Exhibit 10.1


 


MANUFACTURING SUPPORT AND SUPPLY AGREEMENT


 


This Manufacturing Support
and Supply Agreement (the “Agreement”) is entered into this day of December 15th, 2009 by and between
Biospherics, Inc. (“Biospherics”), a Delaware Corporation, with its principal
place of business located at 6430 Rockledge Drive, Westmoreland Building #503,
Bethesda, Maryland 20817, United States of America and Inalco S.p.A. (“Inalco”),
an Italian corporation, with its principal place of business located at Via
Calabiana 18, 20139 Milano, Italy. Biospherics and Inalco are hereinafter
individually referred to as the “Party” and collectively as the “Parties.”


 


RECITALS


 


WHEREAS, Biospherics is
currently conducting a phase 3 clinical trial of D-tagatose (“Product”) for the
treatment of type 2 diabetes and such clinical trial is expected to be complete
in 2010;


 


WHEREAS, Biospherics
anticipates filing a New Drug Application (“NDA”) with the U.S. Food and Drug
Administration (“FDA”) for Product to treat type 2 diabetes in 2011;


 


WHEREAS, Inalco desires
to support Biospherics’ NDA for the Product and to act as Biospherics’
manufacturer and supplier of Product; and


 


WHEREAS, Biospherics
desires to retain Inalco as its manufacturer and supplier of Product.


 


NOW, THEREFORE, in consideration
of the mutual premises and covenants set forth below, the Parties agree as
follows:


 


ARTICLE I: SCOPE OF WORK


 


1.1                                 Inalco’s
Obligations. Inalco shall (i) maintain the Drug Master
File (“DMF”) and support the Chemistry, Manufacturing, and Controls part of
Biospherics’ NDA for Product; (ii) manufacture and deliver Product to
Biospherics in accordance with this Agreement; and (iii) perform all other
applicable requirements and obligations as set forth herein.


 


1.2                                 Biospherics’
Obligations. Biospherics shall: (i) subject to the terms
of this Agreement, order a minimum of 25 Metric Tons (“MT”) of Product from
Inalco in accordance with the terms specified in this Agreement, and (ii) perform
all other applicable requirements and obligations as set forth herein.


 


ARTICLE II: OBLIGATIONS OF INALCO


 


2.1                                 Support of NDA. Inalco shall (i) establish
and maintain active DMF Types I-III  for Product as required by the FDA
in accordance with 21 CFR 314.420(c) and the FDA Guidance for Drug Master
Files as provided on the FDA’s website and provide Biospherics with access to
and copies of all relevant files; (ii) supply Biospherics with a Letter of
Authorization,


 

















 


in accordance with the FDA Guideline for Drug
Master Files as provided on the FDA’s website, naming Biospherics as a sponsor
permitted to incorporate by reference the specific information contained in the
DMF; (iii) allow FDA inspections of its facilities which produce Product;
and (iv) cooperate with Biospherics to address any inquiries and concerns
from the FDA in regards to the DMF.


 


2.2                                 Annual Reports. Inalco will
provide an annual report to the FDA on the anniversary date of the original
submission of the DMF (the “Annual Report”). The Annual Report should contain
the required list of persons authorized to incorporate information in the DMF
by reference in accordance with 21 CFR 314.420(d). Inalco will update this list
in the Annual Report. The updated list will contain Inalco’s name, DMF number,
and the date of the Annual Report. The Annual Report should also identify (i) by
name or code, the information that each person is authorized to incorporate and
give the location of that information by date, volume, and page number,
and (ii) all changes and additional information incorporated into the DMF
since the previous Annual Report. If the subject matter of the DMF is
unchanged, Inalco will provide a statement that the subject matter of the DMF
is current.


 


2.3                                 Supply of
Product. Inalco agrees to manufacture and deliver to Biospherics, in accordance
with orders issued under this Agreement, specified quantities of Product, which
must conform, in all respects, to the United States Pharmacopeia—National
Formulary (“USP–NF”) standards for D-tagatose.


 


2.4                                 Form of
Product. Unless otherwise agreed upon by the Parties, Product will be provided
in powder form and delivered in sealed PE-HD (high-density polyethylene) cans.


 


2.5                                 Compliance with
Laws. Inalco agrees that it will produce and deliver Product under this
Agreement in conformance with all applicable laws and regulations, including
those regulations established by the FDA.


 


2.6                                 Certificates of
Analysis. For each delivery of Product, Inalco shall provide
Certificates of Analysis conforming to International Standards Organization
(ISO) Guide 34 for the Product provided. The analysis must have been conducted
according to the USP monograph for D-tagatose and include High Performance
Liquid Chromatography testing to identify, among any other relevant
information, the type and quantity (to 0.1%) of any residual other sugars.


 


2.7                                 Certification. Inalco shall
submit a Certification with each order certifying that: (i) the Inalco DMF has
not been determined by the FDA to be deficient, and (ii) the Product was
produced in a manner compatible with the FDA’s current Good Manufacturing
Practices requirements for similar products such as lactose.


 


2.8                                 Bank Guarantee.


 


A.                                   Upon Biopherics’
request, Inalco shall provide a bank guarantee (the “Guarantee”) in amounts and
currencies equal to the amount of any Advance Payment. The Guarantee shall be
issued by an entity and from within a country (or other jurisdiction) approved


 


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by Biospherics, and shall be in the form
included in Attachment A or in another form approved
by Biospherics.


 


B.                                     Inaleo shall
ensure that the Guarantee is valid and enforceable until the Advance Payment
has been repaid or Biospherics certifies in writing that it has accepted the
Products for which the Advance Payment has been made. If the terms of the
Guarantee specify an expiration date, and the Advance Payment has not been
repaid, or Biospherics has not certified acceptance of Product as stated above,
by the date 28 days prior to the expiration date, Inalco shall extend the
validity of the Guarantee for a period reasonably acceptable to Biospherics.


 


ARTICLE III: OBLIGATIONS OF BIOSPHERICS


 


3.1                                 Order Quantity. Biospherics
agrees to an order of twenty-five (25) MT of Product (the “Initial Order”) and
to negotiate in good faith another agreement to order a minimum of three
hundred (300) MT of Product under mutually agreeable terms among the Parties.


 


3.2                                 Ordering. Biospherics
shall order Product pursuant to Article 1V.


 


3.3                                 Payment. Biospherics
will make payment for orders pursuant to Article V.


 


3.4                                 Status of NDA. Biospherics
agrees to take reasonable steps to apprise Inalco of the status and progress of
the NDA process, including responding to reasonable inquiries made by Inalco.


 


ARTICLE IV: ORDERING AND DELIVERY OF PRODUCT


 


4.1                                 Initial Order. By execution
of this Agreement, Biospherics orders twenty-five (25) MT of Product at the
price specified in Article 5.1. Production and delivery of
Product purchased pursuant to this Initial Order will not take place until
requested in writing by Biospherics. Upon receipt of such a request, Inalco
will have sixty (60) days to deliver Product to the address specified by
Biospherics.


 


4.2                                 Subsequent
Orders. Biospherics shall submit all subsequent orders for Product to Inalco
via a purchase order (“Purchase Order”) sent to the e-mail address or facsimile
number set forth in Section 12.5. The price per MT of Product
for all subsequent orders will be as specified in Article 5.1. As soon as
practicable after receipt of a Purchase Order, Inalco will notify Biospherics
in writing that the Purchase Order has been received and the date on which
delivery is expected to be made (the “Acceptance Notice”). Upon issuance by
Inalco of the Acceptance Notice, the Purchase Order and Acceptance Notice shall
constitute a contract in accordance with the terms and conditions of this
Agreement. In the event of a conflict between the terms of a Purchase Order and
Acceptance Notice and the terms of this Agreement, the terms of this Agreement
shall govern.


 


4.3                                 Delivery and
Shipment. The location for delivery of Product will be
specified by Biospherics in each Purchase Order. Delivery will be F.O.B.
Destination: [Delivery Address].


 


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Inalco shall hear responsibility for all
costs of delivery including, without limitation, shipping costs, customs
charges, duties, taxes, and other fees. The time specified for delivery of
Product will not be less than 45 days unless agreed to by Inalco.


 


4.4                                 Title and Risk
of Loss and Damages. Title to Product and risk of loss and damage
to Product passes to Biospherics upon delivery of Product to the address
specified in each Purchase Order.


 


4.5                                 Acceptance. Biospherics
shall inspect the Product promptly upon receipt thereof and may reject any
Product which is not in full conformance with the terms of this Agreement.
Product not rejected by written notification to Inalco within fourteen (14)
days of receipt shall be deemed to have been accepted. Rejected Product shall
be returned freight prepaid to Inalco within ten (10) calendar days of
rejection. As soon as possible, but in no case later than ten (10) days,
Inalco may, at its option and expense, replace such rejected Product. Inalco
shall prepay transportation costs back to Biospherics and shall reimburse
Biospherics for any costs of transportation incurred by it in connection with
the return to Inalco of such properly rejected Product.


 


ARTICLE V: PRICES AND PAYMENTS


 


5.1                                 Purchase Price. The price for
Product purchased by Biospherics shall be: (i) $44/kg for the Initial Order of
twenty-five (25) MT of Product, and (ii) $29.70/kg for all subsequent
orders of Product. Each Purchase Order will specify the quantity of Product
ordered. Except expressly stated otherwise, the prices set forth in this Section 5.1 include any
existing or future taxes, tariffs, fees, duties, or levies whatsoever
applicable to Product sold under this Agreement.


 


5.2                                 Payment Terms. Except as
specified below, Biospherics shall make payment to lnalco within thirty (30)
days following acceptance of Product. All payments to Inalco for Product in
accordance with this Section 5.2 shall be made to:


 


Bank:
INTESA SAN PAOLO C/V USD


SWIFT
code: BCITITMM


Account:
IT94 E030 6909 5071 6100 9362 895


Name
of account: Inalco S.p.A.


 


5.3                                 Advance Payment. In connection
with the Initial Order, Biospherics shall make the following payments to Inalco
in advance of delivery of Product (each, an “Advance Payment”):


 


A.                                   Within three
business days following execution of this Agreement, Biospherics will make an
advance payment of five hundred thousand dollars (US$500,000) to Inalco.


 


B.                                     Within six
months thereafter, provided that Inalco has in place the required bank
guarantee described in Section 2.8, Biospherics
will make payment for the balance of the Initial Order in the amount of five
hundred thousand dollars (US$500,000).


 


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ARTICLE VI: TERM


 


6.1                                 Term. This Agreement
shall come into effect on the date set forth in the Preamble
and shall have a term of five (5) years.


 


ARTICLE VII: TERMINATION


 


7.1                                 Termination. This Agreement
may be terminated:


 


A.                                   by written
notice that Biospherics will no longer pursue FDA approval of the NDA for the
Product;


 


B.                                     by either Party
upon thirty (30) days written notice if the other Party commits a material breach
of the Agreement and fails to cure the breach within such thirty (30) day
period; or


 


C.                                     automatically
if either Party ceases to operate its business in the ordinary course, files
for bankruptcy or has an order for relief entered against it in an involuntary
bankruptcy case, files any proceeding for insolvency, reorganization,
liquidation, receivership, or dissolution or there is an assignment for the
benefit of creditors.


 


7.2                                 Effect of
Termination.


 


A.                                   Upon
termination, the Parties agree to perform the following within thirty (30) days
after termination: (i) Biospherics shall pay Inalco all fees due and
unpaid with respect to Product delivered to Biospherics; (ii) Inalco shall
deliver, to the location specified by Biospherics, Product which has already
been paid for by Biospherics; and (iii) Inalco shall deliver the DMF to
Biospherics.


 


B.                                     Except in cases
of bad faith by either Biospherics or Inalco, neither Biospherics or Inalco
shall be liable to the other solely because of the termination of this Agreement,
for compensation, reimbursement, or damages due to the loss of prospective
profits or anticipated sales. Notwithstanding the foregoing, Biospherics and
Inalco, as applicable, shall remain liable for any obligations for unpaid
balances or credits for Product and for damages, indemnities or other
compensations due to breach of this Agreement prior to termination.


 


C.                                     The provisions
of Sections 7.2, 12.1, 12.3, 12.4, 12.5,
12.7, 12.8, 12.11 and Articles VIII, IX, and
X shall survive any termination or expiration of this Agreement.


 


ARTICLE VIII: CONFIDENTIALITY


 


8.1                                 Confidential
Information. In negotiating and implementing this
Agreement, either Party may transmit to the other Party (for the purpose of
this clause, the “Recipient”) or


 


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Recipient’s representative (for the purpose
of this clause, the “Representative”) certain proprietary and confidential
information regarding the Product (the “Confidential Information”). Such
Confidential Information is defined as all non-public information which is
furnished by the other Party or its representatives, regardless of whether
specifically identified as proprietary or confidential together with all
proprietary data on (without limitation) prices, volumes, quality, trade
secrets, know-how, ideas, principles, analyses, techniques, methodologies or
other documents that may be reasonably regarded as confidential under the
circumstances. A Recipient’s Representative shall be deemed to include each
person that is or becomes (i) a subsidiary or other affiliate of
Recipient, or (ii) an officer, director, employee, partner, attorney,
advisor, accountant, agent or representative of Recipient or any of Recipient’s
subsidiaries or other affiliates. The term person will be broadly interpreted
to include any individual and any corporation, partnership, entity or group.
Each Party agrees that, for the term of this Agreement and a period of [three
(3)] years after expiration or termination of this Agreement, it shall not
disclose any information it receives from the other Party to any other third
party, person, corporation or entity; nor shall either Party use Confidential
Information for its own benefit, except as provided herein. Nothing contained
in this Article VIII shall grant or imply any rights by license,
estoppel or otherwise. Confidential Information as used herein does not include
information which: (i) is in the public domain at the time of its
disclosure or which enters the public domain at any time after such disclosure
through no fault of the Recipient, (ii) is generally disclosed to third
parties by the disclosing party without restriction, (iii) is communicated
to the Recipient by a third party having a right to do so without restriction
on nondisclosure, or (iv) is approved for release by written authorization
of the other Party.


 


8.2                                 Disclosure of
Confidential Information. Each Party shall safeguard any Confidential
Information that it receives from the other Party in connection with this
Agreement. No Party shall disclose or cause to be disclosed, any of the
Confidential Information, except to those employees of the Parties and any
affiliates who require access to the Confidential Information to perform under
this Agreement.


 


8.3                                 Remedy for
Breach. The Parties acknowledge that the disclosing party would not have
an adequate remedy at law for money damages if the covenants contained in this Article VIII
were breached. Accordingly, the disclosing party shall be entitled to an
injunction restraining such disclosure and other equitable relief (including
specific performance), without the requirement of posting a bond or other
security.


 


ARTICLE IX: LIMITATION OF LIABILITY AND REMEDIES; INDEMNITY


 


9.1                                 Liability for
Termination. Except as
specifically provided in Section 7.2 or this Section 9.1,
neither Party shall be liable to the other, by reason of the termination of
this Agreement, for incidental, consequential, punitive, or special damages,
reimbursement or damages due to the loss of prospective profits or anticipated
sales or loss of goodwill.


 


9.2                                 Limitation of
Liability for Product; Sole Remedy. Liability under this
Agreement is expressly limited to the total amount paid by Biospherics for the
Product. IN NO EVENT SHALL THERE BE LIABILITY FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL,
INCIDENTAL OR INDIRECT DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS


 


6

















 


OF ANTICIPATED PROFITS OR ECONOMIC LOSS, EVEN
IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE.


 


9.3                                 Indemnity. Each Party
will defend, indemnify and hold harmless the other Party and its officers,
directors, agents, and employees (collectively, the indemnified party’s “Indemnitees”)
as to and against any and all claims asserted against, imposed upon or incurred
by the other Party or any of its Indemnitees arising out of or relating to (i) any
misrepresentation, or any breach of warranty or covenant, by the indemnifying
party under this Agreement, and (ii) any actual or alleged act or omission
of the indemnifying party, related to its performance of its obligations
hereunder.


 


ARTICLE X: REPRESENTATIONS AND WARRANTIES;


RESTRICTIVE COVENANTS


 


10.1                           Representations
and Warranties of the Parties. Biospherics and Inalco
represent and warrant to the other, on the date of the execution of this
Agreement and for the term of the Agreement, that:


 


	
   

  	
  (i)

  	
  it is a company duly
  incorporated and organized and is validly existing under the laws of its
  jurisdiction of incorporation and has not been dissolved;

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  it has full power,
  authority and capacity to enter into this Agreement and to perform its
  obligations hereunder. Except as expressly provided herein, all corporate
  actions, conditions, approvals and requirements to be taken, fulfilled,
  obtained, given and done by it in order to enable it to lawfully and validly
  enter into, exercise its rights and perform and comply with its obligations
  under this Agreement have been duly and validly taken, fulfilled, obtained,
  given and done; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  this Agreement constitutes
  a legal, valid and binding obligation of the relevant Party, enforceable in
  accordance with its terms, subject to any rules of law or equity. The
  execution and delivery of this Agreement, the consummation of the
  transactions contemplated hereby and the fulfillment by such Party of the
  terms, conditions and provisions hereof will not contravene or violate or
  result in the breach (with or without the giving of notice or lapse of time,
  or both) or acceleration of any obligations of the relevant Party under:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  any laws applicable to the
  relevant Party;

  
	
   

  	
   

  	
  (2)

  	
  any judgment, order, writ,
  injunction or decree of any court or of any authority which is presently
  applicable to the relevant Party;

  
	
   

  	
   

  	
  (3)

  	
  the charter documents of
  the relevant Party or any amendments thereto or restatements thereof; or

  
	
   

  	
   

  	
  (4)

  	
  the provisions of any
  agreement, arrangement or understanding to which the relevant Party is a
  party or by which it is bound.

  



 


10.2                           Restrictive
Covenants - Inalco. Inalco agrees that for the term of this
Agreement


 


7

















 


and after the termination or expiration of
the Agreement, it shall not manufacture or deliver Product to any other third
party aside from Biospherics or Biospherics’ successors and assigns.


 


10.3                           Restrictive
Covenants – Biospherics. Biospherics agrees that for
the term of this Agreement, Inalco shall be its sole manufacturer and supplier
of Product, except in the event Inalco is unable, for any reason, including
events of force majeure, to meet Biospherics’ delivery requirements.


 


ARTICLE
XI – FORCE MAJEURE


 


11.1                           Excuse. Neither Party
shall be liable for any delay or failure in performing any of its obligations
hereunder, if such delay or failure is, either wholly or partly, due to force
majeure conditions such as floods, earthquakes or other acts of God, or any
acts of any governmental body or public enemy, wars, riots, embargoes,
epidemics, fires or any other causes, circumstances or contingencies beyond the
control of such Party.


 


11.2                           Notification of
Force Majeure. The Party affected by such force majeure
condition shall notify in writing the other Party of the nature and extent
thereof, and shall, to the extent reasonable and lawful under the
circumstances, use its best efforts to remove or remedy such cause as soon as
possible.


 


11.3                           Continuation of
Force Majeure.


 


A.                                   If the force
majeure condition in question prevails for a continuous period of fourteen (14)
days, the Parties shall enter into bona fide discussions with a view to alleviating
its effect on this Agreement by agreeing to such alternative arrangement as may
be fair and reasonable.


 


B.                                     If the force
majeure condition continues to prevail for more than thirty (30) days, either
Party may terminate this Agreement by giving fifteen (15) days prior written
notice to the other Party.


 


11.4                           Events Not
Considered Force Majeure. It is expressly agreed
between the Parties that mechanical breakdowns, lack of necessary utilities,
labor unrest, transport problems, lack of funds, and similar events shall not
be deemed to be force majeure conditions for the purpose of this Agreement and
shall not be considered to be beyond the control of the Party claiming the
existence of such conditions.


 


ARTICLE XII: GENERAL PROVISIONS


 


12.1                           Relationship
Between the Parties. Each Party is and shall be considered for
all purposes to be an independent contractor in relation to the other Party and
shall not hold itself out as an employee or agent of the other Party. Nothing
herein shall be construed to grant any Party authority to (i) create,
assume or enter into, directly or indirectly, any express or implied
obligation, liability, or contract on behalf or in the name of the other Party;
(ii) pledge the credit of the other Party; or (iii) commence any legal
proceeding in the name of or on behalf of the


 


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other Party. As an independent contractor,
each Party is solely responsible for its employees and agents and they shall
not be entitled to any benefits, severance or other compensation available to
an employee or executive of the other Party.


 


12.2                           Headings. The headings
contained in this Agreement are for general reference and guidance and shall
not be conclusive as to the meaning or interpretation of this Agreement.


 


12.3                           Governing
Language. This Agreement is in the English language only,
which shall be controlling in all respects. No translation, if any, of this
Agreement into any other language shall be of any force or effect in the
interpretation of this Agreement or in a determination of the intent of either
Party hereto.


 


12.4                           Severability. If any provision
of this Agreement shall be declared void, invalid, or illegal, the validity or
legality of any other provisions and of the entire Agreement shall not be
affected thereby. However, the Parties agree that if any such provision shall
be declared void, invalid, or illegal, the Parties will, in good faith,
negotiate mutually acceptable substitute provisions.


 


12.5                           Notices. Any notice or
other information required by this Agreement to be given by a Party to the
other Party may be (i) personally delivered, (ii) sent by registered
or certified mail, return receipt requested, postage prepaid, (iii) sent
via facsimile; or (iv) sent via electronic means to the other Party at the
following addresses:


 




	
  If to
  Inalco:

  	
   

  	
  Giovanni Cipoletti

  
	
   

  	
   

  	
  Inalco S.p.A.

  
	
   

  	
   

  	
  Via Calablana 18

  
	
   

  	
   

  	
  20139 Milano

  
	
   

  	
   

  	
  Italy

  
	
   

  	
   

  	
  Fax: +02 569 4518

  
	
   

  	
   

  	
  E-mail: executive@inalco.in

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Alessandro Cipolletti

  
	
   

  	
   

  	
  Inalco S.p.A.

  
	
   

  	
   

  	
  Via Calablana 18

  
	
   

  	
   

  	
  20139 Milano

  
	
   

  	
   

  	
  Italy

  
	
   

  	
   

  	
  Fax: +02 569 4518

  
	
   

  	
   

  	
  E-mail:
  a.cipolletti@inalcogroup.com

  
	
   

  	
   

  	
   

  
	
  If to
  Biospherics:

  	
   

  	
  Claire L. Kruger, CEO

  
	
   

  	
   

  	
  Biospherics Inc.

  
	
   

  	
   

  	
  6430 Rockledge Drive, #503

  
	
   

  	
   

  	
  Bethesda, MD 20817

  
	
   

  	
   

  	
  United States of America

  
	
   

  	
   

  	
  Fax: [INSERT FAX NUMBER]

  
	
   

  	
   

  	
  E-mail: ckruger@spherix.com

  






 


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Notice shall be deemed to have been duly
given (i) when received if personally delivered, (ii) within five (5) days
after being sent by registered or certified mail, return receipt requested,
postage prepaid, to the Party (and to the persons to whom copies shall be
sent), at the respective addresses of the Party set forth above or at such
other address as shall be given by either Party to the other in writing, or (iii) on
the next day after transmission if delivered via facsimile or electronic
communication.


 


12.6                           Assignment. This
Agreement shall not be assigned or transferred by either Party without the
prior written consent of the other Party. Any attempted assignment or transfer
by either Party without written consent shall be void and of no effect. If
consent is given, this Agreement shall be binding upon and inure to the benefit
of the assigns. Notwithstanding the above, Biospherics may assign this
Agreement in connection with the sale of Biospherics or Biospherics’ rights to
the Product.


 


12.7                           Governing Law. The rights,
duties, and obligations of the Parties shall be construed and governed by the
laws of the State of Maryland, USA. The Parties agree that the transactions
contemplated by this Agreement constitute the sale of “goods” under Maryland
law.


 


12.8                           Dispute
Resolution. The Parties agree to use their best efforts to
resolve all disputes arising in connection with this Agreement through
cooperation and consultation. However, in case any dispute cannot be settled
amicably within thirty (30) days of written notice being served by either Party
on the other, then such dispute shall be settled by arbitration in Bethesda,
Maryland, United States by a panel of three arbitrators in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Each
Party shall be entitled to appoint one arbitrator. Those two arbitrators shall
mutually select the third arbitrator. The language of the arbitration shall be
English. The Parties hereby waive any right of appeal to any court on questions
of law or the merits of the dispute. Nothing contained in this arbitration
clause shall prevent either Party from seeking interim measures of protection
in the form of pre-award attachment of assets, or from seeking specific
performance or injunctive relief to enforce in courts of competent jurisdiction
rights covered by this Agreement. The Parties hereby agree that if it becomes
necessary for either Party to enforce an arbitral award by legal action and/or
additional arbitration of any kind, the Party contesting enforcement shall pay
and discharge all reasonable legal costs and attorneys’ fees that shall be
incurred by the Party seeking to enforce the award.


 


12.9                           No Waiver. Any failure
of either Party to enforce at any time, or for any period of time, any
provision of this Agreement shall not constitute a waiver of such provision or
in any way affect the validity of this Agreement.


 


12.10                     Ethical
Standards. Neither Biospherics nor Inalco, nor any of their
members, employees, representatives, officers, directors, agents, or attorneys
shall take any action which would cause either itself or the other Party to
this Agreement to be in violation of the United States Foreign Corrupt
Practices Act of 1977 (“FCPA”) (as amended), 15 U.S.C. §§78 et  seq.,
or the anti-corruption legislation of any other country that might be
applicable to the activities of either Party under this Agreement. A Party
shall immediately notify the other Party if it has any


 


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information or suspicion that there may be a
violation of the FCPA or any other law in connection with the performance of
obligations under this Agreement.


 


12.11                     Governmental
Approvals. Biospherics and Inalco shall work together
in good faith to ensure that all necessary approvals by governmental
authorities for the execution and performance of this Agreement, including,
without limitation, applicable approvals from exchange control and fair trade
authorities, and import and export clearance from the applicable governmental
authorities, are obtained. Both Biospherics and Inalco shall promptly take such
action as may be reasonably necessary to obtain such approvals.


 


12.12                     Compliance with
Laws. Each Party shall be responsible for compliance with any applicable
national, regional and local laws and regulations, including U.S. and Italian
laws and regulations, and will obtain and maintain, at its expense, all
permits, licenses and government registrations and requirements necessary or
appropriate to perform the obligations hereunder and will, at its own expense,
make all filings with governmental authorities required by applicable law.


 


12.13                     Complete
Agreement. This Agreement sets forth the entire
Agreement between the Parties with respect to the subject matter hereof and supersedes
all previous communications, representations or agreements, whether oral or
written, with respect to the subject matter hereof.


 


12.14                     Modifications. No addition to
or modification of this Agreement shall be binding upon either Party unless
reduced to writing and duly executed by the Parties hereto in the same manner
as the execution of this Agreement.


 


12.15                     Counterparts. This Agreement
may be executed in counterparts, each of which shall be deemed an original, and
each of which shall constitute one and the same instrument.


 


[Signature Page Follows]


 


11

















 


IN WITNESS WHEREOF, the
Parties by their duly authorized representatives have caused this Agreement to
be executed as of the date first above written.


 


 




	
  INALCO S.p.A.

  	
   

  	
  BIOSPHERICS

  
	
   

  	
   

  	
  INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Giovanni
  Cipoletti

  	
   

  	
  /s/ Claire L. Kruger

  
	
  Name:

  	
  Giovanni Cipoletti

  	
   

  	
  Name: Claire L.
  Kruger

  
	
  Title:

  	
  President

  	
   

  	
  Title: CEO

  
	
   

  	
   

  	
   

  
	
  INALCO
  S.p.A.

  	
   

  	
   

  	
   

  
	
  Via
  Calabiana 18 - 20139 MILANO

  	
   

  	
   

  	
   

  
	
  Tel.
  02.55213005 (r.a.)

  	
   

  	
   

  	
   

  
	
  Fax
  02.5694518

  	
   

  	
   

  	
   

  
					






 


12

















 


ATTACHMENT
A


 


Form of
Bank Guarantee


 


Please
see attached.


 

















 


ADVANCE PAYMENT GUARANTEE No.:                 


 


[Bank’s
Name and Address of Issuing Branch or Office]


 


	
  Beneficiary:

  	
  Biospherics, Inc.

  
	
   

  	
  5430 Rockledge Drive

  
	
   

  	
  Westmoreland Building #503
  

  Bethesda, MD 20817

  



 


Date:                         


 


We have been informed that Inalco, S.p.A.
(hereinafter called the “Contractor”) has entered into Contract No. [reference
number of the contract] dated               with
you, for the execution of [name of contract and brief
description of Works] (hereinafter called the “Contract”).


 


Furthermore, we understand that, according to
the conditions of the Contract, an advance payment in the sum of [insert
amount] ([insert amount in words]) is to be made against an advance payment
guarantee.


 


At the request of the Contractor, we [name
of Bank] hereby irrevocably undertake to pay you any sum or
sums not exceeding in total an amount of [amount in
figures] ([amount in words])(1)  upon receipt by us of your
first demand in writing accompanied by a written statement stating that the
Contractor is in breach of its obligation under the Contract.


 


It is a condition for any claim and payment
under this guarantee to be made that the advance payment referred to above must
have been received by the Contractor on its account number                     
at                                   
[name and address of Bank].


 


The maximum amount of this guarantee shall be
progressively reduced by the amount of the advance payment repaid by the
Contractor as indicated in copies of interim statements or payment certificates
which shall be presented to us. This guarantee shall expire, at the latest,
upon our receipt of a copy of the interim payment certificate indicating that
eighty percent (80%) of the Contract Price has been certified for payment, or
on the         day of          ,
2     , whichever is earlier. Consequently, any demand
for payment under this guarantee must be received by us at this office on or
before that date. However, this guarantee may be extended upon the written
request of the Contractor, such request to be presented to the Guarantor before
the expiration of the guarantee.


 


This guarantee is subject to the Uniform Rules for
Demand Guarantees, ICC Publication No. 458.


 


	
   

  	
   

  
	
  [signature(s)]

  	
   

  



 






(1) The Guarantor
shall insert an amount representing the amount of the advance payment and
denominated either in the currency of the advance payment as specified in the
Contract, or in a freely convertible currency acceptable to the Guarantee.