Document:

Exhibit 10.10

 

SUPPLY AGREEMENT

 

This SUPPLY AGREEMENT
(this “Agreement”) is made and entered into as of March 1, 2004, by and
among Chemdex, Inc., a Kansas corporation (“Supplier”) and Sparhawk
Laboratories, Inc., a Missouri corporation (“Purchaser”):

 

W I T N E S S E T H:

 

WHEREAS, Supplier
and Purchaser have agreed that Supplier will agree to supply to Purchaser and
Purchaser will agree to purchase from Supplier, on and subject to the terms and
conditions hereinafter set forth, bulk quantities of each of Ferric Hydroxide
(a/k/a Dialyzed Iron) and Hydrogenated Dextran solution (a/k/a Dextran
solution) for use in producing 10% Bulk Iron Dextran Solution for veterinary
use (collectively, the “Products”); and

 

NOW THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Supplier and Purchaser hereby agree as follows:

 

1.                                       Commitment
of Purchaser.  Purchaser agrees
during the Term (as defined below) that Purchaser will purchase one hundred
percent (100%) of Purchaser’s Products needs for the manufacture of 10% Bulk
Iron Dextran solution exclusively from Supplier; provided, however,
that Purchaser shall be obligated to purchase Products exclusively from Suppler
only so long as:

 

(a)                                  Supplier
makes available for sale to Purchaser sufficient Ferric Hydroxide and
Hydrogenated Dextran solution, in both cases which meet the Product
specifications set forth on Schedule 1 hereto, to meet all of
Purchaser’s requirements during the Term; and

 

(b)                                 Supplier
is not in material breach of this Agreement, which breach continues uncured in
excess of thirty (30) days following the date written notice reasonably
describing such breach is delivered by Purchaser to Supplier pursuant to the
terms hereof.

 

2.                                       Commitment
of Supplier.  Supplier agrees during
the Term that Supplier will sell Products in the United States of America for
use in producing 10% Bulk Iron Dextran solution for veterinary use exclusively
to Purchaser; provided, however, that Supplier will be obligated
to refrain from selling Products in the United States of America for use in
producing 10% Bulk Iron Dextran solution for veterinary use to any person or
entity other than Purchaser only so long as:

 

(a)                                  Purchaser
purchases no less than XXXX*
kilograms of Ferric Hydroxide and XXXX*
kilograms of Hydrogenated Dextran solution every two (2) calendar quarters
(each, a “Purchase Period”) during the Term; provided, however, that this
condition (a) shall not apply if Supplier materially fails to fill
Purchaser’s orders for Ferric Hydroxide and Hydrogenated Dextran solution with
Products meeting the product specification set forth on Schedule 1
hereto; and

 

(b)                                 Purchaser
is not in material breach of this Agreement, which breach continues uncured in
excess of thirty (30) days following the date written notice reasonably
describing such breach is delivered by Supplier to Purchaser pursuant to the
terms hereof.

 

*  Confidential portions omitted and filed
separately with the Commission.

 

 

3.                                       Price
and Payment.

 

(a)                                  Purchaser
shall provide reasonable advance written notice of no less than thirty (30)
days to Supplier of its requirements, including all applicable specifications
therefor consistent with past dealings between the parties and not inconsistent
with the terms of this Agreement (an “Order”).

 

(b)                                 Purchaser
will quarterly provide Supplier with rolling forecasts projecting Purchaser’s
estimated demand for the Products.  Such
rolling forecasts are intended solely for the purpose of assisting Supplier in
its planning and procurement of materials for Product.

 

(c)                                  During
the Term of this Agreement, Purchaser shall pay to Supplier US$XXXX* per kilogram, dry basis, of Iron
supplied as a Ferric Hydroxide solution and US$XXXX* per kilogram, dry basis, of Dextran supplied as a Hydrogenated
Dextran solution (each such amount is referred to as the “Base Price”);
provided, however, that during the second and each subsequent year of this
Agreement, Supplier may increase the Base Price for each Product, not to exceed
more than XXXX*  percent
(XX*%) per annum, solely for XXXX*
as reasonably documented by written evidence provided by Supplier to Purchaser.

 

(d)                                 During
years 6-10 of this Agreement, Supplier may add to the Base Price of each
Product (as calculated pursuant to paragraph (c) above) a surcharge (the
“Surcharge”) as set forth below:

 

XXXX*

 

The foregoing
Surcharges apply during each specified year, but are not cumulative.

 

(e)                                  During
years 1-5 of this Agreement, the “Price” for each Product shall be the Base
Price calculated as set forth in paragraph (c) above.  During years 6-10 of this Agreement, the “Price” for each Product
shall be the sum of the Base Price calculated as set forth in paragraph (c)
above plus the Surcharge for such year as set forth in paragraph (d) above.

 

(f)                                    Purchaser
shall pay the Price for each Order of Products set forth in the invoice
delivered by Supplier to Purchaser with respect thereto within thirty (30) days
after invoice date (which shall be no earlier than the date the Products are
received by Purchaser) of such Product, unless otherwise agreed to in writing
by the parties hereto.

 

(g)                                 Except
as provided in Section 4(b) below, any national, state, provincial, county
or municipal sales or use tax, excise, or similar charge or any other tax
assessment, license, fee or other charge assessed or charged in the sale of
Products sold to Purchaser by Supplier pursuant to this Agreement shall be the
responsibility of Purchaser, and shall be paid by Purchaser to Supplier with
respect to each Order of Product in addition to the Price.

 

*  Confidential portions omitted and filed
separately with the Commission.

 

2

 

4.                                       Other
Terms and Conditions of Purchase and Sale. 
Unless expressly otherwise agreed in writing by Supplier, all Orders
shall be subject to the following terms and conditions, in addition to those
set forth in the other sections of this Agreement:

 

(a)                                  All
Orders shall be governed exclusively by the terms of this Agreement
notwithstanding in particular but without limitation any terms contained in any
purchase order by Purchaser or acknowledgement of same by Supplier.

 

(b)                                 All
Products are sold by Supplier FOB Lenexa, Kansas.  Supplier shall pay all freight charges, custom charges and duties
and title shall pass to Purchaser when Products are received by Purchaser.

 

(c)                                  Supplier
hereby represents and warrants to Purchaser that all Products sold pursuant to
this Supply Agreement will conform to the product specifications set forth on Schedule 1
attached hereto.  All claims for
nonconformity to such representation and warranty shall be made in writing to
Supplier within forty-five (45) days after delivery thereof.  Supplier shall promptly replace defective
Products with Product that meets the product specifications.  Purchaser agrees to cooperate with Supplier
in connection with remedying any nonconformity and for the return on Supplier’s
instructions and at Supplier’s expense of any defective Products.  The warranty shall be voided if any of the
Products is damaged or altered by Purchaser before correction of any product
defects.

 

(d)                                 SUPPLIER MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
OF OR WITH RESPECT TO THE PRODUCTS OR THE DESIGN, MANUFACTURE OR PERFORMANCE
THEREOF, INCLUDING, WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, AND ALL SUCH WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED AND EXCLUDED.

 

5.                                       Force
Majure;  No Consequential Damages

 

(a)                                  Apart
from any specific provisions in this Agreement excusing any party’s performance
or limiting its liability:

 

(i)                                     Supplier
shall be excused from any failure or delay in performance to the extent
directly or indirectly caused in whole or in part by or otherwise resulting
from unavailability of raw materials, parts or components from usual sources of
supply, unforeseen shortages or unavailability of fuel, transportation failures
or delays, labor disputes or other labor-related problems, governmental orders
or restrictions, inability to obtain or delay in obtaining necessary equipment
or governmental approvals, permits, licenses or allocations, fires, floods,
earthquakes or other acts of nature, accidents, acts of terrorism, civil
disturbance or unrest, war or any other circumstances or events beyond its
reasonable control, provided that Supplier gives Purchaser written notice of
the applicable situation, attempts to continue to perform in part to the extent
it is able, and makes reasonable efforts to alleviate the situation so as to
resume full performance

 

3

 

hereunder.  Under any such circumstances, the affected
party shall have the additional time needed to perform under this Agreement,
unless performance becomes impossible, in which case the nonperforming party
agrees to so notify the party who is to receive the performance as soon as
reasonably possible.  In the event of
any such conditions, Supplier shall have the right to allocate its available
supply as determined in Supplier’s reasonable judgment and Purchaser shall have
the right to purchase Products from other sources during the continuation of
such conditions if its requirements for Products are not met by Supplier.

 

(ii)                                  Neither
Supplier, on the one hand, nor Purchaser, on the other hand, shall be liable to
the other party for any incidental, indirect, consequential or special damages
in connection with any matters relating directly or indirectly to this
Agreement or otherwise relating to the business relationship of the parties,
even though such party may have been advised by the other party of the
possibility of such damages.

 

(iii)                               This
Agreement is executed by the parties with full knowledge of their respective
termination rights hereunder.  No party
hereto shall be liable to any other party for compensation, reimbursement for
investments or expenses, lost profits, incidental or consequential damages, or
damages of any other kind or character, because of any exercise of such rights.

 

6.                                       Term.  The commitments of the parties hereunder
shall become effective as of the date hereof and shall, unless terminated
earlier as provided in Section 11 hereof, continue until the date ten (10)
years from the date hereof (the “Term”).

 

7.                                       License.

 

(a)                                  Supplier
hereby grants Purchaser, at no cost, for the duration of the Term of this
Agreement an exclusive, non-transferable, royalty-free license to use the DMF
(Drug Master File) for 10% Bulk Iron Dextran Solution in the name of Supplier
required by the United States Food and Drug Administration (DMF # 336)
(the “10% Bulk Iron Dextran Solution DMF”). 
Supplier shall deliver to Purchaser possession and control of the 10%
Bulk Iron Dextran Solution DMF. 
Purchaser hereby agrees that it will not, at any time, directly or
indirectly, do or cause to be done any act in any way impairing Supplier’s
right, title and interest in and to the 10% Bulk Iron Dextran Solution DMF.

 

(b)                                 Purchaser
shall be at all times during the Term be responsible for all aspects of
production and quality control of the 10% Bulk Iron Dextran Solution and shall
maintain the Drug Master File with respect thereto in compliance with the
then-current standards of the United States Food and Drug Administration and
other applicable regulatory authorities. 
In the event that Purchaser transmits or receives any communication,
memorandum or other correspondence to or form any regulatory agency, including,
without limitation the United States Food and Drug Administration, concerning
the production, efficacy, safety, labeling or any other matter relating to 10%
Bulk Iron Dextran Solution, Purchaser shall provide a copy of same to Supplier
within two (2) business days after transmittal or receipt thereof.

 

4

 

8.                                       Lease
of Equipment.

 

(a)                                  During
the Term of this Agreement, Supplier hereby leases to Purchaser, without cost,
the equipment owned by Supplier listed on Schedule 2 attached
hereto (the “Equipment”).

 

(b)                                 Supplier
shall retain ownership of the Equipment. 
Purchaser shall not remove the Equipment from Purchaser’s facilities located
at 12340 Santa Fe Trail Drive, Lenexa, Kansas without Supplier’s prior written
consent.  Purchaser shall plainly and
conspicuously mark or otherwise adequately identify the Equipment as “Property
of Chemdex, Inc.” and, if requested by Supplier, execute all documents
necessary to effectively protect Supplier’s ownership interest in the Equipment
against creditors of Purchaser or other third parties.  Purchaser hereby irrevocably waives the
right of set off with respect to the Equipment.

 

(c)                                  The
Equipment, while in the custody or control of Purchaser, shall be held at
Purchaser’s risk and shall be insured 
by Purchaser against loss, theft, fire or other casualty in an amount
equal to the current market value therefore. 
During the Term hereof, Purchaser shall pay all personal property taxes
due with respect to the Equipment. 
Purchaser shall reasonably maintain the Equipment at its own
expense.  No material modification to
the Equipment shall be made without the prior written consent of Supplier.

 

(d)                                 Upon
termination of this Agreement for any reason, Purchaser agrees to, at the
election of Supplier, remove the Equipment, prepare for shipment and deliver
same in good condition, reasonable wear and tear excepted, to or at the
direction of Supplier pursuant to written instructions, or provide Supplier
reasonable access in order for Suppler to conduct such removal.  In the event that Supplier elects to have
Purchaser conduct such removal, Supplier agrees to pay all costs associated
with the preparation and removal of the equipment, including, but not limited
to shipping costs.

 

(e)                                  THE EQUIPMENT IS PROVIDED TO PURCHASER “AS IS” AND
SUPPLIER MAKES NO WARRANTY, EXPRESS, IMPLIED OR OTHERWISE, OF OR WITH RESPECT
TO THE EQUIPMENT OR THE DESIGN, CONSTRUCTION OR PERFORMANCE THEREOF, INCLUDING,
WITHOUT LIMITATION, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, AND ALL SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED AND
EXCLUDED.

 

9.                                       Indemnification.

 

(a)                                  Supplier
will indemnify and hold Purchaser, its affiliates and subsidiaries, and all of
their respective affiliates, subsidiaries, shareholders, officers, directors,
employees, agents, assignees and successors harmless from and against any and
all damages, judgments, liabilities, costs, losses and expenses, including
attorneys’ fees and amounts paid in settlement arising from any demand, suit or
claim (collectively, “Losses”) incurred by Purchaser resulting from acts or
omissions of Supplier or arising out of a breach by Supplier of any of its

 

5

 

representations, warranties, agreements, covenants or
obligations under this Agreement; provided, however, that (i)
Supplier shall not be required to indemnify Purchaser to the extent such Losses
arise from the negligence of Purchaser or breach of this Agreement by Purchaser
, and (ii) no settlement by Purchaser of any claim which would give rise to
liability on the part of Supplier shall be made without the prior written
consent of Supplier.

 

(b)                                 Purchaser
will indemnify and hold Supplier, its affiliates and subsidiaries, and all of
their respective affiliates, subsidiaries, shareholders, officers, directors,
employees, agents, assignees and successors harmless from and against any and
all Losses incurred by Supplier resulting from acts or omissions of Purchaser
or arising out of a breach by Purchaser of any of its representations,
warranties, agreements, covenants or obligations under this Agreement; provided,
however, that (i) Purchaser shall not be required to indemnify Supplier
to the extent such Losses arise from the negligence of Supplier or breach of
this Agreement by Supplier, and (ii) no settlement by Supplier of any claim
which would give rise to liability on the part of Purchaser shall be made without
the prior written consent of Purchaser.

 

(c)                                  This
Paragraph 9 shall survive the termination of this Agreement.

 

10.                                 Confidential
Information.

 

(a)                                  Purchaser
and Supplier each have disclosed and/or may disclose to the other directly or
indirectly, through officers or employees, under this Agreement and previous
agreements and relationships, written and oral information for the sole purpose
of producing Products, 10% Bulk Iron Dextran Solution and finished goods
incorporating the Products, and complying with governmental requirements
relating to the manufacture and sale thereof. 
Such information, as well as other Confidential Information disclosed in
the past or future by either party to the other, or its officers or employees,
is confidential and shall not be disclosed by the recipient to third parties,
or used by the recipient for any purpose except as provided herein without the
prior written consent of the disclosing party. 
“Confidential Information” as used herein includes all information
relating to the Product, finished goods incorporating the Products, or future
products similar or relating to the Products, any specifications, plans,
technology, trade secrets, manufacturing procedures and other technical
information, the Equipment, marketing and sales plans, or any financial and
cost data relating to the Products and finished goods incorporating the
Products.

 

(b)                                 Confidential
Information shall be maintained by employees of Purchaser and Supplier in
confidence, and shall be disclosed only to those employees who need to know
such information for purposes of the performance of their duties consistent
with this Agreement.  This
Section 10 shall not restrict the use of information that becomes
generally available to the public, or which became or becomes known to either
party through lawful means prior to, during or after the term of this Agreement
from sources under no obligation of confidentiality to the disclosing party, or
as a result of disclosure, or other act, by either of the parties to this Agreement.

 

6

 

(c)                                  All
Confidential Information shall remain the sole property of the disclosing party
and shall be returned by the other party to the disclosing party promptly upon
request, together with all copies made thereof.  Nothing in this Agreement shall be construed as, or deemed to be
a transfer or license to either party of the other party’s rights in
Confidential Information.

 

(d)                                 At
the expiration of the 10 year Term of this Agreement, the obligations of the
parties under this Section 10 shall terminate.

 

11.                                 Default;
Remedies.  This Agreement may be
terminated (a) for cause upon written notice by either party to the other in
the event that the other party has failed to perform any material obligation
arising hereunder or in respect of any Order placed hereunder and such failure
continues uncured for more than thirty (30) days after delivery of written
notice by the party exercising the right to terminate under this subclause (a)
to the other party specifying in reasonable detail the failure(s) of
performance on which the termination is based; provided, however, that either
party shall only be obligated to deliver such notice and allow such opportunity
to cure prior to termination of this Agreement twice over the term of this
Agreement, (b) immediately with or without notice by either party in the event
that the other party becomes insolvent, ceases to do business as a going
concern, has a material portion of its assets seized, attached, levied upon or subject
to a receivership or assignment for the benefit of creditors, becomes a debtor
in any voluntary or involuntary case under the United States Bankruptcy Code as
from time to time in effect and/or admits in writing its inability to pay its
debts generally as they become due or to perform hereunder. In addition, each
party shall have all rights and remedies provided under the Uniform Commercial
Code and/or other applicable law as from time to time in effect.  Termination shall not affect the liability, if
any, of either party for breach of this Agreement.

 

12.                                 Relationship
of the Parties.  All work or
obligations performed by either party hereunder shall be performed as an
independent contractor and not as an agent of the other party.  Each party acknowledges that it does not
have authority to obligate or bind the other party in any way.  No provision of this Agreement shall be
construed to create an agency, a partnership or a joint venture between the
parties hereto.

 

13.                                 Governing
Law; Waiver of Jury Trial.

 

(a)                                  This
Agreement shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this
Agreement shall be governed by, the internal laws of the State of Kansas,
without giving effect to provisions thereof regarding conflict of laws.

 

(b)                                 Each
of the parties hereto hereby irrevocably waives any and all right to trial by
jury of any claim or cause of action in any legal proceeding arising out of or
related to this Agreement or the transactions or events contemplated hereby or
any course of conduct, course of dealing, statements (whether verbal or
written) or actions of any party hereto. 
The parties each agree that any and all such claims and causes of action
shall be tried by the court

 

7

 

without a jury. 
Each of the parties further waives any right to seek to consolidate any
such legal proceeding in which a jury trial has been waived with any other
legal proceeding in which a jury trial cannot or has not been waived.

 

14.                                 Other
Provisions.

 

(a)                                  Any
action for breach of this Agreement (other than claims for payment of the Price
of the Product) shall be commenced within one (1) year after the cause of
action has accrued.

 

(b)                                 This
Agreement shall in no way restrict the right of Supplier to sell (i) Products
for use in producing 10% Bulk Iron Dextran solution for veterinary use to
customers other than Purchaser outside of the United States of America, or (ii)
Products for use other than producing 10% Bulk Iron Dextran solution for
veterinary use to customers other than Purchaser within or outside of the
United States of America.

 

(c)                                  Any
waiver of any of the terms of or performance due under this Agreement shall
apply only to the specific matter involved and will not be deemed to constitute
a waiver of other or future rights or obligations hereunder.

 

(d)                                 This
Agreement, including Schedule 1 and Schedule 2 attached
hereto, together with the Orders hereunder, constitute the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
and contemporaneous discussions, negotiations and prior proposals regarding the
subject matter hereof.

 

(e)                                  This
Agreement may not be amended except by a writing signed by Purchaser, Supplier.

 

(f)                                    Any
notices, consents or other communications required to be sent or given
hereunder by any of the parties shall in every case be in writing and shall be
deemed properly served if (i) delivered personally, (ii) sent by registered or
certified mail, in all such cases with first class postage prepaid, return
receipt requested, (iii) delivered by a recognized overnight courier service,
or (iv) sent by facsimile transmission to the parties at the addresses as set
forth below or at such other addresses as may be furnished in writing.

 

If to Purchaser to:

 

Sparhawk Laboratories,
Inc.

12340 Santa Fe Trail Drive

Lenexa, Kansas

Attention:  Bert Hughes

Facsimile:  (913) 888-6741

 

If to Supplier to:

 

8

 

Chemdex, Inc. 

c/o Dextran Products, Inc.

421 Comstock Road

Toronto, Ontario, Canada  M1L 2H5

Attention:  George G. Usher

Facsimile:  (416) 755-0334

 

Date of service of such
notice shall be (w) the date such notice is personally delivered, (x) three (3)
business days after the date of mailing if sent by certified or registered
mail, (y) one (1) business day after date of delivery to the overnight courier
if sent by overnight courier or (z) the next succeeding Business Day after
receipt of a facsimile (provided that a transmission confirmation sheet is
emitted from such facsimile machine).

 

(g)                                 No
party hereto may assign or subcontract its rights or obligations under this
Agreement without the prior written consent of the other party hereto; provided,
however, that Supplier may assign or subcontract its rights and/or obligations
under this Agreement to an entity controlled by or under common control with
Supplier without the consent of Purchaser upon written notice thereof to
Purchaser.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

 

(h)                                 The
headings in this Agreement are inserted for convenience only and are in no way
intended to describe, interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof.

 

(i)                                     The
provisions hereof shall be deemed independent and severable, and the invalidity
or partial invalidity or unenforceability of any one provision or portion
hereof shall not affect the validity or enforceability of any other provision
hereof.

 

(j)                                     This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.

 

(k)                                  The
language used in this Agreement will be deemed to be the language chosen by the
parties hereto to express their mutual intent, and no rule of strict
construction will be used against any party hereto.

 

[End of document

signature page follows]

 

9

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed and delivered as of
the date set forth above, each by an officer thereunto duly authorized.

 

 

SPARHAWK
LABORATORIES, INC.

 

	
  By:  

  	
  \s\
  E. Bert Hughes

  	
   

  	
   

  
	
   

  	
  E. Bert Hughes,
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  CHEMDEX, INC.

  
	
   

  	
   

  	
   

  
	
  By:  

  	
  \s\
  George G. Usher

  	
   

  	
   

  
	
   

  	
  George G. Usher,
  President

  	
   

  

 

10

 

SCHEDULE 1

 

Product Specifications

 

	
  Product:

  	
   

  	
  Dialysed Iron (Ferric Hydroxide)

  

 

XXXX*

 

	
  Product:

  	
   

  	
  Hydrogenated Dextran Solution for Manufacture of

  10% Hydrogenated Iron Dextran

  

 

XXXX*

 

*  Confidential portions omitted and filed
separately with the Commission.

 

11

 

SCHEDULE 2

 

Equipment

 

	
  Asset ID

  	
   

  	
  Description

  	
   

  	
  Manufacturer

  	
   

  	
  Serial

  Number

  	
   

  	
  Sparhawk
  ID

  	
   

  
	
  000013-1

  	
   

  	
  Stainless Steel Tank, XXXX*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Tank #1

  	
   

  
	
  000013-1

  	
   

  	
  Stainless Steel Tank, XXXX*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Tank #19

  	
   

  
	
  000013-1

  	
   

  	
  Stainless Steel Tank, XXXX*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Tank #55

  	
   

  
	
  000014-1

  	
   

  	
  Ultra Filtration System
  – XXXX*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  UF-A

  	
   

  
	
  000014-1

  	
   

  	
  Ultra Filtration System
  – XXXX*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  UF-B

  	
   

  
	
  000014-1

  	
   

  	
  Ultra Filtration System
  - Pump/Romicon Filters

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  000015-1

  	
   

  	
  Pump

  	
   

  	
  APV

  	
   

  	
  H-6898-94

  	
   

  	
   

  	
   

  
	
  000016-1

  	
   

  	
  Factory Scales, XXXX*

  	
   

  	
  Weigh-Tronix

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  000021-1

  	
   

  	
  Reactor

  	
   

  	
  Pfaudler

  	
   

  	
  E18040121

  	
   

  	
  Vessel #6

  	
   

  
	
  000023-1

  	
   

  	
  5% Bulk Iron Reactor

  	
   

  	
  Pfaudler

  	
   

  	
   

  	
   

  	
  Vessel #22

  	
   

  
	
  000004-1

  	
   

  	
  Lab Equipment

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  000027-1

  	
   

  	
  HPLC Differential
  Refactometer

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  000028-1

  	
   

  	
  Autosampler

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*  Confidential portions omitted and filed
separately with the Commission.

 

12Exhibit
10.11

 

Execution Copy

 

THIS INSTRUMENT WAS ORIGINALLY ISSUED ON
MARCH 4, 2004, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.

 

THIS INSTRUMENT IS SUBJECT TO THE TERMS AND
CONDITIONS OF THAT CERTAIN SUBORDINATION AGREEMENT DATED MARCH 4, 2004,
AMONG COMMERCE BANK, N.A., C3 CAPITAL PARTNERS, L.P., WALCO INTERNATIONAL,
INC., CHEMDEX, INC. AND SPARHAWK LABORATORIES, INC. (THE ‘‘SUBORDINATION
AGREEMENT’’).

 

1

 

SPARHAWK
LABORATORIES, INC.

 

UNSECURED
SUBORDINATED NOTE

 

	
  March 4, 2004

  	
   

  	
  $350,000.00

  	
   

  

 

FOR VALUE RECEIVED, Sparhawk Laboratories,
Inc. (the ‘‘Company’’) hereby promises to pay to Chemdex, Inc., a Kansas
corporation (‘‘Chemdex’’), the principal amount of $350,000.00 together with
interest thereon calculated from the date hereof in accordance with the
provisions of this Note.

 

1.                                       Payment of
Interest.   Interest shall accrue at
the rate of 13% per annum (computed on the basis of a 365-day year and the
actual number of days elapsed in any year) on the unpaid principal amount of
this Note outstanding from time to time, or (if less) at the highest rate then
permitted under applicable law.  The
Company shall pay to Chemdex all interest accrued on the outstanding principal
amount of this Note during the twelve (12) months immediately preceding the
anniversary of the date of this Note on each of the first, second, third,
fourth and fifth anniversaries of the date of this Note; provided, however, the
Company shall have the right on each of the first, second, third and fourth
anniversaries of the date of this Note to add all or a portion of such accrued
interest to the outstanding principal amount of this Note on such anniversary
date.  Any portion of the accrued
interest that is not paid to Chemdex on the first, second, third or fourth
anniversaries of the date of this Note shall automatically be added to the
outstanding principal amount of this Note and shall bear interest at the same
rate at which interest is then accruing on the outstanding principal amount of
this Note.  All unpaid interest that is
added to the outstanding principal amount of this Note shall become due and
payable in full on the fifth anniversary of the date of this Note, as provided
in Section 2(a) below.  Interest
shall accrue on the outstanding principal amount of this Note until such time
as payment therefore is actually remitted to Chemdex.

 

2.                                       Payment of
Principal on Note.

 

(a)                                                          Scheduled
Payment.  Subject to any voluntary
prepayment permitted pursuant to Section 2(b) below, all outstanding
principal on this Note shall be due and payable in full upon the fifth
anniversary of the date of this Note.

 

(b)                                                         Prepayments.  Subject to the terms of the Subordination
Agreement, the Company may make prepayments of principal of this Note (each a
‘‘Prepayment’’) at any time and from time to time, in each case without premium
or penalty, provided that, in connection with the Prepayment of the entire
unpaid principal balance of this Note, the Company shall also pay all accrued interest
to, but not including, the date of such Prepayment.  The Company agrees, upon Chemdex’s request from time to time, to
furnish Chemdex with a written accounting of the outstanding principal amount
of and accrued interest due on this Note.

 

2

 

3.                                       Cancellation.  After all principal and accrued interest at
any time owed on this Note have been paid in full, this Note shall be
surrendered to the Company for cancellation and shall not be reissued.

 

4.                                       Payments.  All payments to be made to Chemdex shall be
made in the lawful money of the United States of America.

 

5.                                       Place of
Payment.  Payments of principal and
interest shall be remitted to Chemdex at the address specified below for
notices, or to such other address or to the attention of such other person as
specified by prior written notice to the Company.

 

6.                                       Business Days.  If any payment is due, or any time period
for giving notice or taking action expires, on a day which is a Saturday,
Sunday or legal holiday in the State of Kansas, the payment shall be due and
payable on, and the time period shall automatically be extended to, the next
business day immediately following such Saturday, Sunday or legal holiday, and
interest shall continue to accrue at the required rate hereunder until any such
payment is made.

 

7.                                       Usury Laws.  It is the intention of the Company and
Chemdex to conform strictly to all applicable usury laws now or hereafter in
force, and any interest payable under this Note shall be subject to reduction
to the amount not in excess of the maximum legal amount allowed under the
applicable usury laws as now or hereafter construed by the courts having
jurisdiction over such matters.  If the
maturity of this Note is accelerated by reason of an election by Chemdex
resulting from an Event of Default, or otherwise then earned interest may never
include more than the maximum amount permitted by law, statute, rule or
regulation, computed from the date hereof until payment, and any interest in
excess of the maximum amount permitted by law, statute, rule or regulation
shall be canceled automatically and, if theretofore paid, shall at the option
of Chemdex either be refunded to the Company or credited on the principal
amount of this Note, or if this Note has been paid, then the excess shall be
refunded to the Company.  The aggregate
of all interest (whether designated as interest, fees, or otherwise) contracted
for, chargeable, or receivable under this Note shall under no circumstances
exceed the maximum legal rate upon the unpaid principal balance of this Note
remaining unpaid from time to time.  If
such interest does exceed the maximum legal rate, it shall be deemed a mistake
and such excess shall be canceled automatically and, if theretofore paid,
refunded to the Company or credited on the principal amount of this Note, or if
this Note has been repaid, then such excess shall be refunded to the Company.

 

8.                                       Financial
Statements.  So long as there
remains unpaid principal and accrued interest outstanding under this Note, the
Company shall furnish to Chemdex:

 

(i)                                     as
soon as available but in any event within thirty (30) days after the end of
each quarterly accounting period in each fiscal year, unaudited consolidating
and consolidated statements of income and cash flows of Company for such
quarterly period and for the period from the

 

3

 

beginning of the fiscal year to the end of
such quarterly period, and unaudited consolidating and consolidated balance
sheets of Company as of the end of each quarterly period, setting forth in each
case comparisons to Company’s corresponding period in the preceding fiscal
year, and all such statements shall be prepared in accordance with generally
accepted accounting principles consistently applied (except for any financial
periods prior to the date hereof) subject to the absence of footnote
disclosures and to normal year-end adjustments for recurring accruals, and
shall be certified by Company’s chief executive officer; and

 

(ii)                                  within
one hundred twenty (120) days after the end of each fiscal year, consolidating
and consolidated statements of income and cash flows of Company for such fiscal
year, and consolidating and consolidated balance sheets of Company as of the
end of such fiscal year, setting forth in each case comparisons to Company’s
preceding fiscal year, all prepared in accordance with generally accepted
accounting principles consistently applied (except for any financial periods
prior to the date hereof) and certified by BKD, LLP or other independent
accounting firm acceptable to the Senior Lenders (as defined in the
Subordination Agreement) or, if the Senior Liabilities (as defined in the
Subordination Agreement) have been fully paid and satisfied, reasonably
acceptable to Chemdex.

 

9.                                       Events of
Default.  Time is of the essence in
the payment and performance of this Note. 
The occurrence of any of the following shall constitute an ‘‘Event of
Default’’ for purposes of this Note:

 

(i)                                     Subject
to Company’s right to defer the payment of accrued interest pursuant to
Section 1 above, Company fails to make any payment of principal or
interest when due under this Note, and such failure continues for a period of
five (5) business days thereafter;

 

(ii)                                  Company
fails to pay any amount due or perform any other material obligation under that
certain Warrant and Repurchase Agreement, dated March 4, 2004, by Company
to Chemdex, and such failure continues for fifteen (15) or more business days
thereafter; or

 

(iii)                               Company
commences any proceeding with respect to its bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation, or
any such proceeding is commenced against Company and either (a) Company by any
act indicates its approval thereof, consent thereto or acquiescence therein or
(b) such proceeding is not dismissed within sixty (60) days thereafter.

 

Upon the occurrence of any Event of Default,
and at any time thereafter as long as such Event of Default is continuing,
Chemdex may, at its option, declare the entire outstanding principal balance
and accrued interest hereunder immediately due and payable, and Chemdex shall
have all of the rights and remedies available under applicable law.  The

 

4

 

Company agrees that if this Note is placed in
the hands of an attorney for collection, it shall, to the extent permitted by
applicable law, pay Chemdex its reasonable attorneys’ fees and all court costs.

 

10.                                 Construction.  The Company and Chemdex have participated
jointly in the negotiation and drafting of this Note.  In the event an ambiguity or question of intent or interpretation
arises, this Note shall be construed as if drafted jointly by the Company and
Chemdex, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Note.

 

11.                                 Governing Law.  This .Note shall be governed and
construed in accordance with the laws of the State of Kansas, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Kansas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Kansas.

 

12.                                 Replacement.  Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of Chemdex shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of this Note, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Company, or, in the case of any such mutilation
upon surrender of this Note, the Company shall (at its expense) execute and
deliver, in lieu thereof, a new Note of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated Note and dated the
date of such lost, stolen, destroyed or mutilated Note.

 

13.                                 Notices.  All notices and other communications
provided for herein shall, unless otherwise stated herein, be in writing and
shall be personally delivered or sent by certified mail, postage prepaid, by
prepaid overnight nationally recognized courier, or by facsimile, to the
intended party at the address or facsimile number of such party set forth as
follows:

 

If to Chemdex:

 

Chemdex, Inc.

c/o Polydex Pharmaceuticals Limited

421 Comstock Road

Toronto Ontario Canada M1L 2H5

Attn:  President

Facsimile No. 416-755-0334

 

If to the Company:

 

Sparhawk Laboratories, Inc.

12340 Santa Fe Trail Drive

Lenexa, Kansas 66215

 

5

 

Attention: Bert Hughes

Facsimile No. (913) 888-6741

 

or at such other address or facsimile number
as shall be designated by such party in a written notice to the other parties
hereto.  All such notices and
communications shall be effective (a) if personally delivered, when delivered,
(b) if sent by certified mail, three (3) days after having been deposited in
the mail, postage prepaid, (c) if sent by overnight courier, one business day
after having been given to such courier, or (d) if transmitted by facsimile,
upon confirmation of transmission by sender’s facsimile equipment.

 

14.                                 Certain Waivers.  The Company hereby waives diligence,
presentment, protest and demand and notice of protest and demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time, all without in any way affecting
the liability of the undersigned for all obligations and liabilities under this
Note.

 

15.                                 No Assignment.  Neither this Note nor Chemdex’s rights
hereunder may be assigned or transferred by Chemdex without the Company’s prior
written consent thereto, which consent may be withheld or denied by Company in
the exercise of its sole discretion. 
Any purported assignment or transfer by Chemdex without such consent
shall be invalid and without legal effect, in which event Company may continue
to satisfy its payment and other obligations under this Note by directing its
payments and other performance to Chemdex. 
Notwithstanding the foregoing, Chemdex may assign and transfer this Note
and all of its rights hereunder to any entity which is controlled by, controls,
or is under common control with, Chemdex if Chemdex furnishes Company prior
written notice of the name and address of such assignee for purposes of
Company’s performance hereunder.

 

16.                                 No Security.  This Note is an unsecured obligation of the
Company.

 

17.                                 No Right of Set-off.  Chemdex shall have no right to set-off any
obligation owed to the Company against amounts payable by the Company under this
Note.

 

18.                                 Subordination
Agreement.  The rights of Chemdex
under this Note are subject to the terms of a Subordination Agreement, dated
March 4, 2004, by and among the Company, Chemdex, Commerce Bank, N.A., C3
Capital Partners, L.P. and Walco International, Inc.

 

[Remainder
of page intentionally left blank; signature page follows.]

 

6

 

IN WITNESS WHEREOF, the undersigned has
executed and delivered this Note on March 4, 2004.

 

	
   

  	
  SPARHAWK LABORATORIES, INC.

  
	
   

  	
  a Missouri corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ E. Bert Hughes

  
	
   

  	
   

  	
  Name:

  	
  E. Bert Hughes

  
	
      
  

  	
   

  	
  Title:

  	
  President

  

 

7

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