SUPPLY AGREEMENT
This Supply Agreement ("Agreement"), including all attached Exhibits
which are incorporated and made a part hereof, dated as of the 17th day of
December 2001, by and between Novartis Consumer Health, Inc., having an office
at 560 Morris Avenue, Summit, New Jersey 07901 ("NCH"), and Impax Laboratories,
Inc., having an office at 3735 Castor Avenue, Philadelphia, Pennsylvania 19124
("Supplier"), sets forth the terms and conditions for the commercial supply of
the Licensed Products (as defined in the License Agreement by and between NCH
and Supplier, dated as of the date hereof, pursuant to which NCH licenses
generic loratadine ++ products from the Supplier, the "License Agreement"). All
capitalized terms used herein but not defined shall have the same meaning as
ascribed to them in the License Agreement.
WITNESSETH:
WHEREAS, NCH and Supplier have simultaneously entered into the License
Agreement, that establishes all terms and conditions relating to the license
exclusivity of the Licensed Products, and both parties desire to proceed to
commercialization of the Licensed Products for use within the Field;
WHEREAS, Supplier owns or has rights to certain Patents and Know-How applicable
to the Licensed Products;
WHEREAS, Supplier has the requisite experience and facilities to manufacture and
package the Licensed Products; and
WHEREAS, NCH and its Affiliates wish to purchase commercial quantities of the
Licensed Products from Supplier, and Supplier is willing to supply the Licensed
Products exclusively to NCH and its Affiliates for use in the Licensed Products
in the Field and in the Territory, in each case, upon the terms and conditions
set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. GENERAL SCOPE OF AGREEMENT
1.1 Supplier shall use commercially reasonable efforts to manufacture,
sell and cause to be delivered exclusively to NCH the Licensed Products set
forth on Exhibit A hereto in accordance with and subject to the terms and
conditions of this Agreement, in quantities sufficient to meet the total
requirements, consistent with the forecasting and purchase order mechanism set
forth in Article 3 of this Agreement, of NCH of such Licensed Products for use
in the Territory. In addition, all matters relating to Licensed Products which
constitute the stability batches, as described in Article 5 of the License
Agreement, shall be governed by the terms and conditions of this Agreement to
the extent that such terms do not conflict with the provisions of Article 5 of
the License Agreement.
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++ Confidential portions omitted and filed separately with the Commission.
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1.2 NCH shall purchase all of NCH's requirements of the Licensed
Products for use in the Territory from Supplier (except as otherwise provided
herein), in accordance with and subject to the terms and conditions of this
Agreement. This requirements obligation is limited to NCH's requirements of
Licensed Products which meet the Specifications (as defined below).
1.3 NCH shall be responsible for obtaining approvals from all
governmental bodies, organizations and agencies whose approval is necessary to
import, use, sell, market and/or distribute the Licensed Products in the Field
in the Territory. Supplier shall cooperate with NCH and shall use commercially
reasonable efforts to assist NCH in obtaining any and all regulatory approvals
necessary to import, use, sell, market and/or distribute the Licensed Products.
1.4 All Licensed Products sold and delivered to NCH hereunder shall (a)
strictly conform with the specifications set forth in Exhibit B hereto, and with
such further specifications as shall be agreed to by Supplier and NCH in writing
(the "Specifications"); (b) be manufactured, packaged and sold in strict
accordance with (i) the Quality Assurance Agreement, substantially in the form
attached hereto as Exhibit C (the "QA Agreement"), the specific terms of which
shall be negotiated in good faith by the parties as soon hereafter as reasonable
possible, and (ii) all applicable laws, regulations, and requirements of any
government or governmental agency; and (c) be subject to the warranties set
forth in Article 9 of this Agreement.
2. PAYMENT
2.1 In consideration of the manufacture and delivery to NCH of the
Licensed Products, NCH shall pay Supplier for all Licensed Products accepted by
NCH pursuant to Section 4.1 of this Agreement in accordance with the prices set
forth in Exhibit D hereto, subject to adjustment in accordance with this
Agreement. NCH shall make such payments within thirty (30) days of the date of
receipt by NCH of each invoice. NCH shall be entitled to a cash discount of one
percent (1%) for payments made within ten (10) days of each invoice date.
Supplier shall issue its invoice to NCH within ten (10) days of the date on
which any delivery of Licensed Products to NCH hereunder is received by NCH.
2.2 NCH shall bear the cost of any taxes of any kind, nature or
description whatsoever applicable to the sale of any Licensed Products by
Supplier to NCH (except for any taxes based upon the income of Supplier or its
employees), unless NCH is exempt from such taxes and provides to Supplier, at
the time of the submission of any purchase order, tax exemption certificates or
permits acceptable to the appropriate taxing authorities.
2.3 Shipping terms for the Licensed Products shipped in the United
States are EXW (Incoterms 2000), place of manufacture. Title to and risk of loss
of the Licensed Products shall pass to NCH upon delivery to NCH in accordance
with this Section.
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2.4 On the first January 1 falling at least twelve (12) full calendar
months after the date on which the full-scale commercial manufacturing by
Supplier of Licensed Products begins under this Agreement (the date on which
such full-scale commercial manufacturing begins, the "Manufacturing Commencement
Date"), and on each January 1 thereafter during the term of this Agreement,
except as set forth in Section 2.4.3 of this Agreement, the price at which NCH
shall purchase the Licensed Products shall be increased or decreased to pass on
to NCH, without mark-up, one hundred percent (100%) of any net increase or
decrease in the cost of the raw materials and packaging materials necessary to
the manufacture of Licensed Products (collectively, the "Raw Materials")
actually incurred by Supplier in producing the Licensed Products during the
twelve (12) month period ending on the preceding December 1. Such increase or
decrease shall be effective with respect to orders placed after the January 1
effective date of the applicable price adjustment.
2.4.1 On or before October 1 of each calendar year during the
term of this Agreement, Supplier shall provide NCH with a non-binding estimate
of the amount by which the price will increase or decrease pursuant to this
Section 2.4 on the succeeding January 1. Supplier shall determine the final
amount of any such increase or decrease by no later than the following December
1, and Supplier shall notify NCH of such amount in writing at that time.
2.4.2 To determine the amount by which the cost of Raw
Materials has increased or decreased during a year, the average Raw Material
costs for the three (3) month period ending December 1 shall be compared to the
average Raw Material costs for the same three (3) month period the year before,
without regard to intervening fluctuations.
2.4.3 In no event shall the price of Licensed Products be
increased pursuant to Section 2.4 by a percentage greater than the percentage
which the Producers' Price Index ("PPI"), published by the U.S. Department of
Labor, Bureau of Labor Statistics, increased during the period since the last
increase under this Section 2.4, except that (i) in the event that the cost to
Supplier of obtaining the active ingredient in the Licensed Product increases by
more than ten (10%) percent since the date of the last price adjustment, then
the parties agree to negotiate in good faith to agree upon an appropriate
remedy, which remedy may include, without limitation, a price increase of the
Licensed Product above the PPI and/or alternative sourcing possibilities, and
(ii) at least three (3) years after the Manufacturing Commencement Date, and
thereafter once every three (3) years, if the labor costs, overhead costs and/or
quality assurance and quality control costs to Supplier of manufacturing the
Licensed Products have increased over the past three (3) years, Supplier may
approach NCH with documentation supporting such cost increases, and the parties
agree to negotiate in good faith to agree upon an appropriate remedy, which
remedy may include, without limitation, a price increase of the Licensed
Products and/or alternative sourcing possibilities.
2.4.4 Supplier shall transmit to NCH together with any notice
of a price adjustment documentation sufficient to demonstrate that such increase
or decrease in Raw Material costs has occurred.
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2.4.5 NCH shall have the right to identify and present to
Supplier potential suppliers, other than Supplier, that NCH reasonably believes
can produce products meeting specifications substantially similar to the
Specifications for Licensed Products in quantities sufficient to meet NCH's
requirements at lower prices than the then-current prices that Supplier is
charging NCH for the Licensed Products. In the event that the purchase price
charged by Supplier is more than fifteen (15%) percent greater than the price
offered to NCH by any such potential supplier, then every three (3) years, NCH
may request that Supplier reduce the purchase price of the Licensed Product to
an amount that is no more than fifteen (15%) percent greater than the lowest
price offered by any such potential supplier, and, if Supplier is unwilling to
reduce the price of the Licensed Product to such a level, then NCH shall have
the right to terminate this Agreement at no cost. In the event that NCH
terminates this Agreement pursuant to the sentence immediately preceding, then
Supplier shall have no obligation to pay any costs associated with switching to
an alternate supplier.
2.5 If on more than one occasion during each calendar year of this
Agreement Supplier fails to deliver the Licensed Products in the quantities
ordered (so long as such order is consistent with NCH's forecasts) in any
purchase order within ten (10) business days of the date specified in such
purchase order, then NCH shall be entitled, as liquidated damages, and not a
penalty, to a discount of five percent (5%) off the price of the late-delivered
Licensed Products for each week that delivery is delayed, up to a maximum
discount of twenty percent (20%).
2.6 NCH shall have the right, once in each year, upon reasonable notice
and during normal business hours, to review such records of Supplier, or to have
a third-party consultant review such records of Supplier, as may be necessary to
verify the accuracy of the amounts invoiced to NCH hereunder. Should such review
disclose any overpayment by NCH, then, at NCH's option, Supplier shall either
refund to NCH the amount of such overpayment, or issue to NCH a credit in the
amount of such overpayment. NCH shall pay all fees of the accountants or other
personnel performing such verification unless it discloses any overstatement of
amounts invoiced of more than five (5%) percent, in which case Supplier shall
bear all reasonable costs of the audit.
2.7 NCH may at any time identify to Supplier sources from which
Supplier may obtain any of the Raw Materials at a cost at least five percent
(5%) lower than Supplier is able to obtain such Raw Materials; provided that
such sources' facilities comply with cGMP's which may impact the quality of the
Raw Materials. In such an event, Supplier shall utilize the sources identified
by NCH, and the prices charged to NCH for Licensed Products shall be reduced by
the amount of any resulting reductions in Raw Material costs. NCH shall
reimburse Supplier for any costs Supplier shall reasonably incur in implementing
any such change in sources.
2.8 NCH and Supplier shall confer on a regular basis, but no less than
annually, to consider whether new technologies or new manufacturing methods may
exist which likely would reduce Supplier's cost of manufacturing the Licensed
Products. Should any such technologies and/or methods be identified, then the
parties shall share the costs of developing and implementing such technologies
and/or methods and the proceeds from any resulting cost reductions, in amounts
to be agreed upon.
2.9 Notwithstanding the foregoing, the price paid for the Licensed
Products by NCH shall be no greater than the lowest price paid for the Licensed
Products or other products substantially similar thereto that are produced for
sale in the OTC market (collectively, the "Comparison Products") by any other
customer of Supplier (except any governmental agency), assuming that the
quantity of Licensed Products purchased by NCH is the same or greater than the
quantity of Comparison Products purchased by such other customer. In the event
that Supplier's best price for the Comparison Products to any such other
customer is less than the price paid by NCH hereunder, then Supplier shall
promptly advise NCH of such best price and make available to NCH such best
price, effective as of the date that Supplier made such best price for the
Comparison Products available to such other customer. Supplier shall (at NCH's
option) either refund to NCH the amount of any overpayments made by NCH to
Supplier as a result of Supplier's past failure to charge NCH such best price,
or shall credit such amount to NCH's account.
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3. FORECASTS AND ORDERS
3.1 No later than 180 days prior to the Manufacturing Commencement
Date, NCH shall provide to Supplier a written forecast of the quantities of
Licensed Products that NCH anticipates ordering from Supplier during the twelve
(12) month period commencing on the Manufacturing Commencement Date, and
thereafter, in order to assist Supplier in planning production, NCH shall update
such forecast with a twelve (12) month rolling forecast of the quantities of
Licensed Products required by NCH, by month. It is understood that such
forecasts are intended to be estimates only, and shall not be binding upon NCH.
Notwithstanding the foregoing, NCH shall be bound to purchase from Supplier one
hundred percent (100%) of those quantities of Licensed Products set forth in
each such forecast as being NCH's requirements of Licensed Products for the
first three (3) months of each twelve (12) month period. NCH shall communicate
any changes to its forecasts as soon as the changes are known by NCH. NCH shall
use commercially reasonable efforts to ensure the accuracy of its forecasts.
Supplier shall, no later than ten (10) business days after receipt of each such
forecast, notify NCH in writing of any prospective problems of which it is aware
that might prevent it from meeting NCH's forecasted order quantities or
estimated delivery dates. Unless Supplier so informs NCH that it would have
problems in meeting NCH's forecasted requirements, Supplier shall be obligated
to use commercially reasonable efforts to deliver during any calendar year,
pursuant to purchase orders provided under Section 3.2 of this Agreement, up to
one hundred twenty percent (120%) of NCH's forecasted purchases for that
calendar year. Supplier shall further use commercially reasonable efforts to
comply with orders for Licensed Products in excess of such one hundred twenty
percent (120%) amount.
3.2 At least four (4) weeks prior to the date on which NCH desires to
have Product delivered, NCH shall furnish to Supplier a binding purchase order
for the quantity of Licensed Products which NCH shall purchase and Supplier
shall deliver, which orders shall be consistent with its forecasts. Supplier
shall, within five (5) business days after its receipt of such purchase order,
acknowledge such receipt and confirm that the order can be supplied. Should
Supplier fail to do so, then the purchase order shall be deemed to have been
accepted by Supplier. Each such purchase order shall designate the quantity of
Licensed Products ordered and the date by which Supplier must deliver the
Licensed Products to NCH.
3.3 Supplier shall use commercially reasonable efforts to accommodate
any NCH requests for Licensed Products in excess of the quantities described in
any previously-submitted purchase order, or for delivery of Licensed Product
sooner than that allowed pursuant to this Article 3. Should NCH's business
conditions necessitate reduction or delay in purchase order requirements, then
Supplier shall use its commercially reasonable efforts to implement such
requested changes. Notwithstanding the foregoing, Supplier shall not take any
action in response to any such requests which would result in charges to NCH in
addition to those set forth in the respective purchase order without NCH's prior
written consent.
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3.4 If for any reason Supplier experiences any shortage of any input
used by Supplier in manufacturing the Licensed Products, including without
limitation, Raw Materials, labor and plant capacity (each an "Input"), and is
therefore unable to supply NCH with the full quantity of Licensed Products
ordered by it and accepted by Supplier by the date set forth in the purchase
order, then NCH shall be entitled to the same proportionate quantity of the
Input as the quantity of the Input used by Supplier in manufacturing Licensed
Products for NCH in the twelve (12) months preceding the shortage bears to the
total quantity of the Input used by Supplier in manufacturing products for all
its customers, during such period.
3.5 NCH shall be liable for obsolescence of Raw Materials resulting
from NCH switching to an alternate supplier pursuant to Section 2.4.5. Supplier
shall use commercially reasonable efforts to return such Raw Materials to the
sources from which they were acquired or to use such Raw Materials for other
purposes. Supplier shall submit supporting documentation on all claims of
obsolescence and requests for reimbursement thereof, and, upon NCH's request,
Supplier shall deliver all such Raw Materials to NCH.
4. INSPECTIONS AND ACCEPTANCE
4.1 NCH shall accept any delivery of Licensed Products hereunder if the
delivery complies fully with the relevant purchase order, the Specifications,
and with the requirements of this Agreement. NCH shall inspect all Licensed
Products delivered hereunder within ten (10) days of its receipt of the Licensed
Products and all documentation set forth in the Specifications. NCH shall
provide Supplier with written notice of its acceptance or rejection of the
delivery within thirty (30) days of receipt of the Licensed Products and all
such required documentation. Any notice of rejection shall specify the reason(s)
therefor. Except in the event of any investigation, corrective action or
retesting of a delivery, should NCH fail to provide Supplier with written notice
of its acceptance or rejection of the delivery within thirty (30) days of
receipt of the Licensed Products and all such required documentation, then the
delivery shall be deemed to have been accepted by NCH on the thirtieth (30th)
day after delivery.
4.2 If NCH so notifies Supplier that any such delivery, or any part
thereof, is rejected, then, at NCH's option, (a) Supplier shall, at no
additional charge, deliver replacement Licensed Products to NCH as soon as
reasonably practicable thereafter (but, in any event, within ninety (90) days
after the initial notification by NCH), and payment shall not be due until
thirty (30) days after receipt by NCH of such replacement Licensed Products; or
(b) the purchase order at issue shall be deemed terminated, and NCH shall not be
obligated to make any payments to Supplier with respect to such purchase order,
or the rejected delivery (or, if payment has already been made for such Licensed
Products, then Supplier shall issue NCH an immediate credit for such an amount).
In addition, Supplier shall reimburse NCH for all reasonable costs incurred by
NCH in connection with the delivery or return of all rejected Licensed Products
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4.3. If NCH notifies Supplier that any delivery, or any part thereof,
is rejected, and Supplier disputes such rejection, then the parties shall
jointly select a qualified independent third party to determine whether the
applicable Licensed Products complied with the relevant purchase order, the
Specifications, and/or the requirements of this Agreement. If the third party
determines that the Licensed Products complied with same, then NCH shall pay to
Supplier all amounts due for such rejected Licensed Products, and NCH shall be
liable for all expenses associated with the third party's testing of the such
rejected Licensed Products. If such third party determines that the Products
failed to comply with the relevant purchase order, the Specifications, and/or
the requirements of this Agreement, then Supplier shall be liable for all
expenses associated with the third party's testing of such rejected Licensed
Products, and NCH shall additionally be entitled to the relief described in
Section 4.2 hereof.
4.4 NCH'S EXCLUSIVE REMEDY UNDER THIS AGREEMENT SHALL BE FOR DIRECT
DAMAGES, EXCEPT THAT NCH SHALL BE ENTITLED TO RECOVER ALL CATEGORIES OF DAMAGES
AND SHALL BE ENTITLED TO ALL OTHER REMEDIES AT LAW OR EQUITY THAT MAY BE
AVAILABLE WITH RESPECT TO (i) ANY LIABILITIES AND/OR DAMAGES ASSOCIATED WITH
SUPPLIER'S DUTY TO INDEMNIFY NCH PURSUANT TO SECTION 10.2 HEREOF AND (ii) ALL
COSTS TO NCH ASSOCIATED WITH OBTAINING THE LICENSED PRODUCTS FROM A BACK-UP
SUPPLIER (AS DEFINED IN SECTION 11.6 HEREOF) BY REASON OF SUPPLIER'S FAILURE TO
MEET ITS OBLIGATIONS HEREUNDER, INCLUDING WITHOUT LIMITATION, ALL VALIDATION AND
QUALITY ASSURANCE COSTS.
5. DOCUMENTATION AND INFORMATION
5.1 Supplier shall provide to NCH all documentation and information
requested by NCH (a) to assist NCH in determining whether any delivery complies
fully with the Specifications and the requirements of this Agreement; (b) to
assist NCH in obtaining any and all regulatory approvals necessary to market the
Licensed Products; or (c) to enable NCH to comply with any statutory or
regulatory requirements, or with a request by any governmental or regulatory
authority.
5.2 Every delivery of Licensed Products to NCH shall be accompanied by
a Certificate of Analysis. Supplier hereby warrants the accuracy of each such
Certificate of Analysis to a reasonable degree of scientific certainty.
5.3 Supplier shall submit to NCH all manufacturing, packaging and
testing documents relating to any Licensed Products ordered hereunder, including
analyses with instrument conditions, within ten (10) days of the completion of
the final QA release with respect to any particular batch of Licensed Products.
5.4 Supplier shall keep on file all books and records in connection
with the manufacture and testing of the Licensed Products, including, but not
limited to, those books and records relating to cross-over cleaning, process
validation, installation qualification, operational qualification and cleaning
validation for a period consistent with Impax's OA/QC policy, plus the active
year, from the time of generation of such documents.
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6. PRODUCTION PROCEDURES
6.1 Supplier shall not rework or reprocess any non-conforming Licensed
Products without the prior written approval of NCH.
6.2 The Licensed Products shall be delivered to NCH packaged in
accordance with the Specifications. Notwithstanding the foregoing, NCH shall
have the right to require any special or varied packing that it believes is
reasonably necessary to meet customs or regulatory requirements. Reasonable
incremental costs which result directly from any packing changes required by NCH
will be borne by NCH.
6.3 At least ninety (90) days prior to its first production run of
Licensed Products, and at some mutually agreeable time prior to the production
of qualification batches, Supplier shall provide to NCH, for its review and
approval, its production procedures for the Licensed Products, including without
limitation the manufacturing site, manufacturing equipment, manufacturing
process, manufacturing conditions or testing procedures within its facilities
for the manufacture of the Licensed Products (collectively, the "Production
Procedures"). After such initial NCH approval, if Supplier should wish to change
any of the Production Procedures which might affect the quality of the Licensed
Products furnished to NCH hereunder, Supplier shall provide such proposed
changes to NCH at least sixty (60) days prior to implementation. All such
changes must be approved in writing by NCH prior to being implemented, which
approval shall not unreasonably be withheld.
6.4 In the event that regulatory action or applicable law require
changes in the Specifications or any production procedures, then, subject to
NCH's prior written agreement, Supplier shall use commercially reasonable
efforts to implement such changes as soon as reasonably practicable. The parties
shall in good faith allocate the costs of any such changes between them.
6.5 Supplier represents and warrants, and shall take all actions
reasonably necessary to ensure, that all facilities, equipment and practices
used to perform its responsibilities under this Agreement by or on behalf of
Supplier, or any of Supplier's contractors of any rank (including, without
limitation, environmental or safety and health consultants or waste management
or disposal firms) (collectively, the "Supplier Contractors"), will be during
the term of this Agreement, in full compliance with all health, safety and
environmental laws, statutes, ordinances, regulations, rules, permits and
pronouncements. Supplier assumes responsibility for disposing of any and all
waste generated during the performance of its responsibilities under this
Agreement (including, without limitation, during any manufacturing, storage and
transportation activities) in accordance with all legal and professional
standards. Notwithstanding anything to the contrary herein, (i) should Supplier
and/or any Supplier Contractor fail to comply with the obligations set forth in
this Section 6.5, then Supplier shall be solely responsible for any claims,
suits, or liabilities resulting therefrom (including, without limitation, those
based on strict liability and joint and several liability), and Supplier shall
indemnify, defend and save NCH (including all officers, directors, employees,
Affiliates and agents of NCH) harmless from and against any and all such claims,
suits, and liabilities; and (ii) Supplier shall indemnify, defend and save NCH
(including all officers, directors, employees, Affiliates and agents of NCH)
harmless from and against any and all claims, suits, and liabilities which arise
directly or indirectly from the storage, release, transportation or disposal of
chemicals, raw materials, product, waste or any other substance by Supplier
and/or any Supplier Contractor.
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7. OWNERSHIP
7.1 All materials, inventions, know-how, trademarks, information, data,
writings and other property in any form whatsoever, which is provided to
Supplier by and/or on behalf of NCH, or which is used by Supplier with respect
to the performance of its obligations hereunder, and which was owned by NCH
prior to being provided to Supplier, shall remain the property of NCH (the "NCH
Property"). Supplier shall have a license to use any NCH Property supplied to it
solely to the extent necessary to enable Supplier to perform its obligations
hereunder. Supplier shall not acquire any other right, title or interest in the
NCH Property as a result of its performance hereunder.
7.2 All inventions, know-how, trademarks, information, data, writings
and other property, in any form whatsoever, which was provided to NCH by or on
behalf of Supplier, or which was used by Supplier with respect to the
performance of its obligations hereunder, and which was owned by Supplier prior
to its performance hereunder, shall remain the property of Supplier (the
"Supplier Property"). NCH shall acquire no right, title or interest in the
Supplier Property as a result of Supplier's performance hereunder.
7.3 Upon the termination of this Agreement, each party shall return to
its owner all NCH Property or Supplier Property, as applicable, except for one
copy which may be retained in the returning party's confidential files.
8. TRADE SECRETS, CONFIDENTIALITY AND PUBLICITY
The provisions of Sections 8 and 15 of the License Agreement shall be
deemed included herein as if they were fully set forth in this Agreement, and
the parties hereto shall be bound thereby. All references to the License
Agreement therein shall be deemed references to the Supply Agreement herein.
9. QUALITY OF THE PRODUCT; COMPLIANCE WITH LAW
9.1 Supplier hereby represents and warrants that:
9.1.1 no Licensed Products constituting or being a part of any
shipment hereunder shall at the time of any such shipment be (i) adulterated or
misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended from time to time (the "Act"), or regulations promulgated thereunder, as
such law or regulation is constituted and in effect at the time of any such
shipment, or (ii) an article which may not, under the provisions of Sections
404, 505 or 512 of the Act, be introduced into interstate commerce;
9.1.2 all Licensed Products furnished to NCH hereunder shall
be in full compliance with the Specifications at the time of delivery, and shall
remain in full compliance with the Specifications for the full period of the
expected shelf-life of such Licensed Products, so long as the Licensed Products
are stored in accordance with the Specifications;
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9.1.3 Supplier shall perform its obligations hereunder in
compliance with all applicable federal, state and local laws and regulations,
including without limitation the Act, FDA's then current Good Manufacturing
Practices ("cGMP"), and any and all health, safety and environmental laws and
regulations applicable to Supplier's operations and performance hereunder;
9.1.4 all Licensed Products furnished to NCH hereunder shall
have been manufactured in accordance with the terms of the QA Agreement;
9.1.5 Supplier has complied with, and during the term of this
Agreement will continue to comply with the laws, rules and regulations, which
impact the quality of the Licensed Products, and affect the ability of Supplier
to manufacture and package the Licensed Products in commercial quantities for
use and sale in the Territory;
9.1.6 Supplier's manufacturing, laboratory and packaging
facilities shall remain in compliance at all times during the term of this
Agreement with cGMP's which impact the quality of the Licensed Products, to the
extent applicable to the manufacture and packaging of the Licensed Products;
9.1.7 Supplier has disclosed to NCH all material information
concerning Supplier's facilities and Supplier's ability to perform its
obligations hereunder which is in Supplier's possession as of the date this
Agreement is executed by Supplier, and will continue to disclose such
information to NCH in the future, promptly after receiving or becoming aware of
it;
9.1.8 the title conveyed on all Licensed Products furnished to
Buyer hereunder shall be good, and its transfer rightful, and the Licensed
Products shall be delivered free from any security interest or other lien or
encumbrance; and
9.1.9 Supplier owns the Intellectual Property (as defined
below) or has the right to use the Intellectual Property in the course of
Supplier's performance hereunder. For purposes of this Agreement, the term
"Intellectual Property" shall mean all copyright, trademark, patents, and other
intellectual property rights to the intellectual property which Supplier shall
use to perform its obligations hereunder.
9.2 EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT,
SUPPLIER MAKES NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, CONCERNING THE
LICENSED PRODUCTS, OR THE MERCHANTABILITY OR FITNESS THEREOF FOR ANY PURPOSE.
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9.3 NCH hereby represents and warrants that:
9.3.1 it has not and will not knowingly enter into any
contract or any other transaction with any third party that conflicts with its
obligations hereunder.
9.3.2 all Licensed Products that it shall store, use, sell,
market or distribute shall be stored, used, sold, marketed or distributed in
accordance with all applicable laws.
10. INDEMNIFICATION AND INSURANCE
10.1 NCH shall defend, indemnify and hold Supplier (including all
officers, directors, employees, Affiliates and agents of Supplier) harmless
against any and all claims, damages, expenses, reasonable attorneys' fees,
settlement amounts, royalty fees and judgments arising out of any claim of
personal injury, bodily injury or property damage to a third party alleged to
have been caused by the Licensed Products, except to the extent that such injury
or damage was the result of any breach of this Agreement by Supplier, including
any warranty contained herein, or the result of any latent defects in the
Licensed Products caused by the negligence or willful misconduct of Supplier.
Supplier shall promptly notify NCH of any such claim or action, shall reasonably
cooperate with NCH in the defense of such claim or action, and shall permit NCH
to control the defense and settlement of such claim or action, all at NCH's cost
and expense.
10.2 Supplier shall defend, indemnify and hold NCH (including all
officers, directors, employees, Affiliates and agents of NCH) harmless against
any and all claims, damages, expenses, attorneys' fees, settlement amounts,
royalty fees, and judgments arising out of (i) any claim of personal injury,
bodily injury or property damage to a third party to the extent that such injury
or damage is the result of (a) any breach of this Agreement by Supplier,
including any warranty contained herein, or (b) any claim regarding latent
defects in the Licensed Products caused by the negligence or willful misconduct
of Supplier; (ii) any claim regarding a work-related injury to any Supplier
employee; or (iii) any claim that the Licensed Products, or any Intellectual
Property, infringe any patent, trade secret, trademark, copyright, or other
proprietary interest. NCH shall promptly notify Supplier of any such claim or
action, shall reasonably cooperate with Supplier in the defense of such claim or
action, and shall permit Supplier to control the defense and settlement of such
claim or action, all at Supplier's cost and expense. In the defense or
settlement of any claim under clause (iii) above, Supplier shall, at its
expense, and subject to the prior written agreement of NCH use commercially
reasonable efforts to: (x) obtain the right to continue using the Intellectual
Property, or, as applicable, the right of NCH to continue to use or sell the
Licensed Products; or (y) replace or modify the Intellectual Property so that
Supplier's performance hereunder, or, as applicable, the Licensed Products,
become non-infringing while giving equivalent performance.
10.3 After consulting with Supplier, NCH shall, at its sole discretion,
determine whether any Licensed Products must be subject to a field correction,
withdrawn or recalled from the market (collectively, a "Regulatory Recall"). NCH
shall notify all regulatory authorities of any such Regulatory Recall, and shall
take all steps necessary to effectuate such Regulatory Recall. Supplier shall
assist NCH in carrying out any Regulatory Recall to the extent requested by NCH.
Supplier shall reimburse NCH for the costs of such Regulatory Recalls to the
extent such Regulatory Recalls were made necessary by the actions or inaction of
Supplier and NCH shall reimburse Supplier for the costs, if any, incurred by
Supplier of such Regulatory Recalls to the extent such Regulatory Recalls were
made necessary by the actions or inaction of NCH.
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10.4 Supplier shall obtain, at its own expense, a policy of insurance
in amounts no less than those specified below:
10.4.1 naming NCH as an additional insured on a policy of
general liability insurance with combined limits of not less than $1,000,000 per
occurrence and $1,000,000 per accident for bodily injury, including death, and
property damage;
10.4.2 workers' compensation and disability insurance in the
amounts required by the law of the state(s) in which its workers are located,
and employer's liability insurance with limits of not less than $1,000,000 per
occurrence;
10.4.3 naming NCH as an additional insured on a policy of
automobile liability insurance (in the event that the use of an automobile is
required in the performance of this Agreement) with combined limits of not less
than $1,000,000 per occurrence and $1,000,000 per accident for bodily injury,
including death, and property damage is required;
10.4.4 naming NCH as an additional insured on a policy of
product liability insurance with limits not less than $5,000,000;
10.4.5 property insurance for the replacement value of the
facilities and equipment used to produce the Licensed Products; and
10.4.6 naming NCH as an additional insured on a policy of
excess insurance with limits not less than $5,000,000.
10.5 Supplier shall provide to NCH evidence of its insurance. Supplier
shall provide NCH thirty (30) days prior written notice of any cancellation or
change in coverage.
10.6 NCH warrants that it maintains a policy or program of insurance or
self-insurance at levels sufficient to support the indemnification obligations
assumed herein. Upon request, NCH shall provide to Supplier evidence of its
insurance. NCH shall provide to Supplier thirty (30) days prior written notice
of any cancellation or change in coverage.
11. TERM AND TERMINATION
11.1 This Agreement shall commence on the effective date of the License
Agreement and shall continue in effect until the earlier of (a) the ++
anniversary of the effective date of the License Agreement and (b) the
termination of the License Agreement (the "Term"). Except as set forth in
Sections 11.2 and 11.3 of this Agreement, neither party shall have the right to
terminate this Agreement prior to the expiration of the Term.
- -------------------------------------
++Confidential portions omitted and filed separately with the Commission.
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11.2 In the event that either party shall materially breach this
Agreement, the other party shall give such party written notice specifying such
breach with reasonable detail. Should the breaching party fail to cure such
breach within thirty (30) days of its receipt of such notice, then the other
party may terminate this Agreement, which thirty-day period may be extended for
such additional reasonable period of time necessary to cure the breach, in the
event a period of thirty days is not sufficient time to cure such breach and the
breaching party is diligently attempting to cure such breach. In addition,
either party may terminate this Agreement with immediate effect upon giving
written notice to the other party in the event of insolvency, assignment for the
benefit of creditors, or bankruptcy proceedings by or against the other party.
11.3 NCH may immediately terminate this Agreement at no cost and
without prior notice to Supplier if:
11.3.1 on December 31, 2002 Supplier's manufacturing plant has
not been completely built and validated and passed all necessary pre-approval
inspections, or if such plant is otherwise not ready to begin manufacturing the
Licensed Products;
11.3.2 at any time during the term of this Agreement, Supplier
is unable for three (3) consecutive months to supply Licensed Products which
comply with Supplier's obligations hereunder in quantities sufficient to meet
NCH's orders made consistent with Sections 3.1 and 3.2;
11.3.3 on more than four (4) occasions during any twenty four
(24) month period of the term of this Agreement, Supplier is unable to supply
Licensed Products which comply with its obligations hereunder in quantities
sufficient to meet NCH's orders made consistent with Section 3.2 and NCH's
forecasts as detailed in Section 3.1; or
11.3.4 all or substantially all of the capital stock or assets
of Supplier are sold as described in Section 15.9 hereof.
11.4 In order to permit NCH to make a smooth transition to a new
supplier of Licensed Products, in the event that this Agreement should terminate
for any reason (other than a breach by NCH of this Agreement), then NCH shall be
permitted, in its discretion, to continue to submit purchase orders to Supplier
in accordance with Section 3.2, and Supplier shall continue to supply Licensed
Products to NCH in accordance with such purchase orders and this Agreement, for
a period of one hundred twenty (120) days after the termination of this
Agreement, and this Agreement shall remain in effect with respect to such
purchase orders until the expiration or termination of the purchase orders.
11.5 Notwithstanding any termination of this Agreement, the provisions
of Sections 3.5, 5.4, 6.5, 7, 8, 9, 10, 11.4, 11.5, 11.6, 11.7 and 14 shall
remain in effect.
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11.6 Neither the License Agreement nor the validity of NCH's continued
license of the Licensed Products from Supplier shall be affected by the
termination of this Agreement by either party for any or no reason. In the event
that this Agreement is terminated by either party prior to the expiration of the
Term for any of the reasons set forth in Sections 2.4.5, 11.2 or 11.3, NCH may
have a supplier other than the Supplier (a "Back-Up Supplier") manufacture and
package all of NCH's requirements of the Licensed Products from that time on,
and Supplier agrees to cooperate fully with NCH and the Back-Up Supplier and
shall use commercially reasonable efforts to enable the Back-Up Supplier to
qualify and validate the Back-Up Supplier's facilities and to enable the Back-Up
Supplier to manufacture and package the Licensed Products.
11.7 In the event that NCH is required to obtain Licensed Products from
a Back-Up Supplier, then Supplier shall credit NCH against future royalty
payments for all reasonable and appropriately documented costs and related
out-of-pocket expenses incurred by NCH in obtaining the Licensed Products from
the Back-Up Supplier, above and beyond the amount NCH would have paid Supplier
for the same Licensed Products, including without limitation, the cost of
validating the manufacture and packaging of the Licensed Products at the Back-Up
Supplier's facilities.
12. AUDIT AND INSPECTION RIGHTS
12.1 During the term of this Agreement and any extension thereof, NCH
shall have the right, at its sole cost and expense and upon prior written notice
to Supplier, to send NCH representatives to audit, inspect and observe the
manufacture, storage, disposal and transportation of the Licensed Products, and
all other materials related thereto or used in connection therewith, with
reasonable notice during normal business hours. Such NCH representatives shall
have no responsibility for supervision of Supplier employees performing the
manufacture, storage, disposal or transportation operations themselves. The
audit and inspection rights set forth in this Section 12.1 are for the purpose
of determining Supplier's compliance with the terms of this Agreement.
12.2 Supplier shall make available to NCH all records and reports
relating to the manufacture, storage, disposal and transportation of the
Licensed Products, and all other materials related thereto or used in connection
therewith, including without limitation those documents relating to analytical
data, for NCH's review during normal business hours and upon reasonable prior
written notice, and NCH shall have the right to copy these documents as
required. Such records and reports shall be subject to the confidentiality
provisions of Article 8 of this Agreement. NCH shall have the right to conduct
inventory reconciliation audits and other audits as reasonably required for its
internal control, at NCH's sole cost and expense.
12.3 If, as a result of any such inspection, NCH concludes that
Supplier is not in compliance with any of its obligations hereunder, it shall so
notify Supplier in writing, specifying such areas of noncompliance in reasonable
detail. Supplier shall provide to NCH within thirty (30) days of NCH's request a
written action plan satisfactory to NCH, with a time line for resolution of the
problems identified within a reasonable, mutually agreed upon time frame.
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12.4 Supplier shall inform NCH within twenty-four (24) hours of any
notification to Supplier of any site visits to any of Supplier's facilities by
the FDA, state or federal regulatory agencies or any other governmental or
regulatory agency, relating, directly or indirectly, to the manufacture of the
Licensed Products, and shall provide to NCH all other materials related thereto
or used in connection therewith. NCH shall have the option of participating in
any site visit by any governmental or regulatory agency, if the site visit
relates, directly or indirectly, to the manufacturing, storage, disposal and
transportation of the Licensed Products. Should NCH not participate in the site
visit, Supplier shall report in writing the results of the visit to NCH within
seven (7) days of the occurrence thereof. In the event that any such
governmental or regulatory agency finds that the site is deficient or
unsatisfactory in any respect, Supplier shall cure all deficiencies within the
cure period as ordered by the government or regulatory agency. If all
deficiencies are not cured within the required time frame, NCH shall have the
option to immediately terminate this Agreement, without liability.
13. GROSS INEQUITIES
It is the intent of the parties hereto that they shall mutually benefit
from the terms, conditions and provisions of this Agreement, and in the event
that either party shall claim to suffer a gross inequity resulting from such
terms, conditions or provisions, or from a substantial change in circumstances
or conditions, such party shall inform the other of such claim and obtain
agreement in good faith that a gross inequity exists, and if the non-claiming
party acknowledges such inequity, the parties shall negotiate in good faith to
resolve or remove such inequity. It is mutually understood and agreed, however,
that nothing herein shall be construed to relieve either party of any of its
obligations under this Agreement, unless and until such resolution or removal
has been agreed to in writing by both parties.
14. FORCE MAJEURE
14.1 Neither party shall be responsible or liable to the other
hereunder for failure or delay in the performance of this Agreement due to
factors beyond its reasonable control, including without limitation, any war,
fire, accident, earthquake or other casualty, or any act of God or the public
enemy. Upon the occurrence of an event of force majeure, the party failing or
delaying performance, shall promptly notify the other party, in writing, setting
forth the nature to the occurrence, its expected duration and how such party's
performance is affected. In the event of the applicability of this Article 14,
the party failing or delaying performance shall use commercially reasonable
efforts to eliminate, cure and overcome any such causes and resume the
performance of its obligations as soon as practicable under the circumstances.
14.2 Except as provided below, if a force majeure event occurs, then
the affected party's performance shall be excused, and the time for performance
shall be extended for the period of delay or inability to perform due to such
occurrence. If, however, any such event shall delay any shipment hereunder or
the receipt thereof for more than thirty (30) days beyond the scheduled delivery
date, then if such event is suffered by NCH and not also by Supplier, Supplier
shall have the right, at its option, to cancel such shipment without incurring
any liability to NCH with respect thereto, and if such event is suffered by
Supplier and not also by NCH, NCH shall have the right, without incurring any
liability to Supplier, to cancel its order and immediately (without regard to
such 30 day period) to purchase Licensed Products from a Back-Up Supplier until
such time as Supplier is able to perform its obligations hereunder.
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14.3 If any such disability exists for more than ninety (90) days, the
party not under such disability may terminate this contract without liability to
the other party by giving such other party thirty (30) days prior written notice
of termination, and this Agreement shall terminate on such thirtieth (30th) day
unless prior thereto the force majeure event ceases to exist and performance
under this Agreement resumes and the party giving the notice of termination is
so notified in writing.
15. MISCELLANEOUS
15.1 Each party acknowledges and agrees that any failure on the part of
the other party to enforce at any time, or for any period of time, any of the
provisions of this Agreement shall not be deemed or construed to be a waiver of
such provisions or of the right of such other party thereafter to enforce each
and every such provision.
15.2 If and to the extent that any provision of this Agreement is
determined by any legislature, court or administrative agency to be, in whole or
in part, invalid or unenforceable, such provision or part thereof shall be
deemed to be surplusage and, to the extent not so determined to be invalid or
unenforceable, each provision hereof shall remain in full force and effect
unless the purposes of this Agreement cannot be achieved. In the event any
provisions shall be held invalid, illegal or unenforceable the parties shall use
commercially reasonable efforts to substitute a valid, legal and enforceable
provision which insofar as practical implements the purposes hereof.
15.3 This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York as though made and to be fully performed
in said State.
15.4 All notices required or permitted hereunder shall be given in
writing and sent by facsimile transmission, or mailed postage prepaid by
first-class certified or registered mail, or sent by a nationally recognized
express courier service, or hand-delivered to the following addressees:
NCH: Novartis Consumer Health, Inc.
560 Morris Avenue
Summit, NJ 07901
Attn: General Counsel
Supplier: Impax Laboratories, Inc.
3735 Castor Avenue
Philadelphia, PA 19124
Attn: CEO
or to such other address as may be specified in a notice given to the other
party in accordance with this Section. Any notice, if sent properly addressed,
postage prepaid, shall be deemed made three (3) days after the date of mailing
as indicated on the certified or registered mail receipt, or on the next
business day if sent by express courier service or on the date of delivery or
transmission (if delivered or sent during ordinary business hours, otherwise on
the next business day) if hand-delivered or sent by facsimile transmission.
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15.5 The captions of each section of this Agreement are inserted only
as a matter of convenience and for reference and in no way shall be deemed to
define, limit, enlarge, or describe the scope of this Agreement and the
relationship of the parties hereto, and shall not in any way affect this
Agreement or the construction of any provisions herein.
15.6 This Agreement, including all Exhibits annexed hereto (which are
incorporated herein by reference), represents and incorporates the entire
understanding between the parties hereto with respect to the subject matter of
this Agreement, and each party acknowledges that there are no warranties,
representations, covenants or understandings of any kind, nature or description
whatsoever made by any party to any other, except such as are expressly set
forth herein. This Agreement shall not be subject to change or modification
except by the execution of a writing specified to be an explicit amendment to
this Agreement duly executed by all parties hereto. Notwithstanding the
foregoing, the terms and conditions set forth in this Agreement shall take
precedence over any contrary or inconsistent terms and conditions appearing or
referred to in any Exhibits annexed hereto, unless the Exhibit explicitly states
otherwise.
15.7 The parties recognize that, during the term of this Agreement, a
purchase order, acknowledgment 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 shall prevail in
the event of any conflict between this Agreement and the printed provisions of
such Forms, or typed provisions of Forms that add to, vary, modify or are at
conflict with the provisions of this Agreement.
15.8 Nothing in this Agreement shall create between the parties a
partnership, joint venture or principal-agent relationship and, for the
avoidance of doubt, each of Supplier and NCH now confirms and accepts that it is
an independent contractor trading for and on its own behalf.
15.9 Supplier may not assign or otherwise transfer this Agreement or
any interest herein or any right hereunder without the prior written consent of
NCH except a transfer in connection with the sale of all or substantially all of
the capital stock or assets of Supplier. Any purported assignment, transfer, or
attempt to assign or transfer any interest or right hereunder by Supplier,
except in compliance with this Section 15.9, shall be null, void and of no
effect.
15.10 NCH shall have the right to disapprove of any subcontractor or
sub-subcontractor retained or to be retained to assist Supplier in the
performance of its obligations hereunder, but such disapproval shall not be
unreasonable under the circumstances. Any such approval or disapproval shall not
relieve Supplier of its obligations under this Agreement. Supplier may not make
use of the services of any subcontractor or sub-subcontractor in the performance
of its obligations hereunder if NCH has disapproved of that subcontractor or
sub-subcontractor.
15.11 This Agreement may be executed in two or more counterparts, each
of which shall constitute an original and all of which together shall constitute
a single instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
IMPAX LABORATORIES, INC. NOVARTIS CONSUMER HEALTH, INC.
By: /s/ Barry R. Edwards By: /s/ Tim Strong
---------------------------------------- --------------------------
Name: Barry R. Edwards Name: Tim Strong
-------------------------------------- ------------------------
Title: Co-CEO Title: SVP PSM
------------------------------------- -----------------------
Date: 12/19/01 Date: 12/18/01
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