SUPPLY AGREEMENT
Exhibit 10.2
THIS SUPPLY AGREEMENT (this “Agreement”) is made as of July 2, 2010 (the “Effective Date”), by
and between Columbia Laboratories, Inc., a corporation existing and organized under the
laws of the State of Delaware, having a place of business at 000 Xxxxxxxxxx Xxxxxxx, Plaza 1,
Second Floor, Xxxxxxxxxx, XX 00000 (“Supplier”), and Coventry Acquisition, Inc., a
corporation existing and organized under the laws of the State of Delaware, having a place
of business at 000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 (hereinafter “Buyer”).
Capitalized terms used herein but not otherwise defined herein shall have the definitions ascribed
to them in the Purchase and Collaboration Agreement (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, Buyer and Supplier have entered into that certain Purchase and Collaboration
Agreement, dated as of March 3, 2010 (the “Purchase and Collaboration Agreement”), providing for
the purchase by Buyer from Supplier of certain assets related to, and a collaboration with respect
to the Development of, the Products (as hereinafter defined); and
WHEREAS, in connection with the Purchase and Collaboration Agreement, Buyer and Supplier have
agreed to enter into this Agreement pursuant to which Supplier will be the exclusive supplier of
the Products for Buyer.
NOW THEREFORE, in consideration of the premises, which are incorporated herein by reference,
and other good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. SCOPE OF AGREEMENT
1.1 Appointment of Supplier. Subject to the terms and conditions hereof, Buyer hereby
appoints Supplier as its exclusive source and supplier of all of the requirements of Buyer, its
Affiliates and Partners for the products identified on Exhibit 1.1 hereto in the United
States in packaged, ready-for-sale form (the “Products”), and Supplier agrees to act as the
exclusive source and supplier of the requirements of Buyer, its Affiliates and Partners for the
Products. For purposes hereof “Partner” means any Third Party to whom Buyer or its Affiliates has
sold, assigned, transferred, disposed of, licensed or conveyed any of the Purchased Assets or
rights in any Products. Notwithstanding anything to the contrary, upon written notice from Buyer,
provided to Supplier in accordance with Section 19 at least thirty (30) days prior to the date of
any requested change, Buyer may designate any of Buyer’s Affiliates or Partners for the purpose of
furnishing purchase orders and for receipt of shipments of Products from Supplier; provided that,
at any time, there shall be only one such party and that any such designation shall not relieve
Supplier of its obligations hereunder.
1.2 Inventory on Hand. Buyer shall purchase the quantities of finished goods Products in
inventory of Supplier or its Affiliates (“Inventory”) on the First Closing Date for the Purchase
Price determined in accordance with Section 5.1, including any partial Batches (as defined in
Section 2.3 below). Within thirty (30) days after the Effective Date, Supplier shall deliver the
Inventory to Buyer in accordance with Section 3.1, subject to acceptance by Buyer in accordance
with Section 3.2. Except as otherwise provided in this Agreement, the other terms and
conditions of this Agreement shall apply to such Product to the same extent as if it were
ordered pursuant to a Purchase Order furnished pursuant to Section 2.3.
2. FORECASTS; PURCHASE ORDERS; MANUFACTURE
2.1 Supplier Forecasts. Supplier’s forecasts for Product in place immediately prior to the
First Closing Date shall govern for the first four (4) months after the First Closing Date.
Supplier shall use Commercially Reasonable Efforts during such period to meet Buyer requirements
for Product in excess of said pre-closing forecasts, but inability to supply such excess amounts of
Product shall not constitute a breach of this Agreement by Supplier.
2.2 Buyer Forecasts. At the First Closing, and on or before the fifteenth
(15th) day of each calendar month during the Term (as hereinafter defined) Buyer shall
and agrees to submit to Supplier a written forecast of Buyer’s, its Affiliates’ and Partners’
requirements, by calendar month, for the following twelve (12) calendar months for Product (the
“Rolling Forecast”). The first Rolling Forecast shall include Supplier’s forecast for the first
four (4) months after the First Closing and any additional amount of Product required by Buyer, its
Affiliates and Partners in each of the first four (4) calendar months after the First Closing. The
first four (4) calendar months of each Rolling Forecast for Products will be firm orders (the
“Binding Forecast”). It is understood that such forecasts, updated monthly, that extend beyond the
Binding Forecast, are intended to be good faith estimates only, and shall not be binding upon Buyer
or Supplier. Buyer shall be bound to purchase from Supplier, and Supplier shall supply, one
hundred percent (100%) of those quantities of the Products set forth in each Binding Forecast.
Supplier shall comply with Purchase Orders for Products furnished pursuant to Section 2.3 and shall
use Commercially Reasonable Efforts to supply amounts in excess of one hundred percent (100%) of
the Binding Forecast amounts; provided, however, that inability to supply amounts in excess of one
hundred percent (100%) shall not constitute a breach of this Agreement by Supplier. Supplier shall
notify Buyer in writing of any prospective problems of which it is aware that might prevent it from
meeting Buyer’s forecasted order quantities or estimated delivery dates.
2.3 Binding Purchase Orders. At the First Closing and with each Binding Forecast
referenced in Section 2.2 hereof, Buyer shall furnish to Supplier a binding purchase order (each,
a “Purchase Order”) for the quantity of the Products which Buyer shall purchase and Supplier shall
deliver in accordance with the most recent Binding Forecast and this Agreement. Supplier shall
acknowledge receipt of such Purchase Order. Each such Purchase Order shall designate the quantity
of the Products ordered, taking into consideration the fact that all Purchase Orders must be for
one or more full batches (each a “Batch”). A Batch of 8% Product, as identified on Exhibit
1.1, is approximately 610,000 individual applicators, provided however, that production yields
may vary, and a yield of between 580,000 and 620,000 individual applicators will be considered an
8% Product Batch. A Batch of 4% Product, as identified on Exhibit 1.1, is approximately
150,000 individual applicators, provided however, that production yields may vary, and a yield of
between 140,000 and 160,000 individual applicators will be considered a 4% Product Batch. The
initial Purchase Order(s) shall first be filled by utilizing Supplier’s inventory on hand (other
than Inventory), including finished goods and in-transit and in-process inventory of Supplier,
labeled with the name and NDC number of Supplier, until exhausted. Each Purchase Order shall
specify a delivery date for the ordered Product no earlier than ninety (90) days following
Supplier’s receipt of the Purchase Order.
2.4 Buyer’s Ability to Require Supplier to Subcontract the Manufacture of Product.
(a) In the event that (i) the parties reasonably determine that the demand for any Product is
projected to exceed (as evidenced by the Rolling Forecasts provided by Buyer to Supplier) or (ii)
the demand for any Product actually exceeds (as evidenced by Purchase Orders provided by Buyer to
Supplier) Supplier’s capacity to supply Buyer with such Product, Buyer shall have the right to
require Supplier to employ a manufacturer selected by Buyer and reasonably acceptable to Supplier
(“Subcontract Manufacturer”), for the manufacture of such Product pursuant to the terms of this
Agreement. Buyer shall exercise this right by (A) specifying to Supplier the amount of any such
excess demand for such Product and the monthly period(s) in which such excess demand is expected to
occur or has occurred and (B) notifying Supplier of the amounts of such excess demand for such
Product which the Subcontract Manufacturer shall manufacture and supply to Supplier.
(b) If Supplier is unable to manufacture or supply substantially all of any Product required
to be supplied to Buyer under the terms of this Agreement for any reason whatsoever including, for
example, and without limitation, an injunction against such manufacture issued by a government
authority, Buyer shall have the right to require Supplier to employ a Subcontract Manufacturer,
selected by Buyer and reasonably acceptable to Supplier, for the manufacture of such Product for
the remaining Term pursuant to the terms of this Agreement. Buyer’s rights under this Section
2.4(b) shall be exercisable only if (i) Supplier’s inability to manufacture or supply such Product
could reasonably be expected to result in the unavailability of such Product for commercial sale
for at least thirty (30) days, (ii) Buyer provides reasonable evidence of the Subcontract
Manufacturer’s ability to start manufacture of such Product more rapidly than Supplier could
restart manufacture of such Product, and (iii) Supplier’s inability to manufacture or supply such
Product did not result, wholly or in part, from a breach by Buyer of its representations,
warranties or obligations under this Agreement.
(c) If, more than four (4) times in any two (2) year period, Supplier fails to supply, in
conforming form, all or substantially all of the amount of Products subject to an accepted Purchase
Order submitted in accordance with this Agreement (excluding amounts in excess of one hundred
percent (100%) of amounts covered by the applicable Binding Forecast) within thirty (30) days after
the delivery date specified for such Products in the respective Purchase Orders in accordance with
Section 2.3 (such failure, a “Critical Supply Failure”), such Critical Supply Failure shall
constitute a material breach under Section 10.2(c), and Buyer shall have the right, at Buyer’s sole
discretion, to (i) require Supplier to employ a Subcontract Manufacturer (selected by Buyer and
reasonably acceptable to Supplier), for the manufacture of such Product for the remaining Term
pursuant to the terms of this Agreement or (ii) terminate this Agreement pursuant to Section
10.2(c).
(d) Supplier agrees that, notwithstanding anything to the contrary in this Agreement, Buyer,
at any time after the Effective Date, may designate Buyer, or an Affiliate of Buyer or a Third
Party, for the manufacture and supply of Product, provided that (i) Buyer will bear the cost and
expense of establishing Buyer, or an Affiliate of Buyer or a Third Party, for the manufacture and
supply of any Product and (ii) Buyer, or an Affiliate of Buyer or a Third Party, may only supply up
to fifty percent (50%) of the amount of Product ordered in excess of three (3) Batches per calendar
year.
2.5 Provisions Applicable With Subcontract Manufacturer Supplier. If, at any time,
Supplier subcontracts with a Subcontract Manufacturer pursuant to Sections 2.4(a) — (c), or
subcontracts with an Affiliate or a Third Party other than pursuant to Sections 2.4(a) — (c), for
the manufacture and supply of any Product, such Subcontract Manufacturer or such Affiliate or a
Third Party shall be reasonably acceptable to Buyer. Supplier shall provide the Subcontract
Manufacturer, the Affiliate or Third Party, as applicable, or cause the Subcontract Manufacturer,
the Affiliate or Third Party to be provided, with all rights required for the manufacture of such
Product and with all assistance reasonably requested by the Subcontract Manufacturer in setting up
and overseeing its manufacturing facility, including know-how concerning the manufacture of such
Product, and copies of all written or other tangible forms of recorded know-how reasonably related
to the manufacture of such Product. Supplier shall obtain and enforce agreements from any such
Subcontract Manufacturer, Affiliate or Third Party requiring the Subcontract Manufacturer,
Affiliate or Third Party to keep all such information conveyed to such Subcontract Manufacturer,
Affiliate or Third Party confidential and not to use any such rights, materials or information to
manufacture Products other than for Products for sale to Supplier.
3. SHIPMENTS AND ACCEPTANCE
3.1 Delivery. Supplier shall deliver all Products DDP (as such term is defined and used in
Incoterms 2000, ICC Official Rules for Interpretation of Trade Terms) to Buyer’s warehouse in
Gurnee, Illinois, United States, or any other single destination within the United States
identified by Buyer at least thirty (30) days prior to the requested delivery date. Title and risk
of loss will transfer from Supplier to Buyer upon delivery of Product to Buyer.
3.2 Inspection; Rejection. Buyer may inspect the shipment of Product upon receipt to
verify such shipment’s conformity to the relevant Purchase Order as of the time the Product was
delivered to Buyer. If Buyer determines that any portion or all of any shipment of the Product did
not conform to the Purchase Order as of the time it was delivered to Buyer (each non-conforming
Product, a “Defective Product”), then Buyer shall be entitled to reject such portion or all of any
shipment of Product that includes Defective Product. Buyer shall notify Supplier in writing if the
shipment of Product includes Defective Product that existed at the time of the delivery of the
Products to Buyer. Such notification shall be made as soon as reasonably practicable after
discovery of the nonconformity, but not later than thirty (30) days after delivery of the Products.
Such notice shall specify the reasons for rejection. If Buyer does not so reject the Products
within thirty (30) days after delivery, Buyer shall be deemed to have accepted the Products. After
Buyer accepts a Product, or is deemed to have accepted a Product, except with respect to Latent
Defects (as defined herein below), Buyer shall have no recourse against Supplier except as set
forth in Section 6 hereof. After notice of rejection is received by Supplier, Buyer shall
cooperate with Supplier in determining whether such rejection is justified. Supplier shall notify
Buyer as soon as reasonably possible, but not later than thirty (30) days after receipt of the
notice from Buyer, whether it accepts Buyer’s basis for rejection. Notwithstanding anything to the
contrary, if a portion or all of any shipment of Product has a latent defect that renders such
Product a Defective Product prior to the expiry date of such Product and that (a) was not
reasonably discoverable within the inspection period specified in this Section 3.2 and (b) was
attributable to Supplier’s manufacture and/or supply and (iii) did not occur after receipt of such
Product by Buyer as described in Section 3.2 (each such defect, a “Latent Defect”), Buyer shall
promptly, and in no event more than twenty (20) days after the discovery or notification of
such Latent Defect, notify Supplier of such Latent Defect. If Supplier accepts Buyer’s
determination that the Product is a Defective Product or that the Product contains a Latent Defect,
then Buyer shall be entitled to the remedies set forth in Section 6.5 hereof. If Supplier does not
accept Buyer’s determination that the Product is a Defective Product or that the Product contains a
Latent Defect, and Buyer does not accept Supplier’s conclusion, then Supplier and Buyer shall
jointly select an independent Third Party to determine whether it conforms to the Purchase Order.
The parties agree that such Third Party’s determination shall be final. If the Third Party rules
that the Product conformed to the Purchase Order as of the time the Product was delivered to Buyer
or that the Product does not contain a Latent Defect, as applicable, then Buyer shall be deemed to
have accepted the Product at the agreed upon price and Buyer shall bear the cost of such
independent Third Party determination. If the Third Party rules that the Product does not conform
to the Purchase Order at the time the Product was delivered to Buyer or that the Product contains a
Latent Defect, then Buyer shall be entitled to the remedies set forth in Section 6.5 hereof and
Supplier shall bear the cost of such independent Third Party determination.
4. RECORDS AND AUDIT RIGHTS, PUBLIC STATEMENTS; RECALLS
4.1 Records; Audit Rights. Supplier shall maintain, and shall cause its Affiliates and
contract manufacturers and other agents to maintain, all records necessary to comply with all
applicable Laws relating to the manufacture, filling, packaging, testing, storage and shipment of
Products. All such records shall be maintained for such period as may be required by applicable
Laws; provided, however, that all records relating to the manufacture, stability and quality
control of Products shall be retained until the parties agree to dispose of such records. Buyer
and its authorized representatives shall have the right, at Buyer’s sole cost and expense, to
audit, inspect, and observe the manufacture, storage, disposal, and transportation of Products once
per contract year, during normal business hours upon thirty (30) days’ prior written notice;
provided that Buyer may conduct additional audits if required to address serious manufacturing
issues or complaints that necessitate reporting to a regulatory authority or for any for cause
audits.
4.2 Public Statements. Neither party shall use, or authorize others to use, the name,
symbols, or marks of the other in any advertising or publicity material or make any form of
representation or statement with regard to the services provided hereunder which would constitute
an express or implied endorsement by such other of any commercial product or service without the
other’s prior written approval.
4.3 Recalls. Buyer, in Buyer’s sole discretion, shall determine whether any Product must
be withdrawn or recalled from the market. To the extent legally required, Buyer shall notify all
regulatory authorities of any such withdrawal or recall. All costs of withdrawals or recalls
(including costs incurred by Supplier while assisting Buyer) shall be borne by Buyer, except in the
case of recalls or withdrawals caused solely by the negligence or willful malfeasance of Supplier,
its Affiliates or subcontractors or by the material breach by Supplier of its representations and
warranties in this Agreement, in which case Supplier shall credit Buyer for the cost of the
recalled or withdrawn Product and Buyer’s reasonable costs incurred with such withdrawals or
recalls. Buyer shall give Supplier prompt written notice of any withdrawals or recalls that Buyer
believes was caused or may have been caused by the negligence or willful
malfeasance of Supplier, its Affiliates or subcontractors or the material breach by Supplier of its
representations and warranties in this Agreement.
5. PRICE AND PAYMENT
5.1 Price.
(a) The purchase price for Products supplied hereunder (the “Purchase Price”) shall be one
hundred and ten percent (110%) of COGS calculated in accordance with this Section 5.1(a) and paid
in accordance with Section 5.1(d). For purposes hereof “COGS” means internal and external costs
incurred in manufacturing, acquiring, product testing activities for quality assurance and quality
control, packaging, transporting, storing and/or cGMP compliance determined in accordance with
United States generally accepted accounting principles, as consistently applied by Supplier in
accordance with Supplier’s past practice and in the ordinary course of Supplier’s business, in each
case to the extent related and allocable to the Product supplied to Buyer hereunder.
Notwithstanding the foregoing, “COGS” shall (i) include payroll taxes and customs charges
consistent in type and nature with those set forth on Exhibit 5.1(a), and (ii) exclude any
and all (A) costs attributable to general corporate activities, including, by way of example,
executive management, investor relations, business development, legal affairs and finance, (B)
Taxes other than as described in clause (i) above, and (C) the NDA maintenance fee and applicable
FDA establishment fees. Exhibit 5.1(a) to this Agreement sets forth further detail on the
calculation of COGS. For purposes hereof “cGMP” means current good manufacturing practices of the
FDA and other appropriate agencies, as set forth in 21 C.F.R. Parts 210 and 211 and all applicable
FDA rules, regulations, guides and guidances, as amended from time to time and in effect during the
term of this Agreement.
(b) Buyer shall reimburse Supplier the amount actually paid by Supplier in connection with
applicable FDA establishment fees to the extent related and allocable to the Product supplied to
Buyer hereunder; provided, that, with respect to the period from the Effective Date through
September 30, 2010, Buyer’s liability for such establishment fees shall be an amount equal to
$457,200 multiplied by a fraction, the numerator of which is (i) the number of days during such
period, and the denominator of which is (ii) 365. Supplier shall provide Buyer with a detailed
invoice of any amounts due and payable pursuant to this Section 5.1(b) and Buyer shall pay the
amount of such invoice within thirty (30) days following receipt.
(c) Supplier shall at all times use Commercially Reasonable Efforts to keep the cost of
acquiring any Product from a contract manufacturer or Subcontract Manufacturer, if applicable, as
low as possible.
(d) For each Batch of Product supplied hereunder, Buyer shall pay Supplier the Purchase Price
(the “Batch Price”) calculated as set forth in this Section 5.1(d). For the period from the
Effective Date through December 31, 2010, the Batch Price for 8% Product and the Batch Price for 4%
Product shall equal the amount for such Product set forth on Exhibit 5.1(d), subject to
adjustment in accordance with Section 5.1(e) below. For each calendar year thereafter, Supplier
shall notify Buyer of the Batch Price applicable to purchases of Product during such calendar year
no later than December 31st of the year immediately preceding such calendar year. Such
Batch Price shall be Supplier’s good faith estimate of COGS for such
calendar year, determined based on Buyer’s Rolling Forecast, Supplier’s projected costs for
such calendar year and foreign currency exchange rates in effect as of the last Business Day of
November immediately preceding Supplier’s notice, subject to adjustment in accordance with Section
5.1(e); provided, however, that, except for adjustment in accordance with Section 5.1(e), the Batch
Price in any calendar year shall not be greater than one hundred twenty percent (120%) of the Batch
Price in the prior, just-ended calendar year.
(e) The Batch Price shall be adjusted on a monthly basis to reflect foreign currency exchange
rates in effect as published in the Wall Street Journal on the last Business Day of the
month immediately preceding the applicable month.
(f) On or after each shipment of the Product, Supplier shall provide Buyer with an invoice
setting forth the Batch Price payable for such delivery pursuant to this Section 5. Each such
invoice shall, to the extent applicable, identify the Purchase Order number, quantities of the
Product, aggregate Batch Price of Product supplied pursuant to such Purchase Order and the total
amount to be remitted to Supplier.
(g) Buyer will pay amounts due pursuant to this Agreement within forty-five (45) days of the
date of invoice.
(h) Buyer will make all payments to Supplier, due pursuant to this Agreement, to Supplier’s
accounts in the United States.
5.2 Intentionally Omitted.
5.3 Interest. If a party (or any successor thereto pursuant to the terms of this
Agreement) fails to pay in full on or before the date due any payment that is required to be paid
under this Agreement, such party (or any successor thereto pursuant to the terms of this Agreement)
will also pay to the other Party, on demand, interest on any such amount beginning on such due date
at an annual rate (calculated on the basis of a 360-day year) equal to the “base rate” as announced
by JPMorgan N.A., or any successor thereto, in New York, New York in effect on such due date, plus
three (3) percent to be assessed from the date payment of the amount in question first became due.
5.4 Taxes.
(a) Supplier and Buyer each shall cooperate with the other party, as reasonably requested by
the other party, to minimize or eliminate Taxes to the extent legally permissible, including by
making available to such other party any existing resale certificates, exemption certificates or
other existing information relevant for such purpose.
(b) If applicable Tax Law requires Buyer to withhold any Tax from a payment to Supplier, Buyer
shall withhold such Tax and shall pay the amount withheld to the relevant Tax authority.
(c) As soon as practicable after any payment of withheld Taxes by Buyer to a Tax authority,
Buyer shall deliver to Supplier the original or a certified copy of a receipt issued
by such Tax authority evidencing such payment, a copy of the return reporting that payment or
other evidence of such payment reasonably satisfactory to Supplier.
6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of Supplier. Supplier represents and warrants to Buyer
that:
(a) the Products shall be manufactured and packaged in compliance with the provisions of the
Federal Food, Drug, and Cosmetic Act located at 21 U.S.C. §§ 301 to 397 (2000), as it may be
amended from time to time, and regulations promulgated thereunder (the “Act”), the laws or
regulations imposed by other involved health regulatory authorities within the Territory, and
cGMPs;
(b) as of the time of delivery to Buyer (i) Product (other than Inventory) with an FDA
approved shelf-life greater than or equal to thirty (30) months shall have minimum dating of not
less than twenty-four (24) months shelf-life prior to expiration, (ii) Product (other than
Inventory) with an FDA approved shelf-life less than thirty (30) months shall have minimum dating
of not less than eighteen (18) months shelf-life prior to expiration and (iii) Inventory shall have
minimum dating of not less than twelve (12) months shelf-life prior to expiration;
(c) as of the time any Product is delivered to Buyer and during the shelf life of such
Product, such Product shall conform to the specifications set forth in the NDA for such Product
(the “Specifications”); and
(d) upon transfer of the risk of loss of a Product, as provided in Section 3.1, good and valid
title to such Product sold hereunder will be conveyed by Supplier to Buyer free and clear of any
Encumbrances created by Supplier.
6.2 Representations and Warranties of Buyer. Buyer represents and warrants to Supplier
that Buyer will not make any false claims in any packaging, labeling, advertising or promotional
material regarding the Products.
6.3 EXCEPT AS OTHERWISE PROVIDED IN THE PURCHASE AND COLLABORATION AGREEMENT, THE WARRANTIES
SET FORTH IN SECTION 6.1 OF THIS AGREEMENT ARE THE EXCLUSIVE WARRANTIES GIVEN BY SUPPLIER TO BUYER
WITH RESPECT TO THE SUPPLY OF PRODUCTS HEREUNDER, AND ARE GIVEN AND ACCEPTED IN LIEU OF ANY AND ALL
OTHER WARRANTIES, GUARANTEES, CONDITIONS AND REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6.4 EXCEPT AS OTHERWISE PROVIDED IN THE PURCHASE AND COLLABORATION AGREEMENT, THE WARRANTIES
SET FORTH IN SECTION 6.2 OF THIS AGREEMENT ARE THE EXCLUSIVE WARRANTIES GIVEN BY BUYER TO SUPPLIER
WITH RESPECT TO THE PURCHASE OF PRODUCT HEREUNDER,
AND ARE GIVEN AND ACCEPTED IN LIEU OF ANY AND ALL OTHER WARRANTIES, GUARANTEES,
CONDITIONS AND REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6.5 Remedy. Any Product delivered to Buyer by Supplier which is finally determined to be a
Defective Product or contain a Latent Defect in accordance with Section 3.2, shall be replaced at
Supplier’s expense, as Buyer’s sole and exclusive remedy.
7. INDEMNIFICATION
Each party agrees that it shall indemnify the other party for and hold such other party
harmless against any Losses incurred by such other party as a result of a breach of a
representation, warranty, covenant, agreement or obligation of such party contained in this
Agreement, in accordance with the terms and conditions contained in the Purchase and Collaboration
Agreement.
8. INSURANCE
8.1 Coverage. Each party shall maintain during the performance of this Agreement the
following insurance or self-insurance in amounts no less than that specified for each type:
(a) Commercial general liability insurance with combined limits of not less than $1,000,000
per occurrence, $1,000,000 per accident for bodily injury, including death, and property damage, a
general aggregate limit of not less than $1,000,000 and products/completed operations aggregate of
not less than $1,000,000 which coverage shall insure such party for product liability claims and
its obligations under this Agreement;
(b) Workers compensation insurance in the amounts required by the law of the state(s) in which
such party’s workers are located and employer’s liability insurance with limits of not less than
$500,000 per occurrence;
(c) automobile liability insurance covering automobiles and trucks used by or on behalf of
such party either on or away from the other parties’ premises with combined single limit of not
less than $1,000,000 per occurrence and $1,000,000 per accident for bodily injury, including death,
and property damage, which policy shall include coverage for all hired, owned and no-owned
automobiles and trucks; and
(d) Product Liability Insurance with limits not less than $10,000,000.
8.2 Evidence. Each party shall provide the other with evidence of its insurance or self
insurance. Each party shall provide to the other thirty (30) days prior, written notice of any
cancellation or material change in its coverage. Each party agrees to deliver to the other
concurrently with the execution of this Agreement and thereafter annually, a certificate from the
insurance company(ies) evidencing that all the insurance required by this Agreement is in force,
including a broad form vendors’ endorsement naming the other party as an additional insured.
9. CONFIDENTIALITY
The terms of the Confidentiality Agreement shall apply to any information provided by Supplier
to Buyer.
10. TERM AND TERMINATION
10.1 Term. This Agreement shall come into effect on the Effective Date. Unless otherwise
terminated as provided in Section 10.2 or Section 12.2 hereof, this Agreement shall remain in force
through May 19, 2015 (for the purpose of this Section 10 the “Initial Term”). This Agreement shall
renew automatically in two (2) year increments after the Initial Term (each, a “Renewal Term” and,
collectively with the Initial Term, the “Term”) unless either party gives written notice to the
other of its intention to not renew at least one hundred and eighty (180) days prior to expiration
of the Initial Term or the then applicable Renewal Term.
10.2 Termination.
(a) Purchase and Collaboration Agreement. Buyer shall have a right to terminate this
Agreement, upon one hundred and eighty (180) days prior written notice to Supplier, upon the
expiration or termination of the Joint Development Period, as provided in the Purchase and
Collaboration Agreement.
(b) Insolvency. A party may immediately terminate this Agreement without written
notice to the other party, if (i) the other party is the subject of voluntary or involuntary
bankruptcy proceedings instituted on behalf of or against such it (except for involuntary
bankruptcy proceedings which are dismissed within sixty (60) days); (ii) an administrative
receiver, receiver and manager, interim receiver, custodian, sequestrator or similar officer is
appointed in respect of the other party (collectively, the “Receiver”) and that party has not
caused the underlying action or the Receiver to be dismissed within sixty (60) days after the
Receiver’s appointment; (iii) the Board of Directors of the other party shall have passed a
resolution to wind up that party, or such a resolution shall have been passed other than a
resolution for the solvent reconstruction or reorganization of that party; (iv) a resolution shall
have been passed by that party or that party’s directors to make an application for an
administration order or to appoint an administrator; or (e) the other party makes a general
assignment, composition or arrangement with or for the benefit of all or the majority of that
party’s creditors, or makes, suspends or threatens to suspend making payments to all or the
majority of that party’s creditors.
(c) Default. In the event either party commits a material breach or defaults in the
performance or observance of any of the material provisions of this Agreement, and such breach or
default is not cured within one hundred and twenty (120) days (or within fifteen (15) days in the
case of any payment default or obligation to pay royalties hereunder) after the receipt of notice
thereof from the other party specifying such breach or default, the party not in breach or default
shall be entitled (without prejudice to any of its other rights) to terminate this Agreement,
without additional penalty, termination fee or cost, by giving notice to take effect immediately.
11. EFFECT OF EXPIRATION OR TERMINATION
11.1 Mutual Obligations. Upon expiration or termination of this Agreement pursuant to
Section 10 with effect as of the effective date of termination:
(a) the party terminating this Agreement shall be released from all obligations and duties
imposed or assumed hereunder except from those provided in Sections 4.1, 4.2, 6, 7, 8 and 9 and
this Section 11 and Section 21; and
(b) the other party shall lose the benefit of any rights granted in this Agreement, except for
those accrued prior to the effective date of termination and those set forth in Sections 4.1, 4.2,
6, 7, 8 and 9 and this Section 11 and Section 21.
11.2 Purchase Orders.
(a) Where this Agreement is terminated by Buyer pursuant to Section 10.2(a) or by Supplier
pursuant to Section 10.2(b) or 10.2(c), Supplier will be entitled, at its option, to fill or cancel
any Purchase Orders that were submitted by Buyer prior to such termination. If Supplier elects to
fill any such Purchase Orders, Supplier shall use commercially reasonable efforts to fill any such
Purchase Orders. If Supplier elects not to fill any such Purchase Orders, Buyer shall reimburse
Supplier for the costs (including, but not limited to, raw material costs) incurred in connection
with Purchase Orders that Supplier had started to supply prior to the termination of this Agreement
and that are canceled by Supplier pursuant to this Section 11.2(a).
(b) Where this Agreement is terminated by Buyer pursuant to Section 10.2(b) or 10.2(c),
Supplier will be entitled, at its option, to fill or cancel any Purchase Orders that were submitted
by Buyer, its Affiliates or sublicensees prior to such termination; provided that if Supplier
elects not to fill any such Purchase Orders, Supplier shall be liable for the costs (including, but
not limited to, raw material costs) incurred in connection with Purchase Orders that Supplier had
started to manufacture prior to the expiration or termination of this Agreement and that are
canceled by Supplier pursuant to this Section 11.2(b).
11.3 Financial Obligations. In the event that this Agreement is terminated pursuant to
Section 10.2 by either party, Buyer shall make all payments accruing prior to the effective date of
termination to Supplier in the manner specified herein. Supplier may proceed to enforce payment of
all outstanding payments. Each party may proceed to collect any other monies owed to such party
and to exercise any or all of the rights and remedies contained herein or otherwise available to
such party by law or in equity, successively or concurrently at the option of such party.
11.4 Transition upon Termination; HSR.
(a) Upon expiration or termination of this Agreement for any reason pursuant to Sections 10 or
12.2, Supplier and its Affiliates shall provide to Buyer, its Affiliates or Third Party designee(s)
such cooperation and assistance as may be reasonably required to facilitate Buyer, its Affiliates
or Third Party designee(s) to bring about a smooth and orderly transition to one or more new
manufacturers and suppliers of Product following such expiration or termination and continuing for
such period of time following such termination as is reasonably necessary to fully
effectuate such transition. Buyer shall pay the reasonable internal and
external costs incurred by Supplier in providing such cooperation and assistance.
(b) Upon the expiration or termination of this Agreement, Buyer and Supplier will determine
whether any transfer of rights under this Agreement to Buyer is subject to the premerger
notification requirements of the HSR Act. If HSR Act filings are required, Buyer and Supplier will
use commercially reasonable efforts to make such filings and cause the HSR Act waiting period to
expire or terminate.
11.5 No Release. Termination of this Agreement for any reason whatsoever shall neither be
deemed a release, nor shall it relieve either party from any obligation under this Agreement which
may have accrued prior thereto.
12. FORCE MAJEURE
12.1 Suspension of Obligations. If by reason of “force majeure”, which shall mean for the
purpose of this Agreement (a) acts of God, war, riots, civil unrest, acts of the public enemy,
fires, earthquakes, severe weather or storms, or (b) to the extent beyond the reasonable control of
the affected party, strikes, labor disputes, labor shortages, product transportation interruptions
or shortages, accidents, unavailability of raw materials or supplies, or any act in consequence of
compliance with any order of any government or governmental authority, and, in the case of either
(a) or (b), the affected party is delayed or prevented from complying with its obligations under
this Agreement, such affected party shall promptly give notice to the other party with an estimated
date by which the contingency will be removed.
12.2 Termination. To the extent that a party is or has been delayed or prevented by force
majeure from complying with its obligations under this Agreement, the other party may suspend the
performance of its obligations until the contingency is removed. If the party delayed or prevented
from complying with its obligations under this Agreement cannot permanently remove the contingency,
or if the contingency affecting such party results in a delay extending beyond three (3) months,
the other party (upon notice) shall have a right to terminate this Agreement and Section 11,
subject to Section 6.5(b), if applicable, shall apply, with the party delayed or prevented from
complying with its obligations under this Agreement deemed to be the non-terminating party.
13. NOTICES
All notices, requests, claims, demands and other communications hereunder shall be in writing
and shall be deemed to have been duly given (a) when received if delivered personally, (b) when
transmitted if telecopied (which is confirmed), (c) upon receipt, if sent by registered or
certified mail (postage prepaid, return receipt requested) and (d) the day after it is sent, if
sent for next-day delivery to a domestic address by overnight mail or courier, to the parties at
the following addresses:
If to Supplier, to:
Columbia Laboratories, Inc.
000 Xxxxxxxxxx Xxxxxxx
Plaza 1, Second Floor
Livingston, New Jersey 07039
Attention: General Counsel
Facsimile: 973.994.3001
000 Xxxxxxxxxx Xxxxxxx
Plaza 1, Second Floor
Livingston, New Jersey 07039
Attention: General Counsel
Facsimile: 973.994.3001
with copies (which shall not constitute notice) sent concurrently to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx and Xxxxxx X. Xxxxxx
Facsimile: 212.836.8689
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx and Xxxxxx X. Xxxxxx
Facsimile: 212.836.8689
If to Buyer, to:
Coventry Acquisition, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Facsimile: 951.493.5817
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Facsimile: 951.493.5817
with copies (which shall not constitute notice) sent concurrently to:
Xxxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxx Xxxx, XX 00000-0000
Attention: R. Xxxxx Xxxxx
Facsimile: 714.755.8290
000 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxx Xxxx, XX 00000-0000
Attention: R. Xxxxx Xxxxx
Facsimile: 714.755.8290
provided, however, that if any party shall have designated a different address by notice to the
others, then to the last address so designated.
14. ASSIGNMENT
Neither party may assign its rights and obligations under this Agreement without the other
party’s prior written consent, except that: either party may (a) assign its rights and obligations
under this Agreement or any part hereof to one or more of its Affiliates without the consent of the
other party; and (b) assign this Agreement in its entirety without the other party’s consent to an
entity that acquires all or substantially all of the business or assets of the assigning party to
which this Agreement relates, whether by merger, acquisition or otherwise; provided, however, that
in the event of Supplier’s exercise of its right under clause (b), notwithstanding the Product
quantity and minimum order requirements set forth in Section 2.4(d), Buyer, or an Affiliate of
Buyer or a Third Party, may manufacture and supply any and all amounts of Product that Buyer, or an
Affiliate of Buyer or a Third Party, may require, without further obligation to
Supplier under the terms of this Agreement; provided, further, that to the extent an
assignment of rights or obligations by Supplier pursuant to this Section 14 increases the Taxes
(including without limitation any withholding Taxes) of, or the amounts owed under Section 5.1(a)
subsection (i) by, Buyer (or an Affiliate or Partner of Buyer that has been designated by Buyer
pursuant to Section 1 as of the time of such assignment by Supplier), Supplier or the assignee
shall indemnify Buyer (or such Affiliate or Partner of Buyer) for and hold it harmless against such
increase. In the case of any permitted assignment, the assigning party shall remain responsible
for the performance of this Agreement by the assignee. The assigning party shall provide the other
party with prompt written notice of any such assignment. Any permitted assignee shall assume all
obligations of its assignor under this Agreement, and no permitted assignment shall relieve the
assignor of liability hereunder. Any attempted assignment in contravention of the foregoing shall
be void. Subject to the terms of this Agreement, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted assigns.
15. NO WAIVER
The failure of either party to enforce any condition or part of this Agreement at any time
shall not be construed as a waiver of that condition or part, nor shall it forfeit any rights to
future enforcement thereof.
16. RELATIONSHIP OF THE PARTIES
Nothing contained in this Agreement shall be deemed to constitute a partnership, joint
venture, or legal entity of any type between Supplier and Buyer, or to constitute one as the agent
of the other. Both parties shall act solely as independent contractors, and nothing in this
Agreement shall be construed to give either party the power or authority to act for, bind, or
commit the other party.
17. HEADINGS, INTERPRETATION
The headings of sections of this Agreement are for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement in any way. Words denoting the singular
shall include the plural and vice versa; words denoting any gender shall include all genders; and
words denoting persons shall include bodies corporate, and vice versa.
18. SEVERABILITY
If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction or other Regulatory Authority to be invalid, void, unenforceable or against
its regulatory policy such determination shall not affect the enforceability of any others or of
the remainder of this Agreement.
19. ENTIRE AGREEMENT; AMENDMENT OR MODIFICATION
This Agreement may not be amended, supplemented or otherwise modified except by an instrument
in writing signed by both parties hereto. This Agreement, the Purchase and Collaboration
Agreement, the Confidentiality Agreement and the Other Agreements contain the
entire agreement of the parties hereto with respect to the subject matter hereof, superseding
all negotiations, prior discussions and preliminary agreements made prior to the date hereof. No
provision of this Agreement may be amended or modified other than by a written document signed by
authorized representatives of both parties.
20. FORMS
The parties recognize that, during the Term, a Purchase Order, acknowledgement form or similar
routine document (collectively “Forms”) may be used to implement or administer provisions of this
Agreement. Therefore, the parties agree that the terms of this Agreement will prevail in the event
of any conflict between this Agreement and the printed provision of such Forms, or typed provisions
of Forms that add to, vary, modify or are at conflict with the provisions of this Agreement with
respect to Product sold hereunder during the Term.
21. GOVERNING LAW
This Agreement (including any claim or controversy arising out of or relating to this
Agreement) shall be governed by and construed in accordance with the Laws of the State of Delaware
without regard to conflict of law principles that would result in the application of any Law other
than the Laws of the State of Delaware.
22. ARBITRATION
22.1 All disputes, differences, controversies and claims of the parties arising out of or
relating to this Agreement (individually, a “Dispute” and, collectively, “Disputes”), except as
otherwise provided under this Agreement, shall be resolved by final and binding arbitration
administered by the American Arbitration Association (“AAA”) under its Commercial Arbitration
Rules, subject to the provisions of this Section 22.
22.2 Following the delivery of a written demand for arbitration by either party, each of Buyer
and Supplier shall choose one (1) arbitrator within ten (10) Business Days after the date of such
written demand and the two chosen arbitrators shall mutually, within ten (10) Business Days after
their selection, select a third (3rd) arbitrator (each, an “Arbitrator” and together,
the “Arbitrators”), each of whom shall be a retired judge selected from a roster of arbitrators
provided by the AAA. If the third (3rd) Arbitrator is not selected within fifteen (15)
Business Days after delivery of the written demand for arbitration (or such other time period as
the Parties may agree), the parties shall promptly request that the commercial panel of the AAA
select an independent Arbitrator meeting such criteria.
22.3 The rules of arbitration shall be the Commercial Rules of the American Arbitration
Association; provided, however, that notwithstanding any provisions of the Commercial Arbitration
Rules to the contrary, unless otherwise mutually agreed to by Buyer and Supplier, the sole
discovery available to each party shall be its right to conduct up to two (2) non-expert
depositions of no more than three (3) hours of testimony each.
22.4 The Arbitrators shall render an award by majority decision within three (3) months after
the date of appointment, unless the parties agree to extend such time. The award shall be final
and binding upon the parties.
22.5 Any judicial proceeding arising out of or relating to this Agreement or the relationship
of the parties, including without limitation any proceeding to enforce this Section 22, to review
or confirm the award in arbitration, shall be brought exclusively in the Delaware Chancery Court
sitting in the county of New Castle, Delaware (the “Enforcing Court”). By execution and delivery
of this Agreement, each party accepts the jurisdiction of the Enforcing Court.
22.6 Each party shall pay its own expenses in connection with the resolution of Disputes
pursuant to this Section 22, including attorneys’ fees, unless determined otherwise by the
Arbitrator.
22.7 The parties agree that the existence, conduct and content of any arbitration pursuant to
this Section 22 shall be kept confidential and no party shall disclose to any Person any
information about such arbitration, except as may be required by Law or by any Regulatory Authority
(or any exchange on which such Party’s securities are listed) or for financial reporting purposes
in such party’s financial statements.
22.8 Notwithstanding the forgoing, none of the provisions of this Agreement (including the
provision of this Section 22) shall restrict the right of any party to seek injunctive relief or
other equitable remedies, to enjoin any breach or threatened breach of this Agreement or otherwise
specifically enforce any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date and
year first above mentioned.
| COLUMBIA LABORATORIES, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx, Xx. | |||
| Name: | Xxxxx X. Xxxxxxxx, Xx. | |||
| Title: | Chief Executive Officer | |||
| COVENTRY ACQUISITION, INC. |
||||
| By: | /s/ Xxxx X. Xxxxxx | |||
| Name: | Xxxx X. Xxxxxx | |||
| Title: | President and Chief Executive Officer | |||
