Item 11. is hereby amended to add the following:
STOCK PERFORMANCE GRAPH
-----------------------
Set forth below is a line graph comparing the cumulative stockholder return
on the Company's Common Stock against the cumulative total return of the
NASDAQ Industrial Index and the NASDAQ Pharmaceutical Index for the Company's
fiscal years ended June 30, 1995, June 30, 1994, June 30, 1993, June 30, 1992
and June 30, 1991, respectively.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG PUREPAC, INC.,
THE NASDAQ UNITED STATES INDEX AND THE NASDAQ
PHARMACEUTICAL INDEX
<CAPTION>
Measurement Period NASDAQ NASDAQ
(Fiscal Year Covered) Purepac, Inc. United States Pharmaceutical
- --------------------- ------------- ------------- --------------
<S> <C> <C> <C>
Measurement Pt-11/31/89 $100 $100 $100
FYE 6/30/90 $100 $100 $100
FYE 6/30/91 405 106 159
FYE 6/30/92 1038 127 199
FYE 6/30/93 705 160 176
FYE 6/30/94 610 162 146
FYE 6/30/95 762 215 196
</TABLE>
EXHIBIT 10.12
AMENDMENT TO TOLL MANUFACTURING AGREEMENT
AGREEMENT dated as of this day of December, 1994 between PUREPAC
PHARMACEUTICAL CO., a Delaware Corporation, having its principal office at
200 Elmora Avenue, Elizabeth, NJ 07207 ("Purepac"), and FAULDING INC., a
Delaware corporation, having its office at 274 Riverside Avenue, Westport, CT
06880 ("Faulding").
WHEREAS, the parties have entered into a Toll Manufacturing
Agreement (the "Manufacturing Agreement") dated as of August 1, 1993,
providing for the manufacture by Purepac and the purchase by Faulding of
certain pharmaceutical products as contemplated therein; and
WHEREAS, the parties wish to amend certain provisions of the
Manufacturing Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. The percentage "one hundred twenty percent (120%)" set forth
in Section 1.4 of the Manufacturing Agreement shall be changed to "one
hundred twenty-five percent (125%)".
2. The percentage "eighty percent (80%)" set forth in Section 1.5
of the Manufacturing Agreement shall be changed to "seventy-five percent
(75%)".
3. The word "Kapanol" appearing in Section 1.15 of the
Manufacturing Agreement shall be changed to "Kadian".
4. Section 1.17 of the Manufacturing Agreement is hereby amended
to add to the end of such Section the words "and its territories and
possessions, including without limitation Puerto Rico".
5. Section 16.1 of the Manufacturing Agreement is hereby deleted
in its entirety and replaced with the following:
"16.1 Subject to any other provision hereof, this Agreement shall
remain in effect until December 31, 2010, and the term of this
Agreement shall automatically be renewed thereafter for up to four
successive five-year terms unless notice is given by Faulding to
Purepac at least six months prior to the date of any such renewal
of Faudling's desire not to renew such term. In addition to the
foregoing, at any time after December 31, 2010, this Agreement
may be terminated by Faulding upon not less than 24 months'
written notice to Purepac."
6. Section 16.2 of the Manufacturing Agreement is hereby deleted
in its entirety and replaced with the following:
"16.2 The obligations of the parties set forth in this Agreement
may be terminated by notice in writing by either party (i) if the
other party shall default in the performance of any of its
obligations under this Agreement and such default shall continue
for a period of not less than sixty (60) days after written notice
specifying such default shall have been given, or (ii) the other
makes an arrangement with its creditors or goes into receivership
or liquidation, or if a receiver and manager is appointed in
respect of the whole or part of the property or business of such
other party."
7. Except as and to the extent specifically amended hereby, the
Manufacturing Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and date first set forth above.
FAULDING INC. PUREPAC PHARMACEUTICAL CO.
By: /s/ By: /s/
_______________________________ _____________________________
Michael R.D. Ashton, President Robert H. Burr, President
EXHIBIT 10.15
THIS AGREEMENT is made as of the 15th day of March 1995
BETWEEN: F. H. FAULDING & CO. LIMITED having offices at 160 Greenhill Road,
Parkside in the State of South Australia 5063 ("Faulding")
AND: PUREPAC PHARMACEUTICAL CO. having offices at 200 Elmora
Avenue, Elizabeth, New Jersey 07207, United States of America
("Purepac").
Faulding possesses certain technology and expertise related to the Product
described in Schedule 1.
Purepac, a company with expertise in capsule and tablet technology and in the
packaging, promotion and distribution of pharmaceutical products, wishes to
obtain the right to import, distribute, promote and sell the Product within
the Territory.
Faulding has agreed, subject to the terms and conditions of this Agreement to
grant Purepac a non-exclusive license to import, distribute, promote and/or
sell the Product in the Territory and to appoint sub-licensees within the
Territory.
NOW, THEREFORE, in consideration of the mutual covenants as hereinafter
contained, the parties agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
"GMP" means good manufacturing practice as required by the regulations of
the United States Federal Food and Drug Administration..
"License Fee" means the fee of US$70,000 for the grant of the
license by Faulding to Purepac under this Agreement, which has been
paid by Purepac.
"Product" means the product of Faulding and any adaptation or
variation or part thereof whatsoever which is listed in Schedule 1
and such other products as may from time to time be added to that
Schedule by mutual agreement between the parties.
"Regulatory Authority" means the United States Federal Food and Drug
Administration and/or any other like authority whether Federal or
State regulating the import, distribution, marketing and/or sale in
the Territory of therapeutic substances.
"Rights" means any copyright, patent, trade mark, design (whether
registered or unregistered), logos or any other proprietary or
personal rights and includes without limitation all such rights in
relation to all drawings, flow charts, models, formulae operating
instructions, specifications, lists and compilations of data and
other written materials relating to the Product.
"Sales Year" means each full fiscal year during which commercial
sales of the Product occur in the Territory.
"Territory" means the territories listed in Schedule 2 and any other
territories as may from time to time be added to that Schedule by
mutual agreement between the parties.
"Unit" means each one thousand (1,000) capsules, in the case where
the Product is supplied by Faulding to Purepac in containers each
containing bulk capsules with each capsule containing one hundred
(100) milligrams of doxycycline.
2. Appointment of Distributor
Faulding hereby grants to Purepac, and Purepac hereby accepts, the
right to import in bulk, package, distribute, promote and sell the
Product in the Territory subject to the terms and conditions of this
Agreement.
3. Right to Purchase
Faulding hereby grants to Purepac the right to purchase supplies
from Faulding of the Product for sale within the Territory.
4. Distribution and Sale of Product
4.1 Purepac shall use reasonable efforts, at its expense, to promote,
distribute and sell the Product in and throughout the Territory in
order to obtain the optimum market potential for the Product within
and throughout the Territory.
4.2 Purepac shall use reasonable efforts to maintain a reasonable
adequate level of stock of the Product to meet the market demand for
the Product within and throughout the Territory and without limiting
the generality of the foregoing, shall hold sufficient stocks of the
Product in finished form to meet at least three (3) months
requirements of forward budgeted sales in the Territory.
4.3 Purepac shall prepare, at its cost, estimated annual sales of the
Product for discussion with Faulding at least annually.
4.4 Purepac shall submit to Faulding, in a form satisfactory to Faulding
and at Purepac's cost:
(a) bi-annual reports of:
(i) its inventory of the Product; and
(ii) sales of the Product for the month and year to date; and
(b) annual estimates of Purepac s requirements for the
Product, at least three (3) months before the start of
each fiscal year or at such other time as Faulding may
reasonably request.
5. Discounts
Any discount or rebate given by Purepac to any customer will be
borne by Purepac and will not be recoverable from Faulding.
6. Appointments
6.1 Subject to the limitations set forth in clause 6.2 hereof, Purepac
shall have the right to appoint any private label distributor or
unit dose packer to distribute, market, promote and/or sell the
Product within the Territory.
6.2 The appointment of any private label distributor or unit dose packer
under clause 6.1 shall be on such terms and conditions as Purepac
may reasonably require in writing provided such terms and conditions
are not inconsistent with the terms and conditions of this
Agreement.
Purepac agrees that it shall, at all times, be solely responsible
for the acts, deeds or omissions of any private label distributor or
unit dose packer appointed pursuant to clause 6.1 and hereby
indemnifies Faulding against any and all loss, liability, damage,
claims, cost and expense arising from or in connection with such
private label distributor's or unit dose packer's acts, deeds or
omissions.
7. Advertising and Promotion
Purepac shall ensure, at its cost, that all packaging and labelling
used for the Product meets all the requirements under the applicable
laws, rules and regulations in the Territory.
8. Supply of Information to Purepac
Faulding shall place at Purepac's disposal its entire know-how:
(a) concerning the chemical, pharmacological, toxicological and clinical
data of the Product;
(b) the technical data concerning methods, formulae, and standards
to be employed by Purepac in the packaging of the Product; and
(c) any special precautions or handling instructions with respect
to the Product in order to prevent injury or damage arising
from improper handling thereof.
9. Packaging
(a) Purepac agrees that it will prepare and pack the Product in
accordance with any applicable law or regulation in the
Territory relating to the preparation and packaging of the
Product.
(b) Faulding agrees that it will ship the Product under appropriate
storage conditions and will package the Product for shipment
according to the laws and regulations of the United States and
Australia, as applicable and with all necessary export
clearances obtained.
10. Rights of Faulding
Purepac acknowledges and accepts that any and all Rights in, or in
relation to, the Product and/or the processes, designs and
techniques for its manufacture are owned or controlled by Faulding
in and throughout the Territory and agrees not to alter, remove,
disguise, tamper or conceal in any way whatsoever any of the Rights
on or in relation to the Product and not to sell any of the Product
separate from any of the information that may be specifically
provided by Faulding for sale with the Product. Labels or notices
attached to the Product in its packaged form by Purepac shall
provide that the Product is manufactured by Faulding in Australia.
11. Quality Control
11.1 Faulding agrees to maintain adequate and appropriate quality control
in,respect of its manufacture and packaging in bulk of the Product
and to provide Purepac for each lot of Product shipped to Purepac a
certified analysis ensuring and warranting that each such lot meets
the specification set forth in clause 11.2 hereof. Purepac shall
have the right to inspect Faulding's quality control procedures and
records during normal business hours upon prior reasonable written
notice to Faulding.
11.2 Faulding shall submit to Purepac an appropriate specification in
respect of the Product for each lot shipped to Purepac. Purepac
shall have twenty five (25) days after receipt of supplies of the
Product manufactured and sold to Purepac pursuant to this Agreement
to inspect such Product to determine if it conforms to the
applicable specification.
11.3 Faulding agrees to manufacture the Product in accordance with the
regulations of the Regulatory Authority and in conformance with GMP.
Faulding acknowledges and agrees that, as the approved site of
manufacture of the Product, it may be required to undergo
preapproval and other periodic inspections by the Regulatory
Authority.
11.4 Purepac shall give Faulding written notice of any non-conformance
within four (4) weeks after receipt of the Product and Faulding
agrees that in order to maintain Purepac's ability to supply the
Product, such rejected goods shall be replaced by Faulding within
four (4) weeks of Faulding's receipt of Purepac's notice of
rejection. Thereafter, Faulding and Purepac will mutually agree
upon an independent laboratory that will examine the Product in
dispute to determine if it conforms to the applicable specification.
Both parties agree to abide by the opinion of the independent
laboratory. The party in error shall pay the independent
laboratory's fees and all transportation, shipping and insurance
costs and other fees incident to the shipping of the replacement
Product.
12. Condition of Products
12.1 Subject to clause 12.2 and to packaging of the Product, Purepac
shall offer for sale and sell the Product in the same condition as
it is delivered by Faulding. Purepac shall not sell any Product
which has been damaged or is otherwise defective.
12.2 Purepac shall provide suitable storage and handling facilities for
the Product to ensure it can be offered for sale and sold in the
same condition as it is delivered by Faulding.
12.3 Purepac shall forthwith inform Faulding by written notice, of any
damaged or otherwise defective Product alleged to have been
delivered by Faulding and shall upon the request of Faulding return
the damaged or defective Product to Faulding forthwith and the
reasonable cost of return of such Product shall be borne by Faulding
and Faulding shall replace such damaged or defective Product free of
charge depending upon Faulding's availability of stocks of the
Product and provided that Faulding concludes that such damage or
defects have not been caused by Purepac. If Purepac disagrees with
Faulding's determination that such damage or defects have been
caused by Purepac, then the Product shall be submitted to an
independent laboratory, the costs of which shall be paid by the
party against whom the discrepancy is resolved.
12.4 In the event that Purepac determines that a Product should be
recalled for any reason, prior to taking any action, it shall give
written notice to Faulding specifying its reasons for the necessity
of a recall (the "Recall Notice"). If Faulding agrees with the
determination made by Purepac as stated in the Recall Notice,
Purepac shall handle the administration of the recall and Faulding
agrees to replace all Product recalled within one hundred twenty
(120) days from the date of the Recall Notice and to reimburse
Purepac for all reasonable out-of-pocket expenses relating to such
recall. If, within ten (10) days from the date of the Recall Notice,
the parties have been unable to reach an agreement concerning the
necessity of a recall, the parties agree to submit the Product to an
independent laboratory for an independent evaluation (the "Report"),
the cost of which shall be paid by the party against whom the
discrepancy is resolved. In the event that the discrepancy is
resolved against Faulding, Purepac shall handle the administration
of the recall and Faulding shall replace all Product recalled within
one hundred twenty (120) days from the date of the Report and shall
reimburse Purepac for all reasonable out-of-pocket expenses relating
to such recall. In the event that the discrepancy is resolved in
favor of Faulding and Purepac elects to recall the Product
notwithstanding the Report, Faulding shall have no obligation to
Purepac with respect to replacement of Product or reimbursement of
expenses.
13. No Sales Outside the Territory
To the extent permitted by the prevailing laws in the Territory,
Purepac undertakes and agrees that it will not sell any of the
Product directly or indirectly outside the Territory nor export any
of the Product out of the Territory nor fill any orders for the
Product knowing that such orders are intended for sale outside the
Territory.
14. Payments by Purepac
14.1 Purepac hereby agrees that it will bear all reasonable costs of
clinical trials and stability trials in respect of the Product which
are required to obtain registration and/or approval to market the
Product in the Territory during the term of this Agreement whether
those trials are conducted by it or by Faulding and whether or not
they have commenced on the date of execution of this Agreement.
14.2 The price per Unit of the Product purchased by Purepac shall be
$(U.S.)148.65, which price the parties shall review on an annual
basis or more frequently, if requested in writing by either party.
Any amounts due and payable shall be paid in full by Purepac to
Faulding within either sixty (60) days from the date of dispatch of
the Product or thirty (30) days from receipt of Product at Purepac's
premises, whichever is earlier.
14.3 Purepac shall during the continuance of this Agreement and any
extension thereof and thereafter for a period of twelve (12) months
after the date of the transactions to which they relate keep at its
principal office true and particular accounts and records of all
sales of the Product. Faulding or its duly authorized
representatives after giving reasonable notice shall have the right
during ordinary business hours to inspect and audit the accounts and
records referred to in this clause 14.3.
14.4 Purepac shall not be entitled to a discount or rebate from Faulding
on surcharges noted in the invoices such as packing, freight,
insurance, government charges, taxes and duties.
14.5 Property in the Product supplied by Faulding to Purepac under this
Agreement will only pass to Purepac at such time as the Products
have been paid for in full, provided always that all risk in and to
the Product shall pass to Purepac upon delivery to it of the Product.
15. Delivery
All deliveries of Product by Faulding to Purepac will be FOB ex
Faulding's factory at Salisbury, South Australia or such other place
or places as may be mutually agreed by the parties. The delivery of
Product may be in whole or in part of the accepted order. Purepac
shall be responsible for the payment of all freight and insurance
charges and all fees, taxes, excises, duties, and any other charges
which may be assessed against Product ordered from Faulding.
16. Purchase Orders and Forecasts
Purepac shall place written purchase orders with Faulding, receipt
of which shall be promptly acknowledged by Faulding in writing, for
the quantities and the delivery dates of Product which it desires to
purchase under this Agreement. In no event, however, will any such
purchase order specify a delivery date of less than ninety (90) days
from the receipt of the purchase order by Faulding. Faulding shall
confirm to Purepac each purchase order within ten (10) days after
its receipt thereof. On or before the effective date of this
Agreement, and every three (3) months thereafter during the term of
this Agreement, Purepac shall provide Faulding with a forecast of
Product to be ordered for delivery during each quarter for the
succeeding five (5) quarters. Such forecast shall not be a binding
obligation on either party. However, Purepac shall use all
reasonable efforts to make each forecast as accurate as possible,
particularly forecasts for the next two (2) quarters. Faulding
shall not be required to supply during any quarter more than one
hundred and ten per cent (110%) of the forecasted amounts so
furnished for that period but will use all reasonable efforts to
supply the full amount ordered.
17. Warranties, Indemnities and Insurance
17.1 Except as otherwise expressly provided in this Agreement, Faulding
shall not be bound by or subject to any condition, warranty,
obligation or liability of any kind whatsoever in connection with
this Agreement, whether such condition, warranty, obligation or
liability is implied or imposed by virtue of any applicable statute,
statutory rule or regulation or the general law and whether arising
out of negligence on the part of Faulding, its servants or agents or
otherwise howsoever and Purepac shall indemnify and keep indemnified
Faulding against all and any such actions, demands, obligations and
liabilities.
17.2 Purepac agrees to indemnify Faulding against and hold Faulding
harmless from any and all loss, liability, damage, claim cost and
expense (including without limitation, reasonable attorney's fees)
arising from or in connection with the packaging, storage, use, sale
and/or shipping of the Product by Purepac or any Sub-Licensee,
private label distributor or unit dose packer of Purepac and any
claims, express, implied or statutory, made by Purepac or any Sub-
Licensee, private label distributor or unit dose packer of Purepac
as to the efficacy or safety of the Product including, without
limitation, claims made by reference to the labelling or packaging
of the Product; provided however that Purepac shall not be required
to indemnify Faulding with respect to any loss, liability, damage,
claim, cost or expense which results solely from Faulding's breach
of its warranties hereunder, or from information about the Product
supplied by Faulding to Purepac or contained in regulatory filings
within the Territory prepared by Faulding in respect of the Product.
17.3 Faulding agrees to indemnify Purepac against and hold Purepac
harmless from any and all loss (except consequential loss, such as,
for example, loss of business or of profits), liability, damage,
claim, cost and expense (including, without limitation, reasonable
attorney's fees) arising from or in connection with:
(a) the manufacture of the Product by Faulding;
(b) any side effects caused by the active ingredient in the
Product, notwithstanding the fact that the Product meets, or
does not meet, the specification set forth in clause 11.2
hereof;
(c) the breach by Faulding of its warranties hereunder; and
(d) any claims, express, implied or statutory, made by Faulding as
to the efficacy or safety of the Product, or the use to be made
by any purchaser of the Product including, without limitation,
claims made by reference to the labelling or packaging of the
Product approved by Faulding.
17.4 Faulding warrants that:
(a) it has the corporate authority to enter into this Agreement and
to perform its obligations hereunder;
(b) all Product delivered to Purepac pursuant to this Agreement
will meet the specification at the time of delivery by Faulding
to Purepac and throughout its stated shelf-life, provided such
Product has been stored according to Faulding's instructions,
but only so long as it remains in the possession of Purepac;
(c) all Product manufactured and delivered to Purepac pursuant to
this Agreement will be manufactured in a plant which meets the
requirements of the Regulatory Authority in the Territory and
in accordance with Faulding's approved regulatory filings in
the Territory and GMP and will be free and clear of all
security interests, liens and other encumbrances of any kind;
(d) all Product delivered to Purepac pursuant to this Agreement
will have a shelf-life of at least eighteen (18) months,
provided that each order placed by Purepac for such Product
clearly specifies a minimum eighteen (18) months shelf life,
and provided further that such Product has been stored
according to Faulding's instructions; and
(e) Faulding will not deliver adulterated or misbranded Product to
Purepac pursuant to this Agreement.
17.5 Faulding warrants that it is the owner of the Rights free and clear
of any liens or encumbrances of third parties and has sufficient
right, title and interest in the Rights to grant the license to
Purepac granted hereunder;
17.6 Purepac warrants that: it has the corporate authority to enter into
this Agreement and to perform its obligations hereunder.
17.7
(a) If Purepac or any of its affiliates or subsidiaries or Faulding
or any of its affiliates or subsidiaries (in each case an
"Indemnified Party") receives any written claim which it
believes is the subject of indemnity hereunder by Faulding or
Purepac, as the case may be, (in each case as "Indemnifying
Party"), the Indemnified Party shall, as soon as reasonably
practicable after forming such belief, give notice thereof to
the Indemnifying Party, including full particulars of such
claim to the extent known to the Indemnified Party; provided,
that the failure to give timely notice to the Indemnifying
Party as contemplated hereby shall not release the Indemnifying
Party from any liability to the Indemnified party other than
pursuant to this Section 17. The Indemnifying Party shall have
the right, by prompt notice to the Indemnified Party, to assume
the defense of such claim with counsel reasonably satisfactory
to the Indemnified Party, and at the cost of the Indemnifying
Party. If the Indemnifying Party does not so assume the
defense of such claim or, having done so, does not diligently
pursue such defense, the Indemnified Party may assume such
defense, with counsel of its choice, but for the account of the
Indemnifying Party. If the Indemnifying Party so assumes such
defense, the Indemnified Party may participate therein through
counsel of its choice, but the cost of such counsel shall be
for the account of the Indemnified Party.
(b) The party not assuming the defense of any such claim shall
render all reasonable assistance to the party assuming such
defense, and all out-of-pocket costs of such assistance shall
be for the account of the Indemnifying Party.
(c) No such claims 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 Indemnified Party shall have no obligation to consent to
any settlement of any such claim which imposes on the
Indemnified Party any liability or obligation which cannot be
assumed and performed in full by the Indemnifying party.
18. Regulatory Approval
18.1 Purepac hereby agrees that it will, when and as required by and at
the cost and in the name of Faulding, seek all necessary approvals
and/or registrations from the appropriate Regulatory Authority in
the Territory to enable the conduct of pharmokinetic and stability
trials using the Product and/or the import, distribution, marketing
and sale of the Product in the Territory during the term of this
Agreement.
18.2 In the event that any applicable law or regulation in the Territory
prevents the grant of such approvals and/or registrations of the
Product in the name of Faulding, Purepac will secure such approvals
and/or registrations in its own name and at the expense of Faulding
on the express understanding that Faulding shall remain the
beneficial owner thereof and that such approvals and/or
registrations shall be held in trust for the beneficial owner and
shall be assigned to Faulding by Purepac at no charge to Faulding or
to Faulding's nominee as soon as such assignment is possible but in
no event later than the date of expiration or termination of this
Agreement. If upon expiration or termination of this Agreement no
such assignment may legally be made, such approvals and/or
registrations shall forthwith be surrendered for cancellation on the
request of Faulding. Upon Faulding's request, Purepac shall
promptly deliver to Faulding, or to Faulding's nominee, any
documents in its possession relating to such approval and/or
registrations and shall execute all such documents as Faulding may
deem appropriate to ensure any such assignment or cancellation is
effected.
18.3 Faulding hereby agrees that it will:
(a) notify Purepac promptly of any serious and unexpected adverse
reactions reported to Faulding resulting from the use of any
of the Product and on a regular basis notify Purepac of all
other reports of adverse reactions;
(b) advise Purepac of any and all changes in manufacture and
quality control information provided to the Regulatory
Authorities in the Territory before such changes are made;
(c) retain a representative sample from each batch of the Product
produced by Faulding and retain a portion of each such sample
for twelve (12) months past the expiration date stated thereon,
for use in the event a later analysis becomes necessary; and
(d) perform all stability testing of the Product for required
filing for approval to market or for registration in the
Territory.
18.4 Purepac agrees that it will:
(a) notify Faulding promptly of any serious and unexpected adverse
reactions reported to it or to any sub-licensee of Purepac
resulting from the use of the Product and provide to Faulding
copies of all other adverse action reports received by it or
any sub-licensee of Purepac;
(b) notify Faulding promptly of any complaints from third parties
involving the Product; and
(c) provide all necessary assistance to Faulding in complying with
the reporting compliance requirements of the Regulatory
Authorities.
19. Term
Subject to clause 24, the term of this Agreement shall be three (3)
years from the date of execution of this Agreement and thereafter
shall be automatically renewed for successive periods of two (2)
years unless either party shall give six (6) months prior written
notice to the other party of its intention not to renew this
Agreement.
20. Termination
The obligation of the parties set forth in this Agreement may be
terminated by notice in writing by either party if the other party
shall default in the performance of any of its material obligations
under this Agreement and such default shall continue for a period of
not less than ninety (90) days after written notice specifying such
default shall be been given; by either party if the other party
makes an arrangement with its creditors or goes into receivership
or liquidation (other than voluntary liquidation) for the purpose of
internal reorganization, or if a receiver or a receiver and manager
is appointed in respect of the whole or part of the property or
business of the party in default or by either party if a major part
of the assets or all of the assets of the other party are disposed
of or are compulsory acquired by any other person.
21. Confidential Information
21.1 All confidential information communicated by Faulding or its
employees, servants or agents to or obtained by Purepac or its
employees, servants, sub-licensees, private label distributors, unit
dose packers or agents (collectively, "Agents") and all other
information and other materials supplied to or received by Purepac
or its Agents from Faulding or its Agents on a confidential basis
shall be kept confidential by Purepac unless the confidential
information or such information or materials or part of it is in the
public domain other than by breach of this Agreement by Purepac or
its Agents, whereupon to the extent that it is public, this
obligation of confidentiality shall cease.
21.2 The obligation of confidence imposed in clause 21.1 shall continue
in force for a period of ten (10) years following the termination or
expiration of this Agreement.
21.3 Purepac shall take all reasonable steps to eliminate the risk of
unauthorized disclosure of confidential information by obtaining
from all of its Agents who may be granted access to any confidential
information appropriate nondisclosure agreements.
22. Assignment
Neither party to this Agreement shall assign any rights hereunder
to third parties other than the right of payment of monies accrued
without the prior written consent of the other party; provided,
however, that the restriction contained herein shall in no way
limit the rights to sublicense granted to Purepac under this
Agreement or the rights of either party to make assignments to
affiliates. This Agreement shall be binding upon any permitted
assignee or successor of either
party.
23. Entire Agreement
This Agreement constitutes the entire agreement of the parties and
revokes and supersedes any and all agreements, contracts,
understandings or arrangements that might have existed heretofore
between the parties regarding the subject matter hereof.
24. Variations to Agreement
Any modification, alteration, change or variation of any term or
condition of this Agreement shall be only made in writing, executed
by both parties.
25. Severability
The provisions of this Agreement shall be deemed to be severable and
any invalidity of any provision of this Agreement shall not affect
the validity of the remaining provisions of this Agreement.
26. Relationship of Parties
Nothing contained in this Agreement shall be construed so as to
operate or to place any party in the relationship of employee or
agent or joint venturer or legal representative of any other party
and it is hereby expressly agreed and acknowledged that each of the
parties is an independent contracting party which does not have the
authority or power for or on behalf of the other party to enter into
any contract, to incur debts, to accept money, to assume any
obligations or to make any warranties or representations whatsoever.
27. Waiver
The failure of either of the parties to insist upon a strict
performance of any of the terms and provisions herein shall not be
deemed a waiver of any subsequent breach or default in the terms or
provisions of this Agreement.
28. Notices
Any notice or other communication provided for or permitted in this
Agreement shall be in writing and shall be sent by certified or
registered airmail with postage prepaid, by hand delivery, or by
facsimile transmission to the parties as follows:
TO FAULDING:
The Company Secretary
F. H. FAULDING & CO. LIMITED
160 Greenhill Road
Parkside South Australia 5063
Telephone No: (08) 372 1500
Facsimile No: (08) 373 3120
TO PUREPAC:
The President
PUREPAC PHARMACEUTICAL CO.
200 Elmora Avenue
Elizabeth New Jersey 07207 USA
Telephone No: (201) 527-9100
Facsimile No: (201) 527-0649
or such other address or person as either party may specify by
notice in writing to the other. Any notice or other communication
under this clause shall be deemed to have been duly given or made:
(a) ten (10) days after being deposited in the mail with postage
prepaid;
(b) when delivered by hand; or
(c) if sent by facsimile transmission, upon confirmation of
successful transmission of the facsimile to the recipient
generated by the sender's facsimile machine.
29. Force Majeure
Neither party shall be responsible or liable to the other party for,
nor shall this Agreement be terminated as a result of, any failure
to perform any of its obligations hereunder (with the exception of
payment of monies due and owing), if such failure results from
circumstances beyond the control of such party, including, without
limitation, requisition by any government authority or the effect
of any statute, ordinance or governmental order or regulation, wars,
strikes, lockouts, riots, epidemic, disease, act of god, civil
commotion, fire, earthquake, storm, failure of public utilities,
common carriers or any other circumstances, whether or not similar
to the above causes. In the event such force majeure continues for
a period of more than one hundred and eighty (180) days, the party
not the victim of the force majeure may terminate this Agreement on
thirty (30) days written notice to the other party.
30. Governing Law
This Agreement shall be construed with and in accordance with and
governed by the laws of the State of New Jersey, United States of
America and its form, execution, validity, construction and effect
shall be determined in accordance with the laws of the State of New
Jersey.
31. Execution of All Necessary Additional Documents
Each party agrees that it will forthwith upon the request of the
other party execute and deliver all such instruments and agreements
and will take all such other actions as the other party may
reasonably request from time to time in order to effectuate the
provision and purposes of this Agreement.
32. Headings
The headings used in this Agreement are intended for guidance only
and shall not be considered part of this written understanding
between the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first above written.
PUREPAC PHARMACEUTICAL CO.
By: /s/
--------------------------
F. H. FAULDING & CO. LIMITED
By: /s/
--------------------------
SCHEDULE 1
The Product
Generic version of Faulding's doryx product which is licensed in the United
States to Warner-Lambert Company.
SCHEDULE 2
The Territory
The United States of America and its commonwealth states.
EXHIBIT 10.15
LICENSE AGREEMENT made as of the 26th day of June, 1995
between F.H. FAULDING & CO. LIMITED of 160 Greenhill Road, Parkside
in the State of South Australia (hereinafter called "Faulding") and
PUREPAC PHARMACEUTICAL CO. of 200 Elmora Avenue, Elizabeth, New
Jersey, United States of America (hereinafter called "Purepac");
WHEREAS, Faulding is the proprietor of the Technology in
relation to the manufacture and production of the Product;
WHEREAS, Purepac wishes to obtain an exclusive right to
utilize the Technology to complete development of the Product and
to manufacture and sell the Product within the Territory;
WHEREAS, Faulding has agreed to license the Technology to
Purepac on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, IT IS AGREED as follows:
1. For the purposes of this Agreement the following terms
shall have the following meanings:
1.1 "Affiliates" shall mean (a) an entity controlled by
a common parent that owns more than fifty percent of the voting
stock of both such entity and one of the parties to this Agreement
and (b) such parent company.
1.2 "Direct Material Costs" shall mean, with respect to
any calendar quarter, the actual material costs of the manufacture
of the Product, including, without limitation, the costs of
packaging, as determined in accordance with generally accepted U.S.
accounting principles, consistently applied.
1.3 "Enhancements" shall mean any improvements,
enhancements or changes in the Technology in relation to the
Product that are developed by Purepac after the Technology Transfer
Date during the term of this Agreement.
1.4 "Gross Margin" shall mean the Net Sales Price less
the Direct Material Costs.
1.5 "Know-How" shall mean the processes, methods and
procedures for the manufacture and production of the Product and
any improvement or modifications that may be developed by or on
behalf of either Faulding or Purepac during the term of this
Agreement, as set forth in Section 14 hereof.
1.6 "Net Sales Price" shall mean, with respect to any
calendar quarter, the gross income of Purepac from sales of the
Product to independent third parties (not including amounts
received as reimbursement of freight, insurance and other costs or
taxes) invoiced by Purepac during such quarter, less price
discounts, trade returns, trade allowances, chargebacks or rebates
relating to such sales, as calculated using Purepac's standard
accounting procedures, in accordance with U.S. generally accepted
accounting principles, consistently applied. It is understood and
agreed that where the amount of any deduction can not be fairly
determined during the quarter immediately following the quarter in
question, such deduction may be claimed by Purepac with respect to
Net Sales made during a subsequent quarter.
1.7 "Product" shall mean the product set forth on
Schedule 1 hereto.
1.8 "Regulatory Authority" shall mean the United States
Federal Food and Drug Administration and/or any other like
authority whether Federal or State regulating the manufacture,
distribution, marketing and/or sale in the Territory of therapeutic
substances.
1.9 "Technology" shall mean that technology including
technical, scientific, industrial information or knowledge,
confidential information and expertise in relation to the
formulation and composition of the Product, which, as of the
Technology Transfer Date, has been in the possession of Faulding.
1.10 "Technology Transfer Date" shall mean August 31,
1995 or such other date, as mutually agreed to by the parties, on
which Faulding shall transfer the Know-How in Faulding's possession
and the Technology to Purepac.
1.11 "Territory" shall mean the United States of America
and its commonwealth states and territories.
1.12 "U.S." shall mean the United States of America.
2. LICENSE OF TECHNOLOGY
2.1 In consideration of the payment of Technology
licensing fee, set forth in Section 2.2 hereof and the royalty
payments set forth in Section 8 hereof, Faulding hereby licenses
the Technology to Purepac for a period commensurate with the term
of this Agreement, as set forth in Section 15 hereof, to use and
take advantage of the Technology for the purposes of completing the
development of the Product and manufacturing and selling the
Product within the Territory during the term of this Agreement.
Purepac management has been involved in the development of the
Technology and understands that further development of the
Technology is necessary for completion of the Product.
2.2 The parties agree that the Technology licensing fee
shall aggregate $(U.S.)1,834,434 and, as the case may be, has been
paid or shall be payable by Purepac to Faulding in three payments
as follows:
(a) $(U.S.)1,234,434, which Purepac has heretofore paid
Faulding in full;
(b) $(U.S.)350,000, payable on July 31, 1995; and
(c) $(U.S.)250,000, payable thirty (30) days after the
Technology Transfer Date.
2.3 The license of the Technology pursuant to this
Agreement is sole and exclusive for the development, manufacture,
and sale of the Product in the Territory. Faulding agrees that it
will not sell or transfer the Technology or grant any rights to use
or exploit the Technology to any other person or corporation for
the manufacture or distribution in the Territory of the Product or
a product competitive with the Product during the term of this
Agreement, but the parties understand and agree that Faulding has
the right, subject to the limitations set forth in Section 4.3, to
license the Technology outside the Territory for any purpose and
within the Territory for any purpose other than the manufacture and
distribution of a product competitive with the Product.
2.4 Purepac agrees that it will not use or exploit the
Technology for any purpose other than the manufacture and sale of
the Product in the Territory and that it will not manufacture, sell
or attempt to sell the Product outside the Territory either on its
own account or through any third party nor will it sell any Product
to any person or corporation within the Territory where Purepac has
reasonable grounds to believe that such other person or corporation
intends to sell the Product outside the Territory.
2.5 In the event that either (a) Purepac submits a
written request to Faulding to market the Product outside the
Territory or (b) Faulding submits a written request to Purepac to
purchase the Product for sale by Faulding outside the Territory,
the parties agree to negotiate in good faith to determine whether
they can reach an agreement that is commercially acceptable to both
of them.
3. TECHNOLOGY TRANSFER
3.1 Immediately upon execution of this Agreement
Faulding will provide to Purepac details of all work done to date
in relation to development of the Product. Faulding will continue
to carry on formulation work until the Technology Transfer Date and
will provide regular reports on progress with this work to Purepac
and in any event will report not less than twice a month.
3.2 On the Technology Transfer Date, Faulding will
provide to Purepac all Technology and Know-How in its possession as
may be necessary and helpful for Purepac to complete the
development work with respect to the Product and replicate and
scale-up the process for the manufacture of the Product.
3.3 Upon payment of the third installment of the
Technology licensing fee, as set forth in Section 2.2 of this
Agreement, Purepac will be entitled to request Faulding to provide
appropriate scientists and engineers ("Faulding Engineers") on
sites at Purepac's premises to aid Purepac in the completion of the
development work with respect to the Product, the commissioning of
the equipment and the replicating and scaling up of the process of
manufacture of the Product. If requested by Purepac, Faulding,
will send to Purepac's site in the U.S. (a)at Faulding's expense,
a team of not more than two (2) Faulding Engineers from Australia
for a maximum of two visits, together aggregating no more than two
months' duration, and (b) at Purepac's reasonable expense, one
qualified formulator from Australia for one or more visits,
aggregating approximately two years' duration (the exact duration
of which being subject to the on-going negotiation between the
parties).
3.5 At the request of Purepac, but not more than twice
in any calendar year, Purepac personnel will be entitled to visit
Faulding's premises in Australia for technical discussions relating
to the development and scale-up work on the Product PROVIDED,
HOWEVER, that such visits will be at Purepac's sole expense and
will be held at a time reasonably convenient to Faulding.
4. INTELLECTUAL PROPERTY RIGHTS
4.1 Purepac acknowledges and agrees that Faulding is the
owner of the Technology and all industrial and intellectual
property rights of any kind in relation to the Technology including
the right to patents, registered or other designs, copyright,
trademarks or trade names and any other confidential information.
Nothing contained in this Agreement shall be effective to give
Purepac any rights of ownership in and to the Technology and to the
intellectual property owned by Faulding in any area outside the
Territory and the licensing of the Technology under this Agreement
is for the sole purpose of developing, manufacturing and selling
the Product in the Territory.
4.2 Any improvements to the Technology as it applies to
the Product made or discovered by Faulding during the term of this
Agreement shall be made known to Purepac and Purepac shall be
entitled to use and commercially exploit any such improvements
without payment of any further sum PROVIDED HOWEVER, that if such
improvement has the effect of rendering the existing Technology
obsolete (the "Superseding Technology") and the existing
Technology, as such Technology may be improved or enhanced by
Purepac, is effective in relation to the Product at the time of
such Superseding Technology, Faulding shall grant Purepac a right
of first refusal to license the Superseding Technology for the
purposes of manufacturing and selling an improved product within
the Territory on a comparable basis and on comparable terms as
provided in this Agreement and PROVIDED FURTHER, HOWEVER, that if
the existing Technology, as such Technology may be improved or
enhanced by Purepac, is not effective in relation to the Product at
the time of such Superseding Technology, Purepac shall be entitled
to use, enhance and commercially exploit such Superseding
Technology without payment of any further sum.
4.3 Faulding acknowledges and agrees that Purepac is the
owner of all Enhancements to the Technology, as applied to the
Product, and all industrial and intellectual property rights of any
kind in relation to such Enhancements, including the right to
patents, registered or other designs, copyright and any other
confidential information. Nothing contained in this Agreement
shall be effective to give Faulding any rights of ownership in and
to the Enhancements and to the intellectual property rights owned
by Purepac. In the event that Faulding shall desire to register
any product which in any way utilizes any Enhancement anywhere,
within or outside the Territory, the parties agree to negotiate in
good faith to determine the mutually acceptable and commercially
reasonable consideration that Faulding shall pay to Purepac for the
right to use such Enhancement.
4.4 The parties agree that all Know-How shall be jointly
owned by them and that each of them may freely use the Know-How,
whether it has been developed by either party or jointly by both
parties. Any improvement to the Know-How as it applies to the
Product made or discovered by either party during the term of this
Agreement shall be made known to the other party, upon written
request by the other party, and the other party shall be entitled
to use and commercially exploit any such improvement without
payment of any sum to the other party.
5. FAULDING EXPENSES AFTER THE TECHNOLOGY TRANSFER DATE
5.1 Purepac shall only reimburse Faulding for such
reasonable costs incurred by Faulding in connection with the
Technology after the transfer of the Technology to Purepac on the
Technology Transfer Date that Purepac has preapproved in writing.
5.2 If for any reason after the Technology Transfer Date,
Purepac requests Faulding either to (a) perform any services with
respect to the Product or (b) manufacture any batches of the
Product, and Faulding performs such services, Purepac shall
reimburse Faulding for the costs of all such services as follows:
(i) Within seven (7) days after the end each month,
Faulding will submit to Purepac the commercially
reasonable costs incurred by Faulding pursuant to
the provisions of this Section 5.3(a "Monthly
Statement");
(ii) Subject to the provisions of the following
sentence, Purepac shall pay to Faulding the amount
due as reflected in each Monthly Statement within
thirty (30) days after its receipt of such
Statement. Within 10 days after its receipt of the
Final Cost Statement, Purepac may initiate a review
of Faulding's costs, as reflected in the Statement,
by written notice to Faulding. Within 10 days of
Faulding's receipt of such notice, the parties will
meet and negotiate in good faith to resolve any
differences between them.
6. REGULATORY APPROVALS; ADVERSE REPORTS.
6.1 Subject to the provisions of Section 15.3 of this
Agreement, Purepac hereby agrees, at its own expense, to:
6.1.1 complete the development work with respect to
the Product;
6.1.2 carry out all work necessary for the
registration of the Product in the Territory, including scale-up
and definitive pharmacokinetic and stability studies;
6.1.3 seek all necessary approvals and/or
registrations from the appropriate Regulatory Authority in the
Territory to permit the conduct of clinical trials using the
Product and/or the manufacture, distribution, marketing and sale of
the Product in the Territory; and
6.1.4 comply with the reporting compliance
requirements of the Regulatory Authority in the Territory during
the term of this Agreement.
6.2 Faulding hereby agrees that it will, when and as
requested by Purepac, assist Purepac, at Purepac's commercially
reasonable cost, in preparing the ANDA, including, without
limitation providing assistance to Purepac with regard to any
Product/development reports required by the FDA. Purepac will
reimburse Faulding for the costs of such services in the same
manner and during the same time frame as set forth in Section 5.2
of this Agreement.
6.3 Faulding and Purepac recognize and agree that
Purepac, during the term of this Agreement, shall hold title to the
ANDA and to all clinical data developed by Purepac for registration
of the Product in the Territory. Purepac agrees, however, that it
shall not transfer or assign the ANDA to any third party without
the prior consent of Faulding. In the event that Faulding shall
elect to include any of the aforementioned clinical data in an
application by Faulding to register the Product anywhere outside
the Territory, the parties agree to negotiate in good faith to
determine the mutually acceptable and commercially reasonable
consideration that Faulding shall pay to Purepac for the right to
use such clinical data.
6.4 Purepac agrees that upon the expiration of, or
termination of the Agreement for any reason other than a default by
Faulding, Purepac will grant Faulding, or Faulding's nominee, for
the ninety (90) day period after such expiration or termination
(the "Election Period"), a right of first refusal to an assignment
by Purepac of the ANDA as follows:
(a) The right of first refusal may be exercisable by
Faulding by delivery of a written offer (the "Faulding
Assignment Offer") to Purepac, which Faulding Assignment
Offer shall contain all of the material terms of
Faulding's proposed offer. Within ten (10) days after
Purepac's receipt of the Assignment Offer, Purepac shall
either deliver a written acceptance of the Offer to
Faulding or meet with Faulding to negotiate in good faith
mutually acceptable and commercially reasonable terms
upon which to transfer the ANDA.
(b) If the parties shall fail to reach an agreement, or
if Purepac otherwise, during the Election Period,
receives any bona fide offer from an unaffiliated third
party to have the ANDA assigned to such third party (the
"Third Party Assignment Offer"), Purepac shall notify
Faulding in writing of any such Assignment Offer at least
thirty (30) days prior to the intended closing date
thereof, which notice (the "Third Party Assignment
Notice") shall contain all the material terms of the
Third Party Assignment Offer and Faulding may, within
fifteen (15) business days after its receipt of the Third
Party Assignment Notice exercise its right of first
refusal by delivery of a written notice to Purepac.
(c) If Faulding shall fail to elect to enter into the
transaction described in the Third Party Assignment
Notice, or then Purepac shall, during the remainder of
the Election Period be free to consummate the Third Party
Assignment Offer on the terms and conditions, including
price, specified in such Notice.
(d) Upon assignment of the ANDA to Faulding or
Faulding's nominee, Purepac shall promptly deliver to
Faulding, or to Faulding's nominee, any documents in its
possession relating to the ANDA and the registration of
the Product in the Territory and shall execute all such
documents as the Regulatory Authority may require or as
Faulding may deem appropriate to ensure any such
assignment is effected.
6.5 Purepac agrees that it will, in accordance with the
laws and regulations of the Territory as such laws and regulations,
may from time to time be amended, notify Faulding promptly (a) of
any serious and unexpected adverse reactions reported to it or to
any sub-licensee of Purepac resulting from the use of the Product
and provide to Faulding copies of all other adverse action reports
received by it or any sub-licensee of Purepac and (b) of any
complaints from third parties involving the Product.
6.6 Purepac agrees to maintain adequate quality control
in respect of its manufacture, packaging, labelling and storage of
the Product and to ensure that all manufacture of and packaging and
labelling used for the Product meets all the requirements under the
applicable laws, rules and regulations in the Territory.
6.7 In the event that Faulding, subject to the
provisions of Section 4 of this Agreement, uses the Technology,
either within or without the Territory, in the manufacture of any
other product, Faulding agrees that it will, in accordance with the
laws and regulations of the Territory as such laws and regulations,
may from time to time be amended, notify Purepac promptly (a) of
any serious and unexpected adverse reactions reported to it or to
any sub-licensee of Faulding resulting from such use of the
Technology in any product and provide to Purepac copies of all
other adverse action reports received by it or any sub-licensee of
Faulding and (b) of any complaints from third parties involving
such other product.
7. DISTRIBUTION AND SALE OF PRODUCT; APPOINTMENTS
7.1 Upon registration of the Product, Purepac shall use
reasonable efforts, at its expense, to promote, distribute and sell
the Product in and throughout the Territory in order to obtain the
optimum market potential for the Product within and throughout the
Territory.
7.2 Subject to the limitations set forth in Section 7.3
hereof, Purepac shall have the right to appoint any agent or sub-
licensee to market, distribute, promote and/or sell the Product
within the Territory.
7.3 The appointment of any agent or sub-licensee under
Section 7.2 shall be on such terms and conditions as Purepac may
reasonably require in writing provided such terms and conditions
are not inconsistent with the terms and conditions of this
Agreement. Purepac agrees that it shall, at all times, be solely
responsible for the acts, deeds or omissions of any agent or sub-
licensee appointed pursuant to Section 7.2 and hereby indemnifies
Faulding against any and all loss, liability, damage, claims, cost
and expense arising from or in connection with such agent's or sub-
licensee's acts, deeds or omissions.
8. ROYALTY PAYMENTS
8.1 Purepac shall pay to Faulding throughout the term of
this Agreement a royalty at the rate of 8.2% of the Gross Margin of
all Product sold in the Territory by Purepac and its agents and
sub-licensees.
8.2 Royalty payments required by Section 8.1 shall be
made by Purepac within 45 days after the close of each calendar
quarter in U.S. dollars by wire transfer to the account specified
by Faulding from time to time. Purepac may withhold from such
payments any withholding required under U.S. law and shall submit
to Faulding documents evidencing such tax withholding, if any. At
the same time as making any royalty payment, Purepac shall submit
to Faulding a statement setting forth the sales of Product, the
invoiced amount of such sales, the calculation of direct material
costs and gross margin and the amount of any other payments
received in relation to sales of such Product.
8.3 Purepac, during the term of this Agreement and any
extension hereof and thereafter for a period of two years after, as
the case may be,
(a)the last expiration date of any Product manufactured
pursuant to this Agreement; or
(b)an expiration of this Agreement caused by the recall of the
Product in the Territory
shall keep at its principal office true and particular accounts and
records of all sales, the calculation of direct material costs and
gross margin of Product by Purepac and its agents and sub-licensees.
Faulding or its duly authorized representatives after
giving reasonable notice shall have the right during ordinary
business hours to inspect and audit the accounts and records
referred to in this Section 8.3.
9. WARRANTY
9.1 Faulding represents and warrants to Purepac that it:
(a) has the corporate authority to enter into this Agreement
and to perform its obligations hereunder;
(b) is not aware of any legal, contractual or other
restriction, limitation or condition which might affect adversely
its ability to perform hereunder;
(c) is the owner of the Technology free and clear of any
liens or encumbrances of third parties and has sufficient right,
title and interest in the Technology to grant the license to
Purepac granted hereunder;
(d) to the best of its knowledge as of the date of this
Agreement, the Technology, as known as of the date hereof, does not
infringe any valid published U.S. patent; and
(e) upon the transfer of the Technology to Purepac, as
contemplated by Section 3 of this Agreement (i) it will be the
owner of the Technology free and clear of any liens or encumbrances
of third parties and (ii) to the best of its knowledge as of the
date of this Agreement, it will have sufficient right, title and
interest in the Technology to grant the license to Purepac granted
hereunder.
9.2 Purepac represents and warrants to Faulding that it:
(a) has the corporate authority to enter into this Agreement
and to perform its obligations hereunder; and
(b) is not aware of any legal contractual or other
restriction, limitation or condition which might affect adversely
its ability to perform hereunder.
10. CONFIDENTIALITY
10.1 Purepac agrees with Faulding that it will not
disclose to any person or corporation any confidential information
of Faulding that it may acquire at any time during the term of this
Agreement, including, without limitation the Technology and Know-How
and any Enhancements without the prior written consent of
Faulding and that Purepac will use all reasonable efforts to
prevent unauthorized publication or disclosure by any person of
such Technology and Know-How, including, without limitation,
requiring its employees, consultants, sub-licensees and agents to
enter into similar confidentiality agreements in relation to the
Technology and such other confidential information.
10.2 Faulding agrees with Purepac that it will not
disclose to any person or corporation any confidential information
of Purepac that it may acquire at any time during the term of this
Agreement, including, without limitation the Know-How and any
Enhancements, without the prior written consent of Purepac and that
Faulding will use all reasonable efforts to prevent unauthorized
publication or disclosure by any person of such confidential
information, including requiring its employees, consultants and
agents to enter into similar confidentiality agreements in relation
to the Technology and such other confidential information.
10.3 The obligations undertaken by each party under this
Section 10 shall continue in force for a period of five (5) years
following the termination or expiration of this Agreement.
10.4 The obligations contained in this Section 10 do not
apply to any information:
(a) which was at the time of receipt by a party in the public
domain or generally known in the pharmaceutical manufacturing
industry otherwise than by breach of a party's duty of
confidentiality;
(b) which a party can establish to have been known to it at
the time of receipt from the other party and not to have been
acquired directly or indirectly from the other party and
(c) acquired by a party from a third party otherwise than in
breach of an obligation of confidence to the other party.
(d) required by law to be provided to governmental agencies
but only for the purpose of providing it to such governmental
agencies; and
(e) disclosed to an Affiliate of either party for purposes
consistent with this Agreement.
11. INDEMNITY
11.1 Faulding agrees to indemnify, defend and hold
harmless Purepac, its Affiliates and subsidiaries and their
respective employees against any and all claims, losses (except
consequential losses, such as, for example, the loss of business or
of profits), damages and liabilities, including reasonable
attorney's fees, incurred by any of them arising out of any breach
of any obligation by Faulding hereunder or any representation or
warranty by Faulding hereunder or any act or omission of Faulding
in connection with its contract obligations hereunder.
11.2 Purepac agrees to indemnify, defend and hold
harmless Faulding, its Affiliates and subsidiaries and their
employees against any and all claims, losses(except consequential
losses, such as, for example, the loss of business or of profits),
damages and liabilities, including reasonable attorney's fees,
incurred by any of them arising out of any breach of any obligation
by Purepac hereunder, any representation or warranty by Purepac
hereunder, or any act or omission of Purepac in connection with its
contract obligations hereunder.
11.3
(a) If Purepac or any of its Affiliates or subsidiaries or
Faulding or any of its Affiliates or subsidiaries (in each case an
"Indemnified Party") receives any written claim which it believes
is the subject of indemnity hereunder by Faulding or Purepac, as
the case may be, (in each case as "Indemnifying Party"), the
Indemnified Party shall, as soon as reasonably practicable after
forming such belief, give notice thereof to the Indemnifying Party,
including full particulars of such claim to the extent known to the
Indemnified Party; provided, that the failure to give timely notice
to the Indemnifying Party as contemplated hereby shall not release
the Indemnifying Party from any liability to the Indemnified party
other than pursuant to this Section 11. The Indemnifying Party
shall have the right, by prompt notice to the Indemnified Party, to
assume the defense of such claim with counsel reasonably
satisfactory to the Indemnified Party, and at the cost of the
Indemnifying Party. If the Indemnifying Party does not so assume
the defense of such claim or, having done so, does not diligently
pursue such defense, the Indemnified Party may assume such defense,
with counsel of its choice, but for the account of the Indemnifying
Party. If the Indemnifying Party so assumes such defense, the
Indemnified Party may participate therein through counsel of its
choice, but the cost of such counsel shall be for the account of
the Indemnified Party.
(b) The party not assuming the defense of any such claim
shall render all reasonable assistance to the party assuming such
defense, and all out-of-pocket costs of such assistance shall be
for the account of the Indemnifying Party.
(c) No such claims 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
Indemnified Party shall have no obligation to consent to any
settlement of any such claim which imposes on the Indemnified Party
any liability or obligation which cannot be assumed and performed
in full by the Indemnifying party.
11.4 Faulding shall have no liability hereunder for any
claim which, if true, would constitute a breach of the warranties
contained in Sections 9.1(c), (d) and (e) hereof (hereinafter an
"Infringement Claim") based on Purepac's manufacture or
distribution of the Product, as the case may be, after Purepac
receives a notice from Faulding that Purepac should cease such
manufacture or distribution due to an Infringement Claim.
12. TAXATION ISSUES
12.1 Each of the parties is aware that the commercial
arrangements of this Agreement may be subject to transfer pricing
reviews by the relevant taxation authorities in the Territory and
Australia. As a result, this Agreement may be subject to internal
reviews by either or both parties and to audits by the relevant
taxation authorities. If as a result of such reviews or audits, it
becomes necessary or advisable for either party (the "Affected
Party")to change any commercial arrangements of this Agreement,
including, without limitation, making retroactive adjustments, the
other party, within thirty (30) days after written notification by
the Affected Party, which notification shall explain in reasonable
detail the reason for the proposed change, shall meet with the
Affected Party and each of the parties agrees to negotiate in good
faith, and to use its best efforts to reach agreement with respect
to, any modifications to the commercial terms of this Agreement.
In the event that the parties, despite their best efforts, cannot
reach agreement with respect to any material change, which in the
opinion of either party is necessary or advisable for the reasons
set forth in this Section 12.1, either party, upon written notice
to the other party, may terminate this Agreement. The provisions
of Section 15.4 of this Agreement shall apply upon any termination
of the Agreement pursuant to this Section 12.1.
12.2 Each of the parties agrees to provide reasonable
assistance, at the Affected Party's reasonable cost, if the
Affected Party is subject to a taxation audit that reviews any
commercial arrangement of this Agreement.
13. NOTICES
Notices provided under this Agreement to be given or served by
either party on the other shall be given in writing and served
personally or by prepaid registered airmail or by express mail or
by means of facsimile to the following respective addresses or to
such other addresses as the parties may hereafter advise each other
in writing. It being agreed and understood by the parties that any
such notice shall be deemed given and served on the dates
transmitted by facsimile or a date ten (10) days after the date of
airmail by post or express mail.
To: Faulding
The Company Secretary
F.H. Faulding & Co. Limited
160 Greenhill Road
PARKSIDE South Australia 5063
Facsimile +618 373 3120
To: Purepac
President
Purepac Pharmaceutical Co.
200 Elmora Avenue
Elizabeth, New Jersey 07207
United States of America
Facsimile +1 908 527-0649.
14. ASSIGNMENT
Neither party to this Agreement shall assign any rights
hereunder to third parties other than the right of payment of
monies accrued without the prior written consent of the other
party; provided, however, that the restriction contained herein
shall in no way limit the rights to sublicense granted to Purepac
under Section 7 of this Agreement or the rights of either party to
make assignments to Affiliates. This Agreement shall be binding
upon any permitted assignee or successor of either party.
15. TERM AND TERMINATION
15.1 This Agreement shall be for a term of ten (10) years
commencing as of the date of this Agreement and thereafter shall be
automatically renewed for successive periods of five (5) years
unless either party shall give six (6) months prior written notice
to the other party of its intention not to renew this Agreement.
15.2 This Agreement may be terminated by notice in
writing by either party if the other party shall default in the
performance of any of its obligations under this Agreement and such
default shall continue for a period of not less than ninety (90)
days after written notice specifying such default shall have been
given; by either party if the other party makes an arrangement with
its creditors or goes into receivership or liquidation (other than
voluntary liquidation for the purpose of internal reorganization),
or if a receiver or a receiver and manager is appointed in respect
of the whole or part of the property or business of the party in
default or by either party if a major part of the assets or all of
the assets of the other party are disposed of to or compulsorily
acquired by any other person.
15.3 This Agreement may be terminated at any time by
Purepac by notice in writing to Faulding if Purepac determines, in
its sole judgement, that the development, manufacture or sale of
the Product has ceased to be commercially viable and relevant to
the business objectives of Purepac.
15.4 Upon the latter of:
(a) the termination or expiration of this Agreement, or
(b) with respect to any records or other data that must be
retained for a period of time in accordance with, and as set
forth in, the regulations of the Regulatory Authority (the
"Retention Period"), the expiration of the Retention Period,
Purepac shall promptly deliver to Faulding all information with
respect to the Technology in Purepac's possession and Faulding
shall promptly deliver to Purepac all information with respect to
any Enhancements and the parties shall as soon as conveniently
possible reconcile all accounts.
16. FORCE MAJEURE
Neither party shall be liable or be guilty of any breach of
any provision of this Agreement for failure or delay in its part to
perform any obligation where such failure or delay has been
occasioned by any act of God, war, riot, fire, explosion, flood,
sabotage, accident or breakdown of machinery, unavailability of
fuel, labor, containers or transportation facilities, accidents of
navigation or breakdown or damage of vessels or other conveyancers
for air land or sea, other impediments or hindrances to
transportation, government intervention, strikes or other labor
disturbances or any other cause beyond the control of the parties.
17. NON WAIVER
Any party's failure to exercise or enforce any right conferred
upon it under this Agreement shall not be deemed to be a waiver of
any such right or operate to bar the exercise or performance
thereof at any time or times thereafter nor shall any party's
waiver of any right under this Agreement at any given time
including rights to any payment be deemed a waiver for any other
time.
18. GOVERNING LAW
This Agreement shall be deemed to be a contract made under and
shall be governed by and construed in accordance with the laws of
the State of New York.
19. ENTIRE AGREEMENT
This Agreement incorporates the entire understanding of the
parties and revokes and supersedes any and all agreements,
contracts, understandings or arrangements that might have existed
heretofore between the parties regarding the subject matter hereof.
20. HEADINGS
The headings used in this Agreement are intended for guidance
only and shall not be considered part of this written understanding
between the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties on the date first above written.
PUREPAC PHARMACEUTICAL CO.
By: /s/
------------------------
F.H. FAULDING & CO. LIMITED
By: /s/
-------------------------
SCHEDULE 1
A once daily ketoprofen product that will be the rated A/B
substitutable for Oruvail 200 by the United States Food and Drug
Administration.
EXHIBIT 10.17
SERVICES AGREEMENT, dated as of the 26th of June, 1995 by
and between FAULDING HOSPITAL PRODUCTS, INC., a Delaware corporation
having its principal place of business at 200 Elmora Avenue,
Elizabeth, New Jersey(hereinafter referred to as "FHP") and PUREPAC
PHARMACEUTICAL CO., a Delaware corporation having its principal
office at 200 Elmora Avenue, Elizabeth, New Jersey (hereinafter
referred to as "PUREPAC").
WHEREAS, FHP markets parenteral pharmaceutical products
in the Territory.
WHEREAS, PUREPAC possesses certain expertise in the
administration, information systems and distribution of pharmaceutical
products in the Territory;
WHEREAS, FHP wishes to retain PUREPAC to provide certain
services to facilitate its marketing efforts in the Territory, and
PUREPAC wishes to provide such services, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree to the following:
1. DEFINITIONS
For the purposes of this Agreement the following terms
shall have the following meanings:
1.1 "Affiliate" shall mean (a) an entity controlled by
a common parent that owns more than fifty percent of the voting
stock of both such entity and one of the parties to this Agreement
and (b) such parent company.
1.2 "DEA" shall mean the United States Drug Enforcement
Agency.
1.3 "FPR" shall mean Faulding Puerto Rico, Inc., a
Delaware Corporate and an Affiliate of FHP.
1.4 "FDA" shall mean the United States Federal Food and
Drug Administration.
1.5 "FHP" shall mean Faulding Hospital Products, Inc.,
a Delaware corporation.
1.6 "Products" shall mean those products selected by FHP
for marketing from time to time for which PUREPAC shall provide
services as agreed by the parties hereunder.
1.7 "PUREPAC" shall mean Purepac Pharmaceutical Co., a
Delaware company.
1.8 "Territory" shall mean the U.S. and its territories
and possessions, including, without limitation, Puerto Rico.
1.9 "U.S." shall mean the United States of America.
2. SERVICES PROVIDED BY PUREPAC
2.1 Subject to the directives and supervision of FHP, as
hereinafter set forth in Sections 4, 5, 6.3, 8 and 9 of this
Agreement, PUREPAC will perform the following services for FHP:
(a) customer support services, including, without limitation,
the processing of orders, handling of customers' returns and
complaints, and negotiations for the shipping and freighting
of Products to FHP's customers and from FPR;
(b) warehousing services, including, without limitation, the
handling of all pack and ship services, invoicing orders and
providing storage for the Products in accordance with all
applicable requirements and regulations of the FDA and the
Drug Enforcement Agency;
(c) information and accounting function services, including,
without limitation, billing, credit and collection services,
liaison services with FHP's charge-back processing vendor in
the transmittal and receipt of data regarding contracts,
promotions and other like matters, as specifically designated
by FHP,and such other accounting services as may be agreed to
by the parties from time to time;
(d) quality assurance services, including, without limitation,
visual inspection of incoming goods and returns.
2.2 The parties agree that the services provided by
PUREPAC hereunder will be provided by designated PUREPAC employees
who are trained and qualified to provide such services and who will
be reasonably acceptable to FHP. Unless the parties agree
otherwise, PUREPAC will not be required to hire any additional
employees or any independent contractors to provide any of the
services provided hereunder. Purepac warrants and agrees that the
extent and quality of services to be provided under this Agreement
will be comparable to those services that Purepac provides for its
own operations.
2.3 Unless the parties agree otherwise, all PUREPAC
services provided under this Agreement will be performed at
PUREPAC's premises in Elizabeth, New Jersey and at its warehouses
in Elizabeth, New Jersey and Sparks, Nevada.
3. DUTIES OF FHP
3.1 FHP shall provide PUREPAC in writing with timely and
accurate information with respect to any Products agreed by the
parties to be shipped to, and any services to be performed by,
PUREPAC hereunder.
3.2 FHP understands and agrees that it must give PUREPAC
reasonable notice of any required services under this Agreement to
avoid any unnecessary disruptions in the operation of PUREPAC's
business. In the event of any conflict between the parties with
respect to either of their respective obligations hereunder,
either party's Services Liaison (as hereinafter defined in Section
4 of this Agreement), by written notice to the other party's
Services Liaison, which reasonably details the items in dispute,
may initiate a review of the parties' obligations. Within fourteen
(14) days of the recipient's receipt of such notice, the parties
will meet and negotiate in good faith to resolve any differences
between them.
4. SERVICES LIAISONS
4.1 The parties shall each appoint a liaison (a
"Services Liaison") to communicate regularly and at least on a
weekly basis with his or her counterpart with regard to (a) the
day-to-day operations of PUREPAC's provision of services hereunder,
including, without limitation, any problems that may arise for
which the attention or appraisal of the other party is necessary or
advisable, (b) all information that FHP is required to give PUREPAC
to enable PUREPAC to perform its duties hereunder, (c) all
information that PUREPAC is required to give to FHP hereunder and
(d) the occurrence of any unexpected events, as set forth in
Section 5 of this Agreement.
4.2 Each of the parties agrees to supply all information
to the other party's Services Liaison, as reasonably requested by
such party's Liaison, to, as the case may be, enable FHP to deliver
the Products and all relevant information concerning the Products
to PUREPAC and facilitate the provision of PUREPAC's services
hereunder in accordance with all applicable laws and regulations.
4.3 Either party may change its Services Liaison by
written notice to the other party.
5. COOPERATION OF THE PARTIES
5.1 Each of the parties hereto agrees to cooperate fully
with the other party in (a) carrying out its respective duties
hereunder, (b) complying with all regulatory reporting requirements,
(c) responding to any unexpected developments, including,
without limitation, any inspection by a regulatory authority and
any recall or serious adverse events affecting any of the Products
and (d) identifying and installing any specialized storage and
handling requirements for the Products.
5.2 Each of the parties agrees to give the other party
notice immediately if it becomes aware of any regulatory authority's
intention
(a) to inspect the facility of either party or of an Affiliate
of either party and such inspection is related to Products,
shipped or to be shipped to Purepac under this Agreement, or
services provided for under this Agreement; or
(b) to take any other regulatory action with respect to any
matter directly connected with the subject matter of this
Agreement.
6. COSTS OF SERVICES/PAYMENTS
6.1 During the initial term of the Agreement, the annual
cost of all services of PUREPAC, as set forth in Section 2 of this
Agreement, other than the information and accounting functions set
forth in Subsection 2(c), shall be $82,000 and the annual cost of
all information and accounting services, as set forth in Subsection
2(c)hereof, shall be $24,000. The costs of all such services have
been, and will be, calculated using Purepac's standard allocation
procedures based on usage, consistent with United States generally
accepted accounting procedures. All of such services shall be
payable in twelve (12) equal monthly payments, respectively, of
$6,833.33 and $2,000 each.
6.2 In addition and subject to the provisions of
Subsection 6.3 hereof, FHP shall recompense PUREPAC for any direct
costs incurred in connection with providing the aforementioned
services, including, without limitation, the costs of shipping the
Products, telephone, fax and express mail costs and reasonable
transportation and lodging expenses incurred by PUREPAC employees
in the provision of services hereunder, but excluding general
corporate overhead and the costs of compensation(including fringe
benefits) of PUREPAC employees who are providing services hereunder.
6.3 PUREPAC agrees (a) to submit to FHP for its approval
any invoices and estimates of future expenditures in excess of
$1000 and (b) not to make commitments to any third party in excess
of $1000 without FHP's prior approval.
6.4 The parties agree that within five (5) working days
after the end of each month, PUREPAC shall submit to FHP an invoice
for services, as set forth in Subsection 6.1 of this Agreement and
a cost statement detailing the costs that were incurred during
that month, as described in Subsection 6.2 hereof (collectively,
the "Invoice"). Subject to the provisions of the immediately
following sentence, FHP shall pay to PUREPAC the amount due as
reflected in the Invoice within thirty (30) days of its receipt of
such Invoice. FHP may withhold from its payment to PUREPAC only
any amount in dispute with regard to the costs described in
Subsection 6.2 hereof; provided, however that within 10 days after
its receipt of any such Invoice, FHP shall initiate a review of
PUREPAC's costs, as reflected in the Invoice, by written notice to
PUREPAC's Services Liaison. Within 10 days of PUREPAC's receipt of
such notice, the Services Liaisons will meet and negotiate in good
faith to resolve any differences.
6.5 Within thirty (30) business days after the end of
any calendar quarter, if the projected costs of Purepac's services
hereunder for the following calendar quarter are expected to be
greater than 120% of the costs previously forecasted by Purepac,
Purepac may give notice in writing to FHP for a review of the
prices of services described in Section 6.1 of this Agreement. The
parties agree to meet within twenty (20) days of FHP's receipt of
such notice and to negotiate in good faith the commercial terms
between them and, if necessary, any amendments to the terms of this
Agreement.
6.6 All payments made under this Section 6 may be
accomplished by direct payment or credit against any amount due FHP
from PUREPAC or otherwise, as the parties shall agree.
7. INITIAL TERM AND EXTENSION
This Agreement shall be for an initial term commencing as of
the date hereof and terminating on the first anniversary of the
commencement date. The parties agree to hold a meeting not less
than sixty (60) days before the end of the initial term to review
PUREPAC's services to date and the projected twelve-month forecasts
of each of FHP and PUREPAC with regard, respectively, to the volume
of Products and costs of services to be provided and to discuss
whether to extend the Agreement beyond the initial term. The
parties agree to negotiate in good faith the decision whether to
extend the initial term of this Agreement and the commercial terms
between the parties applicable during any such extension period.
Each of the parties shall provide to the other party, not less than
ten (10) business days prior to the meeting, any written records
applicable to the review and reasonably requested by the other
party for such meeting, or if the request is made less than ten
(10) business days prior to the meeting, within three (3) business
days of the request.
8. RECORDS AND REPORTS
8.1 PUREPAC agrees to maintain accurate records and to
prepare in a timely manner monthly reports on the ongoing services
provided hereunder and to deliver promptly to FHP's Services
Liaison, upon his or her request, copies of such records and
reports. The records and monthly reports shall contain information
reasonably agreed to by the parties, consistent with applicable
rules and regulations in the Territory, including, without
limitation, the rules and regulations of the FDA and DEA and all
financial auditing regulations.
8.2 PUREPAC agrees to keep an inventory and maintain
accurate records of the receipt, storage, handling and administration
of the Products in such format and for such time period as FHP
shall reasonably require, consistent with applicable regulatory
requirements in the Territory, and to supply FHP with copies
thereof upon request.
8.3 PUREPAC agrees contemporaneously to furnish FHP
with copies of all correspondence forwarded by PUREPAC to any third
party under FHP's letterhead or otherwise in FHP's name or on FHP's
behalf.
9. AUDITS; RETENTION OF RECORDS
9.1 FHP shall have the right, during regular business
hours upon giving reasonable prior written notice,to have an
independent auditor approved by Purepac, audit Purepac's books and
records relative to the costs of services provided hereunder.
PUREPAC agrees to grant representatives of FHP, at FHP's cost, the
right to inspect PUREPAC's quality assurance procedures and records
and reports in regard to the services performed hereunder during
PUREPAC's normal business hours upon prior reasonable written
notice by FHP to PUREPAC and to permit any inspection by any
regulatory authority, including, without limitation, the DEA, of
such records and reports.
9.2 FHP shall assume all risk of loss and indemnify and
hold PUREPAC harmless from and against any and all loss, liability,
damage, claim and expense including, but not limited to, reasonable
attorneys' fees arising out of or resulting from such audits or
inspections.
9.3 PUREPAC shall retain any records or data with respect
to the services, and costs of services, provided hereunder for a
period equal to the longer of the period of time in accordance with
the pertinent regulations and requirments of the regulatory
authorities in the Territory, including, without limitation, the
regulations and requirements of the FDA, DEA, U.S. Internal
Revenue Service and U.S. Securities and Exchange Commission and
three (3) years after the date that the services were provided by
PUREPAC hereunder.
10. CONFIDENTIALITY.
10.1 Each of the parties agrees that it will not
disclose any confidential information of the other party,
including, without limitation, the business records, sales figures,
customer information or product lists, of such party that it may
acquire at any time during the term of this Agreement without the
prior written consent of such party and that it shall use all
reasonable efforts to prevent unauthorized publication or disclosure
by any person of such confidential information including
requiring its employees, consultants or agents to enter into
similar confidentiality agreements in relation to such confidential
information.
10.2 The obligations undertaken by each party under this
Section 10 shall continue in force for a period of five (5) years
following the termination or expiration of this Agreement.
10.3 The obligations contained in this Section do not
apply to any information:
(a) which was at the time of receipt by a party in the
public domain or generally known in the pharmaceutical
manufacturing industry otherwise than by breach of a
party's duty of confidentiality;
(b) which a party can establish to have been known to it
at the time of receipt from the other party and not to
have been acquired directly or indirectly from the other
party;
(c) acquired by a party from a third party otherwise
than in breach of an obligation of confidence to the
other party;
(d) required by law to be provided to governmental
agencies but only for the purpose of providing it to such
governmental agencies; and
(e) disclosed to an Affiliate of either party for
purposes consistent with this Agreement.
11. RELATIONSHIP OF PARTIES.
Nothing contained in this Agreement shall be construed so
as to operate or to place any party in the relationship of employee
or agent or joint venturer or legal representative of any other
party and it is hereby expressly agreed and acknowledged that each
of the parties is an independent contracting party which does not
have the authority or power for or on behalf of the other party,
except as expressly granted herein, to enter into any contract, to
incur debts, to accept money, to assume any obligations or to make
any warranties or representations whatsoever.
12. INDEMNIFICATIONS.
12.1 PUREPAC hereby agrees to indemnify and to hold
harmless FHP and any Affiliates of FHP from any and all loss
(except consequential loss, such as, for example, loss of business
or of profits), compensatory loss for personal injury, liability ,
damage, claim, cost and expense (including, without limitation,
reasonable attorney's fees) arising from or in connection with any
breach by PUREPAC of this Agreement or of any other obligation of
PUREPAC hereunder (including any breach by PUREPAC of the warranty
made in Section 2.2 of this Agreement.)
12.2 FHP agrees to indemnify and hold harmless PUREPAC
and any Affiliates of PUREPAC from any and all loss (except
consequential loss, such as, for example, loss of business or of
profits), liability, damage, claim, cost and expense (including
without limitation, attorney's fees and disbursements) arising from
or in connection with:
(a) any breach of this Agreement by FHP;
(b) any claim, express, implied or statutory made by FHP
as to the efficacy or safety of any of the Products or
the use to be made by any purchaser of the Products or
any claim arising out of or relating to the use of FHP's
trademark or other name, logo or emblem; and
(c) other act or omission of FHP in connection with the
manufacture, marketing, distribution and sale of the
Products.
12.3 Each party hereto shall give prompt written notice
to the other party of any actual or threatened claim which might
give rise to a claim for indemnification hereunder. If the facts
giving rise to any indemnification hereunder shall involve any
actual or threatened claim or demand by any third party against
either party hereto (the "Indemnitee"), the Indemnitee shall give
notice of such fact to the other party against whom such claim for
indemnification is or will be made (the "Indemnitor"). The
Indemnitor shall then be entitled (without prejudice to the right
of the Indemnitee to participate at its own expense through counsel
of its own choosing) to defend such claim in the name of the
Indemnitee at the expense of the Indemnitor and through any counsel
of the Indemnitor's own choosing, reasonably satisfactory to the
Indemnitee, if the Indemnitor gives written notice of its intention
to do so to the Indemnitee within thirty days after receipt of the
aforesaid notice from the Indemnitee. Whether or not the Indemnitor
chooses to so defend any such claim, all parties hereto shall
cooperate in the defense thereof and shall furnish such records,
information and testimony, and attend such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably
required in connection therewith. No claim shall be settled for
which any Indemnitor shall be liable without the consent of the
Indemnitor, which consent shall not be unreasonably withheld.
13. NOTICES
Notices provided under this Agreement to be given or
served by either party on the other shall be given in writing and
served personally or by prepaid registered airmail post or by
express mail or by overnight courier to the following respective
addresses or to such other addresses as the parties may hereafter
advise each other in writing. It being agreed and understood by the
parties that any such notice shall be deemed given and served four
(4) days after the date of airmail by post or express mail:
To: FHP
President
FAULDING HOSPITAL PRODUCTS, INC.
274 Riverside Avenue
Westport, Connecticut 06880
Facsimile (203) 221-7005
with a copy to:
Services Liaison
FAULDING HOSPITAL PRODUCTS, INC.
274 Riverside Avenue
Westport, Connecticut 06880
Facsimile (203) 221-7005
To: PUREPAC
Chief Operating Officer
PUREPAC PHARMACEUTICAL CO.
200 Elmora Avenue
Elizabeth, New Jersey 07207
Facsimile (908) 527-0649
with a copy to:
Services Liaison
PUREPAC PHARMACEUTICAL CO.
200 Elmora Avenue
Elizabeth, New Jersey 07207
Facsimile (908) 527-0649
14. TERMINATION
14.1 This Agreement may be terminated by notice in
writing by either party if the other party shall default in the
performance of any of its obligations under this Agreement and such
default shall continue for a period of not less than ninety (90)
days after written notice specifying such default shall have been
given; by either party if the other party makes an arrangement with
its creditors or goes into receivership or liquidation, or if a
receiver or a receiver and manager is appointed in respect of the
whole or part of the property or business of the party in default
or by either party if a major part of the assets or all of the
assets of the other party are disposed of or acquired by any other
person.
14.2 Upon termination or expiration of this Agreement,
the parties shall as soon as conveniently possible reconcile all
accounts and PUREPAC, as instructed by FHP, will return or
otherwise dispose of all Products delivered to PUREPAC hereunder.
15. TAXATION ISSUES
15.1 Each of the parties is aware that the commercial
arrangements of this Agreement may be subject to transfer pricing
reviews by the relevant taxation authorities in the Territory. As
a result, this Agreement may be subject to internal reviews by
either or both parties and to audits by the relevant taxation
authorities. If as a result of such reviews or audits, it becomes
necessary or advisable for either party (the "Affected Party")to
change any commercial arrangements of this Agreement, including,
without limitation, making retroactive adjustments, the other
party, within thirty (30) days after written notification by the
Affected Party, which notification shall explain in reasonable
detail the reason for the proposed change, shall meet with the
Affected Party and each of the parties agrees to negotiate in good
faith, and use its best efforts to reach agreement with respect to,
any modification to the commercial terms of this Agreement. In
the event that the parties, despite their best efforts, cannot
reach agreement with respect to any material change, which in the
opinion of either party is necessary or advisable for the reasons
set forth in this Section 15.1, either party, upon written notice
to the other party, may terminate this Agreement. The provisions
of Section 14.4 of this Agreement shall apply upon any termination
of the Agreement pursuant to this Section 15.1.
15.2 Each of the parties agrees to provide reasonable
assistance, at the Affected Party's reasonable cost, if the
Affected Party is subject to a taxation audit that reviews any
commercial arrangement of this Agreement.
16. NON WAIVER
Any party's failure to exercise or enforce any right
conferred upon it under this Agreement shall not be deemed to be a
waiver of any such right or operate to bar the exercise or
performance thereof at any time or times thereafter nor shall any
party's waiver of any right under this Agreement at any given time
including rights to any payment be deemed a waiver for any other
time.
17. GOVERNING LAW
This Agreement shall be deemed to be a contract made
under and shall be governed by and construed in accordance with the
laws of the State of New York.
18. ASSIGNMENT AND SUB-CONTRACTING
The rights and obligations covered hereunder are personal
to each party hereto, and for this reason, this Agreement shall not
be assignable by either party in whole or in part; nor shall either
party sub-contract any of its obligations hereunder without the
prior written consent of the other party; provided, however, that
the restriction contained herein shall in no way limit the rights
of either party to make assignments to its parent or any of its
affiliates. This Agreement shall be binding upon any permitted
assignee or successor of either party.
19. FORCE MAJEURE
Neither party shall be liable or be in breach of any
provision of this Agreement for any failure or delay on its part to
perform any obligation where such failure or delay has been
occasioned by any act of God, war, riot, fire, explosion, flood,
sabotage, accident or breakdown of machinery, unavailability of
fuel, labor, containers or transportation facilities, accidents of
navigation or breakdown or damage of vessels or other conveyancers
for air land or sea, other impediments or hindrances to transportation,
government intervention, strikes or other labor disturbances
or any other cause beyond the control of the parties.
20. ENTIRE AGREEMENT
This Agreement incorporates the entire understanding of
the parties and revokes and supersedes any and all agreements,
contracts, understandings or arrangements that might have existed
heretofore between the parties regarding the subject matter hereof.
21. HEADINGS
The headings used in this Agreement are intended for
guidance only and shall not be considered part of this written
understanding between the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties on the date first above written.
PUREPAC PHARMACEUTICAL CO.
By: /s/
----------------------------
FAULDING HOSPITAL PRODUCTS, INC.
By: /s/
----------------------------
EXHIBIT 10.18
SERVICES AGREEMENT, dated as of the 26th of June, 1995 by and
between Faulding Inc., a Delaware corporation having its principal
place of business at 274 Riverside Ave. Westport, Connecticut
06880 (hereinafter referred to as "Faulding") and Purepac Pharmaceutical
Co., a Delaware corporation having its principal office at
200 Elmora Avenue, Elizabeth New Jersey (hereinafter referred to
as "Purepac").
WHEREAS, Faulding has heretofore entered into a Toll
Manufacturing Agreement with Purepac dated as of August 1, 1993,
which agreement was amended as of December 23, 1994 ("the Toll
Manufacturing Agreement") pursuant to which Faulding has contracted
with Purepac for the manufacture of the Product (as hereinafter
defined);
WHEREAS, Faulding has entered into a supply and distribution
agreement (the "Distribution Agreement") with Bristol-Myers
Squibb Company ("the Distributor") dated December 23, 1994
pursuant to which Faulding has agreed to grant to the Distributor
the exclusive right to distribute the Product in the Territory (as
hereinafter defined) and has agreed in connection with such grant
to provide, or arrange to provide, certain services to the
Distributor;
WHEREAS, the parties, in light of certain provisions of
the Distribution Agreement, wish to clarify each of their
responsibilities under the Toll Manufacturing Agreement and Faulding
wishes to retain Purepac to provide certain additional services, and
Purepac wishes to provide such services, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties agree to the following:
1. DEFINITIONS
For the purposes of this Agreement the following terms
shall have the following meanings:
1.1 "Development Period" shall mean the period commencing
as of August 1, 1993 and ending on the date of the validation and
commencement of commercial production of the Product.
1.2 "Distribution Agreement" shall mean the Supply and
Distribution Agreement dated December 23, 1994 between Faulding
and the Distributor.
1.3 "Distributor" shall mean Bristol-Myers Squibb
Company, a corporation organized under the laws of the State of
Delaware.
1.4 "FDA" shall mean the United States Federal Food and
Drug Administration.
1.5 "F. H. Faulding" shall mean F.H. Faulding & Co.
Limited, a South Australian corporation.
1.6 "Fiscal Year" means the twelve month period
commencing on July 1 of each year and ending on June 30, or any
other twelve month period designated as the fiscal year of Purepac.
1.7 "NDA" shall mean the New Drug Application to be
filed with the FDA in respect of the Product.
1.8 "Product" shall mean an oral sustained release
morphine product comprising a multitude of polymer coated sustained
released pellets of morphine sulphate encapsulated in hard gelatin
capsules containing 20 mg, 50 mg and 100 mg doses or any other dose
in the range of 20 mg to 100 mg of polymer coated sustained release
pellets of morphine sulphate.
1.9 "Specifications" shall mean the written specifications
with respect to the Product mutually agreed to by the parties
hereto, which Specifications may be changed or modified only as
agreed to by the parties in writing.
1.10 "Territory" shall mean the United States of America
and its territories and possessions, including, without limitation,
Puerto Rico.
1.11 "Toll Manufacturing Agreement" shall mean the Toll
Manufacturing Agreement between Faulding and Purepac dated as of
August 1, 1993, as amended as of December 24, 1994.
1.12 "Trademark" shall mean that mark "Kadian" or any
replacement mark for the marketing and sale of the Product agreed
to by the parties as contemplated by Section 14 of the Distribution
Agreement.
2. QUALITY CONTROL AND PRODUCT ACCEPTANCE.
2.1 Purepac will ensure that deliveries of the Product
to Purepac's warehouse are accompanied by quality control certificates
of analysis and will send copies of such certificates of
analysis contemporaneously by telecopier (confirmed by hard copies
mailed) to Faulding and the Distributor.
2.2 Purepac agrees to perform quality control testing of
any returned Product as follows. In the event that any of the
Product is returned to Purepac's warehouse by the Distributor or
the Distributor's customers for the reason that said Product is
claimed not to meet Specifications or is otherwise defective,
Purepac shall notify Faulding within five (5) days of such return
by written notice (the "Return Notice") specifying, if applicable,
the manner in which such Product is claimed not to meet Specifications
or to be otherwise defective. In the case of a return
received by the Distributor, upon Faulding's receipt of written
notice from the Distributor (the "Distributor's Return Notice"),
Faulding may request the Distributor to return the Product which
is claimed to be defective or samples thereof to Purepac for
testing and will contemporaneously notify Purepac of such request.
Upon receipt and testing of the Product, if Purepac concludes that
such Product does not conform to the Specifications or is otherwise
defective and that such departure from Specifications or defect is
due to the fault or act of Purepac (collectively, a "Defect Caused
by Purepac"), Purepac will use its best efforts to replace such
Product, free of charge, with conforming goods within ninety (90)
days from, in the case of a return to Purepac's warehouse, the
return of such Product, or, in the case of a return to the
Distributor, Faulding's receipt of the Distributor's Return Notice
or Purepac's receipt of the samples, whichever is later. If Purepac
concludes that the Product conforms to the Specifications, is not
otherwise defective or that the Product defect is not a Defect
Caused by Purepac, Purepac shall promptly notify Faulding of its
findings and shall cooperate, as reasonably requested by Faulding,
in Faulding's communications with the Distributor and the submission,
if necessary of the Product to an independent laboratory for
analysis in the form of a written report ("Report"). If Faulding
notifies the Distributor that it disagrees with the return of
Product to Purepac's warehouse or with a Distributor's Return
Notice, and if the Distributor submits a new purchase order for
Product to Faulding at such time for the same amount of Product as
in dispute, upon notification by Faulding, Purepac agrees to use
reasonable efforts to deliver such Product as promptly as commercially
practicable. In the event that the Report determines that
any of the Product returned to the Distributor or Purepac's
warehouse does not meet Specifications or is otherwise defective
and such defect is a Defect Caused by Purepac, Purepac will use its
best efforts to replace such Product with conforming goods, free
of charge, within ninety (90) days from the date of the Report.
All transportation, shipping and insurance costs and other fees
incidental to the shipping back to Purepac of Product conceded by
Purepac or determined by the Report to be a Defect Caused by
Purepac and the shipping to the Distributor of the replacement
Product (and costs of the independent laboratory only if the Report
of which has concluded that the Product does not meet Specifications
or is otherwise defective due to a Defect Caused by Purepac)
will be paid for by Purepac.
2.3 Purepac agrees to accept any return of the Product
from the Distributor, whether the Product in question is dated or
claimed to be defective, it being understood that, unless Purepac
is so required, at its cost, to replace such returned Product for
the reasons set forth in Section 2.2 above, Faulding shall bear, or
ensure that the Distributor bears, the cost of any such returned
Product at the applicable invoice price, as agreed to by the
Distributor and Faulding in the Distribution Agreement, and shall
indemnify and hold Purepac harmless from any additional expenditures
relating to the shipping back to Purepac of Product and the
shipping by Purepac of any replacement Product. Purepac shall
dispose of all returned Product by, as appropriate, including it in
the Distributor's inventory or destroying it in accordance with
applicable legal and regulatory requirements. All commercially
reasonable costs of the handling of returned Product, other than
that determined to have returned due to a Defect Caused by Purepac,
shall be charged to the Distributor or otherwise borne by Faulding
and Faulding shall indemnify and hold Purepac harmless from any
such costs.
2.4 No later than the time each batch of the Product is
released by Purepac and transferred to its finished goods warehouse,
Purepac shall furnish the Distributor with a specimen
Product sample from such batch in order that the Distributor may
conduct its own quality control assays. Purepac shall not ship out
any Product from any batch until and unless the Distributor, after
its independent quality assays, has furnished Purepac with a
written release with respect to such batch. Faulding shall use its
best efforts to cause the Distributor to conduct such assays and
furnish Purepac with a written release with respect to each such
batch in a timely manner. Any disagreement as to whether any batch
shall be regarded as defective (thereby requiring Purepac to
replace such batch) shall be dealt with as provided in Section 2.2
of this Agreement and Section 6(b) of the Distribution Agreement.
2.5 Purepac agrees to grant representatives of F.H.
Faulding and the Distributor, at their respective costs, the right
to inspect Purepac's quality control procedures and records in
regard to the manufacture of the Product during Purepac's normal
business hours upon prior reasonable written notice by Faulding to
Purepac and, in particular, the right at any time and from time to
time during business hours, after prior arrangements have been
established with Purepac, to inspect that part of Purepac's plant
facility (or facilities) which is engaged in the manufacture,
preparation, processing or warehousing of the Product for the sole
purpose of reviewing Purepac's compliance with applicable current
Good Manufacturing Practice and applicable DEA regulations as they
specifically relate to the Product. Faulding shall assume all
risk of loss and indemnify and hold Purepac harmless from and
against any and all loss, liability, damage, claim and expense
including, but not limited to, reasonable attorneys' fees arising
out of or resulting from either F.H. Faulding's or the Distributor's
employees' acts or omissions at Purepac facilities.
3. RECALLS.
3.1 In the event that Faulding or Purepac determines that
a Product does not conform to the Specifications or that it should
be recalled for any other reason, prior to taking any action, it
shall give written notice to the other party and the Distributor
specifying its reasons for the necessity of a recall (the "Recall
Notice") or if either party receives a Recall Notice from the
Distributor, it shall promptly notify the other party. If either
Faulding or Purepac has requested the recall or Faulding agrees
with the determination made by the Distributor as stated in a
Recall Notice given by the Distributor to Faulding, and relayed by
Faulding to Purepac, or the FDA has requested a recall or voluntary
market withdrawal, the parties agree that the Distributor shall
handle the administration of the recall and that Purepac shall use
its best efforts, consistent with relevant requirements and
restrictions of the FDA, to replace all Product recalled within one
hundred twenty (120) days from the date of the Recall Notice. The
Distributor shall be reimbursed for all out-of-pocket expenses
relating to such recall (a) by Purepac if it is determined, as set
forth in Section 2.2, that the recalled Product does not meet
Specifications or is otherwise defective as a result of a Defect
Caused by Purepac and (b) by Faulding if the recall has been agreed
to by the parties for any other reason. However, if the Distributor,
in its sole determination, with a Recall Notice to Faulding,
initiates and implements a Product recall, Purepac will not be
required to replace the recalled Product and reimburse the
Distributor for expenses as provided in the preceding sentence or
Section 3.2, without a determination, as set forth in Section 2.2
that the Product recalled did not meet Specifications or is
otherwise defective.
3.2 The parties agree to abide by any recall/voluntary
market withdrawal request of the FDA. Moreover, the parties agree
that in all cases, the Distributor will handle the administration
of the recalls as follows:
(a) If within ten (10) days from the date of a Recall
Notice from the Distributor, Faulding has been unable to
reach an agreement with the Distributor concerning the
necessity of a recall, the parties hereto agree that the
Product shall be submitted to a mutually acceptable
independent laboratory for a Report, the cost of which
shall be borne by Purepac only if the finding of the
Report is that the Product does not meet Specifications
or is otherwise defective as a result of a Defect Caused
by Purepac and otherwise, as the case may be, by Faulding
or the Distributor as set forth under the terms of the
Distribution Agreement.
(b) In the event that the finding of the Report is that
the Product does not meet Specifications or is otherwise
defective as a result of a Defect Caused by Purepac,
Purepac shall, consistent with relevant requirements and
restrictions of the FDA and at its own cost, use its best
efforts to replace all Product recalled within one
hundred twenty (120) days from the date of the Report and
shall reimburse the Distributor for all reasonable out-of-pocket
expenses relating to such recall. In the event
that the discrepancy is resolved in the Report against
Faulding\Purepac for any reason other than that the
Product does not meet Specifications or is defective as
a result of a Defect Caused by Purepac, the parties agree
that the Distributor shall handle the administration of
the recall (unless the Distributor has by that time
already implemented the recall in question pursuant to
the last sentence of Section 3.1} and Purepac, at
Faulding's cost, shall use its best efforts , consistent
with relevant requirements and restrictions of the FDA,
to replace all Product recalled within one hundred twenty
(120) days from the date of the Report and Faulding shall
reimburse the Distributor for all reasonable
out-of-pocket expenses relating to such recall. In the
event that the discrepancy is resolved in the Report in
favor of Faulding\Purepac and the Distributor elects to
recall the Product notwithstanding the Report, the
parties agree that the Distributor shall handle the
administration of the recall (unless the Distributor has
by that time already implemented the recall in question
pursuant to the last sentence of Section 3.1). In such
event, neither of the parties to this Agreement will have
any obligation with respect to replacement of the
Product or reimbursement of the Distributor's expenses.
3.3 Faulding and Purepac shall each advise the other
party, by written notice, in the event that it learns of any facts
or circumstances which could warrant the recall of the Product for
reasons of safety, health or efficacy.
4. THE TRADEMARK AND LABELING
4.1 Purepac shall package and label the Product in
accordance with the packaging and labeling provided by Faulding
(which, as set forth in the Distribution Agreement, shall receive
such packaging and labeling from the Distributor), which shall
comply with FDA specifications and requirements; provided, however
that Purepac has received camera ready labeling and insert copy in
the appropriate quantities for Purepac's use in packaging the
Product and provided, further that Purepac is supplied with the art
work for such packaging and labeling. The parties agree that the
packaging and labeling will carry the Trademark and the packaging
will indicate the actual manufacturer of the Product. Purepac
acknowledges and agrees, as approved Product manufacturer under the
NDA, that it shall be responsible for any of its own acts and
omissions with respect to the form and content of all Product
labels and other aspects of Product packaging and labeling
(collectively, the "Labeling") except to the extent that any claims
with respect to the Labeling relate to label information and
content that either Faulding or the Distributor supplied Purepac.
Faulding agrees to indemnify Purepac and hold it harmless from all
such claims with respect to the Labeling to the extent that such
claims relate to label information and content that either Faulding
or the Distributor supplied Purepac.
4.2 The parties understand and agree that the Distributor,
under Section 14(e) of the Distribution Agreement, has granted
to both of the parties hereto permission to refer to the Trademark
(and any substitute, replacement or additional trademark relating
to the Product) in its regulatory filings, annual reports and other
financial and corporate reporting obligations, brochures and
promotional and public relation materials.
5. COSTS OF SERVICES/PAYMENTS
5.1 Each of the parties agrees that the aggregate cost
of services provided to Faulding by Purepac through March 31, 1995
pursuant to the Toll Manufacturing Agreement and this Service
Agreement, as detailed on Schedule 1, equals $U.S.1,413,558, which
Faulding has heretofore paid to Purepac in full.
5.2 The parties agree that within five (5) working days
after the end of each month, Purepac shall submit to Faulding a
statement detailing the costs of services during that month (a
"Cost Statement"). Subject to the provisions of the immediately
following sentence and Section 6 of this Agreement, Faulding shall
pay to Purepac the amount due as reflected in the Cost Statement
within thirty (30) days of its receipt of such Statement. Faulding
may withhold from its payment to Purepac only any amount in dispute
with regard to such payment; provided, however that within 10 days
after its receipt of any Cost Statement, Faulding shall initiate a
review of Purepac's costs, as reflected in the Statement, by
written notice to Purepac. Within 10 days of Purepac's receipt of
such notice, the parties will meet and negotiate in good faith to
resolve any differences.
5.3 Both parties acknowledge and agree that they expect
that the costs, chargeable to Faulding as set forth in Section 5.2
hereof, that are associated with services (a) set forth in this
Services Agreement will continue throughout the term of this
Agreement and (b) set forth in the Toll Manufacturing Agreement
(the "Toll Manufacturing Costs") will continue only through the
Development Period; provided, however, that if Purepac, at any
time, discovers that any such Toll Manufacturing Costs are likely
to continue after the end of the Development Period, it shall
immediately so advise Faulding in writing, including a detailed
description of the service to be provided, the estimated cost and
duration of such service to be provided after the end of the
Development Period and the rationale for including the cost of such
service as a Toll Manufacturing Cost. Upon Faulding's receipt of
such notice and provided that such Toll Manufacturing Cost would
have been chargeable to Faulding if it had been incurred during the
Development Period, then Purepac shall have the right to invoice
Faulding, and Faulding shall have the obligation to pay Purepac,
for such Toll Manufacturing Services that are incurred after the
Development Period. If Faulding disagrees that any such charge is
a Toll Manufacturing Charge, it shall give Purepac written notice,
which shall detail its objections, and within ten (10) days of
Purepac's receipt of such notice, the parties will meet and
negotiate in good faith to resolve any differences between them.
5.4 All payments made under this Section 5 shall be
payable in United States Dollars. Such payments may be
accomplished by direct payment or credit against any amount due
Faulding from Purepac or otherwise, as the parties shall agree.
6. BUDGET REVIEW AND REVIEW OF SERVICES
6.1 Set forth on Schedules 2 and 3 of this Agreement
are, respectively, the (a) estimated costs of services provided,
and to be provided, by Purepac to Faulding, under the Toll
Manufacturing Agreement and this Services Agreement, from April 1,
1995 through June 30, 1995 and (b) forecast of the cost of services
to be provided by Purepac to Faulding, under both such agreements(the
"Budget Forecast") during the 1995/96 Fiscal Year. All
of such costs will be calculated using Purepac's standard allocation
procedures based on usage, consistent with United States
generally accepted accounting procedures.
6.2 During the Development Period, no later than 120
days before the end of each Fiscal Year, Purepac shall submit to
Faulding a Budget Forecast of its projected costs for the following
Fiscal Year. Within 30 days after its receipt of Purepac's Budget
Forecast, Faulding may initiate a review of Purepac's projected
costs by written notice to Purepac. Within seven (7) days of
Purepac's receipt of such notice, the parties will meet and
negotiate in good faith to resolve any differences between them.
6.3 During the Development Period, Purepac shall review
at least quarterly the projected costs in its current Budget
Forecast and shall promptly notify Faulding in writing whenever
current projected costs exceed 115% of the costs previously
forecasted and delivered to Faulding. Upon Faulding's receipt of
such notice, Faulding may give notice in writing to Purepac (the
"Demand Notice"), requiring a review of Purepac's projected costs
within fourteen (14) days of Purepac's receipt of the Demand
Notice.
6.4 Faulding understands and agrees that it must give
Purepac reasonable notice of any required services under this
Agreement and the Toll Manufacturing Agreement to avoid any
unnecessary disruptions in the operation of Purepac's business. In
the event of any conflict between the parties with respect to
either of their respective obligations hereunder or under the Toll
Manufacturing Agreement, either party, by written notice to the
other party which reasonably details the items in dispute, may
initiate a review of the parties' obligations. Within fourteen
(14) days of the recipient's receipt of such notice, the parties
will meet and negotiate in good faith to resolve any differences
between them.
7. TAXATION ISSUES
7.1 Each of the parties is aware that the commercial
arrangements of this Agreement may be subject to transfer pricing
reviews by the relevant taxation authorities in the Territory and
Australia. As a result, this Agreement may be subject to internal
reviews by either or both parties and to audits by the relevant
taxation authorities. If as a result of such reviews or audits, it
becomes necessary or advisable for either party (the "Affected
Party")to change any commercial arrangements of this Agreement,
including, without limitation, making retroactive adjustments, the
other party, within thirty (30) days after written notification by
the Affected Party, which notification shall explain in reasonable
detail the reason for the proposed change, shall meet with the
Affected Party and each of the parties agrees to negotiate in good
faith, and to use its best efforts to reach agreement with respect
to, any modifications to the commercial terms of this Agreement.
In the event that the parties, despite their best efforts, cannot
reach agreement with respect to any material change, which in the
opinion of either party is necessary or advisable for the reasons
set forth in this Section 7.1, either party, upon written notice to
the other party, may terminate this Agreement.
7.2 Each of the parties agrees to provide reasonable
assistance, at the other party's reasonable cost, if such other
party is subject to a taxation audit that reviews any commercial
arrangements of this Agreement.
8. TERM AND TERMINATION
The term of this Agreement shall commence as of the date
hereof and shall continue until the expiration or termination of
either or both of the Distribution Agreement and/or the Toll
Manufacturing Agreement.
9. NOTICES
Notices provided under this Agreement to be given or
served by either party on the other shall be given in writing and
served personally or by prepaid registered airmail post or by
express mail or by overnight courier to the following respective
addresses or to such other addresses as the parties may hereafter
advise each other in writing. It being agreed and understood by the
parties that any such notice shall be deemed given and served four
(4) days after the date of airmail by post or express mail:
To: Faulding
President
Faulding Inc.
274 Riverside Ave.
Westport, Connecticut 06880
Facsimile (203) 221-7005
To: Purepac
Chief Operating Officer
Purepac Pharmaceutical Co.
200 Elmora Avenue
Elizabeth, New Jersey 07207
Facsimile (908) 527-0649
10. NON WAIVER
Any party's failure to exercise or enforce any right
conferred upon it under this Agreement shall not be deemed to be a
waiver of any such right or operate to bar the exercise or
performance thereof at any time or times thereafter nor shall any
party's waiver of any right under this Agreement at any given time
including rights to any payment be deemed a waiver for any other
time.
11. GOVERNING LAW
This Agreement shall be deemed to be a contract made
under and shall be governed by and construed in accordance with the
laws of the State of New Jersey.
12. ASSIGNMENT AND SUB-CONTRACTING
The rights and obligations covered hereunder are personal
to each party hereto, and for this reason, this Agreement shall not
be assignable by either party in whole or in part; nor shall either
party sub-contract any of its obligations hereunder without the
prior written consent of the other party; provided, however, that
the restriction contained herein shall in no way limit the rights
of either party to make assignments to its parent or any of its
affiliates. This Agreement shall be binding upon any permitted
assignee or successor of either party.
13. ENTIRE AGREEMENT
This Agreement and the Toll Manufacturing Agreement
incorporate the entire understanding of the parties and revokes and
supersedes any and all agreements, contracts, understandings or
arrangements that might have existed heretofore between the parties
regarding the subject matter hereof.
<PAGE>
14. HEADINGS
The headings used in this Agreement are intended for
guidance only and shall not be considered part of this written
understanding between the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties on the date first above written.
PUREPAC PHARMACEUTICAL CO.
By: /s/
-----------------------
FAULDING INC.
By: /s/
------------------------
SCHEDULE 1
US $
DATE INVOICE NUMBERS AMOUNT
Dec. 31, 93 FHF-001-12 $ 39,100
Mar. 31, 94 FHF-002-03 $13,750
Jun. 30, 94 FHF-011-06 89,148
SUB-TOTAL FY 93/4 141,998
July 31, 94 FHF-001-07 80,743
July 31, 94 FHF-001-07 4,331
Aug. 31, 94 FHF-001-08 4,611
Sept. 30, 94 FHF-011-09A 199,535
Oct. 26, 94 FHF-011-10 128,427
Nov. 28, 94 FHF-011-11 168,720
Dec. 29, 94 FHF-011-12 174,256
Jan. 24, 95 FHF-011-01 127,863
Feb. 28, 95 FHF-011-02 111,917
Mar. 28, 95 FHF-011-03 121,332
Apr. 24, 95 FHF-011-04 149,825
SUB-TOTAL FY 94/5 $1,271,560
LIFE OF PROJECT $1,413,558
<PAGE>
SCHEDULE 2
KADIAN CHARGES TO FAULDING FOR THE PERIOD APRIL 1 TO JUNE 30, 1995
April, 1995 $115,693 (actual - billed 5/29/95)
May, 1995 $110,000 (forecast)
June, 1995 $80,000 (forecast)
EXHIBIT 10.19
CO-DEVELOPMENT, SUPPLY AND LICENSING AGREEMENT made as of
the 26th day of June, 1995 between F.H. FAULDING & CO. LIMITED of
160 Greenhill Road, Parkside in the State of South Australia
(hereinafter called "Faulding") and PUREPAC PHARMACEUTICAL CO. of
200 Elmora Avenue, Elizabeth, New Jersey, United States of America
(hereinafter called "Purepac");
WHEREAS, Purepac is engaged in the development of certain
Tabletting Technology, among other reasons, to enable Purepac to
manufacture, distribute and sell a certain Formulated Product in
the Territory (as those terms are hereinafter defined);
WHEREAS, Faulding is engaged in the development of
certain Pellet Technology to enable Faulding to manufacture
Pellets, which Purepac requires for the manufacture of the
Formulated Product;
WHEREAS, in anticipation that the Pellet Technology will
be successfully developed by Faulding, Purepac has requested
Faulding, and Faulding has agreed, subject to the terms and
conditions set forth in this Agreement, to supply all of Purepac's
requirements of the Pellets for Purepac's use in the Territory;
WHEREAS, if the parties determine during the course of
this Agreement that Purepac shall manufacture the Pellets, Faulding
agrees to grant Purepac an exclusive license to use the Pellet
Technology to manufacture the Pellets for the sole purpose of
manufacturing, distributing and selling the Formulated Product
within the Territory.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. DEFINITIONS
For the purposes of this Agreement the following terms
shall have the following meanings:
1.1 "Affiliates" means (a) an entity controlled by a
common parent that owns more than fifty percent of the voting stock
of both such entity and one of the parties to this Agreement and
(b) such parent company.
1.2 "ANDA" means Abbreviated New Drug Application.
1.3 "FDA" means the United States Food and Drug
Administration or any successor body.
1.4 "Fiscal Year" means the twelve month period
commencing on July 1 of each year and ending on June 30, or any
other twelve month period designated as the fiscal year of
Faulding.
1.5 "Formulated Product" means the tabletted product
described on Schedule A hereto.
1.6 "GMP" means good manufacturing practice as required
by the regulations of the FDA.
1.7 "Patents" means patents as to the manufacture, use
and/or sale of the Pellets, the Pellet Technology, the Tabletting
Technology and the Formulated Product as described in Section 10
hereof.
1.8 "Pellet" means the coated pellet described on
Schedule B hereto, as that Schedule may be amended from time to
time by mutual agreement of the parties.
1.9 "Pellet Technology" means technology currently under
development by Faulding, including technical, scientific, industrial
information or knowledge, confidential information and
expertise in relation to the Pellets described on Schedule B
hereto, as that Schedule may be amended from time to time by mutual
agreement of the parties, and the processes and the means and
procedures for the manufacture and production of the Pellets.
1.10 "Project Review" means a meeting between the parties
(a) to discuss, among other matters, the amounts expended by each
party to date, expectations of future earnings and\or costs and any
other matters that may materially affect the continued viability of
the parties' development and manufacture of the Pellets or the
Formulated Product, as the case may be, and the sales of the
Formulated Product in the Territory and (b) to determine whether it
is in both parties' interests to continue to develop and/or
manufacture the Pellets and the Formulated Product, as the case may
be, and to sell the Formulated Product pursuant to the terms of
this Agreement.
1.11 "Regulatory Authority" means the FDA and/or any
other like authority whether Federal or State regulating the
manufacture, distribution, marketing and/or sale in the Territory
of therapeutic substances.
1.12 "Special Circumstances" shall mean the circumstances
described in Section 9.2 of this Agreement.
1.13 "Tabletting Technology" means technology including
technical, scientific, industrial information or knowledge,
confidential information and expertise in relation to the
Tabletting development process described on Schedule A hereto and
the processes and the means and procedures for the manufacture and
production of the Formulated Product in tablet form.
1.14 "Territory" means the United States of America and
its commonwealth states and territories.
2. DEVELOPMENT OF PELLET AND TABLETTING TECHNOLOGIES
2.1 Immediately upon execution of this Agreement,
Faulding will (a) continue with all due diligence the development
of the Pellet Technology to permit Purepac to complete the
tabletted presentation of the Formulated Product and (b) provide to
Purepac details of all work done to date in relation to the
development of the Pellets. Faulding will provide regular reports
on progress with this work to Purepac and in any event will report
not less than twice a month.
2.2 Upon Faulding's completion of its development work
with respect to the Pellets, Faulding will provide to Purepac all
Pellet Technology in its possession as may be necessary or helpful
for Purepac to complete the tabletting stage of the Formulated
Product's development. Faulding will promptly provide to Purepac
all technology which may subsequently be created or acquired by
Faulding as may be necessary or helpful for Purepac to complete the
tabletting stage of the Formulated Product and otherwise to fulfill
its obligations under this Agreement. The timing of each such
transfer of data will be agreed upon by the parties.
2.3 At the written request of Purepac, but not more
than twice in any calendar year, Purepac personnel will be entitled
to visit Faulding's premises in Australia for technical discussions
relating to the development and scale-up work on the Pellet
Technology PROVIDED, HOWEVER, THAT such visits will be at
Purepac's sole expense, will be held at a time reasonably convenient
to Faulding and, together, will be of an aggregate duration
of no more than two weeks.
2.4 Faulding shall pay the development costs incurred
in connection with the development of the Pellet Technology and
Purepac shall pay the development costs incurred in connection with
the development of the Tabletting Technology and the Formulated
Product. The parties agree that each of them , as of the date
hereof, have incurred the respective development costs detailed on
Schedule C hereof and that Faulding owes Purepac an aggregate of
$U.S. 577,546 in consideration for the amount expended by Purepac
on the development of the Pellet Technology up to and including the
date hereof. Faulding agrees to pay the total amount due Purepac
by no later than 30 days after the date of the Agreement.
3. SUPPLY OF PELLETS
3.1 Subject to the provisions of Section 3.2 of this
Agreement, Faulding shall sell to Purepac and Purepac shall
purchase from Faulding all of Purepac's requirements of the
Pellets for the sole purpose of manufacturing, distributing and
selling the Formulated Product within the Territory during the term
of this Agreement. Purepac agrees that it will not manufacture,
sell or attempt to sell the Formulated Product outside the
Territory either on its own account or through any third party nor
will it sell any Formulated Product to any person or corporation
within the Territory where Purepac has reasonable grounds to
believe that such other person or corporation intends to sell the
Formulated Product outside the Territory.
3.2 If at any time during the term of this Agreement,
the parties decide that Purepac shall manufacture the Pellets,
Faulding agrees to grant Purepac, at the estimated price set forth
in Section 6 of this Agreement, an exclusive license to the Pellet
Technology for the remainder of the term of the Agreement for the
sole purpose of manufacturing and selling the Formulated Product in
the Territory. Purepac agrees that it will not use or exploit the
Pellet Technology for any purpose other than the manufacture and
sale of the Formulated Product in the Territory.
3.3 Faulding agrees that it will not sell or transfer
the Pellet Technology or grant any rights to use or exploit the
Pellet Technology to any other person or corporation for the
manufacture of the Formulated Product within the Territory during
the term of this Agreement but the parties understand and agree
that Faulding has the right to license the Pellet Technology both
within and outside the Territory for any purpose other than the
manufacture of the Formulated Product and outside the Territory for
any purpose whatsoever, subject, however, in each instance to the
provisions set forth in Sections 4.2, 10.2 and 10.3 of this
Agreement.
3.4 In the event that Faulding desires to enter into an
agreement with any unaffiliated third party for such third party to
use the Pellets and/or the Pellet Technology in any other product
for sale within the Territory (a "Third Party Transaction"),
Faulding agrees to grant Purepac a prior right of first refusal to
use the Pellets and/or the Pellet Technology as follows:
(a) Faulding shall notify Purepac in writing of any such
intended Third Party Transaction at least sixty (60) days
prior to the intended closing date thereof, which notice
(the "Transaction Notice") shall contain all the material
terms of the proposed transaction. The right of first
refusal shall be exercisable by Purepac by delivery of
written notice ("Election Notice") to Faulding within
fifteen (15) business days after receipt of the Transaction Notice.
(b) If Purepac shall fail to elect to enter into the
transaction described in the Transaction Notice, then,
subject to the provisions of Section 10.3 hereof,
Faulding shall be free to effect such transaction on the
terms and conditions, including price, specified in such
Notice.
3.5 In the event that Purepac otherwise makes a written
request of Faulding to use the Pellets and/or Pellet Technology in
any other product, or in the sale of Product outside the Territory,
the parties agree to negotiate in good faith to determine whether
they can reach mutually acceptable and commercially reasonable
terms for such use of the Pellets and/or the Pellet Technology by
Purepac.
4. REGULATORY APPROVAL
4.1 Purepac hereby agrees to:
4.1.1 carry out all work necessary for the registration
of the Formulated Product in the Territory, other than that
set forth in Section 5 hereof as the responsibility of Faulding,
including scale-up and definitive pharmacokinetic and stability
studies on the tabletted presentation of the Formulated Product;
4.1.2 seek all necessary approvals and/or registrations
from the appropriate Regulatory Authority in the Territory to
permit the conduct of pharmacokinetic studies using the Formulated
Product and/or the manufacture, distribution, marketing and sale of
the Formulated Product in the Territory; and
4.1.3 comply with the reporting compliance requirements
of the Regulatory Authority in the Territory during the term
of this Agreement.
4.2 The parties agree that if Faulding desires to
register the Formulated Product anywhere outside the Territory,
Faulding shall not be permitted to use, and Purepac shall not be
required to disclose to Faulding, any confidential information
regarding the Tabletting Technology. The parties agree to
negotiate in good faith to determine the mutually acceptable and
commercially reasonable consideration that Faulding shall pay to
Purepac for the right to use the Tabletting Technology.
4.3 Purepac agrees that it will, in accordance with the
laws and regulations of the Territory as such laws and regulations,
may from time to time be amended, promptly (a) notify Faulding of
(i) any serious and unexpected adverse reactions reported to it or
to any sub-licensee of Purepac resulting from the use of the
Formulated Product , (ii) any complaints from third parties
involving the Formulated Product and (iii) any recall of the
Formulated Product and (b) provide to Faulding copies of all other
adverse reaction reports received by it or any sub-licensee of
Purepac.
4.4 Purepac agrees to maintain adequate quality control
in respect of its manufacture, packaging, labelling and storage of
the Formulated Product and to ensure that all manufacture of and
packaging and labelling used for the Formulated Product meets all
the requirements under the applicable laws, rules and regulations
in the Territory.
4.5 In the event that Faulding uses the Pellets or
Pellet Technology, either within or outside the Territory, in the
manufacture of any other product ("Other Pellet Product"), Faulding
agrees that it will, in accordance with the laws and regulations of
the Territory as such laws and regulations, may from time to time
be amended, promptly (a) notify Purepac of (i) any serious and
unexpected adverse reactions reported to it or to any sub-licensee
of Faulding resulting from such use of the Pellets or Pellet
Technology in any Other Pellet Product (ii) of any complaints from
third parties involving such Other Pellet Product, and (iii) any
recall of any such Other Pellet Product, and (b) provide to
Purepac copies of all other adverse action reports received by it
or any sub-licensee of Faulding.
4.6 Each party shall immediately notify the other party
of any inspections by any Regulatory Authority as a result of the
recall or other regulatory issue related to the Formulated Product
or any Other Pellet Product, as the case may be.
5. MANUFACTURE OF THE PELLETS BY FAULDING
5.1 Faulding will manufacture the Pellets in accordance
with all regulations of the Regulatory Authority and in conformance
with GMP and the specifications for the Pellets agreed to by the
parties and Purepac's purchase orders described below in Section 7
hereof. Faulding agrees to maintain adequate quality control in
respect of its manufacture, packaging, labelling and storage of the
Pellets and to ensure that all packaging and labelling used for the
Pellets meets all the requirements under the applicable laws, rules
and regulations in the Territory. Faulding also agrees to maintain
complete and accurate records for such period of time as required
by applicable law.
5.2 Faulding acknowledges and agrees that, as the
approved site of manufacture of the Pellets, it may be required, at
its own cost, to undergo preapproval and other periodic inspections
by the Regulatory Authority and that it will, when and as required
by, and in the name of Purepac, assist Purepac in gaining
marketing approval of the Formulated Product, including, without
limitation, undertaking:
5.2.1 the quality control testing of all materials
used in the manufacture of the Pellets in accordance
with the standards of the United States
Pharmacopeia and any other specification which may
be required by the Regulatory Authority;
5.2.2 the scale-up and stability tests of the
Pellets and the manufacture and scale-up of exhibit
and registration stability batches of the Pellets;
5.2.3 the conduct of ongoing stability trials as
required by the Regulatory Authority in the Territory;
and
5.2.4 the completion of all documentation necessary
for the registration of the Formulated Product
in the Territory.
5.3 The quality control testing referred to in Section
5.2 hereof shall be conducted in accordance with all relevant
scientific and legal standards and with all reasonable diligence
and expedition.
5.4 Faulding agrees that any manufacturing and quality
control changes to the Pellets will be made in accordance with the
applicable laws and regulation in the Territory and with the prior
written consent of Purepac.
5.5 Faulding will store and maintain retention samples
of the Pellets from each lot to meet the requirements of the
Regulatory Authority in the Territory.
5.6 All Pellets received by Purepac shall be deemed
accepted unless Purepac gives Faulding written notice (the
"Objection Notice") within thirty (30) days of such receipt
specifying the manner in which the Pellets do not conform to
specifications. The Objection Notice shall be accompanied by
written reports of any testing performed by or for Purepac on the
Pellets. Upon receipt of the Objection Notice, Faulding may request
Purepac to return the rejected Pellets or samples thereof for
further testing. The test results, if any, submitted to Faulding by
Purepac shall be deemed conclusive unless Faulding notifies Purepac
within thirty (30) days of its receipt of the Objection Notice or
the samples, whichever is later, that it disagrees with such test
results. In the event of such notice by Faulding, the rejected
Pellets or samples thereof shall be submitted to a mutually
acceptable independent laboratory (the "Independent Laboratory")
for analysis in the form of a written report (the "Report"), the
costs of which shall be paid by the party against whom the
discrepancy is resolved. In the event that the results of the
Report determine that any of the Pellets rejected by Purepac do not
meet specifications, Faulding will replace such Pellets with
conforming goods within ninety (90) days from the date of the
Report, provided that the departure from specifications is not due
to the fault or act of Purepac. All transportation, shipping and
insurance costs and other fees incident to the shipping back to
Faulding of the Pellets determined by the Report to be defective
and the shipping to Purepac of the replacement Pellets will be paid
for by Faulding if the Pellets have been determined by the Report
to be defective.
5.7 Purepac shall have the right, at its own cost, (a)
twice annually and (b) upon the (i) report to Purepac or any sub-
licensee of Purepac of any serious and unexpected adverse
reactions resulting from the use of the Formulated Product , (ii)
any complaints from third parties involving the Formulated Product,
(iii) any recall of the Formulated Product , (iv) any serious and
unexpected adverse reactions reported to Purepac by Faulding
resulting from the use of the Pellets or Pellet Technology in any
Other Pellet Product , (v) of any complaints from third parties
involving Other Pellet Products, and (vi) any recall of any such
Other Pellet Product, to visit Faulding's manufacturing plant for
the Pellets during regular business hours, provided reasonable
prior written notice is provided to Faulding and that each such
visit shall be of a duration of no more than fourteen (14) business
days.
5.8 During any such visit contemplated by Section 5.7 of
this Agreement, Purepac shall have the right (a) to inspect the
manufacturing facilities, (b) to inspect quality control procedures
and (c) to review any records maintained pursuant to Section 5.1,
to ensure that Faulding complies with GMP regulations and other
applicable regulations for the Pellets.
6. MANUFACTURE OF THE PELLETS BY PUREPAC
6.1 If at any time the parties determine that Purepac
shall manufacture the Pellets, the parties agree to negotiate in
good faith to amend this Agreement as follows:
6.1.1 Faulding shall cooperate with Purepac, at
Purepac's cost, to gain approval by the Regulatory Authority of an
alternate site of manufacture of the Pellets and shall continue to
manufacture and supply the Pellets until such time as the alternate
site is approved.
6.1.2 Upon the payment to Faulding of a technology
transfer fee of $U.S. 250,000 and the agreement to pay to Faulding
an ongoing royalty at the rate of 7.2% of the Gross Margin of all
Formulated Product sold in the Territory by Purepac, Faulding shall
grant Purepac an exclusive license to the Pellet Technology for the
remainder of the term of this Agreement for the sole purpose of
manufacturing and selling the Formulated Product in the Territory,
as set forth in Section 3.2 hereof. As used in this Section, Gross
Margin shall mean the Net Sales Price less the Direct Material
Costs; Net Sales Price shall mean with respect to any calendar
quarter, the gross income of Purepac from sales of the Formulated
Product to independent third parties (not including amounts
received as reimbursement of freight, insurance and other costs or
taxes) invoiced by Purepac during such quarter, less price
discounts, trade returns, trade allowances, chargebacks or rebates
relating to such sales, as calculated using Purepac's standard
accounting procedures, in accordance with U.S. generally accepted
accounting principles, consistently applied. It is understood and
agreed that where the amount of any such deduction can not be
fairly determined during the quarter immediately following the
quarter in question, such deduction may be claimed by Purepac with
respect to Net Sales made during a subsequent quarter; and Direct
Material Costs shall mean, with respect to any calendar quarter,
the actual material costs of the manufacture of the Formulated
Product, including, without limitation, the costs of packaging, as
determined in accordance with generally accepted U.S. accounting
principles, consistently applied.
6.1.3 Faulding shall provide to Purepac all Pellet
Technology in its possession as may be necessary or helpful for
Purepac to replicate and scale up the process for the manufacture
of the Pellets and Formulated Product. The timing of such transfer
of data will be agreed upon by the parties.
6.1.4 Purepac will be entitled to request Faulding
to provide scientists and engineers, as the parties shall mutually
agree to be appropriate, to aid Purepac at Purepac's site in the
replicating and scaling up of the process of manufacture of the
Formulated Product. All of such services will be at Purepac's
expense including travel, accommodation and an appropriate per diem
fee for each of the personnel provided. Faulding agrees to provide
such services to Purepac at commercially reasonable rates.
7. FORECASTS AND PURCHASE ORDERS FOR PELLETS; PAYMENTS
7.1 Purepac shall place written purchase orders with
Faulding, receipt of which shall be promptly acknowledged by
Faulding in writing, for the quantities and the delivery dates of
Pellets which Purepac desires to purchase under this Agreement.
Such purchase orders and acknowledgments thereof may be issued or
given on Faulding's or Purepac's standard forms, as the case may
be, containing standard terms and conditions, but the terms and
conditions of this Agreement, and not such standard terms and
conditions, shall govern the purchase and sale of Pellets under
this Agreement.
7.2 The price of the Pellets purchased by Purepac shall
be as set forth on Schedule D hereto.
7.3 Any amounts due and payable shall be paid in full by
Purepac to Faulding within sixty (60) days from the date of receipt
of the Pellets. Payments for the Pellets, and for any other
services under this Agreement, as set forth in Sections 2.4, 5.2,
6.1 and 17.1, shall be paid in U.S. dollars by wire transfer to
the account specified by the recipient party from time to time.
The payor shall convert the amounts due and payable into U.S.
dollars during the month that such amount is posted within its
books. The exchange rate shall be the T/T mid rate of the
Australia and New Zealand Banking Group Limited in Adelaide,
Australia on the last business day of the month immediately
preceding the month that such amount is posted.
7.4 Immediately before the commencement of every
calendar quarter, Purepac shall provide Faulding with a forecast of
the number of Pellets to be ordered for delivery during each of the
five (5) quarters following the date of the forecast. Such
forecast shall not create a binding obligation on the part of
either party to this Agreement. However, Purepac shall use all
reasonable efforts to make each forecast as accurate as possible.
7.5 Faulding shall not be required to supply during any
particular quarter more than one hundred twenty percent (120%) of
the most recent forecasted amount for such quarter, but will use
all reasonable efforts to supply the full amount ordered.
8. SHIPMENT OF PELLETS
8.1 Deliveries of the Pellets to the destination in the
Territory designated by Purepac shall be made by Faulding as
designated in the purchase orders, but in no event will any such
purchase order require delivery within less than sixty (60) days
after the placement of the purchase order by Purepac. Faulding
will ensure that deliveries of the Pellets are accompanied by
quality control certificates of analysis and will send copies of
such certificates of analysis contemporaneously by telecopier
(confirmed by hard copies mailed) to Purepac. Identification of
the goods to the contract shall occur and title thereto and risk of
loss shall pass to Purepac upon delivery to the carrier.
8.2 Purepac may choose the means of shipment by
notifying Faulding of its choice on its Purchase Order. Purepac
shall pay for all freight and insurance costs. Identification of
the goods to the contract shall occur and risk of loss shall pass
to Purepac upon delivery of the Pellets to the carrier. In the
event Purepac has not furnished Faulding with shipping and
insurance instructions in its purchase order, Faulding shall
deliver the Pellets to Purepac F.O.B. Faulding's plant in Salisbury,
South Australia within 90 days of acceptance of the order by
delivery to a carrier selected by Faulding and Faulding shall, in
its sole discretion, obtain insurance coverage thereon, the cost of
which shall be borne by Purepac and added to the purchase price.
8.3 Purepac (a) shall be responsible for the payment of
any import, customs or similar duties imposed by governmental
authorities and of any federal, state, county or municipal sales or
use tax, excise or similar charge, or any other tax assessment
(other than that assessed against income), license, fee or other
charge lawfully assessed or charged on the use or transportation
of the Pellets sold and delivered to Purepac pursuant to this
Agreement; and (b) shall obtain any licenses, authorizations or
other documents required by any governmental authorities in order
to permit the importation of the Pellets sold and delivered to
Purepac pursuant to this Agreement. Faulding shall be responsible,
at its own cost, for obtaining and paying any export clearances.
8.4 If Purepac claims that there is a shortage of any of
the Pellets delivered by Faulding pursuant to a purchase order, it
shall submit written notice to Faulding within ten (10) days of the
date of the delivery of such order. In case of alleged
non-delivery, a written claim must be submitted to Faulding within
thirty (30) days of Faulding's delivery advice notice. In the
absence of such a written claim, in the case of either alleged
shortage or non-delivery, the Pellets shall be deemed to have been
delivered in accordance with this Agreement. In any event, Purepac
shall not be entitled to refuse to accept delivery by reason only
of an alleged shortage.
9. PROJECT REVIEW
9.1 Within 60 days after the end of each Fiscal Year, or
as otherwise agreed, the parties shall conduct an annual Project
Review.
9.2 In addition to the annual Project Review, either
party, upon the occurrence of any Special Circumstances, may give
notice in writing to the other party requiring a Project Review
within 30 days of the receipt of the notice. The Special Circumstances
are as follows:
(a) the manufacture, use or sale of the Pellets or the
Formulated Product has resulted in, will result in, or will be
likely to result in, the infringement of a third party's
patent or other intellectual property rights relevant to the
Territory or to Australia;
(b) development of the Pellet Technology or the Formulated
Product, submissions to the Regulatory Authority or the
issuance of the ANDA is not going to be achieved, or are not
likely to be achieved, within six (6) months after the
relevant due dates agreed to by the parties;
(c) during any Fiscal Year, the forecasted sales of Formulated
Product are less than 75% of the budgeted sales of Formulated
Product for such Fiscal Year that have been approved either by
the Board of Directors of Purepac's sole stockholder, Purepac,
Inc. or by the management of Faulding;
(d) during any Fiscal Year, the forecasted net income from
sales of Formulated Product is less than 75% of Purepac's
budgeted net income from sales of Formulated Product for such
Fiscal Year that has been approved either by the Board of
Directors of Purepac, Inc. or the management of Faulding ;
(e) projected development costs of either party are currently
expected to be greater than 130% of the costs previously
forecasted by such party;
(f) development, manufacture or sale of the Pellets or the
Formulated Product has ceased to be commercially viable and
relevant to the business objectives of Faulding or Purepac,
respectively; or
(g) Faulding is unable to supply Pellets for a period of time
(i) exceeding one hundred eighty (180) days after the requested
delivery date or (ii) exceeding ninety (90) days after
the requested delivery date and the parties agree that it is
likely that Faulding will be unable to supply Pellets for at
least an additional ninety (90) days.
9.3 If during, or within 15 days after, any Project
Review, either party determines that as a result of the occurrence
of a Special Circumstance, it is not in its best interest to
continue to develop, manufacture and sell the Pellets or the
Formulated Product, as the case may be, pursuant to the terms of
this Agreement, such party may terminate the Agreement in accordance
with the provisions of Section 20.3 of this Agreement;
provided, however, with respect to a termination arising from any
of the Special Circumstances set forth in Subsection (a), (b) and
(g) of Section 9.2 hereof, if such Special Circumstance is no
longer applicable within a period of six (6) months after such
termination, the parties agree to negotiate in good faith to resume
the manufacturing and marketing of the Formulated Product and to
establish the commercial terms between them with regard to such
resumption.
10. INTELLECTUAL PROPERTY RIGHTS
10.1 Purepac acknowledges and agrees that Faulding is
the owner of the Pellet Technology and all industrial and intellectual
property rights of any kind in relation to the Pellet
Technology including the right to patents, registered or other
designs, copyright, trademarks or trade names and any other
confidential information. Nothing contained in this Agreement shall
be effective to give Purepac any rights of ownership in and to the
Pellet Technology and to the intellectual property owned by
Faulding and the licensing of the Pellet Technology under this
Agreement is for the sole purpose of developing, registering,
manufacturing and selling the Formulated Product in the Territory.
10.2 Faulding acknowledges and agrees that Purepac is
the owner of the Tabletting Technology and all industrial and
intellectual property rights of any kind in relation to the
Tabletting Technology, including the right to patents, registered
or other designs, copyright, trademarks or trade names and any
other confidential information. Nothing contained in this
Agreement shall be effective to give Faulding any rights of
ownership in and to the Tabletting Technology, including, without
limitation, any improvements to the Tabletting Technology described
in Section 12 hereof, and to the intellectual property owned by
Purepac.
10.3 In the event that Faulding shall desire to register
the Formulated Product anywhere outside the Territory, the parties
agree to negotiate in good faith to determine the mutually
acceptable and commercially reasonable consideration that Faulding
shall pay to Purepac for the right to use the Tabletting Technology.
11. FORMULATED PRODUCT IMPROVEMENTS BY FAULDING
If Faulding makes or discovers any improvements to the
Pellet Technology as it applies to the Formulated Product during
the term of this Agreement and Faulding wishes to include such
improved Pellet in the Formulated Product, it shall have the option
to do so; provided, however, that the improved Pellet shall first
be approved for use by the Regulatory Authority in the Territory,
that Faulding shall fully cooperate with Purepac in achieving such
regulatory approval and that if Purepac does not agree with
Faulding that the improved Pellet should be included in the
Formulated Product, the cost of incorporating such improved
Pellet, including, without limitation, the cost of achieving
approval by the Regulatory Authority shall be to Faulding's
account. Purepac may use any such improved Pellet without payment
of any further sum; provided, however, that if any such improvements
to the Pellet Technology cause a material reduction in
Purepac's overall costs of manufacturing the Formulated Product or
give any other material commercial advantage to Purepac, then the
parties shall negotiate in good faith whether, and what, modifications
should be made to the commercial terms between them.
12. FORMULATED PRODUCT IMPROVEMENTS BY PUREPAC
12.1 Any improvements to the Pellet Technology as it
applies to the Formulated Product made or discovered by Purepac
during the term of this Agreement shall be made known by Purepac to
Faulding and Faulding shall be entitled to use and commercially
exploit any such improvement without payment of any fee or royalty.
12.2 Purepac shall make known to Faulding any improvements
to the Tabletting Technology that are required to be known by
Faulding to effect the Pellet Technology development.
13. CONFIDENTIALITY
13.1 Purepac agrees with Faulding that it will not
disclose to any person or corporation any of the Pellet Technology
without the prior written consent of Faulding and that Purepac will
use all reasonable efforts to prevent unauthorized publication or
disclosure by any person of such Pellet Technology, including,
without limitation, requiring its employees, consultants, sub-licensees
and agents to enter into similar confidentiality
agreements in relation to the Pellet Technology.
13.2 Faulding agrees with Purepac that it will not
disclose any of the Tabletting Technology and any other confidential
information of Purepac that it may acquire at any time during
the term of this Agreement without the prior written consent of
Purepac and that Faulding will use all reasonable efforts to
prevent unauthorized publication or disclosure by any person of the
Tabletting Technology and such other confidential information,
including requiring its employees, consultants and agents to enter
into similar confidentiality agreements in relation to the
Tabletting Technology and such other confidential information.
13.3 The obligations undertaken by each party under this
Section 13 shall continue in force for a period of five (5) years
following the termination or expiration of this Agreement.
13.4 The obligations contained in this Section 13 do not
apply:
(a) to any information which was at the time of receipt
by a party in the public domain or generally known in the
pharmaceutical manufacturing industry otherwise than by
breach of a party's duty of confidentiality;
(b) information which a party can establish to have been
known to it at the time of receipt from the other party
and not to have been acquired directly or indirectly from
the other party;
(c) information acquired by a party from a third party
otherwise than in breach of an obligation of confidence
to the other party; and
(d) information with respect to the Pellet and Tabletting
Technologies provided to the Regulatory Authority in
connection with the registration of the Formulated
Product.
14. FAULDING'S WARRANTIES
Faulding represents and warrants to Purepac that:
14.1 it has the corporate authority to enter into this
Agreement and to perform its obligations hereunder;
14.2 it is not aware of any legal, contractual or other
restriction, limitation or condition which might affect adversely
its ability to perform hereunder;
14.3 all Pellets manufactured and delivered to Purepac
by Faulding pursuant to this Agreement shall meet the specifications
for such product at the time of delivery by Faulding to
Purepac, as such specifications may be subsequently agreed to by
the parties, and shall be manufactured and stored by Faulding in a
plant which meets the requirements of the Regulatory Authority in
the Territory, in accordance with Purepac's regulatory filings in
the Territory and GMP;
14.4 to the best of its knowledge as of date of this
Agreement, the Pellet Technology as it is known as of the date
hereof does not infringe any published U.S. or Australian patent;
and
14.5 upon the transfer of the Pellet Technology to
Purepac, as contemplated by Section 3.2 of this Agreement (a) it
will be the owner of the Pellet Technology free and clear of any
liens or encumbrances of third parties and (b) to the best of its
knowledge as of the date of this Agreement, it will have sufficient
right, title and interest in the Pellet Technology to grant the
license to Purepac granted hereunder.
15. PUREPAC'S WARRANTIES
Purepac represents and warrants to Faulding that:
15.1 it has the corporate authority to enter into this
Agreement and to perform its obligations hereunder;
15.2 it is not aware of any legal contractual or other
restriction, limitation or condition which might affect adversely
its ability to perform hereunder;
15.3 it is the owner of the Tabletting Technology free
and clear of any liens or encumbrances of third parties and to the
best of its knowledge as of the date of this Agreement, it has
sufficient right, title and interest in the Tabletting Technology
to use such technology in the tabletted presentation of the
Formulated Product; and
15.4 to the best of its knowledge as of the date of this
Agreement, the Tabletting Technology as of the date hereof does not
infringe any published U.S. patent.
16. INDEMNITY
16.1 Faulding agrees to indemnify, defend and hold
harmless Purepac, its Affiliates and subsidiaries and their
respective employees against any and all claims, losses (except
consequential losses, such as, for example, the loss of business or
of profits), damages and liabilities (including reasonable
attorney's fees, and liabilities for personal injury suffered by
any person) arising out of any breach of any obligation by
Faulding hereunder or any representation or warranty by Faulding
hereunder or any act or omission of Faulding in connection with its
contract obligations hereunder.
16.2 Purepac agrees to indemnify, defend and hold
harmless Faulding, its Affiliates and subsidiaries and their
employees against any and all claims, losses (except consequential
losses, such as, for example, the loss of business or of profits),
damages and liabilities (including reasonable attorney's fees and
liabilities for personal injury suffered by any person) arising out
of any breach of any obligation by Purepac hereunder or any
representation or warranty by Purepac hereunder or any act or
omission of Purepac or any of its agents or sub-licensees in
connection with the marketing, distribution and sale of the
Formulated Product.
16.3
(a) If Purepac or any of its Affiliates or subsidiaries or
Faulding or any of its Affiliates or subsidiaries (in each case an
"Indemnified Party") receives any written claim which it believes
is the subject of indemnity hereunder by Faulding or Purepac, as
the case may be, (in each case as "Indemnifying Party"), the
Indemnified Party shall, as soon as reasonably practicable after
forming such belief, give notice thereof to the Indemnifying Party,
including full particulars of such claim to the extent known to the
Indemnified Party; provided, that the failure to give timely notice
to the Indemnifying Party as contemplated hereby shall not release
the Indemnifying Party from any liability to the Indemnified party
other than pursuant to this Section 16. The Indemnifying Party
shall have the right, by prompt notice to the Indemnified Party, to
assume the defense of such claim with counsel reasonably satisfactory
to the Indemnified Party, and at the cost of the Indemnifying
Party. If the Indemnifying Party does not so assume the defense of
such claim or, having done so, does not diligently pursue such
defense, the Indemnified Party may assume such defense, with
counsel of its choice, but for the account of the Indemnifying
Party. If the Indemnifying Party so assumes such defense, the
Indemnified Party may participate therein through counsel of its
choice, but the cost of such counsel shall be for the account of
the Indemnified Party.
(b) The party not assuming the defense of any such claim
shall render all reasonable assistance to the party assuming such
defense, and all out-of-pocket costs of such assistance shall be
for the account of the Indemnifying Party.
(c) No such claims 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
Indemnified Party shall have no obligation to consent to any
settlement of any such claim which imposes on the Indemnified Party
any liability or obligation which cannot be assumed and performed
in full by the Indemnifying party.
16.4 Faulding shall have no liability hereunder for any
claim which, if true, would constitute a breach of the warranties
contained in Sections 14.4 and 14.5 hereof (hereinafter an
"Infringement Claim") based on Purepac's manufacture or distribution
of the Formulated Product, as the case may be, after Purepac
receives a notice from Faulding that Purepac should cease such
manufacture or distribution due to an Infringement Claim.
17. PATENT PROSECUTION, MAINTENANCE AND INFRINGEMENT
17.1 The party responsible for applying for and
obtaining Patents (the "Responsible Party") involving the
Tabletting Technology shall be Purepac and involving the Pellets,
the Pellet Technology and any combination of the Pellet and
Tabletting Technologies shall be Faulding. Each Responsible Party
shall immediately furnish the other party with true copies of the
Patent(s) concerned. Other than with respect to any Patents
combining the Pellet and Tabletting Technologies (the "Combined
Patents"), all expenses for the prosecution and maintenance of each
of the aforementioned Patents shall be paid by the Responsible
Party. The parties shall equally share the expenses for the
prosecution and maintenance of the Combined Patents and the
Combined Patents will be applied for in the names of both Faulding
and Purepac. Each of the parties agrees to cooperate, as
reasonable necessary with the party prosecuting the patent
application, upon the request of such prosecuting party.
17.2 Each party will promptly notify the other party of
any infringement or possible infringement by a third party of any
of the Patents and any claim of litigation by a third party
alleging invalidity of any of the Patents. Moreover, in the event
of any claim of litigation by a third party alleging infringement
by any of the Patents or if either party discovers that any of the
Patents infringe, or may possibly infringe, a third party's
intellectual property rights, each Party shall promptly give notice
of such claim or litigation to the other Party.
17.3 Subject to the warranties set forth in Sections 14
and 15 hereof, the "Litigating Party", which shall be:
(a)Faulding with respect to any actions associated with
alleged infringement of or by Patents involving the Pellets or
Pellet Technology; and
(b) Purepac with respect to any actions associated with
alleged infringement of or by Patents involving the Tabletting
Technology, the Formulated Product or active drug substances,
shall have the right but not the obligation to defend or prosecute
any right with respect to such Patent. In such event, the other
party shall cooperate with the Litigating Party.
17.4 If the Litigating Party fails to prosecute or
defend any such action within one (1) year after giving or
receiving notice thereof, then the other party shall have the
right, but not the obligation, to prosecute or defend any such
action on its own behalf and, if necessary to sustain standing, the
right to name the Litigating Party, or, if applicable, its succes-
sor or assignee, as a party plaintiff. In such event, the
Litigating Party shall reasonably cooperate with the other party.
17.5 The party prosecuting or defending the action shall
control all aspects of such action and bear all costs of such
action and the proceeds of such action, of which there is no
indemnification or for which indemnification is not sought, shall
belong to the prosecuting or defending party, except that with
respect to actions involving the Combined Patents, the parties
shall equally share the costs and proceeds of such actions.
18. TAXATION ISSUES
18.1 Each of the parties is aware that the commercial
arrangements of this Agreement may be subject to transfer pricing
reviews by the relevant taxation authorities in the Territory and
Australia. As a result, this Agreement may be subject to internal
reviews by either or both parties and to audits by the relevant
taxation authorities. If as a result of such reviews or audits, it
becomes necessary or advisable for either party (the "Affected
Party")to change any commercial arrangements of this Agreement,
including, without limitation, making retroactive adjustments, the
other party, within thirty (30) days after written notification by
the Affected Party, which notification shall explain in reasonable
detail the reason for the proposed change, shall meet with the
Affected Party and each of the parties agrees to negotiate in good
faith, and to use its best efforts to reach agreement with respect
to, any modifications to the commercial terms of this Agreement.
In the event that the parties, despite their best efforts, cannot
reach agreement with respect to any material change, which in the
opinion of either party is necessary or advisable for the reasons
set forth in this Section 18.1, either party, upon written notice
to the other party, may terminate this Agreement. The provisions
of Sections 24.4 and 24.5 of this Agreement shall apply upon any
termination of the Agreement pursuant to this Section 18.1.
19. NOTICES
Notices provided under this Agreement to be given or served by
either party on the other shall be given in writing and served
personally or by prepaid registered airmail post, express mail or
by means of facsimile to the following respective addresses or to
such other addresses as the parties may hereafter advise each other
in writing. It being agreed and understood by the parties that any
such notice shall be deemed given and served on the dates transmitted
by facsimile or a date ten (10) days after the date of airmail
or express mail.
To: Faulding
The Company Secretary
F.H. Faulding & Co. Limited
160 Greenhill Road
Parkside, South Australia 5063
Facsimile +61 8 373 3120
To: Purepac
President
Purepac Pharmaceutical Co.
200 Elmora Avenue
Elizabeth, New Jersey 07207
United States of America
Facsimile +1 908 527-0649
20. ASSIGNMENT
Neither party to this Agreement shall assign any rights
hereunder to third parties other than the right of payment of
monies accrued without the prior written consent of the other
party; provided, however, that the restriction contained herein
shall in no way limit the rights of either party to make assignments
to Affiliates. This Agreement shall be binding upon any
permitted assignee or successor of either party.
21. TERM; TERMINATION
21.1 This Agreement shall be for a term of ten (10) years
commencing as of the date of this Agreement and thereafter shall be
automatically renewed for successive periods of two (2) years
unless either party shall give six (6) months prior written notice
to the other party of its intention not to renew this Agreement.
21.2 This Agreement may be terminated by notice in
writing by either party
(a) if the other party shall default in the
performance of any of its obligations under this
Agreement and such default shall continue for a
period of not less than ninety (90) days after
written notice specifying such default shall have
been given;
(b) if the other party makes an arrangement with
its creditors or goes into receivership or liquidation
(other than voluntary liquidation) for the
purpose of internal reorganization, or if a receiver
or a receiver and manager is appointed in
respect of the whole or part of the property or
business of the party in default; or
(c) if a major part of the assets or all of the
assets of the other party are disposed of to or
compulsory acquired by any other person.
21.3 Upon the occurrence of a Special Circumstance, as
described in Section 9.2 hereof, either party, either during or
within 15 days after a Project Review, may terminate the Agreement
upon 30 days' written notice to the other party, which notice shall
provide details of each of the Special Circumstances that are
relied upon as the basis for such notice.
21.4 Upon termination of this Agreement, howsoever
arising, the following provisions shall have effect:
(a) The obligations of the parties pursuant to Section
13 shall continue, notwithstanding termination of this
Agreement.
(b) The full amount of any amounts outstanding by either
party to the other shall be paid forthwith.
(c) All rights and licenses granted hereunder shall
terminate.
21.5 Upon the latter of (a) the termination or
expiration of this Agreement, or (b) with respect to any records or
other data that must be retained for a period of time in accordance
with, and as set forth in, the regulations of the Regulatory
Authority (the "Retention Period"), the expiration of the Retention
Period, Purepac shall immediately deliver to Faulding all information
with respect to the Pellet Technology in Purepac's possession
and Faulding shall immediately deliver to Purepac all information
with respect to the Tabletting Technology in Faulding's possession.
22. FORCE MAJEURE
Neither party shall be liable or be in breach of any provision
of this Agreement for failing or delay in its part to perform any
obligation where such failure or delay has been occasioned by any
act of God, war, riot, fire, explosion, flood, sabotage, accident
or breakdown of machinery, unavailability of fuel, labor, containers
or transportation facilities, accidents of navigation or
breakdown or damage of vessels or other conveyancers for air land
or sea, other impediments or hindrances to transportation,
government intervention, strikes or other labor disturbances or any
other cause beyond the control of the parties.
23. RELATIONSHIP OF THE PARTIES
The relationship between Faulding and Purepac that is created
by this Agreement shall be that of vendor and purchaser and
licensor and licensee and not that of principal and agent. In the
performance of this Agreement, neither party shall have the
authority to assume or create any obligation or responsibility,
either expressed or implied, on behalf of or in the name of the
other party, or to bind the other party in any manner whatsoever.
24. EXECUTION OF ALL NECESSARY ADDITIONAL DOCUMENTS
Each party agrees that it will forthwith upon the request of
the other party execute and deliver all such instruments and
agreements and will take all such other actions as the other party
may reasonably request from time to time in order to effectuate the
provisions and purposes of this Agreement.
25. NON WAIVER
Any party's failure to exercise or enforce any right conferred
upon it under this Agreement shall not be deemed to be a waiver of
any such right or operate to bar the exercise or performance
thereof at any time or times thereafter nor shall any party's
waiver of any right under this Agreement at any given time
including rights to any payment be deemed a waiver for any other
time.
26. GOVERNING LAW
This Agreement shall be deemed to be a contract made under and
shall be governed by and construed in accordance with the laws of
the State of New York.
27. ENTIRE AGREEMENT
This Agreement incorporates the entire understanding of the
parties and revokes and supersedes any and all agreements,
contracts, understandings or arrangements that might have existed
heretofore between the parties regarding the subject matter hereof.
28. HEADINGS
The headings used in this Agreement are intended for guidance
only and shall not be considered part of this written understanding
between the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties on the date first above written.
PUREPAC PHARMACEUTICAL CO.
By: /s/
------------------------
F.H. FAULDING & CO. LIMITED
By: /s/
-------------------------
<PAGE>
SCHEDULE A
A tablet dosage form containing pseudoephedrine hydrochloride in
sustained release pellets (the "Pellets") compressed into tablets
with pseudoephedrine hydrochloride and terfenadine (the
"Tabletting"), approved by the U.S. FDA as an A/B rated substitutable
equivalent of Marion Merrell Dow's Seldane D tablets.
<PAGE>
SCHEDULE C
Total charges from Faulding to Purepac $561,990
Less tablet development costs included in above $7,669
Credit on charges from Australia $554,321
Plus Charges from Purepac for active drug substance $23,225
Net adjustment $577,546
<PAGE>
SCHEDULE D
The price of the Pellets sold by Faulding to Purepac will be based
on Faulding's Total Manufacturing Cost (the "TMC") of the Pellets
with a 63.4% margin based on the following formula:
FOB price/Kg Pellets = TMC $(Aus) of Pellets/ 0.366
For purposes of pricing and calculating the formula, TMC will be
calculated according to Faulding's standard costing system, subject
to normal auditing procedures and consistent with Australian GAAP.
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE
Year Ended June 30,
------------------------------------------
1995 1994 1993
- ---------------------------------------------------------------------------
DATA AS TO EARNINGS:
Income (loss) before
cumulative effect of a $ (846,856) $ 4,298,116 $ 9,160,048
change in accounting for
income taxes
Less: preferred stock
dividends (2,080,380) (2,080,380) (2,080,380)
- ----------------------------------------------------------------------------
Income (loss) before
cumulative effect
applicable to common
and common equivalent shares $ (2,927,236) $ 2,217,73 $ 7,079,668
- ----------------------------------------------------------------------------
Cumulative effect of a change
in accounting for income taxes $ --- $4,149,000 $ ---
- ----------------------------------------------------------------------------
DATA AS TO NUMBER OF COMMON
SHARES:
Weighted average shares
outstanding 12,538,537 12,468,184 12,417,536
Common equivalent shares
relating to contingent issuance 35,877 85,298 98,108
- ----------------------------------------------------------------------------
Average number of common shares
and common share equivalents 12,574,414 12,553,482 12,515,644
============================================================================
PRIMARY EARNINGS PER COMMON
SHARE:
Income (loss) before cumulative
effect of a change in accounting
for income taxes $ (.23) $ .18 $ .57
Cumulative effect of a change in
accounting for income taxes --- .33 ---
- ----------------------------------------------------------------------------
Net Income (Loss) $ (.23) $ .51 $ .57
============================================================================
EARNINGS PER COMMON SHARE AND
COMMON SHARE EQUIVALENT
(Note 1, below):
Income (loss) before cumulative
effect of a change in accounting
for income taxes $ (.23) $ .18 $ .57
Cumulative effect of a change in
accounting for income taxes --- .33 ---
- ----------------------------------------------------------------------------
Net Income (Loss) $ (.23) $ .51 $ .57
============================================================================
Note 1: Common share equivalents in the aggregate dilute the primary
earnings per common share by less than 3 percent.
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE ASSUMING FULL DILUTION
Year Ended June 30,
------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------
DATA AS TO EARNINGS:
Income (loss) before
cumulative effect of a
change in accounting for
income taxes $ (846,856) $ 4,298,116 $ 9,160,048
- ----------------------------------------------------------------------------
Cumulative effect of a
change in accounting for
income taxes $ --- $ 4,149,000 $ ---
- ----------------------------------------------------------------------------
DATA AS TO NUMBER OF
COMMON SHARES:
Average number of common shares
and common share equivalents
(Exhibit 11) 12,574,414 12,553,482 12,515,644
Additional shares assuming
full dilution 5,005,490 5,005,128 5,005,208
- ----------------------------------------------------------------------------
Average number of common shares
assuming full dilution 17,579,904 17,558,610 17,520,852
- ----------------------------------------------------------------------------
EARNINGS PER COMMON SHARE ASSUMING
FULL DILUTION (1995 - ANTIDILUTIVE):
Income (loss) before
cumulative effect of a
change in accounting
for income taxes $ (.05) $ .24 $ .52
Cumulative effect of a
change in accounting
for income taxes --- .24 ---
- ----------------------------------------------------------------------------
Net Income (Loss) $ (.05) $ .48 $ .52
============================================================================
EXHIBIT 21
SUBSIDIARIES
Name State of Incorporation
- ------------------------- -----------------------
Purepac Pharmaceutical Co. Delaware
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,156
<SECURITIES> 0
<RECEIVABLES> 9,703
<ALLOWANCES> 2,054
<INVENTORY> 17,832
<CURRENT-ASSETS> 34,183
<PP&E> 26,603
<DEPRECIATION> 0
<TOTAL-ASSETS> 64,929
<CURRENT-LIABILITIES> 12,372
<BONDS> 0
<COMMON> 126
0
8
<OTHER-SE> 52,423
<TOTAL-LIABILITY-AND-EQUITY> 64,929
<SALES> 61,146
<TOTAL-REVENUES> 61,146
<CGS> 46,476
<TOTAL-COSTS> 16,558
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63
<INCOME-PRETAX> (1,951)
<INCOME-TAX> (1,104)
<INCOME-CONTINUING> (847)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (847)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> 0
</TABLE>
