EXHIBIT 10.2
SUPPLY AGREEMENT
THIS AGREEMENT made as of this 16 day of October 1997 by and between
X.X. XXXXXX & CO., a Delaware corporation ("XXXXXX"), and XXXXXX LABORATORIES,
INC., a Nevada corporation ("BUYER").
WHEREAS, BUYER has obtained rights to certain Products (as
hereinafter defined) from XXXXXX and desires to have the Products supplied by
XXXXXX;
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1 -- DEFINITIONS
1.1 "ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement entered
into between XXXXXX and BUYER dated September 30, 1997.
1.2 "BATCH" means one (1) production lot of a Product as listed for each
Product on Schedule 1.2.
1.3 "CONTRACT YEAR" shall mean each consecutive twelve (12) month period
commencing on October 1, 1997 and ending on the first anniversary of
such date and each consecutive twelve (12) month period ending on an
anniversary of such date during the term hereof.
1.4 "COST OF MANUFACTURE" has the meaning ascribed to such term in
Section 2.3.
1.5 "INITIAL TERM" has the meaning ascribed to such term in Section 10.1.
1.6 "PACKAGING" means the procedures of filling, inspecting, labeling,
packaging and packing of the Products or any part thereof in
accordance with the Specifications. The terms "Package," "Packaged"
and "Packaging" in this Agreement shall have the identical meaning.
1.7 "PROCESSING" means the compounding, component preparation, testing,
and other procedures, or any part thereof, involved in manufacturing
the Products in accordance with the Specifications. The terms
"Process," "Processed" and "Processing" in this Agreement shall have
the identical meaning.
1.8 "PRODUCT(S)" means the pharmaceutical products listed on Schedule
1.8, meeting the Specifications. This definition may change subject
to the provisions of Section 12.1.
1.9 "SPECIFICATIONS" mean the procedures, requirements, standards and
other items attached hereto as Schedule 1.9, as amended from time to
time in accordance with the provisions hereof.
1.10 "SYNTEX FACILITY" shall mean any facility used by
Xxxxxxx-XxXxxxx-Syntex, or a successor to the ownership or use of
such facility, in the supply of Products to XXXXXX or its Affiliates.
1.11 OTHER TERMS. Other defined terms used herein and not defined above
shall have the respective meanings assigned to such terms in the
Asset Purchase Agreement.
ARTICLE 2 -- PROCESSING AND PACKAGING AND PRICE
2.1 UNDERTAKING.
(a) Subject to the limitations contained herein, XXXXXX hereby
agrees to Process and Package or to have Processed and
Packaged BUYER's orders for the Products in the Territory
and BUYER agrees to pay XXXXXX for the quantity of Products
so Processed and Packaged in accordance with this Agreement.
XXXXXX shall not be obligated to Process and Package
Products in excess of the capacity limitations described in
Sections 3.1 and 3.2.
(b) For the duration of this Agreement, BUYER hereby grants to
XXXXXX a royalty-free license and right in the Territory to
use such of the Assets as are necessary or useful to XXXXXX
in fulfilling its obligations under this Agreement. (For the
avoidance of doubt, under the Asset Purchase Agreement,
XXXXXX retained ownership of the Assets outside of the
Territory.)
(c) The parties acknowledge that any of XXXXXX'x obligations
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hereunder may be carried out, at XXXXXX'x election, by third
party manufacturers; provided that XXXXXX'x use of any third
party manufacturer, other than a Syntex Facility
manufacturer, shall require BUYER's prior written consent,
which consent shall not be unreasonably withheld. The use of
any third party manufacturer shall not relieve XXXXXX of its
obligations under this Agreement.
2.2 PRICE AND PAYMENT.
(a) During the Initial Term, the prices for Processing and
Packaging the Products shall be equal to the lesser of the
Cost of Manufacture or $xxxxxxxx per cycle determined under
a weighted average price computation for all products
purchased by Buyer; provided however the parties shall
negotiate a revised maximum price per cycle if the active
ingredient component of Cost of Manufacture increases by
more than five percent (5%). For purposes hereof, "weighted
average price" shall be determined by dividing the sum of
the Cost of Manufacture for a Batch of each of the Products
by the sum of the number of cycles in each such Batch. The
prices in effect for the remainder of calendar year 1997 and
an example of a "weighted average price" computation are set
forth in Schedule 2.2(a). Thereafter, the prices shall be
adjusted as provided in subsection (c) below.
(b) During any extended term following the Initial Term, the
prices for Processing and Packaging the Products shall be
equal to the Cost of Manufacture per cycle plus fifteen
percent (15%); provided, however, that the Cost of
Manufacture per cycle shall be commercially reasonable and
consistent with XXXXXX'x accounting practices for products
it manufactures in its facilities.
(c) By October 31st of each calendar year of the term hereof,
XXXXXX
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shall estimate the Cost of Manufacture for the following
calendar year and provide BUYER written notice thereof.
XXXXXX'x invoices shall state the estimated Cost of
Manufacture. Any differences between such estimated Cost of
Manufacture and the actual Cost of Manufacture during the
month in which Products covered by such invoices were
shipped shall be adjusted annually. Any such adjustment
shall be made by XXXXXX not later than March 31 for the
prior calendar year. XXXXXX shall endeavor, but shall not be
obligated, to provide notice to BUYER of potential
adjustments hereunder.
(d) The Products will be shipped to a location in the Territory
designated by BUYER, FCA (Incoterms 1990) XXXXXX'x
manufacturing plant. Title and risk of loss shall pass to
BUYER upon delivery of the Products to the common carrier.
(e) BUYER will pay in U.S. currency for each shipment of
Products within forty-five (45) days after the date the
relevant invoice is received by BUYER or the date of
shipment, whichever is later.
2.3 DEFINITION OF "COST OF MANUFACTURE". XXXXXX'x cost of manufacture for
the Products (the "Cost of Manufacture") (as calculated in accordance
with generally accepted accounting principles) shall be equal to the
sum of:
(a) Costs of any third party manufacturers, utilities, materials,
indirect materials and supplies used in the Processing and
Packaging of Products;
(b) Wages of those employees directly employed in the Processing and
Packaging of the Products;
(c) Wages of employees directly employed in quality control,
materials management or related functions which are applicable to
the Processing and Packaging of Products and the salaries of the
supervisors of said functions (or an appropriate portion of such
wages
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and salaries if such personnel are not employed exclusively
in said manufacture);
(d) That portion of payroll taxes, benefits, social security payments,
vacation and bonus payments and other employee costs allocable to
the wages and salaries included within the provisions of
subparagraphs (b) and (c) above; and
(e) That portion of XXXXXX'x manufacturing overhead expenses, based
on the manufacturing facility operating at full capacity during
normal business hours (one 8-hour shift), apportioned, in
accordance with generally accepted accounting principles and
XXXXXX'x current practices, to the manufacture of the Products
supplied to BUYER.
2.4 RECORDS OF XXXXXX. XXXXXX shall keep records of its Cost of
Manufacture in accordance with generally accepted accounting
principles in the United States. Such records shall be maintained by
XXXXXX for a period of two (2) years.
2.5 AUDIT. Not more frequently than once each year, BUYER at its expense
through an independent auditor of its choice to whom XXXXXX has no
reasonable objection and subject to the provisions of Section 2.7,
shall have the right to conduct an examination or audit of said
records of XXXXXX in order to verify that amounts paid to XXXXXX
hereunder are correct. XXXXXX agrees to cooperate fully with the
auditor and to provide all reasonable access to records and employees
necessary to promptly complete this audit. BUYER, at BUYER's expense
and reimbursement of any costs to XXXXXX, may elect to have an audit
conducted with respect to a Syntex Facility pursuant to such rights
and conditions as XXXXXX may have with respect to audits of such
Syntex Facility.
2.6 ADJUSTMENTS. In the event any examination or audit of the records of
XXXXXX discloses an under- or overpayment hereunder, written notice
of such fact, specifying the amount and basis of the under- or
overpayment
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shall promptly be furnished to both parties by the person(s)
performing the examination or audit. In the event of an overpayment
the amount thereof shall be credited against future amounts owed to
XXXXXX hereunder, or if there will be no such future amounts, XXXXXX
shall refund the overpayment to BUYER within thirty (30) days of such
notice. In the event of an underpayment, BUYER shall pay the amount
thereof to XXXXXX within thirty (30) days after such disclosure.
2.7 SCOPE OF EXAMINATION AND AUDIT. The examination and audit provided
for in Section 2.5 shall be restricted to those records of XXXXXX
which relate to the services provided hereunder and costs and
expenses incurred hereunder, and shall be undertaken for the sole
purpose of verifying information provided by XXXXXX and payments made
to XXXXXX hereunder. The independent auditor shall not disclose to
BUYER any information obtained in the course of its audit other than
information relating solely to the accuracy of the statements
provided by XXXXXX and payments to be made to XXXXXX pursuant to this
Agreement. BUYER, its representatives and any independent auditor
appointed by it shall keep all information obtained in the course of
any examination or audit confidential, except to the extent
disclosure of under- or overpayment is contemplated herein. If the
auditor determines that XXXXXX has overcharged the BUYER by five per
cent (5%) or more for the Products purchased by the BUYER for the
period audited, XXXXXX agrees to promptly reimburse the BUYER for all
costs and expenses incurred by BUYER in having said audit conducted.
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ARTICLE 3 -- FORECASTS AND ORDERS
3.1 FORECASTS
(a) At least thirty (30) days prior to each calendar quarter,
BUYER will provide XXXXXX with a written twelve (12) month
rolling forecast of the quantities of each Product that
BUYER expects to purchase during each of the next twelve
(12) months (the Twelve Month Forecast"); provided, however,
the first Twelve Month Forecast shall be attached hereto as
Schedule 3.1(a)-I. Except as may be provided otherwise in
this Section 3, the forecast for each Contract Year will be
limited to an amount not greater than one-hundred thirty
percent (130%) of the forecast for the prior Contract Year.
For purposes of bench-marking the current forecast for the
prior Contract Year to which BUYER will be limited under
this Section 3.1(a), attached as Schedule 3.1(a)-II is the
most recent Contract Year forecast submitted by XXXXXX to
its third party manufacturer.
(b) The first three (3) months of each Twelve Month Forecast
(the "Three Month Forecast") shall be firm and shall not
have been changed from the forecasted amounts for the same
calendar months contained in the prior Twelve Month
Forecast.
3.2 PERMITTED AMOUNT TO BE ORDERED. BUYER shall submit a purchase order
to XXXXXX referencing this Agreement each month as required, with a
delivery date of, except as otherwise provided in this Section 3.2,
not less than ninety (90) days after the date thereof. The quantities
ordered will be no less than eighty percent (80%) of the Three Month
Forecast for such month and no more than the greater of one hundred
twenty percent (120%) of the Three Month Forecast for such month or
an additional Batch, provided raw materials are available for the
amounts over one hundred percent (100%) of the Three Month Forecast.
XXXXXX will use its reasonable efforts, but will be under no
obligation, to supply Product in
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excess of one hundred twenty percent (120%) of the Three Month
Forecast. With respect to the inventory identified on Schedule 3.2,
BUYER may submit purchase orders with a delivery date of not less
than seven (7) days after the date thereof. Products, when delivered
to the common carrier under subsection 2.2(d), shall not have an
expiration date of less than eighteen (18) months from the date of
such delivery, except (a) for Products purchased from the inventory
set forth on Schedule 3.2, (b) for the bridging inventory described
under Section 3.4, and/or (c) as the parties may agree otherwise in
writing on a case by case basis. With respect to subsection (c),
XXXXXX shall notify BUYER in writing when and if it has Products
which have an expiration date of less than eighteen (18) months (but
in no event less than fifteen (15) months) and BUYER shall notify
XXXXXX within three (3) days of receipt of such notice whether it
wishes to accept such Products. In the event BUYER accepts such
short-dated Products and BUYER's customer(s) later return such
Products solely as a result of their being short-dated, then XXXXXX
shall reimburse BUYER for the actual amount refunded or credited to
BUYER's customer(s) for such returned Products and the reasonable
expenses related to processing such returned Products. The
record-keeping and audit provisions of Sections 2.4, 2.5, 2.6 and 2.7
shall apply mutatis mutandis to XXXXXX'x right to audit BUYER's
Product returns records pursuant to Section 2.2.
3.3 MINIMUM ORDER SIZE. The minimum size of any order for any Product
shall be one Batch of such Product with larger orders being in whole
number multiples of a Batch. BUYER's forecasts and orders for
finished Product under this Article 3 may be allocated among such
Product cycles referenced on Schedule 1.8 as BUYER may desire,
subject to the minimum Batch sizes set forth in this Section 3.3.
3.4 BRIDGE INVENTORY. Prior to the expiration of the Initial Term or
extended term, as the case may be, XXXXXX shall use reasonable
efforts to assist
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BUYER in obtaining a stock pile of inventory of the applicable
Products to the extent such stock pile is necessary in order to
bridge the period beginning with such expiration and the commencement
of BUYER's manufacture thereof. BUYER shall be responsible for
providing sufficient notice to XXXXXX of the amount of inventory so
required by BUYER within the usual capacity limitations of XXXXXX'x
facility and/or a Syntex Facility.
3.5 FAILURE TO SUPPLY.
(a) In the event XXXXXX fails or is unable to supply the
quantities of the Products ordered by BUYER to meet BUYER's
requirements (within the limits described in Section 2.1
above), BUYER may (i) purchase or obtain so much as to meet
its requirements or any portion thereof from any other
source or (ii) to the extent permitted by law manufacture
the same under the applicable Specifications and quality
control procedures. In such event, XXXXXX shall provide
BUYER or BUYER's contract manufacturer with all documents,
data and other information necessary or useful for
Processing and Packaging the Products at no cost for so long
as XXXXXX is unable to supply sufficient quantities of the
Products to meet BUYER's requirements.
(b) xxx
(c) xxx
(d) xxx
ARTICLE 4 - SPECIFICATIONS
4.1 SPECIFICATIONS. The Products shall be Processed, Packaged, stored and
shipped in accordance with the Specifications.
xxx - "CONFIDENTIAL MATERIAL FILED SEPARATELY WITH THE COMMISSION."
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4.2 BUYER'S CHANGES. The Specifications may be changed by BUYER,
provided the Specifications at all times shall be in compliance with
the Product Registration, from time to time with XXXXXX'x consent
which shall not be unreasonably withheld, but not more often than
twice per year unless required by the FDA or other U.S. government
agency. All such changes shall be communicated to XXXXXX in writing,
after which the parties shall agree on the date of implementation of
such changes as soon as reasonably practicable. If any such change
results in obsolescence of any materials specifically purchased by
XXXXXX for Processing and Packaging of the Products under this
Agreement prior to being notified in writing by BUYER of the change
in the Specifications, BUYER shall reimburse XXXXXX for the actual
out-of-pocket cost of all such materials except to the extent the
quantity of such materials exceeds requirements therefor pursuant to
BUYER's forecasts. Upon being reimbursed and at BUYER's request,
XXXXXX shall promptly ship any such materials to a location
designated by BUYER at BUYER's expense. If any such change or
proposed change to the Specifications results in costs and expenses
to XXXXXX, BUYER shall promptly reimburse all such reasonable costs
and expenses to the extent that such costs and expenses are not
included in XXXXXX'x revised Cost of Manufacture and recovered within
twelve (12) months of implementation of the change.
4.3 XXXXXX CHANGES. XXXXXX may change the Specifications at any time upon
sixty (60) days prior written notice to BUYER, provided the
Specifications at all times shall be in compliance with the Product
Registrations. Any changes to Specifications under this Section 4.3
shall be subject to BUYER's reasonable objections thereto, provided
that any objections to such changes shall be delivered in writing to
XXXXXX within fifteen (15) days of BUYER's receipt of notice of such
changes.
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ARTICLE 5 -- RAW MATERIALS AND PACKAGING MATERIALS
5.1 SUPPLY. XXXXXX will supply all materials required for Processing and
Packaging.
5.2 TITLE AND RISK OF LOSS.Title and risk of loss to all materials
provided by XXXXXX shall pass to BUYER upon delivery of the finished
Products incorporating such materials to the common carrier at
XXXXXX'x manufacturing plant. XXXXXX shall store and maintain all raw
and packaging materials in accordance with the Specifications and in
compliance with all applicable laws and regulations.
ARTICLE 6 -- QUALITY CONTROL; ADVERSE EXPERIENCES AND RECALLS
6.1 TESTING. XXXXXX shall perform quality control tests and assays on
raw materials and the finished Products in accordance with the
Specifications and GMPs (as defined in Section 7.1(a)). Results of
such tests and assays as well as specific batch samples of Products
manufactured under this Agreement following the date hereof will be
submitted to BUYER for the first Batch of each Product during any
Contract Year and each fifth (5th) Batch in such Contract Year
thereafter. In the event of any such request, BUYER will review the
data and samples submitted by XXXXXX promptly and will advise XXXXXX
of its acceptance or rejection of each lot or batch of the Products
not later than thirty (30) days after the date on which results of
the tests and assays and samples are received.
6.2 SAMPLES. XXXXXX shall retain for at least one (1) year after the
expiration date of the applicable lot or batch of Products a file
sample properly stored from each lot or batch of Products Processed
or Packaged, including market packages, sufficient to perform each
quality control test specified in the Specifications at least two (2)
times.
6.3 XXXXXXX xxx ADVERSE DRUG EXPERIENCES AND QUALITY COMPLAINTS. XXXXXX
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shall be responsible for handling all Product complaints (including
product quality complaints and adverse drug experience reports)
related to the Product xxxXxxxxxx. BUYER shall forward to XXXXXX any
Product complaints received by BUYER within three (3) business days,
or sooner if possible, after receipt thereof and shall provide XXXXXX
such assistance in investigating such complaints as XXXXXX may
reasonably request. XXXXXX shall notify BUYER at least once each
calendar quarter of any Product quality complaints received in the
Territory by XXXXXX, provided that XXXXXX shall use reasonable
efforts to provide notice of such complaints on a more current basis
in the event of a significant increase in the number of complaints
received by XXXXXX as compared to prior periods. XXXXXX shall provide
BUYER with a copy of XXXXXX'x annual adverse drug experience report
relating to Product at the same time such report is submitted to the
FDA. Each party shall designate a representative who will handle
Product complaints activities for such party and coordinate such
activities with the other party. However, XXXXXX'x handling of
complaints shall in no way waive, modify or diminish any of BUYER's
obligations under this Agreement except as otherwise provided in
Article 8 hereof.
6.4 OTHER PRODUCTS' ADVERSE DRUG EXPERIENCES AND QUALITY COMPLAINTS.
XXXXXX shall be responsible for handling all Product complaints
(including product quality complaints and adverse drug experience
reports) during the first six (6) months following the date
hereunder. To the extent requested by BUYER, XXXXXX will provide
reasonable assistance in providing data available to XXXXXX relating
to the Products for BUYER's regulatory annual reports required with
respect to such six months period. Thereafter, BUYER shall be
responsible for handling all such Product complaints related to all
Products other than Xxxxxxx. XXXXXX and BUYER shall
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promptly forward any Product complaints received by either of them to
the other no later than three (3) days following receipt and shall
provide assistance in investigating such complaints as may be
reasonably requested. Each party shall designate a representative who
will handle Product complaints activities for such party and
coordinate such activities with the other party. However, BUYER's
handling of complaints shall in no way waive, modify or diminish any
of XXXXXX'x obligations under this Agreement except as otherwise
provided in Article 8 hereof.
6.5 RECALLS RELATING TO Xxxxxxx.xxx This section shall apply only in the
event BUYER sells the Product Xxxxxxx under XXXXXX'x NDA for Xxxxx
and/or Xxxxx. Recalls of the Product Xxxxxxx shall be the
responsibility of XXXXXX. Except as provided in the following
sentence, the party desiring to initiate any such recall shall notify
the other and, immediately thereafter, both parties shall discuss
appropriate alternatives, including whether a recall is required and
the method of implementing a recall. In the case of a serious adverse
health risk XXXXXX may conduct a recall of the Product upon notice to
BUYER. BUYER shall cooperate with XXXXXX in the event of any recall,
field alert or similar event, and provide such assistance in
connection therewith as XXXXXX may reasonably request. The costs of
any such recall shall be borne (a) by the party whose negligence,
breach of this Agreement or other conduct resulted in such recall, or
(b) equally by the parties if neither party's negligence, breach of
this Agreement or other conduct resulted in such recall.
6.6 RECALLS RELATING TO OTHER PRODUCTS. Recalls of the Products other
than Xxxxxxx shall be the responsibility of BUYER. The party desiring
to initiate a recall shall notify the other and, immediately
thereafter, both parties shall discuss appropriate alternatives,
including whether a recall is required and the method of implementing
a recall. XXXXXX shall cooperate with BUYER in the event of any
recall, field alert or similar event and provide such assistance in
connection therewith as BUYER may
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reasonably request. The costs of any such recall shall be borne (a)
by the party whose negligence, breach of this Agreement or other
conduct resulted in such recall, or (b) equally by the parties if
neither party's negligence, breach of this Agreement or other conduct
resulted in such recall.
ARTICLE 7 -- WARRANTIES
7.1 XXXXXX WARRANTIES. XXXXXX warrants that:
(a) the Processing and Packaging and all materials furnished by
XXXXXX or any third party manufacturer pursuant to
subsection 2.1(c) will comply with the Specifications and
with all applicable laws, rules, orders and regulations,
including all current Good Manufacturing Practices ("GMPs")
and will not infringe any currently existing United States
patents held by any person or entity;
(b) the Products, when delivered to the common carrier under
subsection 2.2(d), shall neither be adulterated or
misbranded within the meaning of the United States Food,
Drug and Cosmetic Act, 21 U.S.C. "301c et. seq.; and
(c) EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT,
XXXXXX MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF
ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY EXPRESS
OR IMPLIED WARRANTIES OR MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
7.2 BUYER WARRANTIES. BUYER warrants that:
(a) to the extent that it provides any materials or engages in
Processing or Packaging with respect to the Products, all
such materials, Processing and Packaging will comply with
the Specifications and with all applicable laws, rules,
orders and regulations, including GMPs; and
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(b) subject to XXXXXX'x compliance with the warranties stated in
Section 7.1 above, the Products which BUYER distributes and
sells will not be adulterated or misbranded within the
meaning of the United States Food, Drug and Cosmetic Act, 21
U.S.C. sectionsign 301c et. seq.
7.3 INSPECTION. XXXXXX agrees to permit BUYER's designated
representatives to whom XXXXXX has no reasonable objection to inspect
XXXXXX facilities at which the Products are Processed, Packaged,
stored or tested for the purpose of determining compliance with
applicable regulations and the Specifications at reasonable times
after reasonable notice during regular business hours. BUYER's
exercise of these rights shall in no way waive, modify or diminish
XXXXXX'x obligations under this Agreement.
7.4 QUALITY CONTROL EVALUATION. Within thirty (30) days after receipt of
each shipment, BUYER will inspect and make a quality control
evaluation of such shipment (which shall include a certificate of
analysis). In the event any shipment or part thereof fails, or there
is manifest cause for BUYER to reasonably believe that any shipment
or part thereof fails, to conform to the Specifications or shall have
been Processed, Packaged or shipped under conditions which do not
comply with the FDA requirements or the provisions of this Agreement,
BUYER may reject the same by giving prompt written notice to XXXXXX
specifying the manner in which it fails to meet the requirements
hereof. XXXXXX shall have thirty (30) days within which to accept or
reject BUYER's claims. BUYER may withhold payment for any shipment of
Products that fails to meet the requirements hereof.
7.5 DISPUTES. In the event of any dispute as to whether any shipment of
Products fails in whole or part to meet the Specifications, such
dispute shall be promptly resolved by an independent testing
organization of recognized repute within the U.S. pharmaceutical
industry mutually agreed upon by the parties, the appointment of
which shall not be unreasonably withheld by either party. Until any
dispute is resolved, BUYER will not dispose of
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any nonconforming shipment without prior written authorization from
and agreement with XXXXXX. The fees and costs of such testing
organization shall be borne by the party whose position is not
sustained by the testing organization.
7.6 REPLACEMENT PRODUCTS. If any Products shipped hereunder are properly
rejected by BUYER, XXXXXX agrees to ship as soon as reasonably
possible after notice of such rejection (or if there is a dispute
with regard to the rejection, after notice of the determination of
the independent testing organization) replacement Products either
newly manufactured or, with the consent of BUYER, reworked from the
rejected shipment using an FDA approved procedure with respect
thereto. BUYER's exclusive remedy for XXXXXX'x breach of Section 7.1,
shall be to receive replacement or reworked Product as provided
herein.
7.7 GOVERNMENT INSPECTIONS/COMMUNICATIONS. Each party shall promptly
notify the other party of any government inspections or
communications to or from any governmental agency (including the
reporting of adverse drug experiences or field alerts) which might
(i) adversely affect XXXXXX'x ability to perform its obligations
under this Agreement or (ii) result in an inspection of the
facilities at which XXXXXX, or its third party manufacturer (upon
receipt of notice thereof by XXXXXX from such third party
manufacturer), manufactures the Products.
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ARTICLE 8 -- INDEMNIFICATION
8.1 IN FAVOR OF XXXXXX. BUYER shall defend, indemnify and hold XXXXXX,
its Affiliates and the officers, directors and employees of each
harmless from and against any and all claims, demands, losses,
damages, liabilities, settlement amounts, costs or expenses
whatsoever (including reasonable attorneys' fees) arising from or
related to any claim, action or proceeding made or brought against
such party by a third party (i) as a result of BUYER's use,
promotion, sale and/or distribution of the Products unless such
liability arises from XXXXXX'x breach of any warranty or
representation herein, XXXXXX'x failure to perform any covenant
herein, or the negligent act or omission of XXXXXX in performing its
obligations under this Agreement or (ii) arising from the failure of
BUYER to conduct a recall of any of the Products requested by XXXXXX.
8.2 IN FAVOR OF BUYER. XXXXXX shall defend, indemnify and hold BUYER
and its officers, directors and employees harmless from and against
any and all claims, demands, losses, damages, liabilities, settlement
amounts, costs or expenses whatsoever (including reasonable
attorneys' fees) arising from or related to any claim, action or
proceeding made or brought against such party by a third party as a
result of XXXXXX'x breach of any warranty or representation herein,
XXXXXX'x failure to perform any covenant herein, or the negligent act
or omission of XXXXXX in performing its obligations under this
Agreement.
8.3 NOTICE; DEFENSE. In the event of any claim, action or proceeding for
which a party is entitled to indemnity hereunder, the party seeking
indemnity ("Claimant") shall promptly notify the other party
("Indemnitor") of such matter in writing. Indemnitor shall promptly
but in no event later than thirty (30) days from date of notice
assume responsibility for and shall have full control of the defense
of such matter and Claimant shall fully cooperate in Indemnitor's
handling and defense thereof. Failure to assume the
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defense within the aforementioned time period, shall constitute a
waiver of the Indemnitor's rights to assume the defense and the
Claimant shall have the full right to conduct the defense, settle or
otherwise dispose of the claim at the Indemnitor's expense. The
Indemnitor shall have the right to settle or compromise claims
against the Claimant involving the payment of money only in exchange
for an unconditional release of Claimant. All other dispositions of
claims must be approved by Claimant.
8.4 LIMITATION. Notwithstanding any provision of this Agreement which
might otherwise be to the contrary, except as expressly set forth in
Section 3.5(b), neither party shall be liable to the other for lost
profits or other consequential damages of any kind.
ARTICLE 9 -- CONFIDENTIALITY
During the term of this Agreement and for a period of three (3) years thereafter
except as otherwise provided in the Asset Purchase Agreement, no party shall,
without the specific written consent of the other party, disclose to any third
party (except to governmental health or regulatory authorities to obtain and
maintain the registration of the Products or other disclosures required by law)
or use for its own purposes any confidential information which is received from
the other party or its agent(s) pursuant to this Agreement concerning the
Products or the other party's business unless such information:
(a) was or becomes public through no fault of the receiving party, or
(b) was obtained from a third party legally entitled to use and
disclose the same, or
(c) was known to the party prior to entering into this Agreement.
For this purpose, Assets shall be deemed BUYER'S property in the Territory and
not subject to any obligation of confidentiality by BUYER with respect to the
Territory.
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ARTICLE 10 -- TERM AND TERMINATION
10.1 TERM. The term of this Agreement shall be, unless terminated earlier
as provided herein, for a period of two (2) years commencing on (a)
with respect to the Marketed Products, the date of the closing under
the Asset Purchase Agreement, (b) with respect to the Xxxxxxx xxx
Product and each of the Development Products, the date Xxxxxx or its
designated third party manufacturer commences Processing and
Packaging commercial quantities thereof, and (c) with respect to the
Xxxxx Product, the date the Xxxxx Product is acquired, if at all, by
BUYER pursuant to Section 8.17 of the Asset Purchase Agreement,
(collectively, for each Product category, the "Initial Term"). This
Agreement may be extended at BUYER's election for a period of up to
twenty four (24) months. BUYER shall notify XXXXXX in writing of its
desire to extend the term of this Agreement at least nine (9) months
prior to the expiration of the Initial Term of this Agreement with
respect to each Product category identified in the first sentence of
this Section 10.1.
10.2 TERMINATION. Either party shall have the right to terminate this
Agreement, immediately upon written notice to the other, during the
Initial Term and any extension thereof:
(a) if the other party is dissolved or liquidated, files or has
filed against it a petition under any bankruptcy or insolvency
law, makes an assignment for the benefit of its creditors or has
a receiver appointed for all or substantially all of its property
and is not withdrawn within thirty (30) days of appointment;
(b) if the other party shall commit any material breach (whether
remediable or not) of its obligations under this Agreement
and, if remediable, shall fail to remedy the breach within
(90) days after receipt of written notice from the non-breaching
party describing
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xxx "CONFIDENTIAL MATERIAL FILED SEPARATELY WITH THE COMMISSION."
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19
such breach;
(c) as to any Product, upon BUYER's manufacture of readily
saleable quantities of such Product under BUYER's ANDAs or
BUYER's receipt of FDA approval to manufacture any Product
at a BUYER designated facility.
10.3 WITHOUT PREJUDICE. Termination of this Agreement, due to the fault of
either party, shall be without prejudice to any other rights or
remedies then or thereafter available to either party under this
Agreement or otherwise.
10.4 PRODUCTS AND MATERIALS. Promptly after expiration or termination,
XXXXXX will complete work on all in-process Products. BUYER will pay
XXXXXX the price determined pursuant to Section 2.2 for Products
Processed or Packaged by XXXXXX. However, in no event shall the
quantity of Products to be purchased by BUYER under this provision
exceed BUYER's purchases for the preceding six (6) month period.
ARTICLE 11 -- GOVERNING LAW
This Agreement shall be governed by and interpreted and enforced in accordance
with the laws of the State of Illinois of the United States of America,
regardless of the choice of law principles of Illinois or any other
jurisdiction.
ARTICLE 12 -- MISCELLANEOUS
12.1 CHANGES TO PRODUCTS DEFINITION.
(a) In the event XXXXXX sells, pursuant to the Asset Purchase
Agreement, the Xxxxxxxx Product to BUYER, then the Xxxxx
Product shall be added to the Products covered by this
Agreement.
(b) If at any time during the term hereof BUYER receives FDA
approval to manufacture and ship any Product or BUYER has
any Product manufactured for it by a third party, other than
pursuant to Section
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xxx "CONFIDENTIAL MATERIAL FILED SEPARATELY WITH THE COMMISSION."
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20
3.5, then such Product shall be removed from Schedule 1.6
and no longer covered by this Agreement.
(c) BUYER shall have the right from time to time, and upon
written notice to XXXXXX, to revise Schedule 1.6 by removing
pharmaceutical products listed thereon.
(d) In connection with the Technology Transfer activities
described in the Asset Purchase Agreement, XXXXXX shall
provide to BUYER reasonable assistance to locate a supplier
of raw materials for the manufacture of the Products, such
assistance is intended to take the form of activities such
as identifying potential suppliers and facilitating
introductions with such suppliers. Nothing contained in this
subsection (d) shall be construed as imposing on XXXXXX any
obligation to obtain or secure a supplier on behalf of
BUYER.
12.2 COSTS. Each party shall bear its own costs and expenses incurred in
negotiating this Agreement.
12.3 NOTICES. Any notice required or permitted to be given hereunder
shall be deemed sufficient if sent by facsimile letter or overnight
courier, or delivered by hand to Seller or Buyer at the respective
addresses and facsimile numbers set forth below or at such other
address and facsimile number as either party hereto may designate. If
sent by facsimile letter, notice shall be deemed given when the
transmission is completed if the sender has a confirmed transmission
report. If a confirmed transmission report does not exist, then the
notice will be deemed given when the notice is actually received by
the person to whom it is sent. If delivered by overnight courier,
notice shall be deemed given when it has been signed for. If
delivered by hand, notice shall be deemed given when received.
if to Seller, to:
X.X. Xxxxxx & Co.
21
0000 Xxx Xxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000 XXX
Attention: Xxxx Xxxxxxx
Executive Director, Manufacturing
Operations and Logistics
Fax number: (000) 000-0000
with a copy to: General Counsel
Fax number: (000) 000-0000
if to Buyer, to:
Xxxxxx Laboratories, Inc.
X.X. Xxx 0000
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxx
Fax number: (000) 000-0000
with a copy to:
X'Xxxxxx & Xxxxxx
Suite 2900
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Fax number: (000) 000-0000
No notice by telecopy shall be valid unless confirmed by registered,
airmail letter dispatched within twenty-four hours after dispatch of
the telecopy. Notices shall be deemed to be served as of the earlier
of (i) receipt or (ii) twenty-four hours (in the case of a telecopy)
after dispatch. Any party may, from time to time, notify the other of
a substitute address or telecopy number for notices in the manner set
forth herein.
12.4 SURVIVAL. The provisions of Articles 8, 9 and 11 and Sections 2.2(d),
2.4, 2.6, 10.3 and 12.4 shall survive the expiration or other
termination of this Agreement.
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12.5 ENTIRE AGREEMENT. This Agreement, together with any Schedules hereto
and the Asset Purchase Agreement, constitutes the entire agreement
between the parties concerning the subject matter hereof; it may not
be modified or amended except in writing signed by all parties. All
agreements or arrangements (if any) among the parties executed prior
to the date hereof (except for the Asset Purchase Agreement), whether
written or oral, relating to the subject matter hereof are hereby
canceled and superseded.
12.6 HEADINGS. Headings are inserted for convenience and shall not by
themselves determine the interpretation of this Agreement.
12.7 COUNTERPARTS.This Agreement may be executed in counterparts, each of
which shall be deemed an original, but together constituting one
agreement.
12.8 ASSIGNMENT. Except as otherwise provided in this Section, neither
party may assign or delegate any right or obligation hereunder
without the prior written consent of the other party, which consent
shall not be unreasonably withheld, and any attempted assignment or
delegation in violation hereof shall be void. BUYER and XXXXXX may
each assign all of its rights and obligations hereunder to an
Affiliate on notice to and without the necessity of securing the
other party's consent, subject to and for so long as such assignee
remains an Affiliate of the assignor. In addition, XXXXXX may assign
all of its rights and obligations hereunder to a purchaser of all or
substantially all of the assets or business of XXXXXX.
12.9 WAIVER OF DEFAULT. No waiver of any default hereunder by any party or
any failure to enforce any rights hereunder shall be deemed to
constitute a waiver of any subsequent default with respect to the
same or any other provision hereof. No waiver shall be effective
unless made in writing with specific reference to the relevant
provision(s) of this Agreement and signed by a duly authorized
representative of the party granting the waiver.
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12.10 NOT FOR BENEFIT OF CREDITORS. The provisions of this Agreement are
intended only for the regulation of relations between the parties.
Except as expressly provided in Article 8 (and then subject to the
limitations stated in such Article), this Agreement is not intended
for the benefit of any person, firm or entity not a party hereto and
no rights are granted to such third parties hereunder.
12.11 FORCE MAJEURE. If any party is prevented from performing any
obligation hereunder by reason of fire, explosion, strike, labor
dispute, casualty, accident, lack or failure of transportation
facilities, flood, war, civil commotion, acts of God, any law, order
or decree of any government or subdivision thereof or any other cause
beyond the reasonable control of such party, then such party shall be
excused from performance hereunder to the extent and for the duration
of such prevention, provided it first notifies the other party in
writing of such prevention. The foregoing shall not apply to any
prevention due to any governmental regulatory action resulting
directly from the fault of XXXXXX or a third party manufacturer
designated by XXXXXX under Section 2.1(c).
12.12 PUBLICITY. Neither XXXXXX nor BUYER, nor any Affiliate thereof, will
issue or cause publication of any press release or other announcement
or public communication with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of
the other party, which consent will not be unreasonably withheld or
delayed.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
XXXXXX LABORATORIES, INC. X. X. XXXXXX & CO.
BY /s/ Xxxxx Xxxx BY /s/ Xxxx X. Xxxxxx
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Title President Title Chief Operating Officer
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