MANUFACTURING AGREEMENT

     This Manufacturing Agreement is made this 22nd day of October, 2004
(“Agreement”), by and between Matrixx Initiatives, Inc., a Delaware Corporation,
having a principal place of business at 4742 North 24th Street, Suite 455,
Phoenix, Arizona 85016 (“Customer”), and BioZone Laboratories, a California
corporation, having a principal place of business at 580 Garcia Avenue,
Pittsburg, CA 94565 (“Manufacturer”).

     WHEREAS, Customer desires to purchase product and Manufacturer desires to
manufacture and sell such product to Customer in accordance with and subject to
the terms and conditions of this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties agree as follows:

ARTICLE I
DEFINITIONS

     For purposes of this Agreement, the following definitions shall apply:

     1.1 “FDA” means the United States Food and Drug Administration or any
successor entity thereto.

     1.2 “cGMP” means current Good Manufacturing Practices as defined in the FDA
regulations, 21 CFR Parts 210-211 effective as of the date of manufacture of a
lot of Product.

     1.3 “Labeling” means all labels and other written, printed, or graphic
matter (a) upon the Product or any container and/or wrapper utilized with the
Product or (b) accompanying the Product, including, without limitation, product
inserts that bear the trademarks or trade dress of Customer, or other matter
designated in the Specifications or on approved samples submitted by Customer to
Manufacturer.

     1.4 “Product(s)” means Customer’s products, including, but not limited to,
Zicam Extreme Congestion Relief Nasal Decongestant, Zicam Intense Sinus Relief
Nasal Decongestant, Zicam Nasal Moisturizer, and Zicam Concentrated Cough Mist,
more particularly described in the Specifications, in finished form for
distribution to the consumer, or in bulk packaging for delivery to Customer, or
to a third party at Customer’s direction, for further processing.

     1.5 “Specifications” means the written specifications for the Product,
containing the manufacturing and testing requirements for the Product, as well
as raw material, packaging component, labeling, and quality assurance
specifications, which are set forth in Attachment A to this Agreement, which is
incorporated herein by reference and which may be amended from time to time by
written agreement of the parties.

     1.6 “Contract Term” means a period beginning on the month/day first above
written (the “Anniversary Date”) and ending 3 years later on the date
immediately preceding the Anniversary Date.

 

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     1.7 Contract Year means a period beginning on the “Anniversary Date” and
ending one year later on the date immediately preceding the Anniversary Date.

ARTICLE II
PRODUCT MANUFACTURE; TERMS

     2.1 Purchase and Sales: Subject to the terms and conditions of this
Agreement, Manufacturer shall manufacture and sell Product to Customer pursuant
to purchase orders provided to Manufacturer by Customer; and Customer shall
purchase such Product from Manufacturer.

     2.2 Purchase Orders: Upon receipt of purchase orders from Customer
specifying Product, quantities, and requested delivery date, Manufacturer shall
arrange for the purchase of all required raw materials.

     2.3 Documentation: A master batch record detailing the processes and
procedures for manufacturing the Product in conformance with the Specifications
shall be generated by Manufacturer and shall be reviewed and approved in writing
by Manufacturer and by Customer. Any substantive change to an approved master
batch record will be reviewed and approved in writing by Manufacturer and by
Customer prior to any change being implemented. Each batch of Product shall be
produced according to and shall be documented in a production copy of the master
batch record. Each production batch record shall be assigned a unique batch
number. Any deviation from the specified manufacturing process must be
documented in the production batch record. Manufacturer shall provide Customer
with a copy of a completed production batch record upon request

     2.4 Release Procedure: Manufacturer shall manufacture, package, label, and
test Product in accordance with the Specifications: The Product shall be shipped
to Customer in the quantities specified in the purchase order after release by
Manufacturer if it passes all tests as specified.

     2.5 Delivery: Delivery terms shall be F.O.B., Pittsburg, CA. Manufacturer
shall ship Product in accordance with Customer’s directions as specified in
purchase orders issued pursuant to Section 2.2. Customer shall be responsible
for all freight and delivery charges, including, without limitation, insurance
charges, and shall assume all risk of loss of the Product after delivery to the
designated carrier.

     2.6 Rejected Products/Shortages:

     (a) Notwithstanding any payment made by Customer, Customer shall perform an
incoming inspection of all Product. Within forty five (45) calendar days after
receipt of Product by Customer, Customer shall notify Manufacturer in writing of
any claim relating to: (i) damaged or defective packaging, (ii) any shortage in
quantity of such shipment of Product.

     (b) Upon receipt of notice of rejection of Product, Manufacturer will
investigate such alleged nonconformity, and deliver to Customer a corrective
action plan within 10 (ten) business days after receipt of Customer’s notice of
non-conformity, or such additional time as is

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reasonably required if such investigation or plan requires data from sources
other than Customer or Manufacturer.

     (c) In the event of an unresolved conflict between the test results of
Manufacturer and the test results of Customer with respect to any rejected
Product, a sample of such Product shall be submitted by Manufacturer to an
independent laboratory, reasonably acceptable to both parties, for testing
against the Specifications. The test results obtained by such laboratory shall
be final and controlling. The fees and expenses of such laboratory testing shall
be borne entirely by the party against whom such laboratory’s findings are made.

     (d) In the event of rejection, shortage or breach, at Customer’s election
Manufacturer shall replace the rejected Product or permit Customer to purchase
only acceptable units of Product at the quoted price. Customer shall not be
required to pay for rejected product or shortages unless and until such Product
is replaced by Manufacturer. Manufacturer shall make arrangements with Customer
for the return or destruction of any rejected Product. The costs for such return
shipping and destruction are to be paid by Manufacturer.

     2.7 Price:

     (a) Manufacturer shall charge Customer and Customer shall pay a price for
the Products as set forth in Attachment B to this Agreement, which is
incorporated herein by reference.

     (b) Payment for all Product purchased hereunder shall be net thirty (30)
days from date of invoice, which shall issue upon shipment of a lot of Product
from Manufacturer.

     (c) In the event the Specifications are changed upon the request of
Customer and with the agreement of Manufacturer, an appropriate change agreed to
by the parties shall be made in the pricing for such Product and such changes
shall be set forth in the Attachments hereto, which shall list a mutually agreed
upon effective date for such changes.

     2.8 Price Negotiation: During the last month prior to each Anniversary Date
during the Contract Term, Manufacturer and Customer shall, upon the written
request of either party, negotiate in good faith to determine an adjustment, if
appropriate, up or down in the prices for the Products set forth in Attachment B
for the following Contract Year. Such negotiations shall be concluded not less
than fifteen (15) days prior to the Anniversary Date. The parties agree to
adjust the prices up or down to reflect changes in the costs (compared to the
costs as of the previous Anniversary Date) of the Ingredient Chemicals purchased
and used by Manufacturer in production of the Products; provided, however, that
such prices shall not be increased unless the total actual cost to the
Manufacturer overall of manufacturing the Products has increased over the
period, and provided, further, that the maximum price increase in any Contract
Year shall not be greater than 3% of the base price as set forth in Attachment
B. Both parties must agree in writing to any adjustment in the price of the
Products at any time during the Contract Term. The parties will also negotiate
price adjustments to be applicable after expiration of the Contract Term;
provided, however, any such agreement as to price applicable after expiration of
the Contract Term shall not act to waive either party’s right to non-renewal as
set forth in Section 4.1.

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     2.9 Non-Compete: During the term of this Agreement and for a period of one
year thereafter, Manufacturer agrees that neither it nor its affiliates will
manufacture or sell or participate in the ownership, management or control of
any business that manufactures or sells any similarly formulated products
directly competitive with the Products anywhere in the United States of America.

     2.10 Representation and Warranties of Manufacturer: To induce Customer to
enter into this Agreement, Manufacturer hereby represents and warrants to
Customer that:

     (a) Manufacturer’s manufacturing facility at which all of its work is to be
conducted hereunder is to be performed (including all equipment and procedures
used in such facility) is, and at all times during the term of this Agreement
will be, and all such work to be undertaken by Manufacturer hereunder will be,
compliant with all applicable provisions of the Federal Food, Drug and Cosmetic
Act and all other applicable laws and government regulations, and that it will
promptly disclose to Customer any regulatory breaches upon notification by FDA;

     (b) the entering into of this Agreement by Manufacturer and the performance
by Manufacturer of its covenants and obligations hereunder do not and will not
conflict with or violate any other agreement to which Manufacturer is a party or
by which Manufacturer is bound;

     (c) Except for the intellectual property of Customer referred to in
Article III hereof, Manufacturer owns all right, title and interest in and to,
or otherwise has lawful rights to use, the intellectual property used by it in
the design, production, manufacture, filling and packaging of the Products and
Manufacturer has not received notice of any present or threatened claim, action
or proceeding alleging that any part of its intellectual property infringes any
third party’s intellectual property rights, and Customer and its affiliates may
freely market and sell the Products without infringing any third party’s
intellectual property rights and without any royalty, fee or similar payment of
any kind being or becoming due or payable by Customer or its affiliates to any
third party; and

     (d) Manufacturer represents and warrants that it has all the necessary
permits and licenses for the manufacture of Product.

     2.12 Representation and Warranties of Customer. To induce Manufacturer to
enter into this Agreement, Customer hereby represents and warrants to
Manufacturer that:

     (a) the entering into of this Agreement by Customer and the performance by
Customer of its covenants and obligations hereunder do not and will not conflict
with or violate any other agreement to which Customer is a party or by which
Customer is bound; and

     (b) Customer owns all right, title and interest in and to, or otherwise has
lawful rights to use, the intellectual property used by it in the design,
production and manufacture of the Products (the “Customer IP”), and Customer has
not received notice of any present or threatened claim, action or proceeding
alleging that any part of the Customer IP infringes any third party’s
intellectual property rights, and Manufacturer may perform its obligations
contemplated herein without infringing any third party’s intellectual property
rights in respect of the Products and

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without any royalty, fee or similar payment of any kind being or becoming due or
payable by Manufacturer to any third party in respect of the Products.

     2.13 Representations and Warranties of Customer and Manufacturer: Customer
and Manufacturer each represent and warrant that their respective obligations
hereunder will be performed in full compliance with all applicable laws. Each
party shall cooperate with the other, as necessary, to be and remain in full
compliance with applicable laws.

     2.14 Manufacturer Responsibilities. Manufacturer shall manufacture the
Products in compliance with the Specifications. As set forth in Attachment C,
Customer or Manufacturer, respectively, shall, in strict compliance with the
Specifications, purchase and provide all raw materials, components, packaging,
labeling and shipping materials, labor, utilities and equipment necessary to
manufacture the Products and pack the Products for shipping, all in strict
compliance with the Specifications. Use of materials shall be on a first in,
first out basis, unless otherwise agreed to in writing by Customer. Manufacturer
shall prepare and deliver in a timely fashion all reports and information
reasonably requested by Customer, including, without limitation, product
quality, and daily production and shipping reports. Upon the date hereof and
each Anniversary Date hereafter, Manufacturer shall provide Customer with a list
of all assets that are located at one of Manufacturer’s facilities but are owned
by Customer. Manufacturer shall cooperate to ensure that such assets are
conspicuously marked as being owned by Customer and shall not move any such
assets without the prior written approval of Customer. In addition, Manufacturer
agrees to sign such further documents or instruments (including, without
limitation, a Form UCC-1) requested by Customer to protect Customer’s interest
in such assets.

     2.15 Inventories. Manufacturer shall be responsible for maintaining all raw
material and component inventories, order quantities, lead times, and delivery
dates. All unused materials shall be stored in Manufacturer’s warehouse.
Manufacturer shall be responsible for supplying an inventory report of all raw
materials and components by the end of the third business day following the end
of each calendar month. Manufacturer shall notify Customer immediately of any
significant loss of materials and Manufacturer shall be responsible for all
losses and shrinkage of materials. Manufacturer shall perform an annual physical
inventory relating to the Products at Manufacturer’s own expense and Customer
shall have the right to observe such physical inventory. Customer shall bear the
expense of any other physical inventories requested by Customer.

ARTICLE III
INTELLECTUAL PROPERTY

     3.1 Intellectual Property:

     (a) Customer and Manufacturer agree that as between them, Customer
(including its Affiliates (as hereinafter defined)) owns all rights,
intellectual and otherwise, to (i) all patents and/or formulas (including any
and all ideas, concepts, know-how, techniques, processes, methods, models,
designs, discoveries, developments, inventions, innovations and improvements of
Customer or its affiliates relating thereto) for the Products, and (ii) the
trademarks, trade names and trade dress used in connection with the packaging,
marketing and sale of the Products (other than any reference, if any, on such
packaging to Manufacturer’s name or trademark).

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During the term of this Agreement, Customer shall sell the Product purchased
from Manufacturer pursuant to this Agreement under its own trademarks and trade
dress. Manufacturer acknowledges that such trademarks, trade dress, and any
other designations of the Product labels and packages are the sole property of
Customer, and that Manufacturer’s labeling of the Product under Customer’s
trademarks and trade dress shall not be construed as granting any right in such
trademarks or trade dress to Manufacturer. Manufacturer covenants and agrees
that it will not, nor will it cause or permit any of its Affiliates to, act in
any manner inconsistent with the rights of Customer with respect to its
proprietary technology as described in this Section 3.1(a).

     (b) Customer and Manufacturer agree that as between them, Manufacturer
(including its Affiliates) owns all rights, intellectual and otherwise to its
proprietary processing techniques and proprietary operating procedures for
filling and packaging the Products (including any and all ideas, concepts,
know-how, techniques, processes, methods, models, designs, discoveries,
developments, inventions, innovations and improvements of Manufacturer or its
Affiliates related thereto). Customer covenants and agrees that it will not, nor
will it cause or permit any of its Affiliates to, act in any manner inconsistent
with the rights of Manufacturer with respect to its proprietary technology as
described in this Section 3.1(b).

ARTICLE IV
TERM AND TERMINATION

     4.1 Term: This Agreement will commence on October 13, 2004, and unless
terminated earlier in accordance with this Article IV shall continue until
October 13, 2007, (3 years). Thereafter, this Agreement shall be renewed in its
entirety for one year terms unless either party notifies the other in writing of
nonrenewal at least thirty (30) days prior to the termination date, except as
provided in Section 4.2(v).

     4.2 Termination: This Agreement can be terminated by either party upon
thirty (30) days written notice to the other party in the event of any of the
following: (i) if any provision herein is breached, unless such breach is
corrected within the thirty (30) day notice period; (ii) if either party becomes
insolvent or bankrupt, is unable to satisfy obligations as they become due, or
enters into any arrangement with its creditors or enters into liquidation;
(iii) Customer determines in its sole discretion that it will no longer market
any of the Products for a period of at least one (1) year; (iv) if conditions
constituting force majeure as defined in Article VII exist for a period in
excess of ninety (90) days in any six-month period; or, (v) after the end of the
initial Contract Term only, if there is a failure to reach agreement as to price
as per Section 2.8 and with thirty (30) days notice.

     4.3 Failure to Supply: In event that Manufacturer fails to supply the total
quantity (within +15%/-5% as stated in a purchase order) of Product ordered by
Customer in accordance with Section 2.2 within thirty (30) days of the due date
as stated in the purchase order, Customer shall have the right to terminate this
Agreement, unless such failure is excused pursuant to Section 10. Upon such
termination, Customer is hereby granted an irrevocable, transferable, royalty
free license to use and exploit the intellectual property of Manufacturer
related to the Products as such intellectual property is described in
Section 3.1(b).

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     4.4 Nonwaiver: Failure to terminate upon grounds set forth in Section 4.3
or to exercise any right or remedy hereunder shall not constitute a waiver of
the right to terminate on that or other grounds or to exercise such other right
or remedy in the future.

     4.5 Survival: Termination, expiration, cancellation or abandonment of this
Agreement, through any means and for any reason, shall not relieve either party
of its obligations incurred prior to termination or extinguish any obligation or
right expressly provided in this Agreement to survive the termination of this
Agreement. Section 2.9 – Non-Compete, Article IV — Term and Termination,
Article VI — Product Recalls, Article VII — Product Warranties, Article VIII –
Confidentiality and Article IX – Indemnification shall survive the termination
or cancellation of this Agreement for any reason.

     4.6 Payment on Termination: In the event of the termination or cancellation
of this Agreement, Customer shall pay Manufacturer for (a) all work-in-process
commenced by Manufacturer and (b) all finished goods produced by Manufacturer.
In the event of a default by either party, the non-defaulting party shall be
responsible for all reasonable out of pocket expenses and losses incurred by
such non-defaulting party resulting from the termination.

ARTICLE V
CERTIFICATES OF ANALYSIS AND MANUFACTURING COMPLIANCE

     5.1 Certificates of Analysis: Manufacturer shall test or cause to be tested
each lot of Product purchased pursuant to this Agreement as per the
Specifications. For each lot of Product tested, each test shall set forth the
items tested, specifications, and test results in a certificate of analysis,
which Manufacturer shall send or cause to be sent to Customer. Customer is
entitled to rely on such certificates for all purposes of this Agreement.

     5.2 Certificates of Manufacturing Compliance: Manufacturer shall provide or
cause to be provided a certificate of manufacturing compliance or manufacturing
lot record that will certify that the lot of Product was manufactured in
accordance with the Specifications and applicable cGMPs.

     5.3 Compliance Audit: Except with respect to information and operations
that constitute Manufacturer trade secrets, Customer, upon prior written notice
and during normal business hours, shall have the right to inspect Manufacturer
batch and production records and the portions of Manufacturer’s facility used
for the manufacture of Products once annually unless otherwise mutually agreed
upon. If Customer chooses to audit Manufacturer more than one time in a calendar
year, Customer agrees to reimburse Manufacturer for Manufacturer’s reasonable
expenses incurred in hosting the audit. Manufacturer shall advise Customer
immediately if an authorized agent of the FDA or other governmental agency
visits any of Manufacturer’s manufacturing facilities concerning any Product.
Manufacturer shall furnish to Customer the report by such agency of such visit
as it may apply to any Product within five (5) business days of Manufacturer’s
receipt of such report.

     5.4 Annual Quality Review: Customer shall be responsible for evaluating, at
least annually, the quality standards of the Product to determine the need for
changes in the Specifications, manufacturing processes, and/or controlled
documents. Manufacturer shall

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provide Customer with access to all appropriate batch and production records for
each batch of the Product.

     5.5 Distribution Records: Manufacturer shall maintain distribution records
that contain all of the appropriate information as specified in the cGMP
regulations.

     5.6 Regulatory Compliance: Manufacturer is responsible for cGMP compliance
with all Federal, State and local laws and regulations (“Regulations”) as they
apply to Manufacturer’s facility and as long as the Products meet the
Specifications, Manufacturer shall have no responsibilities for compliance with
Regulations as they relate specifically to ingredients, labeling or marketing.
Customer assumes responsibility for all contact with the FDA and other
regulatory bodies pertaining specifically to Product; provided, however,
Manufacturer shall provide to Customer all such information as Customer requires
in connection with such contacts with the FDA and other regulatory bodies and
Manufacturer agrees to otherwise fully cooperate with Customer in connection
with such matters.

ARTICLE VI
PRODUCT RECALLS

     6.1 Product Recalls: In the event (a) any government authority issues a
directive or order that a Product manufactured or supplied by Manufacturer
hereunder be recalled; or (b) a court of competent jurisdiction orders such a
recall; or (c) Customer reasonably determines that any such Product should be
recalled, or (d) Manufacturer, reasonably determines that any such Product
should be recalled, the parties shall take all appropriate corrective actions to
best preserve the Product’s good will and reputation. If a recall is due to
(a) or (b), Manufacturer and Customer shall split evenly the costs of such
recall until primary responsibility for the cause of the recall is determined,
at which time the party primarily responsible for the cause of the recall shall
assume responsibility for all such costs and expenses and shall reimburse the
other party for any costs and expenses incurred by such party. If a recall is
due to (c) or (d), the party calling for the recall shall initially bear the
expenses of the recall until primary responsibility for the cause of the recall
is determined, at which time the party primarily responsible for the cause of
the recall shall assume responsibility for all such costs and expenses and shall
reimburse the other party for all costs and expenses incurred by such party. If
a recall is due to nonconformance with the cGMP regulations, failure to meet the
Specifications, or if such recall is otherwise due to the actions or negligence
of Manufacturer, Manufacturer shall be considered the party primarily
responsible in which case Manufacturer shall be responsible for all expenses of
the recall and shall hold Customer, its employees, representatives and customers
harmless. For purposes of this Agreement, the expenses of recall shall include,
without limitation, the expenses of notification of customers, the expenses of
return and/or destruction of the recalled Product, any necessary Product rework
expense, any legal expenses incurred and other reasonable related expenses.

     6.2 Consumer Complaints: Complaint files, as required by the cGMP
regulations, shall be maintained by Customer. Any complaints received by
Manufacturer shall be forwarded to Customer, Customer shall make these complaint
files available to Manufacturer in the event they are required during an FDA
inspection. Customer shall be responsible for the review of complaints to
determine the need for an investigation or the need to report to the FDA as

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required by the cGMP regulations. Customer shall notify Manufacturer within five
(5) business days upon Customer having received a manufacturing-related
complaint that requires investigation. Manufacturer shall promptly conduct an
investigation for each manufacturing-related complaint and shall report findings
and follow-up of each investigation to Customer. Manufacturer shall cooperate
with Customer in the resolution of all complaints of consumers with regard to
the Product. In the event of a confirmed complaint relating to safety issues
with regard to use of any Product by consumers, Customer shall determine whether
such information must be reported to the FDA and shall take responsibility for
making such a report.

ARTICLE VII
PRODUCT WARRANTIES

     7.1 Conformity with Specifications: Manufacturer warrants that it will have
good and marketable title to all products sold to customer and that Products
sold and delivered pursuant to this Agreement are manufactured, prepared and
tested in accordance with the Specifications and the cGMP regulations and will
conform to the Specifications and all applicable Regulations when delivered.

     7.2 Extent of Warranty: THE FOREGOING WARRANTIES ARE EXCLUSIVE AND IN LIEU
OF AND SHALL SUPERSEDE ALL OTHER WARRANTIES OF ANY KIND, WHETHER WRITTEN, ORAL,
OR IMPLIED. EXCEPT AS PROVIDED IN SECTIONS 7.1 ABOVE, MANUFACTURER DOES NOT MAKE
ANY WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCT
SUPPLIED BY IT PURSUANT TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE VIII
CONFIDENTIALITY

     8.1 Confidentiality:

     (a) The term “Confidential Information” means any oral or written
information or materials relating to and including, but not limited to, such
matters as trade secrets, systems, procedures, manuals, confidential reports,
lists of suppliers, research and development projects, policies, processes,
formulas, techniques, know-how and facts relating to sales, advertising,
mailing, promotions, financial matters, customers, customer lists, purchases or
requirements or other methods used by a party in its operations. Notwithstanding
the above, the term Confidential Information shall not include any information
that:

          (i) At the time of disclosure is generally available to the public or
thereafter becomes available to the public by publication or otherwise through
no act, omission or default of the party to whom disclosure is made.

          (ii) Was in the possession of the party to whom disclosure is made
prior to the time of disclosure and was not acquired directly or indirectly from
the disclosing party or any person, firm or corporation acting on behalf of, or
otherwise subject to any duty of confidentiality to, the disclosing party.

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          (iii) Is independently made available as a matter of right by a third
party who is under no duty of confidentiality to the disclosing party.

          (iv) Is independently developed by an employee of the receiving party
who has not had access to the Confidential Information received from the
disclosing party.

     (b) Duty not to Disclose: Each party recognizes and acknowledges that by
the terms of this Agreement it shall from time to time obtain and have access to
the Confidential Information of the other party. Accordingly, it shall not,
during the term hereof and at all times forever after the expiration or
termination of this Agreement, in any way, directly or indirectly, make use of,
divulge, publish, reveal or disclose any of the Confidential Information of the
other party or any part thereof for any purpose whatsoever to any person, firm,
corporation, association or other entity without the express written consent of
the disclosing party. Notwithstanding any provision to the contrary contained
herein, the foregoing restriction shall not apply to any release, publication,
or disclosure required by applicable law, provided that, in the event of any
such legal compulsion to disclose Confidential Information, the party being
compelled shall immediately notify the disclosing party of the compulsion and
shall cooperate with the disclosing party in any effort to limit or annul such
compulsion.

     (c) Duty to Preserve Confidentiality: Each party shall use its best
efforts, including, but not limited to, efforts fully commensurate with those
employed by such party for the protection of its own confidential information,
to protect the Confidential Information of the other party in such party’s
possession. Each party shall instruct its employees, agents, directors,
officers, and any other person acting on such party’s behalf to treat the other
party’s Confidential Information as confidential.

     (d) Manufacturer not to Replicate Product: Manufacturer shall not, under
any circumstances, copy, replicate, imitate or reverse engineer any of
Customer’s products, including, but not limited to, the Product(s).

     (e) Injunctive Relief: Each party acknowledges and realizes that the other
party’s Confidential Information is special, unique and extraordinary and is
vital to the other party. Accordingly, the parties acknowledge that the breach
of this Article VIII by one of the parties will result in irreparable to the
other party and that, therefore, in addition to any and all other remedies the
other party may have pursuant to this Agreement, at law or in equity, it shall
be entitled to institute and prosecute proceedings at law or in equity, in any
court of competent jurisdiction, to obtain an injunction restraining the first
party from violating or continuing to violate this Article VIII. Each party
agrees that the disclosing party’s remedy at law would be inadequate and,
therefore, agrees and consents that temporary and/or permanent injunctive relief
may be sought in any proceeding which may be brought to enforce this
Article VIII without the necessity or proof of actual damage.

     (f) Survival of Obligations: The obligations pursuant to this Article VIII
shall survive the expiration or termination of this Agreement.

     (g) Inventions: Any invention made, conceived or reduced to practice by
Manufacturer in connection with the performance of the obligations under this
Agreement,

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during the term of this Agreement or thereafter, whether derived from
Manufacturer or Customer, shall be considered Confidential Information and, to
the extent it relates to any of the Products, shall be the exclusive property of
Customer, except for any such invention involving the manufacturing processes
involved in manufacturing any of the Products, which shall be the exclusive
property of Manufacturer. Either party, in its sole discretion, may file for
patent protection on its respective inventions as set forth above in its own
name, and the other party, upon request, shall promptly sign and deliver any and
all documents or information necessary for the securing of such invention in any
country as determined by the respective owner of the invention.

     (h) Agreement Confidential: Except as required by Securities and Exchange
Commission regulations, the parties agree that the existence and contents of
this Agreement (including any Attachments) is Confidential Information and shall
not be disclosed to any third party without the prior written consent of the
other party, except that in furtherance of this Agreement, and only to the
extent reasonably necessary for this purpose, its existence or contents may be
disclosed to the following who shall also be made subject to the restrictions on
disclosure stated herein; (i) any controlling companies of the parties, (ii) any
companies controlled by the parties, (iii) governmental regulatory agencies,
including, but not limited to, environmental protection authorities,
(iv) contract laboratories, and (v) suppliers of raw materials or components.
This obligation of confidentiality shall not apply to disclosures required by
law.

     (i) Copies: Upon termination of this Agreement for whatever reason, each
party shall return to the other, or destroy, all originals, copies, and
derivative forms of disclosed or developed information relating to the purpose
of this Agreement; except that one copy of such information may be retained by
the receiving party as required by regulatory law for future reference or for
archival purposes. These obligations of confidentiality shall survive the
termination of this Agreement and shall continue for a period of ten (10) years
after the date of expiration or termination of the Agreement.

ARTICLE IX
INDEMNIFICATION

     9.1 Indemnification by Manufacturer: Manufacturer will indemnify and hold
Customer and any parent, subsidiary, or affiliate company or corporation, and
their officers, directors, shareholders, agents, and the employees and insurers
of any of them and/or their successors and assigns thereto (collectively
“Affiliates”), free and harmless against any and all liability, damages, losses,
costs or expenses (“Liability”) resulting from any third party claims made or
suits brought against Customer to the extent such Liability arises from any act
or omission of Manufacturer regarding: (i) the manufacture, storage, handling,
use, or misuse of any Product prior to delivery to Customer, including
Manufacturer’s negligence or willful misconduct in the manufacture of the
Product hereunder; (ii) Manufacturer’s compliance or non-compliance with any
applicable Federal or State laws or regulations; or (iii) Manufacturer’s failure
to perform, in whole or in part, any of its obligations hereunder, including
Manufacturer’s breach of any warranty set forth in Article VII hereof.

     9.2 Indemnification by Customer: Customer will indemnify and hold
Manufacturer (and its Affiliates) harmless against any and all Liability
resulting from any third party claims

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made or suits brought against Manufacturer to the extent such Liability arises
from any act or omission of Customer regarding; (i) any Product labeling or
packaging not attributable to Manufacturer’s negligence; (ii) Customer’s
compliance or non-compliance with any applicable Federal or State laws or
regulations; or (iii) any failure of Customer to perform, in whole or in part,
any of its obligations hereunder.

     9.3 Conditions of Indemnification: Promptly upon receipt of notice of any
claim, demand or assessment or the commencement of any suit, action or
proceeding with respect to which indemnity may be sought pursuant to this
Agreement, the party seeking to be indemnified or held harmless (the
“Indemnitee”) shall notify in writing, if possible, within sufficient time to
permit response to such claim or answer or other pleading in such action, the
party from whom indemnification is sought (the “Indemnitor”). In case any claim,
demand or assessment shall be asserted, or suit, action or proceeding commenced
against the Indemnitee, the Indemnitor shall be entitled, at the Indemnitor’s
expense, to participate therein, and, to the extent that it may wish, to assume
the defense, conduct or settlement thereof, at its own expense, with counsel
satisfactory to the Indemnitee, whose consent to the selection of counsel shall
not be unreasonably withheld or delayed; provided that the Indemnitor confirms
to the Indemnitee that it is a claim to which its rights of indemnification
apply. The Indemnitor shall have the right to settle or compromise monetary
claims; however, as to any other claim, the Indemnitor shall first obtain the
prior written consent from the Indemnitee, which consent shall be exercised in
the sole discretion of the Indemnitee. After notice from the Indemnitor to the
Indemnitee of Indemnitor’s intent so to assume the defense, conduct, settlement
or compromise of such action, the Indemnitor shall not be liable to the
Indemnitee for any legal or other expenses (including, without limitation,
settlement costs) subsequently incurred by the Indemnitee in connection with the
defense, conduct or settlement of such action while the Indemnitor is diligently
defending, conducting, settling or compromising such action. Each party shall
cooperate fully with the other party in the defense of all such claims or suits.

     9.4 Patent Indemnity: Customer warrants that distribution and sale of any
Product or bulk drug substance (where applicable) by Customer will not infringe
any patent or other proprietary rights and that Customer will indemnify, defend
and hold Manufacturer and its Affiliates free and harmless from any damage,
judgment, liability, loss, cost or expense, including legal expenses, arising
from claims that the distribution or sale of the Product or bulk drug substance
infringe patent or other proprietary rights of a third party. Manufacturer
warrants that the use of all manufacturing processes utilized in connection with
the manufacture of any Product by Manufacturer for Customer will not infringe
any patent or other proprietary rights and that Manufacturer will indemnify,
defend, and hold Customer and its Affiliates free and harmless from any damage,
judgment, liability, loss, cost, or expense, including legal expenses, arising
from claims that the manufacturing processes utilized by Manufacturer infringe
patent or proprietary rights of a third party.

     9.5 Insurance by Manufacturer: Manufacturer shall procure and maintain,
during the term of this Agreement and for a period of one year beyond the
expiration date of any Product manufactured for Customer by Manufacturer
pursuant to this Agreement, commercial general liability insurance, including,
without limitation, product liability and contractual liability coverage (the
“Manufacturer Insurance”) in an amount not less than $3,000,000.00 in the
aggregate, and $1,000,000.00 per occurrence. Customer shall be named as
additional insured on

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the Manufacturer Insurance and Manufacturer promptly shall deliver a
certificate(s) of Manufacturer Insurance to Customer evidencing such coverage,
executed by a duly authorized representative of each insurer, showing compliance
with the requirements set forth herein. If Manufacturer fails to furnish such
certificates, or if at any time during the term of this Agreement Customer is
notified of the cancellation or lapse of the Manufacturer Insurance, and
Manufacturer fails to rectify the same within ten (10) calendar days after
notice from Customer, in addition to all other remedies available to Customer
hereunder, Customer, at its option, may obtain the Manufacturer Insurance and
Manufacturer shall promptly reimburse Customer for the cost of the same. Failure
of Customer to demand such certificate or other evidence of full compliance with
these insurance requirements shall not be construed as a waiver of
Manufacturer’s obligation to maintain such insurance. Any deductible and/or self
insured retention, as applicable, are the sole responsibility of Manufacturer.

     9.6 Insurance by Customer: Customer shall procure and maintain, during the
term of this Agreement and for a period one year beyond the expiration date of
any Product manufactured for Customer by Manufacturer pursuant to this
Agreement, commercial general liability insurance, including, without
limitation, product liability and contractual liability coverage (the “Customer
Insurance”) in an amount not less than $3,000,000.00 in the aggregate, and
$1,000,000.00 per occurrence. Manufacturer shall be named as an additional
insured on the Customer Insurance and Customer promptly shall deliver a
certificate(s) of Customer Insurance to Manufacturer evidencing such coverage
executed by a duly authorized representative of each insurer, showing compliance
with the requirements set forth herein. If Customer fails to furnish such
certificate, or if at any time during the term of this Agreement Manufacturer is
notified of the cancellation or lapse of the Customer Insurance, and Customer
fails to rectify the same within ten (10) calendar days after notice from
Manufacturer, in addition to all other remedies available to Manufacturer
hereunder, Manufacturer, at its option, may obtain the Customer Insurance and
Customer promptly shall reimburse Manufacturer for the cost of the same. Failure
of Manufacturer to demand such certificate or other evidence of full compliance
with these insurance requirements shall not be construed as a waiver of
Customer’s obligation to maintain such insurance. Any deductible and/or self
insured retention, as applicable, are the sole responsibility of Customer.

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ARTICLE X
GENERAL PROVISIONS

     10.1 Notices: Any notices permitted or required by this Agreement, except
forecasts and orders, may be sent by facsimile with the original document being
sent by certified (or registered) mail, return receipt requested, or overnight
delivery, and shall be effective when received (or refused) via facsimile or
mail or overnight if faxed and sent and addressed as follows (or to such other
facsimile number or address as may be designated by a party in writing):

If to Customer:

Matrixx Initiatives, Inc.
4742 North 24th Street
Suite 455
Phoenix, AZ 85016
fax number (602) 385-8862
Attention: Director of Operations

If to Manufacturer:

BioZone Laboratories, Inc.
580 Garcia Avenue
Pittsburg, CA 94565
fax number (925) 473-2216
Attention: Mr. Dan Fisher

     10.2 Dispute Resolution:

     (a) The parties agree to effect all reasonable efforts to resolve any and
all disputes between them in connection with this Agreement in an amicable
manner.

     (b) The parties agree that any dispute that arises in connection with this
Agreement and that cannot be amicably resolved by the parties shall be resolved
by binding arbitration in the manner described below.

     (c) If a party intends to begin arbitration to resolve a dispute, such
party shall provide written notice to the ether party informing the other party
of such intention and the issues to be resolved. Within ten (10) business days
after its receipt of such notice, the other party may, by written notice to the
party initiating arbitration, add additional issues to be resolved. Within
twenty (20) business days following the receipt of the original arbitration
notice (“Notice Date”) a neutral shall be selected by the American Arbitration
Association (“AAA”), in Phoenix, Arizona. The neutral shall be a single
individual who shall preside in resolution of any disputes between the parties.
The neutral selected shall not be an Affiliate of either party.

     (d) Each party shall have ten (10) business days from the date the neutral
is selected to object in good faith to the selection of that person. If either
party makes such an objection, the

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AAA shall, as soon as possible thereafter, select another neutral under the same
conditions set forth above. This second selection shall be final.

     (e) (i) No later than twenty (20) business days after selection, the
neutral shall hold a hearing to resolve each of the issues identified by the
parties.

          (ii) At least five (5) days prior to the hearing, each party must
submit to the neutral and serve on the other party a proposed ruling on each
issue to be resolved. Such writing shall be limited to presenting the proposed
ruling, shall contain no argument on or analysis of the facts or issues, and
shall be limited to not more than fifty (50) pages.

          (iii) Each party shall be entitled to no more than five (5) hours of
hearing to present testimony or documentary evidence. The testimony of both
parties shall be presented during the same calendar day. Such time limitation
shall include any direct, cross or rebuttal testimony, but such time limitation
shall only be charged against the party conducting such direct, cross or
rebuttal testimony. It shall be the responsibility of the neutral to determine
whether the parties have had the five (5) hours to which each is entitled.

          (iv) Each party shall have the right to be represented by counsel. The
neutral shall have discretion with regard to the admissibility of any evidence.

          (v) The neutral shall rule on each disputed issue within ten (10) days
following the completion of the testimony of both parties. Such ruling shall
adopt in its entirety the proposed ruling of one of the parties on each disputed
issue.

          (vi) Binding arbitration shall take place at a location agreed by the
parties or, if the parties are unable to agree, then as designated by the
neutral. All costs incurred for a hearing room shall be shared equally between
the parties.

          (vii) The neutral shall be paid a reasonable fee plus expenses, which
fees and expenses shall be shared equally by the parties.

     10.3 Entire Agreement; Amendment: The parties hereto acknowledge that this
Agreement sets forth the entire agreement and understanding of the parties and
supersedes all prior written and oral agreements or understandings with respect
to the subject matter hereof. No modification of any of the terms of this
Agreement, or any amendments thereto, shall be deemed to be valid unless in
writing and signed by an authorized agent or representative of the party against
whom enforcement is sought. No course of dealing or usage of trade shall be used
to modify the terms and conditions herein.

     10.4 Cumulative Remedies and Waiver: The rights and remedies herein granted
to the parties are cumulative and the exercise thereof shall be without
prejudice to the enforcement of any other right or remedy authorized by law or
this Agreement. None of the provisions of this Agreement shall be considered
waived by any party hereto unless such waiver is agreed to, in writing, by
authorized agents of both parties. The failure of a party to insist upon strict
conformance to any of the terms and conditions hereof, or failure or delay to
exercise any rights provided herein or by law, shall not be deemed a waiver of
any rights of any party hereto.

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     10.5 Assignment: This Agreement shall be binding upon and inure to the
benefit of the successors or permitted assigns of each of the parties and may
not be assigned or transferred by either party without the prior written consent
of the other.

     10.6 Governing Law: This Agreement is being delivered and executed in the
State of Arizona. Any action brought regarding the validity, construction and
enforcement of this Agreement, shall be governed by and construed under the laws
of the State of Arizona, U.S.A., without regard to its conflicts of law
principles.

     10.7 Severability: In the event that any term or provision of this
Agreement shall violate any applicable statute, ordinance or rule of law in any
jurisdiction in which it is used, or otherwise be unenforceable, such provision
shall be ineffective to the extent of such violation without invalidating any
other provision hereof.

     10.8 Headings, Interpretation: The headings used in this Agreement are for
convenience only and are not a part of this Agreement.

     10.9 Attachments: All Attachments referenced herein are hereby made a part
of this Agreement.

     10.10 Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.

     10.11 Independent Parties: This Agreement shall not be deemed to create any
partnership, joint venture, or agency relationship between the parties. Each
party shall act hereunder as an independent contractor.

     10.12 Force Majeure: Failure of either party to perform its obligations
pursuant to this Agreement (except the obligation to make payments) shall not
subject such party to any liability to the other if such failure is caused by
acts, such as, but not limited to, acts of God, fire, explosion, flood, drought,
war, riot, sabotage, embargo, strikes or other labor trouble, or compliance with
any order or regulation of any government entity acting with color of right, or
by any cause beyond the reasonable control of the affected party, whether or not
foreseeable, provided that written notice of such event is promptly given to the
other party.

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     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer as of the day and year first above
written.

     
ACCEPTED BY:
  ACCEPTED BY:
Matrixx Initiatives, Inc.
  BioZone Laboratories, Inc.
By:
  By:

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          Name: William J. Hemelt
            Name: Daniel L. Fisher
          Title: Executive Vice President, C.F.O.
            Title: President
Date:
  Date:

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