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Exhibit 10-R
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is entered into as of the ______ day of
February, 1997 but effective as of the close of business on February 28, 1997
("Effective Date") between UNIMED PHARMACEUTICALS, INC., a Delaware corporation
("Distributor") and G. D. SEARLE & CO., a Delaware corporation ("Company").
WHEREAS, Company has heretofore, directly and/or through others, promoted,
marketed and sold its Product (as hereinafter defined) in various countries in
the world;
WHEREAS, Distributor has the necessary facilities and resources to develop
the market for such Product in the Territory (as hereinafter defined), as well
as to carry out the duties hereinafter specified and is desirous of being
granted the right to sell such Product in the Territory; and
WHEREAS, Company is willing to grant such right to Distributor upon the
terms and conditions herein set forth;
NOW, THEREFORE, it is mutually agreed by the Company and Distributor as
follows:
1. APPOINTMENT AND ACCEPTANCE; CONTINGENCY.
(a) Subject to the following terms and conditions, Company hereby appoints
Distributor as Company's exclusive distributor (exclusive even as to the
Company and its affiliates and subsidiaries) in the United States excluding its
territories and possessions (the "Territory") of the product described in
Exhibit A (the "Product") for sale under the trademark "MAXAQUIN" (the
"Trademark") to any and all customers and accounts. Distributor hereby accepts
such appointment. The Company will not, directly or indirectly, use the
Trademark in the Territory during the term of this Agreement. [XXXXX] The
parties will review sales information on a periodic basis during the term of
the Agreement and if they determine that there is any violation of the
territorial limitation of this license by either party, appropriate action will
be taken to prevent such violation in the future.
(b) It is understood and agreed by the Company and Distributor, that
Distributor may from time to time find it convenient, for the discharge of its
obligations hereunder, to appoint subdistributors, agents or dealers within the
Territory. Distributor shall be entitled to appoint subdistributors, agents or
dealers only if the following conditions have been satisfied:
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(i) Distributor shall have notified the Company in writing of the
name, address, and commercial experience of such prospective
subdistributor, agent or dealer and the Company shall have approved such
subdistributor, agent or dealer (which approval will not be unreasonably
withheld); and
(ii) Distributor shall have secured the enforceable written
agreement, in form and substance satisfactory to the Company, of any
subdistributor, agent or dealer that the latter:
(A) shall look solely and exclusively to Distributor for any
compensation of any kind and shall not have any claim or right to
any compensation of any kind whatsoever from the Company, in
particular, termination indemnities, payments, compensations or
other benefits; and
(B) shall have no rights with respect to the distribution of
the Product within the Territory greater than the rights of
Distributor under this Agreement.
(c) Distributor agrees that it shall be responsible for the full and
faithful performance of any duty or obligation under this Agreement delegated,
expressly or by implication, by Distributor to any subdistributor, agent or
dealer and shall indemnify and hold harmless the Company against any liability,
termination indemnity, loss, injury, claim, cost, or expense incurred by the
Company as a result of Distributor's appointment of any subdistributor, agent
or dealer. In particular, Distributor agrees to indemnify the Company for any
liabilities, claims, losses or any other costs or expenses which Company may
incur as a result of any claim by any such subdistributor, agent or dealer
during the term or after the expiration or other termination of this Agreement.
(d) Company represents and warrants to Distributor that it is the licensee
under a License Agreement (the "Master License") dated April 30, 1987, as
amended, between Company and Hokuriku Seiyaku Co., Ltd. (the "Licensor") to
certain patents relating to the Product (the "Patents"). Company has received
no notice of any outstanding dispute with the Licensor under the Master
License. Company further represents and warrants that the rights grant by this
Agreement to Distributor do not violate the license granted to Company under
the Master License. Company will use all reasonable efforts (other than the
payment of money not required under the express terms of the Master License) to
maintain the Master License in full force and effect for the term thereof.
Distributor acknowledges and agrees that the distribution rights granted
under this Agreement are subject to, and limited by, the terms and conditions
of the Master License, including any termination rights thereunder.
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(e) Distributor further acknowledges and agrees that Company and its
Affiliates and Company's Licensor are the exclusive owners of the
quali/quantitative formula and all other information and know-how related to
the Product, and that they shall retain full rights to same.
2. DUTIES OF DISTRIBUTOR.
(a) Distributor accepts the foregoing appointment and agrees to provide
all of the usual and customary services of a distributor in the Territory,
which shall include, without limitation, the following:
(i) Distributor shall use all reasonable efforts to distribute and
sell and diligently promote the Product in the Territory. In this
regard, Distributor shall provide and maintain an aggressive and
efficient sales organization adequate for the needs of the Territory.
(ii) Distributor agrees to sell and distribute Product in a
professional and responsible manner.
(iii) Distributor agrees not to knowingly sell and distribute
counterfeit Company products or Product which has been misbranded or
adulterated or which is otherwise illicit.
(iv) Distributor agrees to include the Product at frequent intervals
in lists, bulletins or catalogs, as they may be issued by Distributor to
its customers, and agrees to check such customers' supplies of Product
regularly to insure adequate stocking and that the Product is in saleable
condition.
(v) Distributor agrees not to sell the Product outside the Territory
or knowingly sell the Product to customers in the Territory intending to
or who do resell outside the Territory.
(vi) Distributor agrees to store and ship the Product strictly in
accordance with the specifications in Exhibit A ("Specifications") and
Company's instructions and as otherwise required by law.
(vii) Distributor agrees not to make any warranty, guarantee, claim
or representation in connection with the Product, unless authorized by
Company or contained in written materials forwarded by Company to
Distributor.
(viii) Distributor agrees to keep Company periodically and regularly
apprised of the state of the market for the Product in the Territory.
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(ix) Distributor shall promptly forward to Company any known Product
related complaints (whether of a medical nature, including adverse
reactions and events, or product quality nature) and will assist Company
in resolving such complaints.
(b) Nothing contained in this Agreement shall be construed to restrict
Company's right, in its sole discretion, to discontinue manufacturing (or
having the Product manufactured on its behalf) or distributing the Product
within the Territory at any time, immediately upon prior written notice to
Distributor if in Company's reasonable scientific or medical judgment (based
upon medical or scientific reasons or on information or circumstances not known
or existing as of the date hereof by Company's senior medical officer), further
sale of the Product in the Territory is not advisable.
(c) Distributor warrants and agrees that it is not now selling and will
not during the term hereof sell in the Territory any goods directly competitive
with the Product. "Directly competitive" means a fluroquinolone product.
(d) Distributor also agrees to grant Company and its designated
representatives access from time to time as requested, during normal business
hours and upon reasonable notice, to all relevant packaging, advertising and
sales records, and to the premises at which Distributor stores any of the
Product.
3. PURCHASE OF PRODUCT.
(a) Distributor shall place purchase orders with Company for, and will
purchase and warehouse, such quantities of the Product as Distributor believes
may from time to time be required to meet trade requirements in the Territory.
(b) Distributor shall submit written purchase orders to the Company for
the Product and Company shall accept such orders to the extent that they meet
the other requirements of this paragraph (b) and do not exceed Company's
capacity to produce Product. All sales hereunder shall be subject to the terms
and conditions of this Agreement, except for quantity and delivery date terms
which may be specified in any purchase order hereunder; provided that, delivery
shall in no event be required in less than ninety (90) days from Company's
receipt of the applicable purchase order. In the event of any conflict, the
terms of this Agreement shall prevail over those contained in purchase orders
or any other documents submitted by Distributor in connection with this
Agreement. Concurrently with the execution of this Agreement, Distributor will
provide Company a forecast of estimated requirements for Product during the
following six (6) calendar quarters. Distributor shall exert all reasonable
efforts to make each forecast as accurate as possible and shall update such
forecast at the end of each calendar quarter for the following six (6) calendar
quarters. Company shall accept and fill orders to the extent they do not
exceed one hundred and twenty percent (120%) of Distributor's forecast for the
applicable calendar quarter and use all reasonable efforts to fill any portion
of such orders in excess of such amount. Unless the parties subsequently agree
to the contrary, Company's obligation to supply
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Product shall cease the earlier of ten (10) years after the date of
execution of this Agreement or, if Distributor's purchases in any calendar year
after 1996 are less than [XXXXX] tablets [XXXXX] tablets in 1997], upon the
expiration of two (2) years' notice given by Company at any time thereafter.
By the end of seven (7) years after the date of execution of this Agreement, if
Company does not agree to extend its obligation to supply Product as described
above, Company will provide reasonable assistance to Distributor to find an
alternative source of supply.
(c) The Product shall meet the Specifications, as the same may be amended
from time to time by agreement of the parties or by requirement of the U.S.
Food and Drug Administration ("FDA").
(d) Sales by Company to Distributor shall be made FOB shipping point
(Incoterms 1990) at Company's plant in Caguas, Puerto Rico (or such other
shipping point as may be agreed between the parties), initially at the prices
specified in Exhibit B, subject to Company's right, at any time and from time
to time, to modify such prices pursuant to the formula as set forth in Exhibit
B. All sales, use, gross receipts, added-value and other taxes, and similar
charges, shall be borne by Distributor. Title to the Product and risk of loss
or damage to the Product shall pass to Distributor upon delivery to the common
carrier at the shipping point.
(e) All payments by Distributor for Product shall be made in United States
dollars to Company's affiliate, Searle & Co. (or other designated affiliate),
by wire transfer to the bank account designated by such affiliate from time to
time, in a written notice to Distributor. Payment shall be due thirty (30)
days (sixty (60) days for the initial shipment) from the date of shipment. It
is understood and agreed that Distributor shall not be obligated to pay for any
shipment, or portion thereof, of Product that has been properly rejected by
Distributor pursuant to this Agreement.
(f) Company shall keep full and accurate books and records related to the
fully absorbed cost of the Product in sufficient detail so amounts payable
hereunder can be properly calculated. Such books and records shall be kept for
the longer of two (2) years after the close of the calendar year to which the
records apply or the period required by law. Commencing with the books and
records for calendar year 1998, Company shall permit (not more than once each
calendar year during the term hereof) independent accountants designated by
Distributor to whom Company has no reasonable objection, to examine said books
and records at reasonable times for the sole purpose of verifying the accuracy
of the written statements submitted to Distributor and the purchase price for
Product paid or payable. Said independent accountants shall not disclose to
Distributor any information other than information relating solely to the
accuracy of the accounting and payments made by Distributor pursuant to this
Agreement and shall otherwise be bound by the confidentiality provisions of
this Agreement.
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4. OBLIGATIONS OF COMPANY.
(a) Subject to paragraph 3 above, Company agrees to use all reasonable
efforts to sell, or cause to be sold to Distributor by one or more of Company's
affiliates, on a timely basis the Product in quantities adequate to meet the
needs of the market throughout the Territory. In the event that Company is
unable to fill any accepted purchase order, Company shall promptly notify
Distributor. Distributor shall have the right under this Agreement to cancel
any quantity of Product for which Company has failed or will be unable for any
reason, including, without, limitation, the force majeure reasons enumerated in
paragraph 19(d) hereof, to deliver within one (1) month following the
applicable delivery date set forth in written purchase orders accepted pursuant
to this Agreement. Any such canceled quantities up to the limits of
Distributor's applicable forecast made in compliance with paragraph 3(b),
however, shall apply to determining the amount of Distributor's purchases for
purposes of the second to last sentence of paragraph 3(b) above.
(b) Company shall inform Distributor of any orders and/or inquiries for
Product in the Territory which it receives. Company shall not knowingly sell
the Product to customers intending to resell the Product in the Territory.
(c) To the extent permitted by law, any decision to recall or cease
distribution of the Product, as a result of the Product being in violation of
any law, rule or regulation or presenting a possible safety risk, shall be made
by Company, after consultation with Distributor. In the event of any recall,
Company shall, with Distributor's cooperation and assistance, determine the
scope and form of the recall and Distributor shall conduct the recall. Company
will provide Distributor with any information concerning the manufacturing of
the Product which may reasonably be required by Distributor to determine the
need for a recall. Costs for any recall shall be borne by the party required
to indemnify the other party in relation to such recall pursuant to paragraph
9. Notwithstanding the foregoing, if Company falls within a reasonable period
of time to recall Product delivered to Distributor pursuant to this Agreement
that Distributor reasonably determines should be recalled due to safety
concerns, Distributor reserves the right to recall such Product after
consultation with Company and subject to ouch reasonable conditions and
limitations as Company may request.
(d) Company shall perform quality control tests and assays on raw and
packaging materials and on finished Product as required under the
Specifications. Unless instructed otherwise in writing by Distributor, Company
will vend Distributor a certificate of analysis for each shipment of Product.
(e) Company shall provide Distributor with relevant material information
concerning clinical studies previously conducted by Company in the Territory
and useful in the promotion and sale of the Product.
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5. DISTRIBUTION RIGHTS PAYMENTS.
(a) In order to secure the rights to distribute and market the Product in
the Territory, Distributor has agreed to pay Company the following sums:
[XXXXX]
If (A) either party terminates this Agreement under paragraph 19(d), (B)
Company (without Distributor's agreement) exercises its rights under paragraph
2(b), (C) the Master License is terminated other than due to the Distributor's
negligence, willful misconduct or breach of this Agreement, or (D) Distributor
exercises its rights to terminate under paragraph 10(b)(i), (ii) or (iii),
Distributor shall be entitled to the return of the following portions of its
paragraph 5(a)(i), (ii), and (iii) payment:
IF TERMINATED
DURING CALENDAR YEAR AMOUNT RETURNED*
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1997 [XXXXX]
1998 [XXXXX]
1999 [XXXXX]
The foregoing shall be Distributor's sole remedy in the event of any
termination of this Agreement for any of the reasons described above. In the
event of the termination of the Agreement for any other reason or at any other
time, Distributor shall not be entitled to a refund of any payment made under
this Agreement.
* The above amounts shall be netted against payments required hereunder,
including without limitation, payments required under each of sub-paragraphs
5(a)(i), (ii), (iii), and (iv) (but as to (iv) only the [XXXXX] percent
([XXXXX]) of Net Sales accrued but unpaid through the date of termination).
(b) For purposes of the above paragraphs, "Net Sales" means the gross
invoice value of the Product as and when sold by Distributor or its affiliates,
to unrelated third parties, less (i) ordinary and customary volume, cash and
trade discounts and rebates, (ii) credits, allowances, refunds and adjustments
actually credited or made to customers for spoiled, damaged, outdated and
returned Project, (iii) sales, use, excise, and value-added taxes, and (iv)
reasonable freight and insurance to the extent included in gross invoice value.
(c) Each payment shall be accompanied by the report required under
paragraph (d) below, plus such other information on the sale of Product as
Company may reasonably request. Except as otherwise provided in paragraph 3,
all payments to be made by Distributor to Company pursuant to this Agreement
shall be made in United States dollars by wire transfer to
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Company's account number [XXXXX] at [XXXXX] (or other bank or account
designated by Company) in immediately available funds and shall not be reduced
by any taxes, licenses, fees or other withholdings.
(d) Within thirty (30) days after the end of each calendar quarter during
the term hereof, Distributor will provide company a statement showing the
calculation of Net Sales (in form satisfactory to Company) and the calculation
of the payment due.
(e) The payments under sub-paragraphs 5(a)(i), (ii), and (iii) above shall
be non-refundable (except as otherwise expressly provided herein) and not
creditable against subparagraph 5(a)(iv) payments.
(f) Distributor shall keep full and accurate books and records related to
Net Sales of the Product in sufficient detail so amounts payable hereunder can
be properly calculated. Such books and records shall be kept for the longer of
the term of this Agreement plus two (2) years or the period required by law.
Distributor shall permit (not more than once each calendar year during the term
hereof) independent accountants designated by Company to whom Distributor has
no reasonable objection, to examine said books and records at all reasonable
times for the sole purpose of verifying the accuracy of the written statements
submitted by Distributor and the distribution rights fees paid or payable.
Said independent accountants shall not disclose to Company any information
other than information relating solely to the accuracy of the accounting and
payments made by Distributor pursuant to this Agreement and shall otherwise be
bound by the confidentiality provisions of this Agreement.
(g) Overdue amounts payable by Distributor to Company or its affiliate
under paragraph 3 and/or this paragraph 5 shall bear interest from the date due
to and including the date paid at the rate of [XXXXX] ([XXXXX]) per month or,
if lower, the highest rate permitted by applicable law.
(h) For purposes of this paragraph 5, "Financial Covenant" means that at
all times prior to the payment in full of amounts due under paragraph 5(a)(ii)
and (iii), Distributor's cash and cash equivalents plus short-term investments,
minus total current liabilities shall equal or exceed [XXXXX] United States
dollars ([XXXXX]). Distributor shall not later than fifteen (15) days after
the end of each calendar month, provide Company with an unaudited balance sheet
showing compliance with the Financial Covenant and certified by Distributor's
chief financial officer. In the event that Distributor breaches the Financial
covenant, payments under paragraphs 5(a)(ii) and (iii) shall be immediately due
and payable, without further notice or demand by Company and without any cure
period.
6. SALES PROMOTION AND REPORTS.
(a) Distributor shall maintain:
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(i) such facilities in the Territory as are necessary for storing
and distributing the Product in the Territory;
(ii) an accurate and up-to-date list of customer" and prospective
customers; and
(iii) a system of recordkeeping to permit tracking of the Product
sold hereunder, in the event a recall of any Product is ordered.
Distributor shall retain, and grant Company and its representatives access
to, such records during the term of this Agreement and for a period of at least
two (2) years following its expiration or other termination.
(b) Distributor shall provide Company with detailed semiannual written
reports of its sales and sales promotion activities in such manner as Company
shall reasonably require.
7. TRADEMARKS AND OTHER PROPRIETARY RIGHTS.
(a) Company represents that the trademark registration for Maxaquin (the
"Trademark") is valid and subsisting in the Territory and, that to the best of
its knowledge, the Company has the exclusive right to use the Trademark in the
Territory.
(b) The parties have agreed, subject to any governmental approvals or
changes, to make changes in the labeling and packaging for the Product so that
they would include Distributor's corporate name.
(c) Distributor acknowledges that the Trademark used in connection with
the Product is not Distributor's property, and Distributor shall not contest
such Trademark or seek to register or have registered any such Trademark or
trade name in the Territory. Distributor shall not display or use any
Trademark or trade name owned by the Company except during the term of this
Agreement and then only in a manner previously approved by Company; provided,
however, that no such prior approval shall be required for the use or
advertising or promotional materials prepared, designed, furnished or approved
in writing in advance by Company. Company shall respond to Distributors
written submissions in this regard within five (5) business days of receipt.
Distributor shall execute any documents necessary for the recordal of any
required registered user agreement in the Territory.
(d) Distributor shall promptly notify Company if Distributor becomes aware
of any actual or potential infringement of or conflict with Company's trademark
rights or any other proprietary rights relating to the Product in the
Territory. Company, at its expense, shall have the right to deal with such
infringement or conflict by appropriate legal proceedings (but Distributor
shall provide all reasonable assistance in connection therewith) and Company
shall be solely entitled to any compensation or other payment received in
connection therewith.
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However, if Company fails to commence and diligently pursue appropriate
legal proceedings against the infringer within sixty (60) days of Distributor's
notice to Company, Distributor shall be solely entitled to deal with such
infringement or conflict by such means as Distributor sees fit (but Company
shall provide all reasonable assistance in connection therewith) and
Distributor shell be solely entitled to any compensation or other payment
received in connection therewith. If the use of the Trademark is enjoined in
the Territory, Company shall provide Distributor with a substitute trademark.
(e) Notwithstanding the foregoing paragraph, in the event Company fails to
commence and diligently pursue appropriate legal proceedings under paragraph
7(d) above, Distributor may, in addition to the other remedies provided in
paragraph 7(d) above, in its sole discretion, elect to register a new trademark
for the Product, which trademark shall be the sole and exclusive property of
Distributor.
8. COMPLIANCE WITH APPLICABLE LAW.
(a) Subject to Company's compliance with paragraph 9 and 15 below,
Distributor shall be responsible for compliance of the Product with all
applicable laws and regulations and governmental orders and decrees in the
Territory, federal, state and local. Further, Distributor shall promptly
inform Company in writing of any change or proposed change in requirements for
production, promotion or sale of the Product imposed by any governmental entity
in the Territory.
(b) Distributor shall communicate all ADE events in the Territory related
to Products sold in the Territory by Distributor to Company in sufficient time
and detail to enable Company to comply with its reporting requirements under
FDA regulations. Sufficient time shall mean within three (3) days as to
serious ADE's and within seven (7) days as to non-serious ADE's.
In addition to its obligations under paragraph 15, every six months
Company will provide Distributor with periodic drug safety update reports
prepared in accordance with EC guidelines.
ADE shall mean any adverse drug experience as defined by FDA regulations
(c) Company shall promptly notify Distributor of any inspections by
federal, state or local regulatory representatives of any facility or
facilities where the Product is manufactured and/or packaged, and shall, if
such inspections directly relate to the Product, send Distributor copies of the
portions of the reports of any such inspections which directly relate to the
Product, including actions taken by Company to remedy condition cited in such
inspections.
(d) Subject to Distributor's compliance with its obligations under this
Agreement, Company shall obtain and maintain all government license, permits
and registrations necessary to manufacture, package and supply Product
hereunder.
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(e) Not more frequently than once each calendar year during the term
hereof, Company shall allow a representative of Distributor (to whom Company
has no reasonable objection) to inspect the facility or facilities where the
Product is manufactured and/or packaged, to assure compliance with Company's
obligations under this Agreement. Such inspection shall be at reasonable
times, following reasonable notice and be subject to such confidentiality
agreement and rules as Company shall designate from time to time.
9. WARRANTY, INDEMNITY AND INSPECTION.
(a) Company warrants, represents and covenants that
(i) the Product, when delivered to the common carrier at the FOB
point, shall have been manufactured and packaged in accordance with
current good manufacturing practices of the FDA ("CGMPs") and meet the
then applicable Specifications;
(ii) On the date of shipment, no Product sold hereunder shall be
adulterated or misbranded within the meaning of the Federal Food, Drug
and Cosmetic Act, as amended (the "Act") , or within the meaning of any
applicable state or municipal laws in which the definitions of
adulteration and misbranding are substantially the same as those
contained in the Act, as the Act and such laws are constituted and
effective at the time of shipment, or consist of or include any product
or article which may not be introduced into interstate commerce;
(iii) Company shall have good title to all Product sold hereunder,
which title shall pass to Distributor as provided herein following
payment therefor, free and clear of any lien, encumbrance or other
conflicting interest of any kind; and
(iv) The New Drug Application which has been filed with the FDA for
the Product (the "NDA") is, to the best of Company's knowledge, accurate
and complete in all material respects as required by law.
(b) THE WARRANTIES SET FORTH IN PARAGRAPH (a) ARE EXCLUSIVE AND IN LIEU OF
ANY OTHER EXPRESS OR IMPLIED WARRANTY, INCLUDING ANY IMPLIED WARRANTY OF
FITNESS OR MERCHANTABILITY.
(c) All Product ordered hereunder shall be subjected to a visual
inspection upon receipt by Distributor. All claims for shortages, alleged
defects, or breaches of warranty which could be discovered by visual inspection
shall be made in writing to Company no later than thirty (30) days after
receipt of such Product and, if not so made, shall be irrevocably waived by
Distributor. If Company disputes Distributor's rejection (for alleged Product
quality reasons) made as provided above of all or part of any shipment of
finished Product such dispute shall be resolved by an independent testing
organization or consultant, or recognized repute within the pharmaceutical
industry in the Territory mutually agreed upon by the parties, the appointment
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of which shall not be unreasonably withheld or delayed by either party.
The determination of such entity with respect to the rejection of all or part
of any shipment of finished Product shall be final and binding upon the
parties, but only as to the reasons given by Distributor in rejecting the
shipment and shall have no effect on any matter for which said entity did not
render a determination. The cost of such determination shall be borne by the
party against whom the decision is made.
(d) Except as provided in subparagraph (e) below, Distributor shall
indemnify and hold Company, its subsidiaries and affiliates and their
respective directors, officers, employees and agents harmless against all
claims, suits, demands, judgments or damages, including reasonable attorneys'
fees and court costs, arising out of or relating to Distributors (i) breach of
this Agreement, or (ii) handling, sale or promotion of the Product in the
Territory (including, without limitation any strict liability, product
liability, tort or similar claim).
(e) Company will indemnify and hold Distributor, its subsidiaries and
affiliates and their respective directors, officers, employees and agents
harmless against all claims, suits, demands, judgments or damages, including,
reasonable attorneys' fees and court costs, arising out of or relating to
Company's (i) breach of this Agreement or (ii) failure to supply Product
complying with any of the express Product quality requirements of this
Agreement or (iii) third party claims resulting from Product sold prior to the
Effective Date.
(f) Notwithstanding the foregoing or any other provision of this
Agreement, neither party shall be liable to the other for lost profits or
consequential damages of any kind.
10. DURATION AND TERMINATION AND REMEDIES.
(a) Subject to paragraphs (b) and (c) below, this Agreement shall be in
effect for the period from the Effective Date and until twenty (20) years after
such date.
(b) This Agreement may be terminated, effective immediately, by a party
("Injured Party") at any time upon written notice to the other party after:
(i) the failure of the other party to comply with then Agreement in
respect of any obligation other than an obligation to make any payment
hereunder, which failure is not cured within thirty (30) days of written
notice thereof;
(ii) the suspension, liquidation, dissolution or bulk sale, or
notice thereof, of the other party's business without the prior written
consent of the Injured Party or in the event of the calling of a meeting
of such party's creditors, an assignment by such other party for the
benefit of creditors, the insolvency of any kind of such other party, or
the filing of any attachment, distraint, levy, execution or judgment
against such party, any filing of a voluntary or involuntary petition
under the provisions of any bankruptcy act, or any application for or
appointment of a receiver for the property of such other party;
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(iii) the cessation by such other party of its business; or
(iv) the other party fails to make any payment hereunder when due
and such failure continues for a period in excess of ten (10) days.
(c) Distributor may, at any time and in its sole discretion, upon not less
than ninety (90) days written notice to Company, terminate this Agreement for
any reason. In such event, Company shall complete manufacture and packaging of
all Product currently on order, and Distributor shall purchase and pay for such
Product. Distributor shall also pay Company's costs for all materials
(including labels) on hand or ordered by Company as of the date of the
termination and usable only with respect to the Product, provided that the
quantities of such materials are reasonably based on forecasted amounts of
Product.
(d) Upon termination of this Agreement for any reason, Distributor shall
promptly return to Company, at Company's cost, all price lists, catalogs and
other advertising literature furnished by Company and, if so requested by
Company in writing, all Product on hand which is in good and saleable
condition. If so requested by Company, Company shall pay Distributor for such
Product at Distributor's purchase price therefor under paragraph 3. Upon
termination of this Agreement for any reason, all related subdistributorship,
agency or dealership agreements entered into by Distributor shall be
automatically terminated. If Company does not request return of Product held
by Distributor, Distributor shall have six (6) months from the date of
termination within which to sell the Products, subject to all the terms and
conditions of this Agreement
(e) No termination pursuant to this Agreement shall give rise to any
obligation by either party to the other except as specifically provided in this
Agreement. In particular, each party agrees that it shall not be entitled to
any payment, whether by way of compensation, indemnity or penalty, arising out
of such termination. Any pre-existing claims, however, shall not be waived by
the parties as a result of such termination.
(f) In addition to any other rights it may have at law or in equity, if
Distributor breaches this Agreement and fails to cure such breach pursuant to
paragraph 10(b)(i) or (iv) above, the Company may on notice to Distributor
unilaterally amend the appointment in paragraph 1 to be as non-exclusive
distributor.
11. INSURANCE.
Distributor shall obtain and maintain, at its expense, product liability
insurance which includes the Product in an aggregate amount for all products of
not less than [XXXXX] US Dollars ([XXXXX]). All such insurance shall include
Company as an additional insured and must be issued by such insurer and have
such deductibles as are acceptable to Company, in its reasonable discretion.
Distributor shall provide a certificate of insurance evidencing such insurance
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concurrently with the execution of this Agreement and will provide new
certificates complying with this Agreement at least thirty (30) days in advance
of the stated expiration date of the period of coverage. Each such certificate
shall recite that the subject insurance is not cancelable and may not be
amended absent at least sixty (60) days notice to Distributor and Company.
12. CURRENT PRODUCT SUPPLY CONTRACTS.
Company shall, if requested by Distributor, use reasonable efforts (but
shall not be required to make any payment) to obtain at the earliest
practicable date, by instruments in form and substance reasonably satisfactory
to Distributor, all consents and approvals to the assignment of material
agreements for the supply of Product to customers within the Territory. If,
with respect to any agreement to be assigned, a required consent to the
assignment is not obtained Company shall use reasonable efforts to keep in
effect and give Distributor (at Distributor's cost and expense) the benefit of
such agreement to the same extent as if it had been assigned and to the extent
not prohibited by that agreement, and Distributor shall perform Company's
obligations under the agreement or cooperate in Company's performance of such
obligations. Nothing in this Agreement shall be construed as an attempt to
assign any agreement that is by its terms nonassignable without the consent of
the other party.
13. NDC NUMBERS AND MEDICAID REBATES.
(a) Promptly following the signing of this Agreement, Distributor shall
take any and all action necessary to change the National Drug Code number
("NDC") for the Product, which change shall be implemented as reasonably agreed
upon by the parties. For purposes of Company's Rebate Agreement with the
Secretary of Health and Human Services ("HHS") under Section 4401 of the
omnibus Budget Reconciliation Act of 1990, Company shall continue to make any
Rebate Payment (as defined in such Rebate Agreement) with respect to the
Product required thereunder; provided that, for Rebate Payments for which State
Medicaid Utilization Information reports show that Medicaid payment was made
for such drug after the Effective Date, Distributor shall reimburse Company for
all such Rebate Payments pursuant to the procedure established under paragraphs
16 and 18.
(b) Distributor shall notify all relevant persons and entities, including
Company and First Data Bank, of such NDC change and comply with all laws and
regulations of HHS or its sub-divisions and agencies (including HCFA) and the
Rebate Agreement.
(c) Distributor shall also provide Company all relevant information
regarding Distributor's sales, promotion, pricing and other activities with
respect to the Product, including pricing calculations for purposes of
determining "Best Price", necessary for Company to comply with the Rebate
Agreement.
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14. RETURN OF PRODUCT.
(a) Company and Distributor shall make joint announcements to the trade
concerning Distributor's appointment, which announcements will advise customers
that there is no reason to return Product, Distributor shall not by its pricing
or other activities seek to induce its customers to return Product. Company
agrees to be responsible, in compliance with its currently prevailing returned
goods policies, for all costs and expenses with respect to the return by
Distributor's or Company's customers of Products shipped prior to the Effective
Date. Distributor agrees to be responsible for all costs and expenses with
respect to the return of Product shipped on or after the Effective Date.
(b) Distributor and Company shall track lot numbers for the purposes of
identifying when Product was sold. For those lots for which both Distributor
and Company have sold Product, returns shall be pro-rated between Distributor
and Company based upon the quantity of such lot sold by each party, as
determined by count of finished goods inventory at the Effective Date. Each
party will issue the appropriate credit for returns to its customers and any
net payment due to either party pursuant to this paragraph 14 will be made
quarterly pursuant to paragraph 18.
(c) For purposes of this paragraph, Product will be deemed to have been
"returned" when received by Company or Distributor at their respective
warehouse facilities or returned goods agents, as applicable.
15. NDA COMPLIANCE.
(a) Provided that Distributor renders all reasonable assistance, including
without limitation by complying with paragraph 8 and the provisions below,
Company shall file all documents as are required to maintain the new drug
application for the Product ("NDA").
(b) In general, Distributor and Company will allocate and assist in the
preparation and review of regulatory filings and reports as follows:
(i) Annual NDA Progress Report - Company will prepare and file with
the FDA;
(ii) Adverse Drug Reaction Reports - Company will prepare and file
with the FDA;
(iii) Submission of promotional materials to the FDA - Distributor
will provide materials to Company concurrently with dissemination,
Distributor will prepare and file with the FDA and give Company
simultaneously a copy of Form 2253 (or its successor) and an original of
each promotional material;
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(iv) Annual IND Progress Report - Company will prepare and file with
the FDA;
(v) IND Amendments - Company to prepare and file with the FDA; and
(vi) Annual antimicrobial susceptibility testing - Company shall
contract for this work and prepare submission. Company will file report
with the FDA (Annual NDA Progress Report), Company will prepare any
required labeling changes and file with the FDA.
(vii) Pending labeling changes as of the date of this Agreement -
Company will file with the FDA until all matters are resolved; provided
that Company has no obligation to initiate or conduct additional clinical
studies, data analyses or other material efforts in this regard.
(viii) Labeling changes after the date of this Agreement - Company
will prepare and file with the FDA.
Company reserves the right to reject, or require changes in, the documents
prepared by Distributor, if in Company's opinion such documents are inaccurate
or fail to comply with applicable laws or regulations. Notwithstanding any
review by company, Distributor shall be solely responsible for the accuracy and
completeness at all information supplied to Company under paragraphs 8, 13 and
15. Company will provide Distributor with copies of reports filed under (i),
(ii), and (iv) above.
(c) Distributor shall compensate Company for its efforts pursuant to
sub-paragraph (a) and (b) above through payment at the rate of [XXXXX] dollars
([XXXXX]) per calendar quarter, plus the contract cost of performing the
antimicrobial susceptibility testing (the latter payment due thirty (30) days
after company provides Distributor with a copy of the applicable invoice). The
quarterly payment shall be made at the same time as payments under paragraph
5(a)(iv). The quarterly rate stated above shall increase each calendar year
commencing with 1998 by a percentage equal to the increase in the Consumer
Price Index (All Urban Consumers Index, 1982-84=100) over the prior calendar
year.
(d) Each party shall designate a regulatory affairs representative for
purposes of coordinating efforts under this Agreement and the two
representatives shall agree upon the procedures for assuring compliance with
the reporting and other filing requirements of the ADA.
16. REBATES AND CHARGEBACKS.
(a) From and after the Effective Date, Distributor shall be responsible
for any rebate payments with respect to the Product, whether by agreement,
government mandate or otherwise.
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(b) From and after the Effective Date, Distributor shall be responsible
for all payments with respect to contract chargeback claims for the Product.
(c) In consideration of Distributor's agreements contained in (a) and (b)
above, Company shall pay or credit Distributor the amount of [XXXXX] dollars
([XXXXX]).
(d) Nevertheless, for administrative convenience Company shall continue to
make any chargeback or rebate payments with respect to the Product required
under agreements, government mandates or otherwise which relate to the period
prior to the Effective Date or to supply contracts not assigned or assignable
under paragraph 12 or which are processed by the Company due to direct requests
of a customer, provided that Distributor shall reimburse Company for all such
payments.
17. SPECIAL SERVICES.
(a) From and after the Effective Date, Company shall notify all customers
and formularies under contracts existing as of the Effective Date of this
Agreement that as of such date Distributor shall be the seller of the Product
in the Territory, by a writing in form and substance satisfactory to
Distributor (providing Distributor with a duplicate set of mailing labels for
its use).
(b) For its services under (a) above and under paragraph 16, Distributor
shall pay Company a fee equal to [XXXXX] percent ([XXXXX]) of the dollar amount
of the chargebacks and rebates in excess of the amount stated in paragraph
16(c) paid by Company (or by Distributor on behalf of Company) to third parties
with respect to the Product.
18. QUARTERLY PAYMENTS.
The parties shall provide each other on a calendar quarterly basis (within
thirty (30) days after the end of the quarter) the information necessary to
calculate payments due under paragraphs 13, 14, 16 and 17 for the calendar
quarter just ended. The payments otherwise due under these separate paragraphs
will be aggregated for each party and the resulting two amounts netted against
each other, and the net payment due the applicable party shall be made not
later than sixty (60) days after the end of each calendar quarter by wire
transfer in immediately available funds to the bank and account designated from
time to time in a notice from the payee party.
19. MISCELLANEOUS PROVISIONS.
(a) The relationship between Company and Distributor hereunder is solely
that of seller and purchaser. Neither party shall have any power or authority
to bind the other in any
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manner and shall not hold themselves out as agents or representatives of the
other party for any purpose.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois, without regard to the conflict of laws
principles of such state or any other jurisdiction.
(c) Any notice required to be given by either party shall be in writing
and hand delivered, sent by telecopier or mailed by registered airmail, postage
prepaid, to the other party at its address set forth below or at such other
address as shall have been designated by such other party by written notice.
Notices shall be deemed given (i) when received, if hand delivered or
telecopied or (ii) the earlier of receipt or five (5) days after deposit in the
mails as aforesaid, if mailed.
if to Company, addressed to:
G. D. Searle & Co.
5200 Old Orchard Road
Skokie, IL 60077
Attention: Mr. John Shannon, Senior Director,
Business Planning and Development, Americas
Telecopier: (847) 470-6743
with a copy to:
General Counsel
Telecopier: (847) 967-2045
if to Distributor, addressed to:
Unimed Pharmaceuticals, Inc.
2150 East Lake Cook Road
Buffalo Grove, IL 60089-1862
Attention: Mr. Robert E. Dudley
President and CEO
Telecopier: (847) 541-2533
with a copy to:
Katherine A. Letourneau
760 Falls Circle
Lake Forest, IL 60045
Telecopier: (847) 295-2409
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(d) The obligations of either party to perform under this Agreement (other
than any obligation to pay money) shall be excused if failure to perform or any
delay is caused by acts of God, strikes, civil commotion, riots, war,
revolution, acts of governments, lack of adequate production capacity, failure
or delay in plant start-up, breakdown of machinery, shortages of raw materials,
power shortages, or shortages of equipment, fuel, transportation or containers,
or any other cause beyond the reasonable control of the party obligated to
perform. Upon the occurrence of any such event, the duties and obligations of
the parties shall be suspended for the duration of the event preventing proper
performance under this Agreement; provided, however, that if such suspension
shall continue for more than one hundred twenty (120) days, either party may
terminate this Agreement immediately upon notice to the other party.
(e) No waiver of any default hereunder by either party or any failure to
enforce any rights hereunder shall be deemed to constitute a salver of any
subsequent default with respect to the same or any other provision. No waiver
shall be effective unless made in writing and signed by the parties.
(f) This Agreement constitutes the complete agreement of the parties with
respect to the subject matter thereof. All prior proposals, communications,
agreements or understandings between Distributor and Company, whether oral or
written, concerning the subject matter hereof, if any, are superseded by this
Agreement. This Agreement may not be modified except in writing signed by both
parties.
(g) Distributor may not assign this Agreement or any right under it
without the prior written consent of Company.
(h) Company shall not be bound to honor any of Distributor's contracts for
resale or supply of the Product.
(i) Each party agrees for the term of this Agreement and a period of ten
years thereafter not to disclose, or use for any purpose except as otherwise
expressly provided herein, any confidential information relative to the other
party's business acquired pursuant to or during the term of this Agreement.
For the avoidance of doubt, all confidential and proprietary information
previously disclosed to Distributor by Company or related to the Product's NDA
or the Specifications are confidential and proprietary information of company's
and subject to the foregoing obligation. The foregoing obligation shall not
apply, however, to information (i) which is or becomes public through no fault
of the recipient, or (ii) which is made lawfully available to the recipient by
an independent third party, or (iii) which was already in recipient's
possession at the time of receipt from the disclosing party as evidenced by its
written records, or (iv) which is independently developed by employees of the
recipient after the date of this Agreement or (v) which is required by law,
regulation, rule, act or order of any governmental authority or agency to be
disclosed.
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(j) If either party wishes to make any public disclosure concerning this
Agreement or the terms hereof, the other party shall be provided with an
advance copy of the proposed disclosure and shall have seven (7) business days
within which to approve or disapprove such disclosure. Approval shall not be
unreasonably withheld by either party. Absent approval, no public disclosure
concerning this Agreement or the terms hereof shall be made by either party.
Notwithstanding the foregoing, it is understood and agreed that no approval
shall be required in the event that the information to be disclosed has been
the subject of a prior public disclosure.
(k) The provisions of paragraphs 1, 2, 3, 5, 6, 7, 9, 10, 11, 13, 14, 16,
17, and 18 shall survive the expiration or other termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
G.D. SEARLE & CO. UNIMED PHARMACEUTICALS, INC.
By: By:
Title: Title:
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EXHIBIT A
SPECIFICATIONS FOR PRODUCT
DOCUMENT NUMBER TITLE EFFECTIVE DATE
A-1
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EXHIBIT B
PRICE FOR PRODUCT
The price for Product shall be Company's "fully absorbed cost" plus
[XXXXX] percent ([XXXXX]) at the time of each order's receipt. For this
purpose, "fully absorbed cost" means:
20. Costs of third party manufacturers, utilities, materials,
indirect materials and supplies used in the manufacturing and packaging
of Product;
21. Wages of those employees directly employed in the manufacturing
and packaging of the Product;
22. Wages of employees directly employed in quality control,
materials management or related functions which are applicable to the
manufacturing and packaging of Product and the salaries of the
supervisors of said functions (or an appropriate portion of such wages
and salaries it such personnel are not employed exclusively in said
manufacture);
23. That portion of payroll taxes, benefits, social security
payments, vacation and bonus payments and other employee costs allocable
to the wages and salaries included within the provisions of subparagraphs
(b) and (c) above; and
24. That portion of Company's manufacturing overhead expenses
apportioned in accordance with generally accepted accounting principles
to the manufacture and packaging of the Product supplied to Distributor.
Notwithstanding the foregoing, the prices for Product ordered prior to
December 31, 1997 shall be at set out below:
Initial Price U.S. [XXXXX] (bottle of 20 tablets)
U.S. [XXXXX] (100 count, unit dose)
B-1