EXHIBIT 10.5
COMMERCIAL SERVICES AGREEMENT
This Commercial Services Agreement ("AGREEMENT"), dated as of April 1,
2004, is between Cardinal Health PTS, LLC, a Delaware limited liability company
("CARDINAL") and Xxxxx Laboratories, Inc., a Texas corporation d/b/a Xxxxx
Respiratory Therapeutics ("XXXXX").
RECITALS
WHEREAS, Cardinal and Xxxxx are parties to that certain Asset Purchase
Agreement (the "PURCHASE AGREEMENT") dated March 24, 2004, pursuant to which
Xxxxx agreed to sell and Cardinal agreed to purchase certain assets on the terms
and conditions set forth therein; and
WHEREAS, in connection with the Purchase Agreement, Cardinal and Xxxxx are
entering into a Supply Agreement (the "SUPPLY AGREEMENT"), pursuant to which
Cardinal is agreeing to manufacture and sell and Xxxxx is agreeing to purchase
certain products on the terms and conditions set forth therein; and
WHEREAS, as a material inducement for Cardinal to consummate the
transactions contemplated by the Purchase Agreement and to commit to perform the
services contemplated by the Supply Agreement, Xxxxx has agreed that Cardinal
shall be Xxxxx' preferred provider of marketing, sales, logistics, development,
analytical and other services and as a material inducement for Xxxxx to
consummate the transactions contemplated by the Purchase Agreement and to commit
to purchase products as contemplated by the Supply Agreement, Cardinal has
agreed to provide favorable pricing to Xxxxx for certain services, in each case
on the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the promises set
forth in this Agreement, the parties agree as follows:
1. Definitions.
(a) "XXXXX PRODUCT" means all products for which Xxxxx now has or during
the term of this Agreement obtains the rights to market or sell including
without limitation products currently marketed under the Mucinex(R) brand, the
ALLERx(R) brand, the Aquatab(R) brand or any replacement or successor brand of
such brands and also includes any experimental (pre-commercial) product.
(b) "AFFILIATE" as applied to Cardinal or Xxxxx shall mean any legal
entity other than Cardinal or Xxxxx, as the case may be, in whatever country
organized, controlling, controlled by or under common control with Cardinal or
Xxxxx. An entity is deemed to be in control of another entity (controlled
entity) if the former owns directly or indirectly at least fifty percent (50%),
or the maximum percentage allowed by law in the country of the controlled
entity, of the outstanding voting equity securities of the controlled entity (or
other equity or ownership interest if such controlled entity is other than a
corporation) or otherwise has the power to direct or cause the direction of the
management of the controlled entity.
(c) "COMMERCIAL OUTSOURCE ACTIVITY" means marketing, sales, logistics,
development, analytical and other services that support or are intended to
support the
commercialization of Xxxxx Products if such services (a) are services of the
type that Cardinal (together with its Affiliates) possesses (or can reasonably
be expected to possess within the applicable timeframe) the means to provide and
(b) are not Excluded Activities. Notwithstanding anything contained herein,
Commercial Outsource Activities do not include development or analytical
services provided by Cardinal with respect to Mucinex(R) or any Mucinex(R) line
extension pursuant to the Transition Services Agreement between Xxxxx and
Cardinal dated as of the date of this Agreement. Without limiting the generality
of the foregoing, a "Commercial Outsource Activity" includes: (i) product
formulation; (ii) product development (including activities to develop an
enhanced, next-generation or line extension of an Xxxxx Product); (iii)
manufacture of samples or products for clinical testing or commercial sale; (iv)
packaging of samples or products for clinical testing or commercial sale; (v)
supply or distribution of samples or products for clinical testing or commercial
sale; (vi) product sales and marketing services; (vii) funding or other
risk-sharing arrangement with respect to the conduct of clinical trials of an
Xxxxx Product; and (viii) other goods or services related to the development,
manufacture or distribution of pharmaceutical or health care products of a type
regularly provided by Cardinal or its Affiliates.
(d) "EXCLUDED ACTIVITY" means services relating to an Xxxxx Product that
are performed by employees of Xxxxx in the ordinary course of business or
product sales and marketing services set forth in Section 1(c)(vi) performed by
a Major Pharmaceutical Enterprise that acquires exclusive rights to market the
relevant Xxxxx Product. For the avoidance of doubt, Excluded Activities, as that
term relates to a Major Pharmaceutical Enterprise or its Affiliates, do not
include any of those Commercial Outsource Activities set forth in Section 1(c)
other than Section 1(c)(vi).
(e) "MAJOR PHARMACEUTICAL ENTERPRISE" means (i) a company which, together
with its Affiliates, had worldwide annual revenues from the sale of prescription
and/or over the counter pharmaceutical, health care or personal care products in
excess of $2 billion during its most recently completed fiscal year and (ii) any
Affiliates of such company.
2. Preferred Provider; Grant Of Right Of First Refusal. During the term
of this Agreement, in connection with any proposed arrangement for Commercial
Outsource Activities required by Xxxxx, Cardinal shall have a right of first
refusal, should Xxxxx seek to source any Commercial Outsource Activities with a
provider (other than Cardinal or its Affiliates), unless Cardinal (together with
its Affiliates) does not then possess (or cannot reasonably be expected to
possess within the applicable timeframe) the means to provide such Commercial
Outsource Activities to Xxxxx. In connection with any Commercial Outsource
Services, Xxxxx shall submit to Cardinal a written request for a proposal
specifying Xxxxx'x requirements for the Commercial Outsource Services, including
reasonably prescribed specifications, standards for materials, quality,
delivery, pricing and/or service support (the "PERFORMANCE REQUIREMENTS").
Within thirty (30) days of the receipt of Xxxxx' Performance Requirements,
Cardinal shall submit a proposal to Xxxxx for the provision of the relevant
Commercial Outsource Services or such portion of such services as Cardinal
possesses (or can reasonably be expected to possess within the applicable
timeframe) the means to provide, proposed pricing and evidence of its ability to
satisfy the Performance Requirements (the "PROPOSAL"). The parties shall then
negotiate in good faith to reach agreement on applicable pricing and/or any
changes to the Performance Requirements and on a definitive agreement for the
Commercial Outsource Services. If the parties do not reach an agreement for the
provision of the Commercial Outsource Services within thirty (30) days of Xxxxx'
receipt of the Proposal (each a "Rejected Commercial Outsource Service), then
Xxxxx shall be free to source such Rejected Commercial Outsource Services with
an alternate provider (other than Xxxxx or its
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Affiliates) so long as the material terms and/or conditions of the arrangement
with the alternate provider are more favorable to Xxxxx than the corresponding
material terms and/or conditions offered by Cardinal in the Proposal or the
subsequent negotiations between Cardinal and Xxxxx.
3. REPRESENTATIONS AND WARRANTIES:
(a) DUE AUTHORIZATION. Xxxxx represents and warrants that this Agreement
has been duly authorized by all necessary corporate action on the part of Xxxxx,
has been duly executed by a duly authorized officer of Xxxxx and constitutes a
valid and binding obligation of Xxxxx. Cardinal represents and warrants that
this Agreement has been duly authorized by all necessary corporate action on the
part of Cardinal, has been duly executed by a duly authorized officer of
Cardinal and constitutes a valid and binding obligation of Cardinal.
(b) NO CONFLICTS. Xxxxx hereby represents and warrants that neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated by it will violate or result in any violation of or be
in conflict with or constitute a default under any term of the organizational
documents of Xxxxx or any agreement, instrument, judgment, decree, law, rule or
order applicable to Xxxxx. Cardinal hereby represents and warrants that neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated by it will violate or result in any violation of or be
in conflict with or constitute a default under any term of the organizational
documents of Cardinal or any agreement, instrument, judgment, decree, law, rule
or order applicable to Cardinal.
4. MISCELLANEOUS.
(a) TERMINATION. This Agreement will terminate upon the earlier of (i) the
termination of the Supply Agreement or (ii) the mutual agreement of the Cardinal
and Xxxxx.
(b) PARTIAL INVALIDITY. In the event one or more terms of this Agreement
are found to violate the provisions of any applicable statute, law or
regulation, the parties hereto shall negotiate in good faith to modify this
Agreement, but only to the extent necessary to make this Agreement valid and
enforceable, having full regard for applicable laws and the intent and purposes
of the parties entering into this Agreement.
(c) INDEPENDENT CONTRACTOR. The parties hereto are independent contractors
under this Agreement and neither of the parties hereto shall have any right or
authority to assume or create any obligations on behalf of, or in the name of
any other party hereto or to bind the other party hereto to any contract,
agreement or undertaking with any third party without the written consent of the
other party hereto.
(d) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relating to the subject matter of this Agreement, and this
Agreement may not be amended or modified, unless such amendment or modification
is in writing and signed by a duly authorized representative of each party.
(e) ASSIGNABILITY. Neither party shall assign this Agreement other than to
Affiliates; however, in the event of any assignment, performance shall be
guaranteed by the assignor in form satisfactory to the other party.
(f) SUCCESSORS AND PERMITTED ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the permitted successors or permitted assigns of
Cardinal and
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Xxxxx respectively.
(g) NOTICES. Any and all notices provided for shall be sent to the
respective parties at the following addresses by certified or registered mail or
sent by a nationally-recognized overnight courier service:
If to Cardinal: Cardinal Health PTS, LLC
00 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: President, Modified Release Technologies
Facsimile No.: 732.537.6491
With a copy to: Cardinal Health PTS, LLC
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Vice President and Associate General Counsel, Pharmaceutical
Technologies & Services
Facsimile No.: 614.757.5051
If to Xxxxx: Xxxxx Laboratories, Inc.
d/b/a Xxxxx Respiratory Therapeutics
Colonial Court
000 Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq., General Counsel, Vice-President and
Secretary
Facsimile No.: 908.879.9784
With a copy to: Xxxxxx Xxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxxxxxx X. XxxxXxxxxxx, Esq.
Facsimile No.: 973.503.5950
or to such other addresses as may be subsequently furnished by one party to the
other in writing. Any such notice shall be deemed effective from the date of
mailing.
(h) GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware without regard to its conflict
of laws provisions.
(i) COUNTERPARTS. This Agreement may be executed in multiple counterparts,
which may be delivered by facsimile, each of which shall have the force and
effect of an original.
(j) DESCRIPTIVE HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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NOW THEREFORE, on the date first above written, the parties have duly
executed this COMMERCIAL SERVICES AGREEMENT.
CARDINAL HEALTH PTS, LLC
By: /s/ Xxxxxx X. Xxxxxx
___________________________________
Name: Xxxxxx X. Xxxxxx
_________________________________
Title: President, Modified Release Tech.
________________________________
XXXXX LABORATORIES, INC.
By: /s/ Xxxxx Xxxxxx
___________________________________
Name: Xxxxx X. Xxxxxx
_________________________________
Title: Chief Financial Officer
_________________________________
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