CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION. THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
MANUFACTURING AGREEMENT
This Manufacturing Agreement (hereinafter the "Agreement"),
made and effective as of the 15th day of May, 1994, by and between Merck & Co.,
Inc., a corporation incorporated under the laws of the State of New Jersey,
U.S.A., having its office at Xxx Xxxxx Xxxxx, Xxxxxxxxxx Xxxxxxx, Xxx Xxxxxx
00000, X.X.X. (hereinafter referred to as "MERCK") and Koffolk, Ltd. and Philipp
Brothers Chemicals, Inc., companies organized and existing under the laws of
Israel and New York, respectively and having offices at X. 0. Xxx 0000, 00000
Xxx Xxxx, Xxxxxx and Xxx Xxxxxx Xxxxx, Xxxx Xxx, Xxx Xxxxxx 00000, U.S.A.,
respectively (hereinafter collectively referred to as "KOFFOLK').
WITNESSETH:
WHEREAS, KOFFOLK has experience MANUFACTURING quantities of
Amprolium; and
WHEREAS, MERCK desires to engage the facilities and services
of KOFFOLK to MANUFACTURE, as defined below, for MERCK; and
WHEREAS, KOFFOLK is willing to undertake MANUFACTURE of the
PRODUCT, as defined below, for MERCK in accordance with the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
of the mutual covenants of the parties hereinafter set forth, the parties hereto
agree as follows:
The following terms are used in this Agreement and shall have
the meanings set forth in this Section:
1.1 The term "PRODUCT" shall mean Amprolium, which is to be MANUFACTURED in
strict accordance with current GOOD MANUFACTURING PRACTICES and the
KNOW-HOW, defined below, which is to meet the specifications set forth
in Schedule A and which is to be packaged as set forth in Schedule B.
Schedule A may be modified from time to time by MERCK in consultation
with KOFFOLK
1.2 The term "MANUFACTURE/MANUFACTURING/MANUFACTURED" except as may
otherwise be agreed in writing by the parties hereto, shall mean all
operations in the production, packaging, quality control testing and
storage of the PRODUCT and storage of all raw materials and packaging
components for PRODUCT.
1.3 The term "KNOW-HOW' shall mean information and data which MERCK has
determined to be necessary to MANUFACTURE the PRODUCT, whenever
disclosed to KOFFOLK, including but not limited to the information
contained in the designated binders referred to as "Technical Know-How
Package" listed in Schedule C, which may be modified by MERCK at any
time. "KNOW-HOW' is covered within the definition of "INFORMATION" in
Section 3.1 below and is subject to the terms of that Section.
1.4 The term "AGENCY" shall mean any applicable Israeli government
regulatory authority involved in granting approvals for the
MANUFACTURING of the PRODUCT in Israel.
1.5 The term "CALENDAR QUARTER" shall mean the period of each three
consecutive calendar months ending on March 31, June 30, September 30
or December 31, as the case may be.
1.6 The term "CALENDAR YEAR" shall mean the period from January 1 through
December 31 in a given year.
1.7 The term "AFFILIATE" shall mean (i) any corporation, company or other
business entity, fifty percent (50%) or more of the voting stock of
which is owned directly or indirectly by MERCK or KOFFOLK, (ii) any
corporation, company or business entity, which owns, directly or
indirectly, fifty percent (50%) or more of the voting stock of MERCK or
KOFFOLK or (iii) any corporation, company or other business entity
under the direct or indirect control of a corporation, company or
business entity described in (i) or (ii).
1.8 The term "FACILITY" shall mean KOFFOLK's facility located at Plant 04,
Ramat Chovav, Israel, and all KOFFOLK facilities at that location used
for the MANUFACTURING and storage of PRODUCT, raw materials and
packaging components.
1 9 "IMMEDIATE/IMMEDIATELY" shall mean within forty-eight (48) hours.
1.10 "PROMPT/PROMPTLY' shall mean within thirty (30) days.
1.11 The term "current GOOD MANUFACTURING PRACTICES" shall mean all laws and
regulations which have jurisdiction over the MANUFACTURE of the PRODUCT
at the time of MANUFACTURE, including but not limited to the Good
Manufacturing Practices as specified in the United States Code of
Federal Regulations, the EEC Good Manufacturing Guidelines and any
other applicable laws, guidelines and/or regulations.
1.12 The term "INTERMEDIATES" shall mean isolated chemical compounds in the
MANUFACTURE of the PRODUCT as stated in the KNOW-HOW.
2. APPOINTMENTS
2.1 (a) MERCK hereby appoints KOFFOLK to act for and on behalf of
MERCK to MANUFACTURE the PRODUCT at KOFFOLK's FACILITY subject
to the conditions and terms set forth herein, and KOFFOLK
accepts such appointment to MANUFACTURE the PRODUCT and to do
such other acts as are herein authorized. All PRODUCT
MANUFACTURED in accordance with this Agreement shall be the
exclusive property of MERCK and shall be supplied to MERCK or
any person or entity that MERCK shall designate in writing.
(b) During the term of this Agreement: (i) KOFFOLK shall not use
the KNOW-HOW or any other information, data or material
provided by MERCK hereunder or in connection with this
Agreement, either in whole or part, for any purpose other than
to MANUFACTURE PRODUCT for MERCK hereunder and (ii) KOFFOLK
shall not sell or otherwise provide PRODUCT or any material
made using any KNOW-HOW to anyone except MERCK, provided that
KOFFOLK may sell INTERMEDIATES to a third party who shall
agree to refrain from using such INTERMEDIATES to produce any
product containing Amprolium and from providing such
INTERMEDIATES to anyone else for such use.
(c) Upon termination or natural expiration of this Agreement, and
continuing for the duration of KOFFOLK's obligations of
confidentiality and non-use set forth in Section 3 below and
in the Confidentiality Agreement referred to in Section 3.1(h)
below, KOFFOLK shall cease using the KNOW-HOW for any purpose,
unless otherwise agreed to in writing by MERCK.
2.2 The appointment of KOFFOLK to MANUFACTURE is exclusive for the PRODUCT.
However, MERCK
2
shall be able to (i) manufacture PRODUCT itself up to January 1,
1996, and (ii) make other arrangements for the manufacture
of PRODUCT if at any time KOFFOLK is unable to fill orders placed by
MERCK under Section 7 below for three (3) consecutive months. Also,
this Agreement has no effect on MERCK's right to sell its inventory of
Amprolium.
2.3 (a) The parties agree to comply with all laws and regulations of
any regulatory authority necessary for MANUFACTURING of
PRODUCT. KOFFOLK shall be responsible for obtaining all the
necessary permits and licenses for the MANUFACTURE of PRODUCT.
KOFFOLK agrees to prepare and file Type I and Type II Drug
Master Files with the U. S. Food and Drug Administration to
allow for the sale of PRODUCT in the U.S. MERCK will provide
reasonable assistance to KOFFOLK in the preparation of the
Type I and II Drug Master Files. KOFFOLK shall also undertake
any actions to keep those Drug Master Files updated. KOFFOLK
will fully cooperate with MERCK in connection with any filings
that MERCK makes with regulatory authorities outside of the
United States relating to the PRODUCT. KOFFOLK agrees to
comply with all applicable regulations in order to allow for
sale of PRODUCT in any market in which it may be sold.
(b) During the term of this Agreement KOFFOLK agrees to permit
MERCK to reference those Drug Master Files in connection with
MERCK's filing of any supplement with the FDA, or as otherwise
needed by MERCK.
(c) During the term of this Agreement and thereafter KOFFOLK shall
not permit anyone other than MERCK to reference or otherwise
use the Type II Drug Master Files referred to in Section
2.3(a) above without the prior written consent of MERCK
2.4 The obligations of MERCK hereunder may be fulfilled either by MERCK or
an AFFILIATE.
3. CONFIDENTIALITY
3.1 KOFFOLK agrees that any and all KNOW-HOW or other information or data,
whether written, graphic or oral which may be provided by MERCK to
KOFFOLK (including any analysis, materials, product or conclusions
drawn or derived therefrom) or which may be derived from or related to
any visits by KOFFOLK personnel to MERCK or may be otherwise known to
KOFFOLK through its visits or contact with MERCK (hereinafter
individually and collectively referred to as"INFORMATION") shall be
disclosed by MERCK and used by KOFFOLK subject to the following terms
and conditions:
(a) KOFFOLK shall keep all INFORMATION in confidence and will not,
without MERCK's prior written consent, disclose said
INFORMATION to any person or entity, except those of KOFFOLK's
officers and employees who directly require said INFORMATION
for fulfillment of the purpose of this Agreement. Each officer
or employee to whom INFORMATION is to be disclosed shall be
advised by KOFFOLK of, and be bound by the terms of this
Agreement. KOFFOLK shall take all reasonable precautions to
prevent INFORMATION from being disclosed to any unauthorized
person or entity.
(b) KOFFOLK shall not use, either directly or indirectly, any
INFORMATION for any purpose other than to MANUFACTURE PRODUCT
for MERCK hereunder without MERCK's prior written consent.
(c) KOFFOLK's obligations of confidentiality set forth herein
shall not apply to any INFORMATION which is:
(i) possessed by KOFFOLK prior to receipt from MERCK,
other than through prior disclosure by MERCK, as
evidenced by KOFFOLK's written records;
3
(ii) published or available to the general public other
than through a breach of this Agreement or other
obligation of confidentiality by KOFFOLK; or
(iii) obtained by KOFFOLK from a third party with a valid
right to disclose such INFORMATION, provided that
said third party is not under a confidentiality
obligation to MERCK or the disclosing party if other
than MERCK.
Any combination of features or disclosures shall not be deemed
to fall within the foregoing exclusions merely because
individual features are published or available to the general
public or in the rightful possession of KOFFOLK unless the
combination itself and principle of operation are published or
available to the general public or in the rightful possession
of KOFFOLK.
(d) All INFORMATION, without limitation, shall remain the personal
and proprietary property of MERCK. KOFFOLK shall not acquire
any license or other intellectual property interest in any
INFORMATION disclosed to it by MERCK. Further, disclosure of
INFORMATION shall not result in any obligation to grant
KOFFOLK any right in and to said INFORMATION.
(e) Any and all discoveries and/or inventions by KOFFOLK, whether
or not patentable, resulting from KOFFOLK's use of INFORMATION
shall be the sole and exclusive property of MERCK. Within
thirty (30) calendar days of any discovery or invention,
KOFFOLK shall notify MERCK, in writing, of the event and shall
assist MERCK in protecting MERCK's proprietary rights to said
discovery or invention.
(f) Upon request by MERCK, KOFFOLK shall immediately return to
MERCK all INFORMATION, all notes which may have been made
regarding the INFORMATION, and all copies thereof, except that
KOFFOLK may retain one copy of each item of INFORMATION
provided that said copy shall be retained and used solely for
compliance purposes and shall be held in KOFFOLK's
confidential legal files.
(g) In the event that KOFFOLK is required by judicial or
administrative process to disclose any or all of the
INFORMATION, KOFFOLK shall promptly notify MERCK and allow
MERCK a reasonable time to oppose such process before
disclosing any INFORMATION.
(h) The obligations of confidentiality and non-use created herein
shall be binding upon KOFFOLK, its successors and assigns with
respect to each successive disclosure of INFORMATION and, with
respect to each disclosure, shall continue for fifteen (15)
years from the date of said disclosure. The obligations of
confidentiality and non-use under the Confidentiality
Agreement between the parties last dated September 6, 1993
shall also continue for fifteen (15) years from the date of
any disclosure under that Confidentiality Agreement.
4. FACILITY
4.1 KOFFOLK hereby undertakes to MANUFACTURE PRODUCT at its FACILITY and
store raw materials and packaging components at that FACILITY. The
Facility shall meet current GOOD MANUFACTURING PRACTICES. KOFFOLK shall
not change the location at which it MANUFACTURES PRODUCT without the
prior written approval of MERCK. KOFFOLK may change the location at
which it stores raw materials and packaging components provided that
any such storage location meets current GOOD MANUFACTURING PRACTICES.
5. EQUIPMENT
5.1 KOFFOLK agrees, at its cost, to operate the FACILITY and all equipment
and machinery used, directly or
4
indirectly, to MANUFACTURE PRODUCT in accordance with current GOOD
MANUFACTURING PRACTICES and in accordance with applicable regulatory
agency requirements, and to maintain said FACILITY, equipment and
machinery in an acceptable state of repair and operating efficiency so
as to meet specifications as set forth in Schedule A and the KNOW-HOW
and all regulatory requirements. KOFFOLK will be responsible for
validating the equipment and all processes and procedures involving
production, cleaning, packaging and any other appropriate steps
performed at the FACILITY. Such validation by KOFFOLK must meet the
validation criteria set forth in the KNOW-HOW and all applicable
regulatory requirements and receive all required regulatory approvals.
5.2 During the term of this Agreement, the FACILITY shall be dedicated
solely to MANUFACTURING PRODUCT. However, if under Section 7.1 below
MERCK places binding orders in any CALENDAR YEAR for less than [
] of PRODUCT, KOFFOLK shall have the option to
use the FACILITY to manufacture another product provided (i) KOFFOLK may
not manufacture any other product without providing written notice to
MERCK in advance in order to permit MERCK to consider any potential
question of cross-contamination; (ii) if MERCK identifies a potential
problem of cross-contamination, the parties will meet to attempt to
resolve the problem and (iii) KOFFOLK shall not manufacture any product
in the FACILITY which MERCK considers to present cross-contamination
problems. KOFFOLK will supply MERCK PROMPTLY with a copy of all
governmental and/or regulatory submissions associated with the FACILITY.
KOFFOLK will IMMEDIATELY notify MERCK in the event that it becomes aware
of any risks of contamination associated with MANUFACTURING PRODUCT at
the FACILITY.
6. SUPPLY OF MATERIALS
6.1 KOFFOLK shall purchase all necessary raw materials and packaging
components in adequate quantities which are required for MANUFACTURING
and shipping the PRODUCT and shall perform all quality control testing
on those raw materials and packaging components as set forth in the
KNOW-HOW. All such packaging components and raw materials shall meet
the requirements set forth in Schedule B and the KNOW-HOW,
respectively. MERCK reserves the right to approve all raw materials and
packaging components and shall not unreasonably withhold such approval.
For the purpose of approval by MERCK, KOFFOLK will also inform MERCK in
writing prior to any changes to sources of supply. KOFFOLK warrants
that all packaging components and raw materials supplied hereunder
shall meet the requirements of Schedule B and the KNOW-HOW,
respectively, and of the applicable regulatory agencies relative to
such components and materials.
7 FORECASTING, PLACING AND SCHEDULING OF ORDERS
7.1 In order that KOFFOLK may forecast production planning needs, MERCK
shall submit to KOFFOLK within one hundred and twenty (120) days of
each CALENDAR QUARTER a non-binding estimate of its marketing
requirements of PRODUCT for that CALENDAR QUARTER. MERCK shall, at
least sixty (60) days before the beginning of each month, place a
binding order with KOFFOLK for the quantity of PRODUCT required by
MERCK for that month and which KOFFOLK shall have ready for delivery
under Section 12 below for that month. MERCK's current non-binding
estimate of its yearly requirements of PRODUCT is between [ ].
As soon as possible after execution of the Agreement, MERCK will
provide KOFFOLK with a non-binding estimate of its marketing
requirements of PRODUCT for the following four (4) months and shall
also provide its binding order of PRODUCT required by MERCK for the
following two (2) months. Unless otherwise agreed to by the parties,
MERCK shall place its orders in full container loads. MERCK will make
its best effort to place its orders for a CALENDAR YEAR in
approximately equal quarterly amounts. Notwithstanding the foregoing,
KOFFOLK shall make every effort to comply with changes that MERCK
wishes to make to a binding order, but shall not be held liable for its
inability to do so.
5
8. QUALITY
8.1 The rights conferred by this Agreement are conditioned upon KOFFOLK
undertaking the MANUFACTURE of PRODUCT strictly in accordance with the
KNOW-HOW, current GOOD MANUFACTURING PRACTICES and all applicable
regulatory requirements. KOFFOLK recognizes the serious nature of this
Agreement and warrants that it will fully comply with the undertaking
set forth in the preceding sentence.
8.2 KOFFOLK may not change the process by which PRODUCT is MANUFACTURED
without prior written consent of MERCK.
8.3 KOFFOLK hereby agrees that MERCK or an AFFILIATE shall have the right
to have reasonable access to the FACILITY during normal business hours
in order to ascertain compliance by KOFFOLK with the terms of this
Agreement, including but not limited to, inspection of MANUFACTURE of
PRODUCT, storage facilities for PRODUCT, raw materials and packaging
components, all equipment and machinery and all records relating to
such MANUFACTURE, storage, equipment and machinery. Observations and
conclusions of any MERCK audit will be discussed with and then issued
to KOFFOLK, and corrective action shall be agreed upon by MERCK and
KOFFOLK within twenty (20) days after MERCK delivers its audit report
to KOFFOLK. Such corrective action will be implemented by KOFFOLK
within forty-five (45) days of MERCK and KOFFOLK having agreed to the
corrective action, unless otherwise agreed by the parties.
8.4 KOFFOLK hereby agrees to advise MERCK IMMEDIATELY of any proposed or
unannounced visit or inspection of the FACILITY or relating to the
PRODUCT or its MANUFACTURE by any regulatory authority and will permit
MERCK to be present. If MERCK is not present during such a visit or
inspection KOFFOLK shall IMMEDIATELY prepare and provide MERCK with a
full report, in English, of the visit or inspection. KOFFOLK shall also
IMMEDIATELY provide MERCK with copies of any letters, reports or other
documents issued by any regulatory authority relative to such
inspection. KOFFOLK shall prepare a response to any inspection report
from a regulatory authority and shall submit it to MERCK for review and
concurrence prior to submission to the regulatory authority. KOFFOLK
shall also advise MERCK of any regulatory issues regarding any other
product made, handled or stored at any other plant at KOFFOLK's Ramat
Chovav operation which would affect MANUFACTURE of the PRODUCT.
8.5 KOFFOLK shall provide MERCK, at the cost and expense of KOFFOLK,
samples in reasonable quantities and with relevant documentation from
each production lot of PRODUCT. KOFFOLK and MERCK shall concurrently
perform, at their respective quality control laboratories, such quality
control tests as are indicated in the KNOW-HOW. KOFFOLK shall make the
results of its quality control tests available to MERCK as directed.
MERCK shall initiate all required quality control tests within fourteen
(14) days of receipt of samples and MERCK shall advise KOFFOLK of the
results without undue delay. Until such time as MERCK is satisfied that
KOFFOLK's quality control laboratories are routinely achieving accurate
test results within tolerance limits specified in MERCK's control
procedures for the PRODUCT, no production lot of PRODUCT shall be
released for delivery unless specific approval has been given in
writing by MERCK. KOFFOLK is responsible for obtaining and retaining
[ ] required for quality control release testing as
indicated in the KNOW-HOW. KOFFOLK will perform annual stability
testing at its cost in accordance with the specifications contained in
the KNOW-HOW. When MERCK is satisfied that KOFFOLK routinely is
reporting accurate test results within the approved tolerance limits,
MERCK may inform KOFFOLK in writing that thereafter, until further
notice, the PRODUCT may be released for delivery if KOFFOLK's tests,
performed in accordance with procedures supplied by MERCK, show the
PRODUCT to meet MERCK's acceptable quality standards. However, even
after waiving such prior quality control approval, MERCK shall have the
right to request representative samples of PRODUCT and KOFFOLK shall
satisfy such requests. Any such
6
waiver may be revoked at any time and shall not constitute a waiver of
or affect in any way KOFFOLK obligations hereunder. KOFFOLK shall at
all times ensure that PRODUCT is in conformity with the standards of
quality currently applied by MERCK, and that the labels affixed to the
PRODUCTS are those duly approved by MERCK and the relevant government
authorities, where necessary, and shall bear the appropriate
identification as may from time to time be determined by MERCK.
8.6 MERCK will specify all required labeling as agreed by the relevant
government authorities, as necessary on the PRODUCT and all components
and containers. KOFFOLK will comply with all specified labeling and use
only labeling which has been approved in writing by MERCK in advance.
8.7 Should any production lot fail to meet the specifications set forth in
Schedule A, such lot shall not be released. The loss resulting from
such deficiency and the cost to dispose of or return the lot shall be
borne by the party who is at fault, which shall be determined by
MERCK's technical staff. If KOFFOLK does not agree with MERCK's
determination of fault, the parties shall meet to attempt to resolve
their differences. If the parties are unable to resolve their
differences as to fault, then either party may refer the matter for
final decision to a specialized firm of international reputation
acceptable to both parties hereto. The decision of such firm shall be
binding on both parties hereto. If MERCK is found to be at fault, it
shall pay KOFFOLK the fee which it would have otherwise paid for the
MANUFACTURE of the lot. If KOFFOLK is found to be at fault, it shall
bear all costs for the lot. The party at fault shall pay the cost for
the above-referenced specialized firm.
8.8 No PRODUCT or material made hereunder shall be re-worked unless such
rework is permitted under the U.S. NADA for the PRODUCT.
8.9 KOFFOLK shall provide MERCK with quality control release certificates
related to the PRODUCT for each batch. At MERCK's request, KOFFOLK
shall provide MERCK with other MANUFACTURING records.
9. RECALL
9.1 In the event MERCK or an AFFILIATE shall be required or shall
voluntarily decide to recall any PRODUCT MANUFACTURED by KOFFOLK
pursuant to this Agreement, then KOFFOLK shall fully cooperate with
MERCK or its AFFILIATE in connection with the recall. If such recall is
initiated because of a defect in the PRODUCT resulting from KOFFOLK's
negligence in the MANUFACTURE or delivery of the PRODUCT, KOFFOLK will
credit MERCK for the price it invoiced MERCK for all PRODUCT returned
and, in addition, KOFFOLK will reimburse MERCK for all reasonable
recall expenses in connection therewith.
9.2 KOFFOLK agrees to abide by all decisions of MERCK or an AFFILIATE to
recall a PRODUCT and both parties shall fully cooperate with each other
in the event of any recall of PRODUCT MANUFACTURED under this
Agreement.
10. COMPLAINTS
10.1 KOFFOLK and MERCK shall notify each other IMMEDIATELY if either
receives any notice of a serious adverse reaction pertaining to the
PRODUCT. KOFFOLK shall report monthly to MERCK all information
concerning a complaint of any kind relating to the PRODUCT MANUFACTURED
hereunder, its components or packaging, including but not limited to
any PRODUCT quality complaint, or any side effect, injury, toxicity or
sensitivity reaction.
10.2 MERCK and KOFFOLK will maintain complaint files regarding components
for packaging, including but
7
not limited to any PRODUCT quality complaints. MERCK and KOFFOLK will
notify each other IMMEDIATELY of any health hazards with respect to the
PRODUCT which have impacted or may impact the employees involved in the
production proce11. PURCHASES AND COMPENSATION
11.1 From the date of this Agreement through January 31, 1995, the price
that MERCK shall pay for each kilogram of PRODUCT MANUFACTURED by
KOFFOLK for MERCK hereunder shall be [ ].
From February 1, 1995 through December 31, 1995, the price that
MERCK shall pay for [ ]. The period from the date of
this Agreement through December 31, 1995 shall be referred to herein as
the "INITIAL PERIOD". During said INITIAL PERIOD MERCK shall purchase
[ ] of PRODUCT.
11.2 (a) Upon termination of the INITIAL PERIOD, and for the remainder
of the term of this Agreement, the price that MERCK shall pay
for [
].
(b) If as of December 31, 1995, [
].
(c) Commencing with the 4th CALENDAR QUARTER of 1996 and every
subsequent 4th CALENDAR QUARTER during the term of the
Agreement, the parties shall jointly review any changes in [
].
(d) If under paragraph 11.2(c) above, the parties jointly
determine that [
].
(e) Except as provided below, commencing January 1, 1997, and any
subsequent January 1 during the term of this Agreement, [
8
].
(f) During the first CALENDAR QUARTER of 1997 and any subsequent
first CALENDAR QUARTER during the term of this Agreement, the
parties shall jointly review [
].
11.3 KOFFOLK shall submit an invoice covering each kilogram of PRODUCT
MANUFACTURED by KOFFOLK for MERCK hereunder on the date that the
PRODUCT is delivered under Section 12.3 below, and such invoice shall
be accompanied by appropriate documentation evidencing performance of
the invoiced activity. MERCK will pay such invoices with appropriate
documentation within forty-five (45) days of MERCK's receipt of the
PRODUCT.
11.4 KOFFOLK agrees that it shall keep accurate records in sufficient detail
to enable the amounts due to KOFFOLK hereunder to be determined and,
upon MERCK's request shall permit an independent chartered accountant,
selected and paid for by MERCK, except one to whom KOFFOLK has
reasonable objection, to have access during ordinary business hours to
such of KOFFOLK's records as may be necessary to determine the
correctness of any payment made or to be made under this Agreement.
This right of audit shall apply to [ ] as described in
Sections 11.1 and 11.2 above. Said accountant shall not disclose to
MERCK any information other than information relating to the
accuracy of reports and payments made under this Agreement, and in no
event are the quantities and prices to individual customers or the
names of those customers to be disclosed to MERCK. In the event of a
determination by the independent chartered accountant that there has
been an inaccurate calculation or payment, an appropriate adjustment
shall be made to the next payment by MERCK. In the event that the
adjustment requires payment from KOFFOLK to MERCK, subsequent
payments by MERCK shall be reduced until no further payments are due
from KOFFOLK.
11.5 Commencing January 1, 1996, if during any CALENDAR YEAR of this
Agreement [
].
11.6 If through no fault of KOFFOLK withdrawal of PRODUCT is required by
regulatory bodies in United States, France and the United Kingdom prior
to January 1, 1996, MERCK and KOFFOLK will agree to negotiate in good
faith, compensation for KOFFOLK's efforts.
11.7 If KOFFOLK is unable to obtain any license, permit or certificate which
is necessary for it to perform its obligations hereunder or if MERCK is
unable to supplement its registration for the PRODUCT in the United
States, France or the United Kingdom in order to allow KOFFOLK to be
MANUFACTURER of PRODUCT, the parties shall meet to determine in good
faith whether the Agreement should be terminated and what, if any,
compensation should be due to either party.
12. STORAGE AND DELIVERY OF PRODUCT
12.1 KOFFOLK shall, in accordance with the KNOW-HOW, maintain adequate
storage accommodations for all the raw materials, packaging components
and PRODUCT.
9
12.2 PRODUCT which has received quality control release shall be stored by
KOFFOLK in a separate segregated area.
12.3 KOFFOLK shall deliver the PRODUCT to the port and under the terms
identified by MERCK.
12.4 Claims that any shipment of PRODUCT does not meet the specifications
contained in Schedule A or the indicated quantity shall be made by
MERCK to KOFFOLK in writing within sixty (60) days following receipt
thereof. Upon the receipt of a claim from MERCK, KOFFOLK shall assay
its retained sample of PRODUCT. If KOFFOLK agrees with MERCK's claim
and the defect is the fault of KOFFOLK, KOFFOLK shall replace the
PRODUCT. If the parties are unable to resolve their differences, then
either party may refer the matter for final analysis to a specialized
firm of international reputation acceptable to both parties. The
analysis of such firm shall be binding on both parties hereto. The
party at fault shall pay the cost for such specialized firm and any
costs associated with the disposal of PRODUCT.
13. RECORDS
13.1 All records relating to MANUFACTURING of any PRODUCT shall be retained
by KOFFOLK for a period of not less than seven (7) years from the date
of MANUFACTURE of each lot of PRODUCT to which said records pertain.
KOFFOLK shall provide MERCK with copies of the appropriate documents
for each production lot, as requested by MERCK.
14. TERM
14.1 The term of this Agreement shall begin on the date first written above
and shall continue for a period of [ ], unless
terminated sooner as provided for below. At least six (6) months prior
to the termination date of this Agreement, the parties shall decide
whether the Agreement will be extended, and if so, on what terms.
15. TERMINATION
15.1 MERCK shall have the right to terminate this Agreement in whole or in
part, in the event KOFFOLK fails to fill orders placed by MERCK under
Section 7 above for three (3) consecutive months.
15.2 Either party shall have the right to terminate this Agreement if the
other party files a petition in bankruptcy, or enters into an agreement
with its creditors, or applies for or consents to the appointment of a
receiver or trustee, or makes an assignment for the benefit of
creditors, or suffers or permits the entry of an order adjudicating it
to be bankrupt or insolvent.
15.3 If either party materially breaches any of the provisions of this
Agreement, and such breach is not cured within ninety (90) days after
the giving of written notice by the other party specifying such breach,
the other party shall have the right to terminate this Agreement
without penalty upon a further sixty (60) days' written notice.
15.4 INFORMATION exchanged between MERCK and KOFFOLK for the MANUFACTURE of
the PRODUCT shall be PROMPTLY returned to the disclosing party upon
termination or natural expiration of the AGREEMENT or, at any time,
upon request by the disclosing party.
15.5 In the event of the sale of the controlling interest of the business of
KOFFOLK, other than through a public offering of stock for which a
registration is filed with the applicable regulatory authority, or the
assignment or delegation by either party of its rights or obligations
hereunder in violation of Section 20 below, KOFFOLK, in the event of
such sale, or either party, in the event of such assignment, shall be
required to
10
provide IMMEDIATE notice to the other party and said other party shall
have the right to terminate this Agreement within forty-five (45) days
of receipt of such notice. Any notice of termination must be in writing
and shall give rise to immediate termination of the Agreement.
Furthermore, no penalty shall be due either party if the other party
terminates pursuant to this Paragraph.
15.6 KOFFOLK shall not be entitled in connection with the termination or
natural expiration of this Agreement, in accordance with its terms, to
claim any indemnity, reimbursement or compensation for alleged losses
of clientele, good will, loss of profits on anticipated sales or the
like, and MERCK shall have no liability for losses or damages which
might result from said termination or natural expiration of the
Agreement. KOFFOLK acknowledges that it had decided and will decide on
all investment expenditures and commitments in full awareness of the
possibility of losses or damages resulting from termination or natural
expiration of the Agreement and is willing to bear the risk thereof.
15.7 Upon termination of this Agreement, the provisions of Sections 2.1(c),
2.3(c), 3, 9, 10, 11.4, 12.4, 13, 15.4, 15.6, 15.7, 18, 21, 22, 23-27,
29 and 30 shall survive. The definitions in Section 1 above needed for
the above surviving provisions shall also survive.
16. AMENDMENTS
16.1 No modifications, changes, alterations, or additions to this Agreement
shall be effective unless in writing, properly executed by authorized
representatives of both parties, and identified as an Amendment to this
Agreement.
17. FORCE MAJEURE
17.1 Unless expressly provided for within this Agreement, neither party
shall be responsible for any failure to comply with the terms of this
Agreement where such failure is due to force majeure, which shall
include, without limitation, fire, flood, explosion, strike, labor
disputes, labor shortages, picketing, lockout, transportation embargo,
or failures or delays in transportation, strikes or labor disputes
affecting supplies, or acts of God, civil riot or insurrection, war,
acts of the Government or any agency thereof judicial action or other
reason of a like nature not the fault of the party delayed in
performing work or doing acts required under the terms of this
Agreement. Specifically excluded from this definition are those acts of
Government (of the U.S. or Israel) or any agency thereof or judicial
action which could have been avoided by compliance with such laws or
regulations, publicly available and reasonably expected to be known by
KOFFOLK or MERCK
17.2 Paragraph 17.1 shall not be available, however, to any party who fails
to use reasonable diligence to remedy, remove or mitigate such cause
and the effects thereof in an adequate manner and with all reasonable
dispatch. The requirement that any force majeure hereunder and the
effects thereof be remedied, removed or mitigated with all reasonable
dispatch shall not require the settlement of strikes or labor
controversies by acceding to the demands of the opposing party or
parties.
17.3 The party affected by any such force majeure shall promptly notify the
other, explaining the nature, details and expected duration thereof
Such party shall also advise the other from time to time as to when the
other can expect the affected party to resume performance in whole or
in part of its obligations hereunder, as well as notify the other at
the expiration of any such force majeure. If a party anticipates that
force majeure may occur, including but not limited to a strike, that
party shall also promptly notify the other explaining the nature,
details and expected duration thereof Should any force majeure excusing
performance hereunder result in a delay in performance or
nonperformance in whole or in part which extends for a period exceeding
ninety (90) days, either party may terminate this Agreement after such
ninety (90) days on fifteen (15) days prior written notice.
11
18. INDEMNITY
18.1 KOFFOLK shall indemnify and hold MERCK and its AFFILIATES harmless
from and against any and all claims, losses, liabilities and expenses
(including but not limited to reasonable lawyers' fees and other
litigation costs) arising out of or resulting from KOFFOLK's (i)
negligence or failure to follow the KNOW-HOW, including but not limited
to the specifications contained therein, in the MANUFACTURE of PRODUCT;
(ii) use of raw materials and packaging components, storage and
disposal of PRODUCT, raw materials or packaging components in the
MANUFACTURE of PRODUCT; or (iii) sale or provision of INTERMEDIATES to
third parties under Section 2.1(b) above. MERCK shall indemnify and
hold KOFFOLK and its AFFILIATES harmless from and against any and all
claims, losses, liabilities and expenses (including but not limited to
reasonable lawyers' fees and other litigation costs) arising out of or
resulting from MERCK's negligence hereunder.
18.2 Each party agrees to give the other prompt written notice of any claims
made, for which the other might be liable under the foregoing
indemnification, together with the opportunity to defend, negotiate,
and settle such claims. The party seeking indemnification under this
Agreement shall provide the other party with all information in its
possession, authority, and assistance to enable the indemnifying party
to carry on the defense of such suit.
18.3 Neither party shall be responsible or bound by any settlement made
without its prior written consent.
19. COOPERATION
19.1 Each party agrees to execute such further papers, agreements,
documents, instruments and the like as may be necessary to effect the
purpose of this Agreement and to carry out its provisions.
19.2 At MERCK's written request, KOFFOLK shall cooperate with MERCK and
provide such information as may be necessary to secure a duty
suspension for the PRODUCT or any formulation derived from or a
precursor to the PRODUCT in any jurisdiction where duty suspensions are
allowed by law, regulation or authorized procedures. Any cost
reductions derived from the award of any such duty suspension shall
inure solely to MERCK.
20. ASSIGNMENT/DELEGATION
20.1 This Agreement shall not be assignable by KOFFOLK, other than to an
AFFILIATE, nor shall the obligations of KOFFOLK be delegatable without
the prior written consent of MERCK, which consent shall not be
unreasonably withheld. Any such attempted assignment or delegation by
KOFFOLK without such prior written consent shall be void. If approved
in writing by an authorized representative of MERCK, then once assigned
or delegated, all of the provisions of this Agreement and all rights
and obligations of the parties hereunder shall be binding upon and
inure to the benefit of and be enforceable by and against the
successors and assigns of KOFFOLK. In addition, in the event KOFFOLK
seeks and obtains MERCK's consent to assign or delegate its rights or
obligations to another party, the obligations of the assignee or
transferee must be guaranteed in writing by KOFFOLK. At the sole
discretion of MERCK, this guarantee of obligations may include the
posting of a performance bond or establishment of an escrow account to
guarantee performance.
20.2 MERCK retains the right to assign its rights or delegate its
obligations under this Agreement to a third party without the consent
of KOFFOLK. In the event of such an assignment or delegation, all of
the provisions of this Agreement and all rights and obligations of the
parties hereunder shall be binding upon and inure to the benefit of and
be enforceable by and against the successors and assigns of MERCK
12
21. RELATIONSHIP CREATED
21.1 The relationship between KOFFOLK and MERCK is that of an independent
contractor and a customer, respectively, and under no circumstances
shall either party, its agents or employees be deemed agents or
representatives of the other party. Neither party shall have the right
to enter into any contracts or commitments in the name of or on behalf
of the other party in any respect whatsoever. In addition, neither
party shall hold itself out to anyone, or otherwise represent, that it
has any such authority vis-a-vis the other party.
21.2 Nothing herein shall be construed as granting any license or right
under any patent, trademark or KNOW-HOW or other right of either
party, by implication or otherwise, to the other.
22. INSURANCE
22.1 During the term of this Agreement KOFFOLK will maintain
general/comprehensive liability including products liability insurance
in an amount not less than one million dollars per occurrence and five
million dollars in the aggregate. Such policy shall name Merck & Co.,
Inc. as an "Additional Insured". KOFFOLK shall provide Certificates of
Insurance evidencing said insurance, which will be placed with insurers
acceptable to MERCK, and KOFFOLK shall provide written notice to MERCK
at least thirty (30) days prior to cancellation, non-renewal or
material change in such insurance.
23. JURISDICTION
23.1 This Agreement shall be governed by, interpreted and construed, and all
claims and disputes, whether in tort, contract or otherwise be resolved
in accordance with the substantive laws of the State of New York,
United States of America, without reference to any rules of conflict of
laws or renvoi. In the event of any controversy or claim arising our of
or relating to this Agreement, performance hereunder, termination
hereof, or relationship created hereby, each party irrevocably submits
to the exclusive jurisdiction of the courts of the Supreme Court of the
State of New York and the U.S. District Court for the Southern District
of New York for the purposes of any suit, action or other proceeding
arising out of this Agreement or transactions contemplated hereby. Each
party irrevocably and unconditionally waives any objection to the
laying of venue in the courts of New York as stated above and that any
such action was brought in an inconvenient forum. Notwithstanding the
foregoing, in the event of a threatened disclosure in violation of this
Agreement, MERCK shall have the right to seek injunctive relief from
any competent court in the jurisdiction where the disclosure is
threatened to prevent such disclosure pending resolution of the merits
of the dispute.
24. HEADINGS
24.1 The headings used in this Agreement are intended for convenience only
and shall not be considered part of the written understanding between
the parties and shall not affect the construction of the Agreement.
25. ENTIRE AGREEMENT
25.1 This Agreement and the attached Schedules constitute the entire
Agreement between the parties relating to the subject matter hereof and
all prior proposals, discussions, and writings by and between the
parties and relating to the MANUFACTURING of the PRODUCT are
superseded, except that the Confidentiality Agreement between the
parties last dated September 6,1993 and the Letter Agreement between
MERCK and Philipp Brothers Chemicals, Inc. last dated February 7,1994
shall continue in effect for all information communicated by MERCK
under those Agreements. As set forth in Section 3.1(h) above, the term
of confidentiality and non-use in the Confidentiality Agreement has
been changed to fifteen (15) years from
13
disclosure.
25.2 All work performed by KOFFOLK for MERCK shall be subject to the
provisions of this AGREEMENT and attached Schedules and shall not be
subject to the terms and conditions contained in any purchase order of
MERCK or confirmation of KOFFOLK except insofar as any such purchase
order or confirmation provides the identity of PRODUCT, delivery date
and place of delivery and labeling or packaging changes.
26. WAIVER
26.1 Failure by MERCK or KOFFOLK at any time to enforce any of the terms or
conditions of this Agreement shall not affect or impair such terms or
conditions in any way, or the right of MERCK or KOFFOLK at any time to
avail itself of such remedies as it may have for any breach of such
terms or conditions under the provisions of this Agreement, in equity
or at law.
27. SEVERABILITY
27.1 If any term or provision of this Agreement shall be held invalid or
unenforceable, the remaining terms hereof shall not be affected but
shall be valid and enforced to the fullest extent permitted by law. The
parties hereto shall use best efforts to substitute a valid, legal and
enforceable provision which, in so far as practical, implements the
purpose hereof.
28. WASTE
28.1 KOFFOLK shall assume responsibility for disposing of all waste and
rejected raw material, components, or PRODUCT generated during the
performance of this Agreement in accordance with all applicable
governmental laws, rules and regulations.
29. ENVIRONMENTAL
29.1 KOFFOLK will comply with all applicable governmental laws, rules and
regulations as well as any other applicable laws, rules and
regulations, including but not limited to those relating to the
protection of human health and the environment.
29.2 KOFFOLK agrees to indemnify, defend, and hold harmless MERCK, its
employees, agents, heirs and assigns from and against any and all
damage, claim, liability, or loss, including reasonable attorneys' and
other fees, arising out of or in any way connected to (1) any condition
in, on, or near the FACILITY; or (2) any condition caused by KOFFOLK,
its employees or agents or arising out of or in any way connected to
any act or omission whatsoever of KOFFOLK, and/or with KOFFOLK's
operations, employees or agents. KOFFOLK's duty of indemnification
shall include, but not be limited to, damage, liability, or loss
pursuant to any applicable government's environmental laws; or pursuant
to claims for injury to person or damage to property including natural
resources and further including claims for environmental investigation
and/or remediation of property at or around the FACILITY or any
off-site location where material from the FACILITY may have been
transported or otherwise came to be located. This provision will not be
construed, nor interpreted as an assumption of acknowledgment by
KOFFOLK of any obligation to any person or entity other than MERCK.
KOFFOLK has the option of selecting the attorneys for the defense of
claims under this provision. MERCK may elect to have its own attorneys
as additional counsel, in which case MERCK shall be responsible for the
fees of said attorneys. KOFFOLK shall have a continuing obligation to
fully cooperate with MERCK in the defense of any such claim. If MERCK's
negligence is the sole cause of the referred damage, claim, liability
or loss, KOFFOLK shall not be required to indemnify MERCK.
14
30. NOTICE
30.1 All notices and demands required or permitted to be provided under the
terms of this Agreement shall be in writing and in English unless
otherwise expressly provided in this Agreement and shall be
conclusively presumed for all purposes of this Agreement to be given or
made at the time the same is received by one of the parties via
certified mail, return receipt requested with sufficient first-class
postage, prepaid, addressed as follows:
If to KOFFOLK:
Koffolk, Xxx.
X.0. Xxx 0000
00000 Xxx Xxxx, Xxxxxx
Telephone: (000) 000-0-000-0000
Panafax: (000) 000-0-000-0000
Attention: Xxxxxxx Xxx
Philipp Brothers Chemicals, Inc.
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000 X.X.X.
Telephone: (000) 000-0000
Panafax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
If to MERCK:
Merck & Co., Inc.
Xxx Xxxxx Xxxxx
Xxxxxxxxxx Xxxxxxx, Xxx Xxxxxx 00000 X.X.X.
Telephone: (000) 000-0000
Panafax: (000) 000-0000
Attention: Vice President, Business Affairs, Merck Manufacturing
Division
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their representatives duly authorized
as of the day and year first above written.
MERCK & CO.
By: /s/
---
Title: V.P.
KOFFOLK, LTD.
By: /s/
---
Title: X.X.
XXXXXXX BROTHERS CHEMICALS, INC.
By: /s/ Xxxx X. Xxxxxxxx
--------------------
Title: President
15
Schedule A
Specifications
--------------
CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION. THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
[ ]
Schedule B
Packaging
---------
CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION. THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
[ ]
Schedule C
Technical Know-How Package
--------------------------
CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION. THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
[ ]
Schedule D
Raw Material Costs
------------------
CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION. THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.
[ ]
