Exhibit 10.31
AGREEMENT
UNAIDS Chartex International
THIS AGREEMENT made this _____ date of ______, 1996 between the Jointed United
Nations Programme on HIV/AIDS (referred to as "UNAIDS") and Chartex
International Plc (referred to as "Chartex");
WHEREAS UNAIDS is interested in introducing new methods for prevention of HIV
infection and Sexually Transmitted Diseases (referred as "STDs"), particularly
in Developing Countries (as hereinafter defined);
WHEREAS Chartex has developed and makes available on a world-wide basis the
female condom which is one such a method;
WHEREAS Chartex is committed and willing to make the female condom available to
the public sector of Developing Countries at preferential and reasonable
prices; and
WHEREAS UNAIDS and Chartex are willing to provide the appropriate resources and
support to enhance the availability and use of the female condom in Developing
Countries and assist developing countries in identifying potential donors to
purchase female condoms.
NOW THEREFORE, in consideration of the foregoing premises and the terms and
conditions set forth herein, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following words and
phrases shall have the meanings as set forth below:
"Developing Countries" means any country other than Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland,
Ireland, Italy, Japan, Luxembourg, Monaco, the Netherlands, New Zealand,
Norway, Portugal, San Marino, Spain, Sweden, Switzerland, the United
Kingdom, and the United States of America. For the purpose of this
Agreement, any republic previously included in the former Union of the
Soviet Socialist Republics and the former Federal Socialist Republic of
Yugoslavia and not otherwise referred to above, as well as of Albania,
Bulgaria, the Czech Republic, Hungary, Poland, Romania, and the Slovak
Republic shall be considered a Developing Country until classified or listed
by the United Nations system either a developed, developing, or a least
developed country. Republics classified or listed as a developing or least
developed country shall be deemed as developing country under this
Agreement.
"Product" means the female condom as manufactured and made available by or
on behalf of Chartex;
"Cost Reduction Programme" means any activity undertaken by or on behalf of
Chartex to reduce the production costs of the Product.
"Public Sector Agencies" means a government, or a department or agency
thereof, a recognised non-profit organization or entity, including
non-governmental organizations, intergovernmental organisations and UNAIDS
"Public Sector Activities" means activities decided and undertaken by or on
behalf of Public Sector Agencies in Developing Countries with regard to the
purchase, distribution and use of the Product, including Social Marketing
Programs which are defined as programs undertaken by or on behalf of Public
Sector Agencies to sell the Product at subsidised prices.
2. Objective of the Agreement. The parties shall, each within the framework
of their respective responsibilities, use their reasonable best efforts to
facilitate the implementation of Public Sector Activities as set forth in this
Agreement.
3. Pricing Strategy. It is the expressed intention of both parties that the
Product (1) shall be made available to the public sector of Developing
Countries as widely as possible in accordance with the terms of this Agreement
and (2) shall be provided by or on behalf of Chartex to Public Sector Agencies
for distribution through the public sector of Developing Countries at
affordable supply prices. UNAIDS recognises that such supply prices
(hereinafter referred to as "Public Sector Price") for the Product should make
the undertaking of this Agreement by Chartex viable, meaning that the sales of
the Product in the public and private sectors of developed and Developing
countries as a whole should be a reasonable undertaking from a commercial
perspective. Without prejudice to the foregoing, the Public Sector Price shall
always be preferential compared to private sector price, it being agreed that
the private sector price shall be set at such level as desired by Chartex.
The Public Sector Price shall be calculated as specified in paragraph 5 and
fixed for each calendar year. In addition, the parties agree that, provided
that the annual volume of sales for Public Sector Activities equals or exceeds
three million units per fiscal year, the Public Sector Price shall, during an
initial three-year term ending December 31, 1999, in no event be greater that
0.38 Pounds Sterling per unit. Based on estimated purchases for 1997, Chartex
agrees to fix the Public Sector Price for the 1997 calendar year at 0.38 Pounds
Sterling per unit.
4. Monitoring of sales. On or before January 31 of each calendar year,
beginning in 1998, Chartex shall provide to UNAIDS a confidential
representation letter, signed and certified by the external auditors of
Chartex's parent company, The Female Health Company, stating the production
costs of the Product as defined herein below, as well as the volume of
production for sales in the private and public sectors of developed and
Developing countries, respectively, over the preceding fiscal year. However,
the parties agree that during the initial three-year term ending 31 December
1999, and provided that (1) the annual volume of sales for Public Sector
Activities equals or exceeds three million units per fiscal year and (2) the
production costs of the Product as defined hereinbelow exceed 0.38 Pounds
Sterling per unit, the aforesaid representation letter may be limited to a
statement of the volume of sales of the Product for Public Sector Activities
over the preceding fiscal year and a confirmation that the production costs of
the Product as defined hereinbelow exceed 0.38 Pounds per unit. In the event
the production costs over the preceding fiscal year are to be stated in the
confidential representation letter, the letter shall also state the projected
production costs of the Product for the running fiscal year, calculated in
accordance with the definition contained in paragraph 5 below, with the
confirmation that such projected costs are the same as the projected production
costs used in Chartex's annual operating plan as approved by the board of
directors of the Female Health Company. At UNAIDS' request, Chartex shall
provide UNAIDS within 30 days, on a confidential basis, with a copy of
pertinent sections of the approved annual operation plan as related to the
projected production costs of the Product as well as any other additional
information UNAIDS may reasonably require in support of the production costs
and volume of production for sales of the Product as set forth in any such
representation letter. The calculation of the Public Sector Price will be
based on the information provided under this paragraph 4, in accordance with
the provisions of paragraph 5 below.
5. Calculation of the annual Public Sector Price. In accordance with
paragraphs 3 and 4, Chartex and UNAIDS shall fix the Public Sector Price for
each calendar year within sixty days of reception of the above mentioned
representation letter. The Public Sector Price shall be equal to the
production costs directly attributable to the manufacture of the Product,
defined, in accordance with generally accepted accounting principles, as the
direct costs of material and labour as well as indirect production costs namely
quality control and safety to comply with Good Manufacturing and Laboratory
Practices, logistics, maintenance, research and development costs and
administration expenses, directly incurred by Chartex in relation with the
Product, but excluding amortisation of capital investment solely related to
manufacture and sale of the Product for the private sector, marketing, sales
and public relation costs. The aforesaid production costs shall be calculated
on the basis of the total volume of production for sales for the private and
public sectors of developed and Developing countries as a whole in the
preceding fiscal year. In the event the projected costs to manufacture the
Product under Chartex's annual operating plan are 10% greater than the
aforementioned calculation, then the Public Sector Price will be the lesser of
0.38 Pounds per unit or the projected cost to manufacture the Product.
However, if at the end of the running fiscal year it appears that the actual
production costs were less than the agreed upon Public Sector Price, the Public
Sector Price for the coming calendar year will be reduced by this lesser
amount. The Public Sector Price shall be reduced each year by the amount of
cost reduction achieved as a result of (1) the Cost Reduction Programme and (2)
increased production economies resulting from increased sales of the Product
worldwide. The agreed Public Sector Price shall be included in an Annex hereto
and become an integral part of this Agreement. The Product shall be made
available at the agreed Public Sector Price ex works (unless otherwise agreed
with the buyers) for any Public Sector Activities.
6. Current Demand Assessment. UNAIDS has prepared, in collaboration with the
WHO Special Programme of Research in Human Reproduction, and delivered to the
Developing Countries, a letter attached hereto in Appendix I, dated 30 August
1996, together with a "Fact Sheet" on the Product and other enclosures thereto,
soliciting expressions of interest in the Product and requesting information as
to estimated purchases of the Product during the calendar years 1997 and 1998.
With regard to that UNAIDS an Chartex shall take the following actions:
a) UNAIDS shall provide such further communications as may be necessary and
appropriate to obtain the information anticipated in the letter and its
annexes, and provide Chartex with a summary thereof for each Developing
Country that has responded (including a list of the Product destinations and
estimated quantities), as applicable, and provide regular follow-ups with
these Developing Countries during the first three (3) months of the term of
the Agreement;
b) UNAIDS shall provide Chartex with a database which includes the names and
contacts of persons responsible for potential purchase of the Product in the
Developing Countries that have responded, independent of whether these
countries have anticipated to purchase the Product in 1997 or not;
c) With respect to purchases made further to the letter at 30 August 1996,
UNAIDS shall provide Chartex with such cooperation and assistance as may be
reasonably requested in obtaining information with respect to forwarding the
Product to the Developing Countries.
7. Product Supply. With respect to supply of the Product for Developing
Counties:
a) Chartex shall assure that its manufacturing facility in London shall
reserve sufficient production capabilities as may be reasonably necessary to
provide an adequate supply of the Product for Public Sector Activities, if
required up to ten percent (10%) of Chartex' total annual production
capacity per year or 6 million units per year, whichever is greater. In the
event that the demand of the Product for the Public Sector Activities
exceeds 10% of Chartex' total annual production capacity or 6 million units
per year, whichever is greater, Chartex shall use reasonable best efforts to
meet such additional demand.
b) In the event the demand for the Product for Public Sector Activities
shall surpass Chartex' production capabilities, Chartex shall use its best
efforts to enhance production capacity at its manufacturing facility within
such period of time as may be reasonably required to achieve the objective
of meeting such demand. In the event Chartex is not able to meet the demand
for Public Sector Activities under the circumstances, Chartex shall
cooperate with UNAIDS in establishing alternative ways to ensure that the
demand for Public Sector activities is met. Chartex shall use all
reasonable efforts to implement these alternatives.
c) Chartex shall be responsible for arrangements for all shipments and
invoicing with respect to purchases of the Product. In this respect,
Chartex shall provide each of the buying Public Sector Agencies with copies
of Chartex's standard forms required for purchases of the Product, including
order request form, product specification, and letter of credit
specification, substantially as set forth in Appendix II attached hereto or
as then currently used by Chartex. Chartex may require that any one order
of Product shall consist of a minimum quality of 1000 units.
d) Chartex, or its parent company on behalf of Chartex, maintains and shall
maintain adequate product liability insurance during the term of this
Agreement.
8. Cost Reduction Programme. Chartex shall review its manufacturing, quality
assurance and testing operations to identify changes to current materials and
manufacturing procedures which will result in possible reductions in related
costs and expenses. Chartex shall implement such changes, provided that they
can be accomplished in a cost-effective and commercially reasonable manner.
9. Special Labeling and packaging. Unless a Public Sector Agency requires
otherwise, Chartex shall make the Product available for Public Sector
Activities under a special labeling as specified in Appendix III. Chartex is
furthermore authorised to include on the external packaging carton for the
Product the following wording:
"This product has been specially prepared and packaged for public sector health
programs"
Chartex shall supply the Product in a bulk package of 1000 female condoms per
box.
10. Education and Social Marketing Support.
a) Education support: UNAIDS, in collaboration with other public sector
partners, will be preparing appropriate educational material for Public
Sector Activities concerning the female condom to be used at different
levels of the health system, including communities and social marketing
programs. Chartex shall furnish to UNAIDS copies of available educational
and instructional materials that facilitate the preparation of Advocacy:
UNAIDS shall promote the use of the female condom at the global level and
toward the National IDS Programs at the country level, insofar as the female
condom can be considered an efficient method for prevention of HIV infection
and STDs. UNAIDS shall also use best reasonable efforts to promote social
marketing approach of the female condom by providing information on the
Public Sector Price as well as such educational and promotional material to
social marketing programs, as UNAIDS may reasonably deem necessary and
appropriate.
b) Public relation and publicity: Chartex shall develop appropriate
advertising strategy, using the usual private sector channels to make the
Product known to the end-users, to the extent as may be commercially
reasonable.
c) Supplies list: Subject to the usual requirements concerning safety,
efficacy, etc., the female condom will be included in the UNAIDS supplies
and equipment list, which catalogues HIV/AIDS materials, at the earliest
opportunity.
d) Overview: From time to time, as may be reasonably appropriate, UNAIDS
shall provide Chartex with an overview of its activities mentioned in the
Agreement.
11. Relationship of the Parties. Nothing in this Agreement shall be deemed to
constitute a partnership between the parties or to constitute either party as
the agent of the other. Without the prior written consent of the other,
neither party shall, in any statement or material of an advertising or
promotional nature refer to the relationship of the other party pursuant to
this Agreement, or to the relationship of the other party to the Product,
unless expressly authorised in this Agreement.
12. Confidentiality. If either party shall receive confidential or
proprietary information of the other party, it shall take all reasonable
measures to keep such information confidential and shall ensure that any
persons having access to such information shall be made aware of and be bound
by the obligations of the receiving party hereunder. However, there shall be
no obligation of confidentiality where:
a) the information is publicly available, or become publicly available
otherwise than by action of the receiving party; or
b) the information was already known to the receiving party (as evidence by
its written records) other than under an obligation of confidentiality prior
to its receipt; or
c) the information was received from a third party not in breach of an
obligation of confidentiality owed to the other party; or
d) the parties have agreed in writing upon the disclosure of the information
The obligations of this paragraph 12 shall continue for a period of five years
after the termination of this Agreement. The terms and conditions contained in
this Agreement shall be subject to the foregoing obligation of confidentiality.
13. Notices. Any notice given under this Agreement must be in writing and
delivered in person, by recognised international courier, by registered mail
postage-prepaid, or by facsimile transmittal (with original confirmation
mailed, as provided above, within two (2) business days of transmittal), to the
following address for each party or to any other address either party
designatees in writing:
a) if to UNAIDS:
00 xxxxxx Xxxxx
XX-0000 Xxxxxx 00
Xxxxxxxxxxx
Attention: Director Policy Strategy and Research
Facsimile No: 41 22 791 4165
b) If to Chartex:
0 Xxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx
Xxxxxx XX00 0XX
Xxxxxxx
Attention: General Manager
Facsimile No. 44 181 453 0324
with copy to: The Female Health Company
Suite 3660, 000 X. Xxxxxxxx Xxx.
Xxxxxxx, Xxxxxxxx 00000
XXX
Attention: President
Facsimile No. 1 312 280 9360
14. Successor and Assigns. This Agreement shall be binding upon the
successors and assignees of the parties hereto and the name of a party
appearing in the Agreement shall be deemed to include the names of its
successors and assignees, provided that nothing herein shall permit any
assignment of this Agreement by either Party without the prior written
agreement of the other (such agreement not to be unreasonably withheld).
15. Term and Termination. The initial term of this Agreement shall be for a
period starting on signature of this Agreement by both parties and ending
December 31, 1999. Thereafter, this Agreement shall automatically continue in
effect, unless terminated by either party effective as of the end of the
initial term or December 31, of any calendar year thereafter, upon not less
than ninety (90) days prior written notice.
16. Survival clause. Notwithstanding any termination of this Agreement, the
rights and obligations of the parties set forth in paragraphs 1,3,4,5,7,11,12,
and 19 shall survive the termination of this Agreement.
17. Force Majeure. A party shall be relieved of its obligations under this
Agreement to the extent and for so long as that party is prevented from
fulfilling such obligations by causes outside its reasonable control, including
but not limited to governmental or official actions or law, labour strikes and
serious adverse weather conditions.
18. Waiver. Neither party waives any breach, or later breach, by failing to
insist on the strict performance of any term or condition of this Agreement or
to exercise any right or remedy available for a breach of this Agreement. If
either party waives any breach, it will not affect this Agreement, and all
terms of this Agreement continue in full force and effect with respect to any
other then existing or later breach.
19. Dispute Resolution. Any dispute relating to the interpretation or
execution of this Agreement shall, unless amicably settled, be subject to
conciliation. In the event of failure of the latter, the dispute shall be
settled by arbitration. The arbitration shall be conducted in accordance with
the modalities to be agreed upon by the parties or, in absence of agreement,
with the rules of arbitration of the International Chamber of Commerce. The
parties shall accept the arbitral award as final.
20. Amendments. Any amendments made to this Agreement shall be agreed by both
parties in writing.
21. Compliance with Laws. The parties shall comply with all applicable laws
and regulations to which they may be subject in the implementation of this
Agreement.
22. Announcement. It is agreed that Chartex shall have the opportunity to
receive public recognition for its commitment made under this Agreement through
a press release to be made by UNAIDS regarding the conclusion of this
Agreement.
Accepted and agreed on behalf of Accepted and agreed on behalf
of
UNAIDS Chartex International Plc
/s/ Xxxxx Xxxx /s/ Xxxx Xxx Xxxxxx, Ph.D
---------------------------- -------------------------------
Name: Xxxxx Xxxx Name: Xxxx Xxx Xxxxxx, Ph.D.
Title: Executive Director Title: Director
Date: 14 March 1997 Date: 20 December 1996
