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 000 Xxxxxx Xxxxxx,
Elizabeth, New Jersey(hereinafter referred to as "FHP") and PUREPAC
PHARMACEUTICAL CO., a Delaware corporation having its principal
office at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx (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.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile (000) 000-0000
with a copy to:
Services Liaison
FAULDING HOSPITAL PRODUCTS, INC.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile (000) 000-0000
To: PUREPAC
Chief Operating Officer
PUREPAC PHARMACEUTICAL CO.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile (000) 000-0000
with a copy to:
Services Liaison
PUREPAC PHARMACEUTICAL CO.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile (000) 000-0000
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/
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FAULDING HOSPITAL PRODUCTS, INC.
By: /s/
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