Document:

EXHIBIT 10.9

 

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

Confidential
treatment has been requested for portions of this exhibit. The copy filed
herewith omits the information subject to the confidentiality request.  Omissions are designated as [*]. A complete version of this exhibit has been filed
separately with the Securities and Exchange Commission.

 

EXECUTION COPY

 

EXCLUSIVE
STRATEGIC SUPPLY AGREEMENT

By and Between

PHILIP MORRIS USA INC.

And

MONOSOL RX, LLC

[*]

Effective February 8, 2007

 

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

Table of Contents

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  1

  
	
  2.

  	
  TERM

  	
  3

  
	
  3.

  	
  PRODUCTS; QUANTITY

  	
  3

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Quantity

  	
  3

  
	
   

  	
  3.2.

  	
  New Products

  	
  3

  
	
   

  	
  3.3.

  	
  Modifications

  	
  4

  
	
   

  	
  3.4.

  	
  Allocation of
  Product

  	
  4

  
	
   

  	
  3.5.

  	
  Seller Decisions
  and Acquisitions

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  FACILITIES

  	
  5

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Seller’s
  Manufacturing Facilities

  	
  5

  
	
   

  	
  4.2.

  	
  Expansion of
  Seller’s Manufacturing Facility

  	
  5

  
	
   

  	
  4.3.

  	
  Buyer’s
  Facilities

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  ANNUAL FORECASTS AND ORDERS

  	
  7

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Annual Forecasts

  	
  7

  
	
   

  	
  5.2.

  	
  Orders

  	
  7

  
	
   

  	
  5.3.

  	
  Delivery Dates

  	
  7

  
	
   

  	
  5.4.

  	
  Vendor Managed
  Inventory

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  DELIVERY, TRANSPORTATION AND RISK OF LOSS

  	
  8

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Primary Delivery
  and Transportation Procedure

  	
  8

  
	
   

  	
  6.2.

  	
  Alternate
  Transportation Procedure

  	
  8

  
	
   

  	
  6.3.

  	
  Packing and
  Marking

  	
  9

  
	
   

  	
  6.4.

  	
  Transfer of
  Title and Risk of Loss

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  INSPECTIONS AND REJECTIONS

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  Receipt
  Inspections

  	
  9

  
	
   

  	
  7.2.

  	
  Rejection of
  Product and Remedies upon Rejection

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  COMPENSATION

  	
  10

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Prices for
  Product and Compensation for Expansion

  	
  10

  
	
   

  	
  8.2.

  	
  Price Ceiling

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  INVOICES AND PAYMENT

  	
  10

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Invoices

  	
  10

  
	
   

  	
  9.2.

  	
  Payment

  	
  10

  
	
   

  	
  9.3.

  	
  Right of
  Retainage and Set-Off

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  WARRANTIES

  	
  11

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
  Title

  	
  11

  
	
   

  	
  10.2.

  	
  Vendor
  Evaluation Program

  	
  12

  
	
   

  	
  10.3.

  	
  Warranty of
  Quality

  	
  12

  
	
   

  	
  10.4.

  	
  Additional
  Remedy

  	
  13

  

 

 

i

 

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

Table of Contents

(continued)

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.5.

  	
  Exclusivity of
  Warranties

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  INTELLECTUAL PROPERTY

  	
  14

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1.

  	
  Seller’s
  Intellectual Property

  	
  14

  
	
   

  	
  11.2.

  	
  Defense of
  Claims

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  INDEMNITY

  	
  14

  
	
  13.

  	
  LIMITATION OF LIABILITY

  	
  15

  
	
  14.

  	
  INSURANCE

  	
  15

  
	
   

  	
   

  	
   

  
	
   

  	
  14.1.

  	
  Coverage

  	
  15

  
	
   

  	
  14.2.

  	
  Endorsements and
  other Requirements

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  STRATEGIC PLANNING AND COOPERATION; QUALITY ASSURANCE

  	
  16

  
	
   

  	
   

  	
   

  
	
   

  	
  15.1.

  	
  Performance
  Evaluations

  	
  16

  
	
   

  	
  15.2.

  	
  Quality
  Assurance Plan

  	
  16

  
	
   

  	
  15.3.

  	
  Quality Audits

  	
  16

  
	
   

  	
  15.4.

  	
  Product Contents

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISES

  	
  17

  
	
  17.

  	
  FORCE MAJEURE

  	
  17

  
	
   

  	
   

  	
   

  
	
   

  	
  17.1.

  	
  Events of Force
  Majeure

  	
  17

  
	
   

  	
  17.2.

  	
  Force Majeure
  Procedure

  	
  17

  
	
   

  	
  17.3.

  	
  Effect of Force
  Majeure

  	
  18

  
	
   

  	
  17.4.

  	
  Allocation of
  Seller’s Production Capacity

  	
  18

  
	
   

  	
  17.5.

  	
  Termination for
  Extended Force Majeure

  	
  18

  
	
   

  	
  17.6.

  	
  Seller’s
  Contingency Plans

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
  COMPLIANCE WITH LAWS; NONDISCRIMINATION; FINES

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  18.1.

  	
  General

  	
  19

  
	
   

  	
  18.2.

  	
  No
  Discrimination

  	
  19

  
	
   

  	
  18.3.

  	
  No Collusion;
  Business Conduct Policy

  	
  19

  
	
   

  	
  18.4.

  	
  Fines

  	
  20

  
	
   

  	
  18.5.

  	
  Child Labor

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
  CONFIDENTIALITY AND CONFIDENTIAL INFORMATION

  	
  20

  
	
  20.

  	
  DISCOVERIES

  	
  21

  
	
  21.

  	
  RECORDS; AUDITS

  	
  21

  
	
   

  	
   

  	
   

  
	
   

  	
  21.1.

  	
  Records

  	
  21

  
	
   

  	
  21.2.

  	
  Right to Audit

  	
  21

  
	
   

  	
  21.3.

  	
  Independent
  Audit

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
  DISPUTE RESOLUTION

  	
  22

  
	
   

  	
   

  	
   

  
	
   

  	
  22.1.

  	
  Intent

  	
  22

  
	
   

  	
  22.2.

  	
  Procedure

  	
  22

  

 

 

ii

 

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

Table of Contents

(continued)

 

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  22.3.

  	
  Performance
  During Dispute

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
  CANCELLATION

  	
  23

  
	
   

  	
   

  	
   

  
	
   

  	
  23.1.

  	
  Default by
  Seller

  	
  23

  
	
   

  	
  23.2.

  	
  Default by Buyer

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
  NOTICES

  	
  25

  
	
  25.

  	
  GOVERNING LAW AND VENUE

  	
  25

  
	
  26.

  	
  NON WAIVER

  	
  25

  
	
  27.

  	
  SEVERABILITY

  	
  26

  
	
  28.

  	
  CHANGE OF CONTROL; ASSIGNMENTS

  	
  26

  
	
   

  	
   

  	
   

  
	
   

  	
  28.1.

  	
  Change of
  Control

  	
  26

  
	
   

  	
  28.2.

  	
  Assignments

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  29.

  	
  SURVIVAL

  	
  26

  
	
  30.

  	
  AMENDMENTS

  	
  27

  
	
  31.

  	
  INDEPENDENT CONTRACTOR

  	
  27

  
	
  32.

  	
  HEADINGS

  	
  27

  
	
  33.

  	
  PUBLICITY

  	
  27

  
	
  34.

  	
  REMEDIES NOT EXCLUSIVE

  	
  27

  
	
  35.

  	
  ORDER OF PRECEDENCE

  	
  27

  
	
  36.

  	
  ENTIRE AGREEMENT

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTACHMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attachment A — Description
  of Product

  	
   

  
	
  Attachment B — Seller’s
  Manufacturing Facilities and Qualified Equipment

  	
   

  
	
  Attachment C —
  Compensation

  	
   

  
	
  Attachment D — Mutual
  Confidentiality Agreement

  	
   

  

 

 

iii

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

AGREEMENT

This Exclusive Supply
Agreement, dated as of February 8, 2007 is by and between Philip Morris USA
Inc., a Virginia corporation with offices at

6601 W. Broad Street,
Richmond, Virginia 23230 (“Buyer”), and MonoSol Rx, LLC, a Delaware limited
liability company with a place of business at 6560 Melton Road, Portage,
Indiana 46368 (“Seller”).

R E C
I T A L S

1.             Buyer is engaged in the business of manufacturing
cigarettes and other tobacco products.

2.             In the conduct of its manufacturing activities, Buyer
requires the Product (as defined herein), which is incorporated into certain of
its finished tobacco products.

3.             Seller owns and leases certain manufacturing facilities
that are capable of producing the Product in accordance with Buyer’s Product
Requirements and the terms and conditions of this Agreement.

N O W  T H E R E F O R E, the parties agree as follows:

1.             DEFINITIONS

Advance Shipment Notice (“ASN”) — Seller’s invoice, communicated
to Buyer via electronic data interchange or Internet transmission, which
details information about the Products in a Shipment.

Affiliate — any corporation or other business
entity that controls a party to this Agreement (a “Controlling Person”) or any
corporation or other business entity that is controlled by or is under common
control with a Controlling Person. For purposes of this definition, an
Affiliate includes entities in existence as of the Effective Date hereof as
well as entities that may come into being in the future so long as such entities
control, are controlled by or are under common control with an entity that is
an Affiliate as of the Effective Date hereof. As used herein, “control” shall
mean possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a corporation or other business
entity.

Annual Forecast — Buyer’s forecast of the quantity of
Products it anticipates it will purchase during the immediately following
Contract Year, as further defined in Article 5.1.

Best Efforts — shall be as the term is used and
applied in the Uniform Commercial Code, but shall not be deemed to mean that
Seller shall be required to (a) breach any contracts it may have with other
buyers for its products, (b) violate any applicable law, (c) endanger its
financial viability, (d) take any act or omission which would be likely to
result in a material adverse effect on Seller’s financial condition as a result
of operations, or (e) make additional capital improvements or otherwise expand
its manufacturing capacity at any of its manufacturing 

 

1

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

facilities (except
as otherwise provided in this Agreement) in order to meet its obligations under
this Agreement.

Buyer — Philip Morris USA Inc., a Virginia
corporation.

Buyer’s Product Requirements — the physical, chemical and other
properties of the Products to be purchased and sold hereunder, as specified by
Buyer in documents Buyer shall provide to Seller.

Contract Year — a 12-month period beginning on February
8, 2007 and any anniversary thereof.

Delivering Carrier — the shipping company or companies
specified to receive and transport Shipments of Product from Seller’s
Manufacturing Facility to Buyer’s designated Plant.

Delivery Date(s) — the date or dates that a Shipment of
Product is received at Buyer’s Plant designated on the applicable Order.

Development Services Agreement — the agreement dated [*] (as amended), executed by the parties for the
development of the Product.

Discoveries — as defined in Article 20.

Effective Date — February 8, 2007.

Expansion Facility — the additional manufacturing line to
be added to one of Seller’s Manufacturing Facilities as provided further in
Article 4.2.

Modification — a change to the Product, as further
provided in Article 3.3.

Order — Buyer’s written directions to Seller
to manufacture and deliver certain quantities of Product hereunder, as further
defined in Article 5.2.

Plants — Buyer’s manufacturing facilities to
which the Products shall be delivered.

Price — the unit price payable for the Product
sold and purchased hereunder.

Producer Price Index — the monthly Industrial Producer Price
Index (less energy) first published by the U. S. Department of Labor, Bureau of
Labor Statistics, in Publication Number ISSN 0882-5270.

Product — the [*]
film strip for [*] tobacco products, which is
described on Attachment A and specified more fully in Buyer’s Product
Requirements (which shall be communicated to Seller), that is to be purchased
and sold hereunder.

Seller — MonoSol Rx, LLC, a Delaware limited
liability company.

 

2

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

Seller’s Manufacturing Facilities — the production plant owned by Seller
and located at 6560 Melton Road, Portage, Indiana, and the production plant
leased by Seller and located at 6465 Ameriplex Drive, Portage Indiana, at which
Seller shall manufacture Product hereunder.

Shipment — All the Product loaded onto the
Delivering Carrier’s trucks during one business day, for transport to PM USA.

Strip — the film strip without [*].

Term — the period during which this Agreement
shall be in effect, as further defined in Article 2.

2.             TERM

This Agreement shall be
effective as of the Effective Date and, unless earlier terminated or cancelled,
shall continue in effect for five years (the “Term”). At the end of the Term,
this Agreement shall expire.

3.             PRODUCTS; QUANTITY

3.1.         Quantity

3.1.1.      Seller shall be
obligated to manufacture and sell to Buyer, and Buyer shall be obligated to
purchase, all of its requirements for [*] film strips for [*] tobacco products,
subject to the terms and conditions of this Agreement.

3.1.2.      Notwithstanding
the foregoing, Seller’s supply obligation shall be limited to [*] units of Product per calendar quarter from the Effective
Date until the Expansion Facility has been qualified by Buyer as provided in
Article 4.2.3 below, and to [*] units of
Product per calendar quarter once the Expansion Facility has been so qualified.
In the event Buyer’s Annual Forecast or Orders exceed the amount stated in the
previous sentence (whichever is applicable), [*]
In the event Buyer’s Annual Forecast or Orders in any calendar quarter exceed
the maximum capacity of the Expansion Facility, the parties shall promptly
begin good faith negotiations to construct additional capacity at the Expansion
Facility, under terms substantially similar to the terms set forth in Attachment
C.

3.1.3.      As
consideration for this obligation to manufacture and sell all of Buyer’s
requirements for the Product, Buyer shall be obligated to compensate Seller for
the Expansion Facility as provided in Article 4.2 below and in Attachment C.

3.1.4.      Nothing in this
Agreement shall be deemed to preclude Buyer from (a) changing its [*] or
tobacco product lines, or (b) reducing or eliminating its manufacture of
tobacco products that incorporate the Product such that Buyer’s requirements
for the Product would be reduced or eliminated during the Term hereof.

3.2.         New Products

 

3

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

During the Term of this
Agreement, Seller may develop new flavor products for use in connection with
Buyer’s tobacco products, in accordance with Buyer’s requirements communicated
to Seller and in accordance with the Development Services Agreement. If Buyer
and Seller agree on the Buyer’s Product Requirements and price for such new
product, then the new product shall be deemed a Product hereunder, and Seller
shall manufacture, sell and deliver such new Product exclusively to Buyer
during the remainder of the Term in accordance with the terms and conditions of
this Agreement. The Price for such new Product shall be negotiated between
Buyer and Seller and contain the same mark-up, if applicable, as other products
of similar configuration and structure.

3.3.         Modifications

Buyer may modify Buyer’s
Product Requirements from time to time during the Term by providing notice to
Seller. The parties intend that modifications to Buyer’s Product Requirements
shall not result in an adjustment to the Price (up or down) unless such
modification changes the Product or changes Seller’s cost to manufacture,
package and deliver the modified Product such that, in either party’s
reasonable judgment, the Price should be adjusted. In such event, either party
may, upon written notice to the other, request that the Price be adjusted for
such modified Product. If the parties are unable to agree upon an adjusted
Price for the modified Product within a reasonable time, not to exceed 30 days,
then Seller shall not be obligated to manufacture or sell such modified Product
to Buyer hereunder.

3.4.         Allocation of Product

Seller covenants that it
will not sell or contract to sell products to others in quantities that are
reasonably likely to impair or impede Seller’s ability to meet its obligations
to Buyer hereunder. Seller shall use its Best Efforts to keep in stock an
inventory of raw materials that meet Buyer’s Product Requirements or to obtain
such raw materials from its suppliers in such quantities as are necessary to
meet its obligations to Buyer hereunder consistent with each Annual Forecast,
as adjusted by Buyer as provided in Article 5.1. If, despite such efforts by
Seller (a) Seller is unable to obtain sufficient quantities of raw materials to
deliver the full quantities of products it is obligated to deliver to all of
its customers, including the Product it is required to deliver to Buyer
hereunder, or (b) Seller is otherwise prevented from fulfilling its obligations
to deliver and sell Product hereunder, Seller shall give first priority in the
allocation of available supplies of raw materials and its finished Product
first to fulfilling its obligations hereunder. [*]
Seller represents that it has not entered into, and covenants that it will not
enter into, any contract with any customer that is inconsistent with the
covenant in the immediately preceding sentence. Seller hereby waives its rights
under Va. Code § 8.2-615(b) to allocate production and delivery capacity to
regular customers not then under contract.

3.5.         Seller Decisions and Acquisitions

Seller shall report to
Buyer any major business decision that could adversely affect Seller’s ability
to meet its Product supply commitment under this Agreement, and shall also
notify Buyer of Seller’s acquisition or development of additional manufacturing
facilities that are capable of manufacturing Product.

 

4

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

4.             FACILITIES

4.1.         Seller’s Manufacturing Facilities

4.1.1.      Unless
otherwise agreed in writing by the parties, Seller covenants that it shall
produce Product delivered hereunder only at the manufacturing facilities
identified in Attachment B hereto (each a “Seller’s Manufacturing Facility”).
Seller covenants that it shall produce Product only on equipment within Seller’s
Manufacturing Facilities that has been qualified by Buyer for the production of
Product. A list of such qualified equipment as of the Effective Date hereof is
set forth in Attachment B hereto. Attachment B shall be updated by Buyer as
necessary to include additional or alternate manufacturing facilities and
equipment that may be qualified hereafter, including, but not limited to,
equipment that is part of the Expansion Facility as provided in Article 4.2.
Buyer agrees not to unreasonably withhold or delay its qualification of
equipment and waives any claims arising out of Seller’s delay or failure to
perform to the extent such delay or failure results from Buyer’s delay in
qualifying equipment necessary to Seller’s performance.

4.1.2.      Buyer and its
agents shall have reasonable access to Seller’s Manufacturing Facilities from
time to time, upon prior notice and during regular business hours, for the
purpose of (a) auditing compliance with Seller’s quality control and quality
assurance programs, (b) inspecting Seller’s manufacturing operations, and (c)
qualifying the Expansion Facility as provided in Article 4.2 below. Such audits
and inspections shall not relieve Seller of its obligation to provide Product
that complies in all respects with Buyer’s Product Requirements and the other
requirements of this Agreement. Buyer shall also be entitled, at Buyer’s cost
and expense, and at reasonable times and manner, to review all quality control
and quality assurance records, to inspect the Product during manufacture and to
witness all tests, provided such review and inspections do not delay Seller’s
performance hereunder. Seller shall use commercially reasonable efforts to
secure for Buyer the right to inspect the facilities of Seller’s suppliers and
vendors for the purposes stated above.

4.2.         Expansion of Seller’s Manufacturing Facility

4.2.1.      Seller agrees
to construct a new manufacturing line at one of Seller’s Manufacturing
Facilities (to be chosen at Seller’s discretion) with a capacity to produce not
less than [*] (the “Expansion Facility”). The Expansion Facility shall consist
of the construction and installation of a [*] at the
Manufacturing Facility. No later than 45 days after the Effective Date, Seller
shall provide Buyer with the following information in writing with respect to
the Expansion Facility: (a) the proposed construction schedule, (b) a proposed
phase budget and (c) the manufacturing capacity. This information shall be made
part of this Agreement and shall be binding on Seller.

4.2.2.      Seller shall
use its Best Efforts to construct the Expansion Facility in accordance with the
proposed construction schedule and to begin manufacturing the Product at the
Expansion Facility no later than [*] after
commencement of construction. Seller warrants that the Expansion Facility, when
qualified by Buyer to manufacture the Product hereunder, shall have the
manufacturing capacity represented by Seller to Buyer in writing in accordance
with this Article 4.2.

 

5

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

4.2.3.      Buyer shall not
be obligated to purchase any Product manufactured at the Expansion Facility
until Buyer has qualified the Expansion Facility in accordance with Buyer’s
qualification procedures, which shall be communicated in writing to Seller.
Buyer shall use its Best Efforts to begin its qualification process at the
Expansion Facility as soon as practicable after Seller notifies Buyer that the
Expansion Facility is ready to begin the qualification process.

4.2.4.      [*]

4.2.5.      The parties
acknowledge that Seller shall own the Expansion Facility, and that the design,
construction, operation and maintenance of the Expansion Facility shall be
Seller’s sole responsibility. Buyer shall not be deemed to be an owner or
operator of the Expansion Facility and shall have no liability of any kind with
respect to the Expansion Facility, [*]. Neither the Expansion Facility nor this
Agreement shall in any way be deemed a joint venture between the parties.

4.2.6.      [*], and except as
otherwise provided herein below, Seller shall use the Expansion Facility solely
for the manufacture of Product hereunder during the Term of this Agreement. In
the event Buyer’s Annual Forecast for any Contract Year (as adjusted as
provided in Article 5.1) shall be less than [*], then during such Contract Year
Seller shall be entitled to use the Expansion Facility to manufacture products
for its other customers, provided that (a) such products shall not in any way
be related to, used with, or incorporated into, any tobacco product, (b) the
manufacture of such products shall not contaminate, or create the possibility
of contaminating, the Expansion Facility with respect to the manufacture of
Product hereunder, (c) Seller shall give first priority to the manufacture
of the Product hereunder, (d) the manufacture of such products shall not impair
or impede Seller’s ability to meet its obligations to Buyer hereunder and (e)
Seller notifies Buyer of the number of days the Expansion Facility is used to
manufacture product for its other customers. In the event Seller uses the
Expansion Facility for the manufacture of products for its other customers, [*]. Buyer shall have the right (but not the obligation) to
conduct such audits of Seller’s records as necessary to verify Seller’s use of
the Expansion Facility to manufacture products for its other customers.

4.3.         Buyer’s Facilities

4.3.1.      Buyer shall
provide reasonable access to Buyer’s Plants for Seller’s employees as Buyer
deems necessary to Seller’s performance hereunder, provided that (a) Seller
provides Buyer with a list of the names of the employees requiring access and
the times such access is required, and (b) any person for whom access is
approved by Buyer shall comply with such security, safety and environmental
requirements which may be communicated by Buyer to Seller. Buyer may provide
Seller’s personnel with security badges enabling access to Buyer’s Plants
during Buyer’s performance hereunder. Seller acknowledges such badges are the
property of Buyer and agrees to the return of any such badges issued to Seller
within 24 hours of the earlier of(a) the personnel’s departure from Seller’s
employment or (b) the expiration, termination or cancellation of this
Agreement. Seller agrees to pay a fee of $[*] per badge
not returned to Buyer in accordance with the preceding sentence.

 

6

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

4.3.2.      Throughout the
Term, Seller shall comply with Buyer’s Information Security Policy. A copy of
the Information Security Policy has been provided to Seller and Seller’s
receipt is hereby acknowledged.

5.             ANNUAL FORECASTS AND ORDERS

5.1.         Annual Forecasts

On the anniversary of
each Contract Year, Buyer shall provide Seller with written notice of Buyer’s
Contract Year forecast of the number of Strips that Buyer anticipates it will
purchase during each quarter of the immediately following Contract Year (“Annual
Forecast”). During the first three Contract Years, Buyer shall update the
Annual Forecast on a quarterly basis, no later than the last day of each
quarter. The Annual Forecast for each Contract Year (as adjusted as provided
herein) shall be for informational purposes only and shall not constitute an
Order for any quantity of Product or any guarantee of purchase.

5.2.         Orders

5.2.1.      From time to
time, Buyer shall place orders for quantities of Product (each, an “Order”).
Orders shall be communicated via Buyer’s written forms, electronic data
interchange, Internet transmission, telecopy, telephone (confirmed by
telecopy), or by such other means as the parties mutually agree. Each Order
shall be dated as of the date of issuance by Buyer and shall specify (a) a
unique order number, (b) the quantity of Product to be manufactured and
delivered by Seller, (c) Buyer’s Plant or warehouse to which the Product shall
be shipped and (d) the Delivery Date(s). Buyer may amend or supplement an Order
at any time. All Orders for Product shall be governed by the terms and
conditions of this Agreement.

5.2.2.      The parties
agree to conduct good faith negotiations as soon as practicable after the
Effective Date to develop mutually agreeable standards and processes for
placing orders and performing other contract obligations using electronic
commerce.

5.3.         Delivery Dates

5.3.1.      Seller shall
acknowledge receipt of Buyer’s Orders in writing within two business days after
Seller’s receipt of each Order. Seller shall use its Best Efforts to comply
with Buyer’s Delivery Date(s) as set forth in the Order, provided however, that
no Delivery Date in an Order shall require delivery of Product sooner than five
business days for the production of each [*] of Product.

5.3.2.      If Seller
determines that despite its Best Efforts it will be unable to comply with Buyer’s
designated Delivery Date(s), Seller shall so notify Buyer (such notice to be
provided to Buyer in writing no later than two business days after Seller’s
receipt of Buyer’s Order) and Seller shall provide Buyer with alternate
Delivery Date(s). Upon Buyer’s consent to such alternate Delivery Date(s)
(which consent shall not be unreasonably withheld), such date(s) shall be
binding on Seller. If Buyer does not so consent, the initial Delivery Date(s)
shall remain binding on Seller.

 

7

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

5.3.3.      If during the
production of any Order, Seller determines for any reason that it will be
unable to meet any of the Delivery Date(s) for that Order, (including any
mutually agreed alternate Delivery Date(s) under Article 5.3.1 hereof), it
shall use its best efforts to notify Buyer in writing as soon as practicable
after making such determination. Such notification shall also include new
Delivery Date(s). Upon Buyer’s consent to such new Delivery Date(s) (which
consent shall not be unreasonably withheld), such date(s) shall be binding on
Seller. If Buyer does not so consent, the initial or alternate Delivery Date(s)
(whichever is applicable) shall remain binding on Seller.

5.3.4.      For purposes of
the quality rating described in Article 10.2, Seller’s performance will be
evaluated based on its adherence to the applicable Delivery Date(s).

5.4.         Vendor Managed Inventory

At any time during the
Term hereof, Buyer may choose to implement a vendor-managed inventory system.
In such event, both parties shall negotiate in good faith as to the amendments
hereto and any other agreements that would be necessary to implement such a
vendor-managed inventory system.

6.             DELIVERY, TRANSPORTATION AND RISK OF LOSS

6.1.         Primary Delivery and Transportation Procedure

6.1.1.      Buyer shall
specify the Delivering Carrier for Shipments of Product hereunder. Seller shall
be responsible for making the necessary arrangements with such Delivering
Carrier to have trucks available at Seller’s Manufacturing Facility in time to
receive and transport Products to meet the applicable Delivery Date(s).
Notwithstanding the foregoing, however, Seller shall not be liable for delays
in receipt to the extent caused by the Delivering Carrier once it has left
Seller’s Manufacturing Facility with the Shipment or by the Delivering Carrier’s
failure or refusal to load and deliver Products in accordance with the applicable
terms and conditions of any transportation agreement between Buyer and the
Delivering Carrier.

6.1.2.      Buyer shall pay
all transportation costs directly to the Delivering Carrier; provided however,
Seller shall reimburse Buyer for any demurrage or other similar charges that
Buyer may be required to pay the Delivering Carrier due to Seller’s failure to
schedule or load any Shipment of Products in accordance with the applicable
terms and conditions of any transportation agreement between Buyer and the Delivering
Carrier, provided such terms and conditions have been communicated to Seller.

6.2.         Alternate Transportation Procedure

Notwithstanding the
foregoing, if Buyer fails to specify a Delivering Carrier or if the Delivering
Carrier specified by Buyer fails or is unable to have trucks available at
Seller’s Manufacturing Facility in time to receive and transport Products to
meet the applicable Delivery Date(s), then Seller shall notify Buyer promptly,
and Buyer shall specify an alternate Delivering Carrier. Alternatively, the
parties may mutually agree that Seller shall specify the Delivering Carrier as
to any portion of the Products to be delivered hereunder. If Buyer and Seller
agree that 

 

8

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

Seller shall
specify the Delivering Carrier, the Products so delivered shall be delivered
F.O.B. Buyer’s Plant, freight collect.

6.3.         Packing and Marking

Seller shall package all
Product delivered hereunder in accordance with the requirements specified in
Buyer’s Product Requirements, unless Buyer has modified such requirements in an
Order, in which case Seller shall comply with the requirements specified in
such Order. Each Shipment must contain a packing list indicating (a) the Order
number, (b) the quantity of Product contained in the Shipment, and (c) such
other identification or information as may be reasonably directed by Buyer or
reasonably necessary to facilitate delivery in accordance with Buyer’s Delivery
Schedule. In addition, upon request by Buyer, Seller shall deliver a
certificate of analysis or certificate of conformance containing such
information as required by Buyer to the address and Buyer representative as
designated by Buyer from time to time.

6.4.         Transfer of Title and Risk of Loss

Title to, and risk of
loss of, all Product shall transfer from Seller to Buyer when the Product is
delivered to the Delivery Carrier, unless Seller specifies the Delivery Carrier
as provided in Article 6.2, in which case title and risk of loss shall pass to
Buyer upon receipt at Buyer’s Plant.

7.             INSPECTIONS AND REJECTIONS

7.1.         Receipt Inspections

Upon receipt at Buyer’s
Plant, Buyer may, but shall not be obligated to, perform preliminary visual
inspections to confirm that the Product conforms to the applicable Order and
Buyer’s Product Requirements in terms of Product type and quantity and
compliance with Delivery Dates. Such inspections may be cursory in nature, and
acceptance of Product by Buyer shall be subject to testing by Buyer to
determine conclusively that the Product conforms to Buyer’s Product
Requirements.

7.2.         Rejection of Product and Remedies upon Rejection

Buyer may reject any
Product that does not conform to the applicable Order or Buyer’s Product
Requirements, provided Buyer provides Seller with notice of such rejection in
accordance with the requirements set forth in Article 10. In addition to such
remedies as may be available hereunder, at law or in equity, upon rejection of
any Product, Buyer shall be entitled to exercise the remedies provided in
Article 10 for breach of warranty with respect to such Product.

 

 

9

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

8.             COMPENSATION

8.1.         Prices for Product [*]

8.1.1.      The Prices for the Product purchased and sold
hereunder shall be as set forth on Attachment C. The Prices may only be
adjusted as provided in Article 3.3 and in Attachment C.

8.1.2.      [*]

8.2.         [*]

8.2.1.      [*]

8.2.2.      [*]

9.             INVOICES AND PAYMENT

9.1.         Invoices

Prior to or upon each
delivery of Product, Seller shall submit an invoice (in the form of an ASN) to
Buyer requesting payment for the Product included in such delivery. Seller’s
invoice must be accompanied by all required documentation necessary to support
all charges. All rebates and discounts applied shall be identified separately
on Seller’s invoices. Any invoices submitted to Buyer in an improper format or
without the required documentation will be returned unpaid to Seller for
correction and resubmission within [*].

9.2.         Payment

Buyer shall pay all
undisputed portions of properly documented invoices within [*]
of receipt of Seller’s invoice or Buyer’s receipt the Products described on the
invoice, whichever is later. If Buyer disputes any portion of an invoice, Buyer
shall provide written notice to Seller indicating the reason Buyer is
withholding any amount, and shall pay the undisputed portion of the invoice.
Neither the payments made to Seller, nor the method of such payments, shall
relieve Seller of its obligation to perform hereunder in strict compliance with
the requirements herein. In 

 

10

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

addition, no
payment by Buyer of any invoice shall be deemed Buyer’s acceptance of the
Products reflected thereon.

9.3.         Right of Retainage and Set-Off

9.3.1.      Notwithstanding
anything in Article 9.2 to the contrary, if Seller materially breaches any
provision of this Agreement, or if any person or entity asserts a claim or lien
against Buyer or its property or facilities that is chargeable to Seller’s
performance hereunder, Buyer shall have the right to retain out of any payments
due or to become due to Seller an amount sufficient to protect Buyer completely
from all corresponding present or future claims, losses, damages and expenses,
provided that (a) Buyer provides notice to Seller setting forth Buyer’s reasons
for such retainage and [*]. If Seller
disputes the retained amount, the parties shall immediately engage in the
dispute resolution procedure set forth in Article 22.

9.3.2.      When the breach
has been cured, the lien: has been released, discharged or otherwise removed or
the claim has been terminated or released (in each case to Buyer’s
satisfaction), Buyer will release to Seller any retained amounts net of any
damages, costs, expenses or other amounts incurred by Buyer as a result of such
breach, lien or claim.

9.3.3.      Further, Buyer shall
have the right to set-off any costs, damages, expenses or other monies, the
payment for which Seller is responsible, against any amounts that Buyer owes
Seller hereunder. Buyer’s right to withhold monies pursuant to this Article
shall be in addition to all other rights and remedies available to Buyer under
this Agreement, at law or in equity.

10.          WARRANTIES

10.1.       Title

10.1.1.    Seller warrants
that title to all Product delivered hereunder shall be good and its transfer
rightful, and that all Product delivered hereunder shall be free from all
security interests, claims, demands, liens and other encumbrances.

10.1.2.    If any Product
fails to conform to the above warranty, Seller, at its expense, shall defend
the title thereto and, if requested in writing by Buyer, shall promptly cause
any security interest, claim, demand, lien or other encumbrance to be removed
by discharging such encumbrance or posting a bond therefor. If Seller fails to
cause any such security interest, claim, demand, lien or other encumbrance to
be removed by discharge or posting a bond within five business days after Buyer
shall request such removal, then Buyer, at Buyer’s option, may either (a) cause
the removal of such security interest, claim, demand, lien or other encumbrance
by bonding, in which case Seller shall be liable to Buyer for the expenses
thereby incurred, or (b) revoke its acceptance of such Product, in which case
Seller shall promptly refund any compensation Seller received from Buyer in
connection with such Product together with all costs incurred by Buyer in
connection with such revocation.

 

11

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

10.2.       Vendor Evaluation Program

10.2.1.    Seller warrants
that the continuous quality of the Product delivered to Buyer hereunder shall
be such that the Product will achieve a “Satisfactory Rating,” as determined by
Buyer on an annual basis in accordance with Buyer’s program of vendor
evaluation and review program applicable to all of Buyer’s direct material
suppliers, and which rates Seller’s performance hereunder in terms of quality,
cost, compliance and technology, and delivery and service (“Vendor Evaluation
Program”). A copy of the Vendor Evaluation Program criteria has been provided
to Seller and Seller’s receipt is hereby acknowledged. Seller shall be advised
of the annual rating assigned to the Product. During the Term, Buyer shall be
free to amend and revise the Vendor Evaluation Program and to judge the overall
quality of the Product pursuant to such amended and revised Vendor Evaluation
Program. Recalls by Seller shall be excluded in calculating the annual rating
for the Product. Such rating shall be adjusted equitably to account for changes
in Buyer’s floor inspection practices or mutually agreed changes to the quality
ratings that could affect the quality rating.

10.2.2.    If the annual
quality rating for the Product during any calendar year is not Satisfactory,
Seller shall promptly take all necessary action to identify and correct the
cause or causes of the non-conformances that led to the low quality rating.
Seller shall provide Buyer with a written report evaluating the
non-conformances and their causes and describing Seller’s plans for preventing
reoccurrence of such non-conformances in the future. Seller shall bear all
costs in fulfilling the foregoing remedial obligations.

10.2.3.    In addition to
Seller’s obligations pursuant to Article 10.2.2 above, and until such time as
Seller demonstrates to Buyer’s satisfaction that the problem causing the
diminished quality rating has been cured and prevented from recurring, Buyer
may, at its sole discretion, purchase Comparable Product from alternate
suppliers.

10.3.       Warranty of Quality

10.3.1.    Seller warrants
that all Product delivered pursuant to this Agreement shall (a) strictly
conform to the applicable Buyer’s Product Requirements and Seller’s quality
assurance plan as provided in Article 15.2 hereof, (b) be free of defects in
workmanship and material and, except as provided in the following sentence,
shall (c) be suitable in all respects for use in Buyer’s manufacturing
facilities for snus tobacco products. Notwithstanding the foregoing, if Buyer
materially changes its manufacturing process and does not notify Seller of such
material change within 30 days after such change is effected, Seller’s warranty
of suitability for use shall no longer apply to the Product.

10.3.2.    If any Product
delivered by Seller hereunder fails to conform to the warranty in Article
10.3.1, then Seller shall promptly replace such nonconforming Product with a
conforming Product at no cost to Buyer; provided, however, Buyer shall have
given Seller written notice of the nonconformity within 30 days after the
container or pallet containing the nonconforming Product is discovered by
Buyer. Seller shall bear all costs in fulfilling the foregoing remedial
obligations. Notwithstanding the foregoing, nothing herein shall be deemed to
make Seller responsible for any nonconformity due solely to Buyer’s handling or
storage of any Product.

 

12

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

10.4.       Additional Remedy

10.4.1.    In addition, to
the extent any nonconforming Product has been incorporated into Buyer’s
finished goods before the nonconformity is discovered [*],
Seller shall become liable to Buyer for liquidated damages in the amount of $[*] per [*] sachets
affected by such nonconformity. Such rate shall be adjusted annually in June
for inflation based on the change in the Producer Price Index as first reported
for July of the then-current calendar year as compared to the base month of
July 2006.

10.4.2.    The parties
hereby acknowledge and agree that in the event that any nonconforming Product
is incorporated into Buyer’s finished goods, Buyer will suffer damages in an
amount that is not susceptible to calculation with reasonable certainty. The
parties agree that the liquidated damages set forth in this Article 10.4 represent
a reasonable determination of the amount of damages that Buyer will suffer in
the event nonconforming Product is incorporated into Buyer’s finished goods and
that the liquidated damages do not constitute a penalty. Seller hereby waives
any defense to Buyer’s recovery of the liquidated damages on the basis that
actual damages are ascertainable, that the liquidated damages so determined do
not represent a reasonable determination of Buyer’s damages or that the
liquidated damages are penalties. The liquidated damages set forth in this
Article represent the exclusive remedy to Buyer in connection with the
remanufacture of Buyer’s finished goods, but shall not relieve Seller of any
other liability or obligation arising under this Agreement, at law or in equity
with respect to other damages (not relating to the recall or replacement of
Products) arising out of a breach of the warranty in Article 10.3.1 above
except as otherwise expressly limited in this Agreement.

10.4.3.    The parties
expressly agree that if Seller contests the imposition of liquidated damages
pursuant to this Article on any basis other than the assertion that either (a)
the Product delivered hereunder conformed in all respects to the applicable
Buyer’s Product Requirements or (b) that any nonconformity did not result in
whole or in part from Seller’s or Seller’s employees’, agents’ or
representatives’ negligence or willful misconduct, then the cap on Seller’s
aggregate liability for the cost of remanufacturing the finished goods shall
not be applicable, it being understood that Buyer’s consent to such limitations
was in reliance on Seller’s promise not to assert any other defense to the
imposition of such liquidated damages and in return for the admissions of fact
and waivers contained in this Article 10.

10.5.       Exclusivity of Warranties

SELLER MAKES NO WARRANTIES OF
TITLE, QUALITY, MERCHANTABILITY OR OTHERWISE EXCEPT THE WARRANTIES SET FORTH IN
THIS ARTICLE, AND SELLER HEREBY DISCLAIMS ALL OTHER WARRANTIES OF ANY KIND,
WHETHER EXPRESS OR IMPLIED, WHETHER CREATED BY CONTRACT OR BY OPERATION OF LAW,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.

 

13

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

11.          INTELLECTUAL PROPERTY

11.1.       Seller’s Intellectual Property

[*]

11.2.       Defense of Claims

11.2.1.    Seller shall,
at its expense, defend any suit or proceeding brought against Buyer to the
extent based on an allegation that any Monosol Intellectual Property (as that
term is defined in the Development Services Agreement) constitutes an
infringement of any patent, trademark, trade secret or copyright, provided
Buyer notifies Seller in writing in a timely manner and gives Seller authority
(including the right to select counsel and to control the relevant proceedings,
negotiations, investigations and settlement discussions), information and
assistance (such assistance to be administrative, not financial) for the
defense of the suit or proceeding.

11.2.2.    Seller shall
(a) pay all damages and costs (including reasonable attorneys’ fees) awarded in
any suit or proceeding so defended as well as the cost and fees associated with
the defense of such a suit or proceeding and (b) indemnify Buyer against any
expenses incurred by Buyer in providing information and assistance to Seller
for the defense of the suit or proceeding. Seller shall not be responsible for
the settlement of any suit or proceeding made without its written consent.

11.2.3.    If the Product
as a result of any suit or proceeding so defended, is held to constitute
infringement of any patent, trademark, trade secret or copyright and its use by
Buyer is enjoined, Seller shall, at its option and at no cost to Buyer, either
(a) procure for Buyer the right to use such Product or (b) replace it with
substantially equivalent non-infringing Product. In the event Seller is unable
to procure such right or replace the Product with substantially equivalent
non-infringing Product, Seller shall be entitled to terminate this Agreement
upon 30 days prior notice to Buyer, without further liability to Buyer, except
for the indemnification obligation set forth in this Article 11.2.

11.2.4.    Notwithstanding
the foregoing, nothing herein shall require Seller to indemnify, defend or hold
harmless Buyer with respect to infringement to the extent that such
infringement is caused by (a) Seller’s production of Product in strict
accordance with designs provided by Buyer, (b) any infringing elements that are
part of Buyer’s Product Requirements, or (c) Buyer’s combination of the Product
with any other material or substance.

12.          INDEMNITY

[*]

 

14

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

13.          LIMITATION OF LIABILITY

NEITHER PARTY SHALL BE
LIABLE TO THE OTHER PARTY IN ANY EVENT FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL,
OR INDIRECT LOSS OR DAMAGE SUFFERED BY THE OTHER PARTY AND ARISING OUT OF THE
AGREEMENT, WHETHER SUCH LOSS OR DAMAGE OR CLAIMS ARISE IN CONTRACT, TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY, WARRANTY, STATUTE OR OTHERWISE,
INCLUDING, BUT NOT LIMITED TO, LOSS OF USE OR LOST PROFITS; PROVIDED, HOWEVER,
THE FOREGOING EXCLUSION SHALL NOT AFFECT CLAIMS BASED ON, AND SHALL BE EXCLUSIVE
OF COSTS AND LIABILITIES ARISING OUT OF, CONTRACTOR’S LIABILITY FOR (a)
INFRINGEMENT CLAIMS, (b) COMPLIANCE WITH LAWS PURSUANT TO SECTION 18.4 BELOW,
(c) CLAIMS OF PERSONS OR ENTITIES NOT A PARTY TO THE CONTRACT, (d) INDEMNITY
OBLIGATIONS EXPRESSLY UNDERTAKEN IN THE CONTRACT or (e) BREACH OF
CONFIDENTIALITY OBLIGATIONS.

14.          INSURANCE

14.1.       Coverage

Seller shall obtain, pay
for and keep in force while performing hereunder, and thereafter as provided
below, the following coverages in the amounts listed below:

14.1.1.    Statutory
workers’ compensation in accordance with all state and local requirements.

14.1.2.    Employer’s
liability with a limit of $500,000 for one or more claims arising from each
accident.

14.1.3.    Commercial
general liability, including coverage for completed operations for at least two
years after delivery of Product, product liability and contractually assumed
obligations, with liability limits of at least $5,000,000 per occurrence for
property damage, $5,000,000 per occurrence for bodily injury and $5,000,000 for
personal injury.

14.1.4.    Comprehensive
automobile liability covering all vehicles used by Seller, whether owned,
non-owned or hired by Seller or otherwise, with liability limits of at least
$5,000,000 per occurrence for property damage, $5,000,000 per occurrence for
bodily injury and $5,000,000 per occurrence for personal injury.

14.2.       Endorsements and other Requirements

14.2.1.    Seller shall
cause its insurers to (a) waive all rights of subrogation against Buyer, its
officers, directors and employees, (b) name Buyer as an additional insured for
the 

 

 

15

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

coverages
set forth in subsections 14.1.3 and 14.1.4 above and (c) furnish certificates
of insurance to Buyer in a form acceptable to Buyer evidencing that the above
insurance is in effect and otherwise complies with the requirements of this
Article 14. Seller shall require its insurance carriers to give Buyer 30 days’
written notice of any material change or alteration in or the cancellation of
any policy of insurance required hereunder.

14.2.2.    The insurance
thus afforded Buyer as an additional insured shall be deemed primary coverage
without the right of contribution from any of Buyer’s insurance. All other
insurance maintained by Buyer (or for Buyer by a third party) is for the
exclusive benefit of Buyer and will not inure to the benefit of Seller.

14.2.3.    The carrying by
Seller of the insurance required herein shall in no way be interpreted as
relieving Seller of any other obligations it may have under this Agreement.

15.          STRATEGIC PLANNING AND COOPERATION; QUALITY ASSURANCE

15.1.       Performance Evaluations

The parties intend that
this Agreement shall result in a world class supply relationship respecting
Product quality, service, technical cooperation and prices. To that end, it is
contemplated that Buyer shall be entitled to evaluate the success of the
relationship periodically by seeking quotations of prices and services from
other potential suppliers of Products who, in Buyer’s sole judgment, have the
technical capability and physical capacity to provide Products of a quality
comparable to, or better than, those provided by Seller hereunder. In doing so,
however, Buyer shall not disclose any of Seller’s Confidential Information (as
defined in Attachment D) nor rely on Seller’s intellectual property or samples
of Seller’s products. Should Buyer conclude, as the result of any such
evaluation, that the above-stated goals are not being achieved, Buyer shall
notify Seller of the results of such evaluation.

15.2.       Quality Assurance Plan

As of the Effective Date
hereof, Seller shall have implemented a Buyer-approved plan for quality
assurance and quality control at Seller’s Manufacturing Facility. Seller shall
amend its quality assurance plan as necessary to be consistent with amendments
to Buyer’s quality assurance program of which Seller may be advised from time
to time.

15.3.       Quality Audits

During the Term hereof,
Seller shall cooperate with any quality audits conducted by Buyer. The parties
agree that Seller’s performance also will be evaluated based on Seller’s
ability to achieve a Satisfactory rating from Buyer’s Vendor Evaluation Program
as described in Article 10.2.

15.4.       Product Contents

Upon Buyer’s request,
Seller shall provide Buyer with a listing of all materials used or proposed to
be used in the manufacture of or incorporated in the Product. Such information
shall be deemed Confidential Information subject to Article 19 and Attachment
D. Thereafter, Seller 

 

16

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

shall notify Buyer
in writing if Seller proposes to change any such materials. Buyer shall have
the right to review and approve all proposed changes to such materials, and to
refuse to purchase or accept any Product that is manufactured with or
incorporates any material that Buyer deems unacceptable.

16.          MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISES

Every effort is being
made by Buyer to use qualified minority and women-owned enterprises in
connection with this Agreement. Within the constraints of the competitive
bidding process, Seller should actively seek to employ minority or women-owned
suppliers to the extent that such utilization is commercially feasible. Seller
shall, upon request by Buyer no more than once per year, report to Buyer, on
forms approved by Buyer, full details of Seller’s actual utilization of
minority or women-owned suppliers in Seller’s performance hereunder. Buyer
shall assist Seller in identifying qualified minority and women-owned business
enterprises upon request.

17.          FORCE MAJEURE

17.1.       Events of Force Majeure

Neither party shall be
responsible or liable, or deemed in breach hereof, to the extent the
performance of any of its obligations hereunder is delayed or prevented due
solely to causes beyond the reasonable control and without the fault or
negligence of the party experiencing such delay or prevention. Such causes may
include, but shall not be limited to, acts of God, unusually severe weather,
war, riots, fire, the demand, failure to act, or requirement of law of any
competent governmental authority, or the party’s inability despite due
diligence to obtain required licenses (such causes are hereinafter called “Force
Majeure”). A delay or failure to perform caused by Seller’s suppliers is not an
event of Force Majeure unless the supplier’s delay or failure to perform is due
solely to an event of Force Majeure as defined above affecting such supplier.
Strikes or other labor difficulties at Seller’s or Seller’s suppliers’
facilities are not events of Force Majeure.

17.2.       Force Majeure Procedure

The party experiencing
the Force Majeure shall exercise due diligence in endeavoring to overcome and
mitigate any resulting delay in, or prevention of, its performance. If Seller
is experiencing the Force Majeure, it shall, in addition to the above actions,
implement any applicable contingency plan prepared in accordance with Article
17.6. The party experiencing the Force Majeure shall also give prompt written
notification to the other party, which notice shall include a full and complete
explanation of the Force Majeure and its cause, the status of the Force Majeure,
and the actions such party is taking and proposes to take to overcome and
mitigate any resulting delay in, or prevention of, its performance.

17.3.       Effect of Force Majeure

Subject to Article 17.6,
if performance by either party is delayed or prevented due to Force Majeure,
the time for that performance shall be extended for a period reasonably
necessary to overcome the effect of the Force Majeure. The party experiencing
the Force Majeure shall

 

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CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

undertake
reasonable measures to make up for the time lost without additional
compensation. Buyer shall have the right, upon written notice to Seller, to
obtain alternate supplies of Products during any event of Force Majeure that
delays or prevents Seller’s performance hereunder if the Force Majeure has, or
in Buyer’s reasonable judgment threatens to have, an adverse effect on Buyer’s
ability to conduct its operations. Buyer shall not be obligated to purchase
additional or “make-up” quantities of Products ordered but not delivered by
Seller due to Force Majeure and such quantities shall be treated as quantities
purchased hereunder for purposes of determining whether Buyer has purchased its
requirements of Products from Seller in any Contract Year.

17.4.       Allocation of Seller’s Production Capacity

If any event of Force
Majeure hereunder delays or prevents Seller from fulfilling its obligations to
deliver the quantities of Products to Buyer as ordered, while meeting its
obligations to deliver products to its other customers, Seller shall allocate
the manufacturing capacity at its Manufacturing Facility first to providing
Buyer’s requirements hereunder. Seller covenants that it has not and will not
enter into contracts with other customers that are inconsistent with this
Article 17.4. Seller hereby waives its rights under Va. Code § 8.2-615(b)
allocate capacity to regular customers not then under contract.

17.5.       Termination for Extended Force Majeure

If Seller’s ability to
perform hereunder is delayed or prevented, in whole or in part, for a period of
12 consecutive months as a result of an event of Force Majeure, Buyer shall
have the right, at its sole option, to terminate this Agreement, in whole or in
part, by giving written notice of termination to Seller. Such termination shall
be effective no earlier than 30 days after Seller’s receipt of such notice and
without regard to whether the event of Force Majeure ends prior to the date on
which the termination becomes effective.

17.6.       Seller’s Contingency Plans

17.6.1.    Buyer and
Seller acknowledge that although the occurrence of any event of Force Majeure
will be outside the control of either party, certain types of Force Majeure are
more likely to occur than others and the adverse effects of such events can
often be reduced or minimized through advance planning. Therefore, no later
than 30 days after the Effective Date, Seller shall prepare and submit for
Buyer’s review contingency plans to address the occurrence of the following
Force Majeure events: raw material shortage or supply interruption when such
interruption is due to a Force Majeure event experienced by Seller’s suppliers,
floods, fire, and such other events of Force Majeure as Buyer and Seller may
mutually agree. In addition, although the following are not events of Force
Majeure, Seller shall prepare and submit for Buyer’s review contingency plans
to address (a) the occurrence of strikes or other labor disturbances at Seller’s
Manufacturing Facility and (b) any disruption in production at Seller’s
Manufacturing Facility which will impair Seller’s ability to perform hereunder
and which Seller anticipates will last for one month or longer.

17.6.2.    If Seller fails
to develop mutually acceptable contingency plans for such events of Force
Majeure, or if upon the occurrence of such an event Seller fails to implement
the applicable contingency plan, any delay in or prevention of Seller’s
performance due to the 

 

 

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CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

occurrence
of such event of Force Majeure shall be deemed to have been within the
reasonable control of Seller and therefore not excused under this Article. In
such event, Buyer may seek alternate supplies of Products and any expenses
incurred by Buyer to obtain such Products in excess of the compensation that
would have been due Seller hereunder shall be reimbursed by Seller. Buyer
reserves the right to review and comment on such plans on an annual basis and,
if reasonably requested by Buyer, Seller shall update such plans as necessary
to address Buyer’s comments.

18.          COMPLIANCE WITH LAWS; NONDISCRIMINATION; FINES

18.1.       General

Seller shall comply with
all federal, state and local laws, rules, regulations and ordinances applicable
to the performance of its obligations under this Agreement. In addition, Seller
shall obtain and maintain in good standing all governmental licenses, permits
and approvals necessary for the operation of those facilities required in the
performance of Seller’s obligations under this Agreement.

18.2.       No Discrimination

Without limiting Article
18.1, Seller shall comply with all applicable provisions of Executive Order
11246, as amended, § 503 of the Rehabilitation Act of 1973, as amended, § 402
of the Vietnam Era Veterans Readjustment Assistance Act of 1974, as amended, §
5152 of the Drug-Free Workplace Act of 1988, the implementing regulations set
forth in 41 C.F.R. §§ 60-1, 60-250 and 60-741 and 48 C.F.R. §§ 23.5, and all
applicable provisions of the Americans with Disabilities Act. The equal
opportunity clause set forth in 41 C.F.R. § 60-1.4 and the affirmative action
clauses set forth in 41 C.F.R. § 60-250.4 and 41 C.F.R. § 60-741.4 are incorporated
by reference and made a part of this Agreement. Seller certifies that it does
not and will not maintain any facilities it provides for its employees in a
segregated manner and that it does not and will not permit its employees to
perform their services at any location under Seller’s control where segregated
facilities are maintained. Seller further agrees to submit and obtain such
certifications of nonsegregated facilities as are required by 41 C.F.R. §
60-1.8. The provisions of this Article 18.2 shall apply to Seller only to the
extent that (a) such provisions are required under existing law, (b) Seller is
not otherwise exempt from said provisions and (c) compliance with said
provisions is consistent with and not violative of 42 U.S.C. § 2000e et  seq.,
42 U.S.C. § 1981 et  seq. or other acts of Congress.

18.3.       No Collusion; Business Conduct Policy

18.3.1.    Neither Seller
nor any person or entity acting or purporting to act on Seller’s behalf shall
enter into any combination, conspiracy, agreement or other form of collusive
arrangement with any person, corporation, limited liability company,
partnership or other entity that directly or indirectly lessens competition
between potential contractors, vendors or suppliers from whom goods or services
may be obtained that will be used by Seller in the performance of its
obligations hereunder.

18.3.2.    Seller shall
comply with Buyer’s Business Conduct Policy by not engaging in any conduct when
dealing with any employee of Buyer that would cause the 

 

 

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CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

employee
to be in violation of such Policy, and in its dealings with any suppliers in
connection with this Agreement or any Order, by complying with all obligations
otherwise applicable to Buyer’s employees. A copy of this Policy has been
provided to Seller and Seller’s receipt is hereby acknowledged. Seller shall
inform all potential suppliers from whom goods may be obtained on Buyer’s
behalf of Buyer’s Policy and shall require compliance therewith.

18.4.       Fines

Any fines, legal costs or
other penalties incurred by Seller or its agents or employees for noncompliance
with any laws, rules, regulations or ordinances with which compliance is
required herein shall not be reimbursed by Buyer, but shall be the sole
responsibility of Seller. If fines, penalties or legal costs are assessed
against Buyer by any government authority or court due to noncompliance by
Seller or its agents or employees with any laws, rules, regulations or
ordinances, or if Buyer’s operations or any part thereof is delayed or stopped
by order of any government authority or court due to Seller’s noncompliance or
the noncompliance of Seller’s agents or employees, Seller shall indemnify and
hold harmless Buyer against any and all losses, liabilities, damages, claims
and costs (including reasonable attorneys’ fees) suffered or incurred because
of the failure of Seller or its agents or employees to comply therewith.

18.5.       Child Labor

Seller warrants that all
Product furnished hereunder will comply with, and be manufactured, priced, sold
and labeled in compliance with applicable United States (federal, state, and
local) and foreign laws, codes, rules, regulations, orders and ordinances,
including without limitation, environmental protection, energy and labor laws
and regulations and applicable industry codes and standards. Without limiting
the foregoing, Seller further warrants that (i) labor utilized in Seller’s
Manufacturing Facility that are utilized to furnish the Product hereunder
complies with the minimum age of employment requirements prescribed by the
International Labor Organization conventions or applicable law, whichever is
higher, and (ii) it will neither employ forced labor nor impose similar working
conditions. Buyer shall have the right (but not the obligation) to audit Seller’s
compliance with this Article 18.5.

19.          CONFIDENTIALITY AND CONFIDENTIAL INFORMATION

This Agreement and the
terms and conditions herein are considered confidential. Neither party shall
disclose this Agreement or its terms and conditions to any person or entity not
a party hereto except as otherwise provided herein or as may be required by
law, any court, government agency or proper discovery request. If either party
is required to disclose this Agreement or any of its terms and conditions, the
disclosing party shall (a) use its Best Efforts to ensure that such disclosure
is made on a confidential basis and (b) in the case of disclosure required as
the result of an order of any court or government agency or a discovery request
in connection with any litigation, give prompt notice thereof so that the other
party may, if it so chooses, assert any rights it may have to maintain
confidentiality or obtain relief from public disclosure. The parties hereto
further acknowledge that their performance of this Agreement is subject to the
terms and conditions of the Mutual Confidentiality Agreement executed by them
and dated [*], a copy of which is attached hereto
as Attachment D. Notwithstanding anything in the Attachment D to the contrary,
(a) Attachment D shall remain in effect for as long as this Agreement remains
in effect, 

 

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CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

and (b) Seller
shall be entitled to disclose this Agreement and its terms and conditions to
its employees, agents, auditors, attorneys, and other third parties who, in
Seller’s reasonable judgment, have a reason to know such information, provided
such entities have agreed in writing to comply with the obligations undertaken
by Seller in this Article and in Attachment D.

20.          DISCOVERIES

Any new or improved
apparatus, process, formula or product discovered or produced by Seller or
Seller’s employees or agents in the course of or by reason of Seller’s
performance hereunder shall be governed by the terms of the Development
Services Agreement.

21.          RECORDS; AUDITS

21.1.       Records

During the Term of this
Agreement, Seller shall keep and maintain complete and accurate records, in
accordance with Generally Accepted Accounting Principles (GAAP), books of
account, reports and other data necessary for the proper administration of this
Agreement, including all rebate programs and any other special pricing program
extended to Seller by any subcontractor in connection with the Agreement.
Seller shall provide Buyer with periodic reports containing such information,
if and when requested by Buyer, but no more often than two times per year.
Seller shall retain such records and all other written materials prepared by
Seller, during the Term of this Agreement and for three years after the
expiration, termination or cancellation of this Agreement and for any
additional time required by governmental authorities with jurisdiction over
Seller.

21.2.       Right to Audit

Buyer or its designee
shall have the right, upon reasonable notice to Seller, during the Term of this
Agreement and for three years following the expiration, termination or cancellation
hereof, to audit and inspect Seller’s books, records and other materials as
described in Article 21.1 with respect to the Prices for the Product, the
compensation for the Expansion, and any credits due Buyer hereunder. If any
audit or inspection reveals an error or irregularity in the compensation
payable to Seller or credits due Buyer hereunder, an appropriate adjustment
shall be made (i) by Seller within thirty (30) days after the conclusion of the
audit or inspection or (ii) at Buyer’s option, by Buyer to amounts properly due
Seller hereunder. Buyer shall pay for any audit or inspection unless such audit
or inspection is conducted subsequent to Seller’s default of this Agreement, in
which case Seller shall pay for all audit or inspection costs incurred by
Buyer. Seller shall pay all expenses incurred by Seller in supporting the audit
and inspection.

21.3.       Independent Audit

Seller shall engage an
independent Certified Public Accounting firm that is enrolled in an approved
practice-monitoring program and has received an unmodified Peer Review report
to conduct annual audits of Seller’s financial statements. The audit shall be
conducted in accordance with Generally Accepted Auditing Standards (GAAS) and
shall result in such independent auditor issuing an opinion as to whether
Seller’s financial statements are fairly stated. The audit will be performed at
Seller’s expense. Within the later of 90 days following the 

 

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CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

end of each of
Seller’s fiscal years during the Term of this Agreement or 30 days after
issuance, Seller shall provide Buyer a copy of Seller’s most recent financial
statement, including integral footnotes and the opinion letter from Seller’s
independent Certified Public Accounting firm as to whether the financial
statements are fairly stated. Upon request by Buyer, Seller shall provide to
Buyer a copy of its most recent quarterly unaudited financial statements. During
the Term of this Agreement, Seller shall provide Buyer with a copy of(i) any
default notice received from a creditor regarding the payment or financial
covenants of any material indebtedness within 5 business days after Seller’s
receipt thereof; and (ii) any certificate or other notice provided to a
creditor indicating noncompliance with a financial covenant with respect to, or
nonpayment of any, material indebtedness within 5 business days after provision
of such notice to the creditor.

22.          DISPUTE RESOLUTION

22.1.       Intent

It is the intention of
the parties to make a good faith effort to resolve, without resort to
litigation, any dispute, controversy or claim arising out of or relating to
this Agreement or any breach hereof (a “Dispute”) according to the procedures
set forth in this Article; provided, however, that the procedures set forth
herein shall not preclude either party from exercising any right of termination
or cancellation of the Agreement as provided herein or as available at law or
in equity.

22.2.       Procedure

Buyer’s and Seller’s
designated representatives shall attempt to resolve all Disputes by
negotiation. In the event a Dispute cannot be resolved promptly by Buyer’s and
Seller’s representatives, each party shall immediately designate a senior
executive with authority to resolve the Dispute. The designated senior
executives shall promptly begin discussions in an effort to agree upon a
resolution of the Dispute. If the senior executives do not agree upon a
resolution of the Dispute within 20 days of the referral to them, either party
may elect to abandon negotiations. If a Dispute cannot be resolved pursuant to
the procedures outlined in this paragraph, the parties may pursue any remedy
available to them at law or in equity.

22.3.       Performance During Dispute

Subject to the rights of
the parties to cancel this Agreement or suspend their performance as set forth
in this Agreement, Seller shall continue to perform its obligations under this
Agreement during the pendency of any Dispute; provided, however, that either
party may seek preliminary and permanent injunctive relief; including specific
performance or other interim or permanent relief, if the Dispute involves (a) a
threatened or actual breach of the confidentiality provisions of Article 19 hereof
or the terms and conditions of the parties’ Confidentiality Agreement set forth
in Attachment D or (b) risk to the safety or security of persons or property,
if in such party’s judgment such relief is necessary to prevent injury or
damage; provided further, that despite any such action, the parties shall
continue to proceed in good faith in the dispute procedures outlined herein.

23.          CANCELLATION

 

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Pursuant to 17 C.F.R. §§200.80(b) and 230.406

23.1.       Default by Seller

23.1.1.    If, during the
Term hereof, one or more of the following events (each of which shall be deemed
an event of “Default”) occurs, Seller shall be deemed in Default:

(a)           The Product shall
fail to achieve a Satisfactory rating during any two calendar years during the
Term;

(b)           Seller or its
Affiliates default in any material respect in the performance of any other
covenant, condition or obligation of Seller or its Affiliates contained herein,
and such default continues for [*] days after
Seller’s receipt of written notice specifying the default and demanding that
the same be remedied;

(c)           Seller, for any
reason other than (i) delays to the extent caused by Buyer, the Delivering
Carrier, or Force Majeure, or (ii) a material breach by Buyer of its
obligations hereunder, fails to comply with the applicable Delivery Date(s)
established in accordance with Article 5 by more than [*]
business days in more than [*] of the
deliveries hereunder during each of any [*] (whether or
not such consecutive calendar quarters are in the same calendar year);

(d)           Seller or its
Affiliates makes a representation or warranty herein or in any certificate,
statement or document made or given pursuant to this Agreement which proves to
be false or misleading in any material respect as of the date on which it was
made;

(e)           Seller (1) files a
petition commencing a voluntary case under the United States Bankruptcy Code,
(2) files a petition for liquidation, reorganization or an arrangement pursuant
to any other federal or state bankruptcy law, (3) is adjudicated a debtor or
declared bankrupt or insolvent under the United States Bankruptcy Code, or any
other federal or state law as now or hereafter may be in effect relating to
bankruptcy, insolvency, winding-up or adjustment of debts, (4) makes an
assignment for the benefit of its creditors, (5) admits in writing its
inability to pay its debts as they become due, or (6) if a petition commencing
an involuntary case under the United States Bankruptcy Code or an answer
proposing the adjudication of Seller as a debtor or a bankrupt or proposing its
liquidation or reorganization pursuant to the United States Bankruptcy Code or
any other federal or state bankruptcy law is filed in any court, and Seller consents
to, or acquiesces in, the filing thereof or such petition or answer is not
discharged or denied within 90 days after the filing thereof; or

(f)            A custodian,
receiver, trustee or liquidator of Seller, or of all or substantially all of
the assets of Seller, is appointed in any proceeding brought against Seller and
is not discharged within 90 days after such appointment, or if Seller consents
to or acquiesces in such appointment.

23.1.2.    In the event of
a Default by Seller, Buyer may, at its option, (a) cancel this Agreement by
providing written notice to Seller, such cancellation to be effective as of the
date set forth in such notice but not earlier than [*] after
such notice is received by Seller or (b) secure an alternate source of supply
of Product. Buyer’s remedies set forth in this Article shall not be exclusive,
but shall be cumulative and may be exercised concurrently or consecutively, 

 

 

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CONFIDENTIAL TREATMENT REQUESTED

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and
shall be in addition to all other remedies Buyer may have under this Agreement,
at law or in equity.

23.2.       Default by Buyer

23.2.1.    If during the
Term one or more of the following events (each of which shall be deemed an
event of “Default”) occurs, Buyer shall be deemed in Default:

(a)           Buyer defaults in
any respect in the performance of any covenant, condition or obligation of
Buyer contained herein, and such default continues for [*]
after Buyer’s receipt of written notice specifying the default and demanding
that the same be remedied;

(b)           Any representation
or warranty made by Buyer herein or in any certificate, statement or document
made or given pursuant to this Agreement (excluding Buyer’s Annual Forecasts)
proves to be false or misleading in any material respect as of the date on
which it was made;

(c)           Buyer (1) files a
petition commencing a voluntary case under the United States Bankruptcy Code,
(2) files a petition for liquidation, reorganization or an arrangement pursuant
to any other federal or state bankruptcy law, (3) is adjudicated a debtor or
declared bankrupt or insolvent under the United States Bankruptcy Code, or any
other federal or state law as now or hereafter may be in effect relating to
bankruptcy, insolvency, winding-up or adjustment of debts, (4) makes an
assignment for the benefit of its creditors, (5) admits in writing its
inability to pay its debts as they become due, or (6) if a petition commencing
an involuntary case under the United States Bankruptcy Code or an answer
proposing the adjudication of Buyer as a debtor or a bankrupt or proposing its
liquidation or reorganization pursuant to the United States Bankruptcy Code or
any other federal or state bankruptcy law is filed in any court and Buyer
consents to, or acquiesces in, the filing thereof, or such petition or answer
is not discharged or denied within [*] after the
filing thereof; or

(d)           A custodian,
receiver, trustee or liquidator of Buyer or of all or substantially all of the
assets of Buyer, is appointed in any proceeding brought against Buyer and is
not discharged within 90 days after such appointment, or if Buyer consents to,
or acquiesces in, such appointment.

23.2.2.    In the event of
a Default by Buyer, Seller may, at its option, cancel this Agreement by
providing written notice to Buyer, such cancellation to be effective as of the
date set forth in such notice but not earlier than [*]
after such notice is received by Buyer. Unless Buyer otherwise agrees in
writing, Seller shall not sell any Product produced hereunder to any alternate
purchasers. Seller’s remedies set forth in this Article shall not be exclusive,
but shall be cumulative and may be exercised concurrently or consecutively, and
shall be in addition to all other remedies Seller may have under this
Agreement, at law or in equity.

24.          NOTICES

All certificates or
notices required hereunder shall be given in writing and addressed or delivered
to the representative(s) specified below. Notices shall be deemed received (a)
upon 

 

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CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

delivery, when
personally delivered; (b) upon receipt, when sent via registered or certified
mail; (c) the next business day, when sent via overnight courier; and (d) upon
transmittal, when sent via facsimile. Copies of all general correspondence
regarding this Agreement shall also be sent to these representative(s). Either
party may change the representative(s) designated to receive notice hereunder
by written notice to the other party. All correspondence and transmittals.
Between the parties shall be executed pursuant to coordination procedures that
shall be developed by the parties.

Notices to Seller:                                                      MonoSol RX, LLC

30 Technology Drive

Warren, New York 07059

Attn: President

with a copy to:                                                                 Anna Kuzmik,
Esq.

Sullivan & Cromwell

125 Broad Street

New York, New York 10004

Notices to Buyer:                                                   Philip Morris
USA

615 Maury Street

Richmond, Virginia 23224

Attn: Bruce Wells III

25.          GOVERNING LAW AND VENUE

This Agreement shall be
governed by the laws of the Commonwealth of Virginia, notwithstanding its
choice of law provisions that might apply the laws of another jurisdiction. For
the adjudication of any disputes arising under this Agreement, the parties hereby
consent to personal jurisdiction and venue in (a) the General District Court
and Circuit Court of the Commonwealth of Virginia, Henrico County and (b) the
United States District Court for the Eastern District of Virginia, Richmond
Division.

26.          NON WAIVER

The failure of either
party to demand strict performance of the terms hereof or to exercise any right
conferred hereby shall not be construed as a waiver or relinquishment of its
rights to assert or rely on any such term or right in the future.

27.          SEVERABILITY

In the event that any
provision of this Agreement is deemed as a matter of law to be unenforceable or
null and void, such unenforceable or void portion of such provision shall be
deemed severable from the Agreement and the remainder of the Agreement shall
continue in full force and effect.

28.          CHANGE OF CONTROL; ASSIGNMENTS

28.1.       Change of Control

 

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CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

28.1.1.    Except as otherwise
provided in Article 28.1.2 below, Buyer may at its option, terminate this
Agreement without any fee, charge or other payment, effective five days after
Seller’s receipt of Buyer’s written notice if(a) after the Effective Date any
person or entity (or any group thereof), which does not own any voting
securities of Seller on the Effective Date, assumes or otherwise gains
beneficial ownership of securities representing 25% or more of the combined
voting power of all outstanding voting securities of Seller or (b) during any
period of 24 consecutive calendar months commencing on the Effective Date
hereof, individuals who were directors of Seller on the first day of such
period and individuals elected as directors by not less than two-thirds of the
individuals who were directors of Seller on the Effective Date shall cease to
constitute a majority of the members of Seller’s board of directors. Seller
shall notify Buyer promptly of any such change in ownership.

28.1.2.    Notwithstanding
the foregoing, the parties acknowledge that Seller is contemplating issuing an
Initial Public Offering (IPO) of its common shares during the Term. Buyer shall
not be entitled to terminate this Agreement solely as result of such IPO,
unless (a) a person or entity (or any group thereof) that directly or
indirectly manufactures or distributes tobacco products in the United States
assumes or otherwise gains beneficial ownership of securities representing 25%
or more of the combined voting power of all outstanding voting securities of Seller
as a result of such IPO, or (b) individuals who were directors of Seller as of
the Effective Date and individuals elected as directors by not less than
two-thirds of the individuals who were directors of Seller on the Effective
Date shall cease to constitute a majority of the members of Seller’s board of
directors as a result of such IPO.

28.2.       Assignments

This Agreement and each
and every covenant, term and condition hereof, shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. Seller shall not assign,
subcontract or otherwise delegate any of its rights or obligations hereunder
without Buyer’s prior written consent. Any such assignment without Buyer’s
consent shall be void.

29.          SURVIVAL

All warranties, remedial
obligations, limitations of liability, indemnities, and confidentiality rights
and obligations provided herein shall survive the cancellation, expiration or
termination hereof.

30.          AMENDMENTS

No amendment,
modification or waiver of any term hereof shall be effective unless set forth
in a writing signed by both Buyer and Seller.

31.          INDEPENDENT CONTRACTOR

Seller is an independent
contractor for all purposes in connection with this Agreement, and is solely
responsible for workers’ compensation, unemployment compensation, social
security, payroll taxes and all similar obligations affecting its employees.
Seller’s employees are not employees of Buyer. Except as provided in Article 8,
Seller shall be responsible for any 

 

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CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

withholding or
other taxes imposed by any tax authority. Seller shall keep all necessary
records and make all necessary payments with respect to its employees and the
performance of this Agreement. This Agreement is a contract for the sale of
goods, and the relationship between the parties is that of buyer and seller.
Nothing herein shall be deemed to constitute a partnership or joint venture
between the parties hereto.

32.          HEADINGS

Headings set forth herein
are inserted for convenience and shall have no effect on the interpretation or
construction of this Agreement.

33.          PUBLICITY

Seller understands that
it is Buyer’s policy that all agreements with its vendors are confidential and
that no vendor may release any information regarding any agreement with Buyer
for publication, advertising or any other purpose without Buyer’s prior written
consent. Any use of Buyer’s name and/or logo shall require the prior written
approval of Buyer. Such approval may be withheld as deemed necessary and is
subject to the sole discretion of Buyer.

34.          REMEDIES NOT EXCLUSIVE

Where remedies for breach
of contract are provided herein, those remedies are in addition to all other
available remedies in the Agreement, at law or in equity, unless otherwise
expressly provided herein. Where no specific remedy for a breach of contract is
specified, the non- breaching party shall be entitled to pursue all available
remedies in this Agreement, at law or in equity.

35.          ORDER OF PRECEDENCE

If there is a discrepancy
or conflict between or among the handwritten or typed information in an Order,
the Articles of this Agreement or the Attachments hereto, they shall be given
precedence in the following order:

1.             Handwritten or typed information contained on the front
of an Order.

2.             The Articles of this Agreement, and any amendments
hereto.

3.             The Attachments (which shall each be given precedence
over each other in the order in which they are attached).

36.          ENTIRE AGREEMENT

This Agreement, which
includes this cover contract, the Attachments hereto and any Order issued by
Buyer hereunder, constitutes the entire agreement of the parties with respect
to the subject matter herein and supersedes any prior or contemporaneous
agreement or understanding between the parties, provided that nothing herein is
intended to, nor shall be construed to, modify or amend the Development
Services Agreement. No course of dealing, no 

 

27

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

usage of trade and
no course of performance shall supplement, explain or amend any term, condition
or instruction of this Agreement or any Order.

[THE
REST OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]

 

 

28

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

WITNESS the signatures of
the authorized representatives of the parties.

	
   

  	
  PHILIP MORRIS USA INC.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Henry P. Long Jr.

  	
   

  
	
   

  	
  Name:
  

  	
  Henry
  P. Long Jr.

  	
   

  
	
   

  	
  Title:

  	
  SVP,
  Procurement & Quality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MONOSOL RX, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Alexander M. Schobel

  	
   

  
	
   

  	
  Name:

  	
  Alexander
  M. Schobel

  	
   

  
	
   

  	
  Title:

  	
  President
  & CEO

  	
   

  
	
   

  	
   

  
						

 

 

29

 

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

ATTACHMENT
A

DESCRIPTION OF PRODUCT

[*]

 

 

 

 

A-1

 

 

 

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

ATTACHMENT
B

SELLER’S
MANUFACTURING FACILITIES

AND QUALIFIED EQUIPMENT

[*]

 

 

B-2

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

ATTACHMENT
C

COMPENSATION

[*]

 

 

C-1

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

 

 

C-2

 

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

 

 

C-3

 

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b) and 230.406

ATTACHMENT
D

MUTUAL
CONFIDENTIALITY AGREEMENT

[*]

 

D-1Exhibit 10.10

 

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

	
  Confidential treatment
  has been requested for portions of this exhibit. The copy filed herewith
  omits the information subject to the confidentiality request. Omissions are
  designated as [*]. A complete version of this exhibit has been filed
  separately with the Securites and Exchange Commission.

  

 

AGREEMENT

by and between

Medtech Products inc.

and

MonoSolRx LLC

THIS AGREEMENT (this “Agreement”) is made and entered into as of the 12th
day of October, 2006 (the “Effective Date”),
by and between MonoSolRx LLC, a Delaware limited liability company with its
corporate headquarters at 30 Technology Drive, Warren, NJ 07059 (hereinafter
referred to as “MonoSolRx”), and Medtech Products Inc., a Delaware corporation with offices
at 90 North Broadway, Irvington, NY 10533 (hereinafter referred to as “Medtech”).

Whereas MonoSolRx owns or has certain rights in a Film Delivery
System and expertise and experience in customizing and developing such Film
Delivery System for use with pharmaceutical drugs; and

Whereas Medtech is
interested in having MonoSolRx
develop, using MonoSolRx expertise and
proprietary technology, thin film Products (as herein defined) for the Chloraseptic®
brand; and

Whereas Medtech desires to purchase the aforementioned film Products from MonoSolRx and MonoSolRx wishes to supply such Products
to Medtech, subject to the terms and
conditions set forth in this two-phase Agreement.

Now, THEREFORE, in
reliance upon and in consideration of the following undertakings, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

1.0          Definitions

1.1          “Affiliates” with respect
to any Person, any other Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the Person specified.

1.2          “Confidentiality
Agreement” shall mean the Confidentiality Agreement dated
January 4, 2005 between MonSolRx and
Prestige Brands, Inc., an Affiliate of Medtech.

1.3          “Film Delivery System” (“Base Film”) shall mean an oral film dosage drug delivery
system composition(s) developed and owned by MonoSolRx
prior to the date of this Agreement and shall
include modifications, such as variations of amounts of ingredients to optimize
the drug delivery system to comply with the Product
specifications set forth on Exhibit A to this Agreement.

 

1

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

1.4          “Monosol Intellectual
Property” (“IP”) shall
mean all patents, copyrights, trade secrets, know-how, trademarks and other
intellectual property rights owned by MonoSolRx
anywhere in the world.

1.5          “Person” shall mean any
individual, corporation, general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or governmental body.

1.6          “Products” shall mean
thin film products as follows:  (a) a
cherry-flavored film that contains benzocaine (3 mg), (b) a citrus-flavored
film that contains benzocaine (3 mg) and (c) a grape-flavored film that
contains benzocaine (2 mg), in each case substantially in accordance with the
specifications set forth in Exhibit A hereto.

2.0                               Phase I — Prototype
Development and Acceptance

2.1          MonoSolRx agrees to use
reasonable best efforts to develop three prototype film MonoSolRx
in accordance with Exhibit A for review and acceptance by Medtech.  Each prototype film strip Product will be based on MonoSolRx’s
Base Film modified to incorporate
combinations of benzocaine and menthol therein.

2.2          MonoSolRx will supply
all compounds, materials or other substances necessary for MonoSolRx
to develop and make the aforesaid prototype Products at its sole expense.

2.3          MonoSolRx will have sole
discretion with regard to the development of the prototype film strip Products.  MonoSolRx also
will have sole discretion with regard to testing of film strips during the
development of the prototype Products.  Medtech will,
however, provide flavor and flavor sourcing information to MonoSolRx
upon MonoSolRx’s request, subject to the
terms of the Confidentiality Agreement.  Moreover,
Medtech agrees to provide prompt
written feedback, no later than twenty days following Medtech’
s receipt, to MonoSolRx concerning prototype Products supplied by MonoSolRx.

2.4          Upon review and
acceptance by Medtech of the three prototype
Products, which shall not be unreasonably withheld, Phase II of this Agreement shall commence. 
For the absence of doubt, Medtech agrees
that that its organaleptic review of the prototype Products will be conducted
with its existing Chloraseptic® film products as a reference, and moreover that
the grape prototype Product
previously supplied by MonoSolRx is
acceptable for purposes of this Phase I review.

2.5          If the
prototype film Products are not accepted within one hundred fifty (150) days of
the Effective Date of this Agreement, this
Agreement shall terminate.  Such termination shall, provided that Medtech has not unreasonably withheld product acceptance
pursuant to Section 2.4 (and otherwise materially complied with its obligation
to provide feedback under Section 2.3) be without any liability to Medtech and its Affiliates.

3.0                               Phase II — Stability and
Validation

3.1          Upon completion
of Phase I and following the entry of the parties into a Quality Agreement and
a commercial supply agreement as contemplated in Section 4.1 hereof, 

 

2

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

MonoSolRx shall develop
stability data for each of the three prototype Products at its own expense for
review and acceptance by Medtech in
accordance with the stability program set forth in Exhibit B hereto.  Medtech shall
find the stability data acceptable if the stability data conforms to the
specifications set forth in Exhibit B.

3.2          Following the
acceptance of the stability data by Medtech, which
shall not be unreasonably withheld, MonoSolRx shall
validate the three prototype Products in
accordance with process validation guidelines typically used in the
pharmaceutical industry and agreed upon between the companies prior to
initiation of process validation.  Medtech agrees to promptly review such Product validations,
no longer than twenty days following notice from MonoSolRx
that validation is completed, and Medtech further
agrees not to unreasonably withhold acceptance of such validation

3.3          If the
stability data and Product
validation are not accepted within one hundred and eighty (180) days following
the completion of Phase I, the Agreement shall
terminate.  Such termination shall,
provided that Medtech has not unreasonably
withheld acceptance of stability data and Product validation pursuant to
Section 3.2, be without any liability to Medtech and its
Affiliates.

4.0                               Commercial Supply to Medtech

4.1          During the
commencement of Phase I, the Parties shall use reasonable best efforts to enter
into a five year commercial supply agreement with the following material terms:   (a) an
initial supply “Price” as set forth below, (b) minimum batch and order sizes
consistent with the first year annual forecasts attached hereto as Exhibit C,
(c) a provision for annual supply price reviews based upon input costs of MonoSolRx, (d) an all requirements commitment from Medtech, and an exclusive supply commitment from MonoSolRx, for OTC thin film products
that contain either benzocaine as a sole active ingredient, or benzocaine and
menthol as part of a combination, two active ingredient product,
supply to commence with the purchase of the complete validation batches, (e)
customary representations and warranties (including, without limitation, a
representation from MonoSolRx that
the Products and the technology used to
manufacture them will not infringe upon the valid patent rights of third
parties, and Products will not be adulterated
and shall be manufactured in full compliance with cGMP guidelines), (1) a
mutual indemnity, under which MonoSolRx shall
indemnify Medtech for any uncured breach of its
representations, warranties, obligations and covenants or any acts or omissions
in connection with the commercial supply agreement, and under which Medtech will indemnify MonoSolRx from
any liabilities associated with its product labeling or marketing of the
product, (g) during the term of the agreement, a disaster plan whereunder MonoSolRx will provide a royalty-free license to use MonoSolRx Intellectual Property utilized to manufacture the
Products should MonoSolRx be rendered unable for a
prolonged and uncured period from supplying product, provided that such license
shall be limited the earlier of the duration of the service interruption or the
term of the agreement, and (h) a damages limitation precluding liability for
lost profits or consequential damages in connection with the agreement.  The effectiveness of the commercial supply
agreement shall be conditioned upon the successful stability and validation of
the Products as referenced in Section 3 above.

 

3

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

4.2          The initial
supply “Price” for each of the three film Products shall
be $[*] per [*]
for Products packaged in polyvinylchloride
(PVC)..  Each card shall include [*] each containing [*] strips, as
more fully described in Exhibit D hereto. 
The commercial supply cost for each of the three film Products shall increase approximately [*]
per blister card for prototype film Products
packaged in Aclar® blister packaging.

5.0                               Term and Termination

5.1          The term of
this Agreement shall commence as of the Effective Date and shall continue until the completion of
the obligations set forth herein or until otherwise terminated.

6.0                               Confidentiality

6.1          Any
confidential information exchanged between the parties hereto shall be treated
in accordance with the terms of the Confidentiality Agreement.

7.0                               Ownership Of Film Products
and Intellectual Property

7.1          MonoSolRx shall retain
ownership of all right, title, and interest in and to the MonoSolRx
Base Film and to all other MonoSolRx  Intellectual Property,
including all proprietary rights therein. 
MonoSolRx shall own the sole and
exclusive rights in and to all IP developed pursuant to this Agreement for which MonoSolRx’s or MonoSolRx Affiliates’ employees, representatives, agents or
consultants have sole inventorship.  Notwithstanding
the generality of the foregoing, MonoSolRx shall
have no rights or interest in any trademark applied to the Products, which
trademarks shall be and remain the exclusive property of Medtech.
MonoSolRx also shall own the sole and
exclusive rights in and to all IP developed by
MonoSolRx pursuant to this Agreement.

7.2          MonoSolRx represents and
warrants to Medtech that the MonoSolRx Intellectual Property used to develop and
manufacture the Products will not infringe any Intellectual Property rights of
any third-party.

7.3          MonoSolRx acknowledges
that the trademark CHLORASEPTIC is the exclusive property of Medtech and further agrees to take no action contrary to the
interest of Medtech respecting said trademark.

8.0                               Miscellaneous

8.1          This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to its conflicts
of law principles thereof.  Any disputes
between the parties arising out of or relating to this Agreement
shall be resolved by final and binding arbitration in New York, New York by a
three arbitrator panel pursuant to the rules of the American Arbitration
Association.

8.2          In case any one
or more of the provisions of this Agreement
should be invalid, illegal, or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

 

4

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

8.3          Neither party
hereto may assign this Agreement and
its rights and duties under this Agreement
without the prior written consent of the other party hereto except that consent
is not required if either party is purchased by a third party or Medtech assigns this Agreement to
one of its Affiliates.  This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns,

9.4          Any and all
provisions, promises and warranties contained herein which by their nature or
effect are required or intended to be observed, kept or performed after
termination of this Agreement will
survive the termination of this Agreement and
remain binding upon and for the benefit of the parties hereto.

9.0                               Notices

All notices or other
communications which shall or may be given pursuant to this Agreement shall be in writing and shall be deemed to be
effective when delivered, by facsimile transmission AND (a) when
delivered if sent by registered or certified mail, return receipt requested, or
(b) on the next business day, if sent by overnight courier, in each case to the
parties hereto at the following addresses (or at such other addresses as shall
be specified by like notice) with postage or delivery charges prepaid:

	
  If
  to MonoSolRx:

  	
   

  	
  A. Mark Schobel

  
	
   

  	
   

  	
  President, CEO

  
	
   

  	
   

  	
  30 Technology Drive

  
	
   

  	
   

  	
  Warren, NJ 07059

  
	
   

  	
   

  	
  Fax: 908.561.1209

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Joseph Fuisz

  
	
   

  	
   

  	
  MonoSolRx, LLC

  
	
   

  	
   

  	
  1100 Connecticut
  Avenue, NW

  
	
   

  	
   

  	
  Suite 440

  
	
   

  	
   

  	
  Washington, DC
  20036

  
	
   

  	
   

  	
  Fax:
  202.223.9069

  
	
   

  	
   

  	
   

  
	
  If
  to Medtech:

  	
   

  	
  Eric Millar

  
	
   

  	
   

  	
  Medtech Products Inc.

  
	
   

  	
   

  	
  90 North Broadway

  
	
   

  	
   

  	
  Irvington, NY 10533

  
	
   

  	
   

  	
  Fax: 914.524.6814

  

 

5

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Legal Department

  
	
   

  	
   

  	
  Medtech Products Inc.

  
	
   

  	
   

  	
  90 North Broadway

  
	
   

  	
   

  	
  Irvington, New York 10533

  
	
   

  	
   

  	
  Fax: 
  914.524.7488

  

 

10.0                        Entire Agreement

This Agreement
contains the entire agreement between the parties hereto concerning the subject
matter hereof and supersedes all prior or contemporaneous agreements or understandings
(whether written or oral) with respect to the subject matter hereof. No course
of dealing or usage of trade shall be used to modify the terms hereof.

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.

	
  Medtech Products Inc.

  	
   

  	
  MonoSolRx  LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Charles N. Jeily

  	
   

  	
  By:

  	
  /s/ Alexander M. Schobel

  
	
   

  	
  Name: Charles N. Jeily

  	
   

  	
   

  	
  Name: Alexander M. Schobel

  
	
   

  	
  Title: Secretary

  	
   

  	
   

  	
  Title: President & CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date: October 18, 2006

  	
   

  	
  Date: 10/12/06

  

 

6

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

Exhibit A

Product
Specifications

[*]

 

 

 

 

 

 

 

7

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

Exhibit B

Stability
Program

[*]

 

 

 

 

 

 

8

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

Exhibit C

Annual
Forecast

[*]

 

 

 

 

 

 

 

9

CONFIDENTIAL TREATMENT REQUESTED

Pursuant to 17 C.F.R. §§200.80(b)
and 230.406

 

Exhibit D

Commercial
Supply Cost

[*]

 

 

 

 

 

 

 

10

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