Irinquiries@prestigebrands.com
Prestige Consumer Healthcare Inc.
660 White Plains Road – Ste 250
Tarrytown, NY 10591
Telephone: 914-524-6819
[
X ]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the quarterly period ended December
31, 2007
|
|
OR
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the transition period from ____ to _____
|
|
Commission
File Number: 001-32433
|
Delaware
|
20-1297589
|
|
(State
or other
jurisdiction of
incorporation
or
organization)
|
(I.R.S.
Employer
Identification No.)
|
90
North Broadway
Irvington,
New York 10533
|
(Address
of
Principal Executive Offices, including zip code)
|
(914)
524-6810
|
(Registrant’s
telephone number, including area
code)
|
Large accelerated filer o | Accelerated filer x | Non-accelerated filer o | Smaller reporting company o |
PART
I.
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Consolidated
Financial Statements
|
|
|
Consolidated Statements of Operations – three months ended December 31, 2007 | |
|
and
2006 and nine months ended December 31, 2007 and 2006
(unaudited)
|
2 |
|
Consolidated
Balance
Sheets – December 31, 2007 and March 31, 2007
(unaudited)
|
3 |
|
Consolidated Statement of Changes in Stockholders’ Equity and | |
|
Comprehensive
Income – nine months ended December 31, 2007
(unaudited)
|
4 |
|
Consolidated Statements of Cash Flows – three months ended December 31, 2007 | |
|
and
2006 and nine months ended December 31, 2007 and 2006
(unaudited)
|
5 |
|
Notes
to Unaudited
Consolidated Financial Statements
|
6 |
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition
and
Results of Operations
|
24
|
Item
3.
|
Quantitative
and
Qualitative Disclosure About Market Risk
|
41
|
Item
4.
|
Controls
and
Procedures
|
41
|
PART
II.
|
OTHER
INFORMATION
|
|
Item
1.
|
Legal
Proceedings
|
42
|
Item
1A.
|
Risk
Factors
|
42
|
Item
2.
|
Unregistered
Sales
of Equity Securities and Use of Proceeds
|
43
|
Item 5. | Other Information | 43 |
Item
6.
|
Exhibits
|
44
|
|
Signatures
|
45 |
PART
I
|
FINANCIAL
INFORMATION
|
Item
1.
|
FINANCIAL
STATEMENTS
|
Three
Months
Ended
December 31
|
Nine
Months
Ended
December 31
|
|||||||||||||||
(In
thousands, except per share data)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Revenues
|
||||||||||||||||
Net
sales
|
$ | 79,644 | $ | 79,564 | $ | 244,525 | $ | 239,164 | ||||||||
Other
revenues
|
578 | 560 | 1,645 | 1,434 | ||||||||||||
Total
revenues
|
80,222 | 80,124 | 246,170 | 240,598 | ||||||||||||
Cost
of Sales
|
||||||||||||||||
Costs
of
sales
|
38,783 | 36,766 | 118,875 | 114,350 | ||||||||||||
Gross
profit
|
41,439 | 43,358 | 127,295 | 126,248 | ||||||||||||
Operating
Expenses
|
||||||||||||||||
Advertising
and
promotion
|
9,572 | 8,952 | 28,375 | 25,809 | ||||||||||||
General
and
administrative
|
6,209 | 7,068 | 24,039 | 20,761 | ||||||||||||
Depreciation
|
126 | 177 | 379 | 616 | ||||||||||||
Amortization
of
intangible assets
|
2,627 | 2,627 | 7,881 | 7,013 | ||||||||||||
Total
operating
expenses
|
18,534 | 18,824 | 60,674 | 54,199 | ||||||||||||
Operating
income
|
22,905 | 24,534 | 66,621 | 72,049 | ||||||||||||
Other
income (expense)
|
||||||||||||||||
Interest
income
|
164 | 199 | 524 | 787 | ||||||||||||
Interest
expense
|
(9,490 | ) | (10,355 | ) | (29,132 | ) | (30,478 | ) | ||||||||
Total
other income
(expense)
|
(9,326 | ) | (10,156 | ) | (28,608 | ) | (29,691 | ) | ||||||||
Income
before
provision for
income
taxes
|
13,579 | 14,378 | 38,013 | 42,358 | ||||||||||||
Provision
for income
taxes
|
5,160 | 3,735 | 14,445 | 14,675 | ||||||||||||
Net
income
|
$ | 8,419 | $ | 10,643 | $ | 23,568 | $ | 27,683 | ||||||||
Basic
earnings per
share
|
$ | 0.17 | $ | 0.21 | $ | 0.47 | $ | 0.56 | ||||||||
Diluted
earnings per
share
|
$ | 0.17 | $ | 0.21 | $ | 0.47 | $ | 0.55 | ||||||||
Weighted
average
shares outstanding:
Basic
|
49,799 | 49,535 | 49,744 | 49,425 | ||||||||||||
Diluted
|
50,035 | 50,024 | 50,040 | 50,016 |
Assets
|
December
31, 2007
|
March
31, 2007
|
||||||
Current
assets
|
||||||||
Cash
and cash
equivalents
|
$ | 11,554 | $ | 13,758 | ||||
Accounts
receivable
|
38,977 | 35,167 | ||||||
Inventories
|
30,659 | 30,173 | ||||||
Deferred
income tax
assets
|
3,094 | 2,735 | ||||||
Prepaid
expenses and
other current assets
|
2,002 | 1,935 | ||||||
Total
current
assets
|
86,286 | 83,768 | ||||||
Property
and
equipment
|
1,437 | 1,449 | ||||||
Goodwill
|
308,915 | 310,947 | ||||||
Intangible
assets
|
649,277 | 657,157 | ||||||
Other
long-term
assets
|
7,528 | 10,095 | ||||||
Total
Assets
|
$ | 1,053,443 | $ | 1,063,416 | ||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 18,703 | $ | 19,303 | ||||
Accrued
interest
payable
|
4,574 | 7,552 | ||||||
Other
accrued
liabilities
|
11,711 | 10,505 | ||||||
Current
portion of
long-term debt
|
3,550 | 3,550 | ||||||
Total
current
liabilities
|
38,538 | 40,910 | ||||||
Long-term
debt
|
422,675 | 459,800 | ||||||
Other
long-term
liabilities
|
2,801 | 2,801 | ||||||
Deferred
income tax
liabilities
|
120,066 | 114,571 | ||||||
Total
Liabilities
|
584,080 | 618,082 | ||||||
Commitments
and Contingencies – Note 13
|
||||||||
Stockholders’
Equity
|
||||||||
Preferred
stock -
$0.01 par value
|
||||||||
Authorized
–
5,000
shares
|
||||||||
Issued
and outstanding –
None
|
-- | -- | ||||||
Common
stock - $0.01
par value
|
||||||||
Authorized
–
250,000
shares
|
||||||||
Issued
–
50,060
shares
|
501 | 501 | ||||||
Additional
paid-in
capital
|
379,983 | 379,225 | ||||||
Treasury
stock, at
cost - 57 shares at December 31, 2007
and
55 shares at March 31, 2007
|
(45 | ) | (40 | ) | ||||
Accumulated
other
comprehensive income
|
21 | 313 | ||||||
Retained
earnings
|
88,903 | 65,335 | ||||||
Total
stockholders’
equity
|
469,363 | 445,334 | ||||||
Total
Liabilities
and Stockholders’ Equity
|
$ | 1,053,443 | $ | 1,063,416 |
Common
Stock
Par
Shares
Value
|
Additional
Paid-in
Capital
|
Treasury
Stock
Shares
Amount
|
Accumulated
Other
Comprehensive
Income
|
Retained
Earnings
|
Totals
|
|||||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||
Balances
- March 31,
2007
|
50,060 | $ | 501 | $ | 379,225 | 55 | $ | (40 | ) | $ | 313 | $ | 65,335 | $ | 445,334 | |||||||||||||||||
Stock-based
compensation
|
-- | -- | 758 | -- | -- | -- | -- | 758 | ||||||||||||||||||||||||
Purchase
of common
stock for treasury
|
-- | -- | -- | 2 | (5 | ) | -- | -- | (5 | ) | ||||||||||||||||||||||
Components
of
comprehensive income:
|
||||||||||||||||||||||||||||||||
Net
income
|
-- | -- | -- | -- | -- | -- | 23,568 | 23,568 | ||||||||||||||||||||||||
Amortization
of
interest rate caps reclassified into earnings, net of income tax
expense
of $181
|
-- | -- | -- | -- | -- | 296 | -- | 296 | ||||||||||||||||||||||||
Unrealized
loss on
interest rate caps, net of income tax benefit of $367
|
-- | -- | -- | -- | -- | (588 | ) | -- | (588 | ) | ||||||||||||||||||||||
Total
comprehensive
income
|
-- | -- | -- | -- | -- | -- | -- | 23,276 | ||||||||||||||||||||||||
Balances
–
December
31, 2007
|
50,060 | $ | 501 | $ | 379,983 | 57 | $ | (45 | ) | $ | 21 | $ | 88,903 | $ | 469,363 |
Nine Months Ended December 31 | ||||||||
(In
thousands)
|
2007
|
2006
|
||||||
Operating
Activities
|
||||||||
Net
income
|
$ | 23,568 | $ | 27,683 | ||||
Adjustments
to
reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and
amortization
|
8,260 | 7,629 | ||||||
Deferred
income
taxes
|
7,366 | 7,686 | ||||||
Amortization
of
deferred financing costs
|
2,283 | 2,422 | ||||||
Stock-based
compensation
|
758 | 439 | ||||||
Changes
in operating
assets and liabilities
|
||||||||
Accounts
receivable
|
(3,810 | ) | 4,812 | |||||
Inventories
|
(486 | ) | 2,707 | |||||
Prepaid
expenses and
other current assets
|
(66 | ) | (765 | ) | ||||
Accounts
payable
|
(795 | ) | 1,366 | |||||
Income
taxes
payable
|
-- | (1,584 | ) | |||||
Accrued
liabilities
|
(1,772 | ) | 2,894 | |||||
Net
cash provided by operating activities
|
35,306 | 55,289 | ||||||
Investing
Activities
|
||||||||
Purchases
of
equipment
|
(364 | ) | (429 | ) | ||||
Change
in other
assets due to purchase price adjustments
|
(16 | ) | 386 | |||||
Purchase
of
business
|
-- | (31,242 | ) | |||||
Net
cash used for investing activities
|
(380 | ) | (31,285 | ) | ||||
Financing
Activities
|
||||||||
Repayment
of
long-term debt
|
(37,125 | ) | (27,392 | ) | ||||
Purchase
of common
stock for treasury
|
(5 | ) | (10 | ) | ||||
Net
cash used for financing activities
|
(37,130 | ) | (27,402 | ) | ||||
Decrease
in
cash
|
(2,204 | ) | (3,398 | ) | ||||
Cash
- beginning of
period
|
13,758 | 8,200 | ||||||
Cash
- end of
period
|
$ | 11,554 | $ | 4,802 | ||||
Supplemental
Cash Flow Information
|
||||||||
Fair
value of assets
acquired
|
$ | -- | $ | 35,096 | ||||
Fair
value of
liabilities assumed
|
-- | (3,854 | ) | |||||
Cash
paid to
purchase business
|
$ | -- | $ | 31,242 | ||||
Interest
paid
|
$ | 29,828 | $ | 30,749 | ||||
Income
taxes
paid
|
$ | 6,911 | $ | 8,790 | ||||
See
accompanying notes.
|
1.
|
Business
and Basis of Presentation
|
Nature
of Business
|
Basis
of Presentation
|
Cash
and Cash Equivalents
|
Accounts
Receivable
|
Inventories
|
Property
and Equipment
|
Years
|
|
Machinery
|
5
|
Computer
equipment
|
3
|
Furniture
and
fixtures
|
7
|
Leasehold
improvements
|
5
|
Goodwill
|
Intangible
Assets
|
Revenue
Recognition
|
Costs
of Sales
|
Advertising
and Promotion Costs
|
Stock-based
Compensation
|
Income
Taxes
|
Derivative
Instruments
|
Recently
Issued Accounting Standards
|
Accounts
Receivable
|
December
31,
2007
|
March
31,
2007
|
|||||||
Accounts
receivable
|
$ | 39,125 | $ | 35,274 | ||||
Other
receivables
|
1,548 | 1,681 | ||||||
40,673 | 36,955 | |||||||
Less
allowances for
discounts, returns and
uncollectible
accounts
|
(1,696 | ) | (1,788 | ) | ||||
$ | 38,977 | $ | 35,167 |
Inventories
|
December
31,
2007
|
March
31,
2007
|
|||||||
Packaging
and raw
materials
|
$ | 2,575 | $ | 2,842 | ||||
Finished
goods
|
28,084 | 27,331 | ||||||
$ | 30,659 | $ | 30,173 |
4.
|
Property
and Equipment
|
December
31,
2007
|
March
31,
2007
|
|||||||
Machinery
|
$ | 1,407 | $ | 1,480 | ||||
Computer
equipment
|
612 | 566 | ||||||
Furniture
and
fixtures
|
205 | 247 | ||||||
Leasehold
improvements
|
344 | 372 | ||||||
2,568 | 2,665 | |||||||
Accumulated
depreciation
|
(1,131 | ) | (1,216 | ) | ||||
$ | 1,437 | $ | 1,449 |
5.
|
Goodwill
|
Over-the-Counter
Healthcare
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
|||||||||||||
Balance
–
March
31,
2007
|
$ | 235,647 | $ | 72,549 | $ | 2,751 | $ | 310,947 | ||||||||
Acquisition
purchase
price adjustments
|
(2,032 | ) | -- | -- | (2,032 | ) | ||||||||||
Balance
–
December
31, 2007
|
$ | 233,615 | $ | 72,549 | $ | 2,751 | $ | 308,915 |
6.
|
Intangible
Assets
|
Indefinite
Lived
Trademarks
|
Finite
Lived
Trademarks
|
Non
Compete
Agreement
|
Totals
|
|||||||||||||
Carrying
Amounts
|
||||||||||||||||
Balance
–
March
31,
2007
|
$ | 544,963 | $ | 139,470 | $ | 196 | $ | 684,629 | ||||||||
Additions
|
-- | -- | -- | -- | ||||||||||||
Balance
–
December
31, 2007
|
$ | 544,963 | $ | 139,470 | $ | 196 | $ | 684,629 | ||||||||
Accumulated
Amortization
|
||||||||||||||||
Balance
–
March
31,
2007
|
$ | -- | $ | 27,375 | $ | 97 | $ | 27,472 | ||||||||
Additions
|
-- | 7,847 | 33 | 7,880 | ||||||||||||
Balance
–
December
31, 2007
|
$ | -- | $ | 35,222 | $ | 130 | $ | 35,352 |
Year
Ending December 31
|
||||
2008
|
$ | 10,505 | ||
2009
|
9,442 | |||
2010
|
9,071 | |||
2011
|
9,071 | |||
2012
|
9,071 | |||
Thereafter
|
57,154 | |||
$ | 104,314 |
7.
|
Other
Accrued Liabilities
|
December
31,
2007
|
March
31,
2007
|
|||||||
Accrued
marketing
costs
|
$ | 7,537 | $ | 5,687 | ||||
Accrued
payroll
|
2,515 | 3,721 | ||||||
Accrued
commissions
|
660 | 335 | ||||||
Other
|
999 | 762 | ||||||
$ | 11,711 | $ | 10,505 |
8.
|
Long-Term
Debt
|
December
31,
2007
|
March
31,
2007
|
|||||||
Senior
revolving
credit facility (“Revolving Credit Facility”), which expires on April 6,
2009 and is available for maximum borrowings of up to $60.0
million. The Revolving Credit Facility bears interest at the
Company’s option at either the prime rate plus a variable margin or LIBOR
plus a variable margin. The variable margins range from 0.75%
to 2.50% and at December 31, 2007, the interest rate on the Revolving
Credit Facility was 8.25% per annum. The Company is also
required to pay a variable commitment fee on the unused portion of
the
Revolving Credit Facility. At December 31, 2007, the commitment
fee was 0.50% of the unused line. The Revolving Credit Facility
is collateralized by substantially all of the Company’s
assets.
|
$ | -- | $ | -- | ||||
Senior
secured term
loan facility (“Tranche B Term Loan Facility” and together with the
Revolving Credit Facility, the “Senior Credit Facility”) that bears
interest at the Company’s option at either the prime rate plus a margin of
1.25% or LIBOR plus a margin of 2.25%. At December 31, 2007,
the
average interest rate on the Tranche B Term Loan Facility was
6.98%. Principal payments of $887,500 plus accrued interest are
payable quarterly. At December 31, 2007, the Company may borrow
up to a maximum amount of $200.0 million under the Tranche B Term
Loan
Facility. Current amounts outstanding under the Tranche B Term
Loan Facility mature on April 6, 2011, while any additional amounts
borrowed will mature on October 6, 2011. The Tranche B Term
Loan Facility is collateralized by substantially all of the Company’s
assets.
|
300,225 | 337,350 | ||||||
Senior
Subordinated
Notes that bear interest at 9.25% which is payable on April 15th
and October 15th
of each year. The Senior Subordinated Notes mature on April 15,
2012; however, the Company may redeem some or all of the Senior
Subordinated Notes on or prior to April 15, 2008 at a redemption
price
equal to 100% plus a make-whole premium, and after April 15, 2008,
at
redemption prices set forth in the Indenture governing the Senior
Subordinated Notes. The Senior Subordinated Notes are
unconditionally guaranteed by Prestige Brands Holdings, Inc. and
its
domestic wholly-owned subsidiaries other than Prestige Brands, Inc.,
the
issuer. Each of these guarantees is joint and
several. There are no significant restrictions on the ability
of any of the guarantors to obtain funds from their
subsidiaries.
|
126,000 | 126,000 | ||||||
426,225 | 463,350 | |||||||
Current
portion of
long-term debt
|
(3,550 | ) | (3,550 | ) | ||||
$ | 422,675 | $ | 459,800 |
Year
Ending December 31
|
||||
2008
|
$ | 3,550 | ||
2009
|
3,550 | |||
2010
|
3,550 | |||
2011
|
289,575 | |||
2012
|
126,000 | |||
$ | 426,225 |
9.
|
Stockholders’
Equity
|
10.
|
Earnings
Per Share
|
Three
Months Ended
December
31
|
Nine
Months Ended
December
31
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Numerator
|
||||||||||||||||
Net
income
|
$ | 8,419 | $ | 10,643 | $ | 23,568 | $ | 27,683 | ||||||||
Denominator
|
||||||||||||||||
Denominator
for
basic earnings per share – weighted average shares
|
49,799 | 49,535 | 49,744 | 49,425 | ||||||||||||
Dilutive
effect of
unvested restricted common stock
|
236 | 489 | 296 | 591 | ||||||||||||
Denominator
for
diluted earnings
per
share
|
50,035 | 50,024 | 50,040 | 50,016 | ||||||||||||
Earnings
per Common Share:
|
||||||||||||||||
Basic
|
$ | 0.17 | $ | 0.21 | $ | 0.47 | $ | 0.56 | ||||||||
Diluted
|
$ | 0.17 | $ | 0.21 | $ | 0.47 | $ | 0.55 |
11.
|
Share-Based
Compensation
|
Restricted
Shares
|
Shares
(000)
|
Weighted-Average
Grant-Date
Fair
Value
|
||||||
Nonvested
at March
31, 2006
|
198.0 | $ | 12.32 | |||||
Granted
|
156.5 | 9.83 | ||||||
Vested
|
(13.1 | ) | 10.67 | |||||
Forfeited
|
(47.0 | ) | 12.47 | |||||
Nonvested
at
December 31, 2006
|
294.4 | $ | 11.05 | |||||
Nonvested
at March
31, 2007
|
294.4 | $ | 11.05 | |||||
Granted
|
292.0 | 12.52 | ||||||
Vested
|
(24.8 | ) | 10.09 | |||||
Forfeited
|
(23.2 | ) | 11.39 | |||||
Nonvested
at
December 31, 2007
|
538.4 | $ | 11.88 |
2007
|
2006
|
|||||||
Expected
volatility
|
33.2 | % | -- | |||||
Expected
dividends
|
-- | -- | ||||||
Expected
term in
years
|
6.0 | -- | ||||||
Risk-free
rate
|
4.5 | % | -- |
Options
|
Shares
(000)
|
Weighted-Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term
|
|||||||||
Outstanding
at March
31, 2006
|
61.8 | $ | 12.95 | 4.3 | ||||||||
Granted
|
-- | -- | -- | |||||||||
Exercised
|
-- | -- | -- | |||||||||
Forfeited
or
expired
|
(61.8 | ) | 12.95 | -- | ||||||||
Outstanding
at
December 31, 2006
|
-- | $ | -- | -- | ||||||||
Outstanding
at March
31, 2007
|
-- | $ | -- | -- | ||||||||
Granted
|
255.1 | 12.86 | 10.0 | |||||||||
Exercised
|
-- | -- | -- | |||||||||
Forfeited
or
expired
|
-- | -- | -- | |||||||||
Outstanding
at
December 31, 2007
|
255.1 | $ | 12.86 | 10.0 | ||||||||
Exercisable
at
December 31, 2007
|
-- | $ | -- | -- |
2007
|
2006
|
|||||||
Expected
volatility
|
-- | 50.0 | % | |||||
Expected
dividends
|
-- | -- | ||||||
Expected
term in
years
|
-- | 2.8 | ||||||
Risk-free
rate
|
-- | 5.0 | % |
SARS
|
Shares
(000)
|
Grant
Date
Stock
Price
|
Weighted-
Average
Remaining
Contractual
Term
|
|||||||||
Outstanding
at March
31, 2006
|
-- | $ | -- | -- | ||||||||
Granted
|
16.1 | 9.97 | 2.75 | |||||||||
Forfeited
or
expired
|
-- | -- | -- | |||||||||
Outstanding
at
December 31, 2006
|
16.1 | $ | 9.97 | 2.5 | ||||||||
Exercisable
at
September 30, 2006
|
-- | $ | -- | -- | ||||||||
Outstanding
at March
31, 2007
|
16.1 | $ | 9.97 | 2.00 | ||||||||
Granted
|
-- | -- | -- | |||||||||
Forfeited
or
expired
|
-- | -- | -- | |||||||||
Outstanding
at
December 31, 2007
|
16.1 | $ | 9.97 | 1.50 | ||||||||
Exercisable
at
December 31, 2007
|
-- | $ | -- | -- |
12.
|
Income
Taxes
|
Commitments
and Contingencies
|
Facilities
|
Equipment
|
Total
|
||||||||||
Year
Ending December 31,
|
||||||||||||
2008
|
$ | 650 | $ | 122 | $ | 772 | ||||||
2009
|
200 | 89 | 289 | |||||||||
2010
|
-- | 47 | 47 | |||||||||
2011
|
-- | 3 | 3 | |||||||||
$ | 850 | $ | 261 | $ | 1,111 |
Concentrations
of Risk
|
15.
|
Business
Segments
|
Three
Months Ended December 31, 2007
|
||||||||||||||||
Over-the-Counter
|
Household
|
Personal
|
||||||||||||||
Healthcare
|
Cleaning
|
Care
|
Consolidated
|
|||||||||||||
Net
sales
|
$ | 45,015 | $ | 29,568 | $ | 5,061 | $ | 79,644 | ||||||||
Other
revenues
|
51 | 527 | -- | 578 | ||||||||||||
Total
revenues
|
45,066 | 30,095 | 5,061 | 80,222 | ||||||||||||
Cost
of
sales
|
16,994 | 18,332 | 3,457 | 38,783 | ||||||||||||
Gross
profit
|
28,072 | 11,763 | 1,604 | 41,439 | ||||||||||||
Advertising
and
promotion
|
7,045 | 2,271 | 256 | 9,572 | ||||||||||||
Contribution
margin
|
$ | 21,027 | $ | 9,492 | $ | 1,348 | 31,867 | |||||||||
Other
operating
expenses
|
8,962 | |||||||||||||||
Operating
income
|
22,905 | |||||||||||||||
Other
(income)
expense
|
9,326 | |||||||||||||||
Provision
for income
taxes
|
5,160 | |||||||||||||||
Net
income
|
$ | 8,419 |
Nine
Months Ended December 31, 2007
|
||||||||||||||||
Over-the-Counter
|
Household
|
Personal
|
||||||||||||||
Healthcare
|
Cleaning
|
Care
|
Consolidated
|
|||||||||||||
Net
sales
|
$ | 137,444 | $ | 89,838 | $ | 17,243 | $ | 244,525 | ||||||||
Other
revenues
|
51 | 1,566 | 28 | 1,645 | ||||||||||||
Total
revenues
|
137,495 | 91,404 | 17,271 | 246,170 | ||||||||||||
Cost
of
sales
|
52,068 | 56,312 | 10,495 | 118,875 | ||||||||||||
Gross
profit
|
85,427 | 35,092 | 6,776 | 127,295 | ||||||||||||
Advertising
and
promotion
|
21,080 | 6,474 | 821 | 28,375 | ||||||||||||
Contribution
margin
|
$ | 64,347 | $ | 28,618 | $ | 5,955 | 98,920 | |||||||||
Other
operating
expenses
|
32,299 | |||||||||||||||
Operating
income
|
66,621 | |||||||||||||||
Other
(income)
expense
|
28,608 | |||||||||||||||
Provision
for income
taxes
|
14,445 | |||||||||||||||
Net
income
|
$ | 23,568 |
Three
Months Ended December 31, 2006
|
||||||||||||||||
Over-the-Counter
Healthcare
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
|||||||||||||
Net
sales
|
$ | 45,574 | $ | 28,155 | $ | 5,835 | $ | 79,564 | ||||||||
Other
revenues
|
-- | 560 | -- | 560 | ||||||||||||
Total
revenues
|
45,574 | 28,715 | 5,835 | 80,124 | ||||||||||||
Cost
of
sales
|
15,800 | 17,787 | 3,179 | 36,766 | ||||||||||||
Gross
profit
|
29,774 | 10,928 | 2,656 | 43,358 | ||||||||||||
Advertising
and
promotion
|
7,089 | 1,595 | 268 | 8,952 | ||||||||||||
Contribution
margin
|
$ | 22,685 | $ | 9,333 | $ | 2,388 | 34,406 | |||||||||
Other
operating
expenses
|
9,872 | |||||||||||||||
Operating
income
|
24,534 | |||||||||||||||
Other
(income)
expense
|
10,156 | |||||||||||||||
Provision
for income
taxes
|
3,735 | |||||||||||||||
Net
income
|
$ | 10,643 |
Nine
Months Ended December 31, 2006
|
||||||||||||||||
Over-the-Counter
Healthcare
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
|||||||||||||
Net
sales
|
$ | 131,427 | $ | 88,625 | $ | 19,112 | $ | 239,164 | ||||||||
Other
revenues
|
-- | 1,434 | -- | 1,434 | ||||||||||||
Total
revenues
|
131,427 | 90,059 | 19,112 | 240,598 | ||||||||||||
Cost
of
sales
|
48,198 | 54,882 | 11,270 | 114,350 | ||||||||||||
Gross
profit
|
83,229 | 35,177 | 7,842 | 126,248 | ||||||||||||
Advertising
and
promotion
|
19,573 | 5,304 | 932 | 25,809 | ||||||||||||
Contribution
margin
|
$ | 63,656 | $ | 29,873 | $ | 6,910 | 100,439 | |||||||||
Other
operating
expenses
|
28,390 | |||||||||||||||
Operating
income
|
72,049 | |||||||||||||||
Other
(income)
expense
|
29,691 | |||||||||||||||
Provision
for income
taxes
|
14,675 | |||||||||||||||
Net
income
|
$ | 27,683 |
Over-the-Counter
|
Household
|
Personal
|
||||||||||||||
Healthcare
|
Cleaning
|
Care
|
Consolidated
|
|||||||||||||
Goodwill
|
$ | 233,615 | $ | 72,549 | $ | 2,751 | $ | 308,915 | ||||||||
Intangible
assets
|
||||||||||||||||
Indefinite
lived
|
374,070 | 170,893 | -- | 544,963 | ||||||||||||
Finite
lived
|
89,093 | 11 | 15,210 | 104,314 | ||||||||||||
463,163 | 170,904 | 15,210 | 649,277 | |||||||||||||
$ | 696,778 | $ | 243,453 | $ | 17,961 | $ | 958,192 |
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three
Month Period Ended December 31, 2007 compared to the
|
|
Three
Month Period Ended December 31, 2006
|
2007
Revenues
|
%
|
2006
Revenues
|
%
|
Increase
(Decrease)
|
%
|
|||||||||||||||||||
OTC
Healthcare
|
$ | 45,066 |
56.2
|
$ | 45,574 | 56.9 | $ | (508 | ) | (1.1 | ) | |||||||||||||
Household
Cleaning
|
30,095 |
37.5
|
28,715 | 35.8 | 1,380 | 4.8 | ||||||||||||||||||
Personal
Care
|
5,061 |
6.3
|
5,835 | 7.3 | (774 | ) | (13.3 | ) | ||||||||||||||||
$ | 80,222 |
100.0
|
$ | 80,124 | 100.0 | $ | 98 | 0.1 |
2007
Gross
Profit
|
%
|
2006
Gross
Profit
|
%
|
Increase
(Decrease)
|
%
|
|||||||||||||||||||
OTC
Healthcare
|
$ | 28,072 | 62.3 | $ | 29,774 | 65.3 | $ | (1,702 | ) | (5.7 | ) | |||||||||||||
Household
Cleaning
|
11,763 | 39.1 | 10,928 | 38.1 | 835 | 7.6 | ||||||||||||||||||
Personal
Care
|
1,604 | 31.7 | 2,656 | 45.5 | (1,052 | ) | (39.6 | ) | ||||||||||||||||
$ | 41,439 | 51.7 | $ | 43,358 | 54.1 | $ | (1,919 | ) | (4.4 | ) |
2007
Contribution
Margin
|
%
|
2006
Contribution
Margin
|
%
|
Increase
(Decrease)
|
%
|
|||||||||||||||||||
OTC
Healthcare
|
$ | 21,027 | 46.7 | $ | 22,685 | 49.8 | $ | (1,658 | ) | (7.3 | ) | |||||||||||||
Household
Cleaning
|
9,492 | 31.5 | 9,333 | 32.5 | 159 | 1.7 | ||||||||||||||||||
Personal
Care
|
1,348 | 26.6 | 2,388 | 40.9 | (1,040 | ) | (43.6 | ) | ||||||||||||||||
$ | 31,867 | 39.7 | $ | 34,406 | 42.9 | $ | (2,539 | ) | (7.4 | ) |
Nine
Month Period Ended December 31, 2007 compared to the
|
|
Nine
Month Period Ended December 31, 2006
|
2007
Revenues
|
%
|
2006
Revenues
|
%
|
Increase
(Decrease)
|
%
|
|||||||||||||||||||
OTC
Healthcare
|
$ | 137,495 | 55.9 | $ | 131,427 | 54.7 | $ | 6,068 | 4.6 | |||||||||||||||
Household
Cleaning
|
91,404 | 37.1 | 90,059 | 37.4 | 1,345 | 1.5 | ||||||||||||||||||
Personal
Care
|
17,271 | 7.0 | 19,112 | 7.9 | (1,841 | ) | (9.6 | ) | ||||||||||||||||
$ | 246,170 | 100.0 | $ | 240,598 | 100.0 | $ | 5,572 | 2.3 |
2007
Gross
Profit
|
%
|
2006
Gross
Profit
|
%
|
Increase
(Decrease)
|
%
|
|||||||||||||||||||
OTC
Healthcare
|
$ | 85,427 | 62.1 | $ | 83,229 | 63.3 | $ | 2,198 | 2.6 | |||||||||||||||
Household
Cleaning
|
35,092 | 38.4 | 35,177 | 39.1 | (85 | ) | (0.2 | ) | ||||||||||||||||
Personal
Care
|
6,776 | 39.2 | 7,842 | 41.0 | (1,066 | ) | (13.6 | ) | ||||||||||||||||
$ | 127,295 | 51.7 | $ | 126,248 | 52.5 | $ | 1,047 | 0.8 |
2007
Contribution
Margin
|
%
|
2006
Contribution
Margin
|
%
|
Increase
(Decrease)
|
%
|
|||||||||||||||||||
OTC
Healthcare
|
$ | 64,347 | 46.8 | $ | 63,656 | 48.4 | $ | 691 | 1.1 | |||||||||||||||
Household
Cleaning
|
28,618 | 31.3 | 29,873 | 33.2 | (1,255 | ) | (4.2 | ) | ||||||||||||||||
Personal
Care
|
5,955 | 34.5 | 6,910 | 36.2 | (955 | ) | (13.8 | ) | ||||||||||||||||
$ | 98,920 | 40.2 | $ | 100,439 | 41.7 | $ | (1,519 | ) | (1.5 | ) |
Nine Months Ended December 31 | ||||||||
(In
thousands)
|
2007
|
2006
|
||||||
Cash
provided by
(used for):
|
||||||||
Operating
Activities
|
$ | 35,306 | $ | 55,289 | ||||
Investing
Activities
|
(380 | ) | (31,285 | ) | ||||
Financing
Activities
|
(37,130 | ) | (27,402 | ) |
·
|
A
decrease of net
income of $4.1 million from $27.7 million for 2006 to $23.6 million
for
2007, and
|
·
|
An
increase in the
components of working capital caused primarily by an increase in
accounts
receivable at December 31, 2007 versus March 31, 2007, compared to
a
decrease in accounts receivable at December 31, 2006 versus March
31,
2006.
|
·
|
$300.2
million of
borrowings under the Tranche B Term Loan Facility, and
|
·
|
$126.0
million of
9.25% Senior Subordinated Notes due 2012.
|
·
|
Have
a leverage
ratio of less than 4.5 to 1.0 for the quarter ended December 31,
2007,
decreasing over time to 3.75 to 1.0 for the quarter ending September
30,
2010, and remaining level
thereafter,
|
·
|
Have
an interest
coverage ratio of greater than 2.75 to 1.0 for the quarter ended
December
31, 2007, increasing over time to 3.25 to 1.0 for the quarter ending
March
31, 2010, and remaining level thereafter,
and
|
·
|
Have
a fixed charge
coverage ratio of greater than 1.5 to 1.0 for the quarter ended December
31, 2007, and for each quarter thereafter until the quarter ending
March
31, 2011.
|
Critical
Accounting Policies and Estimates
|
Over-the-Counter
Healthcare
|
Household
Cleaning
|
Personal
Care
|
Consolidated
|
|||||||||||||
Goodwill
|
$ | 233,615 | $ | 72,549 | $ | 2,751 | $ | 308,915 | ||||||||
Intangible
assets
|
||||||||||||||||
Indefinite
lived
|
374,070 | 170,893 | -- | 544,963 | ||||||||||||
Finite
lived
|
89,093 | 11 | 15,210 | 104,314 | ||||||||||||
463,163 | 170,904 | 15,210 | 649,277 | |||||||||||||
$ | 696,778 | $ | 243,453 | $ | 17,961 | $ | 958,192 |
·
|
Brand
History
|
·
|
Market
Position
|
·
|
Recent
and Projected Sales Growth
|
·
|
History
of and Potential for Product Extensions
|
·
|
Reviews
period-to-period sales and profitability by brand,
|
·
|
Analyzes
industry
trends and projects brand growth rates,
|
·
|
Prepares
annual
sales forecasts,
|
·
|
Evaluates
advertising effectiveness,
|
·
|
Analyzes
gross
margins,
|
·
|
Reviews
contractual
benefits or limitations,
|
·
|
Monitors
competitors’ advertising spend and product innovation,
|
·
|
Prepares
projections
to measure brand viability over the estimated useful life of the
intangible asset, and
|
·
|
Considers
the
regulatory environment, as well as industry litigation.
|
·
|
Type
of instrument
(i.e.: restricted shares vs. an option, warrant or performance
shares),
|
·
|
Strike
price of the
instrument,
|
·
|
Market
price of the
Company’s common stock on the date of
grant,
|
·
|
Discount
rates,
|
·
|
Duration
of the
instrument, and
|
·
|
Volatility
of the
Company’s common stock in the public
market.
|
·
|
Rules
and
regulations promulgated by regulatory agencies,
|
·
|
Sufficiency
of the
evidence in support of our position,
|
·
|
Anticipated
costs to
support our position, and
|
·
|
Likelihood
of a
positive outcome.
|
·
|
General
economic
conditions affecting our products and their respective markets,
|
·
|
The
high level of
competition in our industry and markets,
|
·
|
Our
dependence on a
limited number of customers for a large portion of our sales,
|
·
|
Disruptions
in our
distribution center,
|
·
|
Acquisitions
or
other strategic transactions diverting managerial resources, or incurrence
of additional liabilities or integration problems associated with
such
transactions,
|
·
|
Changing
consumer
trends or pricing pressures which may cause us to lower our prices,
|
·
|
Increases
in
supplier prices,
|
·
|
Increases
in
transportation fees and fuel charges,
|
·
|
Changes
in our
senior management team,
|
·
|
Our
ability to
protect our intellectual property rights,
|
·
|
Our
dependency on
the reputation of our brand names,
|
·
|
Shortages
of supply
of sourced goods or interruptions in the manufacturing of our products,
|
·
|
Our
level of debt,
and ability to service our debt,
|
·
|
Any
adverse judgment
rendered in any pending litigation or arbitration,
|
·
|
Our
ability to
obtain additional financing, and
|
·
|
The
restrictions
imposed by our financing agreements on our operations.
|
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
OTHER
INFORMATION
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
ITEM 1A. | RISK FACTORS |
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Company
Purchases of Equity Securities
|
||||||||||||||||
Period
|
(a)
Total
Number
of
Shares Purchased
|
(b)
Average
Price
Paid Per Share
|
(c)
Total
Number
of
Shares Purchased as Part of Publicly Announced Plans or
Programs
|
(d)
Maximum
Number
(or approximate dollar value) of Shares that May Yet Be
Purchased
Under
the Plans
or
Programs
|
||||||||||||
10/1/07
-
10/31/07
|
616 | $ | 1.70 | -- | -- | |||||||||||
11/1/07
-
11/30/07
|
-- | -- | -- | -- | ||||||||||||
12/1/07
-
12/31/07
|
-- | -- | -- | -- | ||||||||||||
Total
|
616 | $ | 1.70 | -- | -- |
ITEM 5. | OTHER INFORMATION |
Pursuant
to the
terms of the Employment Agreement, Mr. Parkinson's employment
will
continue until (i) his death, disability or resignation from
employment
with the Company and its subsidiaries; or (ii) the Company and
its
subsidiaries decide to terminate Mr. Parkinson's employment with
or
without cause. If (A) Mr. Parkinson's employment is terminated
without cause; or (B) Mr. Parkinson resigns from employment with
the
Company or any of its subsidiaries for good reason, then during
the period
commencing on the date of termination of employment and ending
on the
first anniversary date thereof, the Company shall pay to Mr.
Parkinson, in
equal installments in accordance with the Company's regular payroll,
an
aggregate amount equal to (I) Mr. Parkinson's annual base salary,
plus
(II) an amount equal to the annual bonus, if any, paid or payable
to Mr.
Parkinson by the Company for the last fiscal year ended prior
to the date
of termination. In addition, if Mr. Parkinson is entitled on the
date of termination to coverage under the medical and prescription
portions of the welfare plans, such coverage shall continue for
Mr.
Parkinson and his covered dependents for a period ending on the
first
anniversary of the date of termination at the active employee
cost payable
by Mr. Parkinson with respect to those costs paid by Mr. Parkinson
prior
to the date of termination.
The Employment Agreement also
contains
certain confidentiality, non-competition and non-solicitation
provisions
as well as other provisions that are customary for an executive
employment
agreement.
|
ITEM 6. | EXHIBITS |
SIGNATURES
|
Pursuant
to the
requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
Prestige Brands Holdings, Inc. | ||||
Registrant
|
||||
Date: | February 8, 2008 | By: | /s/ PETER J. ANDERSON | |
Peter J. Anderson | ||||
Chief Financial Officer | ||||
(Principal Financial Officer and | ||||
Duly Authorized Officer) |
10.1
|
Contract
Manufacturing Agreement, dated December 21, 2007, between Medtech
Products
Inc. and Pharmaspray B.V.
|
10.2
|
Contract
Manufacturing Agreement, dated December 21, 2007, between Medtech
Products
Inc. and Pharmaspray B.V.
|
10.3 |
Executive
Employment Agreement, dated as of October 1, 2007, between Prestige
Brands
Holdings, Inc. and John Parkinson.
|
31.1
|
Certification
of
Principal Executive Officer of Prestige Brands Holdings, Inc. pursuant
to
Rule 13a-14(a) of the Securities Exchange Act of 1934.
|
31.2
|
Certification
of
Principal Financial Officer of Prestige Brands Holdings, Inc. pursuant
to
Rule 13a-14(a) of the Securities Exchange Act of 1934.
|
32.1
|
Certification
of
Principal Executive Officer of Prestige Brands Holdings, Inc. pursuant
to
Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United
States Code.
|
32.2
|
Certification
of
Principal Financial Officer of Prestige Brands Holdings, Inc. pursuant
to
Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the
United
States Code.
|
A.
|
Medtech,
having
acquired all of the capital stock of Wartner USA B.V., is the owner
of all
Intellectual Property Rights relating to the Product (as defined
in Clause
1) for the USA and Canada and
is to be considered the Specification Holder of the
Product;
|
B.
|
Pharmaspray
is an
aerosol manufacturer filling aerosol cans with cosmetic and medical
products;
|
C.
|
The
Products sold by
Medtech are subject to ISO-13485 Standard and GMP 820
standard;
|
D.
|
Pharmaspray
operates
in accordance with ISO-9001:2000
Standard;
|
E.
|
The
Parties wish to
(co)operate in accordance with ISO-13485 Standard, ISO-9001:2000
Standard,
the Quality Manual (as defined in Clause 1) and the instructions
of
Medtech as specified in the Schedule(s) which form part of this
Agreement;
|
F.
|
The
Parties now wish
to formalize this Agreement as a “Turn-Key Agreement” in which they will
include all their agreements with respect to the Procurement Services,
Production Services, Packaging Services, Logistic Services and other
services provided by Pharmaspray to Medtech;
and
|
G.
|
This
Agreement
supersedes, amends and replaces an agreement between Pharmaspray
B.V. and
Wartner U.S.A. B.V. dated December 18, 2003 including any and all
schedules and annexes thereto, and the amended and restated Logistics
Agreement between the same parties dated March 2,
2006.
|
1.
|
Definitions
|
1.1.
|
The
term “Acceptance
of the Materials” shall mean the point in time at which the Materials (as
defined hereafter) are physically handed over to or become under
the
control and care of Pharmaspray in order to manufacture and package
the
Products.
|
1.2.
|
The
term “Agreement”
shall mean this document including the Quality Manual and all (further)
Schedules and annexes hereto and thereto, each as amended from time
to
time by the Parties upon mutual written
agreement.
|
1.3.
|
The
term
“Commencement Date” shall mean September 21,
2006.
|
1.4.
|
The
term "Delivery
of the Products" shall mean the point in time at which the Products
(as
defined hereafter) are delivered to Medtech or the designated agent
or
distributor of Medtech. Unless otherwise specified in writing, Delivery
of
Products shall occur ex works (EXW, incoterms 2000) in
Veendam.
|
1.5.
|
The
Term “Force
Majeure” shall mean those circumstances which are unforeseeable and beyond
the reasonable control of each of the Parties and which prevent the
total
or partial carrying out of any obligation by a party under this Agreement,
such as acts or regulations or decrees of any government (de facto
or de
jure), natural phenomena, such as earthquakes and floods, fires,
riots,
shipwrecks, freight embargoes or other circumstances whether similar
or
dissimilar to those enumerated
above.
|
1.6.
|
The
term
“Intellectual Property Rights” shall mean any and all intellectual
property rights, good will, know-how and other intangibles relating
to the
Product and its packaging including (but not limited to) national
and
international patents, trade name(s) and
trademark(s).
|
1.7.
|
The
term
“Logistic Services” shall mean all services provided by Pharmaspray as
from the beginning of the manufacture of the Product until the physical
delivery of the Product to Medtech, Medtech's distributors, agents
or
other destinations, including the storage and the arranging of
transport.
|
1.8.
|
The
term "Machine"
shall mean only the shrink-wrap module acquired by Pharmaspray on
or about
January 24th, 2007 for the packaging of the Product, as specified
in
Schedule 3. This Machine is specially equipped for USA packaging
with a
turn, stack, collate and foil-wrap module and headers for top & bottom
quality seals.
|
1.9.
|
The
term “Materials”
shall mean all semi fabrics, ingredients, spare parts, and packaging
material necessary to assemble the
Product.
|
1.10.
|
The
term “Packaging
Services” shall mean the packaging of the Product(s) (as defined
hereafter) by Pharmaspray according
to the
Quality Manual (as defined hereafter) and other specific
instructions of Medtech.
|
1.11.
|
The
term
“Procurement Services” shall mean the various acts of identifying,
qualifying, ordering and obtaining via Purchase Orders or other means
those Materials necessary or appropriate to the production of Products
until such Materials are physically delivered to Pharmaspray. In
performing Procurement Services, Pharmaspray shall act for its own
account
and not as agent for Medtech.
|
1.12.
|
The
term “Product”
shall mean a consumer product composed and/or manufactured on behalf
of
Medtech bearing the Wartner® or other trademarks owned by Medtech and used
for the cryogenic treatment of warts, skin tags or other lesions
in
humans, according to Medtech’s specifications as described in Schedule
1.
|
1.13.
|
The
term “Production
Services” shall mean the manufacture of the Product, including production,
assembly, filling and labelling of the aerosol cans by Pharmaspray
as
instructed by Medtech in accordance with the terms of this Agreement
and
the Quality Manual.
|
1.14.
|
The
term “Purchase
Order” shall mean a written instruction to provide the Procurement
Services, Production Services, Packaging Services and Logistics Services,
which instruction is prepared by Medtech and directed to Pharmaspray
and
includes specific instruction as to the delivery of the
Product.
|
1.15.
|
The
term “Quality
Manual” shall mean the Quality Agreement attached hereto as Schedule 5, as
it may be subsequently amended, revised or replaced upon mutual written
agreement.
|
1.16.
|
The
term “Schedule”
shall mean any schedule to this Agreement, including any amendment
thereto.
|
1.17.
|
The
term
“Storage Location” shall mean the warehouse located at Demeterlaan 30 and
Cereslaan 9 (9641 ML) Veendam unless otherwise agreed by the Parties
in
writing.
|
1.18.
|
The
term “Supplier”
shall mean suppliers designated or appointed by Pharmaspray, subject
to
approval by Medtech, as described – non limitative – in Schedule
2.
|
1.19.
|
The
term “Turn-Key
Agreement” shall mean an understanding between the Parties acknowledging
the assumption of all responsibility by Pharmaspray for
all Procurement Services, Production Services, Packaging
Services, Logistics Services and other services necessary or appropriate
to the fulfilment of Purchase Orders for the Product except as otherwise
provided in this Agreement.
|
|
In
as far as
applicable in the context of the Agreement, terms defined in the
singular
shall include the plural and vice versa.
|
2.
|
Procurement,
Production, Packaging and Logistic
Services
|
2.1.
|
On
the terms and
conditions of the Agreement, Medtech hereby appoints Pharmaspray
and
Pharmaspray hereby accepts such appointment to provide the Procurement
Services, Production Services, Packaging Services and the Logistic
|
Services during the term of the Agreement in a manner befitting a careful contractor, excepting only as provided herein. | |
2.2.
|
Without
limiting the
(general) obligations of the contracting Parties under this Agreement,
the
Parties shall provide mutual assistance and shall co-operate with
each
other and with third parties in order to ensure that the quality
of the
Procurement, Production, Packaging and Logistics Services are maintained
and that the Parties' expectations in entering into this Agreement
are
fulfilled; in particular, Pharmaspray represents that it has such
resources necessary to fulfil its obligations and that it shall be
pro-active in resolving any problems. Medtech shall promptly inform
Pharmaspray of all changes in its Wartner® business which may impact on
the performance of the Production Services under this
Agreement.
|
2.3.
|
Pharmaspray
shall
provide the Procurement services, Production Services, Packaging
Services
and Logistics Services in accordance with the applicable ISO standards,
the Quality Manual and Schedules, any (other) specific instructions
of
Medtech and any further mandatory national and international
specifications, as applicable from time to
time.
|
2.4.
|
Medtech
will provide
Pharmaspray every month with a twelve month rolling sales forecast
for the
Products. The forecast for the three month period immediately following
the issuance of the forecast shall be converted into Purchase Orders
from
Medtech to Pharmaspray, which Purchase Orders shall be deemed
binding.
|
2.5.
|
If
Pharmaspray
incurs costs directly based upon Medtech’s forecast for the next three
months, and Medtech does not issue a Purchase Order related to those
costs
within six months after the applicable month, Pharmaspray may charge
such
costs to Medtech.
|
2.6.
|
Pharmaspray
will
source the Materials mentioned in Schedule 2 from Suppliers approved
by
Medtech. Pharmaspray will manage a minimum amount of safety stock,
with
the minimum amount to be determined by the Parties. To the
extent any safety stock agreed by the Parties and maintained by
Pharmaspray becomes obsolete due solely to the actions of Medtech,
Medtech
shall be obligated to reimburse Pharmaspray for its actual cost to
purchase such safety stock.
|
2.7.
|
Pharmaspray
is
responsible for the delivery of the Materials required for the manufacture
or production of the Product to Pharmaspray's
premises. Notwithstanding the foregoing, the parties recognize
and agree that the procurement of the existing caps as set forth
on
Schedule 6 from Keltec Dispensing Systems, B.V. is a matter which
is and
will be the subject of a separate negotiation and multi-party agreement,
which may or may not conform to the terms of this
Agreement.
|
2.8.
|
Subject
to clause
7.3 and 7.5 and the provisions of Section 9, Pharmaspray is responsible
for the compliance of the Materials with the applicable ISO standards
and
any further national and international specifications applicable
from time
to time at the moment of Acceptance of the Materials. Pharmaspray
shall
check such compliance, in as far as visually observable, at the Acceptance
of the Materials.
|
2.9.
|
Pharmaspray
shall
deliver the Products related to a specific written order of Medtech
to the
distributors or agents of Medtech within four (4) weeks upon such
order,
provided that Pharmaspray has received the sales forecast the specific
order is based upon, in due time.
|
2.10.
|
Medtech
is allowed
to conduct regularly scheduled quality audits of both the production
process and the Product at Pharmaspray’s premises at any reasonable time
after receipt of written notice from Medtech of its intent in advance.
Pharmaspray may require its representative to be present and that
such
visit is under the condition that the internal rules of Pharmaspray
or the
Storage Location are being complied with. Medtech will be responsible
for
all associated costs of such quality audits. Medtech shall have the
right
to reject Products that do not meet the Product Specifications set
forth
in Schedule 1, the Quality Manual or other specific instructions
of
Medtech. Reasonable efforts will be made to salvage usable portions
of any
batch should a sampling of Products not be in compliance with the
Product
Specifications set forth in Schedule 1, the Quality Manual or other
specific instructions of Medtech.
|
2.11.
|
Pharmaspray
shall
provide Medtech with updates on its business operations as specified
in
the Quality Manual.
|
2.12.
|
Pharmaspray
shall
keep an adequate administration of deliveries to Medtech’s distributors or
agents. Pharmaspray shall provide copies of all shipping documents
to
Medtech in case of re-calls, whatever the cause for such re-calls
may
be.
|
2.13.
|
Each
Party shall,
upon execution of this Agreement, appoint one of its employees to
be a
relationship manager responsible for liaison between the
Parties. The relationship managers shall conference not less
than quarterly and meet in person not less than annually to coordinate
the
production activities, handle purchase orders, track assembly progress
and
any packaging work, movement of Product, deliveries, sales status
and the
current status of the business relationship and manage issues that
have
arisen.
|
2.14.
|
Conveyance
and
delivery of the Products shall occur ex works (EXW) in Veendam, unless
otherwise agreed between the Parties in
writing.
|
2.15.
|
Medtech
is and shall
at all times remain the owner of the Intellectual Property Rights
to the
Product in the United States, Canada and certain other countries
where it
has Intellectual Property Rights. No license of whatever nature in
relation to any Intellectual Property Rights is granted by Medtech
to
Pharmaspray. Pharmaspray shall have the obligation to obtain
and maintain all governmental licenses, permits or approvals necessary
to
manufacture the Product at its facility in
Veendam.
|
3.
|
Packaging
|
3.1.
|
Pharmaspray
will
package the Product according to the Quality Manual and other specific
instructions of Medtech.
|
3.2.
|
Pharmaspray
has
acquired the Machine as described in clause 1.8 above, directly from
Alloga. The acquirement costs were and will be borne by
Pharmaspray.
|
4.
|
Transport
|
4.1.
|
Medtech
is
responsible for transport of delivered Products from the premises
of
Pharmaspray at Veendam to her distributors, agents or (other) final
destinations. The Parties agree that Pharmaspray shall organize this
transport under the authority of and on expense of Medtech, thus
acting as
representative of Medtech.
|
4.2.
|
Medtech
shall
designate the carrier(s)/transporter(s) to be involved in transportation
of delivered Products. Pharmaspray, as representative of Medtech,
will
contract these carriers/transporters; Medtech being the contractant
of the
carrier/transporter.
|
4.3.
|
All
costs of
transport taking place after delivery, charged to Pharmaspray, will
be
charged on to Medtech. Pharmaspray will provide Medtech with copies
of the
transport invoices the on-charging is based
upon.
|
4.4.
|
After
delivery (ex
works) of the Products has taken place, Pharmaspray is neither responsible
nor liable for the acts and omissions of carriers/transporters that
are
contracted by Pharmaspray on behalf of
Medtech.
|
Loading, stowage and discharging | |
4.5.
|
The
obligation of
(un)loading, stowage and discharging the Materials and/or the Products
and
the liability for any damage to and/or loss of the Materials and/or
Products caused by (un)loading, stowage and/or discharging the Materials
and/or the Products rests with Pharmaspray, until delivery of the
Products
to Medtech defined in clause 2.14.
|
4.6.
|
Any
stipulation,
condition, reservation or exemption as to responsibility and/or liability
of Pharmaspray for loss of and/or damage to the Materials and/or
the
Products, occurring during loading on, stowing, and subsequently
to the
discharging from the means of carriage in which the Materials and/or
the
Products are (to be) carried (before delivery to Medtech), shall
be null
and void unless with prior written consent of
Medtech.
|
4.7.
|
Pharmaspray
shall at
all times load, stow and discharge the Materials and the Products
in
accordance with the applicable provisions of the Quality Manual and
the
specific instructions of Medtech.
|
5.
|
Independent
and other Subcontractors of
Pharmaspray
|
5.1.
|
Pharmaspray
is
entitled to contract and instruct (independent) subcontractors and/or
auxiliary persons for the manufacturing, packaging, and storage of
the
Product, subject to the reasonable written consent of Medtech and
subject
to reasonable assurance that all confidential and proprietary information
of Medtech will be safeguarded.
|
5.2.
|
Pharmaspray
shall be
responsible and liable for the acts and omissions of its employees,
servants, (independent) subcontractors, agents, suppliers and
other
|
persons
whose services it uses for the performance of its obligations under
this
Agreement, as if such acts and omissions were its own, cases of Force
Majeure excepted.
|
6.
|
Rates,
Charges and Payment Terms
|
6.1.
|
All
rates, costs and
expenses with respect to the production and packaging and storage
services
shall be charged and invoiced by Pharmaspray to Medtech on a weekly
basis
and in conformity with the provisions set down in Schedule 4 regarding
the
rates and charges. The prices set out on Schedule 4 shall be fixed
prices
for the term of this Agreement; provided, however, Pharmaspray shall
be
entitled to pass on to Medtech in the first quarter of each calendar
year,
by mutual written agreement, any significant net increase in prices
charged by third parties in connection with Pharmaspray's services
provided (including any increase in prices for raw
materials). In the event of a demonstrable price-increase of
one or more Materials exceeding 5%, Pharmaspray shall also during
the
calendar year be entitled to pass on to Medtech this price-increase
in
consultation with Medtech.
|
6.2.
|
Invoices
shall be
issued and expressed in Euros and payment shall be made in Euros
to a
Dutch bank account of Pharmaspray. If, at the request of Pharmaspray,
any
costs, duties and the like involved with payment shall be paid by
Medtech
in another currency and/or a foreign bank account, the costs for
such
payment shall be borne by
Pharmaspray.
|
6.3.
|
Any
objections to
the invoice Medtech has received from Pharmaspray shall be made by
Medtech
in writing within sixty (60) days from the invoice date. If no objections
are made within 60 days from the invoice date, the invoice shall
be
binding on both Parties.
|
6.4.
|
Medtech
shall pay
the invoiced amounts within sixty (60) days counting from the invoice
date. Medtech shall only be allowed to pay at a later date with prior
written consent of Pharmaspray. If Medtech pays the invoice
within eight (8) days of the invoice date, Medtech shall be entitled
to
receive a credit equal to 3% of the total amount of the invoice,
except of
the costs of transport organized on behalf of Medtech as mentioned
in
clause 4.3.
|
6.5.
|
Any
payment to be
made by either Party under this Agreement shall be made in full without
set-off, restriction, condition or deduction for or on account in
any
counterclaim.
|
6.6.
|
Any
and all
outstanding payments of Medtech due to Pharmaspray shall become
immediately payable (opeisbaar)
if Medtech is declared bankrupt or in moratorium of payments, discontinues
its business or if its business is
liquidated.
|
6.7.
|
If
Medtech does not
pay the amount due within the agreed time, Medtech shall be legally
held
to be in default and shall be liable to pay interest equal to the
Dutch
statutory interest rate plus 4% over the entire invoice amount, commencing
on the due date of the invoice, until the actual date of payment.
Medtech
is liable to pay any and all judicial and/or extra-judicial costs
for debt
collection by Pharmaspray.
|
6.8.
|
To
the extent that
Product produced and delivered by Pharmaspray are for sale and use
in the
United States, Canada or anywhere else outside The Netherlands, no
VAT tax
shall be included in the invoice.
|
6.9.
|
The
Parties agree
that the prices, rates and charges appearing in Schedule 4 have been
established for purposes of this Agreement with mutual implicit
assumptions in cost of goods sold (“COGS”) and exchange rates between the
U.S. dollar and the Euro. To the extent that fluctuations in exchange
rates occur such that there is a variance of more than 10% in any
twelve
month period in the effective exchange rate, the Parties agree to
meet and
to negotiate in good faith to achieve an equitable and commercially
viable
accommodation. Increases in COGS not primarily related to exchange
rates
shall be subject to annual review, and to the extent reasonably applicable
shall be modulated by published cost-of-living
indexes.
|
7.
|
Warranties
|
7.1.
|
Subject
to clause
7.3 and 7.5, Pharmaspray represents and warrants that the performance
of
the Production Services shall be in compliance with the Product
Specifications set forth in Schedule 1, the Quality Manual and any
other
provisions of this Agreement, cases of Force Majeure
excepted.
|
7.2.
|
Subject
to clauses
7.3 and 7.5, Pharmaspray represents and warrants that she, after
delivery
of the Machine as mentioned in clause 3.2 to Pharmaspray, shall assemble
the Products in complete and correct state and in compliance with
the
Product Specifications set forth in schedule 1, the Quality Manual
and any
other provisions of this Agreement, cases of Force Majeure
excepted.
|
7.3.
|
The
representation
and warranty mentioned in clause 7.1 and 7.2 do not apply to defects
in
the Product caused by defects in Materials delivered to Pharmaspray
by Suppliers if the Materials are accompanied by a certificate
of analysis conforming with the Specifications and all approval procedures
and criteria required by the Quality Manual are met. The representation
and warranty does not apply to texts/artwork edited or provided by
Medtech.
|
7.4.
|
The
Parties
represent and warrant that, during this Agreement and after termination
and completion of this Agreement, except as may be required by judicial
process or the regulatory requirements of governmental authority
having
jurisdiction over the Parties and/or Products, they shall keep
confidential any information whatsoever regarding the Materials,
the
Products, the contents of this Agreement, and the Quality Manual
and
Schedules and not provide any third party with such confidential
information unless with prior written consent of the other
Party.
|
7.5.
|
The
Parties agree
that the existing design of the Product, and specifically the existing
cap
provided by Keltec which is set forth in Schedule 6, are the
responsibility of Medtech as specification holder. The responsibility
of
Pharmaspray is to insure that production of the Product including
the
existing Keltec cap is in all respects in
|
conformance
with specifications and applicable regulatory
requirements. The warranties of Pharmaspray shall be viewed in
all
respects as limited by this Section
7.5.
|
8. | Insurance |
8.1
|
Both
Parties shall
on request provide the other Party with periodic evidence of satisfactory
product liability insurance coverage for the
Products.
|
9.
|
Liability
|
9.1.
|
Pharmaspray
shall be
liable for any and all damages and costs suffered by Medtech as a
consequence of Pharmaspray’s non-performance (“tekortkoming
in de nakoming”) of its obligations under the Agreement, including
but not limited to the warranties granted by Pharmaspray pursuant
to
clause 7.1 and 7.2 of this Agreement, cases of Force Majeure excepted.
|
9.2.
|
Except
as set forth
in Section 7.5, Pharmaspray shall be responsible for damage, defects,
non-delivery or late delivery caused by Materials from Suppliers.
Notwithstanding the foregoing, Pharmaspray is not liable for damage,
defects, non-delivery or late delivery caused by the design of the
Product, the formula(s), the package or instructions, prescribed
by
Medtech and/or shortcomings caused by Medtech.
|
9.3.
|
As
to arranging for
transport of Products on behalf of Medtech after delivery ex works
has
taken place, Pharmaspray is only liable for her own acts and omissions;
Pharmaspray is not to be considered the insurance carrier or shipper.
|
9.4.
|
The
Parties agree
that Pharmaspray’s liability is in any case limited to the greater of (1)
the invoiced value of the Products for that specific order; or (2)
the
maximum amount Pharmaspray’s insurance company will compensate for in that
particular case provided that Pharmaspray has arranged and maintained
for
sufficient insurance coverage or could reasonably expected to arrange
for,
and maintain a certain level of insurance coverage, considering the
standard practice in the industry, in accordance with this Agreement.
|
9.5.
|
Only
Medtech shall
be responsible and liable for the content of artwork, consumer
instructions and label copy. Pharmaspray is not responsible or liable
for
the content of consumer instructions, artwork and label copies and
any
(other) texts on the Products, including the Product package. Pharmaspray
shall only be responsible for assuring that only artwork provided
by or
approved by Medtech is accurately utilized.
|
9.6.
|
Medtech
shall be
liable for any and all material damages and costs suffered by Pharmaspray
as a consequence of a defect (or defects) in Materials delivered
by
Medtech or defect(s) in texts/artwork edited or provided by Medtech.
|
9.7.
|
Neither
of the
Parties shall be liable in case of Force Majeure.
|
9.8.
|
Claims
of either
party against the other expire in accordance with the provisions
of the
Dutch Civil Code. Shorter expiration dates are not valid, unless
with
prior written consent of the other Party.
|
10. | Indemnifications |
10.1.
|
Subject
to the
provisions of Sections 7.3, 7.5 and 9, Pharmaspray will hold harmless
and
indemnify Medtech from and in regard to any and all claims by third
parties in connection to the performance by Pharmaspray of the production
and packaging services such as, but not limited to, claims originating
from defectiveness of the Products and/or the Materials required
for the
Products and the production process, cases of Force Majeure excepted.
|
10.2.
|
Medtech
will hold
harmless and indemnify Pharmaspray from and in regard to any and
all
claims by third parties other than Suppliers, originating from
|
1.
|
defects
in the
texts/artwork edited, approved or provided by Medtech, or
|
2.
|
the
design of the
Product, formula(s), component parts packaging or instructions provided,
prescribed or designed by Medtech or Medtech's predecessors in interest.
|
11. | Exclusivity |
11.1.
|
During
the term of
this Agreement, Pharmaspray shall not provide any services whatsoever
to
third parties in relation to aerosol products similar to or in any
way
competing with the Product in the United States, Canada and Mexico.
|
11.2.
|
During
the term of
this Agreement, Medtech shall purchase the Product only and exclusively
from Pharmaspray.
|
12. | Duration and Termination |
12.1.
|
This
Agreement shall
become effective for an initial period of three years, starting from
the
Commencement Date. This Agreement may be renewed for additional three
year
periods upon the mutual written consent of the Parties no later than
six
months prior to the then applicable expiration date.
|
12.2.
|
Each
of the Parties
has the right to terminate this Agreement with immediate effect by
giving
written notice if any of the following events shall occur:
|
|
a.
|
the
other party
breaches any of the terms of this Agreement and fails to remedy such
breach within thirty (30) days after written notice requiring to
do so,
unless such breach or failure does not justify this with its consequences
in view of its minor importance;
|
b.
|
the
other party
files a petition for moratorium of payments with the competent court
or is
granted a moratorium of payments;
|
c.
|
the
other party
files a petition for bankruptcy with the competent court or is
|
declared bankrupt; or | ||
d.
|
the
board of
directors of the other party resolves to dissolve or liquidate its
company.
|
12.3.
|
In
case of
termination of the Agreement pursuant to Clause 12.2, the terminating
Party is entitled to receive full compensation for any and all direct
damage suffered by it as a result of the termination and/or, in the
case
of the event stated under Clause 12.2 sub a., any damage suffered
as a
result of such breach.
|
12.4.
|
In
deviation of
Clause 12.1, Medtech may terminate this Agreement with immediate
effect by
giving written notice, without any compensation or damages whatsoever
to
Pharmaspray, if Pharmaspray becomes owned or controlled by or associates
with or merges with a producer who provides production services to
competitors of the Product.
|
13. | Completion after termination |
13.1.
|
Upon
termination of
the Agreement, Medtech is obliged to take delivery of the Materials
and
(semi) Products still in the possession and/or under the control
of
Pharmaspray on the expiration date of the Agreement or, in case of
termination with immediate effect, within 2 weeks upon such termination,
after payment of all outstanding amounts to Pharmaspray. Pharmaspray
and
Medtech shall mutually agree as to the allocation of costs incurred
for
raw materials, labels and packaging; provided, that, in the event
Medtech
terminates this Agreement for any reason other than as set forth
in
Sections 12.2 and 12.4 hereof, Medtech shall be obligated to purchase
from
Pharmaspray, at Pharmaspray’s actual cost, any safety stock agreed between
Medtech and Pharmaspray; and provided further, that, notwithstanding
the
foregoing, any breaching Party shall be fully responsible for such
costs
(including, without limitation, safety stock maintained by
Pharmaspray). Medtech shall have the right, but not the
obligation, to purchase any finished Products being held in Pharmaspray’s
inventory for which no Purchase Orders have been submitted.
|
13.2.
|
If
Medtech
terminates this Agreement within 5 years of the original date of
acquisition of the Machine, Medtech shall, at the sole discretion
of
Pharmaspray, acquire the Machine from Pharmaspray for an amount equal
to
the following percentages of Pharmaspray's acquisition cost of the
Machine:
|
During year 1: | 75% | |
During year 2: | 60% | |
During year 3: | 40% | |
During year 4: | 25% | |
During year 5: | 10% |
The
acquisition cost of the machine is stipulated and agreed to be
€
111.335,20. The original date of acquisition of the Machine for
purposes
of this Agreement is January 24, 2007. Should the machine be utilized
by
Pharmaspray for purposes other than the manufacture of the Product
hereunder, the acquisition cost to Medtech shall be
|
reduced proportionately to the additional use. |
14. | No Rescission |
14.1
|
The
Parties herewith
expressly waive the right to rescind the Agreement pursuant to Article
265
of Book 6, Dutch Civil Code.
|
15. | Miscellaneous |
15.1.
|
Changes
in the Quality Manual. Subject to the written consent of
Pharmaspray which shall not be unreasonably withheld, delayed or
conditioned, Medtech reserves the right to amend or adapt the Quality
Manual and Schedules to changes in the aforementioned regulation
and
legislation and / or to the introduction of new regulations and /
or
legislation regarding the quality requirements of the Product from
time to
time.
|
15.2.
|
Successors
and Assignments. This Agreement is binding on and for the benefit
of both Parties and their successors and permitted assignees. Neither
Party may assign (its rights under) this Agreement without the prior
written consent of the other party. Pharmaspray shall have no rights
in
the Materials and / or Products of Medtech and may not and shall
not
attempt to assign any interests, either real or presumed, to the
Materials
and /or (Semi) Products of Medtech.
|
15.3.
|
Entire
Agreement. This Agreement represents the entire agreement of the
Parties with respect to its subject matter, and supersedes all prior
proposals, agreements, memoranda and / or understandings with respect
to
this Agreement or its subject matter between Medtech and Wartner
USA B.V.
and Pharmaspray B.V. Any future representation, agreement, understanding
or waiver will only be binding if in writing and signed by the Party
sought to be bound.
|
15.4.
|
Schedules
and Annexes. Each schedule, annex and / or the applicable
provisions of the Quality Manual will become part of and subject
to this
Agreement upon signature and date by both Parties.
|
15.5.
|
Waivers.
Either Party’s failure strictly to enforce any provision of this Agreement
will not be construed as a waiver of that provision or as excusing
the
other Party from future performance.
|
15.6.
|
Notices.
All notices required or permitted under this Agreement shall be in
writing
unless otherwise indicated in this Agreement. The notifying Party
shall
send the written notice to the address of the other Party as shown
at the
beginning of this Agreement and/or any other address as agreed upon
by the
receiving Party. Sent notices will only be effective upon actual
receipt
by the other Party.
|
15.7.
|
Electronic
Mail. The Parties agree that day-to-day communication can also
be
by electronic mail (e-mail). Sent e-mail messages will only be effective
upon actual receipt by the other Party. Notwithstanding the preceding
passages, any message, notice and /or document relating to modification
and/or which affects the effect of this Agreement shall only have
binding
effect if in writing (not being electronic mail and/or other electronic
documents) and with written consent of the Parties.
|
15.8.
|
Confidentiality.
Each Party shall, during this Agreement and after termination and
completion of this Agreement, keep confidential any information whatsoever
regarding the business of the other Party and not provide any third
party
with such confidential information unless with prior written consent
of
the other Party, except as may be reasonably required by judicial
process
or compliance with applicable governmental and regulatory requirements.
|
15.9.
|
Mandatory
Law. This Agreement shall only take effect to the extent that
its
provisions are not contrary to any provision of mandatory (national
and /
or international) law. Any provision of this Agreement being contrary
to
any provision of mandatory law or otherwise being null and void does
not
effect the validity of the other provisions of this Agreement.
|
15.10.
|
General
Terms and Conditions. The applicability of any general terms and
conditions of the contracting Parties, other than those which are
expressly and with written consent of both Parties declared applicable
to
the relationship between Medtech and Pharmaspray under this Agreement,
is
hereby expressly excluded.
|
15.11.
|
Changes
to the Agreement. Provisions that deviate from this Agreement can
be invoked by both Parties only if and to the extent that these provisions
are accepted by both Parties in writing.
|
15.12.
|
Severability.
If any term or condition of this Agreement is null and void or will
become
null and void during the course of this Agreement, the validity and
effectiveness of all other terms and conditions shall not be impaired
thereby. All terms and conditions of this Agreement are separable.
|
16. | Applicable law and jurisdiction |
16.1.
|
This
Agreement is
exclusively governed and construed by Dutch law, as will all disputes
that
may arise from this Agreement. All legal concepts to which reference
is
made in this Agreement are Dutch legal concepts.
|
|
All
disputes,
arising in connection with the present Agreement or further contracts
and
/ or agreements resulting here from, which cannot be settled amicably,
shall be settled by the competent Court of Groningen, The Netherlands,
notwithstanding higher appeals.
|
/s/ Peter J. Anderson | /s/ Jos Schott | |||
Medtech
Products Inc.
|
Pharmaspray B.V. | |||
By: Peter J. Anderson | By: Jos Schott | |||
Treasurer | Managing Director | |||
Schedules
|
Schedule 1 | Product Definitions and Specification |
Schedule 2 | Suppliers and Materials |
Schedule 3 | Packaging Machine Specification |
Schedule 4 | Prices, Rates and Charges |
Schedule 5 | Quality Manual |
Schedule 6 | Existing Cap for the Product |
A.
|
Medtech
is the owner
of all Intellectual Property Rights relating to the Product (as defined
in
Clause 1) for the USA, Canada and
certain other countries and
is to be considered the Specification Holder of the
Product;
|
B.
|
Pharmaspray
is an
aerosol manufacturer filling aerosol cans with cosmetic and medical
products;
|
C.
|
The
Products sold by
Medtech are subject to ISO-13485 Standard and GMP 820
standard;
|
D.
|
Pharmaspray
operates
in accordance with ISO-9001:2000
Standard;
|
E.
|
The
Parties wish to
(co)operate in accordance with ISO-13485 Standard, ISO-9001:2000
Standard,
the Quality Manual (as defined in Clause 1) and the instructions
of
Medtech as specified in the Schedule(s) which form part of this Agreement;
and
|
F.
|
The
Parties now wish
to formalize this Agreement as a “Turn-Key Agreement” in which they will
include all their agreements with respect to the Procurement Services,
Production Services, Packaging Services, Logistic Services and other
services provided by Pharmaspray to
Medtech.
|
1.
|
Definitions
|
1.1.
|
The
term “Acceptance
of the Materials” shall mean the point in time at which the Materials (as
defined hereafter) are physically handed over to or become under
the
control and care of Pharmaspray in order to manufacture and package
the
Products.
|
1.2.
|
The
term “Agreement”
shall mean this document including the Quality Manual and all (further)
Schedules and annexes hereto and thereto, each as amended from time
to
time by the Parties upon mutual written
agreement.
|
1.3.
|
The
term
“Commencement Date” shall mean October 5,
2007.
|
1.4.
|
The
term "Delivery
of the Products" shall mean the point in time at which the Products
(as
defined hereafter) are delivered to Medtech or the designated agent
or
distributor of Medtech. Unless otherwise specified in writing, Delivery
of
Products shall occur ex works (EXW, incoterms 2000) in
Veendam.
|
1.5.
|
The
Term “Force
Majeure” shall mean those circumstances which are unforeseeable and beyond
the reasonable control of each of the Parties and which prevent the
total
or partial carrying out of any obligation by a party under this Agreement,
such as acts or regulations or decrees of any government (de facto
or de
jure), natural phenomena, such as earthquakes and floods, fires,
riots,
shipwrecks, freight embargoes or other circumstances whether similar
or
dissimilar to those enumerated
above.
|
1.6.
|
The
term
“Intellectual Property Rights” shall mean any and all intellectual
property rights, good will, know-how and other intangibles relating
to the
Product and its packaging including (but not limited to) national
and
international patents, trade name(s) and
trademark(s).
|
1.7.
|
The
term “Logistic
Services” shall mean all services provided by Pharmaspray as from the
beginning of the manufacture of the Product until the physical delivery
of
the Product to Medtech, Medtech's distributors, agents or other
destinations, including the storage and the arranging of
transport.
|
1.8.
|
The
term “Materials”
shall mean all semi fabrics, ingredients, spare parts, and packaging
material necessary to assemble the
Product.
|
1.9.
|
The
term "Mold"
shall mean the mold purchased by Pharmaspray from NPK Products B.V.
on or
about May 1, 2007 for use by Pharmaspray in the manufacture of the
Product.
|
1.10.
|
The
term “Packaging
Services” shall mean the packaging of the Product(s) (as defined
hereafter) by Pharmaspray according
to the
Quality Manual (as defined hereafter) and other specific
instructions of Medtech.
|
1.11.
|
The
term
“Procurement Services” shall mean the various acts of identifying,
qualifying, ordering and obtaining via Purchase Orders or other means
those Materials necessary or appropriate to the production of Products
until such Materials are physically delivered to Pharmaspray. In
performing Procurement Services, Pharmaspray shall act for its own
account
and not as agent for Medtech.
|
1.12.
|
The
term “Product”
shall mean a consumer product composed and/or manufactured on behalf
of
Medtech bearing the Compound W Freeze Off® or other trademarks owned by
Medtech and used for the cryogenic treatment of warts, skin tags
or other
lesions in humans, according to Medtech’s specifications as described in
Schedule
|
1. | |
1.13.
|
The
term “Production
Services” shall mean the manufacture of the Product, including production,
assembly, filling and labelling of the aerosol cans by Pharmaspray
as
instructed by Medtech in accordance with the terms of this Agreement
and
the Quality Manual.
|
1.14.
|
The
term “Purchase
Order” shall mean a written instruction to provide the Procurement
Services, Production Services, Packaging Services and Logistics Services,
which instruction is prepared by Medtech and directed to Pharmaspray
and
includes specific instruction as to the delivery of the
Product.
|
1.15.
|
The
term “Quality
Manual” shall mean the Quality Agreement attached hereto as Schedule 4, as
it may be subsequently amended, revised or replaced upon mutual written
agreement.
|
1.16.
|
The
term “Schedule”
shall mean any schedule to this Agreement, including any amendment
thereto.
|
1.17.
|
The
term “Storage
Location” shall mean the warehouse located at Demeterlaan 30 and Cereslaan
9 (9641 ML) Veendam unless otherwise agreed by the Parties in writing.
|
1.18.
|
The
term “Supplier”
shall mean suppliers designated or appointed by Pharmaspray, subject
to
approval by Medtech, as described – non limitative – in Schedule
2.
|
1.19.
|
The
term “Turn-Key
Agreement” shall mean an understanding between the Parties acknowledging
the assumption of all responsibility by Pharmaspray for
all Procurement Services, Production Services, Packaging
Services, Logistics Services and other services necessary or appropriate
to the fulfilment of Purchase Orders for the Product except as otherwise
provided in this Agreement.
|
|
In
as far as
applicable in the context of the Agreement, terms defined in the
singular
shall include the plural and vice versa.
|
2.
|
Procurement,
Production, Packaging and Logistic
Services
|
2.1.
|
On
the terms and
conditions of the Agreement, Medtech hereby appoints Pharmaspray
and
Pharmaspray hereby accepts such appointment to provide the Procurement
Services, Production Services, Packaging Services and the Logistic
Services during the term of the Agreement in a manner befitting a
careful
contractor, excepting only as provided
herein.
|
2.2.
|
Without
limiting the
(general) obligations of the contracting Parties under this Agreement,
the
Parties shall provide mutual assistance and shall co-operate with
each
other and with third parties in order to ensure that the quality
of the
Procurement, Production, Packaging and Logistics Services are maintained
and that the Parties' expectations in entering into this Agreement
are
fulfilled; in particular, Pharmaspray represents that it has such
resources necessary to fulfil its obligations and that it shall be
pro-active in resolving any problems. Medtech shall
|
promptly
inform Pharmaspray of all changes in its Compound W Freeze
Off® business which may impact on the performance of the Production
Services under this
Agreement.
|
2.3.
|
Pharmaspray
shall
provide the Procurement services, Production Services, Packaging
Services
and Logistics Services in accordance with the applicable ISO standards,
the Quality Manual and Schedules, any (other) specific instructions
of
Medtech and any further mandatory national and international
specifications, as applicable from time to
time.
|
2.4.
|
Medtech
will provide
Pharmaspray every month with a twelve month rolling sales forecast
for the
Products. The forecast for the three month period immediately following
the issuance of the forecast shall be converted into Purchase Orders
from
Medtech to Pharmaspray, which Purchase Orders shall be deemed
binding.
|
2.5.
|
If
Pharmaspray
incurs costs directly based upon Medtech’s forecast for the next three
months, and Medtech does not issue a Purchase Order related to those
costs
within six months after the applicable month, Pharmaspray may charge
such
costs to Medtech.
|
2.6.
|
Pharmaspray
will
source the Materials mentioned in Schedule 2 from Suppliers approved
by
Medtech. Pharmaspray will manage a minimum amount of safety stock,
with
the minimum amount to be determined by the Parties. To the
extent any safety stock agreed by the Parties and maintained by
Pharmaspray becomes obsolete due solely to the actions of Medtech,
Medtech
shall be obligated to reimburse Pharmaspray for its actual cost to
purchase such safety stock.
|
2.7.
|
Pharmaspray
is
responsible for the delivery of the Materials required for the manufacture
or production of the Product to Pharmaspray’s
premises.
|
2.8.
|
Subject
to clause
7.3 and 7.5 and the provisions of Section 9, Pharmaspray is responsible
for the compliance of the Materials with the applicable ISO standards
and
any further national and international specifications applicable
from time
to time at the moment of Acceptance of the Materials. Pharmaspray
shall
check such compliance, in as far as visually observable, at the Acceptance
of the Materials.
|
2.9.
|
Pharmaspray
shall
deliver the Products related to a specific written order of Medtech
to the
distributors or agents of Medtech within four (4) weeks upon such
order,
provided that Pharmaspray has received the sales forecast the specific
order is based upon, in due time.
|
2.10.
|
Medtech
is allowed
to conduct regularly scheduled quality audits of both the production
process and the Product at Pharmaspray’s premises at any reasonable time
after receipt of written notice from Medtech of its intent in advance.
Pharmaspray may require its representative to be present and that
such
visit is under the condition that the internal rules of Pharmaspray
or the
Storage Location are being complied with. Medtech will be responsible
for
all associated costs of such quality audits. Medtech shall have the
right
to reject Products that do not meet the Product Specifications set
forth
in Schedule 1, the Quality Manual or other specific instructions
of
Medtech. Reasonable efforts will be made to salvage usable portions
of any
batch should a sampling of Products not be in compliance with the
Product
|
Specifications set forth in Schedule 1, the Quality Manual or other specific instructions of Medtech. | |
2.11.
|
Pharmaspray
shall
provide Medtech with updates on its business operations as specified
in
the Quality Manual.
|
2.12.
|
Pharmaspray
shall
keep an adequate administration of deliveries to Medtech’s distributors or
agents. Pharmaspray shall provide copies of all shipping documents
to
Medtech in case of re-calls, whatever the cause for such re-calls
may
be.
|
2.13.
|
Each
Party shall,
upon execution of this Agreement, appoint one of its employees to
be a
relationship manager responsible for liaison between the
Parties. The relationship managers shall conference not less
than quarterly and meet in person not less than annually to coordinate
the
production activities, handle purchase orders, track assembly progress
and
any packaging work, movement of Product, deliveries, sales status
and the
current status of the business relationship and manage issues that
have
arisen.
|
2.14.
|
Conveyance
and
delivery of the Products shall occur ex works (EXW) in Veendam, unless
otherwise agreed between the Parties in
writing.
|
2.15.
|
Medtech
is and shall
at all times remain the owner of the Intellectual Property Rights
to the
Product in the United States, Canada and certain other countries
where it
owns Intellectual Property Rights. No license of whatever nature
in
relation to any Intellectual Property Rights is granted by Medtech
to
Pharmaspray. Pharmaspray shall have the obligation to obtain
and maintain all governmental licenses, permits or approvals necessary
to
manufacture the Product at its facility in
Veendam.
|
3.
|
Packaging
|
3.1.
|
Pharmaspray
will
package the Product according to the Quality Manual and other specific
instructions of Medtech.
|
3.2.
|
Pharmaspray
has
acquired the Mold as described in clause 1.9 above. The acquirement
costs
were and will be borne by
Pharmaspray.
|
4.
|
Transport
|
4.1.
|
Medtech
is
responsible for transport of delivered Products from the premises
of
Pharmaspray at Veendam to her distributors, agents or (other) final
destinations. The Parties agree that Pharmaspray shall organize this
transport under the authority of and on expense of Medtech, thus
acting as
representative of Medtech.
|
4.2.
|
Medtech
shall
designate the carrier(s)/transporter(s) to be involved in transportation
of delivered Products. Pharmaspray, as representative of Medtech,
will
contract these carriers/transporters; Medtech being the contractant
of the
carrier/transporter.
|
4.3.
|
All
costs of
transport taking place after delivery, charged to Pharmaspray, will
be
charged on to Medtech. Pharmaspray will provide Medtech with copies
of the
transport invoices the on-charging is based
upon.
|
4.4.
|
After
delivery (ex
works) of the Products has taken place, Pharmaspray is neither responsible
nor liable for the acts and omissions of carriers/transporters that
are
contracted by Pharmaspray on behalf of Medtech.
|
Loading, stowage and discharging |
4.5.
|
The
obligation of
(un)loading, stowage and discharging the Materials and/or the Products
and
the liability for any damage to and/or loss of the Materials and/or
Products caused by (un)loading, stowage and/or discharging the Materials
and/or the Products rests with Pharmaspray, until delivery of the
Products
to Medtech defined in clause 2.14.
|
4.6.
|
Any
stipulation,
condition, reservation or exemption as to responsibility and/or liability
of Pharmaspray for loss of and/or damage to the Materials and/or
the
Products, occurring during loading on, stowing, and subsequently
to the
discharging from the means of carriage in which the Materials and/or
the
Products are (to be) carried (before delivery to Medtech), shall
be null
and void unless with prior written consent of
Medtech.
|
4.7.
|
Pharmaspray
shall at
all times load, stow and discharge the Materials and the Products
in
accordance with the applicable provisions of the Quality Manual and
the
specific instructions of Medtech.
|
5.
|
Independent
and other Subcontractors of
Pharmaspray
|
5.1.
|
Pharmaspray
is
entitled to contract and instruct (independent) subcontractors and/or
auxiliary persons for the manufacturing, packaging, and storage of
the
Product, subject to the reasonable written consent of Medtech and
subject
to reasonable assurance that all confidential and proprietary information
of Medtech will be safeguarded.
|
5.2.
|
Pharmaspray
shall be
responsible and liable for the acts and omissions of its employees,
servants, (independent) subcontractors, agents, suppliers and other
persons whose services it uses for the performance of its obligations
under this Agreement, as if such acts and omissions were its own,
cases of
Force Majeure excepted.
|
6.
|
Rates,
Charges and Payment Terms
|
6.1.
|
All
rates, costs and
expenses with respect to the production and packaging and storage
services
shall be charged and invoiced by Pharmaspray to Medtech on a weekly
basis
and in conformity with the provisions set down in Schedule 3 regarding
the
rates and charges. The prices set out on Schedule 3 shall be fixed
prices
for the term of this Agreement; provided, however, Pharmaspray shall
be
entitled to pass on to Medtech in the first quarter of each calendar
year,
by mutual written agreement, any significant net increase in prices
charged by third parties in connection with Pharmaspray's services
provided (including any increase in prices
|
for
raw
materials). In the event of a demonstrable price-increase of
one or more Materials exceeding 5%, Pharmaspray shall also during
the calendar year be entitled to pass on to Medtech this
price-increase in consultation with
Medtech.
|
6.2.
|
Invoices
shall be
issued and expressed in Euros and payment shall be made in Euros
to a
Dutch bank account of Pharmaspray. If, at the request of Pharmaspray,
any
costs, duties and the like involved with payment shall be paid by
Medtech
in another currency and/or a foreign bank account, the costs for
such
payment shall be borne by
Pharmaspray.
|
6.3.
|
Any
objections to
the invoice Medtech has received from Pharmaspray shall be made by
Medtech
in writing within sixty (60) days from the invoice date. If no objections
are made within 60 days from the invoice date, the invoice shall
be
binding on both Parties.
|
6.4.
|
Medtech
shall pay
the invoiced amounts within sixty (60) days counting from the invoice
date. Medtech shall only be allowed to pay at a later date with prior
written consent of Pharmaspray. If Medtech pays the invoice
within eight (8) days of the invoice date, Medtech shall be entitled
to
receive a credit equal to 3% of the total amount of the invoice,
except of
the costs of transport organized on behalf of Medtech as mentioned
in
clause 4.3
|
6.5.
|
Any
payment to be
made by either Party under this Agreement shall be made in
full without set-off, restriction, condition or deduction for or on
account in any counterclaim.
|
6.6.
|
Any
and all
outstanding payments of Medtech due to Pharmaspray shall become
immediately payable (opeisbaar)
if Medtech is declared bankrupt or in moratorium of payments, discontinues
its business or if its business is
liquidated.
|
6.7.
|
If
Medtech does not
pay the amount due within the agreed time, Medtech shall be legally
held
to be in default and shall be liable to pay interest equal to the
Dutch
statutory interest rate plus 4% over the entire invoice amount, commencing
on the due date of the invoice, until the actual date of payment.
Medtech
is liable to pay any and all judicial and/or extra-judicial costs
for debt
collection by Pharmaspray.
|
6.8.
|
To
the extent that
Product produced and delivered by Pharmaspray are for sale and use
in the
United States, Canada or anywhere else outside The Netherlands, no
VAT tax
shall be included in the invoice.
|
6.9.
|
The
Parties agree
that the prices, rates and charges appearing in Schedule 3 have been
established for purposes of this Agreement with mutual implicit
assumptions in cost of goods sold (“COGS”) and exchange rates between the
U.S. dollar and the Euro. To the extent that fluctuations in exchange
rates occur such that there is a variance of more than 10% in any
twelve
month period in the effective exchange rate, the Parties agree to
meet and
to negotiate in good faith to achieve an equitable and commercially
viable
accommodation. Increases in COGS not primarily related to exchange
rates
shall be subject to annual review, and to the extent reasonably applicable
shall be modulated by published cost-of-living
indexes.
|
7.
|
Warranties
|
7.1.
|
Subject
to clause
7.3 and 7.5, Pharmaspray represents and warrants that the performance
of
the Production Services shall be in compliance with the Product
Specifications set forth in Schedule 1, the Quality Manual and any
other
provisions of this Agreement, cases of Force Majeure
excepted.
|
7.2.
|
Subject
to clauses
7.3, Pharmaspray represents and warrants that she shall assemble
the
Products in complete and correct state and in compliance with the
Product
Specifications set forth in Schedule 1, the Quality Manual and any
other
provisions of this Agreement, cases of Force Majeure
excepted.
|
7.3.
|
The
representation
and warranty mentioned in clause 7.1 and 7.2 do not apply to defects
in
the Product caused by defects in Materials delivered to Pharmaspray
by Suppliers if the Materials are accompanied by a certificate
of analysis conforming with the Specifications and all approval procedures
and criteria required by the Quality Manual are met. The representation
and warranty does not apply to texts/artwork edited or provided by
Medtech.
|
7.4.
|
The
Parties
represent and warrant that, during this Agreement and after termination
and completion of this Agreement, except as may be required by judicial
process or the regulatory requirements of governmental authority
having
jurisdiction over the Parties and/or Products, they shall keep
confidential any information whatsoever regarding the Materials,
the
Products, the contents of this Agreement, and the Quality Manual
and
Schedules and not provide any third party with such confidential
information unless with prior written consent of the other
Party.
|
7.5.
|
The
Parties agree
that the existing design of the Product is the responsibility of
Medtech
as specification holder. The responsibility of Pharmaspray is to
insure
that production of the Product is in all respects in conformance
with
specifications and applicable regulatory requirements. The warranties
of
Pharmaspray shall be viewed in all respects as limited by this Section
7.5.
|
8. | Insurance |
8.1
|
Both
Parties shall
on request provide the other Party with periodic evidence of satisfactory
product liability insurance coverage for the
Products.
|
9.
|
Liability
|
9.1.
|
Pharmaspray
shall be
liable for any and all damages and costs suffered by Medtech as a
consequence of Pharmaspray's non-performance (“tekortkoming
in de nakoming”) of its obligations under the Agreement, including
but not limited to the warranties granted by Pharmaspray pursuant
to
clause 7.1 and 7.2 of this Agreement, cases of Force Majeure excepted.
|
9.2.
|
Except
as set forth
in Section 7.5, Pharmaspray shall be responsible for damage, defects,
non-delivery or late delivery caused by Materials from Suppliers.
Notwithstanding the foregoing, Pharmaspray is not liable for damage,
defects, non-delivery or late delivery caused by the design of the
Product, the formula(s), the package or instructions, prescribed
by
Medtech and/or shortcomings caused by Medtech.
|
9.3.
|
As
to arranging for
transport of Products on behalf of Medtech after delivery ex works
has
taken place, Pharmaspray is only liable for her own acts and omissions;
Pharmaspray is not to be considered the insurance carrier or shipper.
|
9.4.
|
The
Parties agree
that Pharmaspray’s liability is in any case limited to the greater of (1)
the invoiced value of the Products for that specific order; or (2)
the
maximum amount Pharmaspray’s insurance company will compensate for in that
particular case provided that Pharmaspray has arranged and maintained
for
sufficient insurance coverage or could reasonably expected to arrange
for,
and maintain a certain level of insurance coverage, considering the
standard practice in the industry, in accordance with this Agreement.
|
9.5.
|
Only
Medtech shall
be responsible and liable for the content of artwork, consumer
instructions and label copy. Pharmaspray is not responsible or liable
for
the content of consumer instructions, artwork and label copies and
any
(other) texts on the Products, including the Product package. Pharmaspray
shall only be responsible for assuring that only artwork provided
by or
approved by Medtech is accurately utilized.
|
9.6.
|
Medtech
shall be
liable for any and all material damages and costs suffered by Pharmaspray
as a consequence of a defect (or defects) in Materials delivered
by
Medtech or defect(s) in texts/artwork edited or provided by Medtech.
|
9.7.
|
Neither
of the
Parties shall be liable in case of Force Majeure.
|
9.8.
|
Claims
of either
party against the other expire in accordance with the provisions
of the
Dutch Civil Code. Shorter expiration dates are not valid, unless
with
prior written consent of the other Party.
|
10. | Indemnifications |
10.1.
|
Subject
to the
provisions of Sections 7.3, 7.5 and 9, Pharmaspray will hold harmless
and
indemnify Medtech from and in regard to any and all claims by third
parties in connection to the performance by Pharmaspray of the production
and packaging services such as, but not limited to, claims originating
from defectiveness of the Products and/or the Materials required
for the
Products and the production process, cases of Force Majeure excepted.
|
10.2.
|
Medtech
will hold
harmless and indemnify Pharmaspray from and in regard to any and
all
claims by third parties other than Suppliers, originating from
|
|
1. |
defects
in the
texts/artwork edited, approved or provided by Medtech, or
|
|
2. |
the
design of the
Product, formula(s), component parts packaging or instructions provided,
prescribed or designed by Medtech or Medtech’s predecessors in interest.
|
11. | Exclusivity |
11.1.
|
During
the term of
this Agreement, Pharmaspray shall not provide any services whatsoever
to
third parties in relation to aerosol products similar to or in any
way
competing with the Product in the United States, Canada and Mexico.
|
11.2.
|
During
the term of
this Agreement, Medtech shall purchase the Product only and exclusively
from Pharmaspray.
|
12. | Duration and Termination |
12.1.
|
This
Agreement shall
become effective for an initial period of three years, starting from
the
Commencement Date. This Agreement may be renewed for additional three
year
periods upon the mutual written consent of the Parties no later than
six
months prior to the then applicable expiration date.
|
12.2.
|
Each
of the Parties
has the right to terminate this Agreement with immediate effect by
giving
written notice if any of the following events shall occur:
|
|
a.
|
the
other party
breaches any of the terms of this Agreement and fails to remedy such
breach within thirty (30) days after written notice requiring to
do so,
unless such breach or failure does not justify this with its consequences
in view of its minor importance;
|
b.
|
the
other party
files a petition for moratorium of payments with the competent court
or is
granted a moratorium of payments;
|
c.
|
the
other party
files a petition for bankruptcy with the competent court or is declared
bankrupt; or
|
d.
|
the
board of
directors of the other party resolves to dissolve or liquidate its
company.
|
12.3.
|
In
case of
termination of the Agreement pursuant to Clause 12.2, the terminating
Party is entitled to receive full compensation for any and all direct
damage suffered by it as a result of the termination and/or, in the
case
of the event stated under Clause 12.2 sub a., any damage suffered
as a
result of such breach.
|
12.4.
|
In
deviation of
Clause 12.1, Medtech may terminate this Agreement with immediate
effect by
giving written notice, without any compensation or damages whatsoever
to
Pharmaspray, if Pharmaspray becomes owned or controlled by or associates
with or merges with a producer who provides production services to
competitors of the Product.
|
13. | Completion after termination |
13.1.
|
Upon
termination of
the Agreement, Medtech is obliged to take delivery of the Materials
and
(semi) Products still in the possession and/or under the control
of
|
Pharmaspray on the expiration date of the Agreement or, in case of termination with immediate effect, within 2 weeks upon such termination, after payment of all outstanding amounts to Pharmaspray. Pharmaspray and Medtech shall mutually agree as to the allocation of costs incurred for raw materials, labels and packaging; provided, that, in the event Medtech terminates this Agreement for any reason other than as set forth in Sections 12.2 and 12.4 hereof, Medtech shall be obligated to purchase from Pharmaspray, at Pharmaspray’s actual cost, any safety stock agreed between Medtech and Pharmaspray; and provided further, that, notwithstanding the foregoing, any breaching Party shall be fully responsible for such costs (including, without limitation, safety stock maintained by Pharmaspray). Medtech shall have the right, but not the obligation, to purchase any finished Products being held in Pharmaspray’s inventory for which no Purchase Orders have been submitted. | |
13.2.
|
If
Medtech
terminates this Agreement prior to purchasing eight million (8,000,000)
units of the Product from Pharmaspray, Medtech shall purchase the
Mold
from Pharmaspray in an amount equal to 250,000 Euros (the purchase
price
for the Mold) multiplied by a fraction the numerator of which is
the
Shortfall Amount (as defined below) and the denominator of which
is
8,000,000. The “Shortfall Amount” shall equal eight million (8,000,000)
units less the number of units of the Product purchased by Medtech
hereunder through the termination date. Upon Medtech’s
purchasing eight million (8,000,000) units of the Product from
Pharmaspray, Pharmaspray shall promptly transfer title to the Mold
to
Medtech.
|
Should the Mold be utilized by Pharmaspray for purposes other than the manufacture of the Product hereunder, the acquisition cost of the Mold to Medtech shall be reduced proportionately to the additional use. |
14. | No Rescission |
14.1
|
The
Parties herewith
expressly waive the right to rescind the Agreement pursuant to Article
265
of Book 6, Dutch Civil Code.
|
15. | Miscellaneous |
15.1.
|
Changes
in the Quality Manual. Subject to the written consent of
Pharmaspray which shall not be unreasonably withheld, delayed or
conditioned, Medtech reserves the right to amend or adapt the Quality
Manual and Schedules to changes in the aforementioned regulation
and
legislation and / or to the introduction of new regulations and /
or
legislation regarding the quality requirements of the Product from
time to
time.
|
15.2.
|
Successors
and Assignments. This Agreement is binding on and for the benefit
of both Parties and their successors and permitted assignees. Neither
Party may assign (its rights under) this Agreement without the prior
written consent of the other party. Pharmaspray shall have no rights
in
the Materials and / or Products of Medtech and may not and shall
not
attempt to assign any interests, either real or presumed, to the
Materials
and /or (Semi) Products of Medtech.
|
15.3.
|
Entire
Agreement. This Agreement represents the entire agreement of the
Parties with respect to its subject matter, and supersedes all prior
proposals, agreements, memoranda and / or understandings with respect
to
this Agreement or its subject matter between Medtech and Wartner
USA B.V.
and Pharmaspray B.V. Any future representation, agreement, understanding
or waiver will only be binding if in writing and signed by the Party
sought to be bound.
|
15.4.
|
Schedules
and Annexes. Each schedule, annex and / or the applicable
provisions of the Quality Manual will become part of and subject
to this
Agreement upon signature and date by both Parties.
|
15.5.
|
Waivers.
Either Party’s failure strictly to enforce any provision of this Agreement
will not be construed as a waiver of that provision or as excusing
the
other Party from future performance.
|
15.6.
|
Notices.
All notices required or permitted under this Agreement shall be in
writing
unless otherwise indicated in this Agreement. The notifying Party
shall
send the written notice to the address of the other Party as shown
at the
beginning of this Agreement and/or any other address as agreed upon
by the
receiving Party. Sent notices will only be effective upon actual
receipt
by the other Party.
|
15.7.
|
Electronic
Mail. The Parties agree that day-to-day communication can also
be
by electronic mail (e-mail). Sent e-mail messages will only be effective
upon actual receipt by the other Party. Notwithstanding the preceding
passages, any message, notice and /or document relating to modification
and/or which affects the effect of this Agreement shall only have
binding
effect if in writing (not being electronic mail and/or other electronic
documents) and with written consent of the Parties.
|
15.8.
|
Confidentiality.
Each Party shall, during this Agreement and after termination and
completion of this Agreement, keep confidential any information whatsoever
regarding the business of the other Party and not provide any third
party
with such confidential information unless with prior written consent
of
the other Party, except as may be reasonably required by judicial
process
or compliance with applicable governmental and regulatory requirements.
|
15.9.
|
Mandatory
Law. This Agreement shall only take effect to the extent that
its
provisions are not contrary to any provision of mandatory (national
and /
or international) law. Any provision of this Agreement being contrary
to
any provision of mandatory law or otherwise being null and void does
not
effect the validity of the other provisions of this Agreement.
|
15.10.
|
General
Terms and Conditions. The applicability of any general terms and
conditions of the contracting Parties, other than those which are
expressly and with written consent of both Parties declared applicable
to
the relationship between Medtech and Pharmaspray under this Agreement,
is
hereby expressly excluded.
|
15.11.
|
Changes
to the Agreement. Provisions that deviate from this Agreement can
be invoked by both Parties only if and to the extent that these provisions
are accepted by both Parties in writing.
|
15.12.
|
Severability.
If any term or condition of this Agreement is null and void or will
become
null and void during the course of this Agreement, the validity and
effectiveness of all other terms and conditions shall not be impaired
thereby. All terms and conditions of this Agreement are separable.
|
16. | Applicable law and jurisdiction |
16.1.
|
This
Agreement is
exclusively governed and construed by Dutch law, as will all disputes
that
may arise from this Agreement. All legal concepts to which reference
is
made in this Agreement are Dutch legal concepts.
|
|
All
disputes,
arising in connection with the present Agreement or further contracts
and
/ or agreements resulting here from, which cannot be settled amicably,
shall be settled by the competent Court of Groningen, The Netherlands,
notwithstanding higher appeals.
|
/s/ Peter J. Anderson | /s/ Jos Schott | ||||
Medtech Products Inc. | Pharmaspray B.V. | ||||
By: Peter J. Anderson | By: Jos Schott | ||||
Treasurer | Managing Director |
Schedules
|
Schedule 1 | Product Definitions and Specification |
Schedule 2 | Suppliers and Materials |
Schedule 3 | Prices, Rates and Charges |
Schedule 4 | Quality Manual |
(i) | To Employer: | Prestige Brands Holdings, Inc. |
90 North Broadway | ||
Irvington, New York 10533 | ||
Attention: Chief Executive Officer |
(ii) | With a copy to: | Prestige Brands Holdings, Inc. |
90 North Broadway | ||
Irvington, New York 10533 | ||
Attention: Legal Department |
(iii) | To the Employee: | John Parkinson |
525 E. 72nd Street, Apt. 4E | ||
New York, New York 10021 |
PRESTIGE BRANDS HOLDINGS, INC. | |||
By: | /s/ Mark Pettie | ||
Name: | Mark Pettie | ||
Title: | Chairman and Chief Executive | ||
Officer | |||
/s/ John Parkinson | |||
John Parkinson |
1.
|
I
have reviewed this
Quarterly Report on Form 10-Q of Prestige Brands Holdings, Inc.;
|
2.
|
Based
on my
knowledge, this report does not contain any untrue statement of a
material
fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were
made,
not misleading with respect to the period covered by this report;
|
3.
|
Based
on my
knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
|
4.
|
The
registrant’s
other certifying officer(s) and I are responsible for establishing
and
maintaining disclosure controls and procedures (as defined in Exchange
Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for
the registrant and have:
|
(a)
|
Designed
such
disclosure controls and procedures, or caused such disclosure controls
and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
|
(b)
|
Designed
such
internal control over financial reporting, or caused such internal
control
over financial reporting to be designed under our supervision, to
provide
reasonable assurance regarding the reliability of financial reporting
and
the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
|
(c)
|
Evaluated
the
effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness
of the
disclosure controls and procedures, as of the end of the period covered
by
this report based on such evaluation; and
|
(d)
|
Disclosed
in this
report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
|
5.
|
The
registrant’s
other certifying officer(s) and I have disclosed, based on our most
recent
evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
(a)
|
All
significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely
to
adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
|
(b)
|
Any
fraud, whether
or not material, that involves management or other employees who
have a
significant role in the registrant’s internal control over financial
reporting.
|
Date:
February 8,
2008
|
/s/
Mark
Pettie
|
Mark
Pettie
|
|
Chief
Executive
Officer
|
1.
|
I
have reviewed this
Quarterly Report on Form 10-Q of Prestige Brands Holdings, Inc.;
|
2.
|
Based
on my
knowledge, this report does not contain any untrue statement of a
material
fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were
made,
not misleading with respect to the period covered by this report;
|
3.
|
Based
on my
knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
|
4.
|
The
registrant’s
other certifying officer(s) and I are responsible for establishing
and
maintaining disclosure controls and procedures (as defined in Exchange
Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for
the registrant and have:
|
(a)
|
Designed
such
disclosure controls and procedures, or caused such disclosure controls
and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
|
(b)
|
Designed
such
internal control over financial reporting, or caused such internal
control
over financial reporting to be designed under our supervision, to
provide
reasonable assurance regarding the reliability of financial reporting
and
the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
|
(c)
|
Evaluated
the
effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness
of the
disclosure controls and procedures, as of the end of the period covered
by
this report based on such evaluation; and
|
(d)
|
Disclosed
in this
report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter
(the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially
affect, the registrant’s internal control over financial reporting; and
|
5.
|
The
registrant’s
other certifying officer(s) and I have disclosed, based on our most
recent
evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
|
(a)
|
All
significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely
to
adversely affect the registrant’s ability to record, process, summarize
and report financial information; and
|
(b)
|
Any
fraud, whether
or not material, that involves management or other employees who
have a
significant role in the registrant’s internal control over financial
reporting.
|
Date:
February 8,
2008
|
/s/
Peter J. Anderson
|
Peter
J.
Anderson
|
|
Chief
Financial
Officer
|
/s/
Mark
Pettie
|
|
Name: Mark
Pettie
|
|
Title:
Chief
Executive Officer
|
|
Date:
February 8,
2008
|
/s/
Peter J. Anderson
|
|
Name: Peter
J. Anderson
|
|
Title: Chief
Financial Officer
|
|
Date: February
8, 2008
|