UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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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
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Commission file number 0-11997
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CARRINGTON LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Texas 75-1435663
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2001 Walnut Hill Lane, Irving, Texas 75038
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(Address of principal executive offices and Zip Code)
972-518-1300
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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.
9,315,236 shares of Common Stock, $.01 par value, were outstanding at
April 30, 1998.
<PAGE>
INDEX
Page
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Consolidated Balance Sheets
at March 31, 1998 (unaudited) and
December 31, 1997 3
Condensed Consolidated Statements of
Operations for the three months ended
March 31, 1998 and 1997 (unaudited) 4
Condensed Consolidated Statements of
Cash Flows for the three months ended
March 31, 1998 and 1997 (unaudited) 5
Notes to Condensed Consolidated
Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 12
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets
(Dollar amounts in 000's)
March 31, December 31,
1998 1997
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(unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $ 3,808 $ 4,023
Accounts receivable, net 2,831 3,457
Inventories 5,097 5,003
Prepaid expenses 558 328
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Total current assets 12,294 12,811
Property, plant and equipment, net 10,859 10,815
Other assets 2,504 2,537
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Total assets $25,657 $26,163
======= =======
Liabilities and Shareholders' Investment
Accounts payable $ 621 $ 1,143
Accrued liabilities 2,034 2,194
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Total current liabilities 2,655 3,337
Shareholders' investment:
Common stock 93 93
Capital in excess of par 51,609 51,585
Deficit (28,700) (28,852)
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Total shareholders' investment 23,002 22,826
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Total liabilities and
shareholders' investment $25,657 $26,163
======= =======
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
Condensed Consolidated Statements of Operations (unaudited)
(Dollar amounts and shares in 000's, except per share amounts)
Three Months Ended
March 31,
1998 1997
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<S> <C> <C>
Net sales $ 5,788 $ 6,083
Costs and expenses:
Cost of sales 2,580 2,507
Selling, general and administrative 2,504 2,750
Research and development 599 798
Interest, net (57) (55)
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Income from operations
before income taxes 162 83
Provision for income taxes 10 -
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Net income 152 83
Dividends and income attributed
to preferred shareholders - (68)
Net income available to
common shareholders $ 152 $ 15
======== ========
Net income available to
common shareholders per share -
basic and diluted $ 0.02 $ 0.00
======== ========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
Condensed Consolidated Statements of Cash Flows (unaudited)
(Dollar amounts in 000's)
Three Months
Ended
March 31,
1998 1997
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<S> <C> <C>
Cash flows from operating activities
Net income $ 152 $ 83
Adjustments to reconcile net loss to
net cash provided (used) by
operating activities:
Depreciation and amortization 285 313
Provision for inventory obsolescence 184 163
Changes in assets and liabilities:
Receivables, net 625 (882)
Inventories (278) (1)
Prepaid expenses (230) (11)
Other assets 24 26
Accounts payable and accrued liabilities (673) (337)
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Net cash provided (used) by operating activities 89 (646)
Cash flows from investing activities:
Purchases of property, plant and equipment (320) (77)
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Net cash used by investing activities (320) (77)
Cash flows from financing activities:
Issuances of common stock 24 18
Repurchase of preferred stock - (3,885)
Debt payments (8) (8)
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Net cash provided (used) by financing activities 16 (3,875)
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Net decrease in cash
and cash equivalents (215) (4,598)
Cash and cash equivalents, beginning of period 4,023 11,406
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Cash and cash equivalents, end of period $ 3,808 $ 6,808
======== =======
Supplemental disclosure of cash flow
information
Cash paid during the period for interest $ 1 $ 1
Cash paid during the period for
federal, state and local income taxes 42 78
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
Notes to Condensed Consolidated Financial Statements (unaudited)
(1) Condensed Consolidated Financial Statements:
The condensed consolidated balance sheet as of March 31, 1998, the
condensed consolidated statements of operations for the three month
periods ended March 31, 1998 and 1997 and the condensed consolidated
statements of cash flows for the three month periods ended March 31,
1998 and 1997 have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include all normal
recurring adjustments) necessary to present fairly the consolidated
financial position, results of operations and cash flows at March 31,
1998 and for all periods presented have been made. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed
consolidated financial statements should be read in conjunction with
the audited financial statements and notes thereto included in the
Company's annual report to shareholders or Form 10-K for the year
ended December 31, 1997.
(2) Net Income Per Share:
Basic net income available to common shareholders per share was
computed by dividing net income available to common shareholders by
the weighted average number of common shares outstanding of 9,306,000
and 8,870,000 at March 31, 1998 and 1997, respectively.
In calculating the diluted net income available to common
shareholders per share for the first quarter 1998, no effect was
given to options or warrants. The effect of including these
securities would have been antidilutive because the exercise prices
of options and warrants exceeded the average market price for the
period. Total dilutive securities were insignificant in the first
quarter of 1997 and had no impact on net income available to common
shareholders per share.
(3) Business Segments:
The Company operates in two business segments: Wound Care Products,
and Caraloe, Inc., a consumer products subsidiary, including bulk
ingredients, consumer beverages, nutritional and skin care products.
Corporate Income Before Income Taxes set forth in the following table
includes research and development expenses which were related to the
development of pharmaceutical products not associated with the
reporting segments. Assets which are used in more than one segment
are reported in the segment where the predominant use occurs. The
Company's production facility in Costa Rica, which provides bulk
ingredients for all segments, and total cash for the Company are
included in Corporate assets.
<PAGE>
Business Segments (in thousands)
Wound Caraloe
March 31, 1998 Care Inc. Corporate Total
--------------------------------------------------------------
Sales to unaffiliated
customers $ 3,980 $1,808 $ - $ 5,788
Income (loss) before
income taxes 273 410 (521) 162
Identifiable assets 14,618 1,881 9,158 25,657
Capital expenditures 25 9 286 320
Depreciation and
amortization 150 - 135 285
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March 31, 1997
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Sales to unaffiliated
customers $ 4,655 $1,428 $ - $ 6,083
Income (loss) before
income taxes 470 307 (694) 83
Identifiable assets 14,402 1,071 11,600 27,073
Capital expenditures 27 - 50 77
Depreciation and
amortization 176 - 137 313
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(4) Income Taxes:
The tax effects of temporary differences have given rise to deferred
tax assets. At December 31, 1997, the Company provided a valuation
allowance against the entire deferred tax asset due to the
uncertainty as to the realization of the asset. At December 31,
1997, the Company had net operating loss carryforwards of
approximately $36,670,000 for federal income tax purposes, which
expire during the period from 1999 to 2011, and research and
development tax credit carryforwards of approximately $839,000, which
expire during the period from 1999 to 2008, all of which are
available to offset federal income taxes due in future periods. The
provision for federal income taxes for the first quarter of 1998 was
$10,000 which represents the alternative minimum tax. The remaining
tax on first quarter 1998 income was offset by a reduction in the
valuation allowance.
<PAGE>
(5) Commitments and Contingencies:
In February 1995 the Company entered into a commitment to purchase
$2.5 million of freeze dried products from its principal supplier
over a 66 month period ending in August 2000. The commitment, which
also provides for monthly minimum purchases, is required to be
supported to the extent of 60% of the remaining commitment by a
letter of credit from a bank or a pledged certificate of deposit.
Through April 30, 1998, the Company has purchased $515,000 of
products pursuant to this commitment and made prepayments of $205,000
toward future deliveries under the commitment. Although management
believes that new products which they began to actively market in
late 1997, as well as additional products to be developed, will
result in no losses pursuant to this commitment, the Company could
incur significant losses if they are not able to meet the minimum
purchase commitments.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Background
The Company is a research-based pharmaceutical and medical device
company engaged in the development, manufacturing and marketing of
naturally occurring complex carbohydrate and other natural products
for therapeutics in the treatment of major illnesses and the dressing
and management of wounds and other skin conditions. The Company
sells nonprescription products through its wound and skin care
division; and consumer products and bulk ingredients through its
consumer products subsidiary, Caraloe, Inc. (See Note 3 to the
condensed consolidated financial statements for financial information
on each of the segments). The Company's research and product
portfolio are primarily based on complex carbohydrate technology
derived naturally from the Aloe vera plant.
Liquidity and Capital Resources
At March 31, 1998 and December 31, 1997, the Company held cash and
cash equivalents of $3,808,000 and $4,023,000, respectively. This is
a decrease in cash of $215,000 and is attributable to normal
business operations.
The Company has invested in inventory to support sales of bulk
products to Mannatech, Inc. and Aloe Commodities International, Inc.
Receivables from these two customers totaled $780,000 and $349,000,
respectively, as of March 31, 1998. As of April 30, 1998, $390,000
of the above balances had been collected.
<PAGE>
As of April 30, 1998, the Company had no material capital commitments
other than its leases and agreements with suppliers. In February
1995, the Company entered into a supply agreement with its supplier
of freeze-dried products. The agreement required that the Company
establish a letter of credit equal to 60% of the minimum purchase
commitment of $2,500,000, but allowed for the amount of the letter of
credit to be reduced by 60% of the purchases made under the
agreement. In April 1998, the letter of credit was reduced under
this provision of the agreement to $1,100,000. The supplier
currently produces the CarraSorb[TM] M Freeze Dried Gel and the
Carrington[TM] (Aphthous Ulcer) Patch for the Company. Both of these
products represent new technology and are still in the early phase of
marketing. The Company had approximately $350,000 of CarraSorb[TM] M
and Carrington[TM] (Aphthous Ulcer) Patch inventory on hand as of
March 31, 1998.
The supply agreement also requires the Company to make minimum
monthly purchases of $30,000. In February 1998, the supply agreement
was amended to allow for unmet monthly minimum purchase amounts to be
met by prepayments, to be applied to future purchases under the
agreement, which allows the Company to keep inventory at levels
appropriate for sales demand. Current sales of both items are lower
than the minimum purchase requirement, but the Company believes that
as licensing, acceptance and demand for the new technology increases,
demand will exceed the aggregate minimum purchase requirement. As of
April 30, 1998, the Company had purchased products and made
prepayments totaling approximately $720,000 from this supplier. The
Company is in full compliance with the agreement and, as of May 14,
1998, had the available resources to meet all future minimum purchase
requirements. There is, however, no assurance that the Company will
be able to sell all of the products it is required to purchase from
this supplier. If and to the extent that the Company makes
prepayments under the agreement but does not apply those prepayments
to pay for products that it can sell, such prepayments would
eventually have to be charged against the Company's earnings. As of
April 30, 1998, prepayments of $205,000 have been made.
In November 1997, the Company entered into an agreement with Comerica
Bank-Texas for a $3,000,000 line of credit, secured by accounts
receivable and inventory. This credit facility will be used for
operating needs, as required, and to secure the letter of credit
described above. This resulted in reporting an additional $1,250,000
in operating funds in April 1998, as the certificate of deposit which
had served as collateral for the letter of credit is no longer
required.
In November 1995, the Company signed a licensing agreement with a
supplier of calcium alginates and other wound care products. Under
the agreement, the Company has exclusive marketing rights for ten
years to advanced calcium alginate products for North and South
America and the People's Republic of China. Under the agreement, the
Company made an up-front payment to the supplier of $500,000 in
November 1995, and in July 1997 and October 1997, additional payments
of $166,000 and $167,000, respectively, were paid to this supplier
upon delivery of the CarraSmart[TM] Hydrocolloid, a new product
launched in the third quarter of 1997. These payments resulted in
increasing the prepaid assets of the Company. As of March 31, 1998,
the net book value of this agreement was $687,000.
<PAGE>
In late 1995, the Company began an initial Phase I dosing study using
CarraVex[TM] injectable (formerly CARN 750) in cancer patients
involving six cancer types. As of December 31, 1997, approximately
$295,000 had been expensed against this study. No expenses were
incurred in the first quarter of 1998, as the Company has placed the
study on clinical hold, pending further work on drug formulation.
During 1997, the aloe vera plants on the Company's farm in Costa Rica
sustained some flood damage and a fungal disease that severely
reduced the supply of aloe vera leaves available from the farm. In
addition, Caraloe experienced a sharp increase in sales of raw
materials processed at the Company's processing facility in Costa
Rica. As a result, the Company's demand for aloe vera leaves has
exceeded and continued to exceed both the current and the normal
production capacity of its farm. It has therefore been necessary for
the Company to purchase aloe vera leaves from other sources at costs
that are significantly higher than the cost of leaves produced on its
own farm.
The Company has been exploring other options to obtain the leaves it
needs at lower costs. In March 1998, Caraloe signed a letter of
intent to enter into a supply agreement with a company to be formed
(the "leaf supplier") for the purpose of growing aloe vera plants at
a location in Costa Rica that is less than 15 miles from the
Company's processing plant. The proposed supply agreement would
provide for Caraloe to purchase from the leaf supplier, at mutually
agreeable, locally competitive prices, all of the leaves Caraloe
needs, to the extent its needs exceed the leaves available from the
Company's farm plus up to 200,000 kilograms of leaves per month from
another local source. The terms of the proposed supply agreement
have not been negotiated, and there is no assurance that the proposed
agreement will be entered into. Even if Caraloe or the Company
enters into the proposed agreement, the leaf supplier does not yet
have the ability to supply aloe vera leaves to purchasers, and it is
unlikely that it would be able to supply the Company with any
significant quantities of leaves before the first quarter of 1999.
There is no assurance that the Company will be able to continue
acquiring adequate supplies of aloe vera leaves from other sources or
that it will be able to purchase leaves at costs that will allow the
Company's and Caraloe's products to be price-competitive.
The Company has reformulated its proprietary product Aliminase[TM]
and is preparing for new Phase III clinical trials of that drug for
the treatment of ulcerative colitis. Although the Company hopes to
begin those trials during the first quarter of 1999, there can be no
assurance as to whether or when such trials will begin or, if begun,
whether or not when they will be completed or what the results will
be.
<PAGE>
The Company believes that its available cash resources and expected
cash flows from operations will provide the funds necessary to
finance its current operations. However, the Company does not expect
that its current cash resources will be sufficient to finance the
major clinical studies and costs of filing new drug applications
necessary to develop its products to their full commercial potential.
Additional funds, therefore, may have to be raised through equity
offerings, borrowings, licensing arrangements or other means, and
there is no assurance that the Company will be able to obtain such
funds on satisfactory terms when they are needed.
The Company is subject to regulation by numerous governmental
authorities in the United States and other countries. Certain of the
Company's proposed products will require governmental approval prior
to commercial use. The approval process applicable to prescription
pharmaceutical products usually takes several years and typically
requires substantial expenditures. The Company and any licensees may
encounter significant delays or excessive costs in their respective
efforts to secure necessary approvals. Future United States or
foreign legislative or administrative acts could also prevent or
delay regulatory approval of the Company's or any licensees'
products. Failure to obtain requisite governmental approvals or
failure to obtain approvals of the scope requested could delay or
preclude the Company or any licensees from marketing their products,
or could limit the commercial use of the products, and thereby have a
material adverse effect on the Company's liquidity and financial
condition.
Impact of Inflation
The Company does not believe that inflation has had a material impact
on its results of operations.
First Quarter of 1998 Compared With First Quarter of 1997
Net sales were $5,788,000 in the first quarter of 1998, compared with
$6,083,000 in the first quarter of 1997, a decrease of $295,000, or
4.8%. Caraloe, Inc., the Company's consumer products subsidiary,
increased sales from $1,428,000 to $1,808,000, or 26.6%. Caraloe
sales to Mannatech, Inc., which are primarily Manapol[R] powder,
increased from $540,000 in the first quarter of 1997 to $1,170,000 in
the first quarter of 1998. Additionally, Caraloe made shipments to
Aloe Commodities International, Inc. which resulted in $83,000 in
sales in the first quarter of 1998, as compared to $86,000 in the
first quarter of 1997.
Sales of the Company's wound and skin care products decreased
$675,000 from $4,655,000 to $3,980,000, or 14.5%. The decrease in
wound care sales was primarily due to generally soft conditions in
the wound care market created by changes in government reimbursement
programs, the impact of managed care, and consolidation of
distributors.
<PAGE>
Cost of sales increased from $2,507,000 to $2,580,000, or 2.9%. As a
percentage of sales, cost of sales increased from 41.2% in the first
quarter of 1997 to 44.6% in the first quarter of 1998. This was due
to the weighted impact of increased sales of Caraloe's products,
which have a lower gross margin than the Company's wound and skin
care products.
Selling, general and administrative expenses decreased from
$2,750,000 in the first quarter of 1997 to $2,504,000 in 1998. This
was attributable to reduced selling expenses as the Company continued
to reap the ongoing cost benefits of a streamlined sales force.
Research and development ("R&D") expenses decreased to $599,000 from
$798,000, or 24.9%. This decrease was partially the result of no
costs being incurred in the first quarter of 1998 for the Phase I
dosing study using CarraVex[TM] injectable (formerly CARN 750)
discussed above, whereas $94,000 was incurred for that study in the
first quarter of 1997. Also contributing to the decrease in R&D
expenses was a reduction of general operating expenses.
Net interest income of $57,000 in the first quarter of 1998 was
comparable to the $55,000 of net interest income in the first quarter
of 1997.
Net income for the first quarter of 1998 was $152,000, versus net
income of $83,000 for the first quarter of 1997. This was due
primarily to reductions in selling expenses and research expenditures
that exceeded the decrease in sales volume. Assuming dilution, net
income per share was $0.02 in the first quarter of 1998, compared to
net income per share of $0.00 during the same period in 1997.
All statements other than statements of historical fact contained in
this report, including statements in this "Management's Discussion
and Analysis of Financial Condition and Results of Operations" (and
similar statements contained in the Notes to Condensed Consolidated
Financial Statements), concerning the Company's financial position,
liquidity, capital resources and results of operations, its prospects
for the future and other matters, are forward-looking statements.
Forward-looking statements in this report generally include or are
accompanied by words such as "anticipate", "believe", "estimate",
"expect", "intend", "hopes", "exploring" or words of similar import.
Such forward-looking statements include, but are not limited to,
statements regarding the Company's belief that it will be able to
sell all of the freeze dried, calcium alginate and certain other
wound care products that it is required to purchase under its
existing agreements with the suppliers of those products; the
Company's plan to enter into (or to have Caraloe enter into) an
agreement with a supplier that will sell aloe vera leaves to the
Company or Caraloe at prices equal to or less than the Company's cost
of growing leaves on its own farm, and to continue purchasing aloe
vera leaves from other sources as necessary; the Company's plan to
conduct Phase III clinical trials of Aliminase[TM]; the Company's
belief that its available cash and revenues from operations will
provide the funds necessary to finance its current operations; and
various other matters.
<PAGE>
Although the Company believes that the expectations reflected in its
forward-looking statements are reasonable, no assurance can be given
that such expectations will prove correct. Factors that could cause
the Company's results to differ materially from the results discussed
in such forward-looking statements include but are not limited to the
possibilities that the demand for the Company's freeze dried, calcium
alginate and certain other wound care products may not be sufficient
to enable it to sell the products it is required to purchase from its
suppliers under existing supply agreements; that the Company may be
unable to negotiate a satisfactory agreement with the leaf supplier
that proposes to grow aloe vera leaves and sell them to the Company,
or the leaf supplier may be unable to supply such leaves when they
are needed by the Company, and the Company may not be able to
purchase sufficient quantities of aloe vera leaves to enable it to
satisfy the demand for the Company's and Caraloe's products or to
meet the Company's or Caraloe's obligations under supply agreements
with customers, or the cost of purchasing such leaves may be so high
that the Company and Caraloe will not be able to sell their products
at competitive prices; that the Company may be unable to obtain the
approval of the FDA, or to obtain the funds necessary, to proceed
with the planned clinical trials of Aliminase[TM]; and that the
Company's available cash and expected cash flow from operations may
not be sufficient to finance the Company's current operations for a
variety of reasons.
All forward-looking statements in this report are expressly qualified
in their entirety by the cautionary statements in the two immediately
preceding paragraphs.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
The Company is not required to make the disclosures comtemplated by
Item 3 in this report.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
In November 1997, the Company received a letter from the Texas
Department of Licensing and Regulation (the "TDLR") alleging that the
Company's Walnut Hill facility in Irving, Texas had been inspected
and found in non-compliance with provisions of the Texas
Architectural Barriers Act (the "Act") and regulations issued
thereunder. The Act and the related regulations contain design
requirements to ensure that disabled persons can make use of public
facilities. An inspection report describing the alleged deficiencies
was enclosed with the letter. The letter stated that the Walnut Hill
facility was required to be brought into compliance and written
verification furnished to the TDLR within 30 days, and that the
Company should contact the TDLR if that failure to respond to the
letter would result in the matter being referred to the TDLR's
Enforcement Division, which could result in a maximum administrative
penalty of $1,000 per violation per day.
The Company responded to that letter through the architects that the
Company had engaged to design and supervise the work on the Walnut
Hill facility when the Company moved its wound and skin care product
manufacturing operations to that location in 1995. The response from
the architects to the TDLR proposed that the Company make certain
changes, suggested that a number of the claimed deficiencies do not
constitute violations of the regulations, and sought variances for
certain items. Subsequently, the Company took certain actions to
resolve the majority of the deficiencies alleged by the TDLR and
informed the TDLR orally and in writing about those actions and the
Company's proposals for dealing with the remaining issues. The
Company is now awaiting the TDLR's response to the information and
proposals submitted by the Company. Until it receives that response,
the Company is unable to estimate the cost of resolving this matter.
Item 5. Other Information.
Effective April 30, 1998, Christopher S. Record resigned his
positions as Vice President, Business Development, Secretary and
General Counsel of the Company and as an officer and director of the
Company's subsidiaries. Pursuant to an agreement between the Company
and Mr. Record, he will remain an employee of the Company during the
period from May 1, 1998 through February 14, 1999, or until his
employment is earlier terminated for cause or by reason of his death.
During that period, he will serve as a special advisor to the
Company, with such duties as the Company assigns to him. The Company
has agreed to pay him gross compensation of $62,500 during that
period.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits:
-------------------
10.1* Sales Distribution Agreement between Carrington
Laboratories, Inc. and Carrington Laboratories Belgium
N.V., and Henry Schein U.K. Holdings, Ltd., dated
January 1, 1998.
10.2* Sales Distribution Agreement between Carrington
Laboratories, Inc. and Carrington Laboratories Belgium
N.V., and Saude 2000, dated January 5, 1998.
10.3* Carrington Laboratories, Inc., 1995 Stock Option Plan, As
Amended and Restated Effective January 15, 1998.
10.4* Sales Distribution Agreement between Carrington
Laboratories, Inc. and Carrington Laboratories Belgium
N.V., and Hemopharm GmbH, dated March 27, 1998.
10.5* Sales Distribution Agreement between Carrington
Laboratories, Inc. and Carrington Laboratories Belgium
N.V., and Vincula International Trade Company, dated
March 27, 1998.
10.6* Separation Agreement and Full and Final Release dated
May 1, 1998 between Carrington Laboratories, Inc. and
Christopher S. Record.
27.1* Financial Data Schedule
b. Reports on Form 8-K:
-------------------
No reports on Form 8-K were filed by the Company
during the quarter ended March 31, 1998.
* Filed herewith.
Management contract or compensatory plan.
<PAGE>
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: May 15, 1998 By: /s/ Carlton E. Turner
------------------ ------------------------
Carlton E. Turner,
President and C.E.O.
(principal executive officer)
Date: May 15, 1998 By: /s/ Robert W. Schnitzius
------------------ -----------------------
Robert W. Schnitzius,
Chief Financial Officer
(principal financial and
accounting officer)
EXHIBIT 1
SALES DISTRIBUTION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the
Effective Date (as defined below) by and between CARRINGTON LABORATORIES,
INC., a Texas corporation and CARRINGTON LABORATORIES BELGIUM N.V., a
Belgium corporation, jointly and severally (together hereinafter referred
to as "Carrington"), and HENRY SCHEIN U.K. HOLDINGS, LTD., ("Schein").
W I T N E S S E T H :
WHEREAS, Carrington is engaged in the business of developing,
manufacturing, selling and distributing certain pharmaceutical products
and medical devices and is desirous of establishing a competent and
exclusive distribution source for sales of certain products in the United
Kingdom (defined in Article 1 hereof as the Territory); and
WHEREAS, Schein is desirous of distributing such products in the
Territory, is well introduced in the market, is willing and able to
provide a competent distribution organization in the Territory, and
Schein desires to be Carrington's 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) "Effective Date" shall mean January 1, 1998.
(b) "Know-how" shall mean secret and substantial technical and
scientific information regarding the Products, which may be
necessary, useful or advisable to enable Schein to promote,
market and sell the Products in the Territory, and as is or
will be specified in the documentation which Carrington has
delivered or will deliver to Schein after the Effective Date
and during the term of this Agreement.
(c) "Parties" shall mean Carrington and Schein and "Party" shall
mean either of them as the context indicates.
(d) "Products" shall mean oral care products manufactured by or for
Carrington set forth on Exhibit A hereto.
(e) "Registration" shall mean any official approval, or
authorization, or licensing regarding the Products by the
appropriate and competent authorities in the Territory,
including, if applicable, the Products selling prices and
social security approvals, allowing the lawful marketing of the
Products.
(f) "Territory" shall mean the following countries: the United
Kingdom and Ireland.
<PAGE>
(g) "Trademarks" shall mean all Trademarks, trade names, service
marks, logos and derivatives thereof relating to the Products
Article 2. Appointment
2.1 Subject to the terms and conditions of this Agreement,
Carrington hereby appoints Schein as Carrington's sales distributor in
the Territory for the sale of Products, and Schein hereby accepts such
appointment. As sales distributor in the Territory, Schein shall,
subject to the terms and conditions of this Agreement, have the right to
promote, distribute and sell Products in the Territory, but shall have no
right to take any such action outside the Territory.
2.2 In a manner reasonably satisfactory to Carrington, and at
Carrington's sole expense, Carrington agrees to make and maintain 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.
2.3 During the term of this Agreement, Schein shall be considered
an independent contractor and shall not be considered a partner,
employee, agent or servant of Carrington. As such, Schein has no
authority of any nature whatsoever to bind Carrington or incur any
liability for or on behalf of Carrington or to represent itself as
anything other than a sales distributor and independent contractor.
Schein agrees to make clear in all dealings with customers or prospective
customers that it is acting as a distributor of the Products and not as
an agent of Carrington.
2.4 Nothing in this Agreement shall be construed as giving Schein
any right to use or otherwise deal with the Know-how for purposes other
than those expressly provided for in this Agreement.
Article 3. Certain Performance Requirements
3.1 Schein agrees to promote, market, sell and distribute the
Products only to customers and potential customers within the Territory
for ultimate use within the Territory. Schein will not, under any
circumstances, either directly or indirectly through third parties,
promote, market, sell, or distribute Products within or to, or for
ultimate use within, the United States or any place outside the Territory
subject to EC requirements.
3.2 In order to assure Carrington that Schein is in compliance with
Article 3.1, Schein agrees that:
(a) Schein will send to Carrington quarterly sales reports which
set forth the number of units and sizes of each Product sold,
the net sales, the number of units of free medical samples
distributed, and to whom such Products were sold and/or
distributed during such quarter;
(b) Schein will send to Carrington quarterly inventory reports of
the Products; and
(c) Carrington may mark for identification all Products sold by
Carrington to Schein hereunder.
<PAGE>
3.3 Schein shall promptly provide Carrington with written reports
of any importation or sale of any of the Products in the Territory of
which Schein has knowledge from any source other than Carrington, as well
as with any other information which Carrington may reasonably request in
order to be updated on the market conditions in the Territory.
3.4 Schein shall maintain a sufficient inventory of Products to
assure an adequate supply of Products to serve all its market segments.
Schein shall maintain all its inventory of Products clearly segregated
and meeting all storage and other standards required by applicable
governmental authorities.
3.5 Schein shall be responsible for and shall collect all VAT and
other taxes (excluding license fees) that may be due and owing upon sales
by Schein of Products. Upon written request from Schein, Carrington
shall provide Schein 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 and labeled for sale and
delivered by Carrington to Schein subject to and accordance with all
local rules and regulations. All Products shall be advertised, marketed,
sold and distributed by Schein in compliance with the rules and
regulations, as amended from time to time, of (i) all applicable
governmental authorities within the Territory in which the Products are
marketed, and (ii) all other applicable laws, rules and regulations.
Schein shall pay all expenses associated with (i) any alterations to the
packaging and labeling of the Products which deviate from Carrington s
standard packaging materials, designs, methods and/or procedures, (ii)
any language modifications to the packaging or labeling and/or (iii) any
additions to inserts in the general packaging. The Parties shall agree on
minimum production runs for such custom labels.
3.7 Schein shall not make any alterations or knowingly permit any
alterations to be made to the Products without Carrington's written
consent.
3.8 Schein shall assume all responsibility for and comply with all
applicable laws, regulations and requirements concerning the inventory,
use, promotion, distribution and sale of the Products in the Territory
and correspondingly for any damage, claim, liability, loss or expense
which Carrington may suffer or incur by reason of said inventory, use,
promotion, distribution and sale and shall hold Carrington harmless from
any claim resulting therefrom being directed against Carrington or Schein
by any third party.
3.9 Schein 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 or from the applicable governmental authorities.
3.10 Schein 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.
<PAGE>
Article 4. Sale of Products by Carrington to Schein
4.1 Subject to the terms and conditions of this Agreement,
Carrington shall sell to Schein the Products at a specified price for
each Product (the "Contract Price"). For orders placed by Schein 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 ninety (90) days prior to the end of
each 12-month period of the term of this Agreement, (a) Schein shall
provide in writing to Carrington both a sales forecast and a purchase
forecast for the following 12-month period, and (b) 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. During any
twelve (12) month period Carrington reserves the right to change its
Contract Price for each Product subject to sixty (60) days notice being
given by Carrington to Schein.
4.2 As consideration for its appointment as a sales distributor
entitled to a Product discount, Schein agrees to purchase from
Carrington, during each 12-month period of the term of this Agreement,
commencing with the 12-month period beginning January 31, 1998 through
January, 31, 1999, at the Contract Price, a specified minimum aggregate
dollar amount (based on the Contract Price) of the Products (the
"Specified Minimum Purchase Amount"). For the first 12-month period of
the term of this Agreement, the targeted, but non-binding for this period
only, Specified Minimum Purchase Amount shall be $100,000. The Specified
Minimum Purchase Amounts for each subsequent 12-month period shall be
determined by mutual agreement of the Parties no later than thirty (30)
days prior to the beginning of such period based on Schein's reasonable,
good faith projections of future sales growth and such other factors as
the Parties may deem relevant.
4.3 Schein shall order Products by submitting a purchase order to
Carrington describing the type and quantity of the Products to be
purchased. All orders are subject to acceptance by Carrington. All
purchases shall be spaced in a reasonable manner. If Carrington accepts
the order, Carrington will invoice Schein upon shipment of the Products.
Unless otherwise agreed, Schein shall pay all invoices in full within
ninety (90) days of the date of invoice. Schein shall be solely
responsible for all costs in connection with affecting payments. All
sales and payments shall be made, and all orders shall be accepted, in
the State of Texas.
4.4 Carrington shall not be obligated to ship Products to Schein at
any time when payment of an amount owed by Schein is overdue or when
Schein is otherwise in breach of this Agreement.
<PAGE>
4.5. All shipments shall be initiated by a Purchase Order. Product
shipment dates will be specified in the Purchase Order. These dates may
not scheduled prior to ninety (90) days after the dated the Purchase
Order is received and acknowledged in writing by Seller, unless by mutual
consent of the parties Purchase Orders will be non-cancellable. Schein
will issue to Carrington on a monthly basis, a twelve (12) month rolling
forecast so that Carrington may incorporate said forecasts into its
planning system. The triggering document for production activities is,
however, the purchase order, as stated above. Carrington will guarantee
delivery dates for Product quantities that vary up to 20% above the last
monthly rolling forecast issued prior to the purchase order placed by
Schein. Variation above 20% shall be discussed between the Parties and
Carrington will use its best efforts to maintain delivery dates requested
by Schein.
4.6 All shipments of Products to Schein will be packaged in
accordance with Carrington's standard packaging procedures and shipped
per Carrington's existing distribution policy. All Contract Prices are
F.O.B., (invoice price includes seller's expense for delivery to the
named destination) Carrington's facility, Irving, Texas. Ownership of
and title to Products and all risks of loss with respect thereto shall
pass to Schein upon delivery of such Products by Carrington to the
carrier designated by Schein 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 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 Schein 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. Schein 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 4.7 or that is inconsistent with the policies or
publications of Carrington relating to the Products.
SCHEIN'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 SCHEIN'S
OPTION.
SCHEIN SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CARRINGTON AND
CARRINGTON'S AFFILIATES, 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,
KNOW-HOW OR TRADEMARKS IN A MANNER RECOMMENDED BY SCHEIN WHICH IS
CONTRARY TO CARRINGTON'S WRITTEN OR PUBLISHED REPRESENTATIONS, (ii) ANY
BREACH BY SCHEIN OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS
UNDER THIS AGREEMENT OR (iii) ANY ACTS OR OMISSIONS ON THE PART OF SCHEIN
OR ITS AGENTS, SERVANTS OR EMPLOYEES WHICH ARE OUTSIDE OR BEYOND SCHEIN S
AUTHORIZATION GRANTED HEREIN.
<PAGE>
EXCEPT AS OTHERWISE PROVIDED HEREIN, CARRINGTON SHALL INDEMNIFY AND
HOLD HARMLESS SCHEIN AGAINST ANY AND ALL COSTS, CLAIMS, INCLUDING,
WITHOUT LIMITATION, CLAIMS OF PRODUCT LIABILITY, WHETHER SOUNDING IN TORT
OR IN CONTRACT, LAPSES, DAMAGES, INCLUDING, WITHOUT LIMITATION, ACTUAL
DAMAGES, LIABILITIES, LITIGATION, FEES AND EXPENSES, INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS FEES AND EXPENSES, INCURRED AS A RESULT
OF (i) ANY ALLEGED OR ACTUAL USE OF THE PRODUCTS, OR (ii) ANY BREACH BY
CARRINGTON OF ANY OBLIGATION TO SCHEIN, INCLUDING, WITHOUT LIMITATION,
THOSE CONTAINED HEREIN, OR (iii) ANY NEGLIGENT OR WILLFUL ACTION OR
OMISSION OF CARRINGTON OR ANY OF ITS AGENTS, REPRESENTATIVES, ASSIGNS
EMPLOYEES OR SUCCESSORS IN CONNECTION WITH THE MANUFACTURE, DEVELOPMENT,
SALE, DISTRIBUTION, STORAGE OR DISPENSING OF THE PRODUCTS, OR (iv) ANY
ACTION, INCLUDING, BUT NOT LIMITED TO, AN ACTION FOR THE RECALL OR
SEIZURE OF THE PRODUCTS BROUGHT BY ANY COUNTRY AND/OR STATE, PROVINCIAL
OR LOCAL AGENCY OR REGULATORY BODY PROVIDED SCHEIN'S ACTIONS OR OMISSIONS
DO NOT CAUSE OR CONTRIBUTE TO THE RECALL. THIS INDEMNIFICATION SHALL BE
LIMITED TO THE EXTENT THAT ANY ACTION OR LOSS ARISING OUT OF USE OF THE
PRODUCT IN A MANNER OTHER THAN INTENDED BY CARRINGTON, OR, IN A MANNER
REPRESENTED BY SCHEIN WHICH IS NOT IN ACCORDANCE WITH CARRINGTON S
WRITTEN RECOMMENDATIONS OR REPRESENTATIONS.
4.8 Credits for defective Products to Schein shall include
importation and shipment expenses and will be calculated by Carrington
based on the original Contract Price of the items returned, whether
identified by lot number or another method. Carrington shall provide
Schein with a copy of its liability Insurance Certificate and shall
include Schein thereunder.
Article 5. Term and Termination
5.1 The term of this Agreement shall be for a period of ten years
from the effective date of this Agreement. After such term, this
Agreement shall be automatically terminated unless the parties mutually
agree in writing to extend the term hereof. Notwithstanding the
foregoing, this Agreement may be terminated earlier in accordance with
the provisions of this Article 6 or as expressly provided elsewhere in
this Agreement.
5.2 Carrington shall have the absolute right to terminate this
Agreement if Schein fails to perform or breaches, in any material
respect, any material 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 Schein, Schein 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 5.2, if:
(i) Schein fails or refuses to pay to Carrington any sum when
due;
(ii) Schein breaches any provision of Article 2.2, 3.4, 4, 4.3,
4.7, 6 or 7; or,
(iii) Schein fails to purchase the Specified Minimum
Purchase Amounts of Product for any required period.
<PAGE>
5.3 Each Party shall have the absolute right to terminate this
Agreement in the event the other Party shall become insolvent, or if
there is instituted by or against the other Party procedures in
bankruptcy, or under insolvency laws or for reorganization, receivership
or dissolution, or if the other Party loses any franchise or license to
operate its business as presently conducted in any part of the Territory.
5.4 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 4.2 hereof if the Parties are unable to agree upon the
Contract Prices or the Specified Minimum Amounts for the next 12-month
period of the term.
5.5 During the one-year period following termination of this
Agreement, any inventory of Products held by Schein at the termination of
this Agreement may be sold by Schein 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 Schein's performance obligations and Carrington's rights shall
remain in effect. In order to accelerate the liquidation of any such
inventory, Carrington shall have the option, 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 Schein,
including importation and shipping.
5.6 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 4.7, 5.5, 6, 7 and
14 and the rights and obligations of the Parties thereunder shall survive
the termination of this Agreement for a period of one (1) year.
Article 6. Trademarks
6.1 All Carrington Trademarks, trade names, service marks, logos
and derivatives thereof relating to the Products (the "Trademarks"), and
all patents, technology and other intellectual property (also known as
"Know-how") relating to the Products and of the goodwill associated <PAGE>
therewith, are the sole and exclusive property of Carrington and/or its
affiliates. The Products shall be promoted, sold and distributed only
under the Trademarks. Carrington hereby grants Schein permission to use
the Trademarks for the limited purpose of performing its obligations
under this Agreement. Carrington may, in its sole discretion after
consultation with Schein, modify or discontinue the use of any Trademark
and/or use one or more additional or substitute marks or names, and
Schein shall be obligated to do the same.
6.2 Mutually agreed upon Carrington's Trademarks shall appear on
all Product packaging, labels, and inserts and other materials which
Schein uses for the marketing of the Products. Carrington retains the
right to review and approve all intended uses of the Trademark in any
packaging, inserts, labels, or promotional or other materials relating to
the Products prior to Schein's actual use thereof.
<PAGE>
6.3 Schein agrees to use the Trademarks in full compliance with the
rules prescribed from time to time by Carrington. The Trademarks shall
always be used together with the sign "[R]" or the sign "[TM]". Schein
may not use any Trademark as part of any corporate name or with any
prefix, suffix or other modifying word, term, design or symbol. In
addition, Schein 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.
6.4 In the event of any infringement of, or threatened or presumed
infringement of, or challenge to Schein's use of any Trademark or of
any Carrington's trademark, Schein is obligated to notify Carrington
immediately. Carrington shall investigate any alleged violation and, if
necessary, shall take the appropriate legal action to resolve the issue
and to prevent other competitors from infringing on said intellectual
property rights within the Territory. Carrington shall have sole and
absolute discretion to take such action as it deems appropriate.
6.5 In the event of the termination of this Agreement for any
reason, Schein's right to use the Trademarks shall cease after two years
or at such time as Schein's inventory of Products has been sold whichever
is later. Schein shall, as soon as it is reasonably possible after the
two (2) year, remove all Trademarks which appear on or about the premises
of the office(s) of Schein and any of the advertising of Schein used in
connection with the Products.
6.6 In the event of a breach or threatened breach by Schein of the
provisions of this Article 6, Carrington shall be entitled to 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 Schein.
6.7 Should for some reason the Trademark be prevented from being
used in any part or whole of the Territory, the Parties shall consult as
to a suitable other trademark (which trademark shall be also defined as
"Trademark" for purposes of this Agreement) owned by Carrington or to be
transferred from Schein to Carrington for use in connection with the
marketing and sale of the Products; it being agreed, however,
that Carrington retains the right to ultimately determine what such
alternative Trademark shall be used, provided it is not confusingly
similar to a Trademark owned by Schein in the Territory.
6.8 Nothing contained in this Agreement shall be construed as
giving Schein the right to use the Trademark outside the Territory or for
any other product than the Products.
<PAGE>
Article 7. Confidential Information
7.1 Both Parties recognize and acknowledge that each will have
access to confidential information and trade secrets, including "Know-
how", of the other and other entities doing business with each Party
relating to research, development, manufacturing, marketing, financial
and other business-related activities ("Confidential Information").
Such Confidential Information constitutes valuable, special and unique
property of each Party and/or other entities doing business with each
Party. Other than as is necessary to perform the terms of this
Agreement, neither Party 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 the
other. In the event of a breach or threatened breach by either Party of
the provisions of this Article 7, each Party shall be entitled to an
injunction restraining the other from disclosing and/or using, in whole
or in part, such Confidential Information. Nothing herein shall be
construed as prohibiting either Party from pursuing other remedies
available to it for such breach or threatened breach of this Article 7,
including the recovery of damages from the other. The above does not
apply to information or material that was known to the public or
generally available to the public prior to the date it was received by
either Party.
7.2 Schein shall not disclose any of the terms of this Agreement
without the prior written consent of Carrington.
Article 8. Force Majeure
8.1 Neither Schein nor Carrington shall have any liability
hereunder if either is 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 God 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"), nor
shall Schein's or Carrington's obligations, except as may be necessary,
be suspended during the period of such Force Majeure, nor shall either
Party's obligations be cancelled with respect to such Products as would
have been sold hereunder but for such suspension. Such affected Party
shall give to the other Party 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 both Party's obligations under this Agreement. Should the
Force Majeure continue for more than six (6) months, then the other Party
shall have the right to cancel this Agreement and the Parties shall seek
an equitable agreement on the Parties reward of interests.
8.2 The Parties agree that any obligation to pay money is never
excused by Force Majeure.
<PAGE>
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 represents the entire Agreement between the
Parties and 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.
10.2 Should any provision of this Agreement be rendered invalid or
unenforceable, it shall not affect the validity or enforceability of the
remainder.
Article 11. Assignment
11.1 Neither this Agreement nor any of the rights or obligations of
Schein hereunder shall be transferred or assigned by Schein 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 shall be governed by the laws and
jurisdiction of Texas.
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, commercial courier
services, postage prepaid, return receipt requested, or by fax addressed
to:
(a) Carrington at: Carrington Laboratories, Inc., 2001 Walnut Hill
Lane, Irving, Texas 75038; Attention: President, or at such
other address as Carrington shall have theretofore furnished in
writing to Schein (Fax No. 972-714-5009).
(b) Schein at: Henry Schein U.K. Holdings, Ltd. , Attention:
_______________, or at such other address as Schein shall
have theretofore furnished in writing to Carrington. (Fax
No.____________)
<PAGE>
Article 14. Waiver
14.1 Neither Schein's nor Carrington's failure to enforce at any
time any of the provisions of this Agreement or any right with respect
thereto, shall be considered a waiver of such provisions or rights or in
any way affect the validity of same. Neither Schein's nor Carrington's
exercise of any of its rights shall preclude or prejudice either Party
thereafter from exercising the same or any other right it may have,
irrespective of any previous action by either Party.
Article 15. Arbitration
15.1 Except as expressly provided otherwise herein, 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.
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 International Chamber of Commerce (the "ICC") as amended
from time to time. Any procedural rule not determined under the rules of
the ICC shall be determined by the laws of Switzerland, 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 forty-five (45) days of the submission of a notice of arbitration,
the appointing authority for the implementation of such procedure shall
be the ICC, who shall appoint an independent arbitrator who does not have
any financial or conflicting interest in the dispute, controversy or
claim. If the ICC is unable to appoint, or fails to appoint, an
arbitrator within ninety (90) days of being requested to do so, then the
arbitration shall be heard by three arbitrators, one selected by each
Party within the thirty (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 ICC (if any) shall be
divided equally among the Parties to the arbitration.
<PAGE>
Article 16 Interpretation
16.1 The language of this Agreement is English. No translation into
any other language shall be taken into account in the interpretation of
the Agreement itself.
16.2 The headings in this Agreement are inserted for convenience
only and shall not affect its construction.
16.3 Where appropriate, the terms defined in Article 1 and denoting
a singular number only shall include the plural and vice versa.
16.4 References to any law, regulation, statute or statutory
provision includes a reference to the law, regulation, statute or
statutory provision as from time to time amended, extended or re-enacted.
Article 17. Exhibits
17.1 Any and all exhibits referred to herein shall be considered an
integral part of this Agreement.
Article 18. No Inconsistent Actions
18.1 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 4.7 hereof,
will promptly perform all acts and take all measures as may be
appropriate to comply with the terms, conditions and provisions of this
Agreement.
Article 19. Currency of Account
19.1 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 Schein 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.
<PAGE>
Article 20. Binding Effect
20.1 This Agreement shall inure to the benefit of and be binding
upon the respective successors of the Parties.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the day and year below.
CARRINGTON LABORATORIES, INC.
By:
Name: Carlton E. Turner, Ph.D., D.Sc.
Title: President & CEO
Date: February 4, 1998
CARRINGTON LABORATORIES BELGIUM N.V.
By:
Name: Carlton E. Turner, Ph.D., D.Sc.
Title: President & CEO
Date: February 4, 1998
HENRY SCHEIN, U.K. HOLDINGS, LTD.
By:
Name: Norman Freedman
Title: Director
Date: February 3, 1998
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EXHIBIT A
HENRY SCHEIN U.K. HOLDINGS, LTD.
CONTRACT PRICE
NUMBER PRODUCT PRICE
500144 Carrington[TM] Patch (6 patches per $.75/sleeve
sleeve)
EXHIBIT 2
SALES DISTRIBUTION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of
the Effective Date (as defined below) by and between CARRINGTON
LABORATORIES, INC., a Texas corporation and CARRINGTON LABORATORIES
BELGIUM N.V., a Belgium corporation, jointly and severally (together
hereinafter referred to as "Carrington"), and SAUDE 2000 ("Saude").
W I T N E S S E T H :
WHEREAS, Carrington is engaged in the business of developing,
manufacturing, selling and distributing certain pharmaceutical products
and medical devices and is desirous of establishing a competent and
exclusive distribution source for sales of certain products in Portugal
(defined in Article 1 hereof as the Territory); and
WHEREAS, Saude is desirous of distributing such products in the
Territory, is well introduced in the market, is willing and able to
provide a competent distribution organization in the Territory, and
Saude desires to be Carrington's 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) "Effective Date" shall mean January 5, 1998.
(b) "Know-how" shall mean secret and substantial technical and
scientific information regarding the Products, which may be
necessary, useful or advisable to enable Saude to promote,
market and sell the Products in the Territory, and as is or
will be specified in the documentation which Carrington has
delivered or will deliver to Saude after the Effective Date
and during the term of this Agreement.
(c) "Parties" shall mean Carrington and Saude and "Party" shall
mean either of them as the context indicates.
(d) "Products" shall mean oral care products manufactured by or
for Carrington set forth on Exhibit A hereto.
(e) " Registration" shall mean any official approval, or
authorization, or licensing regarding the Products by the
appropriate and competent authorities in the Territory,
including, if applicable, the Products selling prices and
social security approvals, allowing the lawful marketing of
the Products.
(f) "Territory" shall mean the following country: Portugal
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(g) "Trademarks" shall mean all Trademarks, trade names, service
marks, logos and derivatives thereof relating to the Products
Article 2. Appointment
2.1 Subject to the terms and conditions of this Agreement,
Carrington hereby appoints Saude as Carrington's sales distributor in
the Territory for the sale of Products, and Saude hereby accepts such
appointment. As sales distributor in the Territory, Saude shall,
subject to the terms and conditions of this Agreement, have the right to
promote, distribute and sell Products in the Territory, but shall have
no right to take any such action outside the Territory.
2.2 In a manner reasonably satisfactory to Carrington, and at
Carrington's sole expense, Carrington agrees to make and maintain 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.
2.3 During the term of this Agreement, Saude shall be considered
an independent contractor and shall not be considered a partner,
employee, agent or servant of Carrington. As such, Saude has no
authority of any nature whatsoever to bind Carrington or incur any
liability for or on behalf of Carrington or to represent itself as
anything other than a sales distributor and independent contractor.
Saude agrees to make clear in all dealings with customers or prospective
customers that it is acting as a distributor of the Products and not as
an agent of Carrington.
2.4 Nothing in this Agreement shall be construed as giving Saude
any right to use or otherwise deal with the Know-how for purposes other
than those expressly provided for in this Agreement.
Article 3. Certain Performance Requirements
3.1 Saude agrees to promote, market, sell and distribute the
Products only to customers and potential customers within the Territory
for ultimate use within the Territory. Saude will not, under any
circumstances, either directly or indirectly through third parties,
promote, market, sell, or distribute Products within or to, or for
ultimate use within, the United States or any place outside the
Territory subject to EC requirements.
3.2 In order to assure Carrington that Saude is in compliance with
Article 3.1, Saude agrees that:
(a) Saude will send to Carrington quarterly sales reports which
set forth the number of units and sizes of each Product sold,
the net sales, the number of units of free medical samples
distributed, and to whom such Products were sold and/or
distributed during such quarter;
(b) Saude will send to Carrington quarterly inventory reports of
the Products; and
(c) Carrington may mark for identification all Products sold by
Carrington to Saude hereunder.
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3.3 Saude shall promptly provide Carrington with written reports
of any importation or sale of any of the Products in the Territory of
which Saude has knowledge from any source other than Carrington, as well
as with any other information which Carrington may reasonably request in
order to be updated on the market conditions in the Territory.
3.4 Saude shall maintain a sufficient inventory of Products to
assure an adequate supply of Products to serve all its market segments.
Saude shall maintain all its inventory of Products clearly segregated
and meeting all storage and other standards required by applicable
governmental authorities.
3.5 Saude shall be responsible for and shall collect all VAT and
other taxes (excluding license fees) that may be due and owing upon
sales by Saude of Products. Upon written request from Saude,
Carrington shall provide Saude 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 and labeled for sale and
delivered by Carrington to Saude subject to and accordance with all
local rules and regulations. Upon mutual agreement. however, final
packaging may occur in Portugal. All Products shall be advertised,
marketed, sold and distributed by Saude in compliance with the rules and
regulations, as amended from time to time, of (i) all applicable
governmental authorities within the Territory in which the Products are
marketed, and (ii) all other applicable laws, rules and regulations.
Saude shall pay all expenses associated with (i) any alterations to the
packaging and labeling of the Products which deviate from Carrington s
standard packaging materials, designs, methods and/or procedures, (ii)
any language modifications to the packaging or labeling and/or (iii) any
additions to inserts in the general packaging. The Parties shall agree
on minimum production runs for such custom labels.
3.7 Saude shall not make any alterations or knowingly permit any
alterations to be made to the Products without Carrington's written
consent.
3.8 Saude shall assume all responsibility for and comply with all
applicable laws, regulations and requirements concerning the inventory,
use, promotion, distribution and sale of the Products in the Territory
and correspondingly for any damage, claim, liability, loss or expense
which Carrington may suffer or incur by reason of said inventory, use,
promotion, distribution and sale and shall hold Carrington harmless from
any claim resulting therefrom being directed against Carrington or Saude
by any third party.
3.9 Saude 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 or from the applicable governmental
authorities.
3.10 Saude 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.
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Article 4. Sale of Products by Carrington to Saude
4.1 Subject to the terms and conditions of this Agreement,
Carrington shall sell to Saude the Products at a specified price for
each Product (the "Contract Price"). For orders placed by Saude 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 ninety (90) days prior to the
end of each 12-month period of the term of this Agreement, (a) Saude
shall provide in writing to Carrington both a sales forecast and a
purchase forecast for the following 12-month period, and (b) 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.
During any twelve (12) month period Carrington reserves the right to
change its Contract Price for each Product subject to sixty (60) days
notice being given by Carrington to Saude.
4.2 As consideration for its appointment as a sales distributor
entitled to a Product discount, Saude agrees to purchase from
Carrington, during each 12-month period of the term of this Agreement,
commencing with the 12-month period beginning January 31, 1998 through
January, 31, 1999, at the Contract Price, a specified minimum aggregate
dollar amount (based on the Contract Price) of the Products (the
"Specified Minimum Purchase Amount"). For the first 12-month period of
the term of this Agreement, the targeted, but non-binding for this
period only, Specified Minimum Purchase Amount shall be $5,000. The
Specified Minimum Purchase Amounts for each subsequent 12-month period
shall be determined by mutual agreement of the Parties no later than
thirty (30) days prior to the beginning of such period based on Saude s
reasonable, good faith projections of future sales growth and such other
factors as the Parties may deem relevant.
4.3 Saude shall order Products by submitting a purchase order to
Carrington describing the type and quantity of the Products to be
purchased. All orders are subject to acceptance by Carrington. All
purchases shall be spaced in a reasonable manner. If Carrington accepts
the order, Carrington will invoice Saude upon shipment of the Products.
Unless otherwise agreed, Saude shall pay all invoices in full within
ninety (90) days of the date of invoice. Saude shall be solely
responsible for all costs in connection with affecting payments. All
sales and payments shall be made, and all orders shall be accepted, in
the State of Texas.
4.4 Carrington shall not be obligated to ship Products to Saude at
any time when payment of an amount owed by Saude is overdue or when
Saude is otherwise in breach of this Agreement.
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4.5. All shipments shall be initiated by a Purchase Order. Product
shipment dates will be specified in the Purchase Order. These dates may
not scheduled prior to ninety (90) days after the dated the Purchase
Order is received and acknowledged in writing by Seller, unless by
mutual consent of the parties Purchase Orders will be non-cancellable.
Saude will issue to Carrington on a monthly basis, a twelve (12) month
rolling forecast so that Carrington may incorporate said forecasts into
its planning system. The triggering document for production activities
is, however, the purchase order, as stated above. Carrington will
guarantee delivery dates for Product quantities that vary up to 20%
above the last monthly rolling forecast issued prior to the purchase
order placed by Saude. Variation above 20% shall be discussed between
the Parties and Carrington will use its best efforts to maintain
delivery dates requested by Saude.
4.6 All shipments of Products to Saude will be packaged in
accordance with Carrington's standard packaging procedures and shipped
per Carrington's existing distribution policy. All Contract Prices are
F.O.B., (invoice price includes seller's expense for delivery to the
named destination) Carrington's facility, Irving, Texas. Ownership of
and title to Products and all risks of loss with respect thereto shall
pass to Saude upon delivery of such Products by Carrington to the
carrier designated by Saude 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 accepts liability for defective Products and agrees
to replace such defective Products should they occur with new Products.
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 Saude 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. Saude 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 4.7 or
that is inconsistent with the policies or publications of Carrington
relating to the Products.
SAUDE'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 SAUDE'S
OPTION. CARRINGTON SHALL HAVE NO OTHER OBLIGATION OR LIABILITY FOR
DAMAGES TO SAUDE 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.
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SAUDE SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CARRINGTON AND
CARRINGTON'S AFFILIATES, 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,
KNOW-HOW OR TRADEMARKS BY SAUDE OR ANY OTHER PARTY, (ii) ANY BREACH BY
SAUDE OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS UNDER THIS
AGREEMENT OR (iii) ANY ACTS OR OMISSIONS ON THE PART OF SAUDE OR ITS
AGENTS, SERVANTS OR EMPLOYEES WHICH ARE OUTSIDE OR BEYOND SAUDE S
AUTHORIZATION GRANTED HEREIN.
4.8 Credits for defective Products to Saude shall include
importation and shipment expenses and will be calculated by Carrington
based on the original Contract Price of the items returned, whether
identified by lot number or another method. Carrington shall provide
Saude with a copy of its liability Insurance Certificate and shall
include Saude thereunder.
Article 5. Term and Termination
5.1 The term of this Agreement shall be for a period of five (5)
years from the effective date of this Agreement. After such term, this
Agreement shall be automatically terminated unless the parties mutually
agree in writing to extend the term hereof. Notwithstanding the
foregoing, this Agreement may be terminated earlier in accordance with
the provisions of this Article 5 or as expressly provided elsewhere in
this Agreement.
5.2 Carrington shall have the absolute right to terminate this
Agreement if Saude fails to perform or breaches, in any material
respect, any material 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 Saude, Saude 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 5.2,
if:
(i) Saude fails or refuses to pay to Carrington any sum when
due;
(ii) Saude breaches any provision of Article 2.2, 3.4, 4, 4.3,
4.7, 6 or 7; or,
(iii) Saude fails to purchase the Specified Minimum
Purchase Amounts of Product for any required period.
5.3 Each Party shall have the absolute right to terminate this
Agreement in the event the other Party shall become insolvent, or if
there is instituted by or against the other Party procedures in
bankruptcy, or under insolvency laws or for reorganization, receivership
or dissolution, or if the other Party loses any franchise or license to
operate its business as presently conducted in any part of the
Territory.
<PAGE>
5.4 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 4.2 hereof if the Parties are unable to agree upon the
Contract Prices or the Specified Minimum Amounts for the next 12-month
period of the term.
5.5 During the one-year period following termination of this
Agreement, any inventory of Products held by Saude at the termination of
this Agreement may be sold by Saude 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 Saude's performance obligations and Carrington's rights shall
remain in effect. In order to accelerate the liquidation of any such
inventory, Carrington shall have the option, 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 Saude,
including importation and shipping.
5.6 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 4.7, 5.5, 6, 7
and 14 and the rights and obligations of the Parties thereunder shall
survive the termination of this Agreement for a period of one (1) year.
Article 6. Trademarks
6.1 All Carrington Trademarks, trade names, service marks, logos
and derivatives thereof relating to the Products (the "Trademarks"), and
all patents, technology and other intellectual property (also known as
"Know-how") relating to the Products and of the goodwill associated
therewith, are the sole and exclusive property of Carrington and/or its
affiliates. Saude may, however, use its Trademark "AftaGel" if it so
desires. Carrington hereby grants Saude permission to use the
Trademarks for the limited purpose of performing its obligations under
this Agreement.
6.2 Mutually agreed upon Carrington's Trademarks shall appear on
all Product packaging, labels, and inserts and other materials which
Saude uses for the marketing of the Products. Carrington retains the
right to review and approve all intended uses of the Trademark in any
packaging, inserts, labels, or promotional or other materials relating
to the Products prior to Saude's actual use thereof.
6.3 Saude agrees to use the Trademarks in full compliance with the
rules prescribed from time to time by Carrington. The Trademarks shall
always be used together with the sign "[R]" or the sign "[TM]". Saude
may not use any Trademark as part of any corporate name or with any
prefix, suffix or other modifying word, term, design or symbol. In
addition, Saude 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.
<PAGE>
6.4 In the event of any infringement of, or threatened or presumed
infringement of, or challenge to Saude's use of any Trademark or of any
Carrington's trademark, Saude is obligated to notify Carrington
immediately. Carrington shall investigate any alleged violation and,
if necessary, shall take the appropriate legal action to resolve the
issue and to prevent other competitors from infringing on said
intellectual property rights within the Territory. Carrington shall
have sole and absolute discretion to take such action as it deems
appropriate.
6.5 In the event of the termination of this Agreement for any
reason, Saude's right to use the Trademarks shall cease after two years
or at such time as Saude's inventory of Products has been sold whichever
is later. Saude shall, as soon as it is reasonably possible after the
two (2) year, remove all Trademarks which appear on or about the
premises of the office(s) of Saude and any of the advertising of Saude
used in connection with the Products.
6.6 In the event of a breach or threatened breach by Saude of the
provisions of this Article 6, Carrington shall be entitled to 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 Saude.
6.7 Should for some reason the Trademark be prevented from being
used in any part or whole of the Territory, the Parties shall consult as
to a suitable other trademark (which trademark shall be also defined as
"Trademark" for purposes of this Agreement) owned by Carrington or to be
transferred from Saude to Carrington for use in connection with the
marketing and sale of the Products; it being agreed, however, that
Carrington retains the right to ultimately determine what such
alternative Trademark shall be used, provided it is not confusingly
similar to a Trademark owned by Saude in the Territory.
6.8 Nothing contained in this Agreement shall be construed as
giving Saude the right to use the Trademark outside the Territory or for
any other product than the Products.
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Article 7. Confidential Information
7.1 Both Parties recognize and acknowledge that each will have
access to confidential information and trade secrets, including "Know-
how", of the other and other entities doing business with each Party
relating to research, development, manufacturing, marketing, financial
and other business-related activities ("Confidential Information").
Such Confidential Information constitutes valuable, special and unique
property of each Party and/or other entities doing business with each
Party. Other than as is necessary to perform the terms of this
Agreement, neither Party 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 the other. In the event of a breach or threatened
breach by either Party of the provisions of this Article 7, each Party
shall be entitled to an injunction restraining the other from disclosing
and/or using, in whole or in part, such Confidential Information.
Nothing herein shall be construed as prohibiting either Party from
pursuing other remedies available to it for such breach or threatened
breach of this Article 7, including the recovery of damages from the
other. The above does not apply to information or material that was
known to the public or generally available to the public prior to the
date it was received by either Party.
7.2 Saude shall not disclose any of the terms of this Agreement
without the prior written consent of Carrington.
Article 8. Force Majeure
8.1 N e ither Saude nor Carrington shall have any liability
hereunder if either is 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 God 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"), nor
shall Saude's or Carrington's obligations, except as may be necessary,
be suspended during the period of such Force Majeure, nor shall either
Party's obligations be cancelled with respect to such Products as would
have been sold hereunder but for such suspension. Such affected Party
shall give to the other Party 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 both Party's obligations under this Agreement. Should the
Force Majeure continue for more than six (6) months, then the other
Party shall have the right to cancel this Agreement and the Parties
shall seek an equitable agreement on the Parties reward of interests.
8.2 The Parties agree that any obligation to pay money is never
excused by Force Majeure.
<PAGE>
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 represents the entire Agreement between
the Parties and 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.
10.2 Should any provision of this Agreement be rendered invalid or
unenforceable, it shall not affect the validity or enforceability of the
remainder.
Article 11. Assignment
11.1 Neither this Agreement nor any of the rights or obligations of
Saude hereunder shall be transferred or assigned by Saude 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 shall be governed by the laws and
jurisdiction of Portugal.
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, commercial courier
services, postage prepaid, return receipt requested, or by fax addressed
to:
(a) Carrington at: Carrington Laboratories, Inc., 2001 Walnut Hill
Lane, Irving, Texas 75038; Attention: President, or at such
other address as Carrington shall have theretofore furnished
in writing to Saude. (Fax No. 972-714-5009).
(b) Saude at:________________________, Attention: _______________,
or at such other address as Saude shall have theretofore
furnished in writing to Carrington. (Fax No.____________)
<PAGE>
Article 14. Waiver
14.1 Neither Saude's nor Carrington's failure to enforce at any
time any of the provisions of this Agreement or any right with respect
thereto, shall be considered a waiver of such provisions or rights or in
any way affect the validity of same. Neither Saude's nor Carrington's
exercise of any of its rights shall preclude or prejudice either Party
thereafter from exercising the same or any other right it may have,
irrespective of any previous action by either Party.
Article 15. Arbitration
15.1 Except as expressly provided otherwise herein, 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.
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 International Chamber of Commerce (the "ICC") as amended
from time to time. Any procedural rule not determined under the rules
of the ICC shall be determined by the laws of Switzerland, 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 forty-five (45) days of the submission of a notice of
arbitration, the appointing authority for the implementation of such
procedure shall be the ICC, who shall appoint an independent arbitrator
who does not have any financial or conflicting interest in the dispute,
controversy or claim. If the ICC is unable to appoint, or fails to
appoint, an arbitrator within ninety (90) days of being requested to do
so, then the arbitration shall be heard by three (3) arbitrators, one
selected by each Party within the thirty (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 (6) 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 ICC (if any) shall be
divided equally among the Parties to the arbitration.
<PAGE>
Article 16 Interpretation
16.1 The language of this Agreement is English. No translation
into any other language shall be taken into account in the
interpretation of the Agreement itself.
16.2 The headings in this Agreement are inserted for convenience
only and shall not affect its construction.
16.3 Where appropriate, the terms defined in Article 1 and denoting
a singular number only shall include the plural and vice versa.
16.4 References to any law, regulation, statute or statutory
provision includes a reference to the law, regulation, statute or
statutory provision as from time to time amended, extended or re-
enacted.
Article 17. Exhibits
17.1 Any and all exhibits referred to herein shall be considered an
integral part of this Agreement.
Article 18. No Inconsistent Actions
18.1 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 4.7 and 9 hereof, will promptly perform all acts and take all
measures as may be appropriate to comply with the terms, conditions and
provisions of this Agreement.
Article 19. Currency of Account
19.1 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 Saude 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.
Article 20. Binding Effect
20.1 This Agreement shall inure to the benefit of and be binding
upon the respective successors of the Parties.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the day and year first above written.
CARRINGTON LABORATORIES, INC.
By:
Name: Carlton E. Turner, Ph.D., D.Sc.
Title: President & CEO
Date: January 30, 1998
CARRINGTON LABORATORIES BELGIUM N.V.
By:
Name: Carlton E. Turner, Ph.D., D.Sc.
Title: President & CEO
Date: January 30, 1998
SAUDE 2000
By:
Name: Augusto Cerreia De Achmeida Matos
Title: General Manager
Date: January 28, 1998
<PAGE>
EXHIBIT A
SAUDE 2000
CONTRACT PRICE
NUMBER PRODUCT PRICE
500144 Carrington[TM] Patch (6 patches per $.75/sleeve
sleeve)
NOTE: During the first contract year, Carrington agrees to provide
free samples to Saude 2000 to be used for the promotion and
evaluation of the product. Such free samples shall not exceed,
however, 25% of the total order invoiced.
EXHIBIT 3
CARRINGTON LABORATORIES, INC.
*
1995 STOCK OPTION PLAN
As Amended and Restated Effective January 15, 1998
ARTICLE I
General
Section 1.01. Purpose. It is the purpose of the Plan to
promote the interests of the Company and its shareholders by
attracting, retaining and stimulating the performance of selected
Employees, Directors and Consultants by giving such Employees,
Directors and Consultants the opportunity to acquire a proprietary
interest in the Company and an increased personal interest in its
continued success and progress.
Section 1.02. Definitions. As used herein the following
terms have the following meanings:
(a) " Affiliate" means any parent or subsidiary
corporation of the Company within the meaning of Section
424(e) and (f) of the Code.
(b) "Board" means the Board of Directors of the
Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) " Committee" means the Stock Option Committee
described in Article II hereof.
(e) "Common Stock" means the $0.01 par value Common
Stock of the Company.
(f) "Company" means Carrington Laboratories, Inc., a
Texas corporation.
(g) "Consultant" means any consultant or advisor of the
Company or an Affiliate who is not an Employee or Director,
provided that bona fide services are rendered by the
consultant or advisor and such services are not in connection
with the offer or sale of securities in a capital-raising
transaction.
(h) "Director" means a member of the Board.
(i) "Employee" means any employee of the Company or an
Affiliate.
*
As amended by the Board of Directors on January 15, 1998. Language
added to the Plan is double underscored and language deleted is
struck through.
<PAGE>
(j) "Employee-Director" means an Employee who is a
Director.
(k) "Fair Market Value" means (A) the closing sales
price of the Common Stock on the date in question (or, if
there is no reported sale on such date, then on the last
preceding date on which a reported sale occurred), as reported
on the NASDAQ National Market (if the Common Stock is not
listed on a national securities exchange and sales of the
Common Stock are regularly reported on such market), or as
reported on a national securities exchange (if the Common
Stock is listed for trading on such exchange), or (B) the mean
between the bid and ask prices of the Common Stock on the date
in question (or, if there is no report of such prices on such
date, then on the last preceding date on which such prices
were reported), as reported by the National Association of
Securities Dealers, Inc.
(l) "Option" means any option to purchase shares of
Common Stock granted pursuant to the provisions of the Plan.
(m) "Optionee" means an Employee, Outside Director or
Consultant who has been granted an Option under the Plan.
(n) "Outside Director" means a Director who is not an
Employee.
(o) "Plan" means this Carrington Laboratories, Inc.
1995 Stock Option Plan, as amended and restated effective
January 15, 1998.
Section 1.03. Number of Shares. Options may be granted by
the Company from time to time under the Plan to purchase an aggregate
of 1,500,000 shares of the authorized Common Stock. If any Option
expires or terminates for any reason without having been exercised in
full, the unpurchased shares subject to such expired or terminated
Option shall be available for purposes of the Plan.
ARTICLE II
Administration
The Plan shall be administered by a Stock Option Committee
which shall consist of two or more Outside Directors, each of whom
shall be a disinterested person within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"),
or any similar rule or regulation promulgated thereunder. Each
member of the Committee shall be appointed by and shall serve at the
pleasure of the Board. The Board shall have the sole continuing
authority to appoint members of the Committee both in substitution
for members previously appointed and to fill vacancies however
caused. The following provisions shall apply to the administration
of the Plan:
<PAGE>
(a) The Committee shall designate one of its members as
Chairman and shall hold meetings at such times and places as
it may determine. Each member of the Committee shall be
notified in writing of the time and place of any meeting of
the Committee at least two days prior to such meeting,
provided that such notice may be waived by a Committee member.
A majority of the members of the Committee shall constitute a
quorum, and any action taken by a majority of the members of
the Committee present at any duly called meeting at which a
quorum is present (as well as any action unanimously approved
in writing) shall constitute action by the Committee.
(b) The Committee may appoint a Secretary (who need not
be a member of the Committee) who shall keep minutes of its
meetings. The Committee may make such rules and regulations
for the conduct of its business as it may determine.
(c) The Committee shall have full authority, subject to
the express provisions of the Plan, to interpret the Plan, to
provide, modify and rescind rules and regulations relating
thereto, to determine the terms and provisions of each Option
and the form of each option agreement evidencing an Option
granted under the Plan and to make all other determinations
and perform such actions as the Committee deems necessary or
advisable to administer the Plan. In addition, the Committee
shall have full authority, subject to the express provisions
of the Plan, to determine the Employees, Outside Directors and
Consultants to whom Options shall be granted, the time or date
of grant of each such Option, the number of shares subject
thereto, and the price at which such shares may be purchased.
In making such determinations, the Committee may take into
account the nature of the services rendered by the Employee,
Outside Director or Consultant, his present and potential
contributions to the success of the Company's business and
such other facts as the Committee in its discretion shall deem
appropriate to carry out the purposes of the Plan.
(d) Notwithstanding the authority hereby delegated to
the Committee to grant Options under the Plan, the Board also
shall have full authority, subject to the express provisions
of the Plan, to grant Options under the Plan, to interpret the
Plan, to provide, modify and rescind rules and regulations
relating to it, to determine the terms and provisions of
Options granted under the Plan and to make all other
determinations and perform such actions as the Board deems
necessary or advisable to administer the Plan.
(e) No member of the Committee or the Board shall be
liable for any action taken or determination made in good
faith with respect to the Plan or any Option granted
hereunder.
<PAGE>
ARTICLE III
Grants of Options to Outside Directors
Section 3.01. Grants of Options. At any time and from time
to time on or after January 15, 1998, during the term of the Plan and
subject to the express provisions hereof, Options may be granted by
the Committee to any Outside Director for such number of shares of
Common Stock as the Committee in its discretion shall deem to be in
the best interest of the Company and which will serve to further the
purposes of the Plan. The Options granted under this Article III
shall not be incentive stock options under Section 422 of the Code.
Section 3.02. Price. The purchase price per share of Common
Stock under each Option granted under this Article III shall be
determined by the Committee but in no event shall be less than 100%
of the Fair Market Value per share of Common Stock on the date of
grant of such Option.
Section 3.03. Option Period and Terms of Exercise of
Options. Except as otherwise provided for herein, each Option
granted to an Outside Director under the Plan shall be exercisable in
whole or in part during the four-year period commencing on the date
of grant of such Option. Any Option granted to an Outside Director
shall remain effective during its entire term regardless of whether
the Optionee continues to serve as a Director; provided, however,
that the otherwise unexpired portion of any Option granted hereunder
to an Outside Director shall expire and become null and void
immediately upon the termination of such Outside Director's Board
membership if such Outside Director ceases to serve on the Board by
reason of such Outside Director's (a) fraud or intentional
misrepresentation, or (b) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any
Affiliate. Nothing in the Plan or in any option agreement evidencing
an Option granted under the Plan to an Outside Director shall confer
upon such Director any right to continue as a Director of the
Company.
<PAGE>
ARTICLE IV
Grants of Options to Employees
Section 4.01. Grants of Options. At any time and from time
to time during the term of the Plan and subject to the express
provisions hereof, Options may be granted by the Committee to any
Employee for such number of shares of Common Stock as the Committee
in its discretion shall deem to be in the best interest of the
Company and which will serve to further the purposes of the Plan.
The Committee, in its discretion, may designate any Option granted to
an Employee as an incentive stock option intended to qualify under
Section 422 of the Code; provided, however, that the aggregate Fair
Market Value of the Common Stock with respect to which incentive
stock options granted to an Employee under the Plan (including all
options qualifying as incentive stock options pursuant to Section 422
of the Code granted to such Employee under any other plan of the
Company or any Affiliate) are exercisable for the first time by such
Employee during any calendar year shall not exceed $100,000,
determined as of the date the incentive stock option is granted. If
an Option that is intended to be an incentive stock option shall be
granted and such Option does not comply with the proviso of the
immediately preceding sentence, such Option shall not be void but
shall be deemed to be an incentive stock option to the extent it does
not exceed the limit established by such proviso and shall be deemed
a nonqualified stock option to the extent it exceeds that limit.
The aggregate number of shares of Common Stock for which any
Employee may be granted Options under the Plan during any one
calendar year shall not exceed 75,000.
Section 4.02. Price. The purchase price per share of
Common Stock under each Option granted under this Article IV shall be
determined by the Committee but in no event shall be less than 100%
of the Fair Market Value per share of Common Stock at the time the
Option is granted; provided, however, that the purchase price per
share of Common Stock under any incentive stock option granted to an
Optionee who, at the time such incentive stock option is granted,
owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Affiliate shall
be at least 110% of the Fair Market Value per share of Common Stock
at the date of grant.
<PAGE>
Section 4.03. Option Period and Terms of Exercise of
Employee Options. Except as otherwise provided for herein, each
Option granted to an Employee under the Plan shall be exercisable
during such period as the Committee shall determine; provided,
however, that the otherwise unexpired portion of any Option granted
to an Employee shall expire and become null and void no later than
upon the first to occur of (i) the expiration of ten years from the
date such Option was granted, (ii) the expiration of 30 days from the
date of termination of the Optionee's employment with the Company or
an Affiliate for any reason other than his retirement, death or
disability, (iii) the expiration of one year from the date of
termination of the Optionee's employment with the Company or an
Affiliate by reason of his death or disability, (iv) the expiration
of three years from the date of termination of such Optionee's
employment with the Company or an Affiliate by reason of his
retirement, or (v) the expiration of two years from the date of such
Optionee's death following the termination of his employment with the
Company or an Affiliate by reason of his retirement.
Anything herein to the contrary notwithstanding, the
otherwise unexpired portion of any Option granted to an Employee
hereunder shall expire and become null and void immediately upon the
termination of such Employee's employment with the Company or an
Affiliate by reason of such Employee's fraud, dishonesty or
performance of other acts detrimental to the Company or an Affiliate,
or if, following the termination of the Employee's employment with
the Company or an Affiliate, the Company determines that there is
good cause to cancel such Option.
Any incentive stock option granted to an Optionee who, at
the time such incentive stock option is granted, owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Affiliate shall not be
exercisable after the expiration of five years from the date of its
grant.
Under the provisions of any option agreement evidencing an
Option granted to an Employee, the Committee may limit the number of
shares purchasable thereunder in any period or periods of time during
which the Option is exercisable and may impose such other terms and
conditions upon the exercise of an Option as are not inconsistent
with the terms of the Plan; provided, however, that the Committee, in
its discretion, may accelerate the exercise date of any such Option.
Section 4.04. Termination of Employment. A transfer of
employment among the Company and any of its Affiliates shall not be
considered to be a termination of employment for the purposes of the
Plan. Nothing in the Plan or in any option agreement evidencing an
Option granted under the Plan to an Employee, including an
Employee-Director, shall confer upon any Optionee any right to
continue in the employ of the Company or any Affiliate or in any way
interfere with the right of the Company or any Affiliate to terminate
the employment of the Optionee at any time, with or without cause.
<PAGE>
ARTICLE V
Grant of Options to Consultants
Section 5.01. Grant of Options. At any time and from time
to time during the term of the Plan and subject to the express
provisions hereof, Options may be granted by the Committee to any
Consultant for such number of shares of Common Stock as the Committee
in its discretion shall deem to be in the best interest of the
Company and which will serve to further the purposes of the Plan.
The Options granted under this Article V shall not be incentive stock
options under Section 422 of the Code.
Section 5.02. Price. The purchase price per share of
Common Stock under each Option granted under this Article V shall be
determined by the Committee but in no event shall be less than 100%
of the Fair Market Value per share of Common Stock at the time the
Option is granted.
Section 5.03. Option Period and Terms of Exercise of
Consultant Options. Except as otherwise provided for herein, each
Option granted to a Consultant under the Plan shall be exercisable
during such period as the Committee shall determine; provided,
however, that the otherwise unexpired portion of any Option granted
to a Consultant shall expire and become null and void no later than
upon the first to occur of (i) the expiration of ten years from the
date such Option was granted or (ii) the expiration of one year from
the date of the Consultant's death. Anything herein to the contrary
notwithstanding, the otherwise unexpired portion of any Option
granted to a Consultant hereunder shall expire and become null and
void immediately upon the termination of the Consultant's services to
the Company or an Affiliate by reason of the Consultant's fraud,
dishonesty or performance of other acts detrimental to the Company or
an Affiliate, or if, at any time during or after the performance of
the Consultant's services to the Company or an Affiliate, the Company
determines that there is good cause to cancel such Option.
Under the provisions of any option agreement evidencing an
Option granted to a Consultant, the Committee may limit the number of
shares purchasable thereunder in any period or periods of time during
which the Option is exercisable and may impose such other terms and
conditions upon the exercise of an Option as are not inconsistent
with the terms of the Plan; provided, however, that the Committee, in
its discretion, may accelerate the exercise date of any such Option.
Section 5.04. Termination of Consulting Services. Nothing
in the Plan or in any option agreement evidencing an Option granted
under the Plan to a Consultant shall confer upon any Consultant any
right to continue as a consultant or advisor of the Company or any
Affiliate or in any way interfere with the right of the Company or
any Affiliate to terminate the services of the Consultant at any
time, with or without cause.
<PAGE>
ARTICLE VI
Miscellaneous
Section 6.01. Adjustments Upon Changes in Common Stock. In
the event the Company shall effect a split of the Common Stock or a
dividend payable in Common Stock, or in the event the outstanding
Common Stock shall be combined into a smaller number of shares, the
maximum number of shares as to which Options may be granted under the
Plan shall be decreased or increased proportionately. In the event
that, before delivery by the Company of all of the shares of Common
Stock for which any Option has been granted under the Plan, the
Company shall have effected such a split, dividend or combination,
the shares still subject to such Option shall be increased or
decreased proportionately and the purchase price per share shall be
decreased or increased proportionately so that the aggregate purchase
price for all of the shares then subject to such Option shall remain
the same as immediately prior to such split, dividend or combination.
In the event of a reclassification of Common Stock not
covered by the foregoing, or in the event of a liquidation or
reorganization (including a merger, consolidation or sale of assets)
of the Company, the Board shall make such adjustments, if any, as it
may deem appropriate in the number, purchase price and kind of shares
covered by the unexercised portions of Options theretofore granted
under the Plan. The provisions of this Section shall only be
applicable if, and only to the extent that, the application thereof
does not conflict with any valid governmental statute, regulation or
rule.
Subject to Article VI, Section 6.02 of the Plan, and
notwithstanding any indication to the contrary in the preceding
paragraphs of this Section 6.01, upon the occurrence of a "Change in
Control" (as hereinafter defined) of the Company, the maturity of all
Options then outstanding under the Plan (other than Options granted
under Article V hereof) shall be accelerated automatically, so that
all such Options shall become exercisable in full with respect to all
shares as to which they shall not have previously been exercised or
become exercisable; provided, however, that no such acceleration
shall occur with respect to Options held by optionees whose
employment with the Company or an Affiliate shall have terminated
prior to the occurrence of such Change in Control.
<PAGE>
For purposes of the Plan, a "Change in Control" of the
Company shall be deemed to have occurred if:
(a) the shareholders of the Company shall approve:
(i) any merger, consolidation or reorganization of
the Company (a "Transaction") in which the shareholders of
the Company immediately prior to the Transaction would
not, immediately after the Transaction, beneficially own,
directly or indirectly, shares representing in the
aggregate more than 50% of all votes to which all
shareholders of the corporation issuing cash or securities
in the Transaction (or of its ultimate parent corporation,
if any) would be entitled under ordinary circumstances in
the election of directors, or in which the members of the
Company's Board immediately prior to the Transaction would
not, immediately after the Transaction, constitute a
majority of the board of directors of the corporation
issuing cash or securities in the Transaction (or of its
ultimate parent corporation, if any),
(ii) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions
contemplated or arranged by any party as a single plan) of
all or substantially all of the Company's assets, or
(iii) any plan or proposal for the liquidation or
dissolution of the Company;
(b) individuals who constitute the Company's Board as
of April 1, 1995 (the "Incumbent Directors") cease for any
reason to constitute at least a majority of the Board;
provided, however, that for purposes of this subparagraph (b),
any individual who becomes a Director of the Company
subsequent to April 1, 1995, and whose election, or nomination
for election by the Company's shareholders, is approved by a
vote of at least a majority of the Incumbent Directors who are
Directors at the time of such vote, shall be considered an
Incumbent Director; or
(c) any "person," as that term is defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than the Company, any of its
subsidiaries, any employee benefit plan of the Company or any
of its subsidiaries, or any entity organized, appointed or
established by the Company for or pursuant to the terms of
such plan), together with all "affiliates" and "associates"
(as such terms are defined in Rule 12b-2 under the Exchange
Act) of such person, shall become the "beneficial owner" or
"beneficial owners" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, of securities of
the Company representing in the aggregate 20% or more of
either (i) the then outstanding shares of Common Stock or (ii)
the combined voting power of all then outstanding securities
of the Company having the right under ordinary circumstances
to vote in an election of the Company's Board ("Voting
Securities"), in either such case other than as a result of
acquisitions of such securities directly from the Company.
<PAGE>
Notwithstanding the foregoing, a "Change in Control" of
the Company shall not be deemed to have occurred for purposes of
subparagraph (c) of this Section 6.01 solely as the result of an
acquisition of securities by the Company which, by reducing the
number of shares of Common Stock or other Voting Securities
outstanding, increases (i) the proportionate number of shares of
Common Stock beneficially owned by any person to 20% or more of the
shares of Common Stock then outstanding or (ii) the proportionate
voting power represented by the Voting Securities beneficially owned
by any person to 20% or more of the combined voting power of all then
outstanding Voting Securities; provided, however, that if any person
referred to in clause (i) or (ii) of this sentence shall thereafter
become the beneficial owner of any additional shares of Common Stock
or other Voting Securities (other than as a result of a stock split,
stock dividend or similar transaction), then a "Change in Control" of
the Company shall be deemed to have occurred for purposes of
subparagraph (c) of this Section 6.01.
Section 6.02. A m endment and Termination of the Plan.
Subject to the right of the Board to terminate the Plan prior
thereto, the Plan shall terminate at the expiration of ten years from
April 1, 1995. No Options may be granted after termination of the
Plan. The Board may at any time suspend, terminate, amend or modify
the Plan; provided, however, that no amendment or modification of the
Plan shall become effective without the approval of such amendment or
modification by the shareholders of the Company if the Company, on
the advice of counsel, determines that such shareholder approval is
necessary or desirable. Upon termination of the Plan, the terms and
provisions of the Plan shall, notwithstanding such termination,
continue to apply to Options granted prior to such termination. No
suspension, termination, or amendment or modification of the Plan
shall adversely affect the rights of an Optionee under an Option,
except with the consent of such Optionee.
Section 6.03. Payment of Purchase Price; Application of
Funds. Upon exercise of an Option, the purchase price shall be paid
in full in cash or by check; provided. however, that at the request
of an Optionee and to the extent permitted by applicable law, the
Company shall approve reasonable arrangements with Optionees who are
Outside Directors and may, in its sole and absolute discretion,
approve reasonable arrangements with one or more Optionees who are
Employees or Consultants and their respective brokerage firms, under
which such an Optionee may exercise his Option by delivering to the
Company an irrevocable notice of exercise, together with such other
documents as the Company shall require, and the Company shall, upon
receipt of full payment in cash or by check of the purchase price and
any other amounts due in respect of such exercise, deliver to such
Optionee's brokerage firm one or more certificates representing the
shares of Common Stock issued in respect of such exercise. The
proceeds of any sale of Common Stock covered by Options shall
constitute general funds of the Company. Upon exercise of an Option,
the Optionee will be required to pay to the Company the amount of any
federal, state or local taxes required by law to be withheld in
connection with such exercise.
<PAGE>
Section 6.04. Requirements of Law. The granting of Options
and the issuance of Common Stock upon the exercise of an Option shall
be subject to all applicable laws, rules and regulations and to such
approval by governmental agencies as may be required.
Section 6.05. Nontransferability of Options. An Option
granted under the Plan shall not be transferable by the Optionee
except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionee only by the
Optionee.
Section 6.06. Investment Letter. The Company's obligation
to deliver Common Stock with respect to an Option shall be
conditioned upon its receipt from the Optionee to whom such Common
Stock is to be delivered of an executed investment letter containing
such representations and agreements as the Committee may determine to
be necessary or advisable in order to enable the Company to issue and
deliver such Common Stock to such Optionee in compliance with the
Securities Act of 1933 and other applicable federal, state or local
securities laws or regulations.
Section 6.07. Date of Adoption and Effective Date of the
Plan. The original Carrington Laboratories, Inc. 1995 Stock Option
Plan (the "Original Plan") became effective on April 1, 1995. The
first amendment and restatement of the Original Plan became effective
on March 27, 1996. This second amendment and restatement of the
Original Plan was approved by the Board on January 15, 1998 and shall
be deemed effective as of that date, provided it is duly approved by
the holders of a majority of the shares of Common Stock present or
represented and entitled to vote at the 1998 annual meeting of
shareholders of the Company. If not so approved, this second
amendment and restatement of the Original Plan shall be null and
void, any Options granted hereunder to Outside Directors on or after
January 15, 1998 and prior to the date of the 1998 annual meeting of
shareholders of the Company shall be null and void, and the first
amendment and restatement of the Original Plan shall remain in full
force and effect in accordance with its terms.
Section 6.08. Gender. Words of any gender used in the Plan
shall be construed to include any other gender, unless the context
requires otherwise.
EXHIBIT 4
SALES DISTRIBUTION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of the
Effective Date (as defined below) by and betwen CARRINGTON LABORATORIES,
INC., a Texas corporation and CARRINGTON LABORATORIES BELGIUM N.V., a
Belgium corporation, jointly (together hereinafter referred to as
"Carrington"), and HEMOPHARM GmbH, a German corporation (" hereinafter
referred to as "HEMOPHARM").
WINTNESSETH:
WHEREAS, Carrington is engaged in the business of developing,
manufacturing, selling and distibuting certain pharmaceutical products
and medical devices and is desirious of establishing a competent and
exclusive distribution source for sales of such products in Federal
Republic of Yugoslavia (defined in Article I herefor as the Territory);
and
WHEREAS, HEMOPHARM is desirous of distributing such products in the
Territory, represents that it has experience in obtaining registration
of pharmaceutical preparations or productsand medical devices in the
Territory, is well introduced on the market, is willing and able to
provide are competent distribution organisation in the Territory, and
HEMOPHARM desires to be Carrington's 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) "Effective Date" shall mean the date of last signature of the
Parties hereto.
(b) "Know-how" shall mean secret and substantial tehnical and
scientific information regarding the Products, which may be necessary,
useful or advisable to enable HEMOPHARM to obtain the Registration of,
promote, market and sell the Products in the Territory, and as is or
will be specified in the documentation which Carrington has delivered or
will deliver to HEMOPHARM after the Effective Date and during the term
of this Agreement.
(c) "Parties" shall mean Carrington and HEMOPHARM and "Party"
shall mean either of them as the context indicates.
(d) "Products" shall mean the wound and skin care products
manufactured by or for Carrington set forth on Exhibit A hereto.
Carrington will provide a ninety (90) day notice to HEMOPHARM on its
intent to add or discontinue Products to Exhibit A.
(e) " R e g i stration" shall mean any official approval, or
autorization, or licensing regarding the Products by the appropriate and
competent authorities in the Territory, including, if applicable, the
Products' selling prices and social security approvals, allowing the
lawful marketing of the Products.
<PAGE>
(f) "Territory" shall mean the following countries: Federal
Republic of Yugoslavia.
(g) "Trademarks" shall mean all Trademarks, trade names, service
marks, logos and derivatives thereof relating to the Products.
Article 2. Appointment
2.1. Subject to the terms and conditions of this Agreement,
Carrington hereby appoints HEMOPHARM as Carrington's exclusive sales
distributor in the Territory for the sale of Products, and HEMOPHARM
hereby accepts such appointment. As sales distributor in the Territory,
HEMOPHARM shall, subject to the terms and conditions of the Agreement,
have the right to submit the documentation for the Registration of,
promote, distribute and sell Products in the Territory, but shall have
no right to take any such action outside the Territory.
2.2. In a manner reasonably satisfactory to Carrington, Carrington
agrees to (a) make and maintain all declarations, filings, and
Registratins with, and obtain all approvals and authorization form,
governmental and regulatory authorities required to be made or obtained
in connection with promotion, marketing, sale or distribution of the
Products in the Territory at it's sole expense and HEMOPHARM agrees to
(b) devote its best efforts to the diligent promotion, marketing, sale
and organization of the Products in the Territory, (c) provide and
maintain a competent and aggressive organization for the promotion,
marketing, sale or distribution of the Products in the Territory, (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 at
it's sole expense.
2.3. During the term of this Agreement, HEMOPHARM shall be
considered an agent of Carrington.
2.4. Nothing in this Agreement shall be construed as giving
HEMOPHARM any right to use otherwise deal with the Know-how for purposes
other than those expressly provided for in this Agreement.
2.5. HEMOPHARM shall promptly inform Carrington of any
misappropriation of the Know-how which comes to its attention. After
having discussed such situation with HEMOPHARM, Carrington shall have
sole and absolute discretion to take such action as it deems appropriate
and HEMOPHARM shall reasonably assist Carrington in taking legal action,
if deemed necessary, against such misappropriation.
2.6. All costs and expenses connected with HEMOPHARM's activities
or performance under this Agreement are to be borne solely by HEMOPHARM.
Article 3. Certain Performance Requirements
3.1. HEMOPHARM agrees to promote, market, sell and distribute the
Products only to customers and potential customers within the Territory
for ultimate use within Territory. HEMOPHARM will not, under any
cicumstances, either directly or indirectly through third parties,
promote, market, sell, or distribute Products within or to, or for
ultimate use within, the United States or any place outside the
Territory, except if otherwise agreed by the Parties.
<PAGE>
3.2. In order to assure Carrington that HEMOPHARM is in compliance
with Article 3.1, HEMOPHARM agrees that:
(a) HEMOPHARM will send to Carrington quarterly sales reports
which set forth the number of units and sizes of each Product sold, the
net sales, the number of units of free medical samples distributed;
(b) HEMOPHARM will send to Carrington quarterly inventory reports
of the Products; and
(c) Carrington may mark for identification all Products sold by
Carrington to HEMOPHARM hereunder.
3.3. HEMOPHARM shall promptly provide Carrington with written
reports of any importation or sale of any of the Products in the
Territory of which HEMOPHARM has knowledge from any source other than
Carrington, as well as with any other information which Carrington may
reasonably request in order to be updated on the market conditions in
the Territory.
3.4. HEMOPHARM shall maintain a sufficient inventory of Products to
assure an adequate supply of Products to serve all its market segments.
HEMOPHARM shall maintain all its inventory of Products clearly
segregated and meeting all storage and other standards required by
applicable governmental authorities. All such inventory and HEMOPHARM's
facilities shall be subject to inspection by Carrington or its agents
upon 72 hours written notice.
3.5. HEMOPHARM shall be reponsible for and shall collect all
governmental and regulatory sales and other taxes, charges and fess that
may be due and owing upon sales by HEMOPHARM of Products. Upon written
request from HEMOPHARM, Carrington shall provide HEMOPHARM 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 and delivered by Carrington to
HEMOPHARM's consignement stock. All Products shall be labeled,
advertised, marketed, sold and distributed by HEMOPHARM in compliance
with the rules and regulations, as amended from time to time, of (i) all
applicable governmental authorities within the Territory in which the
Products are marketed, and (ii) all other applicable laws, rules and
regulations. HEMOPHARM shall pay all expenses associated with (i) any
alterations to the packaging and labeling of the Products which deviate
from Carrington's standard packaging materials, designs, methods and/or
procedures, (ii) any language modifications to the packaging or labeling
and/or (iii) any additions to inserts in the general packaging.The
Parties shall agree on minimum production runs for such custom labels.
3.7. HEMOPHARM shall not make any alterations or permit any to be
made to the Products without Carrington's written consent.
<PAGE>
3.8. HEMOPHARM shall assume all responsibility for and comply
with all applicable laws, regulations and requirements concering the
Registration, inventory, use, promotion, distribution and sale of the
Products in the Territory and correspondingly, in case HEMOPHARM
operates otherwise, it shall hold Carrington harmels from any claim
resulting therefrom being directed against Carrington or HEMOPHARM by
any third party.
3.9. HEMOPHARM agrees not to make, or permit any of its employees,
agents or representative to make, any claims of any properties or
results relating to any Product, unless such claims have received
written approval from Carrington or from the applicable governmental
authorities.
3.10. HEMOPHARM shall not use 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 Carington in writing.
3.11. HEMOPHARM will actively and aggressively promote, develop
demand for and maximize the sale of the Products to all customers and
potential customers within the Territory. HEMOPHARM agrees not to
manufacture, promote, market, sell or distribute to any customers or
potential customers in the Territory without ninety (90) days written
notice to and approval from Carrington, any competitive wound care, skin
care, or incontinence care product, except the products already existing
in HEMOPHARM's Production programme and the ones being presently
developed by HEMOPHARM.
3.12. HEMOPHARM represents that its books, records and accounts
pertaining to all its operations hereunder are complete and acurate in
all material respects and have been maintained in accordance with sound
and generally accepted accouting principles. HEMOPHARM's auditor shall
deliver to Carrington, in acordance with Article 14, at the end of each
12-month period during the term of the Agreement, a declaration that the
accounts rendered are correct.
Article 4 Registration of Products
4.1. It being understood that Registration is a prerequisite to
the lawful sale of the Products in the Territory, Carrington hereby
agrees to supply HEMOPHARM, promptly after the execution of this
Agreement, with any Know-how or relevant documentation necessary for
preparing the Registration dossier to be submitted to the aplicable
governmental authorities of the Territory.
4.2. It shall be the responsibility of Carrington, at its sole
expense to apply for, obtain and maintain in force the Registration of
the Products. Subject to having obtained the prior approval of
Carrington, the application shall be submitted to all applicable
governmental authorities, including the health authorites of the
Territory and said application shall be in the name of Carrington.
HEMOPHARM expressly acknowledges and agrees that the absolute and
exclusive ownership of the Regisrtation and all rights orginating out of
from the same shall at all times belong only and exclusively to
Carrington
<PAGE>
4.3. As soon as HEMOPHARM has received Know-how from Carrington,
HEMOPHARM shall prepare, at its sole expense, the Registration dossier
and submission and any shall promptly supply Carrington with a copy of
the said Registration dossier and submission and Carrington shall be
entitled to a free and unrestrained use of the same.
4.4. Subject to having obtained Carrington's written approval of
all such documentation and any subsequent amendments thereto, HEMOPHARM
shall, as soon as possible and in any case within sixty (60) days of
Carrington's approval, submit the Registration application to the
appropriate authorities of the Territory.
4.5. HEMOPHARM shall use its best endeavors to obtain the
Registration as soon as possible.
4.6 HEMOPHARM shall copy and keep Carrington fully and timely
informed, throughout the term of this Agreement, of all communications
sent to or recived from all applicable governmental authorities,
including the health authorities, of the Therritory concerning the
Products.
4.7. Carrington guarantees that the supplied Know-how consists of
accurate and confirmed data posessed by Carrington and that the
Products have the characteristics described therein, but makes no
warranty that the supplied Know-now will necessarily result in the grant
of the Registration and HEMOPHARM shall have no claim against Carrington
arising out of any delay or refusal by the authorities to issue the
Registration.
Article 5. Sale of Products by Carrington to HEMOPHARM
5.1. Subject to the terms ond conditions of this Agreement,
including specifically Article 5.7. herefor, Carrington shall sell to
HEMOPHARM the Products at a specified price for each Product (the
"Contract Price"). For orders placed by HEMOPHARM during the first 12-
month period of the term Agreement, the Contract Prices for the Products
listed Exhibit A are set forth on such exibit opposite each Product. At
least ninety (90) days prior to the end of each 12-month period of the
term of this Agreement, (a) HEMOPHARM shall provide in writing to
Carrington both a sales forecast and a purchase forecast for the
following 12-month period, and (b) 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. During any twelve
(12) month period Carrington reserves the right to change its Contract
Price for each Product.
<PAGE>
5.2. As consideration for its appoinment as a sales distributor
entited to a Product discount, HEMOPHARM agrees to purchase from
Carrington, during each 12-month period of the term of this Agreement,
commencing with the 12-month period beginning _ december , 1997 , at
the Contract Price, a specified minimum aggregate dollar amount (based
on the Contract Price) of the Products (the "Specified Minimum Purchase
Amount"). For the first 12-month period of the term of this Agreement,
the Specified Minimum Purchase Amounts shall be $ 200.000,. The
Specified Minimum Purchase Amounts for each subsequent 12-month period
shall be determined by mutual agreement of the Parties no later than
thirty (30) days prior to the beginning of such period based on
HEMOPHARM's reasonable, good faith projections of future sales growth
and such other factors at the Parties may deem relevant.
5.2.A When and if Carrington decides to use the rights
stipulated under Articles 1.1/d, 5. or 5.7 of this Agreement in order to
delete or add the Products in the Exhibit A, or change the Contract
Price or doesn't deliver the Products in the ordered quantities,
contractual Parties shall in good faith determine the changes in the
Specified Minimum Purchase Amount from the Article 5.2 of this
Agreement.
5.3. HEMOPHARM shall order Products by submitting a purchase
order to Carrington describing the type and quantity of the Products to
be purchased. All orders are subjected to acceptance by Carrington. All
purchases shall be spaced in a reasonable manner. If Carrington accepts
the order, Carrington will invoice HEMOPHARM upon shipment of the
Products. Unless otherwise agreed, HEMOPHARM shall pay all invoices in
full within sixty (60) days of the date of the statement issued by
HEMOPHARM describing the exact quantity and type of Products withdrawn
from the consignement stock. HEMOPHARM shall be solely responsible for
all costs in connection with affecting payments.
5.4. Carrington shall not be obligated to ship Products to
HEMOPHARM at any time when payment of an amount owed by HEMOPHARM is
ovrerdue or when HEMOPHARM is otherwise in breach of this Agreement.
5.5. All shipments shall be initiated by a Purchase Order.
Product shipment dates will be specified in the Purchase Order. These
dates may not be scheduled prior to ninety (90) days after the dates the
Purchase Order is received and acknowledged in writing by Seller, unless
by mutual consent of this parties Purchase Orders will be not-
concellable. HEMOPHARM will issue to Carrington on a monthly basis, a
twelve (12) month rolling forecast so that Carrington may incorporate
said forecasts into its planning system. The triggering document for
production activities is, however, the purchase order, as stated above.
Carrington will guarantee delivery dates for Product quantities that
vary up to 20% above the last monthly rolling forecast issued prior to
the purchase order placed by HEMOPHARM. Variation above 20% shall be
discussed between the Parties and Carrington will use its best efforts
to maintain delivery dates requested by HEMOPHARM.
<PAGE>
5.6. All shipments of Products to HEMOPHARM's consignement stock
will be packaged in accordance with Carrington's standard packaging
procedures and shipped per Carrington's existing distribution policy.
All Contract Prices are F.O.B., (invoice price includes seller's expense
for delivery to the named destination) Carrington's facility, Irving,
Texas. Ownership of and title to Products and all risks of loss with
respect thereto shall pass to HEMOPHARM upon delivery of such Products
and all risks of loss with respect thereto shall pass to HEMOPHARM upon
delivery of such Products by Charrington 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 being utilized by Carrington at the time and location of the
particular delivery.
5.7. Carrington shall use its reasonable best efforts to ensure
availability of all Products ordered by HEMOPHARM under this Agreement.
However, necessary in the best judgment of Carrington, Carrington may
allocate its available supply of Products among all its customers,
distributors or other purchasers, including HEMOPHARM , 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.
5.8. Carrington accepts liability for defective Products and agrees
to replace such defective Products should they occur with new Products.
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 HEMOPHARM's consignement stock
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. HEMOPHARM 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 5.8. or that is incosistent with the policies
or publications of Carrington relating to the Products.
HEMOPHARM'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
HEMOPHARM'S OPTION. EXCEPT FOR THE RESPONSIBILITY FOR THE DAMAGES
RESULTING OUT OF HIDDEN DEFECTS OF THE PRODUCTS, CARRINGTON SHALL HAVE
NO OTHER OBLIGATION OR LIABILITY FOR DAMAGES TO HEMOPHARM 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.
<PAGE>
EACH CONTRACTUAL PARTY IN DEFAULT SHALL DEFEND, INDEMNIFY AND HOLD
HARMLESS OTHER CONTRACTUAL PARTY AND AFFILIATES, OFFICERS, DIRECTORS,
EMPLOYEES AND AGENTS OF OTHER CONTRACTUAL PARTY, 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, KNOW-NOW OR
TRADEMARKS, (ii) ANY BREACH BY ONE OF THE CONTRACTUAL PARTIES OF ANY ITS
REPRESENTATIONS, WARRANTIES OR COVENANTS UNDER THIS AGREEMENT OR (iii)
ANY ACTS OR OMISSIONS ON THE PART OF ONE OF THE CONTRACTUAL PARTIES OR
ITS AGENTS, SERVANTS OR EMPLOYEES WHICH ARE OUTSIDE OR BEYOND ONE OF THE
CONTRACTUAL PARTY'S AUTHORIZATION GRANTED HEREIN.
5.9. Credits for defective Products to HEMOPHARM shall include
importation and shipment expenses and will be calculated by Carrington
based on the original Contract Price of the items returned, whether
identified by lot number ar another method. Carrington shall provide
HEMOPHARM with a copy of its liability Insurance Certificate and shall
include HEMOPHARM thereunder.
Article 6. Term and Termination
6.1. The term of this Agreement shall be for a period of five
years from the effective data of this Agreement. After such term, this
Agreement shall be automatically terminated unless the parties mutually
agree in writing to extend the term hereof. Notwithstanding the
foreogoing, this Agreement may be terminated earlier in accordance with
the provisions of this Article 6 or as expressly provided elsewhere in
this Agreement.
6.2. Carrington shall have the absolute right to terminate
this Agreement if HEMOPHARM fails to perform or breaches, in any
materials respect, any of the terms or provisions of this Ageerment.
Without limiting the events which shall be deemed to constitute a breach
or material breach of this Agreement by HEMOPHARM, HEMOPHARM 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 6.2., if:
(i) HEMOPHARM fails of refuses to pay to Carrington any sum
when due;
(ii) HEMOPHARM breaches any provision of Article 2.2., 3.4.,
4., 5.3., 5.8., 7. or 8; or,
(iii) HEMOPHARM fails to purchase the Specified Minimum
Purchase Amounts of Product for any required period.
6.3. Each Party shall have the absolute right to terminate this
Agreement in the event the other Party shall become insolvent, or if
there is instituted by or aginst the other Party procedures in
bankruptcy, or under insolvency laws or for reorganization, receivership
or dissolution, or if the other Party loses any franchise or licence to
operate its business as presently conducted in any part of the
Territory.
<PAGE>
6.4. This Agreement shall automatically terminate effective at the
end of any 12-month period of the term of this Agreement referred to in
Articles 5.1. and 5.2. hereof if the Parties are unable to agree upon
the Contract Prices or the Specified Minimum Amounts for the next 12-
month period of the term.
6.5. During the one-year period following termination of this
Agreement, any inventory of Products held by HEMOPHARM at the
termination of this Agreement may be sold by HEMOPHARM 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 govering HEMOPHARM's performance obligations and
Carrington's rights shall remain in effect. In order to accelerate the
liquidation of any such inventory, Carrington shall have the option, 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 HEMOPHARM, including importation and shipping.
6.6. 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 5.8., 6.5., 7., 8.
and 15. and the rights and obligations of the Parties thereunder shall
survive the termination of this Agreement for a period of one (1) year.
Article 7. Trademarks
7.1. All Carrington Trademarks, trade names, service marks, logos
and derivatives thereof relating to the Products (the "Tradenames"), and
all patents, technology and other intellectual property (also known as
"Know-how") relating to the Products and of the good will associated
therewith, are the sole and exclusive property of Carrington and/or its
affiliates. The Products shall be promoted, sold and distributed only
under the Trademarks. Carrington hereby grants HEMOPHARM permission to
use the Trademarks for the limited purpose of performing its obligations
under this Agreement. Carrington may, in its sole discretion after
consultation with HEMOPHARM modify or discontinue the use of any
Trademark and/or use one or more additional or substitute marks or
names, and HEMOPHARM shall be obligated to do the same.
7.2. Carrington's Trademarks shall appear on all Product packaging,
labels, and inserts and other materials which HEMOPHARM uses for the
marketing of the Products in such form and manner as Carrington shall
reasonably require. Carrington retains the right to review and approve
all intended uses of the Trademark in any packaging, inserts, labels, or
promotional or other materials relating to the Products prior to
HEMOPHARM's actual use thereof.
<PAGE>
7.3. It shall be the sole responsibility of Carrington, at its sole
expense, to keep in force and maintain the Trademarks in the Territory
by paying all necessary fees throughout the term of this Agreement.
HEMOPHARM agrees to use the Trademarks in full compliance with the rules
prescribed from time to time by Carrington. The Trademarks shall always
be used together with the sign "R" or the sign "TM". HEMOPHARM may not
use any Trademark as part of any corporate name or with any prefix,
suffix or other modifying word, term, design or symbol. In addition,
HEMOPHARM 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.
7.4. In the event of any infrigement of, or threatened or presumed
infrigement of, or challenge to HEMOPHARM's use of any Trademark or of
any HEMOPHARM trademark, HEMOPHARM is obligated to notify Carrington
immediately. Carrington shall have sole and absolute discretion to take
such action as it deems appropriate.
7.5. In the event of the termination of this Agreement for any
reason, HEMOPHARM's right to use the Trademarks shall cease, and
HEMOPHARM shall cease using such Trademarks at such time as HEMOPHARM's
inventory of Products has been sold. HEMOPHARM shall, as soon as it is
reasonably possible, remove all Trademarks which appear on or about the
permises of the office(s) of HEMOPHARM and any of the advertising of
HEMOPHARM used in connection with the Products.
7.6. In the event of a breach or threatened breach by HEMOPHARM of
the provisions of this Article 7., Carrington shall be entitled to 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 7.,
including the recovery of damages from HEMOPHARM.
7.7. Should for some reason the Trademark be prevented from being
used in any part or whole of the Territory, the Parties shall consult as
to a suitable other trademark (which trademark shall be also defined as
"Trademark" for purposes of this Agreement) owned by Carrington or to be
transferred from HEMOPHARM to Carrington for use in connection with the
marketing and sale of the Products; it being agreed, however, that
Carrington retains the right to ultimately determine what such
alternative Trademark shall be used, provided it is not confusingly
similar to a Trademark owned by HEMOPHARM in the Territory.
7.8. Nothing contained in this Agreement shall be construed as
giving HEMOPHARM the right to use the Trademark outside the Territory or
for any other product than the Products.
<PAGE>
Article 8. Confidential Information
8.1. HEMOPHARM recognizes and acknowledges that HEMOPHARM will have
access to confidential information and trade secrets, including "Know-
how", 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, HEMOPHARM 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 HEMOPHARM of the provisions of this Article 8, Carrington
shall be entitled to an injunction restraining HEMOPHARM 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 8, including the recovery of damages from HEMOPHARM. The above
does not apply to information or material that was known to the public
or generally available to the public prior to the date it was received
by HEMOPHARM.
8.2 Contractual parties shall not disclose any of the terms of
this Agreement without the prior written consent of other contractual
party.
8.3 Mutatis mutandis Carrington has the same obligations towards
HEMOPHARM as HEMOPHARM has towards Carrington according to Article 8.1.
<PAGE>
Article 9. Force Majeure
9.1 Neither HEMOPHARM nor Carrington shall have any liability
hereunder if either is 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 comotion, sabotage, vandalism,
smoke, hail, embargo, act of God or the public enemy, other casuality,
strike or lockout, or interference, prohibition or restriction imposed
by any government or any officer or agent thereof ("Force Majeure"), nor
shall HEMOPHARM's or Carrington's obligations, except as may be
necessary, be suspended during the period of such Force Majeure, nor
shall either Party's obligations be cancelled with respect to such
Products as would have been sold hereunder but for such suspension. Such
affected Party shall give to the other Party 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 endavor with due dilligence
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 both Party's obligations under
this Agreement. Should the Force Majeure continue for more than six (6)
months, than the other Party shall have the right to cancel this
Agreement and the Parties shall seek an equitable agreement on the
Parties' reward of interests.
9.2 The Parties agree that any obligations to pay money is never
excused by Force Majeure.
Article 10. Amendment
10.1 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 11. Entire Agreement
11.1 This Agreement represents the entire Agreement between
the Parties and 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.
11.2 Should any provision of this Agreement be rendered invalid or
unenforceable, it shall not affect the validity or enforceability of the
remainder.
<PAGE>
Article 12. Assignment
12.1 Neither this Agreement nor any of the rights or obligations of
HEMOPHARM hereunder shall be transferred or assigned by HEMOPHARM
without the prior written consent of Carrington, executed by a duly
authorized officer of Carrington, except in case of HEMOPHARM's parent
company in the manner already approved by Carrington.
Article 13. Notices
13.1 Any notice required 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, commercial courier services, postage
prepaid, return receipt requested, or by fax addressed to:
a) Carrington at: Carrington Laboratories, Inc., 2001 Walnut Hill
Lane, Irving, Texas 75038; Attention: President, or at such other
address as Carrington shall have theretofore furnished in writing to
HEMOPHARM. (Fax No. 214-518-1020)
b) HEMOPHARM at: Koenigsteiner Strasse 2, 61350 Bad Homburg v.d.H.,
Germany; Attention: Mr Pavle **Airi&**. (Fax No. 06172 968 900)
Article 14. Waiver
14.1 Neither HEMOPHARM's nor Carrington's failure to enforce at any
time any of the provision of this Agreement or any right with respect
thereto, shall be considered a waiver of such provisions or rights or
in any way affect the validity of same. Neither HEMOPHARM's nor
Carrington's exercise of any of its rights shall preclude or prejudice
either Party thereafter from exercising the same or any other right it
may have, irrespective of any previos action by either Party.
Article 15. Interpretation
15.1 The language of this Agreement is English. No translation into
any other language shall be taken into account in the interpretation of
the Agreement itself.
15.2 The headings of this Agreement are inserted for convenience
only and shall not affect its construction.
15.3 Where appropriate, the terms defined in Article 1. and
denoting the single number only shall include the plural and vice versa.
15.4 References to any law, regulation, statut or statutory
provision includes reference to the law, regulation, statute or
statutory provision as from time to time amended, extended or reenacted.
Article 16. Exhibits
16.1 Any and all exhibits referr to herein shall be considered an
integral part of this Agreement.
<PAGE>
Article 17. No Iinconsistent Actions
17.1 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 5.7 and 9 hereof, will promptly perform all acts and take all
measures as may be appropriate to comply with the terms, conditions and
provisions of this Agreement.
Article 18. Currency of Account
18.1 Thius Agreement evidences a transaction of the sale of goods
in which the specification of US dollars is of the essence and US
dollars shall be the currency of account in all events. All payments to
be made by HEMOPHARM to Carrington hereunder shall be made either (i) in
immediately available funds by confirmed wire transfer to bank account
to be designated by Carrington or (ii) in the form of a bank cashiers
check payable to the order of Carrington.
Article 19. Binding Effect
19.1 This Agreement shall inure to the benefit of and be binding
upon the respective successors of the Parties.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the ...... day of the year.. 1997 first above written.
CARRINGTON Laboratories HEMOPHARM GmbH
____________________ __________________
By: By:
Name: Name:
Title: Title:
<PAGE>
EXHIBIT A
HEMOPHARM
Products & Contract Price
Product Contract
No. Product Price
HYDROGEL WOUND DRESSINGS
101002 Carrasyn[R] V Hydrogel (1.0 oz. Pouch) (Up $1.61/unit
to 200,000 units)
101002 Carrasyn[R] V Hydrogel (1.0 oz. Pouch) $1.51/unit
(200,001 - 250,000 units)
101002 Carrasyn[R] V Hydrogel (1.0 oz. Pouch) $1.45/unit
(250,001 - 300,000 units)
101002 Carrasyn[R] V Hydrogel (1.0 oz. Pouch) (over $1.36/unit
300,001 units)
101023 Carrasyn[R] V Hydrogel Wound Dressing, 3 oz. $4.25/unit
tube
101017 CarraGauze[R] 2" x 2" Pad (1 pkg., 15 $63.00/case
pkgs/bx., 6 bxs./cs.) ($0.70 per unit)
101015 CarraGauze[R] 4" x 4" Pad (1 pkg., 15 $112.50/case
pkgs/bx., 6 bxs./cs.) (Up to 150,000 units
$1.25 per unit)
WOUND & SKIN CLEANSERS
102060 CarraKlenz[TM] Wound & Skin Cleanser ( 6 $2.97/bottle
oz. Pump)
102062 CarraKlenz[TM] Wound & Skin Cleanser ( 8 $3.97/bottle
oz. Pump)
102160 CarraKlenz[TM] Wound & Skin Cleanser (16 oz. $6.07/bottle
Pump)
<PAGE>
CALCIUM ALGINATES
101032 CarraSorb[TM] H Calcium Alginate Wound $125.00/case
Dressing (2 x 2) 10bxs./10ea., 10bxs./case
($1.25/unit)
101033 CarraSorb[TM] H Calcium Alginate Wound $272.00/case
Dressing (4 x 4) 10bxs./10ea., 10bxs./case
($2.72/unit)
FREEZE-DRIED GELS
101035 CarraSorb[TM] M Freeze-Dried Gel Wound $196.20/box
Dressing (4" diameter)
15 ea./bx., 4 bxs./cs. ($3.27/unit)
EXHIBIT A
HEMOPHARM
Products & Contract Price
ORAL TECHNOLOGY
The Carrington[TM] Patch (6 per sleeve) $0.75/sleeve
Note: Any volume discounts are based on yearly purchases which
correspond with the specified 12-month period as set forth in Article
5.1 of this Agreement.
EXHIBIT 5
EXCLUSIVE SALES DISTRIBUTION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of
the Effective Date (as defined below) by and between CARRINGTON
LABORATORIES, INC., a Texas corporation and CARRINGTON LABORATORIES
BELGIUM N.V., a Belgium corporation, jointly (together hereinafter
referred to as "Carrington"), and VINCULA INTERNATIONAL TRADE COMPANY, a
Texas corporation ("VINCULA").
W I T N E S S E T H :
WHEREAS, Carrington is engaged in the business of developing,
manufacturing, selling and distributing certain pharmaceutical products
and medical devices and is desirous of establishing a competent and
exclusive distribution source for sales of such products in Oman and
Saudi Arabia (defined in Article 1 hereof as the Territory); and
WHEREAS, Vincula is desirous of distributing such products in the
Territory, represents that it has experience in obtaining registration
of pharmaceutical preparations or products and medical devices in the
Territory, is well introduced on the market, is willing and able to
provide a competent distribution organization in the Territory, and
Vincula desires to be Carrington's 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) "Effective Date" shall mean the date of last signature of the
Parties hereto.
(b) "Know-how" shall mean secret and substantial technical and
scientific information regarding the Products, which may be
necessary, useful or advisable to enable Vincula to obtain the
Registration of, promote, market and sell the Products in the
Territory, and as is or will be specified in the documentation
which Carrington has delivered or will deliver to Vincula
after the Effective Date and during the term of this
Agreement.
(c) "Parties" shall mean Carrington and Vincula and "Party" shall
mean either of them as the context indicates.
(d) "Products" shall mean the wound and skin care products
manufactured by or for Carrington set forth on Exhibit A
hereto. Carrington will provide a ninety (90) day notice to
Vincula on its intent to add or discontinue Products to
Exhibit A.
<PAGE>
(e) " Registration" shall mean any official approval, or
authorization, or licensing regarding the Products by the
appropriate and competent authorities in the Territory,
including, if applicable, the Products' selling prices and
social security approvals, allowing the lawful marketing of
the Products.
(f) "Territory" shall mean the following countries: Oman and
Saudi Arabia. (Other countries in the Middle East may be
added upon mutual agreement).
(g) "Trademarks" shall mean all Trademarks, trade names, service
marks, logos and derivatives thereof relating to the Products.
Article 2. Appointment
2.1 Subject to the terms and conditions of this Agreement,
Carrington hereby appoints Vincula as Carrington's exclusive sales
distributor in the Territory for the sale of Products, and Vincula
hereby accepts such appointment. As exclusive sales distributor in the
Territory, Vincula shall, subject to the terms and conditions of this
Agreement, have the right to obtain the Registration of, promote,
distribute and sell Products in the Territory, but shall have no right
to take any such action outside the Territory.
2.2 In a manner reasonably satisfactory to Carrington, and at
Vincula's sole expense, Vincula agrees to (a) make and maintain 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, (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, and (e)
promptly assign back to Carrington any product Registrations in the
Territory upon termination of Agreement.
2.3 During the term of this Agreement, Vincula shall be considered
an independent contractor and shall not be considered a partner,
employee, agent or servant of Carrington. As such, Vincula has no
authority of any nature whatsoever to bind Carrington or incur any
liability for or on behalf of Carrington or to represent itself as
anything other than a sales distributor and independent contractor.
Vincula agrees to make clear in all dealings with customers or
prospective customers that it is acting as a distributor of the Products
and not as an agent of Carrington.
2.4 Nothing in this Agreement shall be construed as giving Vincula
any right to use or otherwise deal with the Know-how for purposes other
than those expressly provided for in this Agreement.
<PAGE>
2.5 V i n cula shall promptly inform Carrington of any
misappropriation of the Know-how which comes to its attention. After
having discussed such situation with Vincula, Carrington shall have sole
and absolute discretion to take such action as it deems appropriate and
Vincula, at its own cost, shall assist Carrington in taking legal
action, if deemed necessary, against such misappropriation.
2.6 All costs and expenses connected with Vincula's activities or
performance under this Agreement are to be borne solely by Vincula.
Article 3. Certain Performance Requirements
3.1 Vincula agrees to promote, market, sell and distribute the
Products only to customers and potential customers within the Territory
for ultimate use within the Territory. Vincula will not, under any
circumstances, either directly or indirectly through third parties,
promote, market, sell, or distribute 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 Vincula is in compliance
with Article 3.1, Vincula agrees that:
(a) Vincula will send to Carrington quarterly sales reports which
set forth the number of units and sizes of each Product sold,
the net sales, the number of units of free medical samples
distributed, and to whom such Products were sold and/or
distributed during such quarter;
(b) Vincula will send to Carrington quarterly inventory reports of
the Products; and
(c) Carrington may mark for identification all Products sold by
Carrington to Vincula hereunder.
3.3 Vincula shall promptly provide Carrington with written reports
of any importation or sale of any of the Products in the Territory of
which Vincula has knowledge from any source other than Carrington, as
well as with any other information which Carrington may reasonably
request in order to be updated on the market conditions in the
Territory.
3.4 Vincula shall maintain a sufficient inventory of Products to
assure an adequate supply of Products to serve all its market segments.
Vincula shall maintain all its inventory of Products clearly segregated
and meeting all storage and other standards required by applicable
governmental authorities and Carrington. Carrington shall provide any
such requirements in advance in writing. All such inventory and
Vincula's facilities shall be subject to inspection by Carrington or its
agents upon 72 hours written notice.
3.5 Vincula 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 Vincula of Products. Upon written
request from Vincula, Carrington shall provide Vincula 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.
<PAGE>
3.6 All Products shall be packaged and delivered by Carrington to
Vincula. All Products shall be labeled, advertised, marketed, sold and
distributed by Vincula in compliance with the rules and regulations,
as amended from time to time, of (i) all applicable governmental
authorities within the Territory in which the Products are marketed, and
(ii) all other applicable laws, rules and regulations. Vincula shall
pay all expenses associated with (i) any alterations to the packaging
and labeling of the Products which deviate from Carrington's standard
packaging materials, designs, methods and/or procedures, (ii) any
language modifications to the packaging or labeling and/or (iii) any
additions to inserts in the general packaging. The Parties shall agree
on minimum production runs for such custom labels.
3.7 V i ncula shall not make any alterations or permit any
alterations to be made to the Products without Carrington's written
consent.
3.8 Vincula shall assume all responsibility for and comply with
all applicable laws, regulations and requirements concerning the
Registration, inventory, use, promotion, distribution and sale of the
Products in the Territory and correspondingly for any damage, claim,
liability, loss or expense which Carrington may suffer or incur by
reason of said Registration, inventory, use, promotion, distribution and
sale and shall hold Carrington harmless from any claim resulting
therefrom being directed against Carrington or Vincula by any third
party.
3.9 Vincula 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 or from the applicable governmental
authorities.
3.10 Vincula 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.
3.11 Vincula will actively and aggressively promote, develop demand
for and maximize the sale of the Products to all customers and potential
customers within the Territory. Vincula agrees not to manufacture,
promote, market, sell or distribute to any customers or potential
customers in the Territory without ninety (90) days written notice to
and approval from Carrington, any competitive products.
3.12 Relative to the distribution of Carrington products, Vincula
represents that its books, records and accounts pertaining to all its
operations hereunder are complete and accurate in all material respects
and have been maintained in accordance with sound and generally accepted
accounting principles. Carrington shall have the right to have such
books, records, and accounts examined, at its expense, by a qualified
accountant nominated by Carrington.
<PAGE>
Article 4 Registration of Products
4.1 It being understood that Registration is a prerequisite to the
lawful sale of the Products in the Territory, Carrington hereby agrees
to supply Vincula, promptly after the execution of this Agreement, with
any Know-how or relevant documentation necessary for preparing the
Registration dossier to be submitted to the applicable governmental
authorities of the Territory.
4.2 It shall be the responsibility of Vincula, at its sole expense
to apply for, obtain and maintain in force the Registration of the
Products. Subject to having obtained the prior approval of Carrington,
the application shall be submitted to all applicable governmental
authorities, including the health authorities of the Territory and said
application shall be in the name of Carrington, with Vincula being
named as Products distributor in the Territory. Vincula expressly
acknowledges and agrees that the absolute and exclusive ownership of the
Registration and all rights originating out of or from the same shall at
all times belong only and exclusively to Carrington.
4.3 As soon as Vincula has received Know-how from Carrington,
Vincula shall prepare, at its sole expense, the Registration dossier
and submission and any translation which may be required by the
applicable authorities of the Territory. Vincula shall promptly supply
Carrington with a copy of the said Registration dossier and submission
and Carrington shall be entitled to a free and unrestrained use of the
same.
4.4 Subject to having obtained Carrington's written approval of
all such documentation and any subsequent amendments thereto, Vincula
shall, as soon as possible and in any case within sixty (60) days of
Carrington's approval, submit the Registration application to the
appropriate authorities of the Territory.
4.5 V i n c ula shall use its best endeavors to obtain the
Registration within six (6) months from the relevant submission.
Vincula shall notify Carrington in writing at least 3 (three) months
before the expiration of said term of any need for an extension in time
to obtain Registration. The notification shall specify the duration of,
and the reason for, any proposed extension. Carrington shall consider
any such request, evaluating the objective situation and Vincula's
fulfilment of its obligations in this respect. It is, however,
understood that Vincula's deadline to obtain Registration is one year
from the date of filing.
4.6 Vincula shall copy and keep Carrington fully and timely
informed, throughout the term of this Agreement, of all communications
sent to or received from all applicable governmental authorities,
including the health authorities, of the Territory concerning the
Products.
4.7 Carrington makes no warranty that the supplied Know-how will
necessarily result in the grant of the Registration and Vincula shall
have no claim against Carrington arising out of any delay or refusal by
the authorities to issue the Registration.
<PAGE>
Article 5. Sale of Products by Carrington to Vincula
5.1 Subject to the terms and conditions of this Agreement,
including specifically Article 5.7 hereof, Carrington shall sell to
Vincula the Products at a specified price for each Product (the
"Contract Price"). For orders placed by Vincula 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 ninety (90) days prior to the end of each 12-month
period of the term of this Agreement, (a) Vincula shall provide in
writing to Carrington both a sales forecast and a purchase forecast for
the following 12-month period, and (b) 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. During any twelve
(12) month period Carrington reserves the right to change its Contract
Price for each Product.
5.2 As consideration for its appointment as a sales distributor
entitled to a Product discount, Vincula agrees to purchase from
Carrington, during each 12-month period of the term of this Agreement,
commencing with the 12-month period beginning August 1, 1998 through
August 1, 1999, at the Contract Price, a specified minimum aggregate
dollar amount (based on the Contract Price) of the Products (the
"Specified Minimum Purchase Amount"). For the first 12-month period of
the term of this Agreement, the Specified Minimum Purchase Amount shall
be $50,000. The Specified Minimum Purchase Amounts for each subsequent
12-month period shall be determined by mutual agreement of the Parties
no later than thirty (30) days prior to the beginning of such period
based on Vincula's reasonable, good faith projections of future sales
growth and such other factors as the Parties may deem relevant.
5.3 Vincula shall order Products by submitting a purchase order to
Carrington describing the type and quantity of the Products to be
purchased. All orders are subject to acceptance by Carrington. All
purchases shall be spaced in a reasonable manner. If Carrington accepts
the order, Carrington will invoice Vincula upon shipment of the
Products. Unless otherwise agreed, Vincula shall pay all invoices in
full within ninety (90) days of the date of invoice. Vincula shall be
solely responsible for all costs in connection with affecting payments.
All sales and payments shall be made, and all orders shall be accepted,
in the State of Texas.
5.4 Carrington shall not be obligated to ship Products to Vincula
at any time when payment of an amount owed by Vincula is overdue or when
Vincula is otherwise in breach of this Agreement.
<PAGE>
5.5. All shipments shall be initiated by a Purchase Order. Product
shipment dates will be specified in the Purchase Order. These dates may
not be scheduled prior to ninety (90) days after the dated the Purchase
Order is received and acknowledged in writing by Seller, unless by
mutual consent of the parties Purchase Orders will be non-cancellable.
Vincula will issue to Carrington on a monthly basis, a twelve (12) month
rolling forecast so that Carrington may incorporate said forecasts into
its planning system. The triggering document for production activities
is, however, the purchase order, as stated above. Carrington will
guarantee delivery dates for Product quantities that vary up to 20%
above the last monthly rolling forecast issued prior to the purchase
order placed by Vincula. Variation above 20% shall be discussed between
the Parties and Carrington will use its best efforts to maintain
delivery dates requested by Vincula.
5.6 All shipments of Products to Vincula will be packaged in
accordance with Carrington's standard packaging procedures and shipped
per Carrington's existing distribution policy. All Contract Prices are
F.O.B., (invoice price includes seller's expense for delivery to the
named destination) Carrington's facility, Irving, Texas. Ownership of
and title to Products and all risks of loss with respect thereto shall
pass to Vincula 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.
5.7 Carrington shall use its reasonable best efforts to ensure
availability of all Products ordered by Vincula 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 Vincula, 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.
5.8 Carrington accepts liability for defective Products and agrees
to replace such defective Products should they occur with new Products.
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 Vincula 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. Vincula 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 5.8 or that is inconsistent with the policies or
publications of Carrington relating to the Products.
<PAGE>
VINCULA'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 VINCULA'S
OPTION. CARRINGTON SHALL HAVE NO OTHER OBLIGATION OR LIABILITY FOR
DAMAGES TO VINCULA 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.
VINCULA SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS CARRINGTON AND
CARRINGTON'S AFFILIATES, 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,
KNOW-HOW OR TRADEMARKS BY VINCULA OR ANY OTHER PARTY, (ii) ANY BREACH BY
Vincula OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS UNDER
THIS AGREEMENT OR (iii) ANY ACTS OR OMISSIONS ON THE PART OF VINCULA OR
ITS AGENTS, SERVANTS OR EMPLOYEES WHICH ARE OUTSIDE OR BEYOND VINCULA'S
AUTHORIZATION GRANTED HEREIN.
5.9 Credits for defective Products to Vincula shall include
importation and shipment expenses and will be calculated by Carrington
based on the original Contract Price of the items returned, whether
identified by lot number or another method. Carrington shall provide
Vincula with a copy of its liability Insurance Certificate and shall
include Vincula thereunder.
Article 6. Term and Termination
6.1 The term of this Agreement shall be for a period of five years
from the effective date of this Agreement. After such term, this
Agreement shall be automatically terminated unless the parties mutually
agree in writing to extend the term hereof. Notwithstanding the
foregoing, this Agreement may be terminated earlier in accordance with
the provisions of this Article 6 or as expressly provided elsewhere in
this Agreement.
6.2 Carrington shall have the absolute right to terminate this
Agreement if Vincula 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 Vincula, Vincula 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 6.2, if:
(i) Vincula fails or refuses to pay to Carrington any sum
when due;
(ii) Vincula breaches any provision of Article 2.2, 3.4, 4,
5.3, 5.8, 7 or 8; or,
(iii) Vincula fails to purchase the Specified Minimum
Purchase Amounts of Product for any required period.
<PAGE>
6.3 Each Party shall have the absolute right to terminate this
Agreement in the event the other Party shall become insolvent, or if
there is instituted by or against the other Party procedures in
bankruptcy, or under insolvency laws or for reorganization, receivership
or dissolution, or if the other Party loses any franchise or license to
operate its business as presently conducted in any part of the
Territory.
6.4 This Agreement shall automatically terminate effective at the
end of any 12-month period of the term of this Agreement referred to in
Articles 5.1 and 5.2 hereof if the Parties are unable to agree upon the
Contract Prices or the Specified Minimum Amounts for the next 12-month
period of the term.
6.5 During the one-year period following termination of this
Agreement, any inventory of Products held by Vincula at the termination
of this Agreement may be sold by Vincula 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 Vincula's performance obligations and Carrington's rights
shall remain in effect. In order to accelerate the liquidation of
any such inventory, Carrington shall have the option, 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
Vincula, including importation and shipping.
6.6 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 5.8, 6.5, 7, 8
and 15 and the rights and obligations of the Parties thereunder shall
survive the termination of this Agreement for a period of one (1) year.
Article 7. Trademarks
7.1 All Carrington Trademarks, trade names, service marks, logos
and derivatives thereof relating to the Products (the "Trademarks"), and
all patents, technology and other intellectual property (also known as
"Know-how") relating to the Products and of the goodwill associated
therewith, are the sole and exclusive property of Carrington and/or its
affiliates. The Products shall be promoted, sold and distributed only
under the Trademarks. Carrington hereby grants Vincula permission to
use the Trademarks for the limited purpose of performing its obligations
under this Agreement. Carrington may, in its sole discretion after
consultation with Vincula, modify or discontinue the use of any
Trademark and/or use one or more additional or substitute marks or
names, and Vincula shall be obligated to do the same.
7.2 Carrington's Trademarks shall appear on all Product packaging,
labels, and inserts and other materials which Vincula uses for the
marketing of the Products in such form and manner as Carrington shall
reasonably require. Carrington retains the right to review and approve
all intended uses of the Trademark in any packaging, inserts, labels, or
promotional or other materials relating to the Products prior to
Vincula's actual use thereof.
<PAGE>
7.3 It shall be the sole responsibility of Carrington, at its sole
expense, to keep in force and maintain the Trademarks in the Territory
by paying all necessary fees throughout the term of this Agreement.
Vincula agrees to use the Trademarks in full compliance with the rules
prescribed from time to time by Carrington. The Trademarks shall always
be used together with the sign "[R]" or the sign "[TM]". Vincula may
not use any Trademark as part of any corporate name or with any prefix,
suffix or other modifying word, term, design or symbol. In addition,
Vincula 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.
7.4 In the event of any infringement of, or threatened or presumed
infringement of, or challenge to Vincula's use of any Trademark or of
any Vincula trademark, Vincula is obligated to notify Carrington
immediately. Vincula shall investigate any alleged violation and, if
necessary, shall take the appropriate legal action to resolve the issue
and to prevent other competitors from infringing on said intellectual
property rights within the Territory. Carrington shall have sole and
absolute discretion to take such action as it deems appropriate.
7.5 In the event of the termination of this Agreement for any
reason, Vincula's right to use the Trademarks shall cease, and Vincula
shall cease using such Trademarks at such time as Vincula's inventory of
Products has been sold. Vincula shall, as soon as it is reasonably
possible, remove all Trademarks which appear on or about the premises of
the office(s) of Vincula and any of the advertising of Vincula used in
connection with the Products.
7.6 In the event of a breach or threatened breach by Vincula of
the provisions of this Article 7, Carrington shall be entitled to 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 7, including the recovery of damages from Vincula.
7.7 Should for some reason the Trademark be prevented from being
used in any part or whole of the Territory, the Parties shall consult as
to a suitable other trademark (which trademark shall be also defined as
"Trademark" for purposes of this Agreement) owned by Carrington or to be
transferred from Vincula to Carrington for use in connection with the
marketing and sale of the Products; it being agreed, however, that
Carrington retains the right to ultimately determine what such
alternative Trademark shall be used, provided it is not confusingly
similar to a Trademark owned by Vincula in the Territory.
7.8 Nothing contained in this Agreement shall be construed as
giving Vincula the right to use the Trademark outside the Territory or
for any other product than the Products.
<PAGE>
Article 8. Confidential Information
8.1 Vincula recognizes and acknowledges that Vincula will have
access to confidential information and trade secrets, including "Know-
how", 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, Vincula 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 Vincula of the provisions of this Article 8, Carrington shall
be entitled to an injunction restraining Vincula 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 8, including the recovery of damages from Vincula. The above
does not apply to information or material that was known to the public
or generally available to the public prior to the date it was received
by Vincula.
8.2 Vincula shall not disclose any of the terms of this Agreement
without the prior written consent of Carrington.
Article 9. Force Majeure
9.1 Neither Vincula nor Carrington shall have any liability
hereunder if either is 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 God 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"), nor
shall Vincula's or Carrington's obligations, except as may be necessary,
be suspended during the period of such Force Majeure, nor shall either
Party's obligations be cancelled with respect to such Products as would
have been sold hereunder but for such suspension. Such affected Party
shall give to the other Party 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 both Party's obligations under this Agreement. Should the
Force Majeure continue for more than six (6) months, then the other
Party shall have the right to cancel this Agreement and the Parties
shall seek an equitable agreement on the Parties' reward of interests.
9.2 The Parties agree that any obligation to pay money is never
excused by Force Majeure.
<PAGE>
Article 10. Amendment
10.1 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 11. Entire Agreement
11.1 This Agreement represents the entire Agreement between
the Parties and 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.
11.2 Should any provision of this Agreement be rendered invalid or
unenforceable, it shall not affect the validity or enforceability of the
remainder.
Article 12. Assignment
12.1 Neither this Agreement nor any of the rights or obligations of
Vincula hereunder shall be transferred or assigned by Vincula without
the prior written consent of Carrington, executed by a duly authorized
officer of Carrington.
Article 13. Governing Law
13.1 It is expressly agreed that the validity, performance and
construction of this Agreement shall be governed by the laws and
jurisdiction of Texas.
Article 14. Notices
14.1 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, commercial courier
services, postage prepaid, return receipt requested, or by fax addressed
to:
(a) Carrington at: Carrington Laboratories, Inc., 2001 Walnut Hill
Lane, Irving, Texas 75038; Attention: President, or at such
other address as Carrington shall have theretofore furnished
in writing to Vincula. (Fax No. 972-714-5009)
(b) Vincula at: Vincula International Trade, Inc., 10012 Moss
Rose, Aubrey, TX 76227, Attention: Subhi Khireiwish or at such
other address as Vincula shall have theretofore furnished in
writing to Carrington. (Fax No. 940-382-2321)
<PAGE>
Article 15. Waiver
15.1 Neither Vincula's nor Carrington's failure to enforce at any
time any of the provisions of this Agreement or any right with respect
thereto, shall be considered a waiver of such provisions or rights or in
any way affect the validity of same. Neither Vincula's nor Carrington's
exercise of any of its rights shall preclude or prejudice either Party
thereafter from exercising the same or any other right it may have,
irrespective of any previous action by either Party.
Article 16. Arbitration
16.1 Except as expressly provided otherwise herein, 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.
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 International Chamber of Commerce (the "ICC") as amended
from time to time. Any procedural rule not determined under the rules
of the ICC shall be determined by the laws of Switzerland, 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 forth-five (45) days of the submission of a notice of
arbitration, the appointing authority for the implementation of such
procedure shall be the ICC, who shall appoint an independent arbitrator
who does not have any financial or conflicting interest in the dispute,
controversy or claim. If the ICC is unable to appoint, or fails to
appoint, an arbitrator within ninety (90) days of being requested to do
so, then the arbitration shall be heard by three (3) arbitrators, one
selected by each Party within the thirty (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 ICC (if any) shall be
divided equally among the Parties to the arbitration.
Article 17 Interpretation
17.1 The language of this Agreement is English. No translation
into any other language shall be taken into account in the
interpretation of the Agreement itself.
<PAGE>
17.2 The headings in this Agreement are inserted for convenience
only and shall not affect its construction.
17.3 Where appropriate, the terms defined in Article 1 and denoting
a singular number only shall include the plural and vice versa.
17.4 References to any law, regulation, statute or statutory
provision includes a reference to the law, regulation, statute or
statutory provision as from time to time amended, extended or re-
enacted.
Article 18. Exhibits
18.1 Any and all exhibits referred to herein shall be considered an
integral part of this Agreement.
Article 19. No Inconsistent Actions
19.1 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 5.7 and 9 hereof, will promptly perform all acts and take all
measures as may be appropriate to comply with the terms, conditions and
provisions of this Agreement.
Article 20. Currency of Account
20.1 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 Vincula 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.
Article 21. Binding Effect
21.1 This Agreement shall inure to the benefit of and be binding
upon the respective successors of the Parties.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the day and year as written below.
CARRINGTON LABORATORIES, INC.
By:
Name: Dr. Carlton E. Turner, Ph.D., D.Sc.
Title: President & CEO
Date: March 27, 1998
CARRINGTON LABORATORIES BELGIUM N.V.
By:
Name: Dr. Carlton E. Turner, Ph.D., D.Sc.
Title: President & CEO
Date: March 27, 1998
VINCULA INTERNATIONAL TRADE, INC.
By:
Name: Subhi Khireiwish
Title: President
Date: March 22, 1998
<PAGE>
EXHIBIT A
VINCULA INTERNATIONAL TRADE, INC.
PRODUCT
NO. PRODUCT NAME PRICE
WOUND CARE
101005 CARRINGTON[R] CARRASYN[R] HYDROGEL WOUND $2.18
DRESSING, 1/2 oz. tube
101010 CARRINGTON[R] CARRASYN[R] HYDROGEL WOUND $2.87
DRESSING, 1 oz. tube
101030 CARRINGTON[R] CARRASYN[R] HYDROGEL WOUND $3.73
DRESSING, 3 oz. tube
101080 CARRINGTON[R] CARRASYN[R] HYDROGEL WOUND $9.41
DRESSING, (spray gel),8 oz. bottle
101025 CARRINGTON[R] CARRASYN[R] V (VISCOUS) $2.61
HYDROGEL WOUND DRESSING, 1/2 oz. tube
101002 CARRINGTON[R] CARRASYN[R] V (VISCOUS) $1.78
HYDROGEL WOUND DRESSING, 1 oz. sachet (up
to 150,000)
101002 CARRINGTON[R] CARRASYN[R] V (VISCOUS) $1.61
HYDROGEL WOUND DRESSING, 1 oz. sachet
(150,001 to 200,000)
101002 CARRINGTON[R] CARRASYN[R] V (VISCOUS) $1.51
HYDROGEL WOUND DRESSING, 1 oz. sachet
(200,001 to 250,000)
101002 CARRINGTON[R] CARRASYN[R] V (VISCOUS) $1.45
HYDROGEL WOUND DRESSING, 1 oz. sachet
(250,001 to 300,000)
101002 CARRINGTON[R] CARRASYN[R] V (VISCOUS) $1.36
HYDROGEL WOUND DRESSING, 1 oz. sachet
(over 300,000)
101023 CARRINGTON[R]CARRASYN[R] V (VISCOUS) $4.25
HYDROGEL WOUND DRESSING, 3 oz. tube
101012 CARRINGTON[R] CARRAGAUZE[R] STRIPS, 1/2" x 5 $6.50
yds, bottle
101009 CARRINGTON[R] CARRAGAUZE[R] STRIPS, 1" x 5 $7.51
yds, bottle
101017 CARRINGTON[R] CARRAGAUZE[R], 2"x 2" pads $1.00
(up to 150,000)
101017 CARRINGTON[R] CARRAGAUZE[R], 2"x 2" pads $0.75
(over 150,000)
101015 CARRINGTON[R] CARRAGAUZE[R], 4"x 4" pads $2.15
TM
102060 CARRINGTON[R] CARRAKLENZ WOUND & SKIN $2.99
CLEANSER, 6 oz. pump
TM
102062 CARRINGTON[R] CARRAKLENZ WOUND & SKIN $3.97
CLEANSER, 8 oz. spray
<PAGE>
EXHIBIT A
VINCULA INTERNATIONAL TRADE, INC.
PRODUCT
NO. PRODUCT NAME PRICE
TM
102160 CARRINGTON[R] CARRAKLENZ WOUND & SKIN $6.06
CLEANSER, 16 oz. spray
TM
108080 CARRINGTON[R] ULTRAKLENZ WOUND CLEANSER, $4.07
8 oz. bottle
TM
108120 CARRINGTON[R] ULTRAKLENZ WOUND CLEANSER, $5.15
12 oz. bottle
TM
108008 CARRINGTON[R] MICROKLENZ ANTIMICROBIAL $4.28
WOUND CLEANSER, 8 oz. bottle
101032 CARRINGTON[R] CARRASORB[TM] H CALCIUM $1.25
ALGINATE WOUND DRESSING, 2" x 2" pad
101033 CARRINGTON[R] CARRASORB[TM] H CALCIUM $2.73
ALGINATE WOUND DRESSING, 4" x 4" pad
101034 CARRINGTON[R] CARRASORB[TM] H CALCIUM $2.63
ALGINATE WOUND DRESSING, 12" rope
101035 CARRINGTON[R]CARRASORB[TM] M FREEZE-DRIED $3.27
GEL WOUND DRESSING, 4" diameter pad
101036 CARRINGTON[R] CARRAFILM[TM] TRANSPARENT $1.40
FILM DRESSING, 4" x 5" 1/2 sheet
101037 CARRINGTON[R] CARRAFILM[TM] TRANSPARENT $2.23
FILM DRESSING, 5" x 7" sheet
101038 CARRINGTON[R] CARRAFILM[TM] TRANSPARENT $2.28
FILM DRESSING, 6" x 6" sheet
101039 CARRINGTON[R] CARRAFILM[TM] TRANSPARENT $0.63
FILM DRESSING, 2 3/4" x 2 3/8" sheet
101040 CARRINGTON[R] CARRAFILM[TM] TRANSPARENT $3.73
FILM DRESSING, 8" x 10" sheet
101041 CARRINGTON[R] CARRAFILM[TM] TRANSPARENT $2.60
FILM DRESSING, 4" x 10" sheet
INCONTINENCE CARE PRODUCTS
101043 CARRINGTON[R] CARRAFOAM[TM] NON-AEROSOL $4.03
SKIN & PERINEAL CLEANSER, 7.8 oz. bottle
101044 CARRINGTON[R] CARRAFOAM[TM] NON-AEROSOL $3.22
SKIN & PERINEAL CLEANSER, 3.5 oz. bottle
104004 CARRINGTON[R] MOISTURE BARRIER CREAM, 0.4 $0.40
oz. packet
104040 CARRINGTON[R] MOISTURE BARRIER CREAM, 3.5 $2.38
oz. tube
105020 CARRINGTON[R] ANTIFUNGAL CREAM WITH 2 % $3.49
MICONAZOLE NITRATE, 2 oz. tube
105050 CARRINGTON[R] ANTIFUNGAL CREAM WITH 2 % $6.33
MICONAZOLE NITRATE, 5 oz. tube
<PAGE>
EXHIBIT A
VINCULA INTERNATIONAL TRADE, INC.
PRODUCT
NO. PRODUCT NAME PRICE
110001 CARRINGTON[R] INCONTINENCE SKIN CARE KIT, $7.75
6/3.5 oz.
TM
110004 CARRINGTON[R] CARRAFOAM SKIN CARE KIT, $5.82
4/3.5 oz.
TM
110005 CARRINGTON[R] CARRAFOAM SKIN CARE KIT, $6.61
8/3.5 oz.
ENVIRONMENTAL PRODUCTS
TM
101003 CARRINGTON[TM] CARRAFREE , 1 oz. bottle $1.60
TM
107010 CARRINGTON[TM] CARRASCENT Odor $1.67
Eliminator, 1 oz. bottle
TM
107080 CARRINGTON[TM] CARRASCENT Odor $4.54
Eliminator, 8 oz. bottle
CB PRODUCTS
101021 GEL PAD, 4" x 4" $1.51
101022 GEL PAD, 5" x 5" $1.45
SKIN CARE PRODUCTS
103040 CARRINGTON[R] CARRADERM[TM] MOISTURIZING $4.39
CREAM, 4 oz. tube (formerly FOOT&BODY
MOISTURIZING CREAM)
106040 CARRINGTON[R] SKINBALM, 4 oz. tube $4.63
111108 CARRINGTON[R] SHAMPOO & BODY WASH, 8 oz. $2.90
bottle
DIABETIC CARE
101027 DIAB[TM] CREAM, 3 oz. tube $3.33
101028 DIAB[TM] Cream, .14 oz. sachet $0.45
101011 DIAB[TM] DAILY CARE GEL, 1/2 oz. $4.00
101048 DIAB[TM] GEL, 3 oz. tube $4.70
101047 DIAB[TM] KLENZ, 8 oz. bottle $4.30
101014 DIAB[TM] NUTRI, 60 tablets $7.88
RADIATION CARE
106043 RADIACARE[TM] GEL 1/2 oz. tube $2.50
106042 RADICARE[TM] GEL, 3 oz. tube $4.56
101081 RADICARE[TM] KLENZ, 8 oz. bottle $4.48
103042 RADIACARE[TM] CREAM, .14 oz. sachet $0.45
103041 RADIACARE[TM] POST HEALING CREAM, 2 oz. $3.05
<PAGE>
VINCULA INTERNATIONAL TRADE, INC.
PRODUCT
NO. PRODUCT NAME PRICE
101059 RADIACARE[TM] LIP BALM, .15 oz. $1.25
101006 RADIACARE[TM] ORAL WOUND RINSE $7.63
101052 RADICARE[TM] GEL SHEET, 4" x 4" sheet $4.28
ORAL TECHNOLOGY
500144 CARRINGTON[R] PATCH, 6 pack (6 $0.75/sleeve
patches/sleeve)
SEPARATION AGREEMENT
AND FULL AND FINAL RELEASE
Carrington Laboratories, Inc. ("Carrington") and Christopher S.
Record ("Record") make this agreement (the "Agreement"), and hereby
agree as follows:
1. Resignation from All Offices and Termination of Employment.
Record hereby voluntarily resigns (i) from his offices of Vice
President, Business Development, and Secretary, and any and all other
offices held with Carrington and any subsidiaries or affiliates of
Carrington, effective April 30, 1998; and (ii) from his employment
with Carrington, effective February 14, 1999 (the "Separation Date").
2. Interim Employment Status. Effective May 1, 1998, and
continuing through February 14, 1999 (the "Interim Period"), unless
earlier terminated by reason of Record's death or for Cause,
Carrington will employ Record in the capacity of Special Advisor,
with such duties as may be assigned to Record from time to time by
Carrington (which may include those duties Record has customarily
performed in his prior capacities as Vice President, Business
Development, Secretary, and General Counsel). For purposes of this
Paragraph, the term "Cause" shall mean any of the following: (a)
conduct by Record that (i) constitutes willful misconduct or gross
negligence in the performance of his assigned duties as an employee,
(ii) is in derogation of his duties or obligations under this
Agreement, or (iii) constitutes fraud, dishonesty, or a criminal act,
whether or not with respect to Carrington; or (b) Record's willful
and continued failure to substantially perform his assigned duties as
an employee of Carrington. Record will at all times during the
Interim Period remain subject to Carrington's established personnel
policies, practices, and procedures as applicable to his new position
and assigned duties.
3. Authority. During the Interim Period, Record is not
authorized, and shall not hold himself out as being authorized, to
make any representations, enter into any contracts, commitments, or
obligations, or perform any other acts of any kind whatsoever on
behalf of Carrington, unless specifically authorized by the President
and CEO of Carrington.
<PAGE>
4. Salary and Benefits During the Interim Period. Record's
salary during the Interim Period shall be the total sum of
$62,500.00, payable as follows: (i) May-August, 1998: $12,500.00 per
month; (ii) September, 1998: $7,100.00; October, 1998-January, 1999:
$1,200.00 per month; and February 1-14, 1999: $600.00. The foregoing
sums are gross amounts, and are subject to lawful deductions.
Payment for all of Record's earned and accrued but unused vacation
shall be made by Carrington at the conclusion of the first pay period
after April 30, 1998. Record shall remain eligible during the
Interim Period to participate in any group insurance, stock purchase
plans, and other benefits offered by Carrington, subject to the terms
of each such plan and provided he timely pays any cost that he is
required as an employee to pay in connection therewith. Unless
earlier terminated in accordance with the terms of any such plan,
Record's participation in all such plans and other benefits shall
terminate on the Separation Date, except to the extent, if any, that
Record is entitled, and elects, to extend health insurance coverage
thereafter at his own expense pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985. Provided, however, that (a) no
additional days of vacation, sick leave, or other earned benefit that
is based upon actual work performed shall accrue to Record after
April 30, 1998, and (b) no further compensation shall be paid and no
further benefits eligibility (except as otherwise provided under the
terms of the applicable benefit plan or other controlling instrument)
shall be provided hereunder if Record's employment with Carrington is
terminated prior to the Separation Date (i) by his own action for
whatever reason, (ii) by Carrington for Cause, or (iii) by reason of
Record's death.
5. Return of Property. Record acknowledges his obligation to
return to Carrington any and all items of its property, including
without limitation keys, computers, software, calculators, equipment,
credit cards, forms, files, manuals, correspondence, business
records, personnel data, lists of employees, salary and benefits
information, customer lists and files, lists of suppliers and
vendors, price lists, contracts, contract information, marketing
plans, brochures, catalogs, training materials, product samples,
computer tapes and diskettes or other portable media, computer-
readable files and data stored on any hard drive or other installed
device, and data processing reports, and any and all other documents
or property which he has had possession of or control over during the
course of his employment with Carrington. Such of Carrington's
property as is not needed for the conduct of Record's duties during
the Interim Period will be returned by not later than May 10, 1998;
and all other items will be returned by not later than the Separation
Date or, if earlier, the last date of Record's employment.
<PAGE>
6. Use of Confidential Information. Record acknowledges that
(i) he is a party to an existing agreement entitled Employee's
Confidentiality and Invention Agreement, a copy of which is attached
hereto as Exhibit A and is hereby reconfirmed and ratified, his
obligations under which continue in full force and effect and
undiminished in any way by this Agreement; and (ii) all of the
documents and information to which he presently has or will during
the Interim Period have had access during his employment, including
but not limited to all information pertaining to any specific
business transactions in which Carrington or any of the other
Released Parties (as defined in Paragraph 7 below) were, are, or may
be involved, all information concerning salary and benefits paid to
current or former employees of Carrington or any of the other
Released Parties, all personnel information relating in any way to
current or former employees of Carrington or those of any of the
other Released Parties, all information pertaining in any way to
customers and suppliers of Carrington or those of any of the other
Released Parties, pricing information, all financial and budgetary
information, information regarding Carrington's sales methods and
techniques, information regarding Carrington's training methods and
techniques, all other information specified in Paragraph 5 above, and
in general, the business and operations of Carrington or any of the
other Released Parties are considered confidential and are not to be
disseminated or disclosed by Record to any other parties, except as
may be required by law or judicial process. In the event it appears
that Record will be compelled by law or judicial process to disclose
such confidential information, to avoid potential liability Record
should notify Carrington's President and CEO in writing immediately
upon his receipt of a subpoena or other legal process.
<PAGE>
7. General Release. In consideration of the remuneration
provided and paid in full pursuant to Paragraph 4 hereof, Record and
his family members, heirs, successors, and assigns (hereinafter
referred to collectively as the "Releasing Parties") hereby release,
acquit and forever discharge Carrington and its shareholders,
officers, directors, fiduciaries, agents, servants, employees,
representatives, attorneys, insurers, successors, and assigns
(hereinafter referred to collectively as the "Released Parties") from
any and all claims, demands, and causes of action of every kind and
character, whether vicarious, derivative, or direct, that any of the
Releasing Parties now has or may hereafter have or assert against any
or all of the Released Parties growing out of, resulting from, or
connected in any way with Record's employment or the termination of
his employment with Carrington, including but not limited to any
and all claims for damages (actual, exemplary, liquidated, or
unliquidated), back pay, future pay, deferred compensation, bonuses,
commissions, severance payments, vacation and leave benefits,
unreimbursed business expenses, overtime compensation, reinstatement
or priority placement, past and future medical or other employee
benefits for Record or his dependents, employee retirement benefits,
contributions to company sponsored 401(k) plans (except as presently
vested in any savings plan sponsored by Carrington in which Record is
a participant), medical and counseling costs, injunctive relief,
declaratory relief, attorney's fees, costs of court, disbursements,
interest, or any other form whatsoever of legal or equitable relief
to which any of the Releasing Parties claims or might claim
entitlement as a result of any alleged act or omission of any of the
Releasing Parties, including but not limited to any alleged unlawful
age discrimination or any other form of unlawful employment
discrimination, retaliation, wrongful termination, breach of contract
(express or implied), tortious interference with contract, promissory
estoppel, detrimental reliance, negligent or intentional infliction
of emotional distress, negligent hiring and supervision, assault,
battery, defamation of character, any alleged act of harassment or
intimidation, negligent or intentional misrepresentation or fraud,
invasion of privacy, or any other intentional or negligent tort, or
any alleged violation of the Age Discrimination in Employment Act of
1967, Title VII of the Civil Rights Act of 1964, the Texas Commission
on Human Rights Act, the Americans With Disabilities Act, the
Employee Retirement Income Security Act of 1974, the public policy
of the United States, the State of Texas, or any other state, or any
other federal or state statutory or common law, or any other alleged
adverse employment action by any of the Released Parties, and all
other loss, expense, or detriment of every kind and character,
whether past or future, that any of the Releasing Parties may have
sustained or may hereafter sustain by reason of any act or omission
of any of the Released Parties growing out of, resulting from, or
connected in any way with Record's employment or the termination of
his employment with Carrington. This General Release applies and is
fully enforceable with respect to all rights or claims existing on or
before the date this Agreement is originally executed; and with
respect to its later renewal and ratification, to all rights or
claims existing on or before the date of execution of the renewal and
ratification form. In neither event does this General Release act to
waive any rights or claims that arise after the date of execution.
<PAGE>
8. Renewal and Ratification of General Release. Record agrees
that on the Separation Date (or, should Record elect to terminate his
employment during the Interim Period before such date, on the last
day of his employment), he will re-execute this Agreement in renewal
and ratification of his General Release as set forth in Paragraph 7
above, by signing in the appropriate space provided below. Such
renewal and ratification will not become effective and enforceable
until the expiration of seven days after its execution. At any time
before the expiration of such period, Record may revoke his renewal
and ratification; but if he does, he will not receive any unpaid
amounts or unvested benefits specified in Paragraph 4 above and may
be required to repay any of such amounts already received, and
Carrington may seek any other lawful remedies available to it for
breach of this Agreement, including costs and attorney's fees.
9. Confidentiality, Nonprosecution, Nondisparagement, and
Cooperation.
(a) T h e terms of this Agreement shall be and remain
confidential, and shall not be disclosed by Record to any
persons other than the Releasing Parties and Record's attorney
and accountant or tax return preparer if such persons have
agreed to keep such information confidential. If any
confidential information is released by Record, such release
shall be grounds for immediate termination of all benefits
listed herein. Notwithstanding the foregoing, either Record or
Carrington may make any disclosures concerning the terms of this
Agreement that are required by law.
(b) Except as requested by Carrington or as compelled by law or
judicial process, Record will not assist, cooperate with, or
supply information of any kind to any individual or private-
party litigant or their agents or attorneys (i) in any
proceeding, investigation, or inquiry raising issues under the
Age Discrimination in Employment Act of 1967, Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act of
1990, the Family and Medical Leave Act of 1993, the Employee
Retirement Income Security Act of 1974, the Fair Labor Standards
Act, the Fair Credit Reporting Act, the Texas Commission on
Human Rights Act, the Texas Wage Payment Statute, or any other
federal, state, or local law involving the formation,
continuation, or termination of Record's employment
relationship, or the employment of other persons, by Carrington
or any of the other Released Parties; or (ii) in any other
litigation against Carrington or any of the other Released
Parties.
(c) Except as permitted by law, Record will not initiate any
investigation or inquiry, or any other action of any kind,
including an administrative charge with any governmental agency,
with respect to Carrington's facilities, employment practices,
or business operations, relating to the termination of his
employment as provided for in this Agreement.
<PAGE>
(d) Neither Record nor Carrington (including the Released
Parties) will make to any other parties any statement, oral or
written, which directly or indirectly impugns the quality,
reputation or integrity of each other's business or employment
practices, or any other disparaging or derogatory remarks about
each other, their officers, directors, stockholders, managerial
personnel, or other employees.
(e) It shall not be a breach of the obligations set forth in
this Paragraph 9 for Record, his spouse, or his attorneys to
state to any person that any differences, if he believes any to
exist, between Record and Carrington have been settled or
satisfactorily resolved.
(f) During the Interim Period and after the termination of his
employment with Carrington, Record agrees to cooperate fully and
completely with Carrington, or any of the other Released Parties
in any matter related to Carrington's business or activities, as
follows: (i) to be available at mutually agreeable times,
personally or by telephone, as necessary, at such reasonable
times and without unreasonable interference with his future
employment or personal activities, to provide such information
as may be from time to time requested by Carrington in its sole
discretion in connection with various matters in which Record
was involved during his employment with Carrington; and (ii) in
all pending and future litigation involving Carrington or any of
the other Released Parties, which obligation includes promptly
meeting with counsel for Carrington or the other Released
parties at reasonable times upon their request, and providing
testimony in court or upon deposition that is truthful,
accurate, and complete, according to information known to him.
If Record appears as a witness in any pending or future
litigation at the request of Carrington or any of the other
Released Parties, Carrington agrees to reimburse Record, upon
submission of substantiating documentation, for necessary and
reasonable expenses, including actual lost earnings, incurred by
him as a result of his testifying.
10. Agreement Regarding Solicitation of Employees, Customers,
and Suppliers. For a period of one year following the Separation
Date, and thereafter to the extent provided by law, Record will not
directly or indirectly, for his own account or for the benefit of any
other person or party:
(a) Solicit, induce, entice, or attempt to entice any employee,
contractor, or subcontractor of Carrington to terminate his or
her employment or contract with Carrington; or
(b) Solicit, induce, entice, or attempt to entice any customer
or supplier of Carrington, including any firms that have been
customers or suppliers of Carrington within one year preceding
the Separation Date, to terminate its business relationship with
Carrington.
<PAGE>
Should Record breach this obligation, Carrington will be
entitled to enforce the provisions of this Paragraph by seeking
injunctive relief in addition to recovering any monetary damages
Carrington may sustain as a result of such breach, and Record may be
required to repay any amounts provided to him under the provisions of
Paragraph 4 of this Agreement.
11. Effect and Use of Agreement. This Agreement does not in
any manner constitute an admission of liability or wrongdoing on the
part of Carrington or any of the other Released Parties, but
Carrington expressly denies any such liability or wrongdoing.
Except to the extent necessary to enforce this Agreement, neither
this Agreement nor any part of it may be construed, used, or admitted
into evidence in any judicial, administrative, or arbitral proceeding
as an admission of any kind by Carrington or any of the other
Released Parties.
12. Authority to Execute. Record represents and warrants that
he has the authority to execute this Agreement on behalf of all the
Releasing Parties. Record further agrees to indemnify fully and hold
harmless Carrington and any of the other Released Parties from any
and all claims brought by the Releasing Parties or derivative of his
own with respect to the subject matter of this Agreement, including
the amount of any such claims Carrington or any of the other Released
Parties are compelled to pay, and the costs and attorney's fees
incurred in defending against all such claims.
13. Governing Law and Interpretation. This Agreement and the
rights and duties of the parties under it shall be governed by and
construed in accordance with the laws of the State of Texas. If any
provision of this Agreement is held to be unenforceable, such
provision shall be considered separate, distinct, and severable from
the other remaining provisions of this Agreement, and shall not
affect the validity or enforceability of such other remaining
provisions, and that, in all other respects, this Agreement shall
remain in full force and effect. If any provision of this Agreement
is held to be unenforceable as written but may be made to be
enforceable by limitation thereof, then such provision shall be
enforceable to the maximum extent permitted by applicable law. The
language of all parts of this Agreement shall in all cases be
construed as a whole, according to its fair meaning, and not strictly
for or against any of the parties.
14. Effect of Breach. Record acknowledges and agrees that
should he or any of the other Releasing Parties breach any of their
obligations set forth in this Agreement, (i) Carrington will have no
further obligation to comply with its undertakings in Paragraphs 2 or
4 hereof, but that all of the other provisions of this Agreement
shall remain in full force and effect; (ii) Record may be required to
repay any payments made to him and reimburse Carrington for any
payments made on his behalf or for his benefit pursuant to Paragraphs
2 and 4 hereof.
<PAGE>
15. Time for Consideration, Consultation with Attorney, and
Knowing and Voluntary Action. Record acknowledges that (i) he has
had the opportunity to consider the terms of the General Release
contained in Paragraph 7 above, including its waiver of any claims
under the Age Discrimination in Employment Act, for more than 21
days; (ii) he has been advised by Carrington of his right to consult
an attorney of his choosing in connection with his consideration of
the terms of this Agreement, including such General Release and
waiver; and (iii) his execution of this Agreement is knowing and
voluntary.
16. Effective Date. This Agreement will become effective and
enforceable upon the expiration of seven days after Record's
execution of it ("Effective Date"). At any time before the Effective
Date of this Agreement, Record may revoke his acceptance.
17. Entire Agreement. This Agreement contains and constitutes
the entire understanding and agreement between Record and Carrington,
and may be modified only by a writing of contemporaneous or
subsequent date executed by both Record and an authorized official of
Carrington.
SIGNED on the dates shown below.
CARRINGTON LABORATORIES, INC.
Dated: _________________, 1998 By:
Carlton E. Turner
President & CEO
Dated: _________________, 1998
CHRISTOPHER S. RECORD
<PAGE>
RENEWAL AND RATIFICATION OF GENERAL RELEASE
AND RECEIPT FOR CURRENT WAGES
THE FOLLOWING IS TO BE COMPLETED ONLY ON FEBRUARY 14, 1999
(or the last day of employment, if earlier):
1. Renewal and Ratification of General Release. In
consideration of the full payment of the remuneration specified in
Paragraph 4 above, I hereby renew and ratify my General Release as
set forth in Paragraph 7 of this Agreement.
2. Receipt of Prior or Contemporaneous Payments. I
acknowledge that I have received wages and other benefits
attributable to all time actually worked for Carrington, through my
last day of employment on February 14, 1999 [or enter earlier date
here, if applicable: ___________________________].
_______________________________
CHRISTOPHER S. RECORD
Date Signed:___________________
(only the date of February 14, 1999, or earlier date of
termination of employment, if applicable, may be entered)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from (1) Statements of Balance Sheets, (2) Statements of
Operations and (3) Statements of Cash Flows, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 3,808 6,808
<SECURITIES> 0 0
<RECEIVABLES> 3,327 2,999
<ALLOWANCES> 496 205
<INVENTORY> 5,097 3,461
<CURRENT-ASSETS> 12,294 13,442
<PP&E> 19,466 18,928
<DEPRECIATION> 8,607 7,476
<TOTAL-ASSETS> 25,657 27,073
<CURRENT-LIABILITIES> 2,655 3,100
<BONDS> 0 0
0 0
0 0
<COMMON> 93 89
<OTHER-SE> 22,909 23,851
<TOTAL-LIABILITY-AND-EQUITY> 25,657 27,073
<SALES> 5,788 6,084
<TOTAL-REVENUES> 5,788 6,084
<CGS> 2,580 2,507
<TOTAL-COSTS> 5,683 6,033
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (57) (55)
<INCOME-PRETAX> 162 106
<INCOME-TAX> 10 22
<INCOME-CONTINUING> 152 84
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 152 84
<EPS-PRIMARY> 0.02 0.00
<EPS-DILUTED> 0.02 0.00
</TABLE>
