Document:

RELEASE AND LICENSE AGREEMENT

Exhibit 10.23

RELEASE AND LICENSE AGREEMENT

This Release and License Agreement (this "Agreement")
dated as of November 28, 2001 (the "Effective Date") is entered
into by and among NaPro BioTherapeutics, Inc. ("NaPro"), a
Delaware corporation with a principal office at 6304 Spine Road, Unit A,
Boulder, Colorado, Abbott Laboratories ("Abbott"), an Illinois
corporation with a principal office of 100 Abbott Park Road, Abbott Park,
Illinois and Bristol-Myers Squibb Co. ("BMS"), a Delaware
Corporation with a principal office at 345 Park Avenue, New York, New York.
NaPro, Abbott and BMS are referred to herein collectively as the "Parties"
and individually as a "Party".

 

WHEREAS, BMS and NaPro hold patents relating to the
manufacture, formulation and administration of paclitaxel;

 

WHEREAS, the Parties are parties to Civil Action No.
00-B-1818 in the United States District Court for the District of Colorado
and/or Civil Action No. 01-2991 the United States District Court for the
District of New Jersey (the "Lawsuits") alleging patent
infringement relating to the manufacture, formulation and/or administration of
paclitaxel;

 

WHEREAS, the Parties wish to settle the Lawsuits and release
claims relating to such Lawsuits;

 

WHEREAS, the Parties wish to grant each other licenses to
certain patents.

 

NOW, THEREFORE, the Parties agree as follows:

 

  	Definitions

 

  

  	"Affiliate" shall mean, with respect to any entity, any
  other entity Controlling, Controlled by or under common Control with the first
  entity. For the purposes of this Section 1.1, Control shall mean the ownership
  of 50% or more of any class of capital stock of any entity, an interest in 50%
  or more of the profits of any entity or the possession of the power to direct
  the activities of an entity, whether by contract or otherwise.

 

  
  	"BMS Patents" shall mean any United States letters patent
  claiming priority from any of application serial nos. 08/715,914, 08/544,594,
  08/109,331, 07/923,628, 08/559,890, 08/232,404, and 09/499,373, and [THIS
  PORTION HAS BEEN REDACTED] any Canadian counterparts of such patents.

 

  
  	"Customer" shall mean any person or entity purchasing or
  using paclitaxel or formulated paclitaxel from BMS, NaPro or Abbott or from
  any Customer of BMS, NaPro or Abbott.

 

  
  	"NaPro Patents" shall mean any United States letters patent
  claiming priority from any of application serial nos. 07/995,501, 08/594,478,
  08/979,836, 09/028,906, 09/356,158, and 09/563,969 and any Canadian
  counterparts of such patents.

 

   

  
  	"Third Party" shall mean a person or entity other than NaPro,
  Abbott, BMS or an Affiliate of any of them.

 

  
  	"Paclitaxel ANDA" shall mean any abbreviated new drug
  application for paclitaxel controlled by NaPro, Abbott or NaPro and Abbott for
  the treatment of second line ovarian cancer or metastatic breast cancer, i.e.,
  the indications for which BMS's Hatch-Waxman Title I exclusivity expired in
  June 2000.

 

  
  	RELEASE

 

  	NaPro and Abbott Release of BMS. In consideration of mutual
    releases, licenses, covenants, agreements and/or other good and valuable
    consideration, the receipt of which is hereby acknowledged, each of NaPro
    and Abbott, for itself and for its Affiliates and for its and their
    respective administrators, successors, assigns, officers, directors,
    employees, and trustees (all of the foregoing being referred to in this
    paragraph as "Releasors") release, acquit and forever
    discharge BMS, its Affiliates and its and their Customers, administrators,
    successors, assigns, officers, directors, employees, attorneys, and trustees
    (all of the foregoing being referred to in this paragraph as "Releasees")
    from all debts, demands, actions, causes of action, suits, accounts,
    covenants, contracts, agreements, torts, damages, and any and all claims,
    defenses, offsets, judgments, demands and liabilities whatsoever, of every
    name and nature, both at law and in equity, known or unknown, suspected or
    unsuspected, accrued or unaccrued, which have been asserted in the Lawsuits,
    and/or which arise out of the prosecution or defense of those actions,
    and/or which are based on any infringement or alleged infringement of the
    NaPro Patents prior to the Effective Date, provided, however,
    that nothing contained herein is intended to or shall release the Releasees
    from any and all obligations set forth in this Release and License
    Agreement, and provided further that Customers are released only to the
    extent of their purchases from BMS and its Affiliates.

   

  	BMS Release of NaPro and Abbott. In consideration of mutual releases,
  licenses, covenants, agreements and/or other good and valuable consideration,
  the receipt of which is hereby acknowledged, BMS, for itself and for its
  Affiliates and for its and their respective administrators, successors,
  assigns, officers, directors, employees, and trustees (all of the foregoing
  being referred to in this paragraph as "Releasors") release,
  acquit and forever discharge NaPro, Abbott, their respective Affiliates and
  their respective Customers, administrators, successors, assigns, officers,
  directors, employees, attorneys, and trustees (all of the foregoing being
  referred to in this paragraph as "Releasees") from all debts,
  demands, actions, causes of action, suits, accounts, covenants, contracts,
  agreements, torts, damages, and any and all claims, defenses, offsets,
  judgments, demands and liabilities whatsoever, of every name and nature, both
  at law and in equity, known or unknown, suspected or unsuspected, accrued or
  unaccrued, which have been asserted in the Lawsuits, and/or which arise out of
  the prosecution or defense of those actions, and/or which are based on any
  infringement or alleged infringement of the BMS Patents prior to the Effective
  Date, provided, however, that nothing contained herein is
  intended to or shall release the Releasees from any and all obligations set
  forth in this Release and License Agreement, and provided further that
  Customers are released only to the extent of their purchases from NaPro and
  Abbott and their Affiliates.

  	Order of Dismissal. BMS, NaPro and Abbott shall execute and file with
  the United States District Court for the District of Colorado the Stipulation
  of Dismissal attached hereto as Exhibit A. BMS and Abbott shall execute and
  file with the United States District Court for the District of New Jersey the
  Stipulation of Dismissal attached hereto as Exhibit B. In the event additional
  documents are necessary to effect the entry of the foregoing Stipulations of
  Dismissal, the Parties hereby agree to execute and submit such additional
  documents without further consideration.

   

  	Fees and Expenses. The Parties shall each bear the fees and expenses
  of its counsel and their own out-of-pocket costs in connection with the
  Lawsuits and this Agreement.

   

   

  	LICENSE

 

  	NaPro License to BMS. NaPro hereby grants BMS under the NaPro
    Patents a non-exclusive, royalty-free, perpetual and irrevocable right and
    license, without the right to sublicense except to Affiliates (which
    sublicense shall be effective only so long as such Affiliates remain
    Affiliates of BMS), to make, have made, use, sell, offer for sale and import
    paclitaxel-containing products for injection formulated in polyethoxylated
    castor oil and ethanol.

   

  	BMS License to NaPro. BMS hereby grants NaPro under the BMS Patents a
  non-exclusive, royalty-free, perpetual and irrevocable right and license to
  use, offer to sell and sell paclitaxel-containing products for injection
  formulated in polyethoxylated castor oil and ethanol pursuant to a Paclitaxel
  ANDA. NaPro shall have the right to grant a sublicense of the rights granted
  in 3.2 and 3.3 to an Affiliate and, at any given time, to one United States
  distributor and such distributor's Affiliates. Only one party (either NaPro
  or NaPro's distributor, but not both) shall be licensed to offer to sell and
  sell such paclitaxel-containing products to Third Party Customers in the
  United States pursuant to this license and the covenant in 3.3 below.
  Effective [THIS PORTION HAS BEEN REDACTED] NaPro shall have the right to grant
  a sublicense of the rights granted in 3.2 and 3.3 to one Canadian distributor
  and such distributor's Affiliates. Only one party (either NaPro or NaPro's
  distributor, but not both) shall be licensed to offer to sell and sell such
  paclitaxel-containing products to Third Party Customers in Canada pursuant to
  this license and the covenant in 3.3 below.

   

  	BMS Covenants.

 

  	BMS hereby covenants that it will not take any action that seeks to
      block or delay (or has the effect of blocking or delaying) approval by the
      United States Food and Drug Administration of a Paclitaxel ANDA or
      marketing of paclitaxel in the United States pursuant to a Paclitaxel ANDA
      solely for the treatment of second line ovarian cancer or metastatic
      breast cancer, i.e., the indications for which BMS's Hatch-Waxman
      Title I exclusivity expired in June 2000; provided however that this
      covenant shall not apply to any actions BMS might take or refrain from
      taking with respect to United States patent 6,096,331. BMS further
      covenants that it will not provoke any interference action in the United
      States Patent Office involving any of the NaPro Patents.

     

     

    
    	BMS hereby covenants that [THIS PORTION HAS BEEN REDACTED] it will not
      take any action that seeks to block or delay (or has the effect of
      blocking or delaying) approval by the Canadian Health Regulatory Authority
      of a Canadian equivalent of a Paclitaxel ANDA or marketing of paclitaxel
      in Canada pursuant to a Canadian equivalent of a Paclitaxel ANDA solely
      for the treatment of second line ovarian cancer or metastatic breast
      cancer.

   

  	No Other License. Other than the rights granted in Sections 3.1, 3.2,
  and 3.3, no Party grants any other right or license pursuant to this
  Agreement, including any trademark license.

   

  	Patent Marking. Each of the Parties, and their permitted sublicensees,
  shall have the right (but not the obligation) to mark products and services
  licensed hereunder with any one or more of the patents licensed hereunder and
  shall have the right (but not the obligation) to include a phrase such as
  "Purchase of this product carries with it a right to practice under
  Patent No. ________."

   

  	Further Assurances. Each of the Parties shall, following the Effective
  Date, at the request of the other, and without further consideration, take all
  such actions, provide such assistance, execute and deliver (or cause to be
  executed and delivered) to the other Parties or their designee, such
  instruments and documents in addition to those required by this Agreement as
  such other Party may reasonably deem necessary or desirable to implement any
  provision of this Agreement.

   

   

  	WARRANTIES AND LIMITATION OF LIABILITY

 

  	Limited Warranties. Each Party hereby warrants that it has the right
    and authority to enter into and carry out its obligations under this
    Agreement and to grant the licenses granted herein and that this Agreement
    has been authorized by all requisite corporate action. Each Party hereby
    warrants that it shall not enter into any Agreement in conflict with this
    Agreement. Each Party hereby warrants that it has not transferred any right
    to damages or other relief with respect to the Lawsuits, the NaPro Patents
    or the BMS Patents. OTHER THAN THE FOREGOING EXPRESS WARRANTIES AND THE
    WARRANTY CONTAINED IN SECTION 5.2, NONE OF THE PARTIES MAKES AND EACH OF THE
    PARTIES HEREBY DISCLAIMS ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING
    WARRANTIES OF NONINFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR
    PURPOSE.

   

  	Limitation of Liability. EXCEPT FOR DAMAGES ARISING OUT OF A BREACH OF
  SECTION 4.1, EACH PARTY AGREES THAT THE OTHERS SHALL NOT BE LIABLE PURSUANT TO
  THIS AGREEMENT FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING
  LOSS OF PROFITS), EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
  NOTWITHSTANDING THE FOREGOING, AMOUNTS PAYABLE TO THIRD PARTIES PURSUANT TO A
  WRITTEN SETTLEMENT AGREEMENT OR COURT ORDER SHALL BE CONSIDERED DIRECT
  DAMAGES.

   

  	MISCELLANEOUS

 

  	Relationship of the Parties. Nothing herein shall create any
    association, partnership, joint venture or the relation of principal and
    agent between the Parties. Each Party is acting as an independent
    contractor, and no Party shall have the authority to bind any other Party or
    its representatives in any way.

   

  	Entire Agreement. This Agreement constitutes the entire agreement
  between the Parties with respect to the subject matter hereof, and cancels and
  supercedes all prior negotiations, understandings and agreements relating to
  the subject matter hereof. The Parties represent and warrant that there is no
  other agreement or contract relating to the settlement of the Lawsuits or any
  consideration transferred or to be transferred between the Parties other than
  as set forth in this Agreement.

   

  	Waiver and Amendment. This Agreement may not be amended except
  pursuant to a written instrument signed by each of the Parties. No right of a
  Party, and no breach of any terms of this Agreement, can be waived and no
  election under this Agreement can be made unless such waiver or election is in
  writing and signed by the Party waiving such right or making such election.

   

  	Governing Law. This Agreement shall be governed by the laws of the New
  York, without regard to the choice of law principles thereof.

   

  	Construction and Interpretation. This Agreement shall be deemed to
  have been jointly drafted by the Parties, no rules of strict construction
  against either Party shall be applied. In this Agreement, the word
  "including" shall be deemed to be followed by "without
  limitation".

   

  	Severability. The provisions of this Agreement are severable. If any
  such provision shall be held invalid or unenforceable for any reason, such
  provision shall be replaced with a provision which accomplishes, to the extent
  possible, the original business purpose of such provision in a valid and
  enforceable manner. The invalidity or unenforceability of any provision of
  this Agreement shall not affect any other provision of this Agreement.

   

  	Assignment. Each of the Parties shall have the right to assign its
  rights hereunder only to a purchaser of all such Party's assets relating to
  paclitaxel or to a surviving entity of a merger with such Party, by operation
  of law. This Agreement shall be binding on and inure to the benefit of the
  Parties and their respective successors and permitted assigns.

   

  	Notices. Any notice given under this Agreement shall be made in
  writing by registered mail, return receipt requested, or by overnight courier,
  and shall be deemed given on the date received.

   

  
  If to NaPro: Attention General Counsel

  6304 Spine Road, Unit A

  Boulder, CO 80301, USA

   

   

  If to Abbott: Abbott Laboratories

  200 Abbott Park Road

  Abbott Park, Illinois 60064, USA

  Attention of: President, Hospital Products Division

   

  with a copy to: Abbott Laboratories

  Domestic Legal Operations, Dept. 322, Bldg. AP-6

  100 Abbott Park Road

  Abbott Park, Illinois 60064, USA

   

  If to BMS: General Counsel

  Bristol-Myers Squibb Company

  345 Park Avenue

  New York, New York 10154

  Facsimile: (212) 546-9562

   

  with a copy to: Patent Counsel

  Bristol-Myers Squibb Company

  Route 206 & Province Line Road

  Princeton, New Jersey 08543

  Facsimile: (609) 252-3265

   

  
  	Counterparts. This Agreement may be executed by facsimile and in one
  or more counterparts, each of which shall be deemed to be an original and all
  of which together shall constitute the same agreement.

   

  	Publicity. Upon execution of this Release and License Agreement by all
  parties, the parties will issue the joint press release attached hereto as
  Exhibit C.

 

******************

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.

	Abbott Laboratories	 NaPro BioTherapeutics, Inc.
	 	 
	By:  /s/ 	By:  /s/ 
	  Name:  Christopher Begley	 Name:  Gordon Link
	  Title:  President HPD	  Title:  Vice President, CFO

 

Bristol-Myers Squibb Co.

By:  /s/  

Name:  Brian Markison

Title:  President BMSOI 

 

EXHIBIT A

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

	
       

      NAPRO BIOTHERAPEUTICS, INC.

      and ABBOTT LABORATORIES,

      Plaintiffs,

      -against-

      BRISTOL-MYERS SQUIBB COMPANY,

      Defendant.

      	
       

       

      Civil Action No.

      00 B 1818

 

 

STIPULATION OF

DISMISSAL OF ACTION WITH PREJUDICE

 

It is hereby stipulated and agreed that, pursuant to Rule 41(a)(1)(ii)
of the Federal Rules of Civil Procedure, the above captioned action is hereby
dismissed with prejudice by
stipulation of the parties. Each of the parties is to bear its own costs and
attorneys=
fees.

DATED: November  , 2001

 

CONSENTED TO:

	
      TIMOTHY J. MARTIN, P.C.
	
      WELLS, ANDERSON AND RACE, LLC

	
      __________________________
	
      __________________________

	
      Timothy J. Martin
	
      Mary A. Wells

	
      Mark H. Weygandt
	
      Suanne M. Dell

	
      9250 W. 5th Avenue, Suite 200
	
      1700 Broadway, Suite 1020

	
      Lakewood, CO 80226
	
      Denver, CO 80290

	
      (303) 232-3388
	
      (303) 830-1212

		

	
      WINSTON & STRAWN
	
      CRAVATH, SWAINE & MOORE

	
      James F. Hurst
	
      Evan R. Chesler

	
      George Lombardi
	
      Richard J. Stark

	
      35 W. Wacker Drive
	
      Worldwide Plaza

	
      Chicago, IL 60601
	
      825 Eighth Avenue

	
      (312) 558-5600
	
      New York, NY 10019

		
      (212) 474-1000

      

 

	
      Attorneys for Plaintiffs
	
      Attorneys for Defendant

	
      Napro Biotherapeutics, Inc.
	
      Bristol-Myers Squibb Company

	
      and Abbott Laboratories
	

EXHIBIT B

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

	
       

      BRISTOL-MYERS SQUIBB COMPANY,

      Plaintiff,

      -against-

      ABBOTT LABORATORIES,

      Defendant.

      	
       

       

      Civil Action No.

      01-2991 (WHW)

 

 

STIPULATION OF

DISMISSAL OF ACTION WITH PREJUDICE

 

It is hereby stipulated and agreed that, pursuant to Rule 41 of the
Federal Rules of Civil Procedure, the above captioned action is hereby dismissed
with prejudice by stipulation of the parties. Each of the parties is to bear its
own costs and attorneys=

fees. The Court will retain jurisdiction to enforce the provisions of the
Settlement Agreement, a copy of which is attached.

DATED: November  , 2001

 

SO ORDERED:

 

_______________________

Williams H. Walls

United States District Judge

CONSENTED TO:

	
      WINSTON & STRAWN
	
      McCARTER & ENGLISH, LLP

	
      _________________________
	
      _________________________

	
      Brian J. McCarthy
	
      William J. O'Shaughnessy

	
      One Gateway Center
	
      Four Gateway Center

	
      Newark, NJ 07102-5398
	
      P.O. Box 652

	
      (973) 621-5761
	
      Newark, New Jersey 07101

	 	
      (973) 639-2094

	
      WINSTON & STRAWN
	
      CRAVATH, SWAINE & MOORE

	
      James F. Hurst
	
      Evan R. Chesler

	
      George Lombardi
	
      Richard J. Stark

	
      35 W. Wacker Drive
	
      Worldwide Plaza

	
      Chicago, IL 60601
	
      825 Eighth Avenue

	
      (312) 558-5600
	
      New York, NY 10019

	 	
      (212) 474-1000

	
      Attorneys for Defendant
	
      Attorneys for Plaintiff

	
      Abbott Laboratories
	
      Bristol-Myers Squibb Company

Exhibit C

---------------------------------------

 

NaPro letterhead

6304 Spine Road, Unit A

Boulder, Colorado 80301

Tel: (303) 516-8500

Fax: (303) 530-1296

Contact:

	NaPro BioTherapeutics, Inc.	 Burns McClellan, Inc.
	Kai Larson (303) 516-8500	Margaret Wahle (415) 352-6262

 

For Immediate Release

NAPRO BIOTHERAPEUTICS AND ABBOTT LABORATORIES

ENTER INTO PACLITAXEL CROSS-LICENSE AGREEMENT WITH

BRISTOL-MYERS SQUIBB

Boulder, Colo., November 27, 2001- NaPro BioTherapeutics (Nasdaq: NPRO)
and Abbott Laboratories (NYSE: ABT) announced today that they have entered into
a non-exclusive cross license agreement with Bristol-Myers Squibb (NYSE: BMY),
relating to the anti-cancer drug, paclitaxel. The agreement grants NaPro a
license under BMS patents to market paclitaxel injection, pursuant to an ANDA
approval. NaPro has the right under the agreement to sublicense its distributor,
Abbott Laboratories.

The agreement grants BMS a license to NaPro's patents relating to stable
paclitaxel formulations. The scope of both licenses is limited to the
polyethoxylated castor oil and ethanol formulation currently approved by the
FDA. In connection with this cross license, the parties have agreed to settle
the paclitaxel-related litigation currently pending in Colorado and New Jersey.Avoca Agreement

[^#^] Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. Secs.200.80(b)(4) and 240.24b-2

 

 

 

	November 7, 2001   	RJRT Contract No. 01-440-031

 

 

Mr. David Peele

Director Avoca Division

RJ Reynolds Tobacco Company

840 Avoca Farm Rd

Merry Hill, NC 27957

 

Dear Mr. Peele:

 

R. J. Reynolds Tobacco Company (hereinafter "RJRT"),
through its Avoca Division, possesses expertise in plant science, process
chemistry, agronomy, engineering, extraction and processing of botanicals and
natural materials. RJRT possesses facilities for processing natural materials.
RJRT desires to process natural materials at its facilities.

 

NaPro BioTherapeutics, Inc. (hereinafter "NaPro")
possesses expertise with regards to natural products, including paclitaxel and
other taxanes. NaPro possesses natural materials that it desires to have
processed. NaPro desires to have its materials processed at RJRT's facilities.

 

The purpose of this Agreement is to obtain each party's
agreement concerning a long-term business relationship between the parties. In
particular, RJRT and NaPro agree to become parties to this Agreement and agree
as follows:

 

	NaPro shall provide RJRT with technology transfer package containing
    relevant information regarding the preparation of at least one natural
    material that it desires to have processed. NaPro shall identify to RJRT
    starting materials, specifications upon starting materials, reaction
    conditions, extraction conditions, purification conditions, product
    specifications, and other relevant information reasonably necessary for RJRT
    to provide materials that meet NaPro's specifications. Initial material
    that NaPro shall identify to RJRT as a material that NaPro expects to
    receive from RJRT shall be a [^#^], and further materials can be identified
    by written agreement between the parties.

 

  	Promptly after receiving the aforementioned technology transfer package
    from NaPro, RJRT will commence preparation of a process design, and
    subsequently provide to NaPro a proposed process flow sheet.

 

  	RJRT shall provide facilities, personnel and materials for the production
    of materials for NaPro. RJRT shall maintain facilities and controls capable
    of manufacturing materials subject to current good manufacturing practices (cGMP).
    RJRT shall process materials supplied by NaPro within those facilities using
    methods, personnel and controls sufficient for those materials to be
    considered manufactured in accordance with cGMP.

 

  	In December 2001 RJRT will carry out a feasibility run to produce [^#^]
    ("Biomass") provided to RJRT by NaPro at [^#^] to RJRT. Such
    Biomass shall be tree material containing [^#^] material.
    During the first quarter of 2002, RJRT will carry out [^#^] pilot
    batches of [^#^] using Biomass provided to RJRT
    by NaPro, at [^#^] to RJRT. Such Biomass shall be tree material containing
    [^#^] material. The pilot runs will be carried out using Biomass provided by
    NaPro; those lots totaling [^#^]. During the feasibility or pilot study
    period, NaPro shall reimburse RJRT for materials supplied to NaPro as a
    result of pilot runs conducted by RJRT at NaPro's request, irrespective of
    whether or not the materials produced during those pilot runs meet NaPro's
    specifications. NaPro shall pay RJRT a fixed price of [^#^] of Biomass
    processed by RJRT during the pilot runs. NaPro also shall pay RJRT's out
    of pocket costs for materials specified by NaPro, including carbon and
    suitable shipping containers.

 

  	RJRT shall have until March 1, 2002 to carry out the feasibility and pilot
    runs referred to in Section IV above. Upon completion of the pilot runs
    conducted by RJRT, the parties shall meet and determine whether or not to
    proceed further in the relationship whereby RJRT performs services for NaPro.
    In the event that the parties mutually agree that RJRT will perform further
    services for NaPro, the parties shall negotiate in good faith towards
    determining the price that NaPro shall pay RJRT for the supply of materials,
    in accordance with the terms set forth in this Agreement. Thereafter, the
    parties shall meet on an annual basis in order to mutually agree upon any
    change, if any, in manner that the price of those materials is determined.

 

  	The results of the pilot runs referred to in Paragraph IV. shall be used
    by the parties in order to determine specific performance criteria for
    further material that RJRT may process for NaPro. Initially, the extraction
    efficiency of paclitaxel from Biomass shall be set such that [^#^] in Spent
    Biomass (defined in XXXIII below) (on a dry weight basis), and that [^#^]
    (based on [^#^]); and the parties may mutually agreed to change those
    performance criteria, depending upon the results of the pilot run referred
    to in Section IV above.

 

  	The parties agree that the initial price that NaPro shall pay RJRT for
    processing the material from Biomass shall be [^#^] of Biomass processed.
    This expected pricing is based on the assumption that RJRT shall process
    [^#^], and that RJRT will process any incremental amounts of Biomass which
    are lost as a result of lower than agreed to performance criteria in the
    extraction and carbon absorption unit operations free of charge in order
    that the overall amount provided is within the specifications of that
    performance criteria. The price that NaPro shall pay will decrease on a
    sliding scale, to be determined through good faith negotiations between the
    parties, when volume of Biomass processed by RJRT exceeds [^#^] annually.
    Each year's price shall be based on each year's volume commitment by
    NaPro and RJRT. The price of [^#^] of Biomass processed shall be reset at
    the beginning of each calendar year, unless the parties have otherwise
    agreed to alter that price.

 

  	Purchase orders placed by NaPro will be based around a rolling four
    quarter forecast in which the first quarter shall state quantities to a
    binding purchase order, the second quarter states quantities binding to a
    [^#^] accuracy factor, the third quarter shall state quantities to [^#^]
    accuracy factor, and the four quarter and subsequent periods shall state
    non-binding quantities for planning purposes only. Initially, the following
    volumes of Biomass are intended to be processed: [^#^].

 

  	If during any calendar quarter in the contract term, the actual
    performance criteria is routinely below the contracted performance criteria,
    then RJRT will process that volume of Biomass equal to the amount of excess
    Biomass consumed over the performance criteria targets, free of charge. For
    example, for [^#^], figures will equate to approximately [^#^].

 

  	NaPro shall place relevant orders with RJRT 30
    days prior to the beginning of each quarter, and those orders shall set
    forth matters including the amount of material requested, the quality of the
    material, the number of Campaigns the [^#^] should be produced in and the
    location and timetable that the material should be shipped. The term
    "Campaign" shall refer to the maximum number of consecutive
    batches of [^#^] RJRT may produce before any line clearance, as referred to
    in Section XI below, shall occur. RJRT shall provide warehouse space for
    NaPro's Biomass to be used in upcoming RJRT [^#^] Campaigns as well as
    finished [^#^] at no additional cost.

 

  	NaPro will supply Biomass to RJRT at no charge to RJRT. NaPro and RJRT
    jointly shall determine Campaign lengths based on raw material availability,
    processed material stability data, production interruption risk, and RJRT's
    production schedule. Initial Campaign lengths shall be of two-week duration.
    The anticipated number of Campaigns will be updated quarterly, along with
    the rolling quarterly forecasting of requirements. RJRT will perform a
    complete line clearance between lots of a Campaign and will assure a
    complete system cleaning between Campaigns and other RJRT products. RJRT
    shall charge NaPro a clean-up charge of [^#^] for each Campaign.

 

  	Unless otherwise specified in writing, RJRT shall provide material in a
    form ready for shipment within six weeks from the date that RJRT receives
    that order and the Biomass necessary to fill that order.

 

  	To the best of NaPro's knowledge, NaPro represents and warrants that it
    possesses the right to provide information regarding materials that RJRT may
    process for NaPro. To the best of RJRT's knowledge, RJRT represents and
    warrants that it possesses the right to employ the equipment that it uses to
    process materials for NaPro.

 

  	Unless otherwise agreed to in writing or as otherwise set forth in this
    Agreement, each party shall be responsible for its own expenses incurred as
    a result of the activities involved in accordance with this Agreement.
    Absent being expressly provided for in a future agreement between the
    parties, neither party shall be liable to the other party for any cost,
    expense or loss, including but not limited to, lost revenues or profits, or
    any other special, indirect or consequential damages resulting from this
    Agreement. Absent being expressly provided for in a future agreement between
    the parties, neither party shall be responsible for defending the other or
    holding the other harmless from any claim, action, loss, damage or judgment
    resulting from any action brought by a third party as a result of activities
    by the parties in accordance with this Agreement.

 

  	Neither party shall take any action to adversely affect the other party's
    ability to conduct business with regards to the rights and obligations
    conferred in accordance with this Agreement. Notwithstanding the provision
    of Section XIX, during the term of this Agreement, NaPro shall use RJRT
    exclusively to produce NaPro's commercial requirements in excess of its
    own internal capacities of [^#^], provided that RJRT can meet NaPro's
    orders with respect to quantity, timing and quality of materials. During the
    term of this Agreement, RJRT shall produce any taxanes extractions
    exclusively for NaPro, and RJRT shall refer any and all inquiries regarding
    any extracted taxane materials to NaPro. RJRT shall not produce any taxane
    materials for any third party, without NaPro's prior written approval for
    a period of the term of the agreement plus two years. Notwithstanding the
    above, if NaPro shall become insolvent, proceedings are instituted for the
    corporate reorganization or the dissolution of NaPro, or NaPro dissolves
    operations and/or ceases operations, and such proceedings are not dismissed
    within sixty days of the date of filing, RJRT shall have the right to
    produce taxane extracted materials for any third party immediately upon
    dissolution or cessation of NaPro's operations. RJRT's right to product
    taxane materials for third parties in the event of NaPro's insolvency or
    cessation of operations does not constitute in any manner a grant of any
    rights to RJRT under any NaPro patents nor any rights to use NaPro's
    confidential information, trade secrets, patents, or know-how.

  
	RJRT shall provide a certificate of analysis with each lot of material
    that RJRT ships at NaPro's request. Such certificate of analysis shall be
    provided to NaPro (and NaPro's designee, if such lot is to a designee of
    NaPro). RJRT shall provide a materials handling data sheet (MSDS) with
    material that RJRT ships. RJRT and NaPro shall cooperate in the preparation
    in the preparation of relevant MSDS.

  
	NaPro shall make payment to RJRT within thirty days of receipt of the
    invoice, for

    materials that NaPro accepts. Unless otherwise agreed upon by the parties,
    the invoice shall be forwarded to NaPro at the time that the corresponding
    material that NaPro has ordered is shipped. If NaPro requests RJRT to
    warehouse [^#^] at RJRT, the invoice shall be forwarded to NaPro at the time
    of final quality release and at NaPro's discretion a final product sample
    may be requested prior to product acceptance. NaPro shall be responsible for
    payment of freight, duties, excise taxes, import taxes, inventory property
    taxes, value added taxes, and other duties and charges arising from or
    incurred in connection with the transfer, storage, shipment and use of
    materials that RJRT has packaged in a form suitable for shipment. RJRT shall
    package such materials F.O.B. the location of its processing facilities.
    Invoice documentation will include an invoice for each batch of [^#^]
    produced, a reporting of the amount of Biomass consumed as well as a record
    of the lot numbers and associated quantities of Biomass processed in the
    production of the respective [^#^] batch.

	NaPro will retain title to all Biomass located at RJRT, as well as any
    [^#^] which has been invoiced to NaPro, but not shipped. RJRT will provide
    associated warehousing activities in such a manner as to safeguarding of
    NaPro's assets. Minor Biomass inventory loss of up to [^#^] will not
    require RJRT to reimburse NaPro for the value of the associated inventory;
    however inventory losses in excess of these level will be crediting to NaPro
    to be used to offset future RJRT invoices at NaPro's standard costs for
    Biomass and [^#^] respectively. Additionally, at each calendar month-end,
    RJRT will forward to NaPro a roll forward of NaPro's Biomass and [^#^]
    inventory (if any) held at RJRT location including beginning inventory
    quantities by lot number, receipts or shipments during the month, inventory
    usages by [^#^] production activities, any inventory losses and the ending
    inventory quantities by lot.

 

  	Should NaPro elect to develop a new extraction process to produce [^#^],
    or to modify or change the currently approved regulatory manufacturing
    process by which [^#^] is produced from Biomass, RJRT will perform an
    evaluation to determine the cost, capacity and lead-time impacts on RJRT's
    ability to produce [^#^] using the new or modified process. If NaPro elects
    to proceed with any such aforementioned process changes, NaPro will
    negotiate in good faith with RJRT to determine a revised price per kilogram
    of Biomass to be extracted for the new process.
    Should RJRT be unable or unwilling to reach agreement, NaPro may source
    extraction services from any other third party vendor.

 

   

  	All terms and conditions of the parties' agreement (RJRT Contract No.
    97-440-004) effective February 21, 1997 that are not expressly altered by
    this Agreement shall continue to remain in full force and effect. The terms
    and conditions of that agreement are incorporated herein by reference, and
    set forth the parties' respective obligations of confidentiality,
    non-disclosure and limited use of confidential information. However, except
    for the foregoing, this Agreement constitutes and contains the entire
    understanding and agreement of the parties respecting the subject matter
    hereof, and cancels and supercedes any and all prior negotiations,
    correspondences, understandings and agreements between the parties, whether
    oral or written, regarding such subject matter. No waiver, modification or
    amendment of any provision of this Agreement shall be valid or effective
    unless made in writing and signed by a duly authorized officer of each
    party.

 

  	Nothing contained in this Agreement shall be construed to create a
    partnership or joint venture between the parties. Each party shall remain an
    independent contractor with respect to the other, free of control and
    supervision by the other. No representative of either party shall be deemed
    to be, for any purpose, an employee or agent of the other with regards to
    the subject matter of this Agreement. Neither party nor its representatives
    shall have any authority to bind the other party contractually or to assume
    or create any obligation or debt, express or implied, on behalf of the other
    party.

 

  	This Agreement shall be binding on and shall inure to the benefit of the
    parties' successors and assigns. Notwithstanding the foregoing, neither
    party may assign or delegate this Agreement or any of its rights or duties
    under this Agreement without the prior written consent of the other, which
    consent shall not be unreasonably withheld; except either party may assign
    this Agreement to a person or entity into which it has been merged or which
    has otherwise succeeded to all or substantially all of its business and
    assets, and which has assumed in writing the assigning party's obligations
    under this Agreement.

 

  	Neither party shall be liable to the other for its failure to perform any
    of its obligations under this Agreement during any period in which such
    performance is delayed by circumstances beyond its reasonable control,
    including without limitation, acts of God, flood, fire, war, trade embargo
    or sanctions, strike, riot, national emergency, inability to secure
    transportation, or the intervention of any governmental authority. If any
    such delaying cause continues for more than sixty days, the party continuing
    to perform shall have the right to terminate this Agreement.

 

  	Each party shall maintain blanket insurance policies covering Workman's
    Compensation, general product liability and automobile liability to cover
    activities by its employees on the other party's premises. Each party
    shall, while performing services on the other's premises, comply with the
    Federal Occupation Safety and Health Act and that party's rules and
    policies with respect to safety, personnel matters and security.

 

  	This Agreement shall remain in force and effect for a period of three
    years from the effective date hereof, unless sooner terminated in accordance
    with Section V above. However, this Agreement may be terminated at any time
    by mutual agreement between the parties. This Agreement may be terminated by
    either party upon one hundred and eighty days prior written notice; however,
    in such an event, the parties will negotiate in good faith towards each
    party's return of confidential information of the other. Either party may
    terminate this Agreement at any time upon written notice to the other with
    immediate effect if voluntary bankruptcy or a petition for involuntary
    bankruptcy of the other party is not dismissed for a period of 60 days; the
    other party becomes insolvent or unable to pay its debts as they mature,
    ceases to pay its debts in the ordinary course of business, or makes an
    assignment for the benefit of its creditors; or a receiver is appointed for
    the other party or its property. Neither party shall be responsible for any
    costs, expenses or damages associated with termination of this Agreement.

 

  	This agreement can be extended for successive one-year terms. Notice for
    such extensions shall be within 12 months of the date that this Agreement
    would terminate without such notice.

 

  	In the event of termination of this Agreement for any reason, RJRT's
    obligations of confidentiality and non-use of confidential information
    provided to it by NaPro shall remain in full force and effect, in accordance
    with the terms and conditions of this Agreement. In accordance with the
    terms and conditions of this Agreement, RJRT shall not make, use, sell or
    produce for any third party any material that involves the use of NaPro
    confidential information, without NaPro's prior written consent. In the
    event of termination of this Agreement for any reason, NaPro's obligations
    of confidentiality and non-use of confidential information provided to it by
    RJRT shall remain in full force and effect, in accordance with the terms and
    conditions of this Agreement.

 

  	In accordance with the terms and conditions of this Agreement, neither
    party shall make use of any confidential information of the other party,
    without such other party's prior written consent. RJRT shall not conduct
    any extraction or processing services of any taxane compounds to any third
    party for the term of the contract plus two years.

 

  	In the event that RJRT personnel, either individually or in cooperation
    with NaPro personnel, conceive and reduce to practice any invention
    regarding any NaPro material that is the subject matter of this Agreement,
    then such invention shall be owned by NaPro. NaPro shall prepare and file,
    at its discretion and expense, patent applications directed toward any such
    invention. RJRT shall ensure that its relevant personnel assist NaPro, at
    NaPro's expense, by providing input and information necessary to prepare
    patent applications, and by executing all documents necessary to file and
    perfect ownership of such applications. To the extent that any such
    invention concerns uses of the equipment or processes for uses other than
    production of a NaPro material, NaPro grants RJRT a royalty-free,
    non-exclusive license under such application and any patents issuing there
    from for any purpose other than the processing of a NaPro material that is
    within the subject matter of this Agreement. Nothing in this Agreement shall
    be construed as requiring either party to license or assign to the other any
    technology of any kind that did not arise as a result from activities or
    obligations resulting from the Agreement.

 

  	This Agreement shall be governed by the laws of the State of North
    Carolina and shall be construed in accordance therewith.

 

  	RJRT shall provide [^#^] regulatory support and data to NaPro at NaPro's
    request. Such regulatory support and data shall include but not be limited
    to: regulatory agencies' onsite inspections, data for annual report
    filings, process and equipment change control documentation.

 

  	Any provision in this Agreement which by its nature and effect is required
    to be observed, kept or performed after the termination of this Agreement or
    any Non-Disclosure Agreement, including, but not limited to, any provisions
    related to confidentiality and/or exclusivity, shall survive termination and
    remain binding upon and for the benefit of the parties until fully observed,
    kept or performed.

 

  	Spent Biomass, defined as Biomass waste material which results from RJRT's
    production of [^#^], shall be the property of RJRT following all extraction
    procedures and final production of [^#^] product for NaPro.

 

NaPro reserves the right to conduct inspections of RJRT
facilities and production documents relating to this Agreement as NaPro deems
reasonably necessary to ensure compliance with this Agreement as well as cGMP
under the United States Food, Drug and Cosmetic Act or any other applicable
authority at any time during normal business hours upon reasonable prior written
notice (stating the purpose and scope of the inspection requested). Such
inspections shall not occur more frequently than once per calendar quarter
absent NaPro's good faith belief that it has a compelling reason to do so. The
books and records subject to inspection include, but are not limited to, testing
materials, raw materials, batch records, manufacturing procedures and
guidelines, and all quality assurance/quality control documentation, as
contained in the GMP agreement.

 

If you agree to the foregoing, please have an authorized
officer of your company sign and date both copies of this letter and return one
copy to us.

 

NaPro BioTherapeutics, Inc.

 

By: /s/ David Denny

       David Denny, Vice President Operations

 

 

Date: November 7, 2001

 

 

 

Agreed and Accepted:

 

__ th day of November, 2001.

 

 

RJ Reynolds

950 Reynolds Blvd.

Winston Salem, NJ 27105

 

By: /s/ David Townsend_____

David Townsend

 

Title: Executive V.P. of Research and Development

 

 

 

Additional items to be included or referenced to:

cGMP agreement

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