EXHIBIT 10.37
CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of This Agreement
Which Have Been Redacted Are Marked
With Brackets ("[***]"). The Omitted
Material Has Been Filed Separately
With The Securities And Exchange Commission.
EXCLUSIVE DISTRIBUTION AGREEMENT
This Exclusive Distribution Agreements (the "Agreement") is dated
effective as of December 18, 1998, by and between UNISOURCE, INC., a Colorado
corporation, with its principal place of business at 0000-00xx Xx., Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000 ("Unisource"), and HORIZON PHARMACEUTICAL CORPORATION, a
Delaware corporation, with its principal place of business at 000 Xxxxxxx
Xxxxxxx, Xxxxx #000, Xxxxxxx, Xxxxxxx 00000 ("Horizon"):
W I T N E S S E T H
A. Unisource is engaged in the business of developing,
manufacturing and selling pharmaceutical products;
B. Horizon is engaged in the business of marketing and
distributing pharmaceutical products;
C. Unisource and Horizon previously entered into an Exclusive
Distribution Agreement dated January 1, 1996 for a pharmaceutical product known
as TANAFED. Pursuant to the provisions of paragraph 1.1(c) of this Agreement,
Unisource hereby offers and Horizon accepts this offer to market a related
pharmaceutical product known as TANAFED DM containing Pseudoephedrine Tannate,
Chlorpheniramine Tannate and Dextromethorphan Tannate (Product.) This Product is
more fully described in Exhibit A hereto which exhibit is expressly incorporated
herein by this reference; and
D. The parties desire to enter into an Exclusive Distribution
Agreement regarding TANAFED DM which is more fully described in Exhibit A
effective as of the date indicated above, according to the following terms and
conditions.
[***] - CONFIDENTIAL TREATMENT REQUESTED
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, IT IS AGREED:
1. Exclusivity; Requirements Contract; Pricing; and Terms of
Sale.
1.1 Exclusivity.
(a) Unless and until Horizon's exclusivity for the
Product is terminated pursuant to the provisions of Section 1.1(b) hereof,
Unisource shall supply the Product exclusively to Horizon and shall not sell the
Product in the Continent of North America or the Caribbean to anyone other than
Horizon without Horizon's prior written consent. Likewise, Horizon agrees during
the term hereof to purchase the Product exclusively from Unisource for North
American and Caribbean distribution. It is agreed that the mutual exclusivity
provisions of this Agreement shall apply to the Product regardless of package
size or the nature of any packaging.
(b) Unisource shall have the right to terminate Horizon's
exclusivity hereunder if Horizon's aggregate purchases for the Product during
any calendar year beginning in 1999 are less than the scheduled amount set forth
below for such year. Such right to terminate Horizon's exclusivity must be
exercised, if at all, by written notice given within thirty (30) days after the
end of any calendar year. Unisource's right to terminate Horizon's exclusivity
hereunder shall be Unisource's sole remedy for Horizon's failure to order the
scheduled amount during any calendar year. The scheduled amount for the Product,
regardless of package size is as follows:
(i) 1999 - [***];
(ii) 2000 - [***];
(iii) 2001 - [***];
(iv) 2002 and subsequent years - [***].
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For purposes of this Agreement, if more gallons are purchased than scheduled
during a particular year, the overage above scheduled gallons will carry over to
the next year's scheduled obligations as a credit.
For purposes of this Agreement, a gallon shall be defined as 128-fl. oz. To be
packaged in various package sizes.
(c) Horizon shall have the right of first refusal on all
other dosage forms or pharmaceutical products containing Dextromethorphan
Tannate developed by Unisource. Unisource agrees to offer said products in all
forms to Horizon first, and to negotiate terms with Horizon in good faith.
Horizon shall also have the right to match any bona fide offer from any third
party for any said products in all forms, and by agreeing to match the bona fide
offer, Horizon shall be granted exclusivity to the same extent granted herein
for TANAFED-DM.
1.2 Requirements Contract.
(a) During the term of this Agreement, Horizon shall
purchase the Product exclusively from Unisource and Unisource shall exclusively
supply all of Horizon's requirements of the Product for the distribution
channels heretofore defined. Horizon shall not during the term of this Agreement
purchase or manufacture a comparable Product (comparable product is defined as
any product containing Dextromethorphan Tannate, alone or in combination with
other ingredients, and which is intended for the same therapeutic use as the
Product) from anyone other than Unisource. The foregoing obligation of Unisource
to supply all of Horizon's requirements of the Product and Horizon's obligation
to purchase all of its requirements of the Product exclusively from Unisource
shall apply even if Horizon's exclusivity is terminated by Unisource pursuant to
Section 1.1 hereof. Horizon shall have the right to terminate Unisource's
exclusivity hereunder if Unisource is unable to fulfill all of Horizon's
requirements for the Product at any time, subject to sixty-(60) day cure period
described in Subsection 5.2 below.
1.3 Price and Terms of Sale.
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(a) The price to be charged to Horizon for Product in
various package sizes bearing the Horizon or a subsidiary label shall be the
same as those currently quoted to Horizon, as shown on Exhibit "B" attached
hereto and incorporated herein. However, the price charged to Horizon for the
Product shall be reduced if: (1) Unisource engages a new manufacturer who
supplies Product to Unisource at a lower cost, or (2) increased volume orders by
Horizon result in per-unit savings to Unisource because of economies of scale.
Unisource agrees to promptly notify Horizon should either of these contingencies
occur. In the event of the occurrence of either of these contingencies,
Unisource and Horizon agree to negotiate a price reduction in good faith,
promptly upon receipt of written notice from Horizon of a desire to negotiate
price reduction as a result of the occurrence of one or both contingencies.
Unisource shall have the right to increase the price for the Product, on a
semi-annual basis, to the extent that Unisource encounters increased pricing for
materials or cost of manufacturing. No other price changes shall be made without
the written consent of both parties.
(b) Horizon shall pay Unisource for the Product within
thirty (30) days after shipment of the Product to the location specified.
Unisource warrants that when invoiced the Product will conform to those
specifications documented in Exhibit A and Unisource will cause the manufacturer
to provide to Horizon a Certificate of Assay, batch assay sheets and all current
material safety data sheets applicable to the Product for each batch shipped to
Horizon. Horizon will not be obligated to pay for a non-conforming batch of the
Product or a batch for which a Certificate of Assay has not been provided.
(c) All shipments of the Product to Horizon at the
location specified will be made FOB, Unisource site of manufacture.
2. Term of Agreement and Termination. This Agreement shall
commence on January 1, 1999, and this Agreement shall continue for a period of
seven (7) years until December 31, 2005. If upon expiration of this initial term
ending December 31, 2005, Horizon is not in default of any of the material terms
and conditions of this Agreement, Horizon shall have an option to extend this
Agreement for an additional term of seven (7) years under the same terms and
conditions. This option shall be automatically exercised unless Horizon gives
written notice to Unisource of its intent not to exercise the option prior to
December 31, 2005. This
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[***] - CONFIDENTIAL TREATMENT REQUESTED
Agreement shall also terminate immediately upon any voluntary or involuntary
dissolution, act of bankruptcy or reorganization for the benefit of creditors of
either party, and may not be reinstated thereafter except with the other party's
written consent.
In the event that Horizon exercises the seven year option,
Horizon agrees to purchase [***] of Product in each of the first three years of
the option period, and [***] of Product in each of the remaining four years,
pursuant to the exclusivity and requirements provisions of subsection 1 above.
However, if the Product is marketed in North America or the Caribbean during any
of the last 4 years of the option period by a company other than Horizon or its
affiliates, the mutual exclusivity provisions of Provision 1.1(a) shall apply as
long as Horizon purchases a minimum quantity of [***] per year.
3. Representations and Warranties of Unisource. Unisource
represents and warrants to Horizon that the Product supplied hereunder will be
merchantable and that the Product supplied hereunder will be manufactured in
accordance with the then FDA current good manufacturing practices for comparable
products. Unisource shall cause the manufacturer of the Product (the
"Manufacturer") to supply Horizon with the standard form FDA continuing
guaranty. Unisource further represents and warrants to Horizon that it is the
sole and exclusive owner of the Product in that the active pharmaceutical
ingredient Dextromethorphan Tannate is supplied on an exclusive basis to
Unisource by the manufacturer of this ingredient and that no consents are
required from any person to grant Horizon the rights granted to it hereunder.
Unisource hereby agrees to indemnify and hold Horizon harmless from and against
any breach of its representations and warranties set forth in this Agreement. In
no event, however, will Unisource be liable to Horizon for consequential
damages.
4. Insurance. Unisource shall cause the Manufacturer to maintain
product liability insurance in a minimum amount of One Million ($1,000,000)
Dollars and, prior to the delivery of the first order of Product, Unisource
shall cause the Manufacturer to provide Horizon with a certificate of insurance
naming Horizon as an additional insured on Manufacturer's insurance policy.
Thereafter, Unisource shall cause the manufacturer to provide periodic
verification of the liability insurance coverage on each renewal of the policy,
and in any event at least each year on the anniversary date of the policy.
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5. Default.
5.1 Notice of Default. Subject to Section 5.2, if a
default occurs hereunder, then the non-defaulting party shall be entitled to
terminate this Agreement upon sixty (60) days' written notice to the defaulting
party, if the defaulting party has not cured the default of provided in
paragraph 5.2, which notice shall describe the default in reasonable detail.
5.2 Effect of Default and Cure. The party in default
shall have a period of sixty (60) days from receipt of the Notice of Default
provided for in paragraph 5.1 within which to cure the specified default. If the
default is cured and corrected within sixty (60) days after proper notice, this
Agreement shall continue in full force and effect as if no default had existed.
If the default is not timely cured as set forth in this Subsection 5.2, then the
non-defaulting party shall have the option to terminate this Agreement, and such
termination shall be without prejudice to any claim for damages which the
non-defaulting party may have.
6. Force Majeure and Termination.
6.1 Force Majeure. A party to this Agreement shall be
excused from performance under this Agreement to the extent that and for so long
as such performance is substantially hindered or prevented by force majeure,
such as acts of God, strikes, or acts of war.
6.2 Right of Termination. If any performance excused
pursuant to Subsection 6.1 is both protracted and material with reference to the
objectives and purposes of this Agreement, the party not excused thereby may
terminate this Agreement upon fifteen (15) days' written notice to the other
party, and such terminating party shall be entitled to an equitable adjustment
of its rights and obligations hereunder.
7. Applicable Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Colorado without giving
effect to the principles of conflict of laws thereof.
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8. Arbitration. Any controversy or claim arising out of or
relating to this Contract, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration rules of the American
Arbitration Association, and judgement upon the award rendered by the
Arbitrators may be entered in any court of competent jurisdiction. The party
that initiates an action concerning a controversy, claim or the breach of
contract and thereby the arbitration process shall have the choice to select the
place where the arbitration shall be heard.
9. Notices. Any notice, demand or other communication required or
authorized to be given under this Agreement shall, if reasonably practicable, be
transmitted by telecopier to the number specified below, confirmed by hard copy
via U.S. Mail, or such notice may be sent to personal delivery, national
overnight commercial delivery service which provides package tracking services
("Overnight Courier") or by U.S. Mail, certified, return receipt requested. Any
such notice shall be deemed received as of the first business day after it is
sent if delivered by telecopy, Overnight Courier or personal delivery, or on the
day actually received and signed for if sent by Certified U.S. Mail. All notices
shall be sent to the respective parties at the following telecopy numbers and
addresses, or such other telecopy number or address as a party may provide to
the other by written notice complying with this Section 9:
Horizon Pharmaceutical Corporation
000 Xxxxxxx Xxxxxxx, #000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Fax No. (000) 000-0000
Unisource, Inc.
0000-00xx Xx., Xxxxx #000
Xxxxxxx, XX 00000
Attention: President
Fax No. (000) 000-0000
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10. Assignment; Binding Effect. This Agreement may not be assigned
by either party without the prior written consent of the other party, and any
attempt by either party to assign this Agreement without such consent shall be
null and void ab initio. This Agreement shall inure to the benefit of, and be
binding upon, the respective successors and permitted assigns of the parties.
11. Modification. This Agreement may not be modified or amended in
any respect except in writing signed by both parties.
12. Entire Agreement. This is the entire Agreement between the
parties and no prior representations, statements, warranties or inducements from
a part of this contract or vary, modify or expand upon any of the terms or
conditions contained in this written Agreement.
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IN WITNESS WHEREOF, the parties hereto have signed, sealed and
delivered this Agreement effective December 26, 1998.
Attest: UNISOURCE, INC.
/s/ Xxxxx Xxxxxxx By: /s/ Xxxxxx
--------------------------------- ----------------------------------
Title President
Attest: HORIZON PHARMACEUTICAL
CORPORATION
/s/ Xxxxx Xxxxxx By: /s/ Xxxxx Xxxxx
--------------------------------- ----------------------------------
Title President
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EXHIBIT A
TANAFED DM
TANAFED-DM Pediatric Suspension
Each 5 mL contains:
Chlorpheniramine Tannate 4.5 mg
Pseudoephedrine Tannate 75.0 mg
Dextromethorphan Tannate 25.0 mg
[***] - CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B
PRICING
16 oz $[***]/each
Packaging: HDPE 16 oz space saver bottles.
33 mm closures with shrink band or induction liners.
Packaged 12 per case/Kraft corrugated cartons.
Labeling: Pressure sensitive premium labels supplied by Horizon.
Prefolded "outserts" supplied by Horizon.
4 oz $[***]/each
Packaging: HDPE 4 oz round bottles.
24mm closures with shrink band or induction liners.
Packaged 96 per case. Shrink wrapped in groups of 6.
Labeling: Pressure sensitive premium labels supplied by Horizon.
Prefolded "outserts" supplied by Horizon.
20 mL $[***]/each
Packaged: HDPE 1 oz round bottles.
20 mm closures with shrink band or induction liners.
Packaged 108 per case
6 pack trays are shrink-wrapped. Printed 6 pack trays
supplied by Horizon
Labeling: Pressure sensitive premium labels supplied by Horizon.
Freight: FOB-site of manufacture.
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