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EXHIBIT 10.45
CONFIDENTIAL TREATMENT REQUESTED AS TO
CERTAIN INFORMATION CONTAINED IN THIS
EXHIBIT 10.45 AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
EXECUTION COPY
MANUFACTURING, PACKAGING AND SUPPLY AGREEMENT
AMONG
INVERNESS MEDICAL INNOVATIONS, INC.,
INVERNESS MEDICAL SWITZERLAND GmbH,
UNIPATH, LTD.
AND
WARNER-LAMBERT COMPANY LLC
dated as of
JUNE 6, 2003
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MANUFACTURING, PACKAGING AND SUPPLY AGREEMENT
This
MANUFACTURING, PACKAGING AND SUPPLY AGREEMENT dated as of June
6,
2003, by and among INVERNESS MEDICAL
INNOVATIONS, INC., a Delaware corporation
having its principal office at 51 Sawyer
Road, Suite 200, Waltham, MA 02453,
("Innovations") for purposes of Sections
6.3, 8, 11 and 12 of this Agreement
only, INVERNESS MEDICAL SWITZERLAND GMBH, a
Swiss corporation, having its
principal office at Bundesplatz 10, 6300
Zug, Switzerland ("Inverness") for
purposes of Sections 6.2, 11 and 12 of this
Agreement only, Unipath, Ltd., a
United Kingdom company with its principal
office at Priory Business Park,
Bedford, MK 44 3UP ("Unipath") and
WARNER-LAMBERT COMPANY LLC, a Delaware
limited liability company, having its
principal office at 201 Tabor Road, Morris
Plains, New Jersey 07950
("Warner-Lambert").
WITNESSETH:
WHEREAS,
Warner-Lambert desires to have Unipath manufacture, package and
supply to Warner-Lambert, Warner-Lambert's
requirements of early pregnancy test
kits complying with the Specifications
("EPT Product") for resale in the
Territory (defined below) under the terms
and conditions hereinafter set forth,
and
WHEREAS, Unipath
is willing to do so under the terms and conditions
hereinafter set forth, and
WHEREAS, each of
Innovations and Inverness are direct or indirect parents
of Unipath and expect to derive substantial
benefit from Unipath's execution of
and performance under this Agreement.
NOW, THEREFORE,
in consideration of these premises and the mutual
covenants, agreements, representations and
warranties herein contained, the
parties hereby agree as follows:
1. DEFINITIONS
1.1.
"AFFILIATE" shall
mean, with respect to any Person, any other Person
controlling, controlled by or under direct
or indirect common control with such
Person. A Person shall be deemed to control
a corporation (or other entity) if
such Person possesses, directly or
indirectly, the power to direct or cause the
direction of the management and policies of
such corporation (or other entity),
whether through the ownership of voting
securities, by contract or otherwise.
1.2.
"AGREEMENT" shall mean
this Manufacturing, Packaging and Supply
Agreement and all Exhibits and Schedules
attached hereto, as the same may be
amended or otherwise modified from time to
time pursuant to the terms set forth
herein.
1.3.
"ANNUAL MINIMUM" shall
have the meaning set forth in Section 2.13.
1.4.
"BUSINESS DAY" shall
mean any day other than Saturday, Sunday or any
day on which the banks located in New York
are authorized or obligated to be
closed.
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1.5.
"CGMP" shall mean all
applicable standards and Laws relating to
manufacturing practices for products
(including ingredients, intermediates, bulk
and finished products) formulated by any
Governmental Authority having
jurisdiction in the form of Laws,
regulations, guidelines, advisory opinions and
compliance policy guides and current
interpretations of the authority agency, as
the same may be updated, supplemented or
amended from time to time.
1.6.
"CONTRACT YEAR" shall
have the meaning set forth in Section 2.13.
1.7.
"ENVIRONMENTAL LAWS"
shall mean all laws, rules, ordinances, codes,
regulations, governmental, administrative
or judicial orders or decrees or other
legal requirements of any kind, whether
currently in existence or hereafter
promulgated, enacted, adopted or amended,
relating to pollution, contamination
of the environment, safety or protection of
human health and environment
(including ambient air, surface water,
groundwater, land or subsurface strata)
and the handling, treatment, transportation
or disposal of Waste, including the
Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42
U.S.C. 9601 ET SEQ.; the Resource
Conservation and Recovery Act of 1976, 42
U.S.C. 6901 ET SEQ.; the Federal Water
Pollution Control Act, 33 U.S.C. 1251 ET
SEQ.; the Clean Air Act, 42 U.S.C. 7401 ET
SEQ.; Occupational Safety and Health
Act, 29 U.S.C. 651 ET SEQ.; any state
counterparts of the foregoing; any rules,
regulations, or guidances promulgated under
the foregoing; and any other laws
and regulations related to emissions,
spills, leaks, discharges, releases and
threatened releases of substances subject
to regulation thereunder.
1.8.
"ENVIRONMENTAL LOSSES"
shall mean any and all fines, penalties,
costs, liabilities, damages, losses or
expenses (including sampling, monitoring
or remediation costs, liabilities based on
a finding of "successor" liability,
reasonable attorneys', consultants' or
engineering fees and disbursements, costs
of defense and interest expense) incurred
by Warner-Lambert or an Affiliate of
Warner-Lambert or for which Warner-Lambert
or an Affiliate of Warner-Lambert is
liable or obligated pursuant to any
Environmental Law (a) arising out of the
operation, ownership or control of
Unipath's facilities, the facilities of any
Affiliates of Unipath, or the facilities of
any subcontractors of Unipath or its
Affiliates or (b) arising from the
manufacturing, generation, processing,
storage, transportation, distribution,
treatment, disposal or other handling of
Product or materials used in the
manufacture and packaging of the Product, or
associated by-product, raw materials,
intermediates, Wastes, Hazardous
Materials, emissions, releases, spills,
leaks or discharges, or returned
Product, by Unipath, Affiliates of Unipath,
or subcontractors of Unipath or its
Affiliates, or their officers, directors,
employees, agents or contractors.
1.9.
"EPT PRODUCT" shall
have the meaning set forth in the recitals
hereto.
1.10. "FACILITY"
shall mean Unipath's manufacturing facility located at
Priory Business Park, Bedford, MK 44 3UP,
and, subject to Warner-Lambert's prior
qualification and written approval,
approval not to be unreasonably withheld,
such other facilities to be used by Unipath
or its Affiliates in the
manufacture, packaging and storage of
Product or materials utilized in the
manufacture and packaging of Product
hereunder.
1.11. "FIRM
ORDER" shall have the meaning set forth in Section 2.4.3.
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1.12. "FIRM
ORDER PERIOD" shall have the meaning set forth in Section
2.4.3.
1.13.
"GOVERNMENTAL AUTHORITY" shall mean any duly authorized court,
tribunal, arbitrator, agency, commission,
official or other instrumentality of
any federal, state, province, county, city
or other political sub-division,
domestic or foreign.
1.14. "HAZARDOUS
MATERIALS" shall mean any pollutant, contaminant,
hazardous or toxic substance, constituent
or material and other wastes or other
substances regulated under any
Environmental Law and may include Product
properly rejected pursuant to Section 4.12
hereof, but shall not include any
other returned Product.
1.15. "HAZARDOUS
WASTE" shall mean waste arising from the manufacture and
packaging of the Product that is defined as
"Hazardous" by applicable federal,
state, provincial or local laws, rules or
regulations and may include Product
properly rejected pursuant to Section 4.12
hereof, but shall not include any
other returned Product.
1.16.
"IMPROVEMENTS" shall mean (a) any new or modified product that
performs the same function as the Product
in a better or more economical way or
(b) any new or modified product that
performs the same function as the Product
and costs less to manufacture than the
Product.
1.17.
"INNOVATIONS" shall have the meaning set forth in the preamble
hereto.
1.18.
"INTELLECTUAL PROPERTY" means the Patents and Know-How.
1.19.
"INVERNESS" shall have the meaning set forth in the preamble
hereto.
1.20. "KNOW-HOW"
means any current or future manufacturing processes and
information related thereto (including,
without limitation, manufacturing, and
inventory ordering lead-times, and
procedures and vendor and other records),
trade secrets, designs, industrial models,
technology, technical information or
data, manufacturing, engineering, and
technical drawings, know-how,
methodologies, formulae, concepts,
inventions, improvements, copyrights,
clinical data and FDA 510(k) filings
related to the registration, supply
marketing, use or sale of the Product.
1.21. "LAWS"
shall mean any law, statute, rule, regulation, guideline
(including cGMP), ordinance or other
pronouncement of any Governmental Authority
having the effect of law in the United
States, any foreign country or territory,
or any domestic or foreign state, province,
county, city or other political
sub-division, including any Environmental
Law.
1.22. "PATENTS"
means the patents and patent applications (and the related
resulting patents) listed on Exhibit B to
this Agreement and any addition,
continuation, continuation-in-part,
division, reissue, extension, or patent term
extension of, and any substitute
application for, any such patent or patent
application and any other current or future
patents, patent applications or
patent rights related to the Product or the
registration, supply, marketing,
issue or sale of the Product.
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1.23. "PERSON"
shall mean any individual or corporation, company,
partnership, trust, incorporated or
unincorporated association, joint venture or
other entity of any kind.
1.24. "PRICE"
shall mean the price to be charged by Unipath for Product
supplied hereunder, as set forth on Exhibit
C, as the same may be amended or
otherwise modified from time to time
pursuant to the terms set forth herein.
1.25. "PRODUCT"
shall mean the EPT Product in finished and packaged form.
1.26. "PRODUCT
SUPPLY DATE" shall have the meaning specified in Section
2.4.1.
1.27. "PRODUCT
UNIT" shall mean each e.p.t(R) brand early pregnancy test
stick purchased by Warner - Lambert from
Unipath.
1.28. "PRODUCT
WRITINGS" shall mean text, writings, artwork and documents,
including without limitation, text and
artwork for the Product, Product
packaging and Product inserts, created by
or on behalf of Warner-Lambert for the
Product.
1.29. "QUALITY
AGREEMENT" shall have the meaning set forth in Section 4.14.
1.30. "RECALL",
with respect to any Product, shall mean a "recall",
"correction" or "market" withdrawal, as
those terms are defined in 21 CFR 7.3,
as the same may be amended from time to
time, and shall include any post-sale
warning or mailing of information regarding
such Product, including those
warnings or mailings described in 21 CFR
200.5.
1.31. "RECEIVING
POINT" shall have the meaning set forth in Section 3.2.
1.32. "RELEASE"
shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge,
dispersal, leaching or migration into
the indoor or outdoor environment,
including, without limitation, the movement
of Hazardous Materials through the ambient
air, soil, subsurface water,
groundwater, wetlands, lands or subsurface
strata.
1.33. "SPECIAL
WASTE" shall mean waste arising from the manufacture and
packaging of the Product hereunder,
including labeling that contains, or has
come into contact with, the Product or raw
materials, including Product properly
rejected pursuant to Section 4.12 of this
Agreement, rejected or unusable raw
materials, disposable manufacturing
equipment (including filters used in
manufacturing and packaging), wash rinse
and previously used or discarded
protective clothing. Special Waste does not
include Hazardous Waste or
wastewater which is discharged under a
National Pollutant Discharge Elimination
System Permit or discharged to a publicly
owned treatment works or returned
Product not properly rejected pursuant to
Section 4.12 hereof.
1.34.
"SPECIFICATIONS" shall mean the specifications for the raw
materials
and packaging materials used in the
manufacture and/or packaging of the Product
and the specifications for the manufacture,
processing and packaging of the
Product, including all formulae, Know-How,
materials requirements, standards of
quality control, quality assurance and
sanitation, as mutually agreed upon in
writing by Warner-Lambert and Unipath.
Final
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Specifications for the Product, as mutually
agreed upon in writing by
Warner-Lambert and Unipath, are referenced
in Exhibit D. If Specifications have
not yet been finalized as of the date
hereof, as noted on such Exhibit, the
parties shall finalize such Specifications
by written agreement as soon as
reasonably practicable after the date
hereof.
1.35. "START-UP
ACTIVITIES" shall have the meaning set forth in Section 2.1
and Exhibit A hereof.
1.36. "TERM"
shall have the meaning set forth in Section 12.1 hereof.
1.37. "TERM
MINIMUM" shall have the meaning set forth in Section 2.13.
1.38.
"TERRITORY" means the United States, its territories and
possessions.
1.39. "UNIPATH"
shall have the meaning set forth in the preamble hereto.
1.40.
"WARNER-LAMBERT" shall have the meaning set forth in preamble
hereto.
1.41. "WASTE"
shall mean all wastes which arise from the manufacture and
packaging of Product hereunder including
Hazardous Waste and Special Waste.
The definitions
in this Section 1 shall apply equally to both the singular
and plural forms of the terms defined. The
words "include", "includes" and
"including" shall be deemed to be followed
by the phrase "without limitation".
All references herein to Sections and
Exhibits shall be deemed references to
Sections of this Agreement and Exhibits to
this Agreement unless the context
shall otherwise require.
2. START-UP ACTIVITIES; SUPPLY OF
PRODUCT; FIRM ORDERS AND REPORTS.
2.1.
START-UP ACTIVITIES.
Unipath hereby represents, warrants and agrees
that:
(a)
Unipath shall comply with and complete all manufacturing and
packaging
start-up activities with respect to the
Product, including the manufacture or
ordering of all Product materials, the
Product manufacturing and packaging
trials, validation protocols, validation
activities, written validation reports,
the activities listed in Exhibit A hereto
on the dates listed therein and any
other activities agreed to be performed by
Unipath..
(b) Any
protocols and reports prepared by Unipath relating to the
Product
(including any validation reports) shall be
subject to Warner-Lambert's prior
review and approval, such approval not to
be unreasonably withheld.
(c)
Unipath shall permit a reasonable number of Warner-Lambert
employees
(such number to be mutually agreed by
Unipath and Warner-Lambert) to observe and
review the Start-Up Activities at the
Facility during normal business hours and
on reasonable notice subject to
Warner-Lambert employees' compliance with
Facility rules and regulations regarding
security, health and safety. Unipath
and Warner-Lambert have jointly developed
or shall jointly develop a project
plan to determine the timeline for the
ordering and receipt of Product packaging
materials
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for the Product. The validation reports
produced hereunder shall be
deemed confidential information of Unipath
and Warner-Lambert hereunder and
shall not be disclosed by either party to
any third party, except as permitted
under Section 11 hereof.
(d) The
activities described in this Section 2.1 are collectively
referred
to herein as the "Start-Up Activities".
2.2.
PURCHASE AND
INSTALLATION OF EQUIPMENT, MOLDS AND TOOLING. Unipath
shall be responsible for purchasing,
installing, qualifying and maintaining at
its Facility any and all new or used
equipment, molds, tooling and/or
modifications to existing equipment, molds
and/or tooling necessary for the
manufacturing, packaging, labeling and
shipment of Product hereunder. All costs
and expenses associated with such purchase,
installation, qualification and
maintenance shall be borne by Unipath. To
the extent Warner-Lambert purchases or
otherwise pays for any equipment, molds or
tooling for the manufacture or
packaging of Product, all such equipment,
molds and tooling shall be the
property of Warner-Lambert. Unipath shall
use such tooling only in connection
with the manufacture and packaging of the
Product under this Agreement and shall
not modify such tooling without the consent
of Warner-Lambert. The installation,
qualification and maintenance of all
equipment, molds and tooling shall be
conducted in accordance with all applicable
Laws, and any relevant
Specifications.
2.3.
AGREEMENT TO SUPPLY.
During the Term of this Agreement Unipath shall
manufacture, package and supply the Product
to Warner-Lambert in accordance with
terms of this Agreement.
2.4.
FORECAST ; FIRM
ORDERS; CHANGES TO FIRM ORDERS.
2.4.1 Unipath
will first deliver Product to Warner-Lambert, on June 6, 2004
(the "Product Supply Date").
2.4.2 Beginning
six (6) months after the date of this Agreement and
continuing on each calendar month during the term of this
Agreement,
Warner-Lambert shall provide Unipath with written forecast of
its
estimated
monthly purchases of the Product for the twelve (12) month
period commencing with the calendar month following the month
in
which such forecast is delivered to Unipath (except that in the
case
of forecasts delivered prior to May 2004, such forecasts shall be
for
the twelve (12) month period beginning on the Product Supply
Date).
Such forecasts shall represent Warner-Lambert's commercially
reasonable, good-faith estimate of its Product requirements
from
Unipath for such twelve (12) month period in light of then
existing
conditions. Except as provided in Section 2.4.3, such forecasts
are
for the convenience of Unipath only, shall not constitute firm
purchase or shipping orders and shall not be binding upon, or
create
any obligation or liability with respect to, Warner-Lambert or
Unipath.
2.4.3 Beginning
with the forecast delivered in May 2004, at the time each
written forecast is delivered by Warner-Lambert to Unipath
pursuant
to Section 2.4.2, the first three (3) months of such forecast
(the
"Firm Order Period") shall be deemed
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a firm order (a "Firm Order") for the Product, which Firm Order
shall
specify actual quantities and delivery dates for the Product for
the
Firm Order Period. Quantities of Product delivered pursuant to a
Firm
Order shall not vary more than plus or minus five percent ( 5%)
of
such Firm Order. Unipath shall deliver the Product on the
delivery
date specified by Warner-Lambert in the relevant Firm Order or up
to
fifteen (15) Business Days prior to such delivery date.
Warner-Lambert shall be obligated to pay Unipath in accordance
with
Section 3.1, for quantities of Product produced and delivered
by
Unipath in accordance with the instructions contained in
Warner-Lambert's Firm Orders, subject to any exceptions to
Warner-Lambert's obligation to pay for such Product contained in
this
Agreement.
2.4.4 Once a
Firm Order is submitted to Unipath with respect to any given
Firm
Order Period, Warner-Lambert may reasonably vary that Firm
Order
by providing at least five (5) days' written notice to Unipath
prior
to the beginning of the month for which such Firm Order is to
be
varied during such Firm Order Period; PROVIDED, HOWEVER, that
Unipath
shall have thirty (30) days from the day of such variance notice
to
deliver the amount of Product that is in excess of the amount
ordered
by Warner-Lambert pursuant to the original Firm Order.
Notwithstanding the immediately preceding sentence, in the
event
Warner-Lambert wishes to increase a Firm Order by greater than
twenty-five percent (25%), Unipath is only required to make
reasonable
commercial efforts to produce such additional volume of
Product for Warner-Lambert.
2.4.5 If
Warner-Lambert decreases the production volumes set forth in
Warner-Lambert's Firm Orders, Warner-Lambert shall be responsible
for
the reasonable cost of materials for the Product purchased by
Unipath
and in accordance with Warner-Lambert's Firm Orders; PROVIDED,
HOWEVER, that Warner-Lambert shall not be responsible for the
reasonable cost of materials for (i) any materials in excess of
a
ninety (90) day supply unless such excess supply was
specifically
authorized in writing by Warner-Lambert or (ii) any materials
that
are or will be subsequently used by Unipath. At
Warner-Lambert's
option, Warner-Lambert may instruct Unipath to utilize such
materials
in the future supply of Product. In addition, Unipath shall use
reasonable efforts to utilize such materials in the supply of
Product
so as to minimize the amount of such materials that remain
unused.
2.5.
STANDARD FORMS. In
ordering and delivering Product, Warner-Lambert
and Unipath may employ their standard
forms, but nothing in those forms shall be
construed to modify or amend the terms of
this Agreement, and, in the case of
any conflict herewith, the terms of this
Agreement shall control.
2.6.
QUANTITATIVE DEFECTS.
Warner-Lambert shall inform Unipath in writing
of any claim relating to quantitative
defects in shipments of Product within
thirty (30) days following actual receipt
of such shipments by Warner-Lambert,
and Warner-Lambert shall provide to Unipath
copies of any appropriate documents
relating to such defects that
Warner-Lambert may
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have in its possession. Unipath shall, at
its own expense, provide
Warner-Lambert with any missing quantities
of such Product as soon as reasonably
possible after receipt of notice from
Warner-Lambert. Warner-Lambert shall only
be obligated to pay for actual quantities
of Product received by Warner-Lambert.
Any claim for a quantitative defect which
is not made within such thirty (30)
day period shall be deemed to have been
waived by Warner-Lambert.
2.7.
INVENTORY; CARRYING
CHARGES. Unipath will keep adequate inventories
of Product materials on hand or with
suppliers to accommodate variations in
quantities and packaging that may be
reasonably required by Warner-Lambert
hereunder, consistent with Section 2.4
above. In the event Unipath is required,
pursuant to this Agreement, to hold
inventory of non-active raw materials and/or
Product for more than 180 days, Unipath
shall have the right to charge
Warner-Lambert for reasonable inventory
carrying charges (not to exceed 9% of
Unipath's cost of non-active raw materials
in the held inventory) to compensate
Unipath for the carrying cost of such
inventory, if the existence of such
inventory arose as a result of a change in
sales forecast by Warner-Lambert.
Such inventory carrying charges shall be
periodically invoiced to
Warner-Lambert, as incurred, together with
suitable back up information
evidencing the carrying charges and
Warner-Lambert shall pay such invoices
within thirty (30) days after receipt.
2.8.
NO THIRD PARTY
CONFLICTS. Unipath shall not manufacture or process
goods for itself or a third party where to
do so will, as a consequence, delay
delivery of Warner-Lambert's identified
requirements of Product (including any
reasonable increases in Warner-Lambert's
delivery requirements thereof pursuant
to the terms of Section 2.4 hereof).
2.9.
PRODUCT SAMPLES.
Unipath shall provide Warner-Lambert with samples of
the Product (other than retention samples)
promptly upon request. Such Product
samples shall be shipped to Warner-Lambert
in accordance with the provisions set
forth in Section 3.2 hereof, and
Warner-Lambert shall pay the Price for such
Product in the manner described in Section
3.3.
2.10.
ALTERNATIVE SUPPLY. Notwithstanding the provisions of Section
2.11,
if at any time during the Term of this
Agreement Unipath does not for a period
of thirty (30) days or more, or anticipates
that it will not, fill the total
monthly Product volume required by
Warner-Lambert's forecasts, or the Product
supplied by Unipath does not meet or comply
with the Specifications for a period
of thirty (30) days or more, Unipath must
(a) procure from a third party
quantities of Product sufficient to replace
any quantities of Product which
Unipath cannot or will not supply, or (b)
otherwise provide for an alternative
source of Product. Unipath shall promptly
notify Warner-Lambert in the event
that it cannot or will not meet forecasted
volumes, or in the event Product does
not meet or comply with Specifications.
Unipath shall use its best efforts with
Warner-Lambert to resolve such problems
during the thirty (30) day period.
Unipath and its Afiliates shall cooperate
with, and supply all reasonable
technical assistance, including, without
limitation, technical personnel, at
Unipath's expense, to any alternate
supplier, and shall assist in the disclosure
of Intellectual Property to such supplier
and such supplier shall have complete
access to and use of such Intellectual
Property during the period Unipath shall
be unable or unwilling to supply Product,
or the Period during which the Product
fails to meet Specifications; PROVIDED THAT
any alternate supplier to whom
Unipath or its Affiliates must disclose
Intellectual Property in accordance with
this Section 2.10, shall be required to
execute a
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confidentiality agreement prior to
disclosure. If Unipath does not provide an
acceptable alternative source of supply
within 60 days of the first date (x)
Unipath was unable or unwilling to supply
Product, or (y) the Product failed to
meet Specifications, in addition to any
other rights it may have hereunder or at
law, Warner-Lambert may terminate this
agreement in accordance with Section
12.2. Each of Inverness and Unipath shall
indemnify Warner-Lambert, its
Affiliates and their directors, officers,
agents, consultants and employees for
the aggregate losses, including an increase
in the price paid by Warner-Lambert
to a third-party supplier of the substitute
product in connection with the
exercise of its rights under this SECTION
2.10. The parties agree that the
indemnification procedures set forth in
Section 8.4 shall be followed by the
parties with respect to the foregoing
indemnification.
2.11. *****
2.12. UNIPATH
RESTRICTION ON MANUFACTURE. Unipath shall, and shall cause
its Affiliates to, comply with applicable
Law as it applies to manufacturing,
marketing, packaging or selling products
(i) similar to the Product using all or
any portion of Warner-Lambert's customized
design format, or (ii) using
packaging and/or tradedress materials that
make comparisons to or are
substantially similar to the Product and/or
Warner trademarks, packaging or
tradedress materials. Warner-Lambert has
reviewed the products and packaging
listed on Schedule A attached hereto, in
the form provided by Inverness as of
the date hereof, and acknowledges that none
of such products or packaging
infringe the tradedress of the Product or
Warner-Lambert's trademarks. Any claim
or dispute arising out of or in connection
with this Section 2.12 shall be
referred to and finally resolved by binding
arbitration under the Commercial
Arbitration Rules of the American
Arbitration Association ("AAA"), which Rules
are deemed to be incorporated by reference
into this clause. The number of
arbitrators shall be three, all of which
shall be neutral. The arbitrators shall
be selected from the AAA's National roster
of Arbitrators through selection
procedures administered by the AAA within
15 Business Days from commencement of
the arbitration. The place of arbitration
shall be New York, New York. The
language to be used in the arbitral
proceedings shall be English. The tribunal
shall apply the substantive law of New
York, except that the interpretation and
enforcement of this arbitration provision
shall be governed by the Federal
Arbitration Act. Prior to commencement of
arbitration, emergency relief is
available from any court to avoid
irreparable harm. The award of the arbitration
tribunal shall be final and judgment upon
such an award may be entered in any
competent court for judicial acceptance of
such an award and an order of
enforcement. Until the judgment of the
arbitration tribunal has been rendered,
neither party may claim that there has been
a breach of this Agreement based on
Section 2.12.
2.13. MINIMUM
PURCHASE REQUIREMENTS; PRICE REDUCTIONS; VOLUME DISCOUNTS.
***** REPRESENTS TEXT OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL
TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION
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(a) *****
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ANNUAL PERIOD
PURCHASE REQUIREMENT
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<C>
First Contract Year
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Second Contract Year
******
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Third Contract Year
******
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Fourth Contract Year
******
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Fifth Contract Year
******
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(b) Subject to
Section 12, at the end of the Fifth Contract Year,
Warner-Lambert shall pay Unipath an amount
equal to ****** multiplied
by the number that is equal to ******
million less the aggregate number of
Product units purchased by Warner-Lambert
during the Term (the "Term Minimum").
(c) Any minimum
purchase payment due under this Section for a Contract Year
shall be calculated by Unipath within sixty
(60) days of the end of the relevant
Contract Year and invoiced to
Warner-Lambert and shall be paid by Warner-Lambert
in the same manner as invoices issued
pursuant to Section 3.3.
(d) As of the
date all Warner-Lambert purchases made pursuant to this
Agreement add up to ****** million Product
units, the Price of the Product shall
be reduced for the remainder of the Term as
set forth in Section II of Exhibit
C.
(e) If
Warner-Lambert purchases Product units from Unipath, an Affiliate
of
Unipath or any party licensed by Unipath or
its Affiliates to manufacture or
sell the Product, at or above the volumes
set forth below during any Contract
Year, the Product Price set forth on
Exhibit C shall be reduced for all Product
purchased during such Contract Year in
accordance with the table below. Warner -
Lambert agrees to order only the amount of
Product it believes in good faith is
****** REPRESENTS TEXT OMITTED PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT.
THE OMITTED MATERIAL HAS BEEN FILED
SEPERATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
11
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necessary to meet demand from its
customers, and shall not order additional
Product in order to qualify for the volume
discounts provided for in this
Section 2.13(e).
<Table>
<Caption>
PRODUCT UNITS PURCHASED
PRICE REDUCTION
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<C>
******
******
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******
******
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******
******
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******
******
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</Table>
3. PRICE; PAYMENT; SHIPPING
INSTRUCTIONS.
3.1.
DETERMINATION OF
PRICES; COST OF MATERIALS. The Price to be paid to
Unipath by Warner-Lambert for the
manufacture, packaging and supply of the
Product, shall be as set forth in Exhibit
C, subject to the adjustments
described elsewhere in this Agreement. Such
Price includes any costs relating to
Unipath's compliance with the quality
provisions of this Agreement and the
provisions of the Quality Agreement.
*****
3.2.
SHIPPING INSTRUCTIONS;
RISK OF LOSS. Unipath shall deliver Product
ordered by Warner-Lambert pursuant to
Section 2.4, CIP (named destination) as
defined in the Incoterms 2003 to
Warner-Lambert's designated facilities (the
"Receiving Point"). Unipath shall be
responsible for designating the carrier(s)
and negotiating terms for shipment of the
Product and shall bear the cost of
freight, including shipping insurance,
relevant custom duties, import and export
fees, taxes and all other charges
applicable to the Product until it is
delivered by Unipath to the Receiving
Point. Warner-Lambert shall assume all
risk of the loss for the Product upon
delivery by a carrier to the Receiving
Point. Unipath shall be responsible for and
hereby agrees to store and ship
Product consistent with the Product's
labeling until delivered to the Receiving
Point. Warner-Lambert shall be responsible
for and hereby agrees to store and
ship Product consistent with the Product's
labeling after it is delivered to the
Receiving Point.
3.3.
INVOICES; QUANTITIES.
Unipath shall submit invoices to Warner-Lambert
for all shipments of Product hereunder upon
delivery of such Product to
Warner-Lambert's loading dock (which
invoices shall be directed by Unipath to
Warner-Lambert's Accounts Payable
Department at such locations as Warner-Lambert
may instruct from time to time), and such
invoices shall be payable within
thirty (30) days of the date on which the
invoice submitted by Unipath is
received by Warner-Lambert. Invoices shall
be payable in U.S. dollars
****** REPRESENTS TEXT OMITTED PURSUANT TO
A REQUEST FOR CONFIDENTIAL TREATMENT.
THE OMITTED MATERIAL HAS BEEN FILED
SEPERATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
12
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3.4.
TAXES. The Prices set
forth in Exhibit C shall include sales, use,
consumption, or excise taxes of any taxing
authority. Unipath and its Affiliates
hereby indemnify Warner-Lambert against,
and shall reimburse Warner-Lambert for,
any expenditure Warner-Lambert may be
required to make as a result of Unipath's
failure to pay such taxes or other
governmental charges to the relevant taxing
authorities.
4. QUALITY CONTROL; ACCESS; INSPECTION;
SAMPLES.
4.1.
SPECIFICATIONS.
Unipath shall supply the Product to Warner-Lambert in
accordance with the Specifications which
may be modified or changed only by the
mutual written agreement of the parties. To
the extent that such modification or
change results in an increase or decrease
in the cost of manufacturing any
Product, the parties shall jointly examine
and mutually agree upon the
consequences thereof and shall make an
appropriate increase or decrease to the
purchase price of such Product arising from
such modification or change. At
least four (4) weeks prior notice to the
other party is required for any
requested Specifications change; provided,
however, that if any requested
Specifications change requires additional
regulatory approval(s), the
implementation of such requested change
shall in no event be required until four
(4) weeks after such approval(s) have been
obtained. Warner-Lambert shall not
withhold consent to Specification changes
proposed by Unipath for the primary
purpose of terminating this Agreement.
4.2.
STORAGE REQUIREMENTS.
Unipath shall store all materials and Product
in accordance with the Specifications in a
clean and dry area, in facilities
with insect and rodent pest controls to
assure no contamination. Pest control
measures by Unipath must include adequate
cleaning of the facility, control of
food and drink, protection of Product from
the environment, monitoring of flying
and crawling pest, and logs detailing
findings and actions taken. Unipath's pest
control program must be described in
written procedure. Failure to maintain an
adequate pest control program shall
constitute a material breach of this
Agreement. Storage and handling of all
materials and Product shall be in
accordance with the provisions of all
applicable Laws and the quality control
programs and standards set forth in the
Specifications. Bulk Product and other
materials utilized by Unipath in connection
with the manufacturing, processing
and packaging of the Product shall be used
by Unipath on a first in, first out
basis and shall not be used by Unipath
beyond the shelf life required under
applicable Laws or as designated in the
Specifications.
4.3.
NONCONFORMING
MATERIALS. Unipath shall not use any packaging or other
Product materials that do not comply with
the Specifications or Laws. Unipath
shall promptly contact Warner-Lambert, c/o
Warner-Lambert's Quality Assurance
Department or such other persons or
departments as Warner-Lambert may instruct,
in the event that Unipath anticipates
making changes to any such material or in
the event Unipath considers any such
material to be nonconforming or
unacceptable. If Unipath uses any
non-conforming Product material without prior
written approval by Warner-Lambert, Unipath
shall be responsible for all losses,
costs and expenses suffered or incurred by
Warner-Lambert as a result of such
use and any expenses incurred by Unipath in
the correction thereof regardless of
any involvement Warner-Lambert may have had
in connection with such material
including supplying or purchasing Product
materials or designating approved
suppliers; PROVIDED THAT, except for
visually observable
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defects, Unipath shall have no
responsibility for any non-conformity of Product
materials at the time received by
Unipath.
4.4.
QUALITY TESTS AND
CHECKS. Unipath shall perform all in-process and
finished product tests or checks required
by the Specifications or applicable
Laws. For purposes of this Agreement, such
tests shall be considered routine and
shall be performed at Unipath's expense;
PROVIDED THAT, in the event that
Warner-Lambert requests any tests in
addition to the foregoing, Warner-Lambert
shall compensate Unipath for the cost of
such additional tests in accordance
with a method to be mutually determined.
All tests and test results shall be
performed, documented and summarized by
Unipath in accordance with the
Specifications and applicable Laws. All
costs associated with changes to the
Specifications made as a result of changes
to applicable Laws after the date
hereof which affect the Specifications and
which are mutually agreed by the
parties shall be pwassed on to
Warner-Lambert on a dollar-for-dollar basis.
4.5.
PRODUCTION CODES;
RECORDS. Unipath shall maintain detailed records on
Product material usage and finished Product
production, including code dates and
shipping information relating to Product,
in order that Product can be easily
traced in case of a Recall. Such records
shall also comply with any additional
instructions issued by Warner-Lambert and
mutually agreed by the parties.
Unipath's Product records shall be
sufficient such that Unipath shall be capable
of responding to Product inquiries by
Warner-Lambert within one (1) Business Day
of notification, including providing the
code date and the location of the
Product in question.
4.6.
RECALLS. Unipath must
comply and assist with any Recall initiated by
Warner-Lambert. Unipath may not initiate a
Recall if Warner-Lambert objects to
such Recall, except to the extent, in the
reasonable opinion of Unipath's
counsel, Unipath is required to do so by
law. Warner-Lambert shall have sole
responsibility for managing any Recall of
the Product, PROVIDED THAT,
Warner-Lambert shall consult with Unipath
prior to initiating any Recall for
which it appears that Unipath might bear
the expense pursuant to the last
sentence of this Section 4.6. All
communications with parties other than the
United States Food and Drug Administration,
in connection with any Recall, shall
come solely from Warner-Lambert. Upon
receiving from any authority having
jurisdiction any direction to Recall any
Product from the market, the receiving
party shall immediately notify the other
party in accordance with the terms
hereof. To the extent any Recall results
solely from the negligence, willful
misconduct or breach of this Agreement by
Unipath, the cost of implementing any
such Recall shall be borne by Unipath.
4.7.
MAINTENANCE OF
FACILITY AND EQUIPMENT. Unipath shall maintain all
equipment, tooling and molds used in the
manufacture, packaging and supply of
Product hereunder in good operating
condition and shall maintain the Facility
and such equipment, tooling and molds in
accordance with, or shall exceed, all
requirements set forth in the
Specifications and all applicable Laws. In the
event Unipath fails or anticipates it will
fail to meet any of the foregoing
requirements relating to Unipath's
maintenance of the Facility or such
equipment, tooling or molds, or in the
event Unipath receives any notice from
any Governmental Authority with respect to
its maintenance of, or failure to
maintain, the Facility or such equipment,
tooling or molds, Unipath shall
promptly notify Warner-Lambert, c/o
Contract Operations Group of
Warner-Lambert's Quality Assurance
Department (or such other person as
Warner-Lambert may
14
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direct), provide copies of such notice to
Warner-Lambert and, if such notice
relates specifically to the Product,
provide a copy of Unipath's response for
Warner-Lambert's review.
4.8.
INSPECTIONS AND
AUDITS. Warner-Lambert shall have access to Unipath's
Facility for the purpose of conducting
inspections, performing quality control
audits or witnessing the processing,
storage or transportation of Product or
materials related to or used in the
manufacture or packaging of Product, and
Warner-Lambert shall have access to the
results of any Product tests performed
by Unipath or at Unipath's direction.
Warner-Lambert shall also be permitted to
audit that portion of Unipath's books and
records pertaining to the packaging
and supply of Product under this Agreement
to the extent reasonably necessary to
verify Unipath's compliance with its
production and packaging obligations under
this Agreement; PROVIDED THAT such audit
shall not include a review of financial
information. Unipath shall use its
commercially reasonable best efforts to
ensure that Warner-Lambert has similar
access to the facilities, data and
records of Unipath's suppliers or agents.
Such inspections do not relieve
Unipath of any of its obligations under
this Agreement or create new obligations
on the part of Warner-Lambert. Inspections
and audits by Warner-Lambert
personnel hereunder shall be conducted to
the extent reasonably required by
Warner-Lambert and upon reasonable notice,
during normal business hours and in
compliance with the confidentiality
provisions set out in Section 11 hereof and
Unipath's rules and regulations relating to
Facility security, health and
safety.
4.9.
RETENTION OF SAMPLES
AND RECORDS. Unipath shall retain, and upon
request by Warner-Lambert make available to
Warner-Lambert, (a) copies of the
quality control records maintained in
accordance with Section 4.5 and otherwise
in relation to t
