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CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT 10.6
Distribution Agreement
This Distribution Agreement (this "Agreement") made as of the 1st day of
July, 1998 between Ortho-XxXxxx Pharmaceutical Corporation, a Delaware
corporation ("Ortho"), and Women First HealthCare, Inc., a Delaware corporation
("WFH").
WITNESSETH:
WHEREAS, Ortho, among other business activities, is involved in the
manufacture for sale of pharmaceutical products; and
WHEREAS, WFH, among other activities, is engaged in the marketing and
distribution for sale of pharmaceutical products; and
WHEREAS, WFH has agreed to market and distribute generic estropipate
manufactured by Ortho pursuant to that certain Distribution Agreement dated as
of December 6, 1997 by and between the parties hereto; and
WHEREAS, Ortho and WFH wish to enter into this Agreement for the marketing
and distribution by WFH of certain estropipate products supplied by Ortho or an
Affiliate thereof and labeled under the name Ortho-Est and/or such other label
as may be mutually agreed upon by Ortho and WFH and approved by the FDA.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
ARTICLE I - Definitions
As used in this Agreement, the following terms have the meanings specified
or referred to in this Article I:
"Actual Net Sales" shall mean the amount invoiced by WFH for sales of
Products, less estimates which will be adjusted to actual on a periodic basis
of: (i) discounts, including cash discounts, discounts to managed care
organizations, rebates paid, credited, accrued or actually taken (including
government rebates such as Medicaid chargebacks), and retroactive price
reductions or allowances actually allowed or granted from the billed amount,
(ii) credits or allowances actually granted upon claims, rejections or returns
of such sales of Products, and (iii) taxes, duties or other governmental
charges levied on or measured by the billing amount when included in billing,
as adjusted for rebates, chargebacks, and refunds.
2
"Affiliate" shall mean a person, firm or entity which directly or
indirectly through one or more persons, firms or entities controls, is
controlled by, or is under common control with such person, firm or entity.
"Claims(s)" shall mean claim(s) that a Product delivered to WFH does not
conform to the Specifications or contains defects in design, material or
workmanship.
"Equalization Payment" shall have the meaning set forth in Section
3.1(b)(ii) hereof.
"FDA" shall mean the United States Federal Food and Drug Administration.
"Fiscal Quarter" shall mean a fiscal quarter of WFH.
"Fiscal Year" shall mean a fiscal year of WFH.
"Forecasted Sales" shall mean, with respect to a given period, the amount
of "Net Trade Sales" with respect to the Products for the applicable year as set
forth in the P&L, multiplied by the appropriate fraction for such period (i.e.,
one-twelfth for a month, one-fourth for a quarter, etc.).
"Incremental Sales" shall mean, with respect to a given period, the Actual
Net Sales of all Trade Units sold by WFH during such period, minus the
Forecasted Sales for such period.
"Invoiced Amount" shall mean the amount invoiced by Ortho to WFH for
Products shipped by Ortho to WFH in any given period with respect to such
period.
"Inventory Base Amount" shall mean the amount determined by multiplying
(i) the number of units of Product carried in WFH's inventory by (ii) the
applicable transfer price (as set forth on Exhibit D).
"Inventory Payment" shall mean, with respect to a given period, the amount
determined by multiplying the Prime Rate by *** of the Inventory Base Amount
for such period.
"P&L" shall mean the forecasted Income Statement (including forecasted
Pre-Tax Profits) with respect to the Products as agreed upon by both WFH and
Ortho and attached hereto as Exhibit B.
"Pre-Tax Profit" shall mean, with respect to a given period, the Income
Before Tax with respect to the Products for the applicable year as set forth in
the P&L, multiplied by the appropriate fraction for such period (i.e.,
one-twelfth for a month, one-fourth for a quarter, etc.).
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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"Prime Rate" shall mean the prevailing prime rate of interest (as
published in the Wall Street Journal), as determined on the last date of the
applicable Fiscal Month, divided by 12 (to reflect a monthly rate).
"Product" shall mean an estropipate product labeled and packaged under the
name OrthoEst and/or such other label as may be mutually agreed upon by Ortho
and WFH and approved by the FDA, in one of the dosage forms listed in Exhibit C
hereto, plus any additional dosage form for which Ortho subsequently receives
approval from the FDA.
"Rebate Payment" shall have the meaning set forth in Section 3.1(b)(i)
hereof.
"Royalty Payment" shall mean, with respect to a given period, an amount
equal to *** of the Incremental Sales for such period.
"Specifications" shall mean the USP specifications for estropipate in
tablet form and the labeling and packaging specifications as defined in Exhibit
E hereto.
"Territory" shall mean the United States of America (including Puerto
Rico).
"Trade Unit" shall mean a unit of Product to be sold for commercial
purposes and shall not include any sample Products.
"Transfer Price" shall mean with respect to a given year, the applicable
transfer price for the Products as set forth on Exhibit D.
ARTICLE II -- Description of Arrangement
2.1 Ortho hereby appoints WFH as the exclusive distributor of the
Products throughout the Territory and shall sell to WFH WFH's requirements for
Products and WFH shall purchase its requirements for Products, if any, from
Ortho; provided, however, that nothing contained herein shall prevent or
otherwise limit Ortho or any of its customers who purchase generic estropipate
products from Ortho as of the date of this Agreement from performing under any
such arrangements.
2.2 Ortho shall label or arrange for the labeling of Products sold
hereunder upon receipt of camera-ready artwork from WFH to meet the
specifications set forth on Exhibit E hereto; provided that prior to such time.
Ortho may satisfy its obligations under Section 2.1 above by supplying WFH with
its existing inventory of Ortho labeled Product. The parties shall consult
concerning appropriate labeling upon execution of this Agreement. WFH shall not
acquire any rights in or use any trademarks, trade names, service marks, or
other identification owned or used by Ortho or any of its Affiliates in
connection with the Products, except as contemplated by Section 2.8. The
parties also each agree to keep a copy of this Agreement for at least two years
after the final shipment or delivery of such Product labeled by or for WFH from
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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the WFH distribution facility. Further, each party agrees to make such copy
available for inspection at any reasonable hour to any officer or employee of
the Federal Department of Health and Human Services who requests it. Ortho
shall not acquire any rights in or use any trademarks, trade names, service
marks, or other identification owned or used by WFH or any of its Affiliates
in connection with the Products.
2.3 WFH shall provide to Ortho on the first business day of each month a
forecast of its orders for each of the Products for the then-following 12
months, along with requested shipment dates for such Products. Each forecast
shall be binding upon WFH with respect to orders forecasted for the lesser of
(i) the then-following three months, or (ii) the remaining term of this
Agreement (the "Binding Forecast"). No change may be made in the Binding
Forecast for Products or the shipment dates requested therefor without the
prior consent of Ortho. Ortho shall use reasonable efforts to honor any
increase in the amount of Product forecasted for any month, up to 25% of the
amount originally forecasted for such month. In addition, in no event shall WFH
provide less than 90 days' notice of a requested shipment date. All orders for
Product shall be in whole number full batch lots.
2.4 Ortho agrees that it or its manufacturer of Products shall provide a
certificate of conformance to WFH for its review and records with each shipment
of Products to WFH. Ortho shall ship Products ordered by WFH via regular
freight in accordance with the delivery instructions set forth in such order.
All such shipments shall be FOB site of manufacture.
2.5 The terms and conditions of this Agreement shall supersede and
control any inconsistent terms and conditions in any form of order,
acknowledgment or invoice used by the parties.
2.6 Ortho shall use reasonable efforts to administer the current managed
care contracts and any other discount arrangements between Ortho and stated
customers as of the date hereof which relate to the Products until such
contracts or arrangements expire by their terms. WFH shall reimburse Ortho for
rebate amounts and any and all out-of-pocket costs associated or incurred with
respect to the administration of such programs with respect to the Products
within thirty (30) days of receipt of an invoice therefor. Ortho shall promptly
inform WFH of any amendment, modification or supplement to any such contracts
or arrangements and shall consult with WFH prior entering into any amendment,
modification or supplement to any such contracts or arrangements which
materially adversely affects the Products.
2.7 Ortho shall use reasonable efforts to maintain the patient
assistance programs in which Ortho participates as of the date hereof with
respect to the Products until such programs are transferred to WFH, provided
that each party shall use its reasonable best efforts to consummate such
transfer no later than six months from the date hereof; provided that any and
all costs associated or incurred with respect to the administration of such
programs with respect
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to the Products shall be passed on to, and shall be the sole responsibility of,
WFH (including without limitation, with respect to program administration,
Product cost, shipping, etc.).
2.8 Advertising and other promotional materials created by WFH to
promote sales of the Products, and any use of the ORTHO-EST Trademark, will be
submitted to Ortho for its prior written approval which approval shall not be
unreasonably withheld; provided that if no response is sent by Ortho within
thirty (30) days after receipt of such request, approval shall be deemed to
have been given. All promotional costs and expenses and all selling costs and
expenses shall be borne by WFH.
2.9 WFH shall, subject to the terms and conditions of this
Agreement, use commercially reasonable efforts to lawfully promote, distribute
and market the Products so as to optimize sales and distribution of the
Products, and shall do no act or thing to derogate from, diminish, or injure the
market for the Products. WFH shall only be authorized to promote, distribute,
market and sell the Products within the Territory.
2.10 Ortho shall prepare and file at its expense all regulatory
filings and perform any other regulatory compliance necessary to maintain all
licenses, permits and approvals required by any government agency in connection
with the manufacturing of the Products.
ARTICLE III -- Payments
3.1 (a) WFH shall pay for all Products shipped by Ortho to WFH at the
applicable Transfer Price within thirty (30) days of the date of invoice
therefor.
(b) Within (i) ten (10) business days following the end of each month
which is not the final month of the Fiscal Year (i.e. December), and (ii)
within thirty (30) calendar days following the end of the Fiscal Year, WFH
shall prepare and deliver to Ortho (x) a report containing its sales data for
such month on a month and year to date basis (including the number of units of
Product sold and the respective prices therefor and such other information
reasonably necessary to compute the payments contemplated in this Section 3.1),
and (y) a payment reconciliation report, on a month to date and year to date
basis, in substantially the form attached hereto as Exhibit A, which sets forth
the calculation, among other things, regarding the net payments to be made by
Ortho to WFH, or by WFH to Ortho, as the case may be, in connection with the
following:
(i) if, on a year to date basis, the *** (A) ***, with respect to
such period, then *** within ten (10) days after Ortho's receipt of the
such report; and
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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(ii) if, on a year to date basis, the (A) *** for such period,
exceeds (B) the *** for such month, then *** within ten (10) days after the
delivery of such report; provided, however, that *** shall have no obligation
to *** with respect to such period if *** has not delivered *** for ***
for such period.
(c) During the twelve-month period (such period, the "First Contract
Year"; each subsequent twelve-month will be referred to as the "Second Contract
Year; Third Contract Year, etc.; any such 12-month period will be referred to as
a "Contract Year") commencing with the date that Product is first shipped to WFH
by Ortho, WFH will have an aggregate credit limit of ***; provided that ortho
will reassess WFH's credit terms from time to time as it may deem necessary;
and, provided further, that WFH shall prepay the amount that any orders together
with all other outstanding invoices exceed such credit limit.
(d) In the event that WFH fails to make any payment due hereunder in a
timely manner, WFH shall pay interest on such amounts at an annual rate equal
to the prevailing prime rate of interest (as published in the Wall Street
Journal on the due date (or the next day such periodical is published)), plus
600 basis points.
(e) Ortho shall be responsible for any and all rebates, chargebacks,
discounts, returned goods and the like for all Products sold by Ortho and its
Affiliates prior to the date of this Agreement. In the event that WFH issues any
rebates, refunds or customer credits in respect of any Products sold by Ortho
and its Affiliates prior to the date of this Agreement. WFH shall be entitled to
offset any amounts owed to Ortho under this Article III by the full amount of
any such rebates, refunds or customer credits. For purposes of this Section
3.1(e), (i) any non-expired Products shall be deemed to be the responsibility of
the party that invoiced such Product, (ii) any expired Products returned within
two (2) years of the date hereof shall be deemed to be the responsibility of
Ortho, and (iii) any expired Products returned two (2) years or more from the
date hereof shall be deemed to be the responsibility of WFH.
(f) Ortho shall sell to WFH its requirements for samples of Products
during the term of this Agreement, the transfer price of which shall be the
direct manufactured cost as set forth on Exhibit D hereof.
3.2 WFH will make and retain for a period of five years following
the end of each Fiscal Year, true and accurate records, files and books of
account containing all the data reasonably required for the full computation
and verification of the amounts to be paid pursuant to this Article III for
such Fiscal Year. Such books and records shall be in accordance with generally
accepted accounting principles consistently applied. WFH shall permit Ortho, at
Ortho's cost and expense, to inspect WFH's relevant books and records during
regular business hours upon two business days written notice.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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3.4 (a) All payments by WFH shall be made via wire transfer to the
account of Ortho as follows:
[Account Number: ***; ABA Number: ***]
JOM Pharmaceutical Services
c/o Harris Bank/Phone: ***
; or as otherwise provided by notice from Ortho from time to time.
(b) All payments by Ortho shall be made via wire transfer to the account
of WFH as follows:
Account Number: ***, ABA Number: ***
Women First HealthCare, Inc.
c/o Republic National Bank/Phone: ***
or as otherwise provided by notice from WFH from time to time.
ARTICLE IV - Claims for Nonconforming Product
4.1 During the First Contract Year, WFH shall have 45 days (and for
each Contract Year thereafter, 30 days) after receipt of any shipment of
products to examine such products to determine if they conform to the
Specifications and if they are free from defects in design, material and
workmanship, and, on the basis of such examination, to accept or reject such
shipment. All Products shall have a shelf-life of at least two (2) years prior
to the applicable expiration date at the time such Products are first received
and accepted by WFH. Any Claims shall be made by WFH in writing to Ortho,
indicating in detail the nonconforming characteristics of the Products. After
the submission of a Claim by WFH, Ortho shall, at WFH's option, provide WFH with
(i) a refund of the full amount paid by WFH for such Products, (ii) a credit
against future xxxxxxxx equal to the full amount paid by WFH for such Products,
or (iii) replacement for such Products. In no event shall Ortho be required to
accept the return of any Products or provide reimbursement or credit for any
Products to WFH solely because the expiration date for such Products shall have
passed, provided that such Products have been received and accepted by WFH at
least two (2) years prior to the applicable expiration date. Ortho shall pay for
all shipping costs of returning the Products that are the subject of Claims.
Ortho shall bear the risk of loss for such Products, beginning at such time as
they are taken at WFH's premises for return delivery.
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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4.2 Any shipment of the Products to WFH for which WFH shall not submit a
Claim within 45 days for the First Contract Year (or 30 days for the subsequent
Contract Year) after delivery shall be deemed accepted. Upon acceptance, WFH
shall release Ortho from all Claims for non-conformity or defects except
Claims for latent defects which are not reasonably detectable at the time of
acceptance.
ARTICLE V - Warranties
5.1 Ortho warrants that any Products to be supplied to WFH hereunder
will, upon shipment, comply in all respects with the Specifications and the
specifications referred to in the Federal Food Drug and Cosmetic Act, and
regulations issued pursuant to that Act, including but not limited to,
regulations concerning current good manufacturing practices and the Quality
System Regulations (as defined by the FDA)(the "QSR's"). The foregoing warranty
shall not apply to any Products that after delivery to WFH (i) has been
tampered with or otherwise altered; (ii) has been subjected to misuse,
negligence or accident; or (iii) has been stored, handled or used in a manner
contrary to FDA or other governmental requirements or Ortho's written
instructions or applicable industry practices or standards. Subject to the
first sentence of this Section 5.1 and except as otherwise expressly provided
herein, ORTHO MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY AS TO MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OR ANY OTHER MATTER WITH RESPECT TO THE
PRODUCT WHETHER USED ALONE OR IN COMBINATION WITH ANY OTHER MATERIAL. Ortho
agrees to bear the direct, incremental out-of-pocket costs reasonably incurred
by WFH due to the recall of any Product or seizure of any Product by
appropriate governmental authorities as a result of a wrongful act or omission
by Ortho, including without limitation negligence in manufacture or failure to
comply with applicable regulations concerning good manufacturing practices and
the QSR's. Ortho further represents and warrants that to the best of its
knowledge, (x) the Trademark and the Product do not infringe any patent,
trademark, service xxxx, trade name, copyright, trade secret or other
proprietary rights (collectively, Intellectual Property") of third parties in
the Territory, and (y) it is the holder of all Intellectual Property necessary
to perform its obligations hereunder. Ortho further agrees to notify WFH within
twenty-four hours of receipt of notice from any source of any and all adverse
reactions reported to Ortho and which were alleged to have been caused by any
Product or similar products, or any other issues related to the design,
materials, or workmanship of the Product or similar products reported to Ortho.
5.2 WFH warrants that it will comply with all laws, regulations and
orders in the United States, respecting sale of the Products. Without limiting
the generality of the foregoing, WFH specifically warrants that as of the
commencement of the First Contract Year and thereafter during the term of this
Agreement it will have in place an effective system for tracking Products in
the event a recall is necessary. WFH further agrees to use its reasonable best
efforts in the event of a recall to notify all Product purchasers of the recall
and to facilitate retrieval of Products recalled. WFH further agrees to notify
Ortho within twenty-four hours of receipt of
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notice from any source of any and all adverse reactions reported to WFH alleged
to have been caused by any Product or similar products, or any other issues
related to the design, materials or workmanship of the Product or similar
products reported to WFH. WFH agrees to maintain (a) workers' compensation
insurance for all of its employees, the limits of which shall be statutory, and
(b) commercial general liability and automobile insurance with limits of not
less than $5,000,000 per occurrence.
5.3 Ortho hereby agrees to protect, indemnify, defend and hold
harmless WFH, its officers, directors, shareholders, Affiliates, agents and
employees from and against any and all claims, demands, actions, causes of
action or judgments of any kind, nature and description for injury to or death
of any person or persons whomsoever, together with costs and expenses thereto,
including reasonable attorneys' fees, arising out of any product liability
claims to the extent that Ortho has breached its warranties set forth in
Section 5.1 hereof.
5.4 WFH hereby agrees to protect, indemnify, defend and hold
harmless Ortho, its affiliates, officers, agents and employees from and against
any and all claims, demands, actions, causes of action or judgments of any
kind, nature and description as a result of WFH's breach of any of its
warranties contained herein and for any statement, representation or warranty
made by WFH or any of its agents with respect to a Product or its use that is
not first approved by Ortho in writing or that is not consistent with the
statements, representations or warranties contained in the Product labeling or
package insert.
5.5 Ortho and WFH agree to promptly notify each other of and
cooperate with and assist each other in investigating and answering any
customer and regulatory complaints and inquiries concerning any of the Products
without prejudice as to which party which might be ultimately liable or
responsible therefor. In connection therewith, each party will comply with the
current Ortho-XxXxxx Complaint Procedures, as may be amended from time to time.
5.6 Except as set forth in Section 5.3 hereof, neither party shall,
in any case, be liable to the other party for special, incidental or
consequential damages arising from breach of warranty, breach of contract,
negligence or any other legal theory. Such damages include, but are not limited
to, loss of profits or revenue, injury to business, cost of capital, cost of
any substitute product, facilities or services, or claims of customers of
either party for such damages.
5.7 The parties agree that WFH shall have no liability whatsoever
for claims in respect of any Products sold by Ortho and its Affiliates prior to
the date of this Agreement, including without limitation, any past or currently
pending or threatened personal injury claims relating to the use of such
products, and Ortho agrees to protect, indemnify, defend and hold harmless WFH,
its officers, directors, shareholders, Affiliates, agents and employees from
and against any and all claims, demands, actions, causes of action or judgments
of any kind, nature and description arising from or relating to such matters.
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5.8 (a) Subject to Section 6.2(a)(vi) hereof, Ortho agrees
that it shall use its reasonable best efforts to correct process revalidation
issues raised by the FDA related to the Products, including any reformulation of
the Products if Ortho in its sole discretion determines such reformulation to be
necessary; provided that Ortho shall be responsible for all costs associated
therewith; and, provided further, that Ortho shall have no obligation with
respect to the taking of such corrective action pursuant to this Section 5.8 or
otherwise in the event that in the reasonable determination of Ortho the
estimated cost of such corrective action would exceed $3,000,000 in the
aggregate; and, provided further, that in the event of any recall or failure to
supply Product which is a result of Ortho's breach of any representation or
warranty set forth in this Agreement, the parties shall agree to use good faith
efforts to renegotiate the payments to be made under Section 3.1 hereof.
(b) Each of the parties hereby agrees and acknowledges that
any failure to supply Products by Ortho to WFH as a result of the process
revalidation issues raised by the FDA related to the Products set forth in
Section 5.8(a) above, shall not be deemed a breach of Ortho's obligation to
supply Product to WFH pursuant to Article 2 hereof or otherwise.
ARTICLE VI -- Term
6.1 The term of this Agreement shall commence on the date hereof and end
on the date ten (10) years after the date hereof, unless sooner terminated as
provided herein. The term of this Agreement shall automatically renew for one
(1) year periods unless either party elects not to so renew the term which
election shall be made by such party giving written notice to the other party
of its election not to renew not less than 180 days prior to the end of the
initial or renewal term. In the event of any renewal of this Agreement, the
data set forth in the Exhibits attached hereto with respect to the year 2007
shall apply to any renewal term, unless otherwise agreed in writing by the
parties. Notwithstanding any provision of this Agreement to the contrary, upon
the expiration of termination of this Agreement, WFH shall have the right to
sell all Products remaining in its inventory in the Territory in a manner
consistent with its past sales practices during the term of this Agreement;
provided that WFH shall pay to Ortho with respect to such Products sold from
its inventory a royalty payment equal to [***] of the most current net trade
sales price multiplied by the inventory on-hand.
6.2 (a) This Agreement may be terminated upon notice:
(i) by Ortho, in the event WFH shall have failed to pay any amount
due under this Agreement when due, and WFH shall have failed to cure such
failure within ten (10) days after receipt of written notice thereof; provided,
however, that the right to so cure such failure within the periods provided
above shall only be available once in any calendar year; or
[***] Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
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(ii) by either party, in the event the other party have failed to a
material extent to perform or materially breached any term, condition,
representation or warranty herein, and such party shall have failed to cure
such failure or breach within 30 days after notice thereof; provided, however,
that in the event any such failure or breach cannot be cured within such 30
days it shall be sufficient if the party in default shall begin to cure such
violation promptly after receipt of the aforesaid notice and shall complete
such cure as soon as reasonably practicable; and, provided further, that the
right to so cure such failure or breach within the periods provided above shall
only be available once in any calendar year; or
(iii) by either party, in the event the other party makes an assignment
for the benefit of creditors, is the subject of proceedings in voluntary or
involuntary bankruptcy instituted on behalf of or against such party, or has a
receiver or trustee appointed for all or substantially all of its property;
provided that in the case of an involuntary bankruptcy proceeding, such right
to terminate shall only become effective if the other party consents to the
involuntary bankruptcy or such proceeding is not dismissed within ninety (90)
days after the filing thereof; or
(iv) by either party, in the event the other party shall be subject to an
action or proceeding (including without limitation seizure, criminal action,
debarment or administrative or judicial actions seeking any of the foregoing)
by the FDA or other applicable regulatory authority, except with respect to any
issues described in Section 5.8(a) hereof, that might reasonably be expected to
materially and adversely affect such party's ability to fulfill its obligations
under this Agreement;
(v) by Ortho, upon one (1) years' notice; provided that upon WFH's
request, Ortho shall (A) manufacture or have manufactured and provide or cause
to be provided to WFH on substantially similar terms as set forth herein, a
quantity of the Products sufficient to satisfy WFH's estimated sales of the
Product for a one-year period following the effective date of such termination,
and (B) use all reasonable commercial efforts to (i) transfer to WFH the rights
to manufacture and sell the Products in the Territory for the term of this
Agreement, including without limitation the New Drug Application and all other
necessary permits, authorizations and approvals, and (ii) grant to WFH of a
fully paid license to the ORTHO-EST trademark and all other intellectual
property necessary to manufacture and sell the Products in the Territory for
the term of this Agreement, and, provided further, that nothing contained
herein shall limit Ortho from engaging a third party to manufacture the
Products so long as Ortho continues to perform its obligations hereunder;
(vi) by Ortho, in the event that in the reasonable determination of Ortho
(A) the estimated cost of taking the corrective action described in Section 5.8
above would exceed $3,000,000, or (B) it would be impracticable to correct the
process revalidation
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issues raised by the FDA related to the Products described in Section
5.8(a) above without effecting Ortho's ability to supply Products to WFH
in accordance herewith; or
(vii) by either party without cause, at any time after the expiration
of the initial term, by giving 180 days prior written notice to the other
party.
(b) All of the foregoing remedies set forth above in this Section 6.2
shall be alternative and not exclusive and exercise of any one such at any time
shall not preclude or constitute a waiver of a further exercise at another time
or times or the exercise of such other remedy or remedies as are provided
herein or under applicable law. Termination for default or breach hereunder
shall have no effect on performance obligations or amounts to be paid which
have accrued up to the effective date of such termination.
6.3 The provisions of this Agreement set forth in Article V and Article
VIII and any remedies for the breach thereof, shall survive the termination of
this Agreement under the terms hereof.
ARTICLE VII - Force Majeure
7.1 The performance of the obligations of either party hereunder shall be
subject to any delay or non-performance caused by circumstances beyond the
reasonable control of such party, including without limitation, requisition by
any government authority or any other governmental order or regulation, wars,
work stoppages due to strikes, lockouts or other labor disputes, riots,
epidemic, disease, acts of God, civil commotion, fire, earthquake, storm,
failure of public utilities or common carriers, shortage of or inability to
obtain materials, equipment, supplies, utilities, labor or transportation from
normal sources, breakdown of or injury to facilities or equipment used for
production, transportation, receiving, manufacturing, processing, handling or
delivery of Products, technical or other infeasibility of manufacturing any
formulation which has been changed from the specifications therefor as a result
of any governmental action, or any other circumstances whatsoever, whether
similar to the above causes or not; provided, however, that a party excused
from performance under this Section 7.1 shall provide prompt notice of any such
event to the other party, that the duration of such excused performance shall
be limited by the duration of such force majeure event plus ninety (90) days
and the party affected shall use all reasonable efforts to resume performance
under this Agreement as soon as reasonably practicable.
ARTICLE VIII - Miscellaneous
8.1 Expenses. Expenses related to this Agreement and the transactions
contemplated hereby, including without limitation the fees of counsel and
accountants, shall be borne by the party incurring such expenses, except as
expressly provided otherwise in this Agreement.
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13
8.2 Modifications and Waivers. This Agreement may be modified and rights
hereunder may be waived only by a writing executed and delivered on behalf of
the party against whom such modification or waiver is asserted.
8.3 Governing Law. This Agreement and the transactions contemplated hereby
shall be governed by and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed entirely within such
State, without regard to the conflicts of laws principles of such State.
8.4 Arbitration. Any controversy or claim arising out of or relating to
this Agreement or the validity, inducement, or breach thereof, shall be settled
by arbitration before a single arbitrator in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA") then
pertaining, except where those rules conflict with this provision, in which case
this provision controls. The parties hereby consent to the jurisdiction of the
Federal District Court for the District of Delaware for the enforcement of these
provisions and the entry of judgment on any award rendered hereunder. Should
such court for any reason lack jurisdiction, any court with jurisdiction shall
enforce this clause and enter judgment on any award. The arbitrator shall be an
attorney specializing in business litigation who has at least 15 years of
experience with a law firm of over 25 lawyers or was a judge of a court of
general jurisdiction. The arbitration shall be held in New York. New York and
the arbitrator shall apply the substantive law of New York, except that the
interpretation and enforcement of this arbitration provision shall be governed
by the Federal Arbitration Act. Within 30 days of initiation of arbitration, the
parties shall reach agreement upon and thereafter follow procedures assuring
that the arbitration will be concluded and the award rendered within no more
than six months from selection of the arbitrator. Failing such agreement, the
AAA will design and the parties will follow such procedures. Each party has the
right before or during the arbitration to seek and obtain from the appropriate
court provisional remedies such as attachment, preliminary injunction, replevin,
etc., to avoid irreparable harm, maintain the status quo or preserve the subject
matter of the arbitration. THE ARBITRATOR SHALL NOT AWARD ANY PARTY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT TO SEEK SUCH DAMAGES.
8.5 Notices. Any notice, request, instruction or other communication to be
given by either party to the other party in connection with this Agreement or
the transactions contemplated hereby shall be in writing and delivered by
messenger, or sent by certified mail (postage prepaid) or telefax, to the
address of such party set forth below or as changed by such party by notice
given hereunder. Any notice hereunder shall be effective upon receipt at the
indicated address. Such notices shall be
provided, if to Ortho, to:
Ortho-XxXxxx Pharmaceutical Corporation
- 13 -
00
X.X. Xxxxx #000 Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy (which copy shall not constitute notice) to:
Xxxxxxx & Xxxxxxx
Office of General Counsel
Xxx Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxx Xxxxxx 00000
Fax: (000) 000-0000
and, if to WFH to:
Women First HealthCare, Inc.
00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
8.6 Section Headings. The section captions used in this Agreement and the
index are for cross-reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. As used in this Agreement, the
terms "hereof", "herein" and terms of like import shall refer to the entire
agreement, including without limitation all schedules, exhibits and attachments
hereto and thereto.
8.7 Accounting Terms. Each accounting term used herein and not otherwise
defined shall have the respective meaning accorded it under generally accepted
accounting principles, consistently applied on a year-to-year basis.
8.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
shall be deemed to constitute the same Agreement.
- 14 -
15
8.9 Integration. Before signing this Agreement the parties had numerous
conversations, including preliminary discussions, formal negotiations and
informal conversations, and generated correspondence and other writings in which
the parties discussed the transactions contemplated hereby and their aspirations
for success. In such conversations and writings, individuals representing the
parties may have expressed their judgments and beliefs concerning the
intentions, capabilities and practices of the parties, and may have forecasted
future events. The parties recognize that such conversations and writings often
involve an effort by both sides to be positive and optimistic about future
prospects. However, it is also recognized that all business transactions contain
an element of risk, as do the transactions contemplated hereby, and that it is
normal business practice to limit the legal obligations of contracting parties
to only those promises and representations which are essential to their
transactions so as to provide certainty as to their respective future rights and
remedies. Accordingly, this Agreement is intended to define the full extent of
the legally enforceable undertakings of the parties hereto, and no promise or
representation, written or oral, which is not set forth explicitly in this
Agreement is intended by either party to be legally binding. Both parties
acknowledge that in deciding to enter into this Agreement and to consummate the
transactions contemplated hereby neither has relied upon any statements or
representations, written or oral, other than those explicitly set forth in this
Agreement.
8.10 Confidentiality; Publicity. All written information marked as
confidential and exchanged between WFH and Ortho while this Agreement is in
effect shall be treated as confidential information unless one of the exceptions
set out below applies. The party receiving such confidential information shall
not, for so long as that information retains its character as confidential
information, use (other than in the performance of its obligations or the
exercise of its rights hereunder) or disclose such information to any third
party (except any Affiliates or those consultants of the receiving party that
have an obligation of confidentiality to the receiving party) without the prior
written approval of the disclosing party. Information will be deemed
nonconfidential at such time as such information either has become public
knowledge through no fault of the party receiving such information, or comes to
such party from a third party under no obligation of confidentiality with
respect to such information or was in the possession of such party prior to the
date of disclosure, or is developed by or on behalf of such party without any
reliance on confidential information received hereunder or is otherwise required
to be disclosed in compliance with an order by a court or other regulatory body
having competent jurisdiction. The obligations of the parties set forth in this
Section shall survive termination of this Agreement until the third anniversary
of the effective date of such termination. Upon termination of this Agreement,
all Confidential Information of a disclosing party that is held by a receiving
party shall be returned to the disclosing party except that one copy of such
Confidential Information shall be retained by counsel for the receiving party to
ensure compliance with this Section. Neither party shall originate any
publicity, news release or public announcement, written or oral, whether to the
public or press, stockholders or otherwise, relating to this Agreement, to any
amendment or performances under the Agreement, without the prior written consent
of the other which consent shall not be unreasonably withheld, except for such
announcements as in the opinion of counsel for
- 15 -
16
the party making such announcement is required by law to be made. If a party
decides to make an additional announcement required by law under this
Agreement, it shall give the other party thirty (30) days advance written
notice, or any shorter notice period otherwise required by law, of the text of
the announcement so that the other party shall have an opportunity to comment
upon the announcement.
8.11 WFH Acknowledgment. WFH hereby acknowledges that nothing expressed
or implied in this Agreement shall prevent, prohibit or otherwise restrict the
ability of Ortho or any of Ortho's Affiliates from promoting, selling or
otherwise distributing any other product on a brand name or generic basis or
any other basis that may compete with, or is substantially similar to, any or
all of the Products; provided that in no event shall Ortho or any of its
Affiliates promote, sell or distribute any estropipate product sold as a single
ingredient product in an oral formulation nor shall it enter into any
arrangement with any third party with respect to the promoting, selling or
distributing any estropipate product sold as a single ingredient product in an
oral formulation, except as contemplated in Section 2.1 hereof.
8.12 Assignment. This Agreement, or any of the rights and obligations
created herein, shall not be assigned or transferred, in whole or in part, by
either party hereto without the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided, however, that Ortho shall
have the right to assign any or all of its rights or obligations under this
Agreement to any Affiliate, or a successor to that part of its business to
which this Agreement relates, without such prior written consent. Nothing
contained in this Section 8.12 shall restrict or limit in any manner Ortho's
ability to have the Products manufactured by a third party; provided that Ortho
remains bound by its obligations hereunder. Any attempted assignment or
transfer of such rights or obligations without such consent, except as provided
herein, shall be void. Subject to the foregoing sentence, this Agreement shall
bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
- 16 -
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representative.
ORTHO-XXXXXX PHARMACEUTICAL
CORPORATION
By /s/ XXXXX X. TATTLE
-------------------------------------
Name: XXXXX X. TATTLE
Title: CHAIRMAN
WOMEN FIRST HEALTHCARE, INC.
By /s/ XXXXX X. XXXX
-------------------------------------
Name: XXXXX X. XXXX
Title: PRESIDENT & CEO
- 18 -
18
Exhibit A
Ortho-Est
Payment Reconciliation - Trade Product
1. No Reconciliation Payment Due
Actual Trade Units Shipped Transfer Price Total
-------------------------- -------------- ---------
.625 MG *** $ *** $ ***
1.25 MG *** $ *** $ ***
---------
Total invoiced product $ ***
Total forecasted IBT (36,637 divided by 12) $ ***
Total Invoiced Product over IBT forecast $ ***
Actual Net Sales $ ***
Forecasted Net Sales $ ***
Actual Incremental Sales (Assumes
no incremental sales) $ --
Royalty payment of 15% on incremental sales $ --
Actual Manufacturing Cost $
.625 MG *** $ *** $ ***
1.25 MG *** $ *** $ ***
---------
Actual Manufacturing Cost
due to OMP $ ***
---------
Equalization Payment Due (Rebate
Payment Due) $ ***
=========
2. Equalization Payment Due
Actual Trade Units Shipped Transfer Price Total
-------------------------- -------------- ---------
.625 MG *** $ *** $ ***
1.25 MG *** $ *** $ ***
---------
Total invoiced product $ ***
Total forecasted IBT (36,637 divided by 12) $ ***
Total forecasted IBT over total invoiced
product $ ***
Actual Net Sales $ ***
Forecasted Net Sales $ ***
---------
Actual Incremental Sales (Assumes no
incremental sales) $ ***
Royalty payment of 15% on incremental sales $ ***
Actual Manufacturing Cost
.625 MG *** $ *** $ ***
1.25 MG *** $ *** $ ***
---------
Actual Manufacturing Cost due to OMP $ ***
---------
Equalization Payment Due (Rebate
Payment Due) $ ***
=========
3. Rebate Payment Due
Actual Trade Units Shipped Transfer Price Total
-------------------------- -------------- ---------
.625 MG *** $ *** $ ***
1.25 MG *** $ *** $ ***
---------
Total invoiced product $ ***
Total forecasted IBT (36,637 divided by 12) $ ***
Total forecasted IBT over total invoiced
product $ ***
Actual Net Sales $ ***
Forecasted Net Sales $ ***
---------
Actual Incremental Sales $ ***
Royalty payment of 15% on incremental sales $ ***
Actual Manufacturing Cost
.625 MG *** $ *** $ ***
1.25 MG *** $ *** $ ***
---------
Actual Manufacturing Cost due to OMP $ ***
---------
Equalization Payment Due/(Rebate
Payment Due) $ ***
=========
--------------
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
19
EXHIBIT B
Ortho-Est(R)
Income Statement
(Dollars In Thousands)
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Net Trade Sales *** *** *** *** *** *** *** *** *** *** ***
Cost of Goods Sold *** *** *** *** *** *** *** *** *** *** ***
Gross Profit *** *** *** *** *** *** *** *** *** *** ***
Operating Expenses:
Marketing *** *** *** *** *** *** *** *** *** *** ***
Total Operating Expenses *** *** *** *** *** *** *** *** *** *** ***
Income Before Tax $2,425 $6,637 $5,436 $4,305 $4,188 $4,059 $3,854 $3,631 $3,861 $4,111 $47,479
Provisions for Taxes *** *** *** *** *** *** *** *** *** *** ***
Net Income *** *** *** *** *** *** *** *** *** *** ***
Gross Profit % *** *** *** *** *** *** *** *** *** *** ***
Marketing % *** *** *** *** *** *** *** *** *** *** ***
Operating Expense % *** *** *** *** *** *** *** *** *** *** ***
Operating Expense with R&D % *** *** *** *** *** *** *** *** *** *** ***
Net Income % *** *** *** *** *** *** *** *** *** *** ***
------------
*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
20
EXHIBIT C
Products-Ortho-Est (Estropipate)
Dosage
Trade Product:
.625 mg Bottles of 100 tablets
1.250 mg Bottles of 100 tablets
Sample Product:
.625 mg Bottles of 30 tablets
1.250 mg Bottles of 30 tablets
21
EXHIBIT D
TRANSFER PRICES
------------------------------------------------------------------------------------------------------
TRADE 100's 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
.625 mg $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ ***
------------------------------------------------------------------------------------------------------
1.25 mg $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ ***
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
SAMPLE 30's 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
.625 mg $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ ***
------------------------------------------------------------------------------------------------------
1.25 mg $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ *** $ ***
------------------------------------------------------------------------------------------------------
*** Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with
respect to the omitted portions.
