Exhibit 10.3
EXCLUSIVE SUPPLY AGREEMENT
This EXCLUSIVE SUPPLY AGREEMENT, dated as of the 30th day of September,
1997 (the "Effective Date"), among IGI, INC., a Delaware corporation, having a
principal place of business at Xxxxx Xxxx & Xxxxxxx Xxxxxx, Xxxxx, Xxx Xxxxxx
00000, IGEN, INC., a Delaware corporation, having a principal place of business
at 000 Xxxxxxxx Xxxxxxxx, 3411 Silverside Road, Wilmington, Delaware
(hereinafter referred to as "Igen"), IMMUNOGENETICS, INC., a Delaware
corporation, having a principal place of business at Xxxxx Xxxx & Xxxxxxx
Xxxxxx, Xxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as "Immunogenetics")
IGI, Inc. and its Affiliates (including but not limited to Igen and
Immunogenetics are hereinafter collectively referred to as "IGI"), IMX
PHARMACEUTICALS, INC., a Utah corporation, having a principal place of business
at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxx Xxxxx, Xxxxxxx 00000 (hereinafter referred to
as "IMX").
W I T N E S S E T H:
WHEREAS, U.S. letters patent as set forth in Exhibit F, attached hereto,
for certain topical skin care products (the "Products"), utilizing "NOVASOME(R)
Technology" were issued to IGI;
WHEREAS, IGI is the manufacturer of the Products listed on Exhibit A
attached hereto, which are to be manufactured in accordance with the
specifications and other requirements described in this Agreement;
WHEREAS, IGI desires to sell to IMX, and IMX desires to purchase from IGI,
the Products for sale in the Field, on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE in consideration of the mutual promises, terms and
conditions hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
1. Manufacturing Obligations.
1.1 Requirements. During the term of this Agreement, IMX shall
purchase from IGI one hundred percent (100%) of IMX's requirements of Products
in the Field for sale in the Territory, and IGI agrees to supply and sell to IMX
one hundred percent (100%) of IMX's requirements of Products in the Field for
sale in the Territory.
1.2 Exclusivity. During the term of this Agreement, IGI shall
manufacture for and supply the Products exclusively to IMX for its sale in the
Field.
1.3 Forecasts of Quantities. Each calendar month during the term of
this Agreement, IMX shall provide IGI with IMX's forecast of quantity
requirements for Products
by month for the next twelve (12) months. In developing each such forecast, IMX
and IGI will cooperate with each other and act in good faith to provide
estimates of future requirements as accurately as possible in order to supply
IMX's future Product requirements. All forecasts shall be for the sole purpose
of assisting IGI in its production planning, and the forecasts shall not
constitute an obligation of IMX to purchase the quantities of the Products in
the forecasts.
1.4 Shipping and Delivery Terms. All shipments of the Products from
IGI to IMX shall be delivered from IGI's manufacturing facility in Buena, New
Jersey to such location as IMX may designate. All shipping and delivery costs
shall be solely borne by IMX.
1.5 Product Specifications. IGI shall manufacture the Products in
its various presentations in accordance with the product specifications attached
hereto as Exhibit B (the "Product Specifications").
1.6 Indemnification. The Products are manufactured in accordance
with the plans and the Specifications supplied by IMX to IGI together with IGI's
relevant patent numbers. In addition to Section 9.4 herein, IGI warrants that it
exclusively owns the patent rights to the Products and that it shall maintain at
its expense a product liability insurance policy during the manufacturing of the
Products for the term of this Agreement as set forth in Section 11 of at least
$1,000,000 which shall afford coverage for all claims made by any third party
for the operation of the Products, with a copy of the product liability
insurance policy to be made available to IMX upon its request.
1.7 Labeling and Packaging. IGI shall ship and deliver the Products
in such containers and packaging as shall be appropriate for the protection of
the Products. These labels and packaging shall be in accordance with mutually
agreed upon design specifications provided to IGI by IMX.
2. Compensation to IGI for Manufacturing and Other Services.
2.1 Initial Payment.
(a) As payment for the rights granted to IMX by IGI hereunder,
IMX shall pay IGI a non-refundable initial payment of $252,000 (the "Cash") upon
IMX's completion of its Private Placement Offering ("Offering"), the terms of
which are embodied in a Confidential Private Placement Memorandum dated
September 26, 1997 (the "Memorandum"), or December 31, 1997, whichever comes
first. The "Cash" shall be secured by 72,000 shares of restricted common stock
of IMX pursuant to a Pledge Agreement, a copy of which is attached hereto as
Exhibit G.
(b) As part of the Initial Payment, in addition to the Cash,
IMX shall issue to IGI 214,000 shares of IMX's common stock (the "Shares") as
soon as practicable after the execution of this Agreement. The Shares shall be
subject to the same terms, restrictions, rights, and limitations that are set
forth in the Memorandum, a copy of which has been provided to IGI. The 214,000
share amount is based on $3.50 per share value, or an aggregate
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value of $749,000. In the event that the price per share in the Offering goes
below $3.50 per share, then IGI shall receive such additional shares to give it
$749,000 of value based on the lower price. IGI's rights, if any, to have the
shares registered and certain restrictions on resale are set forth in the
Memorandum. In connection with the issuance of the Shares, IGI shall sign a
Subscription Agreement containing such customary representations as IMX and its
counsel deem necessary to ensure that an exemption form registration is
available.
2.2 Cost Reimbursement as Product Price. During the term of this
Agreement, IMX shall reimburse IGI for its Cost of Manufacture (as defined
below) of the Products. A minimum payment of $350,000 will be paid to IGI at the
time the initial order for Products is placed to offset manufacturing and set-up
costs. The $350,000 payment noted herein will be credited against the cost of
manufacturing for future product shipments.
a. Specified Cost of Manufacture for 1997 and 1998. With
respect to the calendar years 1997 and 1998, IMX shall pay the applicable Cost
of Manufacture set forth on Exhibit C attached hereto for all Products which are
manufactured during such calendar year, except as set forth in Section 11(c)
herein..
b. Cost of Manufacture. With respect to each calendar year
subsequent to 1998, IMX shall pay such prices as are mutually agreed to by the
parties prior to November 30 of the year which immediately precedes the calendar
year for which a determination is being made. It is understood and agreed that
prices for any year subsequent to 1998 are to be determined based on IGI's Cost
of Manufacture of the Products. For purposes of this Agreement, the term "Cost
of Manufacture" shall mean all of IGI's costs and expenses for (i) materials
used in connection with the manufacture of the Products, (ii) direct and
indirect labor used in connection with the manufacture of the Products, and
(iii) overhead incurred in the manufacture of the Products, all as included by
IGI in a manner consistent with its historical cost allocation methods in
determining its costs of goods sold and as determined in accordance with
generally accepted accounting principles consistently applied as between the
periods ending prior to the Effective Date and the periods ending subsequent to
the Effective Date. All Products are manufactured FOB Buena, New Jersey. IMX is
solely responsible for all transportation costs.
c. Research and Development Costs. With respect to outside
laboratory costs incurred by IGI relating to irritation, efficacy and SPF
testing of the Products, IMX agrees to directly reimburse IGI for all of the
costs of these outside services. IGI will advise IMX of the cost of these
outside services prior to sending the Products for testing.
2.3 Royalties on Net Sales and the Products. As additional
compensation to IGI for the supply of Product to IMX, IMX shall pay or cause to
be paid to IGI a royalty on the aggregate of all IMX Net Sales in the Field of
Products in the Territory, using the royalty rates as determined below:
(i) Sixteen percent (16%) of the annual aggregate Net Sales on
all Products that contain Alpha Hydroxy Acids;
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(ii) Ten percent (10%) of the annual aggregate Net Sales on
all Products which are developed by IGI or use IGI's NOVASOME(R) Technology and
do not contain Alpha Hydroxy Acids; and
(iii) Eight percent (8%) of the annual aggregate of Net Sales
of any other skin care or cosmetic products bearing a brand-name to be created
by IMX, which brand-name may or may not include the Exorex name, that IMX brings
to IGI for manufacture and/or development or for other skin care or cosmetic
products bearing the brand-name to be created by IMX, which brand-name may or
may not include the Exorex name, that IGI develops for future marketing and/or
sale by IMX.
3. Payments.
3.1 Non-Royalty Payments. Payments other than royalty payments
required to be made by IMX pursuant to this Agreement shall be made by check in
good funds, payable in US Dollars to the order of IGI, Inc. and shall be
delivered to IGI within thirty (30) days of IGI's submitting its invoice for
such payment to IMX.
3.2 Royalty Payments. IMX shall keep complete and accurate records
of the sales of Products with respect to which a royalty is payable according to
this Agreement and within fifteen (15) days following the end of each month, IMX
shall furnish to IGI a written report setting forth (i) the Net Sales of
Products sold and (ii) royalties which shall have accrued hereunder in respect
to such Net Sales, in accordance with the terms of this Agreement; and (iii) a
current list of returns of the Products for reasons stated in Section 6 herein,
which such returns may result in a reduced payment of royalties to IGI.
Royalties shown to have accrued by each royalty report shall be due and payable
on the date such royalty report is due. Payments of royalties in whole or part
may be made in advance of such due date. Payment of royalties shall be made by
check in good funds, payable in US Dollars to the order of IGI, Inc.
4. Passage of Title.
4.1 Passage of Title. Beneficial ownership of, title and risk of
loss to the Products shall pass to IMX when the Products are loaded onto the
common carrier at IGI's Buena, New Jersey facility.
5. Force Majeure.
5.1 Effects of Force Majeure. Except for obligations for the payment
of money, IMX and IGI shall each be excused for any delay or failure to fulfill
any of their respective obligations under this Agreement if such failure or
delay is caused by any act of God, explosion, fire, storm, earthquake, flood,
drought, riot, embargo, war or seizure, requisition or allocation, any failure
or delay of transportation, shortage of or inability to obtain supplies,
equipment, fuel or labor, or any similar circumstances or event beyond the
reasonable control of the party relying upon such circumstances or event. Any
such excused
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non-performance shall remain excused only for so long as the condition
preventing the performance continues, and upon cessation of such condition, the
affected party shall promptly resume performance hereunder.
5.2 Notice Responsibilities. Each party hereto agrees to give each
other party prompt notice of the occurrence of any condition referred to in
Section 5.1, the nature thereof, and the extent to which the affected party will
be unable fully to perform its obligations hereunder. Each party further agrees
to use reasonable efforts to correct the condition as promptly as possible and
to give the other party prompt notice when it is again fully able to perform
such obligations.
5.3 Termination of Agreement. If, as a result of conditions referred
to in Section 5.1, a party is unable to fully perform its obligations hereunder
for any consecutive period of sixty (60) days, then in such case IGI (in the
case of non-performance by IMX) or IMX (in the case of non-performance by IGI)
shall have the right to terminate this Agreement upon sixty (60) days prior
notice to the non-performing party unless such non-performance is remedied
within such sixty (60) day period.
6. Specifications, Manufacturing Process and Warranties.
6.1 Product Specifications. Each of the Products supplied by IGI to
IMX shall meet the Product Specifications for such Product, as determined in
accordance with the analytical methodology as set forth in Exhibit B hereto.
6.2 Warranties Regarding the Products. IGI hereby warrants to IMX
that all quantities of the Products delivered to IMX hereunder shall (i) conform
to the Specifications, (ii) be labeled, packaged and shipped in accordance with
the Specifications, and (iii) conform to and be manufactured and supplied in all
material respects in accordance with all laws and regulations.
6.3 General Warranty. IGI warrants that, under normal use and
service, the Products shall be free from defects in material and formula design,
if properly handled and stored, for a period of time equivalent to the
shelf-life of the Products. IGI warrants that the Products shall at the time of
delivery as set forth herein be new and free and clear of all liens and
encumbrances. If the Products fail to meet this warranty as described herein,
IGI will make a good faith effort to have the Products conform with the
Specifications as set forth in Section 6.4, below.
6.4 Limited Remedy for Non-Conforming Products as to IMX. In the
event that any of the Products delivered to IMX by IGI hereunder shall fail to
conform or comply with any of the warranties specified in Section 6.2 and 6.3,
IGI's sole obligation with respect to claims of non-conformance or
non-compliance made by IMX shall be at IGI's election (i) to remedy the
non-conformance or non-compliance by replacement of the Products as promptly as
reasonably practicable, but not more than thirty (30) days from the date that
IMX notifies IGI of such non-conformance or non-compliance or (ii) to refund to
IMX the purchase price paid
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by IMX with respect to such non-conforming or non-complying Products. Any claims
by IMX under the warranties specified in this Section 6 shall be made in writing
to IGI within one (1) month after IGI tenders such Products to IMX.
6.5 Limitation of Liability and Waiver of Consequential Damages.
EXCEPT AS PROVIDED IN SECTION 1.6, SECTION 6.3 AND SECTION 9, HEREIN, IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL,
SPECIAL OR CONSEQUENTIAL LOSSES OR DAMAGES, INCLUDING BUT NOT LIMITED TO, ANY
CLAIM FOR DAMAGES BASED UPON LOSS OF PROFITS. IN ADDITION, IN NO EVENT SHALL
IGI'S LIABILITY TO IMX EXCEED THE TOTAL NET PRICE PAID TO IGI BY IMX FOR
PRODUCTS SUPPLIED TO IMX. THE FOREGOING ALLOCATION OF RISKS IS REFLECTED IN THE
PRICE OF THE PRODUCTS.
7. Confidentiality.
7.1 Confidential Information. Each party acknowledges and agrees
that in the course of its performance of this Agreement, confidential
technology, trade secrets, Product Specifications, or other proprietary
information relating to the development, manufacture, promotion marketing and
sale of the Products (hereinafter "Confidential Information") may be made known
or made available to the other party. Accordingly, during and after the term of
this Agreement, each party hereby represents and agrees to the following:
(a) that all right, title and interest to the Confidential
Information is the sole and exclusive property of the party that disclosed it;
(b) that each party agrees that the other party hereto has a
proprietary interest in its Confidential Information. During and after the term
of this Agreement, all disclosures of Confidential Information to the receiving
party, its agents and employees shall be held in strict confidence by such
receiving party, which shall disclose the Confidential Information only to those
of its agents and employees to whom it is necessary in order to properly carry
out their duties as limited by the terms and conditions hereof. During and after
the term of this Agreement, the receiving party shall not use the Confidential
Information except for the purposes of exercising its rights and carrying out
its duties hereunder. The provision of this Section 7 shall also apply to any
assignees, consultants or subcontractors during and after the term of this
Agreement, that the receiving party may engage in connection with this
Agreement. Each party shall take necessary steps to ensure that its employees
respect the terms of this Section 7;
(c) that notwithstanding the provisions of this Section 7,
each party may, to the extent necessary, disclose and use Confidential
information, consistent with the rights of such party otherwise granted
hereunder, for the purpose of (i) engaging in research and development,
conducting testing and marketing programs, or securing institutional or
government approval to test or market any Product, if required; (ii) subject to
confidentiality agreements typically executed in the industry under comparable
circumstances, sharing trial
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results and the data with third parties conducting trials on the Products; or
(iii) securing patent or other intellectual property protection for an
invention. If disclosure and use of the Confidential Information as contemplated
in this Section 7 is made, the disclosing party shall provide the non-disclosing
party with written notice of the same as well as the identification of the
recipient of the Confidential Information.
(d) that notwithstanding anything contained in this Agreement
to the contrary, neither party shall be liable for disclosure of the other
party's Confidential Information if the information is so disclosed:
(i) was in the public domain without violation of the
rights of the non-disclosing party at the time it was disclosed by the
disclosing party to the receiving party; or
(ii) was known to or contained in the records of the
receiving party from a source with rights thereto not in violation of the rights
of the non-disclosing party at the time of the disclosure by the disclosing
party to the receiving party and can be so demonstrated; or
(iii) becomes known to the receiving party from a source
other than the disclosing party without breach of this Agreement by the
receiving party and can be so demonstrated; or
(iv) was required to be disclosed under legal or
administrative process, provided that the disclosing party has given the
non-disclosing party no less than ten (10) days prior written notice of the
disclosing party's intention to make a disclosure pursuant to this Section
7.1(d)(iv); or
(v) was independently discovered from research and
development efforts of the non-disclosing party, by individuals who have not had
access to the disclosures made hereunder;
(e) that if either party discovers a misappropriation of the
other party's Confidential Information by a third party, it shall give the other
party prompt notice thereof and shall take no other action against the alleged
misappropriator without the prior written consent of the other party. The
discovering party agrees to cooperate with the other party, at no out-of-pocket
expense to the discovering party, in connection with any action taken by the
other party to pursue such misappropriator. Any recovery of damages or
attorneys' fees in such actions, or amounts received at settlement thereof,
shall accrue to the party that owns the Confidential Information, net of any
costs and expenses incurred by the other party in obtaining such recovery; and
(f) that the other party shall have no obligation to institute
suit or take action against any misappropriator. In the event that the other
party declines to take such action for any reason, the discovering party shall
have the right, but not the obligation, to take
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such action but shall promptly advise the other party of any counterclaims
brought by the alleged misappropriator and give the other party an opportunity
to defend against such counterclaims. In the event of any such counterclaims,
the discovering party shall not enter into settlement with the alleged
misappropriator without the prior written consent of the other party, which
shall not be unreasonably withheld. Notwithstanding anything herein to the
contrary, the provisions of this Section 7 shall no prohibit or otherwise
restrict the right and ability of IGI to use of its Confidential Information in
the development, manufacture and sale of products that do not conflict with the
rights granted to IMX pursuant to this Agreement.
8. Representations and Warranties of the Parties.
8.1 Representations and Warranties of IMX. IMX hereby represents and
warrants to IGI that:
(a) IMX is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Utah, with the corporate
power and authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of IMX. This Agreement has been duly executed and
delivered by IMX and constitutes the valid, binding and enforceable obligation
of IMX, subject to applicable bankruptcy, reorganization, insolvency, moratorium
and other laws affecting creditors' rights generally from time to time in effect
and to general principles of equity.
(b) IMX is not subject to, or bound by any provision of:
(i) any articles or certificates of incorporation or
by-laws;
(ii) any mortgage, deed of trust, lease, note,
shareholders' agreement, bond, indenture, license, permit, trust, custodianship,
or other instrument, agreement or restriction, or
(iii) any judgment, order, writ, injunction or decree or
any court, governmental body, administrative agency or arbitrator,
that would prevent, or be violated by, or under which there would be a default
as a result of, nor is the consent of any person required for, the execution,
delivery and performance by IGI of this Agreement and the obligations contained
herein, including without limitation, the grant to IMX of the licenses described
hereunder.
8.2 Representations and Warranties of IGI. IGI hereby represents and
warrants to IMX that:
(a) Each of IGI, Inc., Igen and Immunogenetics is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware,
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with the corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on the part of each of IGI, Inc.,
Igen and Immunogenetics. This Agreement has been duly executed and delivered by
each IGI, Inc., Igen and Immunogenetics and constitutes the valid, binding and
enforceable obligation of each IGI, Inc., Igen and Immunogenetics, as the case
may be, subject to applicable bankruptcy, reorganization, insolvency, moratorium
and other laws affecting creditors' rights generally from time to time in effect
and to general principles of equity, Igen and Immonogenetics are each wholly
owned subsidiaries of IGI, Inc.
(b) IGI is not subject to, or bound by any provision of:
(i) any articles or certificates of incorporation or
by-laws;
(ii) any mortgage, deed of trust, lease, note,
shareholders' agreement, bond, indenture, license, permit, trust, custodianship,
or other instrument, agreement or restriction, or
(iii) any judgment, order, writ, injunction or decree or
any court, governmental body, administrative agency or arbitrator,
that would prevent, or be violated by, or under which there would be a default
as a result of, nor is the consent of any person required for, the execution,
delivery and performance by IGI of this Agreement and the obligations contained
herein, including without limitation, the grant to IMX of the licenses described
hereunder.
9. Indemnification Regarding Third Party Claims.
9.1 Indemnification by IMX. With respect to claims brought by Third
Parties against IGI related to the Products, IMX agrees, subject to the
compliance by IGI with its obligations set forth in Section 9.3 below, to
indemnify, defend and hold harmless IGI, its Affiliates, and their respective
directors, officers, employees and agents from and against any Damages arising
out of or in connection with any breach of the representations, warranties,
agreements or covenants of IMX hereunder, except to the extent caused by IGI's
negligent acts, willful misconduct or omissions.
9.2 Indemnification by IGI. With respect to claims brought by Third
Parties against IMX related to the Products, IGI agrees, subject to the
compliance by IMX with its obligations set forth in Section 9.3 below, to
indemnify, defend and hold harmless IMX, and its respective directors, officers,
employees and agents from and against any Damages arising out of or in
connection with any breach of the representations, warranties, agreements, or
covenants of IGI hereunder except to the extent caused by IMX's negligent acts,
willful misconduct or omissions.
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9.3 Indemnification Procedures. A party which intends to seek
indemnification under this Section 9 (such parties any of its Affiliates, or any
of their respective directors, officers, employees or agents, hereinafter
collectively referred to as the "Indemnitee") in respect of an action, suit,
proceeding, claim, liability, demand or assessment asserted against such
indemnity by a Third Party shall promptly give notice thereof to the other party
or parties to this Agreement from which the Indemnitee seeks indemnification
(any such other party hereinafter referred to as the "Indemnitor") within a
reasonable period of time after assertion by any such Third Party thereof;
provided, however, that the failure to provide such notice within a reasonable
period of time shall not relieve the Indemnitor of any of its obligations
hereunder except to the extent that the Indemnitor of any of its obligations
hereunder except to the extent that the Indemnitor is prejudiced by such
failure. The Indemnitor shall have the right to assume the complete control of
the defense, compromise or settlement of any such action, suit, proceeding,
claim, liability, demand or assessment, including, at its own expense,
employment of counsel, and at any time thereafter to exercise, on behalf of the
Indemnitee, any rights which may mitigate any of the foregoing; provided,
however, that if the Indemnitor shall have exercised its right to assume such
control, the Indemnitee; (i) may, in its sole discretion and at its own expense,
employ counsel to represent it (in addition to the counsel employed by the
Indemnitor) in any such matter, and in such event counsel selected by the
Indemnitee shall be required to confer and cooperate with such counsel of the
Indemnitor in such defense, compromise or settlement for the purpose of
informing and sharing information with the Indemnitor; (ii) will, at its own
expense, make available to Indemnitor those employees, officers and directors of
Indemnitee whose assistance, testimony or presence is necessary or appropriate
to assist the Indemnitor in evaluating and in defending any such action, suit,
proceeding, claim, liability, demand or assessment; and (iii) shall otherwise
fully cooperate with the Indemnitor and its counsel in the investigation and
defense of such action, suit, proceeding, claim, liability, demand or
assessment.
9.4 Patent Indemnification. Except as otherwise stated in this
Xxxxxxx 0, XXX will defend, at its own expense any and all suits, actions or
claims, against IMX or its customers, charging that the Products or any process
used in manufacturing any of the Products infringes any patent, industrial
design, trademark, trade secret or copyright of the United States, whether the
alleged infringement pertains to the manufacture, purchase, sale or use of the
Products, and will pay IMX's actual costs, all settlement amounts, and all
damages finally awarded against IMX in any such suit, action or claim and will
indemnify and save harmless IMX's customers from all other expenses thereby
incurred.
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10. Term and Termination.
10.1 Term.
(a) Initial Term. The term of this Agreement shall commence on
the Effective Date and shall continue for twelve (12) months from the date IGI
ships the Initial Order of the Products to IMX (the "Initial Term") unless
sooner terminated as set forth below.
(b) At the end of the Initial Term, IMX must have made a
minimum of $2,000,000 (the "Minimum") in Net Sales of the Products in order for
IMX to retain the exclusivity status granted to it by IGI pursuant to Section
1.2 herein and as applied to the First Renewal Period, as set forth in Section
10.1(c) below. However, if IMX does not reach the Minimum at the expiration of
the Initial Term, IMX shall still be entitled to market the Products as
stipulated herein, but shall forfeit its right to the exclusivity granted to it.
(c) Renewal Terms.
(i) The term of this Agreement may be extended by IMX
for a period of one (1) year, at IMX's option, provided IMX's annual Net Sales
for the first year immediately following the Initial Term exceeds $4,000,000
(the "First Renewal Term").
(ii) In the event that IMX has exercised its option with
respect to the expiration of the First Renewal Term, then at IMX's option and
provided IMX's annual Net Sales have reached or exceeded $6,000,000, then the
term of this Agreement shall be extended (the "Second Renewal Term"), including
IMX's exclusivity rights set forth in Section 1.2 herein.
(iii) In the event that IMX has exercised its option
with respect to the expiration of the Second Renewal Term, then at IMX's option
and provided IMX's annual Net Sales have reached or exceeded $8,000,000, then
the term of this Agreement shall be extended (the "Third Renewal Term"),
including IMX's exclusivity rights set forth in Section 1.2 herein.
(iv) In the event that IMX's Net Sales have reached or
exceeded $10,000,000, at the expiration of the Third Renewal Term and at IMX's
option, IMX may renew the terms of this Agreement and shall be entitled to
retain its exclusivity as set forth in Section 1.2 herein for as long as IMX
shall desire to purchase the Products for sale in the Field.
As concerns Section 10.1(a-c)(i-iv), if IMX falls short
of any of the Net Sales requirements set forth in this Section 10.1, then IMX
shall provide IGI with the following monies, based upon the short-fall
percentage ("Short-Fall Percentages"); within thirty (30) days of the expiration
of the applicable renewal term:
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Short-Fall Percentage Money Due IGI by IMX
--------------------- --------------------
0-25% 5%
25-40% 10%
By way of example, if IMX's annual Net Sales at the
expiration of the Second Renewal Term have reached only $4,500,000, then IMX
shall pay shall pay IGI $300,000, within thirty (30) days of the end of the
Second Renewal Term. The Short-Fall Percentages referenced above apply to all of
the renewal terms mentioned in this Section 10. In addition, so long as IMX pays
IGI its Short-Fall Percentage should the same become due, IMX shall maintain the
exclusivity rights granted to it pursuant to Section 1.2 herein; furthermore,
IMX shall have the right to exercise its option to extend this Agreement in
accordance with the terms set forth in Section 10 above. If IMX does not pay the
Short-Fall Percentage for any applicable Renewal Term, IMX shall forfeit the
exclusivity rights granted to it pursuant to Section 1.2 herein for the duration
of the Renewal Term at issue, but shall be entitled to regain exclusivity status
upon either its meeting the annual Net Sales requirement for the subsequent
Renewal Term or its payment of the applicable Short-Fall Percentage for the
subsequent Renewal Term.
10.2 Breach. In the event of a breach of any provision of this
Agreement, the breaching party shall have thirty (30) days after written notice
thereof by the non-breaching party within which to cure such breach. In the
event that such breach has not been cured within such time period, the
non-breaching party may, on notice to the breach party, terminate this
Agreement.
10.3 Insolvency. Either party may terminate this Agreement on notice
to the other party in the event the other party becomes the subject of a
petition filed for relief under any bankruptcy or insolvency law, which is not
dismissed within thirty (30) days of its filing; any general arrangement with
its creditors; or any liquidation, termination or cessation of its business.
10.4 Survival. Termination of this Agreement for any reason shall
not extinguish the unpaid obligations of any party that accrued prior to the
effective date of termination. The obligations of both parties under Section 7
hereof (with respect to confidentiality) and of both parties under Section 1.6,
Section 6, Section 9 shall survive termination for any reason.
11. Effect of Termination.
11.1 Effects in General. Upon termination of this Agreement for any
reason:
(a) IGI shall immediately terminate production of the Products
and each party shall promptly terminate all use of any Confidential Information
of the other party.
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(b) Each party shall, at the request of the other, either
promptly return to the other party or dispose of all of the other party's
Confidential Information in any form whatsoever which it may have in its
possession, custody or control (whether direct or indirect).
(c) IMX shall, at the request of IGI, purchase all of (i) the
existing inventory of the Products, which inventory shall not exceed four (4)
months forecasted volume as referred to in Section 1.3 above, at the then
existing Cost of Manufacture for such Product, and (ii) the parts, materials and
components which, but for the termination, would have ultimately comprised the
Products to be supplied hereunder. All parts, materials and components of the
Products shall be purchased at the price paid by IGI for such items, plus an
amount equal to the transportation, insurance and warehousing expenses incurred
by IGI in acquiring and storing such parts, materials and components.
(d) IMX shall not be released from its obligation to pay any
sums owing to IGI at the time of termination and neither party shall be released
from the obligation to perform any other duty or to discharge any other
liability that has been incurred prior thereto. Subject to the foregoing,
neither party shall by reason of the termination of this Agreement be liable to
the other for compensation or damages on account of the loss of profits or
sales, or expenditures, investments or commitments in connection therewith.
12. Commercialization.
12.1 Government Approvals. IMX shall undertake all studies necessary
for Registration of the Products. Rights in and to the data contained in such
Registrations shall be the property of IMX.
12.2 Marketing Strategy. IMX shall have the exclusive responsibility
for the overall marketing strategy for the Products. IMX shall communicate the
general marketing strategy to IGI, upon IGI's request of the same. All marketing
material and brand names developed by IMX shall remain the exclusive property of
IMX.
12.3 Advertising and Promotion. IMX shall have the exclusive
responsibility for the preparation and dissemination of all advertising and
promotional materials including the selection and use of trade names and
trademarks in connection with the Products and shall pay all costs in connection
therewith.
13. Miscellaneous Provisions.
13.1 Right of First Refusal. IGI agrees to offer IMX the right to
sell and market any new Products developed during the term of this Agreement
before offering such Products to any other party. The terms under which IGI
agrees to sell and IMX agrees to purchase said new Products is subject to
negotiation between IGI and IMX.
13
13.2 Dealings with Other Parties. Nothing contained in this
Agreement shall be construed to limit the right of IGI to utilize the
NOVASOME(R) Technology in product formulations which are owned, licensed or
utilized by other parties.
13.3 Assignment. No party shall assign any or all of its rights or
obligations hereunder to any third party without first obtaining the written
consent thereto of the other party, which consent shall not be unreasonably
withheld or delayed, except that in the event of an assignment in connection
with a sale or transfer of all or substantially all of the assets of the
assigning party relating to this Agreement no such consent shall be required if
the assignee agrees to be bound by the terms hereof within sixty (60) days after
such assignment. The terms and provisions of this Agreement shall inure to the
benefit of, and be binding upon, IMX, IGI and their respective successors and
permitted assigns. Any reference to IMX and IGI hereunder shall be deemed to
include the successors thereto and permitted assigns thereof.
13.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida applicable to
agreements made and to be fully performed therein, without regard to principles
of conflicts of law.
13.5 Amendments. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure by
IMX or IGI therefrom, shall be effective unless the same shall be in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by IMX and IGI,
and each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
it is given. No provision of this Agreement shall be varied, contradicted or
explained by any oral agreements, course of dealing or performance or any other
matter not set forth in an agreement in writing and signed by IMX and IGI.
13.6 No Partnership. Nothing herein contained shall be deemed to
create a joint venture, agency, partnership or employer-employee relationship
between the parties hereto. Neither party shall have any power to enter into any
contracts or commitments in the name of, or on behalf of, the other party, or to
bind the other party in any respect whatsoever.
13.7 Notices. All notices, requests and other communications to IMX
or IGI hereunder shall be in writing (including telecopy or similar electronic
transmissions) and shall be personally delivered or sent by telecopy or other
electronic facsimile transmission during normal business hours or by registered
mail or certified mail, return receipt requested, postage prepaid, in each case
to the respective address specified below (or to such other address as may be
specified in writing to the other party hereto):
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If to IMX:
IMX Pharmaceuticals, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
Tel: (000) 000-0000
Fax: (000) 000-0000
If to IGI:
IGI, Inc.
Wheat Road and Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxx, Xxx Xxxxxx 00000
Attention: President
Tel: (000) 000-0000
Fax: (000) 000-0000
Any notice or communication given in conformity with this Section shall be
deemed to be effective when received by the addressee, if delivered by hand,
telecopy or other electronic facsimile transmission, and three (3) days after
mailing, if mailed.
13.8 Entire Agreement. This Agreement constitutes the entire
agreement of IMX and IGI with respect to the subject matter hereof, and all
prior or contemporaneous understandings or agreements, whether written or oral,
between IMX and IGI with respect to such subject matter are hereby superseded in
their entirety.
13.9 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by law (i) all other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be liberally construed in
order to carry out the intentions of the parties hereto as nearly as may be
possible and (ii) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. To the extent permitted by applicable law, IMX and IGI hereby
waive any provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
13.10 Waiver. No failure on the part of IMX or IGI to exercise and
no delay in exercising any right, power, remedy or privilege under this
Agreement, or provided by statute or law or in equity or otherwise, shall
impair, prejudice or constitute a waiver of any such right, power, remedy or
privilege or be construed as a waiver of any breach of this Agreement or as an
acquiescence therein, nor shall any single or partial exercise of any such
15
right, power, remedy or privilege preclude any other or further exercise thereof
or the exercise of any other right, power, remedy or privilege.
13.11 Survival. Notwithstanding anything else in this Agreement to
the contrary, the parties agree that sections 5, 6, 7, 8, 9 and 10 shall survive
the termination or expiration of this Agreement, as the case may be, to the
extent required thereby for the full observation and performance by any or all
of the parties hereto.
13.12 Headings. The section headings used herein are for convenience
only and shall not in any way affect the construction of, or be taken into
consideration interpreting, this Agreement.
13.13 Counterparts. This Agreement may be executed in counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original, and all of which counterparts, taken together, shall constitute
one and the same instrument.
14. Defined Terms.
For purposes of this Agreement, the following terms shall have the
meanings set forth below. Certain other terms are defined in the text of this
Agreement.
"Affiliate" shall mean any corporation or non-corporate entity which
controls is controlled by, or is under common control with a party. A
corporation or non-corporate entity shall be regarded as in control of another
corporation if (i) it owns or directly or indirectly controls at least fifty
percent (50%) of the voting stock of the other corporation, or (ii) in the
absence of the ownership of at least fifty percent (50%) of the voting stock of
a corporation or in the case of a non-corporate entity, it has the power to
direct or cause the direction of the management and policies of such corporation
or non-corporate entity, as applicable.
"Agreement" means this Exclusive Supply Agreement.
"Damages" shall mean any damages, losses, claims, liabilities and
expenses (including reasonable attorney's fees and expenses).
"Effective Date" means the date set forth at the beginning of this
Agreement.
"FDA" shall mean the United States Food and Drug Administration, or
any successor entity.
"Field" shall mean mass merchandising market for skin care Products,
multi-level marketing of the Products, direct response advertising of the
Products, and/or marketing through the use of electronic media, excluding
clinics and estheticians, dermatologists and upscale retailers.
16
"Governmental Authority" shall mean any domestic or foreign,
federal, state or local or other governmental, administrative or regulatory
authority, body, agency, court, tribunal, or similar entity.
"Initial Order" shall mean the shipment by IGI to IMX of the first
order consisting of each of the Products as referred to in (i) and (ii) of the
"Products" definition set forth in this Section 14.
"Net Sales" with respect to any Product means the gross sales amount
of such Product billed by IMX to Third Party customers, less:
(i) actual credited allowances to such Third Party customers;
(ii) the amounts of trade and cash discounts on Products, to
the extent such trade and cash discounts are not deducted by IMX at the time of
invoice in order to arrive at the gross invoice prices; and
(iii) all invoiced transportation and handling charges, sales
taxes, excise taxes, use taxes and import/export duties actually paid.
"NOVASOME(R) Technology" shall mean the inventions (as described in
several patents and patent applications), trademarks, and information, know-how
and skill which is unique and confidential relating to organized lipid
structures, and lipid vesicle encapsulation technologies useful in conjunction
with various products including topical dermatological products for localized
usage at the delivery zone and processes for making the same.
"Products" shall mean (i) topical skin care products manufactured
utilizing NOVASOME(R) Technology; (ii) topical skin care products manufactured
according to the formulations set forth in Exhibit B; and (iii) topical skin
care products developed during the course of this Agreement which shall not
include those products pertaining to the treatment of psoriasis, eczema or toe
fungus.
"Product Line" shall mean all of the presentations and unit sizes or
(i) the Products sold by IGI to IMX pursuant to the terms and conditions of this
Agreement, and (ii) such additional products as IMX may sell or market under the
same brand name or trademark as IMX is using to market the Products sold by IGI
to IMX hereunder.
"Registration" in relation to any Product means such Approvals by
government authorities in a country of or community or association of countries
included in the Territory (including, where applicable, price approvals) as may
be legally required before such Product may be commercialized in such country.
"Specifications" shall mean the Product Specifications.
17
"Territory" shall mean the United States of America, Canada, and
Puerto Rico.
"Third Party" shall mean any person or entity other than IGI, IMX,
and their respective Affiliates.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
by their duly authorized officers as of the Effective Date.
IMX PHARMACEUTICALS, INC. IGI, INC.
By:__________________________________ By:____________________________________
Name:________________________________ Name:__________________________________
Title:_______________________________ Title__________________________________
IGEN, INC. IMMUNOGENETICS, INC.
By:__________________________________ By:____________________________________
Name:________________________________ Name:__________________________________
Title:_______________________________ Title__________________________________
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INDEX OF EXHIBITS
Exhibit A List of Current Products
Exhibit B Product Specifications
Exhibit C 1997 - Cost of Manufacture
Exhibit D The Trademark
Exhibit E Inventory Guidelines
Exhibit F List of Patents
Exhibit G Pledge/Escrow Agreement
EXHIBIT F
List of Patents
US 4,853,228
US 4,855,090
US 4,895,452
US 4,911,928
US 4,917,951
US 4,942,038
US 5,000,960
US 5,019,174
US 5,019,392
US 5,023,086
US 5,032,457
US 5,104,736
US 5,147,723
US 5,160,669
US 5,164,191
US 5,213,805
US 5,219,538
US 5,234,767
US 5,256,422
US 5,260,065
US 5,405,615
US 5,439,967
US 5,474,848
US 5,490,985
US 5,013,497
