0000 Xxxxx Xxxxxx, Xxx 00
Xxx Xxxxxx, XX 00000-0000
KEMIN FAX: 515/000-0000
FOODS, L.C. Phone: 515/000-0000 or 800/777-8307
September 22,1997
Xx. Xxxxxx Xxxxxxx
President
PacificHealth Laboratories, Inc.
0000 Xxxxx 0 Xxxxx
Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxxxx:
This agreement is made on September 19,1997, between PacificHealth Laboratories,
Inc. (hereinafter "PHL"), a Delaware corporation having its main office at 0000
Xxxxx 0 Xxxxx, Xxxxxxxxxx, XX 00000 and Kemin Foods, L.C. (hereinafter "Kemin"),
an Iowa corporation having its main office at 0000 Xxxxx Xxxxxx, Xxx 00, Xxx
Xxxxxx, XX 00000.
The purpose of this agreement is to outline a framework by which PHL and Kemin
can work together to create and market a FINAL PRODUCT (hereinafter "Product")
which contains a protease inhibitor researched, developed and manufactured by
Kemin and used by PHL in the formulation of a Product to be sold by PHL.
Further, this letter is intended to indicate PHL and Kemin plan to develop a
formal Exclusive Supply and Marketing Agreement between the two companies.
I. Appointment
Kemin appoints PHL as the exclusive marketer worldwide with respect to the
development of Product(s) containing protease inhibitor in various forms for
human consumption including but not limited to caplets, soil gel capsules,
tablets, drinks, bars, foods, powders, and other food forms (hereinafter the
"Protease Inhibitor"). Kemin agrees that during the term of this Agreement it
will sell to PHL on an exclusive basis all quantities of Protease Inhibitor
manufactured by Kemin to be incorporated in Product formulation(s) and form(s).
II. Responsibilities of Kemin
a. Implement at their cost those clinical studies necessary to
determine the efficacy and effective dose of protease inhibitor
alone.
b. Implement at their cost a clinical trial to determine efficacy of
the protease inhibitor in combination with other ingredients that
will be incorporated into the Product for a cost not to exceed
$25,000.
c. Establish at their cost all quality control procedures necessary to
ensure that the protease inhibitor meets or exceeds all standards
under DSHEA and other standards required for the manufacture of
dietary supplements.
d. Develop the necessary manufacturing capability at their cost to meet
needs of PHL.
e. Establish all assay procedures to ensure consistency of the Protease
Inhibitor.
f. Manufacture and sell Protease Inhibitor to PHL as outlined in
Paragraph V.
g. Defend any suits based upon claims of patent infringement.
III. Responsibilities of XXXX
x. Provide direction to Kemin with regard to clinical studies.
b. Select a company to manufacture the Product(s).
c. All payments of all up front manufacturing costs as it relates to
the Product(s).
d. All quality control costs necessary in the manufacture of the
Product(s).
e. Development of marketing and advertising program.
f. Advertise and promote the Product(s) at PHL's cost.
g. Arrange distribution of the Product(s) and be responsible for all
distribution costs.
h. Implement at their costs all PR and promotional costs.
i. Develop at their costs all packaging graphics, Product(s) name, etc.
j. Pay for all legal fees as they pertain to Product(s) advertising
claims.
IV. Responsibilities of PHIL and Kemin
a. PHL and Kemin will each appoint one individual to coordinate
development of the Product(s).
b. PHL and Kemin will review the clinical protocols so that studies
will be able to be utilized in future marketing and advertising
programs.
c. PHL and Kemin will work together in developing a formula which will
form the basis of the Protease Inhibitor containing Product(s).
d. PHL and Kemin will share equally the cost over $25,000 of a clinical
trial to determine efficacy of the protease inhibitor in combination
that will be incorporated into the Product(s) as outlined in
Paragraph II, point b.
e. PHL and Kemin will share equally the data and results of the
clinical trial(s) and are granted unlimited property of the data for
any subsequent use of their own.
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V. Royalty
PHL will pay Kemin for the protease inhibitor ingredient by one of the
following methods:
a. Actual Kemin product costs plus royalty based on gross sales less
returns, credits, shipping and taxes (if applicable) or
b. Mutually agreed upon price per kilogram of protease inhibitor or
c. Mutually agreed upon price per kilogram plus royalty based on gross
sales less returns, credits, shipping and taxes (if applicable).
VI. Minimum Annual Purchase
PHL and Kemin would mutually agree on minimum annual purchases. Failure by
PHL to meet the minimal annual purchases would result in termination of
this Agreement.
VII. Trademark
a. PHL will name the Product(s) and will be responsible for all
trademark costs. The trademark for the Product(s) will be owned by
PHL.
b. All consumer packaging will have language that features "Kemin
Foods, L.C." and the trademarked name for the protease inhibitor.
VIII. Confidentiality
Both parties agree not to disclose at any time during the term of this
Agreement or for a period of three years thereafter, any confidential
information, knowledge or data, which either party may obtain or receive
except by written consent of the other party. Both parties agree that the
confidential, knowledge or data, which either party may obtain or receive
from the other, shall be used only for the purposes contemplated by this
agreement.
IX. Assignment
Agreement is not assignable by either party without the prior written
consent of the other party.
X. Legal Review
The terms outlined in this agreement will be incorporated into an
Exclusive Supply and Marketing Agreement. Any terms or conditions outlined
in the Exclusive Supply and Marketing Agreement will be subject to the
review and modification by the respective legal counsels for both Kemin
and PHL.
XI. Duration
This agreement may be terminated by either party if the other party shall
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materially breach any condition or agreement on its part under this
Agreement, which is not remedied within thirty days after mailing of a
notice specifying such default or breach. This Agreement and the
negotiations regarding the final Exclusive Supply and Marketing Agreement
may be terminated by either party if the final Exclusive Supply and
Marketing Agreement, in a form mutually satisfactory to both parties and
their respective legal counsels, is not completed by December 31, 1997 or
an alternative deadline that is mutually agreed upon in writing by Kemin
and PHL prior to December 3I, 1997. The provision of IV(e) and VII shall
survive the termination of this agreement.
XII. Entire Agreement
This Agreement constitutes the entire agreement between the parties and
supersedes any prior oral or written agreement or understanding between
them with respect to the subject matter hereof. This Agreement may not be
amended or supplemented except in writing signed by both parties.
By: By:
__________________________ _____________________________
Xx. Xxxxxx Xxxxxxx E. Xxxxxxx Xxxxx
President Vice President and General Manager
PacificHealth Laboratories Kemin Foods, L.C.
Date ________________________ Date_________________________
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