EXHIBIT 10.85
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DISTRIBUTION AGREEMENT
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This DISTRIBUTION AGREEMENT is entered into as of the ___ day of December,
1997 ("Effective Date") between XXXXXXX LABORATORIES INC., a New Jersey
corporation ("Distributor") and X. X. XXXXXX & CO., a Delaware corporation
("Company").
Whereas, Company has heretofore, directly and/or through others, promoted,
marketed and sold the Product (as hereinafter defined) in the Territory (as
hereinafter defined); and
Whereas, Distributor has the necessary facilities and resources to develop
the market for such Product in the Territory, as well as to carry out the duties
hereinafter specified and is desirous of being granted the right to sell such
Product in the Territory; and
Whereas, Company is willing to grant such right to Distributor upon the
terms and conditions herein set forth;
Now, therefore, it is mutually agreed by the Company and Distributor as
follows:
1. Appointment and Acceptance; Contingency.
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(a) Subject to the following terms and conditions, Company hereby appoints
Distributor as Company's exclusive distributor (exclusive even as to the Company
and its affiliates and subsidiaries) in the countries listed on Exhibit A (the
"Territory") of the product described in Exhibit B (the "Product") for sale
under the trademark "SLOW-MAG" (the "Trademark") to any and all customers and
accounts. Distributor hereby accepts such appointment. The Company will not,
directly or indirectly, use the Trademark in the Territory during the term of
this Agreement.
(b) It is understood and agreed by the Company and Distributor, that
Distributor may from time to time find it convenient, for the discharge of its
obligations hereunder, to appoint
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subdistributors, agents or dealers within the Territory. Distributor shall be
entitled to appoint subdistributors, agents or dealers only if the following
conditions have been satisfied:
(i) Distributor shall have notified the Company in writing of the name,
address, and commercial experience of such prospective subdistributor,
agent or dealer and the Company shall have approved such
subdistributor, agent or dealer (which approval will not be
unreasonably withheld); and
(ii) Distributor shall have secured the enforceable written agreement, in
form and substance satisfactory to the Company, of any subdistributor,
agent or dealer that the latter:
(A) shall look solely and exclusively to Distributor for any
compensation of any kind and shall not have any claim or right to
any compensation of any kind whatsoever from the Company, in
particular, termination indemnities, payments, compensations or
other benefits;
(B) shall have no rights with respect to the distribution of the
Product within the Territory greater than the rights of
Distributor under this Agreement; and
(C) shall be subject to the responsibilities and obligations of
Distributor set forth in this Agreement
(c) Distributor agrees that it shall be responsible for the full and
faithful performance of any duty or obligation under this Agreement delegated,
expressly or by implication, by Distributor to any subdistributor, agent or
dealer and shall indemnify and hold harmless the Company against any liability,
termination indemnity, loss, injury, claim, cost, or expense incurred by the
Company as a result of Distributor's appointment of any subdistributor, agent or
dealer, except as such loss, injury, claim, cost, or expense is caused by the
fault of the Company.
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(d) Company represents and warrants to Distributor that:
(i) [DELETION]
(ii) [DELETION]
(iii) [DELETION]
(iv) [DELETION]
(v) Company's execution and performance of this Agreement does not
conflict with any of the terms and conditions of the License.
(vi) Except as set forth in Schedule 7(a), no third party has any
option, license or other contract or arrangement with Company with
respect to the manufacture, use or sale of the Product in the
Territory or the use of the Trademark, any related patent right or
know-how in the Territory, except for contracts or arrangements with
customers of the Company in the ordinary course of business.
(vii) Company has disclosed to Distributor all material information
in Company's possession, whether scientific or otherwise, concerning
the Product, the rights granted hereunder and the Trademark.
(e) Distributor acknowledges and agrees that the distribution rights
granted under this Agreement are subject to, and limited by, the terms and
conditions of the License, including any termination rights thereunder.
2. Duties of Distributor.
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(a) Distributor accepts the foregoing appointment and agrees to provide all
of the usual and customary services of a distributor in the Territory, which
shall include, without limitation, the following:
(i) Distributor shall use all reasonable efforts to distribute and
sell and diligently promote the Product in the Territory. In this
regard, Distributor shall provide and maintain a sales organization
adequate to meet the needs of the market in the Territory. Nothing in
this Agreement shall be construed as requiring Distributor to maintain
a sale organization outside the United States of America.
(ii) Distributor agrees not to sell and distribute knowingly
counterfeit Company products or Product which has been misbranded or
adulterated or which is otherwise illicit.
(iii) Distributor agrees to include the Product at frequent intervals
in lists, bulletins or catalogs, as they may be issued by Distributor
to its customers, and agrees to check such customers' supplies of
Product regularly to insure adequate stocking and that the Product is
in saleable condition.
(iv) Distributor agrees not to sell the Product outside the Territory
or knowingly sell the Product to customers in the Territory which
intend to or who resell outside the Territory.
(v) Distributor agrees to store and ship the Product strictly in
accordance with the specifications in Exhibit B ("Specifications") and
Company's instructions and as otherwise required by law.
(vi) Distributor agrees not to make any warranty, guarantee, claim or
representation in connection with the Product, unless authorized by
Company or contained in written materials forwarded by Company to
Distributor.
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(vii) Distributor shall promptly provide Company with copies of any
known Product related complaints of a medical nature, including
adverse reaction and events, or product quality nature.
(b) Nothing contained in this Agreement shall be construed to restrict
Company's right, in its sole discretion, after discussion with Distributor, to
discontinue manufacturing (or having the Product manufactured on its behalf) or
having the Product distributed within the Territory at any time, immediately
upon prior written notice to Distributor if in Company's reasonable scientific
or medical judgment (based upon medical or scientific reasons or on information
or circumstances not known or existing as of the date hereof by Company's senior
medical officer), further sale of the Product in the Territory is not advisable.
(c) Distributor represents and warrants that it is not now selling and will
not during the term hereof sell in the Territory any products directly
competitive with the Product. As used in this Section 2(c), "directly
competitive" means a magnesium supplement product.
(d) Company represents and warrants that it will not during the term hereof,
and for a period of two (2) years after the expiration or earlier termination of
this Agreement other than termination by Company under Section 10(b), sell in
the Territory any products directly competitive with the Product. As used in
this Section 2(d), "directly competitive" means a magnesium supplement product.
Nothing in this Section 2(d) shall in any way restrict or preclude Company or
any of its Affiliates from acquiring another company, business or line of
products (including by license thereof or through investment therein), a non-
material portion of which includes such magnesium supplement pharmaceutical
product. "Non-material" for purposes of this Section 2(d) means that such
magnesium supplement product accounts at the time of purchase for less than ten
per cent (10%) of the gross sales in the Territory of all products included in
the acquired company, business or line of products. If Company acquires any
company, line of products or business with products as in (i) above, Company
agrees to negotiate
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with Distributor, as applicable, toward a possible sale of such products to
Distributor in the Territory.
3. Purchase of Product.
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(a) Distributor shall place purchase orders with Company for, and will
purchase and warehouse, such quantities of the Product as Distributor believes
may from time to time be required to meet trade requirements and sampling in the
Territory.
(b) Distributor shall submit written purchase orders to the Company for the
Product and Company shall accept such orders to the extent that they meet the
other requirements of this Section (b) and do not exceed Company's capacity to
produce Product. All sales hereunder shall be subject to the terms and
conditions of this Agreement, except for quantity and delivery date terms which
may be specified in any purchase order hereunder; provided that, delivery shall
in no event be required in less than one hundred twenty (120) days from
Company's receipt of the applicable purchase order. In the event of any
conflict, the terms of this Agreement shall prevail over those contained in
purchase orders or any other documents submitted by Distributor in connection
with this Agreement. Concurrently with the execution of this Agreement,
Distributor will provide Company a forecast of estimated requirements for
Product during the following six (6) calendar quarters. Distributor shall exert
all reasonable efforts to make each forecast as accurate as possible and shall
update such forecast at the end of each calendar quarter for the following six
(6) calendar quarters. Company shall accept and fill orders to the extent they
do not exceed one hundred and twenty percent (120%) of Distributor's forecast
for the applicable calendar quarter and use all reasonable efforts to fill any
portion of such orders in excess of such amount. Unless the parties
subsequently agree to the contrary, Company's obligation to supply Product shall
cease as of January 1, 2002. If Company does not agree to extend its obligation
to supply Product as described above, Company will provide reasonable assistance
to Distributor to find an alternative source of supply; provided that if an
alternative source of supply is not available to Distributor, Company shall
extend its obligation to supply to December 31, 2002.
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(c) The parties contemplate that Company may transfer manufacture of the
Product to the Company's subsidiary, Xxxxxx Industrie, in Evreux, France. Upon
such transfer, the supply of Product and the related provisions hereunder shall
be assumed by said subsidiary, but Company shall guaranty, as principal and not
as surety, the performance by said Xxxxxx Industrie of all its obligations of
supply.
(d) The Product shall meet the Specifications, as the same may be amended from
time to time by agreement of the parties or by requirement of the U.S. Food and
Drug Administration ("FDA").
(e) Sales by Company to Distributor shall be made as follows:
(i) Sales shall be made FOB shipping point (Incoterms 1990) at such
facility at which the final packaging of the Product is completed,
whether such facility is a Company facility, third party manufacturer
facility, or, as is currently applicable, Distributor's facility (or
such other shipping point as may be agreed between the parties),
initially for the first twelve (12) months after the Effective Date at
the prices specified in Exhibit C annexed hereto and made a part
hereof. (ii) After the first twelve (12) months period in subsection
3(e)(i) above, if Company proposes in increase the price of the
Product [DELETION], it shall so notify Distributor of such increase no
less than ninety (90) days prior to the expiration of such period.
Such price shall be in effect for the ensuing twelve (12) months
period. Any subsequent price increases must be notified to Distributor
in accordance with the foregoing procedure. In no event however, shall
Company notify Distributor of its desire to increase its price for the
Product more than once in any one year during the term of this
Agreement. The price which Distributor shall pay for the Product shall
be that price in effect when an order for the Product is placed. The
foregoing price increases shall include any increases in active
ingredient costs or finished packaging costs charged by Distributor or
its Affiliates ("Distributor Increases"), and such Distributor
Increases shall not be subject to or included in determining the
[DELETION] set forth above.
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(iii) All sales, use, gross receipts, added-value and other taxes,
duties, and similar charges, shall be borne by Distributor.
Distributor shall assume responsibility for risk of loss or damage to
the Product to the extent the Product is held at Distributor's
facility or is otherwise in the possession of Distributor, and
Distributor shall be deemed a warehouseman with respect thereto.
Title to the Product shall pass to Distributor upon delivery of
payment to Company for the Product in accordance with Section 3(f)
below.
(f) All payments by Distributor for Product shall be made in United States
dollars to Company (or other designated affiliate), by wire transfer to the bank
account designated by Company or such affiliate from time to time, in a written
notice to Distributor. Payment shall be due thirty (30) days from the date of
shipment. It is understood and agreed that Distributor shall not be obligated
to pay for any shipment, or portion thereof, of Product that has been properly
rejected by Distributor pursuant to this Agreement.
(g) Company shall keep full and accurate books and records related to the
fully absorbed cost of the Product in sufficient detail so amounts payable
hereunder can be properly calculated. Such books and records shall be kept for
the longer of two (2) years after the close of the calendar year to which the
records apply or the period required by law. Commencing with the books and
records for calendar year 1998, Company shall permit (not more than once each
calendar year during the term hereof) independent accountants designated by
Distributor to whom Company has no reasonable objection, to examine said books
and records at reasonable times for the sole purpose of verifying the accuracy
of the written statements submitted to Distributor and the purchase price for
Product paid or payable. Said independent accountants shall not disclose to
Distributor any information other than information relating solely to the
accuracy of the accounting and payments made by Distributor pursuant to this
Agreement and shall otherwise be bound by the confidentiality provisions of this
Agreement.
(h) Distributor shall purchase Company's inventory of finished Product on hand
as of the Effective Date upon the following terms:
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(i) Within fifteen (15) days following the Effective Date, Company
shall provide Distributor with a statement and count of finished
goods inventory of Product, less finished goods inventory required
for customer orders received prior to the Effective Date, which
orders shall be processed for Company's account. Distributor shall
purchase such finished goods inventory, EX WORKS (as defined by
INCOTERMS 1990 Edition) such facilities where such inventory is
held, at a purchase price [DELETION]. Distributor shall pay the
purchase price within sixty (60) days following receipt of the
statement with respect to said inventory.
(ii) Distributor shall, at its own expense, arrange for shipment of the
finished goods inventory of the Product to its designated
facility.
(iii) Notwithstanding the foregoing, Distributor shall not be required to
purchase any such inventory of the Product which is damaged,
misbranded, adulterated or otherwise unsalable or which will
expire on a date than twelve (12) months from the Effective Date.
4. Obligations of Company
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(a) Subject to Article 3 above, Company agrees to use all reasonable
efforts to or cause to be sold to Distributor by one or more of Company's
affiliates, on a timely basis the Product in quantities adequate to meet the
needs of the market throughout the Territory. In the event that Company is
unable to fill any accepted purchase order, Company shall promptly notify
Distributor. Distributor shall have the right under this Agreement to cancel any
quantity of Product for which Company has failed or will be unable for any
reason to deliver within one (1) month following the applicable delivery date
set forth in written purchase orders accepted pursuant to this Agreement.
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(b) Company shall inform Distributor of any orders and/or inquiries for
Product in the Territory which it receives. Company shall not knowingly sell the
Product to customers intending to resell the Product in the Territory.
(c) To the extent permitted by law, any decision to recall or cease
distribution of the Product, as a result of the Product being in violation of
any law, rule or regulation or presenting a possible safety risk, shall be made
by Company, after consultation with Distributor. In the event of any recall,
Company shall, with Distributor's cooperation and assistance, determine the
scope and form of the recall and Distributor shall conduct the recall. Company
will provide Distributor with any information concerning the manufacturing of
the Product which may reasonably be required by Distributor to determine the
need for a recall. Costs for any recall shall be borne by the party required to
indemnify the other party in relation to such recall pursuant to Article 9
hereof. Notwithstanding the foregoing, if Company fails within a reasonable
period of time to recall Product delivered to Distributor pursuant to this
Agreement that Distributor reasonably determines should be recalled due to
safety concerns, Distributor reserves the right to recall such Product after
consultation with Company and subject to such reasonable conditions and
limitations as Company may request.
(d) Company shall perform quality control tests and assays on raw
materials and on finished Product as required under the Specifications.
Distributor shall provide Company and its representatives access to
Distributor's facility where Product is held, if applicable, for the purpose of
performing such tests and assays. To the extent Distributor provides final
packaging of Product, Distributor shall accept and warehouse on behalf of
Company such bulk finished Product as Company or its designated third party
manufacturer shall ship to Distributor's facility.
5. Distribution Rights Payments.
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(a) In order to further secure the rights to distribute and market the
Product in the Territory, Distributor has agreed to pay Company the following
sums:
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(i) Concurrently with the execution and delivery of a Letter of
Intent, dated October 20, 1997, between the parties, Distributor has
paid Company [DELETION] as xxxxxxx money ("Xxxxxxx Money") by wire
transfer to account number [DELETION].
(ii) [DELETION] concurrently with the signing of this Agreement;
(iii) [DELETION] on the earlier of the termination of this Agreement
by Company under Section 10 or the first anniversary of the Effective
Date;
(iv) [DELETION] on the earlier of the termination of this Agreement
by Company under Section 10 or the second anniversary of the Effective
Date ;
(v) Interest on the amounts set forth in Sections 5(a)(iii) and
(iv) above at an annual rate of [DELETION], payable within thirty (30)
days following the end of each calendar quarter and the date of
payment, as applicable, from the Effective Date to the respective
dates of payment of such amounts; and
(vi) [DELETION] of Net Sales (as defined below) of the Product in the
Territory from the Effective Date through December 31, 2002. Payments
under this sub-Section (v) shall be made quarterly within sixty (60)
days of the close of each calendar quarter.
(b) "Net Sales" means the gross invoice value of the Product billed by
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Distributor or its affiliates, to unrelated third parties, less (i) ordinary and
customary cash and trade discounts and bid contract discounts, (ii) chargebacks,
rebates, credits or allowances actually credited or made to customers for
spoiled, damaged, outdated and returned Product, (iii) sales, turnover, excise,
and value-added or other taxes and duties (other than income taxes), and (iv)
reasonable freight, insurance and handling charges to the extent included in
gross invoice value.
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(c) Each payment shall be accompanied by the report required under
Section (d) of this Article 5 below, plus such other information on the sale of
Product as Company may reasonably request. Except as otherwise provided in
Article 3 of this Agreement, all payments to be made by Distributor to Company
pursuant to this Agreement shall be made in United States dollars by wire
transfer to Company's account number [DELETION] (or other bank or account
designated by Company) in immediately available funds and shall not be reduced
by any taxes, licenses, fees or other withholdings.
(d) Within thirty (30) days after the end of each calendar quarter
during the term hereof, Distributor will provide Company a statement showing the
calculation of Net Sales and the calculation of the payment due.
(e) The payments set forth in Section 5(a) of this Agreement shall be
non-refundable and not creditable against Section 5(a)(vi) payments.
(f) Distributor shall keep full and accurate books and records related
to Net Sales of the Product in sufficient detail so amounts payable hereunder
can be properly calculated. Such books and records shall be kept for the longer
of the term of this Agreement plus two (2) years or the period required by law.
Distributor shall permit (not more than once each calendar year during the term
hereof) independent accountants designated by Company to whom Distributor has no
reasonable objection, to examine said books and records at all reasonable times
for the sole purpose of verifying the accuracy of the written statements
submitted by Distributor and the distribution rights fees paid or payable. Said
independent accountants shall not disclose to Company any information other than
information relating solely to the accuracy of the accounting and payments made
by Distributor pursuant to this Agreement and shall otherwise be bound by the
confidentiality provisions of this Agreement.
(g) Any and all taxes payable in connection with the payments to be
made pursuant to this Agreement shall be for the account of the party upon which
such tax is imposed by law. In the event that Distributor shall be required to
withhold or pay any taxes in the Territory
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applicable to Company with respect to any such payment, Distributor shall
promptly furnish Company with the respective tax receipts, or other evidence of
payment deemed by Company to be sufficient.
(h) Upon request by Company, Distributor shall file on behalf of
Company any tax returns which the law of the Territory may require. Such tax
returns shall be filed in accordance with Company's instructions and Distributor
shall pay such taxes on Company's behalf, deducting the amounts on such tax
payments from the payments due pursuant to this Agreement.
(i) Overdue amounts payable by Distributor to Company or its affiliate
under Articles 3 and 5 shall bear interest, payable quarterly, from the date due
to and including the date paid at the rate of [DELETION] or, if lower, the
highest rate permitted by applicable law.
(j) [DELETION]
6. Sales Promotion and Reports. Distributor shall maintain:
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(a) such facilities in the United States of America as are necessary for
storing and distributing the Product in the Territory;
(b) an accurate and up-to-date list of customers; and
(c) a system of record keeping to permit tracking of the Product sold
hereunder, in the event a recall of any Product is ordered.
Distributor shall retain, and upon reasonable notice and at reasonable times
grant Company and its representatives access to, such records during the term of
this Agreement and for a period of at least two (2) years following its
expiration or other termination.
7. Trademarks and Other Proprietary Rights.
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(a) Except as set forth in Schedule 7(a) attached hereto and made a
part hereof, Company represents that, to the best of its knowledge, the
trademark registration for the Trademark is valid and subsisting in the United
States and other countries of the Territory, and the Company has the exclusive
right to use the Trademark in the Territory.
(b) The parties have agreed, subject to any governmental approvals or
changes, to make changes in the labeling and packaging for the Product so that
they would include Distributor's corporate name. All labels, boxes and
literature shall acknowledge that HCT is the licensee of the Trademark in the
United States.
(c) Distributor acknowledges that the Trademark used in connection with
the Product is not Distributor's property, and Distributor shall not contest
such Trademark or seek to register or have registered any such Trademark or
trade name in the Territory. Distributor shall not display or use any Trademark
or trade name owned by the Company except during the term of this Agreement and
then only in a manner previously approved by Company; provided, however, that no
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such prior approval shall be required for the use of advertising or promotional
materials prepared, designed, furnished or approved in writing in advance by
Company. Company shall respond to Distributor's written submissions in this
regard within five (5) business days of receipt. Distributor shall execute any
documents necessary for the recordal of any required registered user agreement
in the Territory.
(d) Distributor shall promptly notify Company if Distributor becomes
aware of any actual or potential infringement of or conflict with the Trademark
or any other proprietary rights relating to the Product in the Territory.
Company, at its expense, shall have the right to deal with such infringement or
conflict by appropriate legal proceedings (but Distributor shall provide all
reasonable assistance in connection therewith) and Company shall be solely
entitled to any compensation or other payment received in connection therewith.
However, if Company and HCT fail to commence and diligently pursue appropriate
legal proceedings against the infringer within ninety (90) days of Distributor's
notice to Company, Distributor shall be solely entitled to
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deal with such infringement or conflict by such means as Distributor sees fit
(but Company shall provide all reasonable assistance in connection therewith)
and Distributor shall be solely entitled to any compensation or other payment
received in connection therewith. If the use of the Trademark is enjoined in the
Territory, Company shall provide Distributor with a substitute trademark.
(e) Notwithstanding the foregoing Section, in the event Company fails
to commence and diligently pursue appropriate legal proceedings under Section
7(d) above, Distributor may, in addition to the other remedies provided in
Section 7(d) above, in its sole discretion, elect to register a new trademark
for the Product, which trademark shall be the sole and exclusive property of
Distributor.
8. Compliance with Applicable Law.
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(a) Subject to Company's compliance with Section 9 and 15 below,
Distributor shall be responsible for compliance of the Product with all
applicable laws and regulations and governmental orders and decrees in the
Territory, federal, state and local, including but not limited to the dietary
supplement regulations promulgated by the FDA and any labeling and advertising
constraints imposed thereunder. Further, Distributor shall promptly inform
Company in writing of any change or proposed change in requirements for
production, promotion or sale of the Product imposed by any governmental entity
in the Territory.
(b) Company shall promptly notify Distributor of any inspections by
federal, state or local regulatory representatives of any Company facility where
the Product is manufactured and/or packaged, and shall, if such inspections
directly relate to the Product, send Distributor copies of the portions of the
reports of any such inspections which directly relate to the Product, including
actions taken by Company to remedy conditions cited in such inspections.
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(c) Subject to Distributor's compliance with its obligations under this
Agreement, Company shall obtain and maintain all government license, permits and
registrations necessary for the Company's manufacturing, packaging and supply of
Product hereunder.
(d) Not more frequently than once each calendar year during the term
hereof, unless in an emergency situation, Company shall allow a representative
of Distributor (to whom Company has no reasonable objection) to inspect any
Company facility where the Product is manufactured and/or packaged, to assure
compliance with Company's obligations under this Agreement. Such inspection
shall be at reasonable times, following reasonable notice and be subject to such
confidentiality agreement and rules as Company shall designate from time to
time.
9. Warranty, Indemnity and Inspection.
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(a) Company warrants, represents and covenants that, during the supply
period specified in Section 3(b) or any extension thereof,
(i) on the date of shipment, no Product supplied hereunder shall be
adulterated or misbranded within the meaning of the Federal Food,
Drug and Cosmetic Act, as amended (the "Act"), or within the
meaning of any applicable state or municipal laws in which the
definitions of adulteration and misbranding are substantially the
same as those contained in the Act, as the Act and such laws are
constituted and effective at the time of shipment, or consist of or
include any product or article which may not be introduced into
interstate commerce; and
(ii) Company shall have good title to all Product supplied
hereunder, which title shall pass to Distributor as provided herein
following payment therefor, free and clear of any lien, encumbrance
or other conflicting interest of any kind, except as to any lien,
encumbrance or conflicting interest arising with respect thereto as
a result of any act or omission by Distributor.
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(b) THE WARRANTIES SET FORTH IN SECTION (a) ARE EXCLUSIVE AND IN LIEU OF ANY
OTHER EXPRESS OR IMPLIED WARRANTY CONCENING THE PRODUCT, INCLUDING ANY
IMPLIED WARRANTY OF FITNESS OR MERCHANTABILITY.
(c) All Product ordered hereunder shall be subjected to a visual inspection
upon receipt by Distributor. All claims for shortages, alleged defects, or
breaches of warranty which could be discovered by visual inspection shall
be made in writing to Company no later than thirty (30) days after receipt
of such Product and, if not so made, shall be irrevocably waived by
Distributor. If Company disputes Distributor's rejection (for alleged
Product quality reasons) made as provided above of all or part of any
shipment of finished Product such dispute shall be resolved by an
independent testing organization or consultant, of recognized repute within
the industry in the United States mutually agreed upon by the parties, the
appointment of which shall not be unreasonably withheld or delayed by
either party. The determination of such entity with respect to the
rejection of all or part of any shipment of finished Product shall be final
and binding upon the parties. The cost of such determination shall be
borne by the party against whom the decision is made.
(d) Except as provided in Section 9(e) below, Distributor shall indemnify and
hold Company, its subsidiaries and affiliates and their respective
directors, officers, employees and agents harmless against all claims,
suits, demands, judgments or damages, including reasonable attorneys' fees
and court costs, arising out of or relating to Distributor's (i) breach of
this Agreement, or (ii) packaging, warehousing, handling, sale or promotion
of the Product, as applicable, in the Territory (including, without
limitation any strict liability, product liability, tort or similar claim).
(e) Company will indemnify and hold Distributor, its subsidiaries and
affiliates and their respective directors, officers, employees and agents
harmless against all claims, suits, demands, judgments or damages,
including, reasonable attorneys' fees and court costs, arising
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out of or relating to Company's (i) breach of this Agreement or (ii)
failure to supply Product complying with any of the Company's express
Product quality requirements of this Agreement or (iii) third party claims
resulting from Product sold prior to the Effective Date.
(f) Notwithstanding the foregoing or any other provision of this Agreement,
neither party shall be liable to the other for lost profits or
consequential damages of any kind.
10. Duration and Termination and Remedies.
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(a) Subject to Sections (b) and (c) of this Article 10, this Agreement shall be
in effect for the period from the Effective Date until terminated pursuant
to Section (b) below or as otherwise agreed by the parties.
(b) This Agreement may be terminated, effective immediately, by a party
("Injured Party") at any time upon written notice to the other party upon
(i) the failure of the other party to comply with this Agreement in
respect of any obligation, other than an obligation to make any payments
under Sections 5(a) (ii), (iii) and (iv) hereof, which failure is not
cured within thirty (30) days of written notice thereof,
(ii) the suspension, liquidation, dissolution or bulk sale, or notice
thereof, of the other party's business without the prior written consent
of the Injured Party or in the event of the calling of a meeting of such
party's creditors, an assignment by such other party for the benefit of
creditors, the insolvency of any kind of such other party, or the filing
of any attachment, distraint, levy, execution or judgment against such
party, any filing of a voluntary or involuntary petition under the
provisions of any bankruptcy act, or any application for or appointment
of a receiver for the property of such other party, or
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(iii) the cessation by such other party of its business;
or by the Company if,
(iv) Distributor fails to make any payment under Sections 5(a) (ii),
(iii) and (iv) hereof when due and such failure continues for a period in
excess of thirty (30) days.
(c) Upon termination of this Agreement for any reason, Distributor shall
promptly return to Company all price lists, catalogs and other advertising
literature furnished by Company and, if so requested by Company in writing,
all Product on hand which is in good and saleable condition. If so
requested by Company, Company shall pay Distributor for such Product at
Distributor's purchase price therefor under Section 3. Upon termination of
this Agreement for any reason, all related subdistributorship, agency or
dealership agreements entered into by Distributor shall be automatically
terminated. If Company does not request return of Product held by
Distributor, Distributor shall have six (6) months from the date of
termination within which to sell the Products, subject to all the terms and
conditions of this Agreement.
(d) No termination pursuant to this Agreement shall give rise to any obligation
by either party to the other except as specifically provided in this
Agreement. In particular, each party agrees that it shall not be entitled
to any payment, whether by way of compensation, indemnity or penalty,
arising out of such termination, except as specifically provided in Section
5(j). Any pre-existing claims, however, shall not be waived by the parties
as a result of such termination.
11. Insurance.
---------
Distributor shall obtain and maintain, at its expense, product liability
insurance which includes the Product in an aggregate amount for all products of
not less than [DELETION]. All such insurance shall include Company as an
additional insured and must be issued by such insurer.
-20-
Distributor shall provide a certificate of insurance evidencing such insurance
concurrently with the execution of this Agreement and will provide new
certificates complying with this Agreement at least thirty (30) days in advance
of the stated expiration date of the period of coverage. Each such certificate
shall recite that the subject insurance is not cancelable and may not be amended
absent at least sixty (60) days notice to Distributor and Company.
12. Current Product Supply Contracts.
--------------------------------
Company shall, if requested by Distributor, use reasonable efforts (but shall
not be required to make any payment) to obtain at the earliest practicable date,
by instruments in form and substance reasonably satisfactory to Distributor, all
consents and approvals to the assignment of material agreements for the supply
of Product to customers within the Territory. If, with respect to any agreement
to be assigned, a required consent to the assignment is not obtained Company
shall use reasonable efforts to keep in effect and give Distributor (at
Distributor's cost and expense) the benefit of such agreement to the same extent
as if it had been assigned and to the extent not prohibited by that agreement,
and Distributor shall perform Company's obligations under the agreement or
cooperate in Company's performance of such obligations. Nothing in this
Agreement shall be construed as an attempt to assign any agreement that is by
its terms nonassignable without the consent of the other party.
13. NDC Numbers and Medicaid Rebates.
--------------------------------
(a) Promptly following the Effective Date, Distributor shall take any and all
action necessary to change the National Drug Code number ("NDC") for the
Product, which change shall be implemented as reasonably agreed upon by the
parties.
(b) For purposes of Company's Rebate Agreement with the Secretary of Health and
Human Services ("HHS") under Section 4401 of the Omnibus Budget
Reconciliation Act of 1990, Company shall continue to make any Rebate
Payment (as defined in such Rebate Agreement) with respect to the Product
required thereunder; provided that, for Rebate Payments
-21-
for which State Medicaid Utilization Information reports show that Medicaid
payment was made for such drug after the Effective Date, Distributor shall
promptly reimburse Company for all such Rebate Payments in accordance with
Article 17 hereof.
(c) Distributor shall notify all relevant persons and entities, including
Company and First Data Bank, of such NDC change and comply with all laws
and regulations of HHS or its sub-divisions and agencies (including HCFA)
and the Rebate Agreement.
(d) Distributor shall also provide Company all relevant information regarding
Distributor's sales, promotion, pricing and other activities with respect
to the Product, including pricing calculations for purposes of determining
"Best Price", necessary for Company to comply with the Rebate Agreement.
14. Returns of Product
------------------
(a) Returns will be the financial responsibility of the party that
originally sold the returned Product. Returns shall be tracked by
lot number. Returned Product with lot numbers sold exclusively by
Company will be the financial responsibility of Company; returned
Product with lots numbers sold exclusively by Distributor will be the
responsibility of Distributor; financial responsibility for returned
Product from lots where each party sold a portion of the lot will be
prorated based on the portion of the shared lot that each party sold.
(b) Both parties agree to enforce preauthorized return or scan and destroy
procedures in an attempt to have customer return Product and obtain
credit from the party who originally sold the Product to them. Both
parties agree to accept returns from the prorated lot. However,
either party may accept Product returns for which they are not
financially responsible in order to maintain their reputation and good
will in the marketplace and the financially responsible party will
reimburse the party processing the return. In these cases, the
processing party will verify the price the customer originally paid
(and therefore the credit provided) with the party who originally sold
the Product.
-22-
15. Chargebacks and Rebates
-----------------------
(a) Company will be financially responsible for all chargeback claims
related to Product sold by a wholesaler to a chargeback contract
customer on and after the Effective Date and during the first three
(3) months of 1998.
(b) Company will be financially responsible for all managed care rebates
related to Product dispensed by a pharmacist on and after the
Effective Date and during the first six (6) months of 1998.
(c) In general, Distributor will forward to Company for payment any claims
received related to Sections 15(a) and (b) above for which Company is
financially responsible. However, for the purpose of administrative
convenience or at the specific request of a customer, Distributor may
elect to pay the claim for which Company is financially responsible
and Company will reimburse Distributor with respect to such claim.
(d) Company will be financially responsible for all Medicaid rebates
related to Product dispensed by a pharmacist on and after the
Effective Date and during the first six (6) months of 1998. HCFA will
continue to xxxx Company for Medicaid rebates for up to one year after
the expiration date on the last Product issued with a Company labeler
code. For administrative convenience, Company will continue to pay
all future Medicaid rebates claims it receives. Distributor will
reimburse Company for any rebate claims paid by Company but which
relate to Product dispensed by a pharmacist after the aforesaid first
six months of 1998.
(e) Company shall continue to make any chargeback or rebate payments with
respect to the Product required under agreements, government mandates
or otherwise which relate to supply contracts not assigned or
assignable under Section 12 or which are processed by Company due to
direct requests of a customer, provided that Distributor shall
reimburse Company for all such payments pursuant to Section 17 below.
-23-
16. Special Services. From and after the Effective Date and until the
----------------
expiration of twelve (12) weeks thereafter, Company shall,
(a) in written form and substance satisfactory to Distributor, notify all
customers and formularies under contracts existing as of the Effective
Date of this Agreement that as of such date Distributor shall be the
seller of the Product in the Territory (providing Distributor with a
duplicate set of mailing labels for its use).
(b) invoice, book sales and ship Product as agent for Distributor and use
all reasonable efforts (short of instituting third party collection or
legal proceedings) to collect amounts due for Product so shipped. For
its services, Distributor shall pay Xxxxxx a fee equal to [DELETION],
such fee to be paid in monthly installments within thirty (30) days of
Company's invoice therefor.
17. Quarterly Payments. Company shall provide Distributor on a calendar
------------------
quarterly basis (within thirty (30) days after the end of the quarter) the
information necessary to calculate payments due under Sections 14 and 15(d) for
the calendar quarter just ended. The payments due under these separate Sections
will be aggregated for each party and shall be made not later than sixty (60)
days after the end of each calendar quarter by wire transfer in immediately
available funds to the bank and account designated from time to time in a notice
from Company.
18. Assignment of Trademark and Paid-up License. [DELETION]
-------------------------------------------
19. Miscellaneous Provisions.
------------------------
(a) The relationship between Company and Distributor hereunder is solely
that of seller and purchaser of the Product. Neither party shall have
any power or authority to bind the other in any manner and shall not
hold itself out as agent or representative of the other party for any
purpose.
-24-
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois, without regard to the conflict of
laws principles of such state or any other jurisdiction.
(c) Any notice required to be given by either party shall be in writing
and hand delivered, sent by telecopier or mailed by certified airmail,
postage prepaid, to the other party at its address set forth below or
at such other address as shall have been designated by such other
party by written notice. Notices shall be deemed given (i) when
received, if hand delivered or telecopied or (ii) the earlier of
receipt or five (5) days after deposit in the mails as aforesaid, if
mailed.
if to Company, addressed to:
X. X. Xxxxxx & Co.
0000 Xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: President
Telecopier: (000) 000-0000
with a copy to:
General Counsel
Telecopier: (000) 000-0000
if to Distributor, addressed to:
Xxxxxxx Laboratories Inc.
Meridian Center II
0 Xxxxxxxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier: (000) 000-0000
-25-
(d) The obligations of either party to perform under this Agreement (other than
any obligation to pay money) shall be excused if failure to perform or any
delay is caused by acts of God, strikes, civil commotion, riots, war,
revolution, acts of governments, or any other cause beyond the reasonable
control of the party obligated to perform. Upon the occurrence of any such
event, the duties and obligations of the parties shall be suspended for the
duration of the event preventing proper performance under this Agreement.
(e) No waiver of any default hereunder by either party or any failure to
enforce any rights hereunder shall be deemed to constitute a waiver of any
subsequent default with respect to the same or any other provision. No
waiver shall be effective unless made in writing and signed by the parties.
(f) This Agreement constitutes the complete agreement of the parties with
respect to the subject matter thereof. All prior proposals,
communications, agreements or understandings between Distributor and
Company, whether oral or written, concerning the subject matter hereof, if
any, are superseded by this Agreement. This Agreement may not be modified
except in writing signed by both parties.
(g) Distributor may not assign this Agreement or any right under it without the
prior written consent of Company.
(h) Company shall not be bound to honor any of Distributor's contracts for
resale or supply of the Product.
(i) Each party agrees for the term of this Agreement [DELETION] not to
disclose, or use for any purpose except as otherwise expressly provided
herein, any confidential information relative to the other party's business
acquired pursuant to or during the term of this Agreement. For the
avoidance of doubt, all confidential and proprietary information previously
disclosed to Distributor by Company or related to the Product's
Specifications are confidential and proprietary information of Company's
and subject to the foregoing
-26-
obligation. The foregoing obligation shall not apply, however, to
information (i) which is or becomes public through no fault of the
recipient, or (ii) which is made lawfully available to the recipient by an
independent third party, or (iii) which was already in recipient's
possession at the time of receipt from the disclosing party as evidenced by
its written records, or (iv) which is independently developed by employees
of the recipient after the date of this Agreement or (v) which is required
by law, regulation, rule, act or order of any governmental authority or
agency to be disclosed.
(j) If either party wishes to make any public disclosure concerning this
Agreement or the terms hereof, the other party shall be provided with an
advance copy of the proposed disclosure and shall have five (5) business
days within which to approve or disapprove such disclosure. Approval shall
not be unreasonably withheld by either party. Absent approval, no public
disclosure concerning this Agreement or the terms hereof shall be made by
either party. Notwithstanding the foregoing, it is understood and agreed
that no approval shall be required in the event that the information to be
disclosed has been the subject of a prior public disclosure.
(k) The provisions of Articles 1, 2, 3, 5, 6, 7, 9, 10, 11, 13, 14, 15, 16 and
17 shall survive the expiration or other termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
X.X. Xxxxxx & Co. Xxxxxxx Laboratories Inc.
By ________________________ By ______________________
Title: Title:
-00-
Xxxxxxx X
Xxxxxxxxx
---------
Xxxxxx Xxxxxx of America, its territories and possessions
[DELETION]
-28-
Exhibit B
Specifications for Product
--------------------------
ATTACHED
[ATTACHMENT DELETED]
-29-
Exhibit C
Price for Product
-----------------
[DELETION]
