MEMORANDUM OF UNDERSTANDING
1. Memorandum of Understanding. This Memorandum of Understanding, dated as
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of the 12th day of November, 2001, is by and between The Female Health
Company, a Delaware corporation having its principal office at 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, (The Female Health
Company and its affiliated companies hereinafter referred to as "FHC") and
Hindustan Latex Limited, a company organized under the laws of India,
having its principal office at Latex Bhavan, Poojappura,
Thiruvananthapuram, 695-012, India (Hindustan Latex Limited and its
affiliated companies hereinafter referred to as "HLL").
2. FHC. FHC and its affiliated companies hold all rights and interests in
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and to, and are engaged in the manufacturing of FHC's polyurethane female
condom (the "Product").
3. HLL. HLL is a Government of India Undertaking, fully owned by the
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Government of India, and is engaged in the marketing and manufacture of
various contraceptive devices, other than a female condom.
4. Discussions. FHC and HLL desire to enter into discussions regarding the
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marketing, sale and distribution, and possible manufacturing, of the
Product in India. Subject to the results of such discussions and
preliminary activities contemplated by the parties, the parties intend to
negotiate in good faith formal agreements incorporating the matters set
forth herein, and such other terms and conditions as the parties agree to
in writing. The parties anticipate that their discussions and resulting
activities, if any, will be conducted in four distinct phases, each of
which is described below, consisting of HLL's authorization as marketer and
distributor of the Product in India under Phase I, HLL's processing and
manufacturing of the Product through contract management under Phases II
and III, and a possible joint venture between the parties with respect to
Phase IV.
5. Phase I. Subject to clause 10(b), Phase I shall consist of discussions
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and activities leading to the marketing, sale and distribution of the
Product by HLL in India. Such discussions and activities during the initial
three (3) months following the date hereof shall include, but not be
limited to:
(a) The development of a comprehensive plan between the parties for their
collaboration regarding key areas of activities in all Phases I
through IV.
(b) Ascertaining the requirements and arrangements for the registration of
the Product, to the extent necessary, in India for the manufacture,
marketing, sale and distribution of the Product. Should the parties
agree to HLL distributing the Product in India, such registrations
shall be held jointly in the name of FHC, or its designated affiliated
company, and HLL. In the event any such registration can not be so
held, HLL shall advise FHC as early as it can with respect thereto.
(c) FHC shall provide HLL with such technical assistance as may be
reasonably requested in developing a comprehensive marketing plan for
India, and any other markets identified and agreed by the parties, and
in the training of HLL staff and other participants to be involved in
the marketing of the Product.
(d) HLL shall explore initiatives within the commercial, social marketing
and public sector within India for the promotion and distribution of
the Product, including advocating the inclusion of the Product into
national contraceptive programs. HLL and FHC shall pursue donor
support within India for the purpose of subsidizing the Product. FHC
shall maintain and be responsible for the marketing and distribution
of the Product through the international public sector. Given the
importance of strong community involvement in introducing the female
condom, FHC and HLL will coordinate a series of meetings with national
and state AIDS societies, NGOs and advocacy organizations to discuss
the introduction of the female condom in India. The meetings will
provide an opportunity to discuss strategy and partnerships with the
foregoing organizations and to ensure their full participation in the
promotion and distribution of the female condom.
(e) FHC and HLL shall engage in good faith discussions with the objective
of preparing and executing a definitive agreement for the marketing,
sale and distribution of the Product by HLL in India, and such other
markets as the parties may agree upon from time to time. Such
agreement shall amongst other matters include the following:
(i) In the event HLL shall cause the termination of an agreement(s)
between the parties, HLL shall promptly transfer the applicable
registrations and approvals to FHC or its designee without
charge.
(ii) In the event FHC shall cause the termination of an agreement(s)
between the parties, HLL shall transfer the applicable
registrations and approvals to FHC or its designee for a payment
the amount of which would be decided and settled by negotiation
in good faith and mutual understanding of the relevant factors,
including HLL's costs for resources invested with respect to the
Product.
(iii) In connection with any transfer of registrations and approvals
to FHC, HLL will execute all documents and do all things
reasonably necessary to ensure that FHC will have the benefit of
such registrations and approvals.
6. Phase II. Subject to clause 10(b), Phase II shall consist of discussions
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and activities, and if agreed by the parties following such discussions,
leading to the assembly, lubricating and packaging of the Product by HLL at
its facility located at Thiruvananthapuram in India (the "Facility") within
six (6) months following the date hereof. Such discussions and activities
shall include, but not be limited to:
(a) Prior to the initiation of any activities contemplated under Phase II,
HLL shall review FHC's manufacturing procedures and provide a good
faith detailed estimate of costs and expenses for the assembly,
lubricating and packaging on a per Product basis at the Facility.
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(b) Should the parties agree on HLL undertaking manufacturing by HLL of
the Product at its Facility;
(i) FHC shall initially supply to HLL components consisting of
ringed, tested sheaths and inner rings, and packaging film.
(ii) HLL shall initially supply and source within India lubricant and
boxes/leaflets, as appropriate.
(iii) Assembly and packaging of the Product, and associated
procedures, will be conducted by HLL in accordance with FHC's
specifications, quality control standards, and manufacturing
procedures, including batch release methods. HLL shall document
its compliance with the foregoing and furnish copies thereof to
FHC whenever FHC requests it to do so. Documentation furnished by
FHC and HLL with respect to the foregoing shall be in the English
language.
(iv) The implementation of, and manufacturing under, Phase II shall
continue independent and regardless of whether the parties agree
upon and implement Phase III.
(v) FHC and HLL shall engage in good faith discussions with the
objective of preparing and executing a definitive agreement for
the assembly and packaging of the Product by HLL.
7. Phase III. Subject to clause 10(b), Phase III shall consist of
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discussions and activities leading to the manufacture of the Product by HLL
at the Facility, including sheath welding, complete testing and ring
welding, and inner ring manufacture. Based on such discussions and HLL's
desire to manufacture the Product at its facility, and FHC's determination
as to HLL's capability to manufacture, the activities under Phase III shall
include, but not be limited to:
(a) FHC shall supply the necessary technical expertise, capital equipment,
training, and manufacturing specifications and documentation required
for the manufacturing capability for the Product at the Facility.
(b) All ownership rights and interests in and to the capital equipment,
technology, intellectual properties, manufacturing documentation, and
materials supplied by FHC or its designated vendors shall remain in
FHC, and shall be promptly returned to FHC upon any termination of any
agreement between the parties, provided that HLL shall be compensated
for any such materials that it has procured at its own cost
(c) HLL shall provide sufficient capacity and personnel at the Facility
for manufacturing activities associated with the Product, together
with appropriate manufacturing and technical management and on-site
services.
(d) FHC and HLL shall engage in good faith discussions with the objective
of preparing and executing a definitive agreement for the
manufacturing of the Product by XXX.
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0. Xxxxx XX. Subject to clause 10(b), Phase IV shall consist of discussions
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and collaboration between the parties regarding the development of a latex
variation of the Product and a polyurethane male condom.
9. Infringement and Indemnification. The parties contemplate that the
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definitive agreements shall include, as appropriate, provisions with
respect to intellectual property and indemnifications, in addition to the
terms set out in clause 5(e) above, including:
(a) FHC shall have the exclusive right to maintain its intellectual
property rights, including the right to defend any challenge or
initiate any proceedings with respect thereto as it may reasonably
deem necessary or appropriate under the circumstances.
(b) To FHC's knowledge, none of the technology and know-how to be
furnished by FHC to HLL infringes on any valid and enforceable,
patent, registered design, and/or trademark of any third party, and,
in the event of any such infringement, FHC shall indemnify and hold
HLL and its subsidiaries and affiliated companies harmless against any
third party claims resulting therefrom (including reasonable costs and
attorneys' fees).
(c) HLL shall indemnify and hold FHC and its subsidiaries and affiliated
companies harmless against any third party claims (including
reasonable costs and attorneys' fees) resulting from its inappropriate
use of any technology and know-how furnished by FHC or resulting from
any negligence or willful misconduct by HLL.
(d) FHC shall indemnify and hold HLL and its subsidiaries and affiliated
companies harmless against any third party claims (including
reasonable costs and attorneys' fees) resulting from any defective
supplies, materials, and equipment provided by FHC or resulting from
any negligence or willful misconduct by FHC.
(e) Except for consequential damages included in any third party claim,
neither party shall be liable for any consequential damages (including
but not limited to loss of profit, loss of earnings or revenue, loss
of use, loss of contract or loss of goodwill arising from the
performance or non-performance of obligations under the relevant
agreements) incurred by the other party.
(f) Each party, at its expense, shall be responsible for the defense of
any third party claim under which the other party has claimed
indemnification, provided that the party claiming indemnification has
provided prompt notice of such third party claim and cooperates in
providing information and assistance in the defense thereof.
10. Miscellaneous.
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(a) Unless otherwise specified in writing, each party shall be responsible
for any costs and expenses incurred on its behalf or on behalf of its
affiliates in connection with the discussions and activities
contemplated herein.
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(b) Notwithstanding the other provisions of this Memorandum of
Understanding, this Memorandum of Understanding merely expresses the
intention of each party with respect to the matters provided herein,
and neither creates any obligation or commitment on behalf of FHC or
HLL, other than as provided in paragraphs 10(c) and 10(d) below, nor
shall either party be required to continue any discussions or
activities described herein. Either party shall have the right to
terminate any such discussions or activities free from any further
obligations and without any liability to the other party in law, tort,
equity or otherwise, other than pursuant to the Non-disclosure
Agreement, by giving one (1) month's notice to the other party, at any
time. Any obligations or commitments of any party shall only be as set
forth in an agreement between the parties, as contemplated in
paragraphs 5(e), 6(b)(v) and 7(d).
(c) The parties have entered into the attached Nondisclosure Agreement,
dated as of the date hereof, and the terms and conditions of such
agreement shall be applicable to, and binding upon, the discussions
and activities contemplated in this Memorandum of Understanding.
(d) This Memorandum of Understanding will be governed by and construed in
accordance with the laws of India. Even though no minimum irreducible
obligations of either party are being agreed to under any of the other
clauses of this Memorandum of Understanding, other than paragraph
10(c), in case of a dispute or difference arising between the parties
hereto, the parties shall endeavor to settle such differences and/or
disputes in an amicable manner through mutual negotiation, In case
such dispute or difference cannot be settled, such dispute or
difference shall be referred for arbitration as follows:
(i) All and any disputes or differences arising out of or in
connection with this Memorandum of Understanding, or the breach,
termination or invalidity thereof shall be finally settled by
arbitration in accordance with the UNCITRAL Arbitration Rules as
at present in force ("the UNCITRAL Rules"). The Notice of
Arbitration shall be served in accordance with Article 3 of the
UNCITRAL Rules and the number of arbitrators shall be three, each
such arbitrator not being a citizen or resident of a country of
which either party is a resident, appointed in accordance with
the UNCITRAL Rules.
(ii) The appointing authority for the purpose of the UNCITRAL Rules
shall be the International Chamber of Commerce acting in
accordance with the Rules adopted by the ICC for this purpose.
The ICC shall play no other part in these proceedings].
(iii)The seat of the arbitration shall be in India, under the
jurisdiction of the courts of Mumbai, if the arbitration was
commenced by FHC, and in London, if the arbitration was commenced
by HLL in which case the procedural law of arbitration shall be
that of England and Wales, and, in both cases, the language of
the arbitral proceedings shall be English.
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(iv) All and any awards of the Arbitrators shall be made in accordance
with the UNCITRAL Rules in writing and shall be final and binding
on the parties who expressly exclude all and any rights of appeal
from all and any awards, to the extent that such exclusion may be
validly made. All and any awards shall be made by majority
decision. If there be no majority, the award shall be made by the
presiding arbitrator alone. The final award shall be made within
six months from the appointment of the arbitral tribunal, but
insofar as this is impractical, it shall be made as soon as
possible thereafter.
(v) The parties agree to keep confidential to themselves and to their
legal and professional advisers the existence and details of any
proceedings pursuant to this paragraph 10(d) including the
parties' submissions, documents and evidence, all and any awards
(their content, reasons and result) - save to the extent that
such documents or information are in the public domain or their
disclosure is required by a legal duty or is reasonably necessary
to protect or pursue a legal right or remedy.
(e) Both parties shall take all steps to obtain all necessary approvals,
consents and permissions, including approval from their respective
boards of directors, for giving full effect to this Memorandum of
Understanding and implementing the definitive agreements to be
executed in terms of this Memorandum of Understanding. The parties
acknowledge that in the absence of such approvals, no binding
contracts can be executed between the parties.
FHC HLL
_____________________________ _____________________________
Signature Signature
Name: _______________________ Name: _____________________
Title: ______________________ Title: ____________________
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