EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of July 27 2006
(the "EFFECTIVE DATE"), is by and between Cardinal Health PTS, LLC, a Delaware
limited liability company ("SELLER"), and Xxxxx Respiratory Operations, Inc., a
Delaware corporation ("PURCHASER").
A. Pursuant to that certain Asset Purchase Agreement dated March 24, 2004,
as amended effective April 1, 2004 (the "ORIGINAL TRANSFER DATE"), between Xxxxx
Respiratory Therapeutics, Inc. f/k/a Xxxxx Laboratories, Inc. ("PARENT" or
"XXXXX") as seller, and Cardinal Health PTS, LLC, as purchaser (the "ORIGINAL
PURCHASE AGREEMENT"), Seller acquired from Parent certain assets related to the
manufacture of certain Xxxxx Products (as defined therein). Pursuant to the
Original Purchase Agreement, Seller leases and operates a manufacturing plant
located at 00000 Xxxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxx 00000-0000 (the "PLANT"; an
index of defined terms is set forth in Section 8.16). At the Plant, Seller is
engaged in, among other things, manufacturing Xxxxx Products. "XXXXX PRODUCTS"
means all products which Seller now manufactures for Purchaser or Xxxxx and
specifically includes without limitation products currently marketed or planned
to be marketed under the Mucinex(R) and Humibid(R) brands, or any replacement or
successor brand of such brands and also includes any experimental
(precommercial) product. The "TRANSFERRED BUSINESS" consists of those assets
that relate solely or primarily to the manufacture of Xxxxx Products at the
Plant and that were sold by Purchaser to Seller pursuant to the Original
Purchase Agreement, subject to such additions, deletions, improvements, and wear
and tear customary in nature, as have occurred since the Original Transfer Date.
B. Subject only to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell, and Purchaser desires to purchase, Seller's assets relating to the
Transferred Business.
NOW, THEREFORE, in consideration of the foregoing recitals and of the
respective covenants, agreements, representations and warranties herein
contained, and intending to be legally bound hereby, the parties hereto hereby
agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1 Agreement to Sell. At the Closing and except as otherwise specifically
provided in Section 2.3 hereof, Seller shall grant, sell, convey, assign,
transfer and deliver to Purchaser, upon and subject to the terms and conditions
of this Agreement, all right, title and interest of Seller in and to the
Purchased Assets, free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions and other encumbrances and defects of
title of any nature whatsoever except Permitted Liens.
1.1.1 Purchased Assets. The term "PURCHASED ASSETS" shall mean the
following business operations, assets, properties and rights of Seller existing
as of the date of the Closing, except as otherwise expressly provided in Section
1.1.2 or 2.3 hereof:
(a) All of Seller's interests in certain real property leased
by Seller and used in connection with the Transferred Business and located
at 00000 Xxxxxxxxx Xxxx Xxxx Xxxxx, Xxxxx 00000-0000, which interests,
together with the lease relating thereto (the "REAL PROPERTY LEASE") are
more particularly described on SCHEDULE 1.1.1(a);
(b) All fixtures, installations, machinery, equipment and
spare parts, to the extent not constituting real property under applicable
law, vehicles, furniture, tools, office and laboratory equipment and other
personal property located at the Plant and used exclusively or primarily
in the Transferred Business, including but not limited to those identified
in SCHEDULE 1.1.1(b) and/or reflected on the Closing Date Balance Sheet
(the personal property transferred under this paragraph collectively
referred to as the "TANGIBLE PERSONAL PROPERTY"); however, excluding those
items identified on SCHEDULE 1.1.2(a);
(c) Seller's inventories of work in process (including bulk
packaged or unpackaged) tablets, whether at the Plant or at any Cardinal
Affiliate), raw materials, packaging materials, finished goods (whether at
the Plant or at any Cardinal Affiliate, however, excluding Cardinal's
Specialty Pharmaceuticals Services Division), other materials and supplies
held for use in the ordinary course of the Transferred Business as
operated at the Plant and operating the Tangible Personal Property, all as
relate solely or primarily to the Transferred Business, including but not
limited to those identified on SCHEDULE 1.1.1(c) and/or reflected on the
Closing Date Balance Sheet, including, without limitation, all inventory
at the Plant relating to Xxxxx Products and the Transferred Business and
in the possession of contractors providing outsourcing services and all
obsolete goods, materials and supplies, but specifically excluding
inventories of Xxxxx Products shipped and invoiced to Purchaser prior to
Closing (collectively, the "INVENTORY") which SCHEDULE 1.1.1(c) Seller may
update at any time up to and including two (2) business days prior to
Closing;
(d) All prepaid expenses and deposits relating to the
Transferred Business or the Plant, except those listed on SCHEDULE
1.1.2(h);
(e) All files, books, records, data, plans and other
information relating exclusively or primarily to the Purchased Assets or
the Transferred Business, including without limitation all manufacturing
processes and procedures, analytical procedures, quality assurance and
control procedures, sampling procedures, controlled documents, operational
and environmental systems and records, standard operating procedures,
information required to be maintained at the Plant by any governmental
agency, policies or other documents relating to environmental, health and
safety matters, customer and supplier lists, equipment manuals and
maintenance records, building and equipment blueprints and specifications,
drawings and designs, real estate surveys and reports, abstracts of title,
computer software, documentation and related object and source code (to
the extent owned or assignable by Seller, but specifically excluding the
XX Xxxxxxx Software), and other data used or held for use in connection
with the operation of the Transferred Business (all of the foregoing items
shall collectively be referred to as the "BOOKS AND RECORDS"). The parties
acknowledge and agree that they may determine additional items constitute
Books and Records pursuant to the foregoing definition, and each party
agrees to promptly inform the other party of any additional items that
such party believes constitute additional Books and Records;
(f) All of Seller's rights under each written or oral
contract, agreement, warranty relating to any Tangible Personal Property
or other Purchased Asset, lease, plan, instrument, registration, license,
permit or approval, or other document,
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commitment, arrangement, undertaking, practice or authorization entered
into and related exclusively to the Transferred Business or the Purchased
Assets, each as identified on SCHEDULE 3.1.16 and any outstanding purchase
orders issued by Seller prior to Closing in the ordinary course of
business and related to the Transferred Business;
(g) All rights under express or implied warranties relating to
the Transferred Business or the Purchased Assets; and
(h) All other properties and assets of every kind and nature,
real or personal, tangible or intangible, located at the Plant and owned
by Seller or any Cardinal Affiliate and used or held for use exclusively
or primarily in connection with the Transferred Business, including
without limitation, the goodwill associated therewith (which was recorded
on the Seller's financial statements in connection with the Original
Purchase Agreement), and not otherwise specifically excluded under Section
1.1.2. An "AFFILIATE" of a person is a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is
under common control with, the person specified.
1.1.2 Excluded Assets. Notwithstanding the foregoing, the Purchased
Assets shall not include any of the following (the "EXCLUDED ASSETS"):
(a) Those certain fixtures, installations, machinery,
equipment and spare parts, to the extent not constituting real property
under applicable law, vehicles, furniture, tools, office and laboratory
equipment and other personal property located at the Plant and other fixed
assets relating to the Transferred Business, in each case as identified in
SCHEDULE 1.1.2(a) (Seller shall provide an updated SCHEDULE 1.1.2(a) to
Purchaser no less than two (2) business days prior to the Closing Date
which may identify additional excluded items);
(b) Seller's inventories of work in process, raw materials,
packaging materials, finished goods, other materials and supplies held for
use in the course of Seller's business, other than those items identified
on SCHEDULE 1.1.1(c) and/or reflected on the Closing Date Balance Sheet;
(c) All patents, trademarks, service marks and copyrights of
Seller and Seller Confidential Information ("SELLER'S PROPRIETARY
RIGHTS");
(d) The contract rights and Authorizations relating to the
Transferred Business or the Plant and set forth on SCHEDULE 1.1.2(d);
(e) Copies of the Books and Records;
(f) All tangible properties of Seller located at any location
other than the Plant that are not set forth on SCHEDULE 1.1.1(b) and/or
reflected on the Closing Date Balance Sheet;
(g) All cash on hand and on deposit in banks, cash equivalents
and investments, and all accounts, notes and royalties receivable, and
other rights accruing before the Closing Date to receive cash including
contingent rights such as tax refunds;
(h) All prepaid expenses and deposits listed on SCHEDULE
1.1.2(h), which Seller may update at any time up to and including two (2)
business days prior to Closing;
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(i) All tangible personal property disposed of or consumed in
the ordinary course of business between the Effective Date and the Closing
Date;
(j) The corporate seals, certificates of incorporation,
bylaws, qualifications to conduct business as a foreign corporation,
taxpayer and other identification numbers, minute books, stock books, tax
returns, books of account or other records having to do with the corporate
organization of Seller or any Cardinal Affiliate;
(k) All insurance policies relating to the Transferred
Business, including policies relating to property, liability, business
interruption, health and workers' compensation and lives of officers of
Seller or any Cardinal Affiliate;
(l) Pension, profit sharing or savings plans and trusts and
the assets thereof and any other benefit plan of Seller;
(m) Any contracts entered into by Seller or any Cardinal
Affiliate or by which Seller or any of the Purchased Assets is bound,
other than the Assumed Contracts;
(n) Rights to enforce covenants and warranties not included in
the Purchased Assets; and
(o) All hardware, software and rights acquired or licensed by
Seller associated with the XX Xxxxxxx ERP system as installed and
implemented at the Plant by or for Seller (the "XX XXXXXXX SOFTWARE").
1.2 Agreement to Purchase. At the Closing, Purchaser shall purchase the
Purchased Assets from Seller, upon and subject to the terms and conditions of
this Agreement and in reliance on the representations, warranties, covenants and
agreements of Seller contained herein, in exchange for the Purchase Price. In
addition, Purchaser shall assume at the Closing and agree to pay, discharge or
perform, as appropriate, the Assumed Liabilities. Except for the Assumed
Liabilities, Purchaser shall not assume or be responsible for any liabilities or
obligations of Seller or otherwise relating to any of the Purchased Assets.
1.3 The Purchase Price.
1.3.1 Payment of Purchase Price.
(a) Purchase Price Payment. At the Closing, Purchaser shall
pay to Seller an aggregate amount equal to sum of: (i) the estimated * of
the Purchased Assets as of the Closing Date and as set forth on SCHEDULE
1.3.1(a)(i) (the "ESTIMATED CLOSING VALUE") which Estimated Closing Value
has been prepared consistent with *; and (ii) all documented and
reasonable costs out-of-pocket costs (which may include write-offs or
similar charges), which shall not exceed in the aggregate $*, incurred by
the Seller to terminate and sell the Transferred Business, including
without limitation: (x) Seller's legal, accounting and other costs and
expenses associated with this Agreement and the transactions contemplated
hereunder; (y) all sales and transfer taxes and any other governmental
charges payable by Seller (excluding any taxes or other governmental
charges due and payable upon the income of Seller) upon the sale or
transfer of the Purchased Assets; (z) all costs to transfer the technology
and assets of Seller (other than
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* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
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the Purchased Assets) to locations of Seller or any Cardinal Affiliate
other than the Plant; and (aa) any severance costs or other costs
resulting from termination of any Plant Employee(s) in connection with
this Agreement and the sale and transfer of the Transferred Business, all
as estimated and set forth on SCHEDULE 1.3.1(a)(ii) (collectively, the
"TRANSACTION COSTS"); less (A) the accrued but unpaid vacation liability
as of the Closing assumed by the Purchaser for the Transferring Employees,
an estimate of which as of the Effective Date is set forth on SCHEDULE
3.1.17 of the Disclosure Schedule, which Seller shall update at least two
(2) business days prior to Closing; and (B) the accrued bonus liability
assumed by the Purchaser pursuant to Section 1.4.1(h) (the "INITIAL
PURCHASE PRICE"). At least two (2) business days prior to Closing, Seller
shall provide to Purchaser an updated SCHEDULE 1.3.1(a)(ii) setting forth
the estimated Transaction Costs. The *; provided, however, that * under
that certain Supply Agreement between Seller and Xxxxx, dated April 1,
2004, as amended (the "SUPPLY AGREEMENT").
(b) Payment Method. All payments under this Agreement shall be
payable by wire transfer of immediately available funds to such account as
the receiving party shall designate in writing to the paying party.
(c) Post-Closing Adjustment. (i) Within thirty (30) calendar
days after the Closing, Seller shall prepare and deliver to the Purchaser
(x) an unaudited balance sheet of the Transferred Business at the Closing
Date (the "CLOSING DATE BALANCE SHEET"), and (y) an adjusted * of the
Purchased Assets as of the Closing Date *. The Closing Date Balance Sheet
* shall be prepared in accordance with GAAP applied on a consistent basis
with the Seller's normal carrying values for assets and consistent with *,
as reduced to reflect the accelerated depreciation as set forth above.
Seller shall also within such thirty (30) day period prepare and deliver
to Purchaser an adjusted SCHEDULE 1.3.1(a)(ii) showing all Transaction
Costs, adjusted to reflect any additional Transaction Costs which arose or
of which Seller became aware subsequent to the Closing and any adjustments
to previous estimates of Transaction Costs (the "ADJUSTED TRANSACTION
COSTS" and as aggregated with the FINAL CLOSING VALUE, the "FINAL PURCHASE
PRICE"). Purchaser shall be given access during Seller's normal business
hours and upon at least two (2) business days advance notice, to certain
representatives of Seller to discuss and review, as permitted by such
representatives, such books and records of Seller as shall be necessary to
verify the Closing Date Balance Sheet and the Final Purchase Price;
provided, however, that Seller shall not be required to provide access to
or review of books and records Seller reasonably believes are not directly
related to the calculation of the Final Purchase Price. If Purchaser does
not object to Seller's determination of the Final Purchase Price within
fifteen (15) business days following delivery of Seller's calculations of
such amount, the Final Purchase Price as delivered by Seller shall be
deemed accepted. If Purchaser objects to such determination of the Final
Purchase Price, Purchaser shall notify Seller of such objection in writing
within such fifteen (15) day period, stating in such written objection the
reasons therefor and setting forth Purchaser's calculations of the Final
Purchase Price. Upon receipt by Seller of such written objection, the
parties shall attempt to resolve the disagreement through negotiation. If
the parties cannot resolve such disagreement within thirty (30)
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* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
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days following the end of the foregoing fifteen (15) business day period,
the parties shall submit the matter for resolution to a nationally
recognized firm of independent certified public accountants not affiliated
with either party. The costs of any such resolution by independent
accountants shall be borne by the party whose calculation differs most
from the calculation determined by such accountants.
(ii) Based on the Final Purchase Price as determined above,
the Initial Purchase Price shall be increased or decreased, as the case
may be, on a dollar-for-dollar basis by the amount by which the Final
Purchase Price is more or less than the Initial Purchase Price paid to
Seller. Any increase in the Initial Purchase Price as a result of such
adjustment, if any, shall be promptly paid by the Purchaser to Seller, by
wire transfer, within five (5) business days after final determination of
the Final Purchase Price. Any decrease in the Initial Purchase Price as a
result of such adjustment, if any, shall be paid by the Seller to the
Purchaser, by wire transfer, within five (5) business days after final
determination of the Final Purchase Price.
1.3.2 Allocation of Purchase Price. The Purchase Price and the
Assumed Liabilities shall be allocated among the Purchased Assets acquired
hereunder in a manner to be determined by Purchaser prior to Closing in its
reasonable discretion with the consent of Seller, which consent shall not be
unreasonably withheld. Seller and Purchaser shall file all applicable federal,
state, local and foreign tax returns and forms, including Form 8594, consistent
with such allocation.
1.4 Liabilities and Obligations of Seller.
1.4.1 Assumed Liabilities. At the Closing, Purchaser shall assume
and agree to pay, discharge or perform, as appropriate, the following, and only
the following, liabilities and obligations of Seller (the "ASSUMED
LIABILITIES"):
(a) all liabilities and obligations of Seller in respect of
the Assumed Contracts (including any exhibits or other attachments);
provided, that Purchaser shall not, and does not, assume or agree to pay,
discharge or perform (i) any liabilities or obligations which accrued
during the Seller Operating Period and are required to be performed by
Seller prior to the Closing Date, (ii) any liabilities or obligations
arising out of any breach by Seller of any provision of any Assumed
Contract between the Original Transfer Date and the Closing Date (the
"SELLER OPERATING PERIOD"), or the date of assignment if later, or (iii)
amounts owed by Seller for goods purchased by Seller, or services provided
to Seller, prior to the Closing Date;
(b) all liabilities and obligations of Seller in respect of
the Real Property Lease (including any exhibits or other attachments);
provided, that Purchaser shall not, and does not, assume or agree to pay,
discharge or perform (i) any liabilities or payments which arose and
accrued during the Seller Operating Period and are required to be made by
Seller prior to the Closing Date, or (ii) any liabilities or obligations
arising out of any breach by Seller of any provision of the Real Property
Lease during the Seller Operating Period;
(c) all liabilities relating to the Transferred Business other
than those liabilities which were incurred by Seller during the Seller
Operating Period or accrued
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during the Seller Operating Period and are not otherwise assumed by
Purchaser as provided herein;
(d) any liability or obligation with respect to the return of
Xxxxx Products manufactured on or prior to the Closing Date by Seller
(without prejudice to any rights of Purchaser or Parent under the Supply
Agreement);
(e) all liabilities arising out of infringement, personal
injury or otherwise related to harm caused by Xxxxx Products manufactured
by Seller or any Cardinal Affiliate in compliance with the Supply
Agreement or manufactured by Purchaser or Parent;
(f) any liability or obligation that arises after the Closing
and relates solely to periods after the Closing or that relates to the
sale and transfer of the Transferred Business with respect to any Plant
Employees, whether or not employed or engaged by Purchaser after the
Closing, including without limitation, any liability for salaries, wages,
payroll taxes, severance pay entitlements, health, medical, retirement,
vacation or deferred compensation benefits or any other obligations or
expenses arising out of or relating to the employment by Purchaser of the
Plant Employees or the termination of such employees. Purchaser shall
retain and shall assume and discharge all liabilities and costs under the
Consolidated Omnibus Budget Reconciliation Act, as amended ("COBRA")
(including liabilities for violations thereof) as to those Plant Employees
that commence employment with Purchaser immediately following the Closing
for all "qualifying events" (as defined in COBRA) occurring with respect
to those Plant Employees and their dependents that commence employment
with Purchaser after the Closing;
(g) all accrued but unpaid vacation determined as of the
Closing Date for those Plant Employees that accept employment offers from
Purchaser (the "TRANSFERRING EMPLOYEES") as set forth on SCHEDULE 3.1.17
of the Disclosure Schedule ;
(h) the accrual for annual incentive bonus payments to Plant
Employees participating in Cardinal Health's management incentive program
for fiscal year 2006 as reflected in the Closing Date Balance Sheet;
(i) all liabilities or obligations under Environmental
Regulations applicable to the operations of the Plant or the land where
the Plant is located, excluding only those liabilities directly resulting
from Seller's violation of Environmental Regulations during the Seller
Operating Period; and
(j) any sales and transfer taxes and other governmental
charges (excluding any taxes or other governmental charges due and payable
upon the income of Seller) payable upon the sale or transfer of the
Purchased Assets hereunder which are not paid to Seller as part of the
Transaction Costs.
1.4.2 Liabilities and Obligations Retained by Seller. In no event,
however, shall Purchaser assume or incur, nor does Purchaser assume or incur,
any liability or obligation of Seller, under this Section 1.4 or otherwise, in
respect of any of the following:
(a) any federal, state or local income or other tax payable
with respect to operation of the Purchased Assets or the Transferred
Business during the Seller
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Operating Period, or the other business, assets, properties or operations
of Seller or any of its subsidiaries;
(b) any liability or obligation under or in connection with
Excluded Assets;
(c) any liability or obligation relating to any present or
former employees, agents, independent contractors or consultants of
Seller, including any liability for accrued salaries, wages, payroll
taxes, severance pay entitlements, health, medical (including COBRA),
retirement, vacation or deferred compensation benefits or any other
obligations or expenses arising out of or relating to the employment by
Seller of the Plant Employees or Seller's termination of such employees
except as expressly provided for in Sections 1.4.1 (f), (g) and (h); or
(d) any other liability or obligation of Seller other than as
expressly set forth in Section 1.4.1.
1.5 Proration of Certain Items. Payments in respect of the Real Property
Lease or equipment leases included in the Assumed Contracts in respect of the
month in which the Closing occurs and utility, water and sewer use charges shall
be apportioned and adjusted as of the Closing Date. Appropriate cash payments by
Seller or Purchaser, as the case may require, shall be made from time to time,
as soon as practicable after the facts giving rise to the obligation for such
payments are known, to give effect to the prorations provided for in this
Section 1.5.
ARTICLE II - CLOSING AND THIRD PARTY CONSENTS
2.1 Time and Place of Closing. Subject to the provisions of Section 8.1
hereof, the closing (the "CLOSING") of the transactions contemplated by this
Agreement shall be coordinated by Xxxxxx & Bird LLP, counsel to the Purchaser,
and shall be effected by fax, courier, or other means, with or without a
physical meeting of the parties and shall take place at 10:00 A.M., local time,
on July 31, 2006, or such other time or date as the parties may mutually agree
in writing. The date of the Closing is sometimes herein referred to as the
"CLOSING DATE." At the Closing, possession and operating control of the
Purchased Assets shall be delivered and/or tendered by Seller to Purchaser and
title to the Purchased Assets shall pass to Purchaser upon such delivery or
tender of the Purchased Assets.
2.2 Items to be Delivered at Closing. At the Closing and subject to the
terms and conditions herein contained:
(a) Seller shall deliver to Purchaser the following:
(i) a duly executed Xxxx of Sale and Assignment and
Assumption Agreement in substantially the forms
attached hereto as EXHIBITS A-1 and A-2 hereto,
respectively;
(ii) actual possession and operating control of all of
the Purchased Assets;
(iii) a duly executed Assignment of Lease ("ASSIGNMENT
OF LEASE"), Landlord Consent to Assignment
("CONSENT TO ASSIGNMENT") and an Escrow Agreement
as contemplated by Section 2.3(b) ("LEASE
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ESCROW AGREEMENT") (approved in writing by the
Escrow Agent) in substantially the forms of
EXHIBITS X-0, X-0 and B-3 hereto, respectively;
(iv) an Amendment to that certain Commercial Services
Agreement between the Seller and Xxxxx in
substantially the form of EXHIBIT C hereto (the
"SERVICES AGREEMENT") duly executed by Seller;
(v) the Commercial Manufacturing Agreement (Granulate)
in substantially the form of EXHIBIT D hereto (the
"GRANULATE SUPPLY AGREEMENT") duly executed by
Seller;
(vi) the Commercial Packaging Agreement in
substantially the form of EXHIBIT E hereto (the
"PACKAGING AGREEMENT") duly executed by Seller;
(vii) the Quality Agreement in substantially the form of
EXHIBIT F hereto (the "QUALITY AGREEMENTS") duly
executed by Seller; and
(viii) a Transition Services Agreement in substantially
the form of EXHIBIT G hereto (the "TRANSITION
AGREEMENT") duly executed by Seller.
(b) Purchaser shall deliver to Seller the following:
(i) the Purchase Price payment in accordance with
Section 1.3.1(a) hereof;
(ii) a duly executed Assignment of Lease, Consent to
Assignment and Lease Escrow Agreement (approved in
writing by the Escrow Agent);
(iii) a duly executed Services Agreement;
(iv) a duly executed Granulate Supply Agreement and
Packaging Agreement and Quality Agreement;
(v) a duly executed Assignment and Assumption
Agreement; and
(vi) a duly executed Transition Agreement.
(c) At or prior to the Closing, the parties hereto shall also
deliver to each other the agreements, opinions, certificates and other
documents and instruments referred to in Article V hereof.
2.3 Third Party Consents.
(a) SCHEDULE 2.3 sets forth and describes all material approvals, consents
or waivers required under any Assumed Contract listed on Schedule 3.1.16 which
shall be required by the parties as a condition to Closing pursuant to Sections
5.1.5 and 5.2.6 (the "Required Consents"). To the extent that Seller's rights
under any Assumed Contract or other Purchased Asset may not be assigned without
the approval, consent or waiver of another person, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof or be unlawful, and the parties shall use their
reasonable
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commercial efforts to obtain any such required approval(s), consent(s) and
waiver(s) as promptly as possible. Subject to Section 2.3(b) and Section 6.2(g),
if any such approval, consent or waiver shall not be obtained or if any
attempted assignment would be ineffective or would impair Purchaser's rights
under the Assumed Contract or other Purchased Asset in question so that
Purchaser would not acquire the benefit of all such rights and if Purchaser
shall elect to effect the Closing notwithstanding its rights under 5.1.5 to the
contrary, Seller, to the maximum extent permitted by law and the Assumed
Contract or other Purchased Asset, shall act after the Closing as Purchaser's
agent in order to obtain for it the benefit of all such rights thereunder and
shall cooperate with Purchaser in any other mutually agreeable arrangements to
provide the benefit of all such rights to Purchaser.
(b) In connection with the Assignment of Lease and Consent to Assignment:
(i) Purchaser shall deliver to JPMorgan Chase Bank or other
mutually acceptable escrow agent (the "ESCROW AGENT") at the Closing
immediately available funds totaling $2,169,233.76 (the "LEASE
ESCROW AMOUNT"), which amount shall be equal to the sum of all
Monthly Basic Rental (as defined in the Real Property Lease)
payments estimated to be due and payable to the landlord under the
Real Property Lease (the "LANDLORD") pursuant to the Real Property
Lease during the remainder of the term of the Real Property Lease
commencing on the Closing Date and ending on March 31, 2011. The
Lease Escrow Amount shall be held in accordance with the Lease
Escrow Agreement, pursuant to which an amount equal to the Monthly
Basic Rental payments for one (1) month shall be released directly
to the Landlord on a monthly basis. Notwithstanding the foregoing,
Seller agrees that upon receipt of satisfactory evidence that it has
been released by the Landlord from any obligations and liabilities
with respect to the Real Property Lease (the "SELLER RELEASE"), it
shall, jointly with Purchaser, execute and deliver to Escrow Agent a
written notice pursuant to Section 4(B) of the Lease Escrow
Agreement instructing the Escrow Agent to release all of the balance
of the Lease Escrow Amount to Purchaser.
(ii) In the event that the Landlord does not execute the
Consent to Assignment, and in the event the parties mutually agree
that (x) notwithstanding such lack of Landlord consent, the parties
shall consummate the Closing, then the failure of Seller to obtain
such consent shall not be deemed a breach of Seller's
representations, warranties or obligations pursuant to Sections
3.1.3, 3.1.6, 3.1.16, or 4.1.6 of this Agreement or for any other
purposes of this Agreement or the Assignment of Lease, and Seller
and all Cardinal Affiliates shall have no liability under this
Agreement, including without limitation, under Section 6.1 of this
Agreement, to Purchaser or any Affiliate of Purchaser or any
Indemnified Purchaser Party with respect to such failure to obtain
such consent of Landlord, and (y) the parties shall use their
reasonable commercial efforts to obtain such Landlord consent as
promptly as possible following the Closing.
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ARTICLE III - REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. Seller hereby represents and
warrants to Purchaser that, except as set forth on a Disclosure Schedule
delivered to Purchaser with this Agreement, each of which exceptions shall
specifically identify the relevant subsection hereof to which it relates and
shall be deemed to be representations and warranties as if made hereunder (the
"DISCLOSURE SCHEDULE"):
3.1.1 Corporate Existence. Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and qualified to do business in the State of Texas.
3.1.2 Corporate Power; Authorization; Enforceable Obligations.
Seller has the corporate power, authority and legal right to execute, deliver
and perform this Agreement and the other agreements, documents and instruments
required to be delivered by Seller in connection with this Agreement. All
agreements, documents, and instruments required to be delivered by Seller
pursuant to this Agreement are sometimes collectively referred to hereinafter as
the "SELLER'S DOCUMENTS". The execution, delivery and performance by Seller of
this Agreement and of the Seller's Documents have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been, and
the Seller's Documents will be, duly executed and delivered on behalf of Seller
by duly authorized officers of Seller, and this Agreement constitutes, and the
Seller's Documents when executed and delivered will constitute, the legal, valid
and binding obligations of Seller, enforceable against Seller in accordance with
their respective terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally or to general principles of equity.
3.1.3 Validity of Contemplated Transactions, Etc. The execution,
delivery and performance of this Agreement and each of Seller's Documents by
Seller does not and will not violate, conflict with or result in the breach (or
would result in a breach but for any requirement of notice or lapse of time or
both) of any term, condition or provision of, or require the consent (except as
set forth on SCHEDULE 3.1.3 of the Disclosure Schedule) of any other person
under, (a) any existing law, ordinance, or governmental rule or regulation to
which Seller or any of the Purchased Assets is subject, (b) any existing
judgment, order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is applicable to
Seller or any of the Purchased Assets, (c) the certificate of formation and
operating agreement, as amended, of Seller, or (d) any mortgage, indenture,
agreement, contract, commitment, lease, plan, Authorization, or other
instrument, document or understanding, oral or written, by which any of the
Transferred Business, the Purchased Assets or the Purchaser may be bound or
affected, or give any party with rights thereunder the right to terminate,
modify, accelerate or otherwise change the existing rights or obligations of
Seller thereunder, as such rights or obligations relate exclusively or primarily
to the Transferred Business or Purchased Assets, except where such breach or
failure to obtain such consent would not have a material adverse affect on the
Transferred Business or the Purchased Assets. Except as aforesaid, no
Authorization, approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in connection
with the execution, delivery or performance of this Agreement or any of the
Seller's Documents by Seller.
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3.1.4 No Third Party Rights. Except for this Agreement, the Seller's
Documents or agreements disclosed on SCHEDULE 3.1.4 of the Disclosure Schedule,
there are no existing agreements, options, commitments or rights with, of or to
any person to acquire any of Seller's assets, properties or rights included in
the Purchased Assets or any interest therein.
3.1.5 Financial Information. All financial information relating
exclusively to the Transferred Business or the Purchased Assets provided by the
Seller to the Purchaser, including without limitation the Interim Balance Sheet
(such balance sheet, the "BALANCE SHEET" and such date, the "BALANCE SHEET
DATE") (the "FINANCIAL INFORMATION"):
(a) is in all material respects true, complete and correct;
(b) in the case of historical information, is in accordance
with the books and records of Seller; and
(c) in the case of historical information, presents fairly the
results of operations for the periods then ending and other
information concerning the condition of the Plant and the other
Purchased Assets as of the respective dates thereof.
During the term of the Supply Agreement, Seller has accounted for the
Xxxxx Products' profit split consistent with Article IX of the Supply Agreement
in all material respects and has no unallocated manufacturing or purchase price
variations that are creditable or payable to either party as of the Closing.
3.1.6 Title to Property; Absence of Encumbrances, etc.
(a) A true and correct copy of all amendments to the Real
Property Lease entered into during the Seller Operating Period has been
delivered to Purchaser. To the Seller's knowledge, the Real Property Lease
is valid, binding and enforceable in accordance with its terms and is in
full force and effect, and there are no offsets or defenses by either
landlord or tenant thereunder that accrued during the Seller Operating
Period. No events or circumstances have occurred during the Seller
Operating Period which, with or without notice or lapse of time or both,
would constitute defaults, under the Real Property Lease.
(b) To the knowledge of Seller without investigation, other
than as set forth on SCHEDULE 3.1.13 of the Disclosure Schedule, the Plant
has been operated by Seller during the Seller Operating Period in
compliance in all material respects with all applicable federal, state and
local laws, regulations, ordinances, standards and orders, including,
without limitation, applicable regulations, ordinances, standards and
orders relating to operation of the Transferred Business at the Plant.
(c) To the knowledge of Seller, there is no pending
condemnation action with respect to the Plant, or any part thereof. Other
than as set forth on SCHEDULE 3.1.6, Seller has not received written
notice of, and, to the Seller's knowledge, there is no: pending or
contemplated change in any governmental regulation or private restriction
applicable to the Plant; pending or threatened judicial or administrative
action or proceedings in any court or before any governmental authority or
arbitration board or tribunal; or any such action or proceeding pending or
threatened by adjacent landowners or other persons, any of which would
result in any material change in the condition of the Plant, or any part
thereof, or to the access to the Plant. Seller has
12
not received written notice of any contemplated improvements to the Plant
by any public authority, the costs of which are to be assessed, as special
taxes or otherwise, against the Plant or the owner or operator thereof in
the future.
3.1.7 Inventory. Any finished goods which are Xxxxx Products made
and not yet delivered under the Supply Agreement and included in the Inventory
were manufactured in all material respects in compliance with the Supply
Agreement and any work-in-process which is intended to be used in Xxxxx Products
and is included in the Inventory has been manufactured in all material respects,
to the extent specifically applicable, in compliance with the Supply Agreement.
To the extent the Inventory was acquired during the Seller Operating Period,
such Inventory was acquired and has been maintained in the ordinary course of
business. Except as otherwise expressly set forth herein, all Inventory is
transferred "AS IS" without warranty or representation of any kind.
3.1.8 Taxes and Tax Returns. Except as set forth on SCHEDULE 3.1.8
of the Disclosure Schedule, all material federal, state, local and foreign tax
returns, reports, statements and other similar filings required to be filed by
Seller with respect to the Purchased Assets (the "TAX RETURNS") with respect to
any federal, state, local or foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions (including
without limitation all income tax, unemployment compensation, social security,
payroll, sales and use, excise, privilege, property, ad valorem, franchise,
license, school and any other tax or similar governmental charge or imposition
under laws of the United States or any state or political subdivision thereof or
any foreign country or political subdivision thereof) with respect to the
Purchased Assets (the "TAXES"), have been timely filed (taking extensions into
account) with the appropriate governmental agencies in all jurisdictions in
which such Tax Returns are required to be filed and all such Tax Returns
materially reflect the liabilities of Seller for Taxes for the periods, property
or events covered thereby. All Taxes, including without limitation those which
are called for by the Tax Returns or heretofore or hereafter claimed to be due
by any taxing authority from Seller, have been properly accrued or paid (or, in
the case of any contested taxes, Seller has established an adequate reserve) and
the amount of accruals for Taxes recorded by Seller on its books is adequate to
cover the Tax liabilities of Seller. To the Seller's knowledge, there are no
pending tax examinations of or tax claims asserted against any of the Purchased
Assets. There are no tax liens (other than any lien for current Taxes not yet
due and payable) on any of the Purchased Assets. Seller has made all deposits
required by law to be made by it with respect to Plant Employees' withholding
and other employment Taxes relating to the Plant Employees, including without
limitation the portion of such deposits relating to Taxes imposed upon Seller.
3.1.9 Books and Records. The Books and Records and the accounts of
Seller which relate to and were created by Seller during the Seller Operating
Period accurately and fairly reflect, in reasonable detail, all of the
transactions regarding the Plant, the Transferred Business and the Purchased
Assets.
3.1.10 Existing Condition. Since the Balance Sheet Date, Seller has
not:
(a) incurred any liabilities in connection with the
Transferred Business, other than liabilities incurred in the ordinary
course of the Transferred Business consistent with past practice, or
failed to pay or discharge when due any such liabilities of which the
failure to pay or discharge has caused or would reasonably be expected to
13
cause any material damage or risk of material loss to the Purchased Assets
or the Transferred Business;
(b) sold, encumbered, assigned or transferred any material
assets or properties which would have been included in the Purchased
Assets if the Closing had been held on the Balance Sheet Date or on any
date since then, except for the sale of inventory in the ordinary course
of business consistent with past practice and the grant of licenses that
are in the ordinary course of business;
(c) mortgaged, pledged or subjected any of the Purchased
Assets to any mortgage, lien, pledge, security interest, conditional sales
contract or other encumbrance of any nature whatsoever, except for
Permitted Liens or liens that are in the ordinary course of business;
(d) made or suffered any amendment or termination of any
Assumed Contract;
(e) suffered any damage, destruction or loss, whether or not
covered by insurance, (i) materially and adversely affecting the
Transferred Business or the Purchased Assets or (ii) of any item or items
included within the Purchased Assets carried on its books of account
individually or in the aggregate at more than $100,000,;
(f) suffered any material adverse change in the Transferred
Business or the Purchase Assets;
(g) received notice or had knowledge of any occurrence, event
or condition which is reasonably likely to have a material adverse effect
on the Transferred Business or the Purchased Assets;
(h) made commitments or agreements for capital expenditures or
capital additions or betterments relating to the Transferred Business or
the Purchased Assets exceeding in the aggregate $100,000;
(i) increased the salaries or other compensation of, or made
any advance (excluding advances for ordinary and necessary business
expenses) or loan to, any of the Plant Employees or made any increase in,
or any addition to, other benefits to which any such persons may be
entitled, except for changes to Plant Employee Plans, annual salary
increases or bonus awards made in the ordinary course of business
consistent with past practice; or
(j) changed any of the accounting principles followed by it
with respect to the Transferred Business or Purchased Assets or the
methods of applying such principles.
3.1.11 Title to Assets. Except as set forth on SCHEDULE 3.1.11 of
the Disclosure Schedule, Seller has good, valid and marketable title to all of
its properties and assets, real, personal and mixed, which would be included in
the Purchased Assets if the Closing took place on the Effective Date, which it
purports to own, and has good leasehold title to those properties and assets it
purports to lease, including without limitation all Tangible Personal Property,
all Inventory and, all Books and Records transferred hereunder or licensed to
Purchaser, free and clear of all mortgages, liens, pledges, security interests,
charges, claims, restrictions and other encumbrances and defects of title of any
nature whatsoever (collectively
14
"LIENS"), except for Liens that: (i) were in existence prior to the Seller
Operating Period or otherwise resulting from any act or omission of Purchaser,
Xxxxx or any Xxxxx Affiliate, or (ii) are immaterial in character, amount, and
extent, and which do not materially detract from the value or interfere with the
present use of the Purchased Assets or conduct of the Transferred Business
(collectively, "PERMITTED LIENS").
3.1.12 Condition and Sufficiency of Assets. All equipment and other
items of tangible property and assets included in the Purchased Assets are
transferred "AS IS" without warranty or representation of any kind other than as
expressly set forth in Section 3.1.11. There are no tangible, material assets
employed by Seller in manufacturing the Xxxxx Products at the Plant that are not
included in the Purchased Assets, other than the Excluded Assets and those
assets of Purchaser identified on SCHEDULE 1.1.1(b)(i).
3.1.13 Compliance with Regulations. Except as set forth on SCHEDULE
3.1.13 of the Disclosure Schedule, to the knowledge of Seller, during the Seller
Operating Period, Seller's operation of the Transferred Business has complied in
all material respects with each, and is not in violation of any, law, ordinance,
governmental or regulatory rule or regulation, judgment, decision or order,
whether federal, state, local or foreign, applicable to the Transferred Business
("REGULATIONS").
3.1.14 Litigation. Except as set forth on SCHEDULE 3.1.14 of the
Disclosure Schedule, no litigation, arbitration, investigation or other
proceeding of or before any court, arbitrator or governmental or regulatory
official, body or authority is pending against Seller or, to the knowledge of
Seller, is threatened against Seller which could reasonably be expected to have
a materially adverse effect on the Transferred Business, the Purchased Assets or
the transactions contemplated by this Agreement.
3.1.15 Insurance. [Intentionally Omitted]
3.1.16 Agreements, Contracts and Commitments. SCHEDULE 3.1.16 of the
Disclosure Schedule contains accurate lists of the following agreements,
contracts, leases and other documents and understandings (whether written or
oral) to which Seller is a party or has rights with respect to the Transferred
Business or by which any of the Purchased Assets may be bound or affected:
(a) any agreement, contract or commitment with any Plant
Employee or consultant or advisor who provides services relating to the
Transferred Business or the Purchased Assets involving greater than
$50,000 per year or that includes severance or similar benefits;
(b) any agreement, contract or commitment for the future
purchase by Seller of products or services relating to the Transferred
Business which involves $50,000 or more;
(c) any partnership, joint venture, sales agency or similar
agreement, contract or commitment relating to the Transferred Business;
(d) any lease under which Seller is either a lessor or lessee
or relating to any property at which any of the Purchased Assets are
located;
(e) any deed of trust, mortgage, lien or other encumbrance
affecting any of the Purchased Assets;
15
(f) any agreement, contract or commitment for any capital
expenditure or leasehold improvement for the Transferred Business or the
Purchased Assets in excess of $50,000;
(g) any license, franchise, computer service, distributorship
or other agreement which relates in whole or in part to any software,
patent, trademark, trade name, service xxxx or copyright or to any ideas,
technical assistance or other know-how of third parties used by Seller
solely in the conduct of the Transferred Business and included in the
Purchased Assets;
(h) any agreement containing covenants that in any way purport
to restrict the operation of the Transferred Business or limit the freedom
of the operator of the Transferred Business to engage in any line of
business or to compete with any person, including without limitation any
agreements containing any exclusive or semi-exclusive arrangements; and
(i) any other agreement, contract or commitment relating to
the Transferred Business not otherwise listed on SCHEDULE 3.1.16 and which
either (w) continues over a period of more than six months from the
Effective Date, (x) exceeds $50,000 in value, (y) is otherwise material to
the Transferred Business or the Purchased Assets or (z) contains
termination or other provisions triggered by the transactions contemplated
by this Agreement.
Each of the agreements, contracts, commitments, leases, plans
and other instruments, documents and undertakings listed on SCHEDULE
3.1.16, or not required to be listed thereon because of the amount
thereof, including without limitation, outstanding purchase orders issued
by Seller prior to the Closing in the ordinary course of business and
related to the Transferred Business, under which Purchaser is acquiring
rights or obligations hereunder, except for those listed on SCHEDULE
1.1.2(d) or as otherwise set forth on the Disclosure Schedule, is referred
to herein as an "ASSUMED CONTRACT." To Seller's knowledge, each Assumed
Contract is valid and enforceable against the parties thereto in
accordance with its terms, subject to, as to enforcement, (i) to
bankruptcy, insolvency, reorganization, arrangement, moratorium, and other
laws of general applicability relating to or affecting creditor's rights,
(ii) to general principles of equity, whether such enforcement is
considered in a proceeding in equity or at law. With regard to each
Assumed Contract listed on SCHEDULE 3.1.16 to which Seller is a party,
Seller is, and to the knowledge of Seller, all other parties thereto are,
in material compliance with the provisions thereof; Seller is not, and to
the knowledge of Seller, no other party thereto is, in material default in
the performance, observance or fulfillment of any obligation, covenant or
condition contained therein; and to Seller's knowledge no event has
occurred which with or without the giving of notice or lapse of time, or
both, would constitute a material default thereunder. Except as set forth
and described in SCHEDULE 2.3, no Assumed Contract listed on Schedule
3.1.16 and material to the operation of the Transferred Business requires
a consent of any party to its assignment in connection with the
transactions contemplated by this Agreement.
3.1.17 Additional Information. SCHEDULE 3.1.17 of the Disclosure
Schedule contains accurate lists of the following, the names and titles of
and current (as of July 17, 2006) annual base salary or hourly rate for
each person employed by Seller (directly or
16
by way of an employee leasing or similar arrangement) at the Plant as of
the Effective Date (the "PLANT EMPLOYEES"), and each temporary employee,
leased employee, independent contractor or other person providing services
at the Plant, and together with a statement of the full amount and nature
of any other remuneration, whether in cash or kind, paid to each such
person during the most recent fiscal year or payable to each such person
in the future, including the bonuses accrued for each such person and the
vacation and severance benefits to which each such person is entitled,
including accrued but unpaid vacation estimated as of the Closing Date.
3.1.18 Employee Benefit Plans and Labor Matters.
(a) Seller is not a party to any collective bargaining
agreement or any other agreement which determines the terms and conditions
of employment of any Plant Employee. No collective bargaining agent has
been certified as a representative of any of the Plant Employees and to
Seller's knowledge no representation campaign or election is now in
progress with respect to any of the Plant Employees. Seller has not
suffered any strike, slowdown, picketing or work stoppage by any union or
other group of employees affecting the Transferred Business; and to the
knowledge of Seller, there are no efforts underway or threats to effect
any of same.
(b) With respect to Plant Employees, Seller is in compliance
in all material respects with all federal, state and local laws and
regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours, and there is no unfair labor
practice complaint relating to Plant Employees against Seller pending or,
to the knowledge of Seller, threatened.
(c) Except for joint communications with Purchaser or
communications authorized or approved by Purchaser, no representations
have been made by Seller to Plant Employees with respect to Purchaser's
intentions to employ, or not to employ, the Plant Employees or with
respect to the conditions of any such employment.
3.1.19 Business Relations. There exists no actual or, to the
knowledge of Seller, threatened termination, cancellation or limitation of, or
any adverse modification or change in, the business or business relationship of
Seller with any supplier relating to the Transferred Business, and to Seller's
knowledge, there exists no present condition or state of facts or circumstances
that would reasonably be expected to adversely affect the Transferred Business
or prevent Purchaser from conducting such business or business relationships
with any such supplier in the same manner as heretofore conducted by Seller.
3.1.20 Intellectual Property.
(a) To the knowledge of Seller, no Plant Employee or
consultant of Seller which provides services relating to the Transferred
Business is in violation of any requirement of law applicable to such
employee or consultant, or any material term of any employment or
consulting agreement, any patent or invention disclosure agreement, any
non-competition or non-disclosure agreement, or any other contract or
agreement relating to the relationship of such employee or consultant with
Seller.
(b) Seller has used reasonable efforts to keep confidential
the designs, plans, trade secrets, source codes, inventions, processes,
procedures, research records,
17
know-how and formulae of Seller with respect to the Transferred Business,
the value of which is contingent upon maintenance of confidentiality
thereof.
(c) All computer software of Seller included in the Books and
Records (the "SOFTWARE") is provided and transferred "AS IS" with no
warranty or representation of any kind.
3.1.21 Environmental Matters.
(a) Seller has obtained and holds all permits, licenses,
easements, rights, applications, filings, registrations and other
authorizations ("AUTHORIZATIONS") required in connection with the
Transferred Business under applicable Regulations relating to pollution or
protection of the environment, including Regulations relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes into the environment (including without limitation ambient air,
surface water, groundwater, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes (collectively,
"ENVIRONMENTAL REGULATIONS").
(b) Seller has operated the Plant during the Seller Operating
Period substantially in compliance with the operation of the Plant during
the period immediately prior to the Original Transfer Date, and to its
knowledge, n in compliance with all Environmental Regulations. There is no
civil, criminal or administrative claim, action, demand, suit, proceeding,
study or investigation pending or, to the knowledge of Seller, threatened
against Seller under any Environmental Regulations and relating to the
operation of the Plant by Seller (an "ENVIRONMENTAL CLAIM").
(c) Except as set forth on SCHEDULE 3.1.21 of the Disclosure
Schedule, as of the Closing Date, Seller has not received written notice
of any past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere
with or prevent compliance or continued compliance by Seller with respect
to its operation of the Plant or the Transferred Business with any
Environmental Regulations or any order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder or which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge, release or threatened release into
the environment, of any pollutant, contaminant, chemical, or industrial,
toxic or hazardous substance or waste at the Plant or the land where the
Plant is located.
(d) Seller represents and warrants as of the Closing Date
that:
(i) Seller has not, and has no knowledge of any other
person who has, caused any Release, threatened Release, or disposal of any
Hazardous Material at the Plant during the Seller Operating Period; to
Seller's knowledge the Plant is not adversely affected by any Release,
threatened Release or disposal of a Hazardous Material originating or
emanating from any other property that occurred during the Seller
Operating Period;
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(ii) The Seller has not installed or created at the
Plant any: (a) underground storage tank, (b) material amounts of
asbestos-containing building material, (c) landfills or dumps, or (d)
hazardous waste management facility as defined pursuant to RCRA or any
comparable state law, or;
(iii) Seller has no notice or knowledge of any
Environmental Claim involving Seller's operation of the Plant or the land
where the Plant is located;
(iv) Seller has no knowledge of any imminent restriction
on the ownership, occupancy, use or transferability of the land where the
Plant is located in connection with any (a) Environmental Regulation or
(b) Release or disposal of a Hazardous Material; and
(v) To the knowledge of Seller, there are no conditions
or circumstances at the land where the Plant is located which would
reasonably be expected to pose a risk to the environment or the health or
safety of persons.
For purposes of this Section, the following terms shall have the following
meanings:
"HAZARDOUS MATERIAL" shall mean any substance, chemical, compound,
product, solid, gas, liquid, waste, byproduct, pollutant, contaminant or
material which is hazardous or toxic and includes, without limitation, (a)
asbestos, polychlorinated biphenyls, and petroleum (including crude oil or any
fraction thereof) and (b) any such material classified or regulated as
"hazardous" or "toxic" pursuant to any environmental law.
"RCRA" shall mean the Solid Waste Disposal Act, as amended by the Resource
Conversation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 USC 6901 et seq., and any future amendments that are made prior to
the Closing.
"RELEASE" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the indoor or outdoor environment, including, without limitation, the
abandonment or discarding of barrels, drums, containers, tanks, and other
receptacles containing any Hazardous Material.
3.1.22 Availability of Documents. Seller has made available to
Purchaser copies of all documents, including without limitation all agreements,
contracts, commitments, leases, plans, instruments, undertakings,
Authorizations, permits, licenses, patents, trademarks, trade names, service
marks, copyrights and applications therefor, listed in the Disclosure Schedule
or referred to herein. Such copies are true and complete and include all
amendments, supplements and modifications thereto or waivers currently in effect
thereunder.
3.1.23. Completeness of Disclosure. Except to the extent qualified
by Section 3.1.24, no representation or warranty by Seller in this Agreement nor
in any Disclosure Schedule, certificate, statement, document or instrument
furnished or to be furnished to Purchaser pursuant hereto, or in connection with
the negotiation, execution or performance of this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact required to be stated herein or therein or necessary to make any
statement herein or therein not misleading.
3.1.24 Qualification To the extent any representation or warranty of
Seller hereunder or in any Disclosure Schedule, certificate, statement, document
or instrument
19
furnished or to be furnished by Seller pursuant hereto relates to any act,
omission, fact or circumstance prior to the Seller Operating Period, such
representation or warranty is qualified by the representations and warranties
made by Xxxxx under the Original Purchase Agreement or in any Disclosure
Schedule, certificate, statement, document or instrument furnished or to be
furnished by Xxxxx pursuant thereto. Without limiting the generality of the
foregoing, any inaccuracy of a representation or warranty hereunder or in any
Disclosure Schedule, certificate, statement, document or instrument furnished or
to be furnished by Seller pursuant hereto attributable to an inaccuracy in the
Original Purchase Agreement or in any Disclosure Schedule, certificate,
statement, document or instrument furnished or to be furnished by Xxxxx pursuant
thereto is not, and shall not be deemed to be, a breach by Seller of any such
representation or warranty or of this Agreement.
3.2 Representations and Warranties of Purchaser. Purchaser represents and
warrants to Seller as follows:
3.2.1 Corporate Existence. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Purchaser is duly qualified to do business and is in good standing as
a foreign corporation in the State of Texas.
3.2.2 Corporate Power and Authorization. Purchaser has the corporate
power, authority and legal right to execute, deliver and perform this Agreement,
the Assignment and Assumption Agreement and the other agreements, documents and
instruments required to be executed and delivered by Purchaser in accordance
with the provisions hereof (collectively, the "PURCHASER'S DOCUMENTS"). The
execution, delivery and performance of this Agreement and Purchaser's Documents
by Purchaser have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by Purchaser and constitutes, and
Purchaser's Documents when executed and delivered will constitute, the legal,
valid and binding obligations of Purchaser enforceable against Purchaser in
accordance with their respective terms, subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights generally or to general principles of
equity.
3.2.3 Validity of Contemplated Transactions, Etc. The execution,
delivery and performance of this Agreement and Purchaser's Documents by
Purchaser does not and will not violate, conflict with or result in the breach
of any term, condition or provision of, or require the consent of any other
party to, (a) any existing law, ordinance, or governmental rule or regulation to
which Purchaser is subject, (b) any judgment, order, writ, injunction, decree or
award of any court, arbitrator of governmental or regulatory official, body or
authority which is applicable to Purchaser, (c) the certificate of incorporation
or bylaws of, or any securities issued by, Purchaser, or (d) any mortgage,
indenture, agreement, contract, commitment, lease, plan or other instrument,
document or understanding, oral or written, to which Purchaser is a party or by
which Purchaser is otherwise bound or affected. Except as aforesaid, no
authorization, approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is required in connection
with the execution, delivery and performance of this Agreement and Purchaser's
Documents by Purchaser.
3.2.4 Completeness of Disclosure. No representation or warranty by
Purchaser in this Agreement nor in any Disclosure Schedule, certificate,
statement, document or instrument furnished or to be furnished to Seller
pursuant hereto, or in connection with the negotiation, execution or performance
of this Agreement, contains or will contain any untrue statement of a
20
material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make any statement herein or therein
not misleading.
3.3 Survival of Representations and Warranties. All representations and
warranties made by the parties in this Agreement or in any Disclosure Schedule,
certificate, statement, document or instrument furnished hereunder shall survive
the Closing for a period of one year except for the representations and
warranties set forth in Sections 3.1.1 through 3.1.4, inclusive, Section 3.1.24
and Sections 3.2.1 through 3.2.4, inclusive, which shall survive the Closing for
two (2) years. Notwithstanding any investigation or audit conducted before or
after the Closing Date or the decision of any party to complete the Closing,
each party shall be entitled to rely upon the representations and warranties set
forth herein, provided, however, each party shall have an obligation to inform
the other party if it has actual knowledge of any violation of a representation
or warranty by the other party prior to Closing.
ARTICLE IV - AGREEMENTS PENDING CLOSING
4.1 Agreements of Seller Pending the Closing. Seller covenants and agrees
with Purchaser that, pending the Closing and except as otherwise agreed to in
writing by Purchaser:
4.1.1 Business in the Ordinary Course. Seller shall cause the
Transferred Business to be conducted solely in the ordinary course consistent
with Seller's past practice.
4.1.2 Existing Condition. Seller shall not cause nor voluntarily
permit to occur any of the events or occurrences described in Section 3.1.10
hereof.
4.1.3 Maintenance of Physical Assets and Business Relations. Seller
shall continue to maintain and service the physical and intangible assets
included in the Purchased Assets in the same manner as has been its past
practice. Seller shall use its reasonable commercial efforts to maintain the
relations and goodwill with suppliers, customers, the workforce and any others
having business relations relating to the Transferred Business.
4.1.4 Legal Compliance. Seller shall comply in all material respects
with all Regulations and Authorizations and all other laws, regulations and
ordinances applicable to the Transferred Business and the Purchased Assets.
4.1.5 Updated Schedules. Seller shall promptly disclose to Purchaser
in writing any information contained in the representations and warranties, the
Disclosure Schedules or the Schedules which, because of an event occurring after
the Effective Date, is incomplete or is no longer correct as of all times after
the Effective Date until the Closing Date and shall, two (2) days before the
Closing Date, document all such disclosures in an updated Disclosure Schedule or
Schedules. Such updated Disclosure Schedule or Schedules shall not be deemed to
amend or supplement the representations and warranties of Seller or the
Disclosure Schedules thereto or the Schedules unless Purchaser shall have
consented thereto in writing, which consent will not be unreasonably withheld.
4.1.6 Conduct of Business. Seller shall use reasonable efforts to
conduct the Transferred Business and operate the Purchased Assets in the
ordinary course and in such a manner that on the Closing Date the
representations and warranties of Seller contained in this Agreement shall be
true as though such representations and warranties were made on and as of such
date. Furthermore, Seller shall cooperate with Purchaser and use its reasonable
commercial efforts to cause all of the conditions to the obligations of
Purchaser and Seller under this Agreement to be satisfied on or prior to the
Closing Date. In the event that Seller determines that
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a condition is not reasonably likely to be so satisfied, Seller shall promptly
notify Purchaser of such determination.
4.1.7 Access. At all reasonable times prior to Closing, Purchaser
and its representatives shall have the right, upon reasonable advance notice,
to: (a) examine, inspect, and review the Transferred Business and the Purchased
Assets and all books, contracts, agreements, commitments, records and documents
of every kind relating to the Transferred Business or the Purchased Assets,
other than such information relating solely to Excluded Assets; and (b)
interview Plant Employees and suppliers of Seller relating to the Transferred
Business. Seller shall reasonably cooperate with Purchaser and its
representatives in conducting the reviews and other activities described in this
Section 4.1.7.
4.1.8 Press Releases. Except as required by applicable law, Seller
shall not make any public statement or release concerning this Agreement or the
transactions contemplated hereby except in accordance with Section 4.3. If
Seller determines that it shall be required by law to make disclosure of any
such information, Seller shall advise Purchaser as soon as reasonably
practicable and in any event prior to the making of such disclosure.
4.2 Agreements of Purchaser Pending the Closing. Purchaser covenants and
agrees with Seller that, pending the Closing and except as otherwise agreed to
in writing by Seller:
4.2.1 Actions of Purchaser. Purchaser shall cooperate with Seller
and use its reasonable commercial efforts to cause all of the conditions to the
obligations of Purchaser under this Agreement to be satisfied on or prior to the
Closing Date. In the event that Purchaser determines that a condition is not
reasonably likely to be so satisfied, Purchaser shall promptly notify Seller of
such determination.
4.2.2 Publicity. Except as required by applicable law, Purchaser
shall not make any public statement or release concerning this Agreement or the
transactions contemplated hereby except in accordance with Section 4.3. If
Purchaser determines that it shall be required by law to make disclosure of any
such information, Purchaser shall advise Seller as soon as reasonably
practicable and in any event prior to the making of such disclosure, and shall
permit Seller to review and comment upon any such statement or release prior to
such disclosure, and Purchaser will work in good faith with Seller to be
responsive to any comments made by Seller with respect to any such statement or
release. Notwithstanding the foregoing, to the extent Purchaser is required by
applicable law to make timely disclosure of any information that prevents
Purchaser from giving Seller a reasonable opportunity to comment on such
disclosure, Purchaser shall be permitted to make such statement or release
provided that Purchaser has notified Seller in writing and provided a copy of
such proposed statement or disclosure prior to the release of such statement or
disclosure, and has used reasonable efforts to permit Seller to review and
comment upon such statement or disclosure prior to its release.
4.3 Press Releases. From time to time after the execution of this
Agreement, Purchaser and Seller may issue mutually acceptable joint or
coordinated press releases and shall reasonably cooperate with each other to
coordinate and approve any press release or employee briefings.
ARTICLE V - CONDITIONS PRECEDENT TO THE CLOSING
5.1 Conditions Precedent to Purchaser's Obligations. The obligation of
Purchaser under this Agreement to effect the Closing is subject to the
fulfillment or satisfaction, prior to or
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at the Closing, of each of the following conditions precedent (unless waived in
writing by Purchaser):
5.1.1 Representations and Warranties True as of the Closing Date.
The representations and warranties of Seller contained in this Agreement or in
any Disclosure Schedule, certificate, statement, document or instrument
furnished to Purchaser hereunder shall have been true in all material respects
on the Effective Date without regard to any updated Disclosure Schedule
furnished to Purchaser after the Effective Date and prior to the Closing, and
shall be true in all material respects on the Closing Date, taking into account
any updated Disclosure Schedules furnished to Purchaser pursuant to Section
4.1.5, with the same effect as though such representations and warranties were
made as of such date.
5.1.2 Compliance with this Agreement. Seller shall have performed
and complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
5.1.3 Closing Certificate. Purchaser shall have received a
certificate from Seller dated the Closing Date, certifying in such detail as
Purchaser may reasonably request that the conditions specified in Sections 5.1.1
and 5.1.2 hereof have been fulfilled in all material respects and certifying
that Seller has obtained all approvals, consents and waivers required with
respect to Seller or the Transferred Business by Section 5.1.5 hereof.
5.1.4 No Threatened or Pending Litigation. On the Closing Date, no
material suit, action or other proceeding, or injunction or final judgment
relating thereto, shall be known by Seller or Purchaser, to be threatened or to
be pending before any court or governmental or regulatory official, body or
authority in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby, and no investigation shall be known by Seller
or Purchaser to be ongoing that might result in any such suit, action or
proceeding.
5.1.5 Approvals, Consents and Waivers. Seller shall have delivered
to Purchaser, or there shall otherwise have been obtained, the Required
Consents.
5.1.6 Material Adverse Changes. Between the Closing Date and the
Balance Sheet Date, there shall have been no change in the Transferred Business
or the Purchased Assets or the business, operations or condition (financial or
otherwise) thereof, that either alone or in the aggregate would have a
materially adverse effect on the Transferred Business.
5.1.7 Removal of Liens. All encumbrances indicated to exist on or
with respect to any of the Purchased Assets by record searches made by Purchaser
prior to the Closing Date (specifically including, but not limited to, those
liens described on SCHEDULE 3.1.11) shall have been removed, other than
Permitted Liens, and Seller shall have provided evidence satisfactory to
Purchaser of such removal.
5.1.8 Deliverables. Seller shall have delivered the items specified
in Section 2.2(a).
5.2 Conditions Precedent to the Obligations of Seller. The obligation of
Seller under this Agreement to effect the Closing are subject to the fulfillment
or satisfaction, prior to or at the Closing, of each of the following conditions
precedent (unless waived in writing by Seller):
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5.2.1 Representations and Warranties True as of the Closing Date.
The representations and warranties of Purchaser contained in this Agreement or
in any schedule, certificate, statement, document or instrument furnished to
Seller hereunder shall have been true in all material respects on the Effective
Date and shall be true in all material respects on the Closing Date with the
same effect as though such representations and warranties were made as of such
date.
5.2.2 Compliance with this Agreement. Purchaser shall have performed
and complied with all agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at the Closing.
5.2.3 Hiring of Employees. Purchaser shall have made offers of
employment to all of the Plant Employees, containing terms of employment with
positions and salaries substantially similar to their currently existing
positions and salaries and with employee benefits that are consistent with
Purchaser's current employment policies and practices.
5.2.4 Closing Certificate. Seller shall have received a certificate
from Purchaser dated the Closing Date certifying in such detail as Seller may
reasonably request that the conditions specified in Sections 5.2.1 and 5.2.2
hereof have been fulfilled.
5.2.5 No Pending Litigation. On the Closing Date, no suit, action or
other proceeding, or injunction or final judgment relating thereto, shall be
pending before any court or governmental or regulatory official, body or
authority in which it is sought to restrain or prohibit or invalidate the
transactions contemplated by this Agreement or the consummation of the
transactions contemplated hereby.
5.2.6 Approvals, Consents and Waivers. The Required Consents shall
have been obtained prior to or at the Closing.
5.2.7 Sales and Use Tax Permits. Purchaser shall have obtained all
necessary permits from the Texas Comptroller of Accounts for Texas sales tax
purposes prior to the Closing Date.
5.2.8 Execution of Documents. Purchaser shall have executed and
delivered those Deliverables listed in Section 2.2(b) of this Agreement.
ARTICLE VI - INDEMNIFICATION
6.1 General Indemnification Obligations of Seller. From and after the
Closing, subject to the limitations of Section 6.3 hereof, Seller shall
reimburse, indemnify and hold harmless Purchaser, all Affiliates of Purchaser
and their respective successors and assigns and each of their respective
officers, agents, directors and stockholders (each an "INDEMNIFIED PURCHASER
PARTY") against and in respect of any and all damages, losses, deficiencies,
liabilities, costs and expenses (including reasonable legal fees and expenses)
incurred or suffered by any Indemnified Purchaser Party that result from, relate
to or arise out of:
(a) any and all liabilities and obligations of Seller of any
nature whatsoever related to the Transferred Business or Purchased Assets,
except for those liabilities and obligations of Seller which Purchaser
specifically assumes pursuant to Section 1.4.1 of this Agreement, the
Assignment of Lease or the Assignment and Assumption Agreement;
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(b) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Indemnified Purchaser Party that relate to the
Transferred Business or the Purchased Assets in which the principal event
giving rise thereto occurred during the Seller Operating Period or which
result from or arise out of any action or inaction of Seller or any
director, officer, employee, agent, or representative of Seller during the
Seller Operating Period, except for (i) those liabilities and obligations
of Seller which Purchaser specifically assumes pursuant to Section 1.4.1
of this Agreement or the Assignment and Assumption Agreement and (ii)
liabilities of any kind related to the Xxxxx Products (without prejudice
to any rights of Purchaser or Parent under the Supply Agreement); or
(c) any misrepresentation, breach of warranty or
nonfulfillment of any agreement, obligation or covenant on the part of
Seller under this Agreement or from any misrepresentation in or omission
from any Disclosure Schedule (including the update thereto delivered
pursuant to Section 4.1.5), certificate, statement, other document or
instrument furnished to Purchaser pursuant hereto); and any and all
actions, suits, claims, proceedings, investigations, demands, assessments,
audits, fines, judgments, costs and other expenses, (including, without
limitation, reasonable legal fees and expenses) incident to any of the
foregoing or to the enforcement of this Section 6.1; or
(d) any claim by any person employed by Seller with respect to
any matter occurring during the Seller Operating Period, excluding the
termination of such person's employment by Seller in connection with this
Agreement and any severance payments or obligations alleged to be imposed
by contract or by law, all of which obligations are the responsibility of
Purchaser hereunder.
6.2 General Indemnification Obligation of Purchaser. From and after the
Closing, subject to the limitations of Section 6.3 hereof, Purchaser shall
reimburse, indemnify and hold harmless, Seller, all other Affiliates of Seller
and Cardinal Health, Inc. ("CARDINAL AFFILIATES") and their successors or
assigns and their respective officers, agents, directors, shareholders, managers
and members (each an "INDEMNIFIED SELLER PARTY") against and in respect of any
and all damages, losses, deficiencies, liabilities, costs and expenses
(including reasonable legal fees and expenses) incurred or suffered by any
Indemnified Seller Party that result from, relate to or arise out of:
(a) any and all liabilities and obligations of Seller which
have been specifically assumed by Purchaser pursuant to Section 1.4.1 of
this Agreement, the Assignment of Lease or the Assignment and Assumption
Agreement;
(b) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Indemnified Seller Party that relate to the
Purchaser, Transferred Business or the Purchased Assets in which the
principal event giving rise thereto occurred before or after the Seller
Operating Period or which result from or arise out of any action or
inaction, before or after the Seller Operating Period, of Purchaser or any
shareholder, director, officer, employee, agent, representative,
consultant or subcontractor of Purchaser (including without limitation
pursuant to any power of attorney granted by Seller permitting Purchaser
to operate under Seller's DEA registrations), except for those liabilities
or obligations which
25
Seller is obligated to indemnify the Indemnified Purchaser Parties
pursuant to Section 6.1 hereof;
(c) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or
investigations against any Indemnified Seller Party that relate to the
Xxxxx Products (without prejudice to any rights of Purchaser or Parent
under the Supply Agreement);
(d) any claim by any person employed by Seller with respect to
the termination of such person's employment in connection with the sale by
Seller of the Transferred Business, including without limitation, any
severance payments or obligations (all of which are the responsibility of
Purchaser pursuant to Section 1.3.1(a));
(e) any misrepresentation, breach of warranty or
non-fulfillment of any agreement, obligation or covenant on the part of
Purchaser under this Agreement or from any misrepresentation in or
omission from any schedule, certificate, statement, document or instrument
furnished to Seller pursuant hereto ); and any and all actions, suits,
claims, proceedings, investigations, demands, assessments, audits, fines,
judgments, costs and other expenses, (including, without limitation,
reasonable legal fees and expenses) incident to any of the foregoing or to
the enforcement of this Section 6.2;
(f) any costs, expenses, taxes and other amounts incurred by
Seller in connection with the termination and sale of the Transferred
Business which are not otherwise paid by Purchaser to Seller pursuant to
Section 1.3.1 hereof, which costs when aggregated with those Transaction
Costs paid by Purchaser to Seller pursuant to Section 1.3.1 shall not
exceed $*; or
(g) any failure to obtain the signature of the Landlord to the
Consent to Assignment; provided that Seller has used its reasonable
commercial efforts to obtain such consent.
6.3 Method of Asserting Claims, Etc. In the event that any
claim or demand for which Seller would be liable to an Indemnified
Purchaser Party hereunder is asserted against or sought to be collected
from an Indemnified Purchaser Party by a third party, the Indemnified
Purchaser Party shall promptly notify Seller of such claim or demand,
specifying the nature of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such claim and demand) (the
"CLAIM NOTICE"). Seller shall have 30 business days from the giving of the
Claim Notice in accordance with Section 8.8 hereof (the "NOTICE PERIOD")
to notify the Indemnified Purchaser Party, (A) whether or not it disputes
its liability to the Indemnified Purchaser Party hereunder with respect to
such claim or demand and (B) notwithstanding any such dispute, whether or
not it desires, at its sole cost and expense (subject to the limitation in
Section 6.3(b) regarding an Agreed Upon Settlement), to defend the
Indemnified Purchaser Party against such claim or demand.
(a) If Seller disputes its liability with respect to such
claim or demand or the amount thereof (whether or not Seller desires to
defend the Indemnified Purchaser
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
26
Party against such claim or demand as provided in paragraphs (b) and (c)
below), such dispute shall be resolved in accordance with Section 6.5
hereof. Pending the resolution of any dispute by Seller of its liability
with respect to any claim or demand, such claim or demand shall not be
settled (x) without the prior written consent of the Indemnified Purchaser
Party, which consent shall not be unreasonably withheld and (y) by
Purchaser without the prior written consent of Seller, which consent shall
not be unreasonably withheld.
(b) In the event that Seller notifies the Indemnified
Purchaser Party within the Notice Period that they desire to defend the
Indemnified Purchaser Party against such claim or demand then, except as
hereinafter provided, Seller shall have the right to defend the
Indemnified Purchaser Party by appropriate proceedings, which proceedings
shall be promptly settled or prosecuted by them to a final conclusion in
such a manner as to avoid any liability to Indemnified Purchaser Party for
such claim; provided, however, Seller shall not, without the prior written
consent of the Indemnified Purchaser Party, consent to the entry of any
judgment against the Indemnified Purchaser Party or enter into any
settlement or compromise which does not include, as an unconditional term
thereof, the giving by the claimant or plaintiff to the Indemnified
Purchaser Party of a release, in form and substance reasonably
satisfactory to the Indemnified Purchaser Party, from all liability in
respect of such claim or litigation. If any Indemnified Purchaser Party
desires to participate in any such defense or settlement, it may do so at
its sole cost and expense provided that such participation shall be under
the control of, and exclusively through, Seller. If, in the reasonable
opinion of the Indemnified Purchaser Party, any such claim or demand or
the litigation or resolution of any such claim or demand involves an issue
or matter which could have a materially adverse effect on the business,
operations, assets, properties or prospects of the Indemnified Purchaser
Party, including without limitation the administration of the tax returns
and responsibilities under the tax laws of any Indemnified Purchaser
Party, then the Indemnified Purchaser Party shall have the right to
control the defense or settlement of any such claim or demand after giving
notice to Seller of its intention to take control of the defense or
settlement of such claim or demand. If the Indemnified Purchaser Party
should elect to exercise such right, Seller shall have the right to
participate in the defense or settlement of such claim or demand at its
sole cost and expense provided that such participation shall be under the
control of, and exclusively through, such Indemnified Purchaser Party;
provided, that such claim or demand shall not be settled without the prior
written consent of the Seller, which consent shall not be unreasonably
withheld; provided further, that if the third party making any such claim
or demand has agreed or stated its willingness in writing, to (x) settle
such claim or demand in exchange solely for the payment of money in an
agreed upon amount ("AGREED UPON SETTLEMENT") which Seller is willing to
accept and agrees in writing to reimburse and indemnify Indemnified
Purchaser Party for and (y) unconditionally release the Indemnified
Purchaser Parties with respect to the applicable claim or demand, but the
Indemnified Purchaser Parties do not accept such settlement, then in no
event shall Seller be liable to reimburse or indemnify Indemnified
Purchaser Parties with respect to such claim or demand in excess of the
amount of such Agreed Upon Settlement plus the amount of the Indemnified
Purchaser Parties' reasonable costs and out-of-pocket expenses incurred in
connection
27
with such claim or demand through the date the Indemnified Purchaser
Parties refused to accept the Agreed Upon Settlement.
(c)
(i) If Seller does not defend the Indemnified Purchaser
Party against such claim or demand, whether by not giving the
Indemnified Purchaser Party timely notice within the Notice Period
as provided above or the Indemnified Purchaser Party has taken over
control of such defense in accordance with the provisions of
subparagraph (b) above, then, subject to Section 6.3(f), the amount
of any such claim or demand, or that portion thereof as to which
such defense is unsuccessful, in each case shall be conclusively
deemed to be a liability of Seller hereunder, unless Seller shall
have disputed its liability to the Indemnified Purchaser Party
hereunder, as provided in paragraph (a) above, in which event such
dispute shall be resolved as provided in Section 6.5 hereof.
(ii) In the event an Indemnified Purchaser Party should have a
claim against Seller hereunder that does not involve a claim or
demand being asserted against or sought to be collected from it by a
third party, the Indemnified Purchaser Party shall promptly send a
Claim Notice with respect to such claim to Seller. If Seller
notifies the Indemnified Purchaser Party within the Notice Period
that it disputes its liability with respect to such claim or demand,
such dispute shall be resolved in accordance with Section 6.5
hereof. If Seller does not notify the Indemnified Purchaser Party
within the Notice Period that it disputes such claim, then, subject
to Section 6.3(f), the amount of such claim shall be conclusively
deemed a liability of Seller hereunder.
(d) All claims for indemnification by an Indemnified Seller
Party under this Agreement shall be asserted and resolved under the
procedures set forth above substituting in the appropriate places
"Indemnified Seller Party" for "Indemnified Purchaser Party" and
variations thereof and "Purchaser" for "Seller" and variations thereof.
(e) All claims for indemnification for an alleged
misrepresentation or breach of warranty contained in Section 3.1 or
Section 3.2 hereof or in any Disclosure Schedule, certificate, statement,
document or instrument furnished under this Agreement shall be asserted
during the period in which any such representation or warranty survives
pursuant to Section 3.3 hereof. The indemnification obligations of
Purchaser pursuant to Section 6.2(f) shall terminate six (6) months after
the Closing Date and no claims shall be made by Seller under such Section
6.2(f) thereafter, except that the indemnification obligation of Purchaser
shall continue as to any claims for which Seller has notified Purchaser on
or prior to the date such indemnification obligation would otherwise
terminate. The indemnification obligations of Purchaser pursuant to
Section 6.2(g) shall terminate upon either: (i) the receipt of the Seller
Release; or (ii) the later of: (x) the date of expiration of the Real
Property Lease pursuant to its terms and (y) the expiration of the
applicable statute of limitations (or valid extensions thereof) applicable
to claims which may be brought under the Real Property Lease, except that
the indemnification obligation of Purchaser shall continue as to any
claims for which Seller has notified Purchaser on or prior to the date
such indemnification obligation would otherwise terminate.
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(f) No party shall bring a claim for indemnification under
this Section 6.3 unless the aggregate amount of all claims for
indemnification exceeds $250,000, in which event the party may bring any
and all claims for such indemnification without regard to such dollar
threshold, including the first dollar of any and all claims for such
indemnification; provided, however, in no event shall a party's total
liability for indemnification under this Agreement exceed $5,000,000, in
the aggregate. Notwithstanding the foregoing, the limitations set forth in
this Section 6.3(f) shall not apply with respect to any claim pursuant to:
(i) Sections 6.2(a), 6.2(b), 6.2(c), 6.2(d), 6.2(f) or 6.2(g), or (ii) the
retained liabilities set forth in Section 1.4.2.
6.4 Payment. Upon the determination of liability under Section 6.3 or 6.5
hereof, the appropriate party shall pay to the other, as the case may be, within
ten business days after such determination, the amount of any claim for
indemnification made hereunder. In the event that the indemnified party is not
paid in full for any such claim pursuant to the foregoing provisions promptly
after the other party's obligation to indemnify has been determined in
accordance herewith, it shall have the right, notwithstanding any other rights
that it may have against any other person, to setoff the unpaid amount of any
such claim against any amounts owed by it or its Affiliates under this Agreement
or any other agreements entered into pursuant to this Agreement, Seller's
Documents or Purchaser's Documents or otherwise entered into by Seller or any
Cardinal Affiliate and Purchaser or any Affiliate of Purchaser.
6.5 Dispute Resolution. If any Dispute arises between the parties, such
Dispute shall be presented to the respective presidents or senior executives of
Purchaser and Seller for their consideration and resolution. If such parties
cannot reach a resolution of the Dispute, then such Dispute shall be resolved by
binding alternative dispute resolution in accordance with the then existing
commercial arbitration rules of CPR Institute for Dispute Resolution, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000. Arbitration shall be conducted in
Morristown, NJ. "DISPUTE" means any dispute, controversy or disagreement between
the parties in connection with this Agreement. Nothing herein shall restrict the
right of a party to seek a preliminary injunction or other judicial relief if in
that party's judgment such judicial proceedings are necessary or appropriate to
avoid irreparable damage. All applicable statutes of limitation shall be tolled
while the procedures specified in this Section 6.5 are pending. The parties will
take all such actions, if any, which may be necessary or appropriate to
effectuate such tolling.
6.6 Other Rights and Remedies. The indemnification rights of the parties
under this Article VI are the exclusive remedies and are in lieu of any other
rights or remedies the parties may have at law or in equity or otherwise for any
misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, except that a party shall
retain the right to seek specific performance or an injunction with respect to
protection of confidential information. To the extent that any claim in respect
of the Xxxxx Products that could be made by Purchaser or any Affiliate of
Purchaser under the Supply Agreement or that certain Commercial Services
Agreement by and between Seller and Xxxxx dated as of April 1, 2004 (each, a
"PRIOR AGREEMENT") also may constitute a breach of representation or warranty by
Seller hereunder or could otherwise be an indemnifiable claim hereunder,
Purchaser agrees that the Indemnified Purchaser Party may either bring such
claim under the applicable Prior Agreement or seek indemnification pursuant to
this Agreement, but shall not have the right to seek relief under both a Prior
Agreement and this Agreement.
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ARTICLE VII - POST CLOSING MATTERS
7.1 Employee Benefits. After the Closing Date, Purchaser shall make
available to each of the Plant Employees who accepts employment with Purchaser
that portion of all sick pay and accrued vacation time (or pay in lieu thereof)
which has been accrued on behalf of that employee as of the Closing Date, in
each case in accordance with such policies as Purchaser may adopt from time to
time. Seller shall be responsible for and shall promptly discharge any liability
or obligation for any other benefits, wages, salaries and other amounts which
have been accrued on behalf of that employee (or is attributable to expenses
properly incurred by that employee) as of the Closing Date or any worker's
compensation claims related to events occurring prior to the Closing, and
Purchaser shall assume no liability therefor. No portion of the assets of any
plan, fund, program or arrangement, written or unwritten, heretofore sponsored
or maintained by Seller (and no amount attributable to any such plan, fund,
program or arrangement) shall be transferred to Purchaser, and Purchaser shall
not be required to continue any such plan, fund, program or arrangement after
the Closing Date. The amounts payable on account of all benefit arrangements
shall be determined with reference to the date of the event by reason of which
such amounts become payable, without regard to conditions subsequent, and
Purchaser shall not be liable for any claim for insurance, reimbursement or
other benefits payable by reason of any event which occurs prior to the Closing
Date. All amounts payable by Seller directly to Plant Employees who accept
employment with Purchaser, or to any fund, shall be paid by Seller within 30
days after the Closing Date to the extent that such payment is not inconsistent
with the terms of such fund, program, arrangement or plan. For all purposes, all
employees of Seller who are employed by Purchaser on or after the Closing Date
shall be granted credit for years of service with Seller and the predecessor to
Seller's interest in the Transferred Business.
7.2 Transferring Employees; Non-Solicitation. As of the Closing Date,
Purchaser shall have offered employment to, and Seller shall use its reasonable
commercial efforts to assist Purchaser in employing as new employees of
Purchaser, the Transferring Employees. As a condition to such employment by
Purchaser, Purchaser may require each Transferring Employee to pass a drug test
and background check and to execute and deliver to Purchaser the "Certification
and acknowledgement of Receipt of Code of Business Conduct and Ethics," the form
of which Certificate has previously been provided to Seller. Seller shall
terminate, effective as of the Closing Date, all employment or contracting
arrangements it has with any of the Transferring Employees. For a period of six
(6) months after the Closing Date, Seller shall not directly or indirectly
solicit employment of or offer employment to any (a) Transferring Employee, (b)
individual who is then an employee of Purchaser or any Affiliate of Purchaser,
or (c) Transferring Employee who has terminated employment with Purchaser or any
Affiliate of Purchaser without the consent of Purchaser or such other Affiliate
within 180 days of such solicitation or offer. For a period of six (6) months
after the Closing Date, Purchaser shall not directly or indirectly solicit
employment or offer employment to any person that is an employee of Seller or
any Affiliate of Seller immediately after the Closing (the "NON-TRANSFERRING
EMPLOYEES"), without the prior written consent of the Seller or such other
Affiliate within 180 days of such solicitation or offer. For a period commencing
six (6) months after the anniversary of the Closing Date and expiring twelve
(12) months after the anniversary of the Closing Date, neither party will
directly solicit for employment or offer employment to employees of the other
party; however, the Seller may hire Transferring Employees or other employees of
Purchaser who respond to general solicitations not targeted at the such
employees, and the Purchaser may
30
hire Non-Transferring Employees who respond to general solicitations not
targeted at Non-Transferring Employees.
7.3 Discharge of Obligations. From and after the Closing Date, Seller
shall pay and discharge, in accordance with past practice, all obligations and
liabilities of Seller that have not been assumed by Purchaser under Section
1.4.1 of this Agreement, the Assignment and Assumption Agreement or the
Assignment of Lease. From and after the Closing Date, the Purchaser shall pay
and discharge, in accordance with its past practice, all obligations of the
Seller that have been assumed by Purchaser under Section 1.4.1 of this
Agreement, the Assignment and Assumption Agreement and the Assignment of Lease.
7.4 Payments Received. Seller and Purchaser agree that after the Closing
they will hold and will promptly transfer and deliver to the other, from time to
time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which properly
belongs to the other party, including without limitation any insurance proceeds,
and will account to the other for all such receipts.
7.5 Further Assurances. Seller from time to time after the Closing, at
Purchaser's request, shall execute, acknowledge and deliver to Purchaser such
other instruments of conveyance and transfer and shall take such other actions
and execute and deliver such other documents, certifications and further
assurances as Purchaser may reasonably require in order to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Purchased Assets, or to better enable Purchaser to complete, perform or
discharge any of the liabilities or obligations assumed by Purchaser at the
Closing pursuant to Section 1.4.1 of this Agreement, the Assignment and
Assumption Agreement and the Assignment of Lease. Each party hereto will
cooperate with the other party and execute and deliver to the other party such
other instruments and documents and take such other actions as may be reasonably
requested from time to time by the other party as necessary to carry out,
evidence and confirm the intended purposes of this Agreement.
7.6 Sharing of Data; Mutual Cooperation. Following the Closing Date, the
Seller shall have a right to retain copies of all Books and Records and may use
the Books and Records as may be required to conclude its involvement in the
Transferred Business and to comply with applicable law and regulation and as
such Books and Records relate to aspects of Seller's business other than the
Purchased Assets or the Transferred Business. In connection with the foregoing,
following the Closing Date and during normal business hours, Seller shall have
reasonable access to the Books and Records in Purchaser's possession, as such
Books and Records relate to the operation of the Transferred Business prior to
the Closing Date, and the right to make copies and extracts therefrom. Further,
following the Closing Date and subject to Section 8.9, each party will afford
the other party, its counsel and its accountants, during normal business hours,
reasonable access to its employees, including without limitation, access to the
Transferring Employees by Seller, to the extent that such access is reasonably
required by the requesting party for the purposes of: (i) complying with its
obligations under applicable securities, tax, environmental, employment or other
laws and regulations; (ii) the determination or enforcement of any rights and
obligations under this Agreement, the Purchaser's Documents, the Seller's
Documents, or any other agreements by and between Seller or any Cardinal
Affiliate and Purchaser or any Purchaser Affiliate; and (iii) for Seller to
conclude its involvement in the Transferred Business prior to the Closing Date.
Notwithstanding anything to the contrary in this
31
Section 7.6, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with this Section 7.6 shall be subject to applicable rules relating to
discovery.
7.7 Specific Performance. Each of the parties hereto recognizes and agrees
that in the event of a breach by such party of this Article VII, money damages
may not be an adequate remedy to the other party and, even if money damages were
adequate, it may be impossible to ascertain or measure with any degree of
accuracy the damages sustained by such other party therefrom. Accordingly, if
there should be a breach or threatened breach by either party of provisions of
this Article VII, the other party may be entitled to an injunction restraining
such party from any breach without showing or proving actual damage sustained by
such other party. Nothing in the preceding sentence shall limit or otherwise
affect any remedies that either party may otherwise have under applicable law.
ARTICLE VIII - MISCELLANEOUS
8.1 Termination.
(a) Anything herein or elsewhere to the contrary notwithstanding,
this Agreement may be terminated by written notice of termination at any
time before the Closing Date only as follows:
(i) by mutual consent of Seller and Purchaser;
(ii) by Purchaser (A) at any time if the representations and
warranties of Seller made in connection with this Agreement were
incorrect in any material respect when made or at any time
thereafter, (B) upon written notice to Seller if any of the
conditions precedent set forth in Section 5.1 hereof have not been
met (unless the failure of the conditions to have been met is solely
due to Purchaser's failure to comply with the terms of this
Agreement), or (C) at any time if Seller shall have failed to
perform or comply in all material respects with all covenants,
agreements and obligations under this Agreement and Seller shall
have failed to cure such nonperformance or noncompliance within 30
days of the receipt from Purchaser of written notice of such
nonperformance or noncompliance; and
(iii) by Seller, (A) at any time if the representations and
warranties of Purchaser made in connection with this Agreement were
incorrect in any material respect when made or at any time
thereafter, (B) upon written notice to Purchaser if any of the
conditions precedent set forth in Section 5.2 hereof have not been
met (unless the failure of the condition to have been met is solely
due to Seller's failure to comply with the terms of this Agreement),
or (C) at any time if Purchaser shall have failed to perform or
comply in all material respects with all covenants, agreements and
obligations under this Agreement and Purchaser shall have failed to
cure such nonperformance or noncompliance within 30 days of the
receipt from Seller of written notice of such nonperformance or
noncompliance.
(b) In the event of the termination of this Agreement pursuant to
the provisions of this Section 8.1, this Agreement (except for this
Section 8.1 and Sections 8.3 and 8.8 hereof which shall survive) shall
become void and have no effect, without any liability on the part of any
of the parties or their directors or officers or shareholders or
32
members or managers in respect of this Agreement except as otherwise set
forth in this Section 8.1.
(c) If this Agreement is terminated (i) by Seller pursuant to
Section 8.1(a)(iii); or (ii) due to Purchaser's failure to consummate the
contemplated transaction at the Closing provided that Seller has complied
with those conditions precedent set forth in Section 5.1 hereof, then
Purchaser shall immediately pay to Seller a termination fee (the
"TERMINATION FEE") in an amount equal to all reasonable and documented
out-of-pocket expenses incurred by Seller in connection with this
Agreement and all related transaction documents, in lieu of all other
remedies or damages. The parties agree (1) the agreements contained in
this Section 8.1(c) are an integral part of the transactions contemplated
by this Agreement, (2) the foregoing Termination Fee constitutes
liquidated damages, not a penalty, and (3) the Termination Fee is
necessary because the termination of this Agreement in a manner giving
rise to the Termination Fee would result in substantial damages to Seller
which may be difficult to calculate accurately.
8.2 Brokers' and Finders' Fees.
(a) Seller represents and warrants that no broker fee, finder's fees
or other commission in respect of this Agreement or the consummation of
the transactions contemplated hereby is due by it to any third party, and
Seller agrees to indemnify and hold harmless Purchaser against any and all
claims, losses, liabilities and expenses which may be asserted against or
incurred by it as a result of Seller's dealings, arrangements or
agreements with any such person.
(b) Purchaser represents and warrants that no brokerage fee,
finder's fee or other commission in respect of this Agreement or the
consummation of the transactions contemplated hereby is due by it to any
third party, and Purchaser agrees to indemnify and hold harmless Seller
against any and all claims, losses, liabilities and expenses which may be
asserted against or incurred by it as a result of Purchaser's dealings,
arrangements or agreements with or any such person.
(c) The limitations set forth in Section 6.3(f) shall not apply to
any breach of a representation, warranty, covenant or other agreement set
forth in this Article VIII.
8.3 Expenses. Purchaser is obligated to pay the Transaction Costs of
Seller as and to the extent provided for in Section 1.3.1(a). Except for the
payment to Seller of such Transaction Costs, each party shall bear its
respective legal, accounting, and other costs and expenses associated with the
transactions contemplated by this Agreement (including without limitation the
costs of any accountants, attorneys, brokers and financial advisors).
8.4 Contents of Agreement; Parties in Interest; Etc. This Agreement sets
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby. It shall not be amended or modified except by
written instrument duly executed by each of the parties hereto. Except as
provided in Article VI, this Agreement is not intended to confer upon any other
person not a party hereto any rights or remedies hereunder. Any and all previous
agreements and understandings between or among the parties hereto regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement.
8.5 Assignment and Binding Effect. This Agreement may not be assigned by
Seller without the prior written consent of Purchaser. Purchaser may assign its
rights and obligations to
33
any Xxxxx Affiliate (provided that the Purchaser shall remain liable to make all
required payments under this Agreement). Subject to the foregoing, all of the
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the successors and assigns of each party
hereto.
8.6 Waiver and Amendment. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party. No amendment of any provision of this
Agreement shall be valid unless it shall be in writing and signed by the
Purchaser and Seller.
8.7 Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telecopier or
by registered or certified mail, postage prepaid, as follows:
If to Purchaser, to:
Xxxxx Respiratory Operations, Inc.
00000 Xxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxx 00000
Telecopier No: (000) 000-0000
Attention: General Counsel
With a required copy to:
Xxxxx Respiratory Therapeutics, Inc.
0 Xxxx Xxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telecopier No: (000) 000-0000
Attention: General Counsel
And to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier No: (000) 000-0000
Attention: J. Xxxxxxx Xxxxxx
If to Seller, to:
Cardinal Health PTS, LLC
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Vice President and Associate General Counsel,
Pharmaceutical Technologies & Services
34
With a required copy to:
Xxxxxxxxx Law Group PLLC
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
or to such other address or telecopier number as the addressee may have
specified in a notice duly given to the sender as provided herein. Such
notice, request, demand, waiver, consent, approval or other communication
will be deemed to have been given as of the date so delivered, telecopied or
mailed.
8.8 Confidential Information.
8.8.1 Seller Information. From and after the Effective Date, Seller
shall not disclose to any person (other than Purchaser or any Xxxxx Affiliate)
in any manner, directly or indirectly, any confidential or proprietary
information or data of Purchaser or any Xxxxx Affiliate whether of a technical
or commercial nature ("CONFIDENTIAL INFORMATION"), or use or assist any person
(other than any Xxxxx Affiliates) to use, in any manner, directly or indirectly,
any Confidential Information, excepting only use of such data or information as
is at the time generally known to the public and which did not become generally
known through the breach of any provisions of this Agreement. As used in this
Agreement, Confidential Information includes but is not limited to any and all
(i) computer software proprietary to Purchaser, together with all documentation
for any such software; (ii) confidential, proprietary or trade secret
information submitted to Purchaser in confidence by its suppliers, employees,
consultants, customers or others; (iii) information of Purchaser concerning
operations, customers or prospects, terms and conditions of sale and prices,
technical knowledge relating to customer requirements, and knowledge of markets
for its products and services; and (iv) subject to the successful consummation
of the Closing, all confidential, proprietary, and similar information of the
Transferred Business, other than information relating solely to or included
within the Excluded Assets. Seller acknowledges that all information, whether
falling within the above definition or otherwise (unless specifically excepted
above), shall be presumed to be Confidential Information if Purchaser takes
measures designed to prevent it, in the ordinary course of business, from being
available to persons other than those selected by Purchaser to have access
thereto for limited purposes. All information disclosed to Seller or any
Cardinal Affiliates or to which Seller or any Cardinal Affiliate obtains access,
which such person has reasonable basis to believe to be Confidential
Information, or which such person has reasonable basis to believe that any Xxxxx
Affiliate treats as being Confidential Information, shall be presumed to be
Confidential Information. Notwithstanding the foregoing this Section 8.9.1 shall
not restrict Seller from using or disclosing information related to Purchaser or
any Xxxxx Affiliate properly obtained in the course of other business
relationships for any proper purpose otherwise permitted, including, without
limitation, the Seller's Documents. Purchaser acknowledges the Seller and the
Cardinal Affiliates have acquired and developed prior to and during the Seller
Operating Period, and continue to acquire and develop, substantial know-how,
expertise and information relating to the pharmaceutical business and related
industries, including without limitation, relating to the manufacture of tablets
and other products. Nothing in this Agreement shall be deemed to restrict in any
manner the ability of Seller and its Affiliates to engage in manufacturing and
related
35
activities. The foregoing shall not be construed as a license to any patented
intellectual property of Purchaser.
8.8.2 Seller Information. From and after the Effective Date, the
Purchaser shall not disclose to any person in any manner, directly or
indirectly, any confidential or proprietary information or data of Seller or any
Cardinal Affiliate whether of a technical or commercial nature ("SELLER
CONFIDENTIAL INFORMATION"), or use or assist any person (other than Seller or
any Cardinal Affiliates) to use, in any manner, directly or indirectly, any
Seller Confidential Information, excepting only use of such data or information
as is at the time generally known to the public and which did not become
generally known through the breach of any provisions of this Agreement. As used
in this Agreement, Seller Confidential Information includes but is not limited
to any and all (i) computer software proprietary to Seller, together with all
documentation for any such software; (ii) confidential, proprietary or trade
secret information submitted to Seller in confidence by its suppliers,
employees, consultants, customers or others; (iii) information of Seller or any
Cardinal Affiliates concerning operations, customers or prospects, terms and
conditions of sale and prices, technical knowledge relating to customer
requirements, and knowledge of markets for its products and services; and (iv)
all confidential, proprietary, and similar information of the Transferred
Business and the Xxxxx Products. Purchaser acknowledges that all information,
whether falling within the above definition or otherwise, shall be presumed to
be Seller Confidential Information if Seller or any Cardinal Affiliates takes
measures designed to prevent it, in the ordinary course of business, from being
available to persons other than those selected by Seller or its Affiliates to
have access thereto for limited purposes. All information disclosed to Purchaser
or to which Purchaser obtains access, which such person has reasonable basis to
believe to be Seller Confidential Information, or which such person has
reasonable basis to believe Seller or any Cardinal Affiliates treats as being
Seller Confidential Information, shall be presumed to be Seller Confidential
Information. Effective upon the Closing, Seller Confidential Information which
relates solely to the Transferred Business shall become Confidential Information
of Purchaser and the provisions of Section 8.9.1 shall apply thereto and the
provisions of this Section 8.9.2 shall cease to apply thereto. Notwithstanding
the foregoing, this Section 8.9.2 shall not restrict Purchaser or any Xxxxx
Affiliate from using or disclosing information related to Seller properly
obtained in the course of other business relationships for any proper purpose
otherwise permitted.
8.9 Counterparts. This Agreement may be executed in two or more
counterparts that together shall constitute a single agreement.
8.10 Pronouns. All pronouns used in this Agreement shall be deemed to
refer to the masculine, feminine, neuter, singular or plural, as the identity of
the person(s) may require.
8.11 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the internal laws of the State
of Delaware without regard to the principles of conflict of laws thereof.
8.12 No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party.
8.13 Knowledge. For purposes of this Agreement, an individual shall be
deemed to have "knowledge" of a particular fact or other matter if such
individual is actually aware of such fact or other matter or if such person, in
the conduct of their duties, reasonably should have
36
become aware of such fact or other matter. Seller shall be deemed to have
"knowledge" of a particular fact or other matter that any individual set forth
on SCHEDULE 8.13 of the Disclosure Schedule has, or at any time during the
Seller Operating Period had, knowledge of such fact or other matter.
8.14 Severability. If any provision of this Agreement, or the application
thereof to any person, place or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder or
this Agreement and such provisions as applied to other persons, places and
circumstances shall not be effected thereby and remain in full force and effect
only if, after excluding the portion deemed to be unenforceable, the remaining
terms shall provide for the consummation of the transactions contemplated hereby
in substantially the same manner as originally set forth at the later of the
Effective Date was executed or last amended.
8.15 Definitions. The following terms are defined in the sections
indicated below:
TERM WHERE DEFINED
Xxxxx Recital A
Xxxxx Products Recital A
Adjusted Transaction Costs 1.3.1(c)
Affiliate 1.1.1(h)
Agreed Upon Settlement 6.3 (b)
Agreement Introduction
Assignment of Lease 2.2(a)(iii)
Assumed Contract 3.1.16
Assumed Liabilities 1.4.1
Authorizations 3.1.21
Balance Sheet 3.1.5
Balance Sheet Date 3.1.5
Books and Records 1.1.1(e)
Cardinal Affiliate 6.2
Claim Notice 6.3
Closing 2.1
Closing Date 2.1
Closing Date Balance Sheet 1.3.1(c)
COBRA 1.4.1(f)
Confidential Information 8.9.1
Consent to Assignment 2.2(a)(iii)
Disclosure Schedule 3.1
Effective Date Introduction
Environmental Claim 3.1.21 (b)
Environmental Regulations 3.1.21 (a)
Escrow Agent 2.3(b)(i)
Estimated Closing Value 1.3.1(a)
Excluded Assets 1.1.2
Final Closing Value 1.3.1(c)
Final Purchase Price 1.3.1(c)
Financial Information 3.1.5
37
GAAP 1.3.1(a)
Granulate Supply Agreement 2.2(a)(iv)
Hazardous Material 3.1.21
Indemnified Purchaser Party 6.1
Indemnified Seller Party 6.2
Initial Purchase Price 1.3.1(a)
Interim Balance Sheet 1.3.1(a)
Inventory 1.1.1(c)
XX Xxxxxxx Software 1.1.2(o)
Landlord 2.3(b)(i)
Lease Escrow Agreement 2.2(a)(iii)
Lease Escrow Amount 2.3(b)(i)
Non-Transferring Employees 7.2
Notice Period 6.3
Original Purchase Agreement Recital A
Original Transfer Date Recital A
Packaging Agreement 2.2(a)(v)
Parent Recital A
Permitted Liens 3.1.11
Plant Recital A
Plant Employees 3.1.17
Purchased Assets 1.1.1
Purchaser Introduction
Purchaser's Documents 3.2.2
Quality Agreement 2.2(a)(vi)
RCRA 3.1.21
Real Property Lease 1.1.1(a)
Regulations 3.1.13
Release 3.1.21
Required Consents 2.3
Seller Introduction
Seller Confidential Information 8.9.2
Seller's Documents 3.1.2
Seller Operating Period 1.4.1(a)
Seller's Proprietary Rights 1.1.2(c)
Seller Release 2.3(b)(i)
Services Agreement 2.2(a)(iii)
Software 3.1.20 (c)
Supply Agreement 1.3.1(a)
Tangible Personal Property 1.1.1(b)
Tax Returns 3.1.8
Taxes 3.1.8
Termination Fee 8.1(c)
Transaction Costs 1.3.1(a)
Transferred Business Recital A
Transferring Employees 1.4.1(g)
38
Transition Agreement 2.2(a)(vii)
[SIGNATURE PAGE FOLLOWS]
39
IN WITNESS WHEREOF, the undersigned have executed this Agreement, or have
caused this Agreement to be executed by their duly authorized officer, as of the
date first written above.
SELLER: PURCHASER:
CARDINAL HEALTH PTS, LLC XXXXX RESPIRATORY OPERATIONS, INC.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------- -----------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxxxxx
Title: President, Oral Technologies Title: President and Chief Executive
Officer
Xxxxx Respiratory Therapeutics, Inc., a Delaware corporation ("XXXXX"),
hereby guarantees to Cardinal Health PTS, LLC, a Delaware limited
liability company ("SELLER"), the full, prompt and complete payment and
satisfaction of all sums, liabilities and obligations owing or assumed by
Xxxxx Respiratory Operations, Inc., a Delaware corporation and
wholly-owned subsidiary of Xxxxx ("PURCHASER") pursuant to this Asset
Purchase Agreement between Seller and Purchaser (the "AGREEMENT"),
including, without limitation, payments and obligations assumed under Xxxx
of Sale, the Assignment of Lease and Assignment and Assumption Agreement
and any Assumed Contracts (each as defined in the Agreement), subject to
(a) Xxxxx receiving written notification of any payment or other default
by Purchaser under the Agreement or any Assumed Contract (which notice
shall specify the nature and amount of such payment or other default and
shall be sent to Xxxxx at: 0 Xxxx Xxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000
attention: General Counsel; and (b) such amount remaining unpaid or
obligation unfulfilled to Seller or third party under the Assumed Contract
10 days after Xxxxx' receipt of such notice.
XXXXX RESPIRATORY THERAPEUTICS, INC.
By /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Its President and Chief Executive Officer
Date July 27, 2006
Signature Page to Asset Purchase Agreement
Index of Exhibits
Exhibit A-1 Form of Xxxx of Sale
Exhibit A-2 Form of Assignment and Assumption Agreement
Exhibit B-1 Form of Assignment of Lease
Exhibit B-2 Form of Consent to Assignment
Exhibit B-3 Form of Lease Escrow Agreement
Exhibit C Form of Amendment to Commercial Services Agreement
Exhibit D Form of Commercial Manufacturing Supply Agreement (Granulate)
Exhibit E Form of Commercial Packaging Agreement
Exhibit F Form of Quality Agreement (Commercial Manufacturing Supply
Agreement (Granulate) and Commercial Packaging Agreement)
Exhibit G Form of Transition Services Agreement
EXHIBIT A-1
XXXX OF SALE
KNOW ALL MEN BY THESE PRESENTS that, pursuant to the terms and
conditions of that certain Asset Purchase Agreement, dated as of July 27, 2006,
by and among CARDINAL HEALTH PTS, LLC, a Delaware limited liability company,
("SELLER") and XXXXX RESPIRATORY OPERATIONS, INC., a Delaware corporation
("PURCHASER") (the "ASSET PURCHASE AGREEMENT"), Seller, for good and valuable
consideration (the receipt and sufficiency of which is hereby acknowledged),
does hereby grant, sell, convey, assign, transfer and deliver unto Purchaser to
have, and to hold forever, the following (capitalized terms used but not
otherwise defined herein shall have the respective meanings given to such terms
in the Asset Purchase Agreement):
All of its right, title and interest in and to Purchased Assets that
can be transferred pursuant to an instrument of this kind, including
without limitation the Inventory, the Tangible Personal Property
(including without limitation the items set forth on SCHEDULE
1.1.1(a) and/or reflected on the Closing Date Balance Sheet) and the
Books and Records, in each case free and clear of all mortgages,
liens, pledges, security interests, charges, claims, restrictions
and other encumbrances and defects of title of any nature whatsoever
except for Permitted Liens.
This Xxxx of Sale is being executed in connection with, and is
subject to all representations, warranties, covenants and agreements set forth
in the Asset Purchase Agreement and shall neither add to nor detract from the
Asset Purchase Agreement.
Seller covenants and agrees, at all times and from time to time
hereafter, that it will make, do, execute and deliver such further instruments,
acts, consents, and assurances as Purchaser may reasonably request to more
effectively sell, convey, transfer to and vest in Purchaser all of the right,
title and interest in and to the Purchased Assets.
This Xxxx of Sale shall be governed and controlled as to validity,
enforcement, interpretation, construction, effect and in all other respects by
the laws of Delaware. Except for the Asset Purchase Agreement and the other
closing documents executed by Seller and Purchaser pursuant to it, this Xxxx of
Sale records the entire understanding between the parties regarding the sale and
purchase of the Purchased Assets, and supersedes any previous or contemporaneous
agreement, understanding, or representation, oral or written, by either of them.
Seller further covenants and agrees that the covenants herein
contained shall be binding upon its successors and assigns.
[Signature Page Follows]
IN WITNESS WHEREOF, this Xxxx of Sale has been duly executed and
delivered by a duly authorized officer of Seller on this ________ day of
__________, 2006.
SELLER:
CARDINAL HEALTH PTS, LLC
By: _______________________________________
Name: _____________________________________
Its: ______________________________________
Signature Page to Xxxx of Sale
EXHIBIT A-2
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is entered into as of
____________, 2006, by and among CARDINAL HEALTH PTS, LLC, a Delaware limited
liability company, ("ASSIGNOR"), and XXXXX RESPIRATORY OPERATIONS, INC., a
Delaware corporation ("ASSIGNEE").
RECITALS
WHEREAS, Assignor and Assignee are parties to that certain Asset
Purchase Agreement, dated as of July 24, 2006, by and among Assignor and
Assignee (the "ASSET PURCHASE AGREEMENT"), pursuant to which Assignor is selling
to Assignee the Transferred Business, including the Purchased Assets, all as
more particularly described in the Asset Purchase Agreement; and
WHEREAS, pursuant to the terms and conditions of the Asset Purchase
Agreement, Assignor desires to assign and Assignee desires to assume the Assumed
Contracts and the Authorizations and Assumed Liabilities (each as defined in and
more particularly described in the Asset Purchase Agreement).
NOW, THEREFORE, for good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, Assignor and Assignee agree
as follows:
1. Assignment of Assumed Contracts, Authorizations and Assumed Liabilities.
Assignor hereby assigns and transfers to Assignee all of its right, title and
interest in and to the Assumed Contracts, the Authorizations and the Assumed
Liabilities.
2. Acceptance of Assignment and Assumption of Assumed Liabilities. Assignee
hereby agrees to and accepts the assignment under Section 1 above and, except as
provided in Section 1.4.2 of the Asset Purchase Agreement, hereby assumes and
covenants to keep, perform and fulfill from and after the date hereof the
executory portion of the terms, covenants, conditions and obligations of each of
the Assumed Contracts, the Authorizations and the Assumed Liabilities required
to be kept, performed and fulfilled from and after the date hereof by Assignor
thereunder, subject to, in the case of any Assumed Contract or Authorization
which requires consent to assignment, the receipt of any required consent.
3. Effectiveness; Conflicts. Assignor and Assignee acknowledge and agree that
the effectiveness of this Assignment and Assumption Agreement is contingent
upon, and subject to, the Closing. If any provision of this Assignment and
Assumption Agreement conflicts with any provision of the Asset Purchase
Agreement, the provision of the Asset Purchase Agreement shall control.
4. Successors and Assigns. This Assignment and Assumption Agreement shall inure
to the benefit of, and be binding upon, the respective successors and assigns of
the parties hereto. No
further assignment shall relieve Assignee of primary liability hereunder except
as specifically agreed to in writing by the parties hereto.
5. Amendment; Waiver. Neither this Assignment and Assumption Agreement, nor any
of the terms or provisions hereof, may be amended, modified, supplemented or
waived, except by a written instrument signed by the parties hereto (or, in the
case of a waiver, by the party granting such waiver). No waiver of any of the
provisions of this Assignment and Assumption Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver. No failure of any party hereto
to insist upon strict compliance by any other party with any obligation,
covenant, agreement or condition contained in this Assignment and Assumption
Agreement shall operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
6. Further Assurances. Each of the parties hereto, at all times and from time to
time hereafter, and upon every reasonable written request to do so by another
party hereto, shall make, do, execute and deliver, or cause to be made, done,
executed and delivered, all such further acts, deeds, assurances and things as
may be reasonably required in order to further implement and carry out the
intent and purpose of this Assignment and Assumption Agreement.
7. Counterparts. This Assignment and Assumption Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
8. Governing Law. This Assignment and Assumption Agreement shall be governed in
all respects, including validity, interpretation and effect, by the internal
laws of the State of Delaware without regard to the principles of conflict of
laws thereof.
9. Definitions. Capitalized terms used but not otherwise defined herein shall
have the respective meanings given to such terms in the Asset Purchase
Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
Executed as the day and year first above written.
ASSIGNOR:
CARDINAL HEALTH PTS, LLC
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
ASSIGNEE:
XXXXX RESPIRATORY OPERATIONS, INC.
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
Signature Page to Assignment and Assumption Agreement
EXHIBIT B-1
ASSIGNMENT OF LEASE
THIS ASSIGNMENT, dated this ____ day of _______, 2006, between CARDINAL
HEALTH PTS, LLC, a Delaware limited liability company ("Assignor"), whose
address is c/o Cardinal Health, Inc., 0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000,
and XXXXX RESPIRATORY OPERATIONS, INC., a Delaware corporation ("Assignee"),
whose address is 00000 Xxxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxx 00000.
WITNESSETH:
WHEREAS, Medeva Pharmaceuticals, Inc., formerly known as Xxxxx
Laboratories, Inc. ("Original Tenant"), and CCP Investment Properties, Ltd.
("Original Landlord") entered into that certain Industrial Lease Agreement dated
October 29, 1990, as amended by (i) that certain Amendment to Industrial Lease
Agreement dated as of October 29, 1990, by and between Original Landlord and
Original Tenant, (ii) that certain Second Amendment to Industrial Lease
Agreement dated as of March 15, 1991, by and between AEW #14 Corporation
("AEW"), successor in interest to Original Landlord, and Original Tenant, (iii)
that certain Third Amendment to Industrial Lease Agreement dated January 27,
1993, by and between Metropolitan Life Insurance Company ("Metropolitan"),
successor in interest to AEW, and Original Tenant, (iv) that certain Fourth
Amendment to Industrial Lease Agreement dated July 27, 1993, by and between
Metropolitan and Original Tenant, (v) that certain Fifth Amendment to Industrial
Lease Agreement dated January 19, 1995, by and between Metropolitan and Original
Tenant, (vi) that certain Partial Assignment and Sixth Amendment to Industrial
Lease Agreement between Metropolitan, Original Tenant and Xxxxx Laboratories,
Inc. ("Xxxxx"), predecessor in interest to Assignor, dated February 25, 1998,
(vii) that certain Seventh Amendment to Industrial Lease Agreement dated as of
June 1, 2002, by and between The Estate of Xxxxx Xxxxxxxx, Deceased, successor
in interest to Metropolitan and predecessor in interest to Centreport Valwood
Industrial, Inc. ("Landlord"), and Xxxxx, and (viii) that certain Eighth
Amendment to Industrial Lease Agreement dated as of December 7, 2005, by and
between Landlord and Assignor (hereinafter collectively referred to as the
"Lease"), for the premises located in the City of Fort Worth, State of Texas,
commonly known as 00000 Xxxxxxxxx Xxxx (the "Premises"); and
WHEREAS, Assignor desires to assign all its right, title and interest in
the Lease to Assignee.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Assignment and Assumption. Assignor assigns and transfers to Assignee all
its right, title and interest in the Lease, and Assignee accepts the
assignment and assumes and agrees to perform, from the date the assignment
becomes effective, as a direct obligation to Landlord, all the provisions
of the Lease. The assignment
shall take effect on July 31, 2006 (the "Effective Date") and Assignor
shall give possession of the Premises to Assignee on that date.
2. Assignee to Hold Assignor Harmless. Assignor warrants that as of the
Effective Date, there will be no uncured default under the underlying
Lease. If Assignee defaults under the Lease, Assignee shall indemnify and
hold Assignor harmless from all damages resulting from the default. If
Assignee defaults in its obligations under the Lease and Assignor pays
rent to Landlord or fulfills any of Assignee's other obligations in order
to prevent Assignee from being in default, Assignee immediately shall
reimburse Assignor for the amount of rent or costs incurred by Assignor of
Lease, together with interest on those sums at the rate of eight percent
(8%) per annum, or the highest legal rate.
3. Default of Lease. If Assignee defaults under the Lease, Assignor shall
have all rights against Assignee that are available by law and those
contained in the Lease, including, without limitation, Assignor's right to
reenter and retake possession of the Premises from Assignee.
4. No Amendment. Unless and until such time as Assignor has been released by
Landlord from any and all obligations under the Lease, Assignee shall not
(except as expressly permitted under Paragraph 2 of that certain Letter
Agreement executed in connection with the assignment of Lease, between
Assignor, Assignee and Landlord) amend, extend the term of, exercise any
renewal option under, or otherwise modify the Lease without the prior
written consent of Assignor, which consent shall not be unreasonably
withheld.
5. Improvement Allowance. The parties acknowledge that Landlord has given
Assignor an Improvement Allowance (as defined in the Lease) to be applied
subject to the provisions of the Lease. Assignee releases all claims to
such Improvement Allowance and any outstanding portion of such Improvement
Allowance which is supported by payment requests and supporting
documentation as required in the Lease shall be paid by Landlord directly
to Assignor pursuant to the terms of the Lease.
6. Attorney's Fees. If any party commences an action against any of the
parties arising out of or in connection with the Assignment of Lease, the
prevailing party or parties shall be entitled to recover from the losing
party or parties reasonable attorney's fees and cost of suit.
7. Notice. Any notice, demand, request, consent, approval or communication
that either party desires or is required to give to the other party or any
other person shall be in writing and either served personally or sent by
prepaid, first class mail. Any notice, demand, request, consent, approval,
or communication that either party desires or is required to give to the
other party shall be addressed to the other party at the address set forth
in the introductory paragraph of this
2
assignment. Either party may change its address by notifying the other
party of the change of address. Notice shall be deemed communicated within
forty-eight (48) hours from the time of the mailing if mailed as provided
in this paragraph.
ASSIGNOR: ASSIGNEE:
CARDINAL HEALTH PTS, LLC, a XXXXX RESPIRATORY OPERATIONS, INC.,
Delaware limited liability company a Delaware corporation
By: _________________________________ By: ________________________________
Name: _______________________________ Name: ______________________________
Title: ______________________________ Title: _____________________________
Date: _______________________________ Date: ______________________________
3
EXHIBIT B-2
July 27, 2006
Cardinal Health PTS, LLC
c/o Cardinal Health, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Real Estate Administration
Re: Industrial Lease Agreement dated October 29, 1990, by and
between Medeva Pharmaceuticals, Inc., formerly known as Xxxxx
Laboratories, Inc. ("Original Tenant"), and CCP Investment
Properties, Ltd. ("Original Landlord"), as amended by (i) that
certain Amendment to Industrial Lease Agreement dated as of
October 29, 1990, by and between Original Landlord and
Original Tenant, (ii) that certain Second Amendment to
Industrial Lease Agreement dated as of March 15, 1991, by and
between AEW #14 Corporation ("AEW"), successor in interest to
Original Landlord, and Original Tenant, (iii) that certain
Third Amendment to Industrial Lease Agreement dated January
27, 1993, by and between Metropolitan Life Insurance Company
("Metropolitan"), successor in interest to AEW, and Original
Tenant, (iv) that certain Fourth Amendment to Industrial Lease
Agreement dated July 27, 1993, by and between Metropolitan and
Original Tenant, (v) that certain Fifth Amendment to
Industrial Lease Agreement dated January 19, 1995, by and
between Metropolitan and Original Tenant, (vi) that certain
Partial Assignment and Sixth Amendment to Industrial Lease
Agreement between Metropolitan, Original Tenant and Xxxxx
Laboratories, Inc. ("Xxxxx"), successor in interest to
Original Tenant, dated February 25, 1998, (vii) that certain
Seventh Amendment to Industrial Lease Agreement dated as of
June 1, 2002, by and between The Estate of Xxxxx Xxxxxxxx,
Deceased (the "Xxxxxxxx Estate"), successor in interest to
Metropolitan, and Xxxxx, and (viii) that certain Eighth
Amendment to Industrial Lease Agreement dated as of December
7, 2005, by and between Centreport Valwood Industrial, Inc.
("Landlord"), successor in interest to the Xxxxxxxx Estate,
and Cardinal Health PTS, LLC ("Tenant"), successor in interest
to Xxxxx (hereinafter collectively referred to as the
"Lease"), for the premises located in the City of Fort Worth,
State of Texas, commonly known as 00000 Xxxxxxxxx Xxxx (the
"Premises")
Ladies and Gentlemen:
Tenant has requested that Landlord consent to an assignment of the Lease
to Xxxxx Respiratory Operations, Inc. ("Xxxxx Respiratory") and that
Landlord-release Tenant of its obligations under the Lease. Landlord has agreed
to consent to such assignment and hereby agrees to execute a release for the
benefit of Tenant, releasing Tenant from its obligations accruing under the
Lease after the date of such release, provided the following conditions are
satisfied:
Cardinal Health PTS, LLC
July 27, 2006
Page 2
1. Xxxxx Respiratory Therapeutics, Inc., a Delaware corporation, the
parent company of Xxxxx Respiratory, shall execute a guaranty
agreement in the form attached hereto as Exhibit A, guaranteeing the
obligations of the Lease; and with a replacement of the Letter of
Credit within such ten-day time period, such failure shall, without
any notice or demand, be an immediate event of default (as defined
in the Lease); and
3. Tenant and Xxxxx Respiratory shall reimburse Landlord for all
attorneys' fees and administrative expenses incurred by Landlord in
effecting such assignment to Xxxxx Respiratory, the amendment of the
Lease, and the release of Tenant.
Tenant has informed Landlord that the assignment of the Lease is being
consummated in connection with, and will occur upon, the closing of an asset
purchase transaction between Xxxxx Respiratory and Tenant and that such closing
will also operate to terminate that certain Supply Agreement currently in effect
between Tenant and Xxxxx Respiratory dated April 1, 2004, as amended. Tenant and
Xxxxx Respiratory acknowledge that the Sublease Agreement and Lessor Consent
between Xxxxx Respiratory and Tenant, dated as of April 1, 2004, as amended by
that certain Amendment of Sublease Agreement and Lessor Consent dated as of
December 21, 2005, which was not consented to by Landlord, will terminate in
accordance with its terms upon such closing.
If you are agreeable to the foregoing, please evidence your agreement in
the space provided below and return the original to my attention. This letter
shall not be deemed to modify the Lease.
CENTREPORT VALWOOD INDUSTRIAL, INC.,
a Delaware corporation
By: RREEF Management Company, a Delaware
corporation
By: ___________________________________
Name: Xxxxxxx Xxxxx
Title: Vice President, District Manager
- 2 -
Cardinal Health PTS, LLC
July 27, 2006
Page 3
ACCEPTED AND AGREED TO BY:
CARDINAL HEALTH PTS, LLC,
a Delaware limited liability company
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
Date: ______________________________________
XXXXX RESPIRATORY OPERATIONS, INC.,
a Delaware corporation
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
Date: ______________________________________
XXXXX RESPIRATORY THERAPEUTICS, INC.,
a Delaware corporation
By: ________________________________________
Name: ______________________________________
Title: _____________________________________
Date: ______________________________________
- 3 -
EXHIBIT B-3
ESCROW AGREEMENT
Escrow Agreement ("ESCROW AGREEMENT") dated as of the effective date (the
"EFFECTIVE DATE") set forth on schedule 1 attached hereto ("SCHEDULE 1") by and
among the purchaser identified on Schedule 1 (the "PURCHASER"), the seller
identified on Schedule 1 (the "SELLER") and JPMorgan Chase Bank, N.A. as escrow
agent hereunder (the "ESCROW AGENT").
WHEREAS, pursuant to that certain Asset Purchase Agreement between Purchaser and
Seller dated as of July 27, 2006 (the "PURCHASE AGREEMENT"), the Purchaser and
the Seller have agreed that Purchaser shall deposit in escrow certain funds and
wish such deposit to be subject to the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. APPOINTMENT. The Purchaser and Seller hereby appoint the Escrow Agent as
their escrow agent for the purposes set forth herein, and the Escrow Agent
hereby accepts such appointment under the terms and conditions set forth herein.
2. ESCROW FUND. Simultaneous with the execution and delivery of this Escrow
Agreement, the Purchaser is depositing with the Escrow Agent the sum indicated
as the escrow deposit on Schedule 1 (the "ESCROW DEPOSIT"). The Escrow Agent
shall hold the Escrow Deposit and, subject to the terms and conditions hereof,
shall invest and reinvest the Escrow Deposit and the proceeds thereof (the
"ESCROW FUND") as directed in Section 3.
3. INVESTMENT OF ESCROW FUND. During the term of this Escrow Agreement, the
Escrow Fund shall be invested and reinvested by the Escrow Agent in the
investment indicated on Schedule 1 or such other investments as shall be
directed in writing by the Purchaser and the Seller and as shall be acceptable
to the Escrow Agent. All investment orders involving U.S. Treasury obligations,
commercial paper and other direct investments will be executed through JPMorgan
Xxxxxxx Asset Management (JPMFAM), in the investment management division of
JPMorgan Chase. Subject to principles of best execution, transactions are
effected on behalf of the Escrow Fund through broker-dealers selected by JPMFAM.
In this regard, JPMFAM seeks to attain the best overall result for the Escrow
Fund, taking into consideration quality of service and reliability. An agency
fee will be assessed in connection with each transaction. Periodic statements
will be provided to Purchaser and Seller reflecting transactions executed on
behalf of the Escrow Fund. The Purchaser and Seller, upon written request, will
receive a statement of transaction details upon completion of any securities
transaction in the Escrow Fund without any additional cost. The Escrow Agent
shall have the right to liquidate any investments held in order to provide funds
necessary to make required payments under this Escrow Agreement. In the absence
of the gross negligence or willful misconduct of the Escrow Agent, the Escrow
Agent shall have no liability for any loss sustained as a result of any
investment in an investment indicated on Schedule 1 or any investment made
pursuant to the instructions of the parties hereto or as a result of any
liquidation of any investment prior to its maturity or for the failure of the
parties to give the Escrow Agent instructions to invest or reinvest the Escrow
Fund.
4. DISPOSITION AND TERMINATION. The Escrow Agent shall disburse the Escrow Fund
as follows:
(A) During the period commencing on August 1, 2006 and ending on
February 28, 2008, on the twenty-fifth (25th) day of each month
(with the first disbursement under this Section 4(A) occurring on
August 25, 2006 and the last disbursement under this Section 4(A)
occurring on February 25, 2008) the Escrow Agent shall disburse from
the Escrow Fund by wire transfer directly to the landlord under that
certain Industrial Lease Agreement assigned to Purchaser, as
identified on Schedule 1 (the "LANDLORD") an amount equal to
$37,411.80;
(B) During the period commencing on March 1, 2008 and ending February
28, 2011, on the twenty-fifth (25th) day of each month (with the
first disbursement under this Section 4(B) occurring on March 25,
2008 and the final disbursement under this Section 4(B) occurring on
February 25, 2011), the Escrow Agent shall disburse from the Escrow
Fund by wire transfer directly to the Landlord an amount equal to
$39,472.16;
(C) Upon the completion in full of the disbursements described in
Sections 4(A) and (B) above, and not later than April 30, 2011, the
Escrow Agent shall disburse any amounts remaining in the Escrow Fund
(including interest accrued thereon) by wire transfer to Purchaser
pursuant to the wiring instructions set forth on Schedule 1; and
(D) The Escrow Agent shall otherwise disburse all or any portion of the
Escrow Fund upon, and pursuant to, the joint written instructions of
Purchaser and Seller (which Purchaser and Seller acknowledge shall
be made in accordance with Section 2.3(b)(i) of the Purchase
Agreement in connection with the Seller Release (as defined in the
Purchase Agreement) as and when appropriate).
In the event that there are insufficient funds to make the requested
disbursements in Sections 4(A) and (B) above, including by reason of a joint
instruction pursuant to Section 4(D), the Escrow Agent shall remit all remaining
monies and the account shall terminate. Upon disbursement in full of the Escrow
Fund by the Escrow Agent, this Escrow Agreement shall terminate, subject to the
provisions of Section 8.
5. ESCROW AGENT. The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no duties shall be implied. The Escrow Agent
shall have no liability under and no duty to inquire as to the provisions of any
agreement other than this Escrow Agreement. The Escrow Agent may rely upon and
shall not be liable for acting or refraining from acting upon any written
notice, instruction or request furnished to it by Seller and Purchaser hereunder
and believed by it to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall be under no duty to inquire into
or investigate the validity, accuracy or content of any such document. The
Escrow Agent shall have no duty to solicit any payments which may be due it or
the Escrow Fund. The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith except to the extent that a court of competent
jurisdiction determines that the Escrow Agent's gross negligence or willful
misconduct was the primary cause of any loss to the Purchaser or Seller. The
Escrow Agent may execute any of its powers and perform any of its duties
hereunder directly or through agents or attorneys (and shall be liable only for
the careful selection of any such agent or attorney) and may consult with
counsel, accountants and other skilled persons to be selected and retained by
it. The Escrow Agent shall not be liable for anything done, suffered or omitted
in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons. In the event that the Escrow
Agent shall be uncertain as to its duties or rights hereunder or shall receive
instructions, claims or demands from any party hereto which, in its opinion,
conflict with any of the provisions of this Escrow Agreement, it shall be
entitled to refrain from taking any action and its sole obligation shall be to
keep safely all property held in escrow until it shall be directed otherwise in
writing by all of the other parties hereto or by a final order or judgment of a
court of competent jurisdiction. Anything in this Escrow Agreement to the
contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
6. SUCCESSION. The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving 30 days advance notice in writing of such
resignation to the other parties hereto specifying a date following such 30 day
period when such resignation shall take effect. Purchaser and Seller may
terminate the Escrow Agent and discharge the Escrow Agent from its duties or
obligations hereunder by giving 10 days advance notice of such termination to
the Escrow Agent specifying a date following such 10 day period when such
termination shall take effect. In the event of any such resignation or
termination, the Escrow Agent shall cooperate to transfer the Escrow Fund to a
successor escrow agent jointly named by the Purchaser and Seller. The Escrow
Agent shall have the right to withhold an amount equal to any amount due and
owing to the Escrow Agent, plus any costs and expenses the Escrow Agent shall
reasonably believe may be incurred by the Escrow Agent in connection with the
termination of the Escrow Agreement. Any corporation or association into which
the Escrow Agent may be merged or converted or with which it may be
consolidated, or any corporation or association to which all or substantially
all the escrow business of the Escrow Agent's line of business may be
transferred, shall be the Escrow Agent under this Escrow Agreement without
further act.
7. FEES. The Purchaser agrees to (i) pay the Escrow Agent upon execution of this
Escrow Agreement and on each anniversary hereof reasonable compensation for the
services to be rendered hereunder, which unless otherwise agreed in writing
shall be as described in Schedule 1 attached hereto, and (ii) pay or reimburse
the Escrow Agent upon request for all expenses, disbursements and advances,
including reasonable attorney's fees and expenses,
2
incurred or made by it in connection with the preparation, execution,
performance, delivery, modification and termination of this Escrow Agreement.
8. INDEMNITY. Subject to Section 7, which shall be solely the Purchaser's
obligation, the Purchaser and the Seller shall each indemnify, defend and save
harmless the Escrow Agent and its directors, officers, agents and employees (the
"INDEMNITEES") from 50% of all loss, liability or expense (including the
reasonable fees and expenses of in house or outside counsel) arising out of or
in connection with (i) the Escrow Agent's execution and performance of this
Escrow Agreement, except in the case of any indemnitee to the extent that such
loss, liability or expense is due to the gross negligence or willful misconduct
of such indemnitee, or (ii) its following any instructions or other directions
from the Purchaser or the Seller, except to the extent that its following any
such instruction or direction is expressly forbidden by the terms hereof. The
parties hereto acknowledge that the foregoing indemnities shall survive the
resignation or removal of the Escrow Agent or the termination of this Escrow
Agreement.
9. TINS; TAXES. The Purchaser and the Seller each represent that its correct
Taxpayer Identification Number ("TIN") assigned by the Internal Revenue Service
("IRS") or any other taxing authority is set forth in Schedule 1. Upon execution
of this Escrow Agreement, the Purchaser and Seller shall provide the Escrow
Agent with a fully executed W-8 or W-9 IRS form, which shall include the
Purchaser's and Seller's TIN. In addition, all interest or other income earned
under the Escrow Agreement shall be allocated and/or paid in accordance with
Section 4 and reported by the recipient to the Internal Revenue Service or any
other taxing authority as accruing to the account of Purchaser. Escrow Agent
shall report and, as required withhold any taxes as it determines may be
required by any law or regulation in effect at the time of the distribution. All
proceeds of the Escrow Fund shall be retained in the Escrow Fund and reinvested
from time to time by the Escrow Agent as provided in Section 3. In the event
that any earnings remain undistributed at the end of any calendar year, Escrow
Agent shall report to the Internal Revenue Service or such other authority such
earnings as it deems appropriate or as required by any applicable law or
regulation or, to the extent consistent therewith, as accruing to the account of
Purchaser. In addition, Escrow Agent shall withhold any taxes it deems
appropriate and shall remit such taxes to the appropriate authorities.
10. NOTICES. All communications hereunder shall be in writing and shall be
deemed to be duly given and received:
(i) upon delivery if delivered personally or upon confirmed transmittal if
by facsimile;
(ii) on the next Business Day (as hereinafter defined) if sent by
overnight courier; or
(iii) four (4) Business Days after mailing if mailed by prepaid registered
mail, return receipt requested, to the appropriate notice address set
forth on Schedule 1 or at such other address as any party hereto may have
furnished to the other parties in writing by registered mail, return
receipt requested.
Notwithstanding the above, in the case of communications delivered to the Escrow
Agent pursuant to (ii) and (iii) of this Section 10, such communications shall
be deemed to have been given on the date received by the Escrow Agent. In the
event that the Escrow Agent, in its sole discretion, shall determine that an
emergency exists, the Escrow Agent may use such other means of communication as
the Escrow Agent deems appropriate. "BUSINESS DAY" shall mean any day other than
a Saturday, Sunday or any other day on which the Escrow Agent located at the
notice address set forth on Schedule 1 is authorized or required by law or
executive order to remain closed.
11. SECURITY PROCEDURES. In the event funds transfer instructions are given
(other than in writing at the time of execution of this Escrow Agreement, as
indicated in Schedule 1), whether in writing, by telecopier or otherwise, the
Escrow Agent is authorized to seek confirmation of such instructions by
telephone call-back to the person or persons designated on schedule 2 attached
hereto ("SCHEDULE 2"), and the Escrow Agent may rely upon the confirmation of
anyone purporting to be the person or persons so designated. The individuals
authorized to give or confirm funds transfer instructions may be changed only in
a writing actually received and acknowledged by the Escrow Agent. If the Escrow
Agent is unable to contact any of the authorized representatives identified in
Schedule 2, the Escrow Agent is hereby authorized to seek confirmation of such
instructions by telephone call-back to any one or more of the executive officers
of Seller and/or Purchase, as applicable ("EXECUTIVE OFFICERS"), which shall
include the titles of ______________________, as the Escrow Agent may select.
Such Executive Officer shall deliver to the Escrow Agent a fully executed
Incumbency Certificate, and the Escrow Agent may rely upon the confirmation of
anyone purporting to be any such officer. The Escrow Agent and the beneficiary's
bank in any funds transfer may rely solely upon any account numbers or similar
identifying numbers provided by the Purchaser or the Seller to identify (i) the
3
beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank. The
Escrow Agent may apply any of the escrowed funds for any payment order it
executes using any such identifying number, even when its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a bank
other than the beneficiary's bank or an intermediary bank designated. The
parties to this Escrow Agreement acknowledge that these security procedures are
commercially reasonable. All funds transfer instructions must include the
signature of the person(s) authorizing said funds transfer.
12. MISCELLANEOUS. The provisions of this Escrow Agreement may be waived,
altered, amended or supplemented, in whole or in part, only by a writing signed
by all of the parties hereto. Neither this Escrow Agreement nor any right or
interest hereunder may be assigned in whole or in part by any party, except as
provided in Section 6, without the prior consent of the other parties. This
Escrow Agreement shall be governed by and construed under the laws of the State
of New York. Each party hereto irrevocably waives any objection on the grounds
of venue, forum non-conveniens or any similar grounds and irrevocably consents
to service of process by mail or in any other manner permitted by applicable law
and consents to the jurisdiction of the courts located in the State of New York.
The parties further hereby waive any right to a trial by jury with respect to
any lawsuit or judicial proceeding arising or relating to this Escrow Agreement.
No party to this Escrow Agreement is liable to any other party for losses due
to, or if it is unable to perform its obligations under the terms of this Escrow
Agreement because of, acts of God, fire, floods, strikes, equipment or
transmission failure, or other causes reasonably beyond its control. The terms
and provisions of this Escrow Agreement are intended solely for the benefit of
each party hereto and their respective successors or permitted assigns, and it
is not the intention of the parties to confer third-party beneficiary rights
upon any other person or entity. This Escrow Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13. ACCOUNT OPENING INFORMATION/TINS.
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT For accounts
opened in the US: To help the government fight the funding of terrorism and
money laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person who opens an
account. When an account is opened, the Escrow Agent will ask for information
that will allow it to identify relevant parties.
[Signature page follows]
4
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of
the date set forth in Schedule 1.
JPMORGAN CHASE BANK, N.A.
AS ESCROW AGENT
By: __________________________________
Name:
Title:
PURCHASER
By: __________________________________
Name:
Title:
SELLER
By: __________________________________
Name:
Title:
5
SCHEDULE 1
EFFECTIVE DATE: _______________, 2006
NAME OF PURCHASER: XXXXX RESPIRATORY OPERATIONS, INC.
Purchaser Notice Address: 00000 Xxxxxxxxx Xxxx, Xxxx Xxxxx, XX 00000
Purchaser TIN:
Wiring Instructions:
NAME OF SELLER: CARDINAL HEALTH PTS, LLC
Seller Notice Address: 00 Xxxxxxxxxxx Xxxx, Xxxxxxxx, XX 00000
Seller TIN:
Wiring Instructions:
NAME OF LANDLORD: CENTREPORT VALWOOD INDUSTRIAL, INC.
Landlord Notice Address: c/o RREEF Management Company, 0000 Xxxxxx Xxx,
Xxxxx 000, Xxxxxxxxxx, XX 00000
Wiring Instructions:
ESCROW DEPOSIT: $2,169,233.76
INVESTMENT: [specify]
[X] JPMorgan Chase Bank Money Market Account;
[ ] A trust account with JPMorgan Chase Bank;
[ ] A money market mutual fund, including without limitation the
JPMorgan Fund or any other mutual fund for which the Escrow Agent or
any affiliate of the Escrow Agent serves as investment manager,
administrator, shareholder servicing agent and/or custodian or
subcustodian, notwithstanding that (i) the Escrow Agent or an
affiliate of the Escrow Agent receives fees from such funds for
services rendered, (ii) the Escrow Agent charges and collects fees
for services rendered pursuant to this Escrow Agreement, which fees
are separate from the fees received from such funds, and (iii)
services performed for such funds and pursuant to this Escrow
Agreement may at times duplicate those provided to such funds by the
Escrow Agent or its affiliates. Fund
[ ] Such other investments as Purchaser, Seller and Escrow Agent may
from time to time mutually agree upon in a writing executed and
delivered by the Purchaser and the Seller and accepted by the Escrow
Agent.
6
ESCROW AGENT NOTICE ADDRESS: JPMorgan Chase Bank, N.A.
Escrow Services
0 Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax No.: (000)000-0000
ESCROW AGENT'S COMPENSATION: $3,500 PER ANNUM OR PART THEREOF; NOT SUBJECT TO
PRORATION. Payment of first year's fee ($3,500) due by wire transfer
upon execution of this Escrow Agreement
ESCROW AGENT'S WIRING INSTRUCTIONS:
ABA: 000000000
Name of Bank: JPMorgan Chase Bank
Account Number: 507953312
Account Name: Escrow Incoming Wire Account
Ref: further credit to 10227783, escrow fees
Attn: Xxxxx Xxxxxxx
7
SCHEDULE 2
TELEPHONE NUMBER(S) FOR CALL-BACKS AND
PERSON(S) DESIGNATED TO GIVE OR CONFIRM FUNDS TRANSFER INSTRUCTIONS
If to Purchaser:
Name Telephone Number Signature
------------------------ ------------------------- ---------------------
------------------------ ------------------------- ---------------------
------------------------ ------------------------- ---------------------
------------------------ ------------------------- ---------------------
If to Seller:
Name Telephone Number Signature
------------------------ ------------------------- ---------------------
------------------------ ------------------------- ---------------------
------------------------ ------------------------- ---------------------
------------------------ ------------------------- ---------------------
Telephone call backs shall be made to both the Purchaser and Seller if joint
instructions are required pursuant to this Escrow Agreement. All funds transfer
instructions must include the signature of the person(s) authorizing said funds
transfer.
Periodically, a person named above ("YOU") may issue payment orders to the
Escrow Agent to transfer funds by federal funds wire (subject to the
requirements in the Escrow Agreement regarding joint instructions). The Escrow
Agent will review the orders to determine compliance with the governing
documentation and to confirm signature by the appropriate party, in accordance
with the above list. Bank policy requires that, where practicable, the Escrow
Agent undertake callbacks to a party other than the individual who signed the
payment order to verify the authenticity of the payment order.
Inasmuch as you are the only employee in your office who can confirm wire
transfers, we will call you to confirm any federal funds wire transfer payment
order purportedly issued by you. Your continued issuance of payment orders to us
and confirmation in accordance with this procedure will constitute your
agreement (1) to the callback security procedure outlined herein and (2) that
the security procedure outlined herein constitutes a commercially reasonable
method of verifying the authenticity of payment orders. Moreover, you agree to
accept any risk associated with a deviation from this bank policy.
8
EXHIBIT C
AMENDMENT TO
COMMERCIAL SERVICES AGREEMENT
THIS AMENDMENT TO COMMERCIAL SERVICES AGREEMENT (this "AMENDMENT") is made
and entered into as of ___________, 2006 (the "EFFECTIVE DATE"), by and between
Xxxxx Respiratory Therapeutics, Inc., a Delaware corporation, f/k/a Xxxxx
Laboratories, Inc., a Texas corporation ("XXXXX"), Xxxxx Respiratory Products,
Inc., a Delaware Corporation and wholly-owned subsidiary of Xxxxx ("ARP") and
Cardinal Health, PTS, LLC, a Delaware Limited Liability Company ("CARDINAL").
BACKGROUND
a. Cardinal acquired Xxxxx' interest in that certain manufacturing
facility located in Ft. Worth, Texas (the "FACILITY") on the 1st day of April,
2004, pursuant to that certain Asset Purchase Agreement, dated the 24th day of
March, 2004 (the "ORIGINAL ASSET PURCHASE AGREEMENT").
b. In connection with the Original Asset Purchase Agreement, Xxxxx and
Cardinal entered into that certain Commercial Services Agreement, effective as
of the 1st day of April, 2004 (the "COMMERCIAL SERVICES AGREEMENT"), pursuant to
which Cardinal would be the preferred provider of marketing, sales, logistics,
development, analytical, and other services to Xxxxx.
c. Cardinal and Xxxxx Respiratory Operations, Inc., a Delaware corporation
and wholly-owned subsidiary of Xxxxx are parties to that certain Asset Purchase
Agreement dated as of July 27, 2006, pursuant to which Cardinal has agreed to
sell certain assets relating to the Facility back to Xxxxx as set forth therein.
Accordingly, the parties desire to amend the Commercial Services Agreement to:
(i) revise the term of the Commercial Services Agreement; and (ii) include a
minimum purchase obligation for Cardinal's development services.
d. Capitalized terms used herein and not otherwise defined shall have
meanings ascribed to them in the Commercial Services Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Xxxxx, ARP and Cardinal, intending
to be legally bound, hereby amend the Commercial Services Agreement, as of the
Effective Date, as follows:
1. Definition of Xxxxx. The definition of Xxxxx as used in the Commercial
Services Agreement is hereby amended to include Xxxxx Respiratory Products,
Inc., a Delaware corporation.
2. Minimum Commitment. Section 2 of the Commercial Services Agreement
shall be amended by adding the following paragraph to the end of Section 2:
During the term of this Agreement, Xxxxx shall be obligated to purchase
(or to cause one or more of its Affiliates to purchase) $1.0 million worth
of product development services (which shall include all work done on the
current hydrocodone project (Quote No.: QTE-AEC-002.04) after the
Effective Date) from Cardinal pursuant to the terms of this Agreement (the
"MINIMUM PURCHASE OBLIGATION"). Notwithstanding anything to the contrary
in this Agreement, but without prejudice to Cardinal's right of first
refusal set forth in this Section 2, Xxxxx shall not be required to obtain
any services from Cardinal pursuant to this Agreement other than the
development services contemplated by the Minimum Purchase Obligation. If,
upon the termination of this Agreement, Xxxxx has not met the Minimum
Purchase Obligation, Cardinal shall invoice Xxxxx for the difference
between (i) the amount paid by Xxxxx for services rendered as of the date
of termination and (ii) $1.0 million, and Cardinal shall have no
obligation to provide any further services in connection with the amount
so invoiced. Such invoice shall be due and payable within thirty (30) days
from the date of invoice.
3. Termination. Section 4(a) of the Commercial Services Agreement shall be
deleted in its entirety and the following inserted in lieu thereof:
(a) TERMINATION. This Agreement will terminate one (1) year from the
Effective Date.
4. This Amendment shall be governed by and interpreted in accordance with
the laws of the State of Delaware without regard to its conflict of laws
provisions.
5. This Amendment may be executed in any number of counterparts, and each
such counterpart shall be deemed an original, but all such counterparts together
shall constitute one agreement.
[THE REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
2
IN WITNESSS WHEREOF, the undersigned have executed this Amendment as of
the date first written above.
XXXXX RESPIRATORY PRODUCTS, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
XXXXX RESPIRATORY THERAPEUTICS, INC.
F/K/A XXXXX LABORATORIES, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
CARDINAL HEALTH PTS, LLC
By: ________________________________
Name: ______________________________
Title: _____________________________
3
EXHIBIT D
COMMERCIAL MANUFACTURING AGREEMENT (GRANULATE)
This Commercial Manufacturing Agreement ("AGREEMENT") is made this ___ day
of _________, 2006 ("EFFECTIVE DATE"), by and between Xxxxx Respiratory
Operations, Inc., a Delaware corporation, with a place of business at 00000
Xxxxxxxxx Xxxx, Xxxx Xxxxx, Xxxxx, 00000-0000 ("CLIENT"), and Cardinal Health
PTS, LLC, a Delaware limited liability company, with a place of business at 0000
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("CARDINAL HEALTH").
RECITALS
A. Cardinal Health provides contract pharmaceutical development,
manufacturing, packaging, analytical, and sales and marketing services to the
pharmaceutical industry.
B. Client has certain technology relating to certain pharmaceutical
products and wants Cardinal Health to assist in the formulation, filling,
packaging and testing of such products as provided in this Agreement and the
attachments hereto.
C. Client desires to engage Cardinal Health to provide certain services to
Client in connection with the processing of Client's Product (defined below);
and Cardinal Health desires to provide such services pursuant to the terms and
conditions set forth in this Agreement.
THEREFORE, in consideration of the mutual covenants, terms and conditions
set forth below, the parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms have the following meanings in this Agreement:
1.1 "AFFILIATE(s)" means any corporation, firm, partnership or other entity that
controls, is controlled by or is under common control with a party. For purposes
of this definition, "control" shall mean the ownership of at least 50% of the
voting share capital of such entity or any other comparable equity or ownership
interest.
1.2 "API" means the active pharmaceutical ingredient set forth in Attachment A
that has been released by Client and provided to Cardinal Health, along with a
certificate of analysis, as provided in this Agreement.
1.3 "APPLICABLE LAWS" means all laws, ordinances, rules and regulations within
the Territory applicable to the Processing of the Product or any aspect thereof
and the obligations of Cardinal Health or Client, as the context requires, under
this Agreement, including (A) all applicable federal, state and local laws and
regulations of each country within the Territory, (B) the U.S. Federal Food,
Drug and Cosmetic Act and (C) the Good Manufacturing Practices promulgated by
the Regulatory Authorities, as amended from time to time ("GMPS"). Applicable
Laws shall also include all laws, ordinances, rules and regulations applicable
in Territories added to this
Agreement in accordance with its terms, solely to the extent Client has provided
written copies of such laws to Cardinal Health prior to the commencement of
Cardinal Health's Processing for such Territories. Copies of all laws shall be
in the English language
1.4 "BATCH" means defined quantity of formulated bulk drug that has been
Processed in accordance with the Specifications.
1.5 "CARDINAL HEALTH INDEMNITEES" shall have the meaning set forth in Section
13.2.
1.6 "CHANGE ORDER" shall have the meaning set forth in Section 4.6(A).
1.7 "CLIENT INDEMNITEES" shall have the meaning set forth in Section 13.1.
1.8 "CONFIDENTIAL INFORMATION" is as defined in Section 11.2.
1.9 "CONFORMING PRODUCT" means the Product which, as manufactured by Cardinal
Health, conforms to the warranty in Section 10.1.
1.10 "CONTRACT YEAR" means each consecutive twelve (12) month period beginning
on the Effective Date.
1.11 "DEFECTIVE PRODUCT" means Product which is manufactured by Cardinal Health
and is not a Conforming Product.
1.12 "DISPUTE" shall have the meaning set forth in Section 18.10.
1.13 "EXPECTED YIELD" shall have the meaning set forth in Section 2.2.
1.14 "FACILITY" means the Cardinal Health facility located in Winchester,
Kentucky or such other facility as agreed by the parties.
1.15 "FDA" means the United States Food and Drug Administration.
1.16 "FIRM COMMITMENT" shall have the meaning set forth in Section 4.3.
1.17 "INVENTION" shall have the meaning set forth in Article 12.
1.18 "LOSSES" shall have the meaning set forth in Section 13.1.
1.19 "MATERIAL ADVERSE CHANGE" shall have the meaning set forth in Section 4.1.
1.20 "MATERIAL SALES DECREASE" shall have the meaning set forth in Section 4.1.
1.21 "MINIMUM QUARTERLY PURCHASE" shall have the meaning set forth in Section
4.2.
1.22 "MINIMUM REQUIREMENT" shall have the meaning set forth in Section 4.1.
1.23 "MINIMUM REQUIREMENT BALANCE" shall have the meaning set forth in Section
4.1.
2
1.24 "MINIMUM YIELD" shall have the meaning set forth in Section 2.1.
1.25 "PROCESS" or "PROCESSING" means the compounding, producing and/or packaging
of the API and Raw Materials into Product in accordance with the Specifications
and the terms and conditions set forth in this Agreement.
1.26 "PROCESSING DATE" means the day on which the Product is to be compounded by
Cardinal Health.
1.27 "PRODUCT" means a fully compounded bulk drug Processed in accordance with
the applicable Specifications.
1.28 "PURCHASE ORDER" shall have the meaning set forth in Section 4.4.
1.29 "RAW MATERIALS" means all raw materials, supplies, components and packaging
necessary to manufacture and ship the Product in accordance with the
Specifications, as provided in Attachment A, but not including the API.
1.30 "RECALL" shall have the meaning set forth in Section 9.5.
1.31 "REGULATORY AUTHORITY" means any governmental regulatory authority within a
Territory involved in regulating any aspect of the development, manufacture,
market approval, sale, distribution, packaging or use of the Product.
1.32 "RESERVATION FEE" shall have the meaning set forth in Section 7.2.
1.33 "RESERVED CAPACITY" shall have the meaning set forth in Section 4.2.
1.34 "ROLLING FORECAST" shall have the meaning set forth in Section 4.3.
1.35 "SAMPLE" shall have the meaning set forth in Section 5.1.
1.36 "SPECIFICATIONS" means the procedures, requirements, standards, quality
control testing and other data and the scope of services as set forth in
Attachment A, as the same may be amended in accordance with Article 8.
1.37 "TERM" shall have the meaning set forth in Section 15.1.
1.38 "TERRITORY" means the United States of America and any other country which
the parties agree in writing to add to this definition of Territory in an
amendment to this Agreement.
1.39 "VOLUME PRICING" shall have the meaning set forth in Section 7.1.
ARTICLE 2
VALIDATION, PROCESSING & RELATED SERVICES
2.1 Supply and Purchase of Product. During the Term, Cardinal Health shall
Process each Product in accordance with the applicable Specifications, the
Applicable Laws and the terms and conditions of this Agreement.
3
2.2 Yield. The expected yield ("EXPECTED YIELD") of each Product per unit of API
(as measured in kilograms) shall be determined for the first Contract Year by
averaging the actual consumption of API during the first thirty (30) Batches of
such Product Processed during the Contract Year. The Expected Yield for a
Product for each subsequent Contract Year shall be equal to *% of the actual
yield of such Product Processed during the immediately preceding Contract Year
(determined at the end of each Contract Year based on the average consumption of
API for all Batches of such Product Processed during the Contract Year). Subject
to Section 16.1, Cardinal Health shall only be responsible and liable to Client
for loss, damage or destruction of API if the actual yield of finished Product
(determined at the end of each Contract Year based on the average consumption of
API for all Batches of such Product Processed during the Contract Year) is less
than *% of the Expected Yield (the "MINIMUM YIELD"). If Cardinal Health is
required, subject to Section 16.1 and pursuant to this Section 2.2, to reimburse
Client for loss, damage or destruction of API, Cardinal Health shall reimburse
Client only for the actual documented purchase price paid to the supplier for
unusable API (to the extent paid by Client) and any actual documented shipping
costs incurred by Client and associated therewith. Solely for the purposes of
this Section 2.2 and the calculation of the applicable Expected Yield and
Minimum Yield for each Contract Year, API purchased from different suppliers and
Processed in accordance with this Agreement shall each constitute a separate
Product.
2.3 Other Related Services. Cardinal Health shall provide other services upon
terms and conditions agreed to by the parties in writing from time to time.
ARTICLE 3
MATERIALS
3.1 API. Client shall supply to Cardinal Health for Processing, at Client's sole
cost, the API and applicable reference standards in quantities sufficient to
meet Client's requirements for each Product as further set forth in Article 4.
Prior to delivery of any of the API or reference standard to Cardinal Health for
Processing, Client shall provide to Cardinal Health a copy of the API material
safety data sheet, as amended, and thereafter shall promptly provide any
subsequent revisions thereto. Upon receipt of each Purchase Order, Cardinal
Health will provide Client with the scheduled Processing Dates for that API
Client is required to deliver for such Purchase Order. Client shall supply the
API, reference standards (if changed or expired) and a certificate of analysis
for each shipment of API DDP (Incoterms 2000) the Facility no later than ten
(10) days before the scheduled Processing Date upon which such API will be used
by Cardinal Health. Upon receipt of the API, Cardinal Health shall conduct
identification testing of the API. Client shall be responsible for the
timeliness, quantity and quality of the API. Cardinal Health shall use the API
solely and exclusively for Processing under this Agreement.
3.2 Raw Materials. Client shall be responsible for supplying adequate Raw
Materials as necessary to meet Client's requirements for each Product as further
set forth in Article 4, unless otherwise agreed to by the parties in writing.
Client shall be responsible for the timeliness, quantity and quality of supply
of such Raw Materials. Cardinal Health shall use the Raw Materials solely and
exclusively for Processing under this Agreement.
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
4
ARTICLE 4
MINIMUM COMMITMENT, PURCHASE ORDERS & FORECASTS
4.1 Minimum Requirement. During each Contract Year, Client shall purchase the
minimum volume of Product ("MINIMUM REQUIREMENT") set forth on Attachment B. If
Client does not purchase such Minimum Requirement during any Contract Year,
Client shall pay Cardinal Health the difference between (1) the total amount
Client would have paid to Cardinal Health if the Minimum Requirement had been
fulfilled for Product and (2) the sum of all purchases of Product from Cardinal
Health for such Contract Year (the "MINIMUM REQUIREMENT BALANCE"); provided,
however, that if subsequent to the close of the first Contract Year, Client
experiences a Material Adverse Change and fails to purchase the Minimum
Requirement during such Contract Year as a direct result of such Material
Adverse Change, Client shall not be required to pay the Minimum Requirement
Balance to Cardinal Health for such Contract Year, but shall instead pay to
Cardinal Health the greater of either (A) Cardinal Health's gross profit
associated with Processing Product for such Contract Year, or (B) fifty percent
(50%) of the Volume Price, associated with the difference between (x) the
Minimum Requirement for such Contract Year and (y) the amount of Product
Processed by Cardinal Health for such Contract Year. For the purposes of this
Section 4.1, a "MATERIAL ADVERSE CHANGE" shall mean a decrease in the gross
revenues of Client (including all Affiliates and sublicensees of Client, and
successors and assigns) (as determined in accordance with generally accepted
accounting principles) from sales of the Mucinex(R) brand products during a
Contract Year of * percent (*%) or more from gross revenues from sales of such
products during the preceding twelve-month period (a "MATERIAL SALES DECREASE")
due to the marketing and sale by an unaffiliated third party of a private label,
extended release guaifenesin product. Cardinal Health shall have the right to
request an audit of any Material Adverse Change claimed by Client hereunder.
Such audit shall be performed by an independent certified public accountant who
shall be permitted to review such of Client's records and accounts as are
necessary to verify that a Material Sales Decrease has occurred. Cardinal Health
shall have the further right to verify that a Material Adverse Change has
occurred by review of such third party market reports and analyses, including
without limitation, market reports and analysis provided by IMS Health
Incorporated and other reputable information aggregators and providers, as
Cardinal Health determines reasonably necessary to confirm that a private label,
extended release guaifenesin product is currently available and has captured *%
of the U.S. domestic market for extended release guaifenesin products during the
relevant Contract Year (the "MARKET REQUIREMENT"). If such Market Requirement
has been met, then the marketing and sale of such product shall be deemed to
have caused the Material Sales Decrease for the purposes of determining whether
a Material Adverse Change has occurred. If the audit permitted herein discloses
that Client has not experienced a Material Sales Decrease or Cardinal Health is
unable to confirm that the Market Requirement has been met, then Client shall,
in addition to any other amounts due to Cardinal Health hereunder, reimburse
Cardinal Health for all costs and expenses incurred by Cardinal Health in
connection with such audit.
4.2 Reservation of Capacity. Cardinal Health shall reserve capacity to Process
the minimum volume of Product ("RESERVED CAPACITY") set forth on Attachment B.
Notwithstanding Sections 4.3 and 4.4, in an effort to level the Processing
throughout each Contract Year, until the
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
5
occurrence of a Material Adverse Change, Client shall submit each calendar
quarter binding Purchase Orders for at least sixty percent (60%) of the Reserved
Capacity for such calendar quarter (the "MINIMUM QUARTERLY PURCHASE"), as
further described on Attachment B. Cardinal Health shall have no obligation to
Process Product during any calendar quarter in excess of the Reserved Capacity
for such calendar quarter unless Cardinal Health has accepted a Purchase Order
for such Product.
4.3 Forecast. Within ten (10) days of the Effective Date and on or before the
first day of each subsequent calendar month during the Term, Client shall
furnish to Cardinal Health a written twelve (12) month rolling forecast of the
quantities of Product that Client intends to order from Cardinal Health during
such period ("ROLLING FORECAST"). The first three (3) months of such Rolling
Forecast shall constitute a binding order for the quantities of Product
specified therein ("FIRM COMMITMENT") and the following nine (9) months of the
Rolling Forecast shall be non-binding, good faith estimates.
4.4 Purchase Orders. On or before the first day of each calendar month, Client
shall submit a purchase order for the Firm Commitment (or the amount required
pursuant to Section 4.2, if greater) that specifies the actual number of Batches
and the requested delivery date for each Batch ("PURCHASE ORDER"). Client shall
submit each Purchase Order to Cardinal Health at least ninety (90) days in
advance of the delivery date requested in the Purchase Order. In the event of a
conflict between the terms of any Purchase Order and this Agreement, this
Agreement shall control. Cardinal Health shall use commercially reasonable
efforts to supply Client with quantities of Product that are in excess of the
quantities specified in the Firm Commitment, subject to Cardinal Health's other
supply commitments and manufacturing and equipment capacity, but shall be under
no obligation to provide quantities in excess of the Reserved Capacity for any
calendar quarter unless otherwise agreed in writing.
4.5 Cardinal Health's Cancellation of Purchase Orders. Notwithstanding Section
4.6, Cardinal Health reserves the right to cancel all, or any part of, a
Purchase Order upon written notice to Client, and Cardinal Health shall have no
further obligations or liability with respect to such Purchase Order, if Client
refuses or fails to make scheduled deliveries of the API or fails to supply
adequate Raw Materials as provided in Section 3.2.
4.6 Client's Modification or Cancellation.
A. Client may modify the delivery date or quantity of Product in a
Purchase Order only by submitting a written change order ("CHANGE ORDER") to
Cardinal Health at least thirty (30) days in advance of the earliest scheduled
Processing Date for the Processing covered by the Change Order. A Change Order
shall be effective and binding against Cardinal Health only upon the written
approval of Cardinal Health; and notwithstanding any such acceptance by Cardinal
Health, Client shall remain responsible for the Minimum Requirement purchase as
set forth in Section 4.1 and any Firm Commitment portion of the Rolling
Forecast.
B. Notwithstanding any amounts due to Cardinal Health under Section 4.1 or
Section 7.1, if Client fails to place Purchase Orders sufficient to satisfy the
Firm Commitment, Client shall, within thirty (30) days of receipt of invoice,
pay to Cardinal Health the Volume Pricing for
6
all Product that would have been Processed if Client had placed Purchase Orders
sufficient to satisfy the Firm Commitment.
C. Neither changes to or postponement of any delivery or Processing of any
Batch of Product, caused by Client, nor the payment of the fees described in
this Section 4.6, will reduce or in any way effect Client's Minimum Requirement
obligations set forth in Section 4.1.
4.7 Unplanned Delay or Elimination of Processing. Cardinal Health shall use
commercially reasonable efforts to meet the Purchase Orders, subject to the
terms and conditions of this Agreement. Cardinal Health shall provide Client
with as much advance notice as possible (and will use its best efforts to
provide at least fifteen (15) days' advance notice where possible) if Cardinal
Health determines that any Processing will be delayed or eliminated for any
reason (other than an event of force majeure) and, unless such delay or
elimination is due to the action, inaction or fault of Client, including without
limitation, Client's failure to deliver the API or Raw Materials in accordance
with Article 3, the amount of Product eliminated shall be counted against the
Minimum Requirement.
4.8 Inspection of Processing. Notwithstanding any right of inspection set forth
in the Quality Agreement (as defined below), Client may send up to two (2)
representatives to the Facility to observe the Processing for a period not to
exceed one week per Contract Year, provided that Client provide Cardinal Health
at least ten (10) days' advance written notice of the attendance of such Client
representatives. Client's representatives shall have access only to the portion
of the Facility where Cardinal Health Processes the Product solely for the
purposes of inspection and verification that Cardinal Health is Processing the
Product in accordance with the Specifications. Client shall indemnify and hold
harmless Cardinal Health for any action, omission or other activity of such
representatives while on Cardinal Health's premises. Client shall be responsible
for the compliance of such representatives with all standard policies and
procedures of Cardinal Health, including those relating to safety, and with
Article 11. Cardinal Health reserves the right to require such representatives
to enter into separate confidentiality agreements directly with Cardinal Health
in such persons' respective individual capacities on term substantially similar
to those set forth in Article 11.
ARTICLE 5
TESTING; SAMPLES; RELEASE
5.1 Sample; Testing. Within seven (7) days after Cardinal Health's completion of
Processing of each Batch, Cardinal Health shall provide Client or its designee
with a sample of the Product ("SAMPLE") and Cardinal Health's Certificate of
Analysis for such Batch. No later than twenty one (21) days after receipt of the
Sample, Client or its designee shall notify Cardinal Health whether or not the
Sample conforms to the warranty set forth in Section 10.1 of this Agreement.
Upon receipt of notice from Client that a Batch meets the warranty in Section
10.1, or upon failure of Client to respond by the end of such twenty one
(21)-day period, Cardinal Health will invoice Client for such Batch. For
avoidance of doubt, nothing in this Section 5.1 shall preclude Client from
retesting samples of delivered Batches, at its own expense, for the purpose of
determining whether any Batch meets the warranty in Section 10.1.
7
5.2 Discrepant Test Results. In the event of a disagreement between the parties
regarding whether the Product meets the warranty in Section 10.1, the parties
shall cause a mutually agreeable independent third party to review records, test
data and to perform comparative tests and/or analyses on samples of the alleged
defective Product. The independent party's results shall be final and binding.
Unless otherwise agreed to by the parties in writing, the costs associated with
such testing and review shall be borne by the party in error as to whether the
Product so conforms.
5.3 Defective Product. At the option of Client, Cardinal Health will either
reprocess (solely at its cost) any Batch of Defective Product (in accordance
with the Specifications and Applicable Laws) or credit any payments made by
Client for such Batch of Defective Product. To the extent a Batch of Defective
Product is the result of Cardinal Health's deviation from the Specifications due
to the negligence or willful misconduct of Cardinal Health, Cardinal Health
shall reimburse Client for the actual, documented costs of unusable API and Raw
Materials (to the extent paid for by Client) and any actual, documented shipping
costs incurred by Client and associated therewith.
5.4 Supply of Material for Defective Product. In the event Cardinal Health
reprocesses Product pursuant to Section 5.3, Client shall supply, Cardinal
Health with sufficient quantities of API in order for Cardinal Health to
complete such reprocessing.
ARTICLE 6
DELIVERY
6.1 Delivery. Cardinal Health shall segregate and store all Product until
acceptance as set forth in Section 5.1. Cardinal Health shall tender all Product
for delivery, Ex Works (Incoterms 2000) the Facility. Client shall be
responsible for all costs and risk of loss associated with shipment of the
Product. Client shall qualify at least three (3) carriers to ship Product and
then designate the priority of such qualified carriers to Cardinal Health.
6.2 Failure to Take Delivery. If Client fails to take delivery of any Product on
any scheduled delivery date, Cardinal Health shall store such Product as
Client's agent, and Client shall be invoiced on the first day of each month
following such scheduled delivery date for reasonable administration and storage
costs. For each lot of stored Product, Client agrees that (A) Client has made a
fixed commitment to purchase such Product, (B) risk of ownership for such
Product passes to Client, (C) such Product shall be on a xxxx and hold basis for
legitimate business purposes, (D) if no delivery date is determined at the time
of billing, Cardinal Health shall have the right to ship the Product to Client
within four (4) months after billing and (E) Client will be responsible for any
decrease in market value of such Product that relates to factors and
circumstances outside of Cardinal Health's control. Within five (5) days
following a written request from Cardinal Health, Client shall provide Cardinal
Health with a letter confirming items (A) through (E) of this Section for each
lot of stored Product.
8
ARTICLE 7
PRICING AND PAYMENT
7.1 Volume Pricing. Client shall pay to Cardinal Health the volume pricing for
Conforming Product set forth on Attachment B ("VOLUME PRICING"). In the event
that Client requests, and Cardinal Health Processes, any Product in excess of
the Reserved Capacity, Client shall pay Cardinal Health for such Processing at
the Volume Pricing. In the event Client requests services other than Processing,
Cardinal Health shall provide a written quote of the fee for such additional
services and Client shall advise Cardinal Health whether it wishes to have such
additional services performed by Cardinal Health. The scope and agreed fee for
such services shall then be reduced to writing and set forth in an Appendix to
this Agreement which Appendix shall be signed by the parties and appended to
this Agreement. Unless and only to the extent expressly set forth in such
Appendices, the terms and conditions of this Agreement shall govern and apply to
such other services.
7.2 Profit Share Continuation. In consideration of Cardinal Health's waiver of
the twelve-month termination notice period set forth in Section 13.2(b) of that
Supply Agreement between Client and Cardinal Health, dated April 1, 2004, as
amended, and the corresponding termination of Cardinal Health's right thereunder
to earn certain fees as contemplated in Section 9.1 thereof during such 12-month
period, Client shall pay Cardinal Health an amount equal to *% of gross margin
(as reported in Xxxxx' quarterly filings on Form 10-Q and annual filings on Form
10-K with the U.S. Securities and Exchange Commission) accruing for the period
commencing on the Effective Date and ending June 30, 2007 (the "PROFIT SHARE").
The Profit Share shall be calculated quarterly for each of the fiscal quarters
ending on: Sept 30, 2006, December 31, 2006, March 31, 2007, June 30, 2007; and
paid by Client to Cardinal Health within ten (10) days of the filing date of the
10-Q or 10-K pertaining to such quarter, as applicable; provided, that,
notwithstanding anything herein to the contrary, in no event shall any such
quarterly payment be less than $* or greater than $*; provided further, for
clarity, that where the relevant filing is a 10-K, only that portion of gross
margin reported in the 10-K that pertains to the most recently ended quarter
shall be used to calculate the portion of Profit Share then due. Notwithstanding
the foregoing, Client's obligation to pay the Profit Share shall terminate once
Client has paid $* aggregate Profit Share.
7.3 Taxes; Duty. All taxes (excluding taxes based on income), duties and other
amounts assessed on any Raw Materials, API or Conforming Product prior to or
upon sale or delivery to Client or Cardinal Health, as the case may be, are the
responsibility of Client, and Client shall reimburse Cardinal Health for any
such taxes (excluding taxes based on income), duties or other expenses paid by
Cardinal Health.
7.4 Payment Terms. Cardinal Health shall invoice Client for all Product as
provided in Section 5.1 and for all other fees as provided elsewhere in this
Agreement. On or before the twentieth (20th) day of the month following the end
of each Contract Year, Cardinal Health shall invoice Client for any Minimum
Requirement Balance due for the immediately preceding Contract Year. Payment for
all invoices hereunder shall be due within thirty (30) days after the
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
9
date of such invoice. In the event payment is not received by Cardinal Health on
or before the thirtieth (30th) day after the date of the invoice, then such
unpaid amount shall accrue interest at the rate of one and one-half percent (1
1/2%) per month until paid in full.
ARTICLE 8
CHANGES TO SPECIFICATIONS
All Specifications and any changes thereto agreed to by the parties from time to
time shall be in writing, dated and signed by the parties. No change in the
Specifications shall be implemented by Cardinal Health, whether requested by
Client or requested or required by any Regulatory Authority, until the parties
have agreed in writing to such change, the implementation date of such change,
and any increase or decrease in costs, expenses or fees associated with such
change (including any changes to Volume Pricing). Cardinal Health shall respond
promptly to any request made by Client for a change in the Specifications, and
both parties shall use commercially reasonable, good faith efforts to agree to
the terms of such change in a timely manner. As soon as possible after a request
is made for any change in Specifications, Cardinal Health shall notify Client of
the costs associated with such change and shall provide such supporting
documentation as Client may reasonably require. Client shall pay all costs
associated with such agreed upon changes. If there is a conflict between the
terms of this Agreement and the terms of the Specifications, this Agreement
shall control.
ARTICLE 9
RECORDS; REGULATORY MATTERS
9.1 Batch Records and Data. Within ten (10) business days following the
completion of Processing of each Batch, Cardinal Health shall provide Client
with properly completed copies of Batch records prepared in accordance with the
Specifications; provided, that if testing reveals an out-of-Specification
result, Cardinal Health shall provide copies of such Batch records as soon as
practicable but in any event within five (5) business days of completion of
Cardinal Health's investigation of the out-of-Specification result.
9.2 Recordkeeping. Cardinal Health shall maintain materially complete and
accurate books, records, test and laboratory data, reports and all other
information relating to Processing under this Agreement, including all
information required to be maintained by Applicable Laws, in accordance with
Cardinal Health standard operating procedures. Such information shall be
maintained in forms, notebooks and records for a period of at least two (2)
years from the relevant finished Product expiration date or longer if required
under Applicable Laws. Notwithstanding the foregoing, subsequent to such two (2)
year period, prior to destruction or deletion of any such books and records that
constitute current GMPs records related to the services performed pursuant to
this Agreement, Cardinal Health shall notify Client of its intent to destroy or
delete such books and records, and Client shall have a period of ten (10) days
from such notice to request that Cardinal Health transfer such books and records
to Client, at Client's expense. If Client does not so request within such
period, Cardinal Health shall have no obligation to retain such books and
records and may destroy or delete such records in its sole discretion.
10
9.3 Regulatory Compliance. Client shall be solely responsible for all Regulatory
Approvals required by any Regulatory Authority, including any product licenses,
applications and amendments in connection therewith. Cardinal Health will be
responsible to maintain all permits and licenses required by any Regulatory
Authority with respect to the Facility generally. During the Term, Cardinal
Health will assist Client with all regulatory matters relating to Processing
under this Agreement, at Client's request and at Client's expense. Each party
intends and commits to cooperate to satisfy all Applicable Laws relating to
Processing under this Agreement.
9.4 Governmental Inspections and Requests. Cardinal Health shall immediately
advise Client if an authorized agent of any Regulatory Authority requests to
inspect the Facility or audit Cardinal Health's books and records, or visits the
Facility, in each case to the extent concerning Processing of the Product, and
Cardinal Health shall permit Client to have one (1) representative in attendance
only at any pre-approval inspection related solely to a Product or a new product
to be Processed hereunder. Cardinal Health shall furnish to Client a copy of the
report by such Regulatory Authority, if any, within 10 days of Cardinal Health's
receipt of such report.
9.5 Recall. In the event Cardinal Health believes a recall, field alert, Product
withdrawal or field correction (a "RECALL") may be necessary with respect to any
Product provided under this Agreement, Cardinal Health shall immediately notify
Client in writing. Cardinal Health will not act to initiate a Recall without the
express prior written approval of Client, unless otherwise required by
Applicable Laws. In the event Client believes a Recall may be necessary with
respect to any Product provided under this Agreement, Client shall immediately
notify Cardinal Health in writing and Cardinal Health shall provide all
necessary cooperation and assistance to Client. The cost of any Recall shall be
borne by Client unless and to the extent such Recall is caused by Cardinal
Health's breach of its obligations under this Agreement, or its negligence or
willful misconduct, in which case such cost shall be borne by Cardinal Health.
For purposes hereof, such cost shall be limited to reasonable, actual and
documented costs incurred by Client for such Recall and replacement of such
Product in accordance with Article 5. IN NO EVENT SHALL CARDINAL BE LIABLE TO
CLIENT OR ANY AFFILIATE OF CLIENT FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, LOST REVENUES OR PROFITS
OR DAMAGES TO BUSINESS REPUTATION RESULTING FROM ANY RECALL.
9.6 Quality Agreement. Upon the Effective Date, the parties shall execute a
Quality Agreement in substantially the form attached to this Agreement as
Attachment C. The Quality Agreement shall in no way determine liability or
financial responsibility of the parties for the responsibilities set forth
therein. In the event of a conflict between the terms of this Agreement and the
Quality Agreement, this Agreement shall control.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Cardinal Health. Cardinal Health represents and warrants to Client that at
the time of delivery of the Product as provided in Section 6.1, such Product
will conform to and will have been Processed in conformance with the
Specifications and Applicable Laws.
10.2 Client. Client represents, warrants and covenants to Cardinal Health that:
11
A. All materials supplied by or on behalf of Client, including API, will
comply with all applicable Specifications, will have been produced in compliance
with the Applicable Laws, and will be provided in accordance with the terms and
conditions of this Agreement;
B. No specific safe handling instructions are applicable to the Product or
to and any materials supplied by or on behalf of Client, except as disclosed to
Cardinal Health in accordance with Section 3.1 or otherwise in writing by or on
behalf of Client in sufficient time for review and training by Cardinal Health
prior to commencing Processing;
C. All Product delivered to Client by Cardinal Health will be held, used
and/or disposed of by the Client in accordance with all Applicable Laws;
D. Client will comply with all Applicable Laws in performing its
obligations under this Agreement and its use of any materials or Products
provided by Cardinal Health under this Agreement;
E. Client will not release any Batch of Product if the required
Certificate of Analysis indicates that the Product does not comply with the
Specifications;
F. Client has all necessary authority and all right, title and interest in
and to any intellectual property related to the Product, including copyrights,
trademarks, trade secrets, patents, inventions and developments related to the
Product, the manufacture thereof, and any Product artwork; and
G. The work to be performed by Cardinal Health under this Agreement will
not violate or infringe upon any trademark, tradename, copyright, patent or
other rights held by any person or entity.
10.3 Mutual. Each party hereby represents and warrants to the other party that:
A. Such party (1) is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized, (2) has the power
and authority and the legal right to own and operate its property and assets,
and to carry on its business as it is now being conducted, and (3) is in
compliance with all requirements of Applicable Laws, except to the extent that
any noncompliance would not materially adversely affect such party's ability to
perform its obligations under the Agreement;
B. Such party (1) has the power and authority and the legal right to enter
into this Agreement and to perform its obligations hereunder and thereunder and
(2) has taken all necessary action on its part to authorize the execution and
delivery of the Agreement and the performance of its obligations hereunder;
C. This Agreement has been duly executed and delivered on behalf of such
party, and constitutes a legal, valid, binding obligation, enforceable against
such party in accordance with its terms;
12
D. All necessary consents, approvals and authorizations of all Regulatory
Authorities and other persons required to be obtained by such party in
connection with the Agreement, if any, have been obtained; and
E. The execution and delivery of this Agreement and the performance of
such party's obligations hereunder (1) do not conflict with or violate any
requirement of Applicable Laws or any material contractual obligation of such
party and (2) do not materially conflict with, or constitute a material default
or require any consent under, any material contractual obligation of such party.
10.4 Limitations. THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE
10 ARE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES MADE BY EACH PARTY
TO THE OTHER AND NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS, WARRANTIES OR
GUARANTEES OF ANY KIND WHATSOEVER, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR
PURPOSE.
ARTICLE 11
CONFIDENTIAL INFORMATION
11.1 Mutual Obligation. Cardinal Health and Client each agrees that it will not
use the other party's Confidential Information except in connection with the
performance of its obligations hereunder and will not disclose the other party's
Confidential Information to any third party without the prior written consent of
the other party, except as required by law, regulation or court or
administrative order; provided, however, that prior to making any such legally
required disclosure, the party making such disclosure shall give the other party
as much prior notice of the requirement for and contents of such disclosure as
is practicable under the circumstances. Notwithstanding the foregoing, each
party may disclose the other party's Confidential Information to any of its
Affiliates that (A) need to know such Confidential Information for the purpose
of performing under this Agreement, (B) are advised of the contents of this
Article and (C) agree to be bound by the terms of this Article.
11.2 Definition. As used in this Agreement, the term "CONFIDENTIAL INFORMATION"
includes all such information furnished by Cardinal Health or Client, or any of
their respective representatives or Affiliates, to the other party or its
representatives or Affiliates, whether furnished before, on or after the
Effective Date and furnished in any form, including written, verbal, visual,
electronic or in any other media or manner. Confidential Information includes
all proprietary technologies, know-how, trade secrets, discoveries, inventions
and any other intellectual property (whether or not patented), analyses,
compilations, business or technical information and other materials prepared by
either party, or any of their respective representatives or Affiliates,
containing or based in whole or in part on any such information furnished by the
other party or its representatives or Affiliates. Confidential Information also
includes the existence of this Agreement and its terms.
11.3 Exclusions. Notwithstanding Section 11.2, Confidential Information does not
include information that (A) is or becomes generally available to the public or
within the industry to
13
which such information relates other than as a result of a breach of this
Agreement, (B) is already known by the receiving party at the time of disclosure
as evidenced by the receiving party's written records, (C) becomes available to
the receiving party on a non-confidential basis from a source that is entitled
to disclose it on a non-confidential basis or (D) was or is independently
developed by or for the receiving party without reference to the Confidential
Information, as evidenced by the receiving party's written records.
11.4 No Implied License. Except as expressly set forth in Section 11.1, the
receiving party will obtain no right of any kind or license under any
Confidential Information of the disclosing party, including any patent
application or patent, by reason of this Agreement. All Confidential Information
will remain the sole property of the party disclosing such information or data,
subject to Article 12.
11.5 Return of Confidential Information. Upon expiration or termination of this
Agreement, the party receiving Confidential Information will cease its use and,
upon request, within 30 days either return or destroy (and certify as to such
destruction) all Confidential Information of the other party, including any
copies thereof, except for a single copy thereof which may be retained for the
sole purpose of determining the scope of the obligations incurred under this
Agreement.
11.6 Survival. The obligations of this Article will terminate five (5) years
from the expiration or termination of this Agreement.
ARTICLE 12
INTELLECTUAL PROPERTY
For purposes of this Agreement, all inventions, processes, know how, trade
secrets, data, improvements, developments, patent applications and patents and
other intellectual property which are characterized, conceived, developed,
derived, discovered, generated, identified, first reduced to practice or
otherwise made, as the case may be, by employees, servants or agents of Cardinal
Health in connection with this Agreement and the Processing of Products
hereunder (collectively, "INVENTIONS") shall be the property of Cardinal Health,
subject to a nonexclusive, world-wide, royalty free license, with no right to
sublicense, during the Term in favor of Client to any such Inventions which are,
and to the extent, reasonably required by Client in order for Client to
distribute and sell the Products.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by Cardinal Health. Cardinal Health shall indemnify and
hold harmless Client, its Affiliates, and their respective directors, officers,
employees and agents ("CLIENT INDEMNITEES") from and against any and all suits,
claims, losses, demands, liabilities, damages, costs and expenses (including
reasonable attorneys' fees) in connection with any suit, demand or action by any
third party ("LOSSES") arising out of or resulting from (A) any breach of its
representations, warranties or obligations set forth in this Agreement,
including without limitation, any Defective Products, or (B) any negligence or
willful misconduct of Cardinal Health; except to the extent that any of the
foregoing arises out of or results from any Client Indemnitee's negligence,
willful misconduct or breach of this Agreement.
14
13.2 Indemnification by Client. Client shall indemnify and hold harmless
Cardinal Health, its Affiliates, and their respective directors, officers,
employees and agents ("CARDINAL HEALTH INDEMNITEES") from and against all Losses
arising out of or resulting from (A) any breach of its representations,
warranties or obligations set forth in this Agreement, (B) any manufacture,
sale, promotion, distribution or use of or exposure to the Product (but not
Defective Product) or any materials supplied by Client hereunder, including
product liability or strict liability, (C) Client's exercise of control over
Processing, to the extent that Client's instructions or directions violate
Applicable Laws, (D) any claim that the Product or any materials, data or
proprietary rights provided by Client infringe or violate any patent, trade
secret, copyright, trademark or other proprietary rights of any third party; or
(E) any negligence or willful misconduct by Client; except to the extent that
any of the foregoing arises out of or results from any Cardinal Health
Indemnitee's negligence, willful misconduct or breach of this Agreement.
13.3 Indemnification Procedures. All indemnification obligations in this
Agreement are conditioned upon the party seeking indemnification: (A) promptly
notifying the indemnifying party of any claim or liability of which the party
seeking indemnification becomes aware (including a copy of any related
complaint, summons, notice or other instrument); provided, however, that failure
to provide such notice within a reasonable period of time shall not relieve the
indemnifying party of any of its obligations hereunder except to the extent the
indemnifying party is prejudiced by such failure; (B) cooperating with the
indemnifying party in the defense of any such claim or liability (at the
indemnifying party's expense); and (C) not compromising or settling any claim or
liability without prior written consent of the indemnifying party.
ARTICLE 14
INSURANCE
14.1 Cardinal Health Insurance. Cardinal Health shall, at its own cost and
expense, obtain and maintain in full force and effect the following insurance
during the Term: (A) Commercial General Liability insurance with a per
occurrence limit of not less than $1,000,000; (B) Products and Completed
Operations Liability Insurance with a per occurrence limit of not less than
$10,000,000; (C) Workers' Compensation and Employer's Liability Insurance with
statutory limits for Workers' Compensation and Employer's Liability insurance
limits of not less than $1,000,000 per accident; and (D) Professional Services
Errors & Omissions Liability Insurance with per claim and aggregate limits of
not less than $1,000,000. The parties hereby acknowledge and agree that Cardinal
Health may self-insure all or any portion of the above-required insurance. In
the event that any of the required policies of insurance are written on a claims
made basis, then such policies shall be maintained during the entire Term and
for a period of not less than 3 years following the expiration or termination of
this Agreement. Cardinal Health shall obtain a waiver from any insurance carrier
with whom Cardinal Health carries Workers' Compensation insurance releasing its
subrogation rights against Client. Cardinal Health shall furnish certificates of
insurance evidencing the required insurance policies to Client as soon as
practicable after the Effective Date and within 30 days after renewal of such
policies. Each insurance policy that is required under this Agreement shall be
obtained from an insurance carrier with an A.M. Best rating of at least A-VII.
14.2 Client Insurance. Client shall, at its own cost and expense, obtain and
maintain in full force and effect the following insurance during the Term: (A)
Commercial General Liability
15
Insurance with a per occurrence limit of not less than $1,000,000; (B) Products
and Completed Operations Liability Insurance with a per occurrence limit of not
less than $10,000,000; (C) Workers' Compensation and Employer's Liability
Insurance with statutory limits for Workers' Compensation and Employer's
Liability insurance limits of not less than $1,000,000 per accident; and (D) All
Risk Property Insurance, including transit coverage, in an amount equal to full
replacement value covering Client's property while it is at Cardinal Health's
facilities or in transit to, from or between Cardinal Health's facilities. The
parties hereby acknowledge and agree that Client may self-insure all or any
portion of the above-required insurance. Client shall maintain levels of
insurance or self insurance sufficient to meet its obligations under this
Agreement. In the event that any of the required policies of insurance are
written on a claims made basis, then such policies shall be maintained during
the entire Term and for a period of not less than 3 years following the
expiration or termination of this Agreement. Client shall obtain a waiver from
any insurance carrier with whom Client carries Property Insurance releasing its
subrogation rights against Cardinal Health. Client shall not seek reimbursement
for any property claim or portion thereof that is not fully recovered from
Client's Property Insurance policy. Client shall obtain a waiver from any
insurance carrier with whom Client carries Workers' Compensation insurance
releasing its subrogation rights against Cardinal Health. Cardinal Health, Inc.
and its Affiliates shall be named as additional insureds under the Products and
Completed Operations Liability insurance policies with respect to the products
and completed operations outlined in this Agreement. Client shall furnish
certificates of insurance evidencing the required insurance policies and
additional insured status to Cardinal Health as soon as practicable after the
Effective Date and within 30 days after renewal of such policies. Each insurance
policy that is required under this Agreement shall be obtained from an insurance
carrier with an A.M. Best rating of at least A-VII.
ARTICLE 15
TERM AND TERMINATION
15.1 Term. Unless earlier terminated in accordance with Section 15.2, this
Agreement shall commence on the Effective Date and shall continue for a period
of three (3) Contract Years (the "TERM").
15.2 Termination by Either Party.
A. Either party may terminate this Agreement, effective upon sixty (60)
days' prior written notice to the other party, if the other party commits a
material breach of this Agreement and fails to cure such breach by the end of
such sixty-day period; provided, that failure to pay amounts due under this
Agreement within fifteen (15) days after such payments are due (as set forth in
Section 7.4) shall constitute cause for immediate termination of this Agreement
or, at Cardinal Health's discretion, Cardinal Health shall be relieved of any
further obligation to perform under this Agreement until all outstanding amounts
(including interest) are paid in full.
B. Client may terminate this Agreement, effective upon thirty (30) days'
prior written notice to Cardinal Health, if the actual, documented losses of
Client with respect to lost, damaged or destroyed API below the Minimum Yield,
which losses have been claimed by Client
16
pursuant to this Agreement but are unreimbursed, exceed in the aggregate $* in
any Contract Year; provided, however that Cardinal Health shall have the right
to reimburse any such losses in excess of $* within such thirty (30) day period,
in which event this Agreement shall not be terminated.
C. Either party may terminate this Agreement immediately without further
action if the other party becomes insolvent or admits in writing its inability
to pay its debts as they become due, files a petition for bankruptcy, makes an
assignment for the benefit of its creditors or has a receiver, trustee or other
court officer appointed for its properties or assets.
15.3 Effect of Termination. Expiration or termination of this Agreement shall be
without prejudice to any rights or obligations that accrued to the benefit of
either party prior to such expiration or termination. In the event of any
termination of this Agreement, Client shall pay Cardinal Health (A) for all
services performed up to the effective date of termination, (B) any Minimum
Requirement Balance (calculated in accordance with Section 4.1 as prorated for
any period less than a Contract Year), (C) unless terminated by Client pursuant
to Section 15.2.A, for all costs and expenses incurred, and all noncancellable
commitments made, by Cardinal Health in the performance of this Agreement, and
(D) any remaining unpaid balance of the Reservation Fee.
15.4 Survival. The rights and obligations of the parties shall continue under
Articles 5, 9, 10, 11, 12, 13, 14, 16, 17 and 18, and Sections 6.2, 7.3, 7.4 and
15.3 and this Section 15.4, in each case in accordance with their respective
terms if applicable, notwithstanding expiration or termination of this
Agreement.
ARTICLE 16
LIMITATIONS OF LIABILITY
16.1 CARDINAL HEALTH'S LIABILITY UNDER THIS AGREEMENT FOR ANY AND ALL CLAIMS FOR
LOST, DAMAGED OR DESTROYED API OR CLIENT-SUPPLIED MATERIALS, WHETHER OR NOT SUCH
API OR CLIENT-SUPPLIED MATERIALS ARE INCORPORATED INTO FINISHED PRODUCT, SHALL
NOT EXCEED $* FOR ANY CONTRACT YEAR.
16.2 CARDINAL HEALTH'S TOTAL LIABILITY UNDER THIS AGREEMENT SHALL IN NO EVENT
EXCEED THE TOTAL FEES PAID UNDER THIS AGREEMENT BY CLIENT TO CARDINAL HEALTH FOR
THE SERVICES OR BATCH GIVING RISE TO SUCH LIABILITIES, CLAIMS OR OBLIGATIONS.
16.3 NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF PERFORMANCE UNDER THIS
AGREEMENT, INCLUDING LOSS OF REVENUES, PROFITS OR DATA, WHETHER IN CONTRACT OR
IN TORT, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
17
ARTICLE 17
NOTICE
All notices and other communications hereunder shall be in writing and shall be
deemed given: (A) when delivered personally; (B) when delivered by facsimile
transmission (receipt verified); (C) when received or refused, if mailed by
registered or certified mail (return receipt requested), postage prepaid; or (D)
when delivered, if sent by express courier service, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice; provided, however, that notices of a change of address shall be
effective only upon receipt thereof):
To Client: Xxxxx Respiratory Operations, Inc.
00000 Xxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxx 00000
Attn: General Counsel
Facsimile: (000) 000-0000
With a copy to: Xxxxx Respiratory Therapeutics, Inc.
0 Xxxx Xxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
And: Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
To Cardinal Health: Cardinal Health PTS, LLC
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: General Manager
Facsimile: (000) 000-0000
With a copy to: Cardinal Health, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
XXX
Attn: Associate General Counsel, PTS
Facsimile: x0 (000) 000-0000
18
And to: Xxxxxxxxx Law Group PLLC
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
XXX
Attn: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
ARTICLE 18
MISCELLANEOUS
18.1 Entire Agreement; Amendments. This Agreement constitutes the entire
understanding between the parties, and supersedes any contracts, agreements or
understandings (oral or written) of the parties, with respect to the subject
matter hereof. No term of this Agreement may be amended except upon written
agreement of both parties, unless otherwise expressly provided in this
Agreement.
18.2 Captions; Certain Conventions. The captions in this Agreement are for
convenience only and are not to be interpreted or construed as a substantive
part of this Agreement. Unless otherwise expressly provided herein or the
context of this Agreement otherwise requires, (A) words of any gender include
each other gender, (B) words such as "herein", "hereof", and "hereunder" refer
to this Agreement as a whole and not merely to the particular provision in which
such words appear, (C) words using the singular shall include the plural, and
vice versa, (D) the words "include(s)" and "including" shall be deemed to be
followed by the phrase "but not limited to", "without limitation" or words of
similar import, (E) the word "or" shall be deemed to include the word "and"
(e.g., "and/or") and (F) references to "Article," "Section," "subsection,"
"clause" or other subdivision, or to an Attachment or other appendix, without
reference to a document are to the specified provision or Attachment of this
Agreement. This Agreement shall be construed as if it were drafted jointly by
the parties.
18.3 Further Assurances. The parties agree to execute, acknowledge and deliver
such further instruments and to take all such other incidental acts as may be
reasonably necessary or appropriate to carry out the purpose and intent of this
Agreement.
18.4 No Waiver. Failure by either party to insist upon strict compliance with
any term of this Agreement in any one or more instances will not be deemed to be
a waiver of its rights to insist upon such strict compliance with respect to any
subsequent failure.
18.5 Severability. If any term of this Agreement is declared invalid or
unenforceable by a court or other body of competent jurisdiction, the remaining
terms of this Agreement will continue in full force and effect.
18.6 Independent Contractors. The relationship of the parties is that of
independent contractors, and neither party will incur any debts or make any
commitments for the other party except to the extent expressly provided in this
Agreement. Nothing in this Agreement is intended to create or will be construed
as creating between the parties the relationship of joint ventures, co-partners,
employer/employee or principal and agent. Neither party shall have any
19
responsibility for the hiring, termination or compensation of the other party's
employees or contractors or for any employee benefits of any such employee or
contractor.
18.7 Successors and Assigns. This Agreement will be binding upon and inure to
the benefit of the parties, their successors and permitted assigns. Neither
party may assign this Agreement, in whole or in part, without the prior written
consent of the other party, except that either party may, without the other
party's consent, assign this Agreement to an Affiliate or to a successor to
substantially all of the business or assets of the assigning company.
18.8 No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person or entity other than the parties named herein and their
respective successors and permitted assigns.
18.9 Governing Law. This Agreement shall be governed by and construed under the
laws of the State of Delaware, USA, excluding its conflicts of law provisions.
The United Nations Convention on Contracts for the International Sale of Goods
shall not apply to this Agreement.
18.10 Alternative Dispute Resolution. If any dispute arises between the parties
in connection with this Agreement, such dispute shall be presented to the
respective presidents or senior executives of Cardinal Health and Client for
their consideration and resolution. If such parties cannot reach a resolution of
the dispute, then such dispute shall be resolved by binding alternative dispute
resolution in accordance with the then existing commercial arbitration rules of
CPR Institute for Dispute Resolution, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000.
Arbitration shall be conducted in the jurisdiction of the defendant party.
18.11 Prevailing Party. In any dispute resolution proceeding between the parties
in connection with this Agreement, the prevailing party will be entitled to
recover its reasonable attorney's fees and costs in such proceeding from the
other party.
18.12 Publicity. Neither party will make any press release or other public
disclosure regarding this Agreement or the transactions contemplated hereby
without the other party's express prior written consent, except as required
under Applicable Laws, by any governmental agency or by the rules of any stock
exchange on which the shares of the disclosing party are listed, in which case
the party required to make the press release or public disclosure shall use
commercially reasonable efforts to obtain the approval of the other party as to
the form, nature and extent of the press release or public disclosure prior to
issuing the press release or making the public disclosure.
18.13 Force Majeure. Except as to payments required under this Agreement,
neither party shall be liable in damages for, nor shall this Agreement be
terminable or cancelable by reason of, any delay or default in such party's
performance hereunder if such default or delay is caused by events beyond such
party's reasonable control, including acts of God, regulation or law or other
action or failure to act of any government or agency thereof, war or
insurrection, civil commotion, destruction of production facilities or materials
by earthquake, fire, flood or storm, labor disturbances, epidemic or failure of
suppliers, public utilities or common carriers; provided, however, that the
party seeking relief under this Section shall immediately notify the other party
of such cause(s) beyond such party's reasonable control. The party that may
invoke
20
this Section shall use commercially reasonable endeavors to reinstate its
ongoing obligations to the other party as soon as practicable. If the cause(s)
shall continue unabated for ninety (90) days, then both parties shall meet to
discuss and negotiate in good faith what modifications to this Agreement should
result from such cause(s)
18.14 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original but all of which together will
constitute one and the same instrument. Any photocopy, facsimile or electronic
reproduction of the executed Agreement shall constitute an original.
[Signature Page follows]
21
IN WITNESS WHEREOF, the parties have caused their respective duly
authorized representatives to execute this Agreement effective as of the
Effective Date.
CARDINAL HEALTH PTS, LLC XXXXX RESPIRATORY OPERATIONS, INC.
By: _________________________ By: _________________________
Name:________________________ Name:________________________
Its: ________________________ Its: ________________________
Xxxxx Respiratory Therapeutics, Inc., a Delaware corporation ("Xxxxx"), hereby
guarantees to Cardinal Health PTS, LLC, a Delaware limited liability company
("Cardinal Health"), the full, prompt and complete payment and satisfaction of
all sums, liabilities and obligations owing or assumed by Xxxxx Respiratory
Operations, Inc., a Delaware corporation and wholly-owned subsidiary of Xxxxx
("Client") pursuant to this Commercial Manufacturing Agreement between Cardinal
Health and Client (the "Manufacturing Agreement") subject to (a) Xxxxx receiving
written notification of any payment or other default by Client under the
Manufacturing Agreement (which notice shall specify the nature and amount of
such payment or other default and shall be sent to Xxxxx at: 0 Xxxx Xxxxx Xxxx,
Xxxxxxx, Xxx Xxxxxx 00000 attention: General Counsel); and (b) such amount
remaining unpaid or obligation unfulfilled to Cardinal Health ten (10) days
after Xxxxx' receipt of such notice.
XXXXX RESPIRATORY THERAPEUTICS, INC.
By: __________________________
Name:_________________________
Its: _________________________
Date: ________________________
Signature Page to Commercial Manufacturing Agreement (Granulate)
ATTACHMENT A
SPECIFICATIONS
Guaifenesin DC (95%) process is a pre-blend intermediate granulation used in the
manufacture of Mucinex(R). There is no product specification for the Guaifenesin
DC (95%) Intermediate.
The Guaifenesin DC (95%) intermediate must be manufactured following the
procedures and instructions outlined in the current revision of the
Manufacturing Batch Records Process No's CF001 and CF002.
The Guaifenesin DC (95%) must be sampled and tested to comply with the
in-process specifications established in the Manufacturing Batch Records Process
No's. CF001 and CF002.
A summary of the in-process specifications and acceptance criteria is included
in the following table:
TEST ATTRIBUTE ACCEPTANCE CRITERIA
Moisture Average of NMT 0.8%
Sieve Analysis NMT 2% retained on 10-mesh screen
NLT 60% retained on the 20-mesh through the
100-mesh screen (present on the 20, 40,
60, 80, and 100-mesh screens).
NLT 5% through the 100-mesh screen (present
on the 120, 140, and 200-mesh screens and
in the collecting pan).
NMT 18% through the 140-mesh screen (present
on the 200-mesh screen and in the
collecting pan).
ATTACHMENT B
PRICING, MINIMUM REQUIREMENT AND RESERVATION FEES
VOLUME PRICE
$* per kilogram
MINIMUM RESERVED CAPACITY MINIMUM QUARTERLY
REQUIREMENT (PER (PER CALENDAR PURCHASE (PER
CONTRACT YEAR CONTRACT YEAR) QUARTER) CALENDAR QUARTER)
--------------- ---------------- ----------------- -----------------
Contract Year 1 160 metric tons 50 metric tons 30 metric tons
Contract Year 2 160 metric tons 50 metric tons 30 metric tons
Contract Year 3 80 metric tons 25 metric tons 15 metric tons
The Minimum Requirement, Reserved Capacity and Minimum Quarterly Purchase shall
be prorated for any period that is less than a Contract Year or calendar
quarter, as applicable, during the Term.
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
ATTACHMENT C
FORM OF QUALITY AGREEMENT
See Attached.
EXHIBIT E
COMMERCIAL PACKAGING AGREEMENT
This COMMERCIAL PACKAGING AGREEMENT ("AGREEMENT") is made as of
_____________, 2006 ("EFFECTIVE DATE"), by and between Cardinal Health PTS, LLC,
having an address at 00 Xxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxxxx ("CARDINAL
HEALTH") and Xxxxx Respiratory Operations, Inc., a Delaware corporation
("CLIENT"), having a place of business at 00000 Xxxxxxxxx Xxxx, Xxxx Xxxxx,
Xxxxx.
1. Definitions. In this Agreement, (A) "AFFILIATE" means any corporation, firm,
partnership or other entity that controls, is controlled by or is under common
control of a party; (B) "ANNUAL RESERVATION FEE" shall have the meaning set
forth in Section 7.A.; (C) "APPLICABLE LAWS" means all laws, rules and
regulations within the United States applicable to the obligations of the
parties under this Agreement, including, without limitation, the U.S. Federal
Food, Drug and Cosmetic Act, and the Good Manufacturing Practices promulgated by
the FDA, (D) "BULK PRODUCT" means the bulk unfinished product specified in
Exhibit A, (E) "CONTRACT YEAR" shall have the meaning set forth in Section 7.A.;
(F) "PACKAGE," "PACKAGING" and "PACKAGED" mean packaging services performed by
Cardinal Health in accordance with this Agreement, (G) "PACKAGING COMPONENTS"
shall include the Printed Components and all other items identified on Exhibit
B, (H) "PRODUCT" means the Bulk Product packaged in accordance with this
Agreement, (I) "QUARTERLY ALLOCATION" shall have the meaning as set forth in
Section 5.B; (J) "SPECIFICATIONS" means the procedures, standards, and scope of
services set forth in Exhibit A; (K) "RESERVED CAPACITY" means the Unit volume
required to be purchased by Client as set forth on Exhibit D; (L) "TERM" shall
have the meaning set forth in Section 16; (M) "UNIT" means one bottle or one
blister card of Product; and (N) "YIELD LOSS" shall have the meaning set forth
in Section 2.A.
2. Packaging.
A. Cardinal Health shall Package the Bulk Product in accordance with this
Agreement during the Term and shall use commercially reasonable efforts to
minimize waste and loss of the Bulk Product and Packaging Components, subject to
normal packaging losses of up to * percent (*%) ("YIELD LOSS") of Bulk Product
and Packaging Components supplied by Client for Packaging calculated on an
average annual basis. Cardinal Health shall not be responsible or liable for any
loss of Bulk Product and Packaging Components so long as the losses (calculated
on an average annual basis) do not exceed the Yield Loss.
B. Client shall supply to Cardinal Health, at Client's sole cost, the Bulk
Product and the Packaging Components identified on Exhibit B for Packaging at
least seven (7) days prior to such Packaging. At Client's request, Cardinal
Health shall purchase the Packaging Components identified on Exhibit B for
Packaging. Client shall pay a * percent (*%) handling fee on all Cardinal
Health's purchases of Packaging Components (excluding Printed Components
supplied by Cardinal Health). Packaging Components shall be supplied by Cardinal
Health and billed at * plus such *% handling fee.
3. Paper Products. Client agrees to purchase from Cardinal Health at least
ninety percent (90%), on a cost basis, of Client's requirements for printed
components for Client's Mucinex(R), Mucinex(R) DM and Mucinex(R) D products
(collectively, the "MUCINEX(R) BRAND PRODUCTS"), which consists solely of
folding cartons and labels ("PRINTED COMPONENTS") whether or not such Printed
Components are used, or to be used, by Cardinal Health to Package Product
hereunder. For purposes of this Agreement, any Printed Components used by any
Affiliate of Client or any licensee, sublicensee or other transferee of all or
any portion of Client's rights with respect to Mucinex(R) Brand Products shall
be deemed to be used by Client. Notwithstanding the foregoing, if Cardinal
Health is unable to meet Client's requirements for Printed Components (other
than due to the fault of Client) for a period exceeding ten (10) days, Client
shall be entitled to purchase such Printed Components from another source, but
only for so long as and to the extent that Cardinal Health is unable to meet
such requirements, and such purchases shall count against the minimum Packaging
Component requirements set forth above.
4. Representations and Warranties.
A. Cardinal Health represents and warrants that (i) it will Package the
Bulk Product in compliance with the Specifications and all Applicable Laws, and
(ii) it does not and shall not employ any person that is debarred as provided
under Applicable Laws.
B. Client represents and warrants that (i) all Bulk Product, raw
materials, labelling and artwork supplied by Client for Packaging meet
applicable specifications and comply with Applicable Laws, (ii) it has provided
all safe handling instructions and environmental health and safety information
necessary to handle and Package the Bulk Product, (iii) it will comply with
Applicable Laws in the performance of its obligations under this Agreement, and
(iv) all trademarks, service marks, trade names, artwork, content, copyrights
and other material provided by Client does not infringe or violate the
trademark, copyright, trade secret or other proprietary rights of any third
party.
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
C. Each party represents and warrants that (i) it has taken all necessary
action on its part to authorize the execution and delivery of this Agreement,
(ii) this Agreement has been duly executed and delivered on behalf of such
party, and constitutes a legal, valid, binding obligation, enforceable against
such party in accordance with its terms, and (iii) execution, delivery and
performance of this Agreement will not conflict with or result in a breach of
any other contractual obligation of such party.
D. WARRANTIES SET FORTH IN THIS SECTION ARE THE SOLE WARRANTIES MADE BY
EACH PARTY TO THE OTHER AND THERE ARE NO OTHER WARRANTIES, REPRESENTATIONS OR
GUARANTEES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED REGARDING THE
PRODUCTS AND SERVICES PROVIDED UNDER THIS AGREEMENT, INCLUDING WITHOUT
LIMITATION ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT
OR FITNESS FOR A PARTICULAR PURPOSE.
5. Reservation of Capacity; Allocations/Forecasts and Purchase Orders.
A. Client shall purchase, and Cardinal Health shall reserve,
Packaging capacity for blistering and/or bottling of Product in the amounts set
forth on Exhibit X. Xxxxxxxx Health shall provide such reserved Packaging at
either or both of its facilities located in Humacao, Puerto Rico or
Philadelphia, Pennsylvania, United States, in Cardinal Health's sole discretion.
Cardinal Health may perform Packaging at another facility with the consent of
Client, which consent shall not be unreasonably withheld, however, any increase
in shipping costs and/or reasonable and documented costs associated with
validating such facility shall be borne by Cardinal Health.
B. Client shall provide, on a monthly basis, a written twelve (12) month
rolling forecast of the quantities of Packaging that Client intends to order
from Cardinal Health during such period ("FORECAST"). During the first
forty-five (45) days of each calendar quarter, Cardinal Health and Client shall
agree on the amount of Reserved Capacity for the next calendar quarter (the
"QUARTERLY ALLOCATION"), provided that for the calendar quarter ending September
30, 2006, the parties agree that the Quarterly Allocation shall be five million
(5,000,000) Units. Unless otherwise agreed, the Quarterly Allocation for a
quarter shall be equal to the Quarterly Allocation for the immediately preceding
quarter. At least forty-five (45) days prior to the beginning of each quarter,
Client shall deliver a firm and binding purchase order ("PO") for all Product to
be delivered during such quarter; provided, that the lot numbers, delivery dates
and any other required information for the Packaging for the calendar quarter
ending September 30, 2006, which shall serve as the PO for such Packaging, is
attached hereto as Exhibit E. POs shall specify applicable lot numbers and
requested delivery dates which shall be at least forty-five (45) days following
delivery of such PO to Cardinal Health. Cardinal Health shall have ten (10) days
to reject such PO or to specify different delivery dates or quantities,
otherwise such PO shall be deemed accepted. Notwithstanding the foregoing,
Cardinal Health shall not have the right to reject any PO to provide Packaging
that is within the Quarterly Allocation. Cardinal Health may, but shall not be
obligated to, accept any PO for Packaging that exceeds the Quarterly Allocation.
This Agreement supercedes any terms and conditions contained in any PO submitted
by Client and any quotation submitted by Cardinal Health with respect to the
Product.
C. Client shall provide, on a monthly basis, (A) a written twelve
(12) month rolling forecast of the quantities of Packaging Components that
Client intends to order from Cardinal Health during such period ("COMPONENT
FORECAST"), and (B) a firm and binding PO for all Packaging Components to be
delivered during the first four (4) month period covered by the Component
Forecast. POs shall specify applicable lot numbers and requested delivery dates,
which shall be at least thirty (30) days following delivery of such PO to
Cardinal Health. Cardinal Health shall have ten (10) days to reject any PO or to
specify different delivery dates or quantities, otherwise such PO shall be
deemed accepted. This Agreement supercedes any terms and conditions contained in
any PO submitted by Client and any quotation submitted by Cardinal Health with
respect to the Packaging Components.
6. Quality Agreement. The parties shall each have such quality and regulatory
obligations set forth in the Quality Agreement attached as Exhibit C. In the
event of a conflict between the terms of the Quality Agreement and this
Agreement, this Agreement shall control.
7. Pricing.
A. Client shall pay Cardinal Health a non-refundable annual fee for the
Reserved Capacity as set forth on Exhibit D (the "ANNUAL RESERVATION FEE"). The
first Annual Reservation Fee shall be due and payable by Client on the Effective
Date with subsequent payments of the Annual Reservation Fee being due on each of
the first and second annual anniversaries of the Effective Date. During each
Contract Year, Cardinal Health shall invoice Client for Packaging at the Unit
prices set forth in Exhibit B, provided that Client shall be entitled to a
credit of $* per Unit until the aggregate amount of such credits equals the
amount of the Annual Reservation Fee paid for such Contract Year. Client shall
not be entitled to receive any refund or other credit of the Annual Reservation
Fee regardless of the volume of Packaging requested by Client during any
Contract Year. Any Packaging performed by Cardinal Health in excess of the
Reserved Capacity for any quarter shall be invoiced to Client in accordance with
Section 7 and shall be at the prices set forth on Exhibit B. Each of the
processing fees set forth on Exhibit B and the Printed Component pricing may be
adjusted no more than once annually upon thirty (30) days' written notice from
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
3
Cardinal Health in an amount equal to the actual documented increases in labor
charges (directly related to performance of this Agreement by Cardinal Health)
in an amount not to exceed * percent (*%) and increases or decreases in material
or component costs, which shall be passed through to Client. "CONTRACT YEAR"
means the period from the Effective Date until June 30, 2007, the period from
July 1, 2007 through June 30, 2008 and the period from July 1, 2008 through June
30, 2009.
B. Client shall pay Cardinal Health for any supplied Packaging Components
at the prices set forth on Exhibit B, subject to Section 2(B). Cardinal Health
shall have the option, at its expense, on an annual calendar-year basis, to
request an audit of any Printed Components purchased or used by Client. Such
audits shall be performed by an independent certified public accountant (the
"INDEPENDENT AUDITOR"), who shall be permitted to review Client's records and
accounts relating to Printed Components to verify that Client has met its
obligation under Section 3. The Independent Auditor shall be subject to
reasonable and customary confidentiality obligations to be set forth in a
separate agreement. If, during any Contract Year, Client purchases less than 90%
of its requirements for Printed Components (measured in total dollar volume)
from Cardinal Health, then in addition to other amounts payable hereunder,
Client shall pay Cardinal Health, the difference between 90% of Client's
requirements for Printed Components (measured in total dollar volume) during
such Contract Year and the dollar amount of purchases by Client hereunder during
such Contract Year. If Client purchases or otherwise acquires Printed Components
from a third party for less than fair market value, then, for purposes of this
Agreement, Client shall be deemed to have paid fair market value for such
materials, unless such acquisition was in an arms-length transaction with an
unaffiliated third party and not part of or related to a joint venture,
investment or acquisition or other multi-agreement or similar business
relationship. If any audit contemplated by this Section 7.B. discloses that
Client has not met the minimum packaging requirements as set forth in Section 3,
then Client shall, in addition to any other amounts due to Cardinal Health
hereunder, reimburse Cardinal Health for all reasonable documented expenses and
out-of-pocket costs incurred by Cardinal Health in connection with such audit.
C. Cardinal Health may revise the prices provided in this Agreement, if
Client revises Cardinal Health's responsibilities, the Specifications or
procedures applicable to the Packaging. The parties shall agree upon such
changes in writing prior to implementation by Cardinal Health.
D. In the event of (i) a Specification change for any reason, (ii)
termination of this Agreement other than due to breach by Cardinal Health or
(iii) obsolescence of any raw materials, Client shall pay cost plus fifteen
percent (15%) for any unused raw materials in quantities consistent with the
binding PO provided to Cardinal Health pursuant to Section 5.B or 5.C., as the
case may be.
8. Shipping, Invoicing and Payment. All shipments are EXW Cardinal Health's
facilities (Incoterms 2000). Risk of loss for Product or Printed Components, as
applicable, passes to Client upon delivery to Client at Cardinal Health's
facilities. Cardinal Health shall invoice upon completion of Packaging or
shipment of the Printed Components (or use of the Printed Components if used by
Cardinal Health in the Packaging of Product hereunder). To the extent such
invoiced amounts are not credited against the Annual Reservation Fee as set
forth in Section 7.A., Client shall pay each invoice within thirty (30) days of
the date of invoice. Client will pay any sales, use, gross receipts,
compensating or other taxes, licenses, or fees (excluding tax based on net
income and franchise taxes) required to be paid by Cardinal Health to any state
or tax jurisdiction in connection with this Agreement. Cardinal Health charges a
late payment fee of 1-1/2% per month for payments not received within thirty
(30) days of invoice date.
9. Undelivered Product or Printed Components. If Client fails to take delivery
on any scheduled delivery date, Client shall be billed at that time for all
unshipped Product or Printed Components, as applicable, and on the first of each
month thereafter for reasonable administration and storage costs. For each such
batch of undelivered Product or Printed Components, Client agrees that (A)
Client has made a fixed commitment to purchase such Product and Printed
Components, (B) risk of ownership for such Product or Printed Components shall
be borne by Client, (C) such Product or Printed Components shall be on a xxxx
and hold basis for legitimate business purposes, (D) if no delivery date is
determined at the time of billing, Cardinal Health shall have the right to ship
the Product or Printed Components to Client within four (4) months after
billing, and (E) Client shall be responsible for any decrease in market value of
such Product that relates to factors and circumstances outside of Cardinal
Health's control. Within five (5) days following a written request from Cardinal
Health, Client shall provide Cardinal Health with a letter confirming items (A)
through (E) of this section for each batch of undelivered Product or Printed
Components.
10. Non-Conforming Product and Printed Component. No later than ten (10) days
following Client's receipt of any Product and/or Printed Component, Client shall
notify Cardinal Health if Client has determined that such Product and/or Printed
Component does not conform to the Specifications due to Cardinal Health's breach
of this Agreement, and shall provide Cardinal Health a sample of such
non-conforming Product and/or Printed Component. If Cardinal Health agrees that
the Product and/or Printed Component is non-conforming due to Cardinal Health's
breach of this Agreement (or if such Product and/or Printed Component is deemed
to be non-conforming as provided in the next sentence), Client's sole remedy
shall be for Cardinal Health to replace the non-conforming Printed Component
and/or reperform the Packaging of such Product in accordance with this Section,
at Cardinal Health's expense; and, if such non-conformance was a result of
Cardinal Health's
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
4
negligence or wilful misconduct, reimburse Client for the actual, documented
cost of all unusable Bulk Product and Printed Components that were used by
Cardinal Health in the non-conforming Product and/or Printed Component. If
Cardinal Health does not agree with Client's determination that such Product
and/or Printed Component fails to meet the Specifications as a result of
Cardinal Health's breach of this Agreement, then after reasonable efforts to
resolve the disagreement, either party may submit a representative sample of
such Product and/or Printed Component to a mutually agreed independent third
party for review. The independent party's results shall be final and binding and
the costs associated with such testing and review shall be borne by the party
responsible for the error.
11. Confidentiality. The provisions of Section 11 of that certain Commercial
Manufacturing Agreement dated as of even date herewith between Cardinal Health
and Client shall govern the confidentiality and non-use obligations of the
parties under this Agreement.
12. Limitations of Liability. CARDINAL HEALTH'S LIABILITY UNDER THIS AGREEMENT
FOR ANY AND ALL CLAIMS FOR LOST, DAMAGED OR DESTROYED PRODUCT OR CLIENT-SUPPLIED
MATERIALS (WHICH INCLUDES, FOR PURPOSES OF THIS SECTION 12, ANY PACKAGING
COMPONENTS PURCHASED BY CARDINAL HEALTH AT CLIENT'S REQUEST PURSUANT TO SECTION
2(B)), WHETHER OR NOT SUCH PRODUCTS OR CLIENT-SUPPLIED MATERIALS ARE
INCORPORATED INTO FINISHED PACKAGED PRODUCT SHALL NOT EXCEED $* IN ANY CONTRACT
YEAR. CARDINAL HEALTH'S TOTAL LIABILITY UNDER THIS AGREEMENT IN A CONTRACT YEAR
SHALL NOT EXCEED THE TOTAL FEES PAID BY CLIENT TO CARDINAL HEALTH UNDER THIS
AGREEMENT. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY
SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR
ANTICIPATED REVENUES OR PROFITS), WHETHER OR NOT FORESEEABLE, ARISING FROM OR
RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER THEREOF.
13. Indemnification. Cardinal Health shall indemnify and hold harmless Client,
its affiliates, directors, officers, employees and agents ("REPRESENTATIVES")
from and against any suits, claims, losses, demands, liabilities, damages, costs
and expenses (including costs, reasonable attorney's fees and reasonable
investigative costs) ("DAMAGES") in connection with any suit, demand or action
by any third party arising out of or resulting from any negligence, willful
misconduct or breach of this Agreement by Cardinal Health, except to the extent
that any of the foregoing arises out of or results from Client's negligence,
willful misconduct or breach of this Agreement. Client shall indemnify and hold
harmless Cardinal Health and its Representatives from and against all Damages in
connection with any suit, demand or action by any third party arising out of or
resulting from (A) any breach of this Agreement; (B) any manufacture, sale,
promotion, distribution or use of the Product, including, without limitation,
product liability or strict liability; (C) any actual or alleged infringement or
violation of any patent, trade secret, copyright, trademark or other proprietary
rights provided by Client and used by Cardinal Health in manufacturing Product
or Printed Components; or (D) any negligence or willful misconduct by Client,
except to the extent that any of the foregoing arises out of or results from
Cardinal Health's negligence, willful misconduct or breach of this Agreement.
14. Insurance. Each party shall maintain a minimum of $10,000,000 of Product
Liability insurance during the term of this Agreement. Cardinal Health may self
insure all or a portion of such obligation.
15. Recall. Cardinal Health will reimburse Client for actual, reasonable and
documented expenses incurred by Client for a recall of the Product to the extent
such recall was caused by Cardinal Health's breach of this Agreement. Client
shall reimburse Cardinal Health for actual, reasonable and documented expenses
incurred by Cardinal Health for a recall of the Product for any other reason.
16. Term and Termination. This Agreement shall continue for three (3) years
following the Effective Date (the "TERM"). Either party shall have the right to
immediately terminate this Agreement if (A) the other party files a petition in
bankruptcy, or enters into an agreement with its creditors, or applies for or
consents to the appointment of a receiver or trustee, or makes an assignment for
the benefit of creditors, or is adjudicated to be bankrupt or insolvent and such
order is not discharged within thirty (30) days or (B) if the other party
materially breaches this Agreement, and such breach is not cured within sixty
(60) days (other than failure to pay which must be cured within fifteen (15)
days) after written notice of such breach by the other party. Expiration or
termination of this Agreement shall be without prejudice to rights or
obligations accruing prior to expiration or termination. Subject to Client's
payment in full of amounts due to Cardinal Health, Cardinal Health shall return
any Client materials or Product upon termination or expiration at Client's
expense. Client shall have the right to terminate this Agreement upon thirty
(30) days' written notice if Client's actual, documented losses of Bulk Product,
Product or Printed Components, which losses have been claimed by Client pursuant
to this Agreement but are unreimbursed, exceed $* during any Contract Year;
provided, however, that Cardinal Health shall have the right to reimburse any
such losses in excess of $* within such thirty (30) day period, in which event
this Agreement shall not be terminated. If this Agreement is terminated by
Cardinal Health pursuant to this Section 16 (A) or (B), Client shall be
obligated to immediately pay to Cardinal Health all Annual Reservation Fees
which would have been due and payable to Cardinal Health during the remainder of
the Term. If this Agreement is terminated by Client pursuant to this Section 16
(A) or (B), Client shall have no further obligation to pay any Annual
Reservation Fee and Cardinal Health shall reimburse Client for that prorated
portion of the Annual Reservation Fee
----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
5
from the date of termination through the end of the applicable Contract Year.
The terms of Sections 9, 10, 11, 12, 13, 21, 22, 23 and 24 and this Section 16
shall survive expiration or termination of this Agreement.
17. Force Majeure. Except as to payments required under this Agreement, neither
party shall be liable in damages for, nor shall this Agreement be terminable or
cancellable by reason of, any delay or default in such party's performance
hereunder if such default or delay is caused by events beyond such party's
reasonable control, including acts of God, regulation or law or other action or
failure to act of any government or agency thereof, war or insurrection, civil
commotion, destruction of production facilities or materials by earthquake,
fire, flood or storm, labor disturbances, epidemic or failure of suppliers,
public utilities or common carriers; provided, however, that the party seeking
relief under this Section shall immediately notify the other party of such
cause(s) beyond such party's reasonable control. The party that may invoke this
Section shall use commercially reasonable endeavors to reinstate its ongoing
obligations to the other party as soon as practicable. If the cause(s) shall
continue unabated for ninety (90) days, then both parties shall meet to discuss
and negotiate in good faith what modifications to this Agreement should result
from such cause(s).
18. Independent Contractor. It is expressly agreed that the parties shall be
independent contractors and that the relationship between the two parties shall
not constitute a partnership, joint venture or agency.
19. Publicity. Neither party will make any press release or other public
disclosure regarding this Agreement or the transactions contemplated hereby
without the other party's express prior written consent, except as required
under applicable law or by any governmental agency, in which case the party
required to make the press release or public disclosure shall use commercially
reasonable efforts to obtain the approval of the other party as to the form,
nature and extent of the press release or public disclosure prior to issuing the
press release or making the public disclosure.
20. Amendment & Precedence. This Agreement and the Exhibits constitute the
entire agreement of the parties related to the Packaging of the Product and
supply of Printed Components and may not be modified without the other party's
prior written consent. Any previous written acknowledgement, statement or prior
understanding related to the Packaging of the Product or supply of Printed
Components is superseded by this Agreement, provided that any liabilities or
other obligations under any such previous agreement shall survive in accordance
with the terms of such other agreement.
21. Notice. Notices required under this Agreement shall be delivered by reliable
overnight delivery service with confirmed delivery to the other party at the
address stated at the beginning of this Agreement. With a courtesy copy of such
notice being provided to the following parties:
To Client: Xxxxx Respiratory
Therapeutics, Inc. Xxxxxx & Bird LLP
0 Xxxx Xxxxx Xxxx Xxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000 0000 Xxxx Xxxxxxxxx Xxxxxx
Attention: General Counsel Xxxxxxx, Xxxxxxx 00000
Facsimile: 000-000-0000 Attention: J. Xxxxxxx Xxxxxx
Facsimile: 000-000-0000
To Cardinal Health: Cardinal Health, Inc. Xxxxxxxxx Law Group PLLC
0000 Xxxxxxxx Xxxxx 0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxx 00000 Xxxxxxx, Xxxxx Xxxxxxxx 00000
XXX XXX
Attn: Associate General Attn: Xxxxx X. Xxxxxxxx, Esq.
Counsel, PTS Facsimile: (000) 000-0000
Facsimile: x0 (000) 000-0000
22. Dispute Resolution. If a dispute arises between the parties in connection
with this Agreement, the respective presidents or senior executives of the
parties shall first attempt to resolve the dispute. If such parties cannot
resolve the dispute, such dispute shall be resolved in the jurisdiction of the
defendant party by binding arbitration in accordance with the then existing
commercial arbitration rules of The CPR Institute for Dispute Resolution, 000
Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000. This Agreement shall be governed and
construed under the laws of Pennsylvania, excluding its conflict of law
provisions.
23. Governing Law. This Agreement shall be governed by and construed under the
laws of the State of Delaware, USA, excluding its conflicts of law provisions.
The United Nations Convention on Contracts for the International Sale of Goods
shall not apply to this Agreement.
24. Miscellaneous. This Agreement may not be assigned without the prior written
consent of the other party, which shall not be unreasonably withheld. This
Agreement may be executed in counterparts. If any term of this Agreement is
invalid or unenforceable, the remainder of the Agreement shall continue in full
force and effect.
[SIGNATURE PAGE FOLLOWS.]
6
IN WITNESS WHEREOF, the undersigned have executed this Agreement, or have
caused this Agreement to be executed by their duly authorized officer, as of the
date first written above.
CARDINAL HEALTH PTS, LLC XXXXX RESPIRATORY OPERATIONS, INC.
By:________________________ By:__________________________________
Name: _____________________ Name:________________________________
Title: ____________________ Title:_______________________________
Xxxxx Respiratory Therapeutics, Inc., a Delaware corporation ("XXXXX"), hereby
guarantees to Cardinal Health PTS, LLC, a Delaware limited liability company
("CARDINAL HEALTH"), the full, prompt and complete payment and satisfaction of
all sums, liabilities and obligations owing or assumed by Xxxxx Respiratory
Operations, Inc., a Delaware corporation and wholly-owned subsidiary of Xxxxx
("CLIENT") pursuant to this Commercial Packaging Agreement between Cardinal
Health and Client (the "AGREEMENT"), including, without limitation, payment of
the Annual Reservation Fee, subject to (a) Xxxxx receiving written notification
of any payment or other default by Purchaser under the Agreement (which notice
shall specify the nature and amount of such payment or other default and shall
be sent to Xxxxx at: 0 Xxxx Xxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000) and (b) such
amount remaining unpaid or obligation unfulfilled to Cardinal Health 10 days
after Xxxxx' receipt of such notice.
XXXXX RESPIRATORY THERAPEUTICS, INC.
By:____________________________________
Name: _________________________________
Title:_________________________________
Signature Page to Commercial Packaging Agreement
EXHIBIT A
SPECIFICATIONS & CLIENT SUPPLIED MATERIALS
SPECIFICATIONS
CARDINAL HEALTH PACKAGING SERVICES IS CURRENTLY APPROVED TO PACKAGE THE
FOLLOWING PRODUCTS AT EITHER OR BOTH CARDINAL HEALTH - RED LION ROAD AND
HUMACAO, PUERTO RICO FACILITIES:
- MUCINEX 600 MG 20 CT
- MUCINEX 600 MG 40 CT
- MUCINEX DM 600/30 MG 20 CT
- MUCINEX DM 600/30 MG 40 CT
- MUCINEX D 600 MG 18 CT BLISTERS
- MUCINEX D 600 MG 36 CT BLISTERS
THE PRODUCTS SHOULD BE PACKAGED FOLLOWING THE INSTRUCTIONS IN THE PACKAGING
BATCH RECORD INSTRUCTIONS. A LIST OF THE APPROVED RECORDS IS INCLUDED BELOW:
CARDINAL HEALTH FACILITY PRODUCT MASTER PACKAGING INSTRUCTION NO.
------------------------------ -------------------------- --------------------------------------
Cardinal Health, Red Lion Road Mucinex 600 mg 20 ct. PCR-63824-008-20
Mucinex 600 mg 40 ct. PCR-63824-008-40
Mucinex DM 600 mg 20 ct. PCR-63824-056-20
Mucinex DM 600 mg 40 ct. PCR-63824-056-40
Cardinal Health, Humacao Mucinex 600 mg 20 ct. PSH-QAD-0040-F1 for NDC 00000-000-00
Mucinex 600 mg 40 ct. PSH-QAD-0040-F1 for NDC 00000-000-00
Mucinex D 18 ct. blister PSH-QAD-0040-F1 for NDC 00000-000-00
Mucinex D 36 ct. blister PSH-QAD-0040-F1 for NDC 00000-000-00
During the packaging process the tests outlined below are performed to ensure
the quality of the packaged product. The detailed instructions for these tests
are included in the Master Packaging Instruction referenced above. These
documents have been issued by Cardinal Health and approved by Xxxxx.
PRODUCT PACKAGING SPECIFICATIONS AND CRITERIA FOR:
Mucinex 600 mg 20 & 40 ct. presentations
Mucinex DM 600 mg 20 & 40 ct. presentations
Mucinex D 600 mg 18 & 36 ct. blisters (The inspection for blisters as
applicable)
TEST ATTRIBUTE ACCEPTANCE CRITERIA
------------------------------------------- -------------------------------------------------
Torque Test Individual removal torque result should be
One six (6) inch piece of cotton (20 ct) not less than 9-13 in lbs.
One four (4) inch piece of cotton (40 ct) +/- 1/2 inch
Bottle Labels 200% inspect bottle label by inspecting the first
and the last bottle label on each roll used.Also,
inspect the first
TEST ATTRIBUTE ACCEPTANCE CRITERIA
------------------------------------------- -------------------------------------------------
and last bottle label before and
after each splice (if any) on each roll used.
Approximately every four (4) hours
perform the following equipment challenges: Pass or Fail
- Missing Cotton
- Cotton amount
- Missing Cap
- Crooked Cap
- Induction Seal Detector
- Bottle Labeler Vision System
- Bottle Labeler UV Detector
- Bottle Labeler Barcode Scanner
- Carton Barcode Scanner
- Checkweigher
Approximately every hour (1) perform the
following non-tolerable defect inspections: Non-tolerable Defects - Zero defects allowed
- Missing/illegible/incorrect
shipper label
- Incorrect/foreign product,
dosage form or strength
- Incorrect lot # or exp. date at
any packaging level
- Incorrect primary packaging
- Incorrect components with
product contact
Approximately every hour (1) perform the
following critical defect inspections: Critical Defects - AQL 0.065
- Missing/illegible lot# or exp.
Date on bottle
- Missing/illegible primary
labeling
- Missing seal
- Loose desiccant particles in
bottle
- Dirt/Contamination inside
bottle
Approximately every hour (1) perform the
following major defect inspections: Major Defects - AQL 0.40
- Missing/illegible: lot#, exp.
Date, copy on secondary
- Missing secondary labeling
- Crooked or torn label
- Damaged product
- Underfilled bottle
TEST ATTRIBUTE ACCEPTANCE CRITERIA
------------------------------------------- -------------------------------------------------
- Empty secondary package
- Contamination in the seal
- Missing/protruding cotton
- Incomplete seal
- Heat damaged/delaminated:
bottle seal
- Overfilled bottle
- Inadequate/excessive cap torque
- Extraneous primary packaging
material with product contact
Approximately every hour (1) perform the
following minor defect inspections: Minor Defects - AQL 4.0
- Contamination in the seal
(not affecting integrity)
- Smeared but legible lot#, exp.
Date
- Dirty/scuffed: label, bottle,
carton or packer
- Excess/missing glue on carton
(if applicable)
- Miscellaneous cosmetic defects
- Carton flaps not locking
- Minor off register printing
- Missing/incomplete shrink-wrap
For Blister Cards: Document Satisfactory or non-satisfactory based
on established AQL per PSH-QAD-0029-F2.
- Identification of the blister card
- Correct Amount of Tablets
- Push Thru Test
- Perforations or cuts
- Leak Test
- Seal Test (visual)
- General Appearance
FINISHED PRODUCT SHIPPING REQUIREMENTS:
REQUIREMENTS RETAIN SAMPLES
---------------------------------------------------- ------------------------------------------------------
- CUSTOMER AUTHORIZATION REQUIRED TO SHIP. Ship 24 cartons from beginning, middle, and end of the
- QA RELEASE FORM lot to:
- CERTIFICATE OF RELEASE
Xxxxx XX Operations
SHIP FINISHED PRODUCT TO: Quality Assurance Department
Cardinal Health (SPS) 00000 Xxxxxxxxx Xxxx
Specialty Pharmaceutical Services Ft. Xxxxx, XX 00000-0000
Receiving and Transportation Manager
00 Xxxxxx Xxxx., Xxxxx 000
XxXxxxxx, XX 00000
THE PRODUCT SHOULD BE PACKAGED AND STORED IN
TEMPERATURE CONDITIONS OF 68 - 77(DEGREE)F
THERE ARE NO TEMPERATURE REQUIREMENTS DURING
SHIPMENT
PRINTED MATERIAL COMPONENT SPECIFICATIONS
The actual printed material components are included at the end of the Exhibit A
section.
MUCINEX 600 MG BOTTLE LABEL *PM-3000821 - 20 ct
*PM-3000841 - 40 ct
PM-3000860 - 60 ct
PM-3000810 - 100 ct
PM-3000850 - 500 ct
MUCINEX 600 MG CARTON *PM-2000822 - 20 ct
*PM-2000842 - 40 ct
PM-2000860 - 60 ct
MUCINEX DM 600 MG/30 MG BOTTLE LABEL *PM-3005620 - 20 ct
*PM-3005640 - 40 ct
PM-2005642 - 40 ct (RLR)
PM-3005654 - 54 ct
MUCINEX DM 600 MG/30 MG BOTTLE CARTON *PM-2005621 - 20 ct
*PM-2005641 - 40 ct
PM-2005654 - 54 ct
----------
* USED FOR PACKAGING AT CARDINAL HEALTH PACKAGING FACILITIES
CLIENT SUPPLIED MATERIALS
PRODUCT PACKAGING COMPONENT SPECIFICATIONS FOR:
Mucinex 600 mg 20 & 40 ct. presentations - Item No. 500810 (CofA is provided
with shipment)
Mucinex DM 600/30 mg 20 & 40 ct. presentations - Item No. 505600 (CofA is
provided with shipment)
COMPONENT COMPONENT SPECIFICATION
-------------------------- -----------------------
100CC MARLEX RESIN BOTTLE PM-410100
PM-411100
38/400 CRC CAP PM-365038
PHARMACEUTICAL COTTON COIL PM-280000
1 GRAM DESICCANT CANISTER PM-330001
SHRINK FILM PM-4206013
SHIPPER PM-2202404
Cardinal Health Packaging Services - Humacao is currently supplying the
components used for the Mucinex D blister card packaging configuration. The
components and their respective component specification are detailed below:
PRODUCT PACKAGING COMPONENT SPECIFICATIONS FOR:
Mucinex D 18 & 36 ct blisters - Item No. 505700 (CofA is provided with shipment)
COMPONENT *COMPONENT SPECIFICATION
------------------------- ------------------------
FOIL XX XXXX/PUSH MUCINEX CHPS-F-010
PRINTING MAT CHPS-PM-039
ACLAR FILM MUCINEX CHPS-FO-004
MUCINEX D 600 MG CARTONS CHPS-CT-015A 18ct
CHPS-CT-012 36ct
POLYETHYLENE FILM XXXX-XX-000
XXXXXXX XXXXXXX X 000 XX XXXX-XX-000 18 ct
CHPS-SH-021 36 ct
----------
*Purchased by Cardinal Health - Humacao
EXHIBIT B
PRICING
A. PACKAGING
1. PROCESSING FEES
PRODUCT UNIT OF MEASURE PROCESSING FEE
Mucinex D 18ct Per Carton $*
Mucinex D 36ct Per Carton $*
Mucinex SE/DM 40ct Per Bottle $*
Mucinex SE/DM 20ct Per Bottle $*
2. PACKAGING COMPONENTS
The following Packaging Components will be provided by Cardinal Health to
Client at Cardinal Health's actual acquisition cost, however, the Printed
Components below shall be provided by Cardinal Health to Client at the cost set
forth on Subsection B below:
MATERIAL/COMPONENT COSTS: MUCINEX-D 600MG 6CT 36'S
PCH-CHPS-FO-004 Aclar Film
PCH-CHPS-F-010 Foil XX Xxxx/Xxxx Xxxxxxx X
XXX-000000 Xxxxxxx X 600 MG Bulk
PCH-CHPS-PM-039 Printing Mat
PCH-CHPS-CT-012 Carton
PCH-CHPS-SH-021 Shipping Case
PCH-CHPS-SL-063A Shipping Label
PCH-CHPS-PW-008 Low Density Polyetilene
Glue/tape
MATERIAL/COMPONENT COSTS: MUCINEX-D 600MG 6CT 18'S
PCH-CHPS-F-010 Foil XX Xxxx/Push Mucinex D
PCH-CHPS-FO-004 Aclar Film
PCH-CHPS-CT-015A Carton
PCH-CHPS-SH-020 Shipping Case
PCH-CHPS-SL-039 Shipping Label
PCH-CHPS-PM-039 Printing Mat
PCH-CHPS-PW-008 Low Density Polyetilene
Glue/tape
MATERIAL/COMPONENT COSTS: MUCINEX-SE/DM 600MG 40'S
----------------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
XXX-000000 Xxxxxx 000xx
XXX-000000 Xxx XXX 38/400
XXX-000000 Xxxxxxxxx 0xx
XXX-000000 Xxxxxx roll
PCH-3000841 REV011206 Bottle Label
PCH-2000842 REV 011206 Carton
PCH-2202404 Shipping Case
PCH-CHPS-SL-064 Shipping Label
PCH-500814 Mucinex 600Tabs
XXX-XXXX-XX-000 Xxxxxx 000 XX 0"
XXX-XXXX-XX-000 Shrink 602 SB 9"
PCH-CHPS-PW-007 Shrink 602 SB 10"
MATERIAL/COMPONENT COSTS: MUCINEX-SE/DM 600MG 20'S
XXX-000000 Xxxxxx 000xx
XXX-000000 Xxx XXX 38/400
XXX-000000 Xxxxxxxxx 0xx
XXX-000000 Xxxxxx roll
PCH-3000821 REV 011206 Bottle Label
PCH-2000822 REV 011206 Carton
PCH-2202404 Shipping Case
PCH-CHPS-SL-065 Shipping Label
PCH-500814 Mucinex 600Tabs
XXX-XXXX-XX-000 Xxxxxx 000 XX 0"
XXX-XXXX-XX-000 Shrink 602 SB 10"
PCH-CHPS-PW-005 Shrink 602 SB 9"
2
B. Printed Components
SKU ITEM SPEC.# QTY PRICE
--- ---- ------ --- -----
Mucinex(R) 600mg Tray PM-2400802 50m $*
Bottle Tray 2's 100m $*
Mucinex(R) 600mg Carton PM-20000822 250m $*
Bottle Carton 20's 500m $*
750m $*
1mm $*
1.25mm $*
1.5mm $*
Mucinex(R) 600mg Carton PM-2000842 250m $*
Bottle Carton 40's 500m $*
750m $*
1mm $*
1.25mm $*
1.5mm $*
Mucinex(R) DM 600mg Tray PM-2405602 50m
Bottle Tray 2's $*
Mucinex(R) XX Xxxxxx PM-2005621
600mg 150m $*
Bottle Carton 20's 200m $*
250m $*
400m $*
500m $*
750m $*
1mm $*
1.25mm $*
1.5mm $*
-----------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
3
SKU ITEM SPEC.# QTY PRICE
--- ---- ------ --- -----
Mucinex(R) XX Xxxxxx PM-2005641
600mg 150m $*
Bottle Carton 40's 200m $*
250m $*
400m $*
500m $*
750m $*
1mm $*
1.25mm $*
1.5mm $*
Mucinex 600mg Label PM-3100802 150m $*
Tablet 2's 300m $*
600m $*
Mucinex 600mg Label PM-3000821 270m $*
Tablet 20's 540m $*
1mm $*
Mucinex 600mg Label PM-3000841 270m $*
Tablet 40's 500m $*
1.08mm $*
Mucinex 600mg Label PM-3000810 100m $*
Tablet 100's 250m $*
500m $*
Mucinex 600mg Label PM-3000850 25m $*
Tablet 500's 50m $*
100m $*
Mucinex DM 600/30mg
Tablet 2's Label PM-3105602 600m $*
Mucinex DM 600/30mg
Tablet 20's Label PM-3005620 400m $*
Mucinex DM 600/30mg
Tablet 40's Label PM-3100802 675m $*
------------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
4
EXHIBIT C
QUALITY AGREEMENT
SEE ATTACHED.
5
EXHIBIT D
ANNUAL RESERVATION FEE
Contract Year Capacity Reservation by Unit Volume Upfront Annual Reservation Fee
---------------- ----------------------------------- -------------------------------
12 months ending 20 million Units $* million
June 30, 2007
12 months ending 20 million Units $* million
June 30, 2008
12 months ending 10 million Units $* million
June 30, 2009
-------------
* Omitted information is the subject of a request for confidential treatment
pursuant to Rule 24b-2 under the Securities Exchange Act of 1934 and has been
filed separately with the Securities and Exchange Commission.
6
EXHIBIT E
PURCHASE ORDER PURSUANT TO SECTION 5.B. FOR
CALENDAR QUARTER ENDING SEPTEMBER 30, 2006
AUGUST
3 lots of D 18ct 855,000 units
1 lot of D 36ct 270,000 units
15 lots of SE20ct 1,425,000 units
12 lots of SE40ct 540,000 units
6 lots of DM 20ct 324,000 units
Cardinal shall provide all necessary Packaging Components necessary for
Packaging.
SEPTEMBER
3 lots of D 18ct 855,000 units
2 lots of D 36ct 540,000 units
15 lots of SE20ct 1,425,000 units
8 lots of SE40ct 360,000 units
Cardinal shall provide all necessary Packaging Components necessary for
Packaging.
9
EXHIBIT F
COMMERCIAL QUALITY AGREEMENT
This Commercial Quality Agreement, dated as of _________, 2006 (together with
the Exhibits hereto, this "Agreement"), defines the duties of Cardinal Health
PTS, LLC, a Delaware limited liability company ("Cardinal Health"), and Xxxxx
Respiratory Operations, Inc., a Delaware corporation ("Xxxxx"), for the contract
pharmaceutical manufacture of the "Product" as defined in that certain
Commercial Manufacturing Agreement dated as of even date herewith between
Cardinal Health and Xxxxx (the "Manufacturing Agreement") and the packaging of
"Product" as defined in that certain Commercial Packaging Agreement dated as of
even date herewith between Cardinal Health and Xxxxx (the "Packaging
Agreement"). In particular, this Agreement is intended to clearly state which
party is responsible for the cGMP (defined below) aspects of Manufacturing
(defined below) and Packaging (defined below) the Product (defined below) and
specify the way in which the parties shall ensure that the Product complies with
the approved Specifications (defined below) and the Marketing Authorizations
(defined below).
This Agreement takes the form of a detailed checklist of all the activities
associated with pharmaceutical production, analysis, release and distribution.
Responsibility for each activity is assigned to Cardinal Health, Xxxxx or both
in the appropriate box in the Responsibility Delegation Checklist attached
hereto as Exhibit A.
In order to provide better quality assurance, each party shall perform the
activities defined herein as its responsibility in accordance with Standard
Operating Procedures (defined below) to the extent that a Standard Operating
Procedure is applicable to such activity. In the event of a conflict between the
terms of this Agreement and a Standard Operating Procedure, the Standard
Operating Procedure shall control.
This Agreement is incorporated in and subject to the terms of the Manufacturing
Agreement and the Packaging Agreement. In the event of a conflict between this
Agreement and the Manufacturing Agreement or the Packaging Agreement, the
Manufacturing Agreement or Packaging Agreement shall control. The provisions of
this Agreement that relate to Manufacturing shall automatically terminate upon
any termination of the Manufacturing Agreement, and those provisions that relate
to Packaging shall automatically terminate upon any termination of the Packaging
Agreement. This Agreement is not intended to assign financial responsibility for
the activities described herein; financial responsibility shall be governed by
the Manufacturing Agreement or the Packaging Agreement, as appropriate.
This Agreement is intended to comply with the guidance and directives set forth
in the cGMPs, as applicable, establishing certain principles and guidelines of
good manufacturing practice for medicine products for human use.
10
The contact information for the quality assurance representative from each party
(each, a "Quality Assurance Representative" is set forth on Exhibit B attached
hereto. In the event of any controversy or claim arising out of, relating to or
in connection with any provision of this Agreement, or the rights or obligations
of the parties hereunder, the Quality Assurance Representatives from each party
shall try to settle their differences amicably between themselves. If the
Quality Assurance Representatives are unable to resolve such disputed matter
within thirty (30) days of initiating such negotiations, the dispute shall be
escalated to at least one member of senior management of each of the parties. If
the members of senior management are unable to resolve such disputed matter
within thirty (30) days of initiating such negotiations, then either party may
seek any available legal or equitable remedy.
Capitalized terms used in this Agreement but not otherwise defined shall have
the same meaning ascribed to them in the Manufacturing Agreement (if they
related to Manufacturing) or the Packaging Agreement (if they relate to
Packaging). In addition, for purposes of this Agreement, the following
definitions shall apply:
A. "API" means the active pharmaceutical ingredient used in the Manufacture
of the Product as identified in the Specifications.
B. "Applicable Laws" means all laws, ordinances, rules and regulations within
the Territory applicable to the Manufacturing or Packaging (as the case
may be) of Product and the obligations of Cardinal Health or Xxxxx
hereunder, as the context requires, including, without limitation, (i) all
applicable federal, state and local laws and regulations of the Territory,
including, without limitation, the U.S. Federal Food, Drug and Cosmetic
Act, and (ii) cGMPs.
C. "Deviation/Failure" means any OOS result and/or any Manufacturing or
Packaging deviation that affects the Product.
D. "Facilities" means (i) in the context of Manufacturing, the Cardinal
Health Manufacturing facility located in Winchester, Kentucky, (ii) in the
context of Packaging, the Cardinal Health Packaging facilities located in
Humacao, Puerto Rico and/or Red Line Road, Pennsylvania, and (iii) such
other facility or facilities as agreed in writing by the parties.
E. "FDA" means the Food and Drug Administration or any successor agency.
F. "cGMPs" means the current Good Manufacturing Practices for finished
pharmaceuticals promulgated by the FDA, as amended from time to time.
G. "Marketing Application" means an application for marketing authorization
which has not yet been approved by the FDA or other Regulatory Authority,
including, without limitation, FDA New Drug Application, FDA Abbreviated
New Drug Application and other similar marketing applications promulgated
by Regulatory Authorities.
11
H. "Manufacture" or "Manufacturing" means the activities being undertaken
pursuant to the Manufacturing Agreement to process, produce and test the
Product in accordance with the Specifications and the terms and conditions
set forth in the Manufacturing Agreement and this Agreement.
I. "Marketing Authorizations" means any approved application for marketing
authorization, including, without limitation, FDA New Drug Application,
FDA Abbreviated New Drug Application and other similar marketing
authorizations promulgated by Regulatory Authorities.
J. "OOS" means out-of-Specification.
K. "Package" or "Packaging" means the activities being undertaken pursuant to
the Packaging Agreement to package and label the Product in accordance
with the Specifications and the terms and conditions set forth in the
Packaging Agreement and this Agreement. For avoidance of doubt, this
Agreement does not pertain to the delivery of "Packaging Components" under
the Packaging Agreement.
L. "Product" shall have the following meanings: (i) when used in the context
of Manufacturing, "Product" shall be as defined in the Manufacturing
Agreement (i.e., a bulk, granulated product) and (ii) when used in the
context of Packaging, "Product" shall be as defined in the Packaging
Agreement (i.e., a finished product).
M. "Regulatory Authority" means any governmental or regulatory body, court or
arbitrator, including the U.S. Environmental Protection Agency and the
FDA.
N. "Specifications" means the procedures, requirements, standards, quality
control testing, other data and scope of services set forth in Exhibit C.
O. "Standard Operating Procedures" or "SOPs" shall mean the standard
operating procedures in effect at Cardinal Health which have been approved
by Cardinal Health Quality Assurance department and which are applicable
to the Manufacturing.
P. "Territory" means the United States and its territories and possessions,
including Puerto Rico.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the date first stated above.
XXXXX RESPIRATORY OPERATIONS, INC.
__________________________________ ________________
Name Date
Title
CARDINAL HEALTH PTS, LLC
__________________________________ ________________
Name Date
Title
EXHIBIT A
RESPONSIBILITY DELEGATION CHECKLIST
XXXXX
RESPIRATORY CARDINAL CARDINAL
RESPONSIBILITIES OPERATIONS, HEALTH - HEALTH -
---------------- INC. MANUFACTURING PACKAGING
1. REGULATORY AUTHORIZATIONS & CGMP COMPLIANCE
1.1 Will maintain all licenses, registrations and other authorizations as X X
are required to operate a cGMP pharmaceutical Manufacturing or
Packaging (as applicable) facility under the Applicable Laws.
1.2 Will maintain and operate the Facilities in compliance with the cGMPs X X
and all other Applicable Laws.
1.3 Will Manufacture or Package (as applicable) the Product in accordance X X
with the Specifications, cGMPs and all other Applicable Laws.
1.4 Will prepare, maintain and update the Marketing Authorizations in X
accordance with all Applicable Laws and will communicate to Cardinal
Health any changes affecting Manufacturing or Packaging of the Product
and otherwise as appropriate.
1.5 Will provide Cardinal Health with copies of those portions of the X
Marketing Applications which are applicable to the Manufacturing and
Packaging of Product, prior to implementation or submission of such
Marketing Applications to the applicable Regulatory Authority.
1.6 Will meet all drug listing-filing requirements as communicated by Xxxxx X X
to Cardinal Health for the Manufacturing or Packaging (as applicable) of
Product processed at the Facilities.
1.7 Is not debarred under the U.S. Generic Drug Enforcement Act of 1992 and X X X
does not employ or use the services of any individual who is debarred or
who has engaged in activities that could lead to being debarred.
Commercial Quality Agreement
Xxxxx Respiratory Operations
& Cardinal Health PTS, LLC
5 of 18
XXXXX
RESPIRATORY CARDINAL CARDINAL
RESPONSIBILITIES OPERATIONS, HEALTH - HEALTH -
---------------- INC. MANUFACTURING PACKAGING
1.8 Will prepare and submit post-marketing annual reports to the FDA and the X
other Regulatory Authorities in accordance with Applicable Laws.
1.9 Will prepare an Annual Product Review and provide it to Xxxxx in X X
support of Adam's Annual Product Report. The Annual Product Review
shall be provided within 30 days of request and shall contain the following
information:
- Change control information for all changes implemented during the
preceding year pertaining to the Product.
1.10 Will provide Xxxxx with the following information to be included in the X X
post-marketing annual report:
- Change control information for all changes implemented during the
preceding year pertaining to the Product
- List of Deviations and OOS Reports
- Copy of Retain Sample Documentation
- Other information that may be reasonably required
2. REGULATORY ACTIONS & INSPECTIONS
2.1 Will promptly notify Xxxxx of any FDA or other Regulatory Authority X X
notice of inspection or inspection of the Facilities directly relating to
the Product.
2.2 Will promptly notify the other party of any FDA or other Regulatory X X X
Authority investigation relating to Product Manufactured or Packaged at
the Facilities.
XXXXX
RESPIRATORY CARDINAL CARDINAL
RESPONSIBILITIES OPERATIONS, HEALTH - HEALTH -
---------------- INC. MANUFACTURING PACKAGING
2.3 Will provide copies of any FDA Form 483s, Warning Letters or the like X X X
from applicable Regulatory Authorities within 48 hours of receipt and
subsequent response(s) relating to the Product Manufactured or Packaged
at the Facilities.
2.4 Will promptly notify the other party of any Regulatory Authority request X X X
for Product samples or Product batch records related to Manufacturing or
Packaging at the Facilities.
2.5 Will promptly notify the other party of any requests for information, X X X
notices of violations or other communication from a Regulatory Authority
relating to environmental, occupational health and safety compliance,
relating directly to the Product Manufactured or Packaged at the Facilities.
3. COMPLIANCE OF SPECIFICATIONS WITH MARKETING AUTHORIZATIONS &
CHANGE CONTROL
3.1 Will ensure that all Specifications contained in the Manufacturing X
Agreement or Packaging Agreement (as applicable) and master batch
record comply with the Marketing Authorizations, as amended from time
to time, and will certify such in writing to Cardinal Health.
3.2 Will submit any proposed changes to the Specifications to the other X X X
appropriate party for review and approval, prior to the implementation of
such changes and the submission of any such changes to the Regulatory
Authorities.
3.3 Will notify and obtain Xxxxx' approval for any proposed changes to the X X
Facilities, equipment, documents, Manufacturing or Packaging that will
impact the Product.
XXXXX
RESPIRATORY CARDINAL CARDINAL
RESPONSIBILITIES OPERATIONS, HEALTH - HEALTH -
---------------- INC. MANUFACTURING PACKAGING
3.4 Will act as liaison with appropriate Regulatory Authorities for the X
approval, maintenance and updating of Product specifications in the
Marketing Authorizations
3.5 Will review and approve the original Manufacturing or Packaging (as X X X
applicable) master batch record for the Product.
3.6 Will review and approve change control documents for Manufacturing or X X X
Packaging (as applicable) batch records prior to implementation.
3.7 Will provide supporting documentation for the NDA as requested. X X
4. MATERIALS
4.1 Will be responsible for the maintenance and storage of the API according X* X
to the Specifications.
4.2 Will be responsible for the sampling, testing, and release of the API X* X*
according to Specifications.
4.3 Will sample and perform identification testing of API. X* X
4.4 Will be responsible for retaining reference samples of non-active raw X
materials for two years after receipt. Active ingredient(s), including
samples for periodic re-tests, will be retained for one year beyond
Product expiry date of the last lot of the Product containing the active
ingredient.
------------
* If Xxxxx receives the API from the API supplier and then forwards it to
Cardinal Health, Xxxxx (and not Cardinal Health) will have responsibility
for Item 4.2 (until it Cardinal Health receives such API from Xxxxx) and
Cardinal Health (and not Xxxxx) will have responsibility for Item 4.5; if
Cardinal Health receives the API from the API supplier, Cardinal Health
(and not Xxxxx) will have responsibility for Item 4.2. Sampling of API for
identification testing will be performed by Cardinal for all API received
at the facility. If Cardinal (and not Xxxxx) receives the API directly
from the supplier, Xxxxx will not have responsibility for 4.1 - 4.4.
XXXXX
RESPIRATORY CARDINAL CARDINAL
RESPONSIBILITIES OPERATIONS, HEALTH - HEALTH -
---------------- INC. MANUFACTURING PACKAGING
4.5 Will be responsible for the inspection and storage of Packaging materials X
as may be required by Applicable Laws.
4.6 Will audit and qualify the API manufacturers to ensure full compliance X
with the Specifications, cGMPs, Applicable Laws and Standard Operating
Procedures.
4.7 Will audit and qualify raw material suppliers providing raw materials used X
in the Product to ensure full compliance with the Specifications, cGMPs,
Applicable Laws and Standard Operating Procedures.
4.8 Will audit and qualify Packaging materials suppliers providing Packaging X
materials for the Product to ensure full compliance with the
Specifications, cGMPs, Applicable Laws and Standard Operating Procedures.
4.9 Will dispose of Product waste and any special waste related to the X X
Manufacturing or Packaging (as applicable) of the Product.
5. PRODUCTION & VALIDATION
5.1 Will approve process validation protocols and validation reports X X
pertaining to the Manufacture of the Product.
5.2 Will approve any Packaging protocols and reports as appropriate to the X X
Packaging of the Product.
5.3 Will be responsible for maintenance, qualifications and validation of the X X
Facilities, equipment and processes associated with Manufacturing or
Packaging (as applicable) the Product.
5.4 May be present during any process validation work being performed, subject X
to the Manufacturing Agreement and the Packaging Agreement.
XXXXX
RESPIRATORY CARDINAL CARDINAL
RESPONSIBILITIES OPERATIONS, HEALTH - HEALTH -
---------------- INC. MANUFACTURING PACKAGING
5.5 Will Manufacture the Product at the Facilities in accordance with the X
Product master batch record, Standard Operating Procedures, and the
Specifications, and will supply a Certificate of Analysis to Xxxxx.
5.6 Will be responsible for labeling the Product in accordance with the X X
Specifications, and applicable portions of 21 CFR 211.122 through 211.130,
as applicable.
5.7 Will be responsible for preparing and approving all artwork, inserts, X
labeling and packaging components.
5.8 Will be responsible for Packaging the Product in accordance with the X
Specifications.
5.9 Will be responsible for investigating, resolving and documenting all known X X
deviations from the Manufacturing or Packaging (as applicable) master
batch record and Specifications.
5.10 Will review and approve all Deviation/Failure and confirmed OOS reports X X X
for Manufacturing or Packaging (as applicable). Laboratory OOS related to
analyst errors will not require Xxxxx approval. However, copies of the OOS
reports will be provided with the batch documentation.
5.11 Will promptly notify Xxxxx of any deviations or failures related to X X
Manufacturing or Packaging (as applicable). If there is a confirmed
failure or OOS (not related to analyst error), processing of additional
lots shall be discontinued until a common agreement is reached regarding
the impact and approach to be followed.
5.12 Will promptly (but no later than three business days after learning of a X X X
confirmed OOS test result) notify the other party's quality assurance
department of any OOS test result.
XXXXX
RESPIRATORY CARDINAL CARDINAL
RESPONSIBILITIES OPERATIONS, HEALTH - HEALTH -
---------------- INC. MANUFACTURING PACKAGING
6. AUDITS
6.1 Will be entitled to conduct one routine quality audit of Cardinal Health's X
listed facilities per calendar year at mutually agreeable times to
evaluate quality systems and testing processes.
6.2 Will conduct internal audits of quality control and testing processes, in X X
accordance with the cGMPs and applicable Standard Operating Procedures.
7. LOT CODES & EXPIRATION DATING
7.1 Will provide all required information to Cardinal Health in writing at X
least one week prior to Manufacturing or Packaging (as applicable) of each
batch of Product to enable the timely printing of labels or other
materials.
7.2 Will assign Product lot codes and expiration dates as appropriate to X X
Manufacturing or Packaging, on a lot-by-lot basis, in accordance with
Standard Operating Procedures.
8. SAMPLES
8.1 Will retain Product samples in accordance with SOPs and Applicable Laws. X
8.2 Will ensure that appropriate retain stability samples are maintained in X
accordance with stability protocols and Applicable Laws.
8.3 Will pull retain samples during Packaging as required in the approved X
Packaging batch records to be shipped to Xxxxx, Fort Worth for storage.
XXXXX
RESPIRATORY CARDINAL CARDINAL
RESPONSIBILITIES OPERATIONS, HEALTH - HEALTH -
---------------- INC. MANUFACTURING PACKAGING
9. TESTING & ANALYSIS
9.1 Will perform all appropriate in-process testing as agreed upon and X X
required by the Manufacturing or Packaging master batch record pertaining
to the Manufacturing or Packaging of the Product.
9.2 Will promptly notify Cardinal Health of any confirmed stability failure of X
the Product that might be attributed to Cardinal Health's Manufacture of
the Product.
10. RELEASE
10.1 Will be responsible for releasing the Product to Cardinal Health's X
Packaging Facilities.
10.2 Will be responsible for releasing the Product to Xxxxx. X X
10.3 Will be responsible for releasing the Product to the market in accordance X
with the Specifications.
XXXXX
RESPIRATORY CARDINAL CARDINAL
OPERATIONS, HEALTH -- HEALTH --
RESPONSIBILITIES INC. MANUFACTURING PACKAGING
---------------- ----------- ------------- ---------
11. RECORDS
11.1 Will provide the released Manufacturing batch record documentation X
for each batch of the Product, which shall include the
following:
- A statement that the batch was Manufactured (including
bulk packaged and tested) as appropriate in accordance
with cGMPs, identifies the master batch record
documents, and lists any incident reports and
investigations associated with the batch.
- A Certificate of Analysis covering all Regulatory
Authority and compendial tests.
- The signature of the Cardinal Health QA Representative
who released the batch.
- A copy of the batch record including copies of any:
- Deviation/Failure or incident reports
- Deviation/Failure investigation reports
- The Cardinal Health batch release form
11.2 Will provide the released Packaging batch record documentation for each X
batch of the Product, which shall include the following:
- Any incident reports and investigations associated with
the batch.
- The signature of the Cardinal Health QA Representative
who released the batch.
XXXXX
RESPIRATORY CARDINAL CARDINAL
OPERATIONS, HEALTH -- HEALTH --
RESPONSIBILITIES INC. MANUFACTURING PACKAGING
---------------- ----------- ------------- ---------
11.3 Will store the Manufacturing or Packaging (as applicable) master batch X X
record, Manufacturing or Packaging (as applicable) batch records and
all other documentation related to the Product for the minimum period
required by all Applicable Laws.
11.4 Will provide copies of all documentation necessary for the other party X X X
to respond to inquiries by Regulatory Authorities.
12. STORAGE
12.1 Will store the API at the Facilities in accordance with the API X
Specifications until Manufacture of the Product.
12.2 Will store the Product in accordance with the Specifications pending X
release of the Product to Cardinal Health's Packaging Facilities.
12.3 Will store the Product in accordance with the Specifications prior to X
the release of the Product to Xxxxx' authorized carrier.
12.4 Will be responsible for ensuring the storage of the Product in X
accordance with the Specifications following delivery of the Product to
Xxxxx' authorized carrier.
13. SAFETY
13.1 Will maintain safety/hazard and handling data on the Product and API in X X
accordance with the Specifications.
13.2 Will maintain safety/hazard and handling data on the raw materials in X
accordance with the Specifications.
13.3 Will maintain safety/hazard and handling data for new products and X X X
materials in accordance with the Specifications.
XXXXX
RESPIRATORY CARDINAL CARDINAL
OPERATIONS, HEALTH -- HEALTH --
RESPONSIBILITIES INC. MANUFACTURING PACKAGING
---------------- ----------- ------------- ---------
14. COMPLAINTS
14.1 Will assist Xxxxx in investigating and resolving all medical and X X
non-medical Product complaints as it relates to the Manufacture or
Packaging (as applicable) of the Product.
14.2 Will provide Xxxxx with any information in its possession relating to X X
the Manufacturing and Packaging (as applicable) of the Product that is
necessary to address a Product complaint or adverse drug event.
14.3 Will log all information relating to complaints and adverse drug events X X X
in connection with the Product.
14.4 Will assist as appropriate in investigating all complaints and adverse X X X
drug events in connection with the Product.
14.5 Will issue all reports and follow up corrective actions as appropriate X X X
relating to complaints and adverse drug events in connection with the
Product.
15. RECALL, FIELD ALERTS & PRODUCT WITHDRAWAL
15.1 Will be responsible for decision to initiate recall or Product X
withdrawal after consultation with Cardinal Health.
15.2 Reserves the right to recommend a recall to Xxxxx should a problem or X X
issue become known that would affect the safety and efficacy of the
Product.
15.3 Will communicate decision to initiate recall or Product withdrawal to X
Cardinal Health.
15.4 Will be responsible for notification of recall or Product withdrawal to X
appropriate Regulatory Authorities.
XXXXX
RESPIRATORY CARDINAL CARDINAL
OPERATIONS, HEALTH -- HEALTH --
RESPONSIBILITIES INC. MANUFACTURING PACKAGING
---------------- ----------- ------------- ---------
15.5 Will be responsible for management of recall or Product withdrawal. X
15.6 Will be responsible for reconciliation of returned Product following X
recall or Product Withdrawal.
15.7 Will issue and follow up on FDA Field Alerts or similar matters from X
applicable Regulatory Authorities.
15.8 Will provide all necessary support and documents as may be appropriate X X
to issue and follow up on FDA Field Alerts or similar matters from
applicable Regulatory Authorities.
16. RETURNS
16.1 Will be responsible for handling all Product returns in accordance with X
Xxxxx'x standard operating procedures
EXHIBIT B
QUALITY ASSURANCE REPRESENTATIVES CONTACT INFORMATION
XXXXX
XXXXXXXX SELLES
EXECUTIVE DIRECTOR, QUALITY ASSURANCE
Xxxxx Therapeutics
00000 Xxxxxxxxx Xx.
Xx. Xxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Email: xxxxxxx@xxxxxxx.xxx
XXXXX XXXXXXX
QUALITY MANAGER -- RELEASES
Xxxxx Therapeutics
00000 Xxxxxxxxx Xx.
Xx. Xxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Email: xxxxxxxx@xxxxxxx.xxx
XXXXXXX XXXXXX
DOCUMENT CONTROL MANAGER
Xxxxx Therapeutics
00000 Xxxxxxxxx Xx.
Xx. Xxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
Email: xxxxxxx@xxxxxxx.xxx
CARDINAL HEALTH
XXXX XXXXXX
DIRECTOR, QUALITY SYSTEMS
Cardinal Health
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
Email: xxxx.xxxxxx@xxxxxxxx.xxx
XXXXXXX XXXX
DIRECTOR, QUALITY ASSURANCE
Cardinal Health
0000 Xxx Xxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Phone: 215 - 613 - 3178
Fax: 215 - 613 - 3091
Email: xxxxxxx.xxxx@xxxxxxxx.xxx
EXHIBIT C
SPECIFICATIONS
GRANULATION SPECIFICATIONS
Guaifenesin DC (95%) process is a pre blend intermediate granulation used in the
manufacture of Mucinex(R). There is no product specification for the Guaifenesin
DC (95%) Intermediate.
The Guaifenesin DC (95%) intermediate must be manufactured following the
procedures and instructions outlined in the current revision of the
Manufacturing Batch Records Process No's CF001 and CF002.
The Guaifenesin DC (95%) must be sampled and tested to comply with the in
process specifications established in the Manufacturing Batch Records Process
No's. CF001 and CF002.
A summary of the in process specifications and acceptance criteria is included
in the following table:
TEST ATTRIBUTE ACCEPTANCE CRITERIA
MOISTURE AVERAGE OF NMT 0.8%
SIEVE ANALYSIS NMT 2% RETAINED ON 10 MESH SCREEN
NLT 60% RETAINED ON THE 20-MESH
THROUGH THE-100 MESH SCREEN
(PRESENT ON THE 20, 40, 60, 80,
AND 100 MESH SCREENS).
NLT 5% THROUGH THE 100-MESH
SCREEN (PRESENT ON THE 120, 140,
AND 200 MESH SCREENS AND IN
THE COLLECTING PAN).
NMT 18% THROUGH THE 140 MESH
SCREEN (PRESENT ON THE 200 MESH
SCREEN AND IN THE COLLECTING PAN).
For packaging specifications refer to Exhibit A of the Commercial Packaging
Agreement.
EXHIBIT G
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (the "AGREEMENT") is made and entered
into as of ______________, 2006 (the "EFFECTIVE DATE") by and between Xxxxx
Respiratory Operations, Inc. a Texas corporation ("XXXXX"), and Cardinal Health
PTS, LLC, a Delaware limited liability company ("CARDINAL").
W I T N E S S E T H:
X. Xxxxx and Cardinal are party to that certain Asset Purchase Agreement
(the "PURCHASE AGREEMENT") dated as of July 27, 2006 whereby Xxxxx is acquiring
certain tangible and intangible property from Cardinal (the "TRANSFERRED
BUSINESS"); and
X. Xxxxx and Cardinal, in connection with the Transferred Business, wish
to enter into an arrangement whereby Cardinal will provide certain services to
Xxxxx on the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and of the
respective covenants, agreements, representations and warranties herein
contained, and intending to be legally bound hereby, the parties hereto hereby
agree as follows:
1. Provision of Services. To facilitate an orderly transition of
operations of the Transferred Business, Cardinal shall perform and provide to
Xxxxx the services described in the Schedule of Services attached hereto as
Exhibit A (the "Services") during the term of this Agreement or until Cardinal
is notified in writing by Xxxxx that such Service(s) have been transitioned.
2. Charges for Services. Xxxxx shall pay Cardinal those amounts set forth
on Exhibit A for the Services, and such amounts shall be payable by Xxxxx to
Cardinal in advance on or before the tenth (10th) day of each month of the Term.
3. Term; Termination.
3.1 Term. The term of this Agreement shall commence on the Effective Date
and, subject to earlier termination as provided herein, shall continue for a
term of six (6) months, and thereafter shall continue, if for no fault of Xxxxx
the transition of the Services is not completed, for an additional three (3)
month period. Notwithstanding the foregoing, in the event all the Services have
been transitioned, then Xxxxx shall so notify Cardinal as provided in Section 1,
which notice shall include payment in full of all amounts due hereunder, this
Agreement shall terminate upon Cardinal's receipt of such notice, and Cardinal
shall have no further obligation to provide any Services.
3.2 Termination. Either party may terminate this Agreement, if the other
party shall materially breach this Agreement and shall have failed to cure such
breach or undertake substantial efforts towards the cure of the breach within
thirty (30) days of the receipt from the other party of written notice of such
material breach.
4. Miscellaneous.
4.1 Successors and Assigns. Xxxxx may assign its rights and obligations
(a) to any Affiliate (as defined in the Purchase Agreement) of Xxxxx, or (b) in
connection with any merger, stock exchange or sale of any part of its business
to an assignee that provides reasonably satisfactory business and financial
assurances to Cardinal and that expressly assumes the obligations of Xxxxx
hereunder, provided, however, that no such assignment shall constitute a release
of Xxxxx of its obligations with respect to this Agreement. Cardinal may assign
its rights and obligations (a) to any Cardinal Affiliate (as defined in the
Purchase Agreement), or (b) in connection with any merger, stock exchange or
sale of any part of its business to an assignee that provides reasonably
satisfactory business and financial assurances to Cardinal and that expressly
assumes the obligations of Cardinal hereunder. Subject to the foregoing, all of
the terms and provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and assigns of each party
hereto.
4.2 Notice. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telecopier or
by registered or certified mail, postage prepaid, as follows:
If to Cardinal, to:
Cardinal Health PTS, LLC
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Vice President and Associate General Counsel,
Pharmaceutical Technologies & Services
With copy to: Xxxxxxxxx Law Group PLLC
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
If to Xxxxx, to:
Xxxxx Respiratory Operations, Inc.
00000 Xxxxxxxxx Xxxx
Xxxx Xxxxx, Xxxxx 00000-0000
Facsimile No.: (000) 000-0000
Attention: General Counsel
or to such other address or facsimile number as the addressee may have specified
in a notice duly given to the sender as provided herein. Such notice, request,
demand, waiver, consent, approval or other communication will be deemed to have
been given as of the date so delivered, telecopied or mailed.
2
4.3 Limitations. THERE ARE NO WARRANTIES, REPRESENTATIONS OR GUARANTEES OF
ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT OR FITNESS FOR
A PARTICULAR PURPOSE PROVIDED BY CARDINAL TO XXXXX WITH RESPECT TO THE SERVICES.
4.4 Counterparts; Pronoun. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement. All pronouns
used in this Agreement shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identity of the person(s) may require.
4.5 Confidentiality. From time to time Xxxxx and Cardinal may provide
confidential business and technical information to one another either by design
or inadvertently as a result of the provision of the Services under this
Agreement. The use and protection of all such information by each of the parties
shall be governed and subject to the provisions of Section 8.8 of the Purchase
Agreement.
4.6 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the internal laws of the State
of Delaware without regard to the principles of conflict of laws thereof.
4.7 No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party.
4.8 Severability. If any provision of this Agreement, or the application
thereof to any person, place or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder or
this Agreement and such provisions as applied to other persons, places and
circumstances shall not be effected thereby and remain in full force and effect
only if, after excluding the portion deemed to be unenforceable, the remaining
terms shall provide for the consummation of the transactions contemplated hereby
in substantially the same manner as originally set forth at the later of the
date of this Agreement was executed or last amended.
4.9 Entire Agreement. This Agreement, along with the Schedule hereto,
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof, as distinguished from any other contractual arrangements
between the parties, and this Agreement supersedes and renders null and void any
and all other prior oral or written agreements, understandings, or commitments
pertaining to the subject matter hereof. No amendment hereof shall be deemed
valid unless in writing and signed by the parties hereto, and no discharge of
the terms hereof shall be deemed valid unless by full performance by the parties
hereto or by a writing signed by the parties hereto.
4.10 Waiver of Breach. The waiver of any of the provisions of this
Agreement by any party shall be limited to the particular instance involved and
shall not be deemed to be a continuing waiver or to waive any other rights of
the same or any other terms of this Agreement.
[Signature page follows]
3
IN WITNESS WHEREOF, the parties hereto have duly executed this Transition
Services Agreement under seal as of the day and year first above written.
XXXXX RESPIRATORY CARDINAL HEALTH PTS, LLC
OPERATIONS, INC.
By: ____________________________ By: ____________________________
Name: ____________________________ Name: ____________________________
Title:____________________________ Title:____________________________
Signature Page to Transition Services Agreement
EXHIBIT A
SCHEDULE OF SERVICES
Capitalized terms not otherwise defined in this Exhibit A to the
Transition Services Agreement by and between Cardinal and Xxxxx dated July 27,
2006 (the "AGREEMENT") shall have the meanings ascribed thereto in the
Agreement.
SERVICES
1. EMAIL. Cardinal will forward all email for the Ft. Worth, Texas
facility (the "FACILITY") that is part of the Transferred Business to an Xxxxx
specified email address. The email servers that are not part of the Purchased
Assets (as defined in the Purchase Agreement) will remain at the Facility until
Xxxxx can complete its transition to a new email structure within the term of
this Agreement.
2. VOICE/DATA COMMUNICATIONS. Cardinal shall assist Xxxxx in moving the
direct inward dialing numbers to Xxxxx voice primary rate interface.
3. NETWORK. Subject to any restrictions or other parameters required by
Oracle Corporation ("ORACLE"), Cardinal shall maintain open and accessible
communications so that Xxxxx can access Cardinal's XX Xxxxxxx System (defined
below).
4. SOFTWARE.
a. XX Xxxxxxx System. For purposes of this Agreement, the "XX
XXXXXXX SYSTEM" means the XX Xxxxxxx software licensed by Cardinal or one or
more of its affiliates from Oracle, and the related operating software known as
Citrix, DSI and Optio. Cardinal shall (i) permit Xxxxx to use the XX Xxxxxxx
System internally, at the Facility, and solely in connection with continuing the
operations of the Transferred Business; (ii) maintain its current licenses,
rights and access to the XX Xxxxxxx System as in effect on the date hereof,
subject to any changes that would not reasonably be expected to have a material
adverse effect on Xxxxx' use of the XX Xxxxxxx System as contemplated herein;
(iii) provide Xxxxx with copies of all substantive data pertaining to the
Transferred Business at the Facility contained within the XX Xxxxxxx System (in
a format mutually acceptable to the parties and subject to any restrictions
required by Oracle) upon termination of this Service; and (iv) provide to Xxxxx
those standard services, at substantially the same service levels, as provided
to any Cardinal affiliate, for the operation of the XX Xxxxxxx System. Xxxxx
shall use the XX Xxxxxxx System in compliance with all applicable laws and
regulations and the terms and conditions of the license for the XX Xxxxxxx
System from Oracle, and subject to any restrictions or other parameters required
by Oracle.
b. PeopleSoft Application. Upon request, Cardinal shall provide
Xxxxx with copies of all substantive data pertaining to the Transferred
Employees (as defined in the Purchase Agreement) contained within the PeopleSoft
Application (in a format mutually acceptable to the parties). To the extent
permitted by the PeopleSoft Application, Cardinal shall also run such
reports, sorts or similar data manipulation in respect of the Transferred
Employees as Xxxxx may request, and provide to Xxxxx the resulting data (in a
format mutually acceptable to the parties).
c. Other IT Systems. If Xxxxx believes that any software, hardware
or related services that have not been identified in this Item 4 are critical in
the operation of the Transferred Business at the Facility, Xxxxx will promptly
notify Cardinal and identify such software, hardware or related services,
whereupon the parties will discuss in good faith the terms upon which Cardinal
would provide access or use of such software or hardware or related services to
Xxxxx during the term of this Agreement for the operation of the Transferred
Business at the Facility, including scope and fees. This Exhibit A shall be
amended by written agreement of both parties if and when appropriate to provide
for additional services under this Item 4(c) and to set forth the fees therefor.
5. HARDWARE. Cardinal Health shall provide Xxxxx with usage of all
computer-related hardware set forth on Schedule 1.1.2(a) to the Purchase
Agreement (other than blackberry handheld devices) that is located at the
Facility necessary to access the software described in Item 4 above.
6. MISCELLANEOUS. If Xxxxx believes that any other services that have not
been identified in this Exhibit A are reasonably necessary in the operation of
the Transferred Business at the Facility, Xxxxx will promptly notify Cardinal
and identify such other services, whereupon the parties will discuss in good
faith the terms upon which Cardinal would provide such services to Xxxxx during
the term of this Agreement for the operation of the Transferred Business at the
Facility, including scope and fees. This Exhibit A shall be amended by written
agreement of both parties if and when appropriate to provide for additional
services under this Item 6 and to set forth the fees therefor.
FEES
The fee for the Services set forth in Items 1, 2, 3, 4(a), 4(b) and 5 is as
follows:
- For the period from the Effective Date until 3 months thereafter:
$55,000 per month.
- For the period from 3 months after the Effective Date until 6 months
thereafter: $85,000 per month.
- For the period, if any, from 6 months after the Effective Date until
9 months thereafter: $110,000 per month.
The fee for the Services set forth in Items 4(c) and 6 shall be subject to the
mutual agreement of the parties. This Exhibit A shall be amended as and when
appropriate to provide for additional services and to set forth the fees
therefor.
6
