HERBAL PRODUCTS SUPPLY AGREEMENT
THIS AGREEMENT is entered into effective as of the 19th day of November,
1997, by and between PharmaPrint Inc., a corporation of the State of Delaware
having its principal place of business at ▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("PharmaPrint") and ▇▇▇▇▇▇ Inc., a corporation of the State of
Colorado, having offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇▇").
WITNESSETH, THAT:
WHEREAS:
▇. ▇▇▇▇▇▇ has developed special processes, know-how, technologies, and trade
secrets giving rise to a specific expertise in the extraction, isolation,
and purification of a variety of herbal products.
▇. ▇▇▇▇▇▇'▇ expertise enables it to produce bulk quantities of desired herbal
extracts which provides competitive advantages to ▇▇▇▇▇▇, and which are
very valuable to ▇▇▇▇▇▇, as ▇▇▇▇▇▇ supplies herbal extracts to many
customers.
C. PharmaPrint desires to secure a coordinated and continuous commercial
supply of certain herbal extracts.
▇. ▇▇▇▇▇▇ represents that it has or will have by no later than December 31,
1997 the ability to manufacture and sell to PharmaPrint certain herbal
extracts, identified below, in commercial quantities utilizing ▇▇▇▇▇▇'▇
"Good Manufacturing Process."
E. PharmaPrint furthermore has developed proprietary technological
information, know-how, trade secrets, and obtained patents and filed patent
applications relating to and/or covering the subjects of Paragraph F below.
F. PharmaPrint has furthermore developed a process for the identification,
characterization of and standardization of the amounts of bioactive
components in herbal extracts (hereinafter referred to as the
"PharmaPrint-Registered Trademark- Process") and is seeking to
commercialize certain herbal extracts upon further characterization and
standardization utilizing the PharmaPrint-Registered Trademark- Process.
G. PharmaPrint further desires to secure a coordinated and continuous
commercial supply of herbal extracts that have been identified,
characterized and standardized using the PharmaPrint-Registered Trademark-
Process.
H. PharmaPrint recognizes and acknowledges the advantages and value of
▇▇▇▇▇▇'▇ expertise and desires ▇▇▇▇▇▇ to utilize the PharmaPrint-Registered
Trademark- Process to manufacture herbal extracts (hereinafter referred to
as "PharmaPrint-Registered Trademark- Herbal Products").
▇. ▇▇▇▇▇▇ represents that it has or will have the ability to manufacture and
sell to PharmaPrint, PharmaPrint-Registered Trademark- Herbal Products in
commercial quantities utilizing ▇▇▇▇▇▇'▇ "Good Manufacturing Process".
NOW, THEREFORE, in consideration of the foregoing and of the covenants,
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Terms defined in this Article I shall for all purposes of this Agreement,
as the same may be amended or supplemented from time to time, have the meaning
herein specified.
1.1 The term "Effective Date" shall mean the date first written herein above.
1.2 The term "FDA" shall mean the Federal Food and Drug Administration of the
United States Department of Health and Human Services or any successor agency
thereto as well as any governmental agencies of comparable jurisdiction in the
Territory and elsewhere.
1.3 The term "GMP" means the good manufacturing practice regulations of the
FDA as described in the United States Code of Federal Regulations or any
successor regulations in the United States and as may be described in comparable
regulations in force in countries within the Territory. For DSHEA Licensed
Products, "GMP" shall mean compliance with the regulations of the United States
Dietary Supplement Health and Education Act of 1994 and comparable regulations
in force in countries within the Territory, and elsewhere as applicable.
1.4 The term "Government Approvals" shall mean any approvals, licenses,
registrations or authorizations, howsoever called, of any United States federal,
state or local regulatory agency, department, bureau or other governmental
entity, including the FDA, and similar Government Approvals in the other
countries within the Territory and elsewhere, necessary for the manufacture,
use, storage, transport or sale, both interstate and intrastate, in the United
States, its territories, possessions and Puerto Rico as well as the other
countries within the Territory and elsewhere. In the case of DSHEA Licensed
Products, the term "Government Approvals" shall mean compliance with the
applicable sections of the United States Dietary Supplement Health and Education
Act of 1994.
1.5 The term "Specifications" shall mean the specifications for the Herbal
Products, PANAX GINSENG, ECHINACEA PURPUREA and VALERIANRIS OFFICINALIS, as
represented in Attachments A, B, and C, respectively, attached hereto.
1.6 The term "PharmaPrint-Registered Trademark- Specifications" shall mean
the specifications as defined from the "Validation Agreement," to be
incorporated into this Agreement at a later date, for the PharmaPrint-Registered
Trademark- Herbal Products, PANAX GINSENG, ECHINACEA PUPUREA and VALERIANRIS
OFFICINALIS.
1.7 The term "PharmaPrint Affiliate" shall mean any company which directly or
indirectly through stock ownership or through other contractual arrangement
either controls, or is controlled by, or is under common control with
PharmaPrint.
1.8 The term "Patent Rights" shall mean any and all issued patents in the
United States, Canada and or Mexico and any and all patent applications for
letters patent pending in the above countries (until such time as such
applications or any of them are denied, abandoned, or issued into patents)
listed in Attachment D attached hereto, any patents issuing from such
applications, all divisionals, continuations, continuations-in-part and all
patents granted thereon, as well as all other patents in the Territory,
including any re-issues, renewals, or extensions thereof, which are owned by
PharmaPrint, a PharmaPrint Affiliate or under which PharmaPrint or a PharmaPrint
Affiliate shall
2
have the right to grant rights, and which claim a PharmaPrint-Registered
Trademark- Process for identifying, characterizing, and standardizing the
amounts of bioactive components in herbal extracts or any Improvements, which
claim has not lapsed, become abandoned or been declared invalid or unenforceable
by a final non-appealed or unappealable decision or judgment of a court or
tribunal of competent jurisdiction.
1.9 The term "Herbal Product(s)" shall mean only the herbal extracts which
are the subject of this Agreement and are or will be produced by ▇▇▇▇▇▇ in the
open market; namely extracts of PANAX GINSENG, ECHINACEA PURPUREA, VALERIANRIS
OFFICINALIS, or any other herbal extracts mutually agreed upon in the future.
1.10 The term "PharmaPrint-Registered Trademark- Herbal Product(s)" shall mean
only extracts of PANAX GINSENG, ECHINACEA PURPUREA, VALERIANRIS OFFICINALIS or
any other herbal extracts mutually agreed to in the future that are manufactured
according to the PharmaPrint-Registered Trademark- Process and the
PharmaPrint-Registered Trademark- Specifications that are to be developed and
supplied to ▇▇▇▇▇▇ by PharmaPrint.
1.11 The term "Improvements" shall mean any and all new and useful processes,
improvements, manufactures, devices, compositions of matter (except as limited
below) or methods of use first conceived, reduced to practice or developed after
the Effective Date and during the term of this Agreement by PharmaPrint, or a
PharmaPrint Affiliate, ▇▇▇▇▇▇ or any employees, consultants or other persons
under their direction or control of said entities which increase the
performance, efficacy or safety of the PharmaPrint-Registered Trademark- Herbal
Product, reduce the cost of manufacture, harmful side-effects or adverse
reactions of the PharmaPrint-Registered Trademark- Herbal Product, or the
practice of the method(s) claimed in any of the patents and/or patent
applications within the Patent Rights. For the avoidance of doubt, the defined
term "Improvements" does not include the PharmaPrint-Registered Trademark-
Herbal Product PER SE.
1.12 The term "Additional Supply Agreement" means the Agreement for the sale
and supply of the herbal extract Saw Palmetto by ▇▇▇▇▇▇ to PharmaPrint as
executed by the parties concurrently with this Agreement.
1.13 The term "Territory" shall mean the United States, its territories,
possessions, Puerto Rico, Canada and Mexico.
1.14 The term "Contract Year" shall mean the year that initially commences on
the Effective Date of this Agreement and running through December 31, 1998.
Subsequent Contract Years will commence on January 1st of each subsequent year
and run through December 31st of that year.
3
ARTICLE II
PURCHASE AND SALE
2.1 ▇▇▇▇▇▇ agrees to and shall manufacture and provide to PharmaPrint and
PharmaPrint agrees to and shall purchase from ▇▇▇▇▇▇ the PharmaPrint-Registered
Trademark- Herbal Products listed below in at least the amounts indicated for
the years there identified, subject to the other provisions of this Agreement.
PharmaPrint-Registered Trademark- Contract Year
Herbal Products
1998 1999 2000
--------------------------------------------------------------------------------
ECHINACEA PURPUREA
Quantity (Kilograms) 15,000 19,000 24,000
PANAX GINSENG
Quantity (Kilograms) 7,500 10,000 12,500
VALERIANRIS OFFICINALIS
Quantity (Kilograms) 7,500 10,000 12,500
2.2 In the future ▇▇▇▇▇▇ may supply PharmaPrint with the PharmaPrint
-Registered Trademark- Herbal Products according to the PharmaPrint
-Registered Trademark- Specifications that are to be determined and mutually
agreed upon between the parties at a future date. ▇▇▇▇▇▇ agrees not to
supply any third party with or itself market for sale any of the PharmaPrint
-Registered Trademark- Herbal Products developed in accordance with the
PharmaPrint "Validation Agreement."
2.3 ▇▇▇▇▇▇ is obligated to supply to PharmaPrint one-hundred percent (100%)
of PharmaPrint's requirements for each of the PharmaPrint-Registered Trademark-
Herbal Products in the Territory; however, nothing in this Agreement shall
preclude ▇▇▇▇▇▇ from supplying or continuing to supply the Herbal Products to
customer's other than PharmaPrint.
2.4 In the 1998 Calendar year ▇▇▇▇▇▇ agrees to manufacture and deliver to
PharmaPrint and PharmaPrint agrees to and shall purchase at least 3,000 kgs
of each PharmaPrint -Registered Trademark- Herbal Product by January 1, 1998,
3,000 kgs of each PharmaPrint -Registered Trademark- Herbal Product by April
15, 1998, and the remaining minimum product requirements listed in Paragraph
2.1, prior to December 31, 1998. By January 30, 1998, PharmaPrint shall
provide ▇▇▇▇▇▇ with a forecast prepared in good faith of its quarterly
requirements of all PharmaPrint -Registered Trademark- Herbal Products for
the following eighteen (18) month period, the initial six (6) month period
thereof being known as the "Initial Forecast". Purchase orders will be
placed by PharmaPrint corresponding to the first three (3) months of the
Initial Forecast. Throughout the term of the Agreement, PharmaPrint shall
further provide ▇▇▇▇▇▇ with a rolling monthly forecast of PharmaPrint's
anticipated requirements of all PharmaPrint -Registered Trademark- Herbal
Products for the subsequent three (3) month period ("Updated Forecast"). The
forecasted requirements of all PharmaPrint -Registered Trademark- Herbal
Products in each Updated, three (3) month, Forecast shall be binding upon
PharmaPrint. After the first Contract Year of this Agreement each subsequent
Updated Forecast shall bind PharmaPrint only to the minimum forecasted
requirements as outlined in Paragraph 2.1, and will be used for the purpose
of assisting ▇▇▇▇▇▇ to procure raw materials and manufacture the PharmaPrint
-Registered Trademark- Herbal Products for the applicable period. PharmaPrint
agrees to purchase a minimum of one-half (1/2) of the yearly purchase
requirements within six (6) months of the second and third Contract Years.
4
2.5 PharmaPrint shall place purchase orders for each of the
PharmaPrint-Registered Trademark- Herbal Products with ▇▇▇▇▇▇ from time to time
specifying the quantities of each of the PharmaPrint-Registered Trademark-
Herbal Products desired, and the places in which and the manner and dates by
which delivery is to be made; said delivery dates are to be no earlier than
ninety (90) days from the date of the purchase order unless otherwise requested
by PharmaPrint and agreed to by ▇▇▇▇▇▇.
2.6 ▇▇▇▇▇▇ shall acknowledge all purchase orders within ten (10) business
days of their receipt. ▇▇▇▇▇▇ shall execute all accepted purchase orders by
delivery of all ordered quantities of the PharmaPrint-Registered Trademark-
Herbal Products no later than the delivery dates provided in the purchase orders
of PharmaPrint to the destination recited therein, unless otherwise requested by
PharmaPrint and agreed to by ▇▇▇▇▇▇.
2.7 To the extent that the terms of any purchase order or acknowledgment
thereof are inconsistent with the terms of this Agreement, the terms of this
Agreement shall control.
2.8 Title and risk of loss will pass to PharmaPrint upon delivery of the
PharmaPrint-Registered Trademark- Herbal Products to the designated carrier of
PharmaPrint at ▇▇▇▇▇▇'▇ manufacturing facility or its storage facility. The
parties agree that ▇▇▇▇▇▇'▇ facilities shall be domestically located unless
otherwise agreed.
2.9 All PharmaPrint-Registered Trademark- Herbal Products supplied by ▇▇▇▇▇▇
to PharmaPrint in response to purchase orders placed by PharmaPrint will conform
to the Specifications and/or the PharmaPrint-Registered Trademark-
Specifications, respectively, and shall be accompanied by the applicable
certificate of analysis. ▇▇▇▇▇▇ shall manufacture all PharmaPrint-Registered
Trademark- Herbal Products under approved Good Manufacturing Procedures
conforming with GMP regulations. Further, ▇▇▇▇▇▇ shall have the sole
responsibility for obtaining all Government Approvals and meeting DSHEA statutes
and rules.
2.10 Should the minimum yearly quantities not be purchased in the applicable
Contract Year then, subject to the provisions and terms of this Agreement,
PharmaPrint agrees to and shall pay ▇▇▇▇▇▇ fifteen percent (15%) of the then per
kilogram price of each of the PharmaPrint-Registered Trademark- Herbal Products
not purchased from ▇▇▇▇▇▇, up to the total of the minimum kilograms per six (6)
months volume requirements set forth above. PharmaPrint agrees to pay ▇▇▇▇▇▇
15% of the per kilogram price of each of the PharmaPrint-Registered Trademark-
Herbal Products not purchased from ▇▇▇▇▇▇ within sixty (60) days of
communicating to ▇▇▇▇▇▇ of its intention not to purchase. Both parties reserve
the right, using due diligence, to offset excess finished goods inventory by
purchasing or selling inventory. PharmaPrint agrees to reimburse ▇▇▇▇▇▇ for any
excess inventory up to 15% maximum penalty. In the event PharmaPrint does not
purchase the minimum yearly amounts or terminates the agreement prior to the
fourth (4th) year of supply PharmaPrint agrees to reimburse ▇▇▇▇▇▇ the cost of
all outstanding raw material inventory. This raw material reimbursement is
predicated on the third (3rd) year annual eighteen (18) month product forecast
volumes outlined in 2.4 of the agreement. Both parties have the right using due
diligence to offset excess raw material inventories by purchasing or selling
excess inventory. PharmaPrint agrees to reimburse ▇▇▇▇▇▇ for any excess
inventory beyond these efforts.
5
2.11 The prices for each Herbal Product for the first Contract Year are set
forth in the table below. All prices for Herbal Products are freight on board
("FOB") ▇▇▇▇▇▇'▇ manufacturing or storage facility, depending on the location
from which ▇▇▇▇▇▇ ships, or as may be agreed to by the parties.
Herbal Products 1st and 2nd Contract Year Price (except
as referenced below)
--------------------------------------------------------------------------------
ECHINACEA PURPUREA $185.00 per Kg
--------------------------------------------------------------------------------
PANAX GINSENG $171.00 per Kg
--------------------------------------------------------------------------------
VALERIANRIS OFFICINALIS $65.00 per Kg
--------------------------------------------------------------------------------
The prices for each PharmaPrint-Registered Trademark- Herbal Product are based
upon herbal product specifications. Any increase in cost due to new PharmaPrint
Herbal Product specifications will be mutually agreed to and negotiated if
necessary. After the second Contract Year, ▇▇▇▇▇▇ may adjust the price of each
PharmaPrint-Registered Trademark- Herbal Product not more than once per Contract
Year upon not less than ninety (90) days written notice to PharmaPrint with
written agreement from PharmaPrint, to adjust for increases in ▇▇▇▇▇▇'▇
manufacturing costs ("Manufacturing Costs"). Any price adjustment hereunder
shall apply only to the PharmaPrint-Registered Trademark- Herbal Products sold
in response to orders placed after the date on which such adjustment becomes
effective. Such increase in price for each PharmaPrint-Registered Trademark-
Herbal Product shall be based on the increase in Manufacturing Cost for that
PharmaPrint-Registered Trademark- Herbal Product but only upon mutual agreement
shall the increase for Manufacturing Cost be greater than that set forth in the
Consumer Price Index applicable at the time the price adjustment is negotiated.
Product price increases may also reflect increases in raw material costs. Raw
material cost increases may not be reflective of the Consumer Price Index costs,
therefore increases in the PharmaPrint-Registered Trademark- Herbal Product
prices due to raw material increases will not be subject to Consumer Price Index
restrictions provided, however, that Herbal Product prices remain competitive
with the world market. PharmaPrint and ▇▇▇▇▇▇ agree that upon written
submission from ▇▇▇▇▇▇ of evidence of adjustments in raw material costs the
PharmaPrint-Registered Trademark- Herbal Product prices may be adjusted once per
year after the first year to reflect such changes. ▇▇▇▇▇▇ shall keep complete
and accurate records of all Manufacturing Costs incurred in the manufacture of
each PharmaPrint-Registered Trademark- Herbal Product to PharmaPrint. ▇▇▇▇▇▇
shall provide access to said records during reasonable business hours to a
certified public accountant selected by PharmaPrint and reasonably acceptable to
▇▇▇▇▇▇, who shall, at PharmaPrint's expense, have access to such records deemed
by such accountant as reasonably necessary in verifying for PharmaPrint, not
more than once each calendar year, such costs incurred by ▇▇▇▇▇▇.
2.12 With regard to the PharmaPrint-Registered Trademark- Herbal Product
VALERIANRIS OFFICINALIS, due to the current uncertainty of raw material costs
the parties agree to a one time review of the price of that
PharmaPrint-Registered Trademark- Herbal Product following the delivery of the
initial 3,000 Kilograms by January 1, 1998. All other price reviews for
Valerian will be limited to and in accordance with the terms listed above.
6
2.13 PharmaPrint shall randomly inspect all shipments of all
PharmaPrint-Registered Trademark- Herbal Product to determine whether or not the
PharmaPrint-Registered Trademark- Herbal Products are in conformity with the
Specifications and/or the PharmaPrint-Registered Trademark- Specifications,
respectively. In the event that any portion of the shipment of
PharmaPrint-Registered Trademark- Herbal Products received by PharmaPrint fails
to conform to the Specifications and/or the PharmaPrint-Registered Trademark-
Specifications, respectively, as mutually agreed upon, PharmaPrint may reject
the non-conforming PharmaPrint-Registered Trademark- Herbal Product shipment by
giving written notice to ▇▇▇▇▇▇ within sixty (60) days of PharmaPrint's receipt
of the PharmaPrint-Registered Trademark- Herbal Products, which notice shall
specify the manner in which the PharmaPrint-Registered Trademark- Herbal Product
failed to meet the Specifications and/or the PharmaPrint-Registered Trademark-
Specifications, respectively. Failing such notification, PharmaPrint will be
deemed to have accepted the PharmaPrint-Registered Trademark- Herbal Product,
and ▇▇▇▇▇▇ shall not thereafter be required to indemnify PharmaPrint for breach
of its warranties under Paragraph 5.2 as to such PharmaPrint-Registered
Trademark- Herbal Product, except for defects not reasonably discoverable by
PharmaPrint in such inspection.
2.14 In the event ▇▇▇▇▇▇ does not agree that any such PharmaPrint-Registered
Trademark- Herbal Product failed to meet the Specifications and/or the
PharmaPrint-Registered Trademark- Specifications, respectively, and PharmaPrint
and ▇▇▇▇▇▇ cannot reach agreement with respect to such PharmaPrint-Registered
Trademark- Herbal Product, ▇▇▇▇▇▇ will submit the question of whether the
PharmaPrint-Registered Trademark- Herbal Product failed to meet the
Specifications and/or the PharmaPrint-Registered Trademark- Specifications,
respectively, to an independent laboratory selected by ▇▇▇▇▇▇ and approved by
PharmaPrint for determination. The findings of such laboratory shall be binding
upon PharmaPrint and ▇▇▇▇▇▇ and the cost of such determination shall be paid by
the party in error.
2.15 Should the analysis of the independent laboratory, chosen in accordance
with Paragraph 2.14, confirm that ▇▇▇▇▇▇ was at fault, ▇▇▇▇▇▇ shall replace any
PharmaPrint-Registered Trademark- Herbal Product not conforming to the
Specifications and/or the PharmaPrint-Registered Trademark- Specifications,
respectively, forthwith, at its expense, or if it is unable to make prompt
replacement, ▇▇▇▇▇▇ shall either credit PharmaPrint's account or refund any
payment made on the non-accepted PharmaPrint-Registered Trademark- Herbal
Product, depending on PharmaPrint's account balance, within forty-five (45) days
of the independent laboratory's written notification of non-conforming
PharmaPrint-Registered Trademark- Herbal Product. PharmaPrint shall return, at
▇▇▇▇▇▇'▇ expense, the non-accepted PharmaPrint-Registered Trademark- Herbal
Product to ▇▇▇▇▇▇.
2.16 Following the signing of required confidentiality agreements ▇▇▇▇▇▇ shall
secure access for PharmaPrint, employees of the Government regarding
Governmental Agencies and PharmaPrint's distributors to the operations and
facilities of ▇▇▇▇▇▇ wherein the PharmaPrint-Registered Trademark- Herbal
Products are manufactured, packaged, tested, labeled, stored and/or shipped.
PharmaPrint and such other entities shall have the right to inspect such
operations or facilities for, INTER ALIA, GMP purposes and on reasonable prior
notice.
7
ARTICLE III
RIGHT TO MANUFACTURE
3.1 In the event that ▇▇▇▇▇▇ is unable at any time to supply commercial
quantities of PharmaPrint-Registered Trademark- Herbal Products for a period of
sixty (60) consecutive days for any reason, including acts of FORCE MAJEURE,
PharmaPrint shall have the right to have a third party manufacture the
PharmaPrint-Registered Trademark- Herbal Products for PharmaPrint. The time of
such manufacture by such third party shall be for a finite duration of
reasonable length in view of the complexity and costs of arranging such change
in the PharmaPrint-Registered Trademark- Herbal Product manufacturing. As used
herein, commercial quantities of PharmaPrint-Registered Trademark- Herbal
Product shall mean total units of PharmaPrint-Registered Trademark- Herbal
Product equal to seventy five percent (75%) of PharmaPrint's quarterly orders of
the preceding two (2) quarters.
3.2 Recognizing that a third party manufacturer ("TPM"), under Paragraph 3.1,
may require technical assistance in manufacturing the PharmaPrint-Registered
Trademark- Herbal Products, if requested by PharmaPrint:
3.2.1 ▇▇▇▇▇▇ shall assist TPM in determining and acquiring machinery
and equipment necessary to manufacture the PharmaPrint-Registered Trademark-
Herbal Products by TPM. Upon request by PharmaPrint ▇▇▇▇▇▇ will assist TPM in
discussions between TPM and equipment manufacturers, subject to the terms and
conditions of subparagraph 3.2.3.
3.2.2 If technical assistance is requested by TPM at the time of
installation of equipment in TPM's plant, one ▇▇▇▇▇▇ engineer will be sent to
TPM's plant, for a maximum period of thirty (30) calendar days, subject to the
terms and conditions of subparagraph 3.3.
3.2.3 PharmaPrint may request the assistance of ▇▇▇▇▇▇'▇ engineers at
TPM's plant whenever necessary during the term of Paragraph 3.4 to solve some
particular problems or complete the training of TPM's engineers. PharmaPrint
will notify ▇▇▇▇▇▇ thirty (30) calendar days in advance of the start-up date of
TPM's plant, and ▇▇▇▇▇▇ shall extend its technical assistance for such start-up
under the terms and conditions set forth below:
3.2.3.1 ▇▇▇▇▇▇ will designate one or more highly qualified
specialists to stay at TPM's plant for a continuous or an interrupted period of
up to a total of thirty (30) calendar days according to the reasonable needs of
TPM. Should a given specialist not be acceptable, TPM may, at any time, upon
fourteen (14) calendar days notice, ask for a replacement of the specialist sent
by ▇▇▇▇▇▇ with someone more qualified, and ▇▇▇▇▇▇ agrees to make a reasonable
effort to furnish such a replacement within this fourteen (14) day period in
order to provide uninterrupted technical assistance.
3.2.3.2 In addition to the assistance mentioned in 3.2.3.1
above, ▇▇▇▇▇▇ will provide, at TPM's request, one highly qualified specialist
for ninety (90) calendar day periods, with or without interruption, until the
technical assistance extended reaches a total of twelve man-months, but in no
event for periods beyond the term of this Agreement.
8
3.3 ▇▇▇▇▇▇'▇ remuneration for technical assistance at TPM's plant shall be as
follows:
3.3.1 PharmaPrint shall pay directly or reimburse upon appropriate
justification the travel and living expenses of ▇▇▇▇▇▇'▇ specialists. In
addition, PharmaPrint shall pay ▇▇▇▇▇▇ an amount equal to three times the Gross
Salary of the specialist divided by 365 days for each working day of each
specialist's absence from ▇▇▇▇▇▇'▇ premises for the purpose of extending
assistance to TPM; and
3.3.2 Such remuneration shall be made within one (1) month after ▇▇▇▇▇▇
invoices PharmaPrint for such reimbursement payments.
3.4 If the procedure of Paragraph 3.1 is implemented, the manufacture of the
PharmaPrint-Registered Trademark- Herbal Products by the third party and its
supply to PharmaPrint shall revert to ▇▇▇▇▇▇ upon, (a) notification to
PharmaPrint from ▇▇▇▇▇▇ that ▇▇▇▇▇▇ is again able to manufacture and supply the
PharmaPrint-Registered Trademark- Herbal Products, and (b) termination of any
third party obligations incurred by PharmaPrint in obtaining supply of the
PharmaPrint-Registered Trademark- Herbal Products pursuant to Paragraph 3.1
hereof. Upon such reversion, the third party manufacturer's right to use the
manufacturing know-how shall terminate within sixty (60) days.
3.5 ▇▇▇▇▇▇ agrees that as to the PharmaPrint-Registered Trademark- Herbal
Products identified in this Agreement and those herbal extracts identified in
the Additional Supply Agreement contemporaneously entered into between the
parties, if PharmaPrint so desires, it may have herbal extracts other than those
identified in the aforementioned Agreements manufactured and sold to it by a
third party manufacturer of PharmaPrint's choice. PharmaPrint agrees to offer
▇▇▇▇▇▇ first right of refusal to manufacture and supply other herbal extracts as
long as ▇▇▇▇▇▇'▇ herbal extracts meet PharmaPrint's quality and price
requirements.
ARTICLE IV
RECALLS AND RETURNS
4.1 In the event of a recall of any of the PharmaPrint-Registered Trademark-
Herbal Products required by a governmental agency or authority of competent
jurisdiction or if a recall of any PharmaPrint-Registered Trademark- Herbal
Product is reasonably deemed advisable by PharmaPrint, such recall shall be
promptly implemented and administered by PharmaPrint in a manner which is
appropriate and reasonable under the circumstances and in conformity with
accepted trade practices. In the event that a recall is required as a result of
▇▇▇▇▇▇'▇ breach of its obligations hereunder, all costs and expenses incurred in
connection therewith shall be borne by ▇▇▇▇▇▇. PharmaPrint shall bear all costs
associated with such recalls not borne by ▇▇▇▇▇▇.
4.2 The provisions and obligations of this Article IV shall survive any
termination or expiration of this Agreement.
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ARTICLE V
WARRANTIES, COVENANTS AND REPRESENTATIONS
5.1 PharmaPrint represents and warrants to ▇▇▇▇▇▇ that the execution of this
Agreement and the full performance and enjoyment of the rights of PharmaPrint
under this Agreement will not breach or in any way be inconsistent with the
terms and conditions of any license, contract, understanding or agreement,
whether express, implied, written, or oral between PharmaPrint and any third
party. ▇▇▇▇▇▇ represents and warrants to PharmaPrint that the execution of this
Agreement and the full performance and enjoyment of the rights of ▇▇▇▇▇▇ under
this Agreement will not breach or in any way be inconsistent with the terms and
conditions of any license, contract, understanding or agreement, whether
express, implied, written, or oral between ▇▇▇▇▇▇ and any third party.
5.2 ▇▇▇▇▇▇ warrants that the PharmaPrint-Registered Trademark- Herbal
Products supplied by ▇▇▇▇▇▇ pursuant to Paragraph 2.1 of this Agreement shall
conform to the Specifications and/or the PharmaPrint-Registered Trademark-
Specifications, respectively, be manufactured in accordance with GMP and shall
comply with all applicable laws in the Territory. Provided, however, that
▇▇▇▇▇▇ does not make any such warranty as to any matters or processes (including
the Specifications and/or the PharmaPrint-Registered Trademark- Specifications)
specified or established by PharmaPrint. Pursuant to the "Validation
Agreement," the specifications will be reviewed and altered if necessary as
agreed by both parties.
5.3 ▇▇▇▇▇▇ shall indemnify, defend and hold harmless PharmaPrint from all
actions, losses, claims, demands, damages, costs and liabilities (including
reasonable attorneys' fees) except as arising from events listed here below in
paragraph 5.4 to which PharmaPrint is or may become subject insofar as they
arise out of or are alleged or claimed to arise out of:
(i) personal injury, death or property damage sustained by any
person(s) resulting from the use of the PharmaPrint-Registered
Trademark- Herbal Products defectively manufactured by ▇▇▇▇▇▇.
(ii) any material breach by ▇▇▇▇▇▇ of any covenants or warranties of
▇▇▇▇▇▇, or
(iii) any grossly negligent or willful act or omission by ▇▇▇▇▇▇ or its
employees, agents or subcontractors
5.4 PharmaPrint shall indemnify, defend and hold harmless ▇▇▇▇▇▇, its
subsidiaries, and employees from all actions, losses, claims, demands, costs and
liabilities (including reasonable attorneys' fees) to which ▇▇▇▇▇▇ is or may
become subject insofar as they arise out of or are alleged or claimed to arise
out of:
(i) any grossly negligent or willful act or omission by PharmaPrint or
its employees, agent or subcontractors,
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(ii) personal injury, death or property damage sustained by any
person(s) resulting from the (A) use of the PharmaPrint-Registered
Trademark- Herbal Product manufactured by PharmaPrint or by a third
party in accordance with Paragraph 3.1 or (B) any matter or process
(including the Specifications and/or the PharmaPrint-Registered
Trademark- Specifications) specified by PharmaPrint or (C) any
changes to or adulteration of the PharmaPrint-Registered Trademark-
Herbal Product after shipment by ▇▇▇▇▇▇ or (D) the
PharmaPrint-Registered Trademark- Herbal Product manufactured by
▇▇▇▇▇▇ if ▇▇▇▇▇▇ has followed the matters or processes (including
the PharmaPrint-Registered Trademark- Specifications) specified and
established by PharmaPrint and in other respects has manufactured
in accordance with GMP and all applicable laws in the Territory,
(iii) any labeling, advertising or promotional materials used by
PharmaPrint, or
(iv) any material breach by ▇▇▇▇▇▇ of any covenants or warranties of
▇▇▇▇▇▇.
5.5 PharmaPrint represents and warrants that to the best of its knowledge and
belief, the manufacture of the PharmaPrint-Registered Trademark- Herbal Products
hereunder does not infringe any third party patents in the United States or
anywhere in the Territory. PharmaPrint undertakes to indemnify and hold
harmless ▇▇▇▇▇▇ against all judgments, decrees, costs and expenses, including
attorney's fees, resulting from any alleged infringement and shall make its best
efforts to defend, upon written request of ▇▇▇▇▇▇, any claim of patent
infringement in the use and/or sale of the PharmaPrint-Registered Trademark-
Herbal Product manufactured by ▇▇▇▇▇▇ under this Agreement. ▇▇▇▇▇▇ shall
provide prompt notice to PharmaPrint of any such claim of patent infringement
and PharmaPrint shall have complete control over any defense or settlement of
such claim.
5.6 ▇▇▇▇▇▇ shall maintain, during the term of this Agreement, comprehensive
general liability insurance with an insurance carrier reasonably acceptable to
PharmaPrint, which insurance policy or policies shall maintain the full products
hazards provisions with the PharmaPrint-Registered Trademark- Herbal Products
hazards limits subject to deductibles not in excess of $10,000 in the aggregate,
and with at least $2,500,000 per occurrence and at least $2,500,000 overall
coverage for claims of bodily injury and property damage arising out of any
loss. Such policy or policies shall extend coverage with respect to occurrence
during a policy period, regardless of the dates on which claims arising for such
occurrences are made, and shall include PharmaPrint as named insured in such
policy or policies. Both parties shall provide notice to the other of any loss,
whether actual or threatened, promptly upon receipt of notice thereof.
5.7 PharmaPrint shall maintain, during the term of this Agreement,
comprehensive general liability insurance with an insurance carrier reasonably
acceptable to ▇▇▇▇▇▇, which insurance policy or policies shall maintain the full
products hazards provisions with the PharmaPrint-Registered Trademark- Herbal
Product hazards limits subject to deductibles not in excess of $10,000 in the
aggregate, and with at least $2,500,000 per occurrence and at least $2,500,000
overall coverage for claims of bodily injury and property damage arising out of
any loss. Such policy or policies shall extend coverage with respect to
occurrence during a policy period, regardless of the dates on which claims
arising for such occurrences are made, and shall include ▇▇▇▇▇▇ as named insured
in such policy or policies. Both parties shall provide notice to the other of
any loss, whether actual or threatened, promptly upon receipt of notice thereof.
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5.8 A party entitled to indemnification hereunder agrees to give prompt
written notice (in no event later than ten (10) business days following its
receipt) to the indemnifying party after the receipt by such party of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such party will claim
indemnification pursuant to this Agreement. Unless, in the reasonable judgment
of the indemnifying party a conflict of interest may exist between the
indemnified party and the indemnifying parry with respect to a claim, the
indemnifying party may assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel with respect to
such claim. The indemnifying party will not be subject to any liability for any
settlement made without its consent, which shall not be unreasonably withheld.
5.9 The provisions and obligations of this Article V shall survive any
termination or expiration of this Agreement.
ARTICLE VI
CONFIDENTIALITY AND PUBLICITY
6.1 In connection with prior related disclosures and work, pursuant to the
Confidential Disclosure Agreement between the parties of January 24, 1997, which
Agreement is incorporated herein by reference, and with the negotiation,
execution and performance of this Agreement, ▇▇▇▇▇▇ and PharmaPrint have had and
will have access to certain confidential and proprietary information of each
other, including, but not limited to, financial data, know-how, trade secrets,
technology, PharmaPrint's Patent Rights relating to the PharmaPrint process and
certain mutual information concerning the identification, characterization and
standardization of the biological active components, their biological activity
and their percent in the composition of the PharmaPrint-Registered Trademark-
Herbal Products of this Agreement. Recognizing that such information is all
confidential and represents valuable assets and property to both parties, and
the harm that may befall such parties if any of such information is disclosed,
▇▇▇▇▇▇ and PharmaPrint agree that for a period of ten (10) years after the
execution of the January 24, 1997, Confidential Disclosure Agreement between the
parties, referred to above, to hold all such information in confidence and not
to use or otherwise disclose any such information to third parties without the
prior written consent of the other party: PROVIDED, HOWEVER, that the
obligations of confidentiality created herein shall cease to apply to
information: (a) that can be demonstrated through documentary evidence to be in,
or to come into, the public domain through no fault of ▇▇▇▇▇▇ or PharmaPrint;
(b) that can be demonstrated through documentary evidence to have been in either
parties possession prior to its disclosure, or can be demonstrated through
documentary evidence to have been later disclosed to either party by a third
party who, to the receiving party's knowledge, was under no obligation to keep
such information confidential; and (c) which, in the written opinion of legal
counsel for either party, is required to be disclosed by law or regulation or by
the rules of any stock exchange on which ▇▇▇▇▇▇'▇ PharmaPrint's securities are
listed, but only to the extent so required and only upon five (5) business days
written notice to and followed by consultation with the other party.
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6.2 ▇▇▇▇▇▇ shall submit to PharmaPrint and PharmaPrint shall submit to ▇▇▇▇▇▇
all advertising, herbal product labeling, herbal product literature, written
sales promotions, press releases and other publicity matters relating in any way
to this agreement or its general subject matter in which ▇▇▇▇▇▇'▇ trademarks,
and/or PharmaPrint's trademarks, the PharmaPrint-Registered Trademark- Process,
or the Herbal Product produced by said process is mentioned or that contains
language from which the connection of said name, trademark,
PharmaPrint-Registered Trademark- Process or the PharmaPrint-Registered
Trademark- Herbal Product made thereby may be implied or inferred and neither
party shall not publish or use such advertising, sales promotion, press release
or publicity matters without either parties prior written consent.
6.3 In the event ▇▇▇▇▇▇ or PharmaPrint or any of their officers, employees or
consultants is requested or required by subpoena, order, discovery request or
similar process or by applicable law or regulation or the rules of any stock
exchange on which such ▇▇▇▇▇▇ or PharmaPrint securities are listed to disclose
any information that is required to be held in confidence pursuant to paragraph
6.1 of this Agreement, and ▇▇▇▇▇▇ or PharmaPrint is required to disclose such
information the disclosing party shall provide advance notice and a copy of the
proposed disclosure to the other party and will consult with the other party
with respect to taking legally available steps to resist or narrow such request
or disclosure. If disclosure of such information is required and ▇▇▇▇▇▇ or
PharmaPrint is required to disclose such information, it shall furnish only
that portion of the information that, in the written opinion of the disclosing
parties counsel, such party is legally required to disclose and shall cooperate
with any action by the non-disclosing party (at the non-disclosing party's
expense) to obtain an appropriate protective order or written or equally
reliable assurance that confidential treatment shall be accorded the information
ARTICLE VII
NON-COMPETITION
7.1 During the term of this Agreement (or until termination) and for a period
of three (3) years thereafter, ▇▇▇▇▇▇ will not engage in the PharmaPrint
-Registered Trademark- Process and/or the production of the
PharmaPrint-Registered Trademark- Herbal Products, as described herein, for
itself or for third parties for marketing and sale.
7.2 ▇▇▇▇▇▇ admits and agrees that no right or license is granted to it or its
customers or clients (by implication or otherwise) by PharmaPrint under its
proprietary technology, know how, or trade secrets or Patent Rights and/or
Trademarks or by the performing of ▇▇▇▇▇▇'▇ obligations to PharmaPrint under and
pursuant to the Development and Verification Agreement, this Agreement or the
Additional Supply Agreements contemporaneously entered into between the parties.
ARTICLE VIII
PAYMENT SCHEDULE
8.1 Payments by PharmaPrint for the PharmaPrint-Registered Trademark- Herbal
Products delivered by ▇▇▇▇▇▇ shall be due and payable thirty (30) days after
such PharmaPrint-Registered Trademark- Herbal Products are received by
PharmaPrint, or PharmaPrint's designated contract manufacturer unless otherwise
agreed to in writing by the parties. In such an event the net thirty (30) day
payments are not met and ▇▇▇▇▇▇ has provided PharmaPrint with due correspondence
of intention and complied with the termination provisions contained herein,
▇▇▇▇▇▇ retains the right to revoke the supply terms.
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ARTICLE IX
DURATION AND TERMINATION
9.1 This Agreement shall continue in full force and effect until December 31,
2000 unless terminated by either party pursuant to the provisions set forth in
this Article X. Further, ▇▇▇▇▇▇ hereby grants PharmaPrint an option to extend
this Agreement on substantially the same terms of this Agreement on a
year-to-year basis if PharmaPrint gives written notice to ▇▇▇▇▇▇ that it is
exercising the option herein granted on or before July 1st of the year in which
this Agreement would otherwise expire by its terms.
9.2 PharmaPrint and ▇▇▇▇▇▇ may terminate this Agreement in its entirety, upon
mutual agreement, at any time upon thirty (30) days written notice to the other
party. At the sole discretion of PharmaPrint, this Agreement can be terminated
per the termination terms and conditions of their AHP DSHEA Herbal Products
Agreement. In such event, PharmaPrint shall remain obligated to purchase under
the terms of purchase orders received or scheduled to be received by ▇▇▇▇▇▇ or
PharmaPrint for at least ninety (90) days herein such quantities of the
PharmaPrint-Registered Trademark- Herbal Product ordered prior to the date
termination becomes effective.
9.3 Either party hereto shall be entitled to terminate this Agreement upon
thirty (30) days written notice to the other party if the other party shall
commit a breach of any material provision hereof and shall not within thirty
(30) days from receipt of notice of such breach by the complaining party remedy
the same (if capable of remedy).
9.4 Insofar as is lawful and legally permissible, this Agreement may be
terminated with immediate effect by a party upon giving written notice to the
other if the other is insolvent or has committed any act of bankruptcy or an
order is made or resolution passed for the winding up of the other party.
9.5 Failure on the part of either party to exercise or enforce any right
conferred upon it hereunder shall neither be deemed to be a waive of any such
right nor operate to bar the exercise or enforcement thereof at any time
thereafter.
ARTICLE X
MISCELLANEOUS
10.1 Any notice required or permitted under this agreement shall be in writing
and deemed to have been sufficiently provided and effectively made as of the
delivery date if hand-delivered with written acknowledge thereof, or as of the
date received if mailed by registered or certified mail, postage pre-paid, and
addressed to the receiving party at its respective address, as follows:
▇▇▇▇▇▇, INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
PHARMAPRINT, INC.
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
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10.2 The relationship of the parties under this Agreement is that of
independent contractors and not as agents of each other or partners or joint
ventures, and neither party shall have the power to bind the other in any way
with respect to any obligation to any third party unless a specific power of
attorney is provided for such purpose. Each party shall be solely and
exclusively responsible for its own employees and operations.
10.3 In the event that the performance of this Agreement or of any obligation
hereunder, other than payment of money as herein provided by either party hereto
is prevented, restricted or interfered with by reason of any cause not within
the control of the respective party, and which could not by reasonable diligence
have been avoided by such party, the party so affected, upon giving prompt
notice to the other party, as to the nature and probable duration of such event
shall be excused from such performance to the extent and for the duration of
such prevention, restriction or interference, provided that the party so
affected shall use its reasonable efforts to avoid or remove such cause of
non-performance and shall fulfill and continue performance hereunder with the
utmost dispatch whenever and to the extent such cause or causes are removed.
10.4 For the purpose of the preceding paragraph but without limiting the
generality hereof, the following shall be considered as not within the control
of the respective party; acts of God, acts or omissions of a governmental
agency, compliance with requests, recommendations, rules regulations or orders
of any governmental authority or any officer, department, agency or instrument
thereof, flood, storms, earthquake, fire, war, riots, insurrection, accidents,
acts of the public enemy, invasion, quarantine restrictions, strike, lockout,
embargoes, delays or failure in transportation and acts of a similar nature.
10.5 Should one of the provisions of this Agreement become or prove to be null
and void, such will be without effect on the validity of this Agreement as a
whole. Both parties will, however, endeavor to replace the void provision by a
valid one which in its economic effect is most consistent with void provision.
10.6 This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of laws.
10.7 This Agreement and the rights and obligations hereunder shall not be
assignable by ▇▇▇▇▇▇ without the previous written consent of PharmaPrint which
consent will not be unreasonably withheld. PharmaPrint may assign this
Agreement (i) in connection with the transfer of all or substantially all of the
business to which it relates without any such consent, and (ii) in whole or in
part to a PharmaPrint Affiliate without any such consent.
10.8 The rights, duties and obligations of Paragraph 2.10 and Articles V, VI,
VII and VIII shall survive the termination or expiration of this Agreement.
10.9 This Agreement and the Agreements referenced herein constitutes the
entire understanding between the parties regarding the subject matter hereof in
the Territory and no party has relied on any representation not expressly set
forth or referred to in this Agreement. No amendment, variation, waiver or
modification of any of the terms or provisions of this Agreement shall be
effected unless set forth in writing, specifically referencing this Agreement,
and duly signed on behalf of the parties hereto.
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10.10 No press release or other public announcement concerning this Agreement
shall be made by either party without the prior written approval of the other
party hereto, which approval shall not be unreasonably withheld, except as
otherwise required by law according to the written opinion of outside legal
counsel. Press releases or other public announcements reasonably required by
law according to the opinion as aforementioned shall be reviewed with the other
party and their comments given due consideration.
IN WITNESS WHEREOF, the duly authorized representatives of the parties
hereto have caused this Agreement to be executed effective as of the date set
forth above.
▇▇▇▇▇▇, INC. PHARMAPRINT INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇.▇. ▇▇▇▇▇▇▇
--------------------------- -------------------------------
Title: COO Title: COO
------------------------ ----------------------------
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