EXHIBIT 10.2
CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of this Agreement Which Have Been Redacted Are Marked with
Brackets ([***]). The Omitted Material Has Been Filed With The Securities and
Exchange Commission.
SUPPLY AGREEMENT
between
DURA PHARMACEUTICALS, INC.
and
FIRST HORIZON PHARMACEUTICAL CORPORATION
TABLE OF CONTENTS
PAGE
Background....................................................................1
Article 1 - Definitions.......................................................1
Article 2 - Supply of Product.................................................2
2.1 Supply Obligation...........................................2
2.2 Technology Rights...........................................3
2.3 Product for Sale Outside the Territory......................4
2.4 Shipment of Finished Goods..................................5
2.5 Labeling and Packaging of Supplied Products.................5
2.6 Inspections.................................................6
Article 3 - Purchase of Product...............................................7
3.1 Purchase Obligation.........................................7
3.2 Production Scheduling.......................................7
3.3 Testing and Certificate of Analysis.........................8
3.4 Testing Upon Delivery.......................................8
3.5 CGMP Violations.............................................9
Article 4 - Pricing and Payment Terms........................................10
4.1 Pricing....................................................10
4.2 Payment Terms..............................................10
4.3 No Setoff..................................................10
Article 5 - Change Management................................................11
5.1 Required Manufacturing Changes.............................11
5.2 Discretionary Manufacturing Changes........................12
5.3 Labeling Changes...........................................13
5.4 Authorization..............................................13
Article 6 - Liabilities......................................................14
6.1 Warranty and Disclaimer....................................14
6.2 FHP Indemnity..............................................14
6.3 DURA Indemnity.............................................15
6.4 Notice and Opportunity to Defend...........................15
Article 7 - Term and Termination.............................................16
7.1 Term.......................................................16
7.2 Termination................................................17
7.3 Effects of Termination.....................................18
7.4 Transition.................................................18
7.5 Survival...................................................19
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Article 8 - General Provisions...............................................19
8.1 Confidentiality............................................19
8.2 Force Majeure..............................................20
8.3 Entire Agreement...........................................20
8.4 Headings...................................................20
8.5 Relations Between the Parties..............................21
8.6 Assignment.................................................21
8.7 Notice.....................................................22
8.8 Severability...............................................23
8.9 Governing Law..............................................23
8.10 Attachments................................................23
8.11 Waiver.....................................................24
8.12 Counterparts...............................................24
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SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (the "Agreement") is made this 21st day of December,
2001, by and between DURA PHARMACEUTICALS, INC. ("DURA"), a Delaware corporation
with a principal place of business at 0000 Xxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000, and FIRST HORIZON PHARMACEUTICAL CORPORATION ("FHP"), a Delaware
corporation with a principal place of business at 000 Xxxxxxx Xxxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxx 00000. Background
FHP has agreed to purchase from DURA trademarks, know-how and certain other
assets relating to FURADANTIN(R) (nitrofurantoin) oral suspension products
pursuant to the terms and conditions of an Asset Purchase Agreement (Furadantin)
dated as of the date hereof (the "Principal Agreement"). FHP wishes to have DURA
provide to FHP certain supply services relating to such products for a period of
time as is set forth herein. DURA hereby agrees to perform such services on the
terms and conditions set forth herein. NOW, THEREFORE, in consideration of the
mutual covenants contained herein, FHP and DURA agree as follows: Article 1 -
Definitions
The following general use terms used in this Agreement shall have the
meanings set forth below. Other terms of less general applicability are defined
where appropriate. Terms set forth in CAPITAL LETTERS are defined in the
Principal Agreement and, unless otherwise noted in this Agreement, have the
meanings set forth therein.
1.1 "Supplied Product" or "Supplied Products" means the PRODUCT in the
presentation forms listed in Schedule 1.1 of the Contract Manufacturing
Agreement dated May 7, 1996, by and between Procter & Xxxxxx Pharmaceuticals,
Inc. ("P&G") and DURA (the "P&G Manufacturing Agreement"), which has been
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[***] - CONFIDENTIAL TREATMENT REQUESTED
provided in its entirety to FHP and to which FHP acknowledges and agrees to be
bound by the definition contained therein.
1.2 "Specifications" mean the written methods, formulae, procedures,
specifications tests (and testing protocols) and standards pertaining to each
presentation form of the Supplied Products set forth in Schedule 1.2 of the P&G
Manufacturing Agreement, as may have been changed from time to time by DURA
since May 7, 1996, and as may be changed by FHP upon written notice to DURA,
provided that DURA agrees to such changes in writing. Such Schedule 1.2 (as may
have been changed from time to time) set forth in the P&G Manufacturing
Agreement has been provided in its entirety to FHP (and is attached hereto) and
FHP acknowledges and agrees to be bound by the definition of "Specifications"
contained therein.
1.3 "Supply Term" means the period starting on the CLOSING DATE and
continuing for the initial term of this Agreement and any subsequent extension
period, as set forth more particularly in Section 7.1 hereof, subject to any
earlier termination of this Agreement pursuant to Section 7.2 hereof.
Article 2 - Supply of Product
2.1 Supply Obligation. Subject to the terms and conditions hereof, and for
consideration to be paid on the CLOSING DATE by FHP to Dura in the amount of
$[***], by wire transfer of immediately available funds to an account designated
by DURA, DURA shall, and is responsible to, Supply (as defined herein) finished
packaged goods of the Supplied Products.
(a) Supply. As used herein, "Supply" or any variation thereof means
performing or causing to be performed all operations necessary to produce,
manufacture, package, label, xxxx, handle, arrange for shipping and ship the
Supplied Products in accordance with the terms and conditions of this Agreement.
Without limiting the foregoing, the term "Supply" shall also include all storage
2
incident to such operations. "Supply" shall also include the performance of or
the causing to be performed: (i) all "controls" pertaining to the Supplied
Products which are required by applicable regulations on the date hereof, and
(ii) any such "controls" which become required by such regulations after the
date hereof and which DURA has agreed in writing to perform. DURA shall perform
or cause P&G to perform any such "controls" which become required by such
regulations after the date hereof. For purposes of this definition, "controls"
shall have the same general meaning as in 21 X.X.X.xx. 211. Notwithstanding
anything herein to the contrary, FHP shall be responsible for filing field alert
reports, for conducting product recalls and for other duties and obligations
imposed by law, rule or regulation on the holder of the Registrations. DURA
shall use commercially reasonable efforts to cooperate with and assist FHP in
the performance of such duties and obligations.
(b) Stability Testing. FHP shall bear the cost of all stability
testing required for the Supplied Products. DURA shall provide results and
supporting data from that portion of the stability testing as relates to
extension of expiration dating to FHP as and when available.
(c) Continuous Supply. DURA shall provide or cause P&G to provide FHP
with a continuous supply of FHP's requirements for Supplied Products during the
Supply Term. Such obligation shall continue regardless of whether DURA's cost to
supply Supplied Product exceeds any agreed upon purchase price provided for in
this Agreement.
2.2 Technology Rights. Subject to the terms and conditions hereof, DURA and
P&G shall have the right to use the KNOW-HOW and the Information (as defined
herein) to Supply the Supplied Products for FHP or FHP's successors or assigns.
During the Supply Term, DURA shall give FHP and its authorized representatives
reasonable access to the DURA Information (as defined herein). DURA shall, at
its own cost, provide FHP with copies of the DURA Information, to the extent
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that Dura is allowed by law or by third parties to provide such information.
Upon expiration or termination of this Agreement: (i) all hard copies of the
KNOW-HOW and the Information shall be delivered to FHP (except that DURA may
retain one (1) copy of all the KNOW-HOW and the Information as a record copy
subject to the confidentiality provisions of Section 8.1 hereof), and (ii) all
DURA Information shall become the property of FHP.
(a) Information. As used herein, "Information" means any and all
technical information, know-how, formulae, processes, clinical studies, trade
secrets, confidential and/or proprietary information and other know-how,
information, documents and/or materials, technology, formulations,
specifications, testing data and analytical methods and other information
relating to the Supplied Products: (i) which is either supplied or disclosed to
DURA by FHP hereunder during the Supply Term or owned, developed or possessed by
DURA or DURA's AFFILIATES during the Supply Term, (ii) which is necessary or
useful to the Supply of the Supplied Products, and (iii) to the extent such
Information solely relates to the Supplied Products and/or the Supply of the
Supplied Products. Information does not include any information which: (w) has
been either published or is otherwise in the public domain; (x) is lawfully
acquired by DURA from a third party under no obligation of confidentiality to
FHP; (y) is obvious from information that is not otherwise confidential
hereunder, to one of ordinary skill in the relevant art; or (z) is disclosed by
FHP to a third party on a non-confidential basis.
(b) DURA Information. As used herein, "DURA Information" means
Information, which is owned, developed or possessed by DURA or DURA's AFFILIATES
during the Supply Term.
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2.3 Product for Sale Outside the Territory. FHP acknowledges that P&G may
intend to manufacture nitrofurantoin oral suspension and/or its active
ingredient in the TERRITORY for distribution and sale outside the TERRITORY.
2.4 Shipment of Finished Goods. All Supplied Products delivered hereunder
to FHP shall have proper dating on the labels and/or packaging and shall have a
shelf life on delivery to FHP (or to FHP's designee): (i) of not less than
twenty (20) months; or (ii) as agreed to between the parties. All Supplied
Products delivered to FHP hereunder shall be shipped FOB point of manufacture,
which is P&G's manufacturing facility, by a carrier approved and paid for by
FHP. DURA shall ship or shall direct P&G to ship such quantities to the
destination(s) and at the time(s) specified in Releases (as defined in Section
3.2 hereof) by FHP or its designee.
2.5 Labeling and Packaging of Supplied Products. Subject to the terms of
the Principal Agreement, FHP shall, at its own cost and expense, supply DURA
with the mechanical design of artwork for all Printed Matter, and DURA will
supply such mechanical design on artwork for all Printed Matter to P&G. Each set
of such artwork, and each partial set and/or alteration or amendment thereto,
for each piece of Printed Matter shall be identified by a unique item control
number or code (the "Code") supplied by FHP, which is consistent with P&G's
existing control practices. All physical specifications of all Printed Matter
shall comply with P&G's control numbering system, quality control requirements
and manufacturing process constraints as provided by P&G to DURA, and as
provided by DURA to FHP. FHP shall specify the code for each item of Printed
Matter to be supplied with each order for Supplied Products hereunder. Such Code
shall be specified on the purchase order therefor. All Supplied Products
delivered to FHP hereunder shall include the Printed Matter as specified in the
purchase order for such shipment.
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(a) Printed Matter. As used herein, "Printed Matter" means all printed
materials, including labeling, required to be affixed to and/or packaged with
Supplied Products delivered to FHP hereunder.
2.6 Inspections. Upon reasonable notice and upon reasonable frequency,
during P&G's regular business hours, and subject to P&G's normal confidentiality
and safety regulations governing visitors, FHP's representatives shall have the
right to request that DURA's representatives enter and inspect the P&G facility
at which the Supplied Products are manufactured and to request samples of the
Supplied Products being Supplied. DURA shall maintain, or shall cause P&G to
maintain, in compliance with applicable laws, true and accurate records of
chemical, physical and other tests of the raw materials for the Supplied
Products. All information gained by DURA (other than information relating to the
Supplied Products) as a result of any inspection conducted pursuant to this
provision shall be kept confidential and not disclosed to FHP or any other third
parties without the consent of P&G. DURA's obligation to keep said information
confidential shall not apply with respect to information which: (i) has been
published or is otherwise in the public domain; (ii) is lawfully acquired by
DURA from a third party under no obligation of confidentiality to P&G or (iii)
is reasonably obvious to one skilled in the relevant art. DURA shall notify FHP
of the results of any FDA inspections of P&G's facilities of which Dura is made
aware, as and to the extent relating to the Supplied Products.
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Article 3 - Purchase of Product
3.1 Purchase Obligation. FHP shall purchase and receive from DURA, and DURA
shall sell and deliver to FHP or its designated agent, Supplied Products ordered
pursuant to the terms hereof in the quantities set forth in the Releases (as
defined herein). Notwithstanding anything herein to the contrary, DURA shall
have no obligation to sell or deliver to FHP or its designated agent Supplied
Products in other than full batch quantities except for purchases of existing
DURA inventories pursuant to Section 4.02 of the Principal Agreement. The cost
of shipping all such Supplied Products shall be borne by FHP. Title to all
Supplied Products shipped by P&G on behalf of DURA in accordance with the terms
and conditions of this Agreement shall pass to FHP upon acceptance by common
carrier specified by FHP or any other carrier agreed between the parties hereto.
3.2 Production Scheduling. At least thirty (30) business days prior to the
start of each calendar quarter during the Supply Term, FHP or its designated
agent shall, by written notice hereunder, deliver to DURA: (i) written releases
(the "Releases") setting forth the Supplied Products and presentation forms
thereof to be purchased during the next succeeding calendar quarter (the "Next
Quarter") and the quantity and the desired delivery date(s) (which date(s) shall
be no more than once each month during the Next Quarter on or about, to the
extent possible, the fifteenth of such month) for each quantity so ordered; and
(ii) a written forecast (the "Forecast") of FHP's expected requirements of
Supplied Products and the presentation forms thereof for the next three (3)
calendar quarters after the Next Quarter, together with the expected quantity
and delivery date(s) for each quantity so forecast to be ordered during such
quarters.
(a) Release Procedure. All Releases shall be against blanket purchase
orders established from time to time during the Supply Term by agreement of the
parties.
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(b) Limitations. FHP shall use commercially reasonable efforts to
ensure that FHP's Releases comply as closely as possible with the Forecasts for
each calendar quarter during the term hereof. In no event shall DURA be
obligated to deliver to FHP in any calendar quarter during the term hereof more
than one hundred twenty-five percent (l25%) of the total quantity set forth in
the most recent Forecast for such quarter. In no event shall FHP's Releases in
any calendar quarter during the term hereof be less than seventy-five percent
(75%) of the total quantity set forth in the most recent Forecast for such
quarter.
3.3 Testing and Certificate of Analysis. DURA shall provide to FHP or its
designated agent the certificate of analysis provided to DURA by P&G
("Certificate of Analysis"), with each shipment of Supplied Product made
hereunder. Such Certificate of Analysis shall certify with respect to each
shipment and lot (identified by batch or lot number) (i) the quantity of the
shipment, (ii) the Supplied Product flavor, and (iii) that the Supplied Product
delivered was manufactured in accordance with the Specifications and the Master
Batch Records and documented according to requirements of CGMP and Production
SOPs. FHP shall be under no obligation to accept any shipment of Supplied
Product without an accompanying Certificate of Analysis.
3.4 Testing Upon Delivery. Upon receipt of the Supplied Products in any
shipment, FHP shall check the compliance of such batch with the Specifications.
Such compliance check shall be performed by FHP's Quality Assurance department
and shall be certified by the head of such department (or his/her designee).
Copies of the certificate of analysis incorporating such certification shall be
retained and made available to Dura within twenty (20) days of written request.
If FHP deems that any Supplied Products delivered to FHP hereunder fail to
conform to the Specifications upon delivery to FHP, then FHP shall notify DURA
thereof in writing (such notice to include test results) within twenty (20) days
8
from delivery of such Supplied Products to FHP. FHP shall retain the
non-conforming Supplied Products and DURA shall have the right to inspect such
Supplied Products.
(a) Undisputed Claims. DURA shall, if it agrees with FHP's complaint,
replace any such Supplied Products with an equal quantity of Supplied Products
complying with the Specifications at no cost to FHP and without undue delay. FHP
shall dispose of any Supplied Products which are not in compliance with the
Specifications at DURA's cost, except that FHP shall follow any reasonable
instructions from DURA to return such Supplied Products to DURA or otherwise
dispose of such Supplied Products in another manner at DURA's cost.
(b) Disputed Claims. If DURA does not agree with FHP's complaint, then
DURA shall notify FHP of such disagreement within forty-five (45) days of
receipt of notice of deficiency. If the parties cannot themselves resolve such
disagreement within twenty (20) days of FHP's receipt of DURA's notice of
disagreement, then the matter shall be submitted (without undue delay) to an
independent laboratory agreed by the parties in order to resolve the discrepancy
in the analysis of the rejected Supplied Products. The assessment of such
laboratory shall be binding upon the parties and any related expense shall be
borne by the party whose analysis was in error.
3.5 CGMP Violations. Each party shall notify the other of any violation of
any requirements of CGMP alleged by a third party with respect to the Supplied
Product immediately upon such party's awareness of such allegation. As used
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[***] - CONFIDENTIAL TREATMENT REQUESTED
herein, "CGMP" means the current good manufacturing practices for manufacturing
of or finished pharmaceuticals set forth in 21 CFR Parts 210 and 211,
respectively, as may be amended from time to time, and any other current good
manufacturing practices which may be set forth in any federal, state or local
laws, rules or regulations applicable to the Supply of the Supplied Products.
Article 4 - Pricing and Payment Terms
4.1 Pricing. The price (the "Price") for Supplied Product Supplied
hereunder shall be: as US$[***] per 60 ml bottle, and (ii) US$ [***] per 470 ml
bottle. All pricing and shipment terms FOB point of manufacture, which is P&G's
manufacturing facility. Effective each July 1 during the Supply Term, DURA may,
upon twenty (20) days advance written notice to FHP, adjust the Purchase Price
by a percentage adjustment equal to the percent change in the United States
Product Price Index for Drugs and Pharmaceuticals Code 06-35 published by the
United States Government (currently the Department of Labor) over the twelve
(12) month period ending March 31 immediately preceding such July 1 adjustment
date.
4.2 Payment Terms. The Price for all Supplied Product Supplied hereunder
shall be due and owing to DURA net twenty (20) days after shipment. DURA may
withhold subsequent deliveries of Supplied Product or take other action it deems
appropriate should FHP fail to pay within the stated terms. DURA shall have no
further obligation to give notice hereunder of any such action.
4.3 No Setoff. All payments to DURA by FHP hereunder shall be made free and
clear of, and without deduction for, any withholding, discount, offset or other
deduction of any kind, except as expressly authorized in advance by DURA in
writing; provided, however, FHP may withhold payment with respect to any
deliveries of Supplied Product which have been rejected or which are otherwise
10
subject to good faith dispute, without breach of this Agreement.
Article 5 - Change Management
5.1 Required Manufacturing Changes. With respect to changes to the
Specifications or manufacturing process which are required by applicable law,
rule or regulation or by action (or inaction) of any legally competent
government or other regulatory body or authority or by medical or scientific
concerns as to the toxicity, safety and/or efficacy of the Supplied Products
(collectively, "Required Manufacturing Changes"), DURA shall promptly notify FHP
of the nature and likely cost of any such Required Manufacturing Changes. Within
twenty (20) days of such notice, FHP shall notify DURA whether FHP wishes to
proceed with such Required Manufacturing Changes under the terms and conditions
of this Section 5.1. If FHP does not elect to so proceed with making such
Required Manufacturing Changes, then DURA may terminate this Agreement
immediately, such termination being subject in addition to the provisions of
Section 7.3 hereof. If FHP does elect to so proceed with making such Required
Manufacturing Changes, then the parties shall co-operate in making such agreed
changes promptly and FHP shall pay all the costs of all remaining obsolete stock
of Supplied Products, all inventory of affected raw materials (at DURA's actual
acquisition cost) and all remaining obsolete work in process of Supplied
Products resulting from any such changes. For the avoidance of doubt, Required
Manufacturing Changes: (i) do not include any changes or other concerns relating
to the extension of expiration dating for the Supplied Products ongoing by DURA
at CLOSING, (ii) do not include changes to the labeling only (which are dealt
with in Section 5.3 hereof), and (iii) do include changes resulting from or
arising out of changes to or withdrawal of third party raw materials.
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(a) Capital Expenditures. All costs (including installation costs)
required to implement agreed Required Manufacturing Changes shall be borne by
FHP and any capital equipment or improvements which are paid for by FHP and
which are not fixtures for P&G's premises where installed and which pertain
solely and exclusively to the Supply of the Supplied Products (the "FHP
Equipment") shall be titled in the name of FHP. Within five (5) business days of
any termination or expiration of this Agreement, FHP may, at its discretion,
offer to DURA for purchase hereunder any FHP Equipment. Within twenty (20)
business days of receipt of such notice, DURA may, at its discretion, elect (by
notice hereunder to FHP) to purchase any such FHP Equipment offered for sale by
FHP. Any such purchase and sale shall be at fair market value (not including
installation costs) as determined by the parties or, if the parties cannot agree
to a price within twenty (20) days of DURA's election, by an independent third
party appraiser chosen by the parties, with the purchase price to be paid to FHP
within fifteen (15) business days of such appraiser's determination of fair
market value. Unless otherwise agreed by the parties, within thirty (30) days of
any termination or expiration of this Agreement, FHP shall, at its own expense,
remove or cause to be removed from P&G's premises any FHP Equipment not
purchased by DURA pursuant to this section.
5.2 Discretionary Manufacturing Changes. With respect to changes to the
Specifications or the manufacturing process for Supplied Products which are not
required by applicable law, rule or regulation or by action (or inaction) of any
legally competent government or other regulatory body or authority or by medical
or scientific concerns as to the toxicity, safety and/or efficacy of the
Supplied Products (collectively, "Discretionary Manufacturing Changes"); the
parties shall, to the extent commercially reasonable under the circumstances,
cooperate in making such changes and the party initiating such change(s) shall
12
bear all the costs associated with and resulting from any such changes. Any such
proposed changes will be evaluated using P&G' change control process. If the
proposed change is judged to require a prospective validation or regulatory
submission, then the costs of such validations or submission and the resources
to implement such validation or submission shall be the responsibility of the
initiating party.
5.3 Labeling Changes. With respect to changes to the Printed Matter, the
parties shall cooperate in making such changes promptly and FHP shall, unless
otherwise agreed, reimburse DURA for all remaining obsolete stock of Supplied
Products, all inventory of Printed Matter (at DURA's actual acquisition cost)
and all remaining obsolete work in process of Supplied Products resulting from
any such change or amendment to the Printed Matter. FHP may, at any time during
the Supply Term, change or amend any item of the labeling by notice hereunder,
such change or amendment to be effective after appropriate advance written
notice thereof.
5.4 Authorization. During the Supply Term, DURA shall obtain and maintain
or shall cause P&G to obtain and maintain in force all licenses and
authorizations necessary for DURA to Supply Supplied Products hereunder, except
that FHP shall bear all costs associated with maintenance of the NDA. Except as
may be required by Sections 5.1 or 5.2 hereof, DURA shall bear, or shall cause
P&G to bear, the full cost and expense of so obtaining and maintaining such
licenses and authorizations. FHP shall give DURA all help reasonably necessary
to assist DURA in so obtaining and maintaining such licenses and authorizations
and shall bear the full cost and expense of so assisting DURA. Neither party
shall make any Required Manufacturing Changes to the Specifications unless such
changes have been first notified in advance in writing to the other. Neither
party shall make any Discretionary Changes to the specifications unless such
changes have been approved in writing in advance by the other.
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Article 6 - Liabilities
6.1 Warranty and Disclaimer. DURA hereby represents and warrants to FHP
that the Supplied Products shall, on the date of delivery to FHP's carrier: (i)
meet the requirements therefor set forth in the Specifications; (ii) not be
adulterated within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Food, Drug
and Cosmetics Act and the regulations promulgated thereunder as each may be
amended from time to time (collectively, the "Act") ; and (iii) comply with all
federal, state and local laws, rules and regulations (including without
limitation CGMP) applicable to the Supply of the Supplied Products. OTHER THAN
AS SET FORTH HEREIN OR IN THE PRINCIPAL AGREEMENT, DURA MAKES NO WARRANTIES
OTHER THAN THOSE SPECIFICALLY SET FORTH IN THIS SECTION. NO OTHER WARRANTY IS
EXPRESSED OR IMPLIED BY DURA INCLUDING ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE AND NONE SHALL BE IMPLIED. Subject to Section
8.14 of this Agreement, DURA shall not be liable for FHP's consequential,
special or indirect damages resulting from the use, handling, transportation,
storage or manufacture of the Supplied Product.
6.2 FHP Indemnity. Subject to Article 11 of the Principal Agreement, FHP
shall indemnify, defend and hold harmless DURA, DURA's AFFILIATES and DURA's
past, present and future directors, officers, employees and agents from and
against any and all DAMAGES, whether such DAMAGES are based in contract, strict
liability, negligence, warranty, statutes or regulations, or any other legal
theory (other than the negligence or willful misconduct of DURA in the Supply of
the Supplied Products), including without limitation injury to or death of
persons and/or property or contamination of or adverse effect on humans,
animals, aquatic life or the environment, based upon, arising out of or
otherwise in respect of: (i) the use, sale or distribution of the Supplied
Product transferred to FHP hereunder; or (ii) FHP's breach of any term or
14
condition of this Agreement, except to the extent that such DAMAGES are
indemnified against pursuant to Section 6.3 hereof.
6.3 DURA Indemnity. Subject to Articles 11 and 12 of the Principal
Agreement, DURA shall indemnify, defend and hold harmless FHP, FHP's AFFILIATES
and FHP's past, present and future directors, officers, employees and agents
from and against any and all DAMAGES, whether such DAMAGES are based in
contract, strict liability, negligence, warranty, statutes or regulations, or
any other legal theory (other than the negligence or willful misconduct of FHP),
including without limitation injury to or death of persons and/or property or
contamination of or adverse effect on humans, animals, aquatic life or the
environment, based upon, arising out of or otherwise in respect of: (i) the
failure of the Supplied Products transferred to FHP hereunder to meet the
requirements of Section 6.1 hereof, (ii) any negligent act or omission of DURA
hereunder relating to the Supply of the Supplied Products; or (iii) DURA's
breach of any term or condition of this Agreement.
6.4 Notice and Opportunity to Defend. No party against whom a claim of
indemnity shall be made pursuant to Section 6.2 or 6.3 hereof (the "Indemnifying
Party") shall be liable thereunder unless the party making such claim (the
"Claiming Party") shall notify the Indemnifying Party of such claim promptly
upon becoming aware of the existence or threatened existence of any DAMAGE
giving rise to or which may give rise to a claim of indemnity under Section 6.2
or 6.3 hereof, but no later than within ten (10) business days of the service
(or discovery, if later) of the claim against the Claiming Party giving rise to
or potentially giving rise to any such DAMAGE. Upon such notice becoming
effective hereunder, the Indemnifying Party will handle and control the defense
of such DAMAGE. If both parties claim indemnification hereunder for the same
DAMAGE or if the Indemnifying Party in good faith rejects the claim of
15
indemnity, then FHP will handle and control the defense of such DAMAGE pending
final resolution of the parties' respective claims for or with respect to
indemnity hereunder. (At the time of such resolution, defense costs incurred
pursuant to the preceding sentence shall be apportioned between the parties in
the same manner as the parties share ultimate liability for the underlying
DAMAGE pursuant to Sections 6.2 and 6.3 hereof.) In all cases, the party not
handling the controlling such defense shall cooperate in such defense and may,
at its own expense, participate in such defense through counsel of its choice
reasonable acceptable to the defending party. The party handling and controlling
such defense shall not settle or otherwise voluntarily dispose of or agree to
dispose of such matter without prior approval of the other party.
Article 7 - Term and Termination
7.1 Term. Subject to the provisions of Section 7.2 hereof, the initial term
of this Agreement shall commence on the CLOSING DATE and shall continue in full
force and effect, unless otherwise terminated, until the earlier of either (i)
May 3, 2003, or any date to which the term of the P&G Manufacturing Agreement
shall be extended, or (ii) the date on which Seller receives the P&G CONSENT.
(a) Term Extension. If on or before May 3, 2002, FHP makes, in good
faith, application, or files, for an amendment of the NDA with the FDA to
conduct or have conducted quality assurance and release testing and to
manufacture or have manufactured the Supplied Products at a facility other than
a P&G facility (an "FHP NDA Filing"), then, with respect to each of the Supplied
Products covered by such FHP NDA Filing, Dura shall use all commercially
reasonable efforts to cause P&G to continue the term of the P&G Manufacturing
Agreement beyond the end of its initial term for an additional period of two (2)
years.
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(b) Alternative Discussions. Commencing on the fifth anniversary of
the CLOSING DATE, the parties shall discuss alternative options for extending,
possibly extending or not extending the term of this Agreement.
7.2 Termination. This Agreement shall not be terminated at any time during
the term hereof except in accordance with the terms and conditions of this
Section 7.2.
(a) Default. This Agreement may be terminated by written notice by
either party if the other party breaches any material provision of this
Agreement and does not remedy such breach within forty-five (45) days of written
notice of breach unless such breach cannot be remedied within such forty-five
(45) day period, in which case such breach must be remedied as soon as
reasonable diligence will permit. Notwithstanding the above, should P&G be in
breach of the P&G Manufacturing Agreement, causing DURA to be in material breach
of this Agreement, FHP may terminate this Agreement by written notice if DURA
does not remedy such breach within seventy-five (75) days of written notice of
such breach unless such breach cannot be remedied within such seventy-five (75)
day period, in which case such breach must be remedied as soon as reasonable
diligence will permit.
(b) Termination by FHP. FHP may, at any time, terminate FHP's
obligation to purchase and DURA's obligation to Supply Supplied Product, by
giving written notice to DURA at least seven (7) months prior to the effective
date of such termination.
7.3 Effects of Termination. If, due to minimum order quantities for
ordering raw materials and/or packaging materials for the Supply of Supplied
Product or to other commercially reasonable purchasing considerations, DURA has
quantities of such raw materials or packaging materials in excess of DURA's
requirements therefor after expiration of this Agreement pursuant to Section 5.1
or 7.1 hereof or after FHP's termination of this Agreement pursuant to Section
17
7.2(b) hereof, or if, due to such minimum order quantity requirements or
purchasing considerations, DURA is required to order quantities of such raw
materials or packaging materials in excess of DURA's requirements therefor after
termination of this Agreement pursuant to Section 7.2(b) hereof, FHP shall
purchase such raw materials or packaging materials at DURA's out of pocket cost
upon such termination, FOB point of manufacture, which is P&G's manufacturing
facility.
7.4 Transition. The parties acknowledge that it is P&G's goal to cease
Manufacture (as such term is defined in the P&G Manufacturing Agreement) of the
Supplied Product for DURA after the expiration of the Supply Term. During the
Supply Term, DURA shall cause P&G to provide to DURA reasonable transitional
support, and DURA shall then provide FHP reasonable transitional support, to aid
certification of FHP or FHP's designee as a U.S. Manufacturer for the Supplied
Products and to manufacture and sell Supplied Products. As used herein,
"transitional support" means DURA's access to P&G's regulatory, manufacturing,
purchasing and quality assurance personnel and access to any P&G data and
information pertaining to the Supplied Products. All transitional support
provided hereunder shall be provided subject to the availability of P&G's
appropriate personnel. Such transitional support shall be provided by Dura to
FHP without any additional compensation from FHP (other than reimbursement for
out of pocket expenses if any) but shall not exceed a cumulative total of eighty
(80) hours effort from DURA's personnel. DURA takes no responsibility, and
hereby disclaims any liability whatsoever, for, arising from, caused by or
otherwise related to any data, information or services relating to the
transitional support services provided pursuant to this section.
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7.5 Survival. Notwithstanding anything herein to the contrary, the
provisions of Article 6 and of Sections 2.3, 4.2, 4.3, -------- 5.1(a) and 7.3
shall survive any termination or expiration of this Agreement.
Article 8 - General Provisions
8.1 Confidentiality. Subject to Section 13.01 of the Principal Agreement,
during the Supply Term, DURA shall maintain the Information in confidence and
not disclose the Information to a third party other than P&G or use the
Information other than as expressly permitted pursuant in Section 2.2 of this
Agreement provided that DURA shall have no obligation to FHP with respect to
Information which: (i) has been either published or is otherwise in the public
domain; (ii) is lawfully acquired by DURA from a third party under no obligation
of confidentiality to FHP; or (iii) is reasonably obvious to one skilled in the
relevant arts. Notwithstanding anything herein to the contrary, DURA may, after
reasonable notice to FHP, disclose any Information to U.S. FDA or any other
governmental or other body which legally may request such disclosure.
Notwithstanding anything to the contrary contained herein or in any other
agreement to which DURA and FHP are parties, neither DURA nor FHP shall, except
as required by law or upon the prior written consent of the other party hereto,
disclose to any PERSON (other than those of DURA's and FHP's (and their
AFFILIATES') respective directors, officers, employees and advisors having a
need-to-know) any of the terms or provisions of this Agreement.
8.2 Force Majeure. DURA shall not be subject to any liability for delay in
performance or nonperformance hereunder as a result of fire, flood, natural
catastrophe, strike, labor trouble accident, riot, act of governmental
authority, act of God or other contingencies and circumstances beyond its
reasonable control interfering with the Supplied Production, supply,
transportation or receipt of Supplied Product or with the supply of any raw
materials used in the Supply thereof. Quantities so affected may be eliminated
19
from this Agreement without liability, but the Agreement shall otherwise remain
unaffected.
8.3 Entire Agreement. This Agreement (and the Principal Agreement and all
exhibits and schedules thereto and other documents delivered in connection
therewith) supersedes all prior discussions and agreements among the parties
with respect to the subject matter hereof and contains the sole and entire
agreement among the parties with respect to the subject matter hereof. No
modification hereof shall be effected by the acknowledgement or acceptance of
any purchase order or shipping instruction forms containing terms and conditions
at variance with or in addition to those set forth in this Agreement.
8.4 Headings. Section and article headings as to the contents of particular
sections and articles are for convenience only and are in no way to be construed
as part of this Agreement or as a limitation of the scope of the particular
sections or articles to which they refer.
8.5 Relations Between the Parties. DURA shall act as independent contractor
of FHP in performing its obligations hereunder and shall (or shall cause P&G to)
(i) furnish all labor, supervision, machinery and equipment necessary for
performance hereunder and (ii) obtain and maintain all building and other
permits and licenses required by public authorities in connection therewith.
8.6 Assignment. Neither this Agreement nor any claim arising directly or
indirectly out of or in connection with the performance of either party
hereunder shall be assignable by either party hereto without the prior written
consent of the other party, which consent shall not be unreasonably withheld.
Notwithstanding anything herein to the contrary, either party hereto may assign
or otherwise transfer all or part of this Agreement to any person or entity
controlling such party, controlled by such party, under common control with such
party, or otherwise an AFFILIATE of such party; provided, however, that no such
20
assignment or transfer shall relieve or release the assignor or transferor from
any of its liabilities or obligations under this Agreement. Notwithstanding
anything herein to the contrary, FHP acknowledges and agrees that pursuant to
the P&G Manufacturing Agreement, P&G may assign its rights and obligations under
the P&G Manufacturing Agreement to any party or group of parties which shall
purchase P&G's production facility located at Manati, Puerto Rico; provided,
however, that: (i) such party or parties shall agree in advance and in writing
to agree to the terms and conditions of the P&G Agreement, (ii) DURA agrees in
writing to such assignment, and (iii) if DURA does not so agree (as set forth in
clause (ii) of this Section 8.6), then P&G may either subcontract the Supply of
Supplied Products to such party or parties or continue to Supply Supplied
Products, either at the Manati facility or another P&G facility, subject to the
terms and conditions of the P&G Agreement. The parties agree to discuss and
implement commercially reasonable procedures to implement any transitions as
allowed in this Section 8.6.
8.7 Notice. All communications under this Agreement shall be in writing and
shall be either faxed, sent by courier (Federal Express or equivalent) or mailed
by first class mail, postage prepaid, to the fax number and/or address specified
below. If faxed, such communication shall be deemed to be given when sent;
provided, however, that such fax shall be confirmed by sending a hard copy by
courier or first class mail (by the methods specified herein) the same day of
the sending of such fax. If sent by courier or mailed by first class mail as
specified below, such communication shall be deemed to be given either one (1)
business days after sending (for communication sent by courier) or three (3)
business days after mailing (for communication sent by mail). All communications
hereunder shall be sent:
21
(1) if to DURA, at its address shown below or such other address as it may
give to
FHP by notice hereunder:
Dura Pharmaceuticals,
Inc. c/o Elan Pharmaceuticals, Inc.
0000 Xxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
Attention: Vice President Commercial and
Legal Affairs Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
(2) if to FHP, at its address shown below or such other address as it may
give to DURA by notice hereunder:
First Horizon Pharmaceutical Corporation 000
Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Vice President Corporate Development
Fax: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxx, XxXxx & Serritella, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
8.8 Severability. If any provision of this Agreement is found or declared
to be invalid or unenforceable by any court or other competent authority having
jurisdiction, such finding or declaration will not invalidate any other
provision hereof and this Agreement shall thereafter continue in full force and
effect, except that such invalid or unenforceable provision, and (if necessary)
other provisions thereof, shall be reformed by a court of competent jurisdiction
so as to effect, insofar as is practicable, the intention of the parties as set
22
forth in this Agreement, provided that if such court is unable or unwilling to
effect such reformation, the invalid or unenforceable provisions shall be deemed
deleted to the same extent as if it had never existed.
8.9 Governing Law. The provisions of this Agreement shall be governed in
the internal laws of the State of Ohio without regard to the conflict of laws
rules thereof.
8.10 Attachments. The attachments referenced in this Agreement are hereby
incorporated in and made a part of this Agreement. The parties may, by mutual
consent, amend any attachment herein at any time during the term hereof by
executing a version of such attachments dated after the then current version.
8.11 Waiver. Any waiver by either party hereto of a breach or a default of
any provision of this Agreement by any other party hereto shall not be construed
as a waiver of any succeeding breach of the same or any other provision, nor
shall any delay or omission on the part of any party hereto to exercise or avail
itself of any right, power or privilege that it has or may have hereunder
operate as a waiver of any such right, power or privilege by such party.
8.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and same instrument.
8.13 Conflict. Except as otherwise expressly provided herein or in the
Principal Agreement, to the extent that any of the terms and conditions of this
Agreement shall conflict with the terms and conditions of the Principal
Agreement, the terms and provisions of the Principal Agreement shall control. In
no event shall Section 8.14 hereof be deemed to conflict with any provision of
the Principal Agreement and, therefore, Section 8.14 shall be the sole governing
provision with respect to Special Indemnity Matters (as hereafter defined).
23
8.14 Special Indemnity
(a) Special Indemnity by Seller.
(i) Special Indemnity. Subject to Section 8.14(b), from and
after the CLOSING until the first to occur of: (i) the
receipt by FHP and DURA of a P&G MANUFACTURING AGREEMENT
CONSENT, (ii) the expiration or termination (other than for
DURA's breach) of this Agreement, and (iii) the payment by
DURA to FHP of an aggregate amount equal to the Special
Indemnity Cap Amount (as hereinafter defined), DURA shall
indemnify, reimburse, defend and hold harmless BUYER
INDEMNIFIED PARTIES from and against any and all DAMAGES and
consequential damages (collectively, the "Special Indemnity
Damages"), to the extent directly resulting from (A) the
cessation of the supply of PRODUCT to DURA as a result of a
repudiation by P&G of that certain Letter dated December 19,
2001 addressed to Elan Corporation from the Manager, Global
Product Supply Business Planning of P&G, (B) the failure of
DURA to perform in accordance with Section 8.15 hereof, or
(C) P&G's failure to use commercially reasonable efforts to
supply DURA with a supply of Product under the terms of the
P&G Manufacturing Agreement (collectively, the "Special
Indemnity Matters").
(ii) Acknowledgement. Notwithstanding any other terms or
provisions of this Agreement to the contrary (including
other provisions contained herein with respect to
indemnification) or any terms or provisions under or
pursuant to any other agreement to which FHP and DURA are
parties, including the Principal Agreement, DURA shall have
no LIABILITY of any kind or nature whatsoever in the event
that after FHP's filing of an FHP NDA Filing in accordance
with Section 7.1(a) of this Agreement and DURA'S use of all
commercially reasonable efforts to cause P&G to continue the
term of the P&G Manufacturing Agreement beyond the end of
its initial term for an additional period of two years, P&G
breaches Section 7.1(a) of the P&G Manufacturing Agreement
or otherwise refuses to extend the term of the P&G
Manufacturing Agreement pursuant to and in accordance with
Section 7.1(a) thereof.
(iii)Procedures. FHP shall give DURA prompt written notice (a
"Special Indemnification Claim Notice") of any Special
Indemnity Damages or discovery of fact upon which FHP
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intends to base a request for indemnification under Section
8.14(a)(i), provided that no delay on the part of FHP in
notifying DURA shall relieve DURA from any obligation
hereunder; unless DURA is materially prejudiced thereby.
Each Special Indemnification Claim Notice must contain a
reasonable description of the claim and the nature and
amount of such Special Indemnity Damages (to the extent that
the nature and amount of such Special Indemnity Damages are
known at such time). FHP shall furnish promptly to DURA
copies of all papers and official documents received in
respect of any Special Indemnity Damages. All
indemnification claims under Section 8.14(a)(i) in respect
of a PARTY, its AFFILIATES or their respective directors,
officers, employees and agents shall be made solely by such
PARTY to this Agreement.
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[***] - CONFIDENTIAL TREATMENT REQUESTED
(b) Limitations.
(i) In no event shall DURA be liable for any Special Indemnity
Damages pursuant to Section 8.14(a)(i) of this Agreement
unless and until the aggregate amount of all such Special
Indemnity Damages thereunder exceeds [***] Dollars ($[***]),
in which case DURA shall be liable for all such Special
Indemnity Damages including the first [***] Dollars ($[***])
of Special Indemnity Damages.
(ii) In no event shall the aggregate liability of DURA for any
Special Indemnity Damages pursuant to Section 8.14(a)(i)
exceed an aggregate amount equal to [***] Dollars ($[***]
(the "Special Indemnity Cap Amount").
(iii)The amount of any Special Indemnity Damages under Section
8.14(a)(i) shall be reduced by the amount of any insurance
proceeds paid to FHP relating to such claim.
(iv) Notwithstanding any other terms or provisions of this
Agreement (including other provisions contained herein with
respect to indemnification) or any terms or provisions under
or pursuant to any other agreement to which FHP and DURA are
parties, including under Article XI of the Principal
Agreement, the right of the BUYER INDEMNIFIED PARTIES to
indemnification under Section 8.14(a)(i) shall be the sole
and exclusive remedy, without duplication, of the BUYER
INDEMNIFIED PARTIES with respect to any and all claims of
any kind or nature whatsoever incurred by FHP (or any other
BUYER INDEMNIFIED PARTIES) with respect to, arising out of,
resulting from or incident to any of the Special Indemnity
Matters.
8.15 Dura Permformance. Dura shall use its best efforts to carry out its
duties and responsibilities under this Supply Agreement other than where such
performance is prevented by force majeure events as described in Section 8.2
hereof or those duties and responsibilities of Dura which cannot be performed
without performance by P&G under the terms of the P&G Manufacturing Agreement,
in which event Dura shall be required to use only its commercially reasonable
efforts.
[Remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
FIRST HORIZON PHARMACEUTICAL, DURA PHARMACEUTICALS, INC.
CORPORATION
By: /s/ Xxxxxx Xxxxxxxxxxxx By:
------------------------------ ----------------------------------
Title: EVP Corp. Dev./CFO Title:
------------------------------ ----------------------------------
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1426812
