MANUFACTURING AND SUPPLY AGREEMENT
THIS MANUFACTURING AND SUPPLY AGREEMENT (this "AGREEMENT") is entered into
effective as of May 22, 2002 (the "EFFECTIVE DATE"), by and between Anabolic
Laboratories, Inc., a California corporation ("ANABOLIC"), and Twin Laboratories
Inc., a Utah corporation ("TWINLAB"), with such foregoing entities also referred
to hereafter individually as a "PARTY," and collectively, as the "PARTIES."
A. WHEREAS, Concurrent herewith, Anabolic, Twinlab and Health Factors
International Inc., a Delaware corporation and wholly owned subsidiary of
Twinlab ("HFI"), are consummating the transactions contemplated by that certain
Asset Purchase Agreement, dated as of May 22, 2002, pursuant to which Anabolic
is purchasing certain manufacturing assets of HFI;
B. WHEREAS, Concurrent herewith, HFI and LeBruns, LLC, a Delaware limited
liability company and affiliate of Anabolic ("LEBRUNS"), are consummating the
transactions contemplated by that certain Real Estate Purchase and Sale
Agreement dated as of May 22, 2002, pursuant to which LeBruns is purchasing the
manufacturing facility of HFI located at ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ inter alia; and
C. WHEREAS, Twinlab desires to buy from Anabolic and Anabolic desires to
manufacture, package and sell to Twinlab the Products (as defined in Section
1.8), under the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the mutual agreements and covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the Parties hereto agree as follows:
1. DEFINITIONS.
1.1 "AFFILIATES" shall mean with respect to any Person (defined below),
any other Person which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with such
Person.
1.2 "▇▇▇▇▇▇▇ LINE" shall mean that portion of Twinlab's line of dietary
supplements and other products marketed under the ▇▇▇▇▇▇▇ trademark and set
forth on Schedule A, as the same may be amended from time to time upon written
request by Twinlab, subject to the provisions of this Agreement.
1.3 "FDA" shall mean the United States Food and Drug Administration.
1.4 "GOVERNMENTAL ENTITY" shall mean any court, arbitrator, federal,
state, local or foreign government agency, regulatory body or other governmental
authority.
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1.5 "IMPROVEMENTS" shall mean any and all developments, modifications,
improvements, upgrades, enhancements or discoveries related to the Products,
whether or not patenable.
1.6 "KNOW-HOW" shall mean know-how, including, without limitation,
methods, trade secrets, recipes, procedures, technical and proprietary
information, research and development information, inventions (whether or not
patentable), ideas, schematics, documentation, diagnostic aids, designs,
discoveries, techniques, concepts, data, specifications, formulas, batch
records, systems, diagrams, drawings, prototypes, samples, plans, reports,
whether or not reduced to writing and any and all documentation related thereto.
1.7 "PERSON" means an individual, corporation, limited liability company,
partnership, trust, joint venture, association, organization, or other entity or
group (which term shall include a "group" as such term is defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) or any Governmental
Entity.
1.8 "PRODUCTS" shall mean the products set forth on Schedule A to be
manufactured by Anabolic on behalf of Twinlab pursuant to this Agreement, as the
same may be amended from time to time upon request by Twinlab, subject to the
provisions of this Agreement.
1.9 "PRODUCT LIABILITY" shall mean, with respect to any product produced
or sold by any Party, any liability or obligation arising from any claim for
personal injury, consumer redress, death, property damage or other losses or
damages under a product liability, tort or other theory of liability, including,
without limitation, any common law, statutory or equitable cause of action; and
any liability or obligation for the recall, servicing, modification or
enhancement of any Product.
1.10 "TRADEMARKS" shall mean the ▇▇▇▇▇▇▇ trademark and any trademarks
utilized as a product name as set forth in Schedule A, together with any other
trademark identified on Schedule A.
1.11 "APPLICABLE LAWS" shall mean current Good Manufacturing Practices
(cGMPs) under NNFA guidelines or any cGMPs promulgated by the United States Food
and Drug Administration ("FDA") as the same may be modified from time to time
and any relevant federal, state or local United States laws, rules and/or
regulations governing manufacturing facilities and manufacturing practices
concerning dietary supplements, including the Food Drug and Cosmetic Act. In the
event of a conflict between any cGMP's promulgated by the NNFA and FDA, the
FDA's cGMP's shall be deemed to be applicable to this Agreement.
2. MANUFACTURE, LABELING AND PACKAGING OF THE PRODUCTS.
2.1 Exclusive Supply and Purchase of the ▇▇▇▇▇▇▇ Line. During the term of
this Agreement, subject to the provisions hereof, Twinlab hereby appoints
Anabolic as Twinlab's independent exclusive manufacturer of the Products set
forth on Schedule A, with all the rights, privileges and obligations associated
therewith, and Twinlab shall purchase all of its
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requirements for such Products from Anabolic. Anabolic agrees that all Products
shall be manufactured exclusively at the manufacturing facility located at ▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇; provided, however, Anabolic may also manufacture
Products at its facility located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ if
Twinlab is provided with no less than thirty days notice of any election by
Anabolic to shift the manufacture of any Products to the Irvine facility.
Twinlab may also purchase products other than the Products from Anabolic and
Anabolic shall supply such products at such times and in such quantities as
mutually agreed by the Parties. The Parties acknowledge that certain ▇▇▇▇▇▇▇
brand products other than the Products may be manufactured by third parties (or
Twinlab) and are not subject to this Agreement.
2.2 Manufacturing Specifications. Anabolic shall manufacture the Products
according to the manufacturing batch records, vendor/supplier, and quality
control specifications provided by Twinlab, including amounts, procedures and
the raw material, finished goods and analytical testing requirements for the
manufacture of the Products, which specifications shall, unless amended by
Twinlab in writing, be consistent with the specifications for the Products
utilized by Twinlab as of the Effective Date and delivered by Twinlab to
Anabolic upon the execution of this Agreement (the "SPECIFICATIONS"). Anabolic
shall test each finished Product lot produced to assure compliance with the
Specifications in accordance with the testing protocol set forth in the
Specifications and shall produce, upon Twinlab's reasonable request, which
request shall not be unreasonably denied, a copy of the actual test results for
verification, including any batch records.
2.3 Labeling Specifications. The Products shall include thereon a ▇▇▇▇▇▇▇
label in compliance with the labeling specifications for the Products delivered
by Twinlab to Anabolic upon the execution of this Agreement (the "LABELING
SPECIFICATIONS").
2.4 Packaging. Anabolic shall package each of the Products in compliance
with the packaging specifications for the Products delivered by Twinlab to
Anabolic upon the execution of this Agreement (the "PACKAGING SPECIFICATIONS").
2.5 Modifications. Any changes to the Labeling Specifications or Packaging
Specifications shall be made only by Twinlab. All artwork for any amendment to
the Labeling Specifications or Packaging Specifications shall be supplied to
Anabolic at Twinlab's sole cost and expense and Twinlab shall reimburse Anabolic
for any unused labels or packaging materials that the Parties determine cannot
be used following the implementation of a requested modification.
2.6 Discontinued Products. In the event Twinlab discontinues any of the
Products, Twinlab shall reimburse Anabolic for its costs for any unused labels,
packaging materials or work in process that cannot be utilized following such
discontinuation.
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3. PRICING, MINIMUMS AND PAYMENT TERMS.
3.1 Purchase Price.
(a) The purchase price for the Products purchased under this
Agreement shall be those set forth on Schedule B attached hereto, which are
F.O.B. Anabolic's manufacturing facility (each, a "PURCHASE PRICE"). The price
per unit shall be inclusive of the cost of purchasing the raw materials,
manufacturing the Product, supplying the bottles, lids, labels, and other
packaging, procuring and other costs relating to manufacturing and packaging in
accordance with this Agreement.
(i) During the Initial Term, from time to time, the Purchase
Price shall be adjusted for any incremental costs directly related to the
manufacture of the Products solely as a result of (A) requests by Twinlab,
including changes in the Specifications or Labeling Specifications, or (B)
after the first twelve months of the Initial Term solely as a result of an
increase or decrease in the price of raw materials used in the Products in
excess of 5% from the price as of the date hereof. In such an event, the
Purchase Price shall be increased or decreased such that the Purchase
Price shall reflect such incremental costs plus a 27% gross margin to
Anabolic in respect of such incremental costs.
Any other changes in any Purchase Price must be mutually agreed upon
by the Parties in writing.
(b) Unless otherwise specified or required by law, each Purchase
Price is exclusive of federal, state, or local excise, sales, or other similar
taxes, if any. Any such taxes applicable to the Products purchased by Twinlab
shall be additional items on invoices and shall be payable by Twinlab to
Anabolic.
3.2 Minimum Purchases.
(a) During the first twelve months of the Initial Term (as defined
in Section 9.1), Twinlab shall place purchase orders with Anabolic for the
delivery of Products with an aggregate Purchase Price of $5,200,000.
(b) During the final six months of the Initial Term, Twinlab shall
place purchase orders with Anabolic for the delivery of Products with an
aggregate Purchase Price of $2,600,000; provided, however, that if Twinlab fails
to place purchase orders for such minimum amount of the Products during such six
month period, the Initial Term shall automatically be extended for an additional
three months during which time Twinlab shall satisfy its obligation to place
purchase orders for the minimum aggregate Products described in this Section
3.2(b). Upon the placement of purchase orders aggregating $7,800,000 and the
purchase of the products included therein (the "PURCHASE OBLIGATION"), Twinlab
may elect to terminate this Agreement in accordance with Article 9 of this
Agreement.
(c) To satisfy the Purchase Obligation, the Products purchased by
Twinlab from Anabolic under this Agreement may be Products or other dietary
supplements sold by
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Parent or its Affiliates, subject to agreement by the Parties as to the
specifications and pricing for any alternative products. The parties acknowledge
that any non-▇▇▇▇▇▇▇ brand products manufactured by Anabolic for Parent shall be
priced to provide a 27% gross margin to Anabolic.
3.3 Payment Terms. Anabolic shall prepare and submit invoices with each
shipment of the Products showing Twinlab's Purchase Order number and set forth
separately: (a) a description of the Products; (b) the quantity delivered; and
(c) the unit price. Payment terms are net thirty (30) days after receipt of
shipment, unless any or all of the Products are returned due to failure to meet
the quality control provisions of this Agreement; however, if only part of the
Purchase Order is returned due to such a failure then the balance of the
Purchase Order shall be due and payable according to the terms hereof. If
Twinlab fails to pay the invoices within such time, such failure shall
constitute a request for deferment of shipment of additional Products, and if
Anabolic fails to receive payment in full within 30 days after Twinlab receives
written notice that the invoice is past due, and the Products shipped are in
compliance with the terms hereof, Anabolic shall be entitled to exercise its
termination rights under Article 9. Each shipment shall constitute an
independent transaction and Twinlab shall pay for such shipment in accord with
the specified payment terms. With respect to any payment past due under this
Section 3.3, Anabolic reserves the right to charge interest at the rate of one
and one half percent (1.5%) per month or, if less, the highest amount permitted
by law, from the date when any payment was due until payment in full, with
interest, is made. In the event of a material adverse change to Twinlab's credit
rating, Anabolic may make reasonable modifications to the payment terms set
forth in this Agreement.
4. FORECAST, PURCHASE AND SUPPLY.
4.1 Forecast. Throughout the term of this Agreement, Anabolic shall plan
and execute the production of products through a vendor managed inventory
program. Anabolic shall prepare, on a monthly basis, a forecast schedule of the
Products to be produced by Anabolic during the forthcoming four month period
based upon Anabolic's good faith estimate of Twinlab's expected purchases of the
Products during that period (the "SCHEDULE"). The Schedule shall be based on
Twinlab's historical need for the Products and sales history. The Schedule shall
be provided to Twinlab no later than twenty business days prior to the start of
the period to which the four-month production schedule applies. Twinlab will
provide written notice of its approval of the Schedule or any required
modifications to Anabolic no later than ten business days prior to start of the
month for which the Schedule applies. In the event Twinlab does not expressly
request a schedule modification in accordance with this paragraph, Anabolic may
produce the Products in accordance with the proposed Schedule.
4.2 Purchase Orders. No later than five business days after approval of a
Schedule, Twinlab shall issue a firm purchase order in the format set forth as
Exhibit 4.2, the form and content of which are incorporated herein by reference
(the "PURCHASE ORDER"), which Purchase Order shall state the quantities and
desired delivery date for the Products, and the delivery location for the
Products Twinlab shall require for the subject month. Anabolic shall acknowledge
and confirm receipt of each Purchase Order within seven days of receipt. To the
extent of any conflict or inconsistency between the term of this Agreement and
any other document delivered by Twinlab, this Agreement shall govern. Twinlab
may cancel any Purchase
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Order at any time prior to receipt of an acknowledgement and acceptance of such
Purchase Order by Anabolic. In the event of cancellation of a Purchase Order
after acceptance by Anabolic, any portion of the raw materials or work in
process applicable to such Purchase Order that can be used to satisfy a
subsequent Purchase Order issued within sixty (60) days of such cancellation
shall be applied against the purchase price for that subsequent Purchase Order.
If a subsequent Purchase Order for the Products at issue is not issued within
sixty (60) days of such cancellation, Anabolic will, upon written request from
Twinlab, deliver all raw materials and work in process, to Twinlab in the same
manner as Products are delivered, and Twinlab shall reimburse Anabolic for the
cost of any raw materials, work in process and any manufacturing costs incurred
in connection with such cancelled Purchase Order. The costs associated with such
a cancelled Purchase Order shall not constitute any part of the Purchase
Obligation. Unless mutually agreed, Purchase Orders shall be for a minimum batch
size of 50,000 dosage units.
4.3 Shipment Dates. Anabolic shall use commercially reasonable efforts to
ship Product at the shipment time set forth in the Purchase Order, which shall
be no earlier than forty-five (45) days from the date of the Purchase Order.
Notwithstanding the above, in the event of a need for the production of any
Products to be expedited due to consumer demand, upon written notification from
Twinlab, Anabolic shall utilize its commercially reasonable efforts to meet any
production needs of Twinlab requiring less than 45 days notice. In the event
Anabolic determines that it will be unable to ship any of the Products by the
date specified in a Purchase Order, Anabolic shall promptly notify Twinlab of an
expected late shipping date. Anabolic shall use commercially reasonable efforts,
including the use of overtime, to make any late shipping within 14 days after
the originally-scheduled shipping date and if such shipment cannot be made
within such time, Twinlab may cancel such Purchase Order, with such Purchase
Order being counted toward the Purchase Obligation under Section 3.2.
4.4 Shipment Terms. Title to, ownership of and risk of loss or damage to
each shipment of the Products shall pass to Twinlab F.O.B. Anabolic's facility
in Tempe, Arizona or Irvine, California. To ship the Product, Twinlab shall
select a carrier of national reputation who shall be deemed an agent of Twinlab.
Such shipment of the Products shall be at Twinlab's sole cost and expense. Such
shipment shall be delivered to the Twinlab facility designated in the Purchase
Order; provided, however, Anabolic shall not be required to deliver to Twinlab's
customers. Insurance for the Products during shipment will be the sole
responsibility of Twinlab.
4.5 Acceptance. Twinlab shall have fourteen (14) days from the date the
Products are received at Twinlab's warehouse to inspect the Products in
accordance with its standard operating procedure applicable to the receipt of
finished goods into inventory. Twinlab will provide notice to Anabolic of the
rejection of any Product that Twinlab determines through such procedure does not
meet the Specifications, is not the quantity ordered (subject to an
overage/underage of 10%), does not comply with Applicable Laws, does not have a
certificate of analysis delivered within three (3) days of the receipt of the
corresponding shipment, or is damaged or has other visible defects. Twinlab's
notice shall state the reasons for such rejection. Except as set forth below, if
Twinlab does not deliver such written notice to Anabolic within three business
days after the fourteen day notice period, Twinlab shall be deemed to have
accepted the Products. No notice of rejection under this Section 4.5 relieves
Twinlab of its risk
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of loss for Products during shipment. Twinlab's acceptance of the Products shall
not preclude it from making claims with respect to a breach of any of the
representations and warranties set forth in Section 6.1 that was not discovered
during the inventory inspection process. Anabolic shall have the right to review
or inspect any rejected Product. Within one month after acceptance of a notice
of rejection by Twinlab, Anabolic shall reimburse Twinlab for the Product Price
and the transportation expenses incurred by Twinlab for Product rejected for
failure to meet the Specifications, excess quantity returned to Anabolic or
damages resulting from the actions or omissions of Anabolic, or replace such
rejected Product, based on the preference of Twinlab. Anabolic will pay the cost
of freight and insurance for such replacement Products.
4.6 Failure to Supply. Failure by Anabolic, for any reason other than as
set forth in Section 8.4, to ship to Twinlab at least 90% of the total Products
and at least 50% of any individual Product ordered in a Purchase Order by the
scheduled shipping date, in accordance with Section 4.3 hereof (including the 14
day grace period specified therein), shall constitute an event of partial
nonperformance ("PARTIAL NONPERFORMANCE"). If Anabolic: (a) fails, for any
reason other than as set forth in Section 8.4, to ship to Twinlab at least 75%
of the total Products ordered in a Purchase Order by the scheduled shipping
date, in accordance with Section 4.3 hereof (including the 14 day grace period
specified therein) and does not cure such failure to ship the Products within 15
days from the date of written notice of non-performance from Twinlab; or (b)
breaches this Agreement for Partial Nonperformance three or more times during
any six month period (each a "SUBSTANTIAL NONPERFORMANCE"), Twinlab shall have
the right to terminate this Agreement in accordance with the provisions of
Article 9. Notwithstanding anything to the contrary contained in this Agreement,
in the event of any occurrence of Partial or Substantial Nonperformance, Twinlab
may order the balance of the Products ordered in the corresponding Purchase
Order from any other source.
4.7 Anabolic shall provide a weekly schedule of work in process for each
of the Products to Twinlab via e-mail.
4.8 At Twinlab's reasonable request, Anabolic will provide Twinlab from
time to time, at no additional cost, proof of raw materials purchased for
manufacturing the Products, together with a copy of the certificate of analysis
for all ingredients, as received from the ingredient suppliers. This provision
shall not relieve Anabolic of its testing responsibilities as set forth within
the Specifications.
5. LICENSE AND OWNERSHIP OF INTELLECTUAL PROPERTY.
5.1 Trademark License Grant. Subject to the terms and conditions of this
Agreement, Twinlab grants to Anabolic a royalty-free license to use, reproduce,
and display the Trademarks solely in connection with the manufacturing and
labeling rights granted in Article 2 hereof.
5.2 Know-How License Grant. Subject to the terms and conditions of this
Agreement, Twinlab grants to Anabolic a royalty-free license to use the Know-How
and any Twinlab Improvements related to the Products solely in connection with
the manufacture, packaging and labeling of the Products during the Initial Term
or any extension thereof.
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5.3 Ownership of Trademarks. Subject to the license granted by Twinlab in
this Article 5, Twinlab shall have sole and exclusive ownership of, and all
right, title, and interest in and to the Trademarks. Anabolic shall not
challenge Twinlab's rights in the Trademarks in any forum and all goodwill
associated therewith shall be for the benefit of Twinlab.
5.4 Ownership of Know-How. Subject to the license granted by Twinlab in
this Article 5, Anabolic acknowledges that it has no rights in the Know-How
related to the Products, all of which shall be the sole property of Twinlab.
Twinlab acknowledges and agrees that Anabolic researches, develops, manufactures
and commercializes products similar to the Products and employs manufacturing
processes and other information that is similar to the Know-How.
5.5 Ownership of Improvements. All right, title and interest in and to any
Improvements developed independently by a Party shall be owned solely by that
Party. All right, title and interest in any Improvements jointly developed by
the Parties shall be owned jointly by the Parties and each Party will be free to
exploit any jointly developed Improvements after the expiration or termination
of this Agreement without the permission of the other Party and without any
obligation to the other Party.
6. REPRESENTATIONS AND WARRANTIES.
6.1 Anabolic's Representations and Warranties. Anabolic represents,
warrants and covenants to Twinlab with respect to each shipment of Products as
follows:
(a) With respect to each delivery of the Products:
(i) at the time of shipment by Anabolic, the Products sold in
such shipment shall meet the Specifications, the Labeling Specifications
and the Packaging Specifications, in all material respects, shall be free
from any material defect in material or workmanship and shall be
manufactured from quality raw materials (e.g. USP or USP equivalent, if
applicable);
(ii) Anabolic shall have good and marketable title to the
Products sold in such shipment, and all such Products shall be free from
any liens or encumbrances of any third party; and
(iii) the Products delivered in such shipment shall have been
manufactured and packaged in all material respects in conformity with all
Applicable Laws, except to the extent the Specifications, Labeling
Specifications or Packaging Specifications conflict with Applicable Law.
(b) Anabolic has or will have, prior to production of the Products,
all material licenses, permits, certificates, franchises, authorizations and
approvals required to be issued or granted by any United States Governmental
Entity, by any law, rule or regulation which must be obtained or satisfied by
Anabolic in connection with the, manufacture, packaging and sale of the Products
to Twinlab.
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(c) All representations and warranties set forth in this Section 6.1
shall survive inspection, testing and acceptance, use and resale by Twinlab and
shall remain in effect through, including and following resale to and
consumption by consumers, unless Twinlab shall have, prior to distribution of
the Product, actual knowledge that the Product does not conform to the
Specifications and/or Applicable Laws.
6.2 Twinlab's Remedy for Breach. Anabolic's sole responsibility, and
Twinlab's sole remedy, for a breach by Anabolic of the representations contained
in Section 6.1 shall be to (i) replace any defective Products within 30 days of
receipt of such rejected Products, at Anabolic's sole cost and expense,
including delivery and related charges or (ii), if the number of defective
Products is immaterial in amount, to credit Twinlab's account for such defective
Products. Nothing contained in this Article 6 shall limit or otherwise modify
Twinlab's rights and remedies under Articles 7 or 9 hereof. Upon written notice
to Anabolic that Twinlab is alleging a breach of Anabolic's representations and
warranties contained in Section 6.1 with respect to certain Products, Anabolic
shall have 14 days to inspect such Products to confirm that any alleged defect
exists and that such defect was due to a breach by Anabolic of its
representations and warranties contained in Section 6.1. If the Parties, after
discussions in good faith, do not agree on the existence or timing of the
alleged defects, the matter shall be referred to arbitration in accordance with
the provisions of Section 10.12 to determine whether a breach of Anabolic's
representations and warranties has occurred.
6.3 Disclaimer of Additional Representation.
(a) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ANABOLIC MAKES
NO WARRANTIES, EXPRESS, IMPLIED (EITHER IN FACT OR BY OPERATION OF LAW), OR
ARISING BY PERFORMANCE, COURSE OF DEALING, CUSTOM OR USAGE, AS TO ANY MATTER
WHATSOEVER INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. ANY OTHER REPRESENTATIONS
OR WARRANTIES MADE BY ANY PERSON, INCLUDING EMPLOYEES OR REPRESENTATIVES OF
ANABOLIC, WHICH ARE INCONSISTENT HEREWITH SHALL BE DISREGARDED BY TWINLAB AND
SHALL NOT BE BINDING UPON ANABOLIC UNLESS AGREED UPON IN WRITING.
(b) IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES BE LIABLE FOR
ANY CONSEQUENTIAL DAMAGES, INCLUDING LOSS OF USE OR REVENUE OR PROFITS, HOWEVER
CAUSED AND ON ANY THEORY OF LIABILITY ARISING OUT OF, RELATED TO, OR IN
CONNECTION WITH THIS AGREEMENT.
7. INDEMNIFICATION.
7.1 Indemnification by Twinlab. Twinlab shall defend, indemnify, and hold
harmless Anabolic and its Affiliates, and their respective directors, officers,
employees, shareholders and agents (collectively "ANABOLIC INDEMNITEES") from
and against any and all claims, losses, liabilities, damages (including, any
punitive, exemplary or special damages provided by law) costs, obligations,
assessments, penalties and interest, demands, actions, and expenses, whether
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direct or indirect, known or unknown, absolute or contingent (including, without
limitation, settlement costs and any legal, accounting, and other expenses for
investigating or defending any actions or threatened actions) (the "LOSSES"),
which any Anabolic Indemnitee may suffer or incur by reason of:
(a) any third party claim of infringement or misappropriation of any
patent, copyright, trademark, trade secret, confidential information, or other
intellectual property right arising out of, related to, or in connection with
the manufacture, sale, use, or import of the Products or other products
manufactured by Anabolic pursuant to this Agreement (except as described in
Section 7.2(a)); or
(b) any third party claim of harm or injury arising out of, related
to, or in connection with a Recall (as defined in Section 8.6 below) or the
manufacture, sale, use, or import of the Products or other products manufactured
by Anabolic pursuant to this Agreement, including without limitation any Product
Liability, arising from any Products or other products manufactured by Anabolic
pursuant to this Agreement (except as described in Section 7.2(b)).
7.2 Indemnification by Anabolic. Anabolic shall defend, indemnify, and
hold harmless Twinlab and its Affiliates and their respective directors,
officers, employees, shareholders and agents (collectively "TWINLAB
INDEMNITEES") from and against any and all Losses, which any Twinlab Indemnitee
may suffer or incur by reason of:
(a) any third party claim of infringement or misappropriation of any
patent, copyright, trademark, trade secret, confidential information, or other
intellectual property right arising out of, related to, or in connection with
the manufacture, sale, use, or import of the Products or other products
manufactured by Anabolic pursuant to this Agreement only to the extent the
infringement or misappropriation is attributable to Anabolic's deviation from
the Specifications, Labeling Specifications or Packaging Specifications; or
(b) any third party claim of harm or injury arising out of, related
to, or in connection with a Recall or the manufacture, sale, use, or import of
the Products or other products manufactured by Anabolic pursuant to this
Agreement only to the extent the harm or injury is attributable to Anabolic's
deviation from the Specifications, Labeling Specifications or Packaging
Specifications.
7.3 Indemnification Procedures. The indemnification provisions in this
Article 7 are contingent upon: (a) the indemnified Party notifying the
indemnifying Party in writing of any claim which may give rise to a claim for
indemnification hereunder; (b) the indemnifying Party being allowed to control
the defense and settlement of such claim; and (c) the indemnified Party
cooperating with all commercially reasonable requests of the indemnifying Party
(at the indemnifying Party's sole cost and expense) in defending or settling a
claim. The indemnified Party shall have the right, at its sole option and
expense, to participate in the defense of any suit or proceeding through a
counsel of its own choosing.
7.4 Survival of Obligations. The obligations of the Parties under this
Article 7 shall survive the termination or expiration of this Agreement.
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8. ADDITIONAL COVENANTS OF THE PARTIES.
8.1 Insurance.
(a) Anabolic shall maintain policies of general liability insurance,
with contractual and product liability coverage with aggregate limits which are
commercially reasonable but in no event less than $5,000,000 per occurrence.
Such insurance policies shall name Twinlab as an additional insured thereunder
with respect only to the Products. Anabolic shall furnish to Twinlab a
certificate of insurance, which certificate shall evidence the foregoing
coverage and limits and the insurer's agreement to notify Twinlab in writing of
any proposed cancellation of such policies at least 30 days before any such
cancellation is to be effective.
(b) Twinlab shall maintain policies of general liability insurance,
with contractual and product liability coverage with aggregate limits which are
commercially reasonable but in no event less than $5,000,000 per occurrence.
Such insurance policy shall name Anabolic as an additional insured thereunder
with respect only to the Products. Twinlab shall furnish to Anabolic a
certificate of insurance, which certificate shall evidence the foregoing
coverage and limits and the insurer's agreement to notify Anabolic in writing of
any proposed cancellation of such policies at least 30 days before any such
cancellation is to be effective.
(c) The insurance coverage required under this Section 8.1 shall be
carried during the term of this Agreement and for five years following
termination or expiration of the Agreement. Such insurance shall be with
insurance companies licensed to do business in Arizona, and the insurers shall
have a Bests Insurance Rating of at least A.
8.2 Changes to Specifications, Methods of Analysis or Manufacturing
Process. In the event Twinlab desires to change the Specifications, or in the
event Twinlab or Anabolic is required to change the Specifications pursuant to
applicable laws or in response to the order of any Governmental Entity, the
following provisions shall apply:
(a) the requesting Party shall promptly advise the other Party in
writing of such change to the Specifications and Anabolic shall promptly advise
Twinlab as to any scheduling adjustments that may result from such change; and
(b) Anabolic shall cooperate with Twinlab in good faith to implement
all changes to the Specifications as soon as practicable after notice thereof.
8.3 Confidentiality.
(a) To protect certain confidential information which may be
disclosed between the Parties, both Parties agree that any confidential
information such as, but not limited to, technical records, manufacturing
processes, product specifications, trade secrets, data, drawings, supplier lists
or other confidential documents disclosed by one Party to the other under this
Agreement ("CONFIDENTIAL INFORMATION") shall not (1) be used by the receiving
Party except as authorized under this Agreement, or (2) disclosed to any third
parties, without the express prior written consent of the disclosing Party.
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(b) Confidential Information shall be treated with the same degree
of care by the receiving Party, as such Party treats and protects its own
Confidential Information, but in no event shall the receiving Party use less
than reasonable diligence and effort in protecting the disclosing Party's
Confidential Information. The disclosing Party shall retain all rights to
Confidential Information disclosed to the other Party.
(c) Confidential Information shall not include any information
which:
(i) is known to or is documented to be in the possession of
the receiving Party prior to transmission by the disclosing Party;
(ii) becomes available to the receiving Party from a source
other than the disclosing Party or is in or passes into the public domain
other than by breach of any obligation to the disclosing Party;
(iii) is developed independently by the receiving Party as
shown by its written records prior to transmission by the disclosing
Party;
(iv) is authorized to be disclosed by the disclosing Party;
(v) is required to be disclosed by applicable judicial or
administrative orders or applicable laws, rules, or regulations, but only
after prompt prior notice of the required disclosure is given to the
disclosing Party in order to seek a protective order or similar order with
respect to such Confidential Information and the disclosing Party
discloses only the minimum Confidential Information required to be
disclosed in order to comply with the request, and only to the extent of
such required disclosure.
(d) This provision does not apply to any disclosure by either Party
of Confidential Information of the other Party to its own subsidiaries or parent
companies, provided that such entities are bound to maintain such information in
confidence and not use the Confidential Information or disclose it to third
parties except in accordance with this Agreement.
(e) Each Party's obligations under this Section 8.3 are of a special
and unique character which gives them a peculiar value and each Party agrees
that the other Party cannot be reasonably or adequately compensated in damages
in an action at law in the event a Party breaches such obligations. Therefore,
each Party expressly agrees that the other Party shall be entitled to injunctive
and other equitable relief without bond or other security in the event of such
breach or threatened breach of the obligations contained herein in addition to
any other rights or remedies which the Party may possess under applicable law.
(f) The Parties shall upon request cooperate in efforts seeking to
enjoin the subsequent wrongful disclosure of Confidential Information by third
parties to whom such information was disclosed by a receiving Party hereunder.
8.4 Force Majeure.
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(a) The failure of either Party to perform the terms of this
Agreement in whole or in part shall be excused if such failure is the result of
causes beyond such Party's reasonable control, including, without limitation,
acts of God, flood, earthquake, wind and lightning, insurrections, riots, war
and warlike operations, terrorist activities, civil commotion, fires,
explosions, accidents, work stoppages, raw material shortages, the acts or
orders of any Governmental Entity, acts of the public enemy, epidemics, and laws
or regulations or restrictions of any Governmental Entity.
(b) If performance of this Agreement is excused pursuant to Section
8.4(a) hereof, the Party thus excused shall use reasonable efforts to avoid,
remove, and correct the circumstances which caused the failure to perform, and
the Party excused from performance shall resume performance with the utmost
dispatch when such circumstances are avoided, removed or corrected.
(c) If the circumstances of force majeure last longer than 60 days,
the Party which has not declared the force majeure shall have the right to
cancel this Agreement upon 30 days prior written notice to the other Party.
8.5 Right of Inspection. Twinlab and its agents shall be entitled, upon
reasonable notice to visit any and all manufacturing facilities at which the
Products are manufactured, processed, or assembled, during normal business hours
and at a time and manner that will not unreasonably disrupt Anabolic's
operations. Twinlab shall also be entitled to inspect, review, and copy all
relevant records, documents and files, in hardcopy, relating to the Products,
their manufacture, and analysis, and to inspect and review all samples of the
Products. Anabolic shall additionally make available accurate and complete hard
copies of all such records existing as electronic files. The purpose of such
inspections is to determine Anabolic's compliance with the Specifications or
Applicable Laws. If, upon such inspection, Twinlab or its agents reasonably
conclude that Anabolic has failed to comply with Applicable Laws or the
Specifications, Twinlab shall give notice of any shortcomings to Anabolic, who
shall have thirty (30) days or such other time period reasonably necessary, as
the Parties in good faith shall agree, to remedy such shortcomings. In the event
that the shortcomings are not remedied within the thirty (30) day period or such
other time as is reasonably necessary and agreed upon by the Parties in good
faith, the matter shall be referred to arbitration in accordance with the
provisions of Section 10.12 to determine whether a breach of this Agreement has
occurred.
8.6. Product Recall.
(a) Each Party shall keep the other promptly and fully informed of
any notifications or other information, whether received directly or indirectly,
which might affect or relates to the safety of the Products or might result in
the recall or seizure of any of the Products.
(b) In the event either Party believes it may be necessary to
conduct a recall, field correction, market withdrawal, stock recovery, or
similar action with respect to any of the Product sold by Anabolic to Twinlab or
its Affiliates under this Agreement (a "RECALL"), Anabolic and Twinlab shall
consult with each other as to how best to proceed, it being
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understood and agreed that the final decision as to any Recall of any Products
shall be made by Twinlab; provided, however, that Anabolic shall not be
prohibited hereunder from taking any action, including, without limitation,
initiating a Recall, that is required by a Governmental Entity. Twinlab shall
bear all costs and expenses in connection with any such Recall; provided,
however, that Anabolic shall reimburse Twinlab for all costs and expenses
incurred by Twinlab and the Purchase Price of the Products recalled to the
extent the Recall is attributable to Anabolic's breach of its representations or
warranties contained in this Agreement.
8.7 Regulatory Approvals. At Twinlab's sole cost and expense, Twinlab
shall be responsible for obtaining all United States and foreign regulatory
approvals required for the marketing and sale of the Products, including,
without limitation, those required by the FDA; provided, however, that Anabolic
shall provide to Twinlab such information and performance data concerning the
Products as may reasonably be necessary to assist Twinlab in obtaining such
approvals. Anabolic shall maintain all United States and local regulatory
approvals required for the manufacturing of the Products.
9. TERM AND TERMINATION.
9.1 Term. The term of this Agreement shall commence on the Effective Date
and, unless terminated earlier pursuant to Section 9.2 hereof, shall continue
for a period of 18 months, unless automatically extended pursuant to Section
3.2(b) hereof (the "INITIAL TERM"). Unless this Agreement has been terminated
earlier pursuant to the terms hereof, no later than 60 days prior to the
expiration of the Initial Term, the Parties shall meet to discuss the possible
continuation of this Agreement for a subsequent term of 18 months.
9.2 Early Termination.
(a) This Agreement may be terminated: (i) by mutual written
agreement of the Parties; (ii) by Twinlab upon Twinlab's satisfaction of the
Purchase Obligation, or (iii) by either Party upon the occurrence of (A) (except
as provided in Section 4.6), a breach of the representations, warranties or
covenants contained in this Agreement by the other Party which breach, if
capable of cure, is not cured within 30 days after receipt of written notice
thereof, unless a shorter period is provided herein, or (B) any act by or
against the other Party of liquidation, bankruptcy, insolvency, receivership, or
assignment for the benefit of creditors or other action for the protection of
creditors of such other Party. Any early termination of this Agreement pursuant
to Section 9.2(a)(ii) shall not relieve the Parties of their commitment to
discuss an extension of the Term under Section 9.1.
9.3 Effect of Termination.
(a) Upon the expiration of this Agreement or termination of this
Agreement by Twinlab pursuant to the terms of this Agreement, Twinlab shall be
entitled to request delivery and Anabolic shall deliver, according to the terms
of this Agreement, the Products covered by any Purchase Orders accepted but
unfulfilled as of the date of termination or expiration.
(b) Upon the termination of this Agreement by Anabolic pursuant to
Section 9.2(a)(iii) of this Agreement, Twinlab shall purchase at Anabolic's cost
all raw materials,
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labeling, work-in-process and other inventory held by Anabolic for the
manufacture and packaging of the Products, provided that levels of such
inventory are not materially inconsistent with the forecasts delivered pursuant
to Section 4.1 or the requirements requested by Twinlab. Upon the termination of
this Agreement or any extension thereof, regardless of the cause thereof, the
Parties shall abide by and uphold any rights or obligations accrued, or existing
on, the date of such termination. The Parties shall continue to cooperate with
each other to carry out an orderly conclusion of their relations. In particular,
Anabolic shall return to Twinlab any Confidential Information relating to the
Products, including without limitation the manufacturing processes, standard
operating procedures, test procedures, retention samples, records, the
Specifications, batch records and any other Know-How related to the Products.
(c) Any termination or expiration of this Agreement shall not act as
a waiver of any breach of this Agreement and shall not act as a release of
either Party from any liability for breach of any representations, warranties,
or past obligations under this Agreement or any future obligations which survive
termination or expiration of this Agreement.
(d) Notwithstanding anything contained herein to the contrary, upon
termination of this Agreement due to a material breach by Twinlab or pursuant to
Section 9.2(a)(iii)(B), all amounts due to Anabolic pursuant to this Agreement,
shall become immediately due and payable, including without limitation, if
Twinlab has not fulfilled the Purchase Obligation, Twinlab shall pay Anabolic
27% of the shortfall in such Purchase Obligation (equal to the Purchase
Obligation less Twinlab's actual purchases under this Agreement through the date
of termination). These payments shall be Twinlab's sole liability to Anabolic
for any such breach. Upon termination of this Agreement by Twinlab because of a
material breach of this Agreement by Anabolic pursuant to Section 9.2(a),
Twinlab's sole liability shall be for the payment of (i) the Purchase Price of
conforming Products and work in process already shipped against validly issued
Purchase Orders, and (ii) the Purchase Price of conforming Products already
produced, but not yet shipped, against validly issued Purchase Orders. Nothing
contained in this Section 9.3(d) shall limit or otherwise modify the Parties'
respective rights and remedies under Article 7 hereof.
(e) Except as expressly set forth herein, the Parties agree that
termination of this Agreement shall be in addition to and not in lieu of any
other remedies that may be available at law or in equity or which are provided
for elsewhere in this Agreement, including the right of a non-breaching party to
seek injunctive relief pursuant to Section 10.12(g) of this Agreement.
9.4 Survival. Any rights of Anabolic to payments accrued through
termination or expiration of this Agreement, Articles 3, 6, 7, 9, and 10 and
Sections 5.3, 5.4, 8.1, 8.3, 8.6, and 8.8 hereof shall survive the termination
or expiration of this Agreement.
10. MISCELLANEOUS.
10.1 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given (i) upon personal
delivery, (ii) three days after being mailed by certified or registered mail,
postage prepaid, return receipt requested, (iii) one business day after being
sent via a nationally recognized overnight courier service if overnight
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courier service is requested from such service or (iv) upon receipt of
electronic or other confirmation of transmission if sent via facsimile and
followed by certified or registered mail, postage prepaid, return receipt
requested, to the parties, their successors in interest or their assignees at
the following addresses and telephone numbers, or at such other addresses or
telephone numbers as the parties may designate by written notice in accordance
with this Section 10.1:
If to Anabolic: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
Anabolic Laboratories, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Twinlab: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer and President
Twin Laboratories Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10.2 Assignability and Parties in Interest. This Agreement and the rights,
interests or obligations hereunder may not be assigned by any of the parties
hereto (by operation of law or otherwise), except that Twinlab may assign its
rights and obligations under this Agreement in whole or in part to any Affiliate
or Affiliates of Twinlab or any successor to all or substantially all of the
business or assets of Twinlab. This Agreement shall inure to the benefit of and
be binding upon Anabolic, Twinlab and their respective permitted successors and
assigns. Nothing in this Agreement will confer upon any Person not a Party to
this Agreement, or the legal representatives of such Person any rights or
remedies of any nature or kind whatsoever under or by reason of this Agreement.
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10.3 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of California, without giving
effect to its conflicts of laws principles or rules which would require the
application of the law of any other jurisdiction.
10.4 Venue. Any civil action or other legal proceeding brought by Twinlab
arising out of or relating to this Agreement shall be brought in the courts of
record of the State of New York in New York County or the United States District
Court, Southern District of New York. Anabolic consents to the jurisdiction of
such court in any such civil action or other legal proceeding and waives any
objection to the laying of venue of any such civil action or other legal
proceeding in such court. Any civil action or other legal proceeding brought by
Anabolic arising out of or relating to this Agreement shall be brought in the
courts of record of the State of California in Orange County or the United
States District Court, Central District of California. Twinlab consents to the
jurisdiction of such court in any such civil action or other legal proceeding
and waives any objection to the laying of venue of any such civil action or
other legal proceeding in such court.
10.5 Counterparts. Facsimile transmission of any signed original document
or retransmission of any signed facsimile transmission will be deemed the same
as delivery of an original. At the request of any Party, the parties will
confirm facsimile transmission by signing a duplicate original document. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which shall constitute but one and the same instrument.
10.6 Public Announcements. No Party may, or may permit its Affiliates to,
issue or cause the publication of any press release or other public announcement
with respect to this Agreement or the transactions contemplated hereby without
the prior written consent of the other Party. Notwithstanding the foregoing, in
the event any such press release or announcement is required by law to be made
by the Party proposing to issue the same, such Party shall consult in good faith
with the other Party as far in advance as practicable to the issuance of any
such press release or announcement.
10.7 Complete Agreement. This Agreement, the exhibits and schedules hereto
(which are incorporated herein by this reference) contains the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and supersedes all previous oral and written and all contemporaneous oral
negotiations, commitments, and understandings.
10.8 Modifications, Amendments and Waivers. No waiver of any of the
provisions of this Agreement will be considered, or will constitute, a waiver of
any of the rights of remedies, at law or equity, of the Party entitled to the
benefit of such provisions unless made in writing and executed by the Party
entitled to the benefit of such provision. The waiver by any Party of any right
under this Agreement or to a remedy for the breach of any of the provisions
herein shall not operate nor be construed by the breaching Party as a waiver of
the non-breaching Party's remedies with respect to any other or continuing or
subsequent breach.
10.9 Interpretation.
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(a) Headings; References. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References herein to Articles, Sections,
Schedules and Exhibits refer to the referenced Articles, Sections, Schedules or
Exhibits hereof unless otherwise specified.
(b) Construction. In this Agreement, unless a clear contrary
intention appears, the words "includes" means "includes, but is not limited to",
and "or" is used in the inclusive sense of "and/or". This Agreement was
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any Party shall not apply to any construction
or interpretation hereof.
10.10 Severability. If any provision of this Agreement is invalid,
illegal, or unenforceable in any jurisdiction, as to that jurisdiction, such
provision shall be deemed amended to the extent required to make it valid, legal
and enforceable, and to the extent that the rights or obligations of the parties
under this Agreement will not be materially and adversely effected thereby, such
amended provision and the remaining provisions of this Agreement will remain in
full force and effect in such jurisdiction and shall not render that or any
other provision of this Agreement invalid, illegal, or unenforceable in any
other jurisdiction.
10.11 Expenses of Transactions. Except as otherwise expressly provided in
this Agreement, all fees, costs and expenses incurred by Anabolic in connection
with the transactions contemplated by this Agreement shall be borne by Anabolic,
and all fees, costs, and expenses incurred by Twinlab in connection with the
transactions contemplated by this Agreement shall be borne by Twinlab.
10.12 Arbitration.
(a) Any controversy or claim between the parties, whether based on
contract, tort, statute or other legal or equitable theory arising out of or
related to this Agreement (including any amendments or extensions) or the breach
or termination hereof or any right to indemnity hereunder (each, a "DISPUTE")
shall be settled by arbitration in accordance with arbitration terms and
procedures set forth herein.
(b) Without in any way limiting subsection (a) above, each of the
parties hereto hereby irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising between them out of or relating to this Agreement or the
actions or any of them in the negotiation, administration, performance and
enforcement thereof.
(c) All Disputes submitted to arbitration shall be resolved by
binding arbitration administered by the American Arbitration Association (the
"AAA") in accordance with, and in the following order of priority, the following
procedural rules: (i) the terms of these arbitration provisions; (ii) the
Commercial Arbitration Rules of the AAA; (iii) the Federal Arbitration Act
(Title 9 of the United States Code); and (iv) to the extent the foregoing are
inapplicable, unenforceable or invalid, the laws of the State of New York. The
validity and enforceability of these arbitration provisions shall be determined
in accordance with this same
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order of priority. In the event of any inconsistency between these arbitration
provisions and such rules and statutes, these arbitration provisions shall
control. Judgment upon any award rendered hereunder may be entered in any court
having jurisdiction thereof.
(d) Either Party may invoke arbitration (the "DISPUTING Party") by
providing notice to the other Party (the "OTHER PARTY") in which the Disputing
Party shall specify the Dispute in reasonable detail, request arbitration and
designate an arbitrator (the "DISPUTE NOTICE"). Within ten Business Days of
receipt of the Dispute Notice, the Other Party shall designate one arbitrator.
The Disputing Party's arbitrator and the Other Party's arbitrator shall select
the third arbitrator. Such three arbitrators shall constitute the "ARBITRATION
PANEL". If the Other Party fails or refuses to select an arbitrator within the
specified ten Business Day period, the Party's arbitrator shall be the single
arbitrator to resolve the Dispute. The arbitrator (or the Arbitration Panel,
acting by majority vote, as appropriate) shall resolve all Disputes. If a
Dispute involves less that $250,000, then the parties agree to cooperate to use
reasonable efforts to select one neutral arbitrator to decide the Dispute, and
if the parties cannot select a neutral arbitrator within ten Business Days of
receipt of the Dispute Notice, such neutral arbitrator shall be selected
pursuant to the rules of the AAA. Subject to any award of damages pursuant to
subsection (e) below, each Party shall pay all fees for the arbitrator selected
by such Party, and the fees of the neutral arbitrator shall be borne equally by
the parties, or, in the event of a single arbitrator the fees for such
arbitrator.
(e) To the maximum extent practicable, the AAA, the arbitrator (or
the Arbitration Panel, acting by majority vote, as appropriate) and the parties
shall take all reasonable steps to conclude any arbitration proceeding hereunder
within 90 days of the later of (i) the filing of the Dispute with the AAA, or
(ii) the selection of the arbitrator or Arbitration Panel, as appropriate. This
time may be extended upon written agreement of the parties or upon order of the
arbitrator (or Arbitration Panel acting by majority vote, as appropriate).
Unless the parties shall agree otherwise, arbitration proceedings commenced by
Twinlab hereunder shall be conducted in New York City, New York and arbitration
proceedings commenced by Anabolic shall be conducted in Los Angeles, California.
Arbitrators shall be empowered to impose sanctions, permit or order depositions
and discovery and to take such other actions as they deem necessary to the same
extent a judge could pursuant to the Federal Rules of Civil Procedure and
applicable law. With respect to any Dispute, each Party agrees that all
discovery activities shall be expressly limited to matters directly relevant to
the Dispute and any arbitrator, Arbitration Panel and the AAA shall be required
to fully enforce this requirement. Consistent with the expedited nature of the
arbitration, each Party will, upon the written request of the other Party,
promptly provide the other with copies of documents on which the producing Party
may rely in support of or in opposition to any claim or defense directly
relevant to the issues raised by any claim or counterclaim. The provisions of
these arbitration provisions shall survive any termination, amendment or
expiration of this Agreement, unless the parties otherwise expressly agree in
writing.
(f) To the extent permitted by applicable law, arbitrators,
including any Arbitration Panel, shall have the power to award recovery of all
costs and fees (including attorneys' fees, administrative fees, travel expenses,
out-of-pocket costs, witness fees, and arbitrators' fees) to the prevailing
Party or, if no clear prevailing Party, as the arbitrator (or
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Arbitration Panel, if applicable) shall deem just and equitable. The arbitration
award shall be in writing, signed by the arbitrator (or a majority of the
Arbitration Panel, as appropriate), and shall include a reasoned opinion as to
the disposition of each claim. Each Party agrees to keep all Disputes and
arbitration proceedings strictly confidential, except for disclosures of
information acquired by applicable law or as may be required for enforcement of
any award.
(g) Notwithstanding the above, in the event either Party breaches
this Agreement, the Parties agree that the non-breaching Party shall be entitled
to seek injunctive relief before a court of competent jurisdiction, to prevent
any further violation of this Agreement during the final determination of any
Dispute.
10.13 Attorneys' Fees.
(a) If Anabolic or any of its Affiliates, successors or assigns
brings any action, suit, counterclaim, cross-claim, appeal, arbitration, or
mediation for any relief against Twinlab or any of its Affiliates, successors or
assigns, or if Twinlab or any of its Affiliates, successors or assigns brings
any action, suit, counterclaim, cross-claim, appeal, arbitration, or mediation
for any relief against Anabolic or any of its Affiliates, successors or assigns,
declaratory or otherwise, to enforce the terms hereof or to declare rights
hereunder (collectively, an "ACTION"), in addition to any damages and costs
which the prevailing Party otherwise would be entitled, the non-prevailing Party
shall pay to the prevailing Party a reasonable sum for attorneys' fees and costs
(at the prevailing Party's attorneys' then-prevailing rates) incurred in
bringing and prosecuting such Action and/or enforcing any judgment, order,
ruling, or award (collectively, a "DECISION") granted therein, all of which
shall be deemed to have accrued on the commencement of such Action and shall be
paid whether or not such action is prosecuted to a Decision. Any Decision
entered in such Action shall contain a specific provision providing for the
recovery of attorneys' fees and costs incurred in enforcing such Decision.
10.14 Relationship of the Parties. Each party shall perform its
obligations hereunder as an independent contractor and shall be solely
responsible for its own financial obligations. Nothing contained in this
Agreement is intended or is to be construed to imply a joint venture, employer
and employee, or principal and agent relationship between the Parties. Neither
Party has any express or implied right or authority under this Agreement to
assume or create any obligations on behalf of or in the name of the other Party
or to bind the other Party to an agreement or other undertaking with any third
party.
10.15 Further Assurances. Each Party agrees to promptly execute,
acknowledge, and deliver such other and further instruments, writings, and
documents as may reasonably be requested in writing by any other Party to carry
out this Agreement. Each Party agrees to use all reasonable efforts and to
exercise good faith in fulfilling its obligations under this Agreement.
10.16 Remedies. In the event of a breach of this Agreement by either
Party, the aggrieved Party may exercise any legal, equitable, or other rights or
remedies to which it is entitled, including, without limitation, the right to
obtain injunctive relief or specific performance with respect to the violation
of any provision hereof.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives as of the Effective Date.
TWIN LABORATORIES INC.
a Utah corporation
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
ANABOLIC CORPORATION,
a California corporation
By:
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
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INDEX TO SCHEDULES
Schedule A Products
Schedule B Purchase Price
SCHEDULE A
PRODUCTS
▇. ▇▇▇▇▇▇▇ Line.
▇▇▇▇▇▇▇
Insurance Formula
Pro Complex Formula
▇▇▇▇▇▇▇ Formula
Nutrivision
Formula 28
Ok 4 Kids and Design
Performance Edge
Herbal Defense Formula
M.D. Pharmaceutical Vitamins
▇▇▇▇▇▇▇ Complete
Performance Edge
B. Additional Products.
SCHEDULE B
PURCHASE PRICE