EXHIBIT 10.18(B)
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PRODUCT AGREEMENT
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Product Agreement (the "Agreement") dated as of October 8, 1993 by and
between Xxxxxx Pharmaceutical, Inc., a Delaware corporation ("Buyer"), and
Hoechst Celanese Corporation, a Delaware corporation ("HC").
RECITALS
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WHEREAS, Buyer, HC and HCCP Acquisition Corporation, a Delaware corporation
and wholly-owned subsidiary of HC ("Sub"), are concurrently herewith entering
into an Acquisition Agreement, dated as of the date hereof (the "Acquisition
Agreement"), which provides, upon the terms and subject to the conditions
thereof, for the acquisition by Sub of shares (the "Shares") of the outstanding
common stock, $.01 par value per share, of Buyer through a tender offer (the
"Offer") for the Shares; and
WHEREAS, as a condition to the willingness of Buyer to enter into the
Acquisition Agreement, Buyer has requested that HC and Sub enter into this
Agreement to establish certain intercompany relationships prior to, but
effective upon, the successful completion of the Offer.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in accordance with the Acquisition
Agreement, the parties hereto agree as follows:
ARTICLE I
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Supply Relationship
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1.1 Supply. HC shall, and shall cause Hoechst Celanese Bulk Analgesics &
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Acylation Chemicals Division ("BAAC") to, sell to Buyer the quantity Buyer
orders from time to time (subject to availability) of all present and future
Products, as hereinafter defined, of BAAC, except to the extent prohibited by
agreements existing on the date hereof with unaffiliated third parties. Prior
to buying any Product from other suppliers, buyer shall first inquire of HC as
to price and availability of the desired quantity of Product, and will buy from
HC or BAAC if the terms and conditions, including available quantities of
Product, taken as a whole, are more favorable to Buyer than those available from
another supplier. Buyer, and not HC or BAAC, shall supply the Products (after
purchase from HC or BAAC) to any joint venture, collaborative arrangement,
partnership, association, subsidiary or any other Person in which Buyer has at
least a 25% equity or ownership interest (collectively "Buyer Supply
Affiliates"). The term "Products" shall mean bulk active ingredients
manufactured from time to time by BAAC. "Product" means any one of the
Products. Buyer shall use Products only for research and development and/or
incorporation into products intended for sale and shall resell the Products in
bulk only to Buyer Supply Affiliates for the same purposes.
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1.2 Price
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(a) Price. The parties shall negotiate the price to be paid by Buyer for
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each Product, but in no case shall such price be a price higher than the lowest
price charged any other customer for equivalent quality and quantity.
Reasonable shipping and insurance charges shall be paid by HC and added to such
price.
(b) Price Increases. Unless otherwise negotiated, HC shall promptly
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notify Buyer in writing of any material price increase at least three (3) months
in advance of any such price increase. Any such price increase shall only apply
to shipments made after the date of such price increase provided such shipments
were not reasonably requested for delivery prior to the date of such price
increase.
(c) Forecasts and Purchase Orders. Forecasts and purchase orders shall be
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in accordance with normal industry standards. Forecasts shall be nonbinding.
HC shall use its best efforts to supply Product in the quantities and on the
dates set forth in the purchase order for such Product. This subsection (c)
applies to Products which did not originate pursuant to Section 1.5.
(d) Payment. Payment by Buyer for Products supplied by HC or its
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Affiliates hereunder shall be in United States dollars and made within ninety
(90) days after the date of invoice. Products shall be invoiced no sooner than
the date of shipment to Buyer or its designee.
1.3 Third Party Products. If requested by Buyer, HC shall cause BAAC to
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use its best efforts to assist Buyer in locating third party suppliers of
materials which are not Products and negotiating the best available terms for
such materials. This includes BAAC contacting other companies within the
Hoechst Group including Xxxxxxx Uclaf.
1.4 Continuity of Supply. Once BAAC has commenced supply of a Product, HC
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shall cause BAAC to continue manufacturing of such Product so long as Buyer has
need of such supply for its product line provided such manufacture is legally
permitted and economically feasible. If HC or BAAC determines that such
manufacture is no longer economically feasible, it will give Buyer a minimum of
18 months notice of termination.
1.5 Synthesis. Buyer may, from time to time, determine that it requires a
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supply of bulk active ingredients which are not at that time Products. At
Buyer's request, HC shall or will cause BAAC to designate appropriate research
and development specialists and other developmental and manufacturing personnel
as it deems appropriate and necessary to meet with representatives of Buyer to
discuss the material to be synthesized and the feasibility of such synthesis and
to determine the anticipated costs thereof. The HC representatives, together
with the Buyer representatives, shall constitute the "Product Selection
Committee." Upon a determination of technical and economic feasibility to each
party of HC or BAAC manufacturing the material for Buyer, the Product Selection
Committee shall establish production guidelines, and a timetable for developing
and manufacturing the new material. The Product Selection Committee shall also
determine forecasting, purchase order and delivery guidelines for each new
material and the priority of each project. HC agrees to use its best efforts to
synthesize such
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materials for Buyer as promptly as possible and to allocate appropriate
resources to such synthesis.
If the new material is available to Buyer in the commercial market at the
time HC or BAAC have obtained all approvals necessary to ship and sell such new
material, HC shall be entitled to sell such material to other customers and
shall charge Buyer a price no higher than the lowest price charged to any other
customer. If the new material is not generally available in the market, neither
HC nor BAAC shall sell such material without Buyer's agreement to any other
customer and the price charged Buyer shall be negotiated.
1.6 Specifications. All Products supplied hereunder shall meet the
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specifications (including impurity profile) for that Product agreed to by the
Parties. Each shipment shall be accompanied by a Certificate of Analysis.
1.7 HC Warranties. HC warrants that, at the time of shipment, each
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Product supplied by it hereunder (i) shall meet the applicable Product
Specifications (which shall include an impurity profile); (ii) shall not be
adulterated or misbranded within the meaning of the Food, Drug and Cosmetic Act
(the "Act"), or any applicable laws in which the definitions of adulteration and
misbranding are substantially the same as those contained in the Act, as the Act
and such laws are constituted and effective at the time of delivery of such
Product to Buyer or its designee; (iii) shall be manufactured and supplied in
accordance with GMPs and all other applicable laws, rules and governmental
regulations; and (iv) shall not violate any patent, trade secret or other
proprietary right of any third party.
HC's WARRANTIES SET FORTH IN THIS SECTION 1.7 ARE ITS EXCLUSIVE WARRANTIES
TO BUYER WITH RESPECT TO THE PRODUCTS, AND ARE GIVEN AND ACCEPTED IN LIEU OF ANY
AND ALL OTHER WARRANTIES, GUARANTEES, CONDITIONS AND REPRESENTATIONS, EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Subject to Section 1.8 and with respect to the delivery to Buyer of Product
or bulk active ingredients being supplied under Section 1.5, IN NO EVENT WILL
BUYERS DAMAGES OR OTHER RECOVERY FROM HC IN ANY CAUSE OF ACTION, WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY, EXCEED THE PRICE PAID BY BUYER FOR THE
SPECIFIC GOODS AS TO WHICH THE CLAIM IS MADE; and HC SHALL NOT BE LIABLE, AND
BUYER WAIVES ALL CLAIMS AGAINST HC, FOR PROSPECTIVE PROFITS OR SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES BASED UPON NEGLIGENCE, BREACH OF
WARRANTY, STRICT LIABILITY IN TORT OR ANY OTHER CAUSE OR ACTION. HC will not be
liable to Buyer for any contribution to or indemnity against all or any part of
any loss, damage or injury to persons or property to the extent it results from
Buyer's handling, storage, transportation, resale or use of the Products in
manufacturing processes, or in combination with other substances or otherwise.
1.8 HC Indemnity. HC shall indemnify and hold harmless Buyer from and
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against any and all costs, expenses, damages (except as set forth above),
judgments, liabilities (including
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attorneys' fees) incurred by or rendered against Buyer or its Affiliates
(collectively, "Loss and Expense") to the extent arising from any claim made or
suit brought as a result of a breach by HC of its warranties under Section 1.7.
Buyer shall give prompt written notice of any such claim or suit, and shall
permit HC to undertake the defense thereof, at HC's expense. Buyer shall
cooperate in such defense, to the extent reasonably requested by HC, at HC's
expense. Buyer shall have the right to participate in such defense at its own
expense. In any claim made or suit brought, for which Buyer seeks
indemnification under this Section 1.8, Buyer shall not settle, offer to settle,
or admit liability or damages without the prior written consent of HC. HC shall
not settle, offer to settle or admit liability or damages without the prior
written consent of Buyer if such actions would impose any limitations on the
business of Buyer.
Buyer shall similarly indemnify HC with equal limitations as apply to HC
indemnification of Buyer for product liability and other claims to the extent
arising out of its manufacture and marketing of products incorporating Products,
or bulk active ingredients supplied under Section 1.5.
ARTICLE II
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Managed Care Market Development and Sales
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2.1 Organization. Buyer and HC's Affiliate, Xxxxxxx-Xxxxxxx
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Pharmaceuticals Incorporated ("HRPI") have agreed to form a managed care market
development and sales organization ("Organization"). The purpose of this
Organization is to maximize the sales and profits of Buyer and HC and HRPI in
the managed care market by being a preferred supplier of services and high
quality products.
Each of HC and Buyer intends to contribute its particular business
expertise to the Organization. HRPI has an established managed care market
development and sales organization. Buyer also has expertise in this area.
Buyer and HRPI have complementary product lines of generic and specialty
products. Buyer and HRPI intend to cooperate to share knowledge and expertise
in areas such as regulatory affairs and market conditions.
Within thirty (30) days of the effective date hereof, HC shall cause HRPI
to, and Buyer shall appoint an equal number of representatives to a committee
which shall determine:
(i) the form and structure of the Organization;
(ii) the therapeutic areas to be managed by the Organization;
(iii) the current and future product portfolio necessary for managed care
market segments. These may include new ANDA's, insourcing of multi-source
products, new dosage forms of existing products via modified NDA's and patent
protected products.
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(iv) specific market segments to be managed by the Organization including:
* Indemnity Plans
* Hospital Sales
* All HMO's - Staff, IPA's, etc.
* All Pharmacy Benefit Companies
* Mail Order
* Large Buyers that may Result from Clinton Health Proposals
* Long Term Care
* PPO's with Pharmacy Benefit Management
* Other segments or individual accounts which may not currently fall
under traditional managed care segments will be addressed as market
conditions change
* HRPI and Buyer agree to work exclusively through the Organization
in these specific segments. Each retains the right to market and
contract independently to those market segments which do not fall
under the auspices of the Organization.
(v) resource and supply allocation and cost sharing;
(vi) labelling and Organization market identity matters; and
(vii) contract and pricing strategy.
2.2 Product Access.
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(a) Buyer shall be the exclusive generic arm of HC and its affiliate,
HRPI. If HC or HRPI determines that they desire to "genericize" any HRPI product
as it comes off patent or if such products are or are about to become subject to
multi-source competition, HC shall cause HRPI to grant Buyer the exclusive right
from HRPI to market and sell and the exclusive right to manufacture (if
manufacture is agreed to by the parties) the "genericized" product.
HRPI may authorize Buyer to prelaunch products based on HRPI's assessment
of market conditions. Terms and conditions are to be negotiated on a case-by-
case basis. On the Effective Date, Buyer shall have the right to pre-launch,
market and sell glyburide (Diabeta(R)). Buyer and HRPI will immediately
commence negotiating an agreement relating to a generic Diabeta(R) (glyburide).
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If Buyer determines that it is not interest in or capable of "genericizing"
an HRPI product, Buyer will so notify HC in sufficient time to enable HC to make
other arrangements.
(b) HRPI will negotiate to allow Buyer to develop new dosage forms of
existing HRPI products via modified NDA's.
2.3 Managed Care Services Joint Venture. HC and Buyer agreed to consider
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forming a managed healthcare preferred benefit services joint venture.
ARTICLE III
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Services
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3.1 Provisions of Services. HC, BACC and HRPI shall make the following
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services available to Buyer on an as available basis, provided that Buyer shall
have priority over persons which are not affiliates of HC:
(a) access to specialized analytical instrumentation, e.g., NMR, GC Mass
spec, x-ray diffraction and atomic absorption to assist in ANDA submissions.
(b) access to HC purchasing agreements which may be beneficial in
purchasing software, hardware, production equipment, etc.
(c) access to HC distribution network, e.g., warehousing, EDI technology,
transportation, etc.
(d) access to HRPI's excess manufacturing capacity when useful to Buyer,
including all production systems.
All such services will be charged to Buyer at the same full cost charged to
HC divisions and other Affiliates.
Buyer shall make available to HRPI its excess manufacturing capacity when
available and useful to HRPI. Such capacity will be charged for on a full cost
basis.
ARTICLE IV
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Over the Counter
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The parties agree to negotiate in good faith to develop joint ventures in
private label OTC markets.
ARTICLE V
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Term and Termination
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5.1 Commencement. This Agreement shall commence on the Effective Date.
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5.2 Termination. This Agreement shall terminate:
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(i) After five years from the Effective Date, upon at least twelve (12)
months notice by either party; provided, however, that Article I may not be
terminated by HC as to any Product which Buyer is then incorporating in its then
product line, has incorporated in a filed ANDA or has been selected by the
Product Selection Committee. If HC would like to cease supply, the parties will
work together to obtain an alternate source of supply for Buyer so as to permit
Buyer to continue its product sales on an uninterrupted basis.
(ii) Immediately, on any date set by mutual agreement of the parties;
(iii) Subject to Section 6.3 below, if any party breaches any of its
material obligations hereunder or any of its representations and warranties
herein in any material respect which is not cured within ten (10) days from the
date of written notice delivered to the defaulting party in the case of a
payment default, and within thirty (30) days from the date of such notice in all
other cases, upon written notice of termination from the non-defaulting party;
provided, however, that if a breach of a material obligation is not of the type
that can reasonably be cured within such grace period, the defaulting party
shall have an additional period (not to exceed sixty (60) days) in which to cure
such breach, provided that the defaulting party notifies the non-defaulting
party in writing that it is exercising its right to the additional grace period,
explains why such breach cannot be cured within the existing grace period and
promptly commences diligent action to cure such breach;
Upon a termination or expiration of this Agreement by either party hereto
for any reason, all obligations under this Agreement shall cease, except that
Sections 1.7, 1.8, 6.2, and 6.3 shall survive; and Buyer and HC and its
Affiliates shall be and remain liable to pay, each to the other, any and all
sums then due and payable hereunder.
ARTICLE VI
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Miscellaneous
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6.1 Force Majeure.
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(a) Event of Force Majeure. Neither party shall be responsible or liable
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to the other hereunder, for the failure or delay in the performance of this
Agreement except Buyer's obligation to pay for delivered product, or both
parties obligations to pay for performed Services, due wholly or partly to any
cause not in its control or not avoidable by reasonable diligence. The
following, while not an exclusive listing, will be considered not to be within a
party's control or avoidable by reasonable diligence: war, fire, accident or
other casualty, act of God, labor controversies, court decrees, inability to use
the full capacity of plants or facilities as a result of governmental action,
machinery malfunctions or breakdowns, and inability without litigation or the
payment of penalties or unreasonable prices or the acceptance of unreasonable
terms and conditions, to obtain fuel, power, labor, containers, transportation
facilities, or materials necessary to produce the Products. In the event of the
applicability of this Section 6.1, the party
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failing or delaying performance shall use its commercially reasonable best
efforts to eliminate, cure and overcome any of such cause and resume the
performance of its obligations.
(b) Notification. Upon the occurrence of an event of force majeure, the
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party failing or delaying performance shall promptly notify the other party, in
writing, setting forth the nature of the occurrence, its expected duration and
how such party's performance is affected. The failing or delaying party shall
resume performance of its obligations hereunder as soon as practicable after the
force majeure event ceases.
6.2 Proprietary Information. The parties hereto agree that, unless
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otherwise required by law or court order, no Proprietary Information (as defined
below) shall be disclosed during the Term and for a period of two years
thereafter to any party other than those employees and agents of the parties
having a need to know such information to enable the parties to perform their
obligations hereunder. The parties hereto further agree not to use any
Proprietary Information of the other party to the detriment of such other party.
For purposes of this Agreement, "Proprietary Information" shall mean all
confidential or proprietary data or information obtained from another party
hereto, except any portion thereof that (i) was already known to the party
receiving the same, as evidenced by its written records at the time or receipt
thereof; (ii) is disclosed to the party receiving the same, after such receipt,
by a third person who has a right to make such disclosure without violating any
duties owed to the other party hereto; (iii) is or becomes part of the public
domain through no fault of the party receiving the same; or (iv) is subsequently
developed or unrecovered by or on behalf of the receiving party without the
benefit or use, directly or indirectly, of such data or information.
6.3 Dispute Resolution. The parties agree to in good faith explore the
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use of Alternate Dispute Resolution techniques prior to commencing litigation.
6.4 Notices. Any notice or communication given pursuant hereto by any
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party to any other party shall be in writing and shall be sufficient in all
respects if delivered in person or upon receipt after being mailed by
registered, certified or express mail, postage prepaid, return receipt
requested, addressed as follows:
If to Buyer to:
Xxxxxx Pharmaceutical, Inc.
00 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
With a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
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If to HC or any of its affiliates, to:
Hoechst Celanese Corporation
Xxxxx 000-000 Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxx
or to such other address as either party hereto may hereafter in writing notify
the other party hereto.
6.5 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
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AND GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAWS OF CONFLICTS OR CHOICE OF
LAWS, OF THE STATE OF DELAWARE.
6.6 Modifications, Amendments and Waivers. Except as otherwise provided
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herein, provisions of this Agreement may be modified, amended or waived only by
a written document specifically identifying this Agreement and signed by the
party hereto against whom enforcement of such modification, amendment or waiver
is sought. Without limitation, to the extent the terms and conditions of this
Agreement conflict with the terms and conditions on any Purchase Order, shipping
order form, xxxx of lading, receipt or the like, the terms and conditions of
this Agreement shall be controlling.
6.7 Assignment. This Agreement shall not be assignable nor is the
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performance of the duties hereunder delegable without the express written
consent of the non-assigning or non-delegating parties, as the case may be,
whose consent will not be unreasonably withheld.
6.8 Entire Agreement. This Agreement constitutes the entire agreement
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between the parties hereto and supersedes all prior agreements and
understandings, both written and oral, and all concurrent oral agreements and
understandings with respect to the subject matter hereof.
6.9 Headings. The titles or Article or section headings of the various
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provisions hereof are intended solely for convenience and ease of reference and
shall not in any manner amplify, limit or modify or otherwise be used in the
interpretation of any of said provisions.
6.10 No Waiver. The failure of any party hereto at any time to require
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performance by any other party of any provision of this Agreement shall not
affect the right of such party to require performance of that provision, and any
waiver by either party of any breach of any provision of this Agreement shall
not be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right under this
Agreement.
6.11 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
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6.12 Drafter. Neither party hereto, nor its respective counsel, shall be
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deemed the drafter of this Agreement, and all provisions of this Agreement shall
be construed in accordance with their fair meaning, and not strictly for or
against either party hereto.
6.13 Definitions. "Person" means and includes an individual, a
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corporation, a partnership, a joint venture, a trust, and an unincorporated
organization. An "Affiliate" of a specified Person is a Person that directly or
indirectly is controlled by the Person specified. "Effective Date" shall mean
the date on which at least a majority of Buyer's outstanding voting securities
(calculated on a fully diluted basis) shall have been acquired by HC or Sub
pursuant to the Acquisition Agreement dated as of the date hereof.
6.14 Further Assurances. Each party hereto shall, and shall cause its
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Affiliates to, use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all other things necessary, proper or
advisable (including the execution and delivery of other things necessary,
proper or advisable (including the execution and delivery of other documents or
instruments) to carry out the provisions of, or to more effectively consummate
the transactions contemplated by, this Agreement.
6.15 Severability. If any one or more of the provisions of this Agreement
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shall be held to be invalid, illegal or unenforceable in any respect, the
validity, legality or enforceability of the remaining provisions hereof shall
not in any way be affected or impaired hereby. In the event any provisions
shall be held invalid, illegal or unenforceable, the parties shall use their
best efforts to substitute a valid, legal and enforceable provision, which
insofar as practical, implements the purpose hereof and of such invalid, illegal
or unenforceable provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Hoechst Celanese Corporation
By: /s/ Xxxxx X. Benz
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Name: Xxxxx X. Benz
Title: Senior Vice President - Finance,
Chief Financial Officer and Director
Xxxxxx Pharmaceutical, Inc.
By: /s/ Xxxx X.X. Xxxxx
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Name: Xxxx X.X. Xxxxx
Title: Chairperson of the Board, Chief
Executive Officer and President
