (30) calendar days after such commencement.
During negotiations, Supplier and buyer will not have the right to any
discovery, unless agreed by each of Supplier and Buyer.
(c) Any Claim which has not been resolved pursuant to Section
16.09(b) of this Agreement will be referred to good faith negotiations by or
among one or more officers of Supplier and Buyer. Such negotiations will
commence as soon as practicable after termination of the negotiations described
in Section 16.09(b), but not later than ten (10) business day thereafter, and
will terminate thirty (30) calendar days after such commencement. During the
15
negotiations, Supplier and Buyer will not have the right to any discovery,
unless agreed by Supplier and Buyer.
(d) Any Claim which has not been resolved pursuant to Section
16.09(c) of this Agreement will be determined by arbitration. The arbitration
will be conducted by one arbitrator, who will be appointed pursuant to the
Commercial Arbitration Rules of the American Arbitration Association (AAA). The
arbitration will be held in Cincinnati, Ohio and will be conducted in accordance
with the Commercial Arbitration rules of the AAA, except that the rules set
forth in this Section 16.09(d) will govern such arbitration to the extent they
conflict with the rules of the AAA. Supplier and Buyer will use their best
efforts to cause the arbitration to be conducted in an expeditious manner.
Supplier and Buyer will use their best efforts to cause the arbitration to be
completed within sixty (60) days after selection of the arbitrator. In the
arbitration, Delaware law will govern, except to the extent that those laws
conflict with the Commercial Arbitration Rules of the AAA and the provisions of
this Section 16.09(d). There will be no discovery, except as the arbitrator will
permit following a determination by the arbitrator that the person seeking such
discovery has a substantial, demonstrable need. All other procedural matters
will be within the discretion of the arbitrator. In the event a Person fails to
comply with the procedures in any arbitration in a manner deemed material by the
arbitrator, the arbitrator will fix a reasonable period of time for compliance
and, if the Person does not comply within said period, a remedy deemed just by
the arbitrator, including an aware of default, may be imposed. The determination
of the arbitrator will be final and binding on the Supplier and Buyer. Judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
16.10 DAMAGE LIMITATIONS. Notwithstanding anything to the contrary in
this Agreement, none of Supplier's Indemnified Parties nor Buyer's Indemnified
Parties will be permitted to recover any consequential, indirect, special or
punitive damages arising out of or related to this Agreement, regardless of the
form of the Claim or Action, including without limitation Claims or Actions for
indemnification, tort, breach of contract, warranty, representation or covenant.
16.11 SUCCESSORS AND ASSIGNS. This Supply Agreement will be binding upon
and will inure to the benefit of the signatories hereto and their respective
successors and permitted assigns. Neitherof Supplier nor Buyer may assign this
Supply Agreement, or any of their rights or liabilities thereunder, without the
prior written consent of the other parties thereto, provided that Supplier and
Buyer may so assign, in whole or in part, to one or more of their Affiliates.
Any such assignment will not relieve the party making the assignment from any
liability under such agreements.
16.12 NOTICES. All notices required or permitted to be given under this
Supply Agreement will be in writing and will be deemed to be properly given when
actually received by the Person entitled to receive the notice at the address
stated below, or at such other address as Supplier or Buyer may provide by
notice to the other:
SUPPLIER:
The Procter & Gamble Manufacturing Company
The Procter & Gamble Manufacturing Company
One Procter & Gamble Plaza
Cincinnati, Ohio 45202
Attention: Associate General Counsel - Healthcare
Telephone: (513) 983-6084
Fax: (513) 983-4274
BUYER:
Prestige Brands International, Inc.
26811 South Bay Drive
Suite 300
Bonita Springs, FL 34134
Attention: Ted Host
Telephone: (941) 948-8545
Fax: (941) 948-8551
With a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219
Attention: Daniel M. LeBay, Esq.
Telephone: (804) 788-8200
Fax: (804) 788-8218
IN WITNESS WHEREOF, the parties have signed this Supply Agreement on the date
set forth below.
SUPPLIER: BUYER:
THE PROCTER & GAMBLE MANUFACTURING PRESTIGE BRANDS INTERNATIONAL, INC.
COMPANY
By: By:
------------------------------------ ----------------------------------------
Name printed: Name printed:
------------------------------------ ----------------------------------------
Title: Title:
------------------------------------ ----------------------------------------
Date: Date:
------------------------------------ ----------------------------------------
17
P&G INTERNATIONAL OPERATIONS SA PRESTIGE BRANDS INTERNATIONAL (CANADA),
CORP.
By: By:
------------------------------------ ----------------------------------------
Name printed: Name printed:
------------------------------------ ----------------------------------------
Title: Title:
------------------------------------ ----------------------------------------
Date: Date:
------------------------------------ ----------------------------------------
18
Portions of this Exhibit were omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment. Such
portions are marked by a series of asterisks.
SCHEDULE 1.04
BULK LOZENGE PRODUCT
BULK LOZENGES IN DRUMS
cherry
menthol
SCHEDULE 1.13
LIQUID PRODUCT
OPEN STOCK LIQUID
FINISHED PRODUCT:
# per
physical
Brand Codes Description cases
----------- ----------- --------
69350 U.S. Cherry Liquid 6oz. 12
07195 U.S. Menthol Liquid 6oz. 12
04712 U.S. Cool Mint Liquid 6oz. 12
64535 U.S. Cherry Liquid 1oz. 24
67936 Canada Cherry Liquid 175mL (6oz.) 12
67937 Canada Menthol Liquid 175mL (6oz.) 12
Requirements requested by Buyer in the Firm Written Purchase Order will not
exceed the forecast by the following amounts:
Months 1 and 2: Fixed
Months 3 and 4: 10%
Months 5 and 6: 25%
Supplier will be open to consider deviations beyond this on a case-by-case basis
and will use commercially reasonable efforts to accommodate such deviations.
If Buyer's annual requirements are forecasted to increase more than 10% versus
previous year, Buyer and Supplier agree to develop a mutually agreeable plan to
meet the demand.
SCHEDULE 3.02
FORM OF FIRM WRITTEN PURCHASE ORDER
PRESTIGE BRANDS INTERNATIONAL
PURCHASE ORDER
TO: PROCTER & GAMBLE SHIP TO:
tbd
DATE PICK UP DATE SHIP VIA PURCHASE ORDER NO.
SHIPMENTS BY WEEK*
This LICENSE AGREEMENT by and between The Procter & Gamble Company, an Ohio
corporation (collectively with its affiliates, "P&G"), and Prestige Brands
International, Inc., a Virginia corporation, (collectively with its Affiliates
"PRESTIGE"). This LICENSE AGREEMENT will have an effective date of February 1,
2001 ("EFFECTIVE DATE"). Supplier and Buyer are sometimes collectively referred
to herein as "parties" and individually as "party."
BACKGROUND OF THE AGREEMENT
PRESTIGE and P&G have entered into an Asset Sale and Purchase Agreement, dated
March 30, 2000 ("SALE AGREEMENT"), pursuant to which PRESTIGE purchased certain
assets; and on the same day, PRESTIGE and P&G simultaneously entered into a
Transitional Services Agreement to expire June 30, 2000 and a Transitional
Supply Agreement to expire January 31, 2001.
Under the terms of the SALE AGREEMENT, in addition to having agreed to negotiate
in good faith a long term supply agreement governing the supply of certain
product by P&G for a period after January 31, 2001, the PARTIES also agreed to
negotiate in good faith a license agreement governing the licensing by P&G to
PRESTIGE of certain child resistant packaging technology, said license to become
effective in the event P&G no longer supplies the subject product to PRESTIGE.
The parties have negotiated and on this day are simultaneously entering into the
long term supply agreement ("SUPPLY AGREEMENT") to which this LICENSE AGREEMENT
is an exhibit.
In consideration of the mutual representations, warranties, covenants,
agreements and conditions contained herein, the PARTIES agree as follows:
1. DEFINITIONS.
1.1. GENERAL. The capitalized terms defined herein shall have the
meanings indicated for purposes of this LICENSE AGREEMENT;
non-capitalized terms have no limit as to subject matter or scope.
1.2. "AFFILIATE" means, with respect to a Person, another Person
that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such
Person. "Control," whether or not capitalized, means, with respect to
a Person, the ownership by another Person of greater than 50% of the
income or voting interests of such Person or such other Person of
greater than 50% of the income or voting interests of such Person or
such other arrangement as constitutes the direct or indirect ability
to direct the management, affairs or actions of such Person.
1.3. "LICENSE AGREEMENT" means this agreement.
1.4. "LICENSED FIELD" means packaging for the Liquid Product.
1.5. "LICENSED PATENTS" means those patents, patent applications
and patents issuing therefrom specifically set forth in Appendix A.
1.6. "LICENSED PACKAGING" means packaging having a bottle, closure,
and seal as generally set forth in Appendix B; and employing a child
resistant means as specifically set forth in Appendix B; and covered
by and/or produced using a process or method covered by, one or more
claims of LICENSED PATENTS.
1.7. "LIQUID PRODUCT" means the oral anesthetic liquid finished
open stock product produced as of the Signing Date of the SUPPLY
AGREEMENT for sale in the United States and Canada that is set forth
on Schedule 1.12 of the SUPPLY AGREEMENT, together with any
Alterations and/or Modifications.
1.8. "OTHERWISE DISPOSED OF" means the transfer of a UNIT by
PRESTIGE to a THIRD PARTY (except for purposes of scrapping),
irrespective of the form of consideration received by PRESTIGE.
1.9. "PARTY" means either PRESTIGE or P&G, and "PARTIES" means the
two collectively.
1.10. "PERSON" means (as the context requires) an individual, a
Corporation, a partnership, an association, a trust, a limited
liability company, or other entity or organization, including a
governmental entity.
1.11. "PERSONNEL" means, as applied to PRESTIGE or P&G, officers,
employees, consultants, agents, contractors or others hired by or
retained by the respective PARTY.
1.12. "TERRITORY" means the United States and Canada.
1.13. "THIRD PARTY" means any individual, corporation, association
or other entity, which is not a PARTY.
1.14. "UNIT" means a single LICENSED PACKAGING.
1.15. Other Terms. Other terms defined in this LICENSE AGREEMENT, and
the location where they are defined, are:
"LIABILITY" Paragraph 9.1
"LICENSE" Paragraph 2.1
"SALE AGREEMENT" Page 1, second paragraph
"SUITS" Paragraph 9.1
2. GRANT
2.1. LICENSE GRANT. Effective pursuant to Paragraph 2.2, P&G
conditionally grants PRESTIGE a non-exclusive license to make, have
made, use, and sell LICENSED PACKAGING in the TERRITORY under LICENSED
PATENTS solely in the LICENSED FIELD; said license shall not include
the right to sublicense ("LICENSE").
2.2. CONDITION AND EFFECTIVE DATE OF LICENSE GRANT. The LICENSE
shall automatically be granted upon condition of, and become effective
as of the date of, termination of the SUPPLY AGREEMENT under Paragraph
15.02 of the SUPPLY AGREEMENT and whereupon such termination P&G no
longer supplies LICENSED PACKAGING to PRESTIGE.
3. ROYALTIES
3.1. RUNNING ROYALTY. In consideration for the LICENSE granted
herein, PRESTIGE shall pay P&G a running royalty of ***.
4. PAYMENTS
4.1. STATEMENTS AND DUE DATE. Not later than the fifteenth (15th)
day of each February and August, PRESTIGE shall both: furnish to P&G a
written statement in such detail as P&G may reasonably require (but in
any case providing the number of UNITS sold or OTHERWISE DISPOSED OF
during the period) of all amounts due under this LICENSE AGREEMENT for
the semiannual periods ending the last days of the preceding December
and June, respectively; and pay to P&G all amounts due to P&G. If no
amount is accrued during any semiannual period, a written statement to
that effect shall be furnished.
4.2. ELECTRONIC FUND TRANSFER. All monies due P&G under this
LICENSE AGREEMENT shall be paid by electronic fund transfer to an
account to be identified by written notice to PRESTIGE. PRESTIGE shall
bear all charges associated with the electronic fund transfers.
4.3. OVERDUE PAYMENTS. Payments provided for in this Article 4,
when overdue, shall bear interest compounded daily at a rate per annum
equal to four percent (4%) in excess of the "prime rate" published by
"The Wall Street Journal" at the time such payment is due, and for the
time period beginning on the due date and ending on the date payment
is received by P&G.
28
4.4. EFFECT OF TERMINATION. If the LICENSE for any reason is
terminated before all of the payments provided for in this Article 4
have been made, PRESTIGE shall immediately submit a terminal report
and pay to P&G any remaining unpaid balance even though the due date
as above provided has not been reached.
4.5. WITHHOLDING TAX. In the event and to the extent that any
payment under this LICENSE AGREEMENT is subject to a withholding tax
under the law of the country from which the payment is made, and a
treaty exists between that country and the country where the payment
is received, PRESTIGE shall be permitted to make such a deduction from
the payment made to P&G hereunder. PRESTIGE shall, for each such
deduction, obtain from the relevant government authority a certificate
or other documentary evidence of such deduction to enable P&G to
recover the amount of tax or otherwise avoid double taxation on the
payments.
5. Records
5.1. RECORDS. PRESTIGE shall keep and maintain at its regular place
of business complete books and records of all business transactions by
PRESTIGE in connection with LICENSED PACKAGING, including, but not
limited to books and records relating to shipments, orders and sales
of the LICENSED PACKAGING. Such records shall be retained by PRESTIGE
for at least five (5) years following the year to which they pertain.
5.2. INSPECTION OF RECORDS. P&G, or its duly authorized agents or
representatives, shall have the right to inspect said books and
records at PRESTIGE's premises during regular business hours, provided
that P&G shall give PRESTIGE at least ten (10) days advance written
notice of its intention to do so. P&G may only inspect PRESTIGE's
records once per calendar year and may not inspect the same records
twice. PRESTIGE shall pay P&G the amount of any underpayment of
royalties with interest of Twelve Percent (12%) per year within
fifteen (15) business days after the determination of the amount of
such underpayment. P&G shall credit the amount of any overpayment of
royalties made by PRESTIGE to the next royalty payment due after the
determination of such overpayment. In the event of any dispute between
the PARTIES as to the amount of any underpayment or overpayment of
royalties, the PARTIES shall select an independent THIRD PARTY auditor
("AUDITOR") who shall inspect the PARTIES' books and records relating
to any alleged underpayment or overpayment of royalties and whose
determination with respect hereto shall be definitive and final. If
the AUDITOR determines that there was a net underpayment or
overpayment of royalties, then PRESTIGE shall either pay to P&G the
amount of any such underpayment or P&G shall credit PRESTIGE the
amount of any such overpayment as set forth above. If the AUDITOR
finds in favor of P&G's calculations of royalties due and owing, then
PRESTIGE shall bear the costs and fees of the AUDITOR; if the AUDITOR
finds in favor of PRESTIGE's calculations of royalties due and owing,
then P&G shall bear the costs and fees of the AUDITOR. If the AUDITOR
does not find in favor of either
29
PARTY's calculation, then the PARTIES shall share equally the costs
and fees of the AUDITOR.
6. MARKING
6.1. MARKING. PRESTIGE shall place in a conspicuous location, on
any product made or sold under LICENSED PATENTS, a patent notice in
accordance with the applicable patent marking laws of the country in
which the product is made and/or sold, should such marking serve as
legal notice to would-be infringers.
7. ENFORCEMENT
7.1. NOTIFICATION OF INFRINGEMENT. In the event PRESTIGE learns of
any potential or alleged infringement of LICENSED PATENTS due to the
manufacture, use, importation, offer for sale or sale ("INFRINGEMENT")
of LICENSED PACKAGING by a THIRD PARTY, PRESTIGE shall promptly advise
P&G of all the relevant facts and circumstances known by PRESTIGE in
connection with the INFRINGEMENT.
7.2. ENFORCEMENT. P&G shall have the right, but not the obligation,
to institute such action as it deems appropriate to terminate the
INFRINGEMENT through negotiation, litigation and/or alternative
dispute resolution means, at its sole discretion and at its sole cost.
The right to institute such an action shall be exclusive to P&G. P&G
shall have the right to select and to control counsel in any action
initiated by P&G. PRESTIGE shall lend its name to the action, and
provide such assistance as may be reasonably necessary. P&G has the
right to settle such action at its sole discretion; any recovery of
damages shall be retained by P&G.
8. REPRESENTATIONS AND WARRANTIES
8.1. REPRESENTATIONS AND DISCLAIMER OF WARRANTIES. Nothing in this
LICENSE AGREEMENT shall be deemed to be a representation or warranty
by P&G of the accuracy, safety, or usefulness for any purpose of any
technical information, techniques, or practices at any time made
available by P&G; nor to the patentability or validity of any patent
applications or granted patents licensed by P&G. P&G shall have no
liability whatsoever to PRESTIGE or any other person for or on account
of any injury, loss, or damage, of any kind or nature, sustained by,
or any damage assessed or asserted against, or any other liability
incurred by or imposed on PRESTIGE or any other person, arising out of
or in connection with or resulting from (a) the production, use, or
sale of any apparatus or product, or the practice of the subject
licensed patent rights; (b) the use of any technical information,
techniques, or practices disclosed by P&G; or (c) any advertising or
other promotional activities with respect to any of the foregoing, and
PRESTIGE shall hold P&G or its PERSONNEL harmless in the event P&G or
its PERSONNEL is held liable. Additionally, neither PARTY shall be
liable in
30
any circumstances whatsoever (including liability for negligence or
other tortious act or omission) for (a) any loss of profit, loss of
contract or loss of goodwill; or (b) any indirect or consequential
loss. P&G shall not have any liabilities or responsibilities
whatsoever with respect to LICENSED PACKAGING.
9. INDEMNIFICATION
9.1. INDEMNIFICATION. PRESTIGE agrees to indemnify, hold harmless and
defend P&G and its PERSONNEL, against any and all claims, suits,
actions, or demands ("SUITS") for any liability, damage or loss,
including, but not limited to, death, illness, losses, property
damage, costs, fees, and expenses ("LIABILITY") resulting or alleged
to result from or arising out of exercise of the licenses granted
herein or the LICENSED PACKAGING made, used, and/or sold under this
LICENSE AGREEMENT by PRESTIGE. In the event of a SUIT against P&G
which might give rise to a claim of indemnification hereunder, P&G
shall promptly notify PRESTIGE. At its own expense, PRESTIGE shall
have the right to control the resolution of such SUIT by intervention
or otherwise. P&G will cooperate fully to reach disposition or
settlement of the issue.
10. TERMINATION
10.1. TERMINATION. The LICENSE shall terminate upon the expiration
of the last to expire LICENSED PATENT covering LICENSED PACKAGING,
unless the LICENSE AGREEMENT is terminated sooner.
10.2. PRESTIGE TERMINATION. PRESTIGE may terminate this LICENSE
AGREEMENT (including payment obligations hereunder) at any time by
providing written notice to P&G. Upon PRESTIGE'S provision of notice
of such termination, the LICENSE granted to PRESTIGE will terminate
and such rights will revert back to P&G. Notwithstanding the above, in
the event of any such Termination, Prestige will still make payments
due pursuant to Section 4.4 above.
10.3. P&G TERMINATION. P&G may terminate this LICENSE AGREEMENT
after written notice to PRESTIGE if PRESTIGE is in material breach of
this LICENSE AGREEMENT providing that PRESTIGE shall have thirty (30)
days after receipt of such written notice to take prudent and
reasonable steps to cure the material breach. Furthermore, should
PRESTIGE fail to cure the material breach within a reasonable time,
termination of the LICENSE AGREEMENT shall be stayed pending
resolution of any dispute pursuant to Article 10, if a request for
arbitration pursuant to Article 11 is made by PRESTIGE within such
thirty (30) day period. Notwithstanding the above, in the event of any
such Termination, Prestige will still make payments due pursuant to
Section 4.4 above.
11. ARBITRATION
11.1. ARBITRATION OF DISPUTES. Any controversy or dispute arising
out of or in connection with this LICENSE AGREEMENT, its
interpretation, performance, or termination, but not including
validity or enforceability of LICENSED
31
PATENTS, ("DISPUTE") that the PARTIES are unable to resolve within
ninety (90) days after written notice by one PARTY to the other of the
existence of such DISPUTE, shall be submitted to arbitration. The
arbitration shall be conducted in Cincinnati, Ohio, U.S.A. except as
may otherwise be agreed by the PARTIES, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association
("AAA") then in effect. Each DISPUTE shall be submitted to a panel of
three (3) impartial arbitrators with each PARTY selecting one (1)
arbitrator within fifteen (15) days after the commencement of the
arbitration period and the two (2) selected arbitrators selecting a
third arbitrator within thirty (30) days after the commencement of the
arbitration period. Any arbitration hereunder shall commence within
thirty (30) days after appointment of the third arbitrator. Both
Parties will use their best efforts to cause the arbitration to be
completed in an expeditious manner. In the arbitration, Ohio law will
govern, except to the extent that those laws conflict with the
Commercial Arbitration Rules of the AAA and the provisions of this
section. No discovery by either PARTY shall be permitted unless the
arbitrators determine that the PARTY requesting such discovery has a
substantial, demonstrable need. The arbitrators shall make final
determinations as to any discovery disputes and all other procedural
matters. If any PARTY fails to comply with the procedures in any
arbitration in a manner deemed material by the arbitrators, then the
arbitrators shall fix a reasonable time for compliance, and if the
PARTY does not comply within such period, then a remedy deemed just by
the arbitrators, including an award of default, may be imposed. The
decision of the arbitrators shall be rendered no later than one
hundred and twenty (120) days after commencement of the arbitration
period. The final decision of the arbitrators with respect to the
DISPUTE, shall be limited to a finding fully in favor of one PARTY's
position, and no compromise or split decisions shall be allowed. The
costs of arbitration shall be born by the PARTY against whom the
arbitral decision is made. Any judgment or decision rendered by the
panel shall be binding upon the PARTIES and shall be enforceable by
any court of competent jurisdiction.
12. MISCELLANEOUS
12.1. APPLICABLE LAW. This LICENSE AGREEMENT shall be construed
under and enforced in accordance with the laws of the State of Ohio,
without regard to its conflicts of laws principles.
12.2. CURRENCY. All monies due to either PARTY must be paid in US
dollars.
12.3. HEADINGS. The headings or titles of Articles, Sections or
Paragraphs appearing in this LICENSE AGREEMENT are provided for
convenience and are not to be used in construing this LICENSE
AGREEMENT.
12.4. ENTIRE AGREEMENT. This LICENSE AGREEMENT constitutes the
entire understanding between the PARTIES with respect to the subject
matter contained herein and supersedes any and all prior agreements,
understandings and
32
arrangements whether oral or written between the PARTIES relating to
the subject matter hereof, except as expressly set forth herein.
12.5. LIMITATION ON USE OF NAMES. Neither PARTY shall use the name
of the other PARTY without prior written consent of an authorized
representative of the other PARTY; unless such use be required by law
or government regulation, provided the other PARTY is given reasonable
prior notice of such use.
12.6. NON-ASSIGNABILITY. This LICENSE AGREEMENT shall be binding
upon and inure to the benefit of the PARTIES, and, except as provided
in Paragraph 12.6.1, shall be nontransferable and nonassignable to
THIRD PARTIES without the prior express written consent of the other
PARTY.
12.6.1. TRANSFER OF PATENT RIGHTS. Notwithstanding the terms
of Paragraph 12.6, the LICENSE granted herein under the
LICENSED PATENTS shall be binding upon any subsequent party in
ownership or control thereof. P&G shall be responsible for
ensuring the above.
12.7. NON-WAIVER. The waiver by either PARTY of any breach of any
provision hereof by the other PARTY shall not be construed to be a
waiver of any succeeding breach of such provision or a waiver of the
provision itself.
12.8. PARTIAL INVALIDITY. If and to the extent that any court or
tribunal of competent jurisdiction holds any of the terms or
provisions of this LICENSE AGREEMENT, or the application thereof to
any circumstances, to be invalid or unenforceable in a final
nonappealable order, the PARTIES shall use their best efforts to
reform the portions of this LICENSE AGREEMENT declared invalid to
realize the intent of the PARTIES as fully as practicable, and the
remainder of this LICENSE AGREEMENT and the application of such
invalid term or provision to circumstances other than those as to
which it is held invalid or unenforceable shall not be affected
thereby, and each of the remaining terms and provisions of this
LICENSE AGREEMENT shall remain valid and enforceable to the fullest
extent of the law.
12.9. NOTICES. Any and all notices provided for shall be sent to the
respective PARTIES at the following addresses by certified or
registered mail or sent by a nationally recognized overnight courier
service:
If to PRESTIGE: Prestige Brands International, Inc.
26811 South Bay Drive
Suite 300
Bonita Springs, FL 34134
Attention: Ted Host
Telephone: (941) 948-8545
Fax: (941)948-8551
AND COPY TO:
33
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219
Attention: Daniel M. LeBey, Esq.
Telephone: (804) 788-8200
Fax: (804) 788-8218
If to P&G: The Procter and Gamble Company
One Procter & Gamble Plaza
Cincinnati, OH 45202
Attention: Manager, Healthcare L&A
Telephone: (513) 983-6167
Fax: (513) 983-9213
AND COPY TO:
Patent Department
The Procter & Gamble Company
8700 Mason-Montgomery Road
Mason, Ohio 45040-9462
Attention: Associate General Counsel - Patents
This LICENSE AGREEMENT is hereby executed by the PARTIES by their duly
authorized representatives.
FOR: PRESTIGE BRANDS INTERNATIONAL, INC.
By:
Name:
Title:
Date:
FOR: THE PROCTER & GAMBLE COMPANY
By:
Name:
Title:
Date:
34
35
APPENDIX A
Country Application No. Patent No. Grant Date
------------------------------------------------------------------------
Canada 2176151 -- (accepted 04 May 2000)
United States 08/602877 5,586,671 24 Dec. 1996
36
APPENDIX B
[U.S. Patent No. 5,586,671]
37
Exhibit 10.32
Portions of this Exhibit were omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment. Such
portions are marked by a series of asterisks.
MANUFACTURING AGREEMENT
This Manufacturing Agreement (this "AGREEMENT") is made and entered into on
December 30, 2002, by and between Prestige Brands International, Inc., a
Virginia corporation having a place of business at 26811 South Bay Drive, Suite
300, Bonita Springs, Florida 34134 ("BUYER"), and Abbott Laboratories, an
Illinois corporation having a place of business at One Hundred Abbott Park Road,
Abbott Park, Illinois, 60064-3500 ("SELLER"). Buyer and Seller each are
sometimes referred to hereinafter as a "Party" and collectively as the
"Parties."
WITNESSETH:
WHEREAS, Buyer and Seller have entered into an Asset Purchase Agreement,
dated as of December 24, 2002 (the "ASSET PURCHASE AGREEMENT") and
WHEREAS, in connection with the transactions contemplated by the Asset
Purchase Agreement, Buyer desires that Seller supply certain products to Buyer,
and Seller is willing to supply such products to Buyer in accordance with this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the promises
herein, the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 DEFINITIONS. Any initially capitalized terms used herein and not
defined herein shall have the meaning set forth in the Asset Purchase Agreement.
The following initially capitalized terms shall have the following meanings when
used herein:
"ACT" shall mean the United States Federal Food, Drug and Cosmetic act of
1938, including any amendments thereto, and all regulations promulgated
thereunder.
"ADR" shall have the meaning set forth in EXHIBIT 7.7 attached hereto.
"AFFILIATE" shall mean (a) any corporation or business entity fifty percent
(50%) or more of the voting stock of which is owned directly or indirectly by
any party hereto; (b) any corporation or business entity that directly or
indirectly owns fifty percent (50%) or more of the voting stock of any party
hereto; or (c) any corporation or business entity under the direct or indirect
control of such corporation or business entity as described in clause (a) or (b)
hereof; provided, however, that with respect to Seller, the term "Affiliate"
shall specifically exclude TAP Holdings Inc., TAP Finance Inc. and TAP
Pharmaceuticals Products Inc.
"AGREEMENT" shall have the meaning set forth in the introductory paragraph.
"ASSET PURCHASE AGREEMENT" shall have the meaning set forth in the recitals
of this Agreement.
"BUSINESS DAY" shall mean any day, other than a Saturday or Sunday, on
which commercial banks are not authorized to close in Chicago, Illinois.
"BUYER" shall have the meaning set forth in the introductory paragraph.
"cGMP" shall mean the quality systems and current good manufacturing
practices set forth in 21 C.F.R. (Parts 210 and 211) and all applicable
directives, Regulatory Requirements (as defined below) and FDA (as defined
below) rules, regulations, guides and guidance, each as amended from time to
time and in effect during the duration of this Agreement.
"CPR" shall have the meaning set forth in EXHIBIT 7.7 attached hereto.
"CONTRACT YEAR" shall mean the twelve (12) month period coinciding with the
calendar year; provided, however, that the first Contract Year of this Agreement
shall mean the period from the Effective Date to December 31, 2002. Thereafter,
each Contract Year shall be from January 1 through December 31 of each calendar
year during the duration of this Agreement.
"DISCRETIONARY CHANGES" shall have the meaning set forth in SECTION 4.3(b).
"EFFECTIVE DATE" shall mean the Closing Date.
"FDA" shall mean the United States Food and Drug Administration or
comparable state or local authority.
"FIRM ORDER" shall mean the monthly requirements of Product for which Buyer
is obligated to purchase and take delivery pursuant to the terms of this
Agreement.
"FORECAST" shall have the meaning set forth in SECTION 2.2(b)(i).
"INITIAL FIRM ORDER" shall have the meaning set forth in SECTION 2.2(a).
"INITIAL FORECAST" shall have the meaning set forth in SECTION 2.2(a).
"INVENTORY" shall have the meaning set forth in SECTION 2.2(f).
"MATERIALS" shall mean all ingredients, packaging supplies, printed
materials and all other components used to manufacture the Products.
"NEW PRODUCTS" shall have the meaning set forth in SECTION 2.3(f).
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, trust or unincorporated organization or
government or any agency or political subdivision thereof.
"PARTY" or "PARTIES" shall have the meaning set forth in the introductory
paragraph.
"PPI" shall mean the Producer Price Index, Pharmaceutical Preparation,
Ethical (Prescription), Industry Code 2834 issued by the Bureau of Labor
Statistics, U.S. Department of Labor.
2
"PRODUCT(S)" shall mean the products listed in EXHIBITS 1.1, 1.2 and 1.3
attached hereto, which may be amended from time to time by the mutual agreement
of the Parties.
"PRODUCT COMPLAINTS" shall have the meaning set forth in SECTION 3.4(a).
"PRODUCT SPECIFICATIONS" shall mean those product, process, manufacturing
and labeling specifications used by Seller in the production and supply of
Products, including Product formula and materials required for the manufacture
of the Product that is to be purchased and supplied under this Agreement, as
such are in effect as of the Closing Date, which specifications may be amended
from time to time by the written agreement of the Parties.
"PURCHASE ORDER" shall have the meaning set forth in SECTION 2.2(b)(i).
"PURCHASE PRICE" shall have the meaning Set forth in SECTION 2.3(a).
"QUALITY AGREEMENT" shall have the meaning set forth in SECTION 4.2.
"REGISTRATION" shall mean all permits, licenses, registrations, approvals
and authorizations granted by any Regulatory Authority with regard to any
Product.
"REGULATORY AUTHORITY" shall mean any federal, state, local or
international regulatory agency, department, bureau or other governmental
entity, including, without limitation, the FDA, which is responsible for issuing
Registrations necessary for the manufacture, use, storage, import, transport or
sale of Products in a regulatory jurisdiction.
"REGULATORY REQUIREMENTS" shall mean all applicable Registrations and all
other requirements of each applicable Regulatory Authority in relation to the
Products, as in effect from time to time.
"REQUIRED CHANGES" shall have the meaning set forth in SECTION 4.3(a).
"SELLER" shall have the meaning set forth in the introductory paragraph.
"STANDARD FACTORY COST" shall mean the cumulative dollar value of the costs
incurred by Seller with respect to the manufacture of Products hereunder based
upon the Standard Manufacturing Batches and Seller's established and planned
criteria as of the Effective Date, consistently applied, consisting of charges
for Materials and Value Added; provided, however, that notwithstanding anything
in this Agreement to the contrary, (a) with respect to Materials purchased by
Seller from Third Parties, such charges shall consist of the actual
out-of-pocket costs, including, but not limited to, purchase price, set-up and
freight incurred by Seller, provided that freight charges shall be based on
Seller's standard allocation, not actual, and (b) with respect to Materials
produced in-house by Seller, such charges shall consist of the standard costs
incurred by Seller in accordance with Seller's standard internal transfer cost.
Standard Factory Cost shall not include costs associated with any Materials or
Product(s) that do not meet Product Specifications. Standard Factory Costs per
unit of Product shall be as set forth on EXHIBIT 2.3(a) attached hereto.
3
"STANDARD MANUFACTURING BATCH" shall mean, with respect to each Product,
the standard planning batch size at the compounding stage, each of which is set
forth on EXHIBIT 2.3(a) attached hereto.
"THIRD PARTY" shall mean any Person other than Seller or Seller's
Affiliates or Buyer or Buyer's Affiliates.
"TRANSFER PLAN" shall have the meaning set forth in SECTION 5.5.
"UNITED STATES" shall mean the United States of America.
"VALUE ADDED" shall mean the cumulative dollar value of the costs incurred
by Seller with respect to the manufacturing of the Products hereunder based upon
Seller's standard established and planned criteria, consistently applied,
consisting of charges for labor (direct and indirect), testing and variable,
activity and capacity overhead.
1.2 CONSTRUCTION.
(a) The language in all parts of this Agreement shall be
construed, in all cases, according to its fair meaning. Seller and Buyer
acknowledge that each Party and its counsel have reviewed and revised this
Agreement and that any rule of construction to the effect that any
ambiguities are to be resolved against the drafting Party shall not be
employed in the interpretation of this Agreement. Whenever used herein, the
words "include," "includes" and "including" shall mean "include, without
limitation," "includes, without limitation" and "including, without
limitation," respectively. The masculine, feminine or neuter gender and the
singular or plural number shall each be deemed to include the others
whenever the context so indicates.
(b) With respect to any particular action, the use of the words
"Seller shall" or "Seller will" herein shall also mean "Seller shall cause"
the particular action to be performed.
(c) Any obligation of Seller under or pursuant to this Agreement
may be satisfied, met or fulfilled, in whole or in part, at Seller's sole
and exclusive option, either by Seller directly or by any Affiliate of
Seller that Seller causes to satisfy, meet or fulfill such obligation, in
whole or in part.
ARTICLE 2- ORDERS, PRICING, PAYMENT AND CONFORMANCE
2.1 PURCHASE AND SALE OF PRODUCT. Pursuant to the terms and conditions
of this Agreement and for the duration of this Agreement, Seller or Seller's
Affiliates shall manufacture, sell and deliver Products to Buyer, and Buyer
shall purchase and take delivery of Products from Seller or Seller's Affiliates.
Seller shall manufacture Products in accordance with: (a) the Product
Specifications; (b) cGMP; and (c) all other applicable Regulatory Requirements.
Seller and its Affiliates may (x) change the location at which they manufacture
Products, the location of their manufacturing plants or the location of the
Manufacturing Assets or (y) sub-contract any manufacturing or assembly
operations hereunder; provided that Seller obtains the prior written approval of
Buyer, which shall not be unreasonably withheld so long as the foregoing will
not
4
materially increase Buyer's costs under this Agreement. Seller's and its
Affiliates' right to subcontract under this SECTION 2.1 shall not relieve Seller
of any of its obligations set forth in this Agreement.
2.2 FORECASTS AND ORDERS.
(a) INITIAL FORECAST; INITIAL FIRM ORDER. Buyer's forecast of the
monthly requirements of Product to be manufactured and supplied hereunder
for the first eighteen (18) calendar months of this Agreement is set forth
on EXHIBIT 2.2(a) attached hereto (the "INITIAL FORECAST"). The portion of
the Initial Forecast commencing on the Effective Date and ending on the
last day of the third (3rd) month after the Effective Date shall be deemed
a Firm Order (the "INITIAL FIRM ORDER") for which Buyer is obligated to
order and take delivery of the forecasted Product requirements. The Buyer
shall submit a Purchase Order on the Effective Date for the first month
after the Effective Date, and Buyer shall submit a Purchase Order for the
remainder of the period covered by Initial Firm Order on or before the
fifteenth (15th) Business Day after the Effective Date. The remainder of
the Initial Forecast shall set forth Buyer's best estimate of its Product
production and supply requirements for the remainder of the Forecast
period.
(b) ROLLING FORECAST.
(i) Buyer shall provide Seller with an updated eighteen
(18) month forecast of the Products to be manufactured and supplied
(each a "FORECAST") on or before the fifteenth (15th) calendar day
of each month, and such Forecast shall cover the eighteen (18) month
period beginning on the first day of the following calendar month.
The first two months of each Forecast will restate the balance of
the Firm Order period of the prior Forecast (or Initial Forecast, as
the case may be), and the first three (3) months of the Forecast
shall constitute the new Firm Order period for which Buyer is
obligated to purchase and take delivery of the forecasted Product,
and except for any reasonable increase in supply required due to a
Local Closing having taken place since the previous Forecast, the
supply required for the last month of such new Firm Order period
shall not be more than one (1) full Standard Manufacturing Batch
from the quantity specified for such month in the previous Forecast
(or Initial Forecast, as the ease may be). Except as provided in
SECTION 2.2(a), purchase orders setting forth Buyer's monthly
Product requirements (each a "PURCHASE ORDER") will be issued for
the last month of each Firm Order period no later than the fifteenth
calendar day of the first month of each Firm Order period, and such
Purchase Order will be in agreement with the Firm Order period of
the Forecast. If a Purchase Order for any month is not submitted by
such deadline, Buyer shall be deemed to have submitted a Purchase
Order for such month for the amount of Product set forth in Buyer's
Forecast for such month.
(ii) The remainder of the Forecast shall set forth Buyer's
best estimate of its Product production and supply requirements for
the remainder of the Forecast period. Each portion of such Forecast
that is not deemed to be a Firm Order shall not be deemed to create
a binding obligation on Buyer to purchase and
5
take delivery of Products nor a binding obligation of Seller to
deliver Products; provided, however, that Buyer agrees to purchase
any raw material obtained by Seller in contemplation of such
Forecast as set forth in SECTION 2.2(f).
(iii) Forecasts and Purchase Orders shall be in full Standard
Manufacturing Batches. If a Product has multiple SKUs (as set forth
on EXHIBIT 2.3(a)), then the composite of the forecasted SKU must
equate to the Standard Manufacturing Batch. One Purchase Order shall
be issued for each dosage form and strength of each Product for each
month of the Firm Order period, and such Purchase Order shall
contain the information required pursuant to SECTION 2.3(d) herein.
(c) VARIANCE IN PURCHASE ORDER. In the event that a Purchase Order
requires delivery by Seller or Seller's Affiliates of Product in amount
different than the amount set forth in the Forecast for such month, Seller
shall confirm to Buyer its acceptance of the delivery schedule provided for
in such Purchase Order within fifteen (15) calendar days after receipt of
such Purchase Order. In the event that Seller does not agree with the
delivery schedule provided for in such Purchase Order, Seller shall so
notify Buyer within such fifteen (15) day period, and the Parties shall
negotiate in good faith a mutually acceptable delivery schedule for such
Products.
(d) PURCHASE OBLIGATIONS. The Parties agree and acknowledge that
Buyer shall be obligated to purchase, and Seller shall be obligated to
manufacture, those quantities for which it has submitted (or is deemed to
have submitted) a Purchase Order pursuant to SECTIONS 2.2(a) and (b)
(subject to SECTION 2.2(c)) arid shall also purchase the remaining
Inventory, if any, in accordance with SECTION 2.2(f) of this Agreement.
(e) PURCHASE ORDER TERMS. Each Purchase Order or any
acknowledgment thereof, whether printed, stamped, typed or written, shall
be governed by the terms of this Agreement, and none of the provisions of
such Purchase Order or acknowledgment shall be applicable except those
specifying Product and quantity ordered, delivery dates, special shipping
instructions and invoice information. To the extent any conflict may exist
between the terms of any Purchase Order and this Agreement, the terms of
this Agreement shall control.
(f) INVENTORY. In addition to the finished goods inventory that
Buyer has a firm obligation to purchase pursuant to SECTIONS 2.2(a) and (b)
of this Agreement, upon the expiration or termination of this Agreement,
Buyer shall purchase from Seller or Seller's Affiliates, and Seller or
Seller's Affiliates agree to sell to Buyer, all raw material purchased by
Seller or Seller's Affiliates in the normal course of business, consistent
with past practice and pursuant to each Forecast, and all work-in-process
and finished goods inventory manufactured by Seller in the normal course of
business, consistent with past practice and pursuant to each Forecast
("INVENTORY"), remaining in Seller's or Seller's Affiliates' possession.
Such Inventory shall be purchased by Buyer for an amount equal to Seller's
costs for such Inventory, plus 10%, plus any applicable sales, transfer or
similar tax, excise charge or similar charge, with respect to Inventory
located in the United States; provided that such Inventory complies with
the warranties contained in
6
SECTION 3.1 (a) hereof. Any Inventory for which legal title cannot be
transferred to Buyer upon the expiration or termination of this Agreement
due to an Impeding Factor (as defined in the Asset Purchase Agreement)
shall remain in the possession of Seller or Seller's Affiliates and shall
be purchased by Buyer from Seller or Seller's Affiliates pursuant to the
terms and conditions of the Asset Purchase Agreement. At the request of
Buyer and in no event later than thirty-five (35) Business Days prior to
the expiration of this Agreement, or immediately upon termination of this
Agreement, Seller shall provide Buyer with a detailed list and description
of the type and amount of Inventory to be purchased pursuant to this
SECTION 2.2(f), and Buyer shall issue a Purchase Order to Seller for such
Inventory within five (5) Business Days of receipt of such notification
from Seller. Payment for such Inventory shall be made by Buyer within
thirty (30) days from receipt by Buyer of such Inventory.
2.3 PRICE; ADJUSTMENT PAYMENT; SHIPMENT.
(a) PURCHASE PRICE. The price for each Product shall be the
Standard Factory Costs per unit set forth in EXHIBIT 2.3(a) attached hereto
expressed in United States dollars, plus 10% (the "PURCHASE PRICE"). The
Purchase Price shall be subject to adjustment as provided in SECTION
2.3(b).
(b) PURCHASE PRICE ADJUSTMENTS. On November 1st of each Contract
Year, Seller may, at its option, adjust the Purchase Price for each Product
to be effective for the following Contract Year to reflect Seller's actual
increases or decreases over the previous year as follows:
(i) Value Added may be adjusted to reflect Seller's actual
increases or decreases in operational costs at Standard Factory
Cost, versus the previous year, subject to a cap based on the most
recent available PPI.
(ii) Materials may be adjusted to reflect Seller's projected
increases or decreases in Standard Factory Cost for the materials
for the coming year. Because this is a projection of anticipated
market prices, if Seller elects to adjust the Purchase Price based
upon changes in the cost of materials, Seller will calculate the
variance between projected and actual purchase price for purchased
materials used in the production of Product at the completion of the
applicable Contract Year and will issue a debit to Buyer (for the
amount by which actual costs of materials exceeded projected cost of
materials) or credit to Buyer (for the amount by which projected
cost of materials exceeded actual costs of materials) within three
(3) months after the end of such Contract Year. Adjustments to the
Purchase Price based upon changes in the costs of materials shall
not be subject to a cap based on PPI.
Seller shall provide Buyer with written notice of any change in the
Purchase Price within ten (10) Business Days after November 1st of each Contract
Year. Within ten (10) Business Days after receipt of any such written notice,
Buyer shall have the right, during normal business hours and at Buyer's expense,
to have an independent certified public accountant, selected by Buyer and
reasonably acceptable to Seller, audit the change in the Purchase Price;
provided,
7
however, that such independent certified public accountant executes a customary
confidentiality agreement with Seller with respect to the information received
in connection with such audit. Seller shall, at its expense, reasonably
cooperate with Buyer and the independent auditor with respect to any such audit.
Such independent auditor shall provide its findings to both Parties, at which
point, in the event that Seller and Buyer disagree as to any such Purchase Price
change based upon such independent auditor's report, Seller and Buyer shall
negotiate in good faith to attempt to reach a resolution of such disagreement.
(c) PAYMENT. Seller shall invoice Buyer upon delivery of Products,
and Buyer agrees to pay Seller for Products as set forth above. Buyer shall
make payment thirty (30) calendar days from the date of Seller's invoice
with respect to Product to be sold in the United States and forty-five (45)
calendar days from the date of Seller's invoice with respect to Product to
be sold outside the United States. All payments hereunder shall be made in
U.S. Dollars.
(d) TAXES. Any federal, state, county or municipal sales or use
tax, excise, customs charges, duties or similar charge, or any other tax
assessment (other than any tax levied on net income), license, fee or other
charge lawfully assessed or charged on the sale or transportation of
Product sold to Buyer pursuant to this Agreement shall be separately stated
on the invoice and paid by Buyer.
(e) DELIVERY. Seller or Seller's Affiliates shall deliver Product
to Buyer or Buyer's designee in the continental United States F.O.B.
Seller's (or subcontractor's) manufacturing plant, and Buyer shall be
responsible for clearing Products for export from the United States or
import into any other country or territory. Seller will not ship Product,
at Buyer's cost or otherwise, outside the continental United States. Seller
will select the carrier unless Buyer specifies otherwise.
(f) NEW PRODUCTS. Buyer shall notify Seller if Buyer desires
Seller to manufacture any additional product strengths and/or "Put-Ups" of
the Products that Seller does not manufacture (collectively, "NEW
PRODUCTS"). The Parties shall negotiate in good faith to determine whether
Seller shall develop such New Products for Buyer. If the Parties agree upon
a development plan, this Agreement and EXHIBIT 2.3(a) attached hereto shall
then be amended to include such New Products. Seller shall be reimbursed
for all direct and actual out-of-pocket development costs in accordance
with the rates set forth on EXHIBIT 2.3(a), as amended, plus 10%. Pricing
for any New Products shall be Seller's Standard Factory Cost per unit, plus
10% and may be adjusted annually in accordance with SECTION 2.3(b).
(g) RELEASE OF PRODUCT. Buyer is responsible for release of
Product to the market place.
2.4 REPLACEMENT OF NONCONFORMING SHIPMENT. Buyer shall have a period of
fifteen (15) Business Days from the date of its receipt of a shipment of Product
to inspect and reject such shipment for non-conformance with the Product
Specifications based on the outward appearance of such shipment or any other
non-conformance determined by Buyer's normal incoming-goods inspections
procedures. If Buyer rejects such shipment, it shall promptly so
8
notify Seller and provide to Seller samples of such shipment for testing. if
Seller determines that such shipment did conform to the Product Specifications,
the Parties shall, if agreed to be relevant, submit samples of such shipment to
a mutually acceptable independent laboratory for testing. If such independent
laboratory determines that the shipment conformed to the Product Specifications,
Buyer shall bear all expenses of shipping and testing such shipment samples and
shall be obligated to accept and pay for such shipment. If Seller or such
independent laboratory confirms that such shipment did not meet the Product
Specifications, Seller shall replace, at no cost to Buyer, that portion of the
Product shipment that does not conform to the Product Specifications, and shall
bear all expenses of shipping and testing the shipment samples, including any
costs incurred by Buyer in returning such Product to Seller or its nominee. Any
non-conforming portion of any shipment shall be disposed of as directed by
Seller, at Seller's expense. Any Product that Buyer does not reject pursuant to
this SECTION 2.4 shall be deemed accepted, and all claims with respect to
Product not conforming with Product Specifications shall be deemed fully waived
and released by Buyer, except as to defects that are not reasonably discovered
or detected by the inspection required under Buyer's normal incoming-goods
inspection procedures. Notwithstanding the foregoing, this SECTION 2.4 shall not
limit any liability of Seller under SECTION 3.1(c).
ARTICLE 3- WARRANTIES, COVENANTS AND INDEMNIFICATION
3.1 GENERAL WARRANTY AND INDEMNIFICATION.
(a) Seller warrants that Product that Seller delivers to Buyer
pursuant to this Agreement shall be manufactured in accordance with cGMP,
the Act and all other Regulatory Requirements and Product Specifications,
and, at the time of delivery shall (i) be free from defects in materials
and workmanship, (ii) not be adulterated or misbranded within the meaning
of any applicable rules and regulations of any Regulatory Requirements,
(iii) be free and clear of all liens and encumbrances other than liens and
encumbrances that are the result of actions taken by Buyer and (iv) meet
the standards set forth in SECTION 3.5(a) of the Asset Purchase Agreement
(except that the quantity of Products delivered pursuant to Buyer's
Purchase Orders shall not be required to be saleable in a manner consistent
with Seller's past practices). Seller further warrants that Product that
Seller delivers to Buyer pursuant to this Agreement shall be manufactured
in compliance with all applicable statutes, laws, rules or regulations or
any other applicable Regulatory Authority. EXCEPT AS EXPRESSLY STATED IN
THIS SECTION 3.1, SELLER MAKES NO EXPRESS OR IMPLIED WARRANTY AS TO THE
MERCHANTABILITY OF THE PRODUCT OR AS TO ITS FITNESS FOR A PARTICULAR
PURPOSE AND DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, PURSUANT TO
APPLICABLE LAW.
(b) In the event that any Product is quarantined or recalled, or
is subject to stop-sale action, whether voluntary or by governmental
action, it is agreed and understood that any expenses, including reasonable
fees of any experts or attorneys that may be used by either Party,
government fines or penalties, related to such recall, quarantine or
stop-sale, shall be borne by Buyer, unless it is determined that Seller has
breached its obligations under this Agreement and such breach is a material
basis upon which said recall, quarantine or stop-sale was initiated, in
which case such expenses shall
9
be shared according to the relative responsibility of each Party. Said
determination of any recall, quarantine or stop-sale action may be made by
the governmental agency involved, or by mutual agreement of the Parties
following examination and review of all records pertinent to the
manufacture of the Product subject to such recall.
(c) Seller agrees to defend, indemnify and hold Buyer and its
Affiliates harmless from and against any losses, liabilities, costs or
expenses (including reasonable attorney's fees) resulting from a breach by
Seller of any of its agreements, covenants or obligations contained in or
made pursuant to this Agreement. Such indemnification shall include
liability for consequential, incidental, indirect or punitive damages to
the extent Buyer or its Affiliates are required to pay such amount to a
Third Party in respect of a final, non-appealable judgment or order
obtained by such Third Party. Except as expressly provided in the preceding
sentence, there shall be no indemnification by Seller for any
consequential, incidental, indirect or punitive damages, including damages
from loss of profits, loss of use or loss of goodwill.
(d) Buyer agrees to defend, indemnify and hold Seller and its
Affiliates harmless from and against any losses, liabilities, costs or
expenses (including reasonable attorney's fees) resulting from a breach by
Buyer of any of its agreements, covenants or obligations contained in or
made pursuant to this Agreement. Such indemnification shall include
liability for consequential, incidental, indirect or punitive damages to
the extent Seller or its Affiliates are required to pay such amount to a
Third Party in respect of a final, non-appealable judgment or order
obtained by such Third Party. Except as expressly provided in the preceding
sentence, there shall be no indemnification by Buyer for any consequential,
incidental, indirect or punitive damages, including damages from loss of
profits, loss of use or loss of goodwill.
(e) Any Party submitting a claim for indemnification under this
Agreement shall be subject to the procedural requirements set forth in
SECTION 9.2(c) of the Asset Purchase Agreement.
3.2 MANUFACTURING OF THE PRODUCTS.
(a) Seller or its Affiliates shall use commercially reasonable
efforts to manufacture Products at the same level of quality as the
Products were manufactured immediately prior to the Effective Date.
(b) Seller or its Affiliates shall manufacture and deliver (or
cause to be manufactured and delivered) the Products to Buyer at all times
in full compliance with cGMP, the Act and any other applicable Regulatory
Requirements and Product Specifications. Seller or its Affiliates shall
maintain all records as are necessary and appropriate to demonstrate
compliance with cGMP, the Act and any other applicable quality control
standards of any Regulatory Authority and Product Specifications.
(c) Buyer shall have the right during the duration of this
Agreement, at its sole expense, (1) on reasonable advance notice and during
Seller's normal business hours, to inspect the facilities and operations of
Seller's, its Affiliates' and their subcontractors,
10
from time to time as may be reasonable and (ii) not more than once per yeas
unless reasonable cause is shown, to audit the facilities and operations of
Seller's, its Affiliates' and their subcontractors to confirm compliance
with the covenants contained in this Agreement. Buyer also shall have the
right to reasonable access to the facilities at which Products are
manufactured, from time to time during the duration of this Agreement, at
Buyer's sole expense, on reasonable advance notice and during Seller's
normal business hours, for the purpose of providing Buyer with information
reasonably necessary to facilitate the transition of manufacturing Products
from Seller to Buyer.
(d) Seller or its Affiliates shall provide all raw materials,
components, packaging, containers, labeling, release testing, quality
control, equipment (other than the Manufacturing Assets), labor and other
services and materials necessary for the manufacture of Products, as part
of the price therefor. Notwithstanding the foregoing, Buyer may, upon such
terms as agreed to between the Parties, provide to Seller or its Affiliates
the raw materials necessary for the manufacture of the Products, and in
such case, Buyer (i) will be responsible for vendor approvals, (ii) will
provide documentation of such approvals to Seller prior to requiring Seller
to receive such raw materials and (iii) will re-certify the approval status
to Seller on an annual basis. Any such materials provided by Buyer and not
used by the termination of this Agreement shall be purchased by Buyer
pursuant to SECTION 2.2(f) without regard to whether such materials
represent an amount used in the normal course of business, consistent with
past practice and pursuant to Buyer's Forecast. Buyer shall provide, at no
cost or expense to Seller, the Manufacturing Assets, which assets shall
remain at Seller's or its Affiliates' facilities free of charge until the
expiration of this Agreement. Seller agrees that from the Closing Date
until Buyer acquires physical possession of the Manufacturing Assets (or
otherwise directs the disposition of such assets pursuant to the Transfer
Plan), (i) Seller and its Affiliate shall cooperate with Buyer to maintain
the Manufacturing Assets in a manner that is substantially similar to
Seller's maintenance of such assets immediately prior to the Closing Date
and (ii) subject to the following provisions of this SECTION 3.2(d), Seller
shall perform all necessary repairs, maintenance and replacement of the
Manufacturing Assets such that Seller's and its Affiliates can manufacture
the Products in accordance with the standards set forth in this Agreement.
All routine repairs and preventative maintenance shall be at Seller's sole
cost and expense. Major repairs and any replacement of the Manufacturing
Assets shall be at Buyer's sole cost and expense, and Seller shall obtain
Buyer's prior written consent before incurring such expenses; provided,
however, that if Buyer fails to consent to any necessary major repairs or
replacements of the Manufacturing Assets, Seller shall be under no further
obligation to manufacture Products. Any Manufacturing Assets replaced by
Buyer pursuant to this SECTION 3.2(d) shall be deemed to be removed from
EXHIBIT 5.5 of this Agreement and SCHEDULE 2.1(a) of the Asset Purchase
Agreement, and such replacement equipment shall be provided by Buyer to
Seller at no cost or expense to Seller and shall remain at Seller's or its
Affiliates' facilities free of charge until the expiration of this
Agreement.
(e) Seller shall be responsible for any transfer of the
Manufacturing Assets among Seller's or its Affiliates' facilities,
including any damage to the Manufacturing Assets caused by any such change
in location. Seller shall use commercially reasonable
11
efforts to ensure reasonable Product consistency after a change in the
location at which Products are manufactured.
(f) Except as set forth in the Asset Purchase Agreement and as to
currently existing Product inventory packaged and labeled by Seller or its
Affiliates with their own trademarks, trade names, service marks and
existing Product Registrations, Buyer shall, in a manner consistent with
Buyer's Forecasts, promptly supply Seller with approved artwork to comply
with required copy changes. Buyer shall be solely responsible for any costs
incurred by Buyer related to providing these items to Seller, as well as
any reasonable incremental direct out-of-pocket costs of Seller related to
incorporating these items into the manufacturing process that are above
Seller's cost of packaging and labeling Product inventory with its own
trademarks, trade names, service marks and existing Product Registrations.
Seller shall invoice Buyer separately for any such costs and expenses.
Buyer and Seller shall meet promptly after the Effective Date to outline a
plan to convert trade dress for Products to Buyer trade dress. All
production of Products initiated after the twelve (12) month anniversary of
the Effective Date shall be in Buyer's trade dress.
3.3 REGULATORY MATTERS.
(a) Seller shall use its commercially reasonable efforts to
maintain all Registrations that may be necessary to manufacture and ship
the Products to Buyer. Seller agrees that Buyer may continue to use
Seller's UPC Codes for the Products for a period of twelve (12) months
following the Effective Date and thereafter for as long as reasonably
necessary for Buyer to sell all Products and related components existing on
the twelve (12) month anniversary of the Effective Time.
(b) To the extent that either Party requires the reasonable
assistance of the other Party in order to fulfill its obligations pursuant
to this SECTION 3.3, such other Party agrees to fully cooperate.
(c) Except as otherwise provided herein, during the duration of
this Agreement, pending transfer of any Registration, Seller will be
responsible for any reporting of matters regarding the manufacture of
Products to any applicable Regulatory Authorities in accordance with
pertinent laws and regulations. Following transfer of any Registrations,
such responsibility shall be the Buyer's. Seller shall furnish copies of
any reports related to the manufacture of the Products to Buyer. Seller
shall also advise Buyer of any occurrences or information arising out of
Seller's manufacturing activities that have or could reasonably be expected
to have adverse regulatory compliance and/or reporting consequences
concerning Products.
(d) Except as otherwise provided herein, Seller shall be
responsible for handling and responding to any FDA or other Regulatory
Authority inspections with respect to Seller's manufacture of the Products
during the duration of this Agreement. Seller shall provide to Buyer any
information reasonably requested by Buyer and all information requested by
any Regulatory Authority concerning any governmental inspection related to
the Products. To the extent Seller requires the assistance of Buyer in
12
order to fulfill its obligations pursuant to this SECTION 3.3(d), Buyer
agrees to fully cooperate and assist Seller, at Buyer's sole expense.
(e) In the event Seller is inspected by any Regulatory Authority,
Seller shall promptly notify Buyer of any material written alleged
violations or deficiencies relating to the manufacture of the Products.
(f) Except as provided in the Asset Purchase Agreement or any
Other Agreement, Seller has granted no license, express or implied, to
Buyer to use Seller's proprietary technology, know-how or rights relating
to Seller's manufacturing process, other than for purposes of this
Agreement. If Seller, in its sole discretion, deems patentable any
improvement or invention relating to Seller's proprietary technology,
know-how or rights relating to Seller's manufacturing processes made or
reduced to practice in the course of this Agreement, and if such
improvement or invention relates to the Seller's manufacturing operations
in general, Seller shall solely own and shall be entitled to apply for
patent protection on such improvements or inventions at Seller's expense
and risk. if such improvement or invention relates exclusively to the
Products or the manufacture thereof, Buyer shall be entitled to all such
rights relating thereto, and Seller shall assign (free of charge) such
rights to Buyer and assist Buyer in securing any patent or other
intellectual property right relating thereto at Buyer's sole expense.
(g) Buyer has granted no license, express or implied, to Seller to
use Buyer's proprietary technology, know-how or rights relating to
Products, other than for purposes of this Agreement. If Buyer, in its sole
discretion, deems patentable any improvement or invention related to
Products or to Buyer's proprietary technology, know-how or rights relating
to Products, then Buyer shall solely own and shall be entitled to apply for
patent protection on such improvements or inventions at Buyer's sole
expense and risk.
3.4 COMPLAINTS AND RECALLS.
(a) Product complaint reports concerning manufacture of Products
("PRODUCT COMPLAINTS") received by either Party will be faxed as quickly as
possible and in no event later than five (5) Business Days after receipt by
the recipient to the other Party to:
Abbott Laboratories
1401 Sheridan Road
D-44K, Bldg. RI
North Chicago, Illinois 60064-6255
Attention: Quality Assurance Department
Facsimile Number: (847) 937-4261
and
Prestige Brands International, Inc.
26811 South Bay Drive
Suite 300
Bonita Springs, Florida 34134
13
Attn: Alex Terranova, Vice President - Scientific Affairs
Facsimile Number: (941) 948-8551
(b) The Parties will cooperate to investigate all Product
Complaints and to complete a written report in a form reasonably
satisfactory to both Parties. Buyer will investigate all other complaints
associated with Products and provide a written report to Seller. Buyer also
will provide a written response on each Product Complaint to each
complainant with a simultaneous copy to Seller. In the event either Party
should be required to initiate a recall, field alert, Product withdrawal or
field correction pursuant to any Product provided under this Agreement,
that Party shall immediately notify the other Party in writing. Except
where one Party is required by law to do so, no such recall or field
correction shall be made without the other Party's prior express written
consent, such consent not to be withheld unreasonably.
3.5 INSURANCE. Each of Buyer and Seller shall obtain and keep in full
force during the term of this Agreement insurance policies from a reputable
insurance company or pursuant to its self-insurance program providing such Party
with insurance coverage for the Product Line that is not less than $2,000,000
per occurrence.
3.6 EXCLUSIVITY. This Agreement represents an exclusive arrangement
between Buyer and Seller. Seller may not supply Products to any other parties
other than Buyer or such party as may be designated by Buyer.
ARTICLE 4 - MANUFACTURING OF THE PRODUCTS
4.1 EXCEPTION DOCUMENTATION, CERTIFICATES OF ANALYSIS AND BATCH RECORDS.
(a) EXCEPTIONS. Buyer shall be required to review and approve or
reject all exception documentation associated with the manufacture of
Product in accordance with procedures stated in the Quality Agreement.
Seller shall make available to Buyer any and all data supporting the
investigation of such exception, including, but not limited to, the batch
records.
(b) CERTIFICATE OF ANALYSIS. Seller shall provide a certificate of
analysis and other documents as defined in the Quality Agreement for any
Product to be released hereunder, in a form in accordance with the cGMPs
and all other applicable Regulatory Requirements and Product
Specifications. For any batch that initially failed to meet any Product
Specification, the certificate of analysis shall document the exception.
(c) ACCESS TO BATCH DOCUMENTATION; ANNUAL AUDIT. Full batch
documentation including batch production records, and manufacturing and
analytical procedures shall be available for review by Buyer in conjunction
with any annual audit made by Buyer pursuant to SECTION 3.2(c) of this
Agreement.
4.2 QUALITY AGREEMENT. Within ninety (90) days following the Effective
Date, the Parties shall negotiate in good faith to agree upon an intercompany
quality agreement which will appropriately address regulatory, operational and
quality responsibilities (the "QUALITY AGREEMENT").
14
4.3 MANUFACTURING AND PACKAGING CHANGES.
(a) REQUIRED CHANGES. With respect to changes to the Product
Specifications or manufacturing relating to the Products that are required
by laws and other Regulatory Requirements (including, without limitation,
cGMP), or by medical or scientific concerns as to the toxicity, safety
and/or efficacy of the Products (collectively, "REQUIRED CHANGES"), the
Parties shall cooperate in making such Required Changes promptly, and
Seller shall promptly provide written notice for each such Required Change
to Buyer.
(b) DISCRETIONARY CHANGES. Seller shall consider in good faith any
request by Buyer to make changes to the Product Specifications or
manufacturing that are not Required Changes, including, but not limited to,
changes to the existing Product, Product line extensions or changes to the
existing or additional packaging (collectively, "DISCRETIONARY CHANGES").
Any analytical improvements shall be considered Discretionary Changes
unless requested or required by Regulatory Authorities in which case such
improvements shall be considered a Required Change. Any change requested by
Seller that is not a Required Change shall be considered a Discretionary
Change and shall be made only with the written consent of the Buyer, such
consent not to be unreasonably withheld.
(c) COSTS OF CHANGES. Any and all costs associated with (i)
Required Changes or (ii) Discretionary Changes initiated by the Buyer shall
be borne by the Buyer. The Parties shall negotiate in good faith to reach
an agreement on the responsibility for funding any Discretionary Changes
initiated by Seller. Notwithstanding the foregoing, any Required Changes
during the first three (3) months after the Effective Date that are
required in order to comply with laws and other Regulatory Requirements in
effect as of the Effective Date shall be at Seller's sole cost and expense.
4.4 STABILITY. During the term of this Agreement, Seller shall conduct
the commercial stability program and annual Product review pursuant to
Regulatory Requirements applicable as of the Effective Date at no separate
charge. Should additional stability studies be required, the Parties shall
negotiate in good faith to agree upon the protocol and associated charges (which
shall be paid by Buyer) in connection therewith, based on the then current
charge rates for staff services, with invoicing for such additional services to
occur when the lot is placed on stability.
4.5 FILE SAMPLES. Seller shall retain a representative sample or samples
and associated documentation from each manufacturer's lot of key ingredients
used in the manufacture of Products for the period required by the applicable
FDA regulations.
ARTICLE 5 - TERM AND TERMINATION
5.1 TERM. This Agreement shall have a term beginning on the Effective
Date and ending on December 31, 2005. Notwithstanding the foregoing, Buyer may
terminate this Agreement by providing Seller with not less than twelve (12)
months prior written notice; provided, however, that such termination cannot
occur prior to December 31, 2004. This Agreement may be extended for an
additional twelve (12) months if agreed to in writing by both Parties no later
than one (1) year prior to termination.
15
5.2 MATERIAL BREACH. Either Party may terminate this Agreement upon
forty-five (45) calendar day's prior written notice in accordance with SECTION
7.10 to the other Party if the other Party is in material breach of any
provision of this Agreement and fails to cure that breach within such forty-five
(45) day period.
5.3 INSOLVENCY. This Agreement shall automatically terminate if at any
time (a) either Party shall file in any court pursuant to any statute of any
government in any country a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver or
trustee of such Party or of its assets; (b) any Third Party proposes a written
agreement of composition for extension of a Party's debts; (c) either Party
shall be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after filing thereof; (d) either Party shall be a party to any dissolution or
liquidation; (e) either Party shall make a general assignment for the benefit of
its creditors; or (f) either Party shall be subject to any final order of
debarment that can be expected to have a material adverse effect on the sales of
Products.
5.4 EFFECT OF TERMINATION. Termination of this Agreement shall not
affect any obligations of either Party incurred prior to its termination,
including, without limitation, each Party's obligations with respect to Firm
Orders or other binding Purchase Orders that have been submitted or deemed to be
submitted pursuant to ARTICLE 2 hereof.
5.5 TRANSFER OF ASSETS. Upon Buyer's identification of a new
manufacturing site, and in any event no later than six (6) months prior to the
termination of this Agreement, the Parties shall meet and agree upon a plan to
transfer possession of the Manufacturing Assets listed on EXHIBIT 5.5 attached
hereto from Seller or Seller's Affiliates to Buyer or Buyer's Affiliate (the
"TRANSFER PLAN"). The Transfer Plan shall be put into writing and attached
hereto as an exhibit to this Agreement and shall specify the location to which
the Manufacturing Assets (or any replacement equipment) shall be transferred and
shall specify which Manufacturing Assets (or any replacement equipment) are to
be disposed. The Transfer Plan also shall provide for: (a) Seller making
available to Buyer, upon prior notice and for a period no longer than six (6)
months following termination of this Agreement, technical and manufacturing
employees of Seller for reasonable assistance or consultation in connection with
the manufacture of Products, transfer of technology related to the Manufacture
of Products and quality control, quality assurance testing and regulatory
compliance of the Product Line; and (b) providing Buyer with copies of batch
records, quality control testing records, product release, certificates of
manufacture, Product complaint files, Product files and specifications and
labeling information. Transfer of the Manufacturing Assets and the other
information set forth in this SECTION 5.5 shall occur at the earlier of the date
specified in the Transfer Plan or upon termination or expiration of this
Agreement. All of the direct and indirect costs associated with the transfer,
disposal or storage of the Manufacturing Assets (or any replacement equipment),
as specified in the Transfer Plan, and all direct and indirect non-standard
costs of Seller incurred in connection with any consultation, transfer of
technology or other assistance contemplated by the Transfer Plan, including,
without limitation, the non-standard costs of Seller providing its technical and
manufacturing employees, shall be the sole responsibility of Buyer.
16
ARTICLE 6 - CONFIDENTIALITY
6.1 BUYER'S INFORMATION. All information provided by Buyer to Seller
concerning this Agreement shall be maintained in strict confidence by Seller.
Such information shall remain the property of Buyer, and Seller shall not use
the same for or on behalf of any entity other than Buyer or make use of any such
information except for the purposes for which it was provided.
6.2 SELLER'S INFORMATION. Except to the extent Seller may otherwise
agree, all information (other than information included in the Closing Assets
and related exclusively to the Product Line) provided by Seller to Buyer
concerning this Agreement shall be maintained in strict confidence by Buyer.
Such information shall remain the property of Seller, and Buyer shall not make
use of any such information except for the purposes for which it was provided.
Notwithstanding the foregoing, the provisions of this Article 6 shall not apply
to restrict in any manner the use by Buyer and its Affiliates of any
confidential or proprietary information included in the Closing Assets and
related exclusively to the Product Line.
6.3 EXCEPTIONS. The covenants of the receiving party contained in
SECTION 6.1 and SECTION 6.2 shall not apply to information that: (a) is already
in the public domain at the time of disclosure; (b) becomes part of the public
domain through no action or omission of the receiving party after disclosure to
the receiving party; (c) is already known to the receiving party at the time of
disclosure, as evidenced by the receiving party's written records; (d) has been
or is disclosed to the receiving party in good faith by a Third Party who was or
is not, at the time of disclosure, under any obligation of confidence to the
other party hereto at the time the Third Party disclosed such information; or
(e) is required to he disclosed by law. Nothing in this SECTION 6.3 shall be
deemed to supersede, limit or otherwise modify Seller's confidentiality
obligations under SECTION 11.3 of the Asset Purchase Agreement.
6.4 SURVIVAL. This Article 6 shall survive termination of this Agreement
for a period often (10) years.
ARTICLE 7- MISCELLANEOUS
7.1 CORPORATE ORGANIZATION AND AUTHORITY. Each Party represents and
warrants that it is a company duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized, and that
it has all necessary power and authorization to assume its obligations under
this Agreement and to discharge them pursuant to the terms hereof.
7.2 PUBLIC ANNOUNCEMENTS. Neither Party shall make any publicity
releases, interviews or other dissemination of information concerning this
Agreement or its terms, or either Party's performance hereunder, to
communication media, financial analysts or others without the approval of the
other Party, which approval shall not be unreasonably withheld. Either Party may
upon notice to the other make any disclosure in filings with regulatory agencies
as required by law or applicable court order; provided, however, that the other
Party shall have the opportunity to consult on such disclosures and filings.
7.3 FORCE MAJEURE. Neither Party shall be liable to the other if, and to
the extent that, the performance or delay in performance of any of its
obligations under this Agreement is prevented, restricted, delayed or interfered
with due to circumstances beyond the reasonable
17
control of such Party, including, without limitation, government legislation,
fires, floods, explosions, epidemics, accidents, acts of God, wars, riots,
strikes, lockouts or other concerted acts of workers and/or acts of government.
The Party claiming an event of force majeure shall promptly notify the other
Party in writing and provide full particulars of the cause or event (to the
extent known) and the date of first occurrence thereof as soon as possible after
the event and also keep the other Party informed of any further developments.
The Party so affected shall use its commercially reasonable efforts to remove
the cause of non-performance, and both Parties shall resume performance
hereunder with the utmost dispatch when such cause is removed unless this
Agreement has previously been terminated under ARTICLE 5 hereof.
7.4 ENTIRE AGREEMENT. This Agreement and the other agreements entered
into in connection herewith contain the entire agreement and understanding
between the Parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, whether written or oral,
relating to such subject matter; provided, however, that except as otherwise
expressly agreed by the Parties, nothing herein shall modify or supersede the
Asset Purchase Agreement or any of the Other Agreements.
7.5 AMENDMENT AND WAIVER. This Agreement may be amended only by a
writing that specifically states that such is an amendment, specifically states
its purpose and is signed by both Parties. No course of dealing between the
Parties or failure by either Party to exercise any right or remedy hereunder
shall constitute an amendment to this Agreement or a waiver of any other right
or remedy or the later exercise of any right or remedy.
7.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive law of the State of Illinois without regard to
the conflicts of law provisions thereof.
7.7 ALTERNATIVE DISPUTE RESOLUTION. Any dispute, controversy or claim
arising out or relating to this Agreement, or the breach, termination or
invalidity thereof, which is not settled by written agreement between the
Parties shall be finally settled pursuant to the alternative dispute resolution
procedures set forth in EXHIBIT 7.7 attached hereto.
7.8 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns; provided, however, that except as otherwise
provided herein, no Party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without first receiving the prior
written consent of the other Party, except that (a) either Party may assign or
delegate its rights and duties hereunder to any Affiliate of such Party without
obtaining such consent if the assigning Party guarantees the performance by such
Affiliate of the assigning Party's obligations under this Agreement, (b) Seller
may assign or delegate its rights and duties hereunder without obtaining such
consent to any party or entity that acquires substantially all of the business
or assets of the Ross Products Division of Seller, if the acquiring party
expressly assumes Seller's obligations hereunder and (c) Buyer may assign or
delegate its rights and duties hereunder without obtaining such consent to any
party or entity that acquires substantially all of the business or assets of
Buyer, if Buyer guarantees the performance of the acquiring party and the
acquiring party expressly assumes the Buyer's obligations hereunder.
18
7.9 NATURE OF AGREEMENT. In operating under this Agreement, each Party
shall act independently, and this Agreement shall not be construed as creating
any partnership, joint venture or incorporated business entity. Neither Party
shall have any authority to incur any liability or obligation whatsoever on
behalf of the other.
7.10 NOTICES. All communications, notices and consents provided for
herein shall be in writing and be given in person or by means of telex,
facsimile or other means of wire transmission (with request for assurance of
receipt in a manner typical with respect to communications of that type), by
overnight courier or by mail, and shall become effective: (a) on delivery if
given in person; (b) on the date of transmission if sent by telex, facsimile or
other means of wire transmission; (c) one (1) Business Day after delivery to the
overnight service; or (d) four (4) Business Days after being deposited in the
United States mails, with proper postage and documentation, for first-class
registered or certified mail, prepaid.
Notices shall be addressed as follows:
if to Buyer, to:
Prestige Brands International, Inc.
26811 South Bay Drive
Suite 300
Bonita Springs, Florida 34134
Attn: Ted Host, Chief Executive Officer
Facsimile Number: (941) 948-8551
with copies to:
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
Attn: T. Justin Moore, III, Esq.
Facsimile Number: (804) 788-8218
If to Seller, to:
Abbott Laboratories
100 Abbott Park Road
Building AP6D, Department 364
Abbott Park, Illinois 60064-6020
Attn: Senior Vice President, Secretary and General
Counsel
Facsimile Number: (847) 938-6277
with copies to:
Jones, Day, Reavis & Pogue
1900 Huntington Center
Columbus, Ohio 43215
Attn: Randall M. Walters
Facsimile Number: (614) 461-4198
19
provided, however, that if any Party shall have designated a different address
by notice to the others pursuant to this SECTION 7.10, then to the last address
so designated.
7.11 COUNTERPARTS. This Agreement maybe executed in one or more
counterparts (including by means of faxed signature pages), all of which shall
be considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the Parties and delivered to
the other Party.
* * * * * * * *
20
IN WITNESS WHEREOF, the Parties have affixed hereunto their authorized
signature as follows:
By: /s/ GARY FLYNN
-------------------------------------
Gary L. Flynn
President, Ross Products Division,
Abbott Laboratories
EXHIBIT 1.1 - PRODUCTS
Clear eyes(R)
UNITED STATES
LIST NUMBER DESCRIPTION
02541-04-05 Clear Eyes Lubricant
02541-04-09 Clear Eyes Lubricant
02541-04-12 Clear Eyes 1.0 fl. oz. $0.70 IRC
02541-04-15 Clear Eyes Twin-Pack
02541-04-18 Clear Eyes 100% MF
02541-04-28 Clear Eyes Pocket Pal
02541-04-51 Clear Eyes 0.5 fl. oz. $0.40 IRC
02541-04-58 Clear Eyes 1.0 fl. oz
02541-04-79 Clear Eyes 0.2 fl. oz. Clip Strip
02541-04-82 Clear Eyes Pocket Pal Bulk
02541-04-83 Clear Eyes (100% MF)
06592-04-01 Clear Eyes ACR
06592-04-10 Clear Eyes ACR
06592-04-33 Clear Eyes ACR $0.40 IRC
06592-04-36 Clear Eyes ACR $0.70 IRC
06592-04-50 Clear Eyes ACR (100% MF)
06592-04-53 Clear Eyes ACR (100% MF)
06592-04-83 Clear Eyes ACR (100% MF)
06532-04-01 Clear Eyes CLR
06532-04-10 Clear Eyes CLR 0.5 fl. oz. IRC
06532-04-13 Clear Eyes CLR 1.0 fl. oz. IRC
06532-04-20 Clear Eyes CLR 1 fl. oz. IRC
06532-04-23 Clear Eyes CLR 1 fl. oz. IRC
06532-04-50 Clear Eyes CLR
06532-04-24 Clear Eyes CLR (100% MF)
03980-04-03 Clear Eyes Pocket Pal for Lil'
00713-04-01 Say-On 0.5 fl. oz.
03980-04-01 Clear Eyes Pocket Pal for Mechanical Servants - Kroger
06086-04-01 Equate Eye Drops 0.5 fl. oz.
06086-04-05 Equate 1.0 fl. oz.-- WalMart
06686-04-01 Osco 0.5 fl. oz.
INTERNATIONAL
LIST NUMBER DESCRIPTION
18796-54-05 Murine Clear Eyes (Australian)
02541-13-15 Clear Eyes for Canada
02541-13-30 Clear Eyes for Canada
02541-39-15 Clear Eyes New Zealand
02541-39-22 Clear Eyes Pocket Pal for New Zealand
02541-54-05 Clear Eyes International
02541-54-09 Clear Eyes International
02541-54-60 Clear Eyes Bulk Pack
02541-88-05 Clear Eyes Venezuela
02541-88-15 Clear Eyes (Chile)
06532-28-28 Clear Eyes Hong Kong
06592-13-01 Clear Eyes ACR Canada
06592-39-95 Clear Eyes ACR New Zealand
06592-54-56 Clear Eyes ACR, 30 mL
06592-54-57 Clear Eyes ACR, 15 mL
0G662-28-36 Murine Plus Hong Kong
02536-53-53 Murine - UK
EXHIBIT 1.2 - PRODUCTS
MURINE TEARS(R)
UNITED STATES
LIST NUMBER DESCRIPTION
02652-04-05 Murine Tears Plus 0.5 fl. oz.
02652-04-26 Murine Tears Plus 1.0 fl. oz.
02652-04-56 Murine Plus $0.55 IRC
02652-04-66 Murine 1.0 fl. oz. $2.00 Refund
02652-04-81 Murine 1.0 fl. oz. $0.75 IRC
05574-04-05 Murine Opthalmic Solution
05574-04-16 Murine Opthalmic Solution
05574-04-22 Murine Bulk Pak
05574-04-66 Murine 1.0 fl. oz. $2.00 Refund
05574-04-81 Murine 1.0 fl. oz. $0.75 IRC
05574-04-87 Murine .50 .55 IRC
03756-04-01 Eye Drops 0.5 fl. oz. - Walmart
INTERNATIONAL
LIST NUMBER DESCRIPTION
02652-08-05 Murine Plus 0.5 fl. oz. Malaysia
02652-28-36 Murine Plus Hong Kong
02652-54-05 Murine Plus International
02652-88-05 Murine Plus Chile
05574-08-05 Murine 0.5 fl. oz. Malaysia
05574-13-15 Murine 0.50 fl. oz. Canada
05574-13-30 Murine 1.0 fl. oz. Canada
05574-28-05 Murine F/Hong Kong
05574-54-05 Murine International
05574-54-10 Murine Rev Eyes, Australia
05574-54-91 Murine TFE's (Australian)
18797-54-05 Murine Eye Drops (Australian)
EXHIBIT 1.3 - PRODUCTS
MURINE(R) EAR CARE
UNITED STATES
LIST NUMBER DESCRIPTION
07362-04-01 Murine Ear Drops System
07362-04-03 Murine Ear Drops Refill
07362-04-76 Murine Ear Drops Systems $0.55 IRC
07362-04-79 Murine Ear Drops - $2.50 Refund
07362-04-92 Ear Drops Refill $1.50 Refund
07362-04-87 Murine Ear Care Refill
07165-04-01 Walgreen Ear Drops
INTERNATIONAL
LIST NUMBER DESCRIPTION
07362-13-01 Murine Ear Drops
07362-54-95 Murine Ear Drop Systems
07362-54-96 Murine Ear Drops Refill
EXHIBIT 2.2(a) -- INITIAL FORECAST
[TO BE SUBMITTED BY BUYER NO LATER THAN THIRTY (30) DAYS AFTER THE EFFECTIVE
DATE.]
EXHIBIT 2.3(a) - STANDARD FACTORY COSTS AND STANDARD MANUFACTURING BATCHES
See attached.
21
EXHIBIT 2.3a_a
CLEAR EYES FAMILY STANDARD BATCH SIZES AND PRICING FOR 2003
LIST/LABEL
CODE/SIZE CODE
BULK BATCH SOURCED FROM **APPROXIMATE SOLN STD BATCH
BULK LIST # BULK NAME SIZE(S) BULK DESCRIPTION (L)/1000 UNITS SIZE (UNITS)
---------------------------------------------------------------------------------------------------------------------------------
02541 Clear Eyes 8630L U.S.
-----------------
2900L 02541-04-05 CLEAR EYES LUBRICANT 16.9 470,000
02541-04-09 CLEAR EYES LUBRICANT 32.5 83,500
02541-04-12 CLEAR EYES 1.0 FL. OZ. $0.70 IRC 33.8 60,000
02541-04-15 CLEAR EYES TWIN PACK 64.8 18,000
02541-04-18 CLEAR EYES 100% MF 30.0 70,000
02541-04-28 CLEAR EYES POCKET PAL 6.5 150,000
02541-04-51 CLEAR EYES 0.5 FL. OZ. $0.40 IRC 17.6 50,000
02541-04-58 CLEAR EYES 1.0 FL. OZ. 32.5 88,000
02541-04-79 CLEAR EYES 0.2 FL. OZ. CLIP STRIP 6.5 48,000
02541-04-82 CLEAR EYES POCKET PAL BULK 6.5 100,000
02541-04-83 CLEAR EYES (100% MF) 33.8 70,000
CLEAR EYES POCKET PAL FOR 125,000
MECHANICAL SERVANTS - KROGER
03980-04-01 6.5
03980-04-03 CLEAR EYES POCKET PAL FOR LIL' 6.5 30,000
-----------------
INTERNATIONAL
-----------------
02541-13-15 CLEAR EYES FOR CANADA 16.9 9,000
02541-13-30 CLEAR EYES FOR CANADA 32.5 2,300
02541-39-15 CLEAR EYES NEW ZEALAND 16.9 39,996
02541-39-22 CLEAR EYES POCKET PAL FOR NEW 35,000
ZEAL 6.5
02541-54-05 CLEAR EYES INTERNATIONAL 16.9 30,000
02541-54-09 CLEAR EYES INTERNATIONAL 39.0 15,000
02541-54-60 CLEAR EYES BULK PACK 6.5 30,000
02541-88-05 CLEAR EYES VENEZUELA 15.9 300,000
02541-88-15 CLEAR EYES (CHILE) 16.9 30,000
---------------------------------------------------------------------------------------------------------------------------------
06592 Clear Eyes ACR 2842L U.S.
-----------------
06592-04-01 CLEAR EYES ACR 17.6 167,000
06592-04-10 CLEAR EYES ACR 32.5 15,000
06592-04-33 CLEAR EYES ACR $0.40 IRC 16.9 132,000
06592-04-36 CLEAR EYES ACR $0.70 IRC 33.8 16,000
06592-04-50 CLEAR EYES ACR (100% MF) 33.8 16,000
06592-04-53 CLEAR EYES ACR (100% MF) 33.8 170,000
06592-04-83 CLEAR EYES ACR (100% MF) 170,000
INTERNATIONAL
06592-13-01 CLEAR EYES ACR CANADA 16.9 5,000
06592-39-95 CLEAR EYES ACR NEW ZEALAND 17.6 20,000
06592-54-56 CLEAR EYES ACR, 30 mL 32.5 6,500
06592-54-57 CLEAR EYES ACR, 15 mL 17.6 120,000
---------------------------------------------------------------------------------------------------------------------------------
06532 Clear Eyes CLR 1800 L U.S
-----------------
1200 L 06532-04-01 CLEAR EYES CLR 17.6 105,000
06532-04-10 CLEAR EYES CLR 0.5 FL OZ IRC 16.9 50,000
06532-04-13 CLEAR EYES CLR 1.0 FL OZ IRC 33.8 25,000
06532-04-20 CLEAR EYES CLR 1.0 FL OZ IRC 33.8 25,000
06532-04-23 CLEAR EYES CLR 1.0 FL OZ IRC 33.8 25,000
06532-04-24 CLEAR EYES CLR (100% MF) 33.8 25,000
06532-04-50 CLEAR EYES CLR 33.8 12,000
-----------------
INTERNATIONAL
-----------------
06532-28-28 CLEAR EYES - HONG KONG 16.9 30,000
---------------------------------------------------------------------------------------------------------------------------------
11010 Sterile eye 2850 L U.S.
Redness Releiver -----------------
(Visine Knock- 06086-04-01 EQUATE EYE DROPS 0.5 FL OZ 17.6 167,000
Off) -----------------
06086-04-05 EQUATE 1.0 FL OZ - WALMART 32.3 83,500
-----------------
00713-04-01 SAV-ON 0.5 FL OZ 16.4 30,000
-----------------
06686-04-01 OSCO 0.5 FL OZ 16.9 40,000
-----------------
INTERNATIONAL
-----------------
0G662-28-36 MURINE PLUS HONG KONG 16.9 50,004
---------------------------------------------------------------------------------------------------------------------------------
18796 Murine Clear 1800 L INTERNATIONAL
Eyes (Australian) -----------------
18796-54-05 MURINE CLEAR EYES Full Batch 96,676
(AUSTRALIAN)
---------------------------------------------------------------------------------------------------------------------------------
02536 Murine UK 1290 L INTERNATIONAL
---------------------------------------------------------------------------------------------------------------------------------
02536-53-53 MURINE - UK Full Batch 90,000
---------------------------------------------------------------------------------------------------------------------------------
***
** APPROXIMATE SOLUTION (L)/1000 UNITS CALCULATED AS FOLLOWS:
Fill Volume x (1L/1000 mL) x 1000 units x Scrap Factor
WHERE:
Fill Volume = 6 mL, 15 mL, or 30 mL
Scrap Factor is product specific and ranges from 1.0 to 1.3
EXHIBIT 2.3a_b
MURINE TEARS FAMILY STANDARD BATCH SIZES AND PRICING FOR 2003
LIST/LABEL
CODE/SIZE CODE
BULK BATCH SOURCED FROM **APPROXIMATE SOLN STD BATCH
BULK LIST # BULK NAME SIZE(S) BULK DESCRIPTION (L)/1000 UNITS SIZE (UNITS)
---------------------------------------------------------------------------------------------------------------------------------
05574 Murine Tears 2850 L U.S.
-----------------
05574-04-05 MURINE OPTHALMIC SOLUTION 17.6 150,000
05574-04-16 MURINE OPTHALMIC SOLUTION 32.5 40,000
05574-04-22 MURINE BULK PAK 6.5 70,000
05574-04-66 MURINE 1.0 FL. OZ. $2.00 REFUND 33.8 40,000
05574-04-81 MURINE 1.0 FL. OZ. $0.75 IRC 33.8 25,000
05574-04-87 MURINE .50 .55 IRC 16.9 100,000
03756-04-01 EYE DROPS 0.5 FL. OZ. - WALMART 17.6 60,000
-----------------
INTERNATIONAL
-----------------
05574-08-05 MURINE 0.5 FL. OZ. MALAYSIA 19.1 50,000
05574-13-15 MURINE 0.50 FL. OZ CANADA 16.9 9,000
05574-13-30 MURINE 1.0 FL. OZ. CANADA 33.8 1,750
05574-28-05 MURINE F/HONG KONG 16.9 30,000
05574-54-05 MURINE INTERNATIONAL 16.9 30,000
05574-54-10 MURINE REV EYES - AUSTRALIA 16.9 30,000
05574-54-91 MURINE TFE's (Australian) 16.9 91,000
---------------------------------------------------------------------------------------------------------------------------------
02652 Murine Tears 2850 L U.S.
Plus -----------------
Tetrahydrazoline 02652-04-05 MURINE TEARS PLUS 0.5 FL.OZ 16.9 150,000
02652-04-26 MURINE TEARS PLUS 1.0 FL.OZ. 32.5 15,000
02652-04-56 MURINE PLUS $0.55 IRC 16.9 100,000
02652-04-66 MURINE 1.0 FL. OZ. $2.00 REFUND 33.8 20,000
02652-04-81 MURINE 1.0 FL. OZ. $0.75 IRC 33.8 10,000
-----------------
INTERNATIONAL
-----------------
02652-08-05 MURINE PLUS 0.5 FL OZ MALAYSIA 16.9 30,000
02652-28-36 MURINE PLUS HONG KONG 16.9 30,000
02652-54-05 MURINE PLUS INTERNATIONAL 16.9 30,000
02652-88-05 MURINE PLUS CHILE 15.0 30,000
---------------------------------------------------------------------------------------------------------------------------------
18797 Murine Eye 1800 L INTERNATIONAL
Drops -----------------
(Australian) 18797-54-05 MURINE EYE DROPS (Australian) Full Batch 91,000
---------------------------------------------------------------------------------------------------------------------------------
***
** APPROXIMATE SOLUTION (L)/1000 UNITS CALCULATED AS FOLLOWS:
Fill Volume x (1L/1000 mL) x 1000 units x Scrap Factor
WHERE:
Fill Volume = 6 mL, 15 mL, or 30 mL
Scrap Factor is product specific and ranges from 1.0 to 1.3
EXHIBIT 2.3a_c
MURINE EAR CARE FAMILY STANDARD BATCH SIZES AND PRICING FOR 2003
LIST/LABEL
CODE/SIZE CODE
BULK BATCH SOURCED FROM **APPROXIMATE SOLN STD BATCH
BULK LIST # BULK NAME SIZE(S) BULK DESCRIPTION (L)/1000 UNITS SIZE (UNITS)
---------------------------------------------------------------------------------------------------------------------------------
07362 Murine Ear 2000 L U.S.
Drops -----------------
07165-04-01 WALGREEN EAR DROPS 18.2 60,000
07362-04-01 MURINE EAR DROPS SYSTESM 15.5 124,500
07362-04-03 MURINE EAR DROPS REFILL 15.5 124,500
07362-04-76 MURINE EAR DROPS SYSTEMS $0.55 IRC 15.5 60,000
07362-04-79 MURINE EAR DROPS $2.50 REFUND 15.5 60,000
40,000
07362-04-92
07362-04-87 MURINE EAR CARE REFILL 15.5 40,000
-----------------
INTERNATIONAL
-----------------
07362-13-01 MURINE EAR DROPS 15.5 35,000
07362-54-95 MURINE EAR DROP SYSTEMS 15.5 30,000
07362-54-96 MURINE EAR DROPS REFILL 15.5 25,000
---------------------------------------------------------------------------------------------------------------------------------
***
** APPROXIMATE SOLUTION (L)/1000 UNITS CALCULATED AS FOLLOWS:
Fill Volume x (1L/1000 mL) x 1000 units x Scrap Factor
WHERE:
Fill Volume = 6 mL, 15 mL, or 30 mL
Scrap Factor is product specific and ranges from 1.0 to 1.3
EXHIBIT 5.5 - MANUFACTURING ASSETS
EQUIPMENT
ASSET # DESCRIPTION MANUFACTURER MODEL NUMBER SERIAL NUMBER SIZE/CAPACITY
------- ----------- ------------ ------------ ------------- -------------
F1956 Autoclave Finn-Aqua
Line 25
S-3186 Unscrambler Hoppman Series 40 1697 0.5 oz Oval; 0-300 BPM
S-3186 Filler/Plugger/Capper TL Systems TPO 7406 0.5 oz Oval; 0-300 BPM
LC946091 Level Cap Sensor DVT 720 14053
LC950122 Outfeed Conveyor Automatic Feeder AG05760
S3721 Accumulating Table Ambec Accumulating Table
O-2885 Turntable
S-3725 Accumulating Table Ambec Metering Conveyor AM 3725
S3198 Labeler New Jersey Machine 4HD 311LLRRDB337 1186-162 0.5 and 1.0 oz Oval
Front and Back
LC948175 Printer Video Jet (Labeler) Video Jet Excel 170 IHS 982510051WD 0-1500 BPM
LC948512 Printer Video Jet (Labeler) Video Jet Excel 1701 82740034WD
LC963275 Printer Video Jet (cartoner) Video Jet Excel 781 1940010WD 0-1500BPM
S3739 Cartoner Glue Thiele Series 60 60271 0-400 CPM
LC911760 Wrapper Infeed Conveyor Do-Boy Microtronic 96-18259 0-400 CPM
LC911894 Doboy Wrapper Do-Boy Microtronic 96-18258 0-400 CPM
S3735 Shrink Tunnel Shanklin T-62 T83187
FK7114 Printer Video Jet (Logo) Video Jet Excel 100 E94E27017
S-4263 Bundler/Wrapper Scandia 110 25940
LC-907687 Case Packer Thiele Engineering Series 400 9408 12,24,36 Pack RSC Cases
LC-910443 Coupon Placer Label-Aire MOD.211CD 0107169511A
MOD.211-M 6/94458707
MOD.211-M 6/94428707
Line 26
S-3759 Unscrambler Omega 3D-LP-CR 11701
S-3716 Filler/Plugger/Capper Chase-Logemen FPCC3012H 4531085 0-120 BPM
FK-5320 Level Cap Sensor DVT 800 0.2 oz and 1.0 oz Oval
LC968741 Pressureless Combiner Ambec 5415-1 and
5415-29
S-3729 Labeler Accraply P.S. (4 head) 4000-L 1992 0.2 oz and 1.0 oz Oval
S-3730 Cartoner, Glue R.A. Jones CMC 2732
S3736 Infeed Metering Conveyor Runway Enterprises GA 3736 0-200 CPM
S-3718 Wrapper Do-Boy Super H-SK 83-20491 0-200 CPM
S-3719 Heat Tunnel Shanklin T-62 T-83129
LC996996 Semi-Automatic Case Packer ABC Packaging Co. SP-19 23136 Up to 10 cases/min
S-3720 Bundler/Wrapper Scandia 110 5988
S-4317 Case Labeler/Apply Superior Machine Genesis 9500 90395261
S-4316 Case Labeler/Apply Superior Machine Genesis 9500 90295254
LC984699 Blister Machine D.T. Sencorp HP-15 61223901 120BPM 10 cycles/Min.
Other Eyecare Equipment
NN-9080 Tank 707**2950 Liter Vesselcraft M019571-C
FJ-6335 Lightnin Mixer Lightnin
NN-9081 Tank 727** 2950 Liter Vesselcraft M-19571-B
FJ-6334 Lightnin Mixer Lightnin
T-2609 Tank 737** Vesselcraft M-19571-A
S-3727 Lightnin Mixer Lightnin
Q-2851 Tank 747**2250 Gal. Northland 863271
FJ-6306 Lightnin Mixer Lightnin
Q-3501 Tank 757** Precision 5833
IM-1291 Control Panel (750 gal)
LC085336 Control Panel (Yokogawa Rec.)
IM-1293 Control Panel (Temp) DX22012A22 124935407
LC085337 Yokogawa Recorder
* All Manufacturing Assets Located at Seller's North Chicago Plant.
** Significant engineering and other costs would be incurred in
transferring this equipment to another manufacturing site. Costs may be greater
than purchase of new equipment.
- Scope of Project: Remove roof and lift out of current location with crane
and/or helicopter.
EXHIBIT 7.7 -- ALTERNATIVE DISPUTE RESOLUTION
The Parties recognize that from time to time a dispute may arise relating
to either Party's rights or obligations under this Agreement. The Parties agree
that any such dispute shall be resolved by the Alternative Dispute Resolution
("ADR") provisions set forth in this Exhibit 7.7, the result of which shall be
binding upon the Parties.
To begin the ADR process, a Party first must send written notice of the
dispute to the other Party for attempted resolution by good faith negotiations
between their respective presidents (or their designees) of the affected
subsidiaries, divisions or business units within twenty-eight (28) days after
such notice is received (all references to "days" in this ADR provision are to
calendar days). if the matter has not been resolved within twenty-eight (28)
days of the notice of dispute, or if the Parties fail to meet within such
twenty-eight (28) days, either Party may initiate an ADR proceeding as provided
herein. The Parties shall have the right to be represented by counsel in such a
proceeding.
1. To begin an ADR proceeding, a Party shall provide written notice to the
other Party of the issues to be resolved by ADR. Within fourteen (14) days
after its receipt of such notice, the other Party may, by written notice to
the Party initiating the ADR, add additional issues to be resolved within
the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR notice,
the Parties shall select a mutually acceptable neutral to preside in the
resolution of any disputes in this ADR proceeding. if the Parties are
unable to agree on a mutually acceptable neutral within such period, either
Party may request the President of the CPR Institute for Dispute Resolution
("CPR"), 366 Madison Avenue, 14th Floor, New York, New York 10017, to
select a neutral pursuant to the following procedures:
(a) The CPR shall submit to the Parties a list of not less than five (5)
candidates within fourteen (14) days after receipt of the request,
along with a Curriculum Vitae for each candidate. No candidate shall
be an employee, director or shareholder of either Party or any of
their subsidiaries or Affiliates.
(b) Such list shall include a statement of disclosure by each candidate of
any circumstances likely to affect his or her impartiality.
(c) Each Party shall number the candidates in order of preference (with
the number one (1) signifying the greatest preference) and shall
deliver the list to the CPR within seven (7) days following receipt of
the list of candidates. If a Party believes a conflict of interest
exists regarding any of the candidates, that Party shall provide a
written explanation of the conflict to the CPR along with its list
showing its order of preference for the candidates. Any Party failing
to return a list of preferences on time shall be deemed to have no
order of preference.
(d) if the Parties collectively have identified fewer than three (3) candidates
deemed to have conflicts, the CPR immediately shall designate as the neutral the
candidate for whom the Parties collectively have indicated the greatest
preference. if a tie should result between two candidates, the CPR may designate
either candidate. If the Parties collectively have identified three (3) or
more candidates deemed to have conflicts, the CPR shall review the explanations
regarding conflicts and, in its sole discretion, may either (i) immediately
designate as the neutral the candidate for whom the Parties collectively have
indicated the greatest preference, or (ii) issue a new list of not less than
five (5) candidates, in which case the procedures set forth in subparagraphs
2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56) days
after selection, the neutral shall hold a hearing to resolve each of the
issues identified by the Parties. The ADR proceeding shall take place at a
location agreed upon by the Parties. If the Parties cannot agree, the
neutral shall designate a location other than the principal place of
business of either Party or any of their subsidiaries or Affiliates.
4. At least seven (7) days prior to the hearing, each Party shall submit the
following to the other Party and the neutral:
(a) A copy of all exhibits on which such Party intends to rely in any oral
or written presentation to the neutral;
(b) A list of any witnesses such Party intends to call at the hearing, and
a short summary of the anticipated testimony of each witness;
(c) A proposed ruling on each issue to be resolved, together with a
request for a specific damage award or other remedy for each issue.
The proposed rulings and remedies shall not contain any recitation of
the facts or any legal arguments and shall not exceed one (1) page per
issue.
(d) A brief in support of such Party's proposed rulings and remedies;
provided, however, that the brief shall not exceed twenty (20) pages.
This page limitation shall apply regardless of the number of issues
raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d) above, no
discovery shall be required or permitted by any means, including
depositions, interrogatories, requests for admissions or production of
documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each Party shall be entitled to five (5) hours of hearing time to
present its case. The neutral shall determine whether each Party has
had the five (5) hours to which it is entitled.
(b) Each Party shall be entitled, but not required, to make an opening
statement, to present regular and rebuttal testimony, documents or
other evidence, to crossexamine witnesses, and to make a closing
argument. Cross-examination of witnesses shall occur immediately after
their direct testimony, and crossexamination time shall be charged
against the Party conducting the crossexamination.
(c) The Party initiating the ADR shall begin the hearing and, if it
chooses to make an opening statement, shall address not only issues it
raised but also any issues raised by the responding Party. The
responding Party, if it chooses to make an opening statement, also
shall address all issues raised in the ADR. Thereafter, the
presentation of regular and rebuttal testimony and documents, other
evidence and closing arguments shall proceed in the same sequence.
(d) Except when testifying, witnesses shall be excluded from the hearing
until closing arguments.
(e) Settlement negotiations, including any statements made therein, shall
not be admissible under any circumstances. Affidavits prepared for
purposes of the ADR hearing also shall not be admissible. As to all
other matters, the neutral shall have sole discretion regarding the
admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each Party may
submit to the other Party and the neutral a post-hearing brief in support
of its proposed rulings and remedies; provided, however, that such brief
shall not contain or discuss any new evidence and shall not exceed ten (10)
pages. This page limitation shall apply regardless of the number of issues
raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the Parties on each
disputed issue but may adopt one Party's proposed rulings and remedies on
some issues and the other Party's proposed rulings and remedies on other
issues. The neutral shall not issue any written opinion or otherwise
explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the
prevailing Party (including all expert witness fees and expenses), the fees
and expenses of a court reporter, and any expenses for a hearing room,
shall be paid as follows:
(a) If the neutral rules in favor of one Party on all disputed issues in
the ADR, the losing Party shall pay 100% of such fees and expenses.
(b) If the neutral rules in favor of one Party on some issues and the
other Party on other issues, the neutral shall issue with the rulings
a written determination as to how such fees and expenses shall be
allocated between the Parties. The neutral shall allocate fees and
expenses in a way that bears a reasonable relationship to the outcome
of the ADR, with the Party prevailing on more issues, or on issues of
greater value or gravity, recovering a relatively larger share of its
legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall be
binding, nonreviewable and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 above or as required by law, the
existence of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings and briefs),
and the rulings shall be deemed confidential information. The neutral shall
have the authority to impose sanctions for unauthorized disclosure of
confidential information.
Notwithstanding the foregoing, after the initiation of an ADR proceeding
described in numbered paragraph 1, but before the selection of a neutral as
described in numbered paragraph 2, the Parties may agree to submit the issues in
dispute to mediation. If one of the Parties does not agree to mediation, then
the process described beginning at numbered paragraph 2 and following shall be
implemented. If the Parties are in agreement to pursue mediation, then they
shall agree on the selection of a mediator and the mediation shall proceed
pursuant to the procedure established by the mediator. The mediation shall take
place within forty-five (45) days following receipt of the original ADR notice.
If the remediation is not successful in resolving all issues identified as a
result of the process described in numbered paragraph 1, then the process
described in this Exhibit 7.7 shall proceed pursuant to the time periods
established herein. The time during which the Parties pursue mediation shall
toll the time periods established in this Exhibit 77.
EXHIBIT 2.3a_c REV. 3\
MURINE EAR CARE FAMILY STANDARD BATCH SIZES AND PRICING FOR 2003
List Total
Bulk Sourced Trade Singles/ Bottles
Bulk Bulk Batch from Label Size Unite Sales Carriers/ Carrier/ Per
List # Name Size(s) Bulk Code Code Code Size UPC Codes Description Case Case Case
--------------------------------------------------------------------------------------------------------------------------------
Murine
Ear
07362 Drops 2000 L U.S.
--------------------------------------------------------------------------------------------------------------------------------
07165 04 01 01 04 311917000220 Walgreen Ear Drops 6 6 36
07362 04 01 01 02 300747362011 Murine Ear Drops Systems 6 6 36
07362 04 03 03 06 300747362035 Murine Ear Drops Refill 6 6 36
Murine Ear Drops System
07362 04 76 01 07 300747362011 $0.55 IRC 6 6 36
Murine Ear Drops $2.50
07362 04 79 01 08 300747362011 Refund 6 6 36
Murine Ear Drops Refill
07362 04 92 03 13 300747362035 $1.50 Refund 6 6 36
07362 04 57 03 14 300747362035 Murine Ear Care Refill 6 6 36
INTERNATIONAL
07362 13 01 No barcode Murine Ear Drops 0 350 350
07362 54 95 No barcode Murine Ear Drop Systems 6 6 36
07362 54 96 No barcode Murine Ear Drops Refill 6 5 36
**Approximate
Bulk Bulk Singles Soln(L)/1000 Std Batch
List # Name Description units Size (Unites)
-----------------------------------------------------------
Murine
Ear
07362 Drops
-----------------------------------------------------------
0.5 FL OZ 18.2 60,000
0.5 FL OZ 15.5 124,500
0.5 FL OZ 15.5 124,500
0.5 FL OZ 15.5 60,000
0.5 FL OZ 15.5 60,000
0.5 FL OZ 15.5 40,000
0.5 FL OZ 15.5 40,000
0.5 FL OZ 15.5 35,000
0.5 FL OZ 15.5 30,000
0.5 FL OZ 15.5 25,000
***
** APPROXIMATE SOLUTION ACCEPTED BY: DATED: 8/11/03 ACCEPTED BY:
(L)/1000 UNITS CALCULATED AS
FOLLOWS:
Fill Volume X (1L/1000 mL) /s/ KAY PEEL /s/ CYNTHIA B. SATTERWHITE
X 1000 units X Scrap Factor ---------------------------- --------------------------
WHERE: ABBOT LABORATORIES PRESTIGE BRANDS INTERNATIONAL
Fill Volume = 15 mL KAY PEEL 7/15/03
L-7165 Scrap Factor =1.21 VICE PRESIDENT OPERATIONS
L-7362 Scrap Factor = 1.03
EXHIBIT 2.3a_b REV. 5
MURINE EAR CARE FAMILY STANDARD BATCH SIZES AND PRICING FOR 2003
REVISION A
List
Bulk Sourced Trade Singles/
Bulk Batch from Label Size Unite Sales Carrier/
List # Bulk Name Size(s) Bulk Code Code Code Size UPC Codes Description Carriers/Case Case
---------------------------------------------------------------------------------------------------------------------------------
Murine
05574 Tears 2850 L U.S.
05574 04 05 05 09 300745574058 Murine Opthalmic Solution 6 6
05574 04 16 16 10 300745574164 Murine Opthalmic Solution 6 6
05574 04 22 22 11 300745574225 Murine Bluk Pak 0 45
05574 04 41 18 15 300745574164 Murine Tears 100% MF 6 6
05574 04 56 16 12 300745574164 Murine 1.0 FL OZ $2.00 Refund 6 6
05574 04 81 16 13 300745574164 Murine 1.0 FL OZ $0.75 IRC 6 6
05574 04 87 05 14 300745574058 Murine .50 .55 IRC 6 6
03756 04 01 01 03 300743756029 Eye Drops 0.5 FL OZ - Walmart 6 6
INTERNATIONAL
05574 08 05 8888426557450EAN Murine 0.5 FL OZ Malaysia 6 6
05574 13 15 055325557418 Murine 0.50 FL OZ Canada 1 1
05574 13 30 055325557432 Murine 1.0 FL OZ Canada 1 1
05574 28 05 4891035557401EAN Murine F/Hong Kong 6 6
05574 54 05 No barcode Murine International 6 6
05574 54 10 9310185557420EAN Murine Rev Eyes-Australia 6 6
05574 54 91 No barcode Murine TFE's (Australian) 0 145
Murine
Tears
Plus
Tetra-
02652 hydrazoline 2850 L U.S.
02652 04 05 05 04 300742652058 Murine Tears Plus 0.5 FL OZ 6 6
02652 04 26 28 07 300742652261 Murine Tears Plus 1.0 FL OZ 6 6
02652 04 58 05 09 300742652056 Murine Plus $0.55 IRC 6 6
02652 04 58 28 11 300742652261 Murine 1.0 FL OZ $2.00 Refund 6 6
02652 04 51 28 13 300742652261 Murine 1.0 FL OZ $0.75 IRC 6 6
INTERNATIONAL
02652 08 05 8888426265256 EAN Murine Plus 0.5 FL OZ Malaysia 6 6
02652 28 38 4891035265207 EAN Murine Plus Hong Kong 6 6
02652 54 05 No barcode Murine Plus International 6 6
02652 54 55 No barcode Murine Sore Eyes Australia 6 6
02652 88 05 7800009745314 EAN Murine Plus Chile 6 6
INTERNATIONAL
Murine Eye
Drops
18797 (Australia) 1800 L 18797 54 05 No barcode Murine Eye Drops (Australia) 0 145
Total
Bulk Bottles Singles **Approximate Soln Std Batch Siz
List # Bulk Name Per Case Description (L)/1000 units (Unites)
----------------------------------------------------------------------------
Murine
05574 Tears
36 0.5FL OZ 17.6 150,000
36 1.0 FL OZ 32.5 40,000
48 6 MIL 6.5 70,000
36 1.0 FL OZ 32.5 40,000
36 1.0 FL OZ 33.8 40,000
36 1.0 FL OZ 33.8 25,000
36 0.5 FL OZ 16.9 100,000
36 0.5 FL OZ 17.6 60,000
36 0.5 FL OZ 19.1 50,000
1 1 DOZEN 16.9 9,000
1 1 DOZEN 33.8 1,750
36 0.5 FL OZ 16.9 30,000
36 0.5 FL OZ 16.9 30,000
36 15 ML 16.9 30,000
145 15 ML 16.9 91,000
Murine
Tears
Plus
Tetra-
02652 hydrazoline
36 0.5FL OZ 16.9 150,000
36 1.0 FL OZ 32.5 15,000
36 0.5 FK OZ 16.9 100,000
36 1.0 FL OZ 33.8 20,000
36 1.0 FL OZ 33.8 10,000
36 0.5 FL OZ 16.9 30,000
36 0.5 FL OZ 16.9 30,000
36 0.5 FL OZ 16.9 30,000
36 15 ML 16.9 30,000
36 15 ML 15.0 30,000
Murine Eye
Drops
18797 (Australia) 145 15 ML Full Batch 91,000
***
** APPROXIMATE SOLUTION ACCEPTED BY: DATED: 8/11/03 ACCEPTED BY:
(L)/1000 UNITS CALCULATED AS
FOLLOWS:
Fill Volume X (1L/1000 mL) /s/ KAY PEEL /s/ CYNTHIA B. SATTERWHITE
X 1000 units X Scrap Factor ---------------------------- --------------------------
WHERE: ABBOT LABORATORIES PRESTIGE BRANDS INTERNATIONAL
Fill Volume = 15 mL KAY PEEL 7/15/03
L-7165 Scrap Factor =1.21 VICE PRESIDENT OPERATIONS
L-7362 Scrap Factor = 1.03
Exhibit 10.33
Execution Copy
Amended and Restated and
Manufacturing Agreement
Portions of this Exhibit were omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment. Such
portions are marked by a series of asterisks.
AMENDMENT NO. 4
AND
RESTATEMENT OF CONTRACT MANUFACTURING AGREEMENT
WHEREAS, on May 1, 2002 The Procter & Gamble Company, an Ohio corporation
(referred to hereafter as "Supplier" or "P&G") and Prestige Brands
International, Inc., a Virginia corporation (hereinafter together with its
Affiliates, referred to as "Prestige") entered into a Contract Manufacturing
Agreement of even date, (the "Manufacturing Agreement") pursuant to which
Manufacturing Agreement the Supplier agreed to perform certain contract
manufacturing services of Comet products for the benefit of Prestige under
certain conditions; and
WHEREAS, the parties agreed to amend the Manufacturing Agreement pursuant
to the terms and conditions set forth in the Amendment No. 1 of Manufacturing
Agreement (the "First Amendment") effective as of August 25, 2002; and
WHEREAS, the parties agreed to amend the Manufacturing Agreement pursuant
to the terms and conditions set forth in the Amendment No. 2 of Manufacturing
Agreement (the "Second Amendment") effective as of November 12, 2002; and
WHEREAS, the parties agreed to amend the Manufacturing Agreement pursuant
to the terms and conditions set forth in the Amendment No. 3 of Manufacturing
Agreement (the "Third Amendment") effective as of January 7,2003; and
WHEREAS, the parties now agree to further amend the Manufacturing Agreement
pursuant to the terms and conditions set forth in this Amendment No. 4 and
Restatement of Manufacturing Agreement (the "Amendment Agreement") effective as
of May 1, 2003; and
WHEREAS, the parties wish to reaffirm and restate the Manufacturing
Agreement, as well as amend it in order to reflect the amendments agreed upon by
both parties;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
SECTION 1
The parties hereby reaffirm and restate the Manufacturing Agreement, as amended
and restated in Section 2 hereunder,
SECTION 2
The text of the Manufacturing Agreement, as amended and restated, will
henceforth read as follows:
Execution Copy
Amended and Restated and
Manufacturing Agreement
CONTRACT MANUFACTURING AGREEMENT
This is a CONTRACT MANUFACTURING AGREEMENT ("Supply Agreement"), between The
Procter & Gamble Manufacturing Company, an Ohio corporation (collectively with
its affiliates, "Supplier"), and Prestige Brands International, Inc., a Virginia
corporation. ("Buyer"), This Supply Agreement will have an effective date of
May 1, 2002. Supplier and Buyer are sometimes collectively referred to herein as
.parties" and individually as "party."
WHEREAS, Supplier and Buyer have previously entered into an Asset Sale and
Purchase Agreement, dated as of August 27, 2001 ("Sale Agreement"), pursuant to
which Buyer purchased the Acquired Assets (as defined in the Sale Agreement),
and on the same day, Supplier and Buyer simultaneously entered into a
Transitional Services Agreement ("Services Agreement") to expire April 30, 2002
and a Transitional Supply Agreement ("Transitional Supply Agreement") to expire
April 30, 2002.
WHEREAS, upon expiration of the Transitional Supply Agreement and in connection
with the Sale Agreement, Buyer wishes that Supplier, upon Buyer's request and
according to the terms and conditions set forth herein, continue Manufacturing
(as defined hereinafter) Products (as defined hereinafter) or, subject to
Buyer's prior written approval, which will not be unreasonably withheld,
arranging for the Contract Manufacturing (as defined hereinafter) of Products on
Buyer's behalf for the period(s) set forth herein;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, agreements, and conditions contained herein, the parties hereto agree
as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 GENERAL. Any capitalized term used but not defined herein will have the
meaning set forth in the Sale Agreement.
1.02 "AFFILIATE" means, with respect to a Person, another Person that
directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such Person.
"Control," whether or not capitalized, means, with respect to a Person,
the ownership by another Person of greater than 50% of the income or
voting interests of such Person or such other Person of greater than 50%
of the income or voting interests of such Person or such other
arrangement as constitutes the direct or indirect ability to direct the
management, affairs or actions of such Person.
1.03 "PACKAGING MATERIALS SUPPLIERS" means those companies who Supply
packaging materials to Supplier.
1.04 "BUSINESS" means the manufacturing. packaging, distributing, marketing
and selling of the Products under one or more Trademarks in the United
States or Canada.
1.05 "CLOSING DATE" means October 2, 2001, the date when Buyer purchased the
Business from Supplier.
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Amended and Restated and
Manufacturing Agreement
1.06 "CONTRACT MANUFACTURING" means the sourcing and warehousing of raw and
packaging materials, compounding, component preparation, production,
manufacturing, incoming and outgoing quality control, fabrication,
filling, inspecting, labeling, packing, packaging, or any part thereof,
as well as associated activities, in accordance with the Specifications
and the terms and conditions of this Supply Agreement, in each case, by
any non-Affiliate third party pursuant to Contract Manufacturing
Agreement(s) with the Supplier or any of Supplier's Affiliates. The
terms "CONTRACT MANUFACTURE", "CONTRACT MANUFACTURER" and "CONTRACT
MANUFACTURED" will have the appropriate derivative meanings.
1.07 "CONTRACT MANUFACTURING AGREEMENT" means any purchase order, contract,
agreement or other obligation, including without limitation, outsourcing
arrangement, between Supplier or any of Supplier's Affiliates and any
non-Affiliate third party pursuant to which any non-Affiliate third
party Contract Manufactures Products.
1.08 "CONTRACT PLANT" means that portion of a Contract Manufacturer's
facilities used in the Contract Manufacture of Products.
1.09 [RESERVED]
1.10 "DELIVERY DATE" means the date on Supplier's Production Forecast that
designates the date when Supplier will have Products available for Buyer
to pick-up.
1.11 "EFFECTIVE DATE" means May 1, 2002.
1.12 "MANUFACTURING" means the sourcing and warehousing of raw and packaging
materials, compounding, component preparation, production,
manufacturing, incoming and outgoing quality control, fabrication,
filling, inspecting, labeling, packing, packaging and/or warehousing of
any Products, or any part thereof, as well as associated activities, in
accordance with the Specifications and the terms and conditions of this
Supply Agreement, in each case, by Supplier or any of Supplier's
Affiliates. The terms "MANUFACTURE" and "MANUFACTURED" will have the
appropriate derivative meanings.
1.13 "MATERIALS" means works in progress and raw and packaging materials
related to the Business.
1.14 "PERSON" means (as the context requires) an individual, a corporation, a
partnership, an association, a trust, a limited liability company, or
other entity or organization, including a Governmental Entity.
1.15 "PRODUCTS" means collectively, except where specifically qualified in
this Supply Agreement, those powder and spray SKU's of the Business
produced as of the Signing Date of this agreement for sale in the United
States and Canada, and set forth on Schedule 1.15, whether Manufactured
or Contract Manufactured as of the effective date of this Supply
Agreement, together with any Alterations and/or Modifications. Beginning
when the first purchase order for Comet Orange (as defined herein) is
submitted. which is
3
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Amended and Restated and
Manufacturing Agreement
anticipated to be on or about May 1, 2003, the term Products will also
include Comet Orange. For purposes of clarification. the term Products
does not include special pack products or displays.
1.16 "PRODUCT CATEGORY" means the particular type of Product, as set forth on
Schedule 1.15. For purposes of this Supply Agreement, a Product may be
categorized as one of the following: Powder or Spray.
1.17 "SIGNING DATE" means May 1, 2002.
1.18 "SKUS" means Stock Keeping Units.
1.19 "SPECIFICATIONS" means the procedures, requirements, formula(e) and
standards related to Products employed by or on behalf of Supplier as of
the Signing Date and provided to Buyer under the Sale Agreement, as
amended pursuant to this Supply Agreement.
1.20 "SUPPLIER'S PLANT" means that portion of Supplier's and Supplier's
Affiliates' facilities located in St. Louis, Missouri that is used in
the Manufacture of Products and/or such other facilities of Supplier or
Supplier's Affiliates as may be used in the Manufacture of Products.
1.21 "SUPPLY PERIOD" means that period commencing on May 1, 2002 and running
until this Agreement expires pursuant to Section 14.1 of this Supply
Agreement or is terminated pursuant to Article XV of this Supply
Agreement.
1.22 OTHER DEFINITIONS. Other terms defined in this Agreement, and the
2.01 SUPPLIER'S OBLIGATIONS. Subject to the limitations and conditions of
this Supply Agreement, during the applicable Supply Period, Supplier
will Manufacture, or arrange for the Contract Manufacture of, and sell
to Buyer Buyer's requirements (up to the maximums set forth in Schedule
2.02) of Products. Except as set forth in Section 7.01 herein, Supplier
will be responsible for ensuring that all Product sold to Buyer
hereunder complies with Specifications.
2.02 BUYER'S OBLIGATIONS. Subject to the limitations and conditions of this
Supply Agreement, during the applicable Supply Period, Buyer will
purchase from Supplier Buyer's requirements subject to the maximum and
minimum requirements set forth in Schedule 2.02 of Products within the
applicable Product Category, at the prices set forth on Schedule 9.01 or
at such other prices as may be determined in accordance with this Supply
Agreement. Buyer will also be responsible for paying certain other
expenses, as expressly set forth elsewhere in this Supply Agreement.
2.03 FORECAST REQUIREMENT. Subject in all respects to Article III of this
Supply Agreement, all Manufacturing or Contract Manufacturing under this
Supply Agreement will be covered by the Production Forecast set forth in
Section 3.02 below. The terms of this Supply Agreement will govern the
performance of all firm purchase orders and, in the event of any
inconsistency between this Supply Agreement and any firm purchase order,
this Supply Agreement will prevail.
ARTICLE III
FORECASTS/ORDERS/LOCATIONS
3.01 BUYER'S FIRM WRITTEN FORECAST. Pursuant to the terms of this Supply
Agreement, Buyer will be submitting to Supplier an eighteen (18) month
rolling firm, written forecast (the "Forecast") of its requirements and
forecasted shipments of Products, by month, for the term of the Supply
Agreement. The Forecast will be updated biweekly, and Buyer will
continue this process of providing and updating the Forecast under this
Supply Agreement for the Supply Period. Such monthly updates will be
provided to Supplier on the 1st and 15th of each calendar month.
3.02 PRODUCTION FORECAST AND SUBSEQUENT FIRM PURCHASE COMMITMENTS. Buyer will
also provide to Supplier inventory buffer targets, based on which both
parties will then mutually agree on and establish inventory buffer
targets acceptable to both Supplier and Buyer. Pursuant to these
conditions, Supplier will use Buyer's Forecast, the established
inventory buffer targets, and the minimums and maximums set forth in
Schedule 2.02, to determine its production schedule of Products (the
"Production Forecast"), which Supplier will then submit to Buyer. The
first four weeks of the Production Forecast will become binding purchase
commitments on Buyer and will constitute a firm written
5
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Amended and Restated and
Manufacturing Agreement
purchase order, unless Buyer notifies Supplier otherwise in writing no
more than two (2) days after receipt of such Production Forecast from
Supplier. Based on the production schedule so established, Supplier will
manufacture and Buyer will arrange to pickup Products to fulfill such
Production Forecast.
3.03 REPORTS BY SUPPLIER. If requested by Buyer, Supplier will use
commercially reasonable efforts to provide Buyer with quarterly reports
on raw material, packing material and finished Products reflecting
Manufacturing, Contract. Manufacturing, shipments, inventories, and
non-binding projections related thereto.
3.04 CHANGE TO PARTIAL OR FULL CONTRACT MANUFACTURING OR RELOCATION OF
MANUFACTURING. Unless otherwise agreed to by the parties, if Supplier
shall relocate any Manufacturing or Contract Manufacturing to a
facility(ies) different from the facility(ies) currently Manufacturing
or Contract Manufacturing or if Supplier shall decide to switch from
Manufacturing Products to partial or full Contract Manufacturing of
Products, Supplier will provide Buyer with six (6) months prior written
notice of such change for Buyer's approval, which shall not be withheld
unless such relocation materially increases Buyer's total delivered
costs of the Products to Buyer's distribution center in the United
States. Further, in the event of such a switch from Manufacturing
Products to partial or full Contract Manufacturing of Products, such
contract manufacturer shall meet Supplier's normal quality requirements,
including product quality standards and financial stability.
Notwithstanding the foregoing, no such relocation or change shall affect
Supplier's agreements or obligations hereunder, including Schedules 2.02
and 9.01 hereto, unless agreed to by both parties.
ARTICLE IV
MATERIALS AND EQUIPMENT; CAPACITY
4.01 SOURCES OF MATERIALS. During the Supply Period, Supplier will source or
arrange for the sourcing of all raw and packaging materials required for
Manufacturing or Contract Manufacturing Products from vendors reasonably
selected by or on behalf of Supplier consistent with Supplier's ordinary
past business practices and in quantities reasonably calculated to meet
Buyer's Orders in a cost-effective manner. Supplier agrees to maintain
adequate inventories of raw materials and componentry reasonably
calculated to meet the reasonable requirements of Buyer in a timely
manner. Supplier agrees to use commercially reasonable efforts to obtain
competitive pricing. Buyer may identify lower cost sources for supply
materials, which Supplier will evaluate through the Cost and Feasibility
Process set forth in Section 6.04, which evaluation shall not be
unreasonably withheld.
4.02 NORMAL REPAIR AND REPLACEMENT OF EQUIPMENT. Supplier will be responsible
for all repairs and replacement of equipment or facilities used in the
Manufacture of Products at Supplier's Plant.
4.03 CAPACITY. Supplier is not required to install additional production
capacity or additional production lines to perform its supply
obligations hereunder.
6
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Amended and Restated and
Manufacturing Agreement
4.04 MATERIAL SUPPLY. In the event that Supplier cannot, or does not,
pursuant to Sections 2.01, 15.01 or 15.02 of this Supply Agreement,
continue to produce Buyer's requirements, Supplier will use commercially
reasonable efforts to separately supply Materials for Buyer's use at
other contract manufacturers to produce Buyer's requirements.
Notwithstanding the foregoing, Buyer's use of the Materials at another
manufacturer is subject to Section 12.01 below.
4.05 START UP CAPITAL COSTS FOR COMET ORANGE. As soon as the Specifications
for Comet Orange have been defined by Buyer and mutually agreed to
between Buyer and Supplier after May 1, 2003, Supplier will cover and
pay for, on a one time basis, any initial capital cost for tooling,
manufacturing equipment, and any onetime costs related to initial
stability testing services, initial pilot-batch testing services, and
any other onetime start-up testing services provided by Supplier, and
similar related initial start-up costs and expenses required to produce
an annual volume equivalent to 180,000 physical cases of Comet Orange.
Buyer will be responsible for and pay all other costs, fees and
expenses, including without limitation, all manufacturing expenses and
raw and packaging costs, future capital costs, additional capital or and
equipment requirements, related to Comet Orange, and Supplier will not
be responsible for or pay for any costs, fees or expenses other than
those specifically set forth in the first sentence of this Section 4.05.
For purposes of this Supply Agreement, the term "Comet Orange" will mean
a Comet powder line extension product which consists of a chlorine-free
Comet cleansing powder with an orange scent. The Specifications for
Comet Orange will be mutually agreed to between Buyer and Supplier prior
to any capital expenditure for or manufacturing or producing of Comet
Orange.
ARTICLE V
SHIPPING AND USE OF MATERIALS
5.01 PRODUCT SHIPPING. Buyer will arrange for the shipment of Products in
full truckload quantities (on common carriers selected by Buyer). where
possible, and at Buyer's expense (including without limitation any
duties payable in respect of any shipment) and title and risk of loss of
Products will pass from the Supplier's Plant or Contract Plant (i.e.,
F.O.B. Supplier's dock at Supplier's Plant or F.O.B. dock at Contract
Plant). Buyer will be responsible for all actual reasonable costs and
expenses of month-to-month storage and warehousing of Products, wherever
stored or warehoused. Buyer must arrange to pick up its ordered
requirements from the dock at Supplier's Plant or Contract Plant on the
Delivery Date(s) specified in the Production Forecast.
5.02 ORDER OF USE FOR RAW AND PACKAGING MATERIALS AND INVENTORY BY SUPPLIER.
Supplier will, and will cause any Contract Manufacturer to, use raw and
packaging materials on a first-in, first-out basis ("FIFO") consistent
with past ordinary business practices. Any Products Materials as of the
Effective Date will likewise be used first to satisfy Buyer's
requirements.
5.03 COMMON CARRIER CLAIMS. All claims by or to common carriers in connection
with Products will be the responsibility of Buyer, except to the extent
any such claim by a
7
Execution Copy
Amended and Restated and
Manufacturing Agreement
common carrier is the proximate result of the negligence, gross
negligence or intentional misconduct of, or breach of this Supply
Agreement by, Supplier.
5.04 PALLETS. Products will be shipped to Buyer on CHEP pallets. Buyer will
be responsible to establish a lease contract for such pallets directly
with the applicable third party and Buyer will pay all costs, fees and
expenses relating to CHEP pallets, upon transfer of such pallets to
Buyer.
ARTICLE VI
CHANGES TO SPECIFICATIONS
6.01 ALTERATIONS. During the Supply Period, Buyer may alter the
Specifications for artwork and label copy of Products ("Alterations") by
utilizing the Cost and Feasibility Process set forth below in Section
6.04 in order to seek the necessary prior written consent of Supplier,
which consent will not be unreasonably withheld. Once an Alteration has
been approved, Buyer will provide a finished artwork directly to the
Packaging Materials Suppliers designated by Supplier. Once the artwork
has been received by the Packaging Materials Suppliers, the process to
order the materials and have the materials in the plant requires
approximately nine (9) weeks. Buyer will be responsible at the time of
consent for:
(a) providing materials required or prudent for implementation of such
Alterations, including, without limitation, artwork and print
tooling;
(b) having secured from any Governmental Entity any approvals that may
be necessary in connection with any Alteration;
(c) any resulting increases in costs;
(d) all liabilities, costs or expenses, including, without limitation,
those of third parties, arising out of or related to Alterations,
including, without limitation, those related to the failure or
alleged failure of the Alterations to comply with applicable laws
and regulations, provided the alterations are implemented by
Supplier in accordance with the new specifications; and
(e) all scrapping costs associated with any Alterations. However
Supplier will use reasonable efforts to use all Materials on a
"first in, first out basis".
6.02 BUYER'S MODIFICATIONS. All changes to Specifications, including, but not
limited to, new product SKU introductions (collectively
"Modifications"), require the prior written consent of Supplier, such
consent not to be unreasonably withheld. Buyer will utilize the Cost and
Feasibility Process set forth below in Section 6.04 in order to seek the
necessary prior written consent of Supplier. Buyer will be responsible
for any costs and expenses associated with such Modifications,
including, but not limited to any testing required for such
Modifications and any costs and expenses thereof.
8
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Amended and Restated and
Manufacturing Agreement
6.03 SUPPLIER MODIFICATIONS. If Supplier initiates a change in packaging and
Buyer agrees to such change in writing and in advance, Supplier will
bear the cost of any change parts and any cost increase or decrease in
the production of the Product(s) will be passed through to Buyer.
6.04 COST AND FEASIBILITY PROCESS. Any Modifications or Alterations requests
from Buyer are subject to Supplier's cost and feasibility determination
as to whether such modification can be accomplished ("Cost and
Feasibility Process.). Supplier will provide Buyer with the cost and
feasibility form set forth on Schedule 6.04 for submitting requests for
such Modifications or Alterations to Supplier's Cost and Feasibility
Process. Supplier will respond to Buyer's cost and feasibility request
within three (3) weeks of receipt of the cost and feasibility form.
ARTICLE VII
QUALITY ASSURANCE
7.01 QUALITY CONTROL TESTS. Supplier will perform or cause to be performed
quality control tests and assays on raw and packaging materials and on
Products in accordance with Specifications. Buyer will perform or cause
to be performed quality control tests associated with any sampling uses
of the Products.
7.02 STABILITY TESTS. Based on the stability testing requirements and
appropriate documentation, test methodologies and specification which
Buyer will provide to Supplier, Supplier will maintain a stability
testing program for the products; provided, however, that Buyer will be
solely responsible for conducting stability tests for the Products in
the event Buyer modifies, alters or changes the product formulas or
formulations for the Products.
7.03 BUYER INSPECTIONS. Supplier will permit Buyer's designated
representatives to inspect and visit the Comet-related portion of
Supplier's Plant from time to time for the purpose of determining
compliance with this Supply Agreement. Such inspections will occur
during regular business hours after at least twenty-four (24) hours
written notice to Supplier. Buyer will not disrupt Supplier's
operations. Buyer's designated representatives will be permitted to
inspect and visit from time to time any Contract Plant for the purpose
of determining Supplier's compliance with this Supply Agreement, if, and
only to the extent, Supplier obtains the applicable Contract
Manufacturer's consent. In the event Supplier will not be able to secure
the consent of such Contract Manufacturer, Supplier shall allow Buyer to
contact such Contract Manufacturer for the sole and only purpose of
requesting such Contract Manufacturer's consent to Buyer's inspection.
7.04 BUYER TESTS. At Buyer's request, Supplier will cause to be sent, at
Buyer's expense, a reasonable number of Product samples to Buyer for
examination and testing, at Buyer's expense, to assure conformity with
Specifications.
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ARTICLE VIII
COMPLIANCE WITH LAWS
8.01 LAWS RELATED TO MANUFACTURING. Supplier will maintain and require all
Contract Manufacturers to maintain all necessary permits, licenses and
certifications necessary for the Manufacturing of the Product. Supplier
will comply and will require all Contract Manufacturers to comply with
laws and regulations relating to environmental matters, wages and hours,
equal employment opportunity, tax withholding on payrolls, working and
sanitary conditions and workers' compensation. in each case, as well as
all other applicable laws, regulations, ordinances and other rules of
the federal, state or local authorities, with respect to maintenance and
operation of Supplier's Plant or Contract Plant (as the case may be),
except where not material.
8.02 RELATED TO PRODUCTS. Notwithstanding Section 8.01, Buyer will be
responsible for complying in all material respects with all other laws
and regulations relating to Products (without regard to whether such
Products have been the subject of any Alteration or Additional
Modification), including, without limitation, laws relating to the
registration, identification, formulation, transportation, labeling,
sale. marketing or distribution of Products. Buyer will be responsible
for conducting product recalls and for other duties and obligations
imposed by law, rule or regulation arising from or related to Product
purchased by Buyer from Supplier during the Term hereof, Buyer will also
be responsible for documentation, investigation and action regarding
drug adverse events, reports and records. and the like, arising from or
related to Buyer's sales of the Products during the Term hereof.
ARTICLE IX
PRICE
9.01 PRICING AND COST ASSUMPTIONS. Schedule 9.01 sets forth, by SKU, the
price Buyer will pay Supplier for Products. Schedule 9.01 also sets
forth major assumptions concerning the costs of Products (collectively
"Manufacturing Costs"). Supplier will adjust any raw materials and
packaging costs (due to normal market fluctuations, leading to price
changes that are typical in the industry) on a quarterly basis and will
adjust any other manufacturing costs on an annual basis, on or before
January 1st of each calendar year. In the event of any decrease of
material costs from Supplier initiating design changes or negotiating
lower pricing (requiring effort above the normal negotiation process),
Supplier and Buyer will share any such decrease on an equal basis after
the Supplier has recovered its expenses directly related to the
obtaining of that lower price. There will be no circumstance under which
the expenses will exceed the savings and result in additional charges to
Buyer.
In accordance with Supplier's adjustment of these costs, Supplier will
notify Buyer in writing of any such increase or decrease in raw
materials and packaging costs on a quarterly basis, and will notify
Buyer in writing of any such increase or decrease in other manufacturing
costs on an annual basis, on or before January 1st of each calendar
year. The notice will include:
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(a) the reason for the increase or decrease;
(b) the date when the increase or decrease will take effect; and
(c) the amount of the increase or decrease.
(d) reference to any documentation in support of any increase. Such
documentation shall be available, after Buyer's request, for
inspection by Buyer at Supplier's offices during regular office
hours.
Supplier will use its reasonable efforts to minimize cost increases
consistent with its ordinary past business practices; provided, however,
that this requirement will not limit Supplier's ability to switch from
Manufacturing Products to partial or full Contract Manufacturing of
Products.
9.02 ***
ARTICLE X
PAYMENT
10.01 INVOICING AND PAYMENT. Supplier will send Buyer an invoice for each
shipment of Products. All invoices will be based upon the bill of lading
describing the Products and quantity of Products shipped to Buyer. Buyer
will be responsible for promptly paying each invoice in a manner for
Supplier to receive such payments in its bank accounts within thirty
(30) calendar days after the receipt of such invoice. and payment will
not be delayed pending delivery of Products by any common carrier or
resolution of any disputes between Buyer and any common carrier
regarding the shipment. Buyer will pay Supplier a late payment charge of
twelve percent (12%) per annum on any payment not received within thirty
(30) calendar days after the receipt of the relevant invoice; provided.
however. that Buyer will not owe any late payment charge with respect to
any disputed payment amount pending resolution of such dispute. Payment
will be made by wire transfer of immediately available funds in United
States dollars and will be sent to the location designated in advance by
Supplier.
ARTICLE XI
SUPPLIER'S REPRESENTATIONS, WARRANTIES AND DISCLAIMER
11.01 TITLE TO PRODUCTS. Supplier represents and warrants it will pass to
Buyer good and. marketable title to Products, free and clear of all
material liens, claims, security interests and encumbrances of any kind.
11.02 COMPLIANCE WITH SPECIFICATIONS. Supplier represents and warrants the
Products will be in compliance with Specifications within normal
variation at the time such Products are delivered to the common carrier
for shipment to Buyer.
11.03 LIMITATION OF WARRANTIES. SUPPLIER MAKES NO WARRANTY, OTHER THAN THE
WARRANTIES SET FORTH HEREIN OR IN THE SALE AGREEMENT. THE
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WARRANTIES SET FORTH HEREIN AND THEREIN ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE XII
INTELLECTUAL PROPERTY
12.01 OWNERSHIP OF INTELLECTUAL PROPERTY. All intellectual property
constituting the Acquired Assets or constituting the Excluded Assets
shall be owned by and will at all times be and remain the exclusive
property of Buyer or Supplier (or Supplier's Affiliates), respectively,
and this Supply Agreement will not constitute a license, except to the
extent required to fulfill each party's obligations hereunder.
12.02 OWNERSHIP OF COMET ORANGE, MARK AND INTELLECTUAL PROPERTY. In addition
to. and not in limitation of. the provisions of Section 12.01 hereof,
the parties hereto acknowledge and agree that, to the extent not covered
by any intellectual property, trade dress. trademark. patent rights,
know how or trade secrets of Supplier, whether or not covered under the
Patent and Technology License Agreement between Buyer and Supplier dated
October 2, 2001 and/or the Sale Agreement, Buyer shall own all right,
title and interest in and to (i) the COMET ORANGE name and mark, (ii)
the Specifications related to Comet Orange, (iii) the formulae. know how
and patents used to create, produce or manufacture Comet Orange, (iv)
all trademarks, trade dress. copyrights, logos. trade names and other
identifying marks used with Comet Orange, including the name and mark
COMET ORANGE, and (v) all other proprietary rights and intellectual
property related to Comet Orange.
ARTICLE XIII
SUPPLIER'S AND CONTRACT MANUFACTURER'S
USE OF BUYER'S PROPERTY
13.01 BOOKS AND RECORDS. During the Supply Period with respect to any Product
Category, Supplier will be permitted, at no cost to Supplier, to retain
and use any Books and Records transferred to the Buyer pursuant to the
Sale Agreement to the extent reasonably necessary for Supplier to
fulfill its obligations under this Supply Agreement with respect to such
Product Category.
ARTICLE XIV
TERM
14.01 TERM. This Supply Agreement will be in effect from the Effective Date
until May 1, 2010 (the "Term"), unless earlier terminated by either
party pursuant to Section 15.01 or Section 15.02.
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ARTICLE XV
TERMINATION
15.01 NOTICE OF DEFAULT. In addition to any other rights or remedies Buyer or
Supplier may have under the Sale Agreement or at law or in equity, a
party not in default under this Supply Agreement (the "Non-Defaulting
Party") may terminate this Supply Agreement or any Supply Period by
giving written notice to the other party (the "Defaulting Party") of the
Non-Defaulting Party's intention to terminate this Supply Agreement or
any Supply Period upon the occurrence of either or both of the following
events:
(a) a material breach by the Defaulting Party of any of its
obligations hereunder, or
(b) the filing by or against the Defaulting Party of a petition in
bankruptcy, or any appointment of a receiver for the Defaulting
Party or any substantial part of its assets, or any assignment for
the benefit of the Defaulting Party's creditors,
Such notice will identify a date for termination of this Supply
Agreement or any Supply Period, which date will not be sooner than five
(5) Business Days after receipt of such notice by the Defaulting Party
("Termination Date"). If the event on which the notice is based is not
cured prior to the Termination Date, then this Supply Agreement or any
Supply Period will terminate on the Termination Date pursuant to such
notice.
15.02 TERMINATION WITHOUT CAUSE. After May 1, 2008, Buyer or Supplier may
terminate early this Supply Agreement or any Supply Period at any time
without cause by giving twelve (12) months prior written notice to the
other party, subject to the terms set forth below. Without limiting the
foregoing and for avoidance of any doubt, the earliest possible
effective date of any termination without cause pursuant to this Section
15.02, would be May 1, 2009.
(a) If either (x) Buyer terminates this Supply Agreement without cause
in accordance with this Section 15.02, or (y) if this Supply
Agreement is terminated pursuant to the terms of Section 16.11,
then Buyer, its respective successor and/or permitted assignee,
will be liable to Supplier for all costs, and expenses related to
the then existing Inventory and Materials.
(b) If Supplier terminates this Supply Agreement for a default by
Buyer under Section 15.01, or without cause in the manner
described in this Section 15.02, Supplier shall in no event be
liable to Buyer for any termination fee or penalty.
15.03 EFFECT ON OTHER AGREEMENTS/SURVIVAL OF CERTAIN PROVISIONS. Termination
of this Supply Agreement or any Supply Period will have no effect on any
other agreements between Buyer and Supplier, unless an effect is
mutually and specifically agreed in writing between the parties, and
such termination will not relieve either party of any liability to the
other based on acts or omissions prior to such termination. The
following Articles and Sections will survive any such termination:
Article XI, Article XII, and Sections 15.03, 15.04, 16.03, 16.05, 16.06,
16.07, 16.08, 16.09 and 16.10.
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15.04 UNSHIPPED PRODUCTS AND MATERIALS.
(a) Upon any termination of this Supply Agreement or any Supply Period
with respect to any Product Category, Supplier will arrange for
the prompt shipment to Buyer at the addressees) designated by
Buyer pursuant to Section 5.01, and Buyer will purchase:
(i) any unshipped Products within such Product Categor(ies) as
of the Termination Date at the price(s) set forth in
Schedule 9.01 as modified pursuant to Section 9.01; and
(ii) any unused but usable works in progress or Materials
exclusively related to Products within such Product
Categor(ies), at actual cost.
Buyer will be responsible for paying for the shipment of, and will bear
the risk of loss for, usable Materials and Products to the designated
location(s).
(b) In the event this Supply Agreement or any Supply Period is
terminated by reason of an uncured default of Buyer (including,
without limitation, non-payment of any costs, fees and" expenses
due to Supplier hereunder), Supplier shall, in addition and
notwithstanding any other rights, actions or remedies available to
Supplier, have the unrestricted rights, which Buyer hereby
irrevocably grants to Supplier, to sell, transfer, or otherwise
dispose of any inventory, unfinished products, raw materials,
finished Products and/or works in progress, as the case may be, as
Supplier may see fit.
ARTICLE XVI
MISCELLANEOUS
16.01 ENTIRE AGREEMENT. This Supply Agreement constitutes the entire agreement
between Supplier and Buyer with respect to, among other things, the
Manufacture and Contract Manufacture of Products. In the event of any
inconsistency between this Supply Agreement and any subsequently-issued
document, including without limitation, an Order, this Supply Agreement
will prevail, unless such subsequently-issued document expressly and
specifically supercedes the terms of this Supply Agreement.
16.02 TAXES. Buyer and Supplier agree to pay all Taxes assessed on all
materials, excluding Products, to which each of them has title. Buyer
will be responsible for paying all taxes assessed on Products.
16.03 SUPPLIER'S EMPLOYEES AND INDEPENDENT CONTRACTOR STATUS. During the term
hereof, and for a period of two (2) years after the termination of this
Supply Agreement, Buyer will not. and will cause its Affiliates not to,
without Supplier's prior written agreement, directly or indirectly
solicit for employment or hire any employees of Supplier or Supplier's
Affiliates who have worked in connection with the performance of this
Supply
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Agreement. Supplier is acting pursuant to this Supply Agreement as an
independent contractor.
16.04 FORCE MAJEURE. Neither party (the "Affected Party") will be liable to
the other (the "Non-Affected Party") for failure to perform any part of
this Supply Agreement if such failure results from an act of God, war,
revolt, revolution, sabotage, actions of a Governmental Entity, laws,
regulations, embargo, fire, strike, other labor trouble, insolvency or
other financial difficulty of any Contract Manufacturer or any cause
beyond the Affected Party's control. Upon the occurrence of any such
event which results in, or will result in, delay or failure to perform
according to the terms of this Supply Agreement, the Affected Party will
promptly give notice to the Non-Affected Party of such occurrence and
the effect and/or anticipated effect of such occurrence. The Affected
Party will use its reasonable efforts to minimize disruptions in its
performance and to resume performance of its obligations under this
Supply Agreement as soon as practicable, provided, however, the
resolution of any strike or labor trouble will be within the sole
discretion of the Affected Party.
16.05 NO RIGHT OF SET-OFF. Notwithstanding any other provisions of this Supply
Agreement or any other agreement between the parties, all payments to be
made by either party under this Supply Agreement will be made free of
any set-off and will be promptly remitted to the party entitled to
receive payment hereunder.
16.06 LIMITATION. Any Action pursuant to this Supply Agreement, including,
without limitation, any Action with respect to any indemnity obligation,
must be commenced within two (2) years after the termination of this
Supply Agreement.
16.07 INDEMNIFICATION BY SUPPLIER.
(a) Subject to the terms and conditions of this Supply Agreement,
Supplier will jointly and severally defend, indemnify and hold
harmless Buyer and its affiliates and each of their respective
officers, directors, employees, shareholders, agents and
representatives, and their successors and assigns (collectively
the "Buyer Indemnities") from and against all claims, losses,
liabilities, damages, costs and expenses (including without
limitation reasonable fees and expenses of attorneys incurred in
investigation or defense of any Action) (collectively "Claims")
arising out of or related to: (I) Excluded Liabilities as set
forth in the Sale Agreement, (Ii) any breach of any covenant or
agreement of Supplier contained in this Supply Agreement; (iii)
any negligence, gross negligence, or willful or intentional
misconduct by Supplier or any of its personnel; and (iv) any
breach of any representation or warranty of Supplier contained in
this Supply Agreement;
(b) Promptly after receipt by Buyer of notice of any third-party
Action in respect of which indemnity may be sought against
Supplier hereunder (for purposes of this Section 16.01, a "Buyer's
Assertion"), Buyer will notify Supplier in writing of the Buyer's
Assertion, but the failure to so notify Supplier will not relieve
Supplier of any liability it may have to Buyer, except to the
extent Supplier has suffered
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actual prejudice thereby. Supplier will be entitled to participate
in and, to the extent Supplier elects by written notice to Buyer
within thirty (30) days after receipt by Supplier of notice of
such Buyer's Assertion, to assume the defense of such Buyer's
Assertion, at Supplier's own expense, with counsel chosen by it
which will be reasonably satisfactory to Buyer. With respect to
any such Buyer's Assertion, Buyer will promptly provide Supplier
with: (i) notice and copies of any documents served upon Buyer;
and (ii) all reasonable cooperation which Supplier deems necessary
to defend such Buyer's Assertion, including, without limitation,
providing Supplier and its outside attorneys access to any
potentially relevant documents, information, or individuals within
the control of Buyer, other than any privileged documents. If
business information of Buyer other than that pertaining to the
Business is contained in such documents or information, Supplier
and Buyer will enter into appropriate secrecy commitments to
protect such documents or information. Notwithstanding that
Supplier may have elected by written notice to assume the defense
of any Buyer's Assertion, Buyer will have the right to participate
in the investigation and defense thereof, with separate counsel
chosen by Buyer, but in such event the fees and expenses of Buyer
(above those which would otherwise have been incurred) and such
separate counsel will be paid by Buyer.
(c) Notwithstanding anything in this Section 16,07 to the contrary:
(i) Supplier will have no obligation with respect to any Buyer's
Assertion if, in connection therewith, Buyer, without the written
consent of Supplier, which consent will not be unreasonably
withheld, settles or compromises any Action or consents to the
entry of any judgment; and (ii) Supplier will not without the
written consent of Buyer with respect to any Buyers Assertion: (A)
settle or compromise any Action or consent to the entry of any
judgment which does not include as an unconditional term thereof
the delivery by the claimant or plaintiff to Buyer of a duly
executed written release of Buyer from all liability in respect of
such Action, which release will be reasonably satisfactory in form
and substance to counsel for Buyer, or (B) settle or compromise
any Action in any manner that, in the reasonable judgment of Buyer
or its counsel, will adversely affect Buyer other than as a result
of money damages or other money payments.
(d) Upon the payment of any settlement or judgment pursuant to this
Section 16.07 with respect to any Buyer's Assertion, Supplier will
be subrogated to all rights and remedies of Buyer against any
third party in respect of such Buyer's Assertion to the extent of
the amount so paid by Supplier.
(e) The indemnity provided for by this Section 16.07 will be Buyer's
exclusive source of recovery against Supplier with respect to
matters covered hereby.
16.08 INDEMNIFICATION BY BUYER.
(a) Subject to the terms and conditions of this Agreement, Buyer will
defend, indemnify and hold harmless Supplier and its affiliates
and each of their
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respective officers, directors, employees, shareholders, agents
and representatives, and their successors and assigns
(collectively the "Supplier Indemnities") from and against all
Claims arising out of or related to: (i) Assumed Liabilities as
defined in the Sale Agreement, (ii) any breach of any covenant or
agreement of Buyer contained in this Supply Agreement; and (iii)
any breach of any representation or warranty of Buyer contained in
this Supply Agreement.
(b) Promptly after receipt by Supplier of notice of any Action in
respect of which indemnity may be sought against Buyer hereunder
(for purposes of this Section 16.08, a "Supplier's Assertion"),
Supplier will notify Buyer in writing of the Supplier's Assertion,
but the failure to so notify Buyer will not relieve Buyer of any
liability it may have to Supplier, except to the extent Buyer has
suffered actual prejudice thereby, Buyer will be entitled to
participate in and, to the extent Buyer elects by written notice
to Supplier within thirty (30) days after receipt by Buyer of
notice of such Supplier's Assertion, to assume the defense of such
Supplier's Assertion, at its own expense, with counsel chosen by
it, which will be reasonably satisfactory to Supplier. With
respect to any such Supplier's Assertion, Supplier will promptly
provide Buyer with: (i) notice and copies of any documents served
upon Supplier; and (ii) all reasonable cooperation which Buyer
deems necessary to defend such Supplier's Assertion, including
without limitation providing Buyer and its outside attorneys
access to any potentially-relevant documents, information, or
individuals within the control of Supplier, other than any
privileged documents. If business information of Supplier other
than that pertaining to the Business is contained in such
documents or information, Supplier and Buyer will enter into
appropriate secrecy commitments to protect such documents or
information. Notwithstanding that Buyer may have elected by
written notice to assume the defense of any Supplier's Assertion,
Supplier will have the right to participate in the investigation
and defense thereof, with separate counsel chosen by Supplier, but
in such event the fees and expenses. of Supplier (above those
which would otherwise have been incurred) and such separate
counsel will be paid by Supplier.
(c) Notwithstanding anything in this Section 16.08 to the contrary:
(i) Buyer will have no obligation with respect to any Supplier's
Assertion if, in connection therewith, Supplier, without the
written consent of Buyer, settles or compromises any Action or
consents to the entry of any judgment; and (ii) Buyer will not,
without the written consent of Supplier, which consent will not be
unreasonably withheld, with respect to any Supplier's Assertion:
(A) settle or compromise any Action or consent to the entry of any
judgment which does not include as an unconditional term thereof
the delivery by the claimant or plaintiff to Supplier of a duly
executed written release of Supplier from all liability in respect
of such Action, which release will be reasonably satisfactory in
form and substance to counsel for Supplier, or (B) settle or
compromise any Action in any manner that. in the reasonable
judgment of Supplier or their counsel, will materially adversely
affect Supplier other than as a result of money damages or other
money payments.
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(d) Upon the payment of any settlement or judgment pursuant to this
Section 16.08 with respect to any Supplier's Assertion, Buyer will
be subrogated to all rights and remedies of Supplier against any
third party in respect of such Supplier's Assertion to the extent
of the amount so paid by Buyer.
(e) The indemnity provided for by this Section 16.08 will be
Supplier's exclusive source of recovery against Buyer with respect
to matters covered hereby.
16.09 DISPUTE RESOLUTION.
(a) Any Action asserted by Supplier against Buyer or by Buyer against
Supplier (a "Claim") arising out of or related to this Supply
Agreement, including without limitation any Claim for
indemnification pursuant to Sections 16.07 and 16.08 above, hereof
or any issue as to whether or not a Claim is arbitrable, will be
resolved pursuant to the procedures described in this Section
16.09.
(b) Should any Claim arise, Supplier and Buyer will first attempt to
resolve such Claim by entering into good faith negotiations by or
among their appropriate employees or officers. Such negotiations
will commence as soon as practicable after either Supplier or
Buyer has received notice from the other party of such Claim, but
no later than ten (10) days after such receipt, and will terminate
thirty (30) calendar days after such commencement. During
negotiations, Supplier and Buyer will not have the right to any
discovery, unless agreed by each of Supplier and Buyer.
(c) Any Claim which has not been resolved pursuant to Section 16.09(b)
of this Agreement will be referred to good faith negotiations by
or among one or more officers of Supplier and Buyer. Such
negotiations will commence as soon as practicable after
termination of the negotiations described in Section 16.09(b), but
not later than ten (10) business days thereafter, and will
terminate thirty (30) calendar days after such commencement.
During the negotiations, Supplier and Buyer will not have the
right to any discovery, unless agreed by Supplier and Buyer.
(d) Any Claim which has not been resolved pursuant to Section 16.09(c)
of this Agreement will be determined by arbitration. The
arbitration will be conducted by one arbitrator, who will be
appointed pursuant to the Commercial Arbitration Rules of the
American Arbitration Association (AAA). The arbitration will be
held in Cincinnati, Ohio and will be conducted in accordance with
the Commercial Arbitration Rules of the AAA, except that the rules
set forth in this Section 16.09(d) will govern such arbitration to
the extent they conflict with the rules of the AAA. Supplier and
Buyer will use their best efforts to cause the arbitration to be
conducted in an expeditious manner. Supplier and Buyer will use
their best efforts to cause the arbitration to be completed within
sixty (50) days after selection of the arbitrator. In the
arbitration, Delaware law will govern, except to the extent that
those laws conflict with the Commercial Arbitration
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Rules of the AAA and the provisions of this Section 16.09(d).
There will be no discovery, except as the arbitrator will permit
following a determination by the arbitrator that the person
seeking such discovery has a substantial, demonstrable need. All
other procedural matters will be within the discretion of the
arbitrator. In the event a Person fails to comply with the
procedures in any arbitration in a manner deemed material by the
arbitrator, the arbitrator will fix a reasonable period of time
for compliance and, if the Person does not comply within said
period, a remedy deemed just by the arbitrator, including an award
of default, may be imposed. The determination of the arbitrator
will be final and binding on the Supplier and Buyer. Judgment upon
the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.
16.10 DAMAGE LIMITATIONS. Notwithstanding anything to the contrary in the this
Agreement, none of Supplier's Indemnified Parties nor Buyer's
Indemnified Parties will be permitted to recover any consequential,
indirect, special or punitive damages arising out of or related to this
Agreement, regardless of the form of the Claim or Action, including
without limitation Claims or Actions for indemnification, tort, breach
of contract, warranty, representation or covenant. Any provision herein
to the contrary notwithstanding, the maximum liability of Supplier to
any person, firm or corporation whatsoever arising out of or in the
connection with the purpose of this Agreement, the services provided
hereunder by Supplier, or the Products delivered to Buyer hereunder,
whether such liability arises from any claim based on breach or
repudiation of contract, warranty, tort or otherwise, shall in no case
exceed the actual price paid to Supplier by Buyer hereunder for the
Products.
16.11 SUCCESSORS AND ASSIGNS. This Supply Agreement will be binding upon and
will inure to the benefit of the signatories hereto and their respective
successors and permitted assigns. Buyer may not assign this Supply
Agreement, or any of its rights or liabilities hereunder, without the
prior written consent of Supplier. In the event Supplier withholds its
consent to any such assignment, Buyer shall have the option to purchase
up to six (6) months of inventory of Products, subject to the minimum
and maximum requirements set forth in Schedule 2.02. Notwithstanding the
foregoing, Buyer may assign this Supply Agreement, without Supplier's
consent, only in the event of a sale, disposition, merger or
consolidation that involves substantially all of the assets of the
Business or capital stock of Buyer, provided that Buyer may in no event
assign this Agreement, in whole or in part, to anyone or more of the
entities, companies and their respective Affiliates, listed on Schedule
16.11. Notwithstanding the foregoing, if, in the event of a sale,
disposition, merger or consolidation that involves substantially all of
the assets of the Business or capital stock of Buyer, Buyer assigns this
Supply Agreement to The Dial Corporation, this Supply Agreement shall
terminate six (6) months from the date of such assignment, subject to
the terms of Section 15.02(a). Any assignment will however not relieve
the party making the assignment from any liability under this Supply
Agreement. Notwithstanding the foregoing, in no event shall this Supply
Agreement or any rights granted hereunder inure to the benefit of any
trustee in bankruptcy, receiver or other successor of buyer whether by
operation of law or otherwise, without the written consent
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of Supplier and any assignment or transfer without such consent and
approval shall be null and void.
16.12 NOTICES. All notices required or permitted to be given under this Supply
Agreement will be in writing and will be deemed to be properly given
when actually received by the Person entitled to receive the notice at
the address stated below, or at such other address as Supplier or Buyer
may provide by notice to the other:
SUPPLIER:
The Procter & Gamble Manufacturing Company
169 East Grand Avenue
Saint Louis, MO 63147
Attention: John Long
Telephone: 314-622-8473
Fax: 314-622-8278
With a copy to:
The Procter & Gamble Company
Legal Division
One Procter & Gamble Plaza
Cincinnati, Ohio 45202
Attention: Marco R. Kerschen
Telephone: (513) 983-7572
Fax: (513) 983-4274
BUYER:
Prestige Brands International, Inc.
26811 South Bay Drive
Suite 300
Bonita Springs, FL 34134
Attention: Ted Host
Telephone: (941) 948-8545
Fax: (941) 948-8551
With a copy to:
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219
Attention: T. Justin Moore III Esq.
Telephone: (804) 788-8200
Fax: (804) 788-8218
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Execution Copy
Amended and Restated and
Manufacturing Agreement
IN WITNESS WHEREOF, the parties have signed this Supply Agreement on the date
set forth below.
SUPPLIER: BUYER:
THE PROCTER & GAMBLE PRESTIGE BRANDS INTERNATIONAL,
MANUFACTURING COMPANY INC.
By: /s/ R.A. MCDONALD By: /s/ CYNTHIA B. SATTERWHITE
------------------------------------------ ------------------------------------
Name printed: R.A. McDonald Name printed: Cynthia B. Satterwhite
-------------------------------- --------------------------
Title: President, Fabrics & Home Care G.B.U. Title: CFO & VP
--------------------------------------- ---------------------------------
21
Execution Copy
Amended and Restated and
Manufacturing Agreement
Portions of this Exhibit were omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment. Such
portions are marked by a series of asterisks.
SCHEDULE 1.15
PRODUCTS
PRODUCTS PRODUCT CATEGORY BRAND CODE SIZE
---------------------------------------------------------------------------------------
Comet Powder Cleanser Regular Powder 00003362 25 Oz. (4 cans)
Comet Power Cleanser Regular Powder 84900079 25 Oz. (4 cans)
Pallet Display Units
Comet Powder Cleanser Regular Powder 84901390 11 Oz. AVDP
Comet Powder Cleanser Regular Powder 00003697 14 Oz. AVDP
Comet Powder Cleanser Regular Powder 00003529 21 Oz. AVDP
Comet Bathroom Spray Spray 00006588 17 Oz. Fluid
Comet Bathroom Spray Spray 00031110 32 Oz. Fluid
Comet Lemon Powder cleanser Powder 00003732 17 Oz. AVDP
Comet Powder Canada Powder 00002535 400 gr
Comet Powder Lemon Canada Powder 00002577 400 gr
Comet Powder Canada Powder 00002615 600 gr
Comet Powder Canada Powder 00017629 750 gr (6 pack)
Comet Powder Canada Powder 00017643 750 gr (6 pack)
Pallet Display Units
Comet Powder Cleanser Regular Powder 84914165 25 Oz.
(US - Dollar General SKU)
Comet Orange [**] Powder [**] [**] Oz.
** Once the Comet Orange product
Specifications have been agreed to by Buyer and Supplier, Buyer and Supplier
will mutually agree to a Comet Orange product size, brand code, the minimum and
maximum production requirements, and the price per physical case of Comet
Orange.
SCHEDULE 2.02
MAXIMUM AND MINIMUM REQUIREMENTS
1. MAXIMUM REQUIREMENTS
The following sets forth the maximum number of Statistical Units Supplier can be
produced in any calendar month during this Supply Agreement.
Supplier will be open to consider deviations beyond this on a case-by-case basis
and will use commercially reasonable efforts to accommodate such deviations. If
Buyer's annual requirements are forecasted to increase more than 10% versus
previous year, Buyer and Supplier agree to develop a mutually agreeable plan to
meet the demand.
* Statistical Unit Equals:
Comet spray
10 Liters
Comet powder
19 Kilograms
** Once the Comet Orange product
Specifications have been agreed to by Buyer and Supplier, Buyer and Supplier
will mutually agree to a Comet Orange product size, brand code, the minimum and
maximum production requirements, and the price per physical case of Comet
Orange.
2. MINIMUM REQUIREMENTS
The following sets forth the minimum number of Statistical Units (or Cases) for
any consecutive production run during the term of this Supply Agreement.
* Statistical Unit Equals:
Comet spray
10 Liters
Comet powder
19 Kilograms
** Once the Comet Orange product
Specifications have been agreed to by Buyer and Supplier, Buyer and Supplier
will mutually agree to a Comet Orange product size, brand code, the minimum and
maximum production requirements, and the price per physical case of Comet
Orange.
SCHEDULE 3.02
FORM OF FORECAST
PRESTIGE BRANDS INTERNATIONAL
TO: PROCTER & GAMBLE SHIP TO:
tbd
DATE PICK UP DATE SHIP VIA PURCHASE ORDER NO.
---- ------------ -------- ------------------
PRODUCT BRAND CODE SIZE
--------------------------------------------------------------
Comet Powder Lemon 3732 17 Oz.
Comet Powder Lemon-Fiber 84914780 17 Oz.
Dollar General
Comet Powder Regular 84901390 11 Oz.
Comet Powder Regular 3697 14 Oz.
Comet Powder Regular 3529 21 Oz.
Comet Powder Regular- 84914165 25 Oz.
Dollar General
Comet Powder Regular 3362 25 Oz.
Comet Powder Regular 84916618 21 Oz. Pallet
Display
Units
Comet Powder Regular 84900079 25 Oz. Pallet
Display
Units
Comet Powder Lemon Canada 2577 400 Gr.
Comet Powder Reg. Canada 2535 400 Gr.
Comet Powder Reg. Canada 2615 600 Gr.
Comet Powder Reg. Canada 17629 750 Gr.
Comet Powder Reg. Canada 17643 750 Gr. Pallet
Display Units
Comet Powder Reg. Canada-Bonus 84916981 720 Gr.
Comet Bathroom Spray 6588 17 Oz.
Comet Powder 21 oz Bonus 13529 25.2 Oz.
Comet Bathroom Spray 31110 32 Oz.
Comet Bathroom Spray- 84914486 17 Oz.
Bonus Dollar General
Comet Bathroom Spray 84914485 64 Oz.
Comet Bathroom Spray 84916979 650 ml
Comet Orange Powder [**] [**]
***
* Once the Comet Orange product
Specifications have been agreed to by Buyer and Supplier, Buyer and Supplier
will mutually agree to a Comet Orange product size, brand code, the minimum and
maximum production requirements, and the price per physical case of Comet
Orange.
SCHEDULE 16.11
RESTRICTED COMPETITOR ASSIGNMENTS
SC Johnson & Son, Inc.
Colgate Palmolive Inc.
Clorox
Uniliver
Reckitt Benckiser
Orange Glo International
And any trade customers of Supplier.
Exhibit 10.34
Portions of this Exhibit were omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment. Such
portions are marked by a series of asterisks.
April 15, 2004.
Mr. Peter Mann
Chief Executive Officer
Prestige Brands Inc.
90 North Broadway
Irvington, NY 10533
Dear Peter:
This letter will confirm our appointment by Prestige Brands Inc. to serve as
advertising agency on behalf of Prestige Brands Inc. ("Prestige") and its units,
The Spic and Span Company and Medtech, and will set forth our mutual
understanding as to the basis upon which we will so act:
1. SERVICES
We will devote our best efforts to further Prestige interests and endeavor
in every proper way to make their advertising successful. We will understand
Prestige businesses, provide advertising plans, create the advertising, and
provide such other advertising services as may be necessary within your budget
limitations. We will plan media and coordinate media buying activity with
Horizon, your media buying service.
2. PRODUCTS
It is understood that this appointment covers the advertising for brands as
follows:
a) Medtech: Cutex, Compound W, New Skin, Denorex, Chloraseptic, Clear
Eyes, Murine (strategic consulting only, excluding creative and media)
b) The Spic and Span Company: Comet
3. COMPENSATION
Set forth below are the charges we will bill you for the services we are to
render and the expenditures we are to make for your account. Any references to
our "net cost" mean the actual amount we are required to pay or credit to a
third party to purchase materials or services or both, for your account; i.e.
the gross amount charged by the third party, less commissions, applicable
discounts, rebates, shipping and taxes.
(a) ACCOUNT MANAGEMENT AND CREATIVE
Beginning April 1, 2004, CDA will be compensated ***.
(b) MEDIA ADVERTISING - SPACE AND TIME
Beginning April 1, 2004, CDA will be compensated ***.
(c) ARTWORK, PRODUCTION, TALENT, TESTIMONIALS, RESEARCH, ETC.
You will be billed for the following items purchased for you pursuant
to your written authorization at net cost to us without commission or markup.
Items to be billed on this basis include:
(1) Artwork (such as semi-comprehensives, comprehensives, finished
art, special but not rough layouts, storyboards) and mechanical
production (photographs, photostats, typesetting and proofs,
engraving, electrotypes, mats, mechanicals, printing and similar
items);
(2) Talent and production for radio, print and television programs
and commercials, motion pictures, slides and slide films;
(3) Expenditures incurred in securing testimonials and the right to
use names and/or likeness of individuals and copyrighted
materials; and
(4) Research costs incurred or contracted for by the agency with your
approval.
(d) CHARGES FOR INTERNAL SERVICES AND PRODUCTION
Internal services and finished artwork provided by us (as
distinguished from services bought outside our organization) such as special
comprehensive layouts, booklets, package designs, displays, catalogues, public
relations and publicity, sales representations, extraordinary research, etc.
will be charged at our then current rates, or at a fee to be mutually agreed
upon in writing prior to undertaking such work.
(e) OUT-OF-POCKET EXPENSES
You will reimburse us for all authorized out-of-pocket expenses for
the servicing of your account. For example:
(1) Travel transportation, accommodations, etc. -- for trips outside
the New York metropolitan area; which are authorized or requested
by you in writing; also travel expenses of our personnel in
connection with advertising material preparation to the extent
agreed upon in advance.
(2) Packaging, shipping, delivery and communications -- all
authorized expenses incurred in connection with forwarding
advertising material on your behalf (engraving mats, recordings)
and telegraph, cable, messenger and other delivery charges
incurred to provide you with special information or to meet
emergency situations for which we are not responsible, all of
which are outside of the routine correspondence in the ordinary
course of business.
(f) PAYMENTS AND CASH DISCOUNTS
2
(1) Our invoices to you are payable by you within 10 days.
(2) Media invoices, if any, will be issued to you in time as
necessary to take advantage of available cash discounts. Cash
discounts received will be detailed as to the amount on our
invoices and will be billed to you provided we receive payment on
or before the date specified on our invoice.
(3) Production costs on projects or jobs will be billed 75% on
approved estimate and 25% on completion.
We reserve the right, in the case of delinquency in your payment to us or upon
learning of circumstances that may reasonably be expected to affect your ability
to make payments on these due dates, to change the requirements as to terms of
payment under this agreement.
(g) MEDIA PLANS AND PRODUCTION ESTIMATES
Media plans for proposed expenditures for advertising in publications,
on radio and television, etc., and production estimates for proposed
expenditures for costs and services related to the production of advertising and
advertising materials, will be submitted to you for approval. Your written
approval of such plans/estimates will constitute our authorization to enter into
contracts and make purchases for your account.
(h) MONTHLY FEE PAYMENT SCHEDULE
CDA will be compensated by monthly fees as set forth above *** payable
on or before the 15th day of each month during the term hereof.
4. GENERAL PROVISIONS
(a) Except as provided in paragraph 4(b) below you will indemnify, defend
and hold us harmless from and against any loss, cost, liability or damages
(including attorneys' fees) resulting from any claim, suit or proceeding made or
brought against us based upon assertions made for Prestige products or services
in any advertising or other promotional materials which we may prepare and which
you approve in writing before publication or broadcast, as well as for any
claim, suit or proceeding arising out of the nature or use of Prestige products
or services.
(b) We will defend and indemnify you against any loss, costs, or damages
including attorney's fees, made against you arising out of any advertising
prepared and placed by us which is based on libel, slander, piracy, plagiarism,
invasion of privacy or infringement of copyright. We presently carry, and shall,
at our sole cost and expense, during the term of this agreement, continuously
maintain in force, advertising liability insurance coverage in the amount of
$2,000,000.
(c) You reserve the right, in your own best interests to modify, reject,
cancel or stop any and all agreements or commitments entered into by us on your
behalf, as well as all plans, schedules or work in progress. In this event, we
shall promptly take appropriate steps to carry out your instructions. In turn
you agree (i) to pay us, in accordance with the provisions of this
3
agreement, any and all proper charges earned and incurred by us in connection
with such work up to the time of its discontinuance, cancellation or
modification; and (ii) to indemnify us for all claims and actions by third
parties for damages and expenses in consequence of our carrying out your
instructions.
(d) We will use our best efforts to safeguard any and all of your property
entrusted to our custody or control, but in absence of gross negligence on our
part or willful disregard by us of your property rights, we are not to be held
responsible for any loss, damage, destruction or unauthorized use by others of
such property.
(e) We will use our best efforts to guard against any loss to you through
failure of media or suppliers properly to execute their commitments but we shall
not be held responsible for any such failure except that we shall make every
reasonable effort to obtain appropriate make-goods.
(f) If we are called upon to place advertising on your behalf, we will
verify all media invoices by obtaining from the media tear sheets of space
advertising, station affidavits or similar proof of performance of radio and
television time placed by us and will confirm the accuracy of all media charges
by comparison of such proof of performance with the billings rendered.
(g) Unless specifically requested before the release of an advertisement,
we are not responsible for the return of engravings after their use in
publications.
(h) At any reasonable time during the life of this agreement and upon
reasonable notice, you may examine our files and records pertaining directly to
the handling of your advertising, but not including information related to
individual employee compensation.
(i) All talent employed by us for use in any advertising prepared on your
behalf shall be hired as our employees or through subcontractors; as such we
will be responsible for the payment and reporting of all payroll taxes for such
employees to the applicable governmental agencies provided for, and we shall, as
appropriate perform and discharge all obligations imposed upon employers under
Federal, state and local laws. If this agreement is terminated for any reason,
any contract we have entered into (with your approval) with talent who have
performed or are to perform in your advertising or promotional activities,
shall, simultaneously on the effective date of such termination, be
automatically assigned to you and you shall assume all the rights and
obligations under said contract, and we shall be relieved of any further
responsibility or liability with respect thereto. You shall indemnify us against
any expense or loss we may incur as a result of a claim by such talent or a
third party arising after the assignment of said contract.
(j) We will act as agent for you as a disclosed principal with regard to
the purchase, upon prior approval, of materials and services on your behalf.
5. TERM AND TERMINATION OF AGREEMENT
(a) This agreement shall become effective as of the date hereof (with
Monthly Fees to begin in April) and shall continue thereafter unless terminated
by either party giving at least sixty
4
days notice. All notices shall be delivered by registered mail to the principal
place of business of the party to whom such notice is addressed.
(b) Our respective duties, responsibilities and rights shall continue in
full force during the period of notice of termination, and we shall be entitled
to our Monthly Fees throughout the notice period. Upon receipt of notice of
termination we shall not commence work on or place orders for any new
advertising, but shall complete and place all advertising previously approved by
you.
(c) Upon termination of this agreement, you are to pay for all authorized
work in progress, and you shall assume our liability under and indemnify us with
respect to all outstanding contracts and agreements made on your behalf and with
your approval.
(d) Provided that there is no overdue indebtedness then owing by you to
us, we shall transfer, assign and make available to you or your representative
all property and materials in our possession or control belonging to you, and
all information, contracts, options, reservations and orders concerning your
advertising. We will also give you all reasonable cooperation toward
transferring, with the approval of third parties in interest, all reservations,
contracts, and arrangements with advertising media or others, of advertising
space, broadcast time, or materials yet to be used and all rights and claims
thereto and therein, upon our being duly released from the obligations thereof.
(e) You shall own any and all plans, preliminary outlines, layouts, copy,
artwork, films, and other property of advertising material which we prepared for
you or purchased for your account hereunder and which you paid for in accordance
with this agreement, provided such material was produced in final form,
published, displayed, broadcast, distributed, or otherwise presented prior to
the termination hereof. Any unproduced or unpublished advertising programs,
campaigns, plans and ideas prepared by us shall remain our property, provided
that any use we make of the same shall not involve the release of any
confidential information regarding your business or methods of operation.
6. MISCELLANEOUS
(a) This agreement and all matters or issues shall be governed by the laws
of the State of New York applicable to contracts made and performed entirely
therein.
(b) This letter represents the entire agreement between you and us and
supersedes all prior agreements, arrangements and understandings, written or
oral with respect to the subject matter hereof. No modification of this
agreement will be effective unless in writing and signed by both parties.
(c) Except as otherwise provided in this agreement, neither party may
assign any rights or delegate any duties hereunder without prior written consent
of the other party except nothing in this agreement shall preclude us from using
subcontractors in providing our agreed advertising services to you
(d) Any controversy or claim arising out of or relating to this Agreement,
or any breach hereof, shall be settled by arbitration or in the sole event
mediation fails, by arbitration
5
before a single arbitrator in White Plains, New York in accordance with the
rules of the American Arbitration Association, then in effect and judgment upon
such award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The costs and expenses of such arbitration may be
allocated between the parties as determined by the arbitrator. No party to this
Agreement shall be precluded from applying to a proper court for preliminary
injunctive relief by reason of the prior or subsequent commencement of
arbitration proceeding as herein provided.
Your signature together with ours below will constitute this a binding agreement
between us.
CARRAFIELLO DIEHL & ASSOCIATES, INC.
By: /s/ GERALD A. CARRAFIELLO
-----------------------------------
Gerald A. Carrafiello
President
ACCEPTED AND AGREED
Prestige Brands Inc.
By: /s/ PETER C. MANN
--------------------------------
Peter Mann
Chief Executive Officer
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