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EXHIBIT 10.69
ACTIVE INGREDIENT SUPPLY AGREEMENT
[(__________)]
This Active Ingredient Supply Agreement (the "Agreement") dated this 29th
day of March, 2000 between Watson Pharmaceuticals, Inc., a Nevada corporation,
("Watson") and Halsey Drug Co., Inc., a New York corporation ("Halsey").
RECITALS
A. Watson and Halsey have entered into a Product Purchase Agreement and a
Finished Goods Supply Agreement, each of even date herewith, pursuant to which
(i) Halsey has sold, and Watson has purchased the Product Assets, as defined in
the Product Purchase Agreement, relating to a formulation for
[_____________________] and (ii) Halsey will manufacture and supply to Watson
finished pharmaceutical goods containing the active pharmaceutical ingredient
[_____________________] in capsule form for oral administration.
B. Watson and Halsey desire to establish a relationship, pursuant to
which Halsey (or its appropriate Affiliates) will supply, and Watson (or its
appropriate Affiliates) will purchase, the Active Ingredient (as defined
herein).
In consideration of the foregoing premises, and the mutual covenants and
obligations set forth herein, Halsey and Watson hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1. "ACTIVE INGREDIENT" shall mean the active pharmaceutical ingredient
[______________________].
1.2. "ACTIVE INGREDIENT SPECIFICATIONS" shall mean the specifications for
the Active Ingredient set forth in Exhibit A attached hereto, including (as
applicable) statements of pharmaceutical manufacturing, filling, storage and
quality control procedures, and labeling and packaging specifications (as such
may be revised from time to time in accordance with the terms of this Agreement
by written agreement executed by the parties). The parties acknowledge that
there may be more than one form of Active Ingredient and that each such form
will have its own Active Ingredient Specifications.
1.3. "AFFILIATE" shall mean, with respect to any party, any person or
entity which, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such party. A
person or entity shall be deemed to control a corporation (or other entity) if
such person or entity possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such corporation (or other
entity) whether through the ownership of voting securities, by contract or
otherwise.
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1.4. "COMMERCIAL PRODUCT" shall mean a formulation of
[______________________] in capsule form for oral administration, packaged,
labeled and finished to meet the certain specifications for acceptance set forth
by Watson, and includes samples and trade packaging.
1.5. "CONFIDENTIAL INFORMATION" shall mean, with respect to a party, all
information of any kind whatsoever (including without limitation, data,
compilations, formulae, models, patent disclosures, procedures, processes,
projections, protocols, results of experimentation and testing, specifications,
strategies and techniques), and all tangible and intangible embodiments thereof
of any kind whatsoever (including without limitation, apparatus, compositions,
documents, drawings, machinery, patent applications, records and reports), which
is disclosed by such party to the other party and is marked, identified as or
otherwise acknowledged to be confidential at the time of disclosure to the other
party. Notwithstanding the foregoing, Confidential Information of a party shall
not include information which the other party can establish by written
documentation (a) to have been publicly known prior to disclosure of such
information by the disclosing party to the other party, (b) to have become
publicly known, without fault on the part of the other party, subsequent to
disclosure of such information by the disclosing party to the other party, (c)
to have been received by the other party at any time from a source, other than
the disclosing party, rightfully having possession of and the right to disclose
such information, (d) to have been otherwise known by the other party prior to
disclosure of such information by the disclosing party to the other party, or
(e) to have been independently developed by employees or agents of the other
party without use of such information disclosed by the disclosing party to the
other party.
1.6. "DRUG MASTER FILE" shall mean Halsey's Drug Master File for
manufacturing the Active Ingredient filed with the FDA, and the equivalent
filing with the governing health authority of any other country.
1.7. "FDA" shall mean the United States Food and Drug Administration, and
any successor agency thereto.
1.8. "GMP" shall mean current Good Manufacturing Practices promulgated by
the FDA, and their equivalent promulgated by the governing health authority of
any other country in which the Active Ingredient are manufactured by Halsey
under this Agreement.
1.9. "HALSEY INTELLECTUAL PROPERTY" shall mean the Intellectual Property
obtained by, or licensed to, Watson under the Product Purchase Agreement.
1.10. "INTELLECTUAL PROPERTY" shall mean Watson's and its Affiliates'
rights existing as of the date hereof and as may be developed hereafter in and
to all confidential or proprietary information, trade secrets, patent rights,
technology, know-how, developments, improvements, techniques, data, methods,
processes, instructions, formulas, recipes, drawings and specifications
necessary to manufacture and supply the Active Ingredient hereunder, and shall
include the Halsey Intellectual Property.
1.11. "LIMITED WARRANTY" shall have the meaning defined in Section 2.5(d)
hereof.
1.12. "PERSON" shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority or any other form of entity not
specifically listed herein.
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1.13. "RAW MATERIAL COST" shall mean the cost of raw materials used to
manufacture the Active Ingredient, determined in accordance with generally
accepted accounting principles and consistent with Halsey's accounting practices
for other active ingredients manufactured
1.14. "REGULATORY DOSSIERS" shall mean all registrations, permits,
licenses, authorizations, approvals, presentations, notifications or filings
(together with all applications therefor), which are filed with or granted by
the governing health authority of any country, and which are required to
develop, make, use, sell, import or export the Active Ingredient and Commercial
Products, other than the Drug Master File.
ARTICLE 2
MANUFACTURE, SUPPLY AND PURCHASE
2.1. LICENSE GRANT. Watson hereby grants to Halsey a non-exclusive license
to use and practice the Intellectual Property solely to manufacture the Active
Ingredient for Watson in accordance with the provisions of this Agreement.
Watson makes no representation or warranty that the Intellectual Property
licensed hereunder is sufficient to allow Halsey to perform its obligations
hereunder.
2.2. SUPPLY AND PURCHASE OBLIGATIONS. During the applicable term of this
Agreement, Halsey shall manufacture and supply Active Ingredient for Watson.
However, Watson shall not be entitled to purchase, and Halsey shall have no
obligation to supply, Active Ingredient hereunder for manufacture of Commercial
Product by a third party which meets the specifications for Commercial Products
as set forth in the Finished Goods Supply Agreement [(__________)] of even date
herewith, and is subject to ANDA No. [_____], so long as Halsey is supplying
Watson with Finished Goods in accordance with such agreement. Halsey may
manufacture and supply Active Ingredient to third parties, provided however that
(i) Halsey may not use the Intellectual Property for such purposes, and (ii) in
the event of any shortage of Active Ingredient, Halsey shall fill Watson's
orders in full prior to filling orders of any third party. Watson shall have no
obligation to purchase Active Ingredient under this Agreement, except to the
extent Watson provides to Halsey purchase orders pursuant to Section 2.4(c)
below.
2.3. MANUFACTURING PRACTICES.
(a) Active Ingredient Specifications. Halsey shall manufacture the
Active Ingredient in conformity with the Active Ingredient Specifications and in
accordance with all applicable laws and regulations.
(b) GMP. Halsey shall manufacture the Active Ingredient in accordance
with GMP and the Drug Master File. Halsey shall advise Watson of any proposed
process changes outside the Drug Master File prior to their implementation by
Halsey. Watson shall have the right, at its sole expense, to audit Halsey for
compliance with GMP on reasonable notice during normal business hours at least
once in each calendar year, and more often in Watson's reasonable discretion.
(c) Certificates of Analysis. Halsey shall provide Watson with a
certificate of analysis for each shipment of Active Ingredient manufactured and
supplied hereunder based upon a reference standard established by Halsey and
reasonably acceptable to Watson.
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(d) Quality Control Information. Upon the reasonable request of
Watson, Halsey shall provide Watson with such information, including analytical
and manufacturing documentation, requested by Watson regarding quality control
of Active Ingredient supplied hereunder.
(e) Inspection. Watson, or its designee, may, at its own expense,
with prior reasonable notice and during regular business hours, visit the
facilities used by Halsey to manufacture Active Ingredient to review the Active
Ingredient related records and the facilities.
(f) Technical Requirements. In addition Halsey shall comply with the
technical requirements set forth on Exhibit B.
2.4. FORECASTS AND ORDERS.
(a) Forecasts. Not less than forty-five (45) days prior to the first
day of each calendar quarter, Watson shall prepare and provide Halsey with a
written forecast of the estimated Active Ingredient requirements of Watson and
its Affiliates for each of the following four (4) calendar quarters. Such
forecast shall constitute a binding purchase obligation of Watson with respect
to the first quarter thereof, and the rest of such forecast shall be
non-binding.
(b) Supply Obligation. Each calendar quarter, Halsey shall be
required to manufacture, supply and deliver to Watson such quantities of Active
Ingredient as Watson orders pursuant to Section 2.4(c) below, up to one hundred
and twenty five percent (125%) of the quantity forecasted for such calendar
quarter in the most recent forecast under Section 2.4(a) above. Halsey shall use
its commercially reasonable efforts to manufacture, supply and deliver to Watson
any quantities of Active Ingredient as Watson orders pursuant to Section 2.4(c)
below, in excess of one hundred and twenty five percent (125%) of the quantity
forecasted for such calendar quarter in the most recent forecast under Section
2.4(a) above, and shall fill all of Watson's orders (for Active Ingredient or
finished goods order by Watson under the Finished Goods Supply Agreement, as
determined by Watson) prior to filling orders of any third party for Active
Ingredient. If Halsey becomes aware of any circumstances that may cause Halsey
to default in its obligation above to deliver such quantities of conforming
Active Ingredient as Watson orders for any calendar quarter, Halsey shall give
Watson prompt written notice describing such circumstances, together with a
proposed course of action to remedy such failure.
(c) Orders. Watson shall make all purchases hereunder by submitting
firm purchase orders to Halsey. Each such purchase order shall be in writing in
a form reasonably acceptable to Halsey, and shall specify the form of Active
Ingredient ordered, the quantity ordered, the price therefor under Section 3.1
below, the place of delivery and the required delivery date therefor, which
shall not be less than sixty (60) days after the date of such purchase order. In
the event of a conflict between the terms and conditions of any purchase order
and this Agreement, the terms and conditions of this Agreement shall prevail.
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1.5. DELIVERY AND ACCEPTANCE.
(a) Delivery. All Active Ingredient supplied under this Agreement
shall be shipped F.O.B. Halsey's place of manufacture to such location as
designated by Watson (which may be a Watson facility or the facility of a
contractor of Watson) in the applicable purchase order. Watson shall pay all
freight, insurance charges, taxes, import and export duties, inspection fees and
other charges applicable to the sale and transport of Active Ingredient
purchased by Watson hereunder. Title and risk of loss and damages to Active
Ingredient purchased by Watson hereunder shall pass to Watson upon delivery to
Watson's designated carrier.
(b) Rejection and Cure. If a shipment of Active Ingredient or any
portion thereof fails to conform to the Active Ingredient Specifications, then
Watson shall have the right to reject such nonconforming shipment of Active
Ingredient or the nonconforming portion thereof, as the case may be. Watson
shall give written notice to Halsey of its rejection hereunder, within forty
five (45) days after Watson's receipt of such shipment, specifying the grounds
for such rejection. The nonconforming shipment of Active Ingredient, or the
nonconforming portion thereof, shall be held for Halsey's disposition, or shall
be returned to Halsey, in each case at Halsey's expense, as directed by Halsey.
Halsey shall use its commercially reasonable efforts to replace each
nonconforming shipment of Active Ingredient, or the nonconforming portion
thereof, with conforming Active Ingredient as soon as reasonably practicable
after receipt of notice of rejection thereof, and in any event shall do so
within forty five (45) days after receipt of notice of rejection thereof.
(c) Packaging. Halsey shall supply Active Ingredient under this
Agreement in labeled bulk containers reasonably acceptable to Watson.
(d) Warranty. Halsey warrants that (a) Active Ingredient manufactured
hereunder shall conform with the Active Ingredient Specifications; (b) Active
Ingredient shall be manufactured hereunder in accordance with all applicable
laws and regulations, GMP and the Drug Master File; and (c) the manufacture and
sale of Active Ingredient by Halsey hereunder, and the use thereof by Watson and
its Affiliates contemplated hereby, shall not infringe the patent rights of any
Person or constitute a misappropriation of the trade secrets or other
intellectual property rights of any Person, except for any such infringement or
misappropriation arising directly from Halsey's use of the Intellectual Property
(excluding, for purposes hereof, the Halsey Intellectual Property)
(collectively, parts (a), (b) and (c) above comprise the "Limited Warranty").
HALSEY MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE ACTIVE
INGREDIENT, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
(e) Cover. If Halsey fails to timely deliver to Watson the quantity
of conforming Active Ingredient that Watson orders under any purchase order
pursuant to Section 2.4(c) above (subject to the provisions of Section 2.4(b)
above), after providing written notice to Halsey, Watson shall have the right to
purchase substitute Active Ingredient from a third party in substitution for the
quantity of conforming Active Ingredient which Halsey failed to deliver
hereunder. Halsey shall reimburse Watson on demand for the difference between
the cost of obtaining such substitute Active Ingredient (plus any commercially
reasonable charges, expenses or commissions incurred by Watson in connection
with effecting cover, and any other reasonable expenses incident to such
failure), less the price which would have been due to Halsey for the like
quantity of Active Ingredient if supplied by Halsey hereunder.
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ARTICLE 3
PRICE AND PAYMENT TERMS
3.1. PRICE. Watson shall purchase from Halsey all Active Ingredient which
are accepted pursuant to Section 2.5 above at a price of
[__________________________________________] per [______] on each anniversary of
the date hereof, Halsey may increase such price to reflect any increase in the
Raw Material Costs during the preceding year. Such new price shall be effective
for all orders received by Halsey thirty (30) days after written notice of such
increase by Halsey to Watson, such notice, showing in reasonably specific detail
the calculation of such increase.
3.2. INVOICING. Upon shipment of Active Ingredient to Watson, Halsey shall
submit invoices therefor to Watson. Watson shall pay each invoice in full within
forty five (45) days after the date of invoice. All payment shall be made in
U.S. Dollars.
3.3. SALES AND USE TAXES. Watson shall be solely responsible for the
payment of all federal, state, or local sales, use or value-added tax, excise or
similar charge, or other tax assessment (other than that assessed against
income), assessed or charged on the sale of Active Ingredient sold pursuant to
this Agreement.
3.4. AUDIT RIGHT. Upon the written request of Watson and not more than once
in each calendar year, Halsey shall permit an independent certified public
accounting firm, selected by Watson and reasonably acceptable to Halsey to have
access during normal business hours to such of the records of Halsey as may be
reasonably necessary to verify the accuracy of Halsey's calculation of any price
increase hereunder for any period ending not more than twenty-four (24) months
prior to the date of such request. The accounting firm shall disclose to Watson
only whether the calculations are correct or not and the specific details
concerning any discrepancies. If such accounting firm concludes that the price
increase was overstated during the audited period, Halsey shall reimburse Watson
for the amount overpaid by Watson hereunder for such period within thirty (30)
days of the date Watson delivers to Halsey such accounting firm's written report
so concluding. The fees and expenses charged by such accounting firm shall be
paid by Watson; provided, however, if the audit discloses that the price
increase was overstated during the audited period by more than five percent
(5%), then Halsey shall pay the reasonable fees and expenses charged by such
accounting firm.
ARTICLE 4
FURTHER OBLIGATIONS OF THE PARTIES
4.1. DRUG MASTER FILE. Halsey has filed, shall be solely responsible for
maintaining, and shall maintain, the Drug Master File. Watson shall have the
nonexclusive right to reference the Drug Master File in all applicable
Regulatory Dossiers for Commercial Products. All such Regulatory Dossiers shall
be owned by Watson and Halsey shall have no rights therein except as set forth
herein.
4.2. FACILITY QUALIFICATION. Halsey shall, at no cost to Watson, take all
such actions to qualify (and thereafter to maintain qualification of) the
facility (or facilities) at which Halsey manufactures Active Ingredient
hereunder, as required under applicable law in the United States and each other
country in which Watson has informed Halsey that Watson intends to sell
Commercial Products incorporating the Active Ingredient, to enable Watson to
obtain and maintain all applicable Regulatory Dossiers for the Commercial
Products.
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4.3. REGISTRATION ASSISTANCE. Upon the reasonable request of Watson, Halsey
promptly shall, at no cost to Watson, provide Watson with such information,
samples and technical assistance, and otherwise reasonably cooperate with
Watson, in connection with the preparation, prosecution and maintenance of all
applicable Regulatory Dossiers for the Active Ingredient.
4.4. RECALL. In the event either party believes it may be necessary to
conduct a recall, field correction, market withdrawal, stock recovery, or other
similar action with respect to any Commercial Product containing an Active
Ingredient which was sold by Halsey or its Affiliates to Watson or its
Affiliates under this Agreement (a "Recall"), Halsey and Watson shall consult
with each other as to how best to proceed, it being understood and agreed that
the final decision as to any Recall of any such Commercial Product shall be made
by Watson; provided, however, that Halsey shall not be prohibited hereunder from
taking any action that it is required to take by applicable law. Watson shall
bear all costs in connection with any such Recall; provided, however, that
Halsey shall reimburse Watson for all reasonable out-of-pocket expenses incurred
by Watson in connection with any such Recall attributable to any breach by
Halsey hereof, including without limitation, Halsey's failure to manufacture and
supply any Active Ingredient in accordance with the Limited Warranty.
4.5. FURTHER OBLIGATIONS OF HALSEY. During the term of this Agreement,
Halsey shall:
(a) At its own expense, promptly respond to all reasonable inquiries
from Watson pertaining to the supply of Active Ingredient.
(b) Without limiting the other provisions of this Agreement, use its
commercially reasonable efforts at all times to minimize Active Ingredient
delivery time.
(c) Furnish to Watson current copies of all issued master batch
records, procedures, specifications and methods and standard operating
procedures related to the Active Ingredient and submit to Watson for written
approval prior to implementation any and, all proposed changes to the same.
(d) Promptly notify Watson and the FDA of any change in the
manufacturing process that may affect the quality or safety of the Active
Ingredient; provided however, if such change would materially affect Watson's
business, Watson and Halsey shall mutually agree to a schedule for such change.
(e) Promptly notify Watson of any comments, responses or notices
received from the FDA, or other applicable regulatory authorities, which relate
to or may impact the Active Ingredient or the manufacture of Active Ingredient.
At its own cost, obtain and maintain any and all Federal and state regulations
and/or licenses with respect to the manufacture, by Halsey, of the Active
Ingredient.
(f) Provide ongoing technical product and process support with
respect to the Active Ingredient.
4.6. FURTHER OBLIGATIONS OF WATSON. During the term of this Agreement,
Watson shall:
(a) At its own expense, promptly respond to all reasonable inquiries
from Halsey pertaining to the supply of Active Ingredient.
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(b) Promptly notify Halsey of any comments, responses or notices
received from the FDA, or other applicable regulatory authorities, which relate
to or may impact the Active Ingredient or the manufacture of the Active
Ingredient by Halsey.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1. REPRESENTATIONS AND WARRANTIES. Each party hereby represents and
warrants to the other party as follows:
(a) Corporate Existence. Such party is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated.
(b) Authorization and Enforcement of Obligations. Such party (a) has
the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary corporate action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
(c) Consents. All necessary consents, approvals and authorizations of
all governmental authorities and other Persons required to be obtained by such
party in connection with its performance of this Agreement have been obtained.
(d) No Conflict. The execution and delivery of this Agreement and the
performance of such party's obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any material contractual
obligation of such party.
5.2. INSURANCE. Halsey and Watson shall maintain comprehensive general
liability insurance, including product liability insurance against claims
regarding the manufacture of Active Ingredient under this Agreement, in such
amounts as it customarily maintains for similar products and activities. Each
party shall maintain such insurance during the term of this Agreement and
thereafter for so long as it customarily maintains insurance for itself for
similar products and activities. Each party shall cause the other party to be
named as an additional insured under such insurance and shall provide the other
party proof of such insurance upon request. Each party shall give the other
party at least thirty (30) days notice of any cancellation, termination or
change in such insurance. Either party may substitute a self insurance program
on notice to the other party with information demonstrating the adequacy of such
program.
ARTICLE 6
INDEMNIFICATION
6.1. HALSEY'S INDEMNITY OBLIGATIONS. Halsey shall defend, indemnify and
hold harmless Watson, its Affiliates and their respective successors and
permitted assigns (and the respective officers, directors, stockholders,
partners and employees of each) from and against any and all losses,
liabilities, claims, actions, proceedings, damages and expenses (including
without limitation reasonable attorneys' fees and expenses) (herein "Damages")
relating to or arising (a) from the manufacture of the Active Ingredient, (b)
any breach by Halsey or its Affiliates of this Agreement,
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including without limitation, the failure of the Commercial Products to meet the
Limited Warranty or (c) any claims, infringement or misappropriation relating to
the Halsey Intellectual Property, provided however, Halsey shall have no
obligation to indemnify Watson to the extent such Damages relate to Halsey's use
of the Intellectual Property (other than the Halsey Intellectual Property).
6.2. WATSON'S INDEMNITY OBLIGATIONS. Watson shall defend, indemnify and
hold harmless Halsey and its Affiliates, and their respective successors and
permitted assigns (and the respective officers, directors, stockholders,
partners and employees of each) from and against any and all Damages arising out
of (a) the handling, possession, use, marketing, distribution or sale of any
Commercial Products containing Active Ingredient supplied hereunder by Watson or
its Affiliates or any of their distributors or agents, except to the extent such
Damages give rise to an indemnification claim of Watson under Section 6.1 above,
Section 6.1 of the Finished Goods Supply Agreement, or Section 7.1 of the
Product Purchase Agreement and (b) any claims of infringement or
misappropriation relating to the Intellectual Property (other than the Halsey
Intellectual Property).
6.3. INDEMNIFICATION. A party (the "indemnitee") that intends to claim
indemnification under this Article 6 shall notify the other party (the
"indemnitor") promptly in writing of any action, claim or liability in respect
of which the indemnitee believes it is entitled to claim indemnification,
provided that the failure to give timely notice to the indemnitor shall not
release the indemnitor from any liability to the indemnitee except to the extent
the indemnitor is prejudiced thereby. The indemnitor shall have the right, by
notice to the indemnitee, to assume the defense of any such action or claim
within the fifteen (15) day period after the indemnitor's receipt of notice of
any action or claim with counsel of the indemnitor's choice and at the sole cost
of the indemnitor. If the indemnitor so assumes such defense, the indemnitee may
participate therein through counsel of its choice, but at the sole cost of the
indemnitee. The party not assuming the defense of any such claim shall render
all reasonable assistance to the party assuming such defense, and all reasonable
out-of-pocket costs of such assistance shall be for the account of the
indemnitor. No such claim shall be settled other than by the party defending the
same, and then only with the consent of the other party which shall not be
unreasonably withheld; provided that the indemnitee shall have no obligation to
consent to any settlement of any such action or claim which imposes on the
indemnitee any liability or obligation which cannot be assumed and performed in
full by the indemnitor, and the indemnitee shall have no right to withhold its
consent to any settlement of any such action or claim if the settlement involves
only the payment of money by the indemnitor or its insurer.
6.4. LIMITATIONS ON INDEMNIFICATION. Notwithstanding any contrary provision
herein:
(i) no party shall be entitled to indemnification with respect to any
claim or suit to the extent such claim or suit results from (a) its own
negligence or willful misconduct, or (b) any action to which it has
consented in writing; and
(ii) neither party shall be liable to the other for any
consequential, incidental or indirect damages, including damages for lost
profits, loss of opportunity or use of any kind, suffered by the other
party, whether in contract, tort or otherwise.
ARTICLE 7
RELATIONSHIP BETWEEN THE PARTIES
7.1. INDEPENDENT CONTRACTOR. The relationship between Halsey and Watson is
solely that of buyer and seller, it being understood that each party is acting
as an independent contractor for
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its own account and this Agreement does not establish a joint venture, agency,
partnership or employer/employee relationship between the parties. Neither party
shall have authority to conclude contracts or otherwise to act for or bind the
other party in any manner, whatsoever, as agent or otherwise. Any and all
contracts and agreements entered into by either party shall be for that party's
sole account and risk and shall not bind the other party in any respect.
ARTICLE 8
CONFIDENTIALITY AND PUBLIC DISCLOSURE
8.1. CONFIDENTIALITY. Except for literature and information intended for
disclosure to customers, and except as may be required to obtain government
approval to manufacture, sell or use the Commercial Products or Active
Ingredient, each party will treat as confidential the Confidential Information,
and will take all necessary precautions to assure the confidentiality of such
information. Each party agrees to return to the other party upon the expiration
or termination of this Agreement all Confidential Information acquired from such
other party, except as to such information it may be required to retain under
applicable law or regulation, and except for one copy of such information to be
retained by such party's legal department. Neither party shall, during the
period of this Agreement or for three (3) years thereafter, without the other
party's express prior written consent use or disclose any such Confidential
Information for any purpose other than to carry out its obligations hereunder.
Each party, prior to disclosure of such Confidential Information to any
employee, consultant or advisor shall ensure that such person is bound in
writing to observe the confidentiality provisions of this Agreement. The
obligations of confidentiality shall not apply to information that the receiving
party is required by law or regulation to disclose, provided however that the
receiving party shall so notify the disclosing party of its intent and cooperate
with the disclosing party on reasonable measures to protect the confidentiality
of the information.
8.2. PUBLIC DISCLOSURE. Except for such disclosure as is deemed necessary,
in the reasonable judgment of a party, to comply with applicable laws, no
announcement, news release, public statement, publication, or presentation
relating to the existence of this Agreement, the subject matter hereof, or
either party's performance hereunder will be made without the other party's
prior written approval, which approval shall not be unreasonably withheld. The
parties agree that they will use reasonable efforts to coordinate any initial
announcement or press release relating to the existence of this Agreement so
that such initial announcement or press release by each is made
contemporaneously.
ARTICLE 9
TERM AND TERMINATION
9.1. TERM. Unless terminated earlier pursuant to Section 9.2 below, the
initial term of this Agreement shall expire on the date ten (10) years after the
date hereof; provided, however, that the term of this Agreement shall be
automatically extended for up to two (2) successive additional terms of five (5)
years each thereafter unless either party gives to the other not less than one
(1) year's written notice of termination prior to the expiration of the initial
term, or any additional term, of this Agreement.
9.2. TERMINATION.
(a) By Either Party. A party shall have the right to terminate this
Agreement, upon or after the breach of any material provision of this Agreement
by the other party if the other
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party has not cured such breach within sixty (60) days after receipt of written
notice thereof from the non-breaching party.
(b) By Watson. Watson shall have the right to terminate this
Agreement, on sixty (60) days written notice to Halsey, if Halsey fails to
deliver to Watson such quantities of conforming Active Ingredient as Watson
orders pursuant to Section 2.4(c) above (subject to the provisions of Section
2.4(b) above) for any four (4) out of eight (8) consecutive calendar quarters.
(c) Effect of Expiration and Termination. Expiration or termination
of this Agreement shall not relieve the parties of any obligation accruing prior
to such expiration or termination. The provisions of Sections 4.4 and 5.2 and
Articles 6 and 8 shall survive any expiration or termination of this Agreement.
Upon termination or expiration, each party shall immediately deliver to the
other (and cause any of its employees, agents or representatives to so deliver),
at such party's expense, all Confidential Information of the other party,
including without limitation any and all copies, duplications, summaries and/or
notes thereof or derived therefrom, regardless of the format.
ARTICLE 10
MISCELLANEOUS
10.1. NOTICES. All notices or other communications given pursuant hereto by
one party hereto to the other party shall be in writing and deemed given (a)
when delivered by messenger, (b) when sent by telecopier, (with receipt
confirmed), (c) when received by the addressee, if sent by Express Mail, Federal
Express or other express delivery service (receipt requested), or (d) five days
after being mailed in the U.S., first-class postage prepaid, registered or
certified, in each case to the appropriate addresses and telecopier numbers set
forth below (or to such other addresses and telecopier numbers as a party may
designate as to itself by notice to the other party):
If to Watson, to it at:
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, CA 92880
Attention: Chief Operating Officer
Telecopier: (909) 270-1429
with a copy to:
Watson Pharmaceuticals, Inc.
311 Bonnie Circle
Corona, CA 92880
Attention: General Counsel
Telecopier No.: (909) 279-8094
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If to Halsey, to it at:
Halsey Drug Company, Inc.
695 N. Perryville Road
Rockford, Illinois 61107
Attention: Chief Executive Officer
Telecopier No.: (815) 399-9710
10.2. ASSIGNMENT. Neither party shall, without the prior written consent
(not to be unreasonably withheld or delayed) of the other party having been
obtained, assign or transfer this Agreement to any person or entity, in whole or
in part, provided that, each party may assign or transfer this Agreement to any
Affiliate or to any successor by merger of such party or its pharmaceutical
business, or upon a sale of all or substantially all of such parties assets, or
the assets of its pharmaceutical business, without the prior written consent of
the other party hereto. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns.
10.3. SEVERABILITY. If any portion of this Agreement is held invalid by a
court of competent jurisdiction, such portion shall be deemed to be of no force
and effect and the Agreement shall be construed as if such portion had not been
included herein, provided however, if the deletion of such provision materially
impairs the commercial value of this Agreement to either party, the parties
shall attempt to renegotiate such provision in good faith.
10.4. ENTIRE AGREEMENT. This Agreement and all Exhibits attached hereto
contain the sole and entire agreement and understanding of the parties hereto
and their respective Affiliates and representatives related to the subject
matter hereof and supersede all oral or written agreements concerning the
subject matter made prior to the date of this Agreement.
10.5. AMENDMENT; WAIVER. This Agreement cannot be amended, changed, modified
or supplemented orally, and no amendment, change, modification or supplement of
this Agreement shall be recognized nor have any effect, unless the writing in
which it is set forth is signed by Halsey and Watson, nor shall any waiver of
any of the provisions of this Agreement be effective unless in writing and
signed by the party to be charged therewith. The failure of either party to
enforce, at any time, or for any period of time, any provision hereof or the
failure of either party to exercise any option herein shall not be construed as
a waiver of such provision or option and shall in no way affect that party's
right to enforce such provision or exercise such option. No waiver of any
provision hereof shall be deemed to be, or shall constitute, a waiver of any
other provision, or with respect to any succeeding breach of the same provision.
10.6. GOVERNING LAW, DISPUTE RESOLUTION, ARBITRATION. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of
California and the United States, as though made and to be fully performed
therein without regard to conflicts of laws principles thereof.
The parties shall initially attempt in good faith to resolve any
significant controversy, claim, allegation of breach or dispute arising out of
or relating to this Agreement (hereinafter collectively referred to as a
"Dispute") through negotiations between senior executives of Watson and Halsey.
If the Dispute is not resolved within thirty (30) days (or such other period of
time mutually agreed upon by the parties) of notice of the Dispute (the
"Executive Resolution Period"), then the parties agree to
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submit the Dispute to arbitration as provided herein. Unless otherwise mutually
agreed by the parties, only if the Dispute is not resolved through negotiations
as set forth herein, may a party resort to arbitration.
All Disputes relating in any way to this Agreement shall be resolved
exclusively through arbitration conducted in accordance with the Commercial
Arbitration Rule of the American Arbitration Association as then in effect. In
the event either party demands arbitration, it shall do so within thirty (30)
days after the expiration of the Executive Resolution Period (or any mutually
agreed extension) and shall include a request that such arbitration be held
within thirty (30) days of such demand. The arbitration hearing shall be held as
soon as practicable. The arbitration hearing shall be held in Orange County,
California and shall be before a single arbitrator selected by the parties in
accordance with the Commercial Arbitration Rule of the American Arbitration
Association pursuant to its rules on selection of arbitrators. The arbitrator
shall render a formal, binding non-appealable resolution and award on each issue
as expeditiously as possible but not more than ten (10) business days after the
hearing. In any arbitration, the prevailing party shall be entitled to
reimbursement of its reasonable attorneys fees and the parties shall use all
reasonable efforts to keep arbitration costs to a minimum.
10.7. SINGULAR AND PLURAL FORMS. The use herein of the singular form shall
also denote the plural form, and the use herein of the plural form shall denote
the singular form, as in each case the context may require.
10.8. HEADINGS. The headings contained in this Agreement are for convenience
of reference only and shall not constitute a part hereof or define, limit or
otherwise affect the meaning of any of the terms or provisions hereof.
10.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date first above written.
WATSON PHARMACEUTICALS, INC.
By:/s/ Robert C. Funsten
Name:
-------------------------
Title: Senior Vice President
HALSEY DRUG CO., INC.
By:/s/ Michael Reicher
Name:
-------------------------
Title: Chief Executive Officer
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