EXHIBIT 2.2
[Certain information has been omitted from this document pursuant to a request
for confidential treatment submitted to the Securities and Exchange Commission
and the omitted information has been separately submitted to the Securities and
Exchange Commission.]
MANUFACTURING AGREEMENT
This MANUFACTURING AGREEMENT (the "Manufacturing Agreement") is entered
into as of February 18, 2002 (the "Effective Date"), by and between NeoSan
Pharmaceuticals Inc. ("NEOSAN"), a corporation organized and existing under the
laws of the State of Delaware, and Xxx Xxxxx and Company ("Lilly"), a
corporation organized and existing under the laws of the State of Indiana.
NEOSAN and Lilly are sometimes referred to herein individually as a "Party" and
collectively as "Parties".
RECITALS
WHEREAS, Lilly and NEOSAN have entered into an Assignment, Transfer and
Assumption Agreement of even date herewith (the "Assignment Agreement");
WHEREAS, subject to the terms and conditions set forth in this
Manufacturing Agreement, NEOSAN wishes to have Lilly manufacture and sell
certain propoxyphene pharmaceutical products; and
WHEREAS, subject to the terms and conditions set forth in this
Manufacturing Agreement, Lilly wishes to manufacture and sell such propoxyphene
pharmaceutical products for and to NEOSAN.
NOW, THEREFORE, the Parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Manufacturing Agreement, the following terms will
have the meanings set forth below:
1.1 Capitalized terms not otherwise defined herein will have the meaning
given to them in the Assignment Agreement.
1.2 "ADDITIONAL QUANTITIES" will have the meaning set forth in Section 4.3.
1.3 "APPLICABLE DEA QUOTA FORECAST" will have the meaning set forth in
Section 3.5.
1.4 "ASSIGNMENT AGREEMENT" will have the meaning set forth in the first
WHEREAS clause of this Manufacturing Agreement.
1.5 "AUDIT" means a review by NEOSAN or its appointed representatives (such
representatives to be reasonably acceptable to Lilly) of Lilly's
processes, procedures and documents as described in Section 3.3(b) of
this Manufacturing Agreement.
1.6 "CGMP" means current Good Manufacturing Practices pursuant to 21
C.F.R. ss. 211 et seq., as such may be amended from time to time.
1.7 "CONTRACT YEAR" means the twelve-month period beginning as of the
Closing Date, and each twelve-month period thereafter during the term
of this Agreement.
1.8 "DEA QUOTA" means a quota given by the DEA related to the manufacture
and sale of propoxyphene.
1.9 "DISPUTED PRODUCT" will have the meaning set forth in Section 5.3(b).
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1.10 "EFFECTIVE DATE" will have the meaning set forth in the first paragraph
of this Manufacturing Agreement.
1.11 "FDCA" means the Federal Food, Drug and Cosmetic Act (21 U.S.C.ss.301
et seq.), as may be amended from time to time, together with any rules
and regulations promulgated thereunder.
1.12 "FORECAST" will have the meaning set forth in Section 4.4.
1.13 "INITIAL FORECAST" will have the meaning set forth in Section 4.4.
1.14 "LATENT DEFECT" means a defect that causes the Product to fail to
conform to the Specifications and that was not discoverable upon
reasonable inspection and testing.
1.15 "LILLY ERROR" means the negligent performance, failure to perform or
willful misconduct in the performance by Lilly or its officers, agents
or employees of any obligation imposed upon or assigned to Lilly under
this Manufacturing Agreement or any Applicable Laws.
1.16 "MANUFACTURING RESPONSIBILITY DOCUMENT" OR "MRD", a copy of which is
attached hereto as SCHEDULE 1.16, sets forth additional written
instructions regarding the manufacture and supply of Product. In the
event of conflict between the terms of the MRD on the one hand, and the
terms of the Assignment Agreement, this Manufacturing Agreement, or the
Quality Agreement, on the other hand, the terms of the Assignment
Agreement, Manufacturing Agreement or Quality Agreement, as applicable,
will govern.
1.17 "MANUFACTURING SITES" will have the meaning set forth in Section 2.2.
1.18 "PARTY" or "PARTIES" will have the meaning set forth in the first
paragraph of this Manufacturing Agreement.
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1.19 "PRODUCT" means the presentations of finished propoxyphene
pharmaceutical product set forth in SCHEDULE 1.19 attached hereto
marketed under the Assigned Trademarks in the United States.
Notwithstanding the foregoing, "Product" will not mean or include (i)
presentations of propoxyphene pharmaceutical product that were not
marketed by Lilly or its Affiliates in the United States as of the
Closing Date, or (ii) any new formulations including any NEOSAN New
Product.
1.20 "PURCHASE MAXIMUMS" will have the meaning set forth in Section 4.2.
1.21 "PURCHASE MINIMUM" will have the meaning set forth in Section 4.1.
1.22 "PURCHASE PRICE" will have the meaning set forth in Section 2.2.
1.23 "QUALITY AGREEMENT" means an agreement between the Parties which
describes certain quality and regulatory responsibilities relating to
the manufacture and release for sale of the Product by Lilly to NEOSAN.
The Quality Agreement will be compiled and agreed upon by the Parties
prior to the Closing Date. The Quality Agreement will be subject to and
not inconsistent with the terms of this Manufacturing Agreement and the
Assignment Agreement, and in the event of conflict between terms of
this Manufacturing Agreement or the Assignment Agreement, as
applicable, on one hand, and the Quality Agreement on the other, this
Manufacturing Agreement or the Assignment Agreement, as applicable,
will govern. Sections of the Quality Agreement may be modified from
time to time through the issuance of a revised section signed on behalf
of each of the Parties by an authorized representative incorporating
the modification and stating the effective date and revision number of
the modification; provided, however, that no such modification will be
inconsistent with the terms of this Manufacturing Agreement and the
Assignment Agreement, and in the event of conflict between such
modifications, on the one hand, and this Manufacturing Agreement or the
Assignment Agreement, on the other, this Manufacturing Agreement or the
Assignment Agreement, as applicable, will govern. A reference to
"MRD/Quality Agreement" in this Manufacturing Agreement will mean the
MRD and/or Quality Agreement as the context requires.
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1.24 "SPECIFICATIONS" means the specifications for manufacturing and
packaging the Product as set forth in the NDA and in SCHEDULE 1.24
attached hereto.
1.25 "SUPPLY TEAM" will have the meaning set forth in Section 10.1.
1.26 "THREE-YEAR-FORECAST" will have the meaning set forth in Section
4.4(b).
ARTICLE 2
PAYMENTS; PURCHASE AND PRICE OF PRODUCT
2.1 PURCHASE OF INVENTORY. On the Closing Date and as partial consideration
for the amounts paid by NEOSAN to Lilly pursuant to the Assignment
Agreement, Lilly will convey, transfer and deliver to NEOSAN all of
Lilly's United States finished goods inventory of Product (containing
an expiration date of twelve (12) months or more) existing as of the
Closing Date, less the quantity of Product held by Lilly's employee
health services on the Closing Date. SCHEDULE 2.1 attached hereto lists
the finished goods inventory of Product (less the quantity of Product
held by Lilly's employee health services on the Closing Date) as of
January 3, 2002. The quantity of such finished goods inventory conveyed
to NEOSAN pursuant to this Section 2.1 will be applied towards NEOSAN's
minimum purchase requirements as set forth in Sections 4.1 and 4.4,
below, and Lilly's maximum supply obligations set forth in Sections 4.2
and 4.4, below. Lilly will have no obligation to re-label or over-label
any such Product inventory. NEOSAN will not re-label or over-label any
such Product inventory without the prior written consent of Lilly,
which consent will not be unreasonably withheld.
2.2 PURCHASE OF FUTURE PRODUCT. As of the Closing Date and during the term
of this Manufacturing Agreement, subject to Section 4.1 (to the extent
the Purchase Minimum is greater than the purchase obligation described
in this Section 2.2) and
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Sections 4.2 and 4.4, below), NEOSAN will purchase exclusively from
Lilly sixty percent (60%) of NEOSAN's future requirements for Product
for resale in the United States during the first Contract Year, fifty
percent (50%) of NEOSAN's future requirements for Product for resale in
the United States during the second Contract Year, and forty percent
(40%) of NEOSAN's future requirements for Product for resale in the
United States during the third Contract Year, and Lilly will
manufacture and supply such Product for and to NEOSAN. NEOSAN may
request, but will not, subject to the minimum purchase obligations set
forth in Sections 4.1 and 4.4, below, be obligated to request, that
Lilly manufacture and supply Product for resale in the United States in
quantities in excess of NEOSAN's purchase obligations pursuant to this
Section 2.2, and, subject to Lilly's maximum supply obligations set
forth in Sections 4.2 and 4.4, below, Lilly will manufacture and supply
such requested Product for and to NEOSAN. While NEOSAN is not obligated
to do so, the Parties anticipate that NEOSAN will purchase from Lilly
all of its requirements for resale in the United States in excess of
its purchase obligations set forth in this Section 2.2, subject to
Lilly's maximum supply obligations set forth in Section 4.2 and 4.4,
below. NEOSAN will pay the prices set forth in SCHEDULE 2.2A for
Product purchased by NEOSAN pursuant to this Section 2.2 (the "Purchase
Price"). Commencing January 1, 2003, the Purchase Price will be
increased (but not decreased) effective January 1 of each Calendar Year
for purchases made thereafter by an amount equal to [Information
omitted pursuant to a request for confidential treatment submitted to
the Securities and Exchange Commission, and the omitted information has
been separately submitted to the Securities and Exchange Commission.]
percent ([Information omitted pursuant to a request for confidential
treatment submitted to the Securities and Exchange Commission, and the
omitted information has been separately submitted to the Securities and
Exchange Commission.]%) of the prior year's Purchase Price plus Lilly's
actual increase in the purchase price of materials incorporated into
Product that are purchased from such Third Persons. Notwithstanding the
foregoing, in no event will the Purchase Prices be less than Lilly's
standard cost of manufacturing Product. The expiration date with
respect to all Product purchased by NEOSAN pursuant to this Section 2.2
will be no earlier than [Information omitted pursuant to a request for
confidential treatment submitted to the Securities and Exchange
Commission, and the omitted information has been separately submitted
to the Securities and Exchange Commission.] months from the date of
shipment from Lilly to NEOSAN. Lilly will have no obligation to
manufacture or package Product for NEOSAN in any presentation not set
forth in SCHEDULE 1.19. SCHEDULE 2.2B lists Lilly's and its Affiliates'
sites where Product will be manufactured (the "Manufacturing Sites").
Lilly may change from which Manufacturing Site it supplies at its sole
discretion.
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2.3 TERMS OF PAYMENT. NEOSAN agrees to pay all invoices within thirty (30)
days from the date of the applicable invoice. All payments to Lilly
will be made by Federal Reserve wire transfer to an account designated
by Lilly. All payments made under this Manufacturing Agreement will be
made in United States currency.
2.4 EXTENSION OF CREDIT. NEOSAN acknowledges that Lilly will establish a
credit line for NEOSAN to facilitate its purchases of the Product and
that Lilly may periodically review and adjust this credit line as it
deems appropriate. In consideration for providing this credit line,
NEOSAN agrees to provide Lilly, upon request, the financial information
reasonably necessary for Lilly to perform credit reviews; provided,
however, that if NEOSAN does not provide such information, or if
Lilly's analysis of that information does not meet Lilly's standard
credit approval guidelines, then Lilly will have the right to ask for
cash in advance of shipment. Lilly also reserves the right to ask for
cash in advance of shipment should NEOSAN experience a condition of
insolvency, or if notice of intent to terminate has been issued
pursuant to Section 8.2 of this Manufacturing Agreement.
2.5 NO EXCUSE. Notwithstanding Section 12.15, NEOSAN will not be excused
from or relieved of its obligations to pay the amounts described in
this Article 2 by any claimed or actual event of force majeure,
commercial or other impracticability or impossibility, or frustration
of essential purpose.
ARTICLE 3
MANUFACTURING AND QUALITY
3.1 MANUFACTURING. Lilly will manufacture, package, label, test, prepare
for shipment and ship Product to NEOSAN and from Lilly's facilities, or
the facilities of a Third Person under subcontract with Lilly, at the
times and in the quantities set forth by NEOSAN in a purchase order
pursuant to Section 4.5, subject, however, to the quantity restrictions
set forth in Sections 2.2, 4.1, 4.2 and 4.4. Each shipment of Product:
(i) will have been
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manufactured in accordance with cGMP in effect at the time of
manufacture, (ii) will not be adulterated or misbranded by Lilly within
the meaning of the FDCA, (iii) will not have been manufactured, sold or
shipped in violation of any Applicable Laws in any material respect,
and (iv) upon delivery to NEOSAN, FOB Lilly's loading dock, will convey
good title to such Product to NEOSAN and such conveyance will be free
and clear of any Encumbrance other than Permitted Encumbrance or any
Encumbrances caused by or related to financing provided to aaiPharma
Inc. or any of its Affiliates. Lilly will fax a certificate of analysis
and/or a certificate of compliance to NEOSAN (at such location
designated in the Quality Agreement) no later than five (5) days after
NEOSAN's receipt of Product confirming that such Product meets the
Specifications then in effect.
3.2 MODIFICATIONS. NEOSAN will inform Lilly in writing as soon as practical
of any proposed modification to the Specifications. Lilly will inform
NEOSAN in writing of the amount of any additional costs and expenses
(including capital expenditures, regulatory and any other costs) Lilly
would actually incur due to the modification, and if NEOSAN elects to
adopt the modification, NEOSAN will promptly reimburse Lilly for any
required capital expenditures, regulatory and other costs associated
with the modification and the Purchase Price will be increased to
reflect any increase in on-going Product manufacturing costs resulting
from such modification (exclusive of any indirect costs associated with
capital expenditures actually paid for by NEOSAN). Any assets acquired
by Lilly on NEOSAN's behalf pursuant to this Section 3.2 and paid for
by NEOSAN will be maintained by Lilly in the normal course of business
and, to the extent reasonably severable from Lilly's facility without
damage or disruption to such facility, returned to NEOSAN as soon as
practicable after the termination or expiration of this Manufacturing
Agreement.
NEOSAN will also promptly pay for any additional analytical
tests or any other additional requirements that are required by the FDA
(i) resulting from such modifications, or (ii) resulting from a change
in any Applicable Law. Lilly will provide NEOSAN a detailed written
explanation of such capital expenditures and additional costs. If Lilly
is unable or unwilling to comply with a proposed modification or if
NEOSAN is unwilling to pay Lilly's costs to implement such modification
or the
8
increase in Purchase Price associated therewith, then NEOSAN will
withdraw the proposed modification and the Specifications will remain
in full force and effect. Lilly will follow the above-described
procedure, including the payment of any capital expenditures,
regulatory and other costs, if it proposes to modify any Specification.
Lilly will not modify any Specification (other than with respect to
minor changes to secondary packaging) without NEOSAN's prior written
consent, which consent will not be unreasonably withheld. NEOSAN will
notify Lilly as soon as practical of any changes to any Specifications
or procedures that are required by the FDA or Applicable Law and that
could have an impact on Lilly's performance of this Manufacturing
Agreement. Any such changes will be deemed (and treated as)
modifications proposed by NEOSAN under this Section 3.2; provided,
however, that if NEOSAN is not willing to pay for such modification
that is required by Applicable Laws as described in this Section 3.2 or
Lilly is unable to implement such modification that is required by
Applicable Laws after exercising commercially reasonable best efforts,
Lilly may terminate this Manufacturing Agreement as of the earlier of
(i) the date Applicable Laws require the implementation of such
modification that is required by Applicable Laws, or (ii) thirty (30)
days after written notice from Lilly to NEOSAN. Every proposed
modification will be treated separately.
In no event will Lilly be required to make (or not to make) a
modification that is prohibited (or required) by applicable regulations
or regulatory authorities. NEOSAN will have sole responsibility for
obtaining any and all necessary regulatory approvals from the FDA for
modifications to the Specifications and NDA and for reporting any
modifications to the Specifications and the NDA to the FDA as
appropriate.
3.3 QUALITY CONTROL AND ASSURANCE; CGMP AUDIT.
(a) Quality Control and Assurance. Lilly will manufacture
the Product in compliance with the Specifications. Lilly will perform
quality control and quality assurance testing on the Product to be
delivered to NEOSAN hereunder in accordance with the Specifications,
cGMP and the MRD/Quality Agreement.
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(b) Access to Lilly Facilities by NEOSAN Representatives.
Upon no less than thirty (30) days' written notice to Lilly and no more
than one (1) time each Calendar Year, Lilly will permit NEOSAN to
conduct an Audit of Lilly's facilities during regular business hours
for the purpose of making quality control inspections to assure cGMP
compliance of the facilities used in the manufacturing, receiving,
sampling, analyzing, storing, handling, packaging and shipping of
Product, including, but not limited to, in the receipt, storage and
issuance of raw materials, labeling and packaging components, and
ingredients thereof. Notwithstanding the immediately preceding
sentence, in the event of a rejection of Product by NEOSAN pursuant to
Section 5.3, below, because of a failure to meet Specifications, then
NEOSAN will have an additional right to conduct an Audit under the
provisions of this Section 3.3(b). Any NEOSAN representatives will be
advised of the confidentiality obligations of Article 9, below, and
will follow such security and facility access procedures as are
reasonably designated by Lilly.
Lilly may require that at all times the NEOSAN representatives
be accompanied by a Lilly representative and that the NEOSAN
representatives not enter areas of the facility used in production of
the Product at times other than when the production of Product is
occurring to assure protection of Lilly or Third Person confidential
information. Lilly will provide NEOSAN with a written response to any
written Audit observations provided by NEOSAN within ninety (90) days
of Lilly's receipt thereof; provided, however, that Lilly will have no
obligation to further act upon such Audit, but will consider the Audit
in good faith.
(c) Safety Procedures. Lilly will have responsibility for
developing, adopting and enforcing safety procedures for the handling
and production of Product by Lilly and the handling and disposal of all
waste relating thereto. Such responsibilities will terminate as to
Product upon delivery thereof to NEOSAN's common carrier.
3.4 RECORDS AND ACCOUNTING BY LILLY. Lilly will, with respect to each lot
of Product produced by it hereunder, for the longer of (i) any period
required by Applicable Laws, or (ii) a period of one (1) year after the
expiry of the expiration dating of such lot, keep accurate records of
the manufacture and testing of the Product produced by it hereunder,
including, without limitation, all such records which are required
under Applicable Laws.
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Access to such records will be made available by Lilly to NEOSAN during
normal business hours upon NEOSAN's reasonable written request.
3.5 DEA QUOTA. As soon as commercially reasonable after the Closing Date,
Lilly will submit a request to the DEA for a revised DEA Quota for
Calendar Year 2002 based on the Initial Forecast submitted by NEOSAN.
Thereafter, Lilly's only obligation will be to submit a timely request
for a DEA Quota from the DEA for each subsequent Calendar Year based
upon the Forecast submitted by NEOSAN on or before January 1 of the
Calendar Year preceding the Calendar Year for which the DEA Quota
request is submitted (the "Applicable DEA Quota Forecast").
Notwithstanding the foregoing, after the Closing Date Lilly will use
the Initial Forecast for purposes of requesting DEA Quota for Calendar
Year 2003; provided, however, that in the event the Closing Date occurs
after the time that a request was required to be submitted to the DEA
for DEA Quota for Calendar Year 2003, Lilly's only obligation for
Calendar Year 2003 DEA Quota will be to submit a request to the DEA for
a revised DEA Quota for Calendar Year 2003 based on the Initial
Forecast. For purposes of submitting a request for DEA Quota, Lilly
will submit the request for the lesser of (i) the Purchase Maximum, or
(ii) one hundred twenty-five percent (125%) of the quantity forecasted
in the Initial Forecast or Applicable DEA Quota Forecast, as
applicable.
ARTICLE 4
PURCHASE OF PRODUCT; FORECASTS
4.1 MINIMUM PURCHASE REQUIREMENTS. Without limiting NEOSAN's purchase
obligations described in Section 2.2, above, NEOSAN will purchase from
Lilly or a Third Person(s), or any combination thereof, at least
[Information omitted pursuant to a request for confidential treatment
submitted to the Securities and Exchange Commission, and the omitted
information has been separately submitted to the Securities and
Exchange Commission.] kilograms of Product each Calendar Year (the
"Purchase Minimum"). For purposes of this Manufacturing Agreement, the
term "kilogram" when used in the context of the weight of Product means
the kilograms of either propoxyphene napsylate or propoxyphene
hydrochloride, as applicable, contained in the Product. If the initial
Calendar Year is less than three
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hundred sixty-five (365) days, then NEOSAN will only be required to
purchase from Lilly or a Third Person(s), or any combination thereof,
an amount of Product equal to the product of (a) [Information omitted
pursuant to a request for confidential treatment submitted to the
Securities and Exchange Commission, and the omitted information has
been separately submitted to the Securities and Exchange Commission.]
base kilograms multiplied by (b) the quotient of the number of days in
the initial Calendar Year divided by three hundred sixty-five (365)
days.
For purpose of determining the date upon which Product is
purchased pursuant to the terms of this Manufacturing Agreement, the
date of "purchase" of Product means the date upon which Lilly or a
Third Person, as applicable, is obligated to deliver such Product to
NEOSAN pursuant to this Manufacturing Agreement.
4.2 MAXIMUM PURCHASE AMOUNTS. Notwithstanding Lilly's supply obligations
set forth in Sections 2.2 and 4.4, Lilly will not be required to supply
NEOSAN with more than [Information omitted pursuant to a request for
confidential treatment submitted to the Securities and Exchange
Commission, and the omitted information has been separately submitted
to the Securities and Exchange Commission.] kilograms of Product in any
Calendar Quarter or more than [Information omitted pursuant to a
request for confidential treatment submitted to the Securities and
Exchange Commission, and the omitted information has been separately
submitted to the Securities and Exchange Commission.] kilograms of
Product in any Calendar Year. The maximum quantities set forth in the
preceding sentence will be collectively referred to herein as the
"Purchase Maximums." If the initial Calendar Quarter is less than three
(3) full calendar months, then Lilly will only be required to supply an
amount of Product in the initial Calendar Quarter equal to the product
of (a) [Information omitted pursuant to a request for confidential
treatment submitted to the Securities and Exchange Commission, and the
omitted information has been separately submitted to the Securities and
Exchange Commission.] kilograms, multiplied by (b) the quotient of the
number of days in the initial Calendar Quarter divided by ninety (90)
days. If the initial Calendar Year is less than three hundred
sixty-five (365) days, then Lilly will only be required to supply an
amount of Product in the initial Calendar Year equal to the product of
(a) [Information omitted pursuant to a request for confidential
treatment submitted to the Securities and Exchange Commission, and the
omitted information has been separately submitted to the Securities and
Exchange Commission.] kilograms, multiplied by (b) the quotient of the
number of days in the initial Calendar Year divided by three hundred
sixty-five (365) days. Notwithstanding anything in Section 2.2, Section
3.5, this Section 4.2, Section 4.4(a) or any section of this Agreement
to the contrary, Lilly will not be required to supply NEOSAN with more
than Lilly is permitted to manufacture and sell in accordance with the
relevant DEA Quota. Lilly will be deemed not to be in breach of this
Section 4.2 for failure to supply the Purchase Maximum, failure to
supply the quantities required by Section 2.2, or failure to supply the
maximum amounts set forth in Section 4.4, below, as a result of the
limitations on Lilly's supply obligations set forth in the preceding
sentence. In the event NEOSAN
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requests Product in excess of the Purchase Maximum, Lilly agrees to
discuss in good faith supplying NEOSAN with such quantities, but will
have no obligation to so provide NEOSAN with such quantities. For
purposes of this Manufacturing Agreement, Lilly will be deemed to have
"supplied" Product to NEOSAN on the date that Lilly has delivered
Product to NEOSAN in accordance with Section 4.7, below.
4.3 PURCHASE OF PRODUCT FROM THIRD PERSONS. If NEOSAN has purchased the
Purchase Maximums from Lilly in a Calendar Quarter or Calendar Year,
NEOSAN may, but will not be obligated to, request that Lilly provide
additional quantities of Product in excess of the Purchase Maximums
("Additional Quantities"). Lilly will in its sole discretion determine
whether to supply such Additional Quantities to NEOSAN. If Lilly
indicates that it is unable or unwilling to supply to NEOSAN such
Additional Quantities or if NEOSAN in its sole discretion does not
request such Additional Quantities from Lilly, then NEOSAN will have
the right to purchase such Additional Quantities of Product from a
Third Person manufacturer; provided, however, that the purchase of
Additional Quantities by NEOSAN from a Third Person manufacturer will
not relieve NEOSAN of its obligation to satisfy the Purchase Minimum or
purchase obligations set forth in Sections 2.2 and 4.4 from Lilly in
any subsequent Calendar Quarter or Calendar Year, as applicable, so
long as Lilly can supply Product in accordance herewith. If NEOSAN
purchases any such Additional Quantities from a Third Person, NEOSAN
will maintain, at its cost, all records required to identify the
manufacturer of such Product.
4.4 FORECASTS.
(a) Upon the Closing Date and on or before the first day
of each Calendar Quarter thereafter, NEOSAN will provide to Lilly
NEOSAN's estimate of the total quantity of Product to be delivered for
the following Calendar Quarter and the succeeding eight (8) Calendar
Quarters, broken down into calendar months (the "Forecast"). The
initial Forecast is attached hereto as SCHEDULE 4.4 (the "Initial
Forecast"), which Initial Forecast may be amended by NEOSAN on or
before the Closing Date. All future Forecasts will be in substantially
the same form as the Initial Forecast. Subject to
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Sections 2.2 (to the extent NEOSAN's purchase obligation pursuant to
Section 2.2 is greater than the purchase obligation described in this
Section 4.4(a)), 4.1 and 4.2, during each of the first three (3)
Calendar Quarters of the Initial Forecast, (i) NEOSAN will be obligated
to purchase seventy-five percent (75%) of the quantities of Product
forecasted for each of the first three (3) Calendar Quarters in the
Initial Forecast, and (ii) Lilly will, subject to Section 4.2, above,
be obligated to supply NEOSAN with quantity ordered by NEOSAN unless
the quantity exceeds one hundred twenty-five percent (125%) of the
quantities of Product forecasted for such first three (3) Calendar
Quarters in the Initial Forecast. Thereafter, subject to Sections 2.2
(to the extent NEOSAN's purchase obligation in Section 2.2 is greater
than the purchase obligation described in this Section 4.4(a)), 4.1 and
4.2, above, during each Calendar Quarter, NEOSAN will be obligated to
purchase seventy-five percent (75%) of the quantities of Product
forecasted for such Calendar Quarter in the Forecast in which such
Calendar Quarter was the third (3rd) Calendar Quarter of the Forecast,
and Lilly will be obligated to supply NEOSAN with quantity ordered by
NEOSAN unless the quantity exceeds one hundred twenty-five percent
(125%) of the quantities of Product forecasted for such Calendar
Quarter in the Forecast in which such Calendar Quarter was the third
(3rd) Calendar Quarter of the Forecast. Except as otherwise set forth
in this Section 4.4 or elsewhere in this Agreement, the Parties agree
that the Forecasts will be for general planning purposes only, and will
not be binding on Lilly or NEOSAN.
(b) Three-Year Forecast. In addition to the Initial
Forecast and the Forecasts, NEOSAN will deliver to Lilly on the Closing
Date a forecast in months of the quantity of Product NEOSAN expects to
receive from Lilly during the term of this Manufacturing Agreement (the
"Three-Year Forecast"); provided, however, that for purposes of the
Three-Year Forecast only, the forecast for Contract Years two and three
included in the Three-Year Forecast need not be broken down into SKUs.
The Parties agree that the Three-Year Forecast will be used for
planning purposes only and will not be binding on either Party (except
to the extent a forecast for a month or quarter is included in the
Initial Forecast or a Forecast and is otherwise binding as set forth in
Section 4.4(a)).
(c) Unique and Unused Components or Materials. Reasonable
quantities of unique components, or materials that are used in the
manufacture of the Product, will be
14
purchased by Lilly in reliance by Lilly on the Initial Forecast and
each Forecast. If NEOSAN thereafter requests any change to the
quantities previously forecasted for a Calendar Quarter in a Forecast
that causes any obsolescence of any such unique components or materials
purchased by Lilly, NEOSAN will be responsible to Lilly for the
reasonable and direct costs and expenses actually incurred associated
with said components or materials (including, but not limited to, any
costs related to returning such components or material to the vendor or
otherwise disposing thereof).
4.5 PURCHASE ORDERS. NEOSAN will purchase Product solely by written
purchase orders, which purchase orders must be consistent with the
quantity restrictions set forth in Sections 2.2, 4.1, 4.2 and 4.4,
above. Such purchase orders must be for whole lot size quantities of
Product as identified in SCHEDULE 4.5A attached hereto. NEOSAN may not
order Product such that a lot is split into more than two (2) different
package sizes. Each NEOSAN order will be governed by the terms of this
Manufacturing Agreement, the Assignment Agreement and the MRD/Quality
Agreement, and no terms or conditions of NEOSAN purchase orders,
Lilly's acknowledgement forms, or any other forms will be applicable
except those specifying quantity ordered (subject to the quantity
restrictions), shipment locations and invoice information. NEOSAN will
submit each such written purchase order to Lilly at least ninety (90)
days in advance of the date specified in each purchase order by which
delivery of the Product is required. Each purchase order will include
the information listed in SCHEDULE 4.5B attached hereto.
Notwithstanding the foregoing, Lilly will use commercially reasonable
efforts, but will not be obligated, to meet any request of NEOSAN for
delivery of Product in less than ninety (90) days, and further, Lilly
will attempt, but will not be obligated, to accommodate any changes
requested by NEOSAN in delivery schedules for Product following Lilly's
receipt of purchase orders from NEOSAN; provided, however, that Lilly
may add to the Purchase Price Lilly's incremental increase in the cost
of such Product incurred by Lilly in accommodating NEOSAN's requests
pursuant to this sentence. Upon receipt and acceptance of each purchase
order by Lilly hereunder, Lilly will supply the Product in such
quantities (with any variances permitted hereunder) and will use
commercially reasonable efforts to deliver such Product to NEOSAN on
the deliver dates specified in
15
such purchase order, unless otherwise mutually agreed to in writing by
the Parties. Delivery by Lilly of greater than ninety percent (90%) of
the quantity ordered will be accepted by NEOSAN in full satisfaction of
the quantity ordered in such purchase order; provided, however, that
NEOSAN will only be invoiced and required to pay for the quantities
that Lilly actually delivers to NEOSAN, but the full purchase order
will be applied to NEOSAN's required minimum purchases.
4.6 TRANSFER OF MANUFACTURING RESPONSIBILITIES. Lilly agrees to provide at
no cost to NEOSAN other than the expenses described below, up to one
thousand (1,000) hours of assistance per year for each of the first and
second Contract Years of this Manufacturing Agreement. NEOSAN agrees to
pay Lilly promptly all reasonable travel, room and board expenses
incurred by Lilly personnel in providing such assistance. Lilly will
invoice NEOSAN on a monthly basis for the expenses incurred during the
previous calendar month. NEOSAN will pay such invoices in accordance
with Section 2.3, above, except that NEOSAN will not pay such invoices
by wire transfer if so instructed by Lilly not to do so. Lilly's
obligation pursuant to this Section 4.6 will cease in the event this
Manufacturing Agreement is terminated by Lilly pursuant to Sections 8.2
or 8.3. In connection with the technology transfer contemplated in this
Section 4.6, Lilly will only be required to provide NEOSAN with such
documentation as is reasonably necessary to transfer the manufacturing
of Product to NEOSAN or a Third Person.
4.7 SHIPMENT OF PRODUCT. Shipment of Product will be to one distribution
center as designated by NEOSAN. Lilly will not make direct shipments to
final customers. NEOSAN will select and pay the carrier to be used.
Product will be shipped FOB Lilly's loading dock, freight class, Class
70 (Class of Commodity for Food and Pharmaceutical Product) or as may
otherwise be required pursuant to Applicable Laws. Title and risk of
loss or damage to the Product will remain with Lilly to Lilly's loading
dock, at which time title to the Product will rest in, and risk of loss
or damage to the Product will pass to, NEOSAN FOB Lilly's loading dock.
Notwithstanding anything in this Manufacturing Agreement or the
Assignment Agreement to the contrary, Lilly will have no obligation to
deliver Product to any Person that is not registered to possess the
Product with the DEA unless such Person is not required to be
registered with the DEA in order to possess such Product, and Lilly
will have no liability for withholding delivery of Product to a Person
that is not registered to possess the Product with the DEA
16
unless such Person is not required to be registered with the DEA in
order to possess the Product.
ARTICLE 5
LABELING; TRADE DRESS; NON-PRODUCT
5.1 LABELING, TRADE DRESS AND PACKAGING. The Product will be labeled,
prepared and packed for shipment in full compliance with the NDA, and
cGMP and in accordance with the MRD/Quality Agreement. NEOSAN, at its
expense, will provide Lilly with an electronic graphics file for all
new or revised printed packaging components to be used in the
manufacture of Product. Such artwork will be implemented as soon as
practicable after all applicable regulatory requirements with respect
thereto have been met and in accordance with the provisions set forth
in the MRD/Quality Agreement. Until NEOSAN's initial packaging and
labeling materials have been implemented, Product will continue to be
labeled and packaged with the labels and packaging being used by Lilly
as of the Closing Date. Lilly hereby grants to NEOSAN, for no
additional consideration, a non-exclusive license solely to market,
sell and promote the Product delivered by Lilly that contains the
labels and packaging being used by Lilly as of the Closing Date. The
foregoing license will terminate upon the earlier of NEOSAN'S sale of
all of such Product, or on the one (1) year anniversary of the Closing
Date. Lilly will have no obligation to re-label or over-label any such
Product packaged prior to the implementation of NEOSAN's labels and
packaging. The Parties contemplate that NEOSAN's name (or the name of
an Affiliate of NEOSAN) will appear as the exclusive distributor of the
Product and Lilly's name will appear as the manufacturer of the Product
(unless a Third Person manufactures any Product pursuant to Section
4.3, above, in which event such Third Person's name will appear as the
manufacturer of the Product). All changes made to NEOSAN's initial
labeling will be made in accordance with the procedures and timelines
set forth in the MRD. NEOSAN will reimburse Lilly for any
17
costs associated with changing to NEOSAN's initial labeling, trade
dress and packaging work provided by Lilly hereunder and for any
subsequent packaging and labeling change work required or otherwise
requested by NEOSAN hereunder, including without limitation,
commercially reasonable costs associated with the destruction of
printed components rendered obsolete as a result of the transactions
contemplated hereby.
5.2 LOT NUMBERING. Lilly's lot numbers will be affixed on the containers
for the Product and on each shipping carton in accordance with
Applicable Laws.
5.3 TESTING AND REJECTION OF DELIVERED PRODUCT.
(a) Non-Conforming Product. NEOSAN will be entitled, at
its cost and expense and using the test methods set forth in the NDA,
to test any and all Product delivered to it hereunder to determine
whether such Product complies with the Specifications. NEOSAN will use
validated methods to test Product. NEOSAN will notify Lilly in writing
promptly, and in any event not later than thirty (30) days after
delivery thereof if it rejects any Product delivered to it because such
Product failed to meet the Specifications. If NEOSAN rejects any such
Product it will, at Lilly's request, provide Lilly with the opportunity
to conduct its own tests on such rejected Product. Product not rejected
within the thirty (30) day period will be deemed accepted and will
constitute a waiver of any claims NEOSAN may have against Lilly with
respect to payment for such shipment subject, however, to NEOSAN's
right to reject any Product for Latent Defects discovered by NEOSAN and
promptly reported to Lilly after such stipulated period has expired.
Lilly will use commercially reasonable efforts to replace the rejected
Product with Product which meets the Specifications within a
commercially reasonable time and will deliver such replacement Product,
at Lilly's sole cost and expense, to NEOSAN. In addition, Lilly will,
at Lilly's sole cost and expense, arrange for all such rejected Product
to be picked up promptly and, where applicable, destroyed in accordance
with all Applicable Laws. NEOSAN will have no responsibility to Lilly
for the Purchase Price of such nonconforming Product but will pay Lilly
the Purchase Price for the replacement Product in accordance with
Section 2.3, above; provided, however,
18
that to the extent NEOSAN previously paid for Product it properly
rejected in accordance with this Section 5.3(a), NEOSAN will receive a
credit against the Purchase Price for replacement Product. Product
properly rejected in accordance with this Section 5.3(a) will not be
applied to the applicable Purchase Maximums, Purchase Minimums, the
purchase obligation set forth in Section 2.2, or the minimum purchase
or maximum supply obligations set forth in Section 4.4(a); but
replacement Product will be applied to the applicable Purchase
Maximums, Purchase Minimums, the purchase obligations set forth in
Section 2.2, and the minimum purchase or maximum supply obligations set
forth in Section 4.4(a).
(b) Disputed Product. Notwithstanding subsection (a),
above, if NEOSAN and Lilly disagree on whether any Product rejected by
NEOSAN pursuant to subsection (a), above, complies with the
Specifications or on the methods for or results of testing of any of
such rejected Product, an independent laboratory which is acceptable to
both Parties will test the Product in dispute ("Disputed Product")
using the test methods set forth in the NDA, and any other applicable
cGMP test method used by Lilly at the time the Disputed Product was
manufactured, which tests will be validated by such laboratory
independently. If such laboratory finds that the Disputed Product meets
the Specifications, NEOSAN will pay the fees of such laboratory related
to such testing and will promptly pay for the Disputed Product. If such
laboratory finds that the Disputed Product fails to meet the
Specifications, Lilly will pay the fees of such laboratory related to
such testing and will promptly replace the Disputed Product in
accordance with the preceding subsection (a). Both Parties hereby agree
to accept and be bound by the findings of such independent laboratory.
19
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx hereby represents and warrants to NEOSAN that, as of the date
hereof:
6.1 ORGANIZATION AND STANDING. Lilly is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Indiana.
6.2 POWER AND AUTHORITY. Lilly has all requisite corporate power and
authority to execute, deliver, and perform this Manufacturing Agreement
and the other agreements and instruments to be executed and delivered
by it pursuant hereto and thereto and to consummate the transactions
contemplated herein and therein. The execution, delivery, and
performance of this Manufacturing Agreement by Lilly does not, and the
consummation of the transactions contemplated hereby will not, violate
any provisions of Lilly's organizational documents, bylaws, or any
Applicable Law applicable to Lilly, or any agreement, mortgage, lease,
instrument, order, judgment, or decree to which Lilly is a party or by
which Lilly is bound.
6.3 CORPORATE ACTION; BINDING EFFECT. Lilly has duly and properly taken all
action required by law, its organizational documents, or otherwise, to
authorize the execution, delivery, and performance of this
Manufacturing Agreement and the other instruments to be executed and
delivered by it pursuant hereto and thereto and the consummation of the
transactions contemplated hereby and thereby. This Manufacturing
Agreement has been duly executed and delivered by Lilly and
constitutes, and the other instruments contemplated hereby when duly
executed and delivered by Lilly will constitute legal, valid, and
binding obligations of Lilly enforceable against it in accordance with
its respective terms, except as enforcement may be affected by
bankruptcy, insolvency, or other similar laws.
20
6.4 GOVERNMENTAL APPROVAL. Except as set forth in Section 4.14 of the
Assignment Agreement, no consent, approval, waiver, order or
authorization of, or registration, declaration or filing with, any
Governmental or Regulatory Authority or any other Third Person is
required in connection with the execution, delivery and performance of
this Manufacturing Agreement, or any agreement or instrument
contemplated by this Manufacturing Agreement, by Lilly or the
performance by Lilly of its obligations contemplated hereby and
thereby.
6.5 BROKERAGE. No broker, finder or similar agent has been employed by or
on behalf of Lilly, and no Person with which Lilly has had any dealings
or communications of any kind is entitled to any brokerage commission,
finder's fee or any similar compensation, in connection with this
Manufacturing Agreement or the transactions contemplated hereby.
6.6 LITIGATION. There are no pending or, to Lilly's knowledge as of the
Effective Date, threatened judicial, administrative or arbitral Actions
or Proceedings pending as of the date hereof against Lilly or its
Affiliates in the United States which, either individually or together
with any other, will have a material adverse effect on the ability of
Lilly to perform its obligations under this Manufacturing Agreement or
any agreement or instrument contemplated hereby.
6.7 PRODUCT SPECIFICATIONS. All of the existing Product purchased by NEOSAN
pursuant to Section 2.1 above and all Product delivered by Lilly to
NEOSAN hereunder: (i) will conform to the Specifications then in
effect, (ii) will have been manufactured in accordance with cGMP in
effect at the time of manufacture, (iii) will not be adulterated or
misbranded by Lilly within the meaning of the FDCA, (iv) will not have
been manufactured, sold or shipped in violation of any Applicable Laws
in any material respect, and (v) upon delivery to NEOSAN, FOB Lilly's
loading dock, will convey good title to such Product to NEOSAN and such
conveyance will be free and clear of any Encumbrance other than any
Permitted Encumbrance or any Encumbrance caused by or related to
financing provided to aaiPharma Inc. or any of its Affiliates.
21
6.8 NOT DEBARRED. Lilly is not debarred and has not and will not use in any
capacity the services of any Person debarred under subsections 306(a)
or (b) of the Generic Drug Enforcement Act of 1992. If at any time this
representation and warranty is no longer accurate, Lilly will
immediately notify NEOSAN of such fact.
6.9 APPLICABLE LAWS. Lilly will comply with all Applicable Laws relating to
its manufacture of the Product.
6.10 IMPLIED WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE 6 AND
ARTICLE 4 OF THE ASSIGNMENT AGREEMENT, LILLY MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY
STATUTE OR OTHERWISE, AND LILLY SPECIFICALLY DISCLAIMS ANY AND ALL
IMPLIED OR STATUTORY WARRANTIES, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY, WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE AND
WARRANTY OF NONINFRINGEMENT. Without limiting the foregoing, NEOSAN
acknowledges that it has not and is not relying upon any implied
warranty of merchantability, fitness for a particular purpose,
noninfringement, or upon any representation or warranty whatsoever as
to the prospects (financial, regulatory or otherwise) or the likelihood
of commercial success of the Product after the date of this
Manufacturing Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF NEOSAN
NEOSAN represents and warrants to Lilly that, as of the date hereof:
7.1 ORGANIZATION AND STANDING. NEOSAN is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware.
22
7.2 POWER AND AUTHORITY. NEOSAN has all requisite corporate power and
authority to execute, deliver, and perform this Manufacturing Agreement
and the other agreements and instruments to be executed and delivered
by it pursuant hereto and thereto and to consummate the transactions
contemplated herein and therein. The execution, delivery, and
performance of this Manufacturing Agreement by NEOSAN does not, and the
consummation of the transactions contemplated hereby will not, violate
any provisions of NEOSAN's organizational documents, bylaws, or any
Applicable Law applicable to NEOSAN, or any agreement, mortgage, lease,
instrument, order, judgment, or decree to which NEOSAN is a party or by
which NEOSAN is bound.
7.3 CORPORATE ACTION; BINDING EFFECT. NEOSAN has duly and properly taken
all action required by law, its organizational documents, or otherwise,
to authorize the execution, delivery, and performance of this
Manufacturing Agreement and the other instruments to be executed and
delivered by it pursuant hereto and thereto and the consummation of the
transactions contemplated hereby and thereby. This Manufacturing
Agreement has been duly executed and delivered by NEOSAN and
constitutes, and the other instruments contemplated hereby when duly
executed and delivered by NEOSAN will constitute legal, valid, and
binding obligations of NEOSAN enforceable against it in accordance with
its respective terms, except as enforcement may be affected by
bankruptcy, insolvency, or other similar laws.
7.4 GOVERNMENTAL APPROVAL. Except as set forth in Section 5.4 of the
Assignment Agreement, no consent, approval, waiver, order or
authorization of, or registration, declaration or filing with, any
Governmental or Regulatory Authority or any other Third Person is
required in connection with the execution, delivery and performance of
this Manufacturing Agreement, or any agreement or instrument
contemplated by this Manufacturing Agreement, by NEOSAN or the
performance by NEOSAN of its obligations contemplated hereby and
thereby.
7.5 BROKERAGE. No broker, finder or similar agent has been employed by or
on behalf of NEOSAN, and no Person with which NEOSAN has had any
dealings or communications
23
of any kind is entitled to any brokerage commission, finder's fee or
any similar compensation, in connection with this Manufacturing
Agreement or the transactions contemplated hereby.
7.6 LITIGATION. There are no pending or, to NEOSAN's knowledge as of the
Effective Date, threatened judicial, administrative or arbitral Actions
or Proceedings pending as of the date hereof against NEOSAN which,
either individually or together with any other, will have a material
adverse effect on the ability of NEOSAN to perform its obligations
under this Manufacturing Agreement or any agreement or instrument
contemplated hereby.
7.7 NOT DEBARRED. NEOSAN is not debarred and has not and will not use in
any capacity the services of any Person debarred under subsections
306(a) or (b) of the Generic Drug Enforcement Act of 1992. If at any
time this representation and warranty is no longer accurate, NEOSAN
will immediately notify Lilly of such fact.
7.8 APPLICABLE LAWS. NEOSAN will comply with Applicable Laws relating to
its distributing, marketing, promoting and selling of the Product.
ARTICLE 8
TERM OF MANUFACTURING AGREEMENT; TERMINATION
8.1 TERM OF MANUFACTURING AGREEMENT. Unless sooner terminated in accordance
with this Article 8 or any other provision of this Manufacturing
Agreement, this Manufacturing Agreement will take effect and commence
on the Closing Date and continue in effect for a term that will expire
on December 31, 2004.
8.2 TERMINATION. In addition to termination by expiration under Section
8.1, above, Lilly's rights to terminate pursuant to Section 8.3, below,
and as otherwise set forth in this Manufacturing Agreement, each Party
will have the right to terminate this Manufacturing Agreement as
follows:
24
(a) Either Party may terminate this Manufacturing
Agreement because of a material breach or material default of this
Manufacturing Agreement by the other Party as follows: The terminating
Party will give the other Party prior written notice thereof,
specifying in reasonable detail the alleged material breach or material
default, and if such alleged material breach or material default
continues unremedied for a period of thirty (30) days with respect to
monetary breaches or defaults or ninety (90) days with respect to
non-monetary breaches or defaults after the date of receipt of the
notification or, if the non-monetary material breach or material
default reasonably cannot be corrected or remedied within ninety (90)
days, then if (i) the defaulting Party has not commenced remedying said
material breach or material default with said ninety (90) days and be
diligently pursuing completion of same, and (ii) said material breach
or material default has not been corrected or remedied within
one-hundred twenty (120) days, then such terminating Party may
immediately terminate this Agreement by again providing written
notification to the defaulting Party. Except as otherwise limited
pursuant to Section 11.2 of this Manufacturing Agreement and 11.7 of
the Assignment Agreement, this Section 8.2(a) will not be exclusive and
will not be in lieu of any other remedies available to a Party hereto
for any breach or default hereunder on the part of the other Party.
(b) Either Party may immediately terminate this
Manufacturing Agreement by providing written notice to the other Party
if the other Party (or, in the case of NeoSan, an Affiliate of NEOSAN)
is declared insolvent or bankrupt by a court of competent jurisdiction,
or a voluntary petition of bankruptcy is filed in any court of
competent jurisdiction by the other Party (or, in the case of NeoSan,
an Affiliate of NEOSAN), or an involuntary petition for relief under
the United States Bankruptcy Code is filed in a court of competent
jurisdiction against the other Party (or, in the case of NeoSan, an
Affiliate of NEOSAN) which is not dismissed within thirty (30) days of
its filing, or the other Party (or, in the case of NEOSAN, an Affiliate
of NEOSAN) makes or executes any assignment for the benefit of
creditors.
8.3 TERMINATION BY LILLY.
25
In addition to Lilly's rights to terminate pursuant to Section
8.2, Lilly will have the following termination rights:
(a) Purchase Minimums. If in any Calendar Year NEOSAN
fails to satisfy the Purchase Minimum, then Lilly may terminate this
Manufacturing Agreement in its entirety upon sixty (60) days prior
written notice to NEOSAN.
(b) Termination of the Assignment Agreement. Lilly may
terminate this Manufacturing Agreement immediately upon any termination
of the Assignment Agreement other than a termination of the Assignment
Agreement as a result of NEOSAN's exercise of its rights to terminate
the Assignment Agreement under Section 9.1 thereof.
8.4 EFFECT OF TERMINATION. Upon termination of this Manufacturing Agreement
for any reason (whether due to breach of either Party or otherwise),
Lilly will furnish to NEOSAN a complete inventory of all work in
progress for the manufacture of the Product and an inventory of all
finished Product. Unless otherwise agreed to between the Parties, all
stock on hand as of the effective date of termination of this
Manufacturing Agreement will be dealt with promptly as follows:
(a) Product manufactured and packaged pursuant to
purchase orders from NEOSAN and accepted by Lilly will be delivered by
Lilly to NEOSAN, whereupon NEOSAN will pay Lilly therefor in accordance
with the terms hereof;
(b) Work in progress commenced by Lilly against accepted
purchase orders from NEOSAN or work in progress or finished Product
commenced or finished in reliance on the quantity of Product forecasted
for the current Calendar Quarter in the Forecast delivered to Lilly on
or before the first day of the previous Calendar Quarter will be
completed by Lilly and delivered to NEOSAN, whereupon NEOSAN will pay
Lilly therefor in accordance with the terms hereof; and
(c) NEOSAN will reimburse Lilly for Lilly's actual cost
of raw materials (including packaging components) dedicated for use in
the manufacture of Product provided that Lilly purchased such raw
materials in support of the then current Forecast and such raw
materials cannot be returned by Lilly or used in other products
26
manufactured by Lilly. At NEOSAN's option and expense, Lilly will
deliver to NEOSAN any raw materials paid for by NEOSAN under this
provision, FOB point of shipment.
Notwithstanding Section 2.3, but subject to Section 2.4,
payment for all Product and other materials delivered to NEOSAN
pursuant to this Section 8.4 will be deemed payable upon receipt of an
invoice evidencing delivery of such Product and materials to NEOSAN.
In addition to the foregoing, upon the termination of this
Manufacturing Agreement, Lilly will have no obligation to ensure that
NEOSAN has DEA Quota sufficient to satisfy NEOSAN's needs for Product
after the termination of this Manufacturing Agreement; provided,
however, that after the termination of this Manufacturing Agreement
Lilly will abandon any DEA Quota to the DEA which it previously
requested from the DEA for purposes of manufacturing Product pursuant
to this Manufacturing Agreement as soon as is commercially practicable
after receipt of a written request from NEOSAN to do so.
8.5 CONTINUING OBLIGATIONS. Termination of this Manufacturing Agreement for
any reason will not relieve the Parties of any obligation accruing
prior thereto or any antecedent breach of the provisions of this
Manufacturing Agreement, and, subject to Section 11.2 of this
Manufacturing Agreement and Section 11.7 of the Assignment Agreement,
will be without prejudice to the rights and remedies of either Party
with respect to any antecedent breach of the provisions of this
Manufacturing Agreement. Without limiting the generality of the
foregoing and in addition to the foregoing, no termination of this
Manufacturing Agreement, whether by lapse of time or otherwise, will
serve to terminate the rights and obligations of the Parties hereto
under Articles 6, 7, 9, 11 and 12 hereof and Sections 2.3, 3.4, 8.4,
8.5, 8.7, 10.2, 10.3 and 10.6(a) hereof, and such obligations will
survive any such termination.
27
8.6 NON-EXCLUSIVE REMEDIES. Except as otherwise limited pursuant to Section
11.2 of this Manufacturing Agreement and Section 11.7 of the Assignment
Agreement, the remedies set forth in this Section 8 or elsewhere in
this Manufacturing Agreement will be in addition to, and will not be to
the exclusion of, any other remedies available to the Parties at law,
in equity or under this Manufacturing Agreement.
8.7 NEOSAN'S SUPPLY TO LILLY. At Lilly's option, upon expiration or
termination of this Manufacturing Agreement, NeoSan will supply to
Lilly and its Affiliates, Lilly's and its Affiliates' requirements
(subject to NEOSAN's capacity constraints) for products that include
propoxyphene for sale by Lilly and its Affiliates outside of the United
States at prices no greater than the Purchase Prices charged by Lilly
(including the price adjustment mechanism for the Purchase Prices)
under this Manufacturing Agreement; provided, however, that the Parties
can otherwise agree on other commercially reasonable terms. The Parties
agree to negotiate in good faith a supply agreement memorializing the
terms of such supply arrangement.
8.8 EMERGENCY SUPPLY. Subject to the conditions set forth in this Section
8.8, NeoSan may elect, by written notice provided to Lilly on or before
January 1, 2004, to have Lilly extend the term of this Agreement for an
additional six (6) month period beyond the termination date set forth
in Section 8.1, above. If NeoSan exercises this election, the terms and
conditions of this Agreement shall remain in full force and effect
until June 30, 2005, except that Lilly will use commercially reasonable
efforts to supply NeoSan with a calendar year's supply of Product
during the extension period; provided, however, that Lilly will not be
required to supply NeoSan with more than [Information omitted pursuant
to a request for confidential treatment submitted to the Securities and
Exchange Commission, and the omitted information has been separately
submitted to the Securities and Exchange Commission.] kilograms and
Lilly's maximum obligations set forth in Section 4.4(a); provided
further, however, that NeoSan agrees to purchase a minimum of
[Information omitted pursuant to a request for confidential treatment
submitted to the Securities and Exchange Commission, and the omitted
information has been separately submitted to the Securities and
Exchange Commission.] kilograms of Product during such extension
period. NeoSan will have the right to exercise the election set forth
in this Section 8.8 if, and only if, (i) to the extent this Agreement
has not been (or will not be during the extension term) terminated by
Lilly pursuant to Sections 8.2 or 8.3, above, (ii) NeoSan has used its
best efforts to either manufacture for itself or find a Third Party
manufacturer to assume manufacturing responsibility for
28
Product as of December 31, 2004, and (iii) NeoSan pays to Lilly within
five (5) days of NeoSan's delivery of its election to extend the
Manufacturing Agreement pursuant to this Section 8.8 the sum of four
million United States dollars ($4,000,000) by Federal Reserve
electronic wire transfer in immediate available funds to an account
designated by Lilly, which amount will be in addition to the amounts
payable by NeoSan for purchased Product. Notwithstanding anything in
this Agreement to the contrary, in no event will Lilly have any
obligation to manufacture Product for sale to NeoSan after June 30,
2005.
ARTICLE 9
CONFIDENTIALITY
Confidentiality of information will be provided under and pursuant to,
and in accordance with the terms of, Article 8 of the Assignment Agreement,
which terms of such Article 8 are by this reference incorporated herein and made
a part of this Manufacturing Agreement, and all of which for purposes of this
Manufacturing Agreement will survive any termination or expiration of the
Assignment Agreement.
ARTICLE 10
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES
10.1 SUPPLY TEAM. To facilitate an orderly transition of the Activities from
Lilly to NEOSAN, the Parties will form a team (the "Supply Team") to
oversee the activities contemplated by this Manufacturing Agreement.
The Supply Team will be comprised of members appointed by Lilly and
members appointed by NEOSAN. NEOSAN and Lilly will each appoint one of
its members as that Party's lead and that individual will be the
contact person for the other Party. During the first ninety (90) days
after the Closing Date, the Supply Team may meet as reasonably needed
and determined by the Supply Team as reasonably appropriate to conduct
business and assure a smooth transition.
29
10.2 COMPLIANCE WITH LAW. Lilly will comply with all Applicable Laws
relating to its manufacturing of the Product. NEOSAN will comply with
all Applicable Laws relating to its distributing, marketing, promoting
and selling of the Product. NEOSAN agrees and acknowledges that as
owner of the NDA it will have sole responsibility for, among other
things, adverse event reporting, product quality complaints, label
maintenance, other regulatory reporting obligations, payment of any and
all product establishment fees, and medical and technical inquiries.
Lilly and NEOSAN each will keep all records and reports required to be
kept by Applicable Laws, and each will make its facilities available at
reasonable times during regular business hours for inspection by
representatives of governmental agencies. Lilly and NEOSAN each will
notify the other within twenty-four (24) hours of receipt of any notice
or any other indication whatsoever of any FDA, DEA or other
governmental agency inspection, investigation or other inquiry, or
other notice or communication of any type from a governmental agency,
involving the manufacturing, selling, marketing, promoting,
co-promoting and co-marketing of the Product in the United States.
NEOSAN and Lilly will cooperate with each other during any such
inspection, investigation or other inquiry including allowing upon
reasonable request a representative of the other to be present during
the applicable portions of any such inspection, investigation or other
inquiry and providing copies of all relevant documents. NEOSAN and
Lilly will discuss any response to observations or notifications
received in connection with any such inspection, investigation or other
inquiry and each will give the other an opportunity to comment upon any
proposed response before it is made. In the event of disagreement
concerning the form or content of such response, however, Lilly will be
responsible for deciding the appropriate form and content of any
response with respect to any of its cited activities and NEOSAN will be
responsible for deciding the appropriate form and content of any
response with respect to any of its cited activities.
10.3 RECALL. Lilly and NEOSAN will each maintain such traceability records
as may be necessary to permit a recall or field correction of the
Product. If Lilly or NEOSAN is required or requested by any
governmental authority, or if NEOSAN in its sole discretion otherwise
elects, to recall any Product for any reason, NEOSAN will be
responsible for
30
initiating such recall after appropriate consultation with Lilly. If
Lilly determines a recall may be necessary, then Lilly will notify
NEOSAN within twenty-four (24) hours in writing and by telephone to
NEOSAN's Vice President of Regulatory Affairs, whereupon NEOSAN will
decide whether or not a recall is appropriate. Both Parties will
cooperate fully with one another in connection with any recall. If
Product distributed prior to the Closing Date is recalled, then Lilly
will bear all costs associated with such recall. If any recall of
Product distributed on or after the Closing Date is due to Lilly Error,
Lilly will reimburse NEOSAN for (i) the Purchase Price(s) paid by
NEOSAN for such recalled Product, and (ii) all of NEOSAN's other
reasonable direct costs and expenses actually incurred by NEOSAN in
connection with the recall including, but not limited to, direct costs
of retrieving Product already delivered to customers and direct costs
and expenses NEOSAN is required to pay for notification, shipping and
handling charges; provided, however, that for each such recall (a)
NEOSAN will in good faith consult with Lilly and, to the extent
commercially reasonable, implement Lilly's recommendations on whether
or how best to conduct the recall including, without limitation, the
recall notification and retrieval of Product, (b) prior to any
reimbursement hereunder, NEOSAN will provide Lilly with detailed
supporting documentation of all costs and expenses for which
reimbursement is being sought, and (c) notwithstanding Section 11.2, in
no event will the direct costs and expenses described in (iii), above,
include NEOSAN's lost profits associated with such Product. If a recall
of Product distributed after the Closing Date is due to anything other
than Lilly Error, NEOSAN will remain responsible for the Purchase
Price(s) for such Product and will reimburse Lilly for all of the
reasonable direct costs and expenses described above actually incurred
by Lilly (if any) in connection with such recall including, but not
limited to, administration of the recall and such other reasonable
direct costs as may be reasonably related to the recall.
10.4 EXPENSES. Lilly and NEOSAN will each bear their own direct and indirect
expenses incurred in connection with the negotiation and preparation of
this Manufacturing Agreement and, except as set forth in this
Manufacturing Agreement, the performance of the obligations
contemplated hereby.
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10.5 REASONABLE EFFORTS. Lilly and NEOSAN each hereby agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things reasonably necessary or proper to
make effective the transactions contemplated by this Manufacturing
Agreement, including such actions as may be reasonably necessary to
obtain approvals and consents of Governmental or Regulatory Authorities
and other Persons (including, without limitation, all applicable drug
listing and NDA notifications to the FDA and DEA identifying NEOSAN as
a distributor of the Product); provided, however, that no Party will be
required to (i) pay money (other than as expressly required pursuant to
this Manufacturing Agreement or as implicitly required in order for a
Party to carry out its obligations hereunder), or (ii) assume any other
material obligation not otherwise required to be assumed by this
Manufacturing Agreement.
In addition, NEOSAN hereby agrees to use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or proper to begin manufacturing Product as
of the expiration of this Manufacturing Agreement including such
actions as may be reasonably necessary to obtain approvals and consents
of governmental Persons and other Persons (including, without
limitation, all applicable drug listing and NDA notifications to the
FDA and DEA identifying NEOSAN as a manufacturer of the Product).
10.6 COOPERATION.
(a) Cooperation with Third Persons. If either Party
becomes engaged in or participates in any investigation, claim,
litigation or other proceeding with any Third Person, including the FDA
and DEA, relating in any way to the manufacturing, selling, marketing,
promoting, co-marketing or co-promoting the Product in the United
States, the other Party will cooperate in all reasonable respects with
such Party in connection therewith, including using its reasonable
efforts to make available to the other such employees who may be
helpful with respect to such investigation, claim, litigation or other
proceeding, provided that, for purposes of this provision, reasonable
efforts to make available any employee will be deemed to mean providing
a Party with reasonable access
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to any such employee at no cost for a period of time not to exceed
twenty-four (24) hours (e.g., three (3) eight (8) -hour business days)
and provided that neither Party is required to disclose any legally
privileged documents or information to the other Party. Thereafter, any
such employee will be made available for such time and upon such terms
and conditions (including compensation) as the Parties may mutually
agree.
(b) Cooperation with Third Person Manufacturer. If Lilly
enters into an arrangement with a Third Person to manufacture Product
for NEOSAN in accordance herewith, or if Lilly elects to transfer any
portion of the manufacture of Product from one Lilly facility to
another Lilly facility, then NEOSAN will cooperate in all reasonable
respects with Lilly and such Third Person, if applicable, in obtaining
any required FDA approvals. Lilly will reimburse NEOSAN for any
reasonable direct costs incurred by NEOSAN in providing such
assistance.
10.7 CONFLICTING RIGHTS. Neither Party will grant any right to any Third
Person which would violate the terms of or conflict with the rights
granted by such Party to the other Party pursuant to this Manufacturing
Agreement.
10.8 DEEMED BREACH OF COVENANT. Neither Lilly nor NEOSAN will be deemed to
be in breach of this Manufacturing Agreement if such Party's deemed
breach is the result of any action or inaction on the part of the other
Party.
ARTICLE 11
INDEMNIFICATION; INSURANCE
11.1 INDEMNIFICATION AND INSURANCE. Indemnification and insurance coverage
will be provided under and pursuant to and in accordance with the terms
of Article 11 of the Assignment Agreement, which terms of such Article
11 are by this reference incorporated in and made a part of this
Manufacturing Agreement, and all of which for purposes of this
Manufacturing Agreement will survive any termination or expiration of
the Assignment Agreement.
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11.2 LIMITATION OF LIABILITY. Except for (i) the costs of recall enumerated
in Section 10.3 of this Manufacturing Agreement to the extent such
costs constitute indirect, special, incidental, consequential or
punitive damages, AND (ii) WITH RESPECT TO DAMAGES INCURRED BY THIRD
PERSONS FOR WHICH A PARTY HERETO OTHERWISE HAS AN INDEMNIFICATION
OBLIGATION PURSUANT TO SECTIONS 11.1 OR 11.2 OF THE ASSIGNMENT
AGREEMENT OR SECTION 11.1 OF THIS MANUFACTURING AGREEMENT, IN NO EVENT
WILL EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL,
CONSEQUENTIAL (INCLUDING LOST PROFITS) OR PUNITIVE DAMAGES, HOWEVER
CAUSED OR UPON ANY THEORY OF LIABILITY (INCLUDING A PARTY'S OR ITS
AFFILIATES' OWN NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (OR
THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY'S OR
A PARTY'S AFFILIATES' EMPLOYEES, AGENTS OR CONTRACTORS)), ARISING OUT
OF THIS MANUFACTURING AGREEMENT OR THE PERFORMANCE OF, OR THE FAILURE
TO PERFORM, ANY OBLIGATIONS SET FORTH HEREIN. NOTWITHSTANDING THE
FOREGOING, A PARTY'S AGGREGATE LIABILITY TO THE OTHER PARTY UNDER THIS
MANUFACTURING AGREEMENT AND THE ASSIGNMENT AGREEMENT WITH RESPECT TO
ALL INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL (INCLUDING LOST
PROFITS) OR PUNITIVE DAMAGES INCURRED BY THIRD PARTIES FOR WHICH SUCH
PARTY HERETO OTHERWISE HAS AN INDEMNIFICATION OBLIGATION PURSUANT TO
SECTIONS 11.1 AND 11.2 OF THE ASSIGNMENT AGREEMENT OR SECTION 11.1 OF
THIS MANUFACTURING AGREEMENT WILL BE LIMITED TO FIVE MILLION US DOLLARS
($5,000,000).
ARTICLE 12
MISCELLANEOUS PROVISIONS
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12.1 SUCCESSORS AND ASSIGNS. This Manufacturing Agreement will be binding
upon and will inure to the benefit of the Parties hereto and their
respective successors and assigns; provided, however, that neither
Lilly nor NEOSAN may assign this Manufacturing Agreement or any portion
thereof without the prior written consent of the other, which consent
may not be unreasonably withheld or delayed, except that no prior
written consent will be required if Lilly or NEOSAN assigns any or all
of its rights hereunder to one of its Affiliates. No assignment of this
Manufacturing Agreement or any portion of any rights hereunder will
relieve the assigning Party of any of its obligations or liability
hereunder. For purposes of this Section 12.1, NEOSAN's granting of a
security interest in substantially all of the assets of NEOSAN to a
financial institution providing financing to NEOSAN will not be deemed
to be an assignment of this Manufacturing Agreement.
12.2 SUBCONTRACTING. Neither Party may subcontract any or all of its rights
or obligations under this Manufacturing Agreement to any subcontractor
or consultant without prior written consent of the other Party, which
shall not unreasonably be withheld; provided, however, that either
Party may subcontract any or all of its rights or obligations under
this Manufacturing Agreement to any of its Affiliates without the
consent of the other Party. Subject to the preceding sentence, the
subcontracting Party will be fully responsible to the other Party for
any portion of the services performed by the subcontractor or
consultant to the same extent as if such portion of the services was
performed directly by the subcontracting Party.
12.3 NOTICES. Unless otherwise stated in this Manufacturing Agreement as to
the method of delivery, all notices or other communications required or
permitted to be given hereunder will be in writing and will be deemed
to have been duly given if delivered by hand, courier, facsimile or if
mailed first class, postage prepaid, by registered or certified mail,
return receipt requested (such notices will be deemed to have been
given on the date delivered in the case of hand delivery or delivery by
courier, on the date set forth in the confirmation sheet in the case of
facsimile delivery, and on the
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fifth business day following the date of post xxxx in the case of
delivery by mail) as follows:
If to Lilly, as follows:
Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attn: President, Internal Medicines Product Team
With a copy to:
Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attn: General Counsel
If to NEOSAN, as follows:
NeoSan Pharmaceuticals Inc.
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Mr. Xxxxx Xxxxxx, President
With a copy to:
aaiPharma Inc.
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Facsimile: (000 )000-0000
Attn: Xxxxxxx X. Xxxxxxx, General Counsel
Attn: Xx. Xxxxxx Xxxxxxxx, President
or in any case to such other address or addresses as hereafter will be furnished
in a written notice as provided in this Section 12.3 by any Party hereto to the
other Party.
12.4 WAIVER. Any term or provision of this Manufacturing Agreement may be
waived at any time by the Party entitled to the benefit thereof only by
a written instrument executed by such Party. No delay on the part of
Lilly or NEOSAN in exercising any right, power or
36
privilege hereunder will operate as a waiver thereof, nor will any
waiver on the part of either Lilly or NEOSAN of any right, power or
privilege hereunder operate as a waiver of any other right, power or
privilege hereunder nor will any single or partial exercise of any
right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
12.5 ENTIRE AGREEMENT. This Manufacturing Agreement, the Assignment
Agreement, each of their appendices, exhibits, schedules and
certificates, and all documents and certificates delivered in
connection herewith and therewith constitute the entire agreement
between the Parties with respect to the subject matter hereof and
supersede all prior agreements or understandings of the Parties
relating thereto.
12.6 AMENDMENT. This Manufacturing Agreement may be modified or amended only
by written agreement of the Parties hereto signed by authorized
representatives of the Parties.
12.7 COUNTERPARTS. This Manufacturing Agreement may be executed in any
number of counterparts, each of which will be deemed an original but
all of which together will constitute a single instrument.
12.8 GOVERNING LAW. This Manufacturing Agreement will be governed and
construed in accordance with the laws of the State of New York
excluding any choice of law rules that may direct the application of
the law of another state.
12.9 CAPTIONS. All section titles or captions contained in this
Manufacturing Agreement and in any exhibit, schedule or certificate
referred to herein or annexed to this Manufacturing Agreement are for
convenience only, will not be deemed a part of this Manufacturing
Agreement and will not affect the meaning or interpretation of this
Manufacturing Agreement.
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12.10 NO THIRD PERSON RIGHTS. No provision of this Manufacturing Agreement
will be deemed or construed in any way to result in the creation of any
rights or obligations in any Person not a Party to this Manufacturing
Agreement (except for the rights of a Party's Affiliates and its and
its Affiliates' directors, officers and employees to receive
indemnification from the other Party hereunder).
12.11 CONSTRUCTION. This Manufacturing Agreement will be deemed to have been
drafted by both Lilly and NEOSAN and will not be construed against
either Party as the draftsperson hereof. Unless the context of this
Agreement otherwise requires: (a) words of any gender include each
other gender; (b) words using the singular or plural number also
include the plural or singular number, respectively, (c) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to
this entire Agreement; (d) the terms "Article" or "Section" refer to
the specified Article or Section of this Agreement; and (e) the term
"including" or "includes" means "including without limitation" or
"includes without limitation." Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless
business days are specified.
12.12 APPENDICES, EXHIBITS, SCHEDULES AND CERTIFICATES. Each appendix,
exhibit, schedule and certificate attached hereto is incorporated
herein by reference and made a part of this Manufacturing Agreement.
12.13 NO JOINT VENTURE. Nothing contained herein will be deemed to create any
joint venture or partnership between the Parties hereto, and, except as
is expressly set forth herein, neither Party will have any right by
virtue of this Manufacturing Agreement to bind the other Party in any
manner whatsoever.
12.14 SEVERABILITY. If any provision of this Manufacturing Agreement is held
to be illegal, invalid, or unenforceable under present or future laws
effective while this Manufacturing Agreement remains in effect, the
legality, validity and enforceability of the remaining provisions will
not be affected thereby.
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12.15 FORCE MAJEURE. If either Party is prevented from complying, either
totally or in part, with any of the terms or provisions set forth
herein by reason of force majeure, including, by way of example and not
of limitation, fire, flood, explosion, storm, strike, lockout or other
labor dispute, riot, war, rebellion, accidents, acts of God, acts of
governmental agencies or instrumentalities, failure of suppliers or any
other similar or dissimilar cause, in each case to the extent beyond
its control despite its commercially reasonable best efforts to avoid,
minimize, and resolve such cause as promptly as possible, said Party
will (a) provide written notice of same to the other Party, and (b)
subject to its following obligations with respect to said Party's
efforts to remove the disability and Section 2.5, its obligations that
are prevented from compliance by such force majeure are suspended,
without liability, during such period of force majeure. Said notice
will be provided within five (5) business days of the occurrence of
such event and will identify the requirements of this Manufacturing
Agreement or such of its obligations as may be affected. If any raw
materials, facility systems or capacity is used for both the affected
Product and any other product or purposes, any necessary allocation
will be made as between Lilly's needs (including those of any Affiliate
of Lilly), NEOSAN's needs and the needs of any other Party to whom
Lilly has firm contractual obligations on a basis no less favorable
than pro rata on a volume basis. The Party prevented from performing
hereunder will use commercially reasonably best efforts to remove such
disability as promptly as possible and will continue performance
whenever such causes are removed. The Party so affected will give to
the other Party a good faith estimate of the continuing effect of the
force majeure condition and the duration of the affected Party's
nonperformance. If the period of any previous actual nonperformance of
Lilly because of Lilly force majeure conditions plus the anticipated
future period of Lilly nonperformance because of such conditions will
exceed an aggregate of one hundred twenty (120) days within any one
year period, NEOSAN may terminate this Manufacturing Agreement by prior
written notice to Lilly. If the period of any previous actual
nonperformance of NEOSAN because of NEOSAN force majeure conditions
plus the anticipated future period of NEOSAN nonperformance because of
such conditions will exceed an aggregate of one hundred twenty (120)
days within any one year period, Lilly may terminate this
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Manufacturing Agreement by prior written notice to NEOSAN. When such
circumstances as those contemplated herein arise, the Parties will
discuss in good faith, what, if any, modification of the terms set
forth herein may be required in order to arrive at an equitable
solution.
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IN WITNESS WHEREOF, the Parties hereto have executed this Manufacturing
Agreement as of the date first above written.
XXX XXXXX AND COMPANY
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------------------
Printed Name: Xxxx X. Xxxxxxxxxx
Title: Executive Vice President
NEOSAN PHARMACEUTICALS INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------------
Printed Name: Xxxxxx Xxxxxxxx
Title: President
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