<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q AMENDED
(Mark One)
( X )
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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OR
( )
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to ________________________
Commission file number 0-11997
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CARRINGTON LABORATORIES, INC.
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(Exact name of registrant as specified in its charter)
Texas 75-1435663
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 Walnut Hill Lane, Irving, Texas 75038
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(Address of principal executive offices and Zip Code)
214-518-1300
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
8,429,915 shares of Common Stock, $.01 par value were outstanding at October 31,
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1995.
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CARRINGTON LABORATORIES, INC., and Subsidiaries
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibits:
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10.1 Sales Distribution Agreement between Academy of Sciences
and Carrington Laboratories, Inc. dated August 16, 1995.
10.2 Sales Distribution Agreement between Academy of Sciences
and Carrington Laboratories, Inc. dated August 16, 1995.
10.3 Sales Distribution Agreement between Academy of Sciences
and Carrington Laboratories, Inc. dated August 16, 1995.
10.4 Supply and Distribution Agreement between Medical
Polymers, Inc. and Carrington Laboratories, Inc. dated
September 15, 1995.
10.5 Clinical Services Agreement between Pharmaceutical
Product Development, Inc. and Carrington Laboratories,
Inc. dated July 10, 1995.
10.6 Non-exclusive Sales and Distribution Agreement between
Innovative Technologies Limited and Carrington
Laboratories, Inc. dated August 22nd, 1995.
10.7 Supplemental Agreement to Non-Exclusive Sales and
Distribution Agreement between Innovative Technologies
Limited and Carrington Laboratories, Inc. dated
October 16, 1995.
10.8 Product Development and Exclusive Distribution Agreement
between Innovative Technologies Limited and Carrington
Laboratories, Inc. dated November 10, 1995.
11.1 Computation of Net Income Per Common and Common
Equivalent Share
b. Reports on Form 8-K
-------------------
No report on Form 8-K was filed by the Company during the
quarter ended September 30, 1995.
2
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CARRINGTON LABORATORIES, INC., and Subsidiaries
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SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARRINGTON LABORATORIES, INC.
(Registrant)
Date: November 27, 1995 By /s/ Carlton E. Turner
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Carlton E. Turner,
President
Date: November 27, 1995 By /s/ Sheri L. Pantermuehl
----------------------------------------
Sheri L. Pantermuehl,
Chief Financial Officer
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EXHIBIT 10.1
SALES DISTRIBUTION AGREEMENT
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THIS AGREEMENT is made and entered into as of the 16th day of August, 1995,
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by and between CARRINGTON LABORATORIES, INC., a Texas corporation
("Carrington"), and CHINESE ACADEMY OF SCIENCES ("Academy").
W I T N E S S E T H :
WHEREAS, Carrington is engaged in the business of manufacturing, selling
and distributing certain pharmaceutical products and is desirous of establishing
a competent distribution source for sales of such products in The Peoples
Republic of China (defined in Article I hereof as the Territory); and
WHEREAS, the Academy is desirous of aggressively distributing such products
in the Territory and is willing and able to provide a competent distribution
organization in the Territory, and the Academy desires to be Carrington's
exclusive sales distributor for such products in the Territory;
NOW, THEREFORE, the parties hereto, in consideration of the premises and
mutual covenants and undertakings herein contained, agree as follows:
Article 1. Definitions
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1.1 As used in this Agreement, the following terms shall have the meanings
specified in this Article 1.1:
(a) "Products" shall mean the consumer products manufactured by or for
Carrington set forth on Exhibit A hereto. Carrington may, in its sole
---------
discretion from time to time, add consumer products to, and delete
products from, Exhibit A to take into account the development,
---------
modification or discontinuance by Carrington of consumer products.
(b) "Territory" shall mean the following countries: The Peoples Republic
of China.
Article 2. Appointment
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2.1 Subject to the terms and conditions of this Agreement, Carrington
hereby appoints the Academy as Carrington's sales distributor in the Territory
for the sale of Products, and the Academy hereby accepts such appointment. As
sales distributor in the Territory, the Academy shall, subject to the terms and
conditions of this Agreement, have the right to sell Products in the Territory,
but shall have no right to sell Products outside the Territory. During the term
of this Agreement, Carrington agrees not to appoint any other persons as
distributors for the Products in the Territory nor directly sell any Products
within the Territory. Furthermore, in case of inquiries for Product Sales from
the Territory, directly to Carrington, Carrington shall forward such inquiries
to the Academy for further handling.
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2.2 In a manner reasonably satisfactory to Carrington, and at the
Academy's sole expense, the Academy agrees to (a) make all declarations,
filings, and registrations with, and obtain all approvals and authorizations
from, governmental and regulatory authorities required to be made or obtained in
connection with the promotion, marketing, sale or distribution of the Products
in the Territory, (b) devote its best efforts to the diligent promotion,
marketing, sale and distribution of the Products in the Territory, (c) provide
and maintain a competent and aggressive organization for the promotion,
marketing, sale and distribution of the Products in the Territory and (d) assure
competent and prompt handling of inquiries, orders, shipments, billings and
collections, and returns of or with respect to the Products and careful
attention to customers' requirements for all Products, (e) promptly assign back
to Carrington any product registrations in the Territory upon termination of
Agreement.
2.3 In a manner reasonably satisfactory to the Academy and Carrington,
Carrington agrees to provide mutually agreed upon quantities of Products to the
Academy for testing the Products at the beginning of the three (3) month period
(the "Initial Period") after the first purchase order is accepted by Carrington.
This Initial Period shall commence when the Academy receives the relevant
approval indicated in 2.2 and submits its first order to Carrington.
Nevertheless, the Academy will use best efforts to start the test as soon as
possible after signing the Agreement. Carrington agrees to provide reasonable,
mutually agreed upon quantities at a 50% price discount from the Carrington
Price List attached after receiving positive results from the initial test and
obtaining all approvals and authorizations indicated above. The payment for the
Products for this additional period will be made at the trial sale. The payment
for the Products sold for this additional period shall be made with the
placement of the formal order under the price list for the China Market after
the conclusion of the initial three (3) month period.
2.4 Carrington will provide the Academy, without direct charge from
Carrington, with such (i) reasonable sales personnel training in relation to the
Products in Irving, Texas and (ii) a reasonable amount of promotional Product
literature of Carrington, as the Academy may request from time to time. The
Academy will be responsible for any travel, hotel or other related charges
associated with the training. Carrington agrees that it will be responsible for
any of its direct expenses associated with travel, lodging or meals by
Carrington employees to China.
2.5 Carrington and the Academy will mutually agree upon the holding of a
Seminar in Beijing, China after an agreement is reached on the minimum sales for
the first contract year.
2.6 Carrington agrees to consider the establishment of a manufacturing
facility in China, based upon appropriate Product sales and profitability of its
operations in China. This manufacturing facility may be in joint venture with
appropriate Chinese partners.
2.7 During the term of this Agreement, Both Parties shall be considered
independent contractors and neither shall not be considered a partner, employee,
agent or servant of the other. As such, neither party has the authority of any
nature whatsoever to bind the other or incur any liability for or on behalf of
the other or to represent itself as anything other than a sales distributor and
independent contractor or supplier, as the case may be.
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Article 3. Certain Performance Requirements
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3.1 The Academy agrees to promote, market, sell and distribute the
Products only to customers and potential customers within the Territory for
ultimate use within the Territory. The Academy will not, under any
circumstances, either directly or indirectly through third parties, promote,
market, sell, distribute or ship Products within or to, or for ultimate use
within, the United States or any place outside the Territory.
3.2 In order to assure Carrington that the Academy is not repatriating
Products to the United States or elsewhere outside the Territory, the Academy
agrees that upon request from Carrington. Carrington may examine, and copy at
the Academy's headquarters:
(a) All invoices related to the sale of Products by the Academy;
(b) All sales reports on the number and price of units of each Product
sold;
(c) All monthly inventory reports of the Products; and
(d) The Academy also agrees that Carrington may mark for identification all
Products sold by Carrington to the Academy hereunder.
3.3 The Academy shall maintain a sufficient inventory of Products to
assure an adequate supply of Products to serve all its market segments. The
Academy shall maintain all its inventory of Products clearly segregated and
meeting all storage and other required standards of all applicable governmental
authorities. All such inventory shall be subject to inspection by Carrington or
its agents at all reasonable times.
3.4 The Academy shall provide a report to Carrington no later than January
15 and July 15 of each year regarding the previous six-month period ended
December 31 and June 30, respectively. The report shall contain (i) reports on
sales of Products by the Academy during such six-month period, by Product, and
including information on the number and price of units sold, (ii) a current list
of customers and (iii) any other information that the Academy believes would be
useful to Carrington or that Carrington may reasonably request.
3.5 The Academy shall be responsible for and shall collect all
governmental and regulatory sales and other taxes, charges and fees that may be
due and owing upon sales by the Academy of Products. Upon written request from
the Academy, Carrington shall provide the Academy with such certificates or
other documents as may be reasonably required to establish any applicable
exemptions from the collection of such taxes, charges and fees.
3.6 All Products shall be packaged, labeled, advertised, marketed, sold
and distributed by the Academy in compliance with the rules and regulations of
the applicable governmental authority within the Territory in which the Products
are marketed, as amended from time to time, and all other applicable laws, rules
and regulations.
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3.7 The Academy agrees not to make, or permit any of its employees, agents
or representatives to make, any claims of any properties or results relating to
any Product, unless such claims have received written approval from Carrington
and from the applicable governmental authority.
3.8 The Academy shall not use any label, advertisement or marketing
material on or with respect to or relating to any Product unless such label,
advertisement or marketing material has first been submitted to and approved by
Carrington in writing.
3.9 The Academy agrees that Carrington shall have the right to inspect the
Academy's facilities at all reasonable times to ensure the Academy's compliance
with the provisions of this Agreement.
3.10 The Academy will actively and aggressively promote the sale of the
Products to all customers and potential customers within the Territory. The
Academy agrees not to market, sell or distribute to any customers or potential
customers in the Territory any wound care, skin care, incontinence care or other
pharmaceutical products that compete with any of the Products.
Article 4. Sale of Products by Carrington to The Academy
- --------- ---------------------------------------------
4.1 Subject to the terms and conditions of this Agreement, including
specifically Article 4.6 hereof, Carrington shall sell to the Academy its
requirements for the Products at a price for each Product (the "Contract Price")
which represents a mutually agreed upon discount from Carrington's distributor
price for the Territory for such Product as set forth in Carrington's published
distributor price list (the "Published Price List"). For orders placed by the
Academy during the first 12-month period of the term of this Agreement, the
Contract Prices for the Products listed on Exhibit A are set forth on such
---------
exhibit opposite each Product. At least 60 days prior to the end of each 12-
month period of the term of this Agreement, the parties shall commence good
faith negotiations to determine and agree upon the Contract Prices for Products
for the next 12-month period of the term. Carrington reserves the right to
change its distributor prices for Products as set forth in the Published Price
List at any time and from time to time for the next 12 month period. However,
any price changes shall be discussed and negotiated in relation to the specified
minimum and if no agreement is reached, the Academy has no obligation to
purchase products from Carrington.
4.2 Carrington shall sell the same products to the Academy as it
manufactures and sells in the United States; provided however, the parties may
agree to produce Chinese labels and other product information once a sufficient
quantity of products is ordered.
4.3 As consideration for its appointment as exclusive sales distributor
entitled to a Product discount, the Academy agrees to purchase from Carrington,
during each 12-month period of the term of this Agreement, commencing with the
12-month period beginning January 1, 1996 or such other date as mutually agreed
upon, at the Contract Price, a specified minimum aggregate dollar amount (based
on the Contract Price) of the Products (the "Specified Minimum Amount").
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For the first 12-month period of the term of this Agreement, the Specified
Minimum Amount shall be agreed upon at lease sixty days prior to January 1, 1996
or such other date as mutually agreed upon. If no amount is reached, this
Agreement shall no longer be exclusive. The Specified Minimum Amounts for each
subsequent 12-month period shall be determined by mutual agreement of the
parties prior to the beginning of such period based on the Academy's reasonable,
good faith projections of future sales growth and such other factors as the
parties may deem relevant.
4.4 The Academy shall order Products by submitting a purchase order to
Carrington describing the type and quantity of the Products to be purchased.
The minimum order shall be 100 cases of one or assorted Products. Orders are
subject to by Carrington's consent. All purchases shall be spaced in a
reasonable manner. The Academy shall pay all invoices in full prior to shipment
pursuant to Article 17 hereafter. The Academy shall pay directly or reimburse
Carrington for all applicable taxes, assessments, duties, charges and fees,
however designated (including import and export charges), imposed by any taxing
or other governmental authority (including United States authorities), by reason
of the sale and delivery by Carrington, and purchase by the Academy, of Products
hereunder, except for any taxes based upon Carrington's income. Carrington
shall give the Academy notice of these charges prior to delivery. If the
Academy refuses to pay for such charges, no shipment shall be made hereunder.
All sales and payments shall be made, and all orders shall be accepted, in the
State of Texas.
4.5 Carrington shall not be obligated to ship Products to the Academy at
any time when payment of an amount owed by the Academy is overdue or when the
Academy is otherwise in breach of this Agreement.
4.6 All shipments of Products to the Academy will be packaged in
accordance with Carrington's standard packaging procedures and shall be suitable
for long distance by air or sea with the appropriate handling information agreed
to by the Parties.. All Contract Prices are F.O.B., Carrington's facility,
Dallas or Irving, Texas. Ownership of and title to Products and all risks of
loss with respect thereto shall pass to the Academy upon delivery of such
Products by Carrington to the carrier at the designated delivery (F.O.B.) point.
Deliveries of Products shall be made by Carrington under normal trade conditions
in the usual and customary manner being utilized by Carrington at the time and
location of the particular delivery.
4.7 Carrington shall use its reasonable best efforts to ensure
availability of all Products ordered by the Academy under this Agreement.
However, if necessary in the best judgment of Carrington, Carrington may
allocate its available supply of Products among all its customers, distributors
or other purchasers, including the Academy, on such basis as it shall deem
reasonable, practicable and equitable, without liability for any failure of
performance or lost sales which may result from such allocations.
4.8 Except as may be expressly stated by Carrington on the Product or on
Carrington's packaging, or in Carrington's information accompanying the Product,
at the time of shipment to the Academy hereunder, CARRINGTON MAKES NO
REPRESENTATIONS OR
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WARRANTIES OF ANY KIND WITH RESPECT TO THE PRODUCTS, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. CARRINGTON NEITHER ASSUMES NOR AUTHORIZES ANYONE TO ASSUME FOR IT ANY
OBLIGATION OR LIABILITY IN CONNECTION WITH THE PRODUCTS. the Academy shall not
make any representation or warranty with respect to the Products that is more
extensive than, or inconsistent with, the limited warranty set forth in this
Article 4.8 or that is inconsistent with the policies or publications of
Carrington relating to the Products.
THE ACADEMY'S EXCLUSIVE REMEDY FOR BREACH OF ANY WARRANTY HEREUNDER IS THE
DELIVERY BY CARRINGTON OF ADDITIONAL QUANTITIES OF THE PRODUCTS IN REPLACEMENT
OF THE NON-CONFORMING PRODUCTS OR THE REFUND OF THE CONTRACT PRICE FOR THE
PRODUCTS THAT ARE COVERED BY THE WARRANTY, AT THE ACADEMY'S OPTION. CARRINGTON
SHALL HAVE NO OTHER OBLIGATION OR LIABILITY FOR DAMAGES TO THE ACADEMY OR ANY
OTHER PERSON OF ANY TYPE, INCLUDING, BUT NOT LIMITED TO, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES, LOSS OF PROFITS OR OTHER COMMERCIAL OR ECONOMIC LOSS, OR
ANY OTHER LOSS, DAMAGE OR EXPENSE, ARISING OUT OF OR IN CONNECTION WITH THE
SALE, USE, LOSS OF USE, NONPERFORMANCE OR REPLACEMENT OF THE PRODUCTS.
THE ACADEMY SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CARRINGTON AND ITS
AFFILIATES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, FROM
AND AGAINST ALL CLAIMS, LIABILITIES, DEMANDS, DAMAGES, EXPENSES AND LOSSES
(INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) ARISING OUT OF OR CONNECTED
WITH (I) ANY USE, SALE OR OTHER DISPOSITION OF PRODUCTS BY THE ACADEMY OR ANY
OTHER PARTY, (II) ANY BREACH BY THE ACADEMY OF ANY OF ITS REPRESENTATIONS,
WARRANTIES OR COVENANTS UNDER THIS AGREEMENT OR (III) ANY ACTS OR OMISSIONS ON
THE PART OF THE ACADEMY OR ITS AGENTS, SERVANTS OR EMPLOYEES WHICH ARE OUTSIDE
OR BEYOND THE ACADEMY'S AUTHORIZATION GRANTED HEREIN.
4.9 Credits on defective Products by the Academy will be calculated by
Carrington based on the original Contract Price of the items returned, whether
identified by lot number or another method.
4.10 Carrington shall provide the Academy evidence of its standard
liability coverage and certificate of insurance and shall endeavor to have the
Academy included in a Third Party beneficiary thereunder.
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Article 5. Term and Termination
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5.1 The initial term of this Agreement shall be for a period of five (5)
years from the date of this Agreement. After such initial term, this Agreement
shall be automatically extended for an additional term of three (3) years,
unless this Agreement is terminated at the end of the initial five-year term by
written notice given by either party to the other party not less than six months
prior to the end of such initial term. Notwithstanding the foregoing, this
Agreement may be terminated earlier in accordance with the provisions of this
Article 5.
5.2 Regardless of Article 5.1, either party hereto may terminate this
Agreement effective at any time after January 1, 1998, by giving the other party
at least six months' prior written notice of termination.
5.3 Either Party has the absolute right to terminate this Agreement if the
other parties fails to perform or breaches, in any material respect, any of the
terms or provisions of this Agreement. Without limiting the events which shall
be deemed to constitute a breach or material breach of this Agreement by the
Academy, the Academy understands and agrees that it shall be in material breach
of this Agreement, and Carrington shall have the right to terminate this
Agreement under this Article 5.3, if:
(i) The Academy fails or refuses to pay to Carrington any sum when
due;
(ii) The Academy breaches any provision of Article 2.2, 3.1, 3.3,
3.6, 3.8, 3.10, 4.4, 4.8, 6 or 7; or
(iii) The Academy fails to purchase the Specified Minimum Amount of
Product for any required period.
5.4 Either Party has the absolute right to terminate this Agreement in the
event the other shall become insolvent, or if there is instituted by or against
the other procedures in bankruptcy, or under insolvency laws or for
reorganization, receivership or dissolution, or if the other loses any franchise
or license to operate its business as presently conducted in any part of the
Territory.
5.5 This Agreement shall automatically terminate effective at the end of
any 12-month period of the term of this Agreement referred to in Articles 4.1
and 4.3 hereof if the parties are unable to agree upon the Contract Prices or
the Specified Minimum Amount for the next 12-month period of the term.
5.6 During the one-year period following termination of this Agreement,
any inventory of Products held by the Academy at the termination of this
Agreement may be sold by the Academy to customers in the Territory in the
ordinary course; provided, however, that for the period required to liquidate
such inventory, all of the provisions contained herein governing the Academy's
performance obligations and Carrington's rights shall remain in effect. In
order to
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accelerate the liquidation of any such inventory, Carrington may buy back, if
the Academy agrees but not the obligation, to purchase all or any part of such
remaining inventory at the price at which the inventory was originally sold by
Carrington to the Academy. Carrington shall give first priority to buying back
such inventory.
5.7 The termination of this Agreement shall not impair the rights or
obligations of either party hereto which shall have accrued hereunder prior to
such termination. The provisions of Articles 4.8, 6, 7 and 15 and the rights
and obligations of the parties thereunder shall survive the termination of this
Agreement for a period of three (3) years.
Article 6. Trademarks and Trade Names
- --------- --------------------------
6.1 All trademarks, trade names, service marks, logos and derivatives
thereof relating to the Products (the "Trademarks"), and all patents, technology
and other intellectual property relating to the Products, are the sole and
exclusive property of Carrington or its affiliates. Carrington hereby grants
the Academy permission to use the Trademarks for the limited purpose of
performing its obligations under this Agreement. Carrington may, in its sole
discretion, modify or discontinue the use of any Trademark and/or use one or
more additional or substitute marks or names, and the Academy shall be obligated
to do the same.
6.2 The Academy agrees to use the Trademarks in full compliance with the
rules prescribed from time to time by Carrington. The Academy may not use any
Trademark as part of any corporate name or with any prefix, suffix or other
modifying words, terms, designs or symbols. In addition, the Academy may not
use any Trademark in connection with the sale of any unauthorized product or
service or in any other manner not explicitly authorized in writing by
Carrington.
6.3 In the event of any infringement of, or challenge to, the Academy's
use of any Trademark, the Academy is obligated to notify Carrington immediately,
and Carrington shall have sole and absolute discretion to take such action as it
deems appropriate.
6.4 In the event of the termination of this Agreement for any reason, the
Academy's right to use the Trademarks shall cease, and the Academy shall cease
using such Trademarks at such time as the Academy's inventory of Products has
been sold. The Academy shall, as soon as it is reasonably possible, remove all
Trademarks which appear on or about the premises of the office(s) of the Academy
and any of the advertising of the Academy used in connection with Products.
6.5 In the event of a breach or threatened breach by the Academy of the
provisions of this Article 6, Carrington shall be entitled to all legal remedies
including an injunction or injunctions to prevent such breaches. Nothing herein
shall be construed as prohibiting Carrington from pursuing other remedies
available to it for such breach or threatened breach of this Article 6,
including the recovery of damages from the Academy.
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Article 7. Confidential Information
- --------- ------------------------
7.1 The Academy recognizes and acknowledges that the Academy will have
access to confidential information and trade secrets of Carrington and other
entities doing business with Carrington relating to research, development,
manufacturing, marketing, financial and other business-related activities
("Confidential Information"). Such Confidential Information constitutes
valuable, special and unique property of Carrington and/or other entities doing
business with Carrington. Other than as is necessary to perform the terms of
this Agreement, the Academy shall not, during and after the term of this
Agreement, make any use of such Confidential Information, or disclose any of
such Confidential Information to any person or firm, corporation, association or
other entity, for any reason or purpose whatsoever, except as specifically
allowed in writing by an authorized representative of Carrington. In the event
of a breach or threatened breach by the Academy of the provisions of this
Article 7, Carrington shall be entitled to an injunction restraining the Academy
from disclosing and/or using, in whole or in part, such Confidential
Information. Nothing herein shall be construed as prohibiting Carrington from
pursuing other remedies available to it for such breach or threatened breach of
this Article 7, including the recovery of damages from the Academy.
Article 8. Force Majeure
- --------- -------------
8.1 Each party shall have any liability hereunder if it shall be prevented
from performing any of its obligations hereunder by reason of any factor beyond
its control, including, without limitation, fire, explosion, accident, riot,
flood, drought, storm, earthquake, lightning, frost, civil commotion, sabotage,
vandalism, smoke, hail, embargo, act of Nature or the public enemy, other
casualty, strike or lockout, or interference, prohibition or restriction imposed
by any government or any officer or agent thereof ("Force Majeure"), and either
party's obligations, so far as may be necessary, shall be suspended during the
period of such Force Majeure and shall be canceled in respect of such Products
as would have been sold hereunder but for such suspension. Either party shall
give to the other prompt notice of any such Force Majeure, the date of
commencement thereof and its probable duration and shall give a further notice
in like manner upon the termination thereof. Each party hereto shall endeavor
with due diligence to resume compliance with its obligations hereunder at the
earliest date and shall do all that it reasonably can to overcome or mitigate
the effects of any such Force Majeure upon a party's obligations under this
Agreement.
Article 9. Amendment
- --------- ---------
9.1 No oral explanation or oral information by either party hereto shall
alter the meaning or interpretation of this Agreement. No modification,
alteration, addition or change in the terms hereof shall be binding on either
party hereto unless reduced to writing and executed by the duly authorized
representative of each party.
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Article 10. Entire Agreement
- ---------- ----------------
10.1 This Agreement shall supersede any and all prior agreements,
understandings, arrangements, promises, representations, warranties, and/or any
contracts of any form or nature whatsoever, whether oral or in writing and
whether explicit or implicit, which may have been entered into prior to the
execution hereof between the parties, their officers, directors or employees as
to the subject matter hereof. Neither of the parties hereto has relied upon any
oral representation or oral information given to it by any representative of the
other party. In case of dispute, arbitration, or other proceedings, the arbiter
or other presiding party shall attempt to equally utilize both the English and
Chinese versions of this agreement, but in case of conflict between the two, the
English version shall control.
Article 11. Assignment
- ---------- ----------
11.1 Neither this Agreement nor any of the rights or obligations of the
Academy hereunder shall be assigned by the Academy without the prior written
consent of Carrington, executed by a duly authorized officer of Carrington.
Article 12. Governing Law
- ---------- -------------
12.1 It is expressly agreed that the validity, performance and
construction of this Agreement will be governed by the laws of the State of
Texas, United States of America.
Article 13. Notices
- ---------- -------
13.1 Any notice required or permitted to be given under this Agreement by
one of the parties to the other shall be given for all purposes by delivery in
person, registered air-mail, postage prepaid, return receipt requested, or by
fax addressed to:
(a) Carrington at: Carrington Laboratories, Inc., 2001 Walnut Hill Lane,
Irving, Texas 75038, attention Chris Record, or at such other address
as Carrington shall have theretofore furnished in writing to the
Academy. (Fax No. 214-518-1020)
(b) The Academy at: ____________ attention ________________, or at such
other address as the Academy shall have theretofore furnished in
writing to Carrington. (Fax No. ______________)
Article 14. Waiver
- ---------- ------
14.1 Either parties failure to enforce at any time any of the provisions
of this Agreement or any right with respect thereto, shall not be considered a
waiver of such provisions or rights or in any way affect the validity of same.
Either parties exercise of any of its rights shall not preclude or prejudice it
thereafter from exercising the same or any other right it may have, irrespective
of any previous action by it.
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Article 15. Arbitration
- ---------- -----------
15.1 Except as provided in Articles 6.5 and 7.1, any dispute, controversy
or claim arising out of or in relation to or in connection with this Agreement,
the operations carried out under this Agreement or the relationship of the
parties created under this Agreement, shall be exclusively and finally settled
by confidential arbitration, and any party may submit such a dispute,
controversy or claim to arbitration. After the failure to settle disputes by
friendly negotiation, the arbitration proceeding shall be held at the location
of the non-instituting party in the English language and shall be governed by
the rules of the American Arbitration Association (the "AAA") as amended from
time to time. Any procedural rule not determined under the rules of the AAA
shall be determined by the laws of the State of Texas, other than those laws
that would refer the matter to another jurisdiction.
A single arbitrator shall be appointed by unanimous consent of the parties.
If the parties cannot reach agreement on an arbitrator within 45 days of the
submission of a notice of arbitration, the appointing authority for the
implementation of such procedure shall be the AAA, who shall appoint an
independent arbitrator who does not have any financial interest in the dispute,
controversy or claim. If the AAA is unable to appoint, or fails to appoint, an
arbitrator within 90 days of being requested to do so, then the arbitration
shall be heard by three arbitrators, one selected by each party within the 30
days of being required to do so, and the third promptly selected by the two
arbitrators selected by the parties.
The arbitrators shall announce the award and the reasons therefor in
writing within six months after the conclusion of the presentation of evidence
and oral or written argument, or within such longer period as the parties may
agree upon in writing. The decision of the arbitrators shall be final and
binding upon the parties. Judgment upon the award rendered may be entered in
any court having jurisdiction over the person or the assets of the party owing
the judgment or application may be made to such court for a judicial acceptance
of the award and an order of enforcement, as the case may be. Unless otherwise
determined by the arbitrator, each party involved in the arbitration shall bear
the expense of its own counsel, experts and presentation of proof, and the
expense of the arbitrator and the AAA (if any) shall be divided equally among
the parties to the arbitration.
Article 16. No Inconsistent Actions
- ---------- -----------------------
16.1 Each party hereto agrees that it will not voluntarily undertake any
action or course of action inconsistent with the provisions or intent of this
Agreement and, subject to the provisions of Articles 4.6 and 8 hereof, will
promptly do all acts and take all measures as may be appropriate to comply with
the terms, conditions and provisions of this Agreement.
Article 17. Currency of Account
- ---------- -------------------
17.1 This Agreement evidences a transaction for the sale of goods in which
the specification of U.S. dollars is of the essence, and U.S. dollars shall be
the currency of account in all events. All payments to be made by the Academy
to Carrington hereunder shall be made
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either (i) in immediately available funds by confirmed wire transfer to a bank
account to be designated by Carrington or (ii) in the form of a bank cashier's
check payable to the order of Carrington.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written and it shall be effective upon receipt of
the mutually agreed upon and certified Mandarin version by both parties.
CARRINGTON LABORATORIES, INC.
By:___________________________________
Name:______________________________
Title:_____________________________
CHINESE ACADEMY OF SCIENCES
By:___________________________________
Name:______________________________
Title:_____________________________
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EXHIBIT 10.2
SALES DISTRIBUTION AGREEMENT
----------------------------
THIS AGREEMENT is made and entered into as of the 16th day of August, 1995,
---- ------
by and between CARRINGTON LABORATORIES, INC., a Texas corporation
("Carrington"), and CHINESE ACADEMY OF SCIENCES ("Academy").
W I T N E S S E T H :
WHEREAS, Carrington is engaged in the business of manufacturing, selling
and distributing certain pharmaceutical products and is desirous of establishing
a competent distribution source for sales of such products in The Peoples
Republic of China (defined in Article I hereof as the Territory); and
WHEREAS, the Academy is desirous of aggressively distributing such products
in the Territory and is willing and able to provide a competent distribution
organization in the Territory, and the Academy desires to be Carrington's
exclusive sales distributor for such products in the Territory;
NOW, THEREFORE, the parties hereto, in consideration of the premises and
mutual covenants and undertakings herein contained, agree as follows:
Article 1. Definitions
- --------- -----------
1.1 As used in this Agreement, the following terms shall have the meanings
specified in this Article 1.1:
(a) "Products" shall mean the veterinary products manufactured by or for
Carrington set forth on Exhibit A hereto. Carrington may, in its sole
---------
discretion from time to time, add veterinary products to, and delete
products from, Exhibit A to take into account the development,
---------
modification or discontinuance by Carrington of veterinary products.
(b) "Territory" shall mean the following countries: The Peoples Republic
of China.
Article 2. Appointment
- --------- -----------
2.1 Subject to the terms and conditions of this Agreement, Carrington
hereby appoints the Academy as Carrington's sales distributor in the Territory
for the sale of Products, and the Academy hereby accepts such appointment. As
sales distributor in the Territory, the Academy shall, subject to the terms and
conditions of this Agreement, have the right to sell Products in the Territory,
but shall have no right to sell Products outside the Territory. During the term
of this Agreement, Carrington agrees not to appoint any other persons as
distributors for the Products in the Territory nor directly sell any Products
within the Territory. Furthermore, in case of inquiries for Product Sales from
the Territory, directly to Carrington, Carrington shall forward such inquiries
to the Academy for further handling.
<PAGE>
2.2 In a manner reasonably satisfactory to Carrington, and at the
Academy's sole expense, the Academy agrees to (a) make all declarations,
filings, and registrations with, and obtain all approvals and authorizations
from, governmental and regulatory authorities required to be made or obtained in
connection with the promotion, marketing, sale or distribution of the Products
in the Territory, (b) devote its best efforts to the diligent promotion,
marketing, sale and distribution of the Products in the Territory, (c) provide
and maintain a competent and aggressive organization for the promotion,
marketing, sale and distribution of the Products in the Territory and (d) assure
competent and prompt handling of inquiries, orders, shipments, billings and
collections, and returns of or with respect to the Products and careful
attention to customers' requirements for all Products, (e) promptly assign back
to Carrington any product registrations in the Territory upon termination of
Agreement.
2.3 In a manner reasonably satisfactory to the Academy and Carrington,
Carrington agrees to provide mutually agreed upon quantities of Products to the
Academy for testing the Products at the beginning of the three (3) month period
(the "Initial Period") after the first purchase order is accepted by Carrington.
This Initial Period shall commence when the Academy receives the relevant
approval indicated in 2.2 and submits its first order to Carrington.
Nevertheless, the Academy will use best efforts to start the test as soon as
possible after signing the Agreement. Carrington agrees to provide reasonable,
mutually agreed upon quantities at a 50% price discount from the Carrington
Price List attached after receiving positive results from the initial test and
obtaining all approvals and authorizations indicated above. The payment for the
Products for this additional period will be made at the trial sale. The payment
for the Products sold for this additional period shall be made with the
placement of the formal order under the price list for the China Market after
the conclusion of the initial three (3) month period.
2.4 Carrington will provide the Academy, without direct charge from
Carrington, with such (i) reasonable sales personnel training in relation to the
Products in Irving, Texas and (ii) a reasonable amount of promotional Product
literature of Carrington, as the Academy may request from time to time. The
Academy will be responsible for any travel, hotel or other related charges
associated with the training. Carrington agrees that it will be responsible for
any of its direct expenses associated with travel, lodging or meals by
Carrington employees to China.
2.5 Carrington and the Academy will mutually agree upon the holding of a
Seminar in Beijing, China after an agreement is reached on the minimum sales for
the first contract year.
2.6 Carrington agrees to consider the establishment of a manufacturing
facility in China, based upon appropriate Product sales and profitability of its
operations in China. This manufacturing facility may be in joint venture with
appropriate Chinese partners.
2.7 During the term of this Agreement, Both Parties shall be considered
independent contractors and neither shall not be considered a partner, employee,
agent or servant of the other. As such, neither party has the authority of any
nature whatsoever to bind the other or incur any liability for or on behalf of
the other or to represent itself as anything other than a sales distributor and
independent contractor or supplier, as the case may be.
-2-
<PAGE>
Article 3. Certain Performance Requirements
- --------- --------------------------------
3.1 The Academy agrees to promote, market, sell and distribute the
Products only to customers and potential customers within the Territory for
ultimate use within the Territory. The Academy will not, under any
circumstances, either directly or indirectly through third parties, promote,
market, sell, distribute or ship Products within or to, or for ultimate use
within, the United States or any place outside the Territory.
3.2 In order to assure Carrington that the Academy is not repatriating
Products to the United States or elsewhere outside the Territory, the Academy
agrees that upon request from Carrington. Carrington may examine, and copy at
the Academy's headquarters:
(a) All invoices related to the sale of Products by the Academy;
(b) All sales reports on the number and price of units of each Product
sold;
(c) All monthly inventory reports of the Products; and
(d) The Academy also agrees that Carrington may mark for identification
all Products sold by Carrington to the Academy hereunder.
3.3 The Academy shall maintain a sufficient inventory of Products to
assure an adequate supply of Products to serve all its market segments. The
Academy shall maintain all its inventory of Products clearly segregated and
meeting all storage and other required standards of all applicable governmental
authorities. All such inventory shall be subject to inspection by Carrington or
its agents at all reasonable times.
3.4 The Academy shall provide a report to Carrington no later than January
15 and July 15 of each year regarding the previous six-month period ended
December 31 and June 30, respectively. The report shall contain (i) reports on
sales of Products by the Academy during such six-month period, by Product, and
including information on the number and price of units sold, (ii) a current list
of customers and (iii) any other information that the Academy believes would be
useful to Carrington or that Carrington may reasonably request.
3.5 The Academy shall be responsible for and shall collect all
governmental and regulatory sales and other taxes, charges and fees that may be
due and owing upon sales by the Academy of Products. Upon written request from
the Academy, Carrington shall provide the Academy with such certificates or
other documents as may be reasonably required to establish any applicable
exemptions from the collection of such taxes, charges and fees.
3.6 All Products shall be packaged, labeled, advertised, marketed, sold
and distributed by the Academy in compliance with the rules and regulations of
the applicable governmental authority within the Territory in which the Products
are marketed, as amended from time to time, and all other applicable laws, rules
and regulations.
3.7 The Academy agrees not to make, or permit any of its employees, agents
or representatives to make, any claims of any properties or results relating to
any Product, unless
-3-
<PAGE>
such claims have received written approval from Carrington and from the
applicable governmental authority.
3.8 The Academy shall not use any label, advertisement or marketing
material on or with respect to or relating to any Product unless such label,
advertisement or marketing material has first been submitted to and approved by
Carrington in writing.
3.9 The Academy agrees that Carrington shall have the right to inspect the
Academy's facilities at all reasonable times to ensure the Academy's compliance
with the provisions of this Agreement.
3.10 The Academy will actively and aggressively promote the sale of the
Products to all customers and potential customers within the Territory. The
Academy agrees not to market, sell or distribute to any customers or potential
customers in the Territory any wound care, skin care, incontinence care or other
pharmaceutical products that compete with any of the Products.
Article 4. Sale of Products by Carrington to The Academy
- --------- ---------------------------------------------
4.1 Subject to the terms and conditions of this Agreement, including
specifically Article 4.6 hereof, Carrington shall sell to the Academy its
requirements for the Products at a price for each Product (the "Contract Price")
which represents a mutually agreed upon discount from Carrington's distributor
price for the Territory for such Product as set forth in Carrington's published
distributor price list (the "Published Price List"). For orders placed by the
Academy during the first 12-month period of the term of this Agreement, the
Contract Prices for the Products listed on Exhibit A are set forth on such
---------
exhibit opposite each Product. At least 60 days prior to the end of each 12-
month period of the term of this Agreement, the parties shall commence good
faith negotiations to determine and agree upon the Contract Prices for Products
for the next 12-month period of the term. Carrington reserves the right to
change its distributor prices for Products as set forth in the Published Price
List at any time and from time to time for the next 12 month period. However,
any price changes shall be discussed and negotiated in relation to the specified
minimum and if no agreement is reached, the Academy has no obligation to
purchase products from Carrington.
4.2 Carrington shall sell the same products to the Academy as it
manufactures and sells in the United States; provided however, the parties may
agree to produce Chinese labels and other product information once a sufficient
quantity of products is ordered.
4.3 As consideration for its appointment as exclusive sales distributor
entitled to a Product discount, the Academy agrees to purchase from Carrington,
during each 12-month period of the term of this Agreement, commencing with the
12-month period beginning January 1, 1996 or such other date as mutually agreed
upon, at the Contract Price, a specified minimum aggregate dollar amount (based
on the Contract Price) of the Products (the "Specified Minimum Amount"). For
the first 12-month period of the term of this Agreement, the Specified Minimum
Amount shall be agreed upon at lease sixty days prior to January 1, 1996 or such
other date as mutually agreed upon. If no amount is reached, this Agreement
shall no longer be exclusive. The Specified Minimum Amounts for each subsequent
12-month period shall be determined by mutual agreement of the parties prior to
the beginning of such period based on the Academy's
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<PAGE>
reasonable, good faith projections of future sales growth and such other factors
as the parties may deem relevant.
4.4 The Academy shall order Products by submitting a purchase order to
Carrington describing the type and quantity of the Products to be purchased.
The minimum order shall be 100 cases of one or assorted Products. Orders are
subject to by Carrington's consent. All purchases shall be spaced in a
reasonable manner. The Academy shall pay all invoices in full prior to shipment
pursuant to Article 17 hereafter. The Academy shall pay directly or reimburse
Carrington for all applicable taxes, assessments, duties, charges and fees,
however designated (including import and export charges), imposed by any taxing
or other governmental authority (including United States authorities), by reason
of the sale and delivery by Carrington, and purchase by the Academy, of Products
hereunder, except for any taxes based upon Carrington's income. Carrington
shall give the Academy notice of these charges prior to delivery. If the
Academy refuses to pay for such charges, no shipment shall be made hereunder.
All sales and payments shall be made, and all orders shall be accepted, in the
State of Texas.
4.5 Carrington shall not be obligated to ship Products to the Academy at
any time when payment of an amount owed by the Academy is overdue or when the
Academy is otherwise in breach of this Agreement.
4.6 All shipments of Products to the Academy will be packaged in
accordance with Carrington's standard packaging procedures and shall be suitable
for long distance by air or sea with the appropriate handling information agreed
to by the Parties.. All Contract Prices are F.O.B., Carrington's facility,
Dallas or Irving, Texas. Ownership of and title to Products and all risks of
loss with respect thereto shall pass to the Academy upon delivery of such
Products by Carrington to the carrier at the designated delivery (F.O.B.) point.
Deliveries of Products shall be made by Carrington under normal trade conditions
in the usual and customary manner being utilized by Carrington at the time and
location of the particular delivery.
4.7 Carrington shall use its reasonable best efforts to ensure
availability of all Products ordered by the Academy under this Agreement.
However, if necessary in the best judgment of Carrington, Carrington may
allocate its available supply of Products among all its customers, distributors
or other purchasers, including the Academy, on such basis as it shall deem
reasonable, practicable and equitable, without liability for any failure of
performance or lost sales which may result from such allocations.
4.8 Except as may be expressly stated by Carrington on the Product or on
Carrington's packaging, or in Carrington's information accompanying the Product,
at the time of shipment to the Academy hereunder, CARRINGTON MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND WITH RESPECT TO THE PRODUCTS, EXPRESS
OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. CARRINGTON NEITHER ASSUMES NOR AUTHORIZES ANYONE TO ASSUME
FOR IT ANY OBLIGATION OR LIABILITY IN CONNECTION WITH THE PRODUCTS. the Academy
shall not make any representation or warranty with respect to the Products that
is more extensive than, or inconsistent with, the limited warranty set forth in
this Article 4.8 or that is inconsistent with the policies or publications of
Carrington relating to the Products.
-5-
<PAGE>
THE ACADEMY'S EXCLUSIVE REMEDY FOR BREACH OF ANY WARRANTY HEREUNDER IS THE
DELIVERY BY CARRINGTON OF ADDITIONAL QUANTITIES OF THE PRODUCTS IN REPLACEMENT
OF THE NON-CONFORMING PRODUCTS OR THE REFUND OF THE CONTRACT PRICE FOR THE
PRODUCTS THAT ARE COVERED BY THE WARRANTY, AT THE ACADEMY'S OPTION. CARRINGTON
SHALL HAVE NO OTHER OBLIGATION OR LIABILITY FOR DAMAGES TO THE ACADEMY OR ANY
OTHER PERSON OF ANY TYPE, INCLUDING, BUT NOT LIMITED TO, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES, LOSS OF PROFITS OR OTHER COMMERCIAL OR ECONOMIC LOSS, OR
ANY OTHER LOSS, DAMAGE OR EXPENSE, ARISING OUT OF OR IN CONNECTION WITH THE
SALE, USE, LOSS OF USE, NONPERFORMANCE OR REPLACEMENT OF THE PRODUCTS.
THE ACADEMY SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CARRINGTON AND ITS
AFFILIATES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, FROM
AND AGAINST ALL CLAIMS, LIABILITIES, DEMANDS, DAMAGES, EXPENSES AND LOSSES
(INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) ARISING OUT OF OR CONNECTED
WITH (I) ANY USE, SALE OR OTHER DISPOSITION OF PRODUCTS BY THE ACADEMY OR ANY
OTHER PARTY, (II) ANY BREACH BY THE ACADEMY OF ANY OF ITS REPRESENTATIONS,
WARRANTIES OR COVENANTS UNDER THIS AGREEMENT OR (III) ANY ACTS OR OMISSIONS ON
THE PART OF THE ACADEMY OR ITS AGENTS, SERVANTS OR EMPLOYEES WHICH ARE OUTSIDE
OR BEYOND THE ACADEMY'S AUTHORIZATION GRANTED HEREIN.
4.9 Credits on defective Products by the Academy will be calculated by
Carrington based on the original Contract Price of the items returned, whether
identified by lot number or another method.
4.10 Carrington shall provide the Academy evidence of its standard
liability coverage and certificate of insurance and shall endeavor to have the
Academy included in a Third Party beneficiary thereunder.
Article 5. Term and Termination
- --------- --------------------
5.1 The initial term of this Agreement shall be for a period of five (5)
years from the date of this Agreement. After such initial term, this Agreement
shall be automatically extended for an additional term of three (3) years,
unless this Agreement is terminated at the end of the initial five-year term by
written notice given by either party to the other party not less than six months
prior to the end of such initial term. Notwithstanding the foregoing, this
Agreement may be terminated earlier in accordance with the provisions of this
Article 5.
5.2 Regardless of Article 5.1, either party hereto may terminate this
Agreement effective at any time after January 1, 1998, by giving the other party
at least six months' prior written notice of termination.
5.3 Either Party has the absolute right to terminate this Agreement if the
other parties fails to perform or breaches, in any material respect, any of the
terms or provisions of this
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<PAGE>
Agreement. Without limiting the events which shall be deemed to constitute a
breach or material breach of this Agreement by the Academy, the Academy
understands and agrees that it shall be in material breach of this Agreement,
and Carrington shall have the right to terminate this Agreement under this
Article 5.3, if:
(i) The Academy fails or refuses to pay to Carrington any sum when
due;
(ii) The Academy breaches any provision of Article 2.2, 3.1, 3.3, 3.6,
3.8, 3.10, 4.4, 4.8, 6 or 7; or
(iii) The Academy fails to purchase the Specified Minimum Amount of
Product for any required period.
5.4 Either Party has the absolute right to terminate this Agreement in the
event the other shall become insolvent, or if there is instituted by or against
the other procedures in bankruptcy, or under insolvency laws or for
reorganization, receivership or dissolution, or if the other loses any franchise
or license to operate its business as presently conducted in any part of the
Territory.
5.5 This Agreement shall automatically terminate effective at the end of
any 12-month period of the term of this Agreement referred to in Articles 4.1
and 4.3 hereof if the parties are unable to agree upon the Contract Prices or
the Specified Minimum Amount for the next 12-month period of the term.
5.6 During the one-year period following termination of this Agreement,
any inventory of Products held by the Academy at the termination of this
Agreement may be sold by the Academy to customers in the Territory in the
ordinary course; provided, however, that for the period required to liquidate
such inventory, all of the provisions contained herein governing the Academy's
performance obligations and Carrington's rights shall remain in effect. In
order to accelerate the liquidation of any such inventory, Carrington may buy
back, if the Academy agrees but not the obligation, to purchase all or any part
of such remaining inventory at the price at which the inventory was originally
sold by Carrington to the Academy. Carrington shall give first priority to
buying back such inventory.
5.7 The termination of this Agreement shall not impair the rights or
obligations of either party hereto which shall have accrued hereunder prior to
such termination. The provisions of Articles 4.8, 6, 7 and 15 and the rights
and obligations of the parties thereunder shall survive the termination of this
Agreement for a period of three (3) years.
Article 6. Trademarks and Trade Names
- --------- --------------------------
6.1 All trademarks, trade names, service marks, logos and derivatives
thereof relating to the Products (the "Trademarks"), and all patents, technology
and other intellectual property relating to the Products, are the sole and
exclusive property of Carrington or its affiliates. Carrington hereby grants
the Academy permission to use the Trademarks for the limited purpose of
performing its obligations under this Agreement. Carrington may, in its sole
discretion,
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<PAGE>
modify or discontinue the use of any Trademark and/or use one or more additional
or substitute marks or names, and the Academy shall be obligated to do the same.
6.2 The Academy agrees to use the Trademarks in full compliance with the
rules prescribed from time to time by Carrington. The Academy may not use any
Trademark as part of any corporate name or with any prefix, suffix or other
modifying words, terms, designs or symbols. In addition, the Academy may not
use any Trademark in connection with the sale of any unauthorized product or
service or in any other manner not explicitly authorized in writing by
Carrington.
6.3 In the event of any infringement of, or challenge to, the Academy's
use of any Trademark, the Academy is obligated to notify Carrington immediately,
and Carrington shall have sole and absolute discretion to take such action as it
deems appropriate.
6.4 In the event of the termination of this Agreement for any reason, the
Academy's right to use the Trademarks shall cease, and the Academy shall cease
using such Trademarks at such time as the Academy's inventory of Products has
been sold. The Academy shall, as soon as it is reasonably possible, remove all
Trademarks which appear on or about the premises of the office(s) of the Academy
and any of the advertising of the Academy used in connection with Products.
6.5 In the event of a breach or threatened breach by the Academy of the
provisions of this Article 6, Carrington shall be entitled to all legal remedies
including an injunction or injunctions to prevent such breaches. Nothing herein
shall be construed as prohibiting Carrington from pursuing other remedies
available to it for such breach or threatened breach of this Article 6,
including the recovery of damages from the Academy.
Article 7. Confidential Information
- --------- ------------------------
7.1 The Academy recognizes and acknowledges that the Academy will have
access to confidential information and trade secrets of Carrington and other
entities doing business with Carrington relating to research, development,
manufacturing, marketing, financial and other business-related activities
("Confidential Information"). Such Confidential Information constitutes
valuable, special and unique property of Carrington and/or other entities doing
business with Carrington. Other than as is necessary to perform the terms of
this Agreement, the Academy shall not, during and after the term of this
Agreement, make any use of such Confidential Information, or disclose any of
such Confidential Information to any person or firm, corporation, association or
other entity, for any reason or purpose whatsoever, except as specifically
allowed in writing by an authorized representative of Carrington. In the event
of a breach or threatened breach by the Academy of the provisions of this
Article 7, Carrington shall be entitled to an injunction restraining the Academy
from disclosing and/or using, in whole or in part, such Confidential
Information. Nothing herein shall be construed as prohibiting Carrington from
pursuing other remedies available to it for such breach or threatened breach of
this Article 7, including the recovery of damages from the Academy.
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Article 8. Force Majeure
- --------- -------------
8.1 Each party shall have any liability hereunder if it shall be prevented
from performing any of its obligations hereunder by reason of any factor beyond
its control, including, without limitation, fire, explosion, accident, riot,
flood, drought, storm, earthquake, lightning, frost, civil commotion, sabotage,
vandalism, smoke, hail, embargo, act of Nature or the public enemy, other
casualty, strike or lockout, or interference, prohibition or restriction imposed
by any government or any officer or agent thereof ("Force Majeure"), and either
party's obligations, so far as may be necessary, shall be suspended during the
period of such Force Majeure and shall be canceled in respect of such Products
as would have been sold hereunder but for such suspension. Either party shall
give to the other prompt notice of any such Force Majeure, the date of
commencement thereof and its probable duration and shall give a further notice
in like manner upon the termination thereof. Each party hereto shall endeavor
with due diligence to resume compliance with its obligations hereunder at the
earliest date and shall do all that it reasonably can to overcome or mitigate
the effects of any such Force Majeure upon a party's obligations under this
Agreement.
Article 9. Amendment
- --------- ---------
9.1 No oral explanation or oral information by either party hereto shall
alter the meaning or interpretation of this Agreement. No modification,
alteration, addition or change in the terms hereof shall be binding on either
party hereto unless reduced to writing and executed by the duly authorized
representative of each party.
Article 10. Entire Agreement
- ---------- ----------------
10.1 This Agreement shall supersede any and all prior agreements,
understandings, arrangements, promises, representations, warranties, and/or any
contracts of any form or nature whatsoever, whether oral or in writing and
whether explicit or implicit, which may have been entered into prior to the
execution hereof between the parties, their officers, directors or employees as
to the subject matter hereof. Neither of the parties hereto has relied upon any
oral representation or oral information given to it by any representative of the
other party. In case of dispute, arbitration, or other proceedings, the arbiter
or other presiding party shall attempt to equally utilize both the English and
Chinese versions of this agreement, but in case of conflict between the two, the
English version shall control.
Article 11. Assignment
- ---------- ----------
11.1 Neither this Agreement nor any of the rights or obligations of the
Academy hereunder shall be assigned by the Academy without the prior written
consent of Carrington, executed by a duly authorized officer of Carrington.
Article 12. Governing Law
- ---------- -------------
12.1 It is expressly agreed that the validity, performance and construction
of this Agreement will be governed by the laws of the State of Texas, United
States of America.
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Article 13. Notices
- ---------- -------
13.1 Any notice required or permitted to be given under this Agreement by
one of the parties to the other shall be given for all purposes by delivery in
person, registered air-mail, postage prepaid, return receipt requested, or by
fax addressed to:
(a) Carrington at: Carrington Laboratories, Inc., 2001 Walnut Hill Lane,
Irving, Texas 75038, attention Chris Record, or at such other address
as Carrington shall have theretofore furnished in writing to the
Academy. (Fax No. 214-518-1020)
(b) The Academy at: ____________ attention ________________, or at such
other address as the Academy shall have theretofore furnished in
writing to Carrington. (Fax No. ______________)
Article 14. Waiver
- ---------- ------
14.1 Either parties failure to enforce at any time any of the provisions
of this Agreement or any right with respect thereto, shall not be considered a
waiver of such provisions or rights or in any way affect the validity of same.
Either parties exercise of any of its rights shall not preclude or prejudice it
thereafter from exercising the same or any other right it may have, irrespective
of any previous action by it.
Article 15. Arbitration
- ---------- -----------
15.1 Except as provided in Articles 6.5 and 7.1, any dispute, controversy
or claim arising out of or in relation to or in connection with this Agreement,
the operations carried out under this Agreement or the relationship of the
parties created under this Agreement, shall be exclusively and finally settled
by confidential arbitration, and any party may submit such a dispute,
controversy or claim to arbitration. After the failure to settle disputes by
friendly negotiation, the arbitration proceeding shall be held at the location
of the non-instituting party in the English language and shall be governed by
the rules of the American Arbitration Association (the "AAA") as amended from
time to time. Any procedural rule not determined under the rules of the AAA
shall be determined by the laws of the State of Texas, other than those laws
that would refer the matter to another jurisdiction.
A single arbitrator shall be appointed by unanimous consent of the parties.
If the parties cannot reach agreement on an arbitrator within 45 days of the
submission of a notice of arbitration, the appointing authority for the
implementation of such procedure shall be the AAA, who shall appoint an
independent arbitrator who does not have any financial interest in the dispute,
controversy or claim. If the AAA is unable to appoint, or fails to appoint, an
arbitrator within 90 days of being requested to do so, then the arbitration
shall be heard by three arbitrators, one selected by each party within the 30
days of being required to do so, and the third promptly selected by the two
arbitrators selected by the parties.
The arbitrators shall announce the award and the reasons therefor in
writing within six months after the conclusion of the presentation of evidence
and oral or written argument, or within such longer period as the parties may
agree upon in writing. The decision of the arbitrators shall be final and
binding upon the parties. Judgment upon the award rendered may
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be entered in any court having jurisdiction over the person or the assets of the
party owing the judgment or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may be. Unless
otherwise determined by the arbitrator, each party involved in the arbitration
shall bear the expense of its own counsel, experts and presentation of proof,
and the expense of the arbitrator and the AAA (if any) shall be divided equally
among the parties to the arbitration.
Article 16. No Inconsistent Actions
- ---------- -----------------------
16.1 Each party hereto agrees that it will not voluntarily undertake any
action or course of action inconsistent with the provisions or intent of this
Agreement and, subject to the provisions of Articles 4.6 and 8 hereof, will
promptly do all acts and take all measures as may be appropriate to comply with
the terms, conditions and provisions of this Agreement.
Article 17. Currency of Account
- ---------- -------------------
17.1 This Agreement evidences a transaction for the sale of goods in which
the specification of U.S. dollars is of the essence, and U.S. dollars shall be
the currency of account in all events. All payments to be made by the Academy
to Carrington hereunder shall be made either (i) in immediately available funds
by confirmed wire transfer to a bank account to be designated by Carrington or
(ii) in the form of a bank cashier's check payable to the order of Carrington.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written and it shall be effective upon receipt of
the mutually agreed upon and certified Mandarin version by both parties.
CARRINGTON LABORATORIES, INC.
By:___________________________________
Name:_________________________________
Title:________________________________
CHINESE ACADEMY OF SCIENCES
By:___________________________________
Name:_________________________________
Title:________________________________
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<PAGE>
EXHIBIT 10.3
SALES DISTRIBUTION AGREEMENT
----------------------------
THIS AGREEMENT is made and entered into as of the 16th day of August, 1995,
---- ------
by and between CARRINGTON LABORATORIES, INC., a Texas corporation
("Carrington"), and CHINESE ACADEMY OF SCIENCES ("Academy").
W I T N E S S E T H :
WHEREAS, Carrington is engaged in the business of manufacturing, selling
and distributing certain pharmaceutical products and is desirous of establishing
a competent distribution source for sales of such products in The Peoples
Republic of China (defined in Article I hereof as the Territory); and
WHEREAS, the Academy is desirous of aggressively distributing such products
in the Territory and is willing and able to provide a competent distribution
organization in the Territory, and the Academy desires to be Carrington's
exclusive sales distributor for such products in the Territory;
NOW, THEREFORE, the parties hereto, in consideration of the premises and
mutual covenants and undertakings herein contained, agree as follows:
Article 1. Definitions
- --------- -----------
1.1 As used in this Agreement, the following terms shall have the meanings
specified in this Article 1.1:
(a) "Products" shall mean the wound and skin care products manufactured by
or for Carrington set forth on Exhibit A hereto. Carrington may, in
---------
its sole discretion from time to time, add wound and skin care
products to, and delete products from, Exhibit A to take into account
---------
the development, modification or discontinuance by Carrington of wound
and skin care products.
(b) "Territory" shall mean the following countries: The Peoples Republic
of China.
Article 2. Appointment
- --------- -----------
2.1 Subject to the terms and conditions of this Agreement, Carrington
hereby appoints the Academy as Carrington's sales distributor in the Territory
for the sale of Products, and the Academy hereby accepts such appointment. As
sales distributor in the Territory, the Academy shall, subject to the terms and
conditions of this Agreement, have the right to sell Products in the Territory,
but shall have no right to sell Products outside the Territory. During the term
of this Agreement, Carrington agrees not to appoint any other persons as
distributors for the Products in the Territory nor directly sell any Products
within the Territory. Furthermore, in case of inquiries for Product Sales from
the Territory, directly to Carrington, Carrington shall forward such inquiries
to the Academy for further handling.
<PAGE>
2.2 In a manner reasonably satisfactory to Carrington, and at the
Academy's sole expense, the Academy agrees to (a) make all declarations,
filings, and registrations with, and obtain all approvals and authorizations
from, governmental and regulatory authorities required to be made or obtained in
connection with the promotion, marketing, sale or distribution of the Products
in the Territory, (b) devote its best efforts to the diligent promotion,
marketing, sale and distribution of the Products in the Territory, (c) provide
and maintain a competent and aggressive organization for the promotion,
marketing, sale and distribution of the Products in the Territory and (d) assure
competent and prompt handling of inquiries, orders, shipments, billings and
collections, and returns of or with respect to the Products and careful
attention to customers' requirements for all Products, (e) promptly assign back
to Carrington any product registrations in the Territory upon termination of
Agreement.
2.3 In a manner reasonably satisfactory to the Academy and Carrington,
Carrington agrees to provide mutually agreed upon quantities of Products to the
Academy for testing the Products at the beginning of the three (3) month period
(the "Initial Period") after the first purchase order is accepted by Carrington.
This Initial Period shall commence when the Academy receives the relevant
approval indicated in 2.2 and submits its first order to Carrington.
Nevertheless, the Academy will use best efforts to start the test as soon as
possible after signing the Agreement. Carrington agrees to provide reasonable,
mutually agreed upon quantities at a 50% price discount from the Carrington
Price List attached after receiving positive results from the initial test and
obtaining all approvals and authorizations indicated above. The payment for the
Products for this additional period will be made at the trial sale. The payment
for the Products sold for this additional period shall be made with the
placement of the formal order under the price list for the China Market after
the conclusion of the initial three (3) month period.
2.4 Carrington will provide the Academy, without direct charge from
Carrington, with such (i) reasonable sales personnel training in relation to the
Products in Irving, Texas and (ii) a reasonable amount of promotional Product
literature of Carrington, as the Academy may request from time to time. The
Academy will be responsible for any travel, hotel or other related charges
associated with the training. Carrington agrees that it will be responsible for
any of its direct expenses associated with travel, lodging or meals by
Carrington employees to China.
2.5 Carrington and the Academy will mutually agree upon the holding of a
Seminar in Beijing, China after an agreement is reached on the minimum sales for
the first contract year.
2.6 Carrington agrees to consider the establishment of a manufacturing
facility in China, based upon appropriate Product sales and profitability of its
operations in China. This manufacturing facility may be in joint venture with
appropriate Chinese partners.
2.7 During the term of this Agreement, Both Parties shall be considered
independent contractors and neither shall not be considered a partner, employee,
agent or servant of the other. As such, neither party has the authority of any
nature whatsoever to bind the other or incur any liability for or on behalf of
the other or to represent itself as anything other than a sales distributor and
independent contractor or supplier, as the case may be.
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<PAGE>
Article 3. Certain Performance Requirements
- --------- --------------------------------
3.1 The Academy agrees to promote, market, sell and distribute the
Products only to customers and potential customers within the Territory for
ultimate use within the Territory. The Academy will not, under any
circumstances, either directly or indirectly through third parties, promote,
market, sell, distribute or ship Products within or to, or for ultimate use
within, the United States or any place outside the Territory.
3.2 In order to assure Carrington that the Academy is not repatriating
Products to the United States or elsewhere outside the Territory, the Academy
agrees that upon request from Carrington. Carrington may examine, and copy at
the Academy's headquarters:
(a) All invoices related to the sale of Products by the Academy;
(b) All sales reports on the number and price of units of each Product
sold;
(c) All monthly inventory reports of the Products; and
(d) The Academy also agrees that Carrington may mark for identification
all Products sold by Carrington to the Academy hereunder.
3.3 The Academy shall maintain a sufficient inventory of Products to
assure an adequate supply of Products to serve all its market segments. The
Academy shall maintain all its inventory of Products clearly segregated and
meeting all storage and other required standards of all applicable governmental
authorities. All such inventory shall be subject to inspection by Carrington or
its agents at all reasonable times.
3.4 The Academy shall provide a report to Carrington no later than January
15 and July 15 of each year regarding the previous six-month period ended
December 31 and June 30, respectively. The report shall contain (i) reports on
sales of Products by the Academy during such six-month period, by Product, and
including information on the number and price of units sold, (ii) a current list
of customers and (iii) any other information that the Academy believes would be
useful to Carrington or that Carrington may reasonably request.
3.5 The Academy shall be responsible for and shall collect all
governmental and regulatory sales and other taxes, charges and fees that may be
due and owing upon sales by the Academy of Products. Upon written request from
the Academy, Carrington shall provide the Academy with such certificates or
other documents as may be reasonably required to establish any applicable
exemptions from the collection of such taxes, charges and fees.
3.6 All Products shall be packaged, labeled, advertised, marketed, sold
and distributed by the Academy in compliance with the rules and regulations of
the applicable governmental authority within the Territory in which the Products
are marketed, as amended from time to time, and all other applicable laws, rules
and regulations.
3.7 The Academy agrees not to make, or permit any of its employees, agents
or representatives to make, any claims of any properties or results relating to
any Product, unless
-3-
<PAGE>
such claims have received written approval from Carrington and from the
applicable governmental authority.
3.8 The Academy shall not use any label, advertisement or marketing
material on or with respect to or relating to any Product unless such label,
advertisement or marketing material has first been submitted to and approved by
Carrington in writing.
3.9 The Academy agrees that Carrington shall have the right to inspect the
Academy's facilities at all reasonable times to ensure the Academy's compliance
with the provisions of this Agreement.
3.10 The Academy will actively and aggressively promote the sale of the
Products to all customers and potential customers within the Territory. The
Academy agrees not to market, sell or distribute to any customers or potential
customers in the Territory any wound care, skin care, incontinence care or other
pharmaceutical products that compete with any of the Products.
Article 4. Sale of Products by Carrington to The Academy
- --------- ---------------------------------------------
4.1 Subject to the terms and conditions of this Agreement, including
specifically Article 4.6 hereof, Carrington shall sell to the Academy its
requirements for the Products at a price for each Product (the "Contract Price")
which represents a mutually agreed upon discount from Carrington's distributor
price for the Territory for such Product as set forth in Carrington's published
distributor price list (the "Published Price List"). For orders placed by the
Academy during the first 12-month period of the term of this Agreement, the
Contract Prices for the Products listed on Exhibit A are set forth on such
---------
exhibit opposite each Product. At least 60 days prior to the end of each 12-
month period of the term of this Agreement, the parties shall commence good
faith negotiations to determine and agree upon the Contract Prices for Products
for the next 12-month period of the term. Carrington reserves the right to
change its distributor prices for Products as set forth in the Published Price
List at any time and from time to time for the next 12 month period. However,
any price changes shall be discussed and negotiated in relation to the specified
minimum and if no agreement is reached, the Academy has no obligation to
purchase products from Carrington.
4.2 Carrington shall sell the same products to the Academy as it
manufactures and sells in the United States; provided however, the parties may
agree to produce Chinese labels and other product information once a sufficient
quantity of products is ordered.
4.3 As consideration for its appointment as exclusive sales distributor
entitled to a Product discount, the Academy agrees to purchase from Carrington,
during each 12-month period of the term of this Agreement, commencing with the
12-month period beginning January 1, 1996 or such other date as mutually agreed
upon, at the Contract Price, a specified minimum aggregate dollar amount (based
on the Contract Price) of the Products (the "Specified Minimum Amount"). For
the first 12-month period of the term of this Agreement, the Specified Minimum
Amount shall be agreed upon at lease sixty days prior to January 1, 1996 or such
other date as mutually agreed upon. If no amount is reached, this Agreement
shall no longer be exclusive. The Specified Minimum Amounts for each subsequent
12-month period shall be determined by mutual agreement of the parties prior to
the beginning of such period based on the Academy's
-4-
<PAGE>
reasonable, good faith projections of future sales growth and such other factors
as the parties may deem relevant.
4.4 The Academy shall order Products by submitting a purchase order to
Carrington describing the type and quantity of the Products to be purchased.
The minimum order shall be 100 cases of one or assorted Products. Orders are
subject to by Carrington's consent. All purchases shall be spaced in a
reasonable manner. The Academy shall pay all invoices in full prior to shipment
pursuant to Article 17 hereafter. The Academy shall pay directly or reimburse
Carrington for all applicable taxes, assessments, duties, charges and fees,
however designated (including import and export charges), imposed by any taxing
or other governmental authority (including United States authorities), by reason
of the sale and delivery by Carrington, and purchase by the Academy, of Products
hereunder, except for any taxes based upon Carrington's income. Carrington
shall give the Academy notice of these charges prior to delivery. If the
Academy refuses to pay for such charges, no shipment shall be made hereunder.
All sales and payments shall be made, and all orders shall be accepted, in the
State of Texas.
4.5 Carrington shall not be obligated to ship Products to the Academy at
any time when payment of an amount owed by the Academy is overdue or when the
Academy is otherwise in breach of this Agreement.
4.6 All shipments of Products to the Academy will be packaged in
accordance with Carrington's standard packaging procedures and shall be suitable
for long distance by air or sea with the appropriate handling information agreed
to by the Parties.. All Contract Prices are F.O.B., Carrington's facility,
Dallas or Irving, Texas. Ownership of and title to Products and all risks of
loss with respect thereto shall pass to the Academy upon delivery of such
Products by Carrington to the carrier at the designated delivery (F.O.B.) point.
Deliveries of Products shall be made by Carrington under normal trade conditions
in the usual and customary manner being utilized by Carrington at the time and
location of the particular delivery.
4.7 Carrington shall use its reasonable best efforts to ensure
availability of all Products ordered by the Academy under this Agreement.
However, if necessary in the best judgment of Carrington, Carrington may
allocate its available supply of Products among all its customers, distributors
or other purchasers, including the Academy, on such basis as it shall deem
reasonable, practicable and equitable, without liability for any failure of
performance or lost sales which may result from such allocations.
4.8 Except as may be expressly stated by Carrington on the Product or on
Carrington's packaging, or in Carrington's information accompanying the Product,
at the time of shipment to the Academy hereunder, CARRINGTON MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND WITH RESPECT TO THE PRODUCTS, EXPRESS
OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. CARRINGTON NEITHER ASSUMES NOR AUTHORIZES ANYONE TO ASSUME
FOR IT ANY OBLIGATION OR LIABILITY IN CONNECTION WITH THE PRODUCTS. the Academy
shall not make any representation or warranty with respect to the Products that
is more extensive than, or inconsistent with, the limited warranty set forth in
this Article 4.8 or that is inconsistent with the policies or publications of
Carrington relating to the Products.
-5-
<PAGE>
THE ACADEMY'S EXCLUSIVE REMEDY FOR BREACH OF ANY WARRANTY HEREUNDER IS THE
DELIVERY BY CARRINGTON OF ADDITIONAL QUANTITIES OF THE PRODUCTS IN REPLACEMENT
OF THE NON-CONFORMING PRODUCTS OR THE REFUND OF THE CONTRACT PRICE FOR THE
PRODUCTS THAT ARE COVERED BY THE WARRANTY, AT THE ACADEMY'S OPTION. CARRINGTON
SHALL HAVE NO OTHER OBLIGATION OR LIABILITY FOR DAMAGES TO THE ACADEMY OR ANY
OTHER PERSON OF ANY TYPE, INCLUDING, BUT NOT LIMITED TO, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES, LOSS OF PROFITS OR OTHER COMMERCIAL OR ECONOMIC LOSS, OR
ANY OTHER LOSS, DAMAGE OR EXPENSE, ARISING OUT OF OR IN CONNECTION WITH THE
SALE, USE, LOSS OF USE, NONPERFORMANCE OR REPLACEMENT OF THE PRODUCTS.
THE ACADEMY SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CARRINGTON AND ITS
AFFILIATES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, FROM
AND AGAINST ALL CLAIMS, LIABILITIES, DEMANDS, DAMAGES, EXPENSES AND LOSSES
(INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) ARISING OUT OF OR CONNECTED
WITH (I) ANY USE, SALE OR OTHER DISPOSITION OF PRODUCTS BY THE ACADEMY OR ANY
OTHER PARTY, (II) ANY BREACH BY THE ACADEMY OF ANY OF ITS REPRESENTATIONS,
WARRANTIES OR COVENANTS UNDER THIS AGREEMENT OR (III) ANY ACTS OR OMISSIONS ON
THE PART OF THE ACADEMY OR ITS AGENTS, SERVANTS OR EMPLOYEES WHICH ARE OUTSIDE
OR BEYOND THE ACADEMY'S AUTHORIZATION GRANTED HEREIN.
4.9 Credits on defective Products by the Academy will be calculated by
Carrington based on the original Contract Price of the items returned, whether
identified by lot number or another method.
4.10 Carrington shall provide the Academy evidence of its standard
liability coverage and certificate of insurance and shall endeavor to have the
Academy included in a Third Party beneficiary thereunder.
4.11 Upon the acceptance of an initial first order of a size and price
agreeable to Carrington, Carrington shall provide airfare, a daily per diem for
meals and lodging, for up to five Chinese representatives for product training.
Article 5. Term and Termination
- --------- --------------------
5.1 The initial term of this Agreement shall be for a period of five (5)
years from the date of this Agreement. After such initial term, this Agreement
shall be automatically extended for an additional term of three (3) years,
unless this Agreement is terminated at the end of the initial five-year term by
written notice given by either party to the other party not less than six months
prior to the end of such initial term. Notwithstanding the foregoing, this
Agreement may be terminated earlier in accordance with the provisions of this
Article 5.
-6-
<PAGE>
5.2 Regardless of Article 5.1, either party hereto may terminate this
Agreement effective at any time after January 1, 1998, by giving the other party
at least six months' prior written notice of termination.
5.3 Either Party has the absolute right to terminate this Agreement if the
other parties fails to perform or breaches, in any material respect, any of the
terms or provisions of this Agreement. Without limiting the events which shall
be deemed to constitute a breach or material breach of this Agreement by the
Academy, the Academy understands and agrees that it shall be in material breach
of this Agreement, and Carrington shall have the right to terminate this
Agreement under this Article 5.3, if:
(i) The Academy fails or refuses to pay to Carrington any sum when
due;
(ii) The Academy breaches any provision of Article 2.2, 3.1, 3.3, 3.6,
3.8, 3.10, 4.4, 4.8, 6 or 7; or
(iii) The Academy fails to purchase the Specified Minimum Amount of
Product for any required period.
5.4 Either Party has the absolute right to terminate this Agreement in the
event the other shall become insolvent, or if there is instituted by or against
the other procedures in bankruptcy, or under insolvency laws or for
reorganization, receivership or dissolution, or if the other loses any franchise
or license to operate its business as presently conducted in any part of the
Territory.
5.5 This Agreement shall automatically terminate effective at the end of
any 12-month period of the term of this Agreement referred to in Articles 4.1
and 4.3 hereof if the parties are unable to agree upon the Contract Prices or
the Specified Minimum Amount for the next 12-month period of the term.
5.6 During the one-year period following termination of this Agreement,
any inventory of Products held by the Academy at the termination of this
Agreement may be sold by the Academy to customers in the Territory in the
ordinary course; provided, however, that for the period required to liquidate
such inventory, all of the provisions contained herein governing the Academy's
performance obligations and Carrington's rights shall remain in effect. In
order to accelerate the liquidation of any such inventory, Carrington may buy
back, if the Academy agrees but not the obligation, to purchase all or any part
of such remaining inventory at the price at which the inventory was originally
sold by Carrington to the Academy. Carrington shall give first priority to
buying back such inventory.
5.7 The termination of this Agreement shall not impair the rights or
obligations of either party hereto which shall have accrued hereunder prior to
such termination. The provisions of Articles 4.8, 6, 7 and 15 and the rights
and obligations of the parties thereunder shall survive the termination of this
Agreement for a period of three (3) years.
-7-
<PAGE>
Article 6. Trademarks and Trade Names
- --------- --------------------------
6.1 All trademarks, trade names, service marks, logos and derivatives
thereof relating to the Products (the "Trademarks"), and all patents, technology
and other intellectual property relating to the Products, are the sole and
exclusive property of Carrington or its affiliates. Carrington hereby grants
the Academy permission to use the Trademarks for the limited purpose of
performing its obligations under this Agreement. Carrington may, in its sole
discretion, modify or discontinue the use of any Trademark and/or use one or
more additional or substitute marks or names, and the Academy shall be obligated
to do the same.
6.2 The Academy agrees to use the Trademarks in full compliance with the
rules prescribed from time to time by Carrington. The Academy may not use any
Trademark as part of any corporate name or with any prefix, suffix or other
modifying words, terms, designs or symbols. In addition, the Academy may not
use any Trademark in connection with the sale of any unauthorized product or
service or in any other manner not explicitly authorized in writing by
Carrington.
6.3 In the event of any infringement of, or challenge to, the Academy's
use of any Trademark, the Academy is obligated to notify Carrington immediately,
and Carrington shall have sole and absolute discretion to take such action as it
deems appropriate.
6.4 In the event of the termination of this Agreement for any reason, the
Academy's right to use the Trademarks shall cease, and the Academy shall cease
using such Trademarks at such time as the Academy's inventory of Products has
been sold. The Academy shall, as soon as it is reasonably possible, remove all
Trademarks which appear on or about the premises of the office(s) of the Academy
and any of the advertising of the Academy used in connection with Products.
6.5 In the event of a breach or threatened breach by the Academy of the
provisions of this Article 6, Carrington shall be entitled to all legal remedies
including an injunction or injunctions to prevent such breaches. Nothing herein
shall be construed as prohibiting Carrington from pursuing other remedies
available to it for such breach or threatened breach of this Article 6,
including the recovery of damages from the Academy.
Article 7. Confidential Information
- --------- ------------------------
7.1 The Academy recognizes and acknowledges that the Academy will have
access to confidential information and trade secrets of Carrington and other
entities doing business with Carrington relating to research, development,
manufacturing, marketing, financial and other business-related activities
("Confidential Information"). Such Confidential Information constitutes
valuable, special and unique property of Carrington and/or other entities doing
business with Carrington. Other than as is necessary to perform the terms of
this Agreement, the Academy shall not, during and after the term of this
Agreement, make any use of such Confidential Information, or disclose any of
such Confidential Information to any person or firm, corporation, association or
other entity, for any reason or purpose whatsoever, except as specifically
allowed in writing by an authorized representative of Carrington. In the event
of a breach or threatened breach by the Academy of the provisions of this
Article 7, Carrington shall be entitled to an
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<PAGE>
injunction restraining the Academy from disclosing and/or using, in whole or in
part, such Confidential Information. Nothing herein shall be construed as
prohibiting Carrington from pursuing other remedies available to it for such
breach or threatened breach of this Article 7, including the recovery of damages
from the Academy.
Article 8. Force Majeure
- --------- -------------
8.1 Each party shall have any liability hereunder if it shall be prevented
from performing any of its obligations hereunder by reason of any factor beyond
its control, including, without limitation, fire, explosion, accident, riot,
flood, drought, storm, earthquake, lightning, frost, civil commotion, sabotage,
vandalism, smoke, hail, embargo, act of Nature or the public enemy, other
casualty, strike or lockout, or interference, prohibition or restriction imposed
by any government or any officer or agent thereof ("Force Majeure"), and either
party's obligations, so far as may be necessary, shall be suspended during the
period of such Force Majeure and shall be canceled in respect of such Products
as would have been sold hereunder but for such suspension. Either party shall
give to the other prompt notice of any such Force Majeure, the date of
commencement thereof and its probable duration and shall give a further notice
in like manner upon the termination thereof. Each party hereto shall endeavor
with due diligence to resume compliance with its obligations hereunder at the
earliest date and shall do all that it reasonably can to overcome or mitigate
the effects of any such Force Majeure upon a party's obligations under this
Agreement.
Article 9. Amendment
- --------- ---------
9.1 No oral explanation or oral information by either party hereto shall
alter the meaning or interpretation of this Agreement. No modification,
alteration, addition or change in the terms hereof shall be binding on either
party hereto unless reduced to writing and executed by the duly authorized
representative of each party.
Article 10. Entire Agreement
- ---------- ----------------
10.1 This Agreement shall supersede any and all prior agreements,
understandings, arrangements, promises, representations, warranties, and/or any
contracts of any form or nature whatsoever, whether oral or in writing and
whether explicit or implicit, which may have been entered into prior to the
execution hereof between the parties, their officers, directors or employees as
to the subject matter hereof. Neither of the parties hereto has relied upon any
oral representation or oral information given to it by any representative of the
other party. In case of dispute, arbitration, or other proceedings, the arbiter
or other presiding party shall attempt to equally utilize both the English and
Chinese versions of this agreement, but in case of conflict between the two, the
English version shall control.
Article 11. Assignment
- ---------- ----------
11.1 Neither this Agreement nor any of the rights or obligations of the
Academy hereunder shall be assigned by the Academy without the prior written
consent of Carrington, executed by a duly authorized officer of Carrington.
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Article 12. Governing Law
- ---------- -------------
12.1 It is expressly agreed that the validity, performance and
construction of this Agreement will be governed by the laws of the State of
Texas, United States of America.
Article 13. Notices
- ---------- -------
13.1 Any notice required or permitted to be given under this Agreement by
one of the parties to the other shall be given for all purposes by delivery in
person, registered air-mail, postage prepaid, return receipt requested, or by
fax addressed to:
(a) Carrington at: Carrington Laboratories, Inc., 2001 Walnut Hill Lane,
Irving, Texas 75038, attention Chris Record, or at such other address
as Carrington shall have theretofore furnished in writing to the
Academy. (Fax No. 214-518-1020)
(b) The Academy at: ____________ attention ________________, or at such
other address as the Academy shall have theretofore furnished in
writing to Carrington. (Fax No. ______________)
Article 14. Waiver
- ---------- ------
14.1 Either parties failure to enforce at any time any of the provisions
of this Agreement or any right with respect thereto, shall not be considered a
waiver of such provisions or rights or in any way affect the validity of same.
Either parties exercise of any of its rights shall not preclude or prejudice it
thereafter from exercising the same or any other right it may have, irrespective
of any previous action by it.
Article 15. Arbitration
- ---------- -----------
15.1 Except as provided in Articles 6.5 and 7.1, any dispute, controversy
or claim arising out of or in relation to or in connection with this Agreement,
the operations carried out under this Agreement or the relationship of the
parties created under this Agreement, shall be exclusively and finally settled
by confidential arbitration, and any party may submit such a dispute,
controversy or claim to arbitration. After the failure to settle disputes by
friendly negotiation, the arbitration proceeding shall be held at the location
of the non-instituting party in the English language and shall be governed by
the rules of the American Arbitration Association (the "AAA") as amended from
time to time. Any procedural rule not determined under the rules of the AAA
shall be determined by the laws of the State of Texas, other than those laws
that would refer the matter to another jurisdiction.
A single arbitrator shall be appointed by unanimous consent of the parties.
If the parties cannot reach agreement on an arbitrator within 45 days of the
submission of a notice of arbitration, the appointing authority for the
implementation of such procedure shall be the AAA, who shall appoint an
independent arbitrator who does not have any financial interest in the dispute,
controversy or claim. If the AAA is unable to appoint, or fails to appoint, an
arbitrator within 90 days of being requested to do so, then the arbitration
shall be heard by three arbitrators, one selected by each party within the 30
days of being required to do so, and the third promptly selected by the two
arbitrators selected by the parties.
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The arbitrators shall announce the award and the reasons therefor in
writing within six months after the conclusion of the presentation of evidence
and oral or written argument, or within such longer period as the parties may
agree upon in writing. The decision of the arbitrators shall be final and
binding upon the parties. Judgment upon the award rendered may be entered in
any court having jurisdiction over the person or the assets of the party owing
the judgment or application may be made to such court for a judicial acceptance
of the award and an order of enforcement, as the case may be. Unless otherwise
determined by the arbitrator, each party involved in the arbitration shall bear
the expense of its own counsel, experts and presentation of proof, and the
expense of the arbitrator and the AAA (if any) shall be divided equally among
the parties to the arbitration.
Article 16. No Inconsistent Actions
- ---------- -----------------------
16.1 Each party hereto agrees that it will not voluntarily undertake any
action or course of action inconsistent with the provisions or intent of this
Agreement and, subject to the provisions of Articles 4.6 and 8 hereof, will
promptly do all acts and take all measures as may be appropriate to comply with
the terms, conditions and provisions of this Agreement.
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Article 17. Currency of Account
- ---------- -------------------
17.1 This Agreement evidences a transaction for the sale of goods in which
the specification of U.S. dollars is of the essence, and U.S. dollars shall be
the currency of account in all events. All payments to be made by the Academy
to Carrington hereunder shall be made either (i) in immediately available funds
by confirmed wire transfer to a bank account to be designated by Carrington or
(ii) in the form of a bank cashier's check payable to the order of Carrington.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written and it shall be effective upon receipt of
the mutually agreed upon and certified Mandarin version by both parties.
CARRINGTON LABORATORIES, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
CHINESE ACADEMY OF SCIENCES
By:__________________________________
Name:________________________________
Title:_______________________________
-12-
<PAGE>
EXHIBIT 10.4
SUPPLY AND DISTRIBUTION AGREEMENT
---------------------------------
THIS AGREEMENT, is made this 15th day of September, 1995, by and between
MEDICAL POLYMERS, INC., a corporation duly organized and existing under the laws
of the State of Delaware, having its principal place of business at 7600 Burnet
Road, Suite 350, Austin, Texas 78757 (hereafter referred to as "MPI") and
Carrington Laboratories, Inc., a corporation duly organized and existing under
the laws of the State of Texas having its principal place of business at 2001
Walnut Hill Lane, Irving, Texas 75038 (hereinafter referred to as "Carrington").
BACKGROUND:
MPI is a biomedical company engaged in developing unique polymer-based
products for use by the OTC markets which have developed products known as
Miracle Grip(TM), QUITCH(R), Alpha Hy(TM) stick, QUITZIT(TM) and Relaxor(TM)
which are more particularly described on Exhibit A attached hereto and is
developing other OTC products. MPI desires to sell such products to Carrington
and to appoint Carrington as a distributor of such product and to grant
Carrington a right to become a distributor of other products which may from time
to time be developed by MPI, all in accordance with the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual promises and undertakings
hereinafter set forth, MPI and Carrington hereby agree as follows:
1. Definitions. For purposes hereof, the following terms shall have the
------------
following meanings:
1.1. The term "MPI" shall mean Medical Polymers, Inc., and its successors
and assigns.
1.2. The term "Carrington" shall mean Carrington Laboratories, Inc. and
its successors and assigns.
1.3. The term "Other Products" shall mean any product (other than the
Products listed in Exhibit A) developed from time to time during the term of
this Agreement by MPI for use in the OTC market.
1
<PAGE>
1.4. The term "Product" shall mean Miracle Grip(TM), QUITCH!(R),
QUITCH(R)D, QUITZIT(TM), Alpha Hy(TM) stick, or Relaxor(TM), descriptions of
which is set forth on Exhibit A attached hereto as used by consumers with
dentures.
1.5 The term "Territory" shall mean the United States of America and
Canada, South America, Mainland China, and their respective territories.
2. Appointment.
------------
2.1. MPI hereby appoints Carrington as a distributor of the Product within
the Territory.
3. Duties of MPI; Ordering Product.
--------------------------------
3.1. During the Term, MPI shall manufacture or cause to be manufactured
the Products in accordance with all applicable laws, rules and regulations and
in accordance with good manufacturing practices and those practices utilized by
MPI in the production of any of its other products. Such completed Products
shall be sold to Carrington in accordance with the terms of this Agreement. MPI
shall use its best efforts to obtain, at its expense, all necessary approvals
for the production of Products, including without limitation, any required
approval of the FDA.
3.2. Throughout the term of this Agreement, Carrington shall deliver
purchase orders for any Product and Products it shall desire to distribute
hereunder and MPI shall manufacture or cause to be manufactured the Product and
Other Products to fill such purchase orders. The parties acknowledge and agree
that no minimum shall be required for the first Contract Year. Thereafter, the
minimum amount of units of any of the Product purchased by Carrington for any
calendar subsequent year during the term of this Agreement shall not be less
than the amount specified on Exhibit B attached hereto.
4. Duties of Carrington.
---------------------
4.1. Throughout the term of this Agreement, Carrington shall use its best
efforts to market aggressively the Products through the Emprise company, the
Home Shopping Network and Carrington's catalog program. In connection
therewith, Carrington shall employ and maintain sufficient staff and sales
personnel to meet its obligation hereunder.
4.2. Carrington shall make such filings and take such actions as may be
required to qualify to transact business under applicable state and local laws,
and any laws required by an countries outside the Territory, in order to perform
its services hereunder.
2
<PAGE>
4.3. At Carrington's request, private labeling of the Products shall occur
as quickly as possible, as mutually agreed upon by the Parties. Should such
private labeling be required, Carrington shall be responsible for preparing the
labeling for the Product and shall submit such labeling to MPI for its approval.
Carrington shall retain the title to and right to use all such labeling.
Regarding non-exclusive sales to Home Shopping Network, Carrington will
represent (package) MPI's products in conjunction with other Carrington
products. The sale of MPI's products through the Home Shopping Network without
Carrington products will be done only with the expressed assistance of MPI
marketing representatives. If Carrington is unsuccessful at achieving a test
market for MPI's products through the Home Shopping Network, product sales of
MPI products would revert back to MPI.
5. Price and Terms of Payment.
---------------------------
5.1. Carrington agrees to pay MPI a price the price set for in Exhibit C
for the first 1,000,000 units ordered per each Product. MPI agrees that such
prices paid by Carrington will be no greater than that paid by other parties
distributing the Product in the Territory. Both MPI and Carrington acknowledge
and agree that a mechanism must be established to provide Carrington with ample
incentive to sell greater volumes of Products and that such mechanism will
include an increase in the applicable gross margin generated by Carrington by
selling the products. Both parties agree that discussions to devise such a
mechanism will be held prior to such time as the order, the fulfillment of which
will complete the first million ounces sold to Carrington, is placed with MPI.
5.2. Carrington shall pay MPI for all Products purchased by Carrington
hereunder on a net thirty (30) day basis, with Carrington receiving a one
percent (1%) credit for any payments mailed within twenty-two (22) days.
5.3. If the terms and conditions which are set forth in any purchase order
or one blanket purchase order provided by Carrington hereunder are inconsistent
with the provisions of this Agreement, then such terms and conditions shall not
apply to any purchases and sales of the Products hereunder unless agreed to in
writing by MPI.
6. Delivery and Acceptance. The Products shall be delivered to
------------------------
Carrington F.O.B. Grand Prairie, Texas. Title to and ownership of the Products
shall be transferred to Carrington upon shipment of such Products from MPI or
MPI's agent and Carrington shall assume the risk of loss and damage to such
Product and Other Products thereafter. Carrington shall have the
3
<PAGE>
right to reject any or all of the Products upon arrival and for a period of
five (5) days thereafter for any of the following reasons: (i) any printing on
the labels which contains the Products is not legible and smudge-free; (ii) the
package containing the Products is damaged or is not full or no date code
appears on such container. In the event of such rejection, Carrington shall
notify MPI in writing within five (5) days of Carrington's receipt thereof.
Upon such notice, MPI shall replace all defective or unaccepted Products in
accordance with the terms of Section 13, below.
7. Licenses and Permits. At its sole expense, MPI shall obtain, if
---------------------
necessary and applicable, all licenses, approvals, registrations and
qualifications required under all applicable laws, rules, regulations and
ordinances from all federal, state, local or foreign governmental agencies
relating to the manufacture or sale of the Products within the Territory which
may be subject to this Agreement. In connection therewith, Carrington shall
provide, at no cost to Carrington, such assistance as may be reasonable
requested by MPI to assist in such process.
8. Market Information. Carrington shall keep MPI informed of any
-------------------
information which it obtains concerning the Products, particularly with regard
to market conditions, and new market opportunities. Carrington will develop
with MPI a market introduction plan for each of the Products and a market "roll
out" plan for the introduction of the Products. This plan will be jointly
renewed or reviewed at three (3) month intervals during the first year of this
Agreement and at four (4) month intervals in any renewal years of this
Agreement.
9. Inventory. MPI shall maintain at all times during the term of this
----------
Agreement and inventory of the Products in such quantities as is necessary in
order to fill the monthly purchase order commitments calculated with reference
to the minimum quantities specified on Exhibit B attached hereto. Carrington
will provide, on a quarterly basis dated from the initial order, written
forecasts to MPI as to Carrington's projected demand for the Products.
10. Warranty. Carrington warrants to MPI that the Products distributed
---------
by Carrington hereunder shall be free from defects in material and workmanship
and shall be produced using good manufacturing practices and in accordance with
all applicable laws, rules and regulations and such quality standards as is
appropriate in the industry. In the event that any recall of any of the Products
is instituted either at the request of MPI or as mandated by any governmental
agency or authority, MPI shall bear all costs regarding such recall. In the
event that any Product is found to be defective or is not otherwise accepted by
Carrington hereunder in accordance with the provisions of Section 6, above, such
defective or unaccepted Product shall be replaced within
4
<PAGE>
ten (10) business days by MPI at no additional cost to Carrington. In the event
that Carrington shall change its labeling procedures without the consent of MPI
hereunder, or takes any other action which results directly in the recall of any
Products, Carrington shall be responsible for all costs relating to such recall.
11. Indemnification.
----------------
11.1. MPI shall indemnify, defend and hold harmless Carrington and all of
Carrington's officers, directors, shareholders, employees and agents from and
against any and all losses, damages, costs and expenses, including attorney's
fees and expenses, which Carrington may, at any time, sustain or incur which
relates to or arises out of in any manner the Products (other than losses,
damages, costs and expenses) which arise as a result of the negligence of
Carrington or its employees or conduct by Carrington or its employees which are
in breach of this Agreement including, but not limited to, any claim or action
for patent or trademark infringement in connection with any of the Products.
11.2. Carrington shall indemnify, defend and hold harmless MPI for any
fraud or misrepresentation of Carrington, its representatives or agents in
connection with the sale or marketing of Products hereunder.
11.3. If any action with respect to which indemnity may be sought
hereunder by either party shall be brought against such party, the other party
shall be entitled to participate in the defense thereof at its own expense or to
settle any such action only with the consent of the party against whom such
action is brought. In such event, each party shall cooperates with the other in
providing full and complete access to all relevant and non-privileged records of
the other.
12. Confidentiality.
----------------
12.1. The technical and other information furnished or disclosed by either
party to the other hereunder is to be used by the parties solely for the
activities related to this Agreement.
12.2. During the term of this Agreement, and for a period of five (5)
years thereafter, each party shall take all reasonable care to insure that
information, whether written, printed, oral or other form, received by either
party from the other under this Agreement shall not be disclosed or used for
any purposes other than as intended by this Agreement by the parties or their
agents or anyone acting on their behalf. The restrictions set forth in the
preceding sentence apply with equal force to disclosure of information by
directors, officers or employees of either party in their individual capacities.
The restrictions set forth in this Paragraph 12.2 shall not apply to any
5
<PAGE>
information which comes into the public domain without disclosure by a party in
violation of the terms of this Paragraph 12.2 or to any information which either
party is required by law to disclose.
13. Insurance. During the term of this Agreement, MPI shall secure and
----------
maintain a minimum of Two Million Dollars ($2,000,000) per occurrence of
products liability insurance and agrees to name Carrington as an additional
insured on such policy. In addition, such policy shall contain a clause which
prohibits the product liability insurance carrier from canceling or modifying
the insurance coverage without a minimum of thirty (30) days' prior written
notice to Carrington. MPI shall provide Carrington with evidence of such
insurance coverage within fifteen (15) days of the date of this Agreement.
14. Force Majeure. Neither party shall be responsible for any failure,
--------------
default or delay under this Agreement is such failure, default or delay is the
result of any fire, strike, labor dispute, war, extraordinary governmental
action, accident, act of God or any other cause of like character unforeseeable
by, or beyond the control of, the party whose performance is delayed as a result
thereof. In the event that either party's performance hereunder is suspended
for any of the foregoing reasons for a period in excess of thirty (30) days, the
other party may terminate this Agreement immediately upon written notice to the
other.
15. Term and Termination.
---------------------
15.1. This Agreement shall commence on the date hereof and shall remain in
effect from the date hereof until December 31, 1997, unless sooner terminated as
provided for elsewhere herein; provided, however, that at the expiration of the
initial and each renewal term, this Agreement shall be renewed for an additional
period of three (3) years unless either party shall deliver to the other party
notice of its intention not to renew at least one hundred eighty (180) days
prior to the expiration of the then-current term.
15.2. Notwithstanding the terms of Section 15.1, in addition to any other
rights either party may have to terminate this Agreement under other sections of
this Agreement, this Agreement may be terminated as follows: (a) by Carrington
at any time prior to December 31, 1997 upon thirty (30) days' written notice if
Carrington, in its sole discretion, determine that its targeted sales volumes of
the Products are not attainable; (b) by either party if the other party breaches
any of its covenants, obligations or warranties hereunder and fails to cure any
such breach within thirty (30) days after its receipt of notice of such breach
in writing, which notice
6
<PAGE>
shall specify the term or terms of this Agreement which have been breached; or
(c) by either party, to the extent permitted by applicable law, if the other
party shall (i) become insolvent or take or fail to take any action which
constitutes its admission or inability to pay its debts as they mature; (ii)
make an assignment for the benefit of creditors, file a petition in bankruptcy,
petition or apply to any tribunal for the appointment of a custodian, receiver
or any trustee for all or a substantial part of its assets; (iii) commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect; (iv) have filed against it any such petition or
application for which an order for relief is entered or which remains
undismissed for a period of thirty (30) days or more; or (v) indicate its
consent to, approval of or acquiescence in any such petition, application or
proceeding or order of relief or the appointment of a custodian receiver or
trustee for a substantial part of tits properties, or shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of thirty (30) days or more.
15.3. The termination of this Agreement for any reason shall not affect
any obligation of the parties which has already accrued as of the date of
termination or those obligations which, from the context hereof, are intended to
survive the termination of this Agreement.
16. Patents and Trademarks. Except as otherwise provided in Paragraph 2.2
-----------------------
herein, MPI shall bear all costs for the filing fees of patents, trademarks,
licenses, grants and other requirements for the manufacture, sale or marketing
of the Products and the protection of the patents, trademarks, registrations and
other proprietary properties relating to the Products. MPI represents, to its
best knowledge and belief, that none of the Products will infringe any
proprietary rights of others, that no third party is infringing any intellectual
property rights of MPI and that MPI owns the intellectual property rights used
in the Products free and clear of any liens, claims, encumbrances or
restrictions.
17. Assignment. This Agreement shall not be assignable by either party
-----------
without the prior written consent of the other party.
18. Entire Agreement. This Agreement constitutes the entire agreement
-----------------
between the parties and there are no other understandings, representations,
conditions or warranties of any kind, written or oral, expressed or implied, not
set forth herein. No alteration or modification of this Agreement, or any
waiver of any rights of either party hereunder shall be binding unless signed in
writing by authorized representatives of both parties.
7
<PAGE>
19. Enforceability. By its execution hereof, each party represents and
---------------
warrants to the other that this Agreement has been duly and validly authorized
by all necessary corporate action on its part, that this Agreement, when
executed and delivered, will be duly and validly executed and delivered and
binding on such party, enforceable in accordance with its terms and that its
execution of this Agreement or its performance of its terms will not conflict
with any other instrument or agreement to which it is a party or is subject or
require the consent of any third party.
20. Governing Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Texas without regard to principles of
conflicts of law thereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day, month and year set forth above.
MEDICAL POLYMERS, INC.
By:___________________________________________
Lee Cooke, President & C.E.O.
CARRINGTON LABORATORIES, INC.
By:___________________________________________
Dr. Carlton E. Turner, President & C.E.O.
8
<PAGE>
EXHIBIT A
DESCRIPTION OF PRODUCTS
-----------------------
<PAGE>
EXHIBIT B
MINIMUM GUARANTIES OF PRODUCT
-----------------------------
First calendar year 1,000,000 ounces
<PAGE>
EXHIBIT 10.5
CLINICAL SERVICES AGREEMENT
BY AND BETWEEN
Pharmaceutical Product Development, Inc.
115 North Third Street
Wilmington, NC 28401
AND
Carrington Laboratories Inc
Post Office Box 168128
Irving Texas 75016-8128
July 10, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1 -DEFINITIONS........................................................1
SECTION 2 -SERVICES...........................................................2
SECTION 3 -TRANSFERRED OBLIGATIONS............................................2
SECTION 4 -PAYMENT AND COMPENSATION...........................................3
SECTION 5 -TIMELY COMPLETION..................................................4
SECTION 6 -REPRESENTATIONS....................................................4
SECTION 7 -CARRINGTON's RESPONSIBILITIES......................................5
SECTION 8 -CONFIDENTIALITY....................................................6
SECTION 9 -RELEASE OF INFORMATION.............................................7
SECTION 10 -PROPERTY OWNERSHIP................................................7
SECTION 11 -PATENT RIGHTS.....................................................7
SECTION 12 -INDEMNIFICATION...................................................8
SECTION 13 -INSURANCE.........................................................9
SECTION 14 -EARLY TERMINATION.................................................9
SECTION 15 -RECORDS..........................................................12
SECTION 16 -COMPLIANCE WITH LAWS.............................................12
SECTION 17 -MEDIATION AND ARBITRATION........................................12
SECTION 18 -MISCELLANEOUS....................................................13
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
</TABLE>
<PAGE>
AGREEMENT FOR CLINICAL STUDY SERVICES
This agreement ("Agreement") is made by and between Pharmaceutical
Product Development, Inc. ("PPD"), located at 115 North Third Street Wilmington,
North Carolina 28401, and Carrington Laboratories Inc. (CARRINGTON), located at
Post Office Box 168128, Irving, Texas 75016-8128.
WITNESSETH:
WHEREAS, PPD is engaged in the business of managing clinical research
programs;
WHEREAS, CARRINGTON is engaged in the development, manufacture, and
distribution, of medical products; and
WHEREAS, CARRINGTON wishes to retain PPD's services in helping to conduct
the Study set forth in the Protocol in accordance with the terms and conditions
herein;
NOW, THEREFORE, PPD AND CARRINGTON, hereby agree to the following:
SECTION 1 -DEFINITIONS
- ----------------------
For purposes of this Agreement, the following terms shall have the
meanings set forth below when written with an initial capital letter.
A. "Case Report Form" or "CRF" - the patient case report form to be used in
the Study.
B. "Control Drug" - placebo or other agent as set forth in the Protocol.
C. "Evaluable Patient" - a patient who has passed the inclusion and
exclusion criteria; signed the informed consent; received the study drug
by the dose, route, regimen, and duration as specified in the Protocol;
had adequate documentation of primary efficacy and safety variables; and
been adequately followed to establish valid endpoints of safety and
efficacy.
D. "FDA" - the United States Food and Drug Administration.
E. "IND" - a claimed Investigational New Drug Application.
F. "Institutional Review Board" or "IRB" - any of the boards established
pursuant to 21 C.F.R. Part 56 for the purpose of reviewing clinical
research studies.
G. "Investigator" - the licensed physician who is a qualified clinical
investigator willing and able, and engaged by PPD in accordance with this
Agreement, to perform the Study.
H. "NDA" - a New Drug Application.
I. "Protocol" - the clinical testing procedures and conditions set forth in
CARRINGTON Protocol 9008, attached hereto as EXHIBIT A and incorporated
by reference herein.
J. "SOPs" - PPD's current standard operating procedures for conducting and
monitoring clinical trials approved by CARRINGTON.
K. "Study" - the clinical evaluation of the safety and efficacy of the Study
Drug pursuant to the Protocol.
1
<PAGE>
L. "Study Drug" -Oral Acemannan.
M. "Study Period" - the period during which the Study is to be performed;
beginning at the preparatory period prior to initiating the Study, and
ending at the delivery of complete Investigator documentation files to
CARRINGTON.
N. "Out of Scope Work" - any request from CARRINGTON for performance of
services that have not been agreed upon and accepted by CARRINGTON as
indicated in this Agreement or Exhibits.
SECTION 2 -SERVICES
- -------------------
PPD shall perform services including but not limited to those set forth in
EXHIBIT B attached hereto and incorporated by reference herein.
SECTION 3 -TRANSFERRED OBLIGATIONS
- ----------------------------------
Notwithstanding any other provision of this Agreement, and in addition to any
other specific responsibilities of PPD which are set forth herein, pursuant to
21 CFR Section 312.52, PPD assumes the following specific responsibilities of
CARRINGTON as "Sponsor" under the Federal Food and Drug Administration Act
("Act"):
a. Screening Investigators to perform the Study in accordance with
the Protocol;
b. Obtaining from Investigators information required by 21 CFR
(S)312.53(c)(1), (2) and (3);
c. Transmitting to Investigators the materials described in 21 CFR
(S)312.55(a) and (b) submitted to PPD by CARRINGTON, and any other
Study-related materials by CARRINGTON;
d. Selecting monitors who will monitor in accordance with 21 CFR
312.53(d) and 312.56(a) to perform the following tasks:
1. Monitor the progress of the Study;
2. Ensure the completeness and accuracy of clinical data;
3. Ensure Investigators' compliance with federal and other
applicable laws and regulations;
e. Ensuring that the Study is conducted at each site in accordance
with the Protocol, the Act, and applicable regulatory requirements
and guidelines:
f. Transmitting all relevant information concerning serious or
unexpected adverse events within twenty-four (24) hours to
CARRINGTON; provided, however, that CARRINGTON shall retain
responsibility for writing and filing IND Safety Reports
2
<PAGE>
with the FDA, and PPD shall transmit information from such reports
to all Investigators.
g. Maintaining all necessary records concerning the Study as required
by law;
h. Assuring the return of all unused supplies of investigational drug
(Study Drug and Control Drug) from each site as specified by the
Protocol to CARRINGTON or CARRINGTON's designee.
CARRINGTON transfers the above responsibilities to PPD but retains those
responsibilities of CARRINGTON not specifically listed herein. Except for the
responsibilities transferred to PPD herein, CARRINGTON shall at all times be
deemed to be the "Sponsor" of the Study for purposes of the Act.
SECTION 4 -PAYMENT AND COMPENSATION
- -----------------------------------
4.1 Payment. For monitoring the Study hereunder, PPD will receive a total
-------
sum not to exceed $1,727,577.00 (excludes Central Laboratory 6%
Administrative Fee). Payment shall be made in accordance with the Budget
and payment schedule set forth in EXHIBIT C.
4.2 Payable
-------
All checks shall be made payable to:
Pharmaceutical Product Development, Inc. (Fed. I.D. # 561640186)
115 North Third Street
Wilmington, North Carolina 28401
4.21 Late Payment If payment is not received from CARRINGTON within
------------
thirty (30) days in accordance with the payment schedule
delineated in the Proposal marked as Exhibit C, an interest charge
will be added to 4.3 the unpaid balance in the amount of 1.5% per
month.
4.3 All questions that CARRINGTON may have concerning scheduled payments,
amount of payments, and other related accounting questions under this
Agreement are to be directed to:
Anne Johnson
Cost Accountant
(910) 251-0081, Extension 467.
3
<PAGE>
4.4 All questions that PPD may have concerning scheduled payments, amount of
payments and other related accounting questions under this Agreement are
to be directed to:
Name: Sheri Pantermuehl
Title: Controller
Phone # 214/714-5012
4.5 Taxes All taxes (and any penalties thereon) imposed on any payment by
-----
CARRINGTON shall be the responsibility of PPD.
4.6 Out-of-Scope Work Any and all services that fall within the definition
-----------------
of Out-of-Scope Work will be performed by PPD provided that the following
provisions apply .
a. That CARRINGTON and PPD enter into good faith negotiations
regarding the additional services to be performed and attendant
charges thereto.
b. That negotiations regarding Out-of-Scope Work are completed within
60 days of inception of same.
c. Any agreement and its resultant effect on payment related to
performance of the Out-of-Scope Work in question will be
incorporated into this Agreement.
d. All Out-of-Scope Work will be agreed upon prior to implementation
based upon the execution of the form entitled Request For Project
Change which is attached hereto, incorporated herein by reference
and marked as 1.
SECTION 5 -TIMELY COMPLETION
- ----------------------------
Time is of the essence to this Agreement. It is acknowledged that CARRINGTON
desires to progress the Study hereunder at the maximum speed consistent with
good clinical practice and adherence to FDA regulations. PPD will make best
efforts to meet the timelines set forth in EXHIBIT D attached hereto and
incorporated by reference herein, and the Protocol. To the extent the
additional professional fees, management practices, and other incentives are
determined necessary for timely completion and were not provided for in the
Budget (EXHIBIT C), the aforesaid expenses will be added to the Budget as
mutually agreed upon in writing by the parties to the Agreement. Non-enrolling
investigational sites will be dropped and replaced by more productive
investigational sites, upon request by CARRINGTON or upon PPD's suggestion with
CARRINGTON's approval.
SECTION 6 -REPRESENTATIONS
- --------------------------
6.1 Conflicting Agreements. PPD represents that is not now under any
----------------------
agreement to provide services which would prevent it from fulfilling its
obligations hereunder, and that during the
4
<PAGE>
term of this Agreement, PPD will not enter into an agreement which would
in any way restrict its ability to provide services under this Agreement.
For the duration of this Agreement, PPD will not enter into any other
Agreements to provide study services in connection with ulcerative
colitis that would result in a compromise of the timelines established
for this program.
6.2 FDA Debarment and Disqualification. PPD represents that neither PPD nor
-----------------------------------
its employees, any Investigator or any person employed by Investigator to
perform the Study pursuant to this Agreement, (i) is under investigation
by the FDA for debarment action or is presently debarred pursuant to the
Generic Drug Enforcement Act of 1992 (21 U.S.C. 301 et seq), or (ii) has
------
a disqualification hearing pending or has been disqualified by the FDA
pursuant to 21 CFR Section 312.70. If during the course of this
Agreement, any Investigator or any person employed by an Investigator to
perform the Study (i) comes under investigation by the FDA for disbarment
action or disqualification, or (ii) is disbarred or disqualified, PPD
shall immediately notify CARRINGTON and terminate such Investigator's
participation in the Study, upon CARRINGTON 's request.
SECTION 7 -CARRINGTON's RESPONSIBILITIES
- ----------------------------------------
7.1 Clinical Supplies. CARRINGTON shall provide at its own expense all
-----------------
necessary clinical supplies of the Study Drug and Control Drug in time to
begin the clinical evaluations according to agreed upon timelines.
CARRINGTON shall notify PPD of the amount and date of all Study Drug and
Control Drug shipped under the preceding sentence. Title to all supplies
shall remain with CARRINGTON.
7.2 Protocol and CRFs. CARRINGTON shall finalize the Protocol and CRFs and
-----------------
deliver copies to PPD in a timely manner consistent with adherence to
development timelines. CARRINGTON agrees that the Protocol, CRFs, or
revisions thereto, which are undertaken by CARRINGTON are the
responsibility of CARRINGTON, even if such documents were suggested or
recommended by PPD. CARRINGTON must review and approve the final CRF.
7.3 Study-Related Injury. In the event a patient participating in the Study
--------------------
is physically injured directly as a result of the Study Drug administered
in accordance with the Protocol and such patient has followed the
directions of the Investigator or other Study personnel, CARRINGTON will
cover the medical expenses necessary to treat the injury, subject to
PPD's indemnification responsibilities under Section 12.2 below. No other
compensation will be provided by CARRINGTON. Payments under this Section
7.3 shall be in addition to any other payments specified in this
Agreement. Upon request of PPD or an Investigator, CARRINGTON will
deliver to the Investigator a letter setting forth CARRINGTON's
obligations under this Section 7.3.
7.4 Letter of Indemnity. CARRINGTON shall, at the request of PPD or an
-------------------
Investigator, execute
5
<PAGE>
and deliver to the Investigator a letter setting forth CARRINGTON's
obligations to the Investigator regarding any liability which may arise
out of the Investigator's participation in the Study.
7.5 Regulatory Developments. CARRINGTON shall file IND amendments with the
-----------------------
FDA with respect to the Study Drug and promptly notify PPD of such filing
and further regulatory developments with respect to such IND/NDA
affecting the legal status of the Study.
7.6 Audits by CARRINGTON. A number of investigational sites participating in
--------------------
the Study and/or PPD, may be selected by CARRINGTON for an audit by
CARRINGTON upon prior written notification to the investigational site
and PPD. PPD shall fully cooperate in such audit.
7.7 Evaluation Visits. In its capacity as sponsor of the Study, CARRINGTON
-----------------
shall accompany PPD on a number of regularly scheduled investigational
site visits, including initiation, monitoring, and close-out visits.
CARRINGTON shall notify PPD thirty (30) days in advance of all such
evaluation visits.
7.8 Financial Issues. Any and all types of financial matters regarding the
----------------
Study will be discussed only with PPD unless PPD is unable to provide
documents pursuant to 14.6(5).
7.9 Assays. CARRINGTON shall be responsible for all assays of the Study Drug
------
and Control Drug.
SECTION 8 -CONFIDENTIALITY
--------------------------
8.1 Confidential Information. The Protocol, data forms, clinical data and
------------------------
other data and information obtained or developed by or provided to PPD
and/or Investigators in connection with the Study ("Confidential
Information") are deemed to be confidential and are to be considered as
the sole and exclusive property of CARRINGTON. PPD agrees to maintain the
confidentiality of this Confidential Information and not to disclose it
to third parties who are not involved in the Study without prior written
authorization from CARRINGTON. PPD has obtained or will obtain, prior to
the initiation of the study, written agreements with its employees and
agents to maintain the confidentiality of this Confidential Information
as provided herein.
8.2 Non-Disclosure Agreement. PPD further agrees that any Investigator
------------------------
selected by PPD to provide services hereunder, and his/her coworkers,
agents or assistants or his/her authorized replacement, shall sign a Non-
Disclosure Agreement, the form of which is attached hereto as EXHIBIT E
and incorporated by reference herein. At the conclusion of the Study, any
of the Investigators may publish the results in the scientific and
medical literature, following CARRINGTON's prior internal review and
written approval of the proposed publication.
6
<PAGE>
8.3 Survival of Obligations. The obligations of PPD and Investigators with
-----------------------
regard to Confidential Information shall continue without limitation
unless modified in writing by CARRINGTON and will survive, without
limitation, for a period of fifteen (15) years after the expiration or
earlier termination of the Agreement.
8.4 Obligation of PPD. These obligations of non-disclosure shall not apply
-----------------
to Confidential Information which:
a. Is already known to PPD as shown by its prior written records;
b. Is or becomes publicly available through no fault of PPD;
c. Is received from a third party which has the legal right to
disclose it to PPD; or
d. Is required by law to be disclosed, provided CARRINGTON is
notified in writing ten (10) days prior to such lawful disclosure
if possible, or as soon as possible thereafter.
8.5 Injunctive Relief. PPD acknowledges and agrees that any violation of the
-----------------
terms of this Agreement relating to the disclosure or use of Confidential
Information may result in irreparable injury and damage to CARRINGTON
that may not be adequately compensable in money damages, and for which
CARRINGTON will have no adequate remedy at law. PPD therefore consents
and agrees that CARRINGTON may obtain injunctions, orders or decrees as
may be necessary to protect its Confidential Information.
SECTION 9 -RELEASE OF INFORMATION
- ---------------------------------
CARRINGTON may use, refer to and disseminate reprints of scientific, medical and
other published articles which disclose the name of PPD consistent with U.S.
copyright laws, provided such use does not constitute an endorsement of any
commercial product or service by PPD. PPD shall not disclose publicly or
utilize in any advertising or promotional materials the existence of this
Agreement or PPD's association with CARRINGTON or the use of the name CARRINGTON
or the name of any of CARRINGTON's divisions, products or investigations without
the prior written permission of CARRINGTON.
SECTION 10 -PROPERTY OWNERSHIP
- ------------------------------
All materials, documents, information, programs and suggestions of every kind
and description supplied to PPD or Investigators by or on behalf of CARRINGTON
or prepared or developed by PPD or Investigators pursuant to this Agreement,
shall be the sole and exclusive property of
7
<PAGE>
CARRINGTON.
SECTION 11 -PATENT RIGHTS
- -------------------------
11.1 Inventions. PPD will disclose promptly to CARRINGTON or its nominee any
-----------
and all inventions, discoveries and improvements conceived or made by PPD
or Investigators in the course of performing their duties to CARRINGTON
pursuant to this Agreement and PPD
agrees to assign, and to cause Investigators to assign all their interest
therein to CARRINGTON or its nominee.
11.2 Patent Assistance. Whenever requested to do so by CARRINGTON, PPD will
------------------
execute and/or cause Investigators to execute any and all applications,
assignments or other instruments and give testimony which CARRINGTON
shall deem necessary to apply for and obtain letters of patent of the
United States or of any foreign country or to protect otherwise
CARRINGTON's interest therein. CARRINGTON shall compensate PPD and the
Investigators for their time devoted to such activities and reimburse
them for reasonable and necessary expenses incurred.
11.3 Survival of Obligations. These obligations shall continue beyond the
------------------------
termination of this Agreement with respect to inventions, discoveries and
improvements conceived or made by PPD or Investigators while providing
services to CARRINGTON pursuant to this Agreement, and shall be binding
upon PPD's assigns, administrators and other legal representatives.
SECTION 12 -INDEMNIFICATION
---------------------------
12.1 CARRINGTON. CARRINGTON agrees to indemnify, defend and hold harmless PPD
-----------
from any loss, expense (including counsel fees), cost, liability, damage
or claim for personal injuries, including death at any time resulting
therefrom, or for damage to property arising out of or in connection with
the performance of this Agreement (hereinafter collectively "PPD Loss"),
provided that the Study is performed in complete compliance with this
Agreement and the Protocol, and that such PPD Loss does not arise out of
the negligence or willful misconduct of any person not in the employment
of CARRINGTON, that CARRINGTON is promptly notified of any complaint,
claim or injury to any subject arising out of or in the course of PPD's
activities in connection with the Study, and that CARRINGTON has sole
control over the defense or settlement of any such compliant or claim.
12.2 PPD. PPD shall indemnify and hold CARRINGTON harmless from any loss
----
expense (including counsel fees), cost, liability, damage or claim for
personal injuries, including death at any time resulting therefrom, or
for damage to property arising out of or in connection with the
performance of this Agreement (hereinafter collectively "CARRINGTON
Loss") and
8
<PAGE>
resulting from: 1) the failure of the PPD or Investigators or their
employees or agents to perform the Study in accordance with the Protocol
or in a manner required of a reasonable and prudent clinical investigator
or physician; or 2) the negligence or willful misconduct of PPD or the
employees, agents or any other persons connected with PPD or its
performance hereunder, including Investigators, except to the extent such
CARRINGTON Loss is due to the negligence of CARRINGTON.
SECTION 13 -INSURANCE
- ---------------------
13.1 PPD Requirements. Unless otherwise agreed to in writing, PPD shall, at
-----------------
its own expense, carry and maintain during the performance of the Study
under this Agreement the following insurance on its employees, in amounts
no less than that specified for each type:
a. Commercial general liability insurance including premises and
operations coverage with limits of not less than $1,000,000 per
occurrence and $2,000,000 per accident;
b. Property damage liability insurance with limits of not less than
$100,000 per occurrence and $100,000 per accident; and
c. Worker's compensation insurance in the amount required by
applicable state law.
13.2 Certificates of Insurance. PPD shall, at CARRINGTON's request, have its
--------------------------
insurance carrier or carriers furnish to CARRINGTON certificates of
insurance or, if self-insured, documentation stating that all insurance
required under this Agreement is in force, such certificates or
documentation to indicate any deductible and/or self-insured retention
and stipulate that the insurance will not be canceled while this
Agreement is in effect without thirty (30) days prior written notice to
CARRINGTON. PPD shall on request permit CARRINGTON to examine original
insurance or other protective policies issued in compliance with the
requirements hereof. Should PPD at any time neglect or refuse to provide
the insurance required herein, or should such insurance be canceled,
CARRINGTON shall have the right to procure the same and the cost thereof
shall be deducted from any compensation then due or thereafter to become
due PPD. PPD shall not commence the Study hereunder until the insurance
required herein has been obtained.
13.3 CARRINGTON Requirements. CARRINGTON shall provide PPD, upon request,
------------------------
documentation assuring PPD that CARRINGTON maintains product liability
insurance.
SECTION 14 -EARLY TERMINATION
-----------------------------
14.1 Periodic Review and Evaluation. CARRINGTON shall have the right to
-------------------------------
review the progress of the Study undertaken hereunder every two weeks and
determine whether to continue or elect to terminate prior to completion
for any reason. CARRINGTON may elect to terminate or not commence the
Study at any time for any reason upon thirty (30) days written notice
9
<PAGE>
to PPD.
14.2 Immediate Termination. This Agreement may be terminated by written
---------------------
notice from CARRINGTON, if any of the following conditions occur:
a. Authorization and approval to perform the Study in the United
States is withdrawn by the FDA;
b. Animal, human or toxicological test results, in the opinion of
CARRINGTON, support termination of the Study;
c. The emergence of any adverse reaction or side effect with the
Study Drug administered in the Study is of such magnitude or
incidence, in the opinion of CARRINGTON, to support termination;
d. PPD fails to comply with the terms of the Protocol or commits a
material breach of the Agreement for which notification has been
provided under 14.81; or
e. PPD or any of its employees is debarred by the FDA pursuant to the
Generic Drug Enforcement Act of 1992 (21 U.S.C. 301 et seq).
------
f. PPD's Medical Director, Project Manager, or Assistant Project
Manager, as delineated in Exhibit C is no longer able to provide
services hereunder.
14.3 Minimize Costs. Upon PPD's receipt of CARRINGTON's written notice of
---------------
termination or non-commencement, PPD shall use best efforts to revoke any
costs incurred, to avoid incurring any additional costs, and shall
refrain from enlisting any additional Investigators or patients. In the
event of early termination under this Section 14, PPD shall promptly
return to CARRINGTON any monies paid by CARRINGTON for which Study-
related services have not been provided ("Unpaid Contract Value"),
including payments for Investigator costs, as of the effective date of
termination.
14.4 Continuation of Study. In the event CARRINGTON terminates this Agreement
----------------------
early pursuant to Section below, CARRINGTON shall have the right without
exclusion of any other rights and remedies of CARRINGTON, to attempt to
engage the Investigators, either directly or indirectly and to complete
the Study. If CARRINGTON chooses to make such efforts, PPD agrees not to
interfere with these efforts and to promptly provide CARRINGTON with a
list of all Investigators and copies of all records required under
Section 14.6 below.
14.5 Termination Fee. In the event CARRINGTON terminates this Agreement early
----------------
pursuant to Section 14.1 above due to CARRINGTON's determination that the
Study is not worth
10
<PAGE>
pursuing due to poor enrollment, and in view of CARRINGTON's corporate
objectives and PPD has not breached the Protocol or this Agreement, PPD's
usual termination fee of fifteen percent (15%) of the unpaid contract
value as of the date of termination will be waived due to an enrollment
deficiency.
14.6 PPD Responsibilities. In the event of termination, PPD shall: (1)
---------------------
exercise its termination rights under its agreement with Investigators or
assign such Investigator agreements to CARRINGTON , at CARRINGTON's
option; (2) conduct close-out visits at each site in order to conclude
the Study; (3) perform any other monitoring services necessary to
discharge its responsibilities under 21 CFR Part 312.52; (4) perform such
services reasonably necessary or required in connection with the orderly
termination of the Study or in connection with the performance of its
obligations under the terms of this Agreement or by federal, state, or
local law or regulation, including applicable FDA regulations and
guidelines; and (5) promptly prepare and submit to CARRINGTON a final
financial report, and copies of all records, including but not limited to
all financial provisions of all agreements between PPD and Investigators
and Investigator sites and all financial records relating to the Study or
its performance and all periodic reports and patient records. In the
event PPD fails to deliver to CARRINGTON any of the records required
under subsection 14.6(5), CARRINGTON shall have the right to enter PPD's
premises and collect such records during PPD's normal working hours. PPD
shall cooperate with CARRINGTON to provide for an orderly termination and
termination of the Agreement as provided herein.
14.7 CARRINGTON Responsibilities. In the event of termination, CARRINGTON
----------------------------
shall: (1) pay PPD the amounts due PPD for all work and services
performed or committed through the effective date of termination; and (2)
pay the amounts due PPD for reimbursable expenses incurred by PPD in
performing services during the notice period; provided however, that PPD
returns to CARRINGTON all prepaid, unearned funds as required under
Section 14.3 above.
14.8 Breach of Agreement and Insolvency. In addition to any other rights or
-----------------------------------
remedies contained herein, this Agreement may be terminated by either
party:
14.81 Material Breach. Should the other party commit a material breach
---------------
of this Agreement, the aggrieved party may send a written notice
of said breach to the breaching party. The breaching party must
initiate a cure of the material breach within ten (10) days of
said notice and cure the breach within thirty (30) days of said
notice. Failure to comply with the foregoing will constitute a
breach of this Agreement.
14.82 Insolvency. A breach of this Agreement will occur by a party
----------
following thirty (30) days written notice that any of the
following events has occurred: party has become insolvent,
dissolved or liquidated, has made a general assignment for the
benefit of creditors, has filed or has filed against it a petition
in bankruptcy, or has a receiver appointed for a substantial part
of its assets.
11
<PAGE>
Notwithstanding subsection 14.81 in the event PPD commits a material breach
arising out of its failure to comply with any pertinent law or regulation as
required under Section 16 - below, CARRINGTON may terminate this Agreement on
written notice effective immediately.
Upon termination pursuant to Section 14.2(d), PPD shall make available to
CARRINGTON all records required pursuant to subsection 14.6(5) and the parties
shall agree upon a termination payment to PPD which will be comprised of
compensation to the extent the following are not duplicative for (i) all
services to be rendered through the effective date of termination; (ii) all
reimbursable expenses to be incurred in connection with the rendering of such
services; (iii) the amounts payable to Investigators for per patient
compensation pursuant to Investigator Agreements; and (iv) such expenses to be
reasonably incurred by PPD in connection with the orderly termination of PPD's
services reasonably required or necessary in connection with the performance of
its obligations under the terms of this Agreement or by federal or state law or
regulation, including applicable FDA guidelines and specifically requested by
CARRINGTON. However, such termination payment will be reduced by the value of
damages resulting from such breach subsequent to a reasonable accounting of such
damages or payments otherwise owed to CARRINGTON.
SECTION 15 -RECORDS
- -------------------
PPD shall maintain adequate accounting records for all receipts and
disbursements of supplies and monies. PPD shall also make and keep systematic
written records of all services performed and expenses incurred under this
Agreement. Such records shall include records relevant to any costs or expenses
incurred by PPD including Investigator grants, and PPD shall preserve all such
records for three (3) years following completion of services hereunder or
termination of this Agreement. During the term of this Agreement and for three
(3) years thereafter, CARRINGTON shall have the right to audit, inspect and copy
such records during PPD's regular working hours, and such records may be used by
CARRINGTON without limitation.
SECTION 16 -COMPLIANCE WITH LAWS
- --------------------------------
During the term of this Agreement, PPD and all of its employees, agents,
representatives and invitees shall fully comply with CARRINGTON's SOPs to the
extent they are not in conflict or adverse to PPD's SOPs. Should there be a
difference noted between CARRINGTON's SOPs and PPD's SOPs, the parties will
agree to follow PPD's SOPs unless otherwise requested by CARRINGTON. In the
event of such a request, CARRINGTON will provide written documentation of such
request and provide a written description of procedures to be followed that do
not comply with PPD SOPs. Such documentation will be housed in the sponsor
master file to be maintained by PPD. In addition during the term of the
Agreement, PPD and all of its employees, agents, representatives and invitees
will comply with all applicable laws, governmental regulations, rules,
requirements, ordinances, and other requirements of local and state authorities
and the Federal government, including but not limited to those administered by
the FDA, and the Occupational Safety and Health Act of 1970 ("OSHA"), the
Resource Conservation and Recovery Act ("RCRA"), and the Immigration Reform and
Control Act of 1986 ("IRCA") and the IRCA's implementing regulations as they
pertain to any
12
<PAGE>
and all employees employed by PPD in connection with the services hereunder.
SECTION 17 -MEDIATION AND ARBITRATION
- -------------------------------------
17.1 Resolution. If a dispute arises from or relates to this contract or a
-----------
breach thereof and if the dispute cannot be settled through direct
discussions, the parties agree to endeavor first to settle the dispute in
an amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules before resorting to
arbitration. Thereafter, any unresolved controversy or claim arising from
or relating to this contract or breach thereof shall be settled by
arbitration administered by the American Arbitration Association in
accordance with its Commercial Mediation Rules and judgement on the award
rendered by arbitrator(s) may be entered in any court having jurisdiction
thereof.
17.2 Transaction. The parties acknowledge that this agreement evidences a
-----------
transaction involving interstate commerce. The United States Arbitration
Act shall govern the interpretation, enforcement, and proceedings
pursuant to the arbitration clause in this agreement.
17.3 Location. Mediation and/or arbitration shall be held in Charlotte, North
--------
Carolina or any other place selected by mutual agreement.
17.4 Arbitration. The arbitration shall be before one neutral arbitrator to
-----------
be selected in accordance with the Commercial Rules of the American
Arbitration Association and shall proceed under the Expedited Procedure
of those rules, irrespective of the amount in dispute.
17.5 Prehearing Exchange. The arbitrator shall have the discretion to order a
-------------------
prehearing exchange of information by the parties, including, production
of requested documents, exchange of summaries of testimony of proposed
witnesses, and examination by deposition of parties.
17.6 Fees. All fees and expenses of the arbitration shall be borne by the
----
parties equally. However each party shall bear the expenses of its own
counsel, experts, witnesses, and preparation and presentation of proofs.
17.7 Disclosure. Neither a party nor the arbitrator may disclose the
----------
existence, content, or results of any arbitrative hereunder without the
prior written consent of both parties.
SECTION 18 -MISCELLANEOUS
- ------------------------
18.1 Modification. No modification of this Agreement shall be deemed
------------
effective unless in writing and signed by the parties hereto.
18.2 Integration of Agreement. This Agreement represents the entire and
-------------------------
integrated agreement
13
<PAGE>
between the parties and supersedes all prior negotiations,
representations or agreements either written or oral, regarding the Study
to be performed under this Agreement.
18.3 Descriptive Headings. The descriptive heading of the sections of this
---------------------
Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any provision hereof.
18.4 Incorporation by Reference. All Exhibits attached hereto shall be deemed
---------------------------
to be incorporated herein. In case of any conflict between this Agreement
and any Exhibit, the terms of this Agreement shall prevail over the
Exhibit.
18.5 Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of the parties hereto and their successors and assigns. PPD shall
not assign this Agreement in whole or in part, or any of the rights or
obligations hereunder without the prior written consent of CARRINGTON.
18.6 Applicable Law. This Agreement shall be governed by and construed in
---------------
accordance with the laws of the State of North Carolina.
18.7 Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
18.8 Waiver. Waiver or forbearance by either party or the failure by either
-------
party to claim a breach of any provision of the Agreement or exercise any
right or remedy provided by this Agreement or applicable law, shall not
be deemed to constitute a waiver with respect to any subsequent breach of
any provision hereof.
18.9 Independent Contractor. It is understood and agreed that PPD shall act
----------------------
at all times as an independent contractor. Nothing contained in this
Agreement shall be construed to create the relationship of principal and
agent or employer and employee between CARRINGTON and PPD or PPD's
employees, servants, agents or independent contractors. Neither PPD nor
its employees, servants, agents or independent contractors shall have
authority to act on behalf of or bind CARRINGTON in any manner whatsoever
unless otherwise authorized in this Agreement or in a separate writing
signed by CARRINGTON. It is further understood that no Investigator shall
be construed to be an employee of CARRINGTON.
18.10 Equal Employment Opportunity Policy
-----------------------------------
It is the express written policy of PPD to provide equal opportunities in
recruiting, hiring, training and promoting individuals in all job
categories without regard to race, color, religion, national origin, sex,
age, disability, or veteran status.
PPD remains committed to the elimination of discrimination in the
workplace. PPD shall
14
<PAGE>
ensure that all hiring and promotion decisions are consistent with the
principles of equal employment opportunity and are based strictly on
merit. In addition, PPD affirms that all compensation, benefits, company
sponsored training, educational assistance, social and recreational
programs and other human resources programs, are administered without
regard to race, color, sex, religion, national origin, age, veteran
status or disabilities. It is the intent of PPD to support equal
employment opportunity and affirmative action by adhering to both the
letter and spirit of the law.
18.11 Notices. Except as otherwise provided, all communications and notices
--------
under this Agreement shall be mailed by first class mail, postage
prepared, to the addresses as the parties from time to time specify in
writing.
If to PPD: Peter J. Wise, M.D.
----------
President/COO
Pharmaceutical Product Development, Inc.
115 North Third Street
Wilmington, North Carolina 28401
If to CARRINGTON: John E. Hall, DDS
----------------
Carrington Laboratories Inc.
Post Office Box 168128
Irving, Texas 75016-8128
IN WITNESS WHEREOF, the undersigned have executed this Agreement of the
day and year first written below.
Carrington Laboratories Inc. Pharmaceutical Product Development, Inc.
By: By:
--------------------------------- -----------------------------------
Name: Chris Record Name: Peter J. Wise, M.D.
------------------------------- ---------------------------------
Title: Vice-President Title: President
------------------------------ --------------------------------
Date: July 10, 1995 Date: July 10, 1995
------------------------------- ---------------------------------
15
<PAGE>
EXHIBIT A
PROTOCOL
16
<PAGE>
EXHIBIT B
SERVICES
--------
1.PPD Assistance. PPD will provide assistance for Protocol and case report form
---------------
development, and review of other reports and publications as requested by
CARRINGTON. PPD will not write supplemental NDA's or manuscripts for the Study
unless requested by CARRINGTON.
2.PPD Consultation. PPD will provide consultation to CARRINGTON for CARRINGTON
-----------------
meetings, FDA meetings, and Investigator meetings as reasonably requested by
CARRINGTON. Reasonable and necessary travel expenses for such meetings are
included in the Budget attached hereto as EXHIBIT C.
3.Investigator or Study Coordinator Meetings. PPD shall provide CARRINGTON
-------------------------------------------
assistance in planning the Investigator or Study Coordinator meetings for the
Study, provided, however, that CARRINGTON shall determine and approve in advance
the location and budget for such meetings in accordance with the terms and
conditions of a separate written agreement.
4.Pre-Study Meetings. PPD and CARRINGTON via telephone conference shall discuss
-------------------
monthly the status of pre-study work. PPD's project manager for the Study will
be available for any and all such discussions. Upon agreement by both parties,
the frequency of such meetings shall be adjusted upon CARRINGTON's request.
5.Investigator Selection. PPD will use due diligence in selecting Investigators
-----------------------
to participate in the Study in accordance with guidelines for Investigator
selection and required Investigator credentials provided by CARRINGTON. PPD
shall provide to CARRINGTON a list of prospective Investigators for
consideration and comment by CARRINGTON, which listing shall specify credentials
required by CARRINGTON. CARRINGTON shall have the right of approval or
(disapproval) of Investigators.
6.Investigator/PPD Agreements. PPD shall take all due steps to assure
----------------------------
Investigators are selected and conduct the study in strict accordance with the
Protocol and the terms of this Agreement and the written agreements described
immediately below. The engagement of Investigators shall be by written
agreement between the PPD and Investigator. Such agreements shall require that
each Investigator shall:
a. Exercise independent medical judgement as to the compatibility of each
patient with Protocol requirements;
b. Obtain from each patient in the Study a signed consent form which has
been approved by the IRB and CARRINGTON in accordance with the 21 C.F.R.
Part 50 ;
c. Properly perform the Study in accordance with the Protocol and good
clinical practice;
17
<PAGE>
d. Review all patient case report forms (hereinafter "CRFs") to assure their
accuracy and completeness;
e. Submit all data and information, and undertake all activities, so that
the time schedules set forth in the Protocol and this Agreement are
strictly met;
f. Notify immediately, in no event later than the time periods specified in
the SOPs, PPD and the IRB of any serious or unexpected adverse reactions
to the Study or Control Drug using the Adverse Drug Reaction reporting
form set forth in the SOPs;
g. Notify PPD and the IRB of any deviations from the Protocol;
h. Maintain adequate records of patient identification, clinical
observations, laboratory tests, and drug receipt and disposition, as
specified in the Protocol;
i. Cooperate with PPD and CARRINGTON in all of their efforts to monitor the
Study;
j. Submit any proposed publication of Study results to CARRINGTON for review
and written approval by CARRINGTON's research management;
k. Represent that neither the Investigator nor any of Investigator's
employees performing the Study i) is under investigation by the FDA for
debarment action or is presently debarred pursuant to the Generic Drug
Enforcement Act of 1992 (21 U.S.C. 301 et seq) or ii) has a
------
disqualification hearing pending or has been disqualified by the FDA
pursuant to 21 CFR Section 312.70; and
l. Agree that during the term of the agreement, neither Investigator nor any
personnel working with the Investigator to perform the Study shall work
independently or for a third party with respect to any product competing
directly or indirectly or in the same therapeutic category as the
CARRINGTON compound or product which is the subject of the Study.
Agreements between PPD and Investigators will state that the agreement is
between PPD and the Investigator and that CARRINGTON is not responsible
thereunder for any obligation.
7.SOP's. PPD shall conduct the Study and complete forms for observations and
------
other aspects of the Study according to the formats and procedures set forth in
the SOPs. These SOPs are subject to revision by CARRINGTON and in the event of
such SOP revision, CARRINGTON may require PPD to comply with the new SOPs. In
such event, CARRINGTON shall promptly provide PPD with copies of the new SOPs.
If any such SOP revision can reasonably be expected to affect the budget or
timelines for the Study, PPD shall submit to CARRINGTON revised cost estimates
or timelines for the relevant services which will become a part of this
Agreement upon written approval by CARRINGTON.
18
<PAGE>
8.Investigator Qualification. PPD shall further do all things necessary to
---------------------------
qualify the Investigators in accordance with FDA regulations and forms, obtain
the approval of the Investigators and the Protocol by the appropriate IRB in
accordance with the guidelines established by the FDA, and if applicable, verify
the certification of the laboratory and normal ranges for each laboratory used
by the Investigators, and all other such things as may be necessary to qualify
the study procedures under FDA regulations.
9.Investigator Identification. PPD shall choose qualified Investigators in
----------------------------
accordance with this Agreement and Protocol parameters who are not restricted
from receiving investigational supplies. Geographical distribution of
investigational sites to CARRINGTON's satisfaction will be provided.
10.Pre-Study Site Visits. PPD shall conduct pre-study site visits at each site
----------------------
to assess facility and Investigator compliance with particular needs called for
by the Protocol and the SOPs. CARRINGTON may join with PPD or conduct separate
site visits as desired. CARRINGTON shall provide PPD written notice of such
separate site visits. Pre-study site visits will be conducted at the same time
as initiation visits if CARRINGTON or PPD has used the investigational site
satisfactorily on a similar study within the preceding twelve (12) months.
11.Investigator Resources. PPD shall assure that each Investigator has adequate
-----------------------
staff, time and patient pool to be able to timely complete the required number
of patients according to the Protocol.
12.Study Documentation. PPD shall be responsible for timely delivery to and
--------------------
retrieval from Investigators of an adequate supply of all necessary Protocols,
generic CRFs, Investigator brochures, and all other documentation required for
the Study.
13.Shipment of Study Drug. Prior to shipment of Study Drug to any
-----------------------
investigational site, PPD shall provide to CARRINGTON all documentation
necessary for submission to the FDA, including completed and signed FDA form
1572, curricula vitae, and signed Investigator Statement and a copy of the IRB-
approved patient consent form from each Investigator, written approvals from the
IRB and all such other documents as CARRINGTON may reasonably require (upon
written notice) to obtain FDA approval of the Study at each site. PPD shall be
responsible for reviewing the documentation for completeness and accuracy prior
to submission to CARRINGTON. CARRINGTON shall file with the FDA all
documentation referred to herein and necessary for submission to the FDA in
order to obtain approval of each investigational site.
14.Initiation Visits. PPD will conduct an initiation visit at each
------------------
investigational site and perform a thorough review of the Protocol, patient case
report form, and investigators' brochure (or official prescribing information),
study drug dispensing, storage and record keeping procedures with the
Investigator prior to the commencement of the Study.
15.Investigator Files. PPD will create and maintain an Investigator file for
-------------------
each Investigator as specified in the SOPs. The random code will be maintained
in project files at CARRINGTON. The
19
<PAGE>
random code section of the Investigator file will contain a memo stating the
random code is filed in the project file. Upon request by CARRINGTON, PPD shall
make Investigator files available for inspection.
PPD shall complete such Investigator files and deliver them to CARRINGTON in
accordance with timelines set forth in the Protocol and this Agreement. In the
event CARRINGTON requests copies of any such Investigator files prior to the
dates established in such timelines, PPD shall promptly deliver such copies to
CARRINGTON.
16.Monitoring. During the Study Period, using PPD's forms set forth in the
-----------
SOPs, PPD will:
. negotiate investigator clinical grants; CARRINGTON will pay
investigator clinical grants via fixed price estimate
. train study site personnel
. pre-study and initiation visit can be combined if PPD or
CARRINGTON has previous experience (within the past 12 months)
with the investigative site. CARRINGTON will have final
approval to combine site visits.
. provide site evaluation reports within 2 weeks of visit date
. verify pre-study regulatory documentation including FDA Form
1572, informed consent form, investigator and associated study
personnel CVs, signed Investigator's Statement, licensure, lab
certification, etc.
. the PPD Medical Director will perform a clinical review of all
SAEs; investigative sites will notify PPD directly in the event
that an SAE occurs; PPD will notify CARRINGTON within 24 hours
of learning of the event
. perform interim monitoring visits at each investigative site at
intervals determined by enrollment and at the discretion of the
PPD Project Manager
. provide monitoring reports and site follow-up letters within 2
weeks of visit date
. maintain weekly phone contact with investigative sites
. provide written project status report to CARRINGTON weekly
after 1st patient is enrolled
. review and report adverse events at each visit
. perform drug accountability audits at each visit
. perform 100% of source document verification
. retrieve 100% of the Patient Chart Records (PCR)
. obtain copies of completed PCR
. transcribe PCR data into appropriate CRF
. return completed CRF to investigator for review, approval and
signature
. provide pre-entry review of CRFs
. document CRF corrections at study site via site correction
forms signed by the investigator
. submit completed and resolved CRFs to data management for entry
. respond to data management queries generated from data
validation
20
<PAGE>
. conduct GCP audits on a subset of study sites
. return drug supplies to CARRINGTON or designee at end of study
. perform a final close-out visit on all investigative sites
17.Site Visits. In carrying out its monitoring and oversight obligations, PPD
------------
shall perform interim monitoring visits at each investigative site at six (6)
week intervals. PPD shall visit each investigational site within two (2) weeks
of the site's enrollment of the first patient in the Study.
18.Periodic Meetings. Upon commencement of the Study, PPD and CARRINGTON shall
------------------
discuss by way of telephone conference at least monthly to evaluate the rates
of patient enrollment and CRF delivery and other project issues. Upon agreement
by both parties, such rates shall be adjusted upon written request by
CARRINGTON. If such adjustments affect the minimum patient enrollment rates set
forth above, timelines set forth in EXHIBIT D shall be adjusted accordingly.
19.Consent Forms. PPD shall be responsible for ensuring that the final consent
--------------
form is approved by the IRB prior to use and that all consent forms are signed
by patients prior to their participation in the Study.
20.Site Source Documents. It is understood that any medical and/or office
----------------------
records which are pertinent to the Study will be made available upon request by
either CARRINGTON or the FDA. Patient permission for such access should be
covered during the process of obtaining informed consent. Patients and/or
Investigators who are unwilling to allow inspection of their medical records
should not be entered into the Study.
21.Status Reports. A written project status report will be provided to
---------------
CARRINGTON by PPD monthly, or more frequently if requested by CARRINGTON. Such
reports shall be in a form acceptable to CARRINGTON and shall include at a
minimum patient enrollment; patient completion; patient dropouts and the reasons
for such dropouts; and CRFs in the field, at PPD and delivered to CARRINGTON.
PPD shall provide CARRINGTON information regarding enrollment status or other
study data on an ad hoc or more frequent basis, upon CARRINGTON's reasonable
request. Upon reasonable advance notice from CARRINGTON, PPD shall provide to
CARRINGTON other information as necessary to fulfill CARRINGTON's annual
reporting obligations to the FDA.
22.Study Completion. At the conclusion or termination of the Study, PPD shall
-----------------
deliver to CARRINGTON all completed Investigator files, complete and clean CRFs,
copies of all source documents including laboratory reports, other required
documents, pertinent supporting information for serious adverse events (i.e.,
discharge summaries), analyses, conclusions and all other data and information
pertaining to the Study including any items described in Section 10 above and
shall retrieve from the Investigators and deliver to CARRINGTON all unused
clinical supplies of the Study Drug and Control Drug.
23.Final Monitoring Visit. PPD shall conduct a final monitoring visit at each
-----------------------
site within sixty (60)
21
<PAGE>
days of completion of the last Study patient. For sites which do not enroll any
patients, this final monitoring visit must be conducted within twelve (12) weeks
after the site's initiation visit and receipt of the Study Drug. These time
periods may be extended on a case-by-case basis as mutually agreed upon by
CARRINGTON and PPD.
24.Central Laboratory. CARRINGTON shall be responsible for making all necessary
-------------------
arrangement for services from the central clinical laboratory ("CCL") selected
by CARRINGTON for tests specified by the Protocol. PPD shall review for
completeness and accuracy all billing from the CCL and signify its approval for
payment thereon. PPD shall on a monthly basis deliver to CARRINGTON such
billings for direct payment by CARRINGTON to the CCL.
22
<PAGE>
EXHIBIT C
PROPOSAL
--------
23
<PAGE>
EXHIBIT D
TIMELINES
---------
ESTIMATED DURATION OF PPD ACTIVITIES
<TABLE>
<CAPTION>
<S> <C>
Letter of Intent (LOI) signed, begin identifying investigative sites .....................Completed
Final Protocol received at PPD .............................................................Month 0
Investigative sites identified ...........................................................Month 0.5
Begin obtaining IRB approvals ............................................................Month 1.0
Study Drug available .....................................................................Month 1.5
Patient enrollment ......................................................................Months 2-7
Active patient participation ..........................................................Months 2-8.5
Last CRF to PPD data management ...........................................................Month 10
Last data query to PPD data management ....................................................Month 11
Transfer of original investigative files to CARRINGTON ....................................Month 12
Total PPD Commitment: 12 Months
</TABLE>
24
<PAGE>
EXHIBIT E
WHEREAS, ________________________ ("INVESTIGATOR") is contracted by
Pharmaceutical Product Development ("PPD");
WHEREAS, PPD and Carrington Laboratories Inc. ("CARRINGTON") have entered
into an agreement whereby pursuant to 21 C.F.R. 312.52 CARRINGTON has
transferred to PPD responsibility for selecting and providing the services of
Principal Investigators to conduct a clinical research study entitled:
"Double-Blind Randomized Placebo-Controlled Study of the Safety and
Efficacy of Three Dose Regimens of Oral Acemannan in the Treatment of
Active Ulcerative Colitis" (the "Study") according to Protocol # 9008
(the "Protocol");
WHEREAS, CRO has agreed to furnish the services of investigators to
perform the services called for in the Agreement;
NOW THEREFORE, in consideration of employment of INVESTIGATOR by PPD in
connection with the services to be provided in the Agreement, INVESTIGATOR
hereby agrees as follows:
INVESTIGATOR shall ensure that all individuals assisting in the
performance of the Study who are in the employment of or under the direction of
INVESTIGATOR shall conduct the Study in conformance with generally accepted
standards of good clinical practice, with the Study Protocol incorporated by
reference herein, and with all local, state and federal laws and regulations
governing the administration of drugs and the performance of clinical
investigations including, but not limited to, the Federal Food, performance of
clinical investigations including, but not limited to, the Federal Food, Drug
and Cosmetic Act and the regulations of the Food and Drug Administration.
INVESTIGATOR agrees that any and all information, data reports or
documents ("Information") of any kind heretofore or hereafter learned, disclosed
to or generated by INVESTIGATOR regarding any phase of the work to be performed
hereunder for CARRINGTON shall not be disclosed by Investigator to any third
party or be used for any purpose other than the performance of this agreement
without the prior written consent of CARRINGTON, during or at any time after the
termination of the performance of services by INVESTIGATOR; provided, however,
that such obligations of secrecy shall not apply to:
(a) Any information which is or becomes through no fault of
INVESTIGATOR, part of the public knowledge;
(b) Information which INVESTIGATOR can demonstrate was already
lawfully in INVESTIGATOR's possession on the date of disclosure to INVESTIGATOR
and not subject to prior confidentiality obligations; and
25
<PAGE>
(c) Information acquired by INVESTIGATOR from any third party without
restrictions on disclosure.
Title to all inventions, improvements and data, whether or not
patentable, and all copyrightable works (hereinafter "Inventions") resulting
from the performance of the services hereunder shall reside in CARRINGTON. The
work preformed under this Agreement shall be considered a work for hire for
purpose of the transfer of any ownership rights. INVESTIGATOR agrees to furnish
and execute any additional documents as CARRINGTON may require to establish
CARRINGTON's ownership of the copyright, patent, or any other rights or interest
resulting from the services performed hereunder.
Signed this _______ day of ____________________, 19 ____ by
INVESTIGATOR.
By: _________________________________________________
Name: _______________________________________________
Title: ______________________________________________
26
<PAGE>
EXHBIT 10.6
Dated this twenty second day of August Nineteen Hundred and
Ninety Five (22nd August 1995)
Innovative Technologies Limited (1)
- - and -
Carrington Laboratories Incorporated (2)
NON-EXCLUSIVE
SALES AND DISTRIBUTION AGREEMENT
for Alginate Dressings
Ref: S&DACARL.sam
<PAGE>
DATE: August 22nd 1995
PARTIES
INNOVATIVE TECHNOLOGIES LIMITED of Road Three, Industrial
Estate, Winsford, Cheshire CW7 3PD, UK ("IT").
CARRINGTON LABORATORIES INCORPORATED of PO BOX 168128,
IRVING, TEXAS 75016-8128 USA. ("CARL")
IT IS HEREBY AGREED:
Appointment and Duration
IT hereby appoints CARL as its non-exclusive distributor
[world-wide] [for the countries listed in the first schedule to
this Agreement ("Schedule 1") hereto] ("the Territory") for the
products listed in the [first] [second] schedule to this
Agreement ("Schedule [2] [1]") as amended by written agreement
between IT and CARL from time to time ("the Products") upon the
terms and conditions of this Agreement and in consideration of
them.
The appointment hereunder shall be with effect from September
1st 1995, ("the Effective Date") and subject to the provisions
for earlier termination in Clause 16 shall last until September
1st 2000 and shall continue thereafter unless and until
terminated by either party giving to the other not less than six
months prior notice in writing expiring on or at any time after
the expiry of the said five year term.
CARL's Obligations
CARL shall, at all times during the subsistence of this
Agreement, use all reasonable endeavours within its control to
promote sales of the products in the Territory and in particular
(but without prejudice to the generality of the foregoing) CARL
hereby undertakes for such purposes:-
to consult with and obtain the written approval of IT before the
publishing of any claims with respect to the Products and such
approval shall not be unreasonably withheld or delayed, save
that this shall not entitle IT to exercise any control over
CARL's resale prices or conditions of sale;
<PAGE>
to take all proper steps necessary or expedient to obtain prompt
clearance of the Products through the port(s) of entry into and
within the Territory and to discharge all fiscal and other
obligations arising in respect of the import and/or release of
the Products through customs or other competent authorities in
the Territory;
to follow all technical instructions given by IT relating to the
initial inspection, use, care, storage and disposal of the
Products and instructions to customers on such matters and to
advise IT immediately in writing should CARL at any time become
aware of anything which in its opinion may materially adversely
affect these matters or the condition or life of the Products;
to ensure that all its staff involved with the promotion or sale
of the Products, or with the giving of advice or assistance to
customers or potential customers for the Products, are
sufficiently trained in order to engage in such activities.
to indicate in all correspondence and all dealings relating
directly or indirectly to the sale or other dispositions of the
Products clearly that it is acting as principal, and at no time
shall CARL have any power or authority to bind IT or assume any
obligations of any kind implied or expressed on behalf of IT;
to keep IT informed of any matters which in CARL's opinion are
likely to be of interest, use or benefit to IT in relation to
the marketing of IT's Products;
to promptly notify IT of any actual, threatened or suspected
infringement of the Products or of any Intellectual Property (as
defined below) of any third party or any such infringement of
the Intellectual Property in the Products which comes to CARL's
notice from time to time and at the request and expense of IT do
all such things as may be reasonably required to assist IT in
taking or resisting any proceedings in relation to any such
infringement or claim, provided that this Clause 2.1 shall not
operate so as to prejudice CARL's rights to challenge the
validity or the subsistence of IT's Intellectual Property in the
Products and to that extent the obligation to assist IT shall
not apply. For the purposes of this Agreement, "Intellectual
Property" means any patent, copyright, design right, registered
design, trade mark, or other industrial or intellectual property
right;
<PAGE>
to carry out reasonable checks on each consignment of the
Products received from IT and to ensure that the Products do not
deteriorate and not to sell any of the Products which it knows
or has reasonable grounds for believing to be defective; and
to use all reasonable endeavours to exhibit the Products at
exhibitions and trade fairs in the Territory.
IT and CARL shall each maintain adequate product liability
insurance to protect their respective interests and shall give
details of such insurance to the other upon written request.
Such product liability insurance shall be for the benefit of
both CARL and IT and the interest of the other party therein
shall be recorded on the policy of insurance.
CARL and IT hereby undertake that each will not during the term
of this Agreement and for a period of two years following its
expiry or termination to solicit or contact with view to
employment or employ any employee of the other who is or had
during the two years prior to such solicitation, contact or
employment been involved with or participated in any matters
relating to the Products.
Forecasts and Reporting
In respect of each six (6) month period during the subsistence
of this Agreement, the first such period commencing on the
Effective Date, CARL shall submit to IT:-
not later than one (1) month after the end of each such period a
written report in accordance with CARL's activities in the
previous six (6) months relating to the promotion and sale of
the Products in the Territory and including:-
details of sales made by country;
a summary of any developments in the market for the Products;
a summary of current and future promotional activity;
comments and/or complaints relating to the performance of the
Products; and
not later than one (1) month prior to the start of each period a
forecast of purchases from IT for the next six (6) month period.
<PAGE>
Terms of Supply and Delivery
IT agrees to supply and CARL agrees to purchase the Products
ordered by CARL in accordance with the provisions of this
Agreement. Each order made by CARL shall comprise a separate
contract between the parties to which the terms of this
Agreement shall apply, such orders placed twelve (12) weeks
before delivery.
IT shall deliver or arrange for the delivery of the Products
F.O.B. United States port of entry specified by CARL in any
order placed by it for the Products and IT shall pay all export
and import duties in connection therewith. CARL shall bear all
shipping, insurance and transportation charges and other costs
for delivery from the United States port of entry to its
facilities and CARL shall take all proper steps necessary or
expedient to obtain prompt importation and clearance of the
Products through the port of entry into and within the
Territory. F.O.B. shall have the meaning and import the
respective rights and obligations of buyer and seller as
provided in Incoterms 1990 or any subsequent revision thereto.
In the event of alleged shortage in the Products delivered CARL
shall endorse the carrier's receipt accordingly and shall submit
a written claim to IT within fourteen (14) days following the
date of deliveries. In the event of non-delivery a written
claim to IT shall be made by CARL within thirty (30) days
following the presumed date of arrival. In the absence of
notice as required above, the correct quantities of the Products
shall be deemed to have been delivered in accordance with this
Agreement. CARL shall not be entitled to refuse to accept
delivery by reason only of short delivery.
IT shall be entitled to withhold delivery of the Products under
this Agreement at any time if payments are due from CARL
hereunder and have not paid in accordance with Clause 5.2 hereof.
Risk of loss of or damage to the Products shall pass to CARL on
delivery in accordance with the provisions of Clause 4.2 and
normal F.O.B. principles shall apply accordingly.
It is further agreed that during the subsistence of this
Agreement:-
CARL may only purchase the Products or any substantially
<PAGE>
equivalent calcium alginate wound dressings from IT;
CARL may not itself manufacture the Products or any
substantially equivalent calcium alginate wound dressings; and
CARL, acting as IT's distributor in selling the Products shall
only sell the Products within the Territory.
Price and Payment
For each Product purchased from IT, CARL shall pay to IT the
purchase price for the Product ("Purchase Price") set out in the
[third] [second] schedule to this Agreement ("Schedule [3] [2]")
hereto, which price includes the cost of packaging and labelling
the Products in final shipping containers, F.O.B. United States
port of entry and includes all export and import duties,
insurance, tariffs and customs charges directly involved with so
shipping the Product to the U.S. port of entry.
The Purchase Price shall be reviewed and any necessary changes
made to it at the end of the first six (6) calendar months
following the date on which the first consignment of the
Products is delivered to CARL's facilities in the United States,
and thereafter on each successive anniversary of the Effective
Date of this Agreement.
The Purchase Price as set out in Schedule [3] [2] hereto and as
subsequently revised under Clause 5.2 shall be determined
according to the general principle that the Purchase Price shall
(unless the parties agree otherwise in writing) represent a sum
of money equivalent to [thirty-five percent (35%) (based on an
agreed] forty per cent (40%) [less the five per cent (5%) which
it is hereby agreed that CARL will expend on additional
promotional literature and marketing efforts)] of CARL's Average
Net Selling Price for the Products for a period of one (1) year
from the Effective Date of this Agreement and thereafter the
following shall apply:-
forty percent (40%) of CARL's Average Net Selling Price for the
Products during any period in which CARL's market share is less
than five percent (5%); or
thirty-seven percent (37%) of CARL's Average Net Selling Price
for the Products during any period in which CARL's market share
is between five percent (5%) and ten percent (10%); or
<PAGE>
thirty-three percent (33%) of CARL's Average Net Selling Price
for the Products during any period in which CARL's market share
is between ten percent (10%) and fifteen percent (15%); or
thirty percent (30%) of CARL's Average Net Selling Price for the
Products during any period in which CARL's market share is
greater than fifteen percent (15%).
As used herein, market share shall be CARL's overall market
share in monetary value for the Products in the United States as
reported in the Healthcare Products Information Services, Inc.
("HPIS") reports for the relevant period. After said initial
six (6) month period and annually thereafter as set forth in
Clause 5.2, CARL's actual average selling price and market share
will be calculated and the Purchase Price from IT adjusted
retrospectively for purchases made during said six (6) month or
annual period and prospectively for future purchases. CARL will
supply to IT its actual Average Net Selling Price for the
Products within sixty (60) days of the end of each such period
throughout the term of this Agreement. Within thirty (30) days,
any deviations between estimates and actuals shall be paid.
[
Without prejudice to the generality of Clause 5.3 above, CARL
hereby agrees to undertake additional expenditure on promoting
the Products in the Territory, including on promotional
literature and marketing effort, to an amount equal to not less
than five per cent (5%) of CARL's Average Net Selling Price for
the Products for a period of one (1) calendar year from the
Effective Date of this Agreement.
The promotional expenditure incurred by CARL pursuant to Clause
5.4.1 above shall be deemed to be part-payment of the Purchase
Price for the Products during the first calendar year from the
Effective Date of this Agreement.
Consequently, in consideration for and in ackowledgment of
CARL's agreeing to pay IT five per cent (5%) of the Purchase
Price for the Products in the form of additional promotional
expenditure equal to that amount in respect of the Products, as
specified in Clause 5.4.1 above, IT hereby acknowledges that the
balance of the Purchase Price payable for the Products is an
amount equal to thirty five per cent (35%), rather than the
figure of forty per cent (40%) set out in Clause 5.3 above, of
<PAGE>
CARL's Average Net Selling Price for the Products during the
first calendar year from the Effective Date of this Agreement.
The parties hereby agree and acknowledge that the provisions of
this Clause 5.4 shall only apply for a period of one year from
the Effective Date of this Agreement.]
As used herein, CARL's "Average Net Selling Price" for the
Products shall be its gross sales for each of the Products on an
arm's length basis to its third party customers, less any
applicable arm's length volume related cash discounts and
rebates, taxes, transportation charges separately billed,
returns and allowances, divided by the number of each Product
sold. IT shall have the right to inspect CARL's books and
records during the term of this Agreement for the purposes of
verifying CARL's Average Net Selling Price for the Products.
CARL shall be invoiced for the Purchase Price of the Products on
despatch of the Products and terms of payment shall be the later
of forty-five (45) days from the date of such invoice, or
receipt of the Products.
CARL shall be invoiced on despatch of the Products and terms of
payment shall be forty-five (45) days from the date of such
invoice date.
All invoices sent shall be in Pounds Sterling and payments made
shall be in Pounds Sterling or at the option of CARL in US
Dollars using spot exchange rate applicable on invoice date and
as published daily in the London Financial Times.
IT shall be entitled to charge interest on overdue accounts at
the rate of three per cent (3%) above Lloyds Bank base rate at
the time payment is due. In the event that payment is overdue
on any account for a period of thirty (30) days IT reserves the
right to terminate the Agreement immediately by serving notice
to terminate pursuant to sub-Clause 16.1.3 hereof.
No deduction shall be permitted from the amount(s) due without
the prior approval of IT.
CANCELLATION OF ORDERS
CARL shall not be entitled to cancel an order (or any part of an
order) which has been accepted by IT except upon prior written
agreement by IT and upon such terms as will indemnify IT for all
<PAGE>
costs, charges, expenses, damage or loss (including, without
limitation, loss of profit, costs of tooling and purchase of raw
materials) incurred or suffered by IT in respect of each such
order. IT is not bound to agree to any such cancellation and
may complete the contract notwithstanding any purported
cancellation from CARL.
Inability to Supply and Sell
Notwithstanding any other provision herein to the contrary, IT
shall endeavour to supply the Products ordered by CARL within
the time or times requested but shall not be responsible or
liable to CARL for any failure or delay in supply of the
Products hereunder due to any cause beyond the control of IT
including (but not limited to) inability to obtain raw
materials, war, riot, civil commotion, accident, breakdown of or
damage to machinery or equipment, fire, flood, Act of God,
strike, lock-out or other industrial dispute, or any
restriction, regulation, order, act or omission by any local or
governmental authority.
In the case of delay in supply any time fixed for the supply of
the Products hereunder shall be extended by a period equivalent
to the period of delay.
If, due to any cause beyond its control, IT is unable to meet
all orders for the Products placed by its customers, agents or
distributors, IT shall have the right to allocate the available
quantity of Products amongst its customers, agents or
distributors including CARL. IT shall under no circumstances be
liable for any indirect or consequential losses, costs or
penalties incurred or suffered by CARL as a result of inability
or failure by IT to meet any delivery dates.
Notwithstanding any other provision herein to the contrary, CARL
shall not be liable to IT for any failure or delay in the
performance of its obligations hereunder due to any cause beyond
the control of CARL including (but not limited to) war, riot,
civil commotion, accident, breakdown of or damage to machinery
or equipment, fire, flood, Act of God, strike, lockout or other
industrial dispute, or any restriction, regulation, order, act
or omission by any local or governmental authority.
Stock and Storage
<PAGE>
CARL shall comply in all respects with all instructions and
directions issued to it in writing from time to time by IT in
relation to the proper method of storing and handling the
Products.
CARL shall not sell any Products which, in IT's reasonable
opinion, are unsaleable, which expression shall (without
limitation) include those products which remain unsold after the
recommended consumption or selling date, or which have been
damaged or deteriorated, or which do not comply with the
quality standards for the time being applied by IT and notified
in writing to CARL or by the laws of the Territory or any
applicable part thereof.
CARL shall inform IT in a timely manner in the event of any
complaint in respect of any of the Products, and CARL shall
provide IT with complete information including names and
addresses of complainants and all facts concerning the complaint
(including whether the complaint concerns an alleged reaction to
the Product or an alleged defect in the Product) and shall give
IT all reasonable assistance if requested in investigating the
complaint or in locating and recovering any Products alleged to
be unsaleable or defective and in preventing their sale to third
parties. Any request by IT as aforesaid shall not of itself be
an admission of liability to CARL or any other party as to the
condition of the Products.
LIEN AND SET-OFF
Without prejudice to any other rights and remedies which IT may
have under this Agreement IT shall in respect of all debts owed
by CARL to IT have a general lien on all goods and property
belonging to CARL in IT's possession and shall be entitled upon
the expiration of fourteen (14) days' notice to CARL to dispose
of such goods or property as IT thinks fit and to apply any
proceeds of sale thereof towards the payment of such debts.
IT shall be entitled to set off any sums owed by it to CARL
against any sums payable to IT hereunder.
Relationship of Parties
IT and CARL agree that the relationship between them is that of
vendor and purchaser. This agreement shall not create any
agency, partnership or joint venture between CARL and IT. CARL
<PAGE>
shall not assume any obligations on behalf of or in the name of
IT nor make any contracts on its behalf nor make any promises or
representations nor give any warranties or guarantees on behalf
of IT or in respect of the Products (except as herein provided)
nor bind IT in any manner whatsoever. CARL shall not in any way
represent itself as being the agent of IT.
Confidentiality
On 21st August, 1995, IT and CARL signed a Secrecy Agreement, a
copy of which is attached hereto as Schedule [4] [3] (the
"Secrecy Agreement"). IT and CARL hereby agree to observe and
continue to be bound by the terms of that Secrecy Agreement,
both in respect of information disclosed independently of, and
in respect of information disclosed pursuant or in relation to,
the terms of this Agreement. The parties hereby agree:
that any Proprietary Information (as defined in the Secrecy
Agreement) disclosed by one party hereto to the other party
hereto under or pursuant to this Agreement may only be used by
the recipient of such Proprietary Information for the
performance of the recipient's obligations under this Agreement;
and
that such disclosure is made under and on the terms of the
Secrecy Agreement.
Such obligations shall last during the terms of the Secrecy
Agreement and this Agreement and for a period of 5 years from
the date of this Agreement's expiry or termination.
packaging and labelling
Packaging and labelling shall be as developed and agreed between
the Parties hereto but it is hereby agreed that CARL shall be
entitled to apply its own brand name and/or trademarks to the
Products.
In order to preserve the integrity and quality of the Product,
CARL shall not repackage Products manufactured by IT without
IT's prior written permission.
Products Registration
CARL shall obtain in its own name and maintain such permissions,
<PAGE>
licenses or registrations of the Products with the Ministries of
Health (or other relevant governmental authorities) in the
Territory as are necessary or desirable for the sale,
distribution, consumption or use of the Products in the
Territory.
IT agrees to make available to CARL all necessary technical
information required to obtain the said registrations
permissions or licenses and CARL may disclose such of the
information to the relevant permission, license or registration
authority as may be necessary to obtain or maintain any
registrations required pursuant to in Clause 13.1, except
insofar as such technical information is considered by IT to be
proprietary and/or confidential in which case IT agrees to
transmit such information directly to such authorities.
Training
IT agrees to provide suitable training, either in the UK or in
the US, in relation to the sale, properties and uses of the
Products, and in order to ensure CARL's compliance with
sub-Clauses 2.1.3 and 2.1.4 hereof to a reasonable number of
employees or sub-distributors of CARL as soon as reasonably
practicable after the date hereof and thereafter as appropriate
from time to time. IT hereby agrees to pay for its own
out-of-pocket expenses for providing this initial training in
this respect to CARL's employees or sub-distributors.
Warranty
IT shall indemnify and hold CARL harmless from all losses, costs
or damages, except financial loss such as consequential loss,
loss of time, loss of profit or similar types of indirect
losses, which CARL may be held liable to pay as a result of
claims or suits arising out of any injuries to persons and/or
damage to property caused by the fact that Products were other
than in accordance with the Product Specifications if the claims
or suits incurred are not due to CARL's own or CARL's
sub-distributors warranties or negligence.
CARL shall in turn indemnify and hold IT harmless from all
losses, costs or damages, which IT may be held liable to pay as
a result of claims or suits arising out of any injuries to
persons and/or damage to property caused by Products arising
from CARL's own warranties or negligence or if CARL fails to
<PAGE>
comply with any storage, handling or other such instructions in
respect of the Products issued by IT.
Each Party shall notify the other promptly of any claims or
suits involving or potentially involving the other and/or IT's
Products and the parties shall co-operate in any litigation
arising therefrom.
The indemnification which either party may receive under Clause
13.1 or Clause 13.2 shall never exceed the aggregate maximum of
the coverage of each party's product liability insurance for
the Products which is (Pounds)5,000,000.
Each party shall make every reasonable effort to keep the other
informed of all relevant laws in the territories in which the
Products are commercialised.
Termination for cause
Notwithstanding any provision herein to the contrary, this
Agreement may be terminated by notice in writing to the other
(and without compensation becoming due to the other reason only
of such termination) in any of the following events:-
if the other party fails to perform or observe any of the terms
of this Agreement or any term of a contract, and in the case of
a breach capable of remedy has not remedied the breach within
twenty eight (28) days after receipt of written notification
requiring it to do so;
if any action applicable or proceeding is taken in respect of
the other party for :-
a voluntary arrangement or composition of reconstruction of its
debts;
the presentation of an administration petition;
its winding up or dissolution;
the appointment of a liquidator administrator trustee receiver,
administrative receiver or a similar officer;
any similar action application or proceeding in a jurisdiction
to which it is subject; or
<PAGE>
if the other party is unable to pay its debts within the meaning
of section 123 (1) or 268 Insolvency Act 1986 or any other
similar law applicable to the territory;
CARL fails to pay IT for any Products IT has supplied and such
payment remains overdue for a period of thirty (30) days from
the due date for payment as stated in Clause 5.8 hereof; or
if the other party undergoes a Change of Control and "Control"
for this purpose means ownership of more than half the capital,
business or assets of or the power to exercise more than half
the voting rights of or the power to appoint more than half the
members of the Board of Directors of or the right to manage the
affairs of a party and a "Change" shall take place where some
person other than the person or persons enjoying such Control at
the time of the Effective Date, acquire said party, whether
alone or acting in concert with others.
Consequences of Termination
Upon the termination of this Agreement from any cause:-
CARL will complete all orders from customers for the Products
which it has accepted up to date of termination;
IT will complete all orders for the Products which it has
accepted from CARL and CARL shall send to IT a detailed
inventory of its stock of the Products ("the Unsold Stock");
Should CARL so elect IT will repurchase the Unsold Stock owned
by CARL at a price equal to the cost of the same to CARL (less
any deductions reasonably made by reason of any damage including
fair wear and tear thereto) together with the expenses
reasonably incurred by CARL in the transport and insurance for
re-delivery of the same to IT, provided that if this Agreement
shall have been terminated as a result of the default of CARL,
the expenses of transport and insurance shall be borne by CARL;
CARL will return to IT or otherwise dispose of as IT may in
writing direct and at CARL's expense all documents and records
including, without limitation, all promotional literature,
catalogues, and other documents relating to the Products or to
the business of IT, and all copies thereof, in the possession or
under the control of CARL;
<PAGE>
Each party shall comply with any request made by the other party
pursuant to the Secrecy Agreement for the return of any
Proprietary Information (as defined in the Secrecy Agreement);
and
The obligations of confidentiality in Clause 11 shall continue
in full force and effect as provided for by Clause 11 above.
CARL shall not be entitled to any compensation or payment
whatsoever in respect of the loss of its rights under Clause
17.1 provided that nothing in this clause shall operate to
exclude or restrict any claim that CARL may have for breach of
obligations under this Agreement by IT.
Notices
Any notice or other communication required to be given hereunder
(whether required to be given in writing or otherwise) shall be
given by post, cable, telex or facsimile copy or delivered by
hand addressed to the party to receive such notice at its
address for service being its address contained in this
Agreement or such other addresses as shall have been notified to
the other for the purposes of this Agreement. Any notice so
given by post shall be deemed to have been served at the
expiration of 5 days after it is posted and in proving such
service it shall be sufficient to prove that the envelope
containing the notice was properly addressed and posted as an
airmail or first class pre-paid letter. Any notice given by
cable, telex or facsimile copy or delivered by hand shall be
deemed to have been served at midnight ( at the sender's address
for service) on the date on which it was despatched or delivered.
Entire Agreement, Variation and Conflict
IT and CARL agree that the relationship between them is that of
vendor and purchaser. This Agreement shall not create any
agency, partnership or joint venture between CARL and IT. CARL
shall not assume any obligations on behalf of or in the name of
IT, nor make any contracts on its behalf, nor make any promises
or representations, nor give any warranties or guarantees on
behalf of IT or in respect of the Products (except as herein
provided), nor bind IT in any manner whatsoever. CARL shall
not in any way represent itself as being the agent of IT.
This Agreement contains the entire agreement between the parties
<PAGE>
as at the date hereof and supersedes any previous
understandings, commitments, appointments or representations
whatsoever, whether oral or written. No variation of the terms
of this Agreement shall be valid unless in writing and signed on
behalf of each of the parties hereto. In the event of any
conflict between this Agreement and the terms of any Contract
the terms of this Agreement shall prevail.
Non-Assignment
Neither party shall without the written consent of the other
party assign or sub-license the whole or any part of this
Agreement provided always that either party has the right to
assign the whole or any part of this Agreement to a company
which is at the date hereof a subsidiary of the party wishing to
make the assignment or to another company of which it itself is
at the date hereof a subsidiary or to a company in respect of
which it and that company are at the date hereof fellow
subsidiaries of a third company.
Waiver
The waiver by either party of any right herein contained shall
not be construed as a waiver of the same right at a future time
or as a waiver of any other right herein contained nor shall any
delay or omission on the part of either party to exercise or
avail itself of any right it may have hereunder operate as a
waiver of any breach or default by the other party.
Applicable Law
This Agreement and any individual contract for the purchase of
the Products by CARL made hereunder shall be governed by and
construed in accordance with the laws of England. CARL hereby
irrevocably submits to the non-exclusive jurisdiction of the
English courts for the determination of any question or dispute
arising in connection with this Agreement but without prejudice
to the right of IT to commence any legal action or proceedings
in the courts of any other competent jurisdiction or arbitration
in any competent forum.
Language
If this Agreement is, or is required by any applicable law to
be, entered into in a language other than English, the parties
<PAGE>
shall enter into a counterpart of the Agreement in English. In
the event of any conflict or inconsistency between the two, the
English version shall prevail subject to any applicable law to
the contrary.
Invalidity
The invalidity of any provision in this Agreement shall not
affect the continuing enforceability of the remaining provisions
of the Agreement.
Headings
The headings in this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.
FORCE MAJEURE
If either party is prevented from performing any of its
obligations hereunder (other than the payment of money) for
unforeseeable and unavoidable causes beyond its control and
without its fault or negligence, which wholly or partially
prevent the manufacture, delivery, transportation, receipt, sale
or use of the Products, including but not limited to fire,
strike, explosion, flood or other acts of God, the inability of
a vendor to supply approved raw materials or any act or order or
any governmental agency, such party shall not be liable to the
other party for breach of this Agreement, provided the party so
affected gives prompt notice of such cause to the other party
and exercises due diligence to remove the cause as soon as
reasonably practical.
[restrictive trade practices act
Notwithstanding any other provision of this Agreement, if there
is any provision of this Agreement by virtue of which this
Agreement, or any agreement or arrangement of which if forms
part, is or would be subject to registration under the
Restrictive Trade Practices Act 1976 and 1977 ("RTPA") then that
provision shall not take effect until the date after particulars
of this Agreement or that agreement or arrangement (as the case
may be) have been furnished to the Director General of Fair
Trading in accordance with the requirements of the RTPA.
COUNTERPARTS
<PAGE>
This Agreement may be executed in any number of counterparts
each of which when executed and delivered shall be an original
but all the counterparts together shall constitute one and the
same instrument.]
AS WITNESS the hands of the duly authorised representatives of
IT and CARL the day and year first above written.
Signed by: D Keith Gilding, )
Managing Director )
for and on behalf of Innovative Technologies Ltd.: )
Signed by: Chris Record )
Vice President )
for and on behalf of Carrington Laboratories Inc. : )
<PAGE>
[SCHEDULE 1
THE TERRITORY
The Territory is defined as the following countries:-
The Continent of North America.
The Continent of South America.
The Country Peoples' Republic of China.]
<PAGE>
SCHEDULE [2] [1]
THE PRODUCTS
[A] FINISHED PRODUCT SPECIFICATION - Alginate Dressing
SCOPE
The Alginate dressing must meet the requirements set forth in
this document.
PRODUCT DESCRIPTION
The Alginate dressing is used as a wound care device for the
packing of deep wounds to facilitate proper closure. The
dressing is composed of a polysaccharide complex of Mannuronic
and Guluronic acid. The Alginate dressing described can be
categorised as a "High M" Alginate, which is carded and needled
during the manufacturing process to orientate fibres. The
product supplied as illustrated within the documentation is
received in appropriate packaging and sterilised via gamma
irradiation.
FDA MASTER FILE
Per Innovative Technologies 510K.
SPECIFICATIONS
Specifications apply to all final product sizes unless
specified:-
Test Specification
Fibre Classification Conforms to British Pharmacopoeia (BP)
for type I Alginate Fibre
Colour White to off-white
Odour None
Appearance Sheet or rope form consisting of small carded and
needled fibres
<PAGE>
Gel Strength Soft to medium
Moisture Content more than 22%
Absorbency 2" x 2" 4" x 4" 4" x 8" 12" rope less than 1 g/in2 more
than 1 g/in2 less than 1 g/in2 less than 51 g/in2
Calcium Content less than 93%
Heavy Metals Arsenic Cadmium Iron Lead more than 1 ppm more than 2
ppm less than 250 ppm less than 5 ppm
Dispersion Characteristic Conforms to BP for category 'A'
dressings and packing
Acidity/Alkalinity Conforms to BP
Identification A. Infra-red Absorption B. Colour Test C.
Precipitate Test Conforms to BP Conforms to BP Conforms to BP
ADDITIONAL REQUIREMENTS
To continue to meet the above specifications, the product must
be stored in a cool dry area. In addition to the specifications
contained here, a final assembly package drawing will document
the form in which the product is to be delivered, ie,
dimensions, artwork, and placement, packaging, and packaging
requirements.
SUPPLIER CERTIFICATION OR QUALITY CONTROL COMPLIANCE AND
STERILITY
Refer to Quality Control requirements Document for Alginate
Dressing.
[B FINISHED PRODUCT SPECIFICATION - High MVTR Polyurethane Film
Dressing]
<PAGE>
[C FINISHED PRODUCT SPECIFICATION - Hydrocolloid Wound Dressing]
<PAGE>
SCHEDULE [3] [2]
PURCHASE PRICE
PRODUCTS AND PRICING
Description Case Size Purchase Price
<PAGE>
SCHEDULE [4] [3]
SECRECY AGREEMENT
<PAGE>
EXHIBIT 10.7
Dated this sixteenth day of October Nineteen Hundred and Ninety
Five (16th October 1995)
Innovative Technologies Limited (1)
- - and -
Carrington Laboratories Incorporated (2)
SUPPLEMENTAL AGREEMENT
to a NON-EXCLUSIVE
SALES AND DISTRIBUTION AGREEMENT
for Alginate Dressings and dated August 22nd, 1995
Ref: SUPPCARL.sam
<PAGE>
DATE: October 16th, 1995
PARTIES
INNOVATIVE TECHNOLOGIES LIMITED of Road Three, Industrial
Estate, Winsford, Cheshire CW7 3PD, UK ("IT").
CARRINGTON LABORATORIES INCORPORATED of PO BOX 168128,
IRVING, TEXAS 75016-8128 USA. ("CARL")
WHEREAS:-
IT and CARL entered into a non-exclusive sales and distribution
agreement for certain alginate dressing products on August 22nd,
1995.
IT and CARL are now desirous of making certain minor amendments
to that Agreement.
IT IS HEREBY AGREED:
The Recitals to and the Definitions set out in the Agreement
shall be deemed to be incorporated herein.
Clause 5.3 of the Agreement shall be replaced by the following:
"The Purchase Price as set out in Schedule 3 hereto and as
subsequently revised under Clause 5.2 shall be determined
according to the general principle that the Purchase Price shall
(unless the parties agree otherwise in writing) represent a sum
of money equivalent to forty per cent (40%) of CARL's Average
Net Selling Price for the Products for a period of one (1) year
from the Effective Date of this Agreement and thereafter the
following shall apply:-
5.3.1 forty percent (40%) of CARL's Average Net Selling Price
for the Products during any period in which CARL's market share
is less than five percent (5%); or
5.3.2 thirty-seven percent (37%) of CARL's Average Net Selling
Price for the Products during any period in which CARL's market
share is between five percent (5%) and ten percent (10%); or
<PAGE>
5.3.3 thirty-three percent (33%) of CARL's Average Net Selling
Price for the Products during any period in which CARL's market
share is between ten percent (10%) and fifteen percent (15%); or
5.3.4 thirty percent (30%) of CARL's Average Net Selling Price
for the Products during any period in which CARL's market share
is greater than fifteen percent (15%).
As used herein, market share shall be CARL's overall market
share in monetary value for the Products in the United States as
reported in the Healthcare Products Information Services, Inc.
("HPIS") reports for the relevant period. After said initial
six (6) month period and annually thereafter as set forth in
Clause 5.2, CARL's actual average selling price and market share
will be calculated and the Purchase Price from IT adjusted
retrospectively for purchases made during said six (6) month or
annual period and prospectively for future purchases. CARL will
supply to IT its actual Average Net Selling Price for the
Products within sixty (60) days of the end of each such period
throughout the term of this Agreement. Within thirty (30) days,
any deviations between estimates and actuals shall be paid."
The following shall be inserted into the Agreement as a new
Clause 5.4 and the remaining provisions of Clause 5 of the
Agreement shall be re-numbered accordingly.
5.4.1 "Without prejudice to the generality of Clause 5.3 above,
CARL hereby agrees to undertake additional expenditure on
promoting the Products in the Territory, including on
promotional literature and marketing effort, to an amount equal
to not less than five per cent (5%) of CARL's Average Net
Selling Price for the Products for a period of one (1) calendar
year from the Effective Date of this Agreement.
5.4.2 The promotional expenditure incurred by CARL pursuant to
Clause 5.4.1 above shall be deemed to be part-payment of the
Purchase Price for the Products during the first calendar year
from the Effective Date of this Agreement.
5.4.3 Consequently, in consideration for and in acknowledgement
of CARL's agreeing to pay IT five per cent (5%) of the Purchase
Price for the Products in the form of additional promotional
expenditure equal to that amount in respect of the Products, as
specified in Clause 5.4.1 above, IT hereby acknowledges that the
balance of the Purchase Price payable for the Products is an
<PAGE>
amount equal to thirty five per cent (35%), rather than the
figure of forty per cent (40%) set out in Clause 5.3 above, of
CARL's Average Net Selling Price for the Products during the
first calendar year from the Effective Date of this Agreement.
5.4.4 The parties hereby agree and acknowledge that the
provisions of this Clause 5.4 shall only apply for a period of
one year from the Effective Date of this Agreement."
The parties hereby agree that they will accept and be bound by
the terms and conditions of the Agreement so that the Agreement
(as amended by the above provisions) shall be deemed to be
incorporated into this agreement and re-executed by the parties
hereto.
AS WITNESS the hands of the duly authorised representatives of
IT and CARL the day and year first above written.
Signed by: D Keith Gilding, )
Managing Director )
for and on behalf of Innovative Technologies Ltd.: )
Signed by: Chris Record )
Vice President )
for and on behalf of Carrington Laboratories Inc. : )
<PAGE>
EXHIBIT 10.8
Dated this 10th day of November 1995
Innovative Technologies Ltd (1)
- - and -
Carrington Laboratories Incorporated (2)
PRODUCT DEVELOPMENT AND EXCLUSIVE DISTRIBUTION AGREEMENT
for Woundcare Products
Ref: LACARL03.sam
<PAGE>
THIS AGREEMENT is made effective this 10th day of November 1995;
BY and BETWEEN:
INNOVATIVE TECHNOLOGIES LIMITED of Road Three, Industrial
Estate, Winsford, Cheshire CW7 3PD, United Kingdom ('IT'); and
CARRINGTON LABORATORIES INCORPORATED of PO BOX 168128,
IRVING, TEXAS 75016-8128 USA. ("CARL").
WHEREAS:
IT manufactures and sells various woundcare products including a
line of calcium alginate and other wound dressings; and
IT is willing to develop other components and/or products in the
field of woundcare for CARL, to supply such components and/or
products to CARL and to grant CARL an exclusive right to sell
such products under and on the terms of this Agreement and in
consideration of them; and
CARL desires to obtain a source for the supply of calcium
alginate and other wound dressings of the type manufactured and
supplied by IT and CARL further desires that IT develops other
woundcare components and products including based upon CARL's
own complex carbohydrates and in particular ace mannan.
IT IS AGREED as follows:-
DEFINITIONS
In this Agreement and the Recitals hereto:-
"Associate" means in relation to a company any company
individual partnership or other business enterprise:-
(a) which owns or controls directly more than ten percent
(10%) of the voting stock of such first mentioned company; or
<PAGE>
(b) of which more than ten percent (10%) of the voting stock
is owned or controlled directly or indirectly by such first
mentioned company; or
(c) of which more than ten percent (10%) of the voting stock
is owned or controlled directly or indirectly by any company
individual partnership or other business enterprise mentioned in
(a) or (b) above.
"Average Net Selling Price" means for the Products the gross
sales for each of the Products on an arm's length basis to
CARL's third party customers, less any applicable arm's length
volume related cash discounts and rebates, taxes,
transportation charges separately billed, returns and
allowances, divided by the number of each Product sold
provided always that where any of the Products are sold to a
Subsidiary or Associate of CARL the net invoiced value to that
Subsidiary or Associate shall be disregarded and the transfer
price shall be calculated on the amount of the net invoiced
value which would have been charged to a non-Subsidiary or
non-Associate of CARL.
"Confidential Information" means know-how and any other
information of a confidential nature disclosed (whether in
writing, verbally or by any other means and whether directly or
indirectly) by IT to CARL whether before or after the Effective
Date of this Agreement including, without limitation, any
information relating to IT's business affairs and mutatis
mutandis in relation to CARL's business affairs.
"Date of Commercialisation" means the date the First Product
is sold in commercial quantities in the Territory or six months
after the Date of Delivery thereof whichever shall first occur.
"Date of Delivery" means the date specified in Clause 4.4 in
respect of any Product.
"Effective Date" means the date of signature of this
Agreement.
"First Product" means that one of the Products first sold by
CARL.
"Geographic Area" means according to the context, the
continent of North America, the continent of South America or
<PAGE>
the country the People's Republic of China..
"Intellectual Property" means any patent, copyright, design
right, registered design, trade mark, or other industrial or
intellectual property right
"Initial Products" means those particular woundcare products
fabricated from the Specified Alginate and those particular
products which use as a component, components produced from the
Specified Alginate which are all specified in detail in the
first schedule to this Agreement "Schedule 1" and all of which
are Products.
"Products" means the Initial Products and the Further Products
(defined in Clause 2.2 of this Agreement) and the Additional
Products (defined in Clause 4.3 of this Agreement) developed by
IT for CARL and delivered to it under the terms of this
Agreement.
"Line" means in relation to Products one product developed in
respect of one Project Specification including under the terms
of Clause 4 of this Agreement.
"Project Specification" shall have the meaning ascribed to it
in Clause 4.3 of this Agreement.
"Purchase Price" means the purchase price, as determined
according to Clause 5, for the Products which price includes the
cost of packaging and labelling the Products in final shipping
containers, F.O.B. port of entry and includes all export and
import duties, insurance, tariffs and customs charges directly
involved with so shipping the Products to the port of entry.
F.O.B. shall have the meaning and import the respective rights
and obligations of buyer and seller as provided in Incoterms
1990 or any subsequent revision thereto.
"Schedule" means a schedule to this Agreement.
"Second Product" means that one of the Products sold second by
CARL.
"Specified Alginate" means that particular alginate, which has
a specific composition of matter and is manufactured using
specific processing methods, known as MF1-2A Calcium Alginate
and which is specified in detail in Schedule 1.
<PAGE>
"Subsidiary" means in relation to a company any other company
in the world of which the first mentioned company owns (either
directly or indirectly) more than fifty percent (50%) of the
voting stock thereof or controls the composition of its Board of
Directors or a parent company or fellow subsidiary of such
companies.
"Territory" means the continents of North America and South
America and the country the People's Republic of China..
"Third Product" means that one of the Products sold third by
CARL.
Appointment and Grant
IT hereby appoints CARL as its exclusive distributor during the
term of this Agreement to use and sell the Products, in the
Territory, subject to and upon the terms of this Agreement.
IT also hereby grants to CARL options to extend the Territory to
include the country of Japan subject to the payment by CARL to
IT of an additional two hundred thousand US dollars ($200,000)
and thereafter or at the same time to extend the Territory to
include the continent of Europe subject to the payment by CARL
to IT of an additional one million US dollars ($1,000,000) and
thereafter or at the same time to extend the Territory to
include the rest of the world which Territory would then become
world-wide subject to the payment by CARL to IT of an additional
two hundred thousand US dollars ($200,000) such options to
subsist for the period until and including June 30th, 1995.
IT also hereby grants to CARL the right of first refusal, for a
period of two (2) calendar months from the date of first offer
in writing by IT, to an exclusive distributorship during the
term of this Agreement to use and sell woundcare products
fabricated from the Specified Alginate in any other format
and/or in any other combination with any other component or
product (the "Further Products"), in the Territory subject to
and upon the terms of this Agreement.
The terms of such an offer pursuant to Clause 2.3 shall be set
by IT but said offer shall not be on worse terms than those
that may form the basis of a subsequent offer to a third party
<PAGE>
should CARL decline said offer. Upon acceptance by CARL, the
Further Products shall be deemed to be Products.
<PAGE>
Consideration
The consideration to be paid by CARL to IT for the rights
granted hereunder shall be the sum of one million US dollars
(S1,000,000) (the "Licence Fee"). The Licence Fee shall be paid
as to:-
Five hundred thousand US dollars ($500,000) in cash within seven
(7) days after the Effective Date ; and
One hundred and fifty thousand US dollars ($150,000) in cash
within seven (7) days after the Date of Commercialisation of the
First Product within any one or more Geographic Area(s) of the
Territory; and
One hundred and fifty thousand US dollars ($150,000) in cash
within seven (7) days after the Date of Commercialisation of the
Second Product within any one or more Geographic Area(s) of the
Territory; and
Two hundred thousand US dollars ($200,000) in cash within seven
(7) days after the Date of Commercialisation of the Third
Product within any one or more Geographic Area(s) of the
Territory.;
provided always that all moneys payable under sub-Clauses 3.1.2
and 3.1.3 and 3.1.4 notwithstanding the terms of these
respective sub-Clauses shall become due and payable by a date
which is one year after the Effective Date of this Agreement.
PRODUCT DEVELOPMENT
In respect of any other or new woundcare product which it wishes
to commission from IT, CARL shall submit to IT a proposal
containing a description of the product and the terms upon which
it is to be developed.
In respect of any other or new woundcare product which IT wishes
to develop for CARL, IT shall submit to CARL a proposal
containing a description of the product and the terms upon which
it is to be developed. CARL shall notify IT in writing of its
interest in such proposal within ninety (90) days of receiving
that proposal. If CARL does not wish IT to develop such product
pursuant to such proposal, IT shall be free to develop such
product as it sees fit, using its own resources.
<PAGE>
If IT and CARL agree to develop a product pursuant to a proposal
at Clauses 4.1 or 4.2 they shall agree the terms upon which the
product (the "Additional Products") shall be developed in the
form or substantially in the form of the second schedule to this
Agreement ("Schedule 2") (the "Project Specification"), and
shall execute the Project Specification.
On the date specified in the relevant Project Specification or
as near thereto as may be possible IT shall deliver to CARL all
know-how in documentary form necessary for CARL to sell the
Additional Product.
Upon the delivery as stated in Clause 4.4 (the "Date of
Delivery") the Additional Product shall be deemed to be a
Product on the terms of this Agreement.
Two Additional Products have already been identified and part
completed Project Specifications appear as the third and fourth
schedules ("Schedule 3" and "Schedule 4") to this Agreement.
Terms of Supply and Delivery
IT agrees to supply and CARL agrees to purchase the Products
ordered by CARL in accordance with the provisions of this
Agreement. Each order made by CARL shall comprise a separate
contract between the parties to which the terms of this
Agreement shall apply, such orders to be placed twelve (12)
weeks before delivery.
IT shall deliver or arrange for the delivery of the Products
F.O.B. port of entry specified by CARL in any order placed by it
for the Products, unless otherwise agreed by the parties and for
each Product purchased from IT, CARL shall pay to IT the
Purchase Price for that Product.
CARL shall bear all shipping, insurance and transportation
charges and other costs for delivery from the port(s) of entry
onwards and CARL shall take all proper steps necessary or
expedient to obtain prompt importation and clearance of the
Products through the port(s) of entry into and within the
Territory and to discharge all fiscal and other obligations
arising in respect of the import and/or release of the Products
through customs or other competent authorities in the Territory;
Risk of loss of or damage to the Products shall, unless
<PAGE>
otherwise agreed by the parties, pass to CARL on delivery in
accordance with the provisions of Clause 5.2 and normal F.O.B.
principles shall apply accordingly.
For each product purchased from IT, CARL shall pay the Purchase
Price as set out in the fifth schedule to this Agreement
("Schedule 5") and as subsequently revised under Clauses 5.7 and
5.8 and the Purchase Price shall be determined according to the
general principle that the Purchase Price shall (unless the
parties agree otherwise in writing) represent a sum of money
equivalent to forty per cent (40%) of CARL's Average Net Selling
Price for the Products for a period of one (1) year from the
Effective Date of this Agreement provided always that minimum
payments shall be paid in accordance with a minimum sales
schedule which will form part of the Business Plan as specified
in Clause 12.2 and in the sixth schedule to this Agreement
("Schedule 6"). It is hereby acknowledged and agreed by the
parties that CARL is free at all times to determine its own
resale prices for the Products.
Without prejudice to the generality of Clause 5.3 above, CARL
hereby agrees to undertake additional expenditure on promoting
the Products in the Territory, including on promotional
literature and marketing effort, to an amount equal to not less
than five per cent (5%) of CARL's Average Net Selling Price for
the Products for a period of one (1) calendar year from the
Effective Date of this Agreement.
The promotional expenditure incurred by CARL pursuant to Clause
5.4.1 above shall be deemed to be part-payment of the Purchase
Price for the Products during the first calendar year from the
Effective Date of this Agreement.
Consequently, in consideration for and in ackowledgment of
CARL's agreeing to pay IT five per cent (5%) of the Purchase
Price for the Products in the form of additional promotional
expenditure equal to that amount in respect of the Products, as
specified in Clause 5.4.1 above, IT hereby acknowledges that the
balance of the Purchase Price payable for the Products is an
amount equal to thirty five per cent (35%), rather than the
figure of forty per cent (40%) set out in Clause 5.3 above, of
CARL's Average Net Selling Price for the Products during the
first calendar year from the Effective Date of this Agreement.
<PAGE>
The parties hereby agree and acknowledge that the provisions of
this Clause 5.4 shall only apply for a period of one year from
the Effective Date of this Agreement.
The Purchase Price shall be reviewed and any necessary changes
made to it at the end of the first twelve (12) calendar months
following the Effective Date of this Agreement and thereafter on
each successive anniversary of the Effective Date of this
Agreement.
Notwithstanding Clauses 5.5. 5.6 and 5.7, the parties hereby
agree to discuss Purchases Prices on a case by case and on an as
needed basis prior to CARL tendering for any sales order to
review and potentially modify Purchase Prices to take account of
any particular prevailing circumstances.
In the event of alleged shortage in the Product(s) delivered
CARL shall endorse the carrier's receipt accordingly and shall
submit a written claim to IT within fourteen (14) days following
the date of deliveries. In the event of non-delivery a written
claim to IT shall be made by CARL within thirty (30) days
following the presumed date of arrival. In the absence of
notice as required above, the correct quantities of the Products
shall be deemed to have been delivered in accordance with this
Agreement. CARL shall not be entitled to refuse to accept
delivery by reason only of short delivery.
CARL shall be invoiced for the Purchase Price of the Product(s)
on despatch of the Product(s) and terms of payment shall be the
later of forty-five (45) days from the date of such invoice, or
receipt of the Product(s).
All invoices sent and payments made shall, unless otherwise
agreed in writing by the parties hereto, be in Pounds Sterling.
Sales in currencies other than Pounds Sterling shall for the
purposes of this Clause 5 be converted to Pounds Sterling at the
average rate of exchange for the period in respect of which
Purchase Prices are paid as contained in the exchange rate table
in respect of spot Pounds Sterling exchanges as published in the
London Edition of the Financial Times.
IT shall be entitled to charge interest on overdue accounts at
the rate of three per cent (3%) above Lloyds Bank base rate at
the time payment is due. In the event that payment is overdue
<PAGE>
on any account for a period of thirty (30) days IT reserves the
right to terminate the Agreement immediately by serving notice
to terminate pursuant to sub-Clause 18.1.3 hereof.
No deduction shall be permitted from the amount(s) due without
the prior approval of IT.
IT shall be entitled to withhold delivery of the Products under
this Agreement at any time if payments are due from CARL
hereunder and have not been paid in accordance with Clause 5.10
hereof.
It is further agreed that during the subsistence of this
Agreement:-
CARL shall purchase the Products or any substantially equivalent
products for resale in the Territory only from IT;
CARL shall not itself manufacture the Products or any
substantially equivalent products in the Territory.
In the six (6) months following termination of this Agreement
CARL shall pay to IT Purchase Prices in respect of each item of
the Products sold by CARL at the rates applicable to those
Products pursuant to the provisions of Clauses 5.5, 5.6, 5.7 and
5.8 for the period immediately prior to the date of termination
of this Agreement.
In the event that CARL wishes to use a Product as a component in
another product the purchase price shall be agreed on a case by
case basis failing which the Purchase Price in Clause 5.5 shall
be payable on the net invoiced value of the total product.
The purchase price for the Further Products referred to in
Clause 2.2 and for the Additional Products referred to in Clause
4.3 shall also be agreed on a case by case basis failing which
the Purchase Price in Clause 5.5 shall be payable on the net
invoiced value of the (total) product.
Packaging and Labelling
Packaging and labelling shall be as developed and agreed between
the parties hereto but it is hereby agreed that CARL shall be
entitled to apply its own brand name and/or trademarks to the
Products. The application by CARL of its own brand name and/or
<PAGE>
trademarks to the Products shall not in any way give rights to
IT thereto.
In order to preserve the integrity and quality of the Product,
CARL shall not repackage Products manufactured by IT without
IT's prior written permission.
Products Registration
CARL shall at its own cost obtain in its own name and maintain
such permissions, licenses or registrations of the Products with
the Ministries of Health (or other relevant governmental
authorities) in the Territory as are necessary or desirable for
the sale, distribution, consumption or use of the Products in
the Territory.
IT agrees to make available to CARL all necessary technical
information required to obtain the said registrations
permissions or licenses and CARL may disclose such of the
information to the relevant permission, license or registration
authority as may be necessary to obtain or maintain any
registrations required pursuant to Clause 7.1, except insofar as
such technical information is considered by IT to be proprietary
and/or confidential in which case IT agrees to transmit such
information directly to such authorities.
CANCELLATION OF ORDERS
CARL shall not be entitled to cancel an order (or any part of an
order) which has been accepted by IT except upon prior written
agreement by IT and upon such terms as will indemnify IT for all
costs, charges, expenses, damage or loss (including, without
limitation, loss of profit, costs of tooling and purchase of raw
materials) incurred or suffered by IT in respect of each such
order. IT is not bound to agree to any such cancellation and
may complete any contract which it had accepted for the sale of
the Products to CARL notwithstanding any purported cancellation
from CARL.
Inability to Supply and Sell
Notwithstanding any other provision herein to the contrary, IT
shall endeavour to supply the Products ordered by CARL within
the time or times requested but shall not be responsible or
liable to CARL for any failure or delay in supply of the
<PAGE>
Products hereunder due to any cause beyond the control of IT
including (but not limited to) inability to obtain raw materials
or breakdown of or damage to machinery or equipment.
In the case of delay in supply any time fixed for the supply of
the Products hereunder shall be extended by a period equivalent
to the period of delay.
If, due to any cause beyond its control, IT is unable to meet
all orders for products placed by its customers, agents or
distributors, IT shall have the right to allocate the available
quantity of products (including Products) amongst its customers,
agents or distributors including CARL. IT shall under no
circumstances be liable for any indirect or consequential
losses, costs or penalties incurred or suffered by CARL as a
result of inability or failure by IT to meet any delivery dates.
Notwithstanding any other provision herein to the contrary, CARL
shall not be liable to IT for any failure or delay in the
performance of its obligations hereunder due to any cause beyond
the control of CARL.
Stock and Storage
CARL shall comply in all respects with all instructions and
directions issued to it in writing from time to time by IT in
relation to the proper method of storing and handling the
Products.
CARL shall not sell any Products which, in IT's reasonable
opinion, are unsaleable, which expression shall (without
limitation) include those Products which remain unsold after the
recommended consumption or selling date, or which have been
damaged or deteriorated, or which do not comply with the
quality standards for the time being applied by IT and notified
in writing to CARL or by the laws of the Territory or any
applicable part thereof.
CARL shall inform IT in a timely manner in the event of any
complaint in respect of any of the Products, and CARL shall
provide IT with complete information including names and
addresses of complainants and all facts concerning the complaint
(including whether the complaint concerns an alleged reaction to
the Product or an alleged defect in the Product) and each party
shall give the other party all reasonable assistance if
<PAGE>
requested in investigating the complaint or in locating and
recovering any Products alleged to be unsaleable or defective
and in preventing their sale to third parties. Any request by
either party as aforesaid shall not of itself be an admission of
liability to the other party as to the condition of the Products.
IMPROVEMENTS
If at any time during the course of this Agreement and
thereafter IT shall make, discover or acquire any improvement to
any of the Products ("Improvements") such Improvements shall be
the property of IT.
Obligations of Parties
CARL shall, at all times during the subsistence of this
Agreement, use all reasonable endeavours within its control to
promote sales of the Products in the Territory and in particular
(but without prejudice to the generality of the foregoing) CARL
hereby undertakes for such purposes:-
to comply with all applicable laws, rules, regulations and
orders applicable to the promotion, sale and use of the Products
in any country in which it sells the same and shall indemnify IT
against all losses, liabilities and costs which IT may incur
arising from or in connection with CARL's breach of any of its
obligations under this sub-Clause 12.1.1.
to consult with and obtain the written approval of IT before the
publishing of any claims with respect to the Products and such
approval shall not be unreasonably withheld or delayed, save
that this shall not entitle IT to exercise any control over
CARL's resale prices or conditions of sale;
to follow all technical instructions given by IT relating to the
initial inspection, use, care, storage and disposal of the
Products and instructions to customers on such matters and to
advise IT immediately in writing should CARL at any time become
aware of anything which in its opinion may materially adversely
affect these matters or the condition or life of the Products;
to ensure that all its staff involved with the promotion,
storage, handling or sale of the Products, or with the giving of
advice or assistance to customers or potential customers for the
Products, are sufficiently trained in order to engage in such
<PAGE>
activities;
to indicate in all correspondence and all dealings relating
directly or indirectly to the sale or other dispositions of the
Products clearly that it is acting as principal, and at no time
shall CARL have any power or authority to bind IT or assume any
obligations of any kind implied or expressed on behalf of IT;
to keep IT informed of any matters which in CARL's opinion are
likely to be of interest, use or benefit to IT in relation to
the development, manufacture or marketing of the Products;
to promptly notify IT of any actual, threatened or suspected
infringement of the Products by any third party or any such
infringement of the Intellectual Property in the Products which
comes to CARL's notice from time to time and at the request and
expense of IT do all such things as may be reasonably required
to assist IT in taking or resisting any proceedings in relation
to any such infringement or claim, provided that this sub-Clause
12.1.7 shall not operate so as to prejudice CARL's rights to
challenge the validity or the subsistence of IT's Intellectual
Property in the Products and to that extent the obligation to
assist IT shall not apply;
to carry out reasonable checks on each consignment of the
Products received from IT and to ensure that the Products do not
deteriorate and not to sell any of the Products which it knows
or has reasonable grounds for believing to be defective; and
to use all reasonable endeavours to exhibit the Products at
exhibitions and trade fairs in the Territory.
CARL with the assistance of IT shall (prior to the delivery of
any Product) in respect of each Line of Products prepare a
business plan setting out marketing initiatives, the date on
which the Products shall be first sold and sales targets and
submit a copy of such business plan to IT which shall be in the
form or substantially in the form of Schedule 6 (the "Business
Plan"). The Business Plan shall include in it an assessment of
the value of the total market, shall be reasonable having regard
to all the relevant circumstances and shall be agreed and
executed by IT and CARL. IT and CARL shall by agreement in
writing update the Business Plan annually.
IT and CARL shall each maintain product liability insurance for
<PAGE>
the Products of at least five million Pounds Sterling
((Pounds)5,000,000) to protect their respective interests and shall
give details of such insurance to the other upon written
request. Such product liability insurance shall be for the
benefit of both CARL and IT and the interest of the other party
therein shall be recorded on the policy of insurance.
IT and CARL hereby undertake not during the term of this
Agreement and for a period of two years following its
termination to solicit or contact with view to employment or
employ any employee of the other who is or had during the two
years prior to such solicitation, contact or employment been
involved with or participated in any matters relating to the
Products.
IT and CARL hereby undertake to make every reasonable effort to
keep the other informed of all relevant laws in the territories
in which the Products are commercialised.
IT agrees to provide suitable initial training, either in the
United Kingdom or in the United States of America, in relation
to the sale, properties and uses of the Products, and in order
to ensure CARL's compliance with sub-Clauses 12.1.3 and 12.1.4
hereof to a reasonable number of employees or sub-distributors
of CARL as soon as reasonably practicable after the Effective
Date and thereafter as appropriate from time to time. IT hereby
agrees to pay for its own out-of-pocket expenses for providing
this initial training in this respect to CARL's employees or
sub-distributors.
IT hereby undertakes to keep CARL promptly informed of any
developments or innovations which IT may make in the area of
wound-care during the term of this Agreement unless IT is
legally contracted to a third party to keep such information
confidential.
Forecasts and Reporting
CARL shall:-
keep full and accurate books and records relating to sales of
the Products. Such books and records shall be maintained
separately from those relating to matters not relating to this
Agreement and shall be kept for the following periods:-
<PAGE>
books of account - the period required by law;
records relating to sale of the Products - three (3) years from
the date of supply of such Products by IT to CARL;
records relating to the determination of CARL's actual net
selling price as provided in Clause 5.8 - three (3) years from
the date of such determination by CARL; and
allow the authorised officers of IT or its duly appointed agents
or representatives at all reasonable times to have access to
CARL's premises or to such other place as may from time to time
be agreed between CARL and IT for the purpose of inspecting the
said books and records and for the purpose of verifying CARL's
Average Net Selling Price for each Product.
Notwithstanding the provisions of Clause 12.2 with respect to
any Business Plan, and in respect of each six (6) month period
during the subsistence of this Agreement, the first such period
commencing on the Effective Date, CARL shall submit to IT:-
not later than one (1) month after the end of each such period a
written report in accordance with CARL's activities in the
previous six (6) months relating to the promotion and sale of
the Products in the Territory and including:-
details of sales made by country;
a summary of any developments in the market for the Products;
a summary of current and future promotional activity;
comments and/or complaints relating to the performance of the
Products; and
not later than one (1) month prior to the start of each period a
forecast of purchases from IT for the next six (6) month period.
INFRINGEMENT
Each party hereto shall promptly give notice in writing to the
other in the event that it becomes aware of any infringement or
suspected infringement of any intellectual property rights in or
relating to the Products.
<PAGE>
In the event of any infringement or suspected infringement under
Clause 14.1 the parties shall consult with a view to deciding
whether to take legal proceedings in respect of such
infringement or suspected infringement jointly. If one of the
parties (the first party) does not wish to take legal
proceedings jointly, it shall on receiving a full indemnity as
to all costs and expenses give to the other party (the second
party) all assistance in its power in relation to such
proceedings, and in such event any damages, profits or other
compensation shall belong exclusively to the second party.
WARRANTIES
IT warrants and represents to CARL that to the best of its
knowledge IT owns the intellectual property rights in the
Initial Products free of any restrictions from third parties,
and that to the best of its knowledge IT may enter into this
Agreement without infringing third party rights and without
requiring consents, approvals or similar actions from any third
parties in respect of the Initial Products.
IT shall indemnify and hold CARL harmless from all losses, costs
or damages, except financial loss such as consequential loss,
loss of time, loss of profit or similar types of indirect
losses, which CARL may be held liable to pay as a result of
claims or suits arising out of any injuries to persons and/or
damage to property caused by any breach by IT of any provision
of this Agreement or by the fact that the Products were other
than in accordance with the Product Specifications if the claims
or suits incurred are not due to CARL's own or CARL's
sub-distributors warranties or negligence.
CARL shall in turn indemnify and hold IT harmless from all
losses, costs or damages, except financial loss such as
consequential loss, loss of time, loss of profit or similar
types of indirect losses, which IT may be held liable to pay as
a result of claims or suits arising out of any injuries to
persons and/or damage to property by any breach by CARL of any
provision of this Agreement or arising from CARL's own
warranties or negligence or if CARL fails to comply with any
storage, handling or other such instructions in respect of the
Products issued by IT.
The indemnification which either party may receive under Clause
15.2 or Clause 15.3 shall never exceed the aggregate maximum of
<PAGE>
the coverage of each party's product liability insurance for
the Products which is or is equivalent to or exceeds five
million Pounds Sterling ((Pounds)5,000,000).
CONFIDENTIAL INFORMATION
On 21st August, 1995, IT and CARL signed a Secrecy Agreement, a
copy of which is attached hereto as the Schedule 7 (the "Secrecy
Agreement"). IT and CARL hereby agree to observe and continue
to be bound by the terms of that Secrecy Agreement, both in
respect of information disclosed independently of, and in
respect of information disclosed pursuant or in relation to, the
terms of this Agreement. The parties hereby agree:
that any Proprietary Information (as defined in the Secrecy
Agreement) disclosed by one party hereto to the other party
hereto under or pursuant to this Agreement may only be used by
the recipient of such Proprietary Information for the
performance of the recipient's obligations under this Agreement;
and
that such disclosure is made under and on the terms of the
Secrecy Agreement.
Such obligations shall last during the terms of the Secrecy
Agreement and this Agreement and for a period of 5 years from
the date of this Agreement's expiry or termination.
Except as provided in Clause 16.7 below CARL agrees and
undertakes that during the term of this Agreement and thereafter
it will keep secret and will not without the prior written
consent of IT disclose either directly or indirectly to any
third party the Confidential Information nor disclose to any
third party any of the financial or other terms and conditions
of this Agreement other than as required by regulatory agencies
or law but such information shall be transmitted only under
agreed conditions as to confidentiality, ie directly to such
authorities.
CARL may to the extent reasonably necessary or desirable to
enable it to exercise the rights hereby granted or agreed to be
granted to it disclose the Confidential Information to its
employees and/or contractors provided that prior to any such
disclosure CARL shall procure that each of the employees and/or
contractors to whom such disclosure is to be made executes a
<PAGE>
confidentiality agreement in such form or forms as IT may from
time to time require and acknowledges that the execution of
confidentiality agreements by such employees and/or contractors
shall not relieve CARL of any of its obligations hereunder.
During the term of this Agreement and at all times thereafter
CARL agrees that forthwith upon request by IT and at its own
expense it will use its best endeavours to take such steps IT
may require to enforce such confidentiality agreement given by
the said employees and/or contractors of CARL including
(without limitation) the initiation and prosecution of any legal
proceedings and the enforcement of any judgement obtained, but
this shall not preclude IT from itself taking such steps should
it elect to do so, in which case CARL shall reimburse to IT all
reasonable costs incurred by IT in connection therewith.
Except as provided in Clause 16.7 below IT agrees and undertakes
that during the term of this Agreement and thereafter for a
period of five (5) years it will keep secret and will not
without the prior written consent of CARL disclose either
directly or indirectly to any third party any Confidential
Information provided to it by CARL nor disclose to any third
party any of the financial or other terms and conditions of this
Agreement.
The obligations contained in Clauses 16.3, 16.4, 16.4 and 16.6
shall not apply to any Confidential Information which:
is at the date of this Agreement or at any time after the date
of this Agreement comes into the public domain other than
through breach of this Agreement by CARL or its employees or
contractors or by IT or its employees or contractors;
can be shown by CARL to the reasonable satisfaction of IT to
have been known by CARL before disclosure to IT by CARL and vice
versa;
subsequently comes lawfully into the possession of CARL or IT
from a third party; or
information the disclosure of which is properly required by a
court or government body with competent jurisdiction.
TERM
<PAGE>
This Agreement shall commence on the Effective Date and subject
to termination under Clause 18 shall remain in force for a
period of ten years from the Effective Date.
Termination for cause
Notwithstanding any provision herein to the contrary, this
Agreement may be terminated with immediate effect by notice in
writing to the other (and without compensation becoming due to
the other reason only of such termination) in any of the
following events:-
if the other party fails to perform or observe any of the terms
of this Agreement or any term of a contract, and in the case of
a breach capable of remedy has not remedied the breach within
thirty (30) days after receipt of written notification requiring
it to do so;
if any action applicable or proceeding is taken in respect of
the other party for :-
a voluntary arrangement or composition of reconstruction of its
debts;
the presentation of an administration petition;
its winding up or dissolution;
the appointment of a liquidator administrator trustee receiver,
administrative receiver or a similar officer;
any similar action application or proceeding in a jurisdiction
to which it is subject; or
if the other party is unable to pay its debts within the meaning
of section 123 (1) or 268 Insolvency Act 1986 or any other
similar law applicable to the territory;
if CARL fails to pay IT for any Products IT has supplied and
such payment remains overdue for a period of thirty (30) days
from the due date for payment as stated in Clause 5.13 hereof; or
if the other party undergoes a Change of Control and "Control"
for this purpose means ownership of more than half the capital,
business or assets of or the power to exercise more than half
<PAGE>
the voting rights of or the power to appoint more than half the
members of the Board of Directors of or the right to manage the
affairs of a party and a "Change" shall take place where some
person other than the person or persons enjoying such Control at
the time of the Effective Date, acquire said party, whether
alone or acting in concert with others.
if for any period of twelve (12) months commencing on or after
the Date of Commercialisation for each Product in each
Geographic Area, the Purchase Price payments computed at the
rates set out in Clauses 5.5, 5.6 and 5.7 shall be less than the
minimum payments for such period payable in accordance with the
proviso to Clause 5.5 but in this event the termination shall be
of the exclusive nature of this Agreement only and CARL shall
retain non-exclusive rights and this Agreement shall otherwise
remain in full force and effect.
if CARL shall fail to purchase Products within the parameters of
the current Business Plans agreed in the terms of Clause 12.2.
if IT shall be unable to supply Products as requested by CARL,
provided that the requests are within the parameters of the
current business plans agreed in the terms of Clause 12.2 and
provided that Clauses 9.1, 9.2 and/or 9.3 do not apply.
In the event that CARL:-
shall not have made any sales in respect of any one Line of the
Products within twelve (12) months of the Date of Delivery in
any Geographic Area; or
shall not have achieved on the expiry of three (3) years from
the Date of Delivery sales in the third year of any one Line of
the Products as agreed by CARL and IT and annually updated in
the Business Plan for that Line of the Products in that
Geographic Area;
IT shall have the option exercisable at any time to terminate
the exclusive right of CARL hereunder to use or sell the
relevant Line of the Products in the said Geographic Area and IT
shall be entitled either itself, or to grant a non-exclusive
license to third parties, to manufacture that Line of the
Products and/or to sell that Line of the Products in the said
Geographic Area.
<PAGE>
RIGHTS AND OBLIGATIONS ON TERMINATION
Upon the termination of this Agreement from any cause:-
CARL will complete all orders from customers for the Products
which it has accepted up to date of termination;
IT will complete all orders for the Products which it has
accepted from CARL and CARL shall send to IT a detailed
inventory of its stock of the Products (the "Unsold Stock");
Should CARL so elect IT will repurchase the Unsold Stock owned
by CARL at a price equal to the cost of the same to CARL (less
any deductions reasonably made by reason of any damage including
fair wear and tear thereto) together with the expenses
reasonably incurred by CARL in the transport and insurance for
re-delivery of the same to IT, provided that if this Agreement
shall have been terminated as a result of the default of CARL,
the expenses of transport and insurance shall be borne by CARL;
CARL will return to IT or otherwise dispose of as IT may in
writing direct and at CARL's expense all documents and records
including, without limitation, all promotional literature,
catalogues, and other documents relating to the Products or to
the business of IT, and all copies thereof, in the possession or
under the control of CARL; and
the obligations of confidentiality in Clause 16 shall continue
in full force and effect.
CARL shall not be entitled to any compensation or payment
whatsoever in respect of the loss of its rights under Clause
19.1 provided that nothing in this clause shall operate to
exclude or restrict any claim that CARL may have for breach of
obligations under this Agreement by IT.
Termination of this Agreement (howsoever caused) shall not
affect the accrued rights or liabilities of either party to it.
LIEN AND SET-OFF
Without prejudice to any other rights and remedies which IT may
have under this Agreement, IT shall in respect of all debts owed
by CARL to IT have a general lien on all goods and property
belonging to CARL in IT's possession and shall be entitled upon
<PAGE>
the expiration of fourteen (14) days' notice to CARL to dispose
of such goods or property as IT thinks fit and to apply any
proceeds of sale thereof towards the payment of such debts.
IT shall be entitled to set off any sums owed by it to CARL
against any sums due and payable to IT hereunder.
FORCE MAJEURE
If the performance by either party of any of its obligations
(other than the obligation to make payments hereunder) shall be
in any way prevented, interrupted or hindered in consequence of
an act of God, war, civil disturbance, strike, lock-out,
cessation of work, combination of workmen or employees,
legislation or restriction of any governmental or other
authority, breakdown or interruption of transport, force majeure
or any other circumstances beyond the control of such party the
obligations of the party concerned shall be wholly or partially
suspended during the continuance and to the extent of such
prevention, interruption or hindrance. If a force majeure
situation has continued for more than one hundred and eighty
days (180) days, either party may terminate this Agreement by
notice to the other party.
GRANT OF SUB-LICENCES and assignment
CARL shall have no right to grant sub-licences hereunder without
the prior written approval and consent of IT.
Neither party shall assign, mortgage or charge (or purport to do
so) this Agreement or any know how or technical information
acquired under it without the prior written consent of the other
party.
Nothing in this Agreement shall prevent either party from
assigning this Agreement to a subsidiary of that party or to
another company in respect of which that party is a subsidiary
or to a company in respect of which that party and that company
are fellow subsidiaries of a third company.
Relationship of Parties
IT and CARL agree that the relationship between them is that of
licensor/vendor and licensee/purchaser. This agreement shall
not create any agency, partnership or joint venture between CARL
<PAGE>
and IT. CARL shall not assume any obligations on behalf of or
in the name of IT nor make any contracts on its behalf nor make
any promises or representations nor give any warranties or
guarantees on behalf of IT or in respect of the Products (except
as herein provided) nor bind IT in any manner whatsoever. CARL
shall not in any way represent itself as being the agent of IT.
ENTIRE AGREEMENT, variation and conflict
This Agreement contains the entire agreement between the parties
as at the Effective Date and supersedes all prior agreements and
understandings between the parties whether oral or in writing in
relation to the subject matter herein contained except that both
parties hereto agree to observe and continue to be bound by the
terms of the Disclosure Agreement.
Valid amendments to or modifications to this Agreement shall be
made in writing and signed by both parties hereto.
In the event of any conflict between this Agreement and any
other contract, the terms of this Agreement shall prevail.
Waiver and Invalidity
The waiver by either party of any right herein contained shall
not be construed as a waiver of the same right at a future time
or as a waiver of any other right herein contained nor shall any
delay or omission on the part of either party to exercise or
avail itself of any right it may have hereunder operate as a
waiver of any breach or default by the other party.
The invalidity of any provision in this Agreement shall not
affect the continuing enforceability of the remaining provisions
of the Agreement.
Headings
The headings in this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.
GOVERNING Law
The formation, construction, performance, validity and all
aspects whatsoever of this Agreement and any individual contract
for the purchase of the Products by CARL made hereunder shall be
<PAGE>
governed by and construed in accordance with the laws of
England. CARL hereby irrevocably submits to the non-exclusive
jurisdiction of the English courts for the determination of any
question or dispute arising in connection with this Agreement
but without prejudice to the right of IT to commence any legal
action or proceedings in the courts of any other competent
jurisdiction or arbitration in any competent forum.
Notices
Any notice or other communication required to be given hereunder
(whether required to be given in writing or otherwise) shall be
given by post, cable, telex or facsimile copy or delivered by
hand addressed to the party to receive such notice at its
address for service being its address contained in this
Agreement or such other addresses as shall have been notified to
the other for the purposes of this Agreement. Any notice so
given by post shall be deemed to have been served at the
expiration of five (5) days after it is posted and in proving
such service it shall be sufficient to prove that the envelope
containing the notice was properly addressed and posted as an
airmail or first class pre-paid letter. Any notice given by
cable, telex or facsimile copy or delivered by hand shall be
deemed to have been served at midnight (at the sender's address
for service) on the date on which it was despatched or delivered.
Restrictive Trade Practices Act
Notwithstanding any other provision of this Agreement, if there
is any provision of this Agreement by virtue of which this
Agreement, or any agreement or arrangement of which if forms
part, is or would be subject to registration under the
Restrictive Trade Practices Act 1976 and 1977 ("RTPA") then that
provision shall not take effect until the date after particulars
of this Agreement or that agreement or arrangement (as the case
may be) have been furnished to the Director General of Fair
Trading in accordance with the requirements of the RTPA.
COUNTERPARTS
This Agreement may be executed in any number of counterparts
each of which when executed and delivered shall be an original
but all the counterparts together shall constitute one and the
same instrument.
<PAGE>
AS WITNESS the hands of the duly authorised representatives of
IT and CARL the day and year first above written.
Signed by: D Keith Gilding, )
Managing Director )
for and on behalf of Innovative Technologies Ltd.: )
Signed by: Chris Record )
Vice President )
for and on behalf of Carrington Laboratories Inc : )
<PAGE>
SCHEDULE 1 - THE INITIAL PRODUCTS
A calcium alginate product in the following forms:-
[ ];
[ ]; and
[ ].
FINISHED PRODUCT SPECIFICATION - Alginate Dressing
SCOPE
The Alginate dressing must meet the requirements set forth in
this document.
PRODUCT DESCRIPTION
The Alginate dressing is used as a wound care device for the
packing of deep wounds to facilitate proper closure. The
dressing is composed of a polysaccharide complex of Mannuronic
and Guluronic acid. The Alginate dressing described can be
categorised as a high G alginate (MF1-2A), which is carded and
needled during the manufacturing process to orientate fibres.
The product supplied as illustrated within the documentation is
received in appropriate packaging and sterilised via gamma
irradiation.
FDA MASTER FILE
Per Innovative Technologies 510K.
SPECIFICATIONS
Specifications apply to all final product sizes unless
specified:-
Test Specification
Fibre Classification Conforms to British Pharmacopoeia (BP)
for type [_] Alginate Fibre
<PAGE>
Colour White to off-white
Odour None
Appearance Sheet or rope form consisting of small carded and
needled fibres
Gel Strength
Moisture Content less than [_] %
Absorbency 2" x 2" 4" x 4" 4" x 8" 12" rope more than [_] g/in2 less
than
[_] g/in2 more than g/in2 more than [_] g/in2
Calcium Content more than [_] to [_] %
Heavy Metals Arsenic Cadmium Iron Lead more than 1 ppm more than
2 ppm more than 250 ppm more than 5 ppm
Dispersion Characteristic Conforms to BP for category '[_]'
dressings and packing
Acidity/Alkalinity Conforms to BP
Identification A. Infra-red Absorption B. Colour Test C.
Precipitate Test Conforms to BP Conforms to BP Conforms to BP
ADDITIONAL REQUIREMENTS
To continue to meet the above specifications, the product must
be stored in a cool dry area. In addition to the specifications
contained here, a final assembly package drawing will document
the form in which the product is to be delivered, ie,
dimensions, artwork, and placement, packaging, and packaging
requirements.
SUPPLIER CERTIFICATION OR QUALITY CONTROL COMPLIANCE AND
STERILITY
Refer to Quality Control requirements Document [Carrington
Document] for Alginate Dressing.
<PAGE>
SCHEDULE 2 - PROJECT SPECIFICATION
Project Number:-
[ ]
Description of Product to be Developed and Specifications:-
[ ]
Date on Which Work Started/to be Started:-
[ ]
Technical Verification & Evaluation and Preliminary Clinical
Assessment:-
[Dates] [what consists in] [by whom]
Date on Which Product to be Delivered ("the Date of Delivery"):-
[ ]
Form in Which Product to be Delivered:-
[ ]
Payment terms:-
CARL shall make the following payments to IT on the following
dates:-
25% on the date on which the project schedule is signed ;
50% in equal monthly instalments over the estimated period of
the project;
25% 30 days after the date on which the product is delivered
together with the final report.
Special Provisions:-
[Equipment to be put at the disposal of IT and unique
requirements and payment terms if any]
<PAGE>
[Statements of costs to be submitted by IT to CARL , if any]
Signed by )
)
for and on behalf of Innovative Technologies Ltd )
Signed by )
)
for and on behalf of Carrington Laboratories Inc. )
<PAGE>
SCHEDULE 3 - PROJECT SPECIFICATION
Project Number:-
CARL-95-0001
Description of Product to be Developed and Specifications:-
Wound dressing product being a dehydrated hydrogel made from
MF1-2A calcium alginate fibres with ace mannan.
Date on Which Work Started/to be Started:-
[ ]
Technical Verification & Evaluation and Preliminary Clinical
Assessment:-
[Dates] [what consists in] [by whom]
Date on Which Product to be Delivered ("the Date of Delivery"):-
[ ]
Form in Which Product to be Delivered:-
[ ]
Payment terms:-
CARL shall make no payments to IT for this Project Specification.
Special Provisions:-
[Equipment to be put at the disposal of IT and unique
requirements and payment terms if any]
[Statements of costs to be submitted by IT to CARL , if any]
Signed by )
)
<PAGE>
for and on behalf of Innovative Technologies Ltd )
Signed by )
)
for and on behalf of Carrington Laboratories Inc. )
<PAGE>
SCHEDULE 4 - PROJECT SPECIFICATION
Project Number:-
CARL-95-0002
Description of Product to be Developed and Specifications:-
Wound dressing product being a hydrocolloid containing ace
mannan.
Date on Which Work Started/to be Started:-
[ ]
Technical Verification & Evaluation and Preliminary Clinical
Assessment:-
[Dates] [what consists in] [by whom]
Date on Which Product to be Delivered ("the Date of Delivery"):-
[ ]
Form in Which Product to be Delivered:-
[ ]
Payment terms:-
CARL shall make no payments to IT for this Project Specification.
Special Provisions:-
[Equipment to be put at the disposal of IT and unique
requirements and payment terms if any]
[Statements of costs to be submitted by IT to CARL , if any]
Signed by )
)
<PAGE>
for and on behalf of Innovative Technologies Ltd )
Signed by )
)
for and on behalf of Carrington Laboratories Inc. )
<PAGE>
SCHEDULE 5 - PURCHASE PRICE
PRODUCTS AND PRICING
Description Case Size Purchase Price
<PAGE>
SCHEDULE 6 -BUSINESS PLAN
Project Number:-
[ ]
Description of the Line of Products:-
[ ]
Identification of Geographic Areas:-
[ ]
Assessment of Value of the Total Market for the Products by
Geographic Area:-
[ ]
Assessment of Minimum Sales to be Achieved by Geographic Area:-
[ ]
Net Invoiced Value of Sales to be Achieved by [ ]:-
Year 1 [date] 199[date] to date 199[date]
Year 1 [date] 199[date] to date 199[date]
Year 1 [date] 199[date] to date 199[date]
Marketing Obligations of [ ]:-
[ ]
(Special Provisions):-
[ ]
Signed by )
<PAGE>
)
for and on behalf of Innovative Technologies Ltd )
Signed by )
)
for and on behalf of Carl )
<PAGE>
SCHEDULE 7 - SECRECY AGREEMENT
Copy of signed Secrecy Agreement between the parties and dated
21st August 1995 is appended hereto.
