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EXHIBIT 2.2
MANUFACTURING AGREEMENT
This MANUFACTURING AGREEMENT is entered into as of March 18, 1996 by and
between ▇▇▇▇▇ MEDICAL INDUSTRIES, INC. ("JMED"), a corporation organized and
existing under the laws of the State of Delaware with offices at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇ ▇▇▇▇▇ AND COMPANY ("Lilly"), a
corporation organized and existing under the laws of the State of Indiana, with
offices at Lilly Corporate Center, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, pursuant to a Licensing Agreement dated the date hereof, JMED is
licensing from Lilly certain rights and assets utilized in the marketing and
selling of certain pharmaceutical products; and
WHEREAS, subject to the terms and conditions set forth in this Agreement, JMED
wishes to have Lilly manufacture for JMED certain pharmaceutical products; and
WHEREAS, subject to the terms and conditions set forth in this Agreement,
Lilly wishes to manufacture such pharmaceutical products for JMED;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Affiliates" shall mean, with respect to any Person, any Persons directly or
indirectly controlling, controlled by, or under common control with, such other
Person. For purposes hereof,
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the term "controlled" (including the terms "controlled by" and "under common
control with"), as used with respect to any Person, shall mean the direct or
indirect ability or power to direct or cause the direction of management
policies of such Person or otherwise direct the affairs of such Person, whether
through ownership of voting securities or otherwise.
"Applicable Laws" shall mean all applicable federal, state and local laws,
ordinances, rules and regulations, of any kind whatsoever, including without
limitation, the Federal Food, Drug and Cosmetic Act.
"Damages" shall mean any and all costs, losses, claims, liabilities, fines,
penalties, damages and expenses, court costs, and reasonable fees and
disbursements of counsel, consultants and expert witnesses incurred by a party
hereto (including interest which may be imposed in connection therewith).
"Encumbrances" shall mean any and all claims, liens, licenses, charges,
restrictions and other encumbrances, of any kind whatsoever.
"FDA" shall mean the United States Food and Drug Administration.
"Good Manufacturing Practices" or "GMP" shall mean current Good Manufacturing
Practices as defined in 21 CFR Section 210 et seq. as amended.
"Licensing Agreement" shall mean the Licensing Agreement, dated as of the date
of this Agreement, between Lilly and JMED, which provides for the licensing of
certain rights by Lilly to JMED in connection with the Product for the period
specified therein.
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"NDA" shall mean the New Drug Application Number 7-517 for the Product filed
by Lilly with the FDA and all subsequent submissions thereto.
"Person" shall mean a natural person, a corporation, a partnership, a trust, a
joint venture, a limited liability company, any governmental authority or any
other entity or organization.
"Product" shall mean the product listed in Attachment 1 of the Requirements
Document.
"Purchase Order" shall mean a purchase order from JMED to Lilly for the
Product in accordance with the provisions of the Requirements Document.
"Requirements Document" shall mean the Manufacturing Requirements Document
attached hereto as APPENDIX A, as amended from time to time, setting forth
various manufacturing and operational terms and procedures for implementing
this Agreement.
"Specifications" shall mean the specifications for manufacturing and testing
the Product as set forth in the approved NDA and any supplements and amendments
thereto.
"Technology" shall mean all of Lilly's technology, know-how, methods of
operation, manufacturing systems details, processes, information, production
details, recipes, formulations, files, records, specifications, data and other
information necessary to, or that assist in, the manufacture of Product.
"United States" shall mean the fifty (50) states and the District of Columbia
comprising the United States of America.
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SECTION 2. Obligations of JMED.
2.1 Purchase of Inventory. JMED shall purchase Lilly's inventory of Product
existing as of the date of this Agreement at the prices set forth in the
Requirements Document. SCHEDULE 2.1 hereto sets forth a listing of all such
inventory of Product and the dating thereof.
2.2 Purchases of Product. Provided that Lilly performs its obligations
hereunder and supplies all Product ordered by JMED, JMED shall purchase from
Lilly all of JMED's requirements for the Product at the prices set forth in the
Requirements Document.
2.3 Medicaid and Other Rebates. JMED's NDC labeler code(s) shall appear on
the Product as soon as reasonably practicable, and JMED shall be responsible
for and shall timely pay all Medicaid and other federal, state or local
governmentally-mandated rebates or discounts, if any, to the extent set forth
in the Transition Plan.
2.4 Transition Plan. JMED shall perform its obligations set forth in the
Transition Plan attached hereto as APPENDIX B.
SECTION 3. Obligations of Lilly.
3.1 Manufacturing; Requirements; Delivery. For and during the term of this
Agreement, Lilly shall manufacture, package, label, test, prepare for shipment
and ship Product to JMED at and from Lilly's facilities, at the times and in
the quantities set forth by JMED in the Purchase Orders and as provided for in
the Requirements Document. All Products shall be manufactured by Lilly in
accordance with the NDA, Good Manufacturing Practices, and all Applicable Laws.
Each shipment of Product shall include a certificate of analysis in a format
substantially similar to APPENDIX C attached hereto, ("Analysis Certificate")
confirming that the Product therein meets the Specifications.
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3.2 Quality Control and Assurance. (a) Lilly shall manufacture the
Product in compliance with the NDA and in accordance with all Applicable Laws
including, where required, Good Manufacturing Practices and the related
provisions of the Federal Food, Drug and Cosmetic Act. Lilly shall perform
quality control and quality assurance testing on Product to be delivered to
JMED hereunder in accordance with the Specifications and the Requirements
Document.
(b) Personnel from JMED shall, upon reasonable advance notice to
Lilly, have access during normal business hours to Lilly's premises where the
Product is being manufactured, tested, inspected, packaged and/or stored in
order to observe and inspect the manufacturing, quality control and testing
processes for, and the records of all production and quality assurance data
related to, the Product.
3.3 Records and Accounting by Lilly. Lilly shall, with respect to any
particular lot of the Product produced by it hereunder, for a period of three
(3) years after the expiry of the expiration dating of any such lot (or such
longer period as may be required by law), keep accurate records of the
manufacture and testing of the Product produced by it hereunder, including,
without limitation, all such records which are required under Applicable Laws.
Access to such records shall be made available by Lilly to JMED upon JMED's
request.
3.4 Transition Plan. Lilly shall perform its obligations set forth in the
Transition Plan attached hereto as APPENDIX B.
SECTION 4. Purchase Orders.
4.1 JMED shall provide Lilly with Purchase Orders in accordance with the
Requirements Document. Each Purchase Order shall be governed by the terms of
this Agreement and none of the terms or conditions of JMED's Purchase Orders,
Lilly's acknowledgment forms or any other forms
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shall be applicable, except those specifying quantity ordered, delivery
locations and delivery schedule and invoice information. Each Purchase Order
shall constitute a binding obligation upon JMED to accept and pay for the
quantities of Product ordered therein if, and to the extent that, such Product
meets the Specifications and otherwise complies with the provisions of this
Agreement. Subject to the provisions of Section 10.14 hereof and Section 4.0
of the Requirements Document, Lilly shall supply to JMED all quantities of
Product ordered by JMED pursuant to the Purchase Orders.
SECTION 5. Payment, Labeling and Testing Product.
5.1 Terms of Payment. JMED agrees to pay for all invoices within
thirty (30) days after the later of (i) the date of receipt of the applicable
invoice, and (ii) the date of delivery of the Product, at the prices computed
in accordance with the Requirements Document. All payments to Lilly shall be
made by check or bank draft to the following address and shall indicate to
which invoice(s) payment applies:
▇▇▇ ▇▇▇▇▇ and Company
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
5.2 Labeling and Packing. The Product shall be labeled, prepared and
packed by Lilly for shipment in full compliance with the approved NDA, all
Applicable Laws, and in accordance with the Requirements Document. To the
extent permitted by the NDA and all Applicable Laws, JMED's name shall be shown
(in a format reasonably acceptable to JMED) on the label as the distributor of
the Product.
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5.3 Lot Numbering. Lot numbers shall be affixed by Lilly on the
containers for the Product and on each shipping carton in accordance with
Applicable Laws and Lilly's customary practice and in accordance with the
Requirements Document.
5.4 Testing and Rejection of Delivered Product.(a) JMED shall be
entitled, at its cost and expense, to test or inspect any and all Product
delivered to it hereunder in order to determine whether such Product complies
with the Specifications and the Analysis Certificate; however, JMED shall have
no obligation to test or inspect any such Product supplied by Lilly and may
rely on the Analysis Certificate provided with each shipment of Product. In
the event JMED tests or inspects any Product delivered to it and such Product
fails to conform to the Specifications or the Analysis Certificate, then JMED
shall have the right to reject any such Product, or the entire lot of any such
Product, by giving written notice thereof to Lilly. Lilly shall use reasonable
efforts to replace the rejected Product within the shortest possible time with
Product which meets the Specifications and Lilly shall deliver such replacement
Product, at its sole cost and expense, to JMED. If so requested by JMED,
rather than replacing the non-complying Product, Lilly shall credit the account
of JMED for all such rejected Product. In addition, Lilly shall, at its sole
cost and expense, arrange for all such noncomplying Product to be picked up
promptly and destroyed in accordance with all Applicable Laws. JMED shall have
no responsibility to Lilly for the purchase prices of noncomplying Product but
shall pay Lilly the purchase price for the replacement Product within thirty
(30) days of delivery thereof.
(b) Notwithstanding subsection (a) above, if JMED and Lilly disagree
on whether any Product complies with the Specifications or on the methods for
or results of testing of any Product, an independent laboratory which is
acceptable to both parties shall be asked to test the Product in dispute
("Disputed Product"). To the extent such laboratory finds that the Disputed
Product meets the Specifications, JMED shall pay the fees of such laboratory
related to such testing and shall promptly pay for the Disputed Product. To
the extent that such laboratory finds that the
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Disputed Product fails to meet the Specifications, Lilly shall pay the fees of
such laboratory related to such testing and shall either (i) replace or rework
the Disputed Product in accordance with the preceding subsection (a), or (ii)
credit JMED's account, whichever JMED shall so select.
(c) In the event JMED does not test or inspect Product delivered to it
and said Product (the "Suspect Product") is subsequently the subject of a claim
for Damages, then in order to determine whether the Suspect Product complies
with the Specifications, Lilly shall test Lilly's "House Sample" taken at the
time the Suspect Product was manufactured in order to determine whether said
Suspect Product complies with the Specifications. If Lilly determines that the
"House Sample" does not comply with Specifications, then Lilly shall be
responsible for the claim for Damages with respect to the Suspect Product, and
in the event that Lilly determines that the "House Sample" complies with the
Specifications, then JMED shall be responsible for the claim for Damages. The
accuracy of all lab tests shall be certified by an officer of Lilly and Lilly
shall provide JMED with a copy of all laboratory results and reports. Lilly
shall also furnish JMED with a sample of the House Sample on request.
SECTION 6. Representations, Warranties and Covenants of the Parties.
6.1 Product Specifications and Delivery; Authorization.(a) Lilly hereby
represents, warrants and covenants to JMED that (i) all of the existing
inventory purchased by JMED pursuant to Section 2.1, and all future JMED
purchases of Product shall, at the date shipped to JMED, (A) fully conform to
the Specifications, (B) have been or shall be manufactured in compliance with
the NDA and all Applicable Laws, (C) be not less than the potency specified in
the Analysis Certificate nor adulterated or misbranded within the meaning of
any Applicable Law, and (D) comply with all other Applicable Laws, (ii) the
procedures followed by Lilly pursuant to the Requirements Document comply with
all Applicable Laws, (iii) upon delivery of any Product pursuant hereto,
including Lilly's inventory of Product contemplated in Section 2.1 hereof, good
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to such Product shall be conveyed to JMED, free and clear of any and all
interest, lien or Encumbrances, and (iv) unless otherwise mutually agreed upon
by the parties, any and all Product delivered to JMED shall have a shelf life
of at least eighteen (18) months from the date of delivery (except the initial
inventory identified in Section 2.1 hereof which may be less).
(b) EXCEPT AS EXPRESSLY PROVIDED IN SECTION 6.1(a) ABOVE OR AS
OTHERWISE PROVIDED IN THE LICENSING AGREEMENT, LILLY MAKES NO REPRESENTATION OR
WARRANTY AS TO ANY PRODUCT, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION
OF LAW, BY STATUTE OR OTHERWISE, AND LILLY SPECIFICALLY DISCLAIMS ANY AND ALL
IMPLIED OR STATUTORY WARRANTIES, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, OR WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
(c) Lilly hereby covenants that it shall use reasonable efforts to
assure that all of the shipments of Product ordered by JMED pursuant to a
Purchase Order are shipped timely in accordance with the directions contained
in such Purchase Order.
6.2 Indemnification. Indemnification under this Agreement shall be as
provided under and pursuant to and in accordance with the provisions of Section
8 of the Licensing Agreement, which said provisions are by this reference
incorporated in and made a part of this Agreement, and all of which shall
survive any termination or expiration of the Licensing Agreement.
6.3 Not Debarred. JMED and Lilly each hereby represent and warrant to the
other that it is not debarred and has not and will not knowingly use in any
capacity the services of any person debarred under subsections 306(a) or (b) of
the Generic Drug Enforcement Act of 1992. If at any time this representation
and warranty is no longer accurate, JMED or Lilly, as the case may be, shall
immediately notify the other of such fact.
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6.4 Manufacturing Restrictions. Subject to the provisions of Section
8 of this Agreement, Lilly hereby covenants and agrees that it will not
manufacture Products for resale in the United States by any Person other than
JMED.
SECTION 7. Term of Agreement, Renewal, Termination.
7.1 Term of Agreement. Unless sooner terminated in accordance with this
Section 7, this Agreement shall continue in effect for an initial term which
will expire on the date that is ten (10) years from the date of this Agreement.
Thereafter, this Agreement shall automatically renew for additional terms of
ten (10) years each, unless and until terminated as hereinafter set forth.
7.2 Termination by Lilly - Transfer of Manufacturing. (a) Subject to the
provisions of this Section 7.2 and Section 7.5, this Agreement may be
terminated by Lilly at any time after the first five (5) years of the initial
ten (10) year term of this Agreement without cause upon the occurrence of all
of the following: (i) the giving of at least five (5) years written notice to
JMED at any time subsequent to the end of the first five (5) years of the
initial ten (10) year term of this Agreement ("Lilly Notice Period"), (ii)
Lilly using reasonable efforts to manufacture for and sell to JMED that
quantity of the Product reasonably requested by JMED prior to the end of the
Lilly Notice Period to meet anticipated demand therefor in the first year after
the Lilly Notice Period (the "Additional Product"), and (iii) Lilly using
reasonable efforts to assist JMED in obtaining any and all rights, licenses,
approvals and consents as may be necessary, as reasonably determined by JMED,
in order to enable JMED to manufacture, or have manufactured for it, the
Product in the United States. The effective date of the termination of this
Agreement shall be the later of the last day of the Lilly Notice Period or the
day on which Lilly delivers the Additional Product. In the event of such
termination under this Section 7.2, Lilly shall provide such reasonable
assistance to JMED as may be reasonably necessary to (x) effect the transfer of
manufacturing responsibilities from Lilly to
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JMED or a third party manufacturer designated by JMED, and JMED shall reimburse
Lilly for all of Lilly's reasonable costs in connection therewith, and (y)
enable JMED to obtain a reasonable supply of active raw material necessary for
the manufacture of the Product. The termination by Lilly of this Agreement as
set forth in this Section 7.2(a) shall not in any way limit or terminate JMED's
non-exclusive right and license to use the Technology in perpetuity as set
forth in Section 2.8 of the Licensing Agreement.
(b) Incident to the licensing by Lilly of the Technology as set
forth in Section 2.8 of the Licensing Agreement, Lilly covenants and agrees
that the following shall be true and correct at the effective date of the
termination of this Agreement: the Technology licensed to JMED pursuant to
Section 2.8 of the Licensing Agreement, shall be all of the technology, know
how and other information reasonably necessary to manufacture the Product in
compliance with the Specifications, the NDA and all Applicable Laws.
7.3 Termination for Insolvency. If either JMED or Lilly (i) makes a
general assignment for the benefit of creditors or becomes insolvent; (ii)
files an insolvency petition in bankruptcy; (iii) petitions for or acquiesces
in the appointment of any receiver, trustee or similar officer to liquidate or
conserve its business or any substantial part of its assets; (iv) commences
under the laws of any jurisdiction any proceeding involving its insolvency,
bankruptcy, reorganization, adjustment of debt, dissolution, liquidation or any
other similar proceeding for the release of financially distressed debtors; or
(v) becomes a party to any proceeding or action of the type described above in
(iii) or (iv) and such proceeding or action remains undismissed or unstayed for
a period of more than sixty (60) days, then the other party may by written
notice terminate this Agreement with immediate effect.
7.4 Termination for Default. (a) Subject to mediation as provided in
Section 7.7 below, JMED and Lilly shall each have the right to terminate this
Agreement for default upon the other's
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failure to comply in any material respect with the terms and conditions of this
Agreement. Prior to any such termination for default, the party seeking to so
terminate shall give the other written notice of its intention to terminate
this Agreement in accordance with the provisions of this Section 7.4, which
notice shall set forth the default(s) which form the basis for such
termination. If the defaulting party fails to correct such default(s) within
thirty (30) days after receipt of the notification with respect to monetary
defaults, and ninety (90) days after the receipt of notification with respect
to nonmonetary defaults, or if the nonmonetary defaults cannot be corrected or
remedied within ninety (90) days, then if the defaulting party has not
commenced curing said default(s) within said ninety (90) days and be diligently
pursuing completion of same, then such party immediately may terminate this
Agreement. In addition, any default by a party under the Licensing Agreement
shall be deemed to be a default by such party hereunder.
(b) This Section 7.4 shall not be exclusive and shall not be in
lieu of any other remedies available to a party hereto for any default
hereunder on the part of the other party.
7.5 Continuing Obligations. Termination of this Agreement for any
reason shall not relieve the parties of any obligation accruing prior thereto
and shall be without prejudice to the rights and remedies of either party with
respect to any antecedent breach of the provisions of this Agreement. Without
limiting the generality of the foregoing and except as otherwise provided
herein, no termination of this Agreement shall serve to terminate the
obligations of the parties hereto under subsections 2.3, 2.4, 3.3, 3.4, 5.1,
5.4, 6.1, 6.2, 7.5, 7.6 7.7, 8.1 (in accordance with the terms of 8.3(d)), 8.2
(unless terminated by Lilly pursuant to Sections 7.3 or 7.4 hereof), 8.3 (in
accordance with the terms of 8.3(d)), 9, 10.1, 10.2, 10.3 and 10.15 hereof, and
such obligations shall survive any such termination.
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7.6 Returned Materials. On the termination of this Agreement, Lilly
and JMED each shall return to the other all information which it possesses or
controls that belongs to the other, except that each may retain a copy for
record keeping purposes.
7.7 Mediation. (a) Notwithstanding anything in this Agreement to the
contrary, in the event that any dispute or alleged default arises with respect
to this Agreement, then prior to any termination of this Agreement, the
institution of litigation between the parties, or Lilly ceasing to manufacture
and supply Product to JMED, the parties shall mediate such dispute pursuant to
the provisions of paragraph (b) of this Section 7.7. Pending the outcome of
any such mediation, the provisions of this Agreement shall continue in full
force and affect and the parties shall continue to perform their obligations
hereunder.
(b) (i) A dispute shall be submitted to mediation by written notice to
the other party. In the mediation process, the parties
will try to resolve their differences voluntarily with the
aid of an impartial mediator, who will attempt to facilitate
negotiations. The mediator will be selected by agreement of
the parties. If the parties cannot agree on a mediator, a
mediator will be designated by the American Arbitration
Association ("AAA") or JAMS/Endispute at the request of a
party. Any mediator so designated must be acceptable to both
parties.
(ii) The mediation will be conducted as specified by the mediator
and agreed upon by the parties. The parties agree to discuss
their differences in good faith and to attempt, with the
assistance of the mediator, to reach an amicable resolution
of the dispute.
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(iii) The mediation will be treated as a settlement discussion and
therefore will be confidential. The mediator may not testify for
either party in any later proceeding relating to the dispute. No
recording or transcript shall be made of the mediation proceedings.
(iv) Each party will bear its own costs in the mediation. The
fees and expenses of the mediator will be shared equally by the
parties.
(v) The decision of the mediator shall be non-binding and the parties may
pursue other rights and remedies available at law or at equity.
SECTION 8. Restrictive Covenants.
8.1 Non-Compete. For and during the ten (10) year period following the
date of this Agreement (the "Restricted Period"), neither Lilly nor any of its
Affiliates shall directly or indirectly, within the United States, whether as a
shareholder, agent, partner, proprietor, joint venturer, consultant or
otherwise, of any business or entity, take part, participate or become
interested in, in any manner whatsoever, a business or organization which
directly or indirectly manufactures, distributes or sells in the United States,
methimazole products in competition with the Product; provided, however, that
nothing set forth herein shall prevent Lilly from (i) manufacturing Product for
sale to JMED, or (ii) manufacturing methimazole products for sale outside of
the United States, or (iii) acquiring a company which at the time of
acquisition, manufactures, markets or sells methimazole products; and provided
further that, the foregoing to the contrary notwithstanding, JMED acknowledges
and agrees that the following activities, events and conditions shall not be a
breach or violation of the Restrictive Covenants (hereafter defined) and JMED
shall not be entitled to injunctive or any other relief at law or in equity or
any other rights or remedies (including, but not limited to, those set forth in
Section 8.3) in connection with: Lilly or any of its Affiliates engaging
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in any merger, acquisition, joint venture, partnership, alliance, license,
research and/or development collaboration, or combination, arrangement or
relationship of any nature whatsoever (each, a "Relationship") in which the
other party or parties involved in such Relationships (each, a "Significant
Other") at that time already conducts or engages in, directly or indirectly,
anywhere in the United States, whether as a shareholder, agent, partner,
proprietor, joint venturer, consultant or otherwise, the manufacturing,
marketing, distributing or selling of methimazole products ("Methimazole
Business"), provided that the Methimazole Business (i) does not constitute a
material part of the overall business of the Significant Other prior to the
Relationship, and (ii) will not constitute a material part of the overall
business of either such Relationship or Lilly, as the case may be, following
consummation of the Relationship. Further, no provision herein contained
shall prevent or limit in any fashion the right and ability of Lilly or any of
its Affiliates to conduct or engage in the pharmaceutical benefits management
business, integrated disease management business, pharmaceutical mail order
business and any similar or related businesses. Notwithstanding the
foregoing, nothing set forth herein shall (i) impact or effect the exclusivity
of the license granted to JMED in the Licensing Agreement, nor (ii) permit
Lilly to manufacture or develop a generic methimazole product for sale in the
United States. Furthermore, and notwithstanding anything herein to the
contrary, Lilly covenants and agrees that for such period of time as Lilly is
required to manufacture Product for JMED pursuant to the provisions of this
Agreement, neither Lilly nor any of its Affiliates shall, directly or
indirectly, manufacture or develop a generic methimazole product for sale in
the United States.
8.2 Confidentiality. JMED shall treat as confidential the Technology
and all other information of Lilly of which JMED becomes aware (whether in
writing or orally or by sensory detection) in connection with this Agreement
(collectively, "Lilly Proprietary Information"). JMED shall neither disclose
Lilly Proprietary Information to any third party nor use Lilly Proprietary
Information for any purpose other than as set forth in this Agreement. Lilly
shall treat as confidential all information of JMED of which Lilly becomes
aware (whether in writing or orally
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or by sensory detection) in connection with this Agreement (collectively "JMED
Proprietary Information"). Lilly shall neither disclose JMED Proprietary
Information to any third party nor use JMED Proprietary Information for any
purpose other than as set forth in this Agreement.
Nothing contained herein will in any way restrict or impair either party's
(the "Using Party") right to use, disclose or otherwise deal with any
Proprietary Information which:
(a) at the time of disclosure is known to the public or thereafter becomes
known to the public by publication or otherwise through no fault of the
Using Party;
(b) the Using Party can establish was in its possession prior to the time of
the disclosure and was not obtained directly or indirectly from the other
party;
(c) is independently made available as a matter of right to the Using Party by
a third party who is not thereby in violation of a confidential
relationship with the other party;
(d) is developed by the Using Party independently of the Proprietary
Information received and the Using Party can establish such development;
or
(e) is information required to be disclosed by legal or regulatory process,
provided that the Using Party timely informs the other party and uses
reasonable efforts to limit the disclosure and maintain confidentiality to
the extent possible and permits the other party to intervene and contest
or attempt to limit the disclosure.
JMED shall obtain no right or license of any kind under the Lilly Proprietary
Information except as set forth in this Agreement.
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8.3 Equitable Remedies. (a) If a party (the "Breaching Party")
breaches, or threatens to commit a breach of, any of the provisions of Sections
8.1 or 8.2 hereof (the "Restrictive Covenants"), the other party (the
"Non-Breaching Party") shall have the following rights and remedies, each of
which shall be independent of the others and severally enforceable, and each of
which is in addition to, and not in lieu of, any other rights and remedies
available to the Non-Breaching Party at law or in equity: (i) the right and
remedy to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Non-Breaching
Party and that money damages would not provide an adequate remedy to the Non-
Breaching Party; (ii) the right and remedy to require the Breaching Party to
account for and pay over to the Non-Breaching Party, all compensation, profits,
monies, accruals, increments or other benefits derived or received by the
Breaching Party and/or by any other Person as the result of, or in any way
incident to any conduct or transactions constituting a breach of the
Restrictive Covenants; and/or (iii) the right to cease paying royalties or
other amounts due under this Agreement. It is further agreed that the amount
of any bond that the Non-Breaching Party may be required to post incident to
any equitable relief sought hereunder shall not exceed $5,000 and that said
amount shall be deemed reasonable and proper.
(b) Lilly acknowledges and agrees that the Restrictive Covenants are
reasonable in geographical and temporal scope and in other respects. If any
court determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions.
(c) If any court determines that any of the Restrictive Covenants, or
any part thereof, is unenforceable because of the duration or geographic scope
of such provision, such court
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shall have the power to reduce the duration or scope of such provision, as the
case may be, and, in its reduced form, such provision shall then be
enforceable.
(d) The Restrictive Covenants set forth herein shall survive the
termination of this Agreement but only if terminated by Lilly pursuant to
Section 7.2 hereof.
SECTION 9. Failure to Supply Product.
9.1 Due to Force Majeure. (a) For purposes of this Section 9.1:
(i) "Prior Level" shall mean the quantity of Product sold by Lilly in
the United States during the 365 days immediately preceding the date of this
Agreement, as measured by the quantity of bulk methimazole (in kilograms)
contained therein.
(ii) "Deal Year" shall mean the following:
Deal Year 1: March 19, 1996 - March 18, 1997
Deal Year 2: March 19, 1997 - March 18, 1998
Deal Year 3: March 19, 1998 - March 18, 1999
Deal Year 4: ▇▇▇▇▇ ▇▇, ▇▇▇▇ - ▇▇▇▇▇ ▇▇, ▇▇▇▇
(▇▇▇) "Gross Margin" shall mean the then current net selling price
at which the Product is made available to a JMED customer LESS: the then
current purchase price at which JMED purchases the Product from Lilly under this
Agreement.
(iv) "At Risk Amount" shall mean the following:
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In Deal Year 1: $13,000,000 LESS any amounts previously reimbursed to
JMED in any Deal Year pursuant to the Formula (as
hereinafter defined)
In Deal Year 2: $9,750,000 LESS any amounts previously reimbursed to
JMED in any Deal Year pursuant to the Formula
In Deal Year 3: $6,500,000 LESS any amounts previously
reimbursed to JMED in any Deal Year pursuant to the
Formula
In Deal Year 4: $3,250,000 LESS any amounts previously reimbursed to
JMED in any Deal Year pursuant to the Formula
(v) "Interrupted Period" shall mean the period of time during which
Lilly is unable to supply Product due to Force Majeure.
(vi) "Measurement Period" shall mean the six (6) month period
immediately preceding the Interrupted Period during which Product is supplied
by Lilly to JMED pursuant to the provisions of this Agreement (provided,
however, that if the Interrupted Period occurs during Deal Year 1, the
Measurement Period may include certain months prior to the date of this
Agreement during which Lilly sold Product in the United States).
(vii) "Historical Monthly Sales" shall mean the average monthly sales
of Product in the United States by JMED (or by Lilly if the inability to supply
Product occurs during Deal Year 1) during the Measurement Period.
(b) In the event that during any of the first four (4) Deal Years (i)
Lilly is unable, during any such Deal Year, to supply Product to JMED up to
(but not to exceed) the Prior Level as a result
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of an event of Force Majeure (as defined in Section 10.14), and (ii) as
a result of Lilly's inability to supply Product up to (but not to exceed) the
Prior Level for such Deal Year, JMED is unable to supply its customers with
Product, and (iii) JMED is otherwise in compliance with all of the material
terms and conditions of this Agreement and the Licensing Agreement, then the
"risk sharing" formula ("Formula") set forth in paragraph (c) below shall
apply:
(c) (i) If JMED is unable to supply Product to its customers for
thirty (30) days or less (the "Short Period"), then Lilly shall reimburse JMED
an amount equal to 50% of JMED's lost Gross Margin (net of any proceeds of
business interruption insurance received by JMED) as a result of JMED's
inability during such Short Period to supply Product to its customers up to
(but not to exceed) the Prior Level, as measured by bona fide written purchase
orders for the Product submitted to JMED by such customers, such amount
reimbursable by Lilly not to exceed the At Risk Amount for the Deal Year during
which the Short Period occurs.
(ii) If JMED is unable to supply Product to its customers for more
than thirty (30) days, then Lilly shall reimburse JMED an amount equal to 50% of
JMED's lost Gross Margin (net of any proceeds of business interruption
insurance received by JMED) as a result of JMED's inability to supply Product
to its customers during any part of one or more Deal Years as measured (A) in
the first thirty (30) days as set forth above in subparagraph (i), and (B)
thereafter based upon the Historical Monthly Sales of Product multiplied by the
number of months contained in the Interrupted Period, such amount reimbursable
by Lilly not to exceed the At Risk Amount for each such Deal Year during which
the Interrupted Period occurs.
(iii) The reimbursable amounts payable by Lilly pursuant to this
paragraph (c) shall be paid to JMED monthly during the Interrupted Period until
all amounts payable hereunder have been paid.
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(iv) The Formula shall never apply during any Deal Year after Lilly has
supplied to JMED in such Deal Year, Product equal to or greater than the Prior
Level.
(d) The parties hereto acknowledge that the Product is unique and that
JMED is entering into this Agreement and the Licensing Agreement on the
condition that Lilly will furnish Product to Lilly as set forth herein. As
such, in the event that Lilly is unable for the reasons hereinabove described
to supply Product to JMED as required by this Agreement, the parties have
agreed to a reimbursement to JMED as hereinbefore set forth, in addition to all
other rights and remedies available under this Agreement.
9.2 Due to Default. In the event that Lilly refuses or is unable or
unwilling to supply Product to JMED as required under this Agreement due to
reasons not constituting Force Majeure, then JMED shall be entitled to pursue
all of its rights and remedies available under this Agreement, and in addition,
during the period of such failure to supply Product, JMED may defer any
payments due and owing by JMED to Lilly pursuant to this Agreement, or the
Licensing Agreement until such time as Lilly resumes supplying Product to JMED
as required in this Agreement.
SECTION 10. Miscellaneous Provisions.
10.1 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither Lilly nor JMED may
assign any of its rights, duties or obligations hereunder without the prior
written consent of the other, which consent may be withheld in the other's sole
discretion. Nothing set forth in this Section 10.1 shall prevent or restrict
either JMED or Lilly from assigning its rights and obligations under this
Agreement without the consent of the other (i) to its Affiliates (subject to
the consent of the other which said consent shall not be unreasonably
withheld), or (ii) incident to the sale of all or substantially all of its
assets or stock, or (iii) incident to the merger or reorganization of said
party. No assignment of this Agreement or of any rights hereunder shall
relieve the assigning party of any of its obligations or liability hereunder.
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10.2 Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand, or mailed first class, postage prepaid,
by registered or certified mail, return receipt requested (notices shall be
deemed to have been given on the date received) as follows:
If to Lilly, as follows:
▇▇▇ ▇▇▇▇▇ and Company
Lilly ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President, North American Pharmaceutical Operations
With a copy to:
▇▇▇ ▇▇▇▇▇ and Company
Lilly ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
If to JMED, as follows:
▇▇▇▇▇ Medical Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
With a copy to:
▇▇▇▇▇▇ ▇. Chod, Esq.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇, P.C.
1800 Equitable Building
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
or in any case to such other address or addresses as hereafter shall be
furnished as provided in this Section 10.2 by any party hereto to the other
party.
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10.3 Waiver; Remedies. No delay on the part of Lilly or JMED in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of either Lilly or JMED of any right,
power or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder. The
indemnification provided for in Section 6.2 of this Agreement shall be the sole
remedy available for any Damages arising out of or in connection with this
Agreement, except for any rights or remedies which the parties hereto may
otherwise have in equity, in Section 7.7, in Section 8.3, in Section 9.1, in
Section 9.2, or as otherwise specifically provided in this Agreement or the
Licensing Agreement.
10.4 Entire Agreement. This Agreement (together with the Licensing
Agreement) and its appendices constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements or understandings of the parties relating thereto.
10.5 Amendment. This Agreement may be modified or amended only by
written agreement of the parties hereto.
10.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.
10.7 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Indiana excluding any choice of law
rules which may direct the application of the law of another state.
10.8 Captions. All section titles or captions contained in this
Agreement and in any appendix referred to herein or annexed to this Agreement
are for convenience only, shall not be deemed a part of this Agreement and
shall not affect the meaning or interpretation of this Agreement.
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10.9 No Third-Party Rights. No provision of this Agreement shall be
deemed or construed in any way to result in the creation of any rights or
obligation in any Person not a party to this Agreement.
10.10 Construction. This Agreement shall be deemed to have been
drafted by both Lilly and JMED and shall not be construed against either party
as the drafts person hereof.
10.11 Appendices. Each Appendix and other document attached hereto is
incorporated by reference and made a part of this Agreement.
10.12 No Joint Venture. Nothing contained herein shall be deemed to
create any joint venture or partnership between the parties hereto, and,
except as is expressly set forth herein, neither party shall have any right by
virtue of this Agreement to bind the other party in any manner whatsoever.
10.13 Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective
while this Agreement remains in effect, the legality, validity and
enforceability of the remaining provisions shall not be affected thereby, and
in lieu of each such illegal, invalid or unenforceable provision there shall be
added automatically as a part of the document a provision that is legal, valid,
and enforceable, and as similar in terms to such illegal, invalid or
unenforceable provision as may be possible while giving effect to the benefits
and burdens for which the parties have bargained hereunder.
10.14 Force Majeure. (a) If either party is prevented from
complying, either totally or in part with any of the terms or provisions set
forth herein, by reason of force majeure, including, by way of example and not
of limitation, fire, flood, explosion, storm, strike, lockout or other labor
dispute, riot, war, rebellion, accidents, acts of God, acts of governmental
agencies or instrumentalities, failure of suppliers (including, but not limited
to, shortages in bulk material) or any other external or non-negligent internal
cause or externally induced casualty beyond its
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reasonable control, whether similar to the foregoing contingencies or not, said
party shall provide written notice of same to the other party. Said notice
shall be provided within fifteen (15) working days of the occurrence of such
event and shall identify the requirements of this Agreement or such of its
obligations as may be affected, and to the extent so affected, said obligations
shall be suspended during the period of such disability. If any raw materials,
facility systems or capacity is used for both the Product and any other
products or purposes (collectively, "Competing Products"), any necessary
allocation shall be made as between Lilly's and its Affiliates' needs, JMED's
needs and the needs of any other party to whom Lilly has firm contractual
obligations on a pro rata basis based on the Competing Products' respective
percentage contributions to the total gross amount invoiced by Lilly and its
Affiliates to unrelated third parties for sales of the Competing Products in
the twelve (12) months preceding the date of the event constituting force
majeure. The party prevented from performing hereunder shall use reasonable
efforts to remove such disability, and shall continue performance whenever such
causes are removed. The party so affected shall give to the other party a good
faith estimate of the continuing effect of the force majeure condition and the
duration of the affected party's nonperformance. When such circumstances as
those contemplated herein arise, the parties shall discuss in good faith, what,
if any, modification of the terms set forth herein may be required in order to
arrive at an equitable solution.
(b) If the period of any previous actual nonperformance of Lilly
because of Lilly force majeure conditions plus the anticipated future period of
Lilly nonperformance because of such conditions will exceed an aggregate of one
hundred eighty (180) days within any twenty-four (24) month period, JMED may
terminate this Agreement by notice to Lilly. The termination of this Agreement
by JMED as set forth in this paragraph (b) shall not affect the license by
Lilly to JMED of the Technology pursuant to Section 2.8 of the Licensing
Agreement, which said license shall remain in full force and effect. In
addition, prior to such termination, at JMED's request, Lilly shall use
reasonable efforts to assist JMED in obtaining any all rights, licenses,
approvals and consents as may be necessary, as reasonably determined by JMED,
in order to enable JMED to manufacture, or have manufactured for it, the
Product in the United States. JMED shall reimburse Lilly for all of Lilly's
reasonable costs in connection therewith.
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(c) If the period of any previous actual nonperformance of JMED because
of JMED force majeure conditions plus the anticipated future period of JMED
nonperformance because of such conditions will exceed an aggregate of one
hundred eighty (180) days within any twenty-four (24) month period, Lilly may
terminate this Agreement by notice to JMED.
10.15 Survival of Representations. Each of the representations and
warranties made in this Agreement shall survive the execution hereof pursuant
to the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
▇▇▇▇▇ MEDICAL INDUSTRIES, INC. ▇▇▇ LILLY AND COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------- -------------------------
Title: Executive Vice President Title: President and Chief
------------------------ Operating Officer
------------------------
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SCHEDULES AND APPENDICES
TO
MANUFACTURING AGREEMENT
Schedules
Schedule 2.1 - Inventory
Appendices
Appendix A - Manufacturing Requirements Document
Appendix B - Transition Plan
Appendix C - Certificate of Analysis
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