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
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 [ ] the amount of PRODUCT in [ ] 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
6
to request representative samples of PRODUCT and KOFFOLK shall satisfy
such requests. Any such 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.
7
10.2 MERCK and KOFFOLK will maintain complaint files regarding components for
packaging, including but 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 process.
11. 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 [
] one of the following ports as designated per shipment by MERCK: [
] From February 1, 1995 through December 31, 1995, the price that
MERCK shall pay for each [ ] of PRODUCT MANUFACTURED BY KOFFOLK for
MERCK hereunder shall be U.S. [
]. 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 up to a maximum of [ ] metric tons 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 each [ ] of
PRODUCT MANUFACTURED by KOFFOLK for MERCK hereunder shall be [
] That price may be adjusted only as set forth below except as otherwise
agreed by the parties in writing. Of the U.S. [ ] amount,
[ ] is attributed to the actual cost of the raw material listed
on Schedule D ("RAW MATERIAL COST ELEMENT") and U.S. [ ]
is attributed to items other than raw materials ("NON-RAW MATERIAL
COST ELEMENT").
(b) If as of December 31, 1995, the cumulative actual cost of all the
raw materials listed on Schedule D has increased by more than [ ]
over the cumulative actual cost of all such materials as of [ ]
listed on Schedule D, then within [ ] following [ ] KOFFOLK shall
have the right to request MERCK to meet and discuss such increase.
The actual cost of a [ ] of any raw material under this Agreement
shall be determined by mulitplying the per [ ] purchase price of
that raw material by the corresponding Factor for that raw material
listed on Schedule D. For example, if the price at which raw
material "X" is purchased is U.S. $1.00 per [ ] and the Factor for
raw material "X" is .2, then the actual cost of raw material "X" is
U.S. $0.20 per [ ]
(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 the actual cost of
the raw material slisted on Schedule D during that CALENDAR YEAR.
The parties review shall include, but not be limited to, a review
of KOFFOLK's documentation as to raw material costs and contracts
for raw materials.
(d) If under paragraph 11.2(c) above, the parties jointly determine
that a change in the cumulative actual cost of all the raw
materials has occurred, they wil then jointly determine what
increase or decrease, if any, needs to be made to the RAW
8
MATERIAL COST ELEMENT to account for that change. Any such
increase or decrease shall be effective on January 1 of the
following CALENDAR YEAR.
(e) Except as provided below, commencing January 1, 1997, and any
subsequent January 1 during the term of this Agreement, the
NON-RAW MATERIAL COST ELEMENT will be increased or decreased in
accordance with the lesser of: (i) an increase or decrease in the
cumulative actual cost of the energy and labor elements of the NON-RAW
MATERIAL COST ELEMENT in the prior year, to be determined as set forth
in paragraph 11.2(f) below; or (ii) [ ] of the percentage
increase or decrease in the Producer Price Index for Chemicals and
Allied Products in the prior year, as published by U.S. Bureau of Labor
Statistics. As the calculation of such increase or decrease will
likely not be made until after January 1, once the calculation is
made, it shall be retroactive to January 1. Between the termination
of the INITIAL PERIOD and December 21, 1996, MERCK will order a
minimum of [ ] of PRODUCT. None of those
[ ] shall be subject to any increase under this
paragraph 11.2(e) even if they are delivered after December 31, 1996.
(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 any changes in the cumulative actual cost of the energy
and labor elements of the NON-RAW MATERIAL COST ELEMENT in the prior
year. The parties review shall include, but not be limited to, a
review of KOFFOLK's documentation as to energy and labor costs. If the
parties jointly determine that a change in the cumulative actual cost
of energy and labor has occurred, they will then jointly determine
what the increase or decrease, if any, should be.
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
9
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 MERCK orders less than [ ] of PRODUCT, MERCK agrees to meet
with KOFFOLK to address the shortfall.
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.
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
10
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 ten years from this date, 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 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
11
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.
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.
12
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
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
13
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
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
14
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.
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.
15
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
16
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
---------
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.
[ ]
