EXHIBIT 4
EXECUTION COPY
MERCK SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the "Agreement") is dated as of June 30,
1998, between Pharmaceutical Resources, Inc., a New Jersey corporation, whose
principal offices are located at Xxx Xxx Xxxxx Xxxx, Xxxxxx Xxxxxx, Xxx Xxxx
00000 (the "Company"), and Merck KGaA, a Kommanditgesellschaft auf Aktien
organized under the laws of Germany, whose principal offices are located at
Xxxxxxxxxxx Xxxxxxx 000, 00000 Xxxxxxxxx, Xxxxxxx (the "Service Provider"), each
of which may be referred to individually as a "Party" or collectively as the
"Parties." This Agreement and the Annex contemplated hereby are collectively
referred to as the "Agreement" unless indicated otherwise.
WHEREAS, the Service Provider possesses, inter alia, substantial and
long acquired technical expertise and know-how in the areas of product
development, clinical studies and trials, marketing, distribution, financial and
administrative support, and other areas related to the development of ethical
and generic drugs; and
WHEREAS, the Company wishes to engage certain services of the Service
Provider, and the Service Provider is willing to perform the Services defined
herein, on the terms and conditions set forth herein, in consideration of the
issuance by the Company to the Service Provider of a stock option to acquire
820,000 shares of common stock of the Company (the "Option Shares"), in the form
of the Annex hereto (the "Option").
NOW, THEREFORE, in consideration of the mutual obligations and
benefits set forth in this Agreement, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Service Provider agree to the following
terms and conditions:
1. Services
1.1 At the request of the Company and subject to the provisions of this
Agreement, the Service Provider will perform some or all of the
following services (the "Services") with respect to certain products
as agreed to between the parties from time to time (the "Products"):
a. providing assistance to conduct, monitor and analyze preclinical
investigations.
b. rendering advice to the Company's research and development department
on the design and development of protocols.
c. providing assistance and advice to develop and prepare Product
formulations and dosage forms for preclinical, clinical trials and
commercial purposes and develop methods for establishing Product
stability (including expiration dating).
d. providing assistance to develop and transfer to the Company
manufacturing methods and procedures for the synthesis, scale-up and
process validation for the manufacture of Products and their active
ingredients for clinical and commercial purposes.
e. assisting in developing methods and procedures for the testing,
analysis and quality control of finished dosage forms of Products and
their ingredients.
f. assisting the Company in the preparation of ANDAs.
g. providing periodic status reports on the Services being performed.
h. providing assistance, if required, to prepare and file Federal, State
and local tax returns.
i. advising on the investment of funds and rendering assistance and
advice with respect to real property owned or leased by the Company.
j. providing various legal support services when required, including
advice with respect to product liability claims and actions filed
against the Company.
k. providing technical support and/or consulting services for the Company
to optimize the Company's production capacity. To effectuate such an
optimization, the Service Provider may from time to time, transfer
industry demand, capacity utilization data to the Company to assist in
the production planning process.
l. providing assistance in financial planning, budgeting, sales
forecasting for the Products, subject to the Service Provider's
internal operational constraints.
m. providing additional administrative and technical support for new
product launches.
n. providing computer and/or management information system support for
the Company.
o. providing quality control and quality assurance services, as needed,
including Product testing.
p. advising in business planning and analysis.
q. providing assistance in certain data processing functions in support
of other management services provided pursuant hereto.
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1.2 The Service Provider shall use its reasonable efforts to ensure that
the Services provided hereunder are consistent with accepted industry
standards and in a professionally competent manner.
1.3 The Service Provider shall use its reasonable efforts to render
Services in material compliance with all applicable legal
requirements.
1.4 In order for the Service Provider to provide the Services hereunder,
the Company shall disclose to the Service Provider such information
and data which is reasonably requested by the Service Provider. The
Service Provider shall use such information and data exclusively in
the performance of its obligations hereunder, and such disclosure
shall be subject to the terms and conditions of this Agreement,
including Section 7, if such disclosure is of Confidential Information
as defined herein.
2. Payment Terms
In consideration of the Services to be rendered by the Service
Provider hereunder and of its undertaking to perform such Services for the
benefit of the Company during the term of this Agreement, the Company shall make
full payment of its obligations hereunder in the form of the Option. Such Option
shall entitle the Service Provider to acquire, beginning three years and ten
days after the date hereof, 820,000 shares of the Company's common stock at the
Exercise Price (as specified in the Option) for the Services provided. Such
Option shall expire at 5:00 P.M., New York City time, on June 30, 2003 if it
shall not have been fully exercised. The Company shall also reimburse the
Service Provider for all reasonable out-of-pocket costs and expenses (which
shall not include any direct or indirect labor costs) incurred in connection
with the performance of such Services, including, without limitation, travel
expenses, meals and lodging, cost for supplies directly consumed in rendering
such Services, storage and warehousing costs, printing and duplicating costs,
and transport and similar costs; provided, any such reimbursement in excess of
$10,000 in any calendar quarter, shall require the Company's prior written
approval. The Company shall be under no obligation to make any other payments
for the Services contemplated herein pursuant to this Agreement.
3. Schedule of Performance
During the term of this Agreement, the Service Provider shall perform
the Services from time to time, as reasonably required by the Company and as
agreed upon between the Company and the Service Provider, upon the Company's
advance written notice which shall be received by the Service Provider not less
than ten business days before the proposed service date. Upon receipt of such
notice, the Service Provider shall have five business days to accept or, in
consultation with the Company, reschedule the service date. The Company hereby
acknowledges that the Service Provider must take into consideration its own
labor constraints and existing commitments of its own business to other parties
in determining the service date of such Services. In any event, the Services
requested by the Company shall not be more than a total of 200 man hours per
calendar quarter unless the Service Provider expressly agrees otherwise.
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4. Term
This Agreement shall be effective from the date of execution of this
Agreement and shall remain in effect for thirty-six (36) months.
5. Representations and Warranties
5.1 Each Party hereby represents and warrants to the other Party as
follows:
(a) It is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of
incorporation;
(b) It has the corporate power and authority to own its assets,
carry on its business and execute and deliver this Agreement
and to perform its obligations hereunder;
(c) It has taken all appropriate and necessary action to
authorize the execution, delivery and performance of this
Agreement;
(d) All consents, approvals, licenses and authorizations of, and
all filings and registrations with, any governmental
authority necessary for the due execution, delivery,
performance and enforceability of this Agreement, have been
obtained and are in full force and effect; and
(e) This Agreement constitutes a legal, valid and binding
obligation, enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement will
not violate any provision of any applicable laws or
regulations.
6. Independent Contractor
This Agreement does not constitute or create (and the Parties do not
intend to create hereby) a joint venture, pooling arrangement,
partnership, or formal business organization of any kind between and
among any of the Parties, and the rights and obligations of the
Parties shall be only those expressly set forth herein. The Service
Provider will perform the Services as an independent contractor and
shall not be considered, for any purpose, to be an agent of the
Company or its affiliated companies. Each Party shall be responsible
for providing its own personnel and workers' compensation, medical
coverage or similar benefits, any life, disability or other insurance
protection. Each Party shall be solely responsible for the payment of
social security benefits, unemployment insurance, pension benefits,
withholding any required amounts for income and other
employment-related taxes and benefits of its own employees, and shall
make its own arrangements for injury, illness or other insurance
coverage to protect itself, its affiliated companies, its
subcontractors and personnel from any costs, expenses, damages, loss
and/or liability arising out of performance of the Services, or any
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transportation associated therewith. The Service Provider has no power
or authority to act for, represent, or bind the Company or its
affiliated companies in any manner.
7. Confidentiality
7.1 (a) The Parties recognize that in the course of performance of
the Agreement, either of them may disclose to the other
information about the disclosing Party's business or
activities which such Party considers proprietary and
confidential including, without limitation, trade secrets,
marketing and business plans, customer lists, and
information concerning the operations of the Parties (all of
such proprietary and confidential information is hereinafter
referred to as the "Confidential Information"). The Party
who receives any Confidential Information (the "Receiving
Party") agrees to maintain a confidential status for such
Confidential Information, not to use any such Confidential
Information for any purpose other than the purpose for which
it was originally disclosed to the Receiving Party, and not
to disclose any of such Confidential Information to any
third party, unless such information:
(i) is or has become available to the public from a
source other than the Receiving Party;
(ii) was already known to the Receiving Party from
sources other than the other Party at the time it
was disclosed to the Receiving Party and was not
obtained by the Receiving Party from such other
party in violation of a confidentiality or similar
agreement with such other party;
(iii) is disclosed to the Receiving Party by a third
party who is not under any legal obligation
prohibiting such disclosure;
(iv) is required to be disclosed by law;
(v) is developed independently by the Receiving Party;
or
(vi) is disclosed to the Receiving Party by a third
party pursuant to an obligation of such third
party or the exercise of a right by the Receiving
Party in circumstances where no obligation of
confidentiality applies to the Receiving Party
with respect to the information so disclosed.
(b) The Parties acknowledge that they may be required to
disclose Confidential Information to governmental agencies
or authorities by law or in connection with the obtaining of
approvals for the Company, and each shall endeavor to limit
disclosure to that purpose. If either Party is required to
disclose Confidential Information pursuant to this
paragraph, such Party will immediately give the other Party
written notice of any such disclosure, which notice shall
specify the
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substance of the disclosure. The Party making such a
disclosure shall take all reasonable steps to prevent
further disclosure of such Confidential Information.
7.2 Survival of Confidentiality: The provisions of this Section 7 shall
survive the termination of this Agreement for any reason whatsoever.
Upon such termination, the Parties shall return any Confidential
Information which may have been transmitted by the other Party, as
well as any copy or other reproduction, including, without limitation,
electronic data reproductions or representations.
8. Dispute Resolution
8.1 In the event of any controversy or claim between the Parties arising
out of or in connection with this Agreement or the breach hereof, the
Parties shall, in the first instance, make a good faith effort to
settle such dispute amicably.
8.2 If such controversy or claim is not settled within thirty (30) days
following written notice by one Party to the other Party of the
existence thereof, such controversy or claim shall be settled by
arbitration in New York, NY, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and judgment
upon the award may be entered in any court having jurisdiction
thereof.
9. Notices
All notices and other communications required or permitted hereunder
shall be given in writing by hand delivery, by facsimile, or by
registered or certified mail, return receipt requested, postage
prepaid, addressed to the Party to receive the same at its respective
address set forth below, or at such other address as may from time to
time be designated by either Party to the other Party hereunder in
accordance with this Section 9:
To the Service Provider:
Merck XXxX
Xxxxxxxxxxx Xxxxxxx 000
00000 Xxxxxxxxx, Xxxxxxx
Attn: Professor Xx. Xxxxxxxx Xxxxxxxx
Facsimile: 011 49-6151-72-5962
With a copy to:
Coudert Brothers
0000 Xxxxxx xx xxx Xxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxx Xx., Esq.
Facsimile: 000-000-0000
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To the Company:
Pharmaceutical Resources, Inc.
Xxx Xxx Xxxxx Xxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx, Calamari & Xxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxxxxx, Esq. & Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: 212-213-1199
All notices shall be effective when received. A notice is considered
received if a written confirmation of receipt appears thereon or there
exists a written fax confirmation. Either Party may by notice to the
other Party designate a new address for notices, such new address to
be effective ten (10) days after receipt of designation.
10. Indemnity
10.1 Each Party hereby agrees to indemnify and hold harmless the other
Party and its respective shareholders, directors, officers and
employees from and against any and all costs, losses, claims, actions,
demands, damages and liabilities (including attorneys' fees and
disbursements) incurred by such other party arising out of or in
respect of (i) any act, failure to act, or any assumption of any
obligation or responsibility by the indemnifying Party, or by any of
its directors, officers or employees, which is in contravention or
violation of or in conflict with any of the terms or provisions of
this Agreement, or (ii) any material breach of any of the
representations or warranties made by the indemnifying Party under
this Agreement; provided, however, that an indemnified Party shall not
be entitled to indemnification with respect to any costs, losses,
claims, actions, demands, damages and liabilities which was caused by
its own gross negligence, willful misconduct or reckless disregard of
its duties hereunder.
10.2 THE SERVICE PROVIDER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AGREEMENT OR THE PERFORMANCE OF THE SERVICES PROVIDED
HEREUNDER OR THE WORK FURNISHED HEREUNDER, WHETHER ARISING AT LAW OR
IN EQUITY, EXCEPT AS SET FORTH HEREIN.
10.3 IN NO EVENT, OTHER THAN BREACH OF THE EXPRESS PROVISIONS OF THIS
AGREEMENT, SHALL EITHER PARTY OR A PARTY'S AFFILIATES AND ITS OR THEIR
SUBCONTRACTORS AND ITS OR THEIR OFFICERS, EMPLOYEES AND
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AGENTS, BE LIABLE, IN CONTRACT, IN TORT, OR OTHERWISE FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY NATURE ARISING AT ANY TIME
UNDER THIS AGREEMENT, INCLUDING SPECIFICALLY, BUT WITHOUT LIMITATION,
LOSS OF PROFITS OR REVENUE, LOSS OF FULL OR PARTIAL USE OF ANY
EQUIPMENT, DELAYS, COST OF REPLACEMENTS, COST OF CAPITAL, LOSS OF
GOODWILL, CLAIMS OF CUSTOMERS, OR OTHER SUCH DAMAGES.
11. Miscellaneous
11.1 Entire Agreement. This Agreement, together with the Annex hereto,
constitute the entire agreement of the Parties hereto with respect to
the performance of Services by the Service Provider for the Company
and supersedes and terminates all prior arrangements and agreements,
if any, between the Service Provider and the Company or any of its
affiliates with respect to the subject matter hereof.
11.2 No Waiver. No failure by either Party hereto to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right hereunder by
either Party preclude any other or future exercise of that right or
any other right hereunder by that Party.
11.3 Severability. In case any one or more of the provisions of this
Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
11.4 Assignment. Neither Party may assign or transfer, in whole or in part,
its rights or interests in this Agreement.
11.5 Amendment. This Agreement may not be amended, terminated or superseded
except by (i) an agreement in writing between the Company and the
Service Provider and (ii) the prior written approval of a majority of
the Company Designees (as such term is defined in the Stock Purchase
Agreement, dated March 25, 1998, between the Company and Lipha
Americas, Inc.).
11.6 Survival: Any provision of this Agreement which can reasonably be
construed as surviving the expiration or termination of the Agreement,
including but not necessarily limited to the indemnification and
confidentiality provisions, shall so survive.
11.7 Governing Law: This Agreement, including the Annex, shall be governed
by, and construed in accordance with, the laws of the State of New
York without giving effect to the conflict of law provisions thereof.
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11.8 Agreement to Execute Documents: The Parties agree in good faith to
execute any and all documents required for the performance of this
Agreement.
11.9 Counterparts: This Agreement may be executed in any number of separate
counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed
to constitute but one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the Parties,
effective as of the date above indicated.
PHARMACEUTICAL RESOURCES INC. MERCK, KGaA
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxxx
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Name: Name: Prof. Xx. Xxxxxxxx Xxxxxxxx
Title: Title: Member of the Executive Board
By: /s/ Xxxxx-Xxxxx Xxxxxxx
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Name: Xxxxx-Xxxxx Xxxxxxx
Title: Head of Legal Department
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