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MANUFACTURING AGREEMENT
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This MANUFACTURING AGREEMENT is entered into as of August 31,
1995 by and between XXXXX MEDICAL INDUSTRIES, INC. ("JMED"), a
corporation organized and existing under the laws of the State of
Delaware with offices at 0000 Xxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx
00000, and XXX XXXXX AND COMPANY ("Lilly"), a corporation organized
and existing under the laws of the State of Indiana, with offices
at Lilly Corporate Center, Xxxxxxxxxxxx, Xxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, pursuant to a Licensing Agreement dated the date
hereof, JMED is licensing from Lilly certain rights and assets
utilized in the marketing and selling of certain pharmaceutical
products; and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, JMED wishes to have Lilly manufacture for JMED certain
pharmaceutical products; and
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Lilly wishes to manufacture such pharmaceutical products
for JMED;
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1. Definitions. For purposes of this Agreement, the
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following terms shall have the meanings set forth below:
"Affiliates" shall mean, with respect to any Person, any
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Persons directly or indirectly controlling, controlled by, or under
common control with, such other Person. For purposes hereof, the
term "controlled" (including the terms "controlled by" and "under
common control with"), as used
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with respect to any Person, shall mean the direct or indirect
ability or power to direct or cause the direction of management
policies of such Person or otherwise direct the affairs of such
Person, whether through ownership of voting securities or otherwise.
"Applicable Laws" shall mean all applicable federal, state and
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local laws, ordinances, rules and regulations, of any kind
whatsoever, including without limitation, the Federal Food, Drug
and Cosmetic Act.
"Damages" shall mean any and all costs, losses, claims,
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liabilities, fines, penalties, damages and expenses, court costs,
and reasonable fees and disbursements of counsel, consultants and
expert witnesses incurred by a party hereto (including interest
which may be imposed in connection therewith).
"Encumbrances" shall mean any and all claims, liens, licenses,
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charges, restrictions and other encumbrances, of any kind
whatsoever.
"FDA" shall mean the United States Food and Drug
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Administration.
"Good Manufacturing Practices" or "GMP" shall mean current
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Good Manufacturing Practices as defined in 21 CFR Section 210 et seq.
as amended.
"Licensing Agreement" shall mean the Licensing Agreement,
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dated as of the date of this Agreement, between Lilly and JMED,
which provides for the licensing of certain rights by Lilly to JMED
in connection with the Product for the period specified therein.
"NDA" shall mean the New Drug Application Number 11-559 for
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the Product filed by Lilly with the FDA and all subsequent
submissions thereto.
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"Person" shall mean a natural person, a corporation, a
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partnership, a trust, a joint venture, a limited liability company,
any governmental authority or any other entity or organization.
"Product" shall mean the product listed in Attachment 1 of the
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Requirements Document.
"Purchase Order" shall mean a purchase order from JMED to
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Lilly for the Product in accordance with the provisions of the
Requirements Document.
"Requirements Document" shall mean the Manufacturing
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Requirements Document attached hereto as APPENDIX A, as amended
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from time to time, setting forth various manufacturing and
operational terms and procedures for implementing this Agreement.
"Specifications" shall mean the specifications for
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manufacturing and testing the Product as set forth in the approved
NDA and any supplements and amendments thereto.
"Technology" shall mean all of Lilly's technology, know-how,
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methods of operation, manufacturing systems details, processes,
information, production details, recipes, formulations, files,
records, specifications, data and other information necessary to,
or that assist in, the manufacture of Product.
"United States" shall mean the fifty (50) states and the
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District of Columbia comprising the United States of America.
SECTION 2. Obligations of JMED.
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2.1 Purchase of Inventory. JMED shall purchase Lilly's
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inventory of Product existing as of the date of this Agreement at
the prices set forth in the Requirements Document. SCHEDULE 2.1
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hereto sets forth a listing of all such inventory of Product and
the dating thereof.
2.2 Purchases of Product. Provided that Lilly performs its
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obligations hereunder and supplies all Product ordered by JMED,
JMED shall purchase from Lilly all of JMED's requirements for the
Product at the prices set forth in the Requirements Document.
2.3 Medicaid and Other Rebates. JMED's NDC labeler code(s)
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shall appear on the Product as soon as reasonably practicable, and
JMED shall be responsible for and shall timely pay all Medicaid and
other federal, state or local governmentally-mandated rebates or
discounts, if any, to the extent set forth in the Transition Plan.
2.4 Transition Plan. JMED shall perform its obligations set
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forth in the Transition Plan attached hereto as APPENDIX B.
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SECTION 3. Obligations of Lilly.
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3.1 Manufacturing; Requirements; Delivery. For and during
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the term of this Agreement, Lilly shall manufacture, package,
label, test, prepare for shipment and ship Product to JMED at and
from Lilly's facilities, at the times and in the quantities set
forth by JMED in the Purchase Orders and as provided for in the
Requirements Document. All Products shall be manufactured by Lilly
in accordance with the NDA, Good Manufacturing Practices, and all
Applicable Laws. Each shipment of Product shall include a
certificate of analysis in a format substantially similar to
APPENDIX C attached hereto, ("Analysis Certificate") confirming
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that the Product therein meets the Specifications.
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3.2 Quality Control and Assurance. (a) Lilly shall
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manufacture the Product in compliance with the NDA and in
accordance with all Applicable Laws including, where required, Good
Manufacturing Practices and the related provisions of the Federal
Food, Drug and Cosmetic Act. Lilly shall perform quality control
and quality assurance testing on Product to be delivered to JMED
hereunder in accordance with the Specifications and the
Requirements Document.
(b) Personnel from JMED shall, upon reasonable advance
notice to Lilly, have access during normal business hours to
Lilly's premises where the Product is being manufactured, tested,
inspected, packaged and/or stored in order to observe and inspect
the manufacturing, quality control and testing processes for, and
the records of all production and quality assurance data related
to, the Product.
3.3 Records and Accounting by Lilly. Lilly shall, with
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respect to any particular lot of the Product produced by it
hereunder, for a period of three (3) years after the expiry of the
expiration dating of any such lot (or such longer period as may be
required by law), keep accurate records of the manufacture and
testing of the Product produced by it hereunder, including, without
limitation, all such records which are required under Applicable
Laws. Access to such records shall be made available by Lilly to
JMED upon JMED's request.
3.4 Transition Plan. Lilly shall perform its obligations set
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forth in the Transition Plan attached hereto as APPENDIX B.
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SECTION 4. Purchase Orders.
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4.1 JMED shall provide Lilly with Purchase Orders in
accordance with the Requirements Document. Each Purchase Order
shall be governed by the terms of this Agreement and none of the
terms or conditions of JMED's Purchase Orders, Lilly's
acknowledgment forms or any other forms
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shall be applicable, except those specifying quantity ordered,
delivery locations and delivery schedule and invoice information.
Each Purchase Order shall constitute a binding obligation upon JMED
to accept and pay for the quantities of Product ordered therein if,
and to the extent that, such Product meets the Specifications and
otherwise complies with the provisions of this Agreement. Subject
to the provisions of Section 10.14 hereof and Section 4.0 of the
Requirements Document, Lilly shall supply to JMED all quantities of
Product ordered by JMED pursuant to the Purchase Orders.
SECTION 5. Payment, Labeling and Testing Product.
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5.1 Terms of Payment. JMED agrees to pay for all invoices
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within thirty (30) days after the later of (i) the date of receipt
of the applicable invoice, and (ii) the date of delivery of the
Product, at the prices computed in accordance with the
Requirements Document. All payments to Lilly shall be made by
check or bank draft to the following address and shall indicate to
which invoice(s) payment applies:
Xxx Xxxxx and Company
X.X. Xxx 000000
Xxxxxx, XX 00000-0000
5.2 Labeling and Packing. The Product shall be labeled,
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prepared and packed by Lilly for shipment in full compliance with
the approved NDA, all Applicable Laws, and in accordance with the
Requirements Document. To the extent permitted by the NDA and all
Applicable Laws, JMED's name shall be shown (in a format reasonably
acceptable to JMED) on the label as the distributor of the Product.
5.3 Lot Numbering. Lot numbers shall be affixed by Lilly on
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the containers for the Product and on each shipping carton in
accordance with Applicable Laws and Lilly's customary practice and
in accordance with the Requirements Document.
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5.4 Testing and Rejection of Delivered Product. (a) JMED
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shall be entitled, at its cost and expense, to test or inspect any
and all Product delivered to it hereunder in order to determine
whether such Product complies with the Specifications and the
Analysis Certificate; however, JMED shall have no obligation to
test or inspect any such Product supplied by Lilly and may rely on
the Analysis Certificate provided with each shipment of Product.
In the event JMED tests or inspects any Product delivered to it and
such Product fails to conform to the Specifications or the Analysis
Certificate, then JMED shall have the right to reject any such
Product, or the entire lot of any such Product, by giving written
notice thereof to Lilly. Lilly shall use reasonable efforts to
replace the rejected Product within the shortest possible time with
Product which meets the Specifications and Lilly shall deliver such
replacement Product, at its sole cost and expense, to JMED. If so
requested by JMED, rather than replacing the non-complying Product,
Lilly shall credit the account of JMED for all such rejected
Product. In addition, Lilly shall, at its sole cost and expense,
arrange for all such noncomplying Product to be picked up promptly
and destroyed in accordance with all Applicable Laws. JMED shall
have no responsibility to Lilly for the purchase prices of
noncomplying Product but shall pay Lilly the purchase price for the
replacement Product within thirty (30) days of delivery thereof.
(b) Notwithstanding subsection (a) above, if JMED and
Lilly disagree on whether any Product complies with the
Specifications or on the methods for or results of testing of any
Product, an independent laboratory which is acceptable to both
parties shall be asked to test the Product in dispute ("Disputed
Product"). To the extent such laboratory finds that the Disputed
Product meets the Specifications, JMED shall pay the fees of such
laboratory related to such testing and shall promptly pay for the
Disputed Product. To the extent that such laboratory finds that
the Disputed Product fails to meet the Specifications, Lilly shall
pay the fees of such laboratory related to such testing and shall
either (i) replace or rework the Disputed Product in accordance
with the preceding subsection (a), or (ii) credit JMED's account,
whichever JMED shall so select.
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(c) In the event JMED does not test or inspect Product
delivered to it and said Product (the "Suspect Product") is
subsequently the subject of a claim for Damages, then in order to
determine whether the Suspect Product complies with the
Specifications, Lilly shall test Lilly's "House Sample" taken at
the time the Suspect Product was manufactured in order to determine
whether said Suspect Product complies with the Specifications. If
Lilly determines that the "House Sample" does not comply with
Specifications, then Lilly shall be responsible for the claim for
Damages with respect to the Suspect Product, and in the event that
Lilly determines that the "House Sample" complies with the
Specifications, then JMED shall be responsible for the claim for
Damages. The accuracy of all lab tests shall be certified by an
officer of Lilly and Lilly shall provide JMED with a copy of all
laboratory results and reports. Lilly shall also furnish JMED with
a sample of the House Sample on request.
SECTION 6. Representations, Warranties and Covenants of the Parties.
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6.1 Product Specifications and Delivery; Authorization.
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(a) Lilly hereby represents, warrants and covenants to JMED that
(i) all of the existing inventory purchased by JMED pursuant to
Section 2.1, and all future JMED purchases of Product shall, at the
date shipped to JMED, (A) fully conform to the Specifications, (B)
have been or shall be manufactured in compliance with the NDA and
all Applicable Laws, (C) be not less than the potency specified in
the Analysis Certificate nor adulterated or misbranded within the
meaning of any Applicable Law, and (D) comply with all other
Applicable Laws, (ii) the procedures followed by Lilly pursuant to
the Requirements Document comply with all Applicable Laws, (iii)
upon delivery of any Product pursuant hereto, including Lilly's
inventory of Product contemplated in Section 2.1 hereof, good title
to such Product shall be conveyed to JMED, free and clear of any
and all interest, lien or Encumbrances, and (iv) unless otherwise
mutually agreed upon by the parties, any and all Product delivered
to JMED shall have a shelf life of at least eighteen (18) months
from the date of delivery (except the initial inventory identified
in Section 2.1 hereof which may be less).
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(b) EXCEPT AS EXPRESSLY PROVIDED IN SECTION 6.1(a)
ABOVE OR AS OTHERWISE PROVIDED IN THE LICENSING AGREEMENT, LILLY
MAKES NO REPRESENTATION OR WARRANTY AS TO ANY PRODUCT, EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR
OTHERWISE, AND LILLY SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR
STATUTORY WARRANTIES, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
(c) Lilly hereby covenants that it shall use reasonable
efforts to assure that all of the shipments of Product ordered by
JMED pursuant to a Purchase Order are shipped timely in accordance
with the directions contained in such Purchase Order.
6.2 Indemnification. Indemnification under this Agreement
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shall be as provided under and pursuant to and in accordance with
the provisions of Section 8 of the Licensing Agreement, which said
provisions are by this reference incorporated in and made a part of
this Agreement, and all of which shall survive any termination or
expiration of the Licensing Agreement.
6.3 Not Debarred. JMED and Lilly each hereby represent and
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warrant to the other that it is not debarred and has not and will
not knowingly use in any capacity the services of any person
debarred under subsections 306(a) or (b) of the Generic Drug
Enforcement Act of 1992. If at any time this representation and
warranty is no longer accurate, JMED or Lilly, as the case may be,
shall immediately notify the other of such fact.
6.4 Manufacturing Restrictions. Subject to the provisions of
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Section 8 of this Agreement, Lilly hereby covenants and agrees that
it will not manufacture Products for resale in the United States by
any Person other than JMED.
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SECTION 7. Term of Agreement, Renewal, Termination.
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7.1 Term of Agreement. Unless sooner terminated in
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accordance with this Section 7, this Agreement shall continue in
effect for an initial term which will expire on the date that is
ten (10) years from the date of this Agreement. Thereafter, this
Agreement shall automatically renew for additional terms of ten
(10) years each, unless and until terminated as hereinafter set
forth.
7.2 Termination by Lilly - Transfer of Manufacturing. (a)
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Subject to the provisions of this Section 7.2 and Section 7.5, this
Agreement may be terminated by Lilly at any time after the first
five (5) years of the initial ten (10) year term of this Agreement
without cause upon the occurrence of all of the following: (i) the
giving of at least five (5) years written notice to JMED at any
time subsequent to the end of the first five (5) years of the
initial ten (10) year term of this Agreement ("Lilly Notice
Period"), (ii) Lilly using reasonable efforts, consistent with the
availability of governmental quotas, if any, to manufacture for and
sell to JMED that quantity of the Product reasonably requested by
JMED prior to the end of the Lilly Notice Period to meet
anticipated demand therefor in the first year after the Lilly
Notice Period (the "Additional Product"), and (iii) Lilly using
reasonable efforts to assist JMED in obtaining any and all rights,
licenses, approvals and consents as may be necessary, as reasonably
determined by JMED, in order to enable JMED to manufacture, or have
manufactured for it, the Product in the United States. The
effective date of the termination of this Agreement shall be the
later of the last day of the Lilly Notice Period or the day on
which Lilly delivers the Additional Product. In the event of such
termination under this Section 7.2, Lilly shall provide such
reasonable assistance to JMED as may be reasonably necessary to (x)
effect the transfer of manufacturing responsibilities from Lilly to
JMED or a third party manufacturer designated by JMED, and JMED
shall reimburse Lilly for all of Lilly's reasonable costs in
connection therewith, and (y) enable JMED to obtain a reasonable
supply of active raw material necessary for the manufacture of the
Product. The termination by Lilly of this Agreement as set forth
in this Section 7.2(a) shall not
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in any way limit or terminate JMED's non-exclusive right and license
to use the Technology in perpetuity as set forth in Section 2.8 of the
Licensing Agreement.
(b) Incident to the licensing by Lilly of the Technology
as set forth in Section 2.8 of the Licensing Agreement, Lilly
covenants and agrees that the following shall be true and correct
at the effective date of the termination of this Agreement: the
Technology licensed to JMED pursuant to Section 2.8 of the
Licensing Agreement, shall be all of the technology, know how and
other information reasonably necessary to manufacture the Product
in compliance with the Specifications, the NDA and all Applicable
Laws.
7.3 Termination for Insolvency. If either JMED or Lilly (i)
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makes a general assignment for the benefit of creditors or becomes
insolvent; (ii) files an insolvency petition in bankruptcy; (iii)
petitions for or acquiesces in the appointment of any receiver,
trustee or similar officer to liquidate or conserve its business or
any substantial part of its assets; (iv) commences under the laws
of any jurisdiction any proceeding involving its insolvency,
bankruptcy, reorganization, adjustment of debt, dissolution,
liquidation or any other similar proceeding for the release of
financially distressed debtors; or (v) becomes a party to any
proceeding or action of the type described above in (iii) or (iv)
and such proceeding or action remains undismissed or unstayed for
a period of more than sixty (60) days, then the other party may by
written notice terminate this Agreement with immediate effect.
7.4 Termination for Default. (a) Subject to mediation as
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provided in Section 7.7 below, JMED and Lilly shall each have the
right to terminate this Agreement for default upon the other's
failure to comply in any material respect with the terms and
conditions of this Agreement. Prior to any such termination for
default, the party seeking to so terminate shall give the other
written notice of its intention to terminate this Agreement in
accordance with the provisions of this Section 7.4, which notice
shall set forth the default(s) which form the basis for such
termination. If the defaulting party fails to correct such
default(s) within thirty (30) days after receipt of the
notification with
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respect to monetary defaults, and ninety (90) days after the receipt
of notification with respect to nonmonetary defaults, or if the
nonmonetary defaults cannot be corrected or remedied within ninety
(90) days, then if the defaulting party has not commenced curing
said default(s) within said ninety (90) days and be diligently
pursuing completion of same, then such party immediately may
terminate this Agreement. In addition, any default by a party under
the Licensing Agreement shall be deemed to be a default by such
party hereunder.
(b) This Section 7.4 shall not be exclusive and shall
not be in lieu of any other remedies available to a party hereto
for any default hereunder on the part of the other party.
7.5 Continuing Obligations. Termination of this Agreement
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for any reason shall not relieve the parties of any obligation
accruing prior thereto and shall be without prejudice to the rights
and remedies of either party with respect to any antecedent breach
of the provisions of this Agreement. Without limiting the
generality of the foregoing and except as otherwise provided
herein, no termination of this Agreement, whether by lapse of time
or otherwise, shall serve to terminate the obligations of the
parties hereto under subsections 2.3, 2.4, 3.3, 3.4, 5.1, 5.4, 6.1,
6.2, 7.5, 7.6 7.7, 8.1 (in accordance with the terms of 8.3(d)),
8.2 (unless terminated by Lilly pursuant to Sections 7.3 or 7.4
hereof), 8.3 (in accordance with the terms of 8.3(d)), 9, 10.1,
10.2, 10.3 and 10.15 hereof, and such obligations shall survive any
such termination.
7.6 Returned Materials. On the termination of this
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Agreement, Lilly and JMED each shall return to the other all
information which it possesses or controls that belongs to the
other, except that each may retain a copy for record keeping
purposes.
7.7 Mediation. (a) Notwithstanding anything in this
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Agreement to the contrary, in the event that any dispute or alleged
default arises with respect to this Agreement, then prior to any
termination of this Agreement, the institution of litigation
between the parties, or Lilly ceasing to
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manufacture and supply Product to JMED, the parties shall mediate
such dispute pursuant to the provisions of paragraph (b) of this
Section 7.7. Pending the outcome of any such mediation, the
provisions of this Agreement shall continue in full force and affect
and the parties shall continue to perform their obligations
hereunder.
(b) (i) A dispute shall be submitted to mediation by
written notice to the other party. In the
mediation process, the parties will try to
resolve their differences voluntarily with the
aid of an impartial mediator, who will attempt
to facilitate negotiations. The mediator will
be selected by agreement of the parties. If the
parties cannot agree on a mediator, a mediator
will be designated by the American Arbitration
Association ("AAA") or JAMS/Endispute at the
request of a party. Any mediator so designated
must be acceptable to both parties.
(ii) The mediation will be conducted as specified by
the mediator and agreed upon by the parties. The
parties agree to discuss their differences in
good faith and to attempt, with the assistance
of the mediator, to reach an amicable resolution
of the dispute.
(iii) The mediation will be treated as a settlement
discussion and therefore will be confidential.
The mediator may not testify for either party in
any later proceeding relating to the dispute.
No recording or transcript shall be made of the
mediation proceedings.
(iv) Each party will bear its own costs in the
mediation. The fees and expenses of the
mediator will be shared equally by the parties.
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SECTION 8. Restrictive Covenants.
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8.1 Non-Compete. For and during the ten (10) year period
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following the date of this Agreement (the "Restricted Period"),
neither Lilly nor any of its Affiliates shall directly or
indirectly, within the United States, whether as a shareholder,
agent, partner, proprietor, joint venturer, consultant or
otherwise, of any business or entity, take part, participate or
become interested in, in any manner whatsoever, a business or
organization which directly or indirectly manufactures, distributes
or sells in the United States, injectable methohexital products in
competition with the Product; provided, however, that nothing set
forth herein shall prevent Lilly from (i) manufacturing Product for
sale to JMED, or (ii) manufacturing methohexital products for sale
outside of the United States, or (iii) acquiring a company which at
the time of acquisition, manufactures, markets or sells
methohexital products; and provided further that, the foregoing to
the contrary notwithstanding, JMED acknowledges and agrees that the
following activities, events and conditions shall not be a breach
or violation of the Restrictive Covenants (hereafter defined) and
JMED shall not be entitled to injunctive or any other relief at law
or in equity or any other rights or remedies (including, but not
limited to, those set forth in Section 8.3) in connection with:
Lilly or any of its Affiliates engaging in any merger, acquisition,
joint venture, partnership, alliance, license, research and/or
development collaboration, or combination, arrangement or
relationship of any nature whatsoever (each, a "Relationship") in
which the other party or parties involved in such Relationships
(each, a "Significant Other") at that time already conducts or
engages in, directly or indirectly, anywhere in the United States,
whether as a shareholder, agent, partner, proprietor, joint
venturer, consultant or otherwise, the manufacturing, marketing,
distributing or selling of injectable methohexital products
("Methohexital Business"), provided that the Methohexital Business
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(i) does not constitute a material part of the overall business of
the Significant Other prior to the Relationship, and (ii) will not
constitute a material part of the overall business of either such
Relationship or Lilly, as the case may be, following consummation
of the Relationship. Further, no provision herein contained shall
prevent
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or limit in any fashion the right and ability of Lilly or any of its
Affiliates to conduct or engage in the pharmaceutical benefits
management business, integrated disease management business,
pharmaceutical mail order business and any similar or related
businesses. Notwithstanding the foregoing, nothing set forth herein
shall (i) impact or effect the exclusivity of the license granted to
JMED in the Licensing Agreement, nor (ii) permit Lilly to
manufacture or develop a generic methohexital product for sale in
the United States. Furthermore, and notwithstanding anything herein
to the contrary, Lilly covenants and agrees that for such period of
time as Lilly is required to manufacture Product for JMED pursuant
to the provisions of this Agreement, neither Lilly nor any of its
Affiliates shall, directly or indirectly, manufacture or develop a
generic methohexital product for sale in the United States.
8.2 Confidentiality. JMED shall treat as confidential the
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Technology and all other information of Lilly of which JMED becomes
aware (whether in writing or orally or by sensory detection) in
connection with this Agreement (collectively, "Lilly Proprietary
Information"). JMED shall neither disclose Lilly Proprietary
Information to any third party nor use Lilly Proprietary
Information for any purpose other than as set forth in this
Agreement. Lilly shall treat as confidential all information of
JMED of which Lilly becomes aware (whether in writing or orally or
by sensory detection) in connection with this Agreement
(collectively "JMED Proprietary Information"). Lilly shall neither
disclose JMED Proprietary Information to any third party nor use
JMED Proprietary Information for any purpose other than as set
forth in this Agreement.
Nothing contained herein will in any way restrict or impair
either party's (the "Using Party") right to use, disclose or
otherwise deal with any Proprietary Information which:
(a) at the time of disclosure is known to the public or
thereafter becomes known to the public by publication or
otherwise through no fault of the Using Party;
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(b) the Using Party can establish was in its possession prior
to the time of the disclosure and was not obtained
directly or indirectly from the other party;
(c) is independently made available as a matter of right to
the Using Party by a third party who is not thereby in
violation of a confidential relationship with the other
party;
(d) is developed by the Using Party independently of the
Proprietary Information received and the Using Party can
establish such development; or
(e) is information required to be disclosed by legal or
regulatory process, provided that the Using Party timely
informs the other party and uses reasonable efforts to
limit the disclosure and maintain confidentiality to the
extent possible and permits the other party to intervene
and contest or attempt to limit the disclosure.
JMED shall obtain no right or license of any kind under the
Lilly Proprietary Information except as set forth in this
Agreement.
8.3 Equitable Remedies. (a) If a party (the "Breaching
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Party") breaches, or threatens to commit a breach of, any of the
provisions of Sections 8.1 or 8.2 hereof (the "Restrictive
Covenants"), the other party (the "Non-Breaching Party") shall have
the following rights and remedies, each of which shall be
independent of the others and severally enforceable, and each of
which is in addition to, and not in lieu of, any other rights and
remedies available to the Non-Breaching Party at law or in equity:
(i) the right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it
being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Non-
Breaching Party and that money damages would not provide an
adequate remedy to the Non-Breaching Party; (ii) the right and
remedy to require the Breaching Party to account for and pay over
to the Non-Breaching Party, all compensation, profits,
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monies, accruals, increments or other benefits derived or received
by the Breaching Party and/or by any other Person as the result of,
or in any way incident to any conduct or transactions constituting a
breach of the Restrictive Covenants; and/or (iii) the right to
cease paying royalties or other amounts due under this Agreement.
It is further agreed that the amount of any bond that the Non-
Breaching Party may be required to post incident to any equitable
relief sought hereunder shall not exceed $5,000 and that said
amount shall be deemed reasonable and proper.
(b) Lilly acknowledges and agrees that the
Restrictive Covenants are reasonable in geographical and temporal
scope and in other respects. If any court determines that any of
the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect, without regard
to the invalid portions.
(c) If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographic scope of such provision, such
court shall have the power to reduce the duration or scope of such
provision, as the case may be, and, in its reduced form, such
provision shall then be enforceable.
(d) The Restrictive Covenants set forth herein shall
survive the termination of this Agreement but only if terminated by
Lilly pursuant to Section 7.2 hereof.
SECTION 9. Failure to Supply Product.
--------- -------------------------
9.1 Due to Force Majeure. (a) For purposes of this Section
--------------------
9.1:
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(i) "Prior Level" shall mean the quantity of Product
sold by Lilly in the United States during the 365 days immediately
preceding the date of this Agreement, as measured by the quantity
of bulk methohexital (in kilograms) contained therein.
(ii) "Deal Year" shall mean the following:
Deal Year 1: September 1, 1995 - August 31, 1996
Deal Year 2: September 1, 1996 - August 31, 1997
Deal Year 3: September 1, 1997 - August 31, 1998
Deal Year 4: September 1, 1998 - August 31, 1999
(iii) "Gross Margin" shall mean the then current net
selling price at which the Product is made available to a JMED
customer LESS: the then current purchase price at which JMED
purchases the Product from Lilly under this Agreement.
(iv) "At Risk Amount" shall mean the following:
In Deal Year 1: $7,000,000 LESS any amounts
previously reimbursed to JMED
in any Deal Year pursuant to
the Formula (as hereinafter
defined)
In Deal Year 2: $5,250,000 LESS any amounts
previously reimbursed to JMED
in any Deal Year pursuant to
the Formula
In Deal Year 3: $3,500,000 LESS any amounts
previously reimbursed to JMED
in any Deal Year pursuant to
the Formula
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In Deal Year 4: $1,750,000 LESS any amounts
previously reimbursed to JMED
in any Deal Year pursuant to
the Formula
(v) "Interrupted Period" shall mean the period of
time during which Lilly is unable to supply Product due to Force
Majeure.
(vi) "Measurement Period" shall mean the six (6) month
period immediately preceding the Interrupted Period during which
Product is supplied by Lilly to JMED pursuant to the provisions of
this Agreement ( provided, however, that if the Interrupted Period
occurs during Deal Year 1, the Measurement Period may include
certain months prior to the date of this Agreement during which
Lilly sold Product in the United States).
(vii) "Historical Monthly Sales" shall mean the average
monthly sales of Product in the United States by JMED (or by Lilly
if the inability to supply Product occurs during Deal Year 1)
during the Measurement Period.
(b) In the event that during any of the first four (4) Deal
Years (i) Lilly is unable, during any such Deal Year, to supply
Product to JMED up to (but not to exceed) the Prior Level as a
result of an event of Force Majeure (as defined in Section 10.14),
and (ii) as a result of Lilly's inability to supply Product up to
(but not to exceed) the Prior Level for such Deal Year, JMED is
unable to supply its customers with Product, and (iii) JMED is
otherwise in compliance with all of the material terms and
conditions of this Agreement and the Licensing Agreement, then the
"risk sharing" formula ("Formula") set forth in paragraph (c) below
shall apply:
(c) (i) If JMED is unable to supply Product to its
customers for thirty (30) days or less (the "Short Period"), then
Lilly shall reimburse JMED an amount equal to 50% of JMED's lost
Gross Margin (net of any proceeds of business interruption
insurance received by JMED) as a result
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of JMED's inability during such Short Period to supply Product to
its customers up to (but not to exceed) the Prior Level, as measured
by bona fide written purchase orders for the Product submitted to
JMED by such customers, such amount reimbursable by Lilly not to
exceed the At Risk Amount for the Deal Year during which the Short
Period occurs.
(ii) If JMED is unable to supply Product to its
customers for more than thirty (30) days, then Lilly shall
reimburse JMED an amount equal to 50% of JMED's lost Gross Margin
(net of any proceeds of business interruption insurance received by
JMED) as a result of JMED's inability to supply Product to its
customers during any part of one or more Deal Years as measured (A)
in the first thirty (30) days as set forth above in subparagraph
(i), and (B) thereafter based upon the Historical Monthly Sales of
Product multiplied by the number of months contained in the
Interrupted Period, such amount reimbursable by Lilly not to exceed
the At Risk Amount for each such Deal Year during which the
Interrupted Period occurs.
(iii) The reimbursable amounts payable by Lilly
pursuant to this paragraph (c) shall be paid to JMED monthly during
the Interrupted Period until all amounts payable hereunder have
been paid.
(iv) The Formula shall never apply during any Deal
Year after Lilly has supplied to JMED in such Deal Year, Product
equal to or greater than the Prior Level.
(d) The parties hereto acknowledge that the Product
is unique and that JMED is entering into this Agreement and the
Licensing Agreement on the condition that Lilly will furnish
Product to Lilly as set forth herein. As such, in the event that
Lilly is unable for the reasons hereinabove described to supply
Product to JMED as required by this Agreement, the parties have
agreed to a reimbursement to JMED as hereinbefore set forth, in
addition to all other rights and remedies available under this
Agreement.
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9.2 Due to Default. In the event that Lilly refuses or is
--------------
unable or unwilling to supply Product to JMED as required under
this Agreement due to reasons not constituting Force Majeure, then
JMED shall be entitled to pursue all of its rights and remedies
available under this Agreement, and in addition, during the period
of such failure to supply Product, JMED may defer any payments due
and owing by JMED to Lilly pursuant to this Agreement, or the
Licensing Agreement until such time as Lilly resumes supplying
Product to JMED as required in this Agreement..
SECTION 10. Miscellaneous Provisions.
---------- ------------------------
10.1 Successors and Assigns. This Agreement shall be binding
----------------------
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that neither
-----------------
Lilly nor JMED may assign any of its rights, duties or obligations
hereunder without the prior written consent of the other, which
consent may be withheld in the other's sole discretion. Nothing
set forth in this Section 10.1 shall prevent or restrict either
JMED or Lilly from assigning its rights and obligations under this
Agreement without the consent of the other (i) to its Affiliates
(subject to the consent of the other which said consent shall not
be unreasonably withheld), or (ii) incident to the sale of all or
substantially all of its assets or stock, or (iii) incident to the
merger or reorganization of said party. No assignment of this
Agreement or of any rights hereunder shall relieve the assigning
party of any of its obligations or liability hereunder.
10.2 Notices. All notices or other communications required or
-------
permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand, or mailed
first class, postage prepaid, by registered or certified mail,
return receipt requested (notices shall be deemed to have been
given on the date received) as follows:
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If to Lilly, as follows:
Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: President, North American Pharmaceutical Operations
With a copy to:
Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: General Counsel
If to JMED, as follows:
Xxxxx Medical Industries, Inc.
0000 Xxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: President
With a copy to:
Xxxxxx X. Chod, Esq.
Xxxxxxxxxxxx, Xxxxxx & Xxxx, P.C.
1800 Equitable Building
00 Xxxxx Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
or in any case to such other address or addresses as hereafter
shall be furnished as provided in this Section 10.2 by any party
hereto to the other party.
10.3 Waiver; Remedies. No delay on the part of Lilly or JMED
----------------
in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of either
Lilly or JMED of any right, power or privilege hereunder operate as
a waiver of any other right, power or privilege hereunder nor shall
any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right,
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power or privilege hereunder. The indemnification provided for in
Section 6.2 of this Agreement shall be the sole remedy available for
any Damages arising out of or in connection with this Agreement,
except for any rights or remedies which the parties hereto may
otherwise have in equity, in Section 7.7, in Section 8.3, in Section
9.1, in Section 9.2, or as otherwise specifically provided in this
Agreement or the Licensing Agreement.
10.4 Entire Agreement. This Agreement (together with the
----------------
Licensing Agreement) and its appendices constitute the entire
agreement between the parties with respect to the subject matter
hereof and supersede all prior agreements or understandings of the
parties relating thereto.
10.5 Amendment. This Agreement may be modified or amended
---------
only by written agreement of the parties hereto.
10.6 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed an original
but all of which together shall constitute a single instrument.
10.7 Governing Law. This Agreement shall be governed and
-------------
construed in accordance with the laws of the State of Indiana
excluding any choice of law rules which may direct the application
of the law of another state.
10.8 Captions. All section titles or captions contained in
--------
this Agreement and in any appendix referred to herein or annexed to
this Agreement are for convenience only, shall not be deemed a part
of this Agreement and shall not affect the meaning or
interpretation of this Agreement.
10.9 No Third-Party Rights. No provision of this Agreement
---------------------
shall be deemed or construed in any way to result in the creation
of any rights or obligation in any Person not a party to this
Agreement.
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10.10 Construction. This Agreement shall be deemed to have
------------
been drafted by both Lilly and JMED and shall not be construed
against either party as the drafts person hereof.
10.11 Appendices. Each Appendix and other document attached
----------
hereto is incorporated by reference and made a part of this
Agreement.
10.12 No Joint Venture. Nothing contained herein shall be
----------------
deemed to create any joint venture or partnership between the
parties hereto, and, except as is expressly set forth herein,
neither party shall have any right by virtue of this Agreement to
bind the other party in any manner whatsoever.
10.13 Severability. If any provision of this Agreement is
------------
held to be illegal, invalid, or unenforceable under present or
future laws effective while this Agreement remains in effect, the
legality, validity and enforceability of the remaining provisions
shall not be affected thereby, and in lieu of each such illegal,
invalid or unenforceable provision there shall be added
automatically as a part of the document a provision that is legal,
valid, and enforceable, and as similar in terms to such illegal,
invalid or unenforceable provision as may be possible while giving
effect to the benefits and burdens for which the parties have
bargained hereunder.
10.14 Force Majeure. (a) If either party is prevented from
-------------
complying, either totally or in part with any of the terms or
provisions set forth herein, by reason of force majeure, including,
by way of example and not of limitation, fire, flood, explosion,
storm, strike, lockout or other labor dispute, riot, war,
rebellion, accidents, acts of God, acts of governmental agencies or
instrumentalities (including, but not limited to, insufficient
quotas), failure of suppliers (including, but not limited to,
shortages in bulk material) or any other external or non-negligent
internal cause or externally induced casualty beyond its reasonable
control, whether similar to the foregoing contingencies or not,
said party shall provide written notice of same to the other party.
Said notice shall be provided within five
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(5) working days of the occurrence of such event and shall identify
the requirements of this Agreement or such of its obligations as may
be affected, and to the extent so affected, said obligations shall
be suspended during the period of such disability. If any raw
materials, facility systems or capacity is used for both the Product
and any other products or purposes (collectively, "Competing
Products"), any necessary allocation shall be made as between
Lilly's and its Affiliates' needs, JMED's needs and the needs of any
other party to whom Lilly has firm contractual obligations on a pro
rata basis based on the Competing Products' respective percentage
contributions to the total gross amount invoiced by Lilly and its
Affiliates to unrelated third parties for sales of the Competing
Products in the twelve (12) months preceding the date of the event
constituting force majeure. The party prevented from performing
hereunder shall use reasonable efforts to remove such disability,
and shall continue performance whenever such causes are removed.
The party so affected shall give to the other party a good faith
estimate of the continuing effect of the force majeure condition
and the duration of the affected party's nonperformance. When such
circumstances as those contemplated herein arise, the parties shall
discuss in good faith, what, if any, modification of the terms set
forth herein may be required in order to arrive at an equitable
solution.
(b) If the period of any previous actual
nonperformance of Lilly because of Lilly force majeure conditions
plus the anticipated future period of Lilly nonperformance because
of such conditions will exceed an aggregate of one hundred eighty
(180) days within any twenty-four (24) month period, JMED may
terminate this Agreement by notice to Lilly. The termination of
this Agreement by JMED as set forth in this paragraph (b) shall not
affect the license by Lilly to JMED of the Technology pursuant to
Section 2.8 of the Licensing Agreement, which said license shall
remain in full force and effect. In addition, prior to such
termination, at JMED's request, Lilly shall use reasonable efforts
to assist JMED in obtaining any all rights, licenses, approvals and
consents as may be necessary, as reasonably determined by JMED, in
order to enable JMED to manufacture, or have manufactured for it,
the Product in the United States. JMED shall reimburse Lilly for
all of Lilly's reasonable costs in connection therewith.
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(c) If the period of any previous actual
nonperformance of JMED because of JMED force majeure conditions
plus the anticipated future period of JMED nonperformance because
of such conditions will exceed an aggregate of one hundred eighty
(180) days within any twenty-four (24) month period, Lilly may
terminate this Agreement by notice to JMED.
10.15 Survival of Representations. Each of the
---------------------------
representations and warranties made in this Agreement shall survive
the execution hereof pursuant to the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
XXXXX MEDICAL INDUSTRIES, INC. XXX LILLY AND COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx Xxxxxx
----------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxxxxx Name: Xxxxxx Xxxxxx
--------------------------- ---------------------------
Title: Executive Vice President Title: Executive Vice President
-------------------------- --------------------------
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SCHEDULES AND APPENDICES
TO
MANUFACTURING AGREEMENT
Schedules
---------
Schedule 2.1 - Inventory
Appendices
----------
Appendix A - Manufacturing Requirements Document
Appendix B - Transition Plan
Appendix C - Certificate of Analysis
27
