Exhibit 10-38
CULTURE AGREEMENT
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This Agreement is made as of this 1st day of March, 1997 and is between
Xxxxxxx Nursery, Inc. of 16127 Winans, Xxxxx Xxxxx, XX 00000 ("Xxxxxxx") and
NaPro BioTherapeutics, Inc. of 0000 Xxxxx Xxxx, Xxxx X, Xxxxxxx, XX 00000
("NaPro") with respect to the culture of certain Taxus Media Hicksii trees.
STATEMENT OF BACKGROUND INFORMATION
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A. NaPro has agreed to purchase approximately [TEXT REDACTED] trees from
Xxxxxxx pursuant to an Agreement for Sale and Purchase of Nursery Stock
effective as of the date of this Agreement, between Xxxxxxx Nursery, Inc. and
NaPro BioTherapeutics, Inc. ("Purchase Agreement").
B. NaPro expects to acquire and to deliver to Xxxxxxx approximately [TEXT
REDACTED] trees for culture by Xxxxxxx hereunder.
C. NaPro desires to lease from Xxxxxxx certain real property on which all
of the Xxxxxxx Trees (defined below) and the Non-Xxxxxxx Trees (defined below)
will be transplanted and located. NaPro has agreed to lease such real property
from Xxxxxxx pursuant to a certain Lease ("Lease") of even date herewith.
D. NaPro desires that Xxxxxxx transplant, care for, and culture the
Xxxxxxx Trees and the Non-Xxxxxxx Trees, and that Xxxxxxx harvest, cut, store,
and ship to NaPro all or certain portions of the Xxxxxxx Trees and the Non-
Xxxxxxx Trees, and Xxxxxxx has agreed to do so.
E. NaPro has previously purchased certain other Taxus Media Hicksii Trees
from Xxxxxxx pursuant to a Purchase Agreement dated May 1, 1996. Xxxxxxx is
culturing such trees for NaPro pursuant to a Culture Agreement dated March 1,
1996 and the trees are growing on real property subleased to NaPro by Xxxxxxx
pursuant to certain Subleases dated April 1, 1996. All such agreements are
collectively referred to herein as the "Spring Agreements".
F. The parties desire to set forth the terms of their agreements in this
writing.
STATEMENT OF AGREEMENT
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For their mutual convenience and protection, and in consideration of the
mutual covenants and benefits contained in this Agreement, the parties agree as
follows:
SECTION ONE: DEFINITIONS
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1.1 Definition of Xxxxxxx Trees. The "ZelenkaTrees" for purposes of
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this Agreement shall be defined as all of those [TEXT REDACTED] Trees [TEXT
REDACTED] and all of those [TEXT REDACTED] Trees [TEXT REDACTED] purchased by
NaPro from Xxxxxxx under the Purchase Agreement.
1.2 Definition of Non-Xxxxxxx Trees. The "Non-Xxxxxxx Trees" for purpose
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of this Agreement shall be defined as those [TEXT REDACTED] Trees [TEXT
REDACTED] owned by and acquired from sources other than Xxxxxxx which are
delivered by NaPro to Xxxxxxx for transplantation and culture by Xxxxxxx under
this Agreement.
1.3 Definition of Trees. The Xxxxxxx Trees and the Non-Xxxxxxx Trees
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shall be collectively referred to as the "Trees".
SECTION TWO: CULTURE OBLIGATIONS
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2.1 Transplanting. During the term of this Agreement, Xxxxxxx agrees to
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accept and transplant the Trees pursuant to the instructions of NaPro and
pursuant to the schedule described below in paragraph 5.2.
2.2 Transplant, Care and Culture of Trees. During the term of this
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Agreement, Xxxxxxx agrees to transplant, grow, maintain, and care for all of the
Trees pursuant to the instructions of NaPro. In the absence of such
instructions, Xxxxxxx agrees that its care of the Trees shall be consistent with
Xxxxxxx'x normal reasonable cultural practices. Xxxxxxx shall bear all costs
and expenses in connection with the transplanting, care, and maintenance of the
Trees, provided that Xxxxxxx shall be reimbursed for such expenses as provided
in below under Section Three.
2.3 Harvesting & Storing. In addition to Xxxxxxx'x obligations described
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above in paragraphs 2.1 and 2.2, Xxxxxxx agrees to harvest, cut, place in cold
storage, pack, and prepare for shipping any of the Trees or Tree cuttings in
accordance with the NaPro specifications attached hereto as Exhibit 2.2 ("NaPro
Specifications"). Notwithstanding the foregoing, Xxxxxxx shall not be required
to ship any Trees or Tree cuttings to NaPro if NaPro is not current in all of
its obligations to Xxxxxxx under the Purchase Agreement, this Agreement, the
Lease, and the Spring Agreements.
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Any schedules for any activities described in this paragraph shall be mutually
agreed upon by Xxxxxxx and NaPro. All Trees or Tree cuttings shall be shipped
to NaPro FOB Xxxxxxx at NaPro's expense. Further, Xxxxxxx shall not be required
to store, after harvest, any Trees or Tree cuttings for a period exceeding six
months, and Xxxxxxx shall be entitled to ship to NaPro any Trees or Tree
cuttings (in accordance with the NaPro Specifications) as necessary to ensure
that such limit is not exceeded, unless the parties have otherwise agreed in
writing.
SECTION THREE: COMPENSATION AND EXCLUSIVITY
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3.1 Compensation. As compensation for its services under this Agreement,
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Xxxxxxx shall be entitled to receive [TEXT REDACTED]
3.2 Invoices and Payment. Xxxxxxx shall be entitled to invoice NaPro for
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any sums due hereunder on a monthly basis. Such invoices shall be paid within
thirty (30) days of the invoice date and pursuant to Xxxxxxx'x other standard
terms and conditions, which are attached hereto as Exhibit 3.2 ("Xxxxxxx
Terms").
3.3 Exclusivity. During the term of this Agreement, NaPro agrees that
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Xxxxxxx shall be the exclusive provider of all transplanting services, cultural
services, all harvesting and cutting services, all storage services, and any
other services provided hereunder, with respect to all of the Trees, and that
NaPro will not contract or arrange for any other provider of such services with
respect to the Trees or the cuttings thereof. NaPro further agrees that all
products and materials which may be used in connection with the above-described
services shall be purchased and/or acquired exclusively by and through Xxxxxxx
under the terms of this Agreement and that NaPro shall not contract or arrange
for any such materials or products to be provided by any other person or entity
in any other manner.
SECTION FOUR: TERM AND TERMINATION
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4.1 Term. The term of this Agreement shall commence as of the effective
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date hereof and shall continue through 11:59 p.m. on February 28, 2006, unless
earlier terminated by the parties hereunder.
4.2 Extensions of Term. NaPro shall be entitled to renew the term of this
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Agreement, on the same terms and conditions set forth herein, for two separate
five year renewal terms; provided,
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however, that NaPro shall not be entitled to renew this Agreement for any
extended term unless NaPro simultaneously renews the Lease for an extended term
for the same duration. If NaPro desires to exercise any such option, it shall
do so in writing to Xxxxxxx at least 180 days prior to the expiration of the
original or extended term.
4.3 Termination. This Agreement may not be terminated by either party
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hereto except as provided in this paragraph 4.3. If either party fails to pay
any sums due hereunder or any sums due under this Agreement, the Purchase
Agreement, the Lease, or the Spring Agreements within five (5) days after such
sums are due, or if either party defaults under any of its other obligations
under this Agreement, the Purchase Agreement, the Lease, or the Spring
Agreements, and such default continues for ten (10) days after written notice
thereof, then the non-defaulting party shall be entitled to terminate this
Agreement and recover any damages resulting from the breach, in addition to any
other legal or contractual remedy available to the non-defaulting party.
Further, Xxxxxxx shall be entitled to terminate this Agreement, effective
immediately upon written notice to NaPro, if NaPro defaults under any of its
obligations under this Agreement, the Culture Agreement, the Lease, or the
Spring Agreements more than four (4) times during any twelve (12) month period.
4.4 Obligations Upon Termination. Upon the termination or expiration of
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this Agreement, all amounts due to either party under this Agreement shall
become due and payable within 10 days following the termination or expiration.
SECTION FIVE: LEASE ISSUES
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5.1 Lease. As of the effective date of this Agreement, Xxxxxxx and NaPro
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shall enter into a lease with respect to any real property owned by Xxxxxxx on
which the Trees may be located ("Leases"). Such Lease shall be in the form
attached hereto as Exhibit 5.1. The Lease shall form a part of this Agreement
and any breach of the provisions of the Lease shall be deemed a breach of this
Agreement. NaPro's obligations under the Lease and the legal description of
the leased premises thereunder shall not be reduced, limited, or changed even if
NaPro causes the harvest and/or removal of any or all of the Trees from such
leased premises prior to the termination of the Lease.
5.2 Transplanting and Lease. The Lease will initially lease approximately
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[TEXT REDACTED] acres of Xxxxxxx-owned real property to NaPro. Xxxxxxx and NaPro
agree that NaPro will instruct Xxxxxxx to transplant on such real property, on
or before June 30, 1997, all
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of those six year old Trees purchased from Xxxxxxx by NaPro under the Purchase
Agreement, as well as a certain number of trees which have not been purchased by
NaPro from Xxxxxxx. As of the effective date of this Agreement, the parties do
not know whether there will be sufficient space (after the aforementioned
transplanting) on such parcel to transplant any of the [TEXT REDACTED] Trees
purchased from Xxxxxxx by NaPro under the Purchase Agreement. If there is room
to transplant any of the [TEXT REDACTED] Trees, then the parties agree that
Xxxxxxx shall transplant, on or before June 30, 1997, as many of the [TEXT
REDACTED] Trees as possible on the such parcel. If, however, all of the [TEXT
REDACTED] Trees purchased under the Purchase Agreement cannot be transplanted
onto the such parcel prior to June 30, 1997, then Xxxxxxx and NaPro agree to use
good faith efforts to negotiate a lease, with NaPro as lessee and Xxxxxxx as
lessor, pursuant to which NaPro shall lease from Xxxxxxx such real estate as may
be necessary for the transplanting, growing, and culturing of such remaining
[TEXT REDACTED] trees. Such lease shall: (i) commence after January 1, 1998
and before June 30, 1998 and before the transplanting of any such trees on the
land, (ii) expire at 11:59 p.m. on February 28, 2006, (iii) include two five
year renewal options subject to the same terms and conditions of the two five
year renewal options under the Lease, and (iv) include terms substantially
similar to the terms of the Lease. The transplanting of such [TEXT REDACTED]
trees shall occur after January 1, 1998 and before June 30, 1998.
SECTION SIX: GENERAL TERMS
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6.1 Arbitration. Any disagreements or dispute between the parties with
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regard to this Culture Agreement shall be resolved exclusively by arbitration
which shall be binding upon both of the parties. The arbitration shall be
conducted by a panel of three arbitrators under the rules of the American
Arbitration Association. One arbitrator shall be selected by Xxxxxxx, one by
NaPro, and one by the two selected arbitrators. Any arbitration shall be
conducted in Grand Haven, Michigan and the arbitrators shall apply Michigan law.
Unless otherwise allocated or assessed by the arbitrators, the parties shall
share equally the fees and expenses of the arbitrators.
6.2 Definition of Xxxxxxx'x Costs.
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x. Xxxxxxx'x actual costs and expenses shall be calculated based
upon Xxxxxxx'x current cost accounting system. Such cost accounting system will
base Xxxxxxx'x costs and expenses upon, among other things, the number of hours
of labor times Xxxxxxx'x loaded labor rate, plus any other actual costs incurred
by Xxxxxxx such as crate rental, electricity charges,
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shipping charges, etc. The parties acknowledge and agree that Xxxxxxx'x loaded
labor rate includes charges for items related to Xxxxxxx'x performance under
this Agreement such as insurance, irrigation costs (including well drilling and
irrigation equipment), acquisition of equipment (including harvesting
equipment), and repair and maintenance charges. Such actual costs and expenses
shall not include: (i) marketing costs or general administrative costs except to
the extent that those costs are part of Xxxxxxx'x loaded labor rate, (ii)
monthly rental payments due under the Lease, or (iii) those real estate taxes
which are Xxxxxxx'x responsibility under the Lease.
b. NaPro shall have the right to audit Xxxxxxx'x books and records
pertaining to calculation of Xxxxxxx'x costs. Any such inventory shall be
conducted at reasonable intervals and at reasonable times, and shall not
interfere with the business operations of Xxxxxxx. Furthermore, NaPro agrees to
keep confidential and not to disclose to any other party (except to any
professional advisors or employees who have a need to know) any information or
documents learned or discovered by NaPro in connection with any such audit. If
any such audit uncovers overcharges or undercharges, the parties shall attempt
to agree upon the amounts of such overcharges or undercharges and pay to one
another any such amount as may be necessary to correct the overcharge or
undercharge. If the parties cannot agree on any overcharge or undercharge,
either party shall be entitled to submit their question to arbitration under
paragraph 6.1. If the parties agree or an arbitration determines that Xxxxxxx
has overcharged NaPro an amount greater than ten (10%) percent, then Xxxxxxx
shall bear the cost of the audit by NaPro and the cost of the arbitration.
Otherwise, the cost of the audit and arbitration shall be borne by NaPro.
6.3 Xxxxxxx'x Limited Warranty. Xxxxxxx hereby warrants to NaPro that:
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(i) ninety two percent (92%) or more of the Xxxxxxx Trees transplanted between
January 1, 1997 and June 30, 1997 by Xxxxxxx hereunder will be alive as of
August 31, 1997, and (ii) 92% or more of the Xxxxxxx Trees transplanted by
Xxxxxxx by January 1, 1998 and June 30, 1998 hereunder will be alive as of
August 31, 1998. . NaPro or its representatives shall be entitled to inspect
all such Xxxxxxx Trees, with a Xxxxxxx representative, at a time mutually agreed
on by Xxxxxxx and NaPro within ten (10) days before or after the above-described
applicable August 31 date for the purpose of determining the survival rates
under this paragraph 6.3. If NaPro notifies Xxxxxxx in writing, on or before
the date 10 days after the above- described applicable August 31 date, , that
the survival rate of the relevant
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transplanted Xxxxxxx Trees is less than ninety two percent (92%), then Xxxxxxx
shall be required to elect one of the following remedies, in its sole
discretion: (1) Xxxxxxx may reimburse NaPro for the purchase price under the
Purchase Agreement, for the number of Xxxxxxx Trees purchased by NaPro under the
Purchase Agreement multiplied by 92% minus the number of surviving Xxxxxxx
Trees, or (2) Xxxxxxx may replace and transplant (at Xxxxxxx'x cost) the non-
surviving Xxxxxxx Trees with a number of comparable Trees which is equal to the
number of Xxxxxxx Trees purchased and paid for by NaPro under the Purchase
Agreement multiplied by 92% minus the number of surviving Xxxxxxx Trees.
Notwithstanding anything to the contrary in this paragraph 6.3, if NaPro (or its
representatives) fails to inspect the Xxxxxxx Trees within 10 days before or
after the above-described applicable August 31 date, or if NaPro fails to
notify Xxxxxxx in writing on or before the date 10 days after the above-
described applicable August 31 date, that the survival rate of the Xxxxxxx Trees
is less than 92%, then NaPro shall be deemed to have waived all of its rights
under this paragraph 6.3.
6.4 No Warranties. Xxxxxxx offers no warranties or guarantees regarding
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any aspect (including survival or viability) of any Non-Xxxxxxx Trees which are
transplanted or cultured by Xxxxxxx under the terms of this Agreement. Further,
except as otherwise provided in paragraph 6.3, Xxxxxxx offers no warranties or
guarantees regarding any aspect (including the survival or viability) of any
Xxxxxxx Trees or the Non- Xxxxxxx Trees which are transplanted or cultured under
the terms of this Agreement. Without limiting the generality of the foregoing,
Xxxxxxx also offers no warrantees or guarantees regarding: (1) the quantity of
Tree cuttings which will be harvested, cut, or produced hereunder, or (2) the
quality or suitability of the Trees or Tree cuttings for any purpose. Finally,
Xxxxxxx offers no warrantees of merchantability or fitness for any particular
purpose.
6.5 Force Majeure. Neither party shall be liable to the other in the
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event that performance of its obligations hereunder shall be prevented by any
cause beyond its reasonable control, including without limitation acts of God,
acts of government, accident, fire, flood, natural disaster, delay or
destruction of means of transport, or other disaster ("events of force
majeure"), but the affected party shall use best efforts to avoid or remove the
cause of such nonperformance and shall continue performance hereunder with the
utmost dispatch whenever such cause is removed.
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SECTION SEVEN: MISCELLANEOUS
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7.1 Successors and Assigns. This Agreement shall be binding upon and
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inure to the benefit of the parties hereto and their respective successors and
assigns. Neither party shall assign any of their rights, privileges, or
obligations under this Agreement without the written consent of the other party,
which shall not be unreasonably withheld.
7.2 Notices. All notices, requests, demands, and other communications
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hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed certified or registered mail, return receipt
requested with postage prepaid, to the parties at their addresses on page one of
this Agreement. Any party may change its address by providing notice hereunder
to all of the other parties.
7.3 Headings. The headings of sections herein and in the exhibits
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referred to herein are for convenience only and shall not control of effect any
meaning or interpretation of any provision of this Agreement.
7.4 Entire Agreement; Modifications. This Agreement contains the
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entire agreement among the parties hereto with respect to the transactions
contemplated hereby. This Agreement may be modified only by a written agreement
signed by all of the parties hereto.
7.5 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.6 Applicable Law. This Agreement shall be construed and enforced
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in accordance with the laws of the State of Michigan.
7.7 Severability. In the event that any of the provisions of this
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Agreement shall be held to be invalid or unenforceable, the same shall not
affect the validity or enforceability of any other provisions of this Agreement,
unless such validity or unenforceability shall materially affect and frustrate
the intentions of the parties.
7.8 Time is of the Essence. All of the parties hereto agree and
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acknowledge that time is of the essence in connection with this Agreement.
7.9 No Waiver. No waiver of any rights of either party hereunder
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shall be effective against such party unless set forth in writing and signed by
such party. Further, no waiver of any right hereunder shall be construed to be a
waiver of such right or any other right hereunder or in
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the future.
XXXXXXX NURSERY, INC.
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Xxxx Xxxxxxx
Vice President
NAPRO BIOTHERAPEUTICS, INC.
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Xxxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
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