Exhibit 10.11
MANUFACTURING AGREEMENT
This Agreement, made this 14th day of April, 1998 between The Chemins
Company, Inc. ("Chemins"), 0000 X. Xxxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx
00000 and Pure Nature ("Customer");
WHEREAS, Customer intends to distribute a line of dietary supplement
products and wishes to have Chemins manufacture such products; and
WHEREAS, Chemins wishes to manufacture the products for Customer pursuant
to the terms and conditions contained in this Agreement.
NOW, THEREFORE, for the consideration expressed in this Agreement, It Is
Hereby Agreed:
1. PRODUCTS: The products covered by this Agreement are those products as
submitted and agreed upon in accordance with a purchase order as stated in
paragraph 3.2. If Customer wishes to add other products to its product line
during the term of the Agreement, those new products shall be covered by this
Agreement provided that the parties mutually agree to their pricing structure,
specifications, and production schedule.
2. TERM: The term of this Agreement is continuous. It commences on the
date of this Agreement as set out above.
3. MANUFACTURING PROVISIONS:
3.1 Chemins agrees to manufacture the products in accordance with
the agreed upon specifications in a workmanlike manner. Additionally,
Chemins promises that (A) the ingredients and other items which it supplies
for the products will be of such quality that they will pass without
objection in the dietary supplement industry; and (B) in the case of
finished product, each item (such as a capsule or tablet) will be of
superior quality.
3.2 Purchase orders shall be used whenever possible by a Customer
when placing a manufacturing order with Chemins. Each of those orders should,
at a minimum, identify the product ordered, the quantity to be manufactured,
any special labeling, quality, manufacturing, packaging and shipping
requirements and should allow a three week lead time. Customer agrees that
Chemins will not be bound by any pre-printed language on purchase orders used
by Customer and will only be bound by the language on those orders which
reflects the information called for in this paragraph 3.2. See paragraph
10.5 for rights and obligations upon termination.
3.3 If the Customer wishes to initiate any product changes, whether
before or after the manufacturing process has begun for those products,
Chemins has the right for a period of ten days after receiving those
requested changes to determine whether it can or wishes to manufacture such
products. If Chemins is unable to or does not wish to manufacture the products
with those changes, it will inform the Customer within the ten day period. If
the parties are unable to agree to the terms regarding the product changes,
Customer shall have the right to have such products manufactured by someone
other than Chemins.
3.4 Chemins is responsible for the maintenance and storage of
materials and ingredients for the products and Work in Progress [WIP]
inventory. Chemins will keep an accurate record of the receipt, use, and
disposition of all property used in the manufacture of the products. That
record will include "shop orders", Certificates of Analysis from its
suppliers, and shipment records.
3.5 Chemins shall be responsible for obtaining, at its own
expense, casualty and theft insurance covering property owned by Customer
while in the possession of Chemins as well as product liability insurance.
3.6 At any time during normal business hours, but not more
frequently than one time per week, Customer may inspect and copy the books,
records and other documents of Chemins relating to the receipt and disposition
of all of Customer's property in the possession of Chemins. Chemins will give
Customer access to its premises for such purposes. Customer shall conduct
such inspections in a manner that does not interfere with other ongoing
operations of Chemins.
3.7 Chemins will adhere to all governmental regulations,
certifications, or registration with respect to dietary supplements as they
pertain to the manufacturing facility [i.e. physical plant].
3.8 In the case of Customer supplied ingredients, Customer agrees,
to provide Chemins a Certificate of Analysis with respect to each
ingredient, each combination of ingredients and each product furnished in
finished form (e.g. tablet or capsule) to Chemins by Customer. Each of those
certificates shall be delivered along with the ingredient of product
furnished to Chemins. Customer guarantees to Chemins that each representation
on that certificate is true. Customer understands that Chemins will be
relying on that information when and as it undertakes its manufacturing
obligations pursuant to paragraph 3.1. The certificate shall not contain any
language which limits or disclaims Customer's guarantee or liability and, to
the extent it does, Customer now agrees that any such limitation or
disclaimer shall be of no effect.
4. ENFORCEMENT AND PRODUCT ACTIONS: Each party shall notify the other
immediately of any enforcement action, including any Warning Letter issued by
the FDA to either of them, and of any product liability claim which involves
the products. This applies to action or threatened action by local, state, or
federal entity or by private party or entity.
5. PRICING: The pricing for the manufacturing provided by Chemins shall
be as agreed upon by Customer and Chemins at the time of the submission of a
purchase order in accordance with paragraph 3.2. Those prices shall be
effective from the date of this Agreement for 12 months; however, if the cost
of acquisition to Chemins for the raw ingredients or other material needed
to manufacture the products increases during that period Chemins is entitled
to pass along that increase to Customer in the manufacturing run of that
product which follows immediately after Chemins' reception of that increase
cost information.
6. PAYMENT TERMS: New Customers without approved credit agree to pay
50% of each Purchase Order upon the delivery of that order to Chemins and the
other 50% prior to Chemins' shipment of the products. After Customer
establishes a credit history satisfactory to Chemins, Chemins will allow
Customer to pay, on a "net" basis, within 30 days from the invoice date which
will be the date of shipment. However, in any event, if Customer's Account
Receivable with Chemins exceeds their established credit limit, or if any
invoices become over 30 days old, Chemins reserves the right to discontinue,
immediately, its performance of any and all obligations under this Agreement
until Customer arranges with Chemins, in its sole discretion, suitable
payment provisions.
7. EXCLUSIVE OWNERSHIP OF PRODUCTS AND TECHNOLOGY:
7.1 Returned Goods: Any products that are returned to the Chemins
Company for any reason shall have pre-authorization prior to return. All
return materials must be in their original containers and must have all.
original labels intact. Returned goods must also be shipped back in the
original shipping container.
7.2 Customer has developed and owns the products, any patents,
trademarks, copyrights, and any related goodwill.
7.3 Nothing contained in this Section 7 shall be adverse to any
Uniform Commercial Code [the "UCC] or other rights Chemins has or may have in
inventory, tools, dies, or other property for which amounts remain owing 'to
Chemins by Customer.
8. CONFIDENTIALITY: Other than as may be required by any applicable
law, government order or regulation, or by order or decree of any court of
competent jurisdiction, neither party shall divulge or announce, or in any
manner disclose to any third party, any confidential information or matters
revealed to the other party or. any of the terms and conditions of this
Agreement which are specific to this Agreement. Each party shall do all such
things as are reasonably necessary to prevent any such information becoming
known to any party other than the parties involved with the transaction.
9. CHEMINS' AND CUSTOMER'S WARRANTIES; DISCLAIMERS:
9.1 Chemins represents that it has product liability insurance in
the amount of $8,000,000 which insures Chemins and its employees against any
claims, suits, losses, charges, costs, expenses (including reasonable
attorney's fees), judgments, liabilities, and damages arising out of
Chemins' manufacture of the products and any actual or alleged defects in the
products. This liability policy contains standard exclusions from coverage;
Customer may review that policy upon request to Chemins. It is strongly
recommended that Customer will have in effect throughout the duration of this
Agreement, a policy of insurance which provides product liability insurance
to Customer in an amount of at least $1,000,000 per occurrence and $2;,000,000
in the aggregate per policy year.
9.2 Customer acknowledges that Chemins is disclaiming any legal
responsibility for the safety and effectiveness of the products manufactured
by it for Customer with respect to each product's labeling and all non-
labeling promotional material. Among other things, this means that Customer
is solely liable and responsible for complying with all applicable state
sand federal statutes and regulations such as, but not limited to, the
Federal Trade Commission Act of 1994, with respect to a product's labeling
and non-labeling promotional material. Chemins agrees that, upon a request
by a Customer, it will provide information and suggestions to Customer about
the formulation of a product. However, Customer understands and agrees that
Customer waives any right to make or assert any type of claim against
Chemins and any of its employees and agents which arises out of or is based
upon such information or suggestions.
9.3 UPC Codes: The Chemins Company is not responsible for the
accuracy or function of UPC Codes placed on product labels.
9.4 Customer agrees and guarantees to defend, indemnify and hold
Chemins and its employees harmless of, from and against any injury, charges,
suits, damages, costs, expenses (including reasonable attorney's fees),
:judgment, penalties, claims, liabilities or losses of any kind or nature
whatsoever, which may be demanded of or incurred by Chemins and its employees
arising out of Customer's association with the products. Including but not
limited to, claims related to (A) the ingredients, if any, supplied by
Customer; (B) the labeling of the products and non-labeling promotional
material; (C) any trade secret, process, idea, method or device supplied, in
any manner, by Customer to Chemins; (D) the failure of the products to meet
any national, state, or local laws or standards as a result of Customer
conduct; or, (E) any other alleged actual or alleged wrongful action of
Customer which relates to the products.
9.5 Except for Chemins' express warranties set out in paragraphs
3.1 and 9.1 of this Agreement, Chemins does not make and expressly disclaims
and excludes any warranty, whether express or implied,. including the
implied warranties of merchantability and fitness with respect to the
products and any component, including ingredients, of those products.
10. TERMINATION: This Agreement may be terminated by either party upon
90 days written notice to the other. In addition, either party may terminate
this Agreement due to a breach by the other:
10.1 If Chemins' alleged failure is based upon paragraph 3.1 of
this Agreement, Chemins shall have thirty days to cure that breach ("First
Cure Period"). If such a breach remains uncured for thirty days, Customer may
elect to manufacture the-products that are the subject of the particular
default at an alternative source; if Customer makes that election, Customer
shall gives Chemins written notice of its intention to manufacture at an
alternative source within 48 hours of when Customer makes that election. If
the problem or issue that caused that breach is not solved or satisfied
within an additional ten days ("Final Cure Period"), this Agreement may be
terminated at the option of Customer. If a breach occurs due to Customer's
failure to pay timely as specified in paragraph 6., Chemins may terminate
this Agreement after it has given Customer 10 days written notice and if
Customer has not totally satisfied its payment obligation. If a breach by
either party is in regard to any other terms of the Agreement, the breaching
party ;;hall have 20 days to cure said breach after receipt of written
notification of such failure or omission from the other.
10.2 If Customer believes that Chemins has not shipped product on or
by an agreed upon date, Customer shall immediately notify Chemins by
telephone, fax, letter or personal delivery of the fact and inform Chemins of
an absolute deadline for such shipment. The rights and obligations of such
parties at that point shall be governed by Title 4, Article 2 of the Uniform
Commercial Code.
10.3 If a breach or anticipated breach by either party of any
provision of this Agreement causes or may cause the other to default on a
material obligation to a third person or entity, the non-breaching party.
shall promptly inform the other party of the fact in order to prevent a
default on the performance owed to a third party or to minimize damages, if
any.
10.4 The termination or expiration of this Agreement shall be
without prejudice to any rights or claims that a party has against the other
and shall not release any party of any obligation to pay any monies that
become due or owing or arose out of any transaction prior to the date of
termination or expiration of this Agreement.
10.5 Upon termination or expiration of this Agreement, Chemins
shall, within 14 calendar days, provide Customer with a statement showing
the quantity and description of the products, inventory, WIP, materials, and
other property belonging to Customer covered by this Agreement. Customer
shall have the right to take a physical inventory to ascertain or verify such
statement during normal business hours. Customer shall have the right to take
possession of its property after payment is made for that property. Chemins
has the right to be paid within 30 calendar days of such termination's or
expiration for all finished product, WIP, labels, other labeling, packaging,
and other property directly related to the products. With respect to raw
ingredients which Chemins has purchased in order to perform its obligations
under this Agreement, Chemins will determine whether or not it can use them
for any other Customer's products; if, in Chemins' sole discretion, Chemins
cannot do so, Customer shall pay Chemins, within 30 days of Chemins'
determination, for those raw ingredients.
11. NO PARTNERSHIP, JOINT VENTURE OR AGENCY: Nothing contained in
this Agreement shall be deemed or construed to constitute or create between
the parties a partnership, joint venture or agency.
12. FORCE MAJEURE: The parties shall be released from their
respective obligations if government regulations not currently existing or
other causes arising out of a state of war or other national emergency, or
other causes beyond the reasonable control of the parties such as fire,
earthquake, or other casualty or natural cases, renders performance of such
obligations reasonably impracticable and if such event continues for a
period of 60 days.
13. COMPLETE AGREEMENT; "DAYS": This Agreement contains all of the
Agreements and understandings of the parties relating to the subject matter.
It merges :all prior written or oral communications between the parties. This
Agreement may not be modified except by a writing signed by the party to be
bound. Each reference to a day in this Agreement means a calendar day,
including holidays.
14. GOVERNING LAW AND JURISDICTION: This Agreement shall be interpreted
and enforced pursuant to the laws of Colorado only. The parties agree to
submit all disputes arising under or pursuant to this' Agreement for
resolution to the American Arbitration Association only. Any such proceeding
shall be handled by the AAA's Denver office and shall proceed pursuant to
its Commercial Arbitration Rules according to its expedited rules. If
either. or both desire injunctive relief, the parties may file such an
action in the courts of the Sate of Colorado in the county of El Paso or in
the federal court located in Denver, Colorado, should federal jurisdiction
exist. All claims for other types of relief, including damages, shall be
decided by arbitration only; this applies even if an action for injunctive
relief is filed in a court.
THE CHEMINS COMPANY, INC. PURE NATURE
("Chemins") ("Customer")
By: /s/ By: /s/ Joey Canyon
Vice-President CEO/President
("Title") "(Title")
Date Signed: 4-14-98 Date Signed: 4-21-98
