CULTURE AGREEMENT
This Agreement is made as of this 26th day of July 1997 and is between
Cass-Mill, Inc. of 000 Xxxx Xxxxxx, Xxxxxxx, XX 00000 ("Cass-Mill") and NaPro
BioTherapeutics, Inc. of 0000 Xxxxx Xxxx, Xxxx X, Xxxxxxx, XX 00000 ("NaPro")
with respect to the culture of certain Taxus Media Hicksii trees.
STATEMENT OF BACKGROUND INFORMATION
NaPro is the owner of certain Trees (defined below)
The Trees are to be planted in the ground on real property owned or
leased by Cass-Mill
NaPro desires that Cass-Mill care for and culture the Trees, including
any Trees subsequently planted on that property, and that Cass-Mill harvest,
cut, store, and ship to NaPro all or certain portions of the Trees as directed
by NaPro, and Cass-Mill has agreed to do so
The parties desire to set forth the terms of their agreements in this
writing.
STATEMENT OF AGREEMENT
For their mutual convenience and protection, and in consideration of
the mutual covenants and benefits contained in this Agreement, the parties agree
as follows:
SECTION ONE: CULTURE OF TREES
1.1 Definition of Trees. The "Trees" for purposes of this Agreement
shall be defined as follows: all of those Taxus trees which are provided by
NaPro to Cass-Mill or are procured by Cass-Mill on NaPro's behalf or are
purchased from Cass-Mill by NaPro. All such trees, whether currently in the
ground or subsequently planted, shall be collectively referred to herein as the
"Trees". Such real property shall be referred to herein as the "Leased Property"
1.2 Care and Culture of Trees. During the term of this Agreement,
Cass-Mill agrees to plant new Trees as instructed by NaPro, and to grow,
maintain, and care for all the Trees pursuant to the instructions of NaPro. In
the absence of such instructions, Cass-Mill agrees that its care of the Trees
shall be consistent with Cass-Mill's normal reasonable cultural practices.
Cass-Mill shall bear all costs and expenses in connection with the care and
maintenance of the Trees, provided that Cass-Mill shall be reimbursed for such
expenses as provided below under Section Three.
1.3 Definition of Properties. These Trees shall be cultivated on
property owned by Cass-Mill ("Owned Property") or leased by Cass-Mill from third
parties ("Leased Property"). Collectively these properties shall be referred to
herein as the "Cass-Mill Property".
SECTION TWO: HARVESTING AND STORING
2.1 General. In addition to Cass-Mill's obligations described above in
paragraph 1.2, Cass-Mill agrees to harvest, cut, place in storage, pack and
prepare for shipping any of the Trees or Tree cuttings as instructed by NaPro
(pursuant to the NaPro Specifications as defined in the Purchase Agreement as
they may be revised from time to time). All Trees or Tree cuttings shall be
shipped FOB Cass-Mill at NaPro's expense.
SECTION THREE: COMPENSATION AND EXCLUSIVITY
3.1 Compensation. As compensation for its services under this
Agreement, Cass-Mill shall be entitled to receive a sum equal to 1.5 multiplied
by Cass-Mill's actual costs and expenses incurred in connection with: (1)
Cass-Mill's care and maintenance of the Trees hereunder, (2) Cass-Mill's
harvesting, storing, maintaining, packing, cutting, or shipping preparation of
the Trees or Tree cuttings. Cass-Mill's costs and expenses for purposes of this
paragraph shall not include any costs of leasing the Leased Property.
3.2 Invoices and Payment. Cass-Mill shall be entitled to invoice NaPro
for any sums due hereunder on a monthly basis. Such invoices shall be paid
within thirty (30) days of the invoice date.
3.3 Exclusivity. During the term of this Agreement, NaPro agrees that
Cass-Mill shall be the exclusive provider of all cultural services, all
harvesting and cutting services, all storage services, and any other services
provided hereunder, with respect to all of the Trees located on the Cass-Mill
Property and that NaPro will not contract or arrange for any other provider of
such services with respect to the Trees or the cuttings thereof. Nothing in this
section shall be construed to prevent NaPro from purchasing Trees from other
sources, or utilizing other parties to culture taxus, provided that such work is
not done on the Cass-Mill Property. Cass-Mill agrees that neither it nor any
affiliated company shall sell, culture, or otherwise supply Taxus materials to
any other parties for pharmaceutical uses during the term of this Agreement.
NaPro further provides that Cass-Mill shall be the only grower and service
provider in Lake and Ashtabula Counties, Ohio, USA.
SECTION FOUR: TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on July 26, 1996
and shall continue for a period of five years, unless earlier terminated by the
parties hereunder. Unless this Agreement is terminated under the terms of
paragraph 4.3 below, the term of this Agreement (and any extended term hereof)
and the obligations of the parties hereunder shall continue even if one (1) or
more of the Subleases expires, provided that if all of the Subleases expire (and
if NaPro and Cass-Mill thereby lose the right of access to such subleased
property and any remaining Trees located thereon), then this Agreement will
terminate following completion by both parties of all of the obligations of the
parties hereunder which do not require access to the subleased real property
(i.e. storage of harvested cuttings, payment of sums due for labor, materials,
etc.)
4.2 Extensions of Term. NaPro shall be entitled to renew the term of
this Agreement, on the same terms and conditions set forth herein, for three
separate five year renewal terms. If NaPro desires to exercise any such option,
it shall do so in writing to Cass-Mill at least 90 days prior to the expiration
of the original or extended term.
4.3 Termination. This Agreement may not be terminated by either party
hereto except as provided in this paragraph 4.3. If either party fails to pay
any sums due hereunder or any sums due under the Purchase Agreement or the
Subleases within ten (10) days after such sums are due, or if either party
defaults under any of its other obligations under this Agreement, the Purchase
Agreement, the Leases, or the Subleases, and such default continues for (10)
days after written notice thereof, then the non-defaulting party shall be
entitled to terminate this Agreement and recover any damages resulting from the
breach, in addition to any other legal or contractual remedy available to the
non-defaulting party.
4.4 Obligations Upon Termination. Upon the termination or
expiration of this Agreement, all amounts due to either party under this
Agreement shall become due and payable within 10 days following the termination
or expiration.
SECTION FIVE: LEASE ISSUES
5.1 Ground Leases, Ownership, and Mortgages. Cass-Mill represents and
warrants that Exhibit 5.1 contains: (1) true and correct copies of all leases
pertaining to Leased Property, (the "Ground Leases"), (ii) true and correct
copies of the deed to the Owned Property and any encumbrances upon the Owned
Property, and (iii) any true and correct copies of any mortgage upon either the
Leased or Owned Properties.
5.2 Leases and Subleases. As of the effective date of this Agreement,
Cass-Mill and NaPro shall enter into subleases with respect to the Leased
Property ("Subleases") and leases with respect to Owned Property ("Leases").
Such Leases and Subleases shall be in the form attached hereto as Exhibits
5.2(a) and 5.2(b). Each such Lease and Sublease shall form a part of this
Agreement and any breach of the provisions of any Lease or Sublease shall be
deemed a breach of this Agreement.
5.3 Attornment and Non-Disturbance. Cass-Mill shall obtain and record
agreements from (i) the holders of any mortgage upon either the Owned or Leased
Property whether such mortgage currently exists or is created in the future
("Mortgage") and (ii) from the owner of any Leased Property, which provide that
all of NaPro's rights under the Leases and Subleases shall not be affected or
disturbed by subordination of the lease or any sublease to Mortgagee. Such
agreement shall further provide that if the owner or mortgagee shall acquire
title to the Owned or Leased Property during the term of the Lease or Sublease,
NaPro will attorn to and recognize such successor owner as successor lessor and
the successor owner shall accept such attornment and recognize all of NaPro's
rights in accordance with the provisions of the Leases or Subleases. Such
agreements must be satisfactory to NaPro and conform to the requirements of the
Leases and Subleases.
5.4 Ground Leases and Renewals. Simultaneous to entering into the
Leases and Subleases, Cass-Mill shall obtain a renewal or extension of each of
the Ground Leases with respect to the Leased Property. The terms of any Ground
Lease renewal must be mutually agreeable to Cass-Mill and NaPro. If the parties
cannot agree upon a Ground Lease renewal with respect to the Leased Property,
then NaPro shall be free to negotiate directly with the landowner regarding the
leasing of the Leased Property, and Cass-Mill shall assist NaPro (at no
additional cost to Cass-Mill) in the negotiation and execution of a lease
between NaPro and the landowner regarding the Leased Property. No such lease,
however, shall take effect prior to the expiration or termination of the Ground
Lease.
5.5 Failure to Obtain Lease Renewals. In the event that the parties are
unable to obtain a renewal of any one or more of the Ground Leases, and the
parties therefore will lose (prior to the expiration or termination of this
Agreement) access to the property upon which some or all of the Trees are
located, then NaPro may, at its option, cause those affected Trees to be
harvested by Cass-Mill (pursuant to paragraph 2.1 hereof) or cause those
affected Trees to be relocated to another site. If NaPro elects to relocate the
Trees, then Cass-Mill will remove such trees and ready such trees for transport
as instructed by NaPro. If Cass-Mill and NaPro mutually agree that such Trees
shall be relocated to a Cass-Mill owned or Cass-Mill controlled site, then: (i)
Cass-Mill shall re-plant such Trees on such site, (ii) such Trees shall remain
subject to this Culture Agreement, (iii) Cass-Mill will continue to perform the
services contemplated by this Culture Agreement as set forth herein. If the
Trees are relocated to a site which Cass-Mill does not own or control, then
unless otherwise agreed by the parties, this Culture Agreement shall terminate
with respect to the affected Trees following shipment of such Trees by
Cass-Mill. NaPro shall pay Cass-Mill a sum equal to 1.5 multiplied by
Cass-Mill's actual costs and expenses incurred in connection with any services
provided under this paragraph 5.5
5.6 Cass-Mill Purchase of Real Property. If Cass-Mill purchases any
of the Leased Property, then NaPro shall enter into a lease with Cass-Mill for
such real property, the material terms of which are substantially similar to the
terms of the Sublease (and underlying Ground Lease) pursuant to which NaPro had
previously leased the property, except that (1) the new lease shall have a term
and renewal terms which correspond to the term and renewal terms of this
Agreement, and (2) the rental paid by NaPro under any such lease (including
renewal terms) shall be an amount which may be agreed upon by NaPro and
Cass-Mill upon the execution of the lease, or in the absence of such an
agreement, the fair rental value as determined by arbitration as provided in
paragraph 6.1. NaPro and Cass-Mill may also enter into such a lease upon any
other terms as may be mutually agreeable to NaPro and Cass-Mill.
SECTION SIX: GENERAL TERMS
6.1 Arbitration. Any disagreements or disputes between the parties with
regard to this Culture Agreement shall be resolved exclusively by arbitration
which shall be binding upon both of the parties. The arbitration shall be
conducted by a panel of three arbitrators under the rules of the American
Arbitration Association. One arbitrator shall be selected by Cass-Mill, one by
NaPro, and one by the two selected arbitrators shall apply Colorado law. Unless
otherwise allocated by the arbitrators, the parties shall share equally the fees
and expenses of the arbitrators .
6.2 Definition of Cass-Mill's Costs.
x. Xxxx-Mill's actual costs and expenses shall be calculated
based upon generally accepted accounting principles. Such costs shall not
include marketing costs or general administrative costs except to the extent
that those costs are part of Cass-Mill's loaded labor rate.
b. NaPro shall have the right to audit Cass-Mill's books and
records pertaining to calculation of Cass-Mill's costs. Any such inventory shall
be conducted at reasonable intervals and at reasonable times, and shall not
interfere with the business operations of Cass-Mill. Furthermore, NaPro agrees
to keep confidential and not to disclose to any other party (except to any
professional advisors or employees who have a need to know) any information or
documents learned or discovered by NaPro in connection with any such audit. If
any such audit uncovers or overcharges or undercharges, the parties shall
attempt to agree upon the amounts of such overcharges or undercharges and pay to
one another any such amount as may be necessary to correct the overcharge or
undercharge. If the parties cannot agree on any overcharge or undercharge,
either party shall be entitled to submit their question to arbitration under
paragraph 6.1 If the parties agree or an arbitration determines that Cass-Mill
has overcharged NaPro an amount greater than ten percent (10%), then Cass-Mill
shall bear the cost of the audit by NaPro and the cost of arbitration.
Otherwise, the cost of the audit and arbitration shall be borne by NaPro.
6.3 Further Assurances. Cass-Mill shall comply with any requests
by NaPro for aid in perfection of NaPro's ownership interest in the Trees. Such
steps may include among others, the execution of documents required for UCC
filings.
6.4 Force Xxxxxx. Neither party shall be liable to the other in the
event that performance of its obligations hereunder shall be prevented by any
cause beyond its reasonable control, including without limitation acts of God,
acts of government, accident, fire, delay or destruction of means of transport
or other disaster ("events of force xxxxxx"0, but the affected party shall use
best efforts to avoid or remove the cause of such nonperformance and shall
continue performance hereunder with the utmost dispatch whenever such cause is
removed.
6.5 Confidentiality. Cass-Mill agrees to keep confidential all
information regarding the storage and preparation of the Trees and Tree
cuttings, any fertilizers or other growth stimulators used, the quantity of
materials shipped, and any other information about NaPro's business or
operations which is obtained through this relationship. In addition, Cass-Mill
employees who have access to such information shall sign a confidentiality
agreement in the form of Appendix 6.5
6.6 New Technology. Any inventions and intellectual property developed
pursuant to this agreement shall be the sole property to NaPro. In the event
that Cass-Mill develops any intellectual property or patentable invention in
connection with the planting, maintenance, cultivation, harvesting, preparation,
or packaging of the Trees, Cass-Mill shall promptly disclose such inventions to
NaPro. Cass-Mill agrees to assign any such intellectual property and inventions
to NaPro and to execute any documents necessary to effect such transfer.
SECTION SEVEN: MISCELLANEOUS
7.1 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Cass-Mill shall not assign any of their rights,
privileges, or
obligations under this Agreement without the written consent of NaPro.
7.2 Notices. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed certified or registered mail, return receipt
requested with postage prepaid, to the parties at their addresses on page one of
this Agreement. Any party may change its address by providing notice hereunder
to all of the other parties.
7.3 Headings. The headings of sections herein and in the exhibits
referred to herein are for convenience only and shall not control of effect any
meaning or interpretation of any provision of this Agreement.
7.4 Entire Agreement: Modifications. This Agreement contains the
entire agreement among the parties hereto with respect to the transactions
contemplated hereby. This Agreement may be modified only by a written
agreement signed by all of the parties hereto.
7.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.6 Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Colorado.
7.7 Severability. In the event that any of the provisions of this
Agreement shall be held to be invalid or unenforceable, the same shall not
affect the validity or enforceability of any other provisions of this Agreement,
unless such validity or unenforceability shall materially affect and frustrate
the intentions of the parties.
7.8 Time is of the Essence. All of the parties hereto agree and
acknowledge that time is of the essence in connection with this Agreement.
7.9 No Waiver. No waiver of any rights of either party hereunder shall
be effective against such party unless set forth in writing and signed by such
party. Further, no waiver of any right hereunder shall be construed to be a
waiver of such right or any other right hereunder or in the future.
CASS-MILL NURSERY, INC.
/s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx
GM, CEO
NAPRO BIOTHERAPEUTICS, INC.
/s/ Xxxxxx Link
Xxxxxx Link
VP, Chief Financial Officer
