EXHIBIT 10.3
[Confidential Treatment Requested. Confidential Portions of This Document Have
Been Redacted and Filed Separately With The Commission.]
AGREEMENT
THIS AGREEMENT, made as of the 15th day of April, 1997 (the "Effective
Date"), by and between ALCO CHEMICALS LTD., a corporation organized under the
laws of Guernsey, Channel Islands, with a branch office at Xxx Xxx Xxxxxxxxx 0,
XX-0000 Xxxxxx, Xxxxxxxxxxx ("Alco"), and GENCHEM PHARMA LTD., a corporation
organized under the laws of Delaware with offices at 0000 Xxxxx Xxxxxx Xxxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000 ("Company"),
W I T N E S S E T H:
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WHEREAS, Company sells and distributes the products ("Products") described
in Exhibit A hereto; and
WHEREAS, Company desires to utilize the services of Alco in assisting
Company in the marketing and selling of the Products; and
WHEREAS, Alco has personnel with expertise and commercial know-how, and is
in a position to perform the services set forth herein;
NOW, THEREFORE, in consideration of the above premises and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
Sale of Products
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1.1 Definitions.
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(a) "Territory" shall mean all the countries of the world except
Italy.
(b) "Net Sales" shall mean, with respect to any Product, the invoiced
sales price of such Product billed to independent customers by Company (other
than sales to its subsidiaries, divisions or affiliates), less credits,
allowances and rebates for such Product which was spoiled, damaged, out-dated or
returned and less (i) freight and insurance costs incurred in transporting such
Product to such customers; (ii) cash, quantity and other trade discounts; (iii)
customs duties and surcharges and other governmental charges incurred in
connection with the exportation or importation of such Product; and (iv) rebates
given or liabilities incurred resulting from any mandated rebate program.
1.2 Services to be Performed by Alco. In accordance with the terms and
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conditions set forth herein, Alco shall:
(a) identify drug substances of interest to potential customers of
Company in the Territory and which could be produced by affiliates of Company;
(b) work with sales agents and distributors in countries in the
Territory to select final dosage form manufacturers who could develop compounds
utilizing drug substances produced by Company's affiliates, and participate in
negotiating supply agreements with such finished dosage form manufacturers;
(c) act as an interface between Company's customers, its sales agents
and distributors, and affiliates of Company producing drug substances;
(d) assist Company in coordinating and assigning priorities to
various new product development projects of Company;
(e) visit customers of Company with local sales agents and
distributors;
(f) assist Company in maintaining good relationships with its
customers, distributors and sales agents, including discussing pricing issues
and new product possibilities;
(g) promptly advise Company of any safety issue of which Alco becomes
aware regarding the Products;
(h) comply with all applicable laws and regulations relating to the
performance of Alco's obligations hereunder, and conduct its business in a
manner that will reflect favorably on the Company, the Products and the good
name, goodwill and reputation thereof; and
(i) not make any representation or warranty regarding the Products or
Company, except for those warranties regarding Products made by Company in a
writing accompanying the Products or as expressly authorized by Company in
writing.
1.3 Company's Responsibilities. Company shall comply with all applicable
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laws and regulations relating to the performance of Company's obligations
hereunder, and shall promptly advise Alco of any safety issue of which Company
becomes aware regarding the Products, maintain incident and complaint files,
notify Alco of all incidents and complaints which relate or may relate to the
Products, and provide Alco with copies of all correspondence with the United
States Food and Drug Administration ("FDA") or any other health authority
regarding Product safety or any request for recall of the Product.
1.4 Orders and Sales. Alco promptly shall forward to Company all orders
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for Products received from potential or actual customers in the Territory. All
such orders shall be in such form as Company shall reasonably determine and
shall not be binding until accepted by Company. Orders shall be accepted by
Company for booking and selling all Products in the Territory.
1.5 Status of Parties. The parties desire to create a relationship of
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independent contractors, and in no way intend to create a relationship of
employer and employee, of principal and agent or of joint venturers or partners.
At all times during the performance of their respective obligations under this
agreement, the parties are acting and performing as independent contractors.
Alco at all times shall be solely responsible for providing its own place of
work and all supplies necessary for performing any of its obligations hereunder.
Alco may, at its sole expense, employ such employees as Alco deems necessary or
desirable to perform such obligations hereunder. Company shall neither direct
not supervise Alco's employees in the performance of such obligations. Neither
party shall have, nor shall represent itself to any other person or entity as
having, any right, power or authority to create any obligation or liability,
express or implied, on behalf of or in the name of the other party in any manner
or for any purpose whatsoever. Except as expressly provided herein, neither
party shall use the other party's name on its stationery, advertising, or the
like in a manner which might suggest that one party is the other party's agent.
ARTICLE II
Administration
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2.1 Reports. Alco shall furnish to Company such reports on the activities
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undertaken by Alco with respect to the Products as Company may reasonably
require. Company shall furnish to Alco regular updates on the market
development and sales support activities undertaken by Company.
2.2 Audits. Alco shall have the right, upon reasonable written notice to
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Company, to designate a certified public accountant of internationally-
recognized standing reasonably acceptable to Company to have access during
ordinary working hours to such records as may be necessary to audit Company's
dollar sales of Products in the Territory. Such accountant shall not disclose
to Alco any information relating to the business of Company except to inform
Alco of the correctness of any calculations pursuant to section 3.1 hereof and
the amount of any discrepancy.
ARTICLE III
Compensation and Other Terms
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3.1 Fee. In exchange for Alco's performance of the services set forth
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herein, Company shall pay to Alco a fee equal to four percent (4%) of Company's
Net Sales in the Territory, other than sales to Company's subsidiaries,
divisions or affiliates, of the Products set forth in Exhibit A, provided that
at such time during any calendar year as the total fees payable to Alco pursuant
hereto exceed $1,000,000, the amount of the fee set forth herein shall be
reduced to two percent (2%) during the remainder of such calendar year.
3.2 Payment. Alco shall be paid the fee set forth in section 3.1 hereof
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on a calendar quarterly basis based on the Net Sales of Products shipped by
Company for that calendar quarter. Company shall pay to Alco such fee on or
before the forty-fifth (45th) day following the close of such calendar quarter,
and shall accompany each such payment with a statement setting forth the Net
Sales in the Territory for the respective calendar quarter and the calculation
of the fee due with respect thereto.
3.3 Intent of the Parties. It is the intent of the parties that the fee
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payable hereunder shall not impose or result in an economic hardship on the
parties. In the event an economic hardship should result, the parties shall
meet and determine a new fee schedule in order to eliminate such hardship.
ARTICLE IV
Term and Termination
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4.1 Termination Date. Except as otherwise set forth in this Article IV,
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the term of this agreement shall be five (5) years from the Effective Date.
Notwithstanding the foregoing, Company may terminate this Agreement on one
hundred eighty (180) days' notice to Alco in the event (a) of a change on
control of Alco or (b) Xx. Xxxxx Xxxxx is no longer actively involved in the
management of Alco.
4.2 Breach; Default. This agreement may be terminated by one party hereto
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in the event of a material breach thereof by the other party or upon written
notice by one party to the other, if the other party files or has filed against
it a petition under the Bankruptcy Act, makes an assignment for the benefit of
creditors, has a receiver appointed for it or any of its assets. In such event,
the party intending to terminate this agreement shall advise the other party in
writing, setting forth in sufficient detail the breach claimed to be the basis
of the termination and requesting that the alleged breach be cured by the other
party within thirty (30) days of the receipt of the notice. Should the other
party fail to cure the alleged breach within such period, the terminating party
shall so notify the other party and this agreement shall be deemed terminated
thirty (30) days after receipt of such termination notification.
4.3 Effects of Termination. Termination or expiration of this agreement
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shall not
relieve the parties of the obligation to pay any amounts owing between them, and
shall not terminate any rights or obligations arising prior to or upon such
termination or expiration. The provisions of Articles V and VI shall survive the
termination or expiration of this agreement.
ARTICLE V
Trade Secrets and Confidential Information
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5.1 Each party may receive various trade secrets of the other party and
other information of the other party of a confidential nature, including but not
limited to specific commercial and technical information concerning the
Products. Each party shall not disclose to anyone, directly or indirectly,
either during the term of this agreement or for a period of five (5) years
thereafter, any of such trade secrets or other confidential information
(including but not limited to marketing plans and programs, market research
information and sales data) of the other party or use such information of the
other party other than in the course of its performance hereunder. The
obligation to protect such confidential information shall not apply to any
information that: (1) is already in the lawful possession of, or is
independently developed by the party receiving such information (the "Receiving
Party") by persons without access to or use of such information; (2) becomes
publicly available other than through breach of this provision; (3) is received
by the Receiving Party from a third party with authorization to make such
disclosure; or (4) is released with the written consent of the party disclosing
such information. Notwithstanding the foregoing, the Recipient shall have the
right to disclose any such information to the extent required by law, regulation
or order of a court of competent jurisdiction, provided that the Recipient shall
give prior written notice to the other party and sufficient opportunity to
object thereto or to request confidential treatment.
5.2 Except as may be required by applicable laws and regulations or a
court of competent jurisdiction, as required to meet credit or other financing
arrangements, or as required or appropriate in the reasonable judgment of either
party to satisfy the disclosure requirements of any applicable securities law or
regulation, neither party shall make any public release or other disclosure with
respect to this agreement or the terms hereof without the prior consent of the
other party.
ARTICLE VI
Indemnity
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6.1 Company's Indemnity Obligations. Company agrees to defend, indemnify
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and hold Alco, Alco's affiliates and their employees and agents harmless from
all losses, liabilities, damages and expenses (including reasonable attorneys'
fees and costs) incurred as a result of any claim, demand, action or other
proceeding by a third party arising as a result of actions of Company or its
employees causing (a) actual or asserted violations of any applicable law or
regulation by virtue of which Products distributed or sold shall be alleged or
determined to be adulterated, misbranded, mislabeled, misrepresented or
otherwise not in compliance with any applicable law or regulation; (b) claims
for bodily injury, death or property damage attributable to the design,
manufacturing, marketing, distribution, sale or use of Products, or (c) a
Product recall ordered by a governmental agency or required by a confirmed
Product failure as reasonably determined by the Company.
6.2 Alco's Indemnity Obligations. Alco, its affiliates and their
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employees and agents shall not be entitled to the indemnities set forth in
section 6.1 above where the loss, liability, damage or expense for which
indemnification is sought was caused by the negligence, breach of contract or
willful misconduct of Alco. Further, should Company be found responsible for
losses, liabilities, damages or expenses caused by such negligence, breach of
contract or willful misconduct by Alco or its affiliates and not attributable to
other causes for which Company is responsible, Alco shall defend, indemnify and
hold Company, its affiliates and their employees harmless from all such losses,
liabilities, damages and expenses.
6.3 Patent Indemnification. Company shall indemnify and hold Alco, its
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affiliates and their employees harmless from and against any and all losses,
liabilities, damages and expenses (including reasonable attorneys' fees and
costs) which Alco may incur, suffer or be required to pay by reason of any
patent infringement suit brought against Alco because of Alco's performance of
services for Company pursuant to this agreement.
6.4 Procedure. A party or any of its affiliates or their employees or
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agents (the "Indemnitee") that intends to claim indemnification under this
Article VI shall promptly notify the other party (the "Indemnitor") of any
claim, demand, action or other proceeding in respect of which the Indemnitee
intends to claim such indemnification, and the Indemnitor shall assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an Indemnitee shall have the right to retain its own counsel, with
the fees and expenses to be paid by the Indemnitor, if representation of such
Indemnitee by the counsel retained by the Indemnitor would be inappropriate due
to actual or potential differing interests between such Indemnitee and any other
party represented by such counsel in such proceedings. The indemnity agreement
in this Article VI shall not apply to amounts paid in settlement of any claim,
demand, action or other proceeding if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld unreasonably.
The failure to deliver notice to the Indemnitor within a reasonable time after
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such Indemnitor of any liability to the Indemnitee
under this Article VI, but the omission so to deliver notice to the Indemnitor
will not relieve it of any liability that it may have to any Indemnitee
otherwise than under this Article VI. The Indemnitee under this Article VI, its
employees and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigation of any action, claim or liability covered
by this indemnification.
6.5 Affiliate Status. For purposes of this Article VI, Alco and Company
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shall not
be considered affiliates of each other.
ARTICLE VII
General
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7.1 Force Majeure. Neither party shall be liable for failure to perform
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or delay in performing any provision of this agreement to the extent performance
in the customary manner shall be prevented, hindered or delayed in whole or in
part by riots, earthquakes, floods, or any event which shall not reasonably be
within such party's control and which such party is not able to overcome by the
exercise of reasonable measures or which such party is able to overcome only at
substantial expense.
7.2 Entire Agreement. This agreement constitutes the entire understanding
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between the parties with respect to the Products, and supersedes and replaces
all prior representations, understandings and agreements, whether written or
oral, contract provisions and rights relating to the subject matter hereof.
7.3 Amendments. No provision of this agreement may be amended, revoked or
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waived except by writing, signed by an authorized officer of the respective
party. Any waiver on the part of either party of any breach or any right or
interest hereunder shall not imply the waiver of any subsequent breach or waiver
of any other right or interest.
7.4 Notices. Any notice required or permitted to be given hereunder shall
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be deemed sufficient if given in writing by any lawful means to the party to
whom such notice is required or permitted to be given. Any such notice shall be
considered given when received. All notices to Alco shall be addressed as
follows:
Alco Chemicals Ltd.
Xxx Xxx Xxxxxxxxx 0
XX-0000 Xxxxxx, Xxxxxxxxxxx
Attention: Director of Marketing and Sales
All notices to Company shall be addressed as follows:
Genchem Pharma Ltd.
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000, X.X.X.
Either party may change the address to which notice to it is to be given by
written notice to the other party.
7.5 Applicable Law. This agreement shall be governed by, and construed in
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accordance with, the laws of California, without reference to the conflicts of
law principles thereof.
7.6 Titles and Headings. Titles and headings of sections of this
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agreement are for convenience of reference only and shall not affect the
construction of any provision of this agreement.
7.7 Assignment. This agreement may not be assigned by either party
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without the prior written consent of the other party, except that Company may
assign this agreement without such consent to an affiliate, or to a purchaser of
substantially all of its business or assets to which this Agreement pertains, or
in connection with its merger, consolidation, change in control or similar
transaction.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed
and delivered as of the date first above written.
GENCHEM PHARMA LTD. ALCO CHEMICALS LTD.
By /s/ Xxxxx XxxXxxxxx By: /s/ Xxxxx Xxxxx
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EXHIBIT A
Products
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[CONFIDENTIAL TREATMENT REQUESTED]
