Exhibit 10.15
DISTRIBUTION AGREEMENT
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This Distribution Agreement ("Agreement") is made as of March 28, 2001 (the
"Effective Date"), between OraPharma, Inc., a Delaware corporation, having its
principal place of business at 000 Xxxxx Xxxxx, Xxxxxxxxxx, XX 00000 ("Client"),
and CORD Logistics, Inc., an Ohio corporation, having its principal place of
business at 0000 Xxxx Xxxxxx Xxxx., XxXxxxxx, XX 00000 ("CORD").
A. Client is, among other things, in the business of developing and
marketing pharmaceutical products throughout the world (the "Territory").
B. CORD is, among other things, in the business of distributing
pharmaceutical products to wholesalers, specialty distributors, physicians,
clinics, hospitals, pharmacies, and other health care providers in the
Territory, and of providing Information Systems and other services that support
its customers' use of its distribution capabilities.
C. Client desires to engage CORD as its distribution agent for commercial
sales of Arestin(TM) the ("Product"), and such other pharmaceutical products
which may, in the future, be agreed to by the parties in the Territory and to
perform certain other services described in this Agreement, all upon the terms
and conditions set forth in this Agreement.
THEREFORE, in consideration of the mutual conditions and covenants set
forth herein, CORD and Client (collectively referred to as "Party" or "Parties")
agree as follows:
1. APPOINTMENT/AUTHORIZATION.
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1.1. Upon the terms and conditions set forth in this Agreement, Client
appoints CORD as its distribution agent of Product in the Territory to Client's
customers, including, but not limited to, wholesalers, specialty distributors,
dentists, periodontists, clinics, hospitals, and other health care providers in
the Territory (collectively, "Customers").
1.2. Subject to the terms and conditions set forth in this Agreement, CORD
accepts the appointment to represent Client as its authorized distribution
agent of Product to Customers in the Territory.
1.3. [*]
2. SERVICES.
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2.1. CORD shall provide the services set forth in the Operating
Guidelines, which include, without limitation, storage, distribution, returns,
EDI and system access support ("Services"). A copy of the Operating Guidelines
is attached hereto as Exhibit A and incorporated by reference.
2.2. The Operating Guidelines may be amended from time to time upon the
mutual written agreement of the Parties; provided, however, that any change,
modification or
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* Confidential Treatment Requested
amendment to the Operating Guidelines that increase CORD's costs may result in
an increase in the fees charged by CORD in Section 4.
2.3. CORD's services shall comply with the Operating Guidelines. In all
cases, CORD shall use commercially reasonable efforts to comply with the
Operating Guidelines.
2.4. All Product Returns shall be processed and handled by CORD in
accordance with the Operating Guidelines; and, any customization or additional
return services requested by Client shall be performed at an additional fee as
agreed by the Parties.
2.5. Client is solely responsible for all Product recalls. In the event
Product is subject to recall, or Client, on its own initiative, recalls any
Product, CORD shall provide assistance to Client as set forth in the Operating
Guidelines, provided that Client shall pay to CORD an amount equal to CORD's
actual and reasonable costs incurred with any such recall services. Such cost
shall be in addition to the Service Fees described in Section 4 below.
3. PRODUCT SUPPLY/CLIENT RESPONSIBILITIES.
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3.1. Client shall deliver Product to CORD at CORD's facility located at
00 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xx Xxxxxx, XX 00000, or to such other
distribution facility as may be designated by CORD to Client in writing
("Facility").
3.2. Client shall be responsible for delivery of Product to the Facility,
including all costs, expenses and risk of loss associated with such delivery.
Title to Product shall remain with Client at all times, even when Product is
stored or warehoused at the Facility. Client shall at all times insure the
Product for damage, loss, destruction, theft or any such other property damage
("Loss") as further set forth in Section 14 below. Except for Loss resulting
solely from the gross negligence or willful misconduct of CORD, Client shall
bear all risk of loss or damage with respect to the Product stored or warehoused
at the Facility.
3.3. Client shall provide CORD with a forecast of the volume of Product
to be handled by CORD under this Agreement, not less often than semi-annually
("Forecast").
3.4. CORD shall visually inspect each shipment of Product for external
damage or loss in transit and notify Client of any such damage or loss within a
commercially reasonable period of time following discovery.
4. FEES.
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4.1. As compensation for the Services, Client shall pay to CORD the fees
(the "Fees") set forth on Exhibit B (the "Fee Schedule").
4.2. CORD shall issue an invoice to Client for the Services rendered
under this Agreement or for any other amounts due on a monthly basis. Payment is
due within thirty (30) days of the invoice date. If all amounts due CORD
(excluding those subject to good faith dispute) are not paid within such thirty
(30) day period, a service charge on the unpaid amount calculated at the rate of
1.5% per month (or the maximum rate permitted by law if such rate is less than
1.5% per month) shall be imposed until such amount is paid in full.
4.3. The Fees shall be held firm for the first contract year. [*]
4.4. Notwithstanding the terms set forth above in Section 4.3, if either
Party can reasonably demonstrate that the costs for providing the Services have
materially changed, or are likely to materially change in the coming year due
to the adoption of any applicable law or regulation (or any material change in
the interpretation or administration thereof), or due to unforeseen
circumstances beyond CORD's reasonable control, then upon notice from either
Party, the Parties agree to meet in good faith and negotiate a mutually
acceptable adjustment to the Fees.
5. TERM AND TERMINATION.
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5.1. The initial term of this Agreement shall begin on the Effective Date
and shall continue for a period of three (3) years (the "Initial Term"), unless
terminated earlier pursuant to this Agreement. Thereafter, this Agreement shall
automatically renew for additional terms of one (1) year each, unless written
notice of termination is given by either Party at least one hundred eighty (180)
days prior to the end of the Initial Term, or such other term, in which case
this Agreement shall terminate at the end of the then current term.
5.2. Either Party shall have the right to terminate this Agreement:
(a) upon one hundred eighty (180) days prior written notice to the
other Party, provided that in the event Client terminates this Agreement,
without cause, prior to the end of the Initial Term, such termination shall be
effective only upon payment to CORD of all remaining fixed Fees set forth on the
Fee Schedule for the remainder of the Initial Term.
(b) upon the breach by the other Party of a material provision of
this Agreement and that Party's failure to cure such breach within thirty (30)
days following written notice thereof from the non-breaching Party, provided
that, with respect to any failure to make any payment when due under this
Agreement, such period to cure shall be reduced to ten (10) days; or
(c) immediately upon notice to the other Party following the
commencement of any bankruptcy or insolvency proceeding (whether voluntary or
involuntary) with respect to such other Party or its assets, which in the event
of an involuntary proceeding, is not dismissed within ninety (90) days, the
general assignment for the benefit of creditors by such other Party, or the
appointment of a receiver, trustee or liquidator by or for such other Party; or
(d) in accordance with Section 16.6.
5.3. Termination or expiration of this Agreement shall not relieve either
Party from any liability or obligation that accrued prior to such termination or
expiration. Upon termination or expiration of this Agreement, all Product shall
be returned to Client or a designee of Client, at Client's sole cost and
expense. Sections 11, 12 and 13 shall survive termination or expiration of
this Agreement.
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* Confidential Treatment Requested
6. AUDITS. No more than twice per calendar year, Client or its
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designee shall have the right during normal business hours (i.e., 8:00 a.m. to
5:00 p.m. local time), upon fifteen (15) business days prior written notice to
CORD, to: (a) conduct a physical audit of such part of the Facility that relate
solely to Product stored and warehoused at the Facility under this Agreement;
(b) review and audit records that relate solely to the storage and distribution
of the Product; and (c) take a physical inventory of the Product on hand at the
Facility.
7. COMPLIANCE WITH LAWS. Each Party shall conduct its activities in
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connection with this Agreement in compliance with all applicable laws, rules,
regulations, and orders of governmental entities.
8. REPRESENTATIONS AND WARRANTIES.
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8.1. Each Party represents and warrants to the other that:
(a) it has full power and authority to enter into this Agreement
and perform all obligations and conditions to be performed by it under this
Agreement without any restriction by any other Agreement or otherwise;
(b) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action of that Party; and
(c) this Agreement constitutes the legal, valid and binding
obligation of that Party.
8.2. Client further represents and warrants to CORD that the Product:
(a) is and shall be manufactured in conformity with the Food, Drug
and Cosmetic Act, as amended from time to time, and all other applicable laws,
rules, regulations and orders of governmental entities relating to the
manufacture, promotion, sale or distribution of the Product;
(b) does not violate or infringe any patent, trademark, tradename
or other interest of any person or entity.
8.3. CORD further represents and warrants to Client that:
(a) it shall use commercially reasonable efforts to comply with
reasonable instructions from Client regarding the performance of the Services;
(b) its performance of the Services shall comply with the Operating
Guidelines; and
(c) it shall promptly notify Client of any incident or occurrence
that Cord determines may reasonably be expected to have an adverse affect on
CORD's performance of the Services for Client;
(d) it shall promptly notify Client of any information that Cord
deems to be material, which comes to CORD's attention that affects Client or the
Product.
9. TAXES. Client shall pay, if and when due, all sales, use, gross
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receipts, excise, personal property taxes associated with the Product (excluding
any personal property tax associated with CORD's equipment used in connection
with the Services), and other taxes now or hereafter imposed as a result of the
transactions contemplated by this Agreement, none of which have been included in
the fees payable to CORD under this Agreement; provided that the amounts payable
by Client under this section shall not include taxes based on the net income of
CORD.
10. TRADEMARKS. Neither Party shall have the right to use the name of
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the other Party or any Affiliate of the other Party, or the other Party's or
such Affiliates' trademarks, service marks, logos, or other similar marks in any
manner except with the prior written approval of that Party; provided that the
foregoing shall not prohibit CORD's use of Client' names or marks in connection
with the performance of the Services in a manner consistent with this Agreement.
Any such use by CORD shall be in accordance with Client's guidelines and all
goodwill resulting from the use of Client's marks shall accrue solely to Client.
"Affiliate," as used in this Agreement, means any legal entity which, during the
Term hereof, controls, is controlled by, or is under common control with, such
Party. For purposes of this definition, an entity shall be deemed to control
another entity if it owns or controls, directly or indirectly, at least fifty
percent (50%) of the voting interest of all equity interests of the other entity
(or other such comparable ownership interest for an entity other than a
corporation).
11. CONFIDENTIALITY.
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11.1. Each Party acknowledges that as a result of this Agreement it may
learn and have access to trade secrets and other confidential and proprietary
information of the other Party through employees, representatives and/or agents
acting on behalf of or subcontracted to either Party (collectively the
"Representatives"), including without limitation, financial information, sales
data, customer data, Product prices, inventory data, Product returns or recall
data, information regarding business practices and techniques, information
regarding the Product and systems and technology information, or any information
identified as confidential in writing by either Party (the "Confidential
Information"). For purposes of this Agreement, Confidential Information shall
not include information disclosed by one Party to the other Party to the extent
that such information can be proven by written evidence: (a) to be in the public
domain or generally available in the industry in which the disclosing Party
engages in business without any violation of this Agreement by the other Party;
(b) is already legally known to the other Party or any of its Affiliates at the
time of its disclosure by the disclosing Party; (c) becomes known to the other
Party or any of its Affiliates from a third party (that is not prohibited from
disclosing such information) without any obligation of confidentiality or
limitation on use; or (d) is independently developed by the other Party or any
of its Affiliates prior to the date of its disclosure. The specific material
terms of this Agreement shall be deemed to be the Confidential Information of
each Party. Confidential Information shall not be deemed to be in the public
domain or publicly known or in the receiving Party's possession because it is
embraced by more general information in the receiving Party's possession or
because it is embraced in general terms in publications.
11.2. Neither Party shall, and each Party shall cause its Representatives
not to, directly or indirectly, at any time: (a) disclose to any third person or
entity any Confidential Information of the other Party (whether learned before
or after the date of this Agreement), (b) use the other Party's Confidential
Information for any purpose other than fulfilling obligations under this
Agreement, or (c) use, or permit or assist any third person or entity to use,
any such Confidential Information, excepting only: (i) disclosures required by
law, rule, regulation or order, as reasonably determined by the disclosing Party
or its legal counsel, and (ii) disclosures on a confidential basis to directors,
officers, employees, and agents of that Party or its Affiliates who have a
reasonable need to know such Confidential Information in the normal course of
business of that Party or any of that Party's Affiliates.
11.3. The obligations of confidentiality hereunder shall survive the
termination of this Agreement. Upon termination of this Agreement (for any
reason) each Party shall promptly: (i) return to the other Party all
documentation and other materials (including copies of original documentation or
other materials) containing any Confidential Information of the other Party; or
(ii) with the other Party's consent, which consent will not be unreasonably
withheld, certify to the other Party, pursuant to a certificate in form and
substance reasonably satisfactory to the other Party, as to the destruction of
all such documentation and other materials.
12. INDEMNIFICATION. Each Party shall indemnify and hold harmless
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the other Party and its parent and Affiliates, and each of their directors,
officers, employees, agents, and representatives from and against all claims,
liabilities, losses, damages, costs, and expenses, including, without
limitation, reasonable attorneys' fees ("Liability") to a third party or
property arising directly or indirectly out of any failure of that Party to
perform fully all obligations and conditions to be performed by that Party
pursuant to this Agreement or any breach of any warranty made by that Party in
this Agreement. Client further agrees to indemnify and hold harmless CORD, its
parent and Affiliates and each of their directors, officers, employees, agents
and representatives from any and all Liability arising directly or indirectly
out of injury or death to person or property alleged to have been caused by
Client's Product. The indemnifying Party shall not be liable for any amounts
paid in settlement by the indemnified Party without the indemnifying Party's
prior written consent.
13. LIMITATION OF LIABILITY. NOTWITHSTANDING THE FOREGOING PROVISIONS
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OF SECTION 3, OR ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INCIDENTAL,
INDIRECT, SPECIAL, OR OTHER SIMILAR DAMAGES ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, EXCEPT FOR LOSSES RESULTING FROM THE GROSS NEGLIENCE OR
INTENTIONAL MISCONDUCT OF SUCH PARTY.
14. INSURANCE. During the term of this Agreement and for as long
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thereafter as necessary to cover claims resulting from this Agreement, Client
shall maintain: (i) product liability and commercial general liability insurance
having a limit of not less than $5 million; and (ii) property damage insurance
at replacement value for the Product located at the CORD Facility or in transit
to or from the CORD Facility, pursuant to one or more insurance policies with
reputable insurance carriers. Cardinal Health, Inc. and its subsidiaries shall
be designated as "additional insureds" under the product liability and
commercial general liability insurance policy(ies) and under the property damage
insurance policy(ies). Prior to the Commencement Date, Client shall deliver to
CORD certificates evidencing such insurance. Client shall not cause or permit
such insurance to be canceled or modified to materially reduce its scope or
limits of coverage during the term of this Agreement or thereafter as provided
above. Except for any losses resulting solely from the gross negligence or
intentional misconduct of CORD, Client
shall bear all risk of loss or damage with respect to the Product, whether
located at the Facility or otherwise.
15. DISPUTE RESOLUTION. The Parties agree to use good faith efforts
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to resolve all disputes within sixty (60) days of written notice that such a
dispute exists. If dispute under this Agreement cannot be resolved by the
Parties within such sixty (60) day period, the Parties agree to refer the matter
to one executive from each Party not directly involved in the dispute for review
and resolution. A copy of the terms of this Agreement, agreed upon facts and
areas of disagreement, and a concise summary of the basis for each side's
contentions will be provided to both executives who shall review the same,
confer, and attempt to reach a mutual resolution of the issue within twenty (20)
days after receipt of the materials referenced above. If the matter has not
been resolved within such twenty (20) day period, either or both Parties may
pursue resolution of the matter through litigation or other process available
under law or equity. Notwithstanding the foregoing, if the subject matter of
the dispute is not isolated, but rather an ongoing matter causing ongoing losses
for a party, such party may immediately seek legal or equitable relief.
16. MISCELLANEOUS.
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16.1. Relationship of the Parties. The relationship among the Parties
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is that of independent contractors, and this Agreement does not establish or
create a partnership, joint venture, or other agency relationship among the
Parties.
16.2. Notices. Any notice or other communication required or desired
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to be given to any Party under this Agreement shall be in writing and shall be
deemed given: (a) three business days after such notice is deposited in the
United States mail, return receipt first-class postage prepaid, and addressed to
that Party at the address for such Party set forth at the end of this Agreement,
provided the sending Party receives a deliverable receipt; (b) one business day
after delivered to Federal Express, Airborne, or any other similar express
delivery service for delivery to that Party at that address; or (c) when sent by
facsimile transmission, with electronic confirmation, to that Party at its
facsimile number set forth at the end of this Agreement. Any notice delivered by
facsimile transmission will be deemed delivered upon electronic confirmation
provided the notice is also deposited in the U.S. mail, first-class postage
prepaid. Any Party may change its address or facsimile number for notices under
this Agreement by giving the other Parties notice of such change.
16.3. Governing Law. This Agreement shall be construed under the laws
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of the State of Tennessee, without regard to its conflicts of laws provisions.
16.4. Severability. If any term of this Agreement is declared invalid or
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unenforceable by a court or other body of competent jurisdiction, the remaining
terms of this Agreement will continue in full force and effect.
16.5. Non-Waiver. No failure by either Party to insist upon strict
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compliance with any term of this Agreement, to enforce any right, or to seek any
remedy upon any default of the other Party shall affect, or constitute a waiver
of, the first Party's right to insist upon strict compliance, to exercise that
option, to enforce that right, or to seek that remedy with respect to that
default or any prior, contemporaneous, or subsequent default. No custom or
practice of the Parties at
variance with any provision of this Agreement shall affect, or constitute a
waiver of, that Party's right to demand strict compliance with all provisions of
this Agreement.
16.6. Force Majeure. If the performance of any part of this Agreement
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by either Party shall be prevented, restricted, interfered with or affected for
any length of time by fire or other casualty, government restrictions, war,
riots, strikes or labor disputes, lock out, transportation delays, acts of God,
or any other causes which are beyond the reasonable control of such Party, such
Party shall not be responsible for delay or failure of performance of this
Agreement for such length of time, provided, however, that any Party hindered by
such condition beyond its reasonable control must employ reasonable efforts to
overcome such hindrance as promptly as possible. If a Party's performance is
prevented or materially restricted, interfered with or affected by reason of the
foregoing for more than forty-five (45) days, the other Party shall have the
right to terminate this Agreement.
16.7. Complete Agreement. This Agreement constitutes the entire
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understanding between the Parties and supersedes any contracts, agreements or
understanding (oral or written) of the Parties with respect to the subject
matter hereof. No term of this Agreement may be amended except upon written
agreement of both Parties, unless provided otherwise in this Agreement.
16.8. Assignment. Except as set forth herein, neither Party shall
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have the right to assign this Agreement, or any of such Party's rights or
obligations under this Agreement, without the prior written consent of the other
Party, provided, however, that CORD may assign its rights (but not its
obligations) under this Agreement to any parent, subsidiary or affiliate without
obtaining such consent. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by and against the respective successors and
assigns of the Parties.
16.9 Independent Contractor. The relationship of the Parties is that of
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independent contractors, and neither Party shall incur any debts or make any
commitments for the other Party except to the extent expressly provided in this
Agreement. Nothing in this Agreement is intended to create or shall be
construed as creating between the Parties the relationship of joint ventures,
co-partners, employer/employee or principal and agent.
IN WITNESS WHEREOF, the undersigned acknowledge and accept the terms of
this Agreement and have duly executed this Agreement.
CORD LOGISTICS, INC. CLIENT
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxx X. Xxxxxxx
________________________________ _______________________________
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxx
Vice President and General Manager Executive Vice President,
Chief Financial Officer and Secretary
0000 Xxxx Xxxxxx Xxxx, #000 000 Xxxxx Xxxxx
XxXxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Facsimile No. (000) 000-0000 Facsimile No. (000) 000-0000
EXHIBITS
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Exhibit A Operating Guidelines
Exhibit B Fee Schedule
Exhibit C System Access Agreement
EXHIBIT A
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OPERATING GUIDELINES
ORAPHARMA, INC./CORD LOGISTICS, INC.
OPERATING GUIDELINES
In performing its obligations under the Distribution Services Agreement
("Agreement"), CORD Logistics, Inc. ("CORD") will follow the Operating
Guidelines as developed jointly with OraPharma, Inc. ("CLIENT"). These
Operating Guidelines are in addition to CORD Information Systems Operating
Instructions, as well as the CORD Standard Operating Procedures ("SOPs"). Copies
of these documents are maintained by both parties and will be reviewed, and
updated if necessary, from time to time as mutually agreed, but not less than
once per calendar year.
1.0 WAREHOUSING
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1.1 CORD will maintain its warehouse facility in accordance and comply
with all federal, state and local laws, rules and regulations,
including the Prescription Drug Marketing Act and current Good
Manufacturing Practices ("cGMP") as promulgated under the FDA.
1.2 CORD will maintain Standard Operating Procedures appropriate for a
pharmaceutical distribution center operating environment.
1.3 CORD will maintain documented training programs.
1.4 CORD will comply with storage, handling and shipping conditions
designated by CLIENT for the Products.
Products with specific storage requirements, must be identified by Client and
the storage requirements must be expressly communicated by Client to CORD. The
specific requirements must be identified on the package label in accordance with
NWDA bar coding standards. Product so identified by Client will be stored in
areas designed, continuously monitored and periodically validated for the
temperature range specified for each product. CORD will maintain daily
temperature recordings. CORD will provide such records to the Client upon
written request
1.4.1 Controlled ambient - 15 degrees to 30 degrees Celsius
1.5 CORD will report temperature excursions to the Client within one (1)
business days of occurrence.
1.6 Products will be stored in an area with secured access, accessible
only to authorized CORD personnel as agreed to by CLIENT and CORD.
2.0 RECEIVING
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2.1 Client or Client's contract manufacturing agent will arrange
transportation services to transfer the product to CORD. Client will notify CORD
of the specific delivery schedule.
2.2 Client's carrier will contact CORD to arrange a delivery appointment.
2.3 Client retains title to the goods at all times. CORD signature on the
xxxxxxx'x xxxx of lading is an acknowledgement only of CORD's receipt
of product.
2.4 Client will provide CORD with Material Safety Data Sheets for each
product stored at CORD.
2.5 Client's product must meet the following standards for carton
identification, documentation, palletization, and uniformity:
2.5.1 Each shipping carton and inner packaging of Client product must
be labeled to meet NWDA standards for bar coding and human
readable markings.
2.5.2 Client will provide the xxxx of lading, certificate of analysis
and other documentation necessary. CORD and Client will mutually
agree upon the receiving process.
2.5.3 Pallets will meet GMA standards for 40" x 48" dimensions with
four-way entry; will be free of broken boards, treated for
pests, and clean.
2.5.4 Receipt of product on non-standard pallets may require
restacking onto conforming pallets at Client's expense.
2.5.5 Palletized product must be uniform and consistent with
specifications set up in the product master for the number of
cartons and xxxxxx.
2.6 CORD will receive each shipment into a secure Receiving area.
2.7 CORD will count and inspect the exterior packaging of the product,
noting any shortages, overages or damage on the xxxxxxx xxxx of
lading. CORD will obtain the carrier's signature on the xxxx of lading
acknowledging the condition of the product upon receipt by CORD.
2.8 CORD will compare the Client's documentation to CORD's receiving
report. Discrepancies will be noted. CORD Quality Assurance will
investigate and report all discrepancies to Client within 24 hours of
receipt. Client and CORD will determine corrective actions, if any.
2.9 CORD will post receipts in the computer inventory system within one
business day of delivery unless count discrepancies, missing
paperwork, damage investigation, and other receiving anomalies
interfere with efficient receiving and documentation. CORD will use
commercially reasonable efforts to receive product accurately and
efficiently.
2.10 CORD reserves the right to assess a fee for services required to hold
non-conforming product in receiving, and to investigate, reconcile
and report discrepancies to the Client. Fees for Receiving services
are listed in the Fee Schedule, Exhibit B.
2.11 CORD will return partial case quantities - defined as less than a
saleable quantity - to the CLIENT at CLIENT's expense.
2.12 Client product in unapproved or quarantine status will be physically
segregated and CORD's computer system will be flagged accordingly to
prevent unapproved product from entering approved picking areas of the
warehouse. The Client will provide written documentation to CORD to
change quarantine product to approved status.
2.13 CORD will move product from the Receiving area to bulk storage
following CORD SOPs.
3.0 INVENTORY
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3.1 Inventory will be received, tracked and controlled on CORD's
computerized inventory system by item number, lot number, expiration
date, quantity, and status. CORD system will meet all cGMP
requirements for lot traceability and accountability, from receipt of
product at CORD to shipment of product to CLIENT's customer.
3.2 Quarantined product will be physically segregated and appropriately
labeled. Quarantined Product will be released from quarantine status
in CORD's inventory system upon written authorization by CLIENT.
3.3 CORD will assign unique locations for each product and lot in storage.
3.4 Inventory will be routinely verified by CORD through periodic cycle
counts. CORD will use its best efforts to maintain accurate and timely
inventory records.
3.5 Inventory deviations will be investigated by CORD and reported to
CLIENT. Corrective actions will be determined jointly by CORD and
CLIENT.
3.6 CLIENT may conduct a complete physical inventory twice per calendar
year, upon at least fifteen (15) days advance written notice prior to
the start of a physical inventory.
3.7 CORD will notify CLIENT of all expired or short dated Product(as
specified by Client to be six months prior to expiry date).
3.8 Disposition of returned, rejected or expired Product will be handled
according to CLIENT's specific written direction.
4.0 DISTRIBUTION
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4.1 Orders approved and available for processing (pick & pack) by 2:30
p.m. Central Time will be shipped before the close of business the
same day, Monday through Friday. Orders received and processed after
the cutoff times will be shipped the following business day.
4.2 Recognizing that order volume may fluctuate from time to time, CORD
will staff to meet 125% of the rolling average number of CLIENT orders
processed over the previous two (2) calendar months. CORD will use
commercially reasonable efforts to meet the shipping schedule outlined
herein when order or unit volume exceeds 125% of the rolling average
number of orders or units; provided, however, that CORD cannot
guarantee daily on-time shipping standards will be achieved during
such increased activity periods.
4.3 CORD will measure the timeliness of shipments and will report this
attribute periodically according to Section 12 of the Operating
Guidelines.
4.4 Emergency shipments and other exceptions will be authorized in writing
by CLIENT. CORD will separately invoice CLIENT for emergency
shipments, which are defined as shipments occurring on weekends,
holidays, and non-standard hours, as defined in the Fee Schedule,
Exhibit B.
4.5 CORD's inventory system will comply with First-to-Expire, First-Out
(FEFO) inventory allocation. Any exceptions from FEFO must be approved
by CLIENT in writing prior to shipment.
4.6 CORD will provide the system, equipment and procedures, along with
trained personnel and supervision to services related to picking
product for CLIENT's customer orders.
4.7 CORD will perform quality verification on all CLIENT shipments by an
individual other than the employee who picked the order. CORD will use
commercially reasonable efforts to pick, check and ship accurately all
Client customer orders.
4.8 CORD and CLIENT will mutually determine and agree in writing on the
packaging requirements for shipping CLIENT's finished product(s).
CORD's Quality Assurance will assist CLIENT and CORD will issue
appropriate guidelines and training to the Distribution department to
assure compliance with CLIENT specifications.
4.9 CLIENT and CORD will mutually determine and agree on special shipping
conditions, such as for refrigerated product, which may be limited to
Monday through Thursday shipping, or as otherwise instructed by the
Client.
4.10 CORD will provide shipment confirmation information to CLIENT through
CORD's information system on the same business day on which the
shipment occurs.
4.11 CORD will manage shipping supplies - including vendor selection,
ordering, inventory record keeping, and storage. CORD will invoice
CLIENT for all shipping materials - corrugated cartons, insulated
coolers (if specified), address labels, inner packing - as may be
required by CLIENT's packing specifications, per CORD's proposal.
4.12 All Product will be shipped utilizing packaging and shipping carton(s)
as per Clients' packaging instructions, or as deemed appropriate by
CORD in the absence of Client specifications. Unless instructed
otherwise by CLIENT, shipping will occur based on the shipping
procedures provided by CLIENT.
4.13 CORD personnel will be available for emergency product shipments, via
phone request, 24 hours per day, 365 days per year. For emergency
shipments called in after the carrier's cutoff time (approximately
8:00 p.m. for overnight airfreight), CORD will ship the product the
following day, except Sunday, unless otherwise directed by the Client.
CORD's fees for emergency shipments are set forth in the Fee Schedule,
Exhibit B.
5.0 TRANSPORTATION
--------------
5.1 CORD and CLIENT will mutually agree upon a common carrier(s) based on
shipment size, destination, freight rates, availability of standard
and special services, reliability of delivery, and claim history among
other requirements.
5.2 CORD shall provide, if CLIENT agrees, carriers under contract with
Cardinal-Allegiance for discounted rates. The Client and CORD will
share the savings according to a formula acceptable to both parties,
or, if CLIENT so chooses and CORD agrees, CORD shall charge a freight
management fee according to the Fee Schedule, Exhibit B.
5.3 Shipping charges, including all special charges for insurance, proof
of delivery, hazardous materials, service upgrades, and so forth, will
be billed directly to CORD's account with the carrier and passed
through to CLIENT per terms of the Distribution Agreement, inclusive
of CORD's transportation management fees as defined in the Fee
Schedule, Exhibit B.
5.4 Freight terms will be F.O.B. Origin, Freight Prepaid where title
passes to the customer when the shipment is tendered to the common
carrier.
5.5 CORD, at the request of the Client, will provide proof of delivery for
specific customer shipments. Fees charged by carriers for proofs of
delivery, if any, will be passed directly to the Client.
5.6 CLIENT will approve payment of all credits to CLIENT customers for
overage, shortage and damage claims related to transportation. CORD,
if handling Accounts Receivable for CLIENT, will issue a credit to
CLIENT's customer accordingly, or CORD will provide freight claim
documentation to the CLIENT when the CLIENT is responsible for the
Accounts Receivable.
6.0 GOVERNMENT REPORTING
--------------------
6.1 CORD personnel will provide the following Government reports to CLIENT
by the fifth business day following the close of a business quarter.
6.1.1 IFF Direct Sales Report
6.1.2 IFF Indirect Sales Report
6.1.3 AMP Report
6.1.4 Non FAMP Report
6.1.5 Best Price Report
6.1.6 Most Favored Price Report
6.2 CORD will also provide supporting schedules and source documents to be
used by CLIENT to perform verification of the Government reports.
7.0 MONTH-END CLOSE
---------------
7.1 CORD will comply with month-end reporting requirements as specified by
CLIENT.
7.2 CLIENT will complete its close by the 5th working day after the last
day of the month being closed.
8.0 RETURN GOODS
------------
8.1 Returns will be processed according to the Return Procedures defined
by CLIENT.
8.2 CORD will complete the processing of all returns and issue credits
within 5 business days of receipt of the return.
8.3 CORD will use commercially reasonable efforts to process return goods
as timely and accurately as possible.
9.0 RECALL ASSISTANCE
-----------------
9.1 CLIENT is responsible for management of a recall event, including but
not limited to preparation of the letter of notification to customers,
coordination and reporting with FDA, tracking of recalled product by
customer, follow up letters to customers, and final disposition of
product.
9.2 CORD will provide the necessary recall reports within two hours of
notification by CLIENT. Reports will contain, but not be limited to,
the following
information for each recalled product and lot number: all customer
shipments by date, item number, quantity, lot number, and ship to
address.
9.3 CORD will provide a secure area for the receipt of recalled product.
CORD will assist CLIENT with inventory reconciliation.
9.4 CORD will provide destruction services for recalled product as may be
required by CLIENT.
10.0 SYSTEMS
-------
10.1 CLIENT retains ownership to all data in the CORD system related to
CLIENT's business.
10.2 CORD will maintain security of the CLIENT's data in files segregated
and inaccessible to other CORD clients, to CORD's parent organization
Cardinal Health, or to any other entity as determined by the CLIENT.
CORD will not disclose the CLIENT's data to any Third Party.
10.3 CORD will provide CLIENT with on-line access to sales information,
inventory records, lot tracking, customer profiles, item maintenance,
pricing and terms, and other business critical data as defined in
CORD's standard reports output.
10.4 Reporting and interfaces will be defined by CLIENT and jointly agreed
upon with CORD.
10.5 CORD will maintain all systems within the change control SOPs.
10.6 CORD's system will be accessible by CLIENT 7:30 a.m. - 7:30 p.m.
Central Time, Monday through Friday except for routine, scheduled
maintenance.
10.7 Unscheduled system downtime per calendar quarter shall not exceed 2%
of the normally accessible access hours. CORD will immediately notify
OraPharma Director of Information Technology of any system problem
that might affect services and an estimated time for restoration of
system access.
10.8 Daily system backups of changed object files and weekly fully system
backups will be performed according to Regional Data Center SOP# RDC-
004. Fire proof offsite storage is utilized for the safekeeping of
the weekly full backups.
11.0 AUDITS / INVENTORIES
--------------------
11.1 Upon not less than ten (10) days prior written notice, CLIENT
personnel and their representatives will have access to CORD
facilities for review and audit of CORD's facility and records to
assure compliance with cGMP's, standard operating procedures,
guidelines, and CLIENT specific agreements.
11.2 CLIENT may request complete physical inventory of CLIENT products
twice per year.
11.3 CORD will assist CLIENT with inspections/audits ordered by the
Federal Food & Drug Administration or other governmental or official
agencies.
11.4 CORD will notify CLIENT immediately of any inspection activity by
FDA, DEA or other government agency, as applicable to the CLIENT or
CLIENT's product.
12.0 QUALITY COUNCIL REPORT
----------------------
12.1 CORD will provide CLIENT with a periodic report on measurable
attributes, as identified in preceding sections, to be used to track
and benchmark performance. The frequency of the report will be
determined jointly by CORD and CLIENT.
12.2 CLIENT and CORD will agree to meet periodically to review performance
and to develop methods, policies, practices, and procedures that may
improve the quality and efficiency of the CORD - CLIENT relationship.
12.3 CORD will use its best efforts to meet or exceed the CLIENT's
expectation for performance based on the measured attributes.
12.4 Measured attributes and standards:
Section Performance Attribute Performance Standard Reporting Frequency
-----------------------------------------------------------------------------------------------
1.0 Temperature excursions 100% excursion-free Upon occurrence
-----------------------------------------------------------------------------------------------
2.0 On-time receipts and 95% within 4 business hours for Monthly
data entry all conforming receipts
-----------------------------------------------------------------------------------------------
3.0 Cycle count accuracy 99.5% Monthly
-----------------------------------------------------------------------------------------------
4.0 On-time shipping 99% same day for orders Monthly
received by the standard
cut-off time
-----------------------------------------------------------------------------------------------
4.0 Picking / shipping 99.5% for all orders processed Monthly
accuracy with carton markings meeting
NWDA bar code standards
-----------------------------------------------------------------------------------------------
5.0 Return goods processing 99% processed in 5 business Monthly
cycle time days or less
-----------------------------------------------------------------------------------------------
6.0 System availability greater than 98% of normal Upon occurrence
accessible hours
-----------------------------------------------------------------------------------------------
EXHIBIT B
---------
ORAPHARMA INC.
FEE SCHEDULE
[*]
--------------------------
* Confidential Treatment Requested
EXHIBIT C
---------
SYSTEM ACCESS AGREEMENT
This System Access Agreement ("Agreement") is made as of March 28,
2001 between CORD Logistics, Inc., an Ohio corporation ("Licensor"), and
OraPharma, Inc., a Delaware corporation ("Licensee"), who hereby agree as
follows:
1. Distribution Services Agreement. Licensor and Licensee have
-------------------------------
entered into a Distribution Services Agreement ("Distribution Agreement") of
even date with this Agreement, the terms of which are incorporated by reference.
2. System Access; Maintenance Obligations. Licensor hereby grants to
--------------------------------------
Licensee a nonexclusive, nontransferable limited license (the "License") to
utilize Licensor's Operating System Base Package, consisting of the computer
hardware (as set forth below), software, and other components described in the
Distribution Agreement as well as future upgrades and maintenance of the base
package (collectively, the "System"), for the information processing needs of
Licensee in connection with the Services to be provided by Licensor under the
Distribution Agreement. Licensee shall maintain during the term of this
Agreement the local area network (including without limitation centralized
server) and desktop processing requirements for the System as further described
in the Distribution Agreement or the Operating Guidelines, a copy of which are
attached to the Distribution Agreement as Exhibit A.
During the term of this Agreement, Licensor shall employ reasonable
security measures and policies designed to safeguard the integrity,
accessibility, and confidentiality of all of Licensee's data resident on the
System and establish and maintain reasonable disaster and emergency recovery
plans designed to minimize disruption from System operation interruptions.
Licensee shall have the right to review the operation of the System from time to
time during regular business hours, upon reasonable prior notice and at a time
mutually agreeable by the parties; provided that such reviews shall be conducted
in a manner to avoid disruption of Licensor's business operations.
3. Lease of Hardware. Licensee shall have the right to lease a
-----------------
router ("Hardware") from Licensor during the term of this Agreement, at no
additional cost to Licensee, other than the Fee set forth in the Distribution
Agreement. The Hardware shall be kept by Licensee (a) subject to inspection by
Licensor during regular business hours, upon reasonable prior notice and at a
time mutually agreeable by the parties; (b) at Licensee's address, as stated at
the end of this Agreement, which Hardware shall not be relocated without the
prior written consent of Licensor, which consent shall not be unreasonably
withheld; (c) free of all security interests if any kind whatsoever, liens,
encumbrances and other claims; (d) marked with Licensor's identification marks
or numbers and if requested by Licensor, conspicuously labeled "supplied by
Licensor"; and (e) maintained in good and efficient working order, condition and
repair, reasonable wear and tear accepted.
Licensee shall use the equipment with due care to prevent injury
thereto, and to any person or property and in conformity with all applicable
laws, ordinances, rules, regulations and other requirements of any insurer or
governmental bonding and with all requirements of the manufacturer with respect
to use, maintenance and operation of the Hardware. Licensee shall not modify
any hardware without the prior written consent of Licensor, which may be granted
or withheld in its sole discretion. It is the intention and understanding of
both Licensor and Licensee that the Hardware shall be, and at all times remain,
separately identifiable personal property of Licensor. Licensee shall not
permit any Hardware to be installed in or used, stored or maintained with, any
of Licensee's personal property in such manner or under such circumstances that
such Hardware might be or become an accession to or confused with such other
personal property. Licensee shall not permit such Hardware to be installed in
or used, stored or
maintained with, any real property in such manner or under such circumstances
that any person might acquire any rights in such Hardware paramount to the
rights of the Licensor by reason of such Hardware being deemed to be real
property or a fixture thereon.
Licensee shall at all times during the term of this Agreement and until the
Hardware has been returned to Licensor, at its own expense, maintain physical
damage insurance in the amount of not less than the replacement value of the
Hardware. All insurance so maintained shall provide for a thirty (30) day prior
written notice to Licensor or its assignees of any cancellation or reduction of
coverages; (ii) an option in Licensor or its assignees to prevent cancellation
by payment of premiums, (iii) cover the interest of the Licensor and (iv)
provide that all insurance proceeds shall be payable to the Licensee and
Licensor, as their respective interests may appear at the time of any such
payment. Licensor shall be named as an additional insured on any public
liability insurance policy so maintained. Upon the request of Licensor,
Licensee shall furnish to Licensor satisfactory evidence of any insurance so
maintained.
4. Proprietary Rights. Licensee shall have the right to use the System
------------------
during the term of this Agreement as expressly provided in paragraphs 1 and 2 of
this Agreement, but not otherwise. Licensee shall not assign or otherwise
transfer, disclose, copy, modify, re-engineer, sell, license, disassemble, or
decompile the System or disclose or permit access to the System or related
documentation to any other person or entity. The System and all parts thereof,
in all of their tangible and intangible manifestations, all existing or new
enhancements, developments, derivative works, and other adaptions or
modifications to the System (or any part thereof), and all related proprietary
rights, are and shall remain the exclusive property of Licensor. Except for the
License and Lease, Licensee shall have no right, title, or interest in or to the
System or any part thereof. Upon termination of this Agreement, Licensee shall
promptly return to Licensor all portions of the System then in Licensee's
possession or under its control in accordance with the term set forth in Section
6 below.
5. Warranties. Licensee acknowledges that it has had adequate
----------
opportunity to review the System and its features and operation, and Licensee
accepts the System "AS IS" for its use as contemplated in the Distribution
Agreement. LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, AND HEREBY
EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED,
RELATING DIRECTLY OR INDIRECTLY TO THE SYSTEM OR ANY PART THEREOF, INCLUDING
WITHOUT LIMITATION ANY WARRANTIES OF QUALITY, PERFORMANCE, MERCHANTABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE.
6. Limitation On Liability. LICENSOR SHALL NOT BE LIABLE FOR ANY
-----------------------
CONSEQUENTIAL, INDIRECT, SPECIAL, OR OTHER SIMILAR DAMAGES ARISING DIRECTLY OR
INDIRECTLY OUT OF THE USE OR INABILITY TO USE THE SYSTEM OR ANY PART THEREOF,
EVEN IF INFORMED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER CLAIMED UNDER
CONTRACT, TORT, OR ANY OTHER LEGAL THEORY.
IF ANY OF THE LIMITATIONS ON THE LIABILITY OF LICENSOR CONTAINED IN
THIS AGREEMENT ARE FOUND TO BE INVALID OR UNENFORCEABLE FOR ANY REASON, THEN
LICENSOR AND LICENSEE EXPRESSLY AGREE THAT THE MAXIMUM AGGREGATE LIABILITY OF
LICENSOR FOR ALL CLAIMS RELATING TO THE SYSTEM SHALL NOT EXCEED 100% OF THE
AGGREGATE BASE PACKAGE FEES PAID BY LICENSEE TO
LICENSOR FOR LICENSEE'S USE OF THE SYSTEM UNDER THE DISTRIBUTION AGREEMENT.
7. Taxes. Licensee shall pay when due all sales, use, gross
-----
receipts, excise, property, and other taxes (other than taxes based upon
Licensor's net income) now or hereafter imposed as a result of the transactions
contemplated by this Agreement.
8. System Availability. The System shall be available for access
-------------------
twenty-four (24) hours a day, seven (7) days a week, except for scheduled
maintenance periods.
9. Term. The term of this Agreement shall begin upon Licensee's
----
initial use of the System as evidenced by the first entry of inventory into the
System (which may be a date earlier than the Commencement Date specified for the
Distribution Agreement) and shall end: (a) automatically upon the termination
of the Distribution Agreement (for any reason), or (b) on any earlier date
specified by Licensee in notice to Licensor given not less than ninety (90) days
prior to the specified termination date; provided that: (i) paragraphs 4
through 10 inclusive shall survive the termination of this Agreement, and (ii)
no termination of this Agreement shall affect any liabilities arising from, or
based upon, acts or omissions occurring prior to such termination.
10. Expiration/Termination. Licensee shall continue to have access
----------------------
to the System for a reasonable period of time (not be exceed ninety (90) days)
following termination of this Agreement solely for purposes of retrieving and
transferring to a separate system Licensee's data relating to its pre-
termination operations, and Licensor shall reasonably cooperate with Licensee to
preserve the integrity and accessibility of Licensee's data during such period;
provided that, during such period, Licensee shall continue to pay the full Base
Package and other fees payable by Licensee under the Distribution Agreement and
comply with all other requirements imposed upon Licensee under this Agreement.
Upon the expiration of this Agreement, Licensee shall return the
Hardware to Licensor in the same condition and configuration as received,
receivable wear and tear accepted.
11. Notices. Any notice or other communication required or desired
-------
to be given to either Party under this Agreement shall be in writing and shall
be deemed given: (a) five (5) days after mailing, if deposited in the United
States mail, first-class postage prepaid, and addressed to that Party at its
address set forth at the end of this Agreement; (b) when received if delivered
to Federal Express or any other similar overnight delivery service for delivery
to that Party at that address; or (c) when sent by facsimile transmission, with
electronic confirmation, to that Party at its facsimile number set forth at the
end of this Agreement. Either Party may change its address or facsimile number
for notices under this Agreement by giving the other Party notice of such
change.
12. Remedies. Licensee shall indemnify Licensor and its affiliates,
--------
directors, officers, employees, agents, and representatives against all claims,
liabilities, losses, damages, costs, and expenses (including without limitation
reasonable attorneys' fees) arising directly or indirectly out of any failure of
Licensee to perform fully all obligations and conditions to be performed by
Licensee pursuant to this Agreement. Licensee acknowledges that in the event of
any violation by it of any of the provisions of paragraph 2 (Proprietary Rights)
of this Agreement, Licensor would suffer irreparable harm and its remedies at
law would be inadequate. Accordingly, in the event of any violation or
attempted violation of any such provisions by Licensee, Licensor shall be
entitled, in addition to any other rights or remedies which may be available to
Licensor, to a temporary restraining order, temporary and/or permanent
injunctions, specific performance, and other equitable relief, without the
showing of irreparable harm, injury, damage or the inadequacy of damages, and
without the necessity of the posting of any bond.
13. Force Majeure. Notwithstanding any other provisions of this
-------------
Agreement or the Distribution Agreement to the contrary, each Party's
obligations under this Agreement (exclusive of payment obligations) shall be
excused if and to the extent that any delay or failure to perform such
obligations is due to fire or other casualty, government restrictions, war,
riot, strikes or labor disputes, acts of God, or other causes beyond the
reasonable control of that Party; provided, however, that any party hindered by
such condition beyond its reasonable control must employ reasonable efforts to
overcome such hindrance as promptly as practicable.
14. Successors. Licensee shall not assign or otherwise transfer this
----------
Agreement or any of its rights or obligations under this Agreement without the
prior written consent of Licensor, which consent shall not be unreasonably
withheld. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by and against the respective
successors and assigns of each Party.
15. Interpretation. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Ohio. If and to the
extent that any court of competent jurisdiction determines that it is impossible
to construe any provision of this Agreement consistently with any law or public
policy and consequently holds that provision to be invalid, such holding shall
in no way affect the validity of the other provisions of this Agreement, which
shall remain in full force and effect.
16. Complete Agreement. This Agreement (together with the
------------------
Distribution Agreement, which is hereby incorporated herein by reference)
constitutes the entire Agreement between the Parties with respect to the subject
matter of this Agreement and supersedes all prior or contemporaneous
discussions, negotiations, representations, warranties, or Agreements relating
to the subject matter of this Agreement. This Agreement may not be amended or
otherwise modified except by a written instrument signed by each Party.
IN WITNESS WHEREOF, the undersigned acknowledge and accept the terms of this
Agreement and have duly executed this Agreement.
CORD LOGISTICS, INC. CLIENT
By By
_________________________ ______________________________
Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxx
Vice President and General Manager Executive Vice President, Chief
Financial Officer and Secretary
00 Xxxxxx Xxxx, Xxxxx #000 000 Xxxxx Xxxxx
XxXxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
Facsimile No. (000) 000-0000 Facsimile No. (000) 000-0000
