INVENTORY PURCHASE AGREEMENT
Exhibit
10.3
THIS
INVENTORY PURCHASE AGREEMENT (this “Agreement”) is entered into on October 8,
2007 between Reagents Applications, Inc., a Delaware corporation (“RAI”) located
at 0000 Xxxxxxx Xxxxx, Xxx Xxxxx, XX 00000 and Cliniqa Corporation, a California
corporation (“Cliniqa”) located at 000 Xxxx Xxxx Xxxxxx Xxxx, Xxx Xxxxxx, XX
00000.
X. XXX
and Cliniqa have entered into an Asset Purchase Agreement (“Purchase Agreement”)
dated October 8, 2007 whereby Cliniqa has agreed to buy specified assets of
Reagents Applications, Inc., a wholly owned subsidiary of Hemagen Diagnostics,
Inc (“Hemagen”).
B. Cliniqa
desires to purchase inventory from RAI.
X. XXX
has agreed to supply such inventory to Cliniqa on the terms and conditions
set
forth in this Agreement.
1. DEFINITIONS.
1.1
“Effective Date” shall mean the date first set forth in the first paragraph of
this
Agreement.
1.2
“Party” or “Parties” shall mean, respectively, RAI or Cliniqa, and RAI and
Cliniqa.
1.3
“Purchase Price” shall have the meaning assigned to such term in Section 3.1.
1.4 “Inventory”
shall mean the products listed on Exhibit A.
1.5 “Term”
shall have the meaning assigned to such term in Section 6.1.
1.6 “Minimum
Purchase Commitment” shall have the meaning assigned to such term in Section 2.2.
2. INVENTORY
2.1 Inventory
Selection. During the term of this Agreement, RAI shall sell to
Cliniqa, and Cliniqa will purchase from RAI, free and clear of any charges,
encumbrances, security interests and claims, Inventory which has been selected
by Cliniqa, from Exhibit A, as Cliniqa wishes to acquire from RAI.
2.2 Supply. Cliniqa
shall purchase Inventory pursuant to this Agreement and be obligated to purchase
a minimum of $500,000 of Inventory (the “Minimum Purchase Commitment”) during
the 18 month period after the effective date. Pursuant to the
Purchase Agreement, Cliniqa’s Purchase Price includes $100,000 of Inventory and
thus the Minimum Purchase Commitment shall begin after Cliniqa receives $100,000
of Inventory.
2.3 Acceptance
of Purchase Orders. Cliniqa shall issue purchase orders under
this Agreement. RAI shall accept all purchase orders that are issued
in conformance with the terms and conditions of this Agreement. Upon
acceptance of a purchase order, this Agreement and such accepted purchase order
shall constitute a contract between Cliniqa and RAI. If there is a
conflict of terms between the terms of this Agreement and any such accepted
purchase order, the terms of this Agreement shall prevail.
2.4 Delivery. RAI
shall maintain its Inventory on a consignment basis to Cliniqa at the Raichem
facility, located at 0000 Xxxxxxx Xxxxx, Xxx Xxxxx, XX 00000, or at another
facility if Cliniqa moves its operations out of the Raichem
facility. Cliniqa shall ensure that the Inventory is segregated
physically from its own inventory. Cliniqa acknowledges that it shall
be responsible for maintaining and safeguarding the Inventory, including
maintaining all risk property damage insurance on such inventory at the
replacement value, naming Hemagen as additional insured and loss
payee. Cliniqa shall provide a certificate of insurance identifying
such coverages on the date hereof, and Hemagen shall be provided thirty (30)
days notice of cancellation.
2.5 Title,
Risk of Loss. Title and risk of loss, delay or damage to the
Inventory shall pass to Cliniqa upon delivery.
2.6 Reports,
Audits. RAI shall provide Cliniqa with an inventory report, not
later than 10 days after the end of each month, showing the beginning balance
of
the Inventory, usage of inventory during the month from issued purchase orders
and the balance at the end of the month. Cliniqa agrees that it will
perform spot inventory checks for certain inventory items identified by Hemagen
on a monthly basis. Cliniqa also agrees that Hemagen, at its own
expense, may perform a physical inventory audit at the end of each
month. Hemagen shall inform Cliniqa no less than five days in advance
of performing the audit. Cliniqa shall use its best efforts to aid
Hemagen in its audit.
2.7 Inventory
Shortfall. Cliniqa agrees that any shortfall in the monthly
inventory report shall constitute a purchase of Inventory and Cliniqa shall
promptly issue a purchase order for Hemagen for the Inventory.
2.8 Preferred
Supplier. For the Term of the Agreement, Cliniqa agrees that it
shall purchase Inventory solely from RAI, prior to purchasing any like inventory
from a third party. If RAI desires to use any of the Inventory, it
shall provide Cliniqa with a ten day written notice. If Cliniqa
desires to purchase the specific Inventory, it must promptly issue a purchase
order to RAI. RAI acknowledges that it will provide Cliniqa with
sufficient notice on products that are scheduled for production or for which
there are long lead times with other vendors. If Cliniqa does not
desire to purchase the specific inventory, RAI shall issue an inventory transfer
order to Cliniqa for such quantity of Inventory desired to Hemagen’s facility,
and the parties shall adjust
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consigned
inventory balances accordingly. Cliniqa shall ship the product to
Hemagen, or to another party, at Hemagen’s option and charge Hemagen reasonable
shipping costs. Any products purchased by RAI pursuant to this
Section 2.9 shall reduce the Minimum
Purchase Commitment by the value of the Inventory agreed upon under this
agreement.
2.9 Cliniqa
will have the opportunity to review the most recently completed physical
inventory reports to verify that sufficient inventory exists that would be
purchasable under this agreement. Should there be insufficient
inventory acceptable to Cliniqa, such Minimum Purchase Commitment will be
adjusted through negotiations with both Parties.
3. PURCHASE
PRICE; PAYMENT TERMS.
3.1 Purchase
Price; Payment Terms. In consideration of the delivery of
Inventory pursuant to Article 2, Cliniqa shall pay to RAI the price for each
Inventory item as set forth at Exhibit A (the “Purchase Price”).
3.2 Taxes. The
prices stated are exclusive of any taxes, fees, duties, licenses or levies
(“Taxes”) now or hereinafter imposed upon the Inventory, or use of the
Inventory. Any Sales and Use Taxes related to the Reagents used by
Cliniqa shall be paid by Cliniqa or in lieu thereof, Cliniqa shall provide
an
exemption certificate acceptable to the taxing authorities. Property
taxes on the consigned inventory remain the responsibility of RAI.
3.3 Payment
Terms. On the 15th and
the last day
of each month, RAI shall invoice Cliniqa for the Inventory
purchased. Payment terms are net thirty (30) days from the date of
Hemagen’s invoice to Cliniqa.
3.4 Final
Payment. Cliniqa acknowledges that if it has not met its
obligation to purchase the Minimum Purchase Commitment, net of the Inventory
Credit, during the 18 months period from the effective date, Cliniqa will issue
a PO for the Minimum Purchase Commitment due 18 months from the effective date
and it may designate specific inventory to be transferred at the prices agreed
upon under this agreement.
3.5 Non-saleable
Material. All material in consigned inventory reaching its
expiration date or otherwise considered as outdated, spoiled, expired or for
any
reason unsaleable, is to be removed from inventory and not charged to Cliniqa,
unless such damage to the inventory is caused as a direct result of Cliniqa’s
negligence in maintaining and storing the inventory under proper storage
conditions at Cliniqa’s facility. The Minimum Purchase Commitment
will be reduced by the value of such inventory considered
non-saleable.
4. LIMITED
WARRANTY.
4.1 Limited
Warranty. With respect to any Inventory purchased pursuant to
this Agreement, RAI makes those warranties expressly identified as “warranties”
as are set forth in RAI’s current operating manual, catalog, or written
guarantee covering such Inventory. Any description of the Inventory
contained in this Agreement, is for the sole purpose of identifying them, and
any such description is not part of the basis of the bargain, and does not
constitute a warranty that the Inventory shall conform to that
description. Any sample or model used in connection with this
Agreement is for illustrative purposes only, is not part of the basis of
the
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bargain,
and is not to be construed as a warranty that the Inventory will conform
to the
sample or model. No affirmation of fact or promise made by RAI,
whether or not in this Agreement, shall constitute a warranty that the Inventory
will conform to the affirmation or promise. THE WARRANTY SET FORTH IN
THIS PARAGRAPH IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED,
INCLUDING THOSE OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, EXCEPT
WITH RESPECT TO INTELLECTUAL PROPERTY.
5. LIMITATION
OF LIABILITY.
5.1 LIMITATION
OF LIABILITY. IN NO EVENT SHALL HEMAGEN BE LIABLE FOR ANY SPECIAL,
INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION
WITH ANY ASPECT OF THIS AGREEMENT OR THE USE OR PERFORMANCE OF HEMAGEN’S
PRODUCTS.
6. TERM
AND TERMINATION.
6.1 Term. The
initial term of this Agreement shall commence on the Effective Date hereof
and
shall continue until the second anniversary of the Effective Date, unless
terminated sooner as provided in this Agreement (the “Term”):
6.2 Termination
for Default. If Cliniqa breaches any material provision of this
Agreement and if such breach is not corrected within thirty (30) days after
Hemagen gives notice of the breach to Cliniqa, Hemagen may, without prejudice
to
any of its other rights conferred on it by this Agreement, in addition to any
other remedies available to it by law or in equity, terminate this Agreement
immediately by giving notice of the termination, effective on the date of the
notice, and declare any of the Minimum Commitment amount outstanding immediately
due. For any outstanding Minimum Commitment to be paid under this
Section 6.2, Cliniqa may designate
specific inventory to be transferred at the prices agreed upon under this
agreement. The right of Hemagen to terminate this Agreement, as
provided in this Section 6.2, shall not
be affected in any way by its waiver or failure to take action with respect
to
any previous default.
6.3 Termination
for Insolvency. Subject to applicable bankruptcy laws, RAI may
terminate this Agreement if, at any time, Cliniqa shall file in any court or
agency pursuant to any statute or regulation of any state or country, a petition
in bankruptcy or insolvency or for reorganization or for an arrangement or
for
the appointment of a receiver or trustee of it or of its assets, or if Cliniqa
proposes a written agreement of composition or extension of its debts, or if
Cliniqa 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 the filing thereof.
6.4 Survival
of Rights. In the event of the termination of this Agreement
prior to its expiration, the obligations of the Parties theretofore accrued
under this Agreement shall survive, and the rights and obligations of the
Parties under Sections 2.5, 3.3,
4,
5,
6,
7.5
and 8 shall survive in accordance with
the terms of such Sections.
6.5 Rights
Not Exclusive. All rights to terminate, and rights upon
termination, provided in this Agreement are in addition to other remedies in
law
or equity which may be available.
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7. MISCELLANEOUS.
7.1 Severability. In
the event that any provision of this Agreement shall be held illegal, void
or
ineffective, the remaining portions hereof shall remain in full force and effect
so long as such remaining portions do not materially change the intent of this
Agreement or the right or obligations of the Parties hereunder. If
any provision of this Agreement is in conflict with any applicable statute
or
law in any jurisdiction, then such provision shall be deemed inoperative in
such
jurisdiction to the extent of such conflict and the Parties will renegotiate
the
affected provisions of this Agreement to resolve any inequities. It
is the intention of the Parties that, if any court or other tribunal construes
any provision or clause of this Agreement, or any portion thereof, to be
illegal, void or unenforceable because of the duration of such provision or
the
area or matter covered thereby, such court shall reduce the duration, area
or
matter of such provision and enforce such provision in its reduced
form.
7.2 Waiver. A
waiver by either Party of any of the terms and conditions of this Agreement
in
any instance shall not be deemed or construed to be a waiver of such term or
condition for the future, or of any subsequent breach hereof. All
rights, remedies, undertakings, obligations and agreements contained in this
Agreement shall be cumulative and none of them shall be in limitation of any
other remedy, right, undertaking, obligation or agreement of either
Party.
7.3 Notices. Any
notice or other communication required or permitted under this Agreement shall
be sent by certified mail or courier service, charges prepaid, or by facsimile
transmission (receipt confirmed), to the address or facsimile number specified
below:
(a) If
to Hemagen:
Hemagen
Diagnostics, Inc.
0000
Xxx Xxxxxx
Xxxx
Xxxxxxxx,
XX
00000
Fax: (000)
000-0000
Attn: Xxxxxxx
X. Xxxxx, Chairman, President and CEO
(b) If
to Cliniqa:
Cliniqa
Corporation
000
Xxxx Xxxx Xxxxxx
Xxxx
Xxx
Xxxxxx, XX
00000
Fax: 000-000-0000
Attn: Xxxxx
Xxxxx, President
or
to
such other address or facsimile number as a Party may specify in a notice duly
given to the sender as provided herein. A notice will be deemed to
have been given five (5) days after the date deposited in the United States
mail, or two (2) days after the date deposited with a courier service or, in
the
case of facsimile transmission, when received.
7.4 Assignment;
Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Parties
hereto. Neither Party may assign any of its
rights, or delegate any of its obligations, under this Agreement without the
written consent of the other Party.
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Notwithstanding
the foregoing, either Party may, without obtaining the consent of the other
Party, assign this Agreement to any Affiliate or to any entity with which it
may
merge or consolidate, or to which it may transfer all or substantially of its
assets to which this Agreement relates.
7.5 Headings
and References. All section headings contained in this Agreement
are for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement. Unless the context requires
otherwise, all references in this Agreement to any section, exhibit or appendix
shall be deemed and construed as references to a section of, or an exhibit
or
appendix to, this Agreement, and any such exhibits and appendices are hereby
incorporated in this Agreement by such reference.
7.6 No
Agency. It is understood and agreed that each Party shall have
the status of an independent contractor under this Agreement and that nothing
in
this Agreement shall be construed as authorization for either Party to act
as
agent for the other.
7.7 No
Strict Construction. This Agreement has been prepared jointly and
shall not be strictly construed against either Party.
7.8 Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall
be
an original as against any Party whose signature appears thereon but all of
which together shall constitute but one and the same instrument.
7.9 Inconsistencies. Notwithstanding
the content of Cliniqa’s purchase order, the terms of this Agreement shall take
precedence over such purchase order, and any conflicting or inconsistent terms
of Cliniqa’s purchase order shall be null and void.
7.10 Choice
of Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware,
U.S.A. Any litigation or other dispute resolution between the Parties
relating to this Agreement shall take place in the San Diego District of
California. The Parties consent to the personal jurisdiction of and
venue in the state and federal courts within that District.
7.11 Complete
Understanding. This Agreement, including all exhibits,
constitutes the entire understanding between the Parties with respect to the
subject matter hereof, and supersedes and replaces all prior or contemporaneous
understandings or agreements, written or oral, regarding such subject
matter. No amendment to .or modification
of
this Agreement shall be binding unless in writing and signed by a duly
authorized representative of both Parties.
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Hemagen
Diagnostics, Inc.
By:
/s/Xxxxxxx X. Xxxxx
Name: Xxxxxxx
X. Xxxxx
Title: Chairman,
President and CEO
Cliniqa
Corporation
By:
/s/Xxxxxxx
Xxxxx
Name: Xxxxxxx
Xxxxx
Title: President
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