Exhibit 10.7
MANUFACTURE AND SUPPLY AGREEMENT
This Manufacture and Supply Agreement (this "Agreement"), dated as of _____
__, 2004 (the "Effective Date"), is by and between Hospira, Inc., a Delaware
corporation ("Hospira"), and Xxxxxx Laboratories, an Illinois corporation
("Abbott").
RECITALS
WHEREAS, the board of directors of Abbott has determined that it is
in the best interests of Abbott and its shareholders to separate Xxxxxx'x core
hospital products business from its other existing businesses;
WHEREAS, in order to effectuate the foregoing, Abbott and Hospira
have entered into a Separation and Distribution Agreement of even date herewith
(the "Separation and Distribution Agreement"), which provides, among other
things, subject to the terms and conditions set forth therein, for the
separation and the distribution to Hospira of certain assets and the assumption
by Hospira of certain liabilities, and for the execution and delivery of certain
other agreements in order to facilitate and provide for the foregoing; and
WHEREAS, in connection with the transactions contemplated by the
Separation and Distribution Agreement, Hospira desires Abbott to manufacture and
supply the products set forth on EXHIBIT A attached hereto (individually, the
"Product" and collectively, the "Products") to Hospira, and Abbott is willing to
manufacture and supply such Products to Hospira in accordance with this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
ARTICLE 1- DEFINITIONS
1.1 For the purpose of this Agreement the following terms will have the
following meanings:
"Abbott" has the meaning set forth in the Preamble.
"Act" means the United States Food, Drug and Cosmetic Act, as amended,
including all regulations promulgated thereunder.
"Agreement" means this API Supply Agreement, including any amendments
hereto and each of the Exhibits hereto.
"cGMPs" shall mean the current Guidelines for Good Manufacturing Practice
set forth in 21 C.F.R. (Parts 210 and 211), as may be amended from time to time,
and the current International Conference on Harmonization Good Manufacturing
Practice Guidelines as promulgated by the FDA, as may be amended from time to
time, as applicable.
"Discretionary Changes" has the meaning set forth in SECTION 3.6(c).
"Effective Date" has the meaning set forth in the Preamble.
"Exhibit D Products" means the Products listed on EXHIBIT D.
"Exhibit E Products" means the Products listed on EXHIBIT E.
"Exhibit D Successive Term" has the meaning set forth in SECTION 4.1.
"Exhibit E Successive Term" has the meaning set forth in SECTION 4.1.
"FDA" means the United States Food and Drug Administration and any
successor agency thereto.
"Hospira" has the meaning set forth in the Preamble.
"Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, including studies, reports, records, books, contracts, instruments,
surveys, discoveries, ideas, concepts, know-how, techniques, designs,
specifications, drawings, blueprints, diagrams, models, prototypes, samples,
flow charts, data, computer data, disks, diskettes, tapes, computer programs or
other software, marketing plans, customer names, communications by or to
attorneys (including attorney-client privileged communications), memos and other
materials prepared by attorneys or under their direction (including attorney
work product), and other technical, financial, employee or business information
or data.
"Initial Term" has the meaning set forth in SECTION 4.1.
"Parties" means the parties to this Agreement.
"Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Regulatory Authority.
"Prime Rate" means the rate which Citibank N.A. (or its successor or
another major money center commercial bank agreed to by the Parties) announces
as its prime lending rate, as in effect from time to time
"Product" and "Products" have the meanings set forth in the Recitals.
"Product Specifications" shall mean those product, labeling and performance
specifications for the Products filed with the FDA or other appropriate
Regulatory Authorities, including Product formula and materials required for the
manufacture of the Products that are to be purchased and supplied under this
Agreement, which specifications may be amended from time to time by the written
agreement of the Parties.
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"Quality Agreement" means: (i) with respect to Products manufactured in the
United States, the Quality Agreement by and between Abbott and Hospira,
substantially in the form of EXHIBIT B, as the same may be amended; and (ii)
with respect to Products manufactured outside of the United States, the
International Technical Agreement by and between Abbott and Hospira, consistent
with the Product Specifications and substantially in the form of EXHIBIT C, as
the same may be amended.
"Regulatory Authority" means any federal, state or local or international
regulatory agency, department, bureau or other governmental entity including the
FDA which is responsible for issuing approvals, licenses, registrations or
authorizations necessary for the manufacture, use, storage, import, transport or
sale of any Product in a regulatory jurisdiction.
"Required Changes" has the meaning set forth in SECTION 3.6(b).
"Separation and Distribution Agreement" has the meaning set forth in the
Recitals.
"Subsidiary" of any Person means another Person that is directly or
indirectly controlled by such first Person. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities or other interests, by contract or otherwise. For
the avoidance of doubt, TAP Pharmaceutical Products Inc., TAP Finance Inc. and
TAP Pharmaceuticals Inc. are not Subsidiaries of Abbott as that term is used in
this Agreement.
"Third Party" means any Person other than Abbott, any Abbott Subsidiary,
Hospira and any Hospira Subsidiary.
"Transfer Plan" has the meaning set forth in SECTION 6.1.
ARTICLE 2- ORDERS, PRICING, PAYMENT AND CONFORMANCE
2.1 FORECASTS AND ORDERS.
(a) PURCHASE AND SALE OF PRODUCT. Pursuant to the terms and
conditions of this Agreement and for the duration of this
Agreement, Abbott shall manufacture, sell and deliver the
Products to Hospira in the quantities requested pursuant to
SECTION 2.1(b) and Hospira shall purchase and take delivery of
its worldwide requirements of the Products exclusively from
Abbott.
(b) ROLLING FORECAST. Simultaneously with the execution of this
Agreement, Hospira shall provide Abbott with an eighteen (18)
month non-binding forecast of Hospira's best estimate of its
future requirements of the Products, which forecast shall be
updated by the fifteenth (15th) day of each month during the
term of this Agreement. Such forecast shall (i) specify the
Product, the item number, and quantity of each Product and (ii)
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be consolidated by month. For the Exhibit D Products, the first
six (6) months of each rolling eighteen (18) month forecast
shall constitute a firm order for such Product quantities. For
the Exhibit E Products, the first four (4) months of each
rolling eighteen (18) month forecast shall constitute a firm
order for such Product quantities. For purposes of
clarification of the forecast, the firm order period described
above shall not include the current month (I.E. the firm order
period for Exhibit D Products commencing June 2004 would
include orders placed through December 2004). As updated by the
fifteenth (15th) day of the month, such updated forecast shall
restate the balance of the firm order period remaining prior to
such updated forecast and include in the firm order period the
requirements for the next month of such updated forecast.
(c) LONG-RANGE FORECAST. For capacity planning purposes, Hospira
shall also provide Abbott with a three (3) year non-binding
forecast prior to January 1st of each year during the term of
this Agreement.
(d) FIRM ORDERS. All firm purchase orders, or alternative forms of
communication, delivered in accordance with the provisions of
SECTION 2.1(b) shall be for an amount no less than eighty
percent (80%) nor more than one hundred twenty percent (120%)
of the most recent forecast for such period; provided, however,
in the event such firm order exceeds one hundred twenty percent
(120%) of the most recent forecast for such Products, Abbott
shall use its commercially reasonable efforts to manufacture
and deliver to Hospira, in addition to the forecasted
quantities, such excess of the Products ordered by Hospira
exceeding one hundred twenty percent (120%) of the most recent
forecast for such Products. If any such forecast or update
exceeds Xxxxxx'x anticipated capacity, Abbott shall so notify
Hospira within fourteen (14) days of receipt of the forecast or
update.
(e) FIRM ORDER CHANGES. If Hospira requests changes to firm orders
within the firm order period specified in SECTION 2.1(b),
Abbott shall attempt to accommodate the changes within
reasonable manufacturing capabilities and efficiencies. Abbott
shall advise Hospira of the costs associated with making any
such change, and the Parties shall mutually agree upon the
amount of such costs prior to Abbott proceeding to make the
change. Upon such mutual agreement, Abbott shall make such
change and Hospira shall be responsible for paying such costs.
(f) PURCHASE ORDER TERMS. Hospira shall issue a purchase order, or
an agreed upon method of communicating its requirements of the
Products, to Abbott. Each purchase order or any acknowledgment
thereof, if any, whether printed, stamped, typed, or written,
shall be governed by the terms
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of this Agreement and none of the provisions of such purchase
order or acknowledgment shall be applicable except those
specifying Product and quantity ordered, delivery dates,
special shipping instructions and invoice information. All
Product orders hereunder shall be in order quantities as
agreed between the Parties. Abbott shall deliver the Products
in such firm order quantities and on such delivery dates as
are specified in the applicable purchase order and, if no such
purchase order is issued, as specified in the firm order
period of Hospira's eighteen (18) month forecasts and monthly
updates provided pursuant to SECTION 2.1(b). Abbott shall
receive Hospira's prior approval prior to making any
adjustments to Product order quantities and/or shipping dates.
2.2 PRICE; ADJUSTMENT PAYMENT; SHIPMENT.
(a) INITIAL TERM PRICES. The prices for each Product for the
Initial Term of the Agreement shall be those set forth in
EXHIBIT A attached hereto. The prices set forth in EXHIBIT A
shall be subject to adjustment as provided in SECTION 2.2(b).
(b) PRICE ADJUSTMENTS. The prices set forth in EXHIBIT A shall be
subject to adjustment as follows:
(i) In the event Hospira elects to extend the term of this
Agreement beyond the Initial Term, as set forth in
SECTION 4.1, (A) the prices for the Products for the
first twelve (12) month period subsequent to the
Initial Term shall be adjusted from the prices set
forth in EXHIBIT A, as such prices may have been
adjusted pursuant to SECTION 2.2(b)(ii) or SECTION
2.2(c), to reflect the increase in the Producer Price
Index for the prior twenty-four (24) month period, and
(B) the prices for the Products for the twelve (12)
month period subsequent to the period described in (A)
above shall be adjusted from the prices set forth in
EXHIBIT A, as such prices may have been adjusted
pursuant to SECTION 2.2(b)(ii) or SECTION 2.2(c) and
(A) above, to reflect the increase in the Producer
Price Index for the prior twelve (12) month period.
(ii) In the event that due to material unforeseen and
unavoidable reasons, the aggregate standard cost of
manufacturing the Products hereunder (e.g. raw
materials or other circumstances outside the control of
Abbott, but not including labor and overhead costs)
increases by five percent (5%) or more, Abbott shall
promptly provide notice to Hospira of such increase
(which notice shall document the reasons for such
increase)
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and the Parties shall meet within thirty (30) days of
Xxxxxx'x notice to negotiate an appropriate price
adjustment. If the Parties are unable to negotiate an
appropriate price adjustment, the Parties shall resolve
the conflict in accordance with the procedures set
forth in SECTION 8.6.
(c) MATERIALS COST REDUCTIONS. In the event that Hospira assists
Abbott in reducing its costs of purchasing materials from
suppliers in connection with Xxxxxx'x manufacture of Products
hereunder, such cost reductions realized by Hospira shall be
shared equally by Abbott and Hospira, net of all implementation
costs.
(d) PAYMENT TERMS. Abbott shall invoice Hospira upon delivery of
Product or transfer of Product into Hospira's inventory
pursuant to the U.S. Transition Services Agreement between the
Parties dated as of the date hereof, as applicable. Hospira
shall make payment net thirty (30) days from the date of
Xxxxxx'x invoice; provided, however, that Hospira shall notify
Abbott of any disputed invoice as soon as practicable and a
timeline for resolving such dispute shall be mutually agreed by
the Parties within forty-five (45) days of the date of the
disputed invoice. Failure to pay a disputed invoice shall not
be deemed a breach of this Agreement by Hospira and will not
relieve Abbott from its commitment to continue to supply
Products hereunder. Product invoices that remain unpaid within
thirty (30) days after the invoice date, other than invoices
being disputed in accordance with the terms set forth above,
shall bear interest at a rate per annum equal to Prime Rate
plus two percent (2%); provided however, any invoices disputed
by Hospira and resolved in favor of Abbott shall be subject to
such late payment fee as of the invoice date until paid in
full. All payments hereunder shall be made in U.S. dollars.
(e) TAXES. Any federal, state, county or municipal sales or use
tax, excise, customs charges, duties or similar charge, or any
other tax assessment (other than that assessed against income),
license, fee or other charge lawfully assessed or charged on
the manufacture, sale or transportation of Product sold
pursuant to this Agreement shall be paid by Hospira.
(f) DELIVERY. Abbott shall deliver the Products to Hospira or into
Hospira's inventory pursuant to the U.S. Transition Services
Agreement between the Parties dated as of the date hereof, as
applicable, F.C.A. Xxxxxx'x manufacturing facility and title
shall pass to Hospira at such point. Shipment to Hospira's
designated location, if applicable, shall be at Hospira's
expense and via a carrier designated by Hospira. Hospira shall
be the importer of record for all Products imported hereunder,
if any, and
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shall assume all associated costs and import activities,
whether customs or transportation-related.
(g) NO SET-OFF. Hospira's obligation to make any required payments
under this Agreement shall not be subject to any right of
offset, set-off, deduction or counterclaim, however arising.
2.3 EXPIRATION/RETEST DATING. So long as Hospira purchases Exhibit D
Products in full batch quantities, such Products, when shipped to Hospira
hereunder, shall have at least two-thirds of their original shelf life and at
least two-thirds of their first retest date remaining at the date of shipment,
unless otherwise agreed in writing by Hospira.
2.4 REJECTION. Hospira shall perform such samplings and tests as may be
required under the Quality Agreement to determine whether the Product meets the
Product Specifications, is not adulterated or misbranded within the meaning of
the Act and complies with all applicable statutes, laws, rules and regulations,
including without limitation, cGMPs. Any Product not refused pursuant to the
terms of the Quality Agreement shall be deemed accepted. If Hospira wishes to
refuse acceptance, Hospira shall inform Abbott of its refusal to accept the
Product, and the reasons therefor. In the event that Hospira refuses acceptance,
Abbott, upon confirmation of the reasons for refusal of the Product, shall
replace the defective Product. If Abbott and Hospira do not agree on the refusal
or rejection of Product, then either Party may refer the matter for final
analysis to a specialized laboratory of national reputation acceptable to both
Parties for the purpose of determining the results. Any determination by such
laboratory shall be binding upon both Parties. If such independent laboratory
determines that the shipment conformed to the requirements of this Agreement,
Hospira shall bear all expenses of shipping, including freight charges, and
testing such shipment samples. If Abbott or such independent laboratory confirms
that such shipment did not meet the requirements of this Agreement, Abbott shall
replace, at no cost to Hospira, the portion of the shipment which does not
conform and bear all expenses of shipping, including freight charges, and
testing the shipment samples.
2.5 TESTING; CERTIFICATE OF ANALYSIS AND CONFORMANCE. Abbott shall,
pursuant to the terms of the Quality Agreement, perform the necessary testing
and provide the required documentation to release the Products to Hospira, which
such documentation may include a certificate of analysis for each shipment of
the Products.
ARTICLE 3- WARRANTIES, COVENANTS AND INDEMNIFICATION
3.1 GENERAL WARRANTIES AND INDEMNIFICATION.
(a) ABBOTT REPRESENTATIONS AND WARRANTIES. Abbott represents and
warrants to Hospira that none of the Products Abbott delivers
to Hospira pursuant to this Agreement shall, at the time of
delivery, be adulterated or misbranded within the meaning of
the Act or within the meaning of any applicable
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state or municipal law in which the definitions of adulteration
and misbranding are substantially the same as those contained
in the Act, as the Act and such laws are constituted and
effective at the time of delivery, and will not be an article
which may not under the provisions of Sections 404 and 505 of
the Act be introduced into interstate commerce. Abbott further
represents and warrants to Hospira that each of the Products
Abbott delivers to Hospira pursuant to this Agreement shall be
free from defects in material and workmanship and shall be
manufactured: (a) in accordance and conformity with the Product
Specifications provided by Hospira; and (b) in compliance with
all applicable statutes, laws, rules or regulations, including
those relating to the environment, food or drugs and
occupational health and safety, including, without limitation,
those enforced or promulgated by the FDA (including, without
limitation, compliance with cGMPs). Abbott further represents
and warrants to Hospira that Xxxxxx'x performance of its
obligations under this Agreement will not result in a material
violation or breach of any agreement, contract, commitment or
obligation to which Abbott is a party or by which it is bound
and will not conflict with or constitute a default under its
Certificate of Incorporation or corporate bylaws. ABBOTT MAKES
NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO
PRODUCT. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY
ABBOTT.
(b) HOSPIRA REPRESENTATIONS AND WARRANTIES. Hospira represents and
warrants that it shall provide Product Specifications to Abbott
with respect to the Products. Hospira further represents and
warrants to Abbott that Hospira's performance of its
obligations under this Agreement will not result in a material
violation or breach of any agreement, contract, commitment or
obligation to which Hospira is a party or by which it is bound
and will not conflict with or constitute a default under its
corporate charter or bylaws.
(c) RECALLS. Hospira shall, as between the Parties, be responsible
for the handling of all recalls of the Exhibit D Products,
including without limitation, withdrawal of the Products from
the market and regulatory actions. Abbott shall, as between the
Parties, be responsible for the handling of all recalls of the
Exhibit E Products, including without limitation, withdrawal of
the Products from the market and regulatory actions. Costs for
recalls of any Product to the extent arising out of, relating
to, or resulting from a breach by Abbott of this Agreement
shall be borne by Abbott, including reimbursement to Hospira
for costs incurred for the handling of such recall. In
addition, Abbott shall indemnify Hospira against any and all
costs and expenses which Hospira may incur as a result of any
such recall to the extent Abbott is responsible. Costs for
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any recalls of any Product to the extent Abbott is not liable
under this Agreement or any other agreement between the Parties
relating to the Products shall be borne by Hospira. In
addition, Hospira shall indemnify Abbott against any and all
costs and expenses which Abbott may incur as a result of any
recall to the extent Hospira is responsible. The Parties shall
promptly advise and consult with one another with respect to
any recall related to the manufacture of any Product, and each
Party shall participate, if requested by the controlling Party,
in all meetings with the FDA and/or equivalent foreign
regulatory body regarding such recall. The expense of each
Party's participation in any such meetings shall be borne by
the Party responsible for the recall.
(d) INDEMNIFICATION BY ABBOTT. Abbott shall indemnify, defend and
hold harmless Hospira, its affiliates, officers, directors and
employees from and against all claims, causes of action, suits,
costs and expenses (including reasonable attorney's fees),
losses or liabilities pursuant to this Agreement and asserted
by Third Parties to the extent such arise out of, result from
or relate to: (i) Xxxxxx'x breach of any representation or
warranty set forth in SECTION 3.1(a); (ii) any violation or
infringement of any proprietary right of any Third Party to the
extent relating to, arising out of or resulting from Xxxxxx'x
manufacturing processes used in the manufacture of Products
pursuant to this Agreement (exclusive of the Product
Specifications or any Hospira proprietary rights); and (iii)
any negligent, wrongful act, or willful misconduct or omission
on the part of Abbott, its officers, directors, employees,
agents or representatives relating to Xxxxxx'x performance
hereunder.
(e) INDEMNIFICATION BY HOSPIRA. Hospira shall indemnify, defend and
hold harmless Abbott, its affiliates, officers, directors and
employees from and against all claims, causes of action, suits,
costs and expenses (including reasonable attorney's fees),
losses or liabilities pursuant to this Agreement and asserted
by Third Parties to the extent such arise out of, result from
or relate to: (i) Hospira's breach of any representation or
warranty set forth in SECTION 3.1(b); (ii) any violation or
infringement of any proprietary right of any Third Party to the
extent relating to, arising out of or resulting from the
Exhibit D Products, other than Xxxxxx'x manufacturing processes
used in the manufacture of Products pursuant to this Agreement;
(iii) the use of or lack of safety or efficacy of the Exhibit D
Products; and (iv) any negligent, wrongful act, or willful
misconduct or omission on the part of Hospira, its officers,
directors, employees, agents or representatives relating to
Hospira's performance hereunder.
(f) CONDITIONS OF INDEMNIFICATION. If either Party seeks
indemnification from the other hereunder, it shall promptly
give notice to the other Party of any
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such claim or suit threatened, made or filed against it which
forms the basis for such claim of indemnification and shall
cooperate fully with the other Party in the investigation and
defense of all such claims or suits. The indemnifying Party
shall have the option to assume the other Party's defense in
any such claim or suit with counsel reasonably satisfactory to
the other Party. No settlement or compromise shall be binding
on a Party hereto without its prior written consent, such
consent not to be unreasonably delayed or withheld.
(g) LIMITATIONS ON LIABILITY. FOR EACH TWELVE (12) MONTH PERIOD
DURING WHICH THIS AGREEMENT IS IN EFFECT, COMMENCING AS OF THE
EFFECTIVE DATE, THE MAXIMUM LIABILITY OF ABBOTT AND ITS
SUBSIDIARIES TO, AND THE SOLE REMEDY OF, HOSPIRA AND ANY OF ITS
SUBSIDIARIES WITH RESPECT TO ANY AND ALL CLAIMS ARISING UNDER
OR IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF THE THEORY
UPON WHICH THE LIABILITY IS PREMISED, SHALL NOT EXCEED XXXXXX'X
PROFITS HEREUNDER, WHICH SHALL BE DEEMED TO BE EQUAL TO THE
AMOUNT OF THE XXXX-UP RECEIVED BY ABBOTT DURING SUCH TWELVE
(12) MONTH PERIOD AS SET FORTH ON EXHIBIT A AND AS MAY BE
ADJUSTED PURSUANT TO THE TERMS OF SECTION 2.2(b).
(h) NO CONSEQUENTIAL DAMAGES. NEITHER PARTY SHALL BE LIABLE TO THE
OTHER FOR INDIRECT, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES, INCLUDING WITHOUT LIMITATION, LOST PROFITS
AND PUNITIVE DAMAGES RESULTING FROM ANY BREACH OF THIS
AGREEMENT, EVEN IF THE PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, AND EACH PARTY HEREBY WAIVES ON
BEHALF OF ITSELF AND ITS SUBSIDIARIES ANY CLAIM FOR SUCH
DAMAGES, INCLUDING ANY CLAIM FOR PROPERTY DAMAGE OR LOST
PROFITS, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE.
(i) The foregoing limitations on liability in this SECTION 3.1
shall not apply to: (i) Xxxxxx'x liability for breaches of
confidentiality under ARTICLE VII, or (ii) Xxxxxx'x obligations
for claims brought by Third Parties arising out of Xxxxxx'x
gross negligence or willful misconduct.
3.2 MANUFACTURE OF THE PRODUCTS.
(a) MANUFACTURING STANDARDS. Abbott shall manufacture and deliver
the Products to Hospira at all times in full compliance with
the Act, cGMPs,
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Product Specifications for each Product, any other applicable
regulatory requirements and the requirements set forth in the
Quality Agreement. Abbott shall maintain during the term of
this Agreement and for a period thereafter consistent with
Xxxxxx'x policies and standard cGMP requirements, all records
as are necessary or appropriate to demonstrate compliance with
the Act, cGMPs, Product Specifications, any other applicable
regulatory requirements and the Quality Agreement. If Abbott
fails to comply with cGMPs in a material manner, as
demonstrated by an observation of a Regulatory Authority,
Abbott shall use reasonable commercial efforts to remedy such
material deviation.
(b) MANUFACTURING PROCESS. Abbott shall provide all raw materials,
components, packaging, containers, labeling, release testing,
quality control, equipment, labor, and other services and
materials necessary for the manufacture of the Products, as
part of the price set forth in EXHIBIT A, except as otherwise
provided by Hospira. Abbott shall be responsible for vendor
quality approval for vendors of such materials all of which
shall comply with Product Specifications.
(c) NON-STANDARD EQUIPMENT COSTS. If non-standard, specialized
equipment is required to manufacture any Exhibit D Product for
Hospira, Hospira shall pay the cost of such equipment, subject
to Hospira's prior approval of such costs, which approval shall
not be unreasonably withheld. Abbott shall advise Hospira of
specialized equipment required and the estimated costs
associated with the purchase and installation of such
equipment. After Hospira approves such costs, Abbott shall
install the equipment and xxxx Hospira for the associated
costs. Hospira shall make payment to Abbott no later than
thirty (30) days from the date of Xxxxxx'x invoice. Title to
the equipment shall be in Xxxxxx'x name. If Abbott wishes to
use the specialized equipment for manufacture of a product
other than an Exhibit D Product for Hospira, Abbott and Hospira
shall meet and discuss the technical and practical
ramifications of such use and appropriate compensation to
Hospira. Abbott will be responsible for insuring, maintaining
and repairing all Hospira-purchased equipment located at
Xxxxxx'x facility to the same level of care of Abbott-owned
equipment. In the event of loss of any Hospira-purchased
equipment while in Xxxxxx'x possession during the term of this
Agreement, Hospira shall receive the replacement funds for such
equipment received by Abbott arising from its insurance claim
for such equipment. Upon the termination or expiration of this
Agreement, Abbott shall, as agreed by the Parties, transfer
ownership of any equipment purchased by Abbott pursuant to this
SECTION 3.2(d) to Hospira or maintain ownership of the
equipment by paying Hospira the greater of the then current
book or fair market value of the equipment. Hospira shall bear
all costs associated with the removal of equipment from
Xxxxxx'x facility if the Parties elect to transfer ownership
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of such equipment. This provision shall not apply to any
standard equipment normally used or required for the
manufacture of Exhibit D Product or for additional standard
equipment required to increase production capacity or
efficiency at Xxxxxx'x manufacturing facility. =
(d) AUDIT. Hospira shall have the right, either by itself or
through independent outside auditors or consultants, not more
than once per year during the term of this Agreement, unless
reasonable cause is shown, to inspect and audit any areas of
Xxxxxx'x facilities in which any portion of the manufacturing
of the Products is performed for the examination of production
or quality records or to perform cGMP audits, at its sole
expense, on reasonable advance notice, during Xxxxxx'x normal
business hours in a manner that does not interfere unreasonably
with Xxxxxx'x operations. Any such auditor or consultant shall
enter into an agreement with the Parties on terms in which such
independent auditor shall agree to maintain the confidentiality
of the information obtained during the course of such audit.
3.3 REGULATORY MATTERS.
(a) PERMITS, REGISTRATIONS, LICENSES AND APPROVALS. Abbott shall be
responsible for maintaining all regulatory and governmental
permits, registrations, licenses and approvals necessary to
manufacture and deliver the Exhibit D Products to Hospira. To
the extent Abbott requires the assistance of Hospira in order
to fulfill its obligations pursuant to this SECTION 3.3(a),
Hospira agrees to fully cooperate and assist Abbott at
Hospira's expense. Upon the expiration or termination of this
Agreement, Abbott shall use reasonable commercial efforts to
cooperate with Hospira to transfer and maintain such permits,
licenses, registrations and approvals.
(b) REPORTING REQUIREMENTS. During the term of this Agreement,
Abbott will be responsible for any reporting of matters
regarding the manufacture of Products to any applicable
Regulatory Authority in accordance with pertinent laws and
regulations. Abbott shall promptly furnish copies of any such
reports to Hospira. Abbott shall also advise Hospira of any
occurrences or information that arises out of Xxxxxx'x
manufacturing activities that have or could reasonably be
expected to have adverse regulatory compliance and/or reporting
consequences concerning the Products.
(c) INSPECTIONS. Abbott shall be responsible, at Xxxxxx'x sole
expense, for handling and responding to any FDA or other
governmental agency inspections with respect to the manufacture
of the Exhibit D Products during the term of this Agreement.
Abbott shall provide to Hospira any
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Information reasonably requested by Hospira and all Information
requested by the FDA or any other governmental agency
concerning any governmental inspection related to the Exhibit D
Products. To the extent Abbott requires the assistance of
Hospira in order to fulfill its obligations pursuant to this
SECTION 3.3(c), Hospira agrees to fully cooperate and assist
Abbott at Hospira's expense.
In the event Abbott or any of the Products are inspected by any
applicable Regulatory Authority, Abbott shall notify Hospira as soon
as practicable of (i) any such inspection with reasonable advance
notice, (ii) any written alleged violations or deficiencies relating
to the manufacturing facility at which Products are manufactured,
packaged or stored, and (iii) the corrective action to be taken, and
shall promptly contest such alleged violations or deficiencies in
good faith or take the required corrective action, each at Xxxxxx'x
sole expense.
3.4 COMPLAINTS AND RECALLS.
(a) Hospira shall notify Abbott promptly of any Product complaints
involving Xxxxxx'x manufacture in sufficient time to allow
Abbott to evaluate the complaints and assist Hospira in
responding to such complaints.
(b) In the event that Abbott should be required to initiate a
recall, field alert, Product withdrawal or field correction
with respect to any Product provided under this Agreement,
Abbott shall immediately notify Hospira in writing. In the
event that Hospira believes that a recall, field alert, Product
withdrawal, or field correction is necessary with respect to
any Product provided under this Agreement, Hospira shall
promptly so notify Abbott.
3.5 INSURANCE. During the term of this Agreement, Abbott and Hospira
shall maintain their own respective product liability insurance with respect to
the Products, in such amounts and with such scope of coverage as are adequate to
cover their respective obligations under this Agreement and as are appropriate
for companies of like size in like industries, taking into account the scope of
activities contemplated herein.
3.6 MANUFACTURING CHANGES.
(a) PRODUCT CHANGES. Abbott shall not make any changes to the
Product Specifications and/or manufacturing that would require
approval from, or notification to, any Regulatory Authority
without the prior written consent of Hospira, which such
consent shall not be unreasonably withheld. The timing of
Xxxxxx'x notice to Hospira of any such change shall permit
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adequate time for Hospira to make any necessary regulatory
filings and obtain any necessary approval thereof from a
Regulatory Authority prior to the change being implemented.
(b) REQUIRED CHANGES. For changes to the Product Specifications or
manufacturing relating solely to the Products that are required
by laws and other regulatory requirements (including, without
limitation, cGMP), or by medical or scientific concerns as to
the toxicity, safety and/or efficacy of the Products
(collectively, "Required Changes"), the Parties shall cooperate
in making such changes promptly.
(c) DISCRETIONARY CHANGES. Abbott shall consider in good faith any
request by Hospira to make changes to the Product
Specifications or manufacturing that are not Required Changes,
including, but not limited to, changes to the existing Product,
Product line extensions, or changes to the existing or
additional packaging (collectively, "Discretionary Changes").
Any analytical improvements shall be considered Discretionary
Changes unless requested or required by Regulatory Authorities
in which case such improvements shall be considered a Required
Change. Any change requested by Abbott which is not a Required
Change shall be made only with the written consent of Hospira,
which consent shall not be unreasonably withheld.
(d) COSTS OF CHANGES. Any and all costs associated with Required
Changes shall be borne by Hospira. Any Discretionary Changes
initiated by either party shall be agreed to by the Parties
including which Party or Parties shall be responsible for the
funding of such Discretionary Change. Notwithstanding the
foregoing, any Required Changes during the first three (3)
months after the Effective Date that are required in order to
comply with laws and other Regulatory Requirements in effect as
of the Effective Date shall be at Xxxxxx'x sole cost and
expense.
ARTICLE 4- TERM AND TERMINATION
4.1 TERM. This Agreement shall have an initial term of two (2) years
commencing on the Effective Date (the "Initial Term"). With respect to the
Exhibit D Products, Hospira may extend this Agreement beyond the Initial Term by
giving written notice of such extension to Abbott not less than twelve (12)
months prior to expiration of the Initial Term. Such extension of the Initial
Term (the "Exhibit D Successive Term") shall continue for a period equal to the
amount of time required by Hospira to (i) identify and qualify an alternative
supplier for the Exhibit D Products, or (ii) negotiate a new agreement with
Abbott for the supply of such Products; provided, however, that such Exhibit D
Successive Term shall not exceed two (2) years. For the duration of the Exhibit
D Successive Term, Hospira shall (i) use reasonable commercial efforts to
identify and qualify such alternative supplier for the Exhibit D Products, or
(ii) engage in good faith negotiations with Abbott regarding such new agreement.
With respect
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to the Exhibit E Products, Abbott may extend this Agreement beyond the Initial
Term by giving written notice of such extension to Hospira not less than twelve
(12) months prior to expiration of the Initial Term. Any such extension of the
Initial Term (the "Exhibit E Successive Term") shall continue for a period equal
to the amount of time required by Abbott to (i) identify and qualify an
alternative source for the finishing of the Exhibit E Products, or (ii)
negotiate a new agreement with Hospira for the finishing of such Products;
provided, however, that such Exhibit E Successive Term shall not exceed two (2)
years. For the duration of the Exhibit E Successive Term, Abbott shall (i) use
commercially reasonable efforts to identify and qualify such alternative source
for finishing the Exhibit E Products, or (ii) engage in good faith negotiations
with Hospira regarding such new agreement. Abbott may terminate the Exhibit E
Successive Term by giving Hospira not less than twelve (12) months written
notice of such termination. During the Initial Term and any Successive Term, the
Parties may mutually agree to early termination of this Agreement, on a
Product-by-Product basis, at any time.
4.2 MATERIAL BREACH. Either Party may terminate this Agreement upon sixty
(60) days' prior written notice to the other Party if the other Party is in
material breach of any term of this Agreement, as determined according to the
dispute resolution procedures set forth in SECTION 8.6 or as agreed in writing
by the breaching party, and such breaching party fails to cure that breach
within such sixty (60) day period. Any final order of debarment which has a
material adverse effect on sales of the Products shall constitute a material
breach of the Agreement for purposes of this SECTION 4.2.
4.3 INSOLVENCY. This Agreement may be terminated upon thirty (30) days'
prior written notice by either Party at any time during this Agreement if (a)
the other Party shall file in any court pursuant to any statute of any
government in any country a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver or
trustee of the Party or of its assets; (b) any Third Party proposes a written
agreement of composition for extension of its debts; (c) the other Party shall
be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after filing thereof; (d) the other Party shall be a party to any dissolution or
liquidation, or (e) the other Party shall make a general assignment for the
benefit of its creditors.
4.4 DIVESTITURE OR CLOSURE OF PLANT. If Abbott divests to a Third Party
or closes any of its manufacturing facilities used in manufacturing of any of
the Exhibit D Products , Abbott shall continue to manufacture such Products in
an FDA approved alternative facility approved by Hospira prior to the transfer
of the manufacturing of such Products, such approval not to be unreasonably
withheld or delayed, or if applicable, obligate the purchaser of such
facility(ies) to assume Xxxxxx'x obligations hereunder as a condition to closing
such divestiture. Abbott is solely responsible for all costs associated with any
transfer of manufacturing pursuant to this SECTION 4.4.
4.5 INVENTORY TRANSFER. Upon the termination of this Agreement, Abbott
shall transfer all remaining firm orders of Products pursuant to SECTION 2.1(b),
work in process and raw materials relating to the Products manufactured pursuant
to this Agreement to Hospira at
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Hospira's expense, unless such termination shall have been as a result of a
breach of this Agreement by Abbott or the early termination of this Agreement
pursuant to SECTION 4.1, in which case such inventory, work in process and raw
materials shall be returned at Xxxxxx'x expense.
4.6 EFFECT OF TERMINATION. Termination of this Agreement shall not affect
any obligations of either Party incurred prior to its termination, including,
without limitation, each Party's obligations with respect to any firm orders
that have been submitted or deemed to be submitted pursuant to ARTICLE 2 hereof.
ARTICLE 5-INTELLECTUAL PROPERTY
5.1 XXXXXX'X PROPRIETARY RIGHTS. Abbott has granted no license, express
or implied, to Hospira to use Abbott proprietary technology, know-how or rights
relating to its manufacturing processes for the Products other than for the
purposes of this Agreement. If Abbott, in its sole discretion, deems patentable
any improvement or invention related to Xxxxxx'x proprietary technology,
know-how or rights relating to its manufacturing processes made or reduced to
practice in the course of this Agreement and if such improvement or invention
relates exclusively to Xxxxxx'x manufacturing operations in general, then Abbott
shall solely own and shall be entitled to apply for patent protection on such
improvements or inventions at Xxxxxx'x expense and risk. Subject to the
preceding sentence, Hospira shall be entitled to all such rights relating to any
improvement or invention relating to Abbott proprietary technology, know-how or
rights relating exclusively to the Product or the manufacture thereof. Abbott
hereby grants (and shall have deemed to have granted) to Hospira without any
further action by Abbott, a fully-paid, non-exclusive, perpetual, irrevocable,
royalty-free license to use such improvements or inventions of the Product
Specification solely for the purposes of the manufacture of the Products.
5.2 HOSPIRA'S PROPRIETARY RIGHTS. Hospira has granted no license, express
or implied, to Abbott to use Hospira's proprietary technology, know-how or
rights relating to the Products, other than for the purposes of this Agreement.
If Hospira, in its sole discretion, deems patentable any improvement or
invention related to the Products or to Hospira's proprietary technology,
know-how or rights relating to the Products, then Hospira shall solely own and
shall be entitled to apply for patent protection on such improvements or
inventions at its expense and risk.
ARTICLE 6- TECHNICAL TRANSFER
6.1 TRANSFER PLAN. The Parties hereby agree that effective at the time of
any expiration or termination of this Agreement or at Hospira's request in the
event that Hospira desires to qualify a source other than Abbott to manufacture
a Product, the Parties shall meet and mutually agree upon a reasonable plan to
transfer the Product Specifications from Abbott to Hospira or Hospira's
designees (the "Transfer Plan").
6.2 PROPRIETARY RIGHTS ASSOCIATED WITH TRANSFER PLAN. Hospira shall
receive, pursuant to this SECTION 6.2, the necessary Product Specifications and
know-how and certain intellectual
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property developed in the course of this Agreement as described in SECTION 5.1
to permit Hospira or Hospira's designee to manufacture the Products in
accordance with the Product Specifications in place at the time of the transfer.
At any time after the Effective Date, Abbott shall reasonably cooperate with
Hospira's efforts to qualify a source other than Abbott to manufacture the
Products and obtain necessary approvals for such qualifications. The effective
date of such transfer shall be specified by Hospira upon written notice to
Abbott (provided that such transfer shall not relieve Abbott of any obligations
accrued prior to such transfer date, including the responsibility for firm
orders already placed and any remaining inventory).
6.3 COSTS OF TRANSFER PLAN. In the event that this Agreement terminates
for any reason except Xxxxxx'x material breach, all direct actual out-of-pocket
costs incurred by Abbott in connection with each such Transfer Plan, and
Xxxxxx'x time (at the current staff rates) incurred in connection with each such
Transfer Plan, shall be the sole responsibility of Hospira. In the event that
this Agreement terminates as a result of Xxxxxx'x material breach, all direct
actual out-of-pocket costs incurred [by Abbott] in connection with each such
Transfer Plan, and Xxxxxx'x time (at the current staff rates) incurred in
connection with each such Transfer Plan, shall be the sole responsibility of
Abbott.
ARTICLE 7 - CONFIDENTIALITY
7.1 CONFIDENTIALITY. Subject to SECTION 7.3, Abbott, on behalf of
itself and each Abbott Subsidiary, and Hospira, on behalf of itself and each
Hospira Subsidiary, agrees to hold, and to cause its respective directors,
officers, employees, agents, accountants, counsel and other advisors and
representatives to hold, in strict confidence, with at least the same degree of
care that applies to Xxxxxx'x confidential and proprietary information pursuant
to policies in effect as of the Effective Date, all Information concerning the
other and the other's Subsidiaries that is either in its possession (including
Information in its possession prior to the Effective Date) or furnished by the
other or the other's Subsidiaries or their respective directors, officers,
employees, agents, accountants, counsel and other advisors and representatives
at any time pursuant to this Agreement, and will not use any such Information
other than for such purposes as may be expressly permitted hereunder, except, in
each case, to the extent that such Information has been (i) in the public domain
through no fault of such Party or its Subsidiaries or any of their respective
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives, (ii) later lawfully acquired from other sources by such
Party (or any of its Subsidiaries) which sources are not themselves bound by a
confidentiality obligation, or (iii) independently generated without reference
to any proprietary or confidential Information of the other Party.
7.2 NO RELEASE; RETURN OR DESTRUCTION. Each Party agrees not to release
or disclose, or permit to be released or disclosed, any such Information to any
other Person, except its directors, officers, employees, agents, accountants,
counsel and other advisors and representatives who need to know such
Information, and except in compliance with SECTION 7.3. Without limiting the
foregoing, when any Information furnished by the other Party after the Effective
Date pursuant to this Agreement is no longer needed for the purposes
contemplated by this Agreement, each Party will promptly after receiving a
written request from the other Party either return to the other Party all such
Information in a tangible form (including all copies
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thereof and all notes, extracts or summaries based thereon) or certify to the
other Party that it has destroyed such Information (and such copies thereof and
such notes, extracts or summaries based thereon).
7.3 PROTECTIVE ARRANGEMENTS. In the event that either Party or any of its
Subsidiaries either determines on the advice of its counsel that it is required
to disclose any Information pursuant to applicable law or the rules or
regulations of any Regulatory Authority or receives any demand under lawful
process or from any Regulatory Authority to disclose or provide Information of
any other Party that is subject to the confidentiality provisions hereof, such
Party shall notify the other Party prior to disclosing or providing such
Information and shall cooperate at the expense of the requesting Party in
seeking any reasonable protective arrangements requested by such other Party.
Subject to the foregoing, the Person that received such request may thereafter
disclose or provide Information to the extent required by such law (as so
advised by counsel) or by lawful process or such Regulatory Authority.
ARTICLE 8 - MISCELLANEOUS
8.1 CORPORATE ORGANIZATION AND AUTHORITY. Each Party represents and
warrants that it is a company duly organized, validly existing, and in good
standing under the laws of the jurisdiction wherein it is organized, and that it
has all necessary power and authorization to assume its obligations under this
Agreement, and to discharge them pursuant to the terms hereof.
8.2 PUBLIC ANNOUNCEMENTS. Neither Party shall make any publicity
releases, interviews, or other dissemination of Information concerning this
Agreement or its terms, or either Party's performance hereunder, to
communication media, financial analysts or others without the written approval
of the other Party, which approval shall not unreasonably be withheld. Either
Party may upon notice to the other make any disclosure in filings with
regulatory agencies as required by law or applicable court order; provided that
the other Party shall have the opportunity to consult on such disclosures and
filings.
8.3 FORCE MAJEURE. Neither Party shall be liable to the other if, and to
the extent that, the performance or delay in performance of any of its
obligations under this Agreement is prevented, restricted, delayed or interfered
with due to circumstances beyond the reasonable control of such Party,
including, but not limited to, government legislation, fires, floods,
explosions, epidemics, accidents, acts of God, wars, riots, strikes, lockouts or
other concerted acts of workers and/or acts of government. The Party claiming an
event of force majeure shall promptly notify the other Party in writing, and
provide full particulars of the cause or event and the date of first occurrence
thereof, as soon as possible after the event and also keep the other Party
informed of any further developments. The Party so affected shall use its
commercially reasonable efforts to remove the cause of non-performance, and both
the Parties shall resume performance hereunder with the utmost dispatch when
such cause is removed unless this Agreement has previously been terminated under
ARTICLE 4 hereof.
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8.4 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto contain the
entire agreement and understanding between the Parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
whether written or oral, relating to such subject matter; provided, that except
as otherwise expressly agreed by the Parties, nothing herein shall modify or
supersede the Separation and Distribution Agreement or any of the other
agreements contemplated therein.
8.5 AMENDMENT AND WAIVER. This Agreement may be amended only by a writing
which specifically states that such an amendment is its purpose and which is
signed by both Parties. No course of dealing between the Parties or failure by
either Party to exercise any right or remedy hereunder shall constitute an
amendment to this Agreement or a waiver of any other right or remedy or the
later exercise of any right or remedy.
8.6 GOVERNING LAW; DISPUTE RESOLUTION. This Agreement will be governed by
and construed and interpreted in accordance with the laws of the State of
Illinois irrespective of the choice of laws principles of the State of Illinois,
as to all matters, including matters of validity, construction, effect,
enforceability, performance and remedies. Any controversy or claim arising out
of or relating to this Agreement, or the breach thereof, shall be resolved
exclusively by the alternative dispute resolution process described in EXHIBIT
F.
8.7 ASSIGNMENT. Neither this Agreement nor any of the rights and
obligations of a Party hereunder shall be assignable or transferable by such
Party without the prior written consent of the other Party; provided, however,
that this Agreement shall be assignable by either Party with the prior written
consent of the other Party (which consent shall not be unreasonably withheld,
delayed or conditioned) in connection with a sale, by sale of stock, sale of
assets, merger or otherwise, of all or substantially all of one or more
businesses, business units or product lines of the assigning Party.
8.8 NATURE OF AGREEMENT. In operating under this Agreement, each Party
shall act independently and this Agreement shall not be construed as creating
any partnership, joint venture or incorporated business entity. Neither Party
shall have any authority to incur any liability or obligation whatsoever on
behalf of the other.
8.9 NOTICE. All notices or other communications under this Agreement must
be in writing and will be deemed to be duly given (a) when delivered in person,
(b) upon transmission via confirmed facsimile transmission, provided that such
transmission is followed by delivery of a physical copy thereof in person, via
U.S. first class mail, or via a private express mail courier, or (c) two days
after deposit with a private express mail courier, in any such case addressed as
follows:
If to Abbott, to:
Xxxxxx Laboratories
000 Xxxxxx Xxxx Xxxx
00
Xxxxxxxx XX0X, Xxxx. 364
Xxxxxx Park, Illinois 60064-6020
Attn: General Counsel
Facsimile: (000) 000-0000
If to Hospira to:
Hospira, Inc.
Legal Department
Dept. _____
000 Xxxxx Xxxxx Xxxxx
X.X. Xxx 0000
Xxxx Xxxxxx, XX 00000-0000
Attn: General Counsel
Facsimile: (224) 212-_________________
Any Party may, by notice to the other Party, change the address to which such
notices are to be given.
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IN WITNESS WHEREOF, the Parties hereto have affixed hereunto their
authorized signature as of the date first above written:
HOSPIRA, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
-----------------------------
XXXXXX LABORATORIES
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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