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Exhibit 10.92
SUPPLY AGREEMENT
SUPPLY AGREEMENT
BY AND BETWEEN
HOECHST ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ DEUTSCHLAND GMBH
AND
MEDICIS PHARMACEUTICAL CORPORATION
DATED AS OF NOVEMBER 15, 1998
TRADEMARK NOTICE: 'Loprox' and 'Topicort' are registered trademarks of HMR,
certain rights to which are granted to MEDICIS in accordance with the TRADEMARK
LICENSE AGREEMENT (as defined herein). The use of such trademarks in this
AGREEMENT is in each case deemed to be accompanied by an appropriate notice of
trademark registration.
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SUPPLY AGREEMENT
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS.................................................................................... 6
1.1 "AAA"............................................................................... 6
1.2 "ACT"............................................................................... 6
1.3 "ACTIVE INGREDIENTS"................................................................ 6
1.4 "AFFILIATE"......................................................................... 6
1.5 "AGREEMENT"......................................................................... 7
1.6 "APPLICABLE EXCHANGE RATE".......................................................... 7
1.7 "APPLICABLE LAWS"................................................................... 7
1.8 "AVERAGE EXCHANGE RATE"............................................................. 7
1.9 "BACKORDERS"........................................................................ 7
1.10 "cGMP".............................................................................. 7
1.11 "CICLOPIROX"........................................................................ 7
1.12 "CLAIM"............................................................................. 7
1.13 "CONTRACT YEAR"..................................................................... 7
1.14 "CPI"............................................................................... 7
1.15 "CPI INCREASE"...................................................................... 7
1.16 "EFFECTIVE DATE".................................................................... 7
1.17 "EXCLUDED HMR PRODUCT LIABILITY".................................................... 8
1.18 "EXTENDED SUPPLY INTERRUPTION"...................................................... 8
1.19 "FDA"............................................................................... 8
1.20 "FORCE MAJEURE"..................................................................... 8
1.21 "FORECAST MONTH".................................................................... 8
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SUPPLY AGREEMENT
1.22 "HMR GmbH".......................................................................... 8
1.23 "HMR GmbH INDEMNIFIED PARTY"........................................................ 8
1.24 "HMR MANUFACTURED PRODUCTS"......................................................... 8
1.25 "HMRI".............................................................................. 8
1.26 "INITIAL RENEWAL PERIOD"............................................................ 8
1.27 "INITIAL TERM"...................................................................... 8
1.28 "INTERRUPTED MEDICIS ORDERS"........................................................ 8
1.29 "LIABILITY"......................................................................... 8
1.30 "LICENSE AND OPTION AGREEMENT"...................................................... 9
1.31 "LOPROX LOTION"..................................................................... 9
1.32 "LOPROX LOTION SUPPLY AGREEMENT".................................................... 9
1.33 "LOST SALES"........................................................................ 9
1.34 "MEDICIS"........................................................................... 9
1.35 "MEDICIS INDEMNIFIED PARTY"......................................................... 9
1.36 "NDAs".............................................................................. 9
1.37 "NET SALES"......................................................................... 9
1.38 "PURCHASE AGREEMENT"................................................................ 9
1.39 "RENEWAL PERIOD".................................................................... 9
1.40 "RULES"............................................................................. 9
1.41 "QUALIFIED ALTERNATE SUPPLIER"...................................................... 9
1.42 "SHORTFALL"......................................................................... 9
1.43 "SPECIFICATIONS".................................................................... 9
1.44 "SUPPLY INTERRUPTION"............................................................... 9
1.45 "TERRITORY"......................................................................... 10
1.46 "TRADE QUOTA"....................................................................... 10
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SUPPLY AGREEMENT
1.47 "TRADEMARK LICENSE AGREEMENT"....................................................... 10
1.48 "TRANSITION SERVICES AGREEMENT"..................................................... 10
1.49 "24-MONTH FORECAST"................................................................. 10
ARTICLE II. MANUFACTURE, PURCHASE AND SALE OF HMR MANUFACTURED PRODUCTS................................... 10
2.1 Purchase and Sale................................................................... 10
2.2 [Reserved].......................................................................... 11
2.3 Labeling and Packaging.............................................................. 11
2.4 Forecasts........................................................................... 11
2.5 Communication....................................................................... 12
2.6 Minimum Inventory................................................................... 13
2.7 Delivery............................................................................ 13
2.8 Shortages/Damaged Goods/Rejected Goods.............................................. 13
2.9 Current Inventory................................................................... 15
2.10 SUPPLY INTERRUPTION................................................................. 15
2.11 Supply Price for HMR MANUFACTURED PRODUCTS and Exchange Rate and
Adjustment.......................................................................... 20
2.12 Payment............................................................................. 21
2.13 Advertising/Marketing/Sales Costs and Product Pricing............................... 22
2.14 Samples............................................................................. 22
2.15 Compliance with APPLICABLE LAWS..................................................... 23
2.16 Rights Necessary for Manufacturing.................................................. 23
ARTICLE III. TERM AND TERMINATION......................................................................... 24
3.1 Term of this AGREEMENT.............................................................. 24
3.2 RENEWAL PERIODS..................................................................... 24
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3.3 Early Termination................................................................... 25
3.4 Consequences of Termination and Survival............................................ 26
3.5 Accrued Obligations................................................................. 27
ARTICLE IV. MANUFACTURING COMPLIANCE, ACCESS AND REGULATORY MATTERS....................................... 28
4.1 Tests; Retained Samples............................................................. 28
4.2 Manufacturing Compliance............................................................ 28
4.3 Changes in SPECIFICATIONS........................................................... 28
4.4 Access to Facilities................................................................ 29
4.5 Regulatory Correspondence........................................................... 29
4.6 Inquiries and Complaints relating to the HMR MANUFACTURED PRODUCTS.................. 29
4.7 Response to Complaints and/or Adverse Drug Reactions (or Events).................... 30
4.8 Additional Information.............................................................. 30
4.9 Technical Agreement................................................................. 30
ARTICLE V. HMR MANUFACTURED PRODUCTS RECALLS.............................................................. 30
5.1 Recalls During INITIAL TERM......................................................... 30
5.2 Recalls During RENEWAL PERIODS or Thereafter........................................ 31
ARTICLE VI. WARRANTIES AND REMEDIES....................................................................... 31
6.1 FDA Approval........................................................................ 31
6.2 Conformity with SPECIFICATIONS...................................................... 31
6.3 Compliance with the Federal Food, Drug and Cosmetic Act............................. 31
6.4 No Liens............................................................................ 31
6.5 Exclusion of Other Warranties....................................................... 31
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ARTICLE VII. INDEMNIFICATION, LIMITATION OF LIABILITY AND INSURANCE....................................... 32
7.1 Indemnification by MEDICIS.......................................................... 32
7.2 Indemnification by HMR GmbH......................................................... 33
7.3 Process of Indemnification.......................................................... 33
7.4 Settlements......................................................................... 33
7.5 Limitation of Liability............................................................. 34
7.6 Distribution Insurance.............................................................. 34
7.7 Manufacturer's Insurance............................................................ 34
7.8 HMR MANUFACTURED PRODUCT Liability Claims........................................... 35
ARTICLE VIII. GENERAL PROVISIONS.......................................................................... 35
8.1 FORCE MAJEURE....................................................................... 35
8.2 Governing Law....................................................................... 35
8.3 Headings and References............................................................. 35
8.4 Dispute Resolution.................................................................. 36
8.5 Severability........................................................................ 38
8.6 Entire Agreement.................................................................... 38
8.7 Amendment........................................................................... 38
8.8 Notices............................................................................. 38
8.9 Assignment and Binding Effect....................................................... 39
8.10 No Agency........................................................................... 39
8.11 No Strict Construction.............................................................. 39
8.12 Counterparts........................................................................ 39
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SUPPLY AGREEMENT
SUPPLY AGREEMENT
This Supply Agreement (the "AGREEMENT") is entered into as of November
15, 1998, by and between Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Deutschland GmbH, a German
limited liability company ("HMR GmbH"), and Medicis Pharmaceutical Corporation,
a Delaware corporation ("MEDICIS"). Capitalized terms shall have the meanings
ascribed to them in Article I hereof or as otherwise set forth in this
AGREEMENT.
RECITALS
A. HMR GmbH is engaged in the manufacture of the HMR MANUFACTURED
PRODUCTS pursuant to certain NDAs owned during the INITIAL TERM by HMR GmbH or
its AFFILIATES.
B. MEDICIS is willing to purchase its requirements for the HMR
MANUFACTURED PRODUCTS from HMR GmbH in accordance with, and for the INITIAL TERM
and any RENEWAL PERIOD of, this AGREEMENT.
C. HMR GmbH is willing to supply such HMR MANUFACTURED PRODUCTS to
MEDICIS in accordance with, and for the INITIAL TERM and any RENEWAL PERIOD of,
this AGREEMENT.
D. In addition to the actions contemplated by this AGREEMENT, HMR GmbH,
certain AFFILIATES of HMR GmbH and MEDICIS are entering into the LOPROX LOTION
SUPPLY AGREEMENT, the LICENSE AND OPTION AGREEMENT, the TRADEMARK LICENSE
AGREEMENT, the TRANSITION SERVICES AGREEMENT and the PURCHASE AGREEMENT.
NOW, THEREFORE, in consideration of the mutual promises hereinafter
made and the mutual benefits to be derived from this AGREEMENT, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 "AAA" shall have the meaning set forth in Section 8.4 hereof.
1.2 "ACT" means the United States Federal Food, Drug and Cosmetic Act,
as amended.
1.3 "ACTIVE INGREDIENTS" means CICLOPIROX and desoximetasone, or either
of them, as the case may be.
1.4 "AFFILIATE" means any individual, corporation or other legal entity
which either party directly or indirectly through one or more intermediaries
controls or which is
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controlled by or under common control with such party. For the purpose of this
AGREEMENT, "control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of an individual,
corporation or other legal entity, whether through the ownership of voting
securities, by contract, or otherwise; provided, however, that ▇▇▇▇▇▇
Pharmaceutical, Inc., a Delaware corporation, shall not be an AFFILIATE of HMR
GmbH.
1.5 "AGREEMENT" means this Supply Agreement between HMR GmbH and
MEDICIS.
1.6 "APPLICABLE EXCHANGE RATE" shall have the meaning set forth in
Section 2.11(b) hereof.
1.7 "APPLICABLE LAWS" shall mean all applicable laws, statutes, rules,
regulations, ordinances, orders, decrees, writs, judicial or administrative
decisions and the like of any nation or government, any state or other political
subdivision thereof, any entity exercising executive, judicial, regulatory or
administrative functions of or pertaining to government (including, without
limitation, any governmental authority, agency, department, board, commission or
instrumentality of any governmental unit or any political subdivision thereof),
any tribunal or arbitrator of competent jurisdiction, and any self-regulatory
organization.
1.8 "AVERAGE EXCHANGE RATE" shall have the meaning set forth in Section
2.11(b) hereof.
1.9 "BACKORDERS" shall have the meaning set forth in Section
2.10(c)(i)(B)(3) hereof.
1.10 "cGMP" shall mean the then-current Good Manufacturing Practices as
promulgated under the ACT at 21 CFR (chapters 210, 211, 600 and 610), as the
same may be amended or re-enacted from time to time and as interpreted in
accordance with then-current industry standards and FDA policies.
1.11 "CICLOPIROX" means ciclopirox acid and/or ciclopirox olamine.
1.12 "CLAIM" shall have the meaning set forth in Section 8.4(a) hereof.
1.13 "CONTRACT YEAR" shall mean the twelve (12) month period commencing
on the EFFECTIVE DATE and ending on the first anniversary of the EFFECTIVE DATE
and each consecutive twelve (12) month period thereafter during the INITIAL TERM
and any RENEWAL PERIOD.
1.14 "CPI" shall have the meaning set forth in Section 2.11(a) hereof.
1.15 "CPI INCREASE" shall have the meaning set forth in Section 2.11(a)
hereof.
1.16 "EFFECTIVE DATE" means the date of this AGREEMENT as first set
forth above.
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1.17 "EXCLUDED HMR PRODUCT LIABILITY" means any LIABILITY of HMR or
their AFFILIATES arising under any applicable federal, state, local or other
product liability law, regulation, common law principle, court order or
judgment, jury verdict or arbitral award arising out of or related to the
manufacture of the HMR MANUFACTURED PRODUCTS by HMR GmbH or its AFFILIATES after
the EFFECTIVE DATE; excluding, however, any such LIABILITY due to, caused by,
resulting from or arising out of any breach by HMR GmbH or any AFFILIATE of
Article VI of this AGREEMENT.
1.18 "EXTENDED SUPPLY INTERRUPTION" shall have the meaning set forth in
Section 2.10(c)(i)(B)(1) hereof.
1.19 "FDA" means the United States Food and Drug Administration or any
successor entity thereto.
1.20 "FORCE MAJEURE" shall have the meaning set forth in Section 8.1
hereof.
1.21 "FORECAST MONTH" shall have the meaning set forth in Section
2.4(b) hereof.
1.22 "HMR GmbH" means Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Deutschland GmbH, a German
limited liability company.
1.23 "HMR GmbH INDEMNIFIED PARTY" shall have the meaning set forth in
Section 7.1 hereof.
1.24 "HMR MANUFACTURED PRODUCTS" means the human dermatology products
listed in Exhibit B to this AGREEMENT and (unless the context indicates
otherwise) samples thereof as listed in Exhibit C to this AGREEMENT as
manufactured for sale in the TERRITORY.
1.25 "HMRI" means Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., a Delaware corporation.
1.26 "INITIAL RENEWAL PERIOD" shall have the meaning set forth in
Section 3.2 (a) hereof.
1.27 "INITIAL TERM" means the three (3) year period commencing upon the
EFFECTIVE DATE.
1.28 "INTERRUPTED MEDICIS ORDERS" shall have the meaning set forth in
Section 2.10(c)(i)(B)(4) hereof.
1.29 "LIABILITY" means any and all liabilities, losses, damages,
penalties, fines, assessments, expenses and costs of any kind or nature required
to be paid by a party hereunder (or its AFFILIATE) to any third party (which
shall not include any AFFILIATE of such paying party), primary or secondary,
direct or indirect, absolute or contingent, known or unknown, including without
limitation costs of settlement, reasonable attorneys' fees and related costs and
expenses and any liabilities for claims of personal injury or death, suffered or
incurred by an indemnified party hereunder.
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1.30 "LICENSE AND OPTION AGREEMENT" means the License and Option
Agreement, of even date herewith, among HMR GmbH, certain of its AFFILIATES and
MEDICIS.
1.31 "LOPROX LOTION" shall have the meaning set forth in the LOPROX
LOTION SUPPLY AGREEMENT.
1.29 "LOPROX LOTION SUPPLY AGREEMENT" means the Loprox Lotion Supply
Agreement, of even date herewith, between HMRI and MEDICIS.
1.33 "LOST SALES" shall have the meaning set forth in Section
2.10(c)(i)(B)(2) hereof.
1.34 "MEDICIS" means Medicis Pharmaceutical Corporation, a Delaware
corporation.
1.35 "MEDICIS INDEMNIFIED PARTY" shall have the meaning set forth in
Section 7.2 hereof.
1.36 "NDAs" means the New Drug Applications, Abbreviated New Drug
Applications and Abbreviated Antibiotic Drug Applications (as such terms are
defined by the FDA) for the HMR MANUFACTURED PRODUCTS filed and approved in
accordance with the requirements of the FDA, as may be amended or supplemented
from time to time, and as set forth on Exhibit A hereto.
1.37 "NET SALES" shall have the meaning set forth in Section
2.10(c)(i)(B)(5) hereof.
1.38 "PURCHASE AGREEMENT" means the PURCHASE AGREEMENT as defined in
the LICENSE AND OPTION AGREEMENT.
1.39 "RENEWAL PERIOD" means the INITIAL RENEWAL PERIOD and any
additional renewal periods pursuant to Section 3.2(b) hereof.
1.40 "RULES" shall have the meaning set forth in Section 8.4(b) hereof.
1.41 "QUALIFIED ALTERNATE SUPPLIER" shall have the meaning set forth in
Section 2.10(b) hereof.
1.42 "SHORTFALL" shall have the meaning set forth in Section 2.14
hereof.
1.43 "SPECIFICATIONS" mean the written specifications for the HMR
MANUFACTURED PRODUCTS contained in the NDAs, as the same may be amended from
time to time by HMR GmbH pursuant to the provisions of Section 4.3 herein.
1.44 "SUPPLY INTERRUPTION" shall have the meaning set forth in Section
2.10 hereof.
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1.45 "TERRITORY" means the United States of America and its possessions
and territories.
1.46 "TRADE QUOTA" shall have the meaning set forth in Section 2.14(a)
hereof.
1.47 "TRADEMARK LICENSE AGREEMENT" means the Trademark License
Agreement, dated of even date herewith, among HMR GmbH, HMRI, an AFFILIATE of
HMRI and MEDICIS.
1.48 "TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement, dated of even date herewith, between HMRI and MEDICIS.
1.49 "24-MONTH FORECAST" shall have the meaning set forth in Section
2.4(b) hereof.
Unless the context clearly indicates otherwise, the use herein of the
singular shall include the plural, and the use of the masculine shall included
the feminine.
ARTICLE II.
MANUFACTURE, PURCHASE AND
SALE OF HMR MANUFACTURED PRODUCTS
2.1 Purchase and Sale. Pursuant and subject to the terms and conditions
of this AGREEMENT, HMR GmbH agrees to manufacture or have manufactured MEDICIS'
requirements for the HMR MANUFACTURED PRODUCTS for sale or distribution by
MEDICIS in the TERRITORY during the INITIAL TERM and any RENEWAL PERIOD of this
AGREEMENT, and MEDICIS agrees to purchase from HMR GmbH its requirements for the
HMR MANUFACTURED PRODUCTS for sale or distribution by MEDICIS in the TERRITORY
during the INITIAL TERM and any RENEWAL PERIOD of this AGREEMENT; provided,
however, that if during any CONTRACT YEAR during the INITIAL TERM MEDICIS
purchases from HMR GmbH HMR MANUFACTURED PRODUCTS having an aggregate supply
price of U.S. $2.6 million (plus the CPI INCREASE for the second and third
CONTRACT YEAR), MEDICIS may in such CONTRACT YEAR or in the next succeeding
CONTRACT YEAR purchase from the QUALIFIED ALTERNATIVE SUPPLIER HMR MANUFACTURED
PRODUCTS having an aggregate supply price of not more than U.S. $435,000. HMR
GmbH may during the INITIAL TERM or any RENEWAL TERM abandon its manufacture of
any HMR MANUFACTURED PRODUCT due to the regulatory requirement of any government
or agency thereof; provided, however, that in the event HMR GmbH at any time is
required to so abandon such manufacture, HMR GmbH shall immediately notify
MEDICIS in writing of such requirement; and, provided further, that such right
of abandonment shall not prejudice any rights and remedies, if any, MEDICIS may
have hereunder in connection with or as a result of such abandonment, including
without limitation any rights and remedies relating to any SUPPLY INTERRUPTION
or EXTENDED SUPPLY INTERRUPTION or the termination rights under Section 3.3(c)
arising therefrom.
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SUPPLY AGREEMENT
2.2 [Reserved].
2.3 Labeling and Packaging. MEDICIS shall be responsible for paying all
out-of-pocket costs of the design of any new packaging and labeling of HMR GmbH
or MEDICIS for the HMR MANUFACTURED PRODUCTS and shall provide to HMR GmbH
(which shall actually prepare such packaging and labeling) MEDICIS' logo, color
codes, designs, information, graphics and art work to be applied to each HMR
MANUFACTURED PRODUCT, which MEDICIS warrants shall be consistent with the FDA
approved labeling for the HMR MANUFACTURED PRODUCTS, shall be in accordance with
APPLICABLE LAWS and shall not knowingly infringe upon the proprietary rights of
any third party. MEDICIS shall provide such logo, color codes, designs,
information, graphics and art work pursuant to this Section 2.3 to HMR GmbH by
such time in advance of the delivery requirements for the HMR MANUFACTURED
PRODUCTS as HMR GmbH shall have notified MEDICIS in writing is sufficient for
purposes of this AGREEMENT.
2.4 Forecasts.
(a) Long-Range Forecasts. Upon execution of this AGREEMENT, and
thereafter at least six (6) months prior to the commencement of each succeeding
calendar year, commencing with the first (1st) calendar year, MEDICIS shall
provide HMR GmbH with a rolling annual forecast of the quantities of each HMR
MANUFACTURED PRODUCT, by finished dosage form and package size (SKU), with the
first two (2) calendar year divided by months, that MEDICIS intends to order
during the five (5) year period commencing with that calendar year or part
thereof. The parties acknowledge that such forecasts shall represent reasonable
good faith estimates, and not purchase or supply commitments.
(b) Short-Term Forecasts. Upon execution of this AGREEMENT, and
thereafter no later than the tenth (10th) calendar day of any calendar month
(the "FORECAST MONTH") (with the previous month's forecast to govern in the
event of the failure or delay of such delivery), MEDICIS shall deliver to HMR
GmbH a rolling monthly forecast of the quantities of each HMR MANUFACTURED
PRODUCT, by finished dosage form and package size (SKU), that MEDICIS intends to
order during the ensuing twenty four (24) month period (including the FORECAST
MONTH) after receipt by HMR GmbH of the forecast. It is acknowledged that the
monthly forecasts in the 24-MONTH FORECAST for the period from the LICENSE
EFFECTIVE DATE through the end of the third (3rd) full calendar month following
the LICENSE EFFECTIVE DATE shall constitute confirmed MEDICIS orders for
purposes of this AGREEMENT. HMR GmbH shall within ten (10) business days
following its receipt of each forecast confirm in writing, in whole or in part,
the quantities of HMR MANUFACTURED PRODUCT that HMR GmbH shall supply hereunder,
and such confirmation shall pertain only to the third (3rd) month after the
FORECAST MONTH.
HMR GmbH may elect not to confirm, in whole or in part, any
forecast which (i) is made at a time when HMR has the right to suspend the
provision of HMR MANUFACTURED PRODUCTS pursuant to Section 2.12(b) hereof, (ii)
cannot be filled due to circumstances arising under Section 8.1, (iii) are in
excess of the quantities forecasted by
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SUPPLY AGREEMENT
MEDICIS in the 24-MONTH FORECAST (which quantities HMR GmbH may, at its option,
apportion pro rata among each month in a calendar quarter in the 24-MONTH
FORECAST for purposes of this clause), or (iv) relates to any period of time
beyond the 24-MONTH FORECAST. All rejections, in whole or in part, of MEDICIS
orders by HMR GmbH must be in writing and delivered within such ten (10)
business day confirmation period. By virtue of HMR GmbH's written confirmation
and to the extent of such written confirmation, the forecast for such third
(3rd) calendar month after the FORECAST MONTH shall become a binding obligation
on MEDICIS to purchase, and a binding obligation on HMR GmbH to supply, such
quantities. MEDICIS' first short term forecast (the "24-MONTH FORECAST") is
attached hereto as Exhibit D. Unless mutually agreed by HMR GmbH and MEDICIS in
writing, MEDICIS shall be required to purchase that percentage of the quantity
of each HMR MANUFACTURED PRODUCT specified in each short-term forecast for
successive quarters as follows:
Percentage of HMR MANUFACTURED
PRODUCTS indicated in Each Short-Term
Period of the Forecast Forecast that MEDICIS is Required to Purchase
---------------------- ---------------------------------------------
First Three Month Period 100%
Second Three Month Period 75%
Third Three Month Period 50%
Fourth Three Month Period 25%
(c) HMR GmbH Twenty Four (24) Month Supply Commitment. Subject to
Sections 2.4(b)(i), 2.10 and 8.1 hereof, HMR GmbH covenants and agrees that
during each of the successive calendar quarters reflected in the 24-MONTH
FORECAST, HMR GmbH shall confirm and deliver to MEDICIS at least the quantities
of HMR MANUFACTURED PRODUCTS forecasted to be ordered by MEDICIS for such
calendar quarter as set forth in the 24-MONTH FORECAST, provided that such
quantities are actually ordered by MEDICIS pursuant to Section 2.4(b) hereof.
2.5 Communication MEDICIS acknowledges that each HMR MANUFACTURED
PRODUCT is produced in full lot quantities, as set forth on Exhibit E attached
hereto. Separate orders are not necessary and are not legally binding. The
written forecasts from MEDICIS as confirmed by HMR GmbH pursuant to Section
2.4(b) hereof shall constitute legally binding orders between MEDICIS and HMR
GmbH for the HMR MANUFACTURED PRODUCTS. All forecasts by MEDICIS hereunder shall
be in writing and addressed as follows:
Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Deutschland GmbH
Demand Management
▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Demand Manager
Telephone: ▇▇-▇▇-▇▇▇-▇▇▇▇▇
Fax: ▇▇-▇▇-▇▇▇▇▇▇
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SUPPLY AGREEMENT
MEDICIS shall be obligated to purchase all such HMR MANUFACTURED PRODUCTS which
are confirmed by HMR GmbH in accordance with Section 2.4(b), provided that such
HMR MANUFACTURED PRODUCTS meet the SPECIFICATIONS. After receipt by MEDICIS of
HMR GmbH's written confirmation, no other purchase order, shipping document,
confirmation or waybill shall be deemed to modify, supplement or substitute for
the terms and conditions of this AGREEMENT, except upon the mutual written
agreement of the parties. All such documents shall be subject to, and shall be
deemed to incorporate, the terms and conditions of this AGREEMENT.
2.6 Minimum Inventory. Subject to the constraints imposed by any breach
by HMR GmbH of any of the terms of this AGREEMENT, by any SUPPLY INTERRUPTION or
by any EXTENDED SUPPLY INTERRUPTION, and subject to HMR GmbH's fulfillment of
its delivery obligations under Sections 2.4(b) and 2.4(c) hereof, MEDICIS shall
maintain at its expense at all times after the six (6) month anniversary of the
EFFECTIVE DATE, including immediately prior to delivery of a new shipment of HMR
MANUFACTURED PRODUCTS, inventory of each HMR MANUFACTURED PRODUCT equivalent to
the quantities of such HMR MANUFACTURED PRODUCT sold by MEDICIS over a three (3)
month period (or by HMR GmbH and/or its AFFILIATES for any period prior to the
EFFECTIVE DATE) which shall be computed as being the average of the quantities
sold during the three (3) most recently completed calendar quarters.
2.7 Delivery. The HMR MANUFACTURED PRODUCTS shall be shipped by HMR
GmbH Delivered Duty Unpaid (DDU), per Incoterms 1990, to the port of New York or
such other mutually agreeable port in the TERRITORY. MEDICIS shall pay for all
import licenses and charges and all freight and insurance costs with respect to
shipment within the TERRITORY. All deliveries of confirmed MEDICIS orders shall
be made on or before the last day of the calendar month for which the relevant
order was confirmed by HMR GmbH hereunder; for the avoidance of doubt, for
purposes of this sentence, "deliveries" shall be deemed to be made when the HMR
MANUFACTURED PRODUCTS physically arrive in the TERRITORY, and shall not be
considered to be the time when the HMR MANUFACTURED PRODUCTS clear U.S. customs.
2.8 Shortages/Damaged Goods/Rejected Goods.
(a) Shortages/Damaged Goods. MEDICIS shall notify HMR GmbH in
writing of any obvious visible damage or obvious shortage in quantity of any
shipment of an HMR MANUFACTURED PRODUCT within its possession within six (6)
business days after receipt at MEDICIS' regional distribution centers. In the
event of (a) any shortage in quantity of any shipment of an HMR MANUFACTURED
PRODUCT that is not within MEDICIS' possession, (b) any non-obvious shortage in
quantity of any shipment of an HMR MANUFACTURED PRODUCT within MEDICIS'
possession or (c) any non-obvious damage to any HMR MANUFACTURED PRODUCT,
MEDICIS shall notify HMR GmbH in writing within the earlier of (i) ten (10)
business days after discovery of such shortage or damage or (ii) the shelf life
of such HMR MANUFACTURED PRODUCT, provided that MEDICIS shall provide
documentation reasonably satisfactory to HMR GmbH demonstrating that such
shortage
15
SUPPLY AGREEMENT
or damage existed when such HMR MANUFACTURED PRODUCT was delivered by HMR GmbH.
Notification under this Section 2.8(a) shall specify the finished dosage form
and package size (SKU) of such HMR MANUFACTURED PRODUCT. In the event of any
shortage or damage as described in this Section 2.8(a) (and provided HMR GmbH is
reasonably satisfied with any required documentation relating thereto), HMR GmbH
shall make up the shortage or replace the damaged shipment within thirty (30)
business days after notification by MEDICIS, if replacement HMR MANUFACTURED
PRODUCT stock is available, or, if no such replacement stock is available, as
soon as reasonably practicable after receiving such notice. MEDICIS shall deduct
the invoiced amount relating to any shortage of HMR MANUFACTURED PRODUCTS or
damaged HMR MANUFACTURED PRODUCTS from payment of the HMR GmbH invoice or
invoices for such HMR MANUFACTURED PRODUCTS.
(b) Rejected Goods. MEDICIS shall notify HMR GmbH in writing of any
claim relating to an HMR MANUFACTURED PRODUCT failing to meet the SPECIFICATIONS
at the time title passes to MEDICIS in accordance with Section 2.7 hereof (other
than due solely to storage, handling or shipping by MEDICIS, its AFFILIATES,
customers and/or carriers) within the earlier of (i) thirty (30) business days
after discovery of such failure to meet the SPECIFICATIONS or (ii) the shelf
life of such HMR MANUFACTURED PRODUCT. Such notification shall specify the
finished dosage form and package size (SKU) of such HMR MANUFACTURED PRODUCT.
Subject to the provisions of Section 2.8(c) hereof, HMR GmbH shall replace any
such HMR MANUFACTURED PRODUCT that fails to meet the SPECIFICATIONS within
thirty (30) business days after notification by MEDICIS, if replacement HMR
MANUFACTURED PRODUCT stock is available, or, if no such replacement stock is
available, as soon as reasonably practicable after receiving such notice.
MEDICIS shall not be responsible, and shall receive a credit from HMR GmbH, for
any additional costs of shipping, freight, customs and duties required to be
paid as a result of any replacement of HMR MANUFACTURED PRODUCTS under this
Section 2.8(b). The provisions of this Section 2.8(b) shall not apply to HMR
MANUFACTURED PRODUCTS which fail to meet the SPECIFICATIONS due solely to
storage, handling or shipping by MEDICIS, its AFFILIATES, customers and/or
carriers. MEDICIS shall deduct the invoiced amount for any HMR MANUFACTURED
PRODUCTS which fail to meet the SPECIFICATIONS (other than due solely to
storage, handling or shipping by MEDICIS, its AFFILIATES, customers and/or
carriers) from payment of the HMR GmbH invoice or invoices for such HMR
MANUFACTURED PRODUCTS.
(c) Disputes. In the event of a dispute regarding whether any HMR
MANUFACTURED PRODUCT fails to meet the SPECIFICATIONS which HMR GmbH and MEDICIS
are unable to resolve, a sample of such HMR MANUFACTURED PRODUCT shall be
submitted by MEDICIS to an independent laboratory reasonably acceptable to both
parties for testing and the test results obtained by such laboratory shall be
final and controlling. The fees and expenses of such laboratory testing and all
additional shipping and transportation costs incurred as a result of the dispute
shall be borne entirely by the party against whom such laboratory's findings are
made. In the event the test results indicate that the HMR MANUFACTURED PRODUCT
in question fails to meet the SPECIFICATIONS, HMR GmbH shall replace such HMR
MANUFACTURED PRODUCT within thirty (30) business days after
16
SUPPLY AGREEMENT
receipt of such results if replacement HMR MANUFACTURED PRODUCT stock is
available, or, if no such replacement stock is available, as soon as reasonably
practicable after receiving such notice. MEDICIS shall not be responsible, and
shall receive a credit from HMR GmbH, for any additional costs of shipping,
freight, customs and duties required to be paid as a result of any replacement
of HMR MANUFACTURED PRODUCTS under this Section 2.8(c). MEDICIS shall deduct the
invoiced amount for any HMR MANUFACTURED PRODUCTS which are so determined to
fail to meet the SPECIFICATIONS from payment of the HMR GmbH invoice or invoices
for such HMR MANUFACTURED PRODUCTS.
2.9 Current Inventory. In accordance with the terms of the TRANSITION
SERVICES AGREEMENT, HMR GmbH or its AFFILIATES shall deliver to MEDICIS in its
initial or subsequent shipments to MEDICIS at the prices set forth in Exhibit B
and Exhibit C, respectively, attached hereto, existing inventory of the HMR
MANUFACTURED PRODUCTS and all existing samples thereof in inventory of HMR GmbH
and its AFFILIATES and in process with at least twelve (12) months of shelf life
remaining. If MEDICIS has distributed such existing inventory of HMR
MANUFACTURED PRODUCTS first, MEDICIS shall notify HMR GmbH in writing of the
quantities of each such HMR MANUFACTURED PRODUCT that have not been sold or
given to MEDICIS' customers, as the case may be, at a date as of nine (9) months
prior to their respective expiration dating. HMR GmbH shall instruct MEDICIS in
writing whether, at HMR GmbH's expense, to destroy such HMR MANUFACTURED
PRODUCTS or to return such HMR MANUFACTURED PRODUCTS to HMR GmbH or its
AFFILIATES. Within ten (10) days after receiving each such notification by
MEDICIS, HMR GmbH shall reimburse MEDICIS for all amounts paid by MEDICIS to HMR
GmbH for such destroyed or returned HMR MANUFACTURED PRODUCTS and any and all
reasonable disposal, shipping or other expenses incurred by MEDICIS in
connection with the destruction or return of such HMR MANUFACTURED PRODUCTS.
2.10 SUPPLY INTERRUPTION. For purposes of this AGREEMENT, a "SUPPLY
INTERRUPTION" shall be deemed to occur: (i) if HMR GmbH's ability to supply
adequate quantities of HMR MANUFACTURED PRODUCTS in saleable form in a timely
manner to MEDICIS is adversely affected or inhibited as reasonably determined by
both parties, (ii) if HMR GmbH fails to deliver to MEDICIS, in saleable form in
accordance with the terms of this AGREEMENT, any portion, greater than 6% in
quantity, of any confirmed order for any SKU of any HMR MANUFACTURED PRODUCT, or
(iii) if in any calendar quarter covered by the 24-MONTH FORECAST, HMR GmbH
fails to deliver, in saleable form in accordance with the terms of this
AGREEMENT, HMR MANUFACTURED PRODUCTS in accordance with the 24-MONTH FORECAST
or, if less, in the applicable portion of MEDICIS' last short-term forecast
provided prior to the SUPPLY INTERRUPTION. For purposes of this AGREEMENT, a
SUPPLY INTERRUPTION shall be deemed to have been fully cured once HMR GmbH has
delivered to MEDICIS all confirmed orders and, for any calendar months for which
there have been no confirmed orders due to the SUPPLY INTERRUPTION, at least the
minimum quantities in saleable form of HMR MANUFACTURED PRODUCTS forecasted to
be ordered by MEDICIS during such calendar months as set forth in the 24-MONTH
FORECAST or, if less, in the applicable portion of MEDICIS' last short-term
forecast provided prior to the SUPPLY
17
SUPPLY AGREEMENT
INTERRUPTION. In the event of any SUPPLY INTERRUPTION, the following terms and
conditions shall apply:
(a) Pro Rata Entitlement. In the event of a SUPPLY INTERRUPTION,
MEDICIS shall be entitled to a pro rata (in unit quantity) share of the
manufacturing capacity of HMR GmbH and its AFFILIATES for the manufacture of HMR
MANUFACTURED PRODUCTS, and HMR GmbH and its AFFILIATES shall also be subject to
a pro rata (in unit quantity) entitlement to such manufacturing capacity. If,
for example, during a period of SUPPLY INTERRUPTION, HMR GmbH receives orders
for a total of 2,000 units, of which 500 units (i.e., 25% of the total orders)
are ordered by MEDICIS and 1,500 units (i.e., 75% of the total orders) are
ordered by third parties or by AFFILIATES of HMR GmbH, MEDICIS shall be entitled
to receive 25% of HMR GmbH's manufacturing capacity during the period of such
SUPPLY INTERRUPTION. Thus, if HMR GmbH were able to manufacture only 1,000 units
during the period of such SUPPLY INTERRUPTION, MEDICIS would be entitled to
receive 25% of such total number of units (i.e., 250 units) and third parties
and AFFILIATES of HMR GmbH would be entitled to receive 75% of such total number
of units (i.e., 750 units). MEDICIS' entitlement to HMR GmbH's and its
AFFILIATES' manufacturing capacity under this Section 2.10(a) shall be in
addition to any other rights and remedies MEDICIS may have under this AGREEMENT
as a result of any SUPPLY INTERRUPTION.
(b) QUALIFIED ALTERNATE SUPPLIER. At any time during the INITIAL
TERM and any RENEWAL PERIOD, MEDICIS shall have the right to designate and
qualify one and only one qualified alternate supplier, which selection shall be
reasonably acceptable to HMR GmbH (the "QUALIFIED ALTERNATE SUPPLIER"). The
QUALIFIED ALTERNATE SUPPLIER may only be utilized by MEDICIS during the INITIAL
TERM and any RENEWAL PERIOD as specifically set forth in this Section 2.10 or in
Section 2.1 hereof. HMR GmbH, at MEDICIS' sole expense, shall promptly provide
at such times and locations as may reasonably be requested by MEDICIS,
reasonable cooperation to MEDICIS in qualifying such alternate supplier for the
HMR MANUFACTURED PRODUCTS. Such cooperation shall include, without limitation,
participation by HMR GmbH's representatives in at least two meetings in North
America during the INITIAL TERM. From the time that any SUPPLY INTERRUPTION
begins until such SUPPLY INTERRUPTION is fully cured, MEDICIS may obtain any
resulting shortage of HMR MANUFACTURED PRODUCTS from the QUALIFIED ALTERNATE
SUPPLIER. If the OPTION (as defined in the LICENSE AND OPTION AGREEMENT) is not
exercised in accordance with Section 4.1 of the LICENSE AND OPTION AGREEMENT,
(i) MEDICIS, its AFFILIATES, or its successors, assigns or sublicensees shall
not obtain supply of the HMR MANUFACTURED PRODUCTS or of the ACTIVE INGREDIENTS,
in their current formulations, from the QUALIFIED ALTERNATE SUPPLIER, its
AFFILIATES, or its successors, assigns or sublicensees for a period of three (3)
years after the INITIAL TERM, and (ii) HMR GmbH, its AFFILIATES, or its
successors, assigns or sublicensees after the INITIAL TERM may obtain supply of
the HMR MANUFACTURED PRODUCTS or of the ACTIVE INGREDIENTS from such QUALIFIED
ALTERNATE SUPPLIER, its AFFILIATES, or its successors, assigns or sublicensees
after the INITIAL TERM.
18
SUPPLY AGREEMENT
(c) LOST SALES Remedy.
(i) (A) For each calendar quarter or portion thereof during an
EXTENDED SUPPLY INTERRUPTION and as liquidated damages and not as a penalty, HMR
GmbH shall pay to MEDICIS an amount equal to MEDICIS' LOST SALES as provided
herein.
(B) For purposes of this Section 2.10(c) and this AGREEMENT:
(1) An "EXTENDED SUPPLY INTERRUPTION" shall mean a period
which:
(a) begins on the sixty-first (61st) consecutive day of a
SUPPLY INTERRUPTION; provided that during the first six (6) months
during the term hereof, the first (1st) day of a SUPPLY
INTERRUPTION shall begin such period (which in all cases must be
before the two (2) month anniversary of the date on which the FDA
approves the QUALIFIED ALTERNATE SUPPLIER or, if earlier, the date
that is eighteen (18) months after the EFFECTIVE DATE); and
(b) ends on the earliest of (x) the date as of which HMR
GmbH has fully cured the SUPPLY INTERRUPTION, (y) the date that is
eighteen (18) months after the EFFECTIVE DATE, or (z) the two (2)
month anniversary of the date on which the FDA approves the
QUALIFIED ALTERNATE SUPPLIER.
(2) "LOST SALES" shall mean, determined on a quarterly basis
for each calendar quarter or portion thereof during an EXTENDED SUPPLY
INTERRUPTION, the greater of:
(a) 65% of the dollar amount MEDICIS would have invoiced
for BACKORDERS placed with MEDICIS during such quarter or portion
thereof; or
(b) 70% of the average of NET SALES for the four (4) most
recently completed calendar quarters prior to the commencement of
the SUPPLY INTERRUPTION immediately preceding such EXTENDED SUPPLY
INTERRUPTION; provided, however, that (i) for any such calculation
for any calendar quarter or portion thereof in 1998, such average
shall be of NET SALES for the three (3) rather than four (4) most
recently completed calendar quarters prior to the commencement of
such SUPPLY INTERRUPTION, (ii) any calculation under this Section
for a portion of a calendar quarter shall be made on a pro rata
basis based on a ninety (90) day calendar quarter, (iii) to the
extent that NET SALES for any calendar quarter (or pro rata
portion thereof) are based on sales of
19
SUPPLY AGREEMENT
quantities of an HMR MANUFACTURED PRODUCT which exceed the
quantities of the INTERRUPTED MEDICIS ORDERS for such HMR
MANUFACTURED PRODUCT for the calendar quarter (or portion thereof)
for which LOST SALES are being determined, the corresponding NET
SALES value of such quantities in excess of the INTERRUPTED
MEDICIS ORDERS shall be excluded from the determination of NET
SALES, and (iv) only quantities of inventory for which MEDICIS is
out-of-stock due to the SUPPLY INTERRUPTION shall be included in
the calculation of NET SALES.
(c) Notwithstanding anything to the contrary in
subparagraphs 2(a) or 2(b) above, in the event MEDICIS is
out-of-stock for any HMR MANUFACTURED PRODUCT during any period of
any EXTENDED SUPPLY INTERRUPTION due solely to MEDICIS' failure to
maintain a minimum inventory of such HMR MANUFACTURED PRODUCT in
accordance with Section 2.6 hereof and subject to the
qualifications set forth therein, in determining LOST SALES
hereunder: (i) any BACKORDERS or portions thereof which cannot be
filled due solely to the failure on the part of MEDICIS in
accordance with Section 2.6 shall be excluded from the calculation
pursuant to subparagraph 2(a) above, and (ii) the corresponding
NET SALES value of any such quantities of inventory which MEDICIS
has failed to maintain in accordance with Section 2.6 shall be
excluded from the determination of NET SALES for purposes of
subparagraph 2(b) above.
(3) "BACKORDERS" shall mean orders actually received by
MEDICIS from third-party customers of MEDICIS (which cannot be
AFFILIATES of MEDICIS) for HMR MANUFACTURED PRODUCTS which MEDICIS
cannot fill because it is out-of-stock due to a SUPPLY INTERRUPTION,
which must be within the quantities of the INTERRUPTED MEDICIS ORDERS.
(4) An "INTERRUPTED MEDICIS ORDER" shall mean any quantities
of HMR MANUFACTURED PRODUCTS (other than samples) which were ordered or
forecasted to be ordered by MEDICIS but not delivered by HMR GmbH in
saleable form because of a SUPPLY INTERRUPTION, which shall be limited:
(a) for time periods within the relevant short-term
forecasts submitted by MEDICIS and confirmed by HMR GmbH pursuant
to Section 2.4(b) hereof, to the quantities that were actually
included by MEDICIS in such confirmed short-term forecasts prior
to the SUPPLY INTERRUPTION; or
20
SUPPLY AGREEMENT
(b) for time periods beyond such confirmed short-term
forecasts, to the quantities set forth in the 24-MONTH FORECAST
or, if less, in the applicable portion of MEDICIS' last short-term
forecast (which would not have yet been confirmed by HMR GmbH)
submitted prior to the SUPPLY INTERRUPTION pursuant to Section
2.4(b).
(5) "NET SALES" shall mean the gross invoice amount of HMR
MANUFACTURED PRODUCTS invoiced by MEDICIS, HMRI or HMRI on behalf of
MEDICIS to third parties in the TERRITORY during a calendar quarter,
less (i) promotional and trade discounts; (ii) sales and excise taxes,
value-added and other taxes, shipping costs and insurance premiums and
duties which are billed to customers as separate items on invoices;
(iii) allowances for short shipments, claims for returned goods and
price adjustments; and (iv) contracts charge-backs and government
rebates (provided that for any calendar quarters after the EFFECTIVE
DATE, such charge-backs and rebates shall be limited to those which are
the responsibility of MEDICIS under the LICENSE AND OPTION AGREEMENT).
HMRI shall promptly provide MEDICIS with any and all documents and
information reasonably requested by MEDICIS in order to enable MEDICIS
to make any determination of NET SALES required under this AGREEMENT.
(C) MEDICIS covenants and agrees that it shall not solicit
orders from customers outside the ordinary course of business, make or
announce any price increases or otherwise act in any manner not in the
ordinary course of business with respect to the HMR MANUFACTURED PRODUCTS
subject to the EXTENDED SUPPLY INTERRUPTION where such actions would have
the effect of increasing the quantities of BACKORDERS, during any period
(i) in which an EXTENDED SUPPLY INTERRUPTION is continuing, or (ii) after
such time that HMR GmbH notifies MEDICIS that an EXTENDED SUPPLY
INTERRUPTION is likely to occur until such time as the EXTENDED SUPPLY
INTERRUPTION is cured or avoided as further notified by HMR GmbH to
MEDICIS.
(D) During the period of any such EXTENDED SUPPLY INTERRUPTION,
MEDICIS shall invoice HMR quarterly for LOST SALES, and HMR GmbH shall pay
each such invoice not later than ten (10) business days after its receipt
thereof. Each such invoice shall be accompanied by documentation
reasonably satisfactory to HMR GmbH setting forth the LOST SALES covered
by the invoice.
(ii) Notwithstanding anything to the contrary in Section 2.10(c)(i)
hereof, MEDICIS shall have no right to recover for LOST SALES under
Section 2.10(c)(i) in connection with any EXTENDED SUPPLY INTERRUPTION
which is caused solely and directly by force majeure due to: (a) an act of
God; (b) any act, regulation, order, decree or law of any government or
agency thereof which is not a result of or caused by any action or
inaction on the part of HMR GmbH or an AFFILIATE in violation of its
obligations under any of the TRANSACTION
21
SUPPLY AGREEMENT
DOCUMENTS or APPLICABLE LAWS; (c) war or civil commotion; (d) damage to or
destruction of HMR GmbH's manufacturing facilities resulting from an act
of God; (e) labor disturbances which are not specific to the operations or
facilities of HMR GmbH or its AFFILIATES and which are not within the
power of HMR GmbH or its AFFILIATES to settle or control; (f) epidemic;
(g) failure of a sole source supply to HMR GmbH of a particular supply
item for HMR MANUFACTURED PRODUCTS by reason of any force majeure (as
force majeure is defined in this Section 2.10(c)(ii)); (h) failure of all
sources of supply to HMR GmbH of a particular supply item for HMR
MANUFACTURED PRODUCTS where HMR GmbH has multiple sources of supply for
such item, provided such failure is not due to or caused by any action or
inaction on the part of HMR GmbH; (i) the failure of public utilities; or
(j) the failure of common carriers.
2.11 Supply Price for HMR MANUFACTURED PRODUCTS and Exchange Rate and
Adjustment.
(a) The supply price of the HMR MANUFACTURED PRODUCTS to be paid by
MEDICIS to HMR GmbH for the INITIAL TERM and the INITIAL RENEWAL PERIOD shall be
as specified in Exhibits B and C attached hereto; provided, however, that the
supply prices shall be increased on March 1 of each year by the increase in the
U.S. consumer price index released by the U.S. Department of Labor (the "CPI")
using March 1, 1998 as the base reference point (the "CPI INCREASE"); provided,
further, if the supply price set forth in Exhibits B and C for a particular HMR
MANUFACTURED PRODUCT is less than HMR GmbH's costs to manufacture and supply
such HMR MANUFACTURED PRODUCT to MEDICIS, the price for such HMR MANUFACTURED
PRODUCT shall be increased by an amount so that the supply price for such HMR
MANUFACTURED PRODUCT equals the cost for such HMR MANUFACTURED PRODUCT. HMR GmbH
shall use its reasonable commercial efforts to lower the prices of other trade
or sample HMR MANUFACTURED PRODUCTS to the fullest extent possible to give
MEDICIS the same economic benefits that it would have received under this
AGREEMENT had such price not been increased.
(b) Exchange Rate and Adjustment. The reference exchange rate for
this AGREEMENT is 1.80 Deutsche ▇▇▇▇ buys U.S. $1.00 ("APPLICABLE EXCHANGE
RATE"). In the event of changes of such exchange rate as indicated below, the
purchase prices shall be adjusted as set forth below, with the overriding
premise being that the parties shall equally bear the impact of any such change
in the APPLICABLE EXCHANGE RATE.
Initial Six (6) Month Period. In the event that the average
exchange rate for the Deutsche ▇▇▇▇ to the U.S. Dollar in a particular month (as
computed by the Frankfurt am Main currency exchange and published monthly by the
Deutsche Bundesbank Devisenkursstatistik) ("AVERAGE EXCHANGE RATE") during the
first six (6) months should exceed 2.15 DM/U.S. $ or decrease below 1.45 DM/U.S.
$, then a new purchase price shall be immediately renegotiated in good faith and
be immediately applicable prior to the expiration of the first six (6) month
period.
22
SUPPLY AGREEMENT
Subsequent To Initial Six (6) Month Period. In the event that the
AVERAGE EXCHANGE RATE calculated for the last six (6) months ending at the end
of each six (6) month period should deviate from the prevailing APPLICABLE
EXCHANGE RATE by five percent (5%) or more, then the purchase price for all
deliveries for each of the HMR MANUFACTURED PRODUCTS supplied to MEDICIS during
the ensuing six (6) month period shall be adjusted using a new APPLICABLE
EXCHANGE RATE as follows:
APPLICABLE EXCHANGE RATE + AVERAGE EXCHANGE RATE = new APPLICABLE EXCHANGE RATE
------------------------------------------------
2
The purchase prices shall then be adjusted as follows:
Current purchase price x APPLICABLE EXCHANGE RATE = Adjusted purchase price
------------------------
New APPLICABLE EXCHANGE RATE
Example:
Current purchase price in U.S. $ per
60 gram tube of 'Topicort' Cream: U.S. $ 5.35
APPLICABLE EXCHANGE RATE: 1.80 DM:1 U.S. $
AVERAGE EXCHANGE RATE: 1.70 DM: 1 U.S. $
Calculation of new APPLICABLE EXCHANGE RATE:
1.80x1.70 = 1.75 (which is the new APPLICABLE EXCHANGE RATE)
--------
2
Calculation of adjusted purchase price for 60 gram tube:
5.35 x 1.80 = 5.50 U.S. $ (which is the adjusted purchase price)
----
1.75
2.12 Payment.
(a) All payments required by this AGREEMENT shall be made in United
States Dollars. All invoices are net and payment must be received not later than
(i) forty-five (45) calendar days after the date of invoice or (ii) if later,
thirty (30) days after delivery to the port of New York or such other port in
the TERRITORY as the parties have mutually agreed pursuant to Section 2.7
hereof. The date of each invoice shall be on or about the date of shipment of
HMR MANUFACTURED PRODUCTS. Payment shall be made without deduction, deferment,
set-off, lien or counterclaim of any nature, other than for rejected or returned
goods. Time for payment shall be of the essence. Unless MEDICIS notifies HMR
GmbH in writing of a good faith dispute, with respect to payments not received
within five (5) calendar days after the end of such forty-five (45) calendar day
or longer period, interest shall accrue on any amount overdue, at the rate of
prime plus two percent (2%) per annum, such interest to begin accruing on a
daily basis from the date of invoice, and shall accrue both before and after
judgment; provided, however, in the case of a good faith dispute regarding
payment resolved to be due and not paid within five (5) business days after such
resolution, interest shall accrue on any amount overdue, at the rate of prime
plus two percent (2%) per annum, such interest to begin accruing on a daily
basis from the date such payment becomes overdue, and
23
SUPPLY AGREEMENT
shall accrue both before and after judgment; provided, further, in the case of a
good faith dispute regarding payment, MEDICIS may in its discretion determine to
pay such amounts disputed to be overdue and in the event amounts are finally
determined not to be due, HMR GmbH shall repay such excess amounts determined
not be due to MEDICIS, and interest shall accrue on any such amount, at the rate
of prime plus two percent (2%) per annum, such interest to begin accruing on a
daily basis from the date such disputed payment was received by HMR GmbH.
(b) With respect to defaults of payment not cured within fifteen (15)
business days after receipt of written notice from HMR GmbH to MEDICIS, HMR GmbH
shall, in its sole discretion, and without prejudice to any other of its accrued
rights, be entitled to suspend the provision of HMR MANUFACTURED PRODUCTS;
provided, however, a good ▇▇▇▇▇ ▇▇▇▇ fide dispute by MEDICIS regarding a payment
pursuant to this AGREEMENT shall not be considered a default of payment so long
as MEDICIS notifies HMR GmbH in writing of such dispute within sixty (60)
calendar days from the date of invoice. MEDICIS understands that it shall notify
HMR GmbH promptly upon a determination that a dispute exists regarding a
payment.
2.13 Advertising/Marketing/Sales Costs and Product Pricing. MEDICIS shall
be responsible for all advertising, marketing and sales costs associated with
the distribution of HMR MANUFACTURED PRODUCTS in the TERRITORY. MEDICIS shall
have complete authority for all pricing decisions for the HMR MANUFACTURED
PRODUCT in the TERRITORY. MEDICIS shall not alter the HMR MANUFACTURED PRODUCTS
and shall not recommend or knowingly sell the HMR MANUFACTURED PRODUCTS for any
uses except as described in the FDA approved HMR MANUFACTURED PRODUCTS labeling.
2.14 Samples.
(a) During each CONTRACT YEAR of the INITIAL TERM, HMR GmbH shall
provide MEDICIS with samples of the HMR MANUFACTURED PRODUCTS with a value
totaling U.S. $870,000, based upon the sample unit prices set forth in Exhibit C
hereto (plus the CPI INCREASE for the second and third CONTRACT YEAR), at no
cost to MEDICIS; provided, however, that subject to the terms of this AGREEMENT,
if MEDICIS does not purchase HMR MANUFACTURED PRODUCTS other than samples with
an aggregate supply price of U.S. $2.6 million (as increased by the CPI INCREASE
for any portion of a CONTRACT YEAR for which such CPI INCREASE is in effect)
(the "TRADE QUOTA") from HMR GmbH during any CONTRACT YEAR of the INITIAL TERM
(a "SHORTFALL"), at the end of such CONTRACT YEAR containing a SHORTFALL,
MEDICIS shall reimburse HMR GmbH for the samples on a pro rata basis at the full
sample unit prices set forth in Exhibit C hereto (plus the CPI INCREASE, as
applicable). By way of example only and without taking into account the CPI
INCREASE during the first CONTRACT YEAR, if during such CONTRACT YEAR MEDICIS
purchases HMR MANUFACTURED PRODUCTS other than samples with an aggregate supply
price of U.S. $1.95 million, the amount of the reimbursement by MEDICIS under
this Section 2.14(a) would be equal to the product of One-Fourth (1/4) and U.S.
$870,000, or U.S. $217,500.
24
SUPPLY AGREEMENT
(b) In the event a SUPPLY INTERRUPTION occurs in the same CONTRACT
YEAR in which a SHORTFALL occurs, then (i) to the extent that the aggregate
quantities of HMR MANUFACTURED PRODUCTS other than samples purchased by MEDICIS
from the QUALIFIED ALTERNATE SUPPLIER during the period of such SUPPLY
INTERRUPTION exceeds by more than 5% the quantities of the INTERRUPTED MEDICIS
ORDERS for such period, MEDICIS' TRADE QUOTA under Section 2.14(a) for the next
succeeding CONTRACT YEAR shall be increased by the aggregate supply price of
such excess quantities (as determined by reference to the prices in the CONTRACT
YEAR in which the SUPPLY INTERRUPTION occurs); (ii) the aggregate supply price
of the quantities of all HMR MANUFACTURED PRODUCTS other than samples purchased
by MEDICIS from the QUALIFIED ALTERNATE SUPPLIER during the period of such
SUPPLY INTERRUPTION shall be credited towards MEDICIS' TRADE QUOTA for such
CONTRACT YEAR under Section 2.14(a) hereof, but only to the extent such
quantities do not exceed the quantities of the INTERRUPTED MEDICIS ORDERS for
such period; and (iii) in the event that the QUALIFIED ALTERNATE SUPPLIER has
not been qualified prior to the commencement of such SUPPLY INTERRUPTION,
MEDICIS shall receive credit towards its TRADE QUOTA pursuant to Section 2.14(a)
to the extent of the INTERRUPTED MEDICIS ORDERS. With respect to subpart (ii) of
the immediately preceding sentence and by way of example only, without taking
into account any CPI INCREASE, if during any such CONTRACT YEAR MEDICIS were to
purchase from HMR GmbH and the QUALIFIED ALTERNATE SUPPLIER HMR MANUFACTURED
PRODUCTS other than samples with aggregate supply prices of U.S. $1.95 million
and U.S. $650,000, respectively, and the aggregate supply price for the
INTERRUPTED MEDICIS ORDERS for the period of the SUPPLY INTERRUPTION during such
CONTRACT YEAR were U.S. $325,000, the amount of the reimbursement by MEDICIS
under Section 2.14(a) hereof would be equal to (1) U.S. $325,000 divided by U.S.
$2.6 million, multiplied by (2) U.S. $870,000, or U.S. $108,750.
(c) Except as otherwise provided by this Section 2.14, prices for
samples of HMR MANUFACTURED PRODUCTS purchased by MEDICIS from HMR GmbH shall be
at the full sample unit price set forth in Exhibit C attached hereto.
(d) MEDICIS shall select the mix of the samples of the HMR
MANUFACTURED PRODUCTS which MEDICIS is to receive, which shall be within HMR
GmbH's manufacturing capacities for each such sample as reasonably determined by
HMR GmbH.
(e) Samples shall be delivered to MEDICIS by HMR GmbH in accordance
with Section 2.7 hereof.
2.15 Compliance with APPLICABLE LAWS. HMR GmbH and its AFFILIATES shall
comply fully with APPLICABLE LAWS in the performance of this AGREEMENT.
2.16 Rights Necessary for Manufacturing. In accordance with the terms and
conditions of the LICENSE AND OPTION AGREEMENT during the INITIAL TERM, HMR GmbH
reserves the right, and in accordance with the terms of the PURCHASE AGREEMENT
during
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SUPPLY AGREEMENT
any RENEWAL PERIODS, MEDICIS grants to HMR GmbH a royalty-free, non-exclusive
license, to use the PATENTS, the TRADEMARKS and the PRODUCT KNOW-HOW solely to
make and have made the HMR MANUFACTURED PRODUCTS in the TERRITORY (i) for sale
to MEDICIS under and pursuant to this AGREEMENT and (ii) for use and resale
outside the TERRITORY in accordance with the terms of the LICENSE AND OPTION
AGREEMENT and the PURCHASE AGREEMENT.
ARTICLE III.
TERM AND TERMINATION
3.1 Term of this AGREEMENT. The term of this AGREEMENT shall be the
INITIAL TERM unless a RENEWAL PERIOD is applicable in accordance with Section
3.2 hereof, or unless this AGREEMENT is earlier terminated in accordance with
the provisions of Section 3.3 hereof.
3.2 RENEWAL PERIODS.
(a) If the OPTION (as defined in the LICENSE AND OPTION AGREEMENT) is
exercised pursuant to Section 4.1 of the LICENSE AND OPTION AGREEMENT and unless
MEDICIS provides written notice to HMR GmbH no later than the second anniversary
of the EFFECTIVE DATE of its election not to extend this AGREEMENT, this
AGREEMENT shall be extended under the same terms and conditions as those set
forth herein, subject to the CPI INCREASES each year, for a period of two (2)
years after the expiration of the INITIAL TERM (the "INITIAL RENEWAL PERIOD").
In the alternative, if the OPTION is exercised and upon the request of MEDICIS
by written notice to HMR GmbH given no later than the second anniversary of the
EFFECTIVE DATE, from and after the date of such notice the parties shall
negotiate in good faith to extend the term of this AGREEMENT for an additional
period of two (2) years after the expiration of the INITIAL TERM under the same
conditions as those set forth herein, subject to the CPI INCREASES each year,
except that (i) this AGREEMENT would no longer be deemed to be on a requirements
basis and MEDICIS would be free to obtain the HMR MANUFACTURED PRODUCTS from
third parties, (ii) there would be no penalty for HMR GmbH's delay or failure to
supply the HMR MANUFACTURED PRODUCTS hereunder, and (iii) the parties would
negotiate mutually acceptable minimum purchases (by product SKU) which would
become an additional obligation of MEDICIS hereunder. Any extension of this
AGREEMENT pursuant to the immediately preceding sentence of this Section 3.2
shall be effected pursuant to a written amendment to this AGREEMENT executed by
each of the parties hereto.
(b) Upon expiration of the INITIAL RENEWAL PERIOD, the term of this
AGREEMENT may be extended for additional consecutive two (2) year periods upon
the mutual written agreement of the parties entered into no later than one (1)
year prior to the expiration of the then-current RENEWAL PERIOD.
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SUPPLY AGREEMENT
3.3 Early Termination.
(a) This AGREEMENT shall automatically be terminated upon the
termination of the LICENSE AND OPTION AGREEMENT by HMRI pursuant to Section 15.2
thereof or by MEDICIS pursuant to Section 15.3 thereof.
(b) Either of MEDICIS or HMR GmbH, as the case may be, may terminate
this AGREEMENT forthwith by notice in writing to the other party upon the
occurrence of any of the following events:
(i) if the other party commits a material breach of this
AGREEMENT, which in the case of a breach capable of remedy shall not have been
remedied within sixty (60) days of the receipt by the other party of a notice
identifying the breach and requiring its remedy or such longer time as the party
in breach may demonstrate to the other party is necessary to remedy the breach
using its reasonable efforts to do so; or
(ii) if the other party ceases for any reason to carry on
business or convenes a meeting of its creditors or has a receiver or manager
appointed in respect of all or substantially all of its assets or is the subject
of an application for an administration order or of any proposal for a voluntary
arrangement or enters into liquidation (whether compulsorily or voluntarily) or
undergoes any analogous act or proceedings under foreign law; or
(iii) the enactment of any law, order or regulation by
governmental authority that would render it impossible for such party to perform
its obligations hereunder; provided, however, that if the enactment of any such
law, order or regulation renders it impossible for HMR GmbH to perform hereunder
and such law, order or regulation is enacted as a result of or is caused by any
action or inaction on the part of HMR GmbH, HMR GmbH shall have no right to
terminate this AGREEMENT under this Section 3.3(b) as a result of such
enactment.
(c) In addition to its right to terminate this AGREEMENT pursuant to
Section 3.3(b) hereof, MEDICIS may terminate this AGREEMENT and the LOPROX
LOTION SUPPLY AGREEMENT forthwith by notice in writing to HMR GmbH in the event
that during the INITIAL TERM and prior to the earlier of the date which is
twenty four (24) months after the EFFECTIVE DATE and the date on which the FDA
approves the QUALIFIED ALTERNATE SUPPLIER, (i) HMR GmbH abandons or terminates
the manufacture of the HMR MANUFACTURED PRODUCTS, or (ii) HMR GmbH is unable or
fails to supply to MEDICIS hereunder and HMRI is unable or fails to supply to
MEDICIS under the LOPROX LOTION SUPPLY AGREEMENT, or MEDICIS, with the written
consent of HMR GmbH and HMRI, which consent shall not be unreasonably withheld
or delayed, reasonably and in good faith determines that HMR GmbH and HMRI will
be unable to supply to MEDICIS for six (6) or more consecutive months hereunder
and under the LOPROX LOTION SUPPLY AGREEMENT, HMR MANUFACTURED PRODUCTS and
LOPROX LOTION with an aggregate supply price equal to at least 50% of the total
U.S. Dollar amount of the quantities of HMR MANUFACTURED PRODUCTS and LOPROX
LOTION included by MEDICIS in confirmed orders for such period and, for any
months during such period for which there are no confirmed
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SUPPLY AGREEMENT
orders, the quantities of HMR MANUFACTURED PRODUCTS and LOPROX LOTION forecasted
to be ordered during such months as set forth in the 24-MONTH FORECAST hereunder
and the "24-MONTH FORECAST" as defined in the LOPROX LOTION SUPPLY AGREEMENT or,
if less, in the applicable portion of MEDICIS' last short-term forecasts
submitted hereunder and under Section 2.4(b) of the LOPROX LOTION SUPPLY
AGREEMENT prior to such six (6) month or longer period; provided, however, that
MEDICIS may not terminate this AGREEMENT or the LOPROX LOTION SUPPLY AGREEMENT
pursuant to this Section 3.3(c) if the abandonment, termination or failure to
supply is caused solely and directly by force majeure due to: (a) an act of God;
(b) any act, regulation, order, decree or law of any government or agency
thereof which is not a result of or caused by any action or inaction on the part
of HMR GmbH or an AFFILIATE in violation of its obligations under any of the
TRANSACTION DOCUMENTS or APPLICABLE LAWS; (c) war or civil commotion; (d) damage
to or destruction of HMR GmbH's manufacturing facilities resulting from an act
of God; (e) labor disturbances which are not specific to the operations or
facilities of HMR GmbH or its AFFILIATES and which are not within the power of
HMR GmbH or its AFFILIATES to settle or control; (f) epidemic; (g) failure of a
sole source of supply to HMR GmbH or its AFFILIATES of a particular supply item
for HMR MANUFACTURED PRODUCTS or LOPROX LOTION by reason of any force majeure
(as force majeure is defined in this Section 3.3(c)); (h) failure of the source
of supply for LOPROX LOTION to supply LOPROX LOTION to HMRI by reason of any
force majeure (as force majeure is defined in this Section 3.3(c)); (i) failure
of all sources of supply to HMR GmbH or its AFFILIATES of a particular supply
item for HMR MANUFACTURED PRODUCTS where HMR GmbH or its AFFILIATES has multiple
sources of supply for such item, provided such failure is not due to or caused
by any action or inaction on the part of HMR GmbH or its AFFILIATES; (j) the
failure of public utilities; (k) the failure of common carriers; or (l) an event
of force majeure as defined in Section 2.10(c)(ii) of the LOPROX LOTION SUPPLY
AGREEMENT. MEDICIS shall additionally have certain rights to terminate the
LICENSE AND OPTION AGREEMENT upon termination of this AGREEMENT pursuant to this
Section 3.3(c) and Section 15.3 of the LICENSE AND OPTION AGREEMENT.
3.4 Consequences of Termination and Survival.
(a) Termination of this AGREEMENT for whatever reason shall not
affect the accrued rights and obligations of either HMR GmbH or MEDICIS arising
under or out of this AGREEMENT. The provisions of Articles V (HMR MANUFACTURED
PRODUCT Recalls), VI (Warranties and Remedies) and VII (Indemnification,
Limitation of Liability and Insurance) and of Sections 2.8, 2.9 (last sentence),
2.10(b), 2.10(c), 2.12, 3.5, 8.2, 8.4, 8.5, 8.6, 8.8, 8.10 and 8.11 of this
AGREEMENT and this Section 3.4 shall survive the expiration or termination of
this AGREEMENT or of any extensions thereof. In addition, any other provisions
which are required to interpret and enforce the parties' rights and obligations
under this AGREEMENT shall also survive such expiration or termination to the
extent required for the full observation and performance of this AGREEMENT by
the parties hereto.
(b) If the OPTION (as defined in the LICENSE AND OPTION AGREEMENT) is
exercised pursuant to Section 4.1 of the LICENSE AND OPTION
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SUPPLY AGREEMENT
AGREEMENT, upon the expiration of the INITIAL TERM and any RENEWAL PERIOD of
this AGREEMENT, at MEDICIS' request, the parties or their AFFILIATES shall enter
into a supply agreement for the supply of the ACTIVE INGREDIENT CICLOPIROX for
the HMR MANUFACTURED PRODUCTS by HMR GmbH or its AFFILIATES to MEDICIS pursuant
to which HMR GmbH or its AFFILIATES shall agree: (i) to sell the ACTIVE
INGREDIENT CICLOPIROX to MEDICIS for as long as HMR GmbH or its AFFILIATES
manufacture the ACTIVE INGREDIENT CICLOPIROX at a supply price equal to U.S.
$3,295 per kilo of ciclopirox acid and $2,540 per kilo of ciclopirox olamine
subject to any CPI INCREASE or exchange rate adjustment pursuant to Section 2.11
hereof; (ii) to manufacture and sell to MEDICIS at least a four (4) year supply
of the ACTIVE INGREDIENT CICLOPIROX if HMR GmbH ceases to manufacture such
ACTIVE INGREDIENT, where such four (4) year supply is based on the amount of
such ACTIVE INGREDIENT CICLOPIROX purchased by MEDICIS during the twelve (12)
month period prior to HMR GmbH's ceasing to manufacture such ACTIVE INGREDIENT
CICLOPIROX for MEDICIS; and (iii) in the event HMR GmbH ceases to manufacture
the ACTIVE INGREDIENT CICLOPIROX, HMR GmbH shall, at its election, either (a)
provide the specifications and production process flow chart to allow MEDICIS to
initiate and establish a source of supply with an FDA approved third party
manufacturer with whom MEDICIS shall enter into an exclusive supply agreement,
prohibiting such manufacturer from manufacturing for or selling or providing
know how to any other person or entity, or (b) arrange for an alternative source
of supply from a third party supplier reasonably acceptable to MEDICIS and on
terms and conditions reasonably acceptable to MEDICIS.
(c) If the OPTION is exercised pursuant to Section 4.1 of the LICENSE
AND OPTION AGREEMENT, upon termination of the INITIAL TERM and any RENEWAL TERM
of this AGREEMENT, at MEDICIS' request, the parties or their AFFILIATES may
enter into a supply agreement for the supply of the ACTIVE INGREDIENT
desoximetasone for the HMR MANUFACTURED PRODUCTS by HMR GmbH to MEDICIS upon
terms mutually agreeable to the parties.
3.5 Accrued Obligations. In the event that this AGREEMENT is terminated
by HMR GmbH pursuant to the provisions of Section 3.3 herein, MEDICIS shall
immediately pay to HMR GmbH (i) all amounts outstanding and remaining to be paid
for HMR MANUFACTURED PRODUCTS supplied prior to the termination, (ii) all
amounts that would be due to HMR GmbH related to binding quantities of HMR
MANUFACTURED PRODUCTS ordered pursuant to Section 2.4 hereof, (iii) all amounts
outstanding and remaining to be paid for samples supplied pursuant to Section
2.14(b) prior to the termination, and (iv) subject to Section 2.14(b), an amount
equal to the value of the samples supplied pursuant to Section 2.14(a)(i) prior
to the termination if during the CONTRACT YEAR in which this AGREEMENT is
terminated MEDICIS has not purchased HMR MANUFACTURED PRODUCTS other than
samples with an aggregate supply price of at least an amount equal to U.S. [$2.6
million] (plus the CPI INCREASE for the second and third CONTRACT YEAR)
multiplied by a fraction, the numerator of which is equal to the number of days
during the then current CONTRACT YEAR during which this AGREEMENT was in effect
prior to its termination and the denominator of which is equal to 365.
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SUPPLY AGREEMENT
ARTICLE IV.
MANUFACTURING COMPLIANCE,
ACCESS AND REGULATORY MATTERS
4.1 Tests; Retained Samples. HMR GmbH shall perform, or cause to be
performed, tests on each lot of HMR MANUFACTURED PRODUCT, including all samples
thereof, manufactured pursuant to this AGREEMENT before delivery to MEDICIS.
Such tests shall include required assay and stability testing and the testing of
the HMR MANUFACTURED PRODUCTS for compliance with the SPECIFICATIONS and the
NDAs. HMR GmbH shall maintain in accordance with prudent industry standards all
retained samples of the HMR MANUFACTURED PRODUCTS and of the raw materials for
the HMR MANUFACTURED PRODUCTS.
4.2 Manufacturing Compliance. HMR GmbH shall manufacture the HMR
MANUFACTURED PRODUCTS, including all samples thereof, in accordance with the
SPECIFICATIONS, cGMPs and the NDAs. HMR GmbH shall manufacture and supply HMR
MANUFACTURED PRODUCTS from HMR GmbH's plants approved in the relevant NDA, and
the choice of locations shall be in HMR GmbH's sole discretion; provided,
however, that HMR GmbH hereby represents and warrants to MEDICIS that any change
in manufacturing location as permitted by this Section 4.2 shall not (i)
materially adversely affect HMR GmbH's ability to perform and comply fully with
all of its obligations under this AGREEMENT or (ii) materially adversely affect
HMR GmbH's capacity to manufacture any quantities of HMR MANUFACTURED PRODUCTS
as compared to HMR GmbH's capacity to manufacture such quantities prior to the
date of such change in location.
4.3 Changes in SPECIFICATIONS. Any changes in SPECIFICATIONS or the test
methods or manufacturing processes referenced in the NDAs shall not be made by
HMR GmbH without MEDICIS' prior substantive involvement and written approval,
which approval shall not be unreasonably withheld or delayed. Any changes in
SPECIFICATIONS or the test methods or manufacturing processes referenced in the
NDAs shall not be made by MEDICIS without HMR GmbH's prior substantive
involvement and written approval, which approval shall not be unreasonably
withheld or delayed. If, upon a change in SPECIFICATIONS or such test methods or
manufacturing processes made by MEDICIS without HMR GmbH's prior substantive
involvement and written approval, an HMR MANUFACTURED PRODUCT no longer meets
the old or new SPECIFICATIONS or does not pass inspection under the old or new
test method, then MEDICIS shall bear responsibility for such problem and any
financial consequences flowing from such failure, including without limitation
failed lots and recalls. If, upon a change in SPECIFICATIONS or such test
methods or manufacturing processes made by HMR GmbH without MEDICIS' prior
substantive involvement and written approval, an HMR MANUFACTURED PRODUCT no
longer meets the old or new SPECIFICATIONS or does not pass inspection under the
old or new test method, then HMR GmbH shall bear responsibility for such problem
and any financial consequences flowing from such failure, including without
limitation failed lots and recalls.
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SUPPLY AGREEMENT
4.4 Access to Facilities.
(a) MEDICIS Access. Upon the reasonable prior written request of
MEDICIS, MEDICIS shall have the right to inspect those portions of the
manufacturing and testing facilities of HMR GmbH where HMR MANUFACTURED PRODUCTS
are being manufactured or tested, as the case may be, during regular business
hours, to ascertain compliance with cGMP and the SPECIFICATIONS. If the FDA or
other applicable governmental regulatory agency asserts any notice to the effect
that HMR GmbH has failed to comply with any law or regulation in connection with
the manufacture of the HMR MANUFACTURED PRODUCTS, or if HMR GmbH delivers HMR
MANUFACTURED PRODUCTS that do not meet the SPECIFICATIONS, then MEDICIS shall
have the right to inspect such portions of the manufacturing facilities of HMR
GmbH that relate to the manufacture of the HMR MANUFACTURED PRODUCTS upon
reasonable notice and during normal business hours.
(b) HMR GmbH Access. Upon the reasonable prior written request of HMR
GmbH, HMR GmbH shall have the right to inspect those portions of the warehouse
and distribution facilities of MEDICIS where the HMR MANUFACTURED PRODUCTS are
being stored and distributed, during regular business hours, to observe HMR
MANUFACTURED PRODUCTS storage and distribution or other related activities. If
the FDA or other applicable governmental regulatory agency asserts any notice to
the effect that MEDICIS has failed to comply with any law or regulation in
connection with the storage or distribution of the HMR MANUFACTURED PRODUCTS,
then MEDICIS shall promptly notify HMR GmbH and HMR GmbH shall have the right to
inspect such portions of the warehouse and distribution facilities of MEDICIS
that relate to the storage or distribution of the HMR MANUFACTURED PRODUCTS upon
reasonable notice and during normal business hours.
4.5 Regulatory Correspondence. MEDICIS shall promptly provide to HMR GmbH
copies of all MEDICIS correspondence to or from the FDA relating to the HMR
MANUFACTURED PRODUCTS. HMR GmbH shall notify MEDICIS in writing of and make
available (or cause to be made available) to MEDICIS within three (3) days after
receipt all regulatory correspondence regarding regulatory letters and
correspondence bearing on the safety and efficacy of the HMR MANUFACTURED
PRODUCTS.
4.6 Inquiries and Complaints relating to the HMR MANUFACTURED PRODUCTS.
Except for technical product complaints relating to the manufacture of HMR
MANUFACTURED PRODUCTS or as otherwise required by law or governmental
regulation, MEDICIS shall be responsible for investigating and responding to all
inquiries, complaints and adverse events regarding HMR MANUFACTURED PRODUCTS.
From and after the date on which MEDICIS assumes responsibility for FDA
regulatory matters for all HMR MANUFACTURED PRODUCTS except the 'Loprox' Cream
pursuant to the LICENSE AND OPTION AGREEMENT, it shall be the responsibility of
MEDICIS to comply with all material federal, state and local governmental
reporting requirements regarding adverse drug events and quality matters
relating to the HMR MANUFACTURED PRODUCTS other than the 'Loprox' Cream. It
shall be MEDICIS' responsibility to comply with such requirements relating to
the
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SUPPLY AGREEMENT
'Loprox' Cream from and after the respective dates on which MEDICIS assumes
responsibility for such matters for each such HMR MANUFACTURED PRODUCT. From and
after the date on which MEDICIS assumes responsibility pursuant to the LICENSE
AND OPTION AGREEMENT for FDA regulatory matters for an HMR MANUFACTURED PRODUCT,
MEDICIS shall comply with the standard operating procedures to be developed
under Section 7.4 of the LICENSE AND OPTION AGREEMENT. In the event of a dispute
in respect of the therapeutic action or quality of a HMR MANUFACTURED PRODUCT:
(i) if the dispute involves only MEDICIS and a subsequent purchaser, then
MEDICIS and HMR GmbH shall consult prior to any compromise or settlement of such
dispute; and (ii) if the dispute involves MEDICIS, HMR GmbH and a subsequent
purchaser, then both parties must consent in writing prior to any compromise or
settlement of such dispute.
4.7 Response to Complaints and/or Adverse Drug Reactions (or Events).
Pursuant to any reported complaint and/or adverse drug reaction (or event), if
the nature of the reported complaint and/or adverse drug reaction (or event)
requires testing, HMR GmbH shall, at MEDICIS' reasonable request and expense,
perform analytical testing of corresponding retention samples and provide the
results thereof to MEDICIS as soon as reasonably practicable; provided, however,
that HMR GmbH shall be responsible for the reasonable costs of such testing and
reporting to the FDA or any other governmental regulatory agency if it is
mutually and reasonably agreed upon between MEDICIS and HMR GmbH that HMR GmbH
is responsible for such reported complaint and/or adverse drug reaction (or
event). Such testing shall be performed using approved testing procedures.
4.8 Additional Information. HMR GmbH shall provide to MEDICIS in a timely
manner, but in no event less than sixty (60) days prior to the due date of
MEDICIS' annual report to the FDA with respect to the HMR MANUFACTURED PRODUCTS,
all information (in written form) which MEDICIS reasonably requests regarding
the HMR MANUFACTURED PRODUCTS in order to comply with applicable federal and
state drug laws. MEDICIS shall also be responsible for assuring that all
labeling, packaging and promotional material produced by it relating to HMR
MANUFACTURED PRODUCTS complies with federal, state and local law.
4.9 Technical Agreement. The parties have agreed to the allocation of
certain responsibilities as set forth in the Technical Agreement attached hereto
as Attachment 1. In the event of any conflict between the provisions of this
AGREEMENT and such Technical Agreement, the provisions of this AGREEMENT shall
govern. During the INITIAL TERM and any RENEWAL PERIOD, the parties hereto shall
keep each other informed as to any changes which may be necessary to such
Technical Agreement.
ARTICLE V.
HMR MANUFACTURED PRODUCTS RECALLS
5.1 Recalls During INITIAL TERM. In the event that during the INITIAL
TERM (i) any governmental agency or authority issues a request or directive or
order that an HMR MANUFACTURED PRODUCT in the TERRITORY be recalled or
retrieved, (ii) a court of
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SUPPLY AGREEMENT
competent jurisdiction orders such a recall or retrieval, or (iii) HMR GmbH and
MEDICIS reasonably determine that any HMR MANUFACTURED PRODUCT should be
recalled or retrieved in the TERRITORY or a "dear doctor" letter is required
relating to restrictions on the use of any HMR MANUFACTURED PRODUCT in the
TERRITORY, the rights and obligations of the parties shall be governed by
Section 7.5 of the LICENSE AND OPTION AGREEMENT, which is incorporated herein by
this reference.
5.2 Recalls During RENEWAL PERIODS or Thereafter. In the event that
during any RENEWAL PERIOD or thereafter (i) any governmental agency or authority
issues a request or directive or order that an HMR MANUFACTURED PRODUCT in the
TERRITORY be recalled or retrieved, (ii) a court of competent jurisdiction
orders such a recall or retrieval, or (iii) MEDICIS reasonably determines that
any HMR MANUFACTURED PRODUCT should be recalled or retrieved in the TERRITORY or
a "dear doctor" letter is required relating to restrictions on the use of any
HMR MANUFACTURED PRODUCT in the TERRITORY, the rights and obligations of the
parties shall be governed by Section 7.2 of the PURCHASE AGREEMENT, which is
incorporated herein by this reference.
ARTICLE VI.
WARRANTIES AND REMEDIES
6.1 FDA Approval. HMR GmbH warrants as of the date hereof that each HMR
MANUFACTURED PRODUCT is approved by the FDA for the uses set forth in the HMR
MANUFACTURED PRODUCT labeling approved by HMR GmbH as of the date hereof. All
HMR MANUFACTURED PRODUCTS shall conform to, and the HMR MANUFACTURED PRODUCTS
manufactured by HMR GmbH shall be manufactured in conformity with, the
regulations of the FDA.
6.2 Conformity with SPECIFICATIONS. HMR GmbH warrants that each HMR
MANUFACTURED PRODUCT manufactured by HMR GmbH and sold to MEDICIS pursuant to
this AGREEMENT shall meet the SPECIFICATIONS for such HMR MANUFACTURED PRODUCT
in effect at the time title to such HMR MANUFACTURED PRODUCT passes from HMR
GmbH to MEDICIS pursuant to Section 2.7 hereof.
6.3 Compliance with the Federal Food, Drug and Cosmetic Act. HMR GmbH
warrants that all HMR MANUFACTURED PRODUCT delivered to MEDICIS pursuant to this
AGREEMENT shall, at the time of such delivery, not be adulterated within the
meaning of the ACT and shall not be an article which may not, under the
provisions of the ACT, be introduced into interstate commerce.
6.4 No Liens. HMR GmbH warrants that all HMR MANUFACTURED PRODUCTS
delivered to MEDICIS pursuant to this AGREEMENT shall, at the time of such
delivery, be free and clear of all liens, security interests and other
encumbrances.
6.5 Exclusion of Other Warranties.
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SUPPLY AGREEMENT
(a) EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
EXPRESS WARRANTIES PROVIDED IN SECTIONS 6.1, 6.2, 6.3 AND 6.4 ARE IN LIEU OF,
AND HMR GMBH HEREBY DISCLAIMS, ALL CONDITIONS, WARRANTIES AND STATEMENTS IN
RESPECT OF HMR MANUFACTURED PRODUCTS AND IN RESPECT OF THE MANUFACTURING
SERVICES PROVIDED HEREUNDER, WHETHER EXPRESS OR IMPLIED, BY STATUTE, CUSTOM OF
THE TRADE OR OTHERWISE (INCLUDING WITHOUT LIMITATION ANY SUCH CONDITION,
WARRANTY OR STATEMENT RELATING TO THE DESCRIPTION OR QUALITY OF HMR MANUFACTURED
PRODUCTS, THEIR MERCHANTABILITY OR THEIR FITNESS FOR A PARTICULAR PURPOSE OR USE
UNDER ANY CONDITIONS) AND ANY SUCH CONDITION, WARRANTY OR STATEMENT IS HEREBY
EXCLUDED.
(b) IN ADDITION TO THEIR RESPECTIVE REMEDIES UNDER ARTICLE VII AND
ANY REMEDY PROVIDED HEREIN, AT LAW OR IN EQUITY FOR BREACH OF THIS AGREEMENT AS
LIMITED BY SECTION 6.5(A), MEDICIS AND HMR GMBH SHALL BE ENTITLED TO ANY AND ALL
RIGHTS AND REMEDIES AVAILABLE AT LAW OR IN EQUITY OR UNDER THE TRANSACTION
DOCUMENTS WITH RESPECT TO RIGHTS AND OBLIGATIONS ARISING THEREUNDER; PROVIDED,
HOWEVER, THAT EXCEPT AS EXPRESSLY SET FORTH IN SECTION 2.10(C) HEREOF, IN NO
EVENT SHALL HMR GMBH OR MEDICIS BE LIABLE TO THE OTHER PARTY UNDER OR WITH
RESPECT TO THIS AGREEMENT FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OF ANY KIND, INCLUDING LOSS OF PROFITS.
ARTICLE VII.
INDEMNIFICATION, LIMITATION OF LIABILITY AND INSURANCE
7.1 Indemnification by MEDICIS. In addition to any other rights HMR GmbH
may have at law or in equity and subject to Section 6.5 hereof, MEDICIS shall
indemnify, defend and hold harmless HMR GmbH and its AFFILIATES, and their
employees, officers and directors, and their successors and assigns (each, an
"HMR GmbH INDEMNIFIED PARTY"), from and against any and all LIABILITIES which
the HMR GmbH INDEMNIFIED PARTY may incur, suffer or be required to pay resulting
from or arising in connection with: (i) the marketing, distribution, sale or
promotion of the HMR MANUFACTURED PRODUCTS by MEDICIS or its AFFILIATES after
the EFFECTIVE DATE; or (ii) the manufacture of the HMR MANUFACTURED PRODUCTS by
MEDICIS or its AFFILIATES or by a third party (other than an AFFILIATE of HMR
GmbH) after the EFFECTIVE DATE, unless HMR GmbH had knowledge as of the
EFFECTIVE DATE that, based on facts in existence and circumstances persisting on
the EFFECTIVE DATE, such third party's manufacture of the HMR MANUFACTURED
PRODUCTS after the EFFECTIVE DATE would be likely to result in or create such
LIABILITIES.
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SUPPLY AGREEMENT
7.2 Indemnification by HMR GmbH. In addition to any other rights MEDICIS
may have at law or in equity and subject to Section 6.5 hereof, HMR GmbH shall
indemnify, defend and hold harmless MEDICIS and its AFFILIATES, employees,
officers and directors and its successors and assigns (each, a "MEDICIS
INDEMNIFIED PARTY"), from and against any and all LIABILITIES which the MEDICIS
INDEMNIFIED PARTY may incur, suffer or be required to pay resulting from or
arising in connection with: (i) the manufacture of the HMR MANUFACTURED PRODUCTS
by HMR GmbH or its AFFILIATES prior to the EFFECTIVE DATE or after the EFFECTIVE
DATE in breach of any of HMR GmbH's representations, warranties, covenants and
obligations under this AGREEMENT, excluding, however, any EXCLUDED HMR PRODUCT
LIABILITY; (ii) the manufacture, marketing, distribution, sale or promotion of
the PRODUCTS by HMR GmbH or by any AFFILIATE of HMR GmbH or by any third party
prior to the EFFECTIVE DATE, regardless of the date of first assertion of any
claim or action relating thereto; or (iii) the manufacture (except for matters
which are the subject of subpart (i) of this Section 7.2), marketing,
distribution, sale or promotion of the PRODUCTS outside the TERRITORY by HMR
GmbH or by any AFFILIATE of HMR GmbH or by any third party (other than MEDICIS,
MEDICIS' AFFILIATES, assignees and sublicensees and the QUALIFIED ALTERNATE
SUPPLIER) after the EFFECTIVE DATE.
7.3 Process of Indemnification. Promptly after an indemnified party
becomes aware of any potential LIABILITY hereunder, such party shall deliver
written notice to the indemnifying party, stating the nature of the potential
LIABILITY; provided, however, that the delay in giving or the failure to give
such notification shall not affect the indemnification provided hereunder except
to the extent the indemnifying party shall have been actually prejudiced as a
result of such delay or failure. The indemnified party shall give the
indemnifying party such information with respect to the potential LIABILITY as
the indemnifying party may from time to time reasonably request. The
indemnifying party shall have the right to conduct the defense of any suit,
claim or other proceeding related to the LIABILITY if it has assumed
responsibility for the suit, claim or other proceeding in writing; provided,
however, if in the reasonable judgment of the indemnified party, such suit,
claim or proceeding involves an issue or matter which could have a material
adverse effect on the business, operations or assets of the indemnified party,
the indemnified party may elect, at its own expense, to conduct a separate
defense thereof, but in no event shall any such election be construed as a
waiver of any indemnification rights such indemnified party may have under this
Article VII, at law or in equity, or otherwise. If the indemnifying party
defends the suit or claim, the indemnified party may participate in (but not
control) the defense thereof at its sole cost and expense; provided, however,
that the indemnifying party shall pay the reasonable fees and costs of any
separate counsel to the extent such representation is due to a conflict of
interest between the parties.
7.4 Settlements. Neither party may settle a claim or action related to a
LIABILITY without the consent of the other party, which consent shall not be
unreasonably withheld, if such settlement would impose any monetary obligation
on the other party or require the other party to submit to an injunction or
otherwise limit the other party's rights under this AGREEMENT, and any payment
made by a party in such a settlement without obtaining such consent shall be at
its own cost and expense. Notwithstanding the foregoing, the indemnifying party
will be liable under this Article VII for any settlement effected without its
consent if the indemnifying party
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SUPPLY AGREEMENT
has refused to acknowledge liability for indemnification hereunder and/or
declines to defend the indemnified party in any such claim, action or proceeding
and it is determined by arbitration pursuant to Section 8.4 hereof that the
indemnifying party was liable to the indemnified party for indemnification
related to such settlement.
7.5 Limitation of Liability. Subject to the terms of this AGREEMENT, with
respect to any claim by one party against the other arising out of the
performance or failure of performance of the other party under this AGREEMENT,
the parties expressly agree that the liability of such party to the other party
for such breach shall be limited under this AGREEMENT or otherwise at law or in
equity to direct damages only and in no event shall a party be liable to the
other party for indirect, incidental, special or consequential damages,
including without limitation, lost profits.
7.6 Distribution Insurance. MEDICIS shall obtain and maintain in effect
for the term of this AGREEMENT liability insurance or indemnity policies with an
insurer reasonably acceptable to HMR GmbH, in an amount not less than U.S. $5
million with an indemnity to principals clause with respect to the distribution
of each HMR MANUFACTURED PRODUCT, which policies shall name HMR GmbH as an
additional insured and shall be blanket policies. Such policies shall insure
against liability on the part of MEDICIS and any of its AFFILIATES, as their
interests may appear, due to injury, disability or death of any person or
persons, or injury to property, arising from the distribution of the HMR
MANUFACTURED PRODUCTS. Upon the execution of this AGREEMENT and thereafter on
January 1 of each year during the term, MEDICIS shall provide to HMR GmbH a
certificate of insurance (i) summarizing such insurance coverage, (ii)
identifying any exclusions and (iii) indicating that the terms of MEDICIS'
insurance policies are in accordance with this Section 7.6. MEDICIS shall
promptly notify HMR GmbH of any material alterations to the terms of such
policies or in the amounts for which insurance is provided.
7.7 Manufacturer's Insurance. HMR GmbH shall obtain and maintain in
effect for the term of this AGREEMENT liability insurance or indemnity policies
with an insurer reasonably satisfactory to MEDICIS, in an amount not less than
U.S. $5 million with an indemnity to principals clause with respect to the
manufacture of the HMR MANUFACTURED PRODUCTS, which policies shall name MEDICIS
as an additional insured and shall be blanket policies. Such policies shall
insure against liability on the part of HMR GmbH and any of its AFFILIATES, as
their interests may appear, due to injury, disability or death of any person or
persons, or injury to property arising from the negligence of HMR GmbH or its
AFFILIATES in the manufacture of the HMR MANUFACTURED PRODUCTS. Upon the
execution of this AGREEMENT and thereafter on January 1 of each year during the
term, HMR GmbH shall provide to MEDICIS a certificate of insurance (i)
summarizing such insurance coverage, (ii) identifying any exclusions and (iii)
indicating that the terms of HMR GmbH's insurance policies are in accordance
with this Section 7.7. HMR GmbH shall promptly notify MEDICIS of any material
alterations to the terms of such policies or in the amounts for which insurance
is provided.
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SUPPLY AGREEMENT
7.8 HMR MANUFACTURED PRODUCT Liability Claims. As soon as it becomes
aware, each party shall give the other party prompt written notice of any claim
involving an HMR MANUFACTURED PRODUCT, any injury alleged to have occurred as a
result of the use or application of an HMR MANUFACTURED PRODUCT, and any
circumstances that may give rise to litigation or recall of an HMR MANUFACTURED
PRODUCT or regulatory action that may affect the sale or manufacture of an HMR
MANUFACTURED PRODUCT, specifying, to the extent the party has such information,
the time, place and circumstances thereof and the names and addresses of the
persons involved. Each party shall also furnish promptly to the other party
copies of all papers received in respect of any claim, action or suit arising
out of such alleged defect, injury or regulatory action.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 FORCE MAJEURE. If the performance by either party of any obligation
under this AGREEMENT, is prevented, restricted, interfered with or delayed by
reason of FORCE MAJEURE, the party so affected shall, upon giving written notice
to the other party, be excused from such performance to the extent of such
prevention, restriction, interference or delay, provided that the affected party
shall use its reasonable efforts to avoid or remove such causes of
non-performance and shall continue performance with the utmost dispatch whenever
such causes are removed and, provided further, that notwithstanding anything
contained in this Section 8.1, MEDICIS shall be entitled to any and all rights
and remedies which may arise under Sections 2.10 and 3.3(c) hereof as a result
of or in connection with any such prevention, restriction, interference with or
delay of HMR GmbH's performance of any of its obligations hereunder. For the
purposes of this AGREEMENT (and except with respect to "force majeure" for
purposes of Sections 2.10(c) and 3.3(c) hereof), "FORCE MAJEURE" is defined as
follows: acts of God; acts, regulations, orders, decrees or laws of any
government or agency thereof that are not due to or caused by any action or
inaction of the party claiming the benefit of force majeure where such action or
inaction is in violation of such party's obligations under the TRANSACTION
DOCUMENTS or APPLICABLE LAWS; war; civil commotion; damage to or destruction of
facilities; labor disturbances (whether or not any such labor disturbance is
within the power of the affected party to settle); epidemic; and failure of
suppliers, public utilities or common carriers.
8.2 Governing Law. This AGREEMENT shall be construed in accordance with
the laws of the State of Delaware in the United States of America, without
giving effect to the principles of conflicts of law thereof.
8.3 Headings and References. All section headings contained in this
AGREEMENT are for convenience of reference only and shall not affect the meaning
or interpretation of this AGREEMENT.
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SUPPLY AGREEMENT
8.4 Dispute Resolution.
(a) Any dispute, controversy or claim arising out of or relating to
this AGREEMENT, or the breach or termination of this AGREEMENT or the rights of
either party for indemnification hereunder (each, a "CLAIM"), shall be submitted
in the first instance to the President, North American Region of HMRI, for HMR
and the Chief Executive Officer of MEDICIS for MEDICIS.
(b) If any CLAIM cannot be resolved by the individuals designated in
Section 8.4 (a) within thirty (30) days after being submitted to them, and
except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order to preserve the status quo or to
prevent irreparable harm pending the selection and confirmation of a panel of
arbitrators in accordance herewith, such CLAIM shall be settled by arbitration
in accordance with the Commercial Arbitration Rules (the "RULES") of the
American Arbitration Association (the "AAA") in effect on the day the
arbitration is commenced in accordance with this AGREEMENT, except as modified
by this Section 8.4. After expiration of the thirty (30) day period pursuant to
Section 8.4(a) hereof, either party may commence arbitration by serving upon the
other party a written demand for arbitration sent by a courier service of
internationally recognized reputation, in accordance with this AGREEMENT, with a
copy of the same delivered by a courier service of internationally recognized
reputation, to the AAA regional office in which either party is then located.
The number of arbitrators shall be three, one of whom is selected by MEDICIS,
one of whom is selected by HMR GmbH and one of whom is selected by HMR GmbH and
MEDICIS (or by the other two arbitrators if the parties cannot, within thirty
(30) days after the commencement of the arbitration proceeding, agree on the
third arbitrator). In the event that either party shall fail to appoint an
arbitrator within thirty (30) days after the commencement of the arbitration
proceeding, such arbitrator and the third arbitrator shall be appointed by the
AAA in accordance with the RULES. The arbitration award shall be rendered by a
majority of the members of the board of arbitration. Except as expressly
provided in Section 8.5 hereof, the panel shall not be entitled to modify this
AGREEMENT or the transactions contemplated herein. The arbitration proceeding
shall be conducted in the English language and shall be brought in Chicago,
Illinois, unless the parties agree in writing to conduct the arbitration in
another location. The AAA shall have jurisdiction over all parties to this
AGREEMENT for purposes of the arbitration and the parties hereby expressly
consent to such jurisdiction.
(c) The arbitration decision shall be final and binding and shall not
be appealable to any court in any jurisdiction. The prevailing party may enter
such decision in any court having competent jurisdiction, and the parties
expressly agree that the state and federal courts in the State of Delaware shall
have such jurisdiction. Each party hereby expressly waives any right to object
to such jurisdiction on the basis of venue or forum non conveniens. For purposes
of any such legal proceeding and any arbitration under this Section 8.4, HMR
GmbH hereby irrevocably appoints HMRI as its agent for service of process in the
United States of America.
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SUPPLY AGREEMENT
(d) Any statute of limitations or other equitable or legal doctrine
which would otherwise be applicable to any action brought by either of the
parties shall be applicable in the arbitration. In the event either party to
this AGREEMENT files a petition under the bankruptcy laws of the United States
or has a petition filed against it which results in an order for relief or other
indicia that a bankruptcy case has commenced, it is the express intention of the
parties that this AGREEMENT shall control and be enforced in accordance with its
terms and conditions that any CLAIM shall remain subject to arbitration to the
maximum extent permitted by law.
(e) There shall be no rights of discovery in connection with the
arbitration except as follows:
(i) Each party shall have the right to request the arbitrators to
issue subpoenas for documents in accordance with the RULES.
(ii) Each party shall have the right to initiate two (2)
depositions of each other party to the arbitration; and each party shall have
the right to initiate one (1) additional oral deposition pursuant to a subpoena
issued by the arbitrators or any court of competent jurisdiction.
(iii) At any time following the tenth day after the commencement
of the arbitration in accordance with this AGREEMENT, a written notice served
upon all parties shall be sufficient to compel the attendance of any party at a
deposition upon not less than sixty (60) days notice and no subpoena shall be
required for that purpose. If a person fails or refused to testify at a
deposition, that person shall not be permitted to testify at the hearing, except
for good cause shown. The number of depositions that may be initiated by either
party may be varied by agreement of all parties to the arbitration but not by
any action, order or request of the arbitrators or any court.
(iv) Not less than thirty (30) days prior to the scheduled
arbitration proceeding, the arbitrator shall conduct a preliminary hearing in
accordance with the AAA guidelines. Not less than five (5) days prior to the
preliminary hearing, all parties to the arbitration shall serve upon all other
parties to the arbitration a written list of witnesses and exhibits to be used
at the arbitration hearing. Except for good cause shown, no witness or exhibit
may be utilized at the arbitration hearing other than as set forth on such list.
The arbitrators shall receive evidence at a single hearing. The arbitrators
shall award reasonable attorneys' fees and costs in favor of the prevailing
party or parties. The arbitrator shall issue a final award not more than twenty
(20) days following the conclusion of the hearing. The arbitrators shall have
the power to hear and decide, by documents only or with a hearing (at the
arbitrators' sole discretion) any prehearing motions in the nature of a
pre-trial motion to dismiss or for summary judgment.
(f) The arbitrators shall be entitled to receive reasonable
compensation at an hourly rate to be established between the arbitrators and the
AAA. If required by the arbitrators, MEDICIS on the one hand, and HMRI, on the
other, will deposit with the AAA an equal share of the total anticipated fee of
the arbitrators in an amount to be estimated by the AAA. The non-prevailing
party in the proceedings shall be ordered to pay, and shall have the ultimate
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SUPPLY AGREEMENT
responsibility for, all arbitrators' fees and the fees of the AAA and such fees
shall be included in the judgment to be entered against the non-prevailing
party.
(g) Notwithstanding any other provision of this AGREEMENT, any party
may apply to a court of competent jurisdiction within the TERRITORY for an order
in the nature of a temporary restraining order or preliminary injunction for
purposes of maintaining the status quo pending the final resolution of any
dispute pursuant to the arbitration provisions hereof.
(h) Each party consents to the jurisdiction and administration of the
AAA for purposes of the arbitration proceedings contemplated herein.
8.5 Severability. If any provision of this AGREEMENT is held by a court
of competent jurisdiction to be invalid or unenforceable, it shall be modified
to the minimum extent necessary to make it valid and enforceable.
8.6 Entire Agreement. This AGREEMENT, including the Exhibits and
Schedules hereto, and the TRANSACTION DOCUMENTS constitute the entire AGREEMENT
between the parties and their AFFILIATES relating to the subject matter hereof
and supersede all previous writings and understandings, whether oral or written,
relating to the subject matter of this AGREEMENT.
8.7 Amendment. This AGREEMENT may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by both parties
that specifically refers to this AGREEMENT.
8.8 Notices. Any notice required or permitted under this AGREEMENT shall
be in writing and sent by a courier service of internationally recognized
reputation, charges prepaid, or by facsimile transmission with confirmation by
reputable courier service, to the address or facsimile number specified below.
Such notices shall be deemed given three (3) business days following deposit
with such courier service or one (1) business day following such facsimile
transmission.
If to HMR GmbH: Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Deutschland GmbH
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
Attention: General Manager
Fax: ▇▇▇-▇▇-▇▇▇-▇▇▇▇▇
Copy to: Hoechst ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇-▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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SUPPLY AGREEMENT
If to MEDICIS: Medicis Pharmaceutical Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
8.9 Assignment and Binding Effect. Each party shall have the right to
assign its rights in whole or in part under this AGREEMENT to an AFFILIATE of
such party without the other party's consent or to a third party with the other
party's prior written consent, which consent shall not be unreasonably withheld,
provided that in either case such party guarantees to the other party all of
such party's obligations hereunder and the assignee agrees in writing to observe
and perform the obligations of the assignor hereunder.
8.10 No Agency. It is understood and agreed that each party shall have
the status of an independent contractor under this AGREEMENT and that nothing in
this AGREEMENT shall be construed as authorization for either party to act as
agent for the other. Neither party shall incur any liability for any act or
failure to act by employees of the other party. Notwithstanding anything to the
contrary in this Section 8.10, HMR GmbH hereby appoints HMRI and any duly
appointed statutory agent of HMRI as its agent for service of process as to any
proceeding commenced pursuant to or in connection with this AGREEMENT.
8.11 No Strict Construction. This AGREEMENT has been prepared jointly and
shall not be strictly construed against either party.
8.12 Counterparts. This AGREEMENT may be executed in two counterparts,
each of which shall be an original as against any party whose signature appears
thereon but both of which together shall constitute one and the same instrument.
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SUPPLY AGREEMENT
IN WITNESS WHEREOF, the parties, through their authorized officers,
have duly executed this as of the date first written above.
HOECHST ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, INC. MEDICIS PHARMACEUTICAL CORPORATION
By: /s/ ▇▇▇▇▇ Schlikker By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------- -------------------
Name: DR. ▇▇▇▇▇ SCHLIKKER Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Member of the Board Title: Chairman and Chief
Executive Officer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Member of the Board
