-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SbPRVpfLrF6pK01inqDrS8FZQruKaCL9XCEVpra78OS/Q7N3K5sSFykCEVfD2Fr6 0mGzm+/w7pPvakI+P6reYQ== 0000926372-95-000030.txt : 19951003 0000926372-95-000030.hdr.sgml : 19951003 ACCESSION NUMBER: 0000926372-95-000030 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950929 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUREPAC INC/ CENTRAL INDEX KEY: 0000729069 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 042769995 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13588 FILM NUMBER: 95577867 BUSINESS ADDRESS: STREET 1: 200 ELMORA AVE CITY: ELIZABETH STATE: NJ ZIP: 07207 BUSINESS PHONE: 9085279100 MAIL ADDRESS: STREET 1: 200 ELMORA AVENUE STREET 2: 200 ELMORA AVENUE CITY: ELIZABETH STATE: NJ ZIP: 07207 FORMER COMPANY: FORMER CONFORMED NAME: MOLECULON INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MOLECULON BIOTECH INC DATE OF NAME CHANGE: 19860417 10-K/A 1 Item 11. is hereby amended to add the following: STOCK PERFORMANCE GRAPH ----------------------- Set forth below is a line graph comparing the cumulative stockholder return on the Company's Common Stock against the cumulative total return of the NASDAQ Industrial Index and the NASDAQ Pharmaceutical Index for the Company's fiscal years ended June 30, 1995, June 30, 1994, June 30, 1993, June 30, 1992 and June 30, 1991, respectively. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG PUREPAC, INC., THE NASDAQ UNITED STATES INDEX AND THE NASDAQ PHARMACEUTICAL INDEX
Measurement Period NASDAQ NASDAQ (Fiscal Year Covered) Purepac, Inc. United States Pharmaceutical - --------------------- ------------- ------------- -------------- Measurement Pt-11/31/89 $100 $100 $100 FYE 6/30/90 $100 $100 $100 FYE 6/30/91 405 106 159 FYE 6/30/92 1038 127 199 FYE 6/30/93 705 160 176 FYE 6/30/94 610 162 146 FYE 6/30/95 762 215 196
EX-10 2 EXHIBIT 10.12 AMENDMENT TO TOLL MANUFACTURING AGREEMENT AGREEMENT dated as of this day of December, 1994 between PUREPAC PHARMACEUTICAL CO., a Delaware Corporation, having its principal office at 200 Elmora Avenue, Elizabeth, NJ 07207 ("Purepac"), and FAULDING INC., a Delaware corporation, having its office at 274 Riverside Avenue, Westport, CT 06880 ("Faulding"). WHEREAS, the parties have entered into a Toll Manufacturing Agreement (the "Manufacturing Agreement") dated as of August 1, 1993, providing for the manufacture by Purepac and the purchase by Faulding of certain pharmaceutical products as contemplated therein; and WHEREAS, the parties wish to amend certain provisions of the Manufacturing Agreement; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: 1. The percentage "one hundred twenty percent (120%)" set forth in Section 1.4 of the Manufacturing Agreement shall be changed to "one hundred twenty-five percent (125%)". 2. The percentage "eighty percent (80%)" set forth in Section 1.5 of the Manufacturing Agreement shall be changed to "seventy-five percent (75%)". 3. The word "Kapanol" appearing in Section 1.15 of the Manufacturing Agreement shall be changed to "Kadian". 4. Section 1.17 of the Manufacturing Agreement is hereby amended to add to the end of such Section the words "and its territories and possessions, including without limitation Puerto Rico". 5. Section 16.1 of the Manufacturing Agreement is hereby deleted in its entirety and replaced with the following: "16.1 Subject to any other provision hereof, this Agreement shall remain in effect until December 31, 2010, and the term of this Agreement shall automatically be renewed thereafter for up to four successive five-year terms unless notice is given by Faulding to Purepac at least six months prior to the date of any such renewal of Faudling's desire not to renew such term. In addition to the foregoing, at any time after December 31, 2010, this Agreement may be terminated by Faulding upon not less than 24 months' written notice to Purepac." 6. Section 16.2 of the Manufacturing Agreement is hereby deleted in its entirety and replaced with the following: "16.2 The obligations of the parties set forth in this Agreement may be terminated by notice in writing by either party (i) if the other party shall default in the performance of any of its obligations under this Agreement and such default shall continue for a period of not less than sixty (60) days after written notice specifying such default shall have been given, or (ii) the other makes an arrangement with its creditors or goes into receivership or liquidation, or if a receiver and manager is appointed in respect of the whole or part of the property or business of such other party." 7. Except as and to the extent specifically amended hereby, the Manufacturing Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and date first set forth above. FAULDING INC. PUREPAC PHARMACEUTICAL CO. By: /s/ By: /s/ _______________________________ _____________________________ Michael R.D. Ashton, President Robert H. Burr, President EX-10 3 EXHIBIT 10.15 THIS AGREEMENT is made as of the 15th day of March 1995 BETWEEN: F. H. FAULDING & CO. LIMITED having offices at 160 Greenhill Road, Parkside in the State of South Australia 5063 ("Faulding") AND: PUREPAC PHARMACEUTICAL CO. having offices at 200 Elmora Avenue, Elizabeth, New Jersey 07207, United States of America ("Purepac"). Faulding possesses certain technology and expertise related to the Product described in Schedule 1. Purepac, a company with expertise in capsule and tablet technology and in the packaging, promotion and distribution of pharmaceutical products, wishes to obtain the right to import, distribute, promote and sell the Product within the Territory. Faulding has agreed, subject to the terms and conditions of this Agreement to grant Purepac a non-exclusive license to import, distribute, promote and/or sell the Product in the Territory and to appoint sub-licensees within the Territory. NOW, THEREFORE, in consideration of the mutual covenants as hereinafter contained, the parties agree as follows: 1. Definitions As used in this Agreement, the following terms shall have the following meanings: "GMP" means good manufacturing practice as required by the regulations of the United States Federal Food and Drug Administration.. "License Fee" means the fee of US$70,000 for the grant of the license by Faulding to Purepac under this Agreement, which has been paid by Purepac. "Product" means the product of Faulding and any adaptation or variation or part thereof whatsoever which is listed in Schedule 1 and such other products as may from time to time be added to that Schedule by mutual agreement between the parties. "Regulatory Authority" means the United States Federal Food and Drug Administration and/or any other like authority whether Federal or State regulating the import, distribution, marketing and/or sale in the Territory of therapeutic substances. "Rights" means any copyright, patent, trade mark, design (whether registered or unregistered), logos or any other proprietary or personal rights and includes without limitation all such rights in relation to all drawings, flow charts, models, formulae operating instructions, specifications, lists and compilations of data and other written materials relating to the Product. "Sales Year" means each full fiscal year during which commercial sales of the Product occur in the Territory. "Territory" means the territories listed in Schedule 2 and any other territories as may from time to time be added to that Schedule by mutual agreement between the parties. "Unit" means each one thousand (1,000) capsules, in the case where the Product is supplied by Faulding to Purepac in containers each containing bulk capsules with each capsule containing one hundred (100) milligrams of doxycycline. 2. Appointment of Distributor Faulding hereby grants to Purepac, and Purepac hereby accepts, the right to import in bulk, package, distribute, promote and sell the Product in the Territory subject to the terms and conditions of this Agreement. 3. Right to Purchase Faulding hereby grants to Purepac the right to purchase supplies from Faulding of the Product for sale within the Territory. 4. Distribution and Sale of Product 4.1 Purepac shall use reasonable efforts, at its expense, to promote, distribute and sell the Product in and throughout the Territory in order to obtain the optimum market potential for the Product within and throughout the Territory. 4.2 Purepac shall use reasonable efforts to maintain a reasonable adequate level of stock of the Product to meet the market demand for the Product within and throughout the Territory and without limiting the generality of the foregoing, shall hold sufficient stocks of the Product in finished form to meet at least three (3) months requirements of forward budgeted sales in the Territory. 4.3 Purepac shall prepare, at its cost, estimated annual sales of the Product for discussion with Faulding at least annually. 4.4 Purepac shall submit to Faulding, in a form satisfactory to Faulding and at Purepac's cost: (a) bi-annual reports of: (i) its inventory of the Product; and (ii) sales of the Product for the month and year to date; and (b) annual estimates of Purepac s requirements for the Product, at least three (3) months before the start of each fiscal year or at such other time as Faulding may reasonably request. 5. Discounts Any discount or rebate given by Purepac to any customer will be borne by Purepac and will not be recoverable from Faulding. 6. Appointments 6.1 Subject to the limitations set forth in clause 6.2 hereof, Purepac shall have the right to appoint any private label distributor or unit dose packer to distribute, market, promote and/or sell the Product within the Territory. 6.2 The appointment of any private label distributor or unit dose packer under clause 6.1 shall be on such terms and conditions as Purepac may reasonably require in writing provided such terms and conditions are not inconsistent with the terms and conditions of this Agreement. Purepac agrees that it shall, at all times, be solely responsible for the acts, deeds or omissions of any private label distributor or unit dose packer appointed pursuant to clause 6.1 and hereby indemnifies Faulding against any and all loss, liability, damage, claims, cost and expense arising from or in connection with such private label distributor's or unit dose packer's acts, deeds or omissions. 7. Advertising and Promotion Purepac shall ensure, at its cost, that all packaging and labelling used for the Product meets all the requirements under the applicable laws, rules and regulations in the Territory. 8. Supply of Information to Purepac Faulding shall place at Purepac's disposal its entire know-how: (a) concerning the chemical, pharmacological, toxicological and clinical data of the Product; (b) the technical data concerning methods, formulae, and standards to be employed by Purepac in the packaging of the Product; and (c) any special precautions or handling instructions with respect to the Product in order to prevent injury or damage arising from improper handling thereof. 9. Packaging (a) Purepac agrees that it will prepare and pack the Product in accordance with any applicable law or regulation in the Territory relating to the preparation and packaging of the Product. (b) Faulding agrees that it will ship the Product under appropriate storage conditions and will package the Product for shipment according to the laws and regulations of the United States and Australia, as applicable and with all necessary export clearances obtained. 10. Rights of Faulding Purepac acknowledges and accepts that any and all Rights in, or in relation to, the Product and/or the processes, designs and techniques for its manufacture are owned or controlled by Faulding in and throughout the Territory and agrees not to alter, remove, disguise, tamper or conceal in any way whatsoever any of the Rights on or in relation to the Product and not to sell any of the Product separate from any of the information that may be specifically provided by Faulding for sale with the Product. Labels or notices attached to the Product in its packaged form by Purepac shall provide that the Product is manufactured by Faulding in Australia. 11. Quality Control 11.1 Faulding agrees to maintain adequate and appropriate quality control in,respect of its manufacture and packaging in bulk of the Product and to provide Purepac for each lot of Product shipped to Purepac a certified analysis ensuring and warranting that each such lot meets the specification set forth in clause 11.2 hereof. Purepac shall have the right to inspect Faulding's quality control procedures and records during normal business hours upon prior reasonable written notice to Faulding. 11.2 Faulding shall submit to Purepac an appropriate specification in respect of the Product for each lot shipped to Purepac. Purepac shall have twenty five (25) days after receipt of supplies of the Product manufactured and sold to Purepac pursuant to this Agreement to inspect such Product to determine if it conforms to the applicable specification. 11.3 Faulding agrees to manufacture the Product in accordance with the regulations of the Regulatory Authority and in conformance with GMP. Faulding acknowledges and agrees that, as the approved site of manufacture of the Product, it may be required to undergo preapproval and other periodic inspections by the Regulatory Authority. 11.4 Purepac shall give Faulding written notice of any non-conformance within four (4) weeks after receipt of the Product and Faulding agrees that in order to maintain Purepac's ability to supply the Product, such rejected goods shall be replaced by Faulding within four (4) weeks of Faulding's receipt of Purepac's notice of rejection. Thereafter, Faulding and Purepac will mutually agree upon an independent laboratory that will examine the Product in dispute to determine if it conforms to the applicable specification. Both parties agree to abide by the opinion of the independent laboratory. The party in error shall pay the independent laboratory's fees and all transportation, shipping and insurance costs and other fees incident to the shipping of the replacement Product. 12. Condition of Products 12.1 Subject to clause 12.2 and to packaging of the Product, Purepac shall offer for sale and sell the Product in the same condition as it is delivered by Faulding. Purepac shall not sell any Product which has been damaged or is otherwise defective. 12.2 Purepac shall provide suitable storage and handling facilities for the Product to ensure it can be offered for sale and sold in the same condition as it is delivered by Faulding. 12.3 Purepac shall forthwith inform Faulding by written notice, of any damaged or otherwise defective Product alleged to have been delivered by Faulding and shall upon the request of Faulding return the damaged or defective Product to Faulding forthwith and the reasonable cost of return of such Product shall be borne by Faulding and Faulding shall replace such damaged or defective Product free of charge depending upon Faulding's availability of stocks of the Product and provided that Faulding concludes that such damage or defects have not been caused by Purepac. If Purepac disagrees with Faulding's determination that such damage or defects have been caused by Purepac, then the Product shall be submitted to an independent laboratory, the costs of which shall be paid by the party against whom the discrepancy is resolved. 12.4 In the event that Purepac determines that a Product should be recalled for any reason, prior to taking any action, it shall give written notice to Faulding specifying its reasons for the necessity of a recall (the "Recall Notice"). If Faulding agrees with the determination made by Purepac as stated in the Recall Notice, Purepac shall handle the administration of the recall and Faulding agrees to replace all Product recalled within one hundred twenty (120) days from the date of the Recall Notice and to reimburse Purepac for all reasonable out-of-pocket expenses relating to such recall. If, within ten (10) days from the date of the Recall Notice, the parties have been unable to reach an agreement concerning the necessity of a recall, the parties agree to submit the Product to an independent laboratory for an independent evaluation (the "Report"), the cost of which shall be paid by the party against whom the discrepancy is resolved. In the event that the discrepancy is resolved against Faulding, Purepac shall handle the administration of the recall and Faulding shall replace all Product recalled within one hundred twenty (120) days from the date of the Report and shall reimburse Purepac for all reasonable out-of-pocket expenses relating to such recall. In the event that the discrepancy is resolved in favor of Faulding and Purepac elects to recall the Product notwithstanding the Report, Faulding shall have no obligation to Purepac with respect to replacement of Product or reimbursement of expenses. 13. No Sales Outside the Territory To the extent permitted by the prevailing laws in the Territory, Purepac undertakes and agrees that it will not sell any of the Product directly or indirectly outside the Territory nor export any of the Product out of the Territory nor fill any orders for the Product knowing that such orders are intended for sale outside the Territory. 14. Payments by Purepac 14.1 Purepac hereby agrees that it will bear all reasonable costs of clinical trials and stability trials in respect of the Product which are required to obtain registration and/or approval to market the Product in the Territory during the term of this Agreement whether those trials are conducted by it or by Faulding and whether or not they have commenced on the date of execution of this Agreement. 14.2 The price per Unit of the Product purchased by Purepac shall be $(U.S.)148.65, which price the parties shall review on an annual basis or more frequently, if requested in writing by either party. Any amounts due and payable shall be paid in full by Purepac to Faulding within either sixty (60) days from the date of dispatch of the Product or thirty (30) days from receipt of Product at Purepac's premises, whichever is earlier. 14.3 Purepac shall during the continuance of this Agreement and any extension thereof and thereafter for a period of twelve (12) months after the date of the transactions to which they relate keep at its principal office true and particular accounts and records of all sales of the Product. Faulding or its duly authorized representatives after giving reasonable notice shall have the right during ordinary business hours to inspect and audit the accounts and records referred to in this clause 14.3. 14.4 Purepac shall not be entitled to a discount or rebate from Faulding on surcharges noted in the invoices such as packing, freight, insurance, government charges, taxes and duties. 14.5 Property in the Product supplied by Faulding to Purepac under this Agreement will only pass to Purepac at such time as the Products have been paid for in full, provided always that all risk in and to the Product shall pass to Purepac upon delivery to it of the Product. 15. Delivery All deliveries of Product by Faulding to Purepac will be FOB ex Faulding's factory at Salisbury, South Australia or such other place or places as may be mutually agreed by the parties. The delivery of Product may be in whole or in part of the accepted order. Purepac shall be responsible for the payment of all freight and insurance charges and all fees, taxes, excises, duties, and any other charges which may be assessed against Product ordered from Faulding. 16. Purchase Orders and Forecasts Purepac shall place written purchase orders with Faulding, receipt of which shall be promptly acknowledged by Faulding in writing, for the quantities and the delivery dates of Product which it desires to purchase under this Agreement. In no event, however, will any such purchase order specify a delivery date of less than ninety (90) days from the receipt of the purchase order by Faulding. Faulding shall confirm to Purepac each purchase order within ten (10) days after its receipt thereof. On or before the effective date of this Agreement, and every three (3) months thereafter during the term of this Agreement, Purepac shall provide Faulding with a forecast of Product to be ordered for delivery during each quarter for the succeeding five (5) quarters. Such forecast shall not be a binding obligation on either party. However, Purepac shall use all reasonable efforts to make each forecast as accurate as possible, particularly forecasts for the next two (2) quarters. Faulding shall not be required to supply during any quarter more than one hundred and ten per cent (110%) of the forecasted amounts so furnished for that period but will use all reasonable efforts to supply the full amount ordered. 17. Warranties, Indemnities and Insurance 17.1 Except as otherwise expressly provided in this Agreement, Faulding shall not be bound by or subject to any condition, warranty, obligation or liability of any kind whatsoever in connection with this Agreement, whether such condition, warranty, obligation or liability is implied or imposed by virtue of any applicable statute, statutory rule or regulation or the general law and whether arising out of negligence on the part of Faulding, its servants or agents or otherwise howsoever and Purepac shall indemnify and keep indemnified Faulding against all and any such actions, demands, obligations and liabilities. 17.2 Purepac agrees to indemnify Faulding against and hold Faulding harmless from any and all loss, liability, damage, claim cost and expense (including without limitation, reasonable attorney's fees) arising from or in connection with the packaging, storage, use, sale and/or shipping of the Product by Purepac or any Sub-Licensee, private label distributor or unit dose packer of Purepac and any claims, express, implied or statutory, made by Purepac or any Sub- Licensee, private label distributor or unit dose packer of Purepac as to the efficacy or safety of the Product including, without limitation, claims made by reference to the labelling or packaging of the Product; provided however that Purepac shall not be required to indemnify Faulding with respect to any loss, liability, damage, claim, cost or expense which results solely from Faulding's breach of its warranties hereunder, or from information about the Product supplied by Faulding to Purepac or contained in regulatory filings within the Territory prepared by Faulding in respect of the Product. 17.3 Faulding agrees to indemnify Purepac against and hold Purepac harmless from any and all loss (except consequential loss, such as, for example, loss of business or of profits), liability, damage, claim, cost and expense (including, without limitation, reasonable attorney's fees) arising from or in connection with: (a) the manufacture of the Product by Faulding; (b) any side effects caused by the active ingredient in the Product, notwithstanding the fact that the Product meets, or does not meet, the specification set forth in clause 11.2 hereof; (c) the breach by Faulding of its warranties hereunder; and (d) any claims, express, implied or statutory, made by Faulding as to the efficacy or safety of the Product, or the use to be made by any purchaser of the Product including, without limitation, claims made by reference to the labelling or packaging of the Product approved by Faulding. 17.4 Faulding warrants that: (a) it has the corporate authority to enter into this Agreement and to perform its obligations hereunder; (b) all Product delivered to Purepac pursuant to this Agreement will meet the specification at the time of delivery by Faulding to Purepac and throughout its stated shelf-life, provided such Product has been stored according to Faulding's instructions, but only so long as it remains in the possession of Purepac; (c) all Product manufactured and delivered to Purepac pursuant to this Agreement will be manufactured in a plant which meets the requirements of the Regulatory Authority in the Territory and in accordance with Faulding's approved regulatory filings in the Territory and GMP and will be free and clear of all security interests, liens and other encumbrances of any kind; (d) all Product delivered to Purepac pursuant to this Agreement will have a shelf-life of at least eighteen (18) months, provided that each order placed by Purepac for such Product clearly specifies a minimum eighteen (18) months shelf life, and provided further that such Product has been stored according to Faulding's instructions; and (e) Faulding will not deliver adulterated or misbranded Product to Purepac pursuant to this Agreement. 17.5 Faulding warrants that it is the owner of the Rights free and clear of any liens or encumbrances of third parties and has sufficient right, title and interest in the Rights to grant the license to Purepac granted hereunder; 17.6 Purepac warrants that: it has the corporate authority to enter into this Agreement and to perform its obligations hereunder. 17.7 (a) If Purepac or any of its affiliates or subsidiaries or Faulding or any of its affiliates or subsidiaries (in each case an "Indemnified Party") receives any written claim which it believes is the subject of indemnity hereunder by Faulding or Purepac, as the case may be, (in each case as "Indemnifying Party"), the Indemnified Party shall, as soon as reasonably practicable after forming such belief, give notice thereof to the Indemnifying Party, including full particulars of such claim to the extent known to the Indemnified Party; provided, that the failure to give timely notice to the Indemnifying Party as contemplated hereby shall not release the Indemnifying Party from any liability to the Indemnified party other than pursuant to this Section 17. The Indemnifying Party shall have the right, by prompt notice to the Indemnified Party, to assume the defense of such claim with counsel reasonably satisfactory to the Indemnified Party, and at the cost of the Indemnifying Party. If the Indemnifying Party does not so assume the defense of such claim or, having done so, does not diligently pursue such defense, the Indemnified Party may assume such defense, with counsel of its choice, but for the account of the Indemnifying Party. If the Indemnifying Party so assumes such defense, the Indemnified Party may participate therein through counsel of its choice, but the cost of such counsel shall be for the account of the Indemnified Party. (b) The party not assuming the defense of any such claim shall render all reasonable assistance to the party assuming such defense, and all out-of-pocket costs of such assistance shall be for the account of the Indemnifying Party. (c) No such claims shall be settled other than by the party defending the same, and then only with the consent of the other party, which shall not be unreasonably withheld; provided, that the Indemnified Party shall have no obligation to consent to any settlement of any such claim which imposes on the Indemnified Party any liability or obligation which cannot be assumed and performed in full by the Indemnifying party. 18. Regulatory Approval 18.1 Purepac hereby agrees that it will, when and as required by and at the cost and in the name of Faulding, seek all necessary approvals and/or registrations from the appropriate Regulatory Authority in the Territory to enable the conduct of pharmokinetic and stability trials using the Product and/or the import, distribution, marketing and sale of the Product in the Territory during the term of this Agreement. 18.2 In the event that any applicable law or regulation in the Territory prevents the grant of such approvals and/or registrations of the Product in the name of Faulding, Purepac will secure such approvals and/or registrations in its own name and at the expense of Faulding on the express understanding that Faulding shall remain the beneficial owner thereof and that such approvals and/or registrations shall be held in trust for the beneficial owner and shall be assigned to Faulding by Purepac at no charge to Faulding or to Faulding's nominee as soon as such assignment is possible but in no event later than the date of expiration or termination of this Agreement. If upon expiration or termination of this Agreement no such assignment may legally be made, such approvals and/or registrations shall forthwith be surrendered for cancellation on the request of Faulding. Upon Faulding's request, Purepac shall promptly deliver to Faulding, or to Faulding's nominee, any documents in its possession relating to such approval and/or registrations and shall execute all such documents as Faulding may deem appropriate to ensure any such assignment or cancellation is effected. 18.3 Faulding hereby agrees that it will: (a) notify Purepac promptly of any serious and unexpected adverse reactions reported to Faulding resulting from the use of any of the Product and on a regular basis notify Purepac of all other reports of adverse reactions; (b) advise Purepac of any and all changes in manufacture and quality control information provided to the Regulatory Authorities in the Territory before such changes are made; (c) retain a representative sample from each batch of the Product produced by Faulding and retain a portion of each such sample for twelve (12) months past the expiration date stated thereon, for use in the event a later analysis becomes necessary; and (d) perform all stability testing of the Product for required filing for approval to market or for registration in the Territory. 18.4 Purepac agrees that it will: (a) notify Faulding promptly of any serious and unexpected adverse reactions reported to it or to any sub-licensee of Purepac resulting from the use of the Product and provide to Faulding copies of all other adverse action reports received by it or any sub-licensee of Purepac; (b) notify Faulding promptly of any complaints from third parties involving the Product; and (c) provide all necessary assistance to Faulding in complying with the reporting compliance requirements of the Regulatory Authorities. 19. Term Subject to clause 24, the term of this Agreement shall be three (3) years from the date of execution of this Agreement and thereafter shall be automatically renewed for successive periods of two (2) years unless either party shall give six (6) months prior written notice to the other party of its intention not to renew this Agreement. 20. Termination The obligation of the parties set forth in this Agreement may be terminated by notice in writing by either party if the other party shall default in the performance of any of its material obligations under this Agreement and such default shall continue for a period of not less than ninety (90) days after written notice specifying such default shall be been given; by either party if the other party makes an arrangement with its creditors or goes into receivership or liquidation (other than voluntary liquidation) for the purpose of internal reorganization, or if a receiver or a receiver and manager is appointed in respect of the whole or part of the property or business of the party in default or by either party if a major part of the assets or all of the assets of the other party are disposed of or are compulsory acquired by any other person. 21. Confidential Information 21.1 All confidential information communicated by Faulding or its employees, servants or agents to or obtained by Purepac or its employees, servants, sub-licensees, private label distributors, unit dose packers or agents (collectively, "Agents") and all other information and other materials supplied to or received by Purepac or its Agents from Faulding or its Agents on a confidential basis shall be kept confidential by Purepac unless the confidential information or such information or materials or part of it is in the public domain other than by breach of this Agreement by Purepac or its Agents, whereupon to the extent that it is public, this obligation of confidentiality shall cease. 21.2 The obligation of confidence imposed in clause 21.1 shall continue in force for a period of ten (10) years following the termination or expiration of this Agreement. 21.3 Purepac shall take all reasonable steps to eliminate the risk of unauthorized disclosure of confidential information by obtaining from all of its Agents who may be granted access to any confidential information appropriate nondisclosure agreements. 22. Assignment Neither party to this Agreement shall assign any rights hereunder to third parties other than the right of payment of monies accrued without the prior written consent of the other party; provided, however, that the restriction contained herein shall in no way limit the rights to sublicense granted to Purepac under this Agreement or the rights of either party to make assignments to affiliates. This Agreement shall be binding upon any permitted assignee or successor of either party. 23. Entire Agreement This Agreement constitutes the entire agreement of the parties and revokes and supersedes any and all agreements, contracts, understandings or arrangements that might have existed heretofore between the parties regarding the subject matter hereof. 24. Variations to Agreement Any modification, alteration, change or variation of any term or condition of this Agreement shall be only made in writing, executed by both parties. 25. Severability The provisions of this Agreement shall be deemed to be severable and any invalidity of any provision of this Agreement shall not affect the validity of the remaining provisions of this Agreement. 26. Relationship of Parties Nothing contained in this Agreement shall be construed so as to operate or to place any party in the relationship of employee or agent or joint venturer or legal representative of any other party and it is hereby expressly agreed and acknowledged that each of the parties is an independent contracting party which does not have the authority or power for or on behalf of the other party to enter into any contract, to incur debts, to accept money, to assume any obligations or to make any warranties or representations whatsoever. 27. Waiver The failure of either of the parties to insist upon a strict performance of any of the terms and provisions herein shall not be deemed a waiver of any subsequent breach or default in the terms or provisions of this Agreement. 28. Notices Any notice or other communication provided for or permitted in this Agreement shall be in writing and shall be sent by certified or registered airmail with postage prepaid, by hand delivery, or by facsimile transmission to the parties as follows: TO FAULDING: The Company Secretary F. H. FAULDING & CO. LIMITED 160 Greenhill Road Parkside South Australia 5063 Telephone No: (08) 372 1500 Facsimile No: (08) 373 3120 TO PUREPAC: The President PUREPAC PHARMACEUTICAL CO. 200 Elmora Avenue Elizabeth New Jersey 07207 USA Telephone No: (201) 527-9100 Facsimile No: (201) 527-0649 or such other address or person as either party may specify by notice in writing to the other. Any notice or other communication under this clause shall be deemed to have been duly given or made: (a) ten (10) days after being deposited in the mail with postage prepaid; (b) when delivered by hand; or (c) if sent by facsimile transmission, upon confirmation of successful transmission of the facsimile to the recipient generated by the sender's facsimile machine. 29. Force Majeure Neither party shall be responsible or liable to the other party for, nor shall this Agreement be terminated as a result of, any failure to perform any of its obligations hereunder (with the exception of payment of monies due and owing), if such failure results from circumstances beyond the control of such party, including, without limitation, requisition by any government authority or the effect of any statute, ordinance or governmental order or regulation, wars, strikes, lockouts, riots, epidemic, disease, act of god, civil commotion, fire, earthquake, storm, failure of public utilities, common carriers or any other circumstances, whether or not similar to the above causes. In the event such force majeure continues for a period of more than one hundred and eighty (180) days, the party not the victim of the force majeure may terminate this Agreement on thirty (30) days written notice to the other party. 30. Governing Law This Agreement shall be construed with and in accordance with and governed by the laws of the State of New Jersey, United States of America and its form, execution, validity, construction and effect shall be determined in accordance with the laws of the State of New Jersey. 31. Execution of All Necessary Additional Documents Each party agrees that it will forthwith upon the request of the other party execute and deliver all such instruments and agreements and will take all such other actions as the other party may reasonably request from time to time in order to effectuate the provision and purposes of this Agreement. 32. Headings The headings used in this Agreement are intended for guidance only and shall not be considered part of this written understanding between the parties hereto. IN WITNESS WHEREOF, this Agreement has been executed by the parties as of the date first above written. PUREPAC PHARMACEUTICAL CO. By: /s/ -------------------------- F. H. FAULDING & CO. LIMITED By: /s/ -------------------------- SCHEDULE 1 The Product Generic version of Faulding's doryx product which is licensed in the United States to Warner-Lambert Company. SCHEDULE 2 The Territory The United States of America and its commonwealth states. EX-10 4 EXHIBIT 10.15 LICENSE AGREEMENT made as of the 26th day of June, 1995 between F.H. FAULDING & CO. LIMITED of 160 Greenhill Road, Parkside in the State of South Australia (hereinafter called "Faulding") and PUREPAC PHARMACEUTICAL CO. of 200 Elmora Avenue, Elizabeth, New Jersey, United States of America (hereinafter called "Purepac"); WHEREAS, Faulding is the proprietor of the Technology in relation to the manufacture and production of the Product; WHEREAS, Purepac wishes to obtain an exclusive right to utilize the Technology to complete development of the Product and to manufacture and sell the Product within the Territory; WHEREAS, Faulding has agreed to license the Technology to Purepac on the terms and conditions set forth in this Agreement. NOW, THEREFORE, IT IS AGREED as follows: 1. For the purposes of this Agreement the following terms shall have the following meanings: 1.1 "Affiliates" shall mean (a) an entity controlled by a common parent that owns more than fifty percent of the voting stock of both such entity and one of the parties to this Agreement and (b) such parent company. 1.2 "Direct Material Costs" shall mean, with respect to any calendar quarter, the actual material costs of the manufacture of the Product, including, without limitation, the costs of packaging, as determined in accordance with generally accepted U.S. accounting principles, consistently applied. 1.3 "Enhancements" shall mean any improvements, enhancements or changes in the Technology in relation to the Product that are developed by Purepac after the Technology Transfer Date during the term of this Agreement. 1.4 "Gross Margin" shall mean the Net Sales Price less the Direct Material Costs. 1.5 "Know-How" shall mean the processes, methods and procedures for the manufacture and production of the Product and any improvement or modifications that may be developed by or on behalf of either Faulding or Purepac during the term of this Agreement, as set forth in Section 14 hereof. 1.6 "Net Sales Price" shall mean, with respect to any calendar quarter, the gross income of Purepac from sales of the Product to independent third parties (not including amounts received as reimbursement of freight, insurance and other costs or taxes) invoiced by Purepac during such quarter, less price discounts, trade returns, trade allowances, chargebacks or rebates relating to such sales, as calculated using Purepac's standard accounting procedures, in accordance with U.S. generally accepted accounting principles, consistently applied. It is understood and agreed that where the amount of any deduction can not be fairly determined during the quarter immediately following the quarter in question, such deduction may be claimed by Purepac with respect to Net Sales made during a subsequent quarter. 1.7 "Product" shall mean the product set forth on Schedule 1 hereto. 1.8 "Regulatory Authority" shall mean the United States Federal Food and Drug Administration and/or any other like authority whether Federal or State regulating the manufacture, distribution, marketing and/or sale in the Territory of therapeutic substances. 1.9 "Technology" shall mean that technology including technical, scientific, industrial information or knowledge, confidential information and expertise in relation to the formulation and composition of the Product, which, as of the Technology Transfer Date, has been in the possession of Faulding. 1.10 "Technology Transfer Date" shall mean August 31, 1995 or such other date, as mutually agreed to by the parties, on which Faulding shall transfer the Know-How in Faulding's possession and the Technology to Purepac. 1.11 "Territory" shall mean the United States of America and its commonwealth states and territories. 1.12 "U.S." shall mean the United States of America. 2. LICENSE OF TECHNOLOGY 2.1 In consideration of the payment of Technology licensing fee, set forth in Section 2.2 hereof and the royalty payments set forth in Section 8 hereof, Faulding hereby licenses the Technology to Purepac for a period commensurate with the term of this Agreement, as set forth in Section 15 hereof, to use and take advantage of the Technology for the purposes of completing the development of the Product and manufacturing and selling the Product within the Territory during the term of this Agreement. Purepac management has been involved in the development of the Technology and understands that further development of the Technology is necessary for completion of the Product. 2.2 The parties agree that the Technology licensing fee shall aggregate $(U.S.)1,834,434 and, as the case may be, has been paid or shall be payable by Purepac to Faulding in three payments as follows: (a) $(U.S.)1,234,434, which Purepac has heretofore paid Faulding in full; (b) $(U.S.)350,000, payable on July 31, 1995; and (c) $(U.S.)250,000, payable thirty (30) days after the Technology Transfer Date. 2.3 The license of the Technology pursuant to this Agreement is sole and exclusive for the development, manufacture, and sale of the Product in the Territory. Faulding agrees that it will not sell or transfer the Technology or grant any rights to use or exploit the Technology to any other person or corporation for the manufacture or distribution in the Territory of the Product or a product competitive with the Product during the term of this Agreement, but the parties understand and agree that Faulding has the right, subject to the limitations set forth in Section 4.3, to license the Technology outside the Territory for any purpose and within the Territory for any purpose other than the manufacture and distribution of a product competitive with the Product. 2.4 Purepac agrees that it will not use or exploit the Technology for any purpose other than the manufacture and sale of the Product in the Territory and that it will not manufacture, sell or attempt to sell the Product outside the Territory either on its own account or through any third party nor will it sell any Product to any person or corporation within the Territory where Purepac has reasonable grounds to believe that such other person or corporation intends to sell the Product outside the Territory. 2.5 In the event that either (a) Purepac submits a written request to Faulding to market the Product outside the Territory or (b) Faulding submits a written request to Purepac to purchase the Product for sale by Faulding outside the Territory, the parties agree to negotiate in good faith to determine whether they can reach an agreement that is commercially acceptable to both of them. 3. TECHNOLOGY TRANSFER 3.1 Immediately upon execution of this Agreement Faulding will provide to Purepac details of all work done to date in relation to development of the Product. Faulding will continue to carry on formulation work until the Technology Transfer Date and will provide regular reports on progress with this work to Purepac and in any event will report not less than twice a month. 3.2 On the Technology Transfer Date, Faulding will provide to Purepac all Technology and Know-How in its possession as may be necessary and helpful for Purepac to complete the development work with respect to the Product and replicate and scale-up the process for the manufacture of the Product. 3.3 Upon payment of the third installment of the Technology licensing fee, as set forth in Section 2.2 of this Agreement, Purepac will be entitled to request Faulding to provide appropriate scientists and engineers ("Faulding Engineers") on sites at Purepac's premises to aid Purepac in the completion of the development work with respect to the Product, the commissioning of the equipment and the replicating and scaling up of the process of manufacture of the Product. If requested by Purepac, Faulding, will send to Purepac's site in the U.S. (a)at Faulding's expense, a team of not more than two (2) Faulding Engineers from Australia for a maximum of two visits, together aggregating no more than two months' duration, and (b) at Purepac's reasonable expense, one qualified formulator from Australia for one or more visits, aggregating approximately two years' duration (the exact duration of which being subject to the on-going negotiation between the parties). 3.5 At the request of Purepac, but not more than twice in any calendar year, Purepac personnel will be entitled to visit Faulding's premises in Australia for technical discussions relating to the development and scale-up work on the Product PROVIDED, HOWEVER, that such visits will be at Purepac's sole expense and will be held at a time reasonably convenient to Faulding. 4. INTELLECTUAL PROPERTY RIGHTS 4.1 Purepac acknowledges and agrees that Faulding is the owner of the Technology and all industrial and intellectual property rights of any kind in relation to the Technology including the right to patents, registered or other designs, copyright, trademarks or trade names and any other confidential information. Nothing contained in this Agreement shall be effective to give Purepac any rights of ownership in and to the Technology and to the intellectual property owned by Faulding in any area outside the Territory and the licensing of the Technology under this Agreement is for the sole purpose of developing, manufacturing and selling the Product in the Territory. 4.2 Any improvements to the Technology as it applies to the Product made or discovered by Faulding during the term of this Agreement shall be made known to Purepac and Purepac shall be entitled to use and commercially exploit any such improvements without payment of any further sum PROVIDED HOWEVER, that if such improvement has the effect of rendering the existing Technology obsolete (the "Superseding Technology") and the existing Technology, as such Technology may be improved or enhanced by Purepac, is effective in relation to the Product at the time of such Superseding Technology, Faulding shall grant Purepac a right of first refusal to license the Superseding Technology for the purposes of manufacturing and selling an improved product within the Territory on a comparable basis and on comparable terms as provided in this Agreement and PROVIDED FURTHER, HOWEVER, that if the existing Technology, as such Technology may be improved or enhanced by Purepac, is not effective in relation to the Product at the time of such Superseding Technology, Purepac shall be entitled to use, enhance and commercially exploit such Superseding Technology without payment of any further sum. 4.3 Faulding acknowledges and agrees that Purepac is the owner of all Enhancements to the Technology, as applied to the Product, and all industrial and intellectual property rights of any kind in relation to such Enhancements, including the right to patents, registered or other designs, copyright and any other confidential information. Nothing contained in this Agreement shall be effective to give Faulding any rights of ownership in and to the Enhancements and to the intellectual property rights owned by Purepac. In the event that Faulding shall desire to register any product which in any way utilizes any Enhancement anywhere, within or outside the Territory, the parties agree to negotiate in good faith to determine the mutually acceptable and commercially reasonable consideration that Faulding shall pay to Purepac for the right to use such Enhancement. 4.4 The parties agree that all Know-How shall be jointly owned by them and that each of them may freely use the Know-How, whether it has been developed by either party or jointly by both parties. Any improvement to the Know-How as it applies to the Product made or discovered by either party during the term of this Agreement shall be made known to the other party, upon written request by the other party, and the other party shall be entitled to use and commercially exploit any such improvement without payment of any sum to the other party. 5. FAULDING EXPENSES AFTER THE TECHNOLOGY TRANSFER DATE 5.1 Purepac shall only reimburse Faulding for such reasonable costs incurred by Faulding in connection with the Technology after the transfer of the Technology to Purepac on the Technology Transfer Date that Purepac has preapproved in writing. 5.2 If for any reason after the Technology Transfer Date, Purepac requests Faulding either to (a) perform any services with respect to the Product or (b) manufacture any batches of the Product, and Faulding performs such services, Purepac shall reimburse Faulding for the costs of all such services as follows: (i) Within seven (7) days after the end each month, Faulding will submit to Purepac the commercially reasonable costs incurred by Faulding pursuant to the provisions of this Section 5.3(a "Monthly Statement"); (ii) Subject to the provisions of the following sentence, Purepac shall pay to Faulding the amount due as reflected in each Monthly Statement within thirty (30) days after its receipt of such Statement. Within 10 days after its receipt of the Final Cost Statement, Purepac may initiate a review of Faulding's costs, as reflected in the Statement, by written notice to Faulding. Within 10 days of Faulding's receipt of such notice, the parties will meet and negotiate in good faith to resolve any differences between them. 6. REGULATORY APPROVALS; ADVERSE REPORTS. 6.1 Subject to the provisions of Section 15.3 of this Agreement, Purepac hereby agrees, at its own expense, to: 6.1.1 complete the development work with respect to the Product; 6.1.2 carry out all work necessary for the registration of the Product in the Territory, including scale-up and definitive pharmacokinetic and stability studies; 6.1.3 seek all necessary approvals and/or registrations from the appropriate Regulatory Authority in the Territory to permit the conduct of clinical trials using the Product and/or the manufacture, distribution, marketing and sale of the Product in the Territory; and 6.1.4 comply with the reporting compliance requirements of the Regulatory Authority in the Territory during the term of this Agreement. 6.2 Faulding hereby agrees that it will, when and as requested by Purepac, assist Purepac, at Purepac's commercially reasonable cost, in preparing the ANDA, including, without limitation providing assistance to Purepac with regard to any Product/development reports required by the FDA. Purepac will reimburse Faulding for the costs of such services in the same manner and during the same time frame as set forth in Section 5.2 of this Agreement. 6.3 Faulding and Purepac recognize and agree that Purepac, during the term of this Agreement, shall hold title to the ANDA and to all clinical data developed by Purepac for registration of the Product in the Territory. Purepac agrees, however, that it shall not transfer or assign the ANDA to any third party without the prior consent of Faulding. In the event that Faulding shall elect to include any of the aforementioned clinical data in an application by Faulding to register the Product anywhere outside the Territory, the parties agree to negotiate in good faith to determine the mutually acceptable and commercially reasonable consideration that Faulding shall pay to Purepac for the right to use such clinical data. 6.4 Purepac agrees that upon the expiration of, or termination of the Agreement for any reason other than a default by Faulding, Purepac will grant Faulding, or Faulding's nominee, for the ninety (90) day period after such expiration or termination (the "Election Period"), a right of first refusal to an assignment by Purepac of the ANDA as follows: (a) The right of first refusal may be exercisable by Faulding by delivery of a written offer (the "Faulding Assignment Offer") to Purepac, which Faulding Assignment Offer shall contain all of the material terms of Faulding's proposed offer. Within ten (10) days after Purepac's receipt of the Assignment Offer, Purepac shall either deliver a written acceptance of the Offer to Faulding or meet with Faulding to negotiate in good faith mutually acceptable and commercially reasonable terms upon which to transfer the ANDA. (b) If the parties shall fail to reach an agreement, or if Purepac otherwise, during the Election Period, receives any bona fide offer from an unaffiliated third party to have the ANDA assigned to such third party (the "Third Party Assignment Offer"), Purepac shall notify Faulding in writing of any such Assignment Offer at least thirty (30) days prior to the intended closing date thereof, which notice (the "Third Party Assignment Notice") shall contain all the material terms of the Third Party Assignment Offer and Faulding may, within fifteen (15) business days after its receipt of the Third Party Assignment Notice exercise its right of first refusal by delivery of a written notice to Purepac. (c) If Faulding shall fail to elect to enter into the transaction described in the Third Party Assignment Notice, or then Purepac shall, during the remainder of the Election Period be free to consummate the Third Party Assignment Offer on the terms and conditions, including price, specified in such Notice. (d) Upon assignment of the ANDA to Faulding or Faulding's nominee, Purepac shall promptly deliver to Faulding, or to Faulding's nominee, any documents in its possession relating to the ANDA and the registration of the Product in the Territory and shall execute all such documents as the Regulatory Authority may require or as Faulding may deem appropriate to ensure any such assignment is effected. 6.5 Purepac agrees that it will, in accordance with the laws and regulations of the Territory as such laws and regulations, may from time to time be amended, notify Faulding promptly (a) of any serious and unexpected adverse reactions reported to it or to any sub-licensee of Purepac resulting from the use of the Product and provide to Faulding copies of all other adverse action reports received by it or any sub-licensee of Purepac and (b) of any complaints from third parties involving the Product. 6.6 Purepac agrees to maintain adequate quality control in respect of its manufacture, packaging, labelling and storage of the Product and to ensure that all manufacture of and packaging and labelling used for the Product meets all the requirements under the applicable laws, rules and regulations in the Territory. 6.7 In the event that Faulding, subject to the provisions of Section 4 of this Agreement, uses the Technology, either within or without the Territory, in the manufacture of any other product, Faulding agrees that it will, in accordance with the laws and regulations of the Territory as such laws and regulations, may from time to time be amended, notify Purepac promptly (a) of any serious and unexpected adverse reactions reported to it or to any sub-licensee of Faulding resulting from such use of the Technology in any product and provide to Purepac copies of all other adverse action reports received by it or any sub-licensee of Faulding and (b) of any complaints from third parties involving such other product. 7. DISTRIBUTION AND SALE OF PRODUCT; APPOINTMENTS 7.1 Upon registration of the Product, Purepac shall use reasonable efforts, at its expense, to promote, distribute and sell the Product in and throughout the Territory in order to obtain the optimum market potential for the Product within and throughout the Territory. 7.2 Subject to the limitations set forth in Section 7.3 hereof, Purepac shall have the right to appoint any agent or sub- licensee to market, distribute, promote and/or sell the Product within the Territory. 7.3 The appointment of any agent or sub-licensee under Section 7.2 shall be on such terms and conditions as Purepac may reasonably require in writing provided such terms and conditions are not inconsistent with the terms and conditions of this Agreement. Purepac agrees that it shall, at all times, be solely responsible for the acts, deeds or omissions of any agent or sub- licensee appointed pursuant to Section 7.2 and hereby indemnifies Faulding against any and all loss, liability, damage, claims, cost and expense arising from or in connection with such agent's or sub- licensee's acts, deeds or omissions. 8. ROYALTY PAYMENTS 8.1 Purepac shall pay to Faulding throughout the term of this Agreement a royalty at the rate of 8.2% of the Gross Margin of all Product sold in the Territory by Purepac and its agents and sub-licensees. 8.2 Royalty payments required by Section 8.1 shall be made by Purepac within 45 days after the close of each calendar quarter in U.S. dollars by wire transfer to the account specified by Faulding from time to time. Purepac may withhold from such payments any withholding required under U.S. law and shall submit to Faulding documents evidencing such tax withholding, if any. At the same time as making any royalty payment, Purepac shall submit to Faulding a statement setting forth the sales of Product, the invoiced amount of such sales, the calculation of direct material costs and gross margin and the amount of any other payments received in relation to sales of such Product. 8.3 Purepac, during the term of this Agreement and any extension hereof and thereafter for a period of two years after, as the case may be, (a)the last expiration date of any Product manufactured pursuant to this Agreement; or (b)an expiration of this Agreement caused by the recall of the Product in the Territory shall keep at its principal office true and particular accounts and records of all sales, the calculation of direct material costs and gross margin of Product by Purepac and its agents and sub-licensees. Faulding or its duly authorized representatives after giving reasonable notice shall have the right during ordinary business hours to inspect and audit the accounts and records referred to in this Section 8.3. 9. WARRANTY 9.1 Faulding represents and warrants to Purepac that it: (a) has the corporate authority to enter into this Agreement and to perform its obligations hereunder; (b) is not aware of any legal, contractual or other restriction, limitation or condition which might affect adversely its ability to perform hereunder; (c) is the owner of the Technology free and clear of any liens or encumbrances of third parties and has sufficient right, title and interest in the Technology to grant the license to Purepac granted hereunder; (d) to the best of its knowledge as of the date of this Agreement, the Technology, as known as of the date hereof, does not infringe any valid published U.S. patent; and (e) upon the transfer of the Technology to Purepac, as contemplated by Section 3 of this Agreement (i) it will be the owner of the Technology free and clear of any liens or encumbrances of third parties and (ii) to the best of its knowledge as of the date of this Agreement, it will have sufficient right, title and interest in the Technology to grant the license to Purepac granted hereunder. 9.2 Purepac represents and warrants to Faulding that it: (a) has the corporate authority to enter into this Agreement and to perform its obligations hereunder; and (b) is not aware of any legal contractual or other restriction, limitation or condition which might affect adversely its ability to perform hereunder. 10. CONFIDENTIALITY 10.1 Purepac agrees with Faulding that it will not disclose to any person or corporation any confidential information of Faulding that it may acquire at any time during the term of this Agreement, including, without limitation the Technology and Know-How and any Enhancements without the prior written consent of Faulding and that Purepac will use all reasonable efforts to prevent unauthorized publication or disclosure by any person of such Technology and Know-How, including, without limitation, requiring its employees, consultants, sub-licensees and agents to enter into similar confidentiality agreements in relation to the Technology and such other confidential information. 10.2 Faulding agrees with Purepac that it will not disclose to any person or corporation any confidential information of Purepac that it may acquire at any time during the term of this Agreement, including, without limitation the Know-How and any Enhancements, without the prior written consent of Purepac and that Faulding will use all reasonable efforts to prevent unauthorized publication or disclosure by any person of such confidential information, including requiring its employees, consultants and agents to enter into similar confidentiality agreements in relation to the Technology and such other confidential information. 10.3 The obligations undertaken by each party under this Section 10 shall continue in force for a period of five (5) years following the termination or expiration of this Agreement. 10.4 The obligations contained in this Section 10 do not apply to any information: (a) which was at the time of receipt by a party in the public domain or generally known in the pharmaceutical manufacturing industry otherwise than by breach of a party's duty of confidentiality; (b) which a party can establish to have been known to it at the time of receipt from the other party and not to have been acquired directly or indirectly from the other party and (c) acquired by a party from a third party otherwise than in breach of an obligation of confidence to the other party. (d) required by law to be provided to governmental agencies but only for the purpose of providing it to such governmental agencies; and (e) disclosed to an Affiliate of either party for purposes consistent with this Agreement. 11. INDEMNITY 11.1 Faulding agrees to indemnify, defend and hold harmless Purepac, its Affiliates and subsidiaries and their respective employees against any and all claims, losses (except consequential losses, such as, for example, the loss of business or of profits), damages and liabilities, including reasonable attorney's fees, incurred by any of them arising out of any breach of any obligation by Faulding hereunder or any representation or warranty by Faulding hereunder or any act or omission of Faulding in connection with its contract obligations hereunder. 11.2 Purepac agrees to indemnify, defend and hold harmless Faulding, its Affiliates and subsidiaries and their employees against any and all claims, losses(except consequential losses, such as, for example, the loss of business or of profits), damages and liabilities, including reasonable attorney's fees, incurred by any of them arising out of any breach of any obligation by Purepac hereunder, any representation or warranty by Purepac hereunder, or any act or omission of Purepac in connection with its contract obligations hereunder. 11.3 (a) If Purepac or any of its Affiliates or subsidiaries or Faulding or any of its Affiliates or subsidiaries (in each case an "Indemnified Party") receives any written claim which it believes is the subject of indemnity hereunder by Faulding or Purepac, as the case may be, (in each case as "Indemnifying Party"), the Indemnified Party shall, as soon as reasonably practicable after forming such belief, give notice thereof to the Indemnifying Party, including full particulars of such claim to the extent known to the Indemnified Party; provided, that the failure to give timely notice to the Indemnifying Party as contemplated hereby shall not release the Indemnifying Party from any liability to the Indemnified party other than pursuant to this Section 11. The Indemnifying Party shall have the right, by prompt notice to the Indemnified Party, to assume the defense of such claim with counsel reasonably satisfactory to the Indemnified Party, and at the cost of the Indemnifying Party. If the Indemnifying Party does not so assume the defense of such claim or, having done so, does not diligently pursue such defense, the Indemnified Party may assume such defense, with counsel of its choice, but for the account of the Indemnifying Party. If the Indemnifying Party so assumes such defense, the Indemnified Party may participate therein through counsel of its choice, but the cost of such counsel shall be for the account of the Indemnified Party. (b) The party not assuming the defense of any such claim shall render all reasonable assistance to the party assuming such defense, and all out-of-pocket costs of such assistance shall be for the account of the Indemnifying Party. (c) No such claims shall be settled other than by the party defending the same, and then only with the consent of the other party, which shall not be unreasonably withheld; provided, that the Indemnified Party shall have no obligation to consent to any settlement of any such claim which imposes on the Indemnified Party any liability or obligation which cannot be assumed and performed in full by the Indemnifying party. 11.4 Faulding shall have no liability hereunder for any claim which, if true, would constitute a breach of the warranties contained in Sections 9.1(c), (d) and (e) hereof (hereinafter an "Infringement Claim") based on Purepac's manufacture or distribution of the Product, as the case may be, after Purepac receives a notice from Faulding that Purepac should cease such manufacture or distribution due to an Infringement Claim. 12. TAXATION ISSUES 12.1 Each of the parties is aware that the commercial arrangements of this Agreement may be subject to transfer pricing reviews by the relevant taxation authorities in the Territory and Australia. As a result, this Agreement may be subject to internal reviews by either or both parties and to audits by the relevant taxation authorities. If as a result of such reviews or audits, it becomes necessary or advisable for either party (the "Affected Party")to change any commercial arrangements of this Agreement, including, without limitation, making retroactive adjustments, the other party, within thirty (30) days after written notification by the Affected Party, which notification shall explain in reasonable detail the reason for the proposed change, shall meet with the Affected Party and each of the parties agrees to negotiate in good faith, and to use its best efforts to reach agreement with respect to, any modifications to the commercial terms of this Agreement. In the event that the parties, despite their best efforts, cannot reach agreement with respect to any material change, which in the opinion of either party is necessary or advisable for the reasons set forth in this Section 12.1, either party, upon written notice to the other party, may terminate this Agreement. The provisions of Section 15.4 of this Agreement shall apply upon any termination of the Agreement pursuant to this Section 12.1. 12.2 Each of the parties agrees to provide reasonable assistance, at the Affected Party's reasonable cost, if the Affected Party is subject to a taxation audit that reviews any commercial arrangement of this Agreement. 13. NOTICES Notices provided under this Agreement to be given or served by either party on the other shall be given in writing and served personally or by prepaid registered airmail or by express mail or by means of facsimile to the following respective addresses or to such other addresses as the parties may hereafter advise each other in writing. It being agreed and understood by the parties that any such notice shall be deemed given and served on the dates transmitted by facsimile or a date ten (10) days after the date of airmail by post or express mail. To: Faulding The Company Secretary F.H. Faulding & Co. Limited 160 Greenhill Road PARKSIDE South Australia 5063 Facsimile +618 373 3120 To: Purepac President Purepac Pharmaceutical Co. 200 Elmora Avenue Elizabeth, New Jersey 07207 United States of America Facsimile +1 908 527-0649. 14. ASSIGNMENT Neither party to this Agreement shall assign any rights hereunder to third parties other than the right of payment of monies accrued without the prior written consent of the other party; provided, however, that the restriction contained herein shall in no way limit the rights to sublicense granted to Purepac under Section 7 of this Agreement or the rights of either party to make assignments to Affiliates. This Agreement shall be binding upon any permitted assignee or successor of either party. 15. TERM AND TERMINATION 15.1 This Agreement shall be for a term of ten (10) years commencing as of the date of this Agreement and thereafter shall be automatically renewed for successive periods of five (5) years unless either party shall give six (6) months prior written notice to the other party of its intention not to renew this Agreement. 15.2 This Agreement may be terminated by notice in writing by either party if the other party shall default in the performance of any of its obligations under this Agreement and such default shall continue for a period of not less than ninety (90) days after written notice specifying such default shall have been given; by either party if the other party makes an arrangement with its creditors or goes into receivership or liquidation (other than voluntary liquidation for the purpose of internal reorganization), or if a receiver or a receiver and manager is appointed in respect of the whole or part of the property or business of the party in default or by either party if a major part of the assets or all of the assets of the other party are disposed of to or compulsorily acquired by any other person. 15.3 This Agreement may be terminated at any time by Purepac by notice in writing to Faulding if Purepac determines, in its sole judgement, that the development, manufacture or sale of the Product has ceased to be commercially viable and relevant to the business objectives of Purepac. 15.4 Upon the latter of: (a) the termination or expiration of this Agreement, or (b) with respect to any records or other data that must be retained for a period of time in accordance with, and as set forth in, the regulations of the Regulatory Authority (the "Retention Period"), the expiration of the Retention Period, Purepac shall promptly deliver to Faulding all information with respect to the Technology in Purepac's possession and Faulding shall promptly deliver to Purepac all information with respect to any Enhancements and the parties shall as soon as conveniently possible reconcile all accounts. 16. FORCE MAJEURE Neither party shall be liable or be guilty of any breach of any provision of this Agreement for failure or delay in its part to perform any obligation where such failure or delay has been occasioned by any act of God, war, riot, fire, explosion, flood, sabotage, accident or breakdown of machinery, unavailability of fuel, labor, containers or transportation facilities, accidents of navigation or breakdown or damage of vessels or other conveyancers for air land or sea, other impediments or hindrances to transportation, government intervention, strikes or other labor disturbances or any other cause beyond the control of the parties. 17. NON WAIVER Any party's failure to exercise or enforce any right conferred upon it under this Agreement shall not be deemed to be a waiver of any such right or operate to bar the exercise or performance thereof at any time or times thereafter nor shall any party's waiver of any right under this Agreement at any given time including rights to any payment be deemed a waiver for any other time. 18. GOVERNING LAW This Agreement shall be deemed to be a contract made under and shall be governed by and construed in accordance with the laws of the State of New York. 19. ENTIRE AGREEMENT This Agreement incorporates the entire understanding of the parties and revokes and supersedes any and all agreements, contracts, understandings or arrangements that might have existed heretofore between the parties regarding the subject matter hereof. 20. HEADINGS The headings used in this Agreement are intended for guidance only and shall not be considered part of this written understanding between the parties hereto. IN WITNESS WHEREOF, this Agreement has been executed by the parties on the date first above written. PUREPAC PHARMACEUTICAL CO. By: /s/ ------------------------ F.H. FAULDING & CO. LIMITED By: /s/ ------------------------- SCHEDULE 1 A once daily ketoprofen product that will be the rated A/B substitutable for Oruvail 200 by the United States Food and Drug Administration. EX-10 5 EXHIBIT 10.17 SERVICES AGREEMENT, dated as of the 26th of June, 1995 by and between FAULDING HOSPITAL PRODUCTS, INC., a Delaware corporation having its principal place of business at 200 Elmora Avenue, Elizabeth, New Jersey(hereinafter referred to as "FHP") and PUREPAC PHARMACEUTICAL CO., a Delaware corporation having its principal office at 200 Elmora Avenue, Elizabeth, New Jersey (hereinafter referred to as "PUREPAC"). WHEREAS, FHP markets parenteral pharmaceutical products in the Territory. WHEREAS, PUREPAC possesses certain expertise in the administration, information systems and distribution of pharmaceutical products in the Territory; WHEREAS, FHP wishes to retain PUREPAC to provide certain services to facilitate its marketing efforts in the Territory, and PUREPAC wishes to provide such services, subject to the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree to the following: 1. DEFINITIONS For the purposes of this Agreement the following terms shall have the following meanings: 1.1 "Affiliate" shall mean (a) an entity controlled by a common parent that owns more than fifty percent of the voting stock of both such entity and one of the parties to this Agreement and (b) such parent company. 1.2 "DEA" shall mean the United States Drug Enforcement Agency. 1.3 "FPR" shall mean Faulding Puerto Rico, Inc., a Delaware Corporate and an Affiliate of FHP. 1.4 "FDA" shall mean the United States Federal Food and Drug Administration. 1.5 "FHP" shall mean Faulding Hospital Products, Inc., a Delaware corporation. 1.6 "Products" shall mean those products selected by FHP for marketing from time to time for which PUREPAC shall provide services as agreed by the parties hereunder. 1.7 "PUREPAC" shall mean Purepac Pharmaceutical Co., a Delaware company. 1.8 "Territory" shall mean the U.S. and its territories and possessions, including, without limitation, Puerto Rico. 1.9 "U.S." shall mean the United States of America. 2. SERVICES PROVIDED BY PUREPAC 2.1 Subject to the directives and supervision of FHP, as hereinafter set forth in Sections 4, 5, 6.3, 8 and 9 of this Agreement, PUREPAC will perform the following services for FHP: (a) customer support services, including, without limitation, the processing of orders, handling of customers' returns and complaints, and negotiations for the shipping and freighting of Products to FHP's customers and from FPR; (b) warehousing services, including, without limitation, the handling of all pack and ship services, invoicing orders and providing storage for the Products in accordance with all applicable requirements and regulations of the FDA and the Drug Enforcement Agency; (c) information and accounting function services, including, without limitation, billing, credit and collection services, liaison services with FHP's charge-back processing vendor in the transmittal and receipt of data regarding contracts, promotions and other like matters, as specifically designated by FHP,and such other accounting services as may be agreed to by the parties from time to time; (d) quality assurance services, including, without limitation, visual inspection of incoming goods and returns. 2.2 The parties agree that the services provided by PUREPAC hereunder will be provided by designated PUREPAC employees who are trained and qualified to provide such services and who will be reasonably acceptable to FHP. Unless the parties agree otherwise, PUREPAC will not be required to hire any additional employees or any independent contractors to provide any of the services provided hereunder. Purepac warrants and agrees that the extent and quality of services to be provided under this Agreement will be comparable to those services that Purepac provides for its own operations. 2.3 Unless the parties agree otherwise, all PUREPAC services provided under this Agreement will be performed at PUREPAC's premises in Elizabeth, New Jersey and at its warehouses in Elizabeth, New Jersey and Sparks, Nevada. 3. DUTIES OF FHP 3.1 FHP shall provide PUREPAC in writing with timely and accurate information with respect to any Products agreed by the parties to be shipped to, and any services to be performed by, PUREPAC hereunder. 3.2 FHP understands and agrees that it must give PUREPAC reasonable notice of any required services under this Agreement to avoid any unnecessary disruptions in the operation of PUREPAC's business. In the event of any conflict between the parties with respect to either of their respective obligations hereunder, either party's Services Liaison (as hereinafter defined in Section 4 of this Agreement), by written notice to the other party's Services Liaison, which reasonably details the items in dispute, may initiate a review of the parties' obligations. Within fourteen (14) days of the recipient's receipt of such notice, the parties will meet and negotiate in good faith to resolve any differences between them. 4. SERVICES LIAISONS 4.1 The parties shall each appoint a liaison (a "Services Liaison") to communicate regularly and at least on a weekly basis with his or her counterpart with regard to (a) the day-to-day operations of PUREPAC's provision of services hereunder, including, without limitation, any problems that may arise for which the attention or appraisal of the other party is necessary or advisable, (b) all information that FHP is required to give PUREPAC to enable PUREPAC to perform its duties hereunder, (c) all information that PUREPAC is required to give to FHP hereunder and (d) the occurrence of any unexpected events, as set forth in Section 5 of this Agreement. 4.2 Each of the parties agrees to supply all information to the other party's Services Liaison, as reasonably requested by such party's Liaison, to, as the case may be, enable FHP to deliver the Products and all relevant information concerning the Products to PUREPAC and facilitate the provision of PUREPAC's services hereunder in accordance with all applicable laws and regulations. 4.3 Either party may change its Services Liaison by written notice to the other party. 5. COOPERATION OF THE PARTIES 5.1 Each of the parties hereto agrees to cooperate fully with the other party in (a) carrying out its respective duties hereunder, (b) complying with all regulatory reporting requirements, (c) responding to any unexpected developments, including, without limitation, any inspection by a regulatory authority and any recall or serious adverse events affecting any of the Products and (d) identifying and installing any specialized storage and handling requirements for the Products. 5.2 Each of the parties agrees to give the other party notice immediately if it becomes aware of any regulatory authority's intention (a) to inspect the facility of either party or of an Affiliate of either party and such inspection is related to Products, shipped or to be shipped to Purepac under this Agreement, or services provided for under this Agreement; or (b) to take any other regulatory action with respect to any matter directly connected with the subject matter of this Agreement. 6. COSTS OF SERVICES/PAYMENTS 6.1 During the initial term of the Agreement, the annual cost of all services of PUREPAC, as set forth in Section 2 of this Agreement, other than the information and accounting functions set forth in Subsection 2(c), shall be $82,000 and the annual cost of all information and accounting services, as set forth in Subsection 2(c)hereof, shall be $24,000. The costs of all such services have been, and will be, calculated using Purepac's standard allocation procedures based on usage, consistent with United States generally accepted accounting procedures. All of such services shall be payable in twelve (12) equal monthly payments, respectively, of $6,833.33 and $2,000 each. 6.2 In addition and subject to the provisions of Subsection 6.3 hereof, FHP shall recompense PUREPAC for any direct costs incurred in connection with providing the aforementioned services, including, without limitation, the costs of shipping the Products, telephone, fax and express mail costs and reasonable transportation and lodging expenses incurred by PUREPAC employees in the provision of services hereunder, but excluding general corporate overhead and the costs of compensation(including fringe benefits) of PUREPAC employees who are providing services hereunder. 6.3 PUREPAC agrees (a) to submit to FHP for its approval any invoices and estimates of future expenditures in excess of $1000 and (b) not to make commitments to any third party in excess of $1000 without FHP's prior approval. 6.4 The parties agree that within five (5) working days after the end of each month, PUREPAC shall submit to FHP an invoice for services, as set forth in Subsection 6.1 of this Agreement and a cost statement detailing the costs that were incurred during that month, as described in Subsection 6.2 hereof (collectively, the "Invoice"). Subject to the provisions of the immediately following sentence, FHP shall pay to PUREPAC the amount due as reflected in the Invoice within thirty (30) days of its receipt of such Invoice. FHP may withhold from its payment to PUREPAC only any amount in dispute with regard to the costs described in Subsection 6.2 hereof; provided, however that within 10 days after its receipt of any such Invoice, FHP shall initiate a review of PUREPAC's costs, as reflected in the Invoice, by written notice to PUREPAC's Services Liaison. Within 10 days of PUREPAC's receipt of such notice, the Services Liaisons will meet and negotiate in good faith to resolve any differences. 6.5 Within thirty (30) business days after the end of any calendar quarter, if the projected costs of Purepac's services hereunder for the following calendar quarter are expected to be greater than 120% of the costs previously forecasted by Purepac, Purepac may give notice in writing to FHP for a review of the prices of services described in Section 6.1 of this Agreement. The parties agree to meet within twenty (20) days of FHP's receipt of such notice and to negotiate in good faith the commercial terms between them and, if necessary, any amendments to the terms of this Agreement. 6.6 All payments made under this Section 6 may be accomplished by direct payment or credit against any amount due FHP from PUREPAC or otherwise, as the parties shall agree. 7. INITIAL TERM AND EXTENSION This Agreement shall be for an initial term commencing as of the date hereof and terminating on the first anniversary of the commencement date. The parties agree to hold a meeting not less than sixty (60) days before the end of the initial term to review PUREPAC's services to date and the projected twelve-month forecasts of each of FHP and PUREPAC with regard, respectively, to the volume of Products and costs of services to be provided and to discuss whether to extend the Agreement beyond the initial term. The parties agree to negotiate in good faith the decision whether to extend the initial term of this Agreement and the commercial terms between the parties applicable during any such extension period. Each of the parties shall provide to the other party, not less than ten (10) business days prior to the meeting, any written records applicable to the review and reasonably requested by the other party for such meeting, or if the request is made less than ten (10) business days prior to the meeting, within three (3) business days of the request. 8. RECORDS AND REPORTS 8.1 PUREPAC agrees to maintain accurate records and to prepare in a timely manner monthly reports on the ongoing services provided hereunder and to deliver promptly to FHP's Services Liaison, upon his or her request, copies of such records and reports. The records and monthly reports shall contain information reasonably agreed to by the parties, consistent with applicable rules and regulations in the Territory, including, without limitation, the rules and regulations of the FDA and DEA and all financial auditing regulations. 8.2 PUREPAC agrees to keep an inventory and maintain accurate records of the receipt, storage, handling and administration of the Products in such format and for such time period as FHP shall reasonably require, consistent with applicable regulatory requirements in the Territory, and to supply FHP with copies thereof upon request. 8.3 PUREPAC agrees contemporaneously to furnish FHP with copies of all correspondence forwarded by PUREPAC to any third party under FHP's letterhead or otherwise in FHP's name or on FHP's behalf. 9. AUDITS; RETENTION OF RECORDS 9.1 FHP shall have the right, during regular business hours upon giving reasonable prior written notice,to have an independent auditor approved by Purepac, audit Purepac's books and records relative to the costs of services provided hereunder. PUREPAC agrees to grant representatives of FHP, at FHP's cost, the right to inspect PUREPAC's quality assurance procedures and records and reports in regard to the services performed hereunder during PUREPAC's normal business hours upon prior reasonable written notice by FHP to PUREPAC and to permit any inspection by any regulatory authority, including, without limitation, the DEA, of such records and reports. 9.2 FHP shall assume all risk of loss and indemnify and hold PUREPAC harmless from and against any and all loss, liability, damage, claim and expense including, but not limited to, reasonable attorneys' fees arising out of or resulting from such audits or inspections. 9.3 PUREPAC shall retain any records or data with respect to the services, and costs of services, provided hereunder for a period equal to the longer of the period of time in accordance with the pertinent regulations and requirments of the regulatory authorities in the Territory, including, without limitation, the regulations and requirements of the FDA, DEA, U.S. Internal Revenue Service and U.S. Securities and Exchange Commission and three (3) years after the date that the services were provided by PUREPAC hereunder. 10. CONFIDENTIALITY. 10.1 Each of the parties agrees that it will not disclose any confidential information of the other party, including, without limitation, the business records, sales figures, customer information or product lists, of such party that it may acquire at any time during the term of this Agreement without the prior written consent of such party and that it shall use all reasonable efforts to prevent unauthorized publication or disclosure by any person of such confidential information including requiring its employees, consultants or agents to enter into similar confidentiality agreements in relation to such confidential information. 10.2 The obligations undertaken by each party under this Section 10 shall continue in force for a period of five (5) years following the termination or expiration of this Agreement. 10.3 The obligations contained in this Section do not apply to any information: (a) which was at the time of receipt by a party in the public domain or generally known in the pharmaceutical manufacturing industry otherwise than by breach of a party's duty of confidentiality; (b) which a party can establish to have been known to it at the time of receipt from the other party and not to have been acquired directly or indirectly from the other party; (c) acquired by a party from a third party otherwise than in breach of an obligation of confidence to the other party; (d) required by law to be provided to governmental agencies but only for the purpose of providing it to such governmental agencies; and (e) disclosed to an Affiliate of either party for purposes consistent with this Agreement. 11. RELATIONSHIP OF PARTIES. Nothing contained in this Agreement shall be construed so as to operate or to place any party in the relationship of employee or agent or joint venturer or legal representative of any other party and it is hereby expressly agreed and acknowledged that each of the parties is an independent contracting party which does not have the authority or power for or on behalf of the other party, except as expressly granted herein, to enter into any contract, to incur debts, to accept money, to assume any obligations or to make any warranties or representations whatsoever. 12. INDEMNIFICATIONS. 12.1 PUREPAC hereby agrees to indemnify and to hold harmless FHP and any Affiliates of FHP from any and all loss (except consequential loss, such as, for example, loss of business or of profits), compensatory loss for personal injury, liability , damage, claim, cost and expense (including, without limitation, reasonable attorney's fees) arising from or in connection with any breach by PUREPAC of this Agreement or of any other obligation of PUREPAC hereunder (including any breach by PUREPAC of the warranty made in Section 2.2 of this Agreement.) 12.2 FHP agrees to indemnify and hold harmless PUREPAC and any Affiliates of PUREPAC from any and all loss (except consequential loss, such as, for example, loss of business or of profits), liability, damage, claim, cost and expense (including without limitation, attorney's fees and disbursements) arising from or in connection with: (a) any breach of this Agreement by FHP; (b) any claim, express, implied or statutory made by FHP as to the efficacy or safety of any of the Products or the use to be made by any purchaser of the Products or any claim arising out of or relating to the use of FHP's trademark or other name, logo or emblem; and (c) other act or omission of FHP in connection with the manufacture, marketing, distribution and sale of the Products. 12.3 Each party hereto shall give prompt written notice to the other party of any actual or threatened claim which might give rise to a claim for indemnification hereunder. If the facts giving rise to any indemnification hereunder shall involve any actual or threatened claim or demand by any third party against either party hereto (the "Indemnitee"), the Indemnitee shall give notice of such fact to the other party against whom such claim for indemnification is or will be made (the "Indemnitor"). The Indemnitor shall then be entitled (without prejudice to the right of the Indemnitee to participate at its own expense through counsel of its own choosing) to defend such claim in the name of the Indemnitee at the expense of the Indemnitor and through any counsel of the Indemnitor's own choosing, reasonably satisfactory to the Indemnitee, if the Indemnitor gives written notice of its intention to do so to the Indemnitee within thirty days after receipt of the aforesaid notice from the Indemnitee. Whether or not the Indemnitor chooses to so defend any such claim, all parties hereto shall cooperate in the defense thereof and shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably required in connection therewith. No claim shall be settled for which any Indemnitor shall be liable without the consent of the Indemnitor, which consent shall not be unreasonably withheld. 13. NOTICES Notices provided under this Agreement to be given or served by either party on the other shall be given in writing and served personally or by prepaid registered airmail post or by express mail or by overnight courier to the following respective addresses or to such other addresses as the parties may hereafter advise each other in writing. It being agreed and understood by the parties that any such notice shall be deemed given and served four (4) days after the date of airmail by post or express mail: To: FHP President FAULDING HOSPITAL PRODUCTS, INC. 274 Riverside Avenue Westport, Connecticut 06880 Facsimile (203) 221-7005 with a copy to: Services Liaison FAULDING HOSPITAL PRODUCTS, INC. 274 Riverside Avenue Westport, Connecticut 06880 Facsimile (203) 221-7005 To: PUREPAC Chief Operating Officer PUREPAC PHARMACEUTICAL CO. 200 Elmora Avenue Elizabeth, New Jersey 07207 Facsimile (908) 527-0649 with a copy to: Services Liaison PUREPAC PHARMACEUTICAL CO. 200 Elmora Avenue Elizabeth, New Jersey 07207 Facsimile (908) 527-0649 14. TERMINATION 14.1 This Agreement may be terminated by notice in writing by either party if the other party shall default in the performance of any of its obligations under this Agreement and such default shall continue for a period of not less than ninety (90) days after written notice specifying such default shall have been given; by either party if the other party makes an arrangement with its creditors or goes into receivership or liquidation, or if a receiver or a receiver and manager is appointed in respect of the whole or part of the property or business of the party in default or by either party if a major part of the assets or all of the assets of the other party are disposed of or acquired by any other person. 14.2 Upon termination or expiration of this Agreement, the parties shall as soon as conveniently possible reconcile all accounts and PUREPAC, as instructed by FHP, will return or otherwise dispose of all Products delivered to PUREPAC hereunder. 15. TAXATION ISSUES 15.1 Each of the parties is aware that the commercial arrangements of this Agreement may be subject to transfer pricing reviews by the relevant taxation authorities in the Territory. As a result, this Agreement may be subject to internal reviews by either or both parties and to audits by the relevant taxation authorities. If as a result of such reviews or audits, it becomes necessary or advisable for either party (the "Affected Party")to change any commercial arrangements of this Agreement, including, without limitation, making retroactive adjustments, the other party, within thirty (30) days after written notification by the Affected Party, which notification shall explain in reasonable detail the reason for the proposed change, shall meet with the Affected Party and each of the parties agrees to negotiate in good faith, and use its best efforts to reach agreement with respect to, any modification to the commercial terms of this Agreement. In the event that the parties, despite their best efforts, cannot reach agreement with respect to any material change, which in the opinion of either party is necessary or advisable for the reasons set forth in this Section 15.1, either party, upon written notice to the other party, may terminate this Agreement. The provisions of Section 14.4 of this Agreement shall apply upon any termination of the Agreement pursuant to this Section 15.1. 15.2 Each of the parties agrees to provide reasonable assistance, at the Affected Party's reasonable cost, if the Affected Party is subject to a taxation audit that reviews any commercial arrangement of this Agreement. 16. NON WAIVER Any party's failure to exercise or enforce any right conferred upon it under this Agreement shall not be deemed to be a waiver of any such right or operate to bar the exercise or performance thereof at any time or times thereafter nor shall any party's waiver of any right under this Agreement at any given time including rights to any payment be deemed a waiver for any other time. 17. GOVERNING LAW This Agreement shall be deemed to be a contract made under and shall be governed by and construed in accordance with the laws of the State of New York. 18. ASSIGNMENT AND SUB-CONTRACTING The rights and obligations covered hereunder are personal to each party hereto, and for this reason, this Agreement shall not be assignable by either party in whole or in part; nor shall either party sub-contract any of its obligations hereunder without the prior written consent of the other party; provided, however, that the restriction contained herein shall in no way limit the rights of either party to make assignments to its parent or any of its affiliates. This Agreement shall be binding upon any permitted assignee or successor of either party. 19. FORCE MAJEURE Neither party shall be liable or be in breach of any provision of this Agreement for any failure or delay on its part to perform any obligation where such failure or delay has been occasioned by any act of God, war, riot, fire, explosion, flood, sabotage, accident or breakdown of machinery, unavailability of fuel, labor, containers or transportation facilities, accidents of navigation or breakdown or damage of vessels or other conveyancers for air land or sea, other impediments or hindrances to transportation, government intervention, strikes or other labor disturbances or any other cause beyond the control of the parties. 20. ENTIRE AGREEMENT This Agreement incorporates the entire understanding of the parties and revokes and supersedes any and all agreements, contracts, understandings or arrangements that might have existed heretofore between the parties regarding the subject matter hereof. 21. HEADINGS The headings used in this Agreement are intended for guidance only and shall not be considered part of this written understanding between the parties hereto. IN WITNESS WHEREOF, this Agreement has been executed by the parties on the date first above written. PUREPAC PHARMACEUTICAL CO. By: /s/ ---------------------------- FAULDING HOSPITAL PRODUCTS, INC. By: /s/ ---------------------------- EX-10 6 EXHIBIT 10.18 SERVICES AGREEMENT, dated as of the 26th of June, 1995 by and between Faulding Inc., a Delaware corporation having its principal place of business at 274 Riverside Ave. Westport, Connecticut 06880 (hereinafter referred to as "Faulding") and Purepac Pharmaceutical Co., a Delaware corporation having its principal office at 200 Elmora Avenue, Elizabeth New Jersey (hereinafter referred to as "Purepac"). WHEREAS, Faulding has heretofore entered into a Toll Manufacturing Agreement with Purepac dated as of August 1, 1993, which agreement was amended as of December 23, 1994 ("the Toll Manufacturing Agreement") pursuant to which Faulding has contracted with Purepac for the manufacture of the Product (as hereinafter defined); WHEREAS, Faulding has entered into a supply and distribution agreement (the "Distribution Agreement") with Bristol-Myers Squibb Company ("the Distributor") dated December 23, 1994 pursuant to which Faulding has agreed to grant to the Distributor the exclusive right to distribute the Product in the Territory (as hereinafter defined) and has agreed in connection with such grant to provide, or arrange to provide, certain services to the Distributor; WHEREAS, the parties, in light of certain provisions of the Distribution Agreement, wish to clarify each of their responsibilities under the Toll Manufacturing Agreement and Faulding wishes to retain Purepac to provide certain additional services, and Purepac wishes to provide such services, subject to the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree to the following: 1. DEFINITIONS For the purposes of this Agreement the following terms shall have the following meanings: 1.1 "Development Period" shall mean the period commencing as of August 1, 1993 and ending on the date of the validation and commencement of commercial production of the Product. 1.2 "Distribution Agreement" shall mean the Supply and Distribution Agreement dated December 23, 1994 between Faulding and the Distributor. 1.3 "Distributor" shall mean Bristol-Myers Squibb Company, a corporation organized under the laws of the State of Delaware. 1.4 "FDA" shall mean the United States Federal Food and Drug Administration. 1.5 "F. H. Faulding" shall mean F.H. Faulding & Co. Limited, a South Australian corporation. 1.6 "Fiscal Year" means the twelve month period commencing on July 1 of each year and ending on June 30, or any other twelve month period designated as the fiscal year of Purepac. 1.7 "NDA" shall mean the New Drug Application to be filed with the FDA in respect of the Product. 1.8 "Product" shall mean an oral sustained release morphine product comprising a multitude of polymer coated sustained released pellets of morphine sulphate encapsulated in hard gelatin capsules containing 20 mg, 50 mg and 100 mg doses or any other dose in the range of 20 mg to 100 mg of polymer coated sustained release pellets of morphine sulphate. 1.9 "Specifications" shall mean the written specifications with respect to the Product mutually agreed to by the parties hereto, which Specifications may be changed or modified only as agreed to by the parties in writing. 1.10 "Territory" shall mean the United States of America and its territories and possessions, including, without limitation, Puerto Rico. 1.11 "Toll Manufacturing Agreement" shall mean the Toll Manufacturing Agreement between Faulding and Purepac dated as of August 1, 1993, as amended as of December 24, 1994. 1.12 "Trademark" shall mean that mark "Kadian" or any replacement mark for the marketing and sale of the Product agreed to by the parties as contemplated by Section 14 of the Distribution Agreement. 2. QUALITY CONTROL AND PRODUCT ACCEPTANCE. 2.1 Purepac will ensure that deliveries of the Product to Purepac's warehouse are accompanied by quality control certificates of analysis and will send copies of such certificates of analysis contemporaneously by telecopier (confirmed by hard copies mailed) to Faulding and the Distributor. 2.2 Purepac agrees to perform quality control testing of any returned Product as follows. In the event that any of the Product is returned to Purepac's warehouse by the Distributor or the Distributor's customers for the reason that said Product is claimed not to meet Specifications or is otherwise defective, Purepac shall notify Faulding within five (5) days of such return by written notice (the "Return Notice") specifying, if applicable, the manner in which such Product is claimed not to meet Specifications or to be otherwise defective. In the case of a return received by the Distributor, upon Faulding's receipt of written notice from the Distributor (the "Distributor's Return Notice"), Faulding may request the Distributor to return the Product which is claimed to be defective or samples thereof to Purepac for testing and will contemporaneously notify Purepac of such request. Upon receipt and testing of the Product, if Purepac concludes that such Product does not conform to the Specifications or is otherwise defective and that such departure from Specifications or defect is due to the fault or act of Purepac (collectively, a "Defect Caused by Purepac"), Purepac will use its best efforts to replace such Product, free of charge, with conforming goods within ninety (90) days from, in the case of a return to Purepac's warehouse, the return of such Product, or, in the case of a return to the Distributor, Faulding's receipt of the Distributor's Return Notice or Purepac's receipt of the samples, whichever is later. If Purepac concludes that the Product conforms to the Specifications, is not otherwise defective or that the Product defect is not a Defect Caused by Purepac, Purepac shall promptly notify Faulding of its findings and shall cooperate, as reasonably requested by Faulding, in Faulding's communications with the Distributor and the submission, if necessary of the Product to an independent laboratory for analysis in the form of a written report ("Report"). If Faulding notifies the Distributor that it disagrees with the return of Product to Purepac's warehouse or with a Distributor's Return Notice, and if the Distributor submits a new purchase order for Product to Faulding at such time for the same amount of Product as in dispute, upon notification by Faulding, Purepac agrees to use reasonable efforts to deliver such Product as promptly as commercially practicable. In the event that the Report determines that any of the Product returned to the Distributor or Purepac's warehouse does not meet Specifications or is otherwise defective and such defect is a Defect Caused by Purepac, Purepac will use its best efforts to replace such Product with conforming goods, free of charge, within ninety (90) days from the date of the Report. All transportation, shipping and insurance costs and other fees incidental to the shipping back to Purepac of Product conceded by Purepac or determined by the Report to be a Defect Caused by Purepac and the shipping to the Distributor of the replacement Product (and costs of the independent laboratory only if the Report of which has concluded that the Product does not meet Specifications or is otherwise defective due to a Defect Caused by Purepac) will be paid for by Purepac. 2.3 Purepac agrees to accept any return of the Product from the Distributor, whether the Product in question is dated or claimed to be defective, it being understood that, unless Purepac is so required, at its cost, to replace such returned Product for the reasons set forth in Section 2.2 above, Faulding shall bear, or ensure that the Distributor bears, the cost of any such returned Product at the applicable invoice price, as agreed to by the Distributor and Faulding in the Distribution Agreement, and shall indemnify and hold Purepac harmless from any additional expenditures relating to the shipping back to Purepac of Product and the shipping by Purepac of any replacement Product. Purepac shall dispose of all returned Product by, as appropriate, including it in the Distributor's inventory or destroying it in accordance with applicable legal and regulatory requirements. All commercially reasonable costs of the handling of returned Product, other than that determined to have returned due to a Defect Caused by Purepac, shall be charged to the Distributor or otherwise borne by Faulding and Faulding shall indemnify and hold Purepac harmless from any such costs. 2.4 No later than the time each batch of the Product is released by Purepac and transferred to its finished goods warehouse, Purepac shall furnish the Distributor with a specimen Product sample from such batch in order that the Distributor may conduct its own quality control assays. Purepac shall not ship out any Product from any batch until and unless the Distributor, after its independent quality assays, has furnished Purepac with a written release with respect to such batch. Faulding shall use its best efforts to cause the Distributor to conduct such assays and furnish Purepac with a written release with respect to each such batch in a timely manner. Any disagreement as to whether any batch shall be regarded as defective (thereby requiring Purepac to replace such batch) shall be dealt with as provided in Section 2.2 of this Agreement and Section 6(b) of the Distribution Agreement. 2.5 Purepac agrees to grant representatives of F.H. Faulding and the Distributor, at their respective costs, the right to inspect Purepac's quality control procedures and records in regard to the manufacture of the Product during Purepac's normal business hours upon prior reasonable written notice by Faulding to Purepac and, in particular, the right at any time and from time to time during business hours, after prior arrangements have been established with Purepac, to inspect that part of Purepac's plant facility (or facilities) which is engaged in the manufacture, preparation, processing or warehousing of the Product for the sole purpose of reviewing Purepac's compliance with applicable current Good Manufacturing Practice and applicable DEA regulations as they specifically relate to the Product. Faulding shall assume all risk of loss and indemnify and hold Purepac harmless from and against any and all loss, liability, damage, claim and expense including, but not limited to, reasonable attorneys' fees arising out of or resulting from either F.H. Faulding's or the Distributor's employees' acts or omissions at Purepac facilities. 3. RECALLS. 3.1 In the event that Faulding or Purepac determines that a Product does not conform to the Specifications or that it should be recalled for any other reason, prior to taking any action, it shall give written notice to the other party and the Distributor specifying its reasons for the necessity of a recall (the "Recall Notice") or if either party receives a Recall Notice from the Distributor, it shall promptly notify the other party. If either Faulding or Purepac has requested the recall or Faulding agrees with the determination made by the Distributor as stated in a Recall Notice given by the Distributor to Faulding, and relayed by Faulding to Purepac, or the FDA has requested a recall or voluntary market withdrawal, the parties agree that the Distributor shall handle the administration of the recall and that Purepac shall use its best efforts, consistent with relevant requirements and restrictions of the FDA, to replace all Product recalled within one hundred twenty (120) days from the date of the Recall Notice. The Distributor shall be reimbursed for all out-of-pocket expenses relating to such recall (a) by Purepac if it is determined, as set forth in Section 2.2, that the recalled Product does not meet Specifications or is otherwise defective as a result of a Defect Caused by Purepac and (b) by Faulding if the recall has been agreed to by the parties for any other reason. However, if the Distributor, in its sole determination, with a Recall Notice to Faulding, initiates and implements a Product recall, Purepac will not be required to replace the recalled Product and reimburse the Distributor for expenses as provided in the preceding sentence or Section 3.2, without a determination, as set forth in Section 2.2 that the Product recalled did not meet Specifications or is otherwise defective. 3.2 The parties agree to abide by any recall/voluntary market withdrawal request of the FDA. Moreover, the parties agree that in all cases, the Distributor will handle the administration of the recalls as follows: (a) If within ten (10) days from the date of a Recall Notice from the Distributor, Faulding has been unable to reach an agreement with the Distributor concerning the necessity of a recall, the parties hereto agree that the Product shall be submitted to a mutually acceptable independent laboratory for a Report, the cost of which shall be borne by Purepac only if the finding of the Report is that the Product does not meet Specifications or is otherwise defective as a result of a Defect Caused by Purepac and otherwise, as the case may be, by Faulding or the Distributor as set forth under the terms of the Distribution Agreement. (b) In the event that the finding of the Report is that the Product does not meet Specifications or is otherwise defective as a result of a Defect Caused by Purepac, Purepac shall, consistent with relevant requirements and restrictions of the FDA and at its own cost, use its best efforts to replace all Product recalled within one hundred twenty (120) days from the date of the Report and shall reimburse the Distributor for all reasonable out-of-pocket expenses relating to such recall. In the event that the discrepancy is resolved in the Report against Faulding\Purepac for any reason other than that the Product does not meet Specifications or is defective as a result of a Defect Caused by Purepac, the parties agree that the Distributor shall handle the administration of the recall (unless the Distributor has by that time already implemented the recall in question pursuant to the last sentence of Section 3.1} and Purepac, at Faulding's cost, shall use its best efforts , consistent with relevant requirements and restrictions of the FDA, to replace all Product recalled within one hundred twenty (120) days from the date of the Report and Faulding shall reimburse the Distributor for all reasonable out-of-pocket expenses relating to such recall. In the event that the discrepancy is resolved in the Report in favor of Faulding\Purepac and the Distributor elects to recall the Product notwithstanding the Report, the parties agree that the Distributor shall handle the administration of the recall (unless the Distributor has by that time already implemented the recall in question pursuant to the last sentence of Section 3.1). In such event, neither of the parties to this Agreement will have any obligation with respect to replacement of the Product or reimbursement of the Distributor's expenses. 3.3 Faulding and Purepac shall each advise the other party, by written notice, in the event that it learns of any facts or circumstances which could warrant the recall of the Product for reasons of safety, health or efficacy. 4. THE TRADEMARK AND LABELING 4.1 Purepac shall package and label the Product in accordance with the packaging and labeling provided by Faulding (which, as set forth in the Distribution Agreement, shall receive such packaging and labeling from the Distributor), which shall comply with FDA specifications and requirements; provided, however that Purepac has received camera ready labeling and insert copy in the appropriate quantities for Purepac's use in packaging the Product and provided, further that Purepac is supplied with the art work for such packaging and labeling. The parties agree that the packaging and labeling will carry the Trademark and the packaging will indicate the actual manufacturer of the Product. Purepac acknowledges and agrees, as approved Product manufacturer under the NDA, that it shall be responsible for any of its own acts and omissions with respect to the form and content of all Product labels and other aspects of Product packaging and labeling (collectively, the "Labeling") except to the extent that any claims with respect to the Labeling relate to label information and content that either Faulding or the Distributor supplied Purepac. Faulding agrees to indemnify Purepac and hold it harmless from all such claims with respect to the Labeling to the extent that such claims relate to label information and content that either Faulding or the Distributor supplied Purepac. 4.2 The parties understand and agree that the Distributor, under Section 14(e) of the Distribution Agreement, has granted to both of the parties hereto permission to refer to the Trademark (and any substitute, replacement or additional trademark relating to the Product) in its regulatory filings, annual reports and other financial and corporate reporting obligations, brochures and promotional and public relation materials. 5. COSTS OF SERVICES/PAYMENTS 5.1 Each of the parties agrees that the aggregate cost of services provided to Faulding by Purepac through March 31, 1995 pursuant to the Toll Manufacturing Agreement and this Service Agreement, as detailed on Schedule 1, equals $U.S.1,413,558, which Faulding has heretofore paid to Purepac in full. 5.2 The parties agree that within five (5) working days after the end of each month, Purepac shall submit to Faulding a statement detailing the costs of services during that month (a "Cost Statement"). Subject to the provisions of the immediately following sentence and Section 6 of this Agreement, Faulding shall pay to Purepac the amount due as reflected in the Cost Statement within thirty (30) days of its receipt of such Statement. Faulding may withhold from its payment to Purepac only any amount in dispute with regard to such payment; provided, however that within 10 days after its receipt of any Cost Statement, Faulding shall initiate a review of Purepac's costs, as reflected in the Statement, by written notice to Purepac. Within 10 days of Purepac's receipt of such notice, the parties will meet and negotiate in good faith to resolve any differences. 5.3 Both parties acknowledge and agree that they expect that the costs, chargeable to Faulding as set forth in Section 5.2 hereof, that are associated with services (a) set forth in this Services Agreement will continue throughout the term of this Agreement and (b) set forth in the Toll Manufacturing Agreement (the "Toll Manufacturing Costs") will continue only through the Development Period; provided, however, that if Purepac, at any time, discovers that any such Toll Manufacturing Costs are likely to continue after the end of the Development Period, it shall immediately so advise Faulding in writing, including a detailed description of the service to be provided, the estimated cost and duration of such service to be provided after the end of the Development Period and the rationale for including the cost of such service as a Toll Manufacturing Cost. Upon Faulding's receipt of such notice and provided that such Toll Manufacturing Cost would have been chargeable to Faulding if it had been incurred during the Development Period, then Purepac shall have the right to invoice Faulding, and Faulding shall have the obligation to pay Purepac, for such Toll Manufacturing Services that are incurred after the Development Period. If Faulding disagrees that any such charge is a Toll Manufacturing Charge, it shall give Purepac written notice, which shall detail its objections, and within ten (10) days of Purepac's receipt of such notice, the parties will meet and negotiate in good faith to resolve any differences between them. 5.4 All payments made under this Section 5 shall be payable in United States Dollars. Such payments may be accomplished by direct payment or credit against any amount due Faulding from Purepac or otherwise, as the parties shall agree. 6. BUDGET REVIEW AND REVIEW OF SERVICES 6.1 Set forth on Schedules 2 and 3 of this Agreement are, respectively, the (a) estimated costs of services provided, and to be provided, by Purepac to Faulding, under the Toll Manufacturing Agreement and this Services Agreement, from April 1, 1995 through June 30, 1995 and (b) forecast of the cost of services to be provided by Purepac to Faulding, under both such agreements(the "Budget Forecast") during the 1995/96 Fiscal Year. All of such costs will be calculated using Purepac's standard allocation procedures based on usage, consistent with United States generally accepted accounting procedures. 6.2 During the Development Period, no later than 120 days before the end of each Fiscal Year, Purepac shall submit to Faulding a Budget Forecast of its projected costs for the following Fiscal Year. Within 30 days after its receipt of Purepac's Budget Forecast, Faulding may initiate a review of Purepac's projected costs by written notice to Purepac. Within seven (7) days of Purepac's receipt of such notice, the parties will meet and negotiate in good faith to resolve any differences between them. 6.3 During the Development Period, Purepac shall review at least quarterly the projected costs in its current Budget Forecast and shall promptly notify Faulding in writing whenever current projected costs exceed 115% of the costs previously forecasted and delivered to Faulding. Upon Faulding's receipt of such notice, Faulding may give notice in writing to Purepac (the "Demand Notice"), requiring a review of Purepac's projected costs within fourteen (14) days of Purepac's receipt of the Demand Notice. 6.4 Faulding understands and agrees that it must give Purepac reasonable notice of any required services under this Agreement and the Toll Manufacturing Agreement to avoid any unnecessary disruptions in the operation of Purepac's business. In the event of any conflict between the parties with respect to either of their respective obligations hereunder or under the Toll Manufacturing Agreement, either party, by written notice to the other party which reasonably details the items in dispute, may initiate a review of the parties' obligations. Within fourteen (14) days of the recipient's receipt of such notice, the parties will meet and negotiate in good faith to resolve any differences between them. 7. TAXATION ISSUES 7.1 Each of the parties is aware that the commercial arrangements of this Agreement may be subject to transfer pricing reviews by the relevant taxation authorities in the Territory and Australia. As a result, this Agreement may be subject to internal reviews by either or both parties and to audits by the relevant taxation authorities. If as a result of such reviews or audits, it becomes necessary or advisable for either party (the "Affected Party")to change any commercial arrangements of this Agreement, including, without limitation, making retroactive adjustments, the other party, within thirty (30) days after written notification by the Affected Party, which notification shall explain in reasonable detail the reason for the proposed change, shall meet with the Affected Party and each of the parties agrees to negotiate in good faith, and to use its best efforts to reach agreement with respect to, any modifications to the commercial terms of this Agreement. In the event that the parties, despite their best efforts, cannot reach agreement with respect to any material change, which in the opinion of either party is necessary or advisable for the reasons set forth in this Section 7.1, either party, upon written notice to the other party, may terminate this Agreement. 7.2 Each of the parties agrees to provide reasonable assistance, at the other party's reasonable cost, if such other party is subject to a taxation audit that reviews any commercial arrangements of this Agreement. 8. TERM AND TERMINATION The term of this Agreement shall commence as of the date hereof and shall continue until the expiration or termination of either or both of the Distribution Agreement and/or the Toll Manufacturing Agreement. 9. NOTICES Notices provided under this Agreement to be given or served by either party on the other shall be given in writing and served personally or by prepaid registered airmail post or by express mail or by overnight courier to the following respective addresses or to such other addresses as the parties may hereafter advise each other in writing. It being agreed and understood by the parties that any such notice shall be deemed given and served four (4) days after the date of airmail by post or express mail: To: Faulding President Faulding Inc. 274 Riverside Ave. Westport, Connecticut 06880 Facsimile (203) 221-7005 To: Purepac Chief Operating Officer Purepac Pharmaceutical Co. 200 Elmora Avenue Elizabeth, New Jersey 07207 Facsimile (908) 527-0649 10. NON WAIVER Any party's failure to exercise or enforce any right conferred upon it under this Agreement shall not be deemed to be a waiver of any such right or operate to bar the exercise or performance thereof at any time or times thereafter nor shall any party's waiver of any right under this Agreement at any given time including rights to any payment be deemed a waiver for any other time. 11. GOVERNING LAW This Agreement shall be deemed to be a contract made under and shall be governed by and construed in accordance with the laws of the State of New Jersey. 12. ASSIGNMENT AND SUB-CONTRACTING The rights and obligations covered hereunder are personal to each party hereto, and for this reason, this Agreement shall not be assignable by either party in whole or in part; nor shall either party sub-contract any of its obligations hereunder without the prior written consent of the other party; provided, however, that the restriction contained herein shall in no way limit the rights of either party to make assignments to its parent or any of its affiliates. This Agreement shall be binding upon any permitted assignee or successor of either party. 13. ENTIRE AGREEMENT This Agreement and the Toll Manufacturing Agreement incorporate the entire understanding of the parties and revokes and supersedes any and all agreements, contracts, understandings or arrangements that might have existed heretofore between the parties regarding the subject matter hereof. 14. HEADINGS The headings used in this Agreement are intended for guidance only and shall not be considered part of this written understanding between the parties hereto. IN WITNESS WHEREOF, this Agreement has been executed by the parties on the date first above written. PUREPAC PHARMACEUTICAL CO. By: /s/ ----------------------- FAULDING INC. By: /s/ ------------------------ SCHEDULE 1 US $ DATE INVOICE NUMBERS AMOUNT Dec. 31, 93 FHF-001-12 $ 39,100 Mar. 31, 94 FHF-002-03 $13,750 Jun. 30, 94 FHF-011-06 89,148 SUB-TOTAL FY 93/4 141,998 July 31, 94 FHF-001-07 80,743 July 31, 94 FHF-001-07 4,331 Aug. 31, 94 FHF-001-08 4,611 Sept. 30, 94 FHF-011-09A 199,535 Oct. 26, 94 FHF-011-10 128,427 Nov. 28, 94 FHF-011-11 168,720 Dec. 29, 94 FHF-011-12 174,256 Jan. 24, 95 FHF-011-01 127,863 Feb. 28, 95 FHF-011-02 111,917 Mar. 28, 95 FHF-011-03 121,332 Apr. 24, 95 FHF-011-04 149,825 SUB-TOTAL FY 94/5 $1,271,560 LIFE OF PROJECT $1,413,558 SCHEDULE 2 KADIAN CHARGES TO FAULDING FOR THE PERIOD APRIL 1 TO JUNE 30, 1995 April, 1995 $115,693 (actual - billed 5/29/95) May, 1995 $110,000 (forecast) June, 1995 $80,000 (forecast) EX-10 7 EXHIBIT 10.19 CO-DEVELOPMENT, SUPPLY AND LICENSING AGREEMENT made as of the 26th day of June, 1995 between F.H. FAULDING & CO. LIMITED of 160 Greenhill Road, Parkside in the State of South Australia (hereinafter called "Faulding") and PUREPAC PHARMACEUTICAL CO. of 200 Elmora Avenue, Elizabeth, New Jersey, United States of America (hereinafter called "Purepac"); WHEREAS, Purepac is engaged in the development of certain Tabletting Technology, among other reasons, to enable Purepac to manufacture, distribute and sell a certain Formulated Product in the Territory (as those terms are hereinafter defined); WHEREAS, Faulding is engaged in the development of certain Pellet Technology to enable Faulding to manufacture Pellets, which Purepac requires for the manufacture of the Formulated Product; WHEREAS, in anticipation that the Pellet Technology will be successfully developed by Faulding, Purepac has requested Faulding, and Faulding has agreed, subject to the terms and conditions set forth in this Agreement, to supply all of Purepac's requirements of the Pellets for Purepac's use in the Territory; WHEREAS, if the parties determine during the course of this Agreement that Purepac shall manufacture the Pellets, Faulding agrees to grant Purepac an exclusive license to use the Pellet Technology to manufacture the Pellets for the sole purpose of manufacturing, distributing and selling the Formulated Product within the Territory. NOW, THEREFORE, IT IS AGREED AS FOLLOWS: 1. DEFINITIONS For the purposes of this Agreement the following terms shall have the following meanings: 1.1 "Affiliates" means (a) an entity controlled by a common parent that owns more than fifty percent of the voting stock of both such entity and one of the parties to this Agreement and (b) such parent company. 1.2 "ANDA" means Abbreviated New Drug Application. 1.3 "FDA" means the United States Food and Drug Administration or any successor body. 1.4 "Fiscal Year" means the twelve month period commencing on July 1 of each year and ending on June 30, or any other twelve month period designated as the fiscal year of Faulding. 1.5 "Formulated Product" means the tabletted product described on Schedule A hereto. 1.6 "GMP" means good manufacturing practice as required by the regulations of the FDA. 1.7 "Patents" means patents as to the manufacture, use and/or sale of the Pellets, the Pellet Technology, the Tabletting Technology and the Formulated Product as described in Section 10 hereof. 1.8 "Pellet" means the coated pellet described on Schedule B hereto, as that Schedule may be amended from time to time by mutual agreement of the parties. 1.9 "Pellet Technology" means technology currently under development by Faulding, including technical, scientific, industrial information or knowledge, confidential information and expertise in relation to the Pellets described on Schedule B hereto, as that Schedule may be amended from time to time by mutual agreement of the parties, and the processes and the means and procedures for the manufacture and production of the Pellets. 1.10 "Project Review" means a meeting between the parties (a) to discuss, among other matters, the amounts expended by each party to date, expectations of future earnings and\or costs and any other matters that may materially affect the continued viability of the parties' development and manufacture of the Pellets or the Formulated Product, as the case may be, and the sales of the Formulated Product in the Territory and (b) to determine whether it is in both parties' interests to continue to develop and/or manufacture the Pellets and the Formulated Product, as the case may be, and to sell the Formulated Product pursuant to the terms of this Agreement. 1.11 "Regulatory Authority" means the FDA and/or any other like authority whether Federal or State regulating the manufacture, distribution, marketing and/or sale in the Territory of therapeutic substances. 1.12 "Special Circumstances" shall mean the circumstances described in Section 9.2 of this Agreement. 1.13 "Tabletting Technology" means technology including technical, scientific, industrial information or knowledge, confidential information and expertise in relation to the Tabletting development process described on Schedule A hereto and the processes and the means and procedures for the manufacture and production of the Formulated Product in tablet form. 1.14 "Territory" means the United States of America and its commonwealth states and territories. 2. DEVELOPMENT OF PELLET AND TABLETTING TECHNOLOGIES 2.1 Immediately upon execution of this Agreement, Faulding will (a) continue with all due diligence the development of the Pellet Technology to permit Purepac to complete the tabletted presentation of the Formulated Product and (b) provide to Purepac details of all work done to date in relation to the development of the Pellets. Faulding will provide regular reports on progress with this work to Purepac and in any event will report not less than twice a month. 2.2 Upon Faulding's completion of its development work with respect to the Pellets, Faulding will provide to Purepac all Pellet Technology in its possession as may be necessary or helpful for Purepac to complete the tabletting stage of the Formulated Product's development. Faulding will promptly provide to Purepac all technology which may subsequently be created or acquired by Faulding as may be necessary or helpful for Purepac to complete the tabletting stage of the Formulated Product and otherwise to fulfill its obligations under this Agreement. The timing of each such transfer of data will be agreed upon by the parties. 2.3 At the written request of Purepac, but not more than twice in any calendar year, Purepac personnel will be entitled to visit Faulding's premises in Australia for technical discussions relating to the development and scale-up work on the Pellet Technology PROVIDED, HOWEVER, THAT such visits will be at Purepac's sole expense, will be held at a time reasonably convenient to Faulding and, together, will be of an aggregate duration of no more than two weeks. 2.4 Faulding shall pay the development costs incurred in connection with the development of the Pellet Technology and Purepac shall pay the development costs incurred in connection with the development of the Tabletting Technology and the Formulated Product. The parties agree that each of them , as of the date hereof, have incurred the respective development costs detailed on Schedule C hereof and that Faulding owes Purepac an aggregate of $U.S. 577,546 in consideration for the amount expended by Purepac on the development of the Pellet Technology up to and including the date hereof. Faulding agrees to pay the total amount due Purepac by no later than 30 days after the date of the Agreement. 3. SUPPLY OF PELLETS 3.1 Subject to the provisions of Section 3.2 of this Agreement, Faulding shall sell to Purepac and Purepac shall purchase from Faulding all of Purepac's requirements of the Pellets for the sole purpose of manufacturing, distributing and selling the Formulated Product within the Territory during the term of this Agreement. Purepac agrees that it will not manufacture, sell or attempt to sell the Formulated Product outside the Territory either on its own account or through any third party nor will it sell any Formulated Product to any person or corporation within the Territory where Purepac has reasonable grounds to believe that such other person or corporation intends to sell the Formulated Product outside the Territory. 3.2 If at any time during the term of this Agreement, the parties decide that Purepac shall manufacture the Pellets, Faulding agrees to grant Purepac, at the estimated price set forth in Section 6 of this Agreement, an exclusive license to the Pellet Technology for the remainder of the term of the Agreement for the sole purpose of manufacturing and selling the Formulated Product in the Territory. Purepac agrees that it will not use or exploit the Pellet Technology for any purpose other than the manufacture and sale of the Formulated Product in the Territory. 3.3 Faulding agrees that it will not sell or transfer the Pellet Technology or grant any rights to use or exploit the Pellet Technology to any other person or corporation for the manufacture of the Formulated Product within the Territory during the term of this Agreement but the parties understand and agree that Faulding has the right to license the Pellet Technology both within and outside the Territory for any purpose other than the manufacture of the Formulated Product and outside the Territory for any purpose whatsoever, subject, however, in each instance to the provisions set forth in Sections 4.2, 10.2 and 10.3 of this Agreement. 3.4 In the event that Faulding desires to enter into an agreement with any unaffiliated third party for such third party to use the Pellets and/or the Pellet Technology in any other product for sale within the Territory (a "Third Party Transaction"), Faulding agrees to grant Purepac a prior right of first refusal to use the Pellets and/or the Pellet Technology as follows: (a) Faulding shall notify Purepac in writing of any such intended Third Party Transaction at least sixty (60) days prior to the intended closing date thereof, which notice (the "Transaction Notice") shall contain all the material terms of the proposed transaction. The right of first refusal shall be exercisable by Purepac by delivery of written notice ("Election Notice") to Faulding within fifteen (15) business days after receipt of the Transaction Notice. (b) If Purepac shall fail to elect to enter into the transaction described in the Transaction Notice, then, subject to the provisions of Section 10.3 hereof, Faulding shall be free to effect such transaction on the terms and conditions, including price, specified in such Notice. 3.5 In the event that Purepac otherwise makes a written request of Faulding to use the Pellets and/or Pellet Technology in any other product, or in the sale of Product outside the Territory, the parties agree to negotiate in good faith to determine whether they can reach mutually acceptable and commercially reasonable terms for such use of the Pellets and/or the Pellet Technology by Purepac. 4. REGULATORY APPROVAL 4.1 Purepac hereby agrees to: 4.1.1 carry out all work necessary for the registration of the Formulated Product in the Territory, other than that set forth in Section 5 hereof as the responsibility of Faulding, including scale-up and definitive pharmacokinetic and stability studies on the tabletted presentation of the Formulated Product; 4.1.2 seek all necessary approvals and/or registrations from the appropriate Regulatory Authority in the Territory to permit the conduct of pharmacokinetic studies using the Formulated Product and/or the manufacture, distribution, marketing and sale of the Formulated Product in the Territory; and 4.1.3 comply with the reporting compliance requirements of the Regulatory Authority in the Territory during the term of this Agreement. 4.2 The parties agree that if Faulding desires to register the Formulated Product anywhere outside the Territory, Faulding shall not be permitted to use, and Purepac shall not be required to disclose to Faulding, any confidential information regarding the Tabletting Technology. The parties agree to negotiate in good faith to determine the mutually acceptable and commercially reasonable consideration that Faulding shall pay to Purepac for the right to use the Tabletting Technology. 4.3 Purepac agrees that it will, in accordance with the laws and regulations of the Territory as such laws and regulations, may from time to time be amended, promptly (a) notify Faulding of (i) any serious and unexpected adverse reactions reported to it or to any sub-licensee of Purepac resulting from the use of the Formulated Product , (ii) any complaints from third parties involving the Formulated Product and (iii) any recall of the Formulated Product and (b) provide to Faulding copies of all other adverse reaction reports received by it or any sub-licensee of Purepac. 4.4 Purepac agrees to maintain adequate quality control in respect of its manufacture, packaging, labelling and storage of the Formulated Product and to ensure that all manufacture of and packaging and labelling used for the Formulated Product meets all the requirements under the applicable laws, rules and regulations in the Territory. 4.5 In the event that Faulding uses the Pellets or Pellet Technology, either within or outside the Territory, in the manufacture of any other product ("Other Pellet Product"), Faulding agrees that it will, in accordance with the laws and regulations of the Territory as such laws and regulations, may from time to time be amended, promptly (a) notify Purepac of (i) any serious and unexpected adverse reactions reported to it or to any sub-licensee of Faulding resulting from such use of the Pellets or Pellet Technology in any Other Pellet Product (ii) of any complaints from third parties involving such Other Pellet Product, and (iii) any recall of any such Other Pellet Product, and (b) provide to Purepac copies of all other adverse action reports received by it or any sub-licensee of Faulding. 4.6 Each party shall immediately notify the other party of any inspections by any Regulatory Authority as a result of the recall or other regulatory issue related to the Formulated Product or any Other Pellet Product, as the case may be. 5. MANUFACTURE OF THE PELLETS BY FAULDING 5.1 Faulding will manufacture the Pellets in accordance with all regulations of the Regulatory Authority and in conformance with GMP and the specifications for the Pellets agreed to by the parties and Purepac's purchase orders described below in Section 7 hereof. Faulding agrees to maintain adequate quality control in respect of its manufacture, packaging, labelling and storage of the Pellets and to ensure that all packaging and labelling used for the Pellets meets all the requirements under the applicable laws, rules and regulations in the Territory. Faulding also agrees to maintain complete and accurate records for such period of time as required by applicable law. 5.2 Faulding acknowledges and agrees that, as the approved site of manufacture of the Pellets, it may be required, at its own cost, to undergo preapproval and other periodic inspections by the Regulatory Authority and that it will, when and as required by, and in the name of Purepac, assist Purepac in gaining marketing approval of the Formulated Product, including, without limitation, undertaking: 5.2.1 the quality control testing of all materials used in the manufacture of the Pellets in accordance with the standards of the United States Pharmacopeia and any other specification which may be required by the Regulatory Authority; 5.2.2 the scale-up and stability tests of the Pellets and the manufacture and scale-up of exhibit and registration stability batches of the Pellets; 5.2.3 the conduct of ongoing stability trials as required by the Regulatory Authority in the Territory; and 5.2.4 the completion of all documentation necessary for the registration of the Formulated Product in the Territory. 5.3 The quality control testing referred to in Section 5.2 hereof shall be conducted in accordance with all relevant scientific and legal standards and with all reasonable diligence and expedition. 5.4 Faulding agrees that any manufacturing and quality control changes to the Pellets will be made in accordance with the applicable laws and regulation in the Territory and with the prior written consent of Purepac. 5.5 Faulding will store and maintain retention samples of the Pellets from each lot to meet the requirements of the Regulatory Authority in the Territory. 5.6 All Pellets received by Purepac shall be deemed accepted unless Purepac gives Faulding written notice (the "Objection Notice") within thirty (30) days of such receipt specifying the manner in which the Pellets do not conform to specifications. The Objection Notice shall be accompanied by written reports of any testing performed by or for Purepac on the Pellets. Upon receipt of the Objection Notice, Faulding may request Purepac to return the rejected Pellets or samples thereof for further testing. The test results, if any, submitted to Faulding by Purepac shall be deemed conclusive unless Faulding notifies Purepac within thirty (30) days of its receipt of the Objection Notice or the samples, whichever is later, that it disagrees with such test results. In the event of such notice by Faulding, the rejected Pellets or samples thereof shall be submitted to a mutually acceptable independent laboratory (the "Independent Laboratory") for analysis in the form of a written report (the "Report"), the costs of which shall be paid by the party against whom the discrepancy is resolved. In the event that the results of the Report determine that any of the Pellets rejected by Purepac do not meet specifications, Faulding will replace such Pellets with conforming goods within ninety (90) days from the date of the Report, provided that the departure from specifications is not due to the fault or act of Purepac. All transportation, shipping and insurance costs and other fees incident to the shipping back to Faulding of the Pellets determined by the Report to be defective and the shipping to Purepac of the replacement Pellets will be paid for by Faulding if the Pellets have been determined by the Report to be defective. 5.7 Purepac shall have the right, at its own cost, (a) twice annually and (b) upon the (i) report to Purepac or any sub- licensee of Purepac of any serious and unexpected adverse reactions resulting from the use of the Formulated Product , (ii) any complaints from third parties involving the Formulated Product, (iii) any recall of the Formulated Product , (iv) any serious and unexpected adverse reactions reported to Purepac by Faulding resulting from the use of the Pellets or Pellet Technology in any Other Pellet Product , (v) of any complaints from third parties involving Other Pellet Products, and (vi) any recall of any such Other Pellet Product, to visit Faulding's manufacturing plant for the Pellets during regular business hours, provided reasonable prior written notice is provided to Faulding and that each such visit shall be of a duration of no more than fourteen (14) business days. 5.8 During any such visit contemplated by Section 5.7 of this Agreement, Purepac shall have the right (a) to inspect the manufacturing facilities, (b) to inspect quality control procedures and (c) to review any records maintained pursuant to Section 5.1, to ensure that Faulding complies with GMP regulations and other applicable regulations for the Pellets. 6. MANUFACTURE OF THE PELLETS BY PUREPAC 6.1 If at any time the parties determine that Purepac shall manufacture the Pellets, the parties agree to negotiate in good faith to amend this Agreement as follows: 6.1.1 Faulding shall cooperate with Purepac, at Purepac's cost, to gain approval by the Regulatory Authority of an alternate site of manufacture of the Pellets and shall continue to manufacture and supply the Pellets until such time as the alternate site is approved. 6.1.2 Upon the payment to Faulding of a technology transfer fee of $U.S. 250,000 and the agreement to pay to Faulding an ongoing royalty at the rate of 7.2% of the Gross Margin of all Formulated Product sold in the Territory by Purepac, Faulding shall grant Purepac an exclusive license to the Pellet Technology for the remainder of the term of this Agreement for the sole purpose of manufacturing and selling the Formulated Product in the Territory, as set forth in Section 3.2 hereof. As used in this Section, Gross Margin shall mean the Net Sales Price less the Direct Material Costs; Net Sales Price shall mean with respect to any calendar quarter, the gross income of Purepac from sales of the Formulated Product to independent third parties (not including amounts received as reimbursement of freight, insurance and other costs or taxes) invoiced by Purepac during such quarter, less price discounts, trade returns, trade allowances, chargebacks or rebates relating to such sales, as calculated using Purepac's standard accounting procedures, in accordance with U.S. generally accepted accounting principles, consistently applied. It is understood and agreed that where the amount of any such deduction can not be fairly determined during the quarter immediately following the quarter in question, such deduction may be claimed by Purepac with respect to Net Sales made during a subsequent quarter; and Direct Material Costs shall mean, with respect to any calendar quarter, the actual material costs of the manufacture of the Formulated Product, including, without limitation, the costs of packaging, as determined in accordance with generally accepted U.S. accounting principles, consistently applied. 6.1.3 Faulding shall provide to Purepac all Pellet Technology in its possession as may be necessary or helpful for Purepac to replicate and scale up the process for the manufacture of the Pellets and Formulated Product. The timing of such transfer of data will be agreed upon by the parties. 6.1.4 Purepac will be entitled to request Faulding to provide scientists and engineers, as the parties shall mutually agree to be appropriate, to aid Purepac at Purepac's site in the replicating and scaling up of the process of manufacture of the Formulated Product. All of such services will be at Purepac's expense including travel, accommodation and an appropriate per diem fee for each of the personnel provided. Faulding agrees to provide such services to Purepac at commercially reasonable rates. 7. FORECASTS AND PURCHASE ORDERS FOR PELLETS; PAYMENTS 7.1 Purepac shall place written purchase orders with Faulding, receipt of which shall be promptly acknowledged by Faulding in writing, for the quantities and the delivery dates of Pellets which Purepac desires to purchase under this Agreement. Such purchase orders and acknowledgments thereof may be issued or given on Faulding's or Purepac's standard forms, as the case may be, containing standard terms and conditions, but the terms and conditions of this Agreement, and not such standard terms and conditions, shall govern the purchase and sale of Pellets under this Agreement. 7.2 The price of the Pellets purchased by Purepac shall be as set forth on Schedule D hereto. 7.3 Any amounts due and payable shall be paid in full by Purepac to Faulding within sixty (60) days from the date of receipt of the Pellets. Payments for the Pellets, and for any other services under this Agreement, as set forth in Sections 2.4, 5.2, 6.1 and 17.1, shall be paid in U.S. dollars by wire transfer to the account specified by the recipient party from time to time. The payor shall convert the amounts due and payable into U.S. dollars during the month that such amount is posted within its books. The exchange rate shall be the T/T mid rate of the Australia and New Zealand Banking Group Limited in Adelaide, Australia on the last business day of the month immediately preceding the month that such amount is posted. 7.4 Immediately before the commencement of every calendar quarter, Purepac shall provide Faulding with a forecast of the number of Pellets to be ordered for delivery during each of the five (5) quarters following the date of the forecast. Such forecast shall not create a binding obligation on the part of either party to this Agreement. However, Purepac shall use all reasonable efforts to make each forecast as accurate as possible. 7.5 Faulding shall not be required to supply during any particular quarter more than one hundred twenty percent (120%) of the most recent forecasted amount for such quarter, but will use all reasonable efforts to supply the full amount ordered. 8. SHIPMENT OF PELLETS 8.1 Deliveries of the Pellets to the destination in the Territory designated by Purepac shall be made by Faulding as designated in the purchase orders, but in no event will any such purchase order require delivery within less than sixty (60) days after the placement of the purchase order by Purepac. Faulding will ensure that deliveries of the Pellets are accompanied by quality control certificates of analysis and will send copies of such certificates of analysis contemporaneously by telecopier (confirmed by hard copies mailed) to Purepac. Identification of the goods to the contract shall occur and title thereto and risk of loss shall pass to Purepac upon delivery to the carrier. 8.2 Purepac may choose the means of shipment by notifying Faulding of its choice on its Purchase Order. Purepac shall pay for all freight and insurance costs. Identification of the goods to the contract shall occur and risk of loss shall pass to Purepac upon delivery of the Pellets to the carrier. In the event Purepac has not furnished Faulding with shipping and insurance instructions in its purchase order, Faulding shall deliver the Pellets to Purepac F.O.B. Faulding's plant in Salisbury, South Australia within 90 days of acceptance of the order by delivery to a carrier selected by Faulding and Faulding shall, in its sole discretion, obtain insurance coverage thereon, the cost of which shall be borne by Purepac and added to the purchase price. 8.3 Purepac (a) shall be responsible for the payment of any import, customs or similar duties imposed by governmental authorities and of any federal, state, county or municipal sales or use tax, excise or similar charge, or any other tax assessment (other than that assessed against income), license, fee or other charge lawfully assessed or charged on the use or transportation of the Pellets sold and delivered to Purepac pursuant to this Agreement; and (b) shall obtain any licenses, authorizations or other documents required by any governmental authorities in order to permit the importation of the Pellets sold and delivered to Purepac pursuant to this Agreement. Faulding shall be responsible, at its own cost, for obtaining and paying any export clearances. 8.4 If Purepac claims that there is a shortage of any of the Pellets delivered by Faulding pursuant to a purchase order, it shall submit written notice to Faulding within ten (10) days of the date of the delivery of such order. In case of alleged non-delivery, a written claim must be submitted to Faulding within thirty (30) days of Faulding's delivery advice notice. In the absence of such a written claim, in the case of either alleged shortage or non-delivery, the Pellets shall be deemed to have been delivered in accordance with this Agreement. In any event, Purepac shall not be entitled to refuse to accept delivery by reason only of an alleged shortage. 9. PROJECT REVIEW 9.1 Within 60 days after the end of each Fiscal Year, or as otherwise agreed, the parties shall conduct an annual Project Review. 9.2 In addition to the annual Project Review, either party, upon the occurrence of any Special Circumstances, may give notice in writing to the other party requiring a Project Review within 30 days of the receipt of the notice. The Special Circumstances are as follows: (a) the manufacture, use or sale of the Pellets or the Formulated Product has resulted in, will result in, or will be likely to result in, the infringement of a third party's patent or other intellectual property rights relevant to the Territory or to Australia; (b) development of the Pellet Technology or the Formulated Product, submissions to the Regulatory Authority or the issuance of the ANDA is not going to be achieved, or are not likely to be achieved, within six (6) months after the relevant due dates agreed to by the parties; (c) during any Fiscal Year, the forecasted sales of Formulated Product are less than 75% of the budgeted sales of Formulated Product for such Fiscal Year that have been approved either by the Board of Directors of Purepac's sole stockholder, Purepac, Inc. or by the management of Faulding; (d) during any Fiscal Year, the forecasted net income from sales of Formulated Product is less than 75% of Purepac's budgeted net income from sales of Formulated Product for such Fiscal Year that has been approved either by the Board of Directors of Purepac, Inc. or the management of Faulding ; (e) projected development costs of either party are currently expected to be greater than 130% of the costs previously forecasted by such party; (f) development, manufacture or sale of the Pellets or the Formulated Product has ceased to be commercially viable and relevant to the business objectives of Faulding or Purepac, respectively; or (g) Faulding is unable to supply Pellets for a period of time (i) exceeding one hundred eighty (180) days after the requested delivery date or (ii) exceeding ninety (90) days after the requested delivery date and the parties agree that it is likely that Faulding will be unable to supply Pellets for at least an additional ninety (90) days. 9.3 If during, or within 15 days after, any Project Review, either party determines that as a result of the occurrence of a Special Circumstance, it is not in its best interest to continue to develop, manufacture and sell the Pellets or the Formulated Product, as the case may be, pursuant to the terms of this Agreement, such party may terminate the Agreement in accordance with the provisions of Section 20.3 of this Agreement; provided, however, with respect to a termination arising from any of the Special Circumstances set forth in Subsection (a), (b) and (g) of Section 9.2 hereof, if such Special Circumstance is no longer applicable within a period of six (6) months after such termination, the parties agree to negotiate in good faith to resume the manufacturing and marketing of the Formulated Product and to establish the commercial terms between them with regard to such resumption. 10. INTELLECTUAL PROPERTY RIGHTS 10.1 Purepac acknowledges and agrees that Faulding is the owner of the Pellet Technology and all industrial and intellectual property rights of any kind in relation to the Pellet Technology including the right to patents, registered or other designs, copyright, trademarks or trade names and any other confidential information. Nothing contained in this Agreement shall be effective to give Purepac any rights of ownership in and to the Pellet Technology and to the intellectual property owned by Faulding and the licensing of the Pellet Technology under this Agreement is for the sole purpose of developing, registering, manufacturing and selling the Formulated Product in the Territory. 10.2 Faulding acknowledges and agrees that Purepac is the owner of the Tabletting Technology and all industrial and intellectual property rights of any kind in relation to the Tabletting Technology, including the right to patents, registered or other designs, copyright, trademarks or trade names and any other confidential information. Nothing contained in this Agreement shall be effective to give Faulding any rights of ownership in and to the Tabletting Technology, including, without limitation, any improvements to the Tabletting Technology described in Section 12 hereof, and to the intellectual property owned by Purepac. 10.3 In the event that Faulding shall desire to register the Formulated Product anywhere outside the Territory, the parties agree to negotiate in good faith to determine the mutually acceptable and commercially reasonable consideration that Faulding shall pay to Purepac for the right to use the Tabletting Technology. 11. FORMULATED PRODUCT IMPROVEMENTS BY FAULDING If Faulding makes or discovers any improvements to the Pellet Technology as it applies to the Formulated Product during the term of this Agreement and Faulding wishes to include such improved Pellet in the Formulated Product, it shall have the option to do so; provided, however, that the improved Pellet shall first be approved for use by the Regulatory Authority in the Territory, that Faulding shall fully cooperate with Purepac in achieving such regulatory approval and that if Purepac does not agree with Faulding that the improved Pellet should be included in the Formulated Product, the cost of incorporating such improved Pellet, including, without limitation, the cost of achieving approval by the Regulatory Authority shall be to Faulding's account. Purepac may use any such improved Pellet without payment of any further sum; provided, however, that if any such improvements to the Pellet Technology cause a material reduction in Purepac's overall costs of manufacturing the Formulated Product or give any other material commercial advantage to Purepac, then the parties shall negotiate in good faith whether, and what, modifications should be made to the commercial terms between them. 12. FORMULATED PRODUCT IMPROVEMENTS BY PUREPAC 12.1 Any improvements to the Pellet Technology as it applies to the Formulated Product made or discovered by Purepac during the term of this Agreement shall be made known by Purepac to Faulding and Faulding shall be entitled to use and commercially exploit any such improvement without payment of any fee or royalty. 12.2 Purepac shall make known to Faulding any improvements to the Tabletting Technology that are required to be known by Faulding to effect the Pellet Technology development. 13. CONFIDENTIALITY 13.1 Purepac agrees with Faulding that it will not disclose to any person or corporation any of the Pellet Technology without the prior written consent of Faulding and that Purepac will use all reasonable efforts to prevent unauthorized publication or disclosure by any person of such Pellet Technology, including, without limitation, requiring its employees, consultants, sub-licensees and agents to enter into similar confidentiality agreements in relation to the Pellet Technology. 13.2 Faulding agrees with Purepac that it will not disclose any of the Tabletting Technology and any other confidential information of Purepac that it may acquire at any time during the term of this Agreement without the prior written consent of Purepac and that Faulding will use all reasonable efforts to prevent unauthorized publication or disclosure by any person of the Tabletting Technology and such other confidential information, including requiring its employees, consultants and agents to enter into similar confidentiality agreements in relation to the Tabletting Technology and such other confidential information. 13.3 The obligations undertaken by each party under this Section 13 shall continue in force for a period of five (5) years following the termination or expiration of this Agreement. 13.4 The obligations contained in this Section 13 do not apply: (a) to any information which was at the time of receipt by a party in the public domain or generally known in the pharmaceutical manufacturing industry otherwise than by breach of a party's duty of confidentiality; (b) information which a party can establish to have been known to it at the time of receipt from the other party and not to have been acquired directly or indirectly from the other party; (c) information acquired by a party from a third party otherwise than in breach of an obligation of confidence to the other party; and (d) information with respect to the Pellet and Tabletting Technologies provided to the Regulatory Authority in connection with the registration of the Formulated Product. 14. FAULDING'S WARRANTIES Faulding represents and warrants to Purepac that: 14.1 it has the corporate authority to enter into this Agreement and to perform its obligations hereunder; 14.2 it is not aware of any legal, contractual or other restriction, limitation or condition which might affect adversely its ability to perform hereunder; 14.3 all Pellets manufactured and delivered to Purepac by Faulding pursuant to this Agreement shall meet the specifications for such product at the time of delivery by Faulding to Purepac, as such specifications may be subsequently agreed to by the parties, and shall be manufactured and stored by Faulding in a plant which meets the requirements of the Regulatory Authority in the Territory, in accordance with Purepac's regulatory filings in the Territory and GMP; 14.4 to the best of its knowledge as of date of this Agreement, the Pellet Technology as it is known as of the date hereof does not infringe any published U.S. or Australian patent; and 14.5 upon the transfer of the Pellet Technology to Purepac, as contemplated by Section 3.2 of this Agreement (a) it will be the owner of the Pellet Technology free and clear of any liens or encumbrances of third parties and (b) to the best of its knowledge as of the date of this Agreement, it will have sufficient right, title and interest in the Pellet Technology to grant the license to Purepac granted hereunder. 15. PUREPAC'S WARRANTIES Purepac represents and warrants to Faulding that: 15.1 it has the corporate authority to enter into this Agreement and to perform its obligations hereunder; 15.2 it is not aware of any legal contractual or other restriction, limitation or condition which might affect adversely its ability to perform hereunder; 15.3 it is the owner of the Tabletting Technology free and clear of any liens or encumbrances of third parties and to the best of its knowledge as of the date of this Agreement, it has sufficient right, title and interest in the Tabletting Technology to use such technology in the tabletted presentation of the Formulated Product; and 15.4 to the best of its knowledge as of the date of this Agreement, the Tabletting Technology as of the date hereof does not infringe any published U.S. patent. 16. INDEMNITY 16.1 Faulding agrees to indemnify, defend and hold harmless Purepac, its Affiliates and subsidiaries and their respective employees against any and all claims, losses (except consequential losses, such as, for example, the loss of business or of profits), damages and liabilities (including reasonable attorney's fees, and liabilities for personal injury suffered by any person) arising out of any breach of any obligation by Faulding hereunder or any representation or warranty by Faulding hereunder or any act or omission of Faulding in connection with its contract obligations hereunder. 16.2 Purepac agrees to indemnify, defend and hold harmless Faulding, its Affiliates and subsidiaries and their employees against any and all claims, losses (except consequential losses, such as, for example, the loss of business or of profits), damages and liabilities (including reasonable attorney's fees and liabilities for personal injury suffered by any person) arising out of any breach of any obligation by Purepac hereunder or any representation or warranty by Purepac hereunder or any act or omission of Purepac or any of its agents or sub-licensees in connection with the marketing, distribution and sale of the Formulated Product. 16.3 (a) If Purepac or any of its Affiliates or subsidiaries or Faulding or any of its Affiliates or subsidiaries (in each case an "Indemnified Party") receives any written claim which it believes is the subject of indemnity hereunder by Faulding or Purepac, as the case may be, (in each case as "Indemnifying Party"), the Indemnified Party shall, as soon as reasonably practicable after forming such belief, give notice thereof to the Indemnifying Party, including full particulars of such claim to the extent known to the Indemnified Party; provided, that the failure to give timely notice to the Indemnifying Party as contemplated hereby shall not release the Indemnifying Party from any liability to the Indemnified party other than pursuant to this Section 16. The Indemnifying Party shall have the right, by prompt notice to the Indemnified Party, to assume the defense of such claim with counsel reasonably satisfactory to the Indemnified Party, and at the cost of the Indemnifying Party. If the Indemnifying Party does not so assume the defense of such claim or, having done so, does not diligently pursue such defense, the Indemnified Party may assume such defense, with counsel of its choice, but for the account of the Indemnifying Party. If the Indemnifying Party so assumes such defense, the Indemnified Party may participate therein through counsel of its choice, but the cost of such counsel shall be for the account of the Indemnified Party. (b) The party not assuming the defense of any such claim shall render all reasonable assistance to the party assuming such defense, and all out-of-pocket costs of such assistance shall be for the account of the Indemnifying Party. (c) No such claims shall be settled other than by the party defending the same, and then only with the consent of the other party, which shall not be unreasonably withheld; provided, that the Indemnified Party shall have no obligation to consent to any settlement of any such claim which imposes on the Indemnified Party any liability or obligation which cannot be assumed and performed in full by the Indemnifying party. 16.4 Faulding shall have no liability hereunder for any claim which, if true, would constitute a breach of the warranties contained in Sections 14.4 and 14.5 hereof (hereinafter an "Infringement Claim") based on Purepac's manufacture or distribution of the Formulated Product, as the case may be, after Purepac receives a notice from Faulding that Purepac should cease such manufacture or distribution due to an Infringement Claim. 17. PATENT PROSECUTION, MAINTENANCE AND INFRINGEMENT 17.1 The party responsible for applying for and obtaining Patents (the "Responsible Party") involving the Tabletting Technology shall be Purepac and involving the Pellets, the Pellet Technology and any combination of the Pellet and Tabletting Technologies shall be Faulding. Each Responsible Party shall immediately furnish the other party with true copies of the Patent(s) concerned. Other than with respect to any Patents combining the Pellet and Tabletting Technologies (the "Combined Patents"), all expenses for the prosecution and maintenance of each of the aforementioned Patents shall be paid by the Responsible Party. The parties shall equally share the expenses for the prosecution and maintenance of the Combined Patents and the Combined Patents will be applied for in the names of both Faulding and Purepac. Each of the parties agrees to cooperate, as reasonable necessary with the party prosecuting the patent application, upon the request of such prosecuting party. 17.2 Each party will promptly notify the other party of any infringement or possible infringement by a third party of any of the Patents and any claim of litigation by a third party alleging invalidity of any of the Patents. Moreover, in the event of any claim of litigation by a third party alleging infringement by any of the Patents or if either party discovers that any of the Patents infringe, or may possibly infringe, a third party's intellectual property rights, each Party shall promptly give notice of such claim or litigation to the other Party. 17.3 Subject to the warranties set forth in Sections 14 and 15 hereof, the "Litigating Party", which shall be: (a)Faulding with respect to any actions associated with alleged infringement of or by Patents involving the Pellets or Pellet Technology; and (b) Purepac with respect to any actions associated with alleged infringement of or by Patents involving the Tabletting Technology, the Formulated Product or active drug substances, shall have the right but not the obligation to defend or prosecute any right with respect to such Patent. In such event, the other party shall cooperate with the Litigating Party. 17.4 If the Litigating Party fails to prosecute or defend any such action within one (1) year after giving or receiving notice thereof, then the other party shall have the right, but not the obligation, to prosecute or defend any such action on its own behalf and, if necessary to sustain standing, the right to name the Litigating Party, or, if applicable, its succes- sor or assignee, as a party plaintiff. In such event, the Litigating Party shall reasonably cooperate with the other party. 17.5 The party prosecuting or defending the action shall control all aspects of such action and bear all costs of such action and the proceeds of such action, of which there is no indemnification or for which indemnification is not sought, shall belong to the prosecuting or defending party, except that with respect to actions involving the Combined Patents, the parties shall equally share the costs and proceeds of such actions. 18. TAXATION ISSUES 18.1 Each of the parties is aware that the commercial arrangements of this Agreement may be subject to transfer pricing reviews by the relevant taxation authorities in the Territory and Australia. As a result, this Agreement may be subject to internal reviews by either or both parties and to audits by the relevant taxation authorities. If as a result of such reviews or audits, it becomes necessary or advisable for either party (the "Affected Party")to change any commercial arrangements of this Agreement, including, without limitation, making retroactive adjustments, the other party, within thirty (30) days after written notification by the Affected Party, which notification shall explain in reasonable detail the reason for the proposed change, shall meet with the Affected Party and each of the parties agrees to negotiate in good faith, and to use its best efforts to reach agreement with respect to, any modifications to the commercial terms of this Agreement. In the event that the parties, despite their best efforts, cannot reach agreement with respect to any material change, which in the opinion of either party is necessary or advisable for the reasons set forth in this Section 18.1, either party, upon written notice to the other party, may terminate this Agreement. The provisions of Sections 24.4 and 24.5 of this Agreement shall apply upon any termination of the Agreement pursuant to this Section 18.1. 19. NOTICES Notices provided under this Agreement to be given or served by either party on the other shall be given in writing and served personally or by prepaid registered airmail post, express mail or by means of facsimile to the following respective addresses or to such other addresses as the parties may hereafter advise each other in writing. It being agreed and understood by the parties that any such notice shall be deemed given and served on the dates transmitted by facsimile or a date ten (10) days after the date of airmail or express mail. To: Faulding The Company Secretary F.H. Faulding & Co. Limited 160 Greenhill Road Parkside, South Australia 5063 Facsimile +61 8 373 3120 To: Purepac President Purepac Pharmaceutical Co. 200 Elmora Avenue Elizabeth, New Jersey 07207 United States of America Facsimile +1 908 527-0649 20. ASSIGNMENT Neither party to this Agreement shall assign any rights hereunder to third parties other than the right of payment of monies accrued without the prior written consent of the other party; provided, however, that the restriction contained herein shall in no way limit the rights of either party to make assignments to Affiliates. This Agreement shall be binding upon any permitted assignee or successor of either party. 21. TERM; TERMINATION 21.1 This Agreement shall be for a term of ten (10) years commencing as of the date of this Agreement and thereafter shall be automatically renewed for successive periods of two (2) years unless either party shall give six (6) months prior written notice to the other party of its intention not to renew this Agreement. 21.2 This Agreement may be terminated by notice in writing by either party (a) if the other party shall default in the performance of any of its obligations under this Agreement and such default shall continue for a period of not less than ninety (90) days after written notice specifying such default shall have been given; (b) if the other party makes an arrangement with its creditors or goes into receivership or liquidation (other than voluntary liquidation) for the purpose of internal reorganization, or if a receiver or a receiver and manager is appointed in respect of the whole or part of the property or business of the party in default; or (c) if a major part of the assets or all of the assets of the other party are disposed of to or compulsory acquired by any other person. 21.3 Upon the occurrence of a Special Circumstance, as described in Section 9.2 hereof, either party, either during or within 15 days after a Project Review, may terminate the Agreement upon 30 days' written notice to the other party, which notice shall provide details of each of the Special Circumstances that are relied upon as the basis for such notice. 21.4 Upon termination of this Agreement, howsoever arising, the following provisions shall have effect: (a) The obligations of the parties pursuant to Section 13 shall continue, notwithstanding termination of this Agreement. (b) The full amount of any amounts outstanding by either party to the other shall be paid forthwith. (c) All rights and licenses granted hereunder shall terminate. 21.5 Upon the latter of (a) the termination or expiration of this Agreement, or (b) with respect to any records or other data that must be retained for a period of time in accordance with, and as set forth in, the regulations of the Regulatory Authority (the "Retention Period"), the expiration of the Retention Period, Purepac shall immediately deliver to Faulding all information with respect to the Pellet Technology in Purepac's possession and Faulding shall immediately deliver to Purepac all information with respect to the Tabletting Technology in Faulding's possession. 22. FORCE MAJEURE Neither party shall be liable or be in breach of any provision of this Agreement for failing or delay in its part to perform any obligation where such failure or delay has been occasioned by any act of God, war, riot, fire, explosion, flood, sabotage, accident or breakdown of machinery, unavailability of fuel, labor, containers or transportation facilities, accidents of navigation or breakdown or damage of vessels or other conveyancers for air land or sea, other impediments or hindrances to transportation, government intervention, strikes or other labor disturbances or any other cause beyond the control of the parties. 23. RELATIONSHIP OF THE PARTIES The relationship between Faulding and Purepac that is created by this Agreement shall be that of vendor and purchaser and licensor and licensee and not that of principal and agent. In the performance of this Agreement, neither party shall have the authority to assume or create any obligation or responsibility, either expressed or implied, on behalf of or in the name of the other party, or to bind the other party in any manner whatsoever. 24. EXECUTION OF ALL NECESSARY ADDITIONAL DOCUMENTS Each party agrees that it will forthwith upon the request of the other party execute and deliver all such instruments and agreements and will take all such other actions as the other party may reasonably request from time to time in order to effectuate the provisions and purposes of this Agreement. 25. NON WAIVER Any party's failure to exercise or enforce any right conferred upon it under this Agreement shall not be deemed to be a waiver of any such right or operate to bar the exercise or performance thereof at any time or times thereafter nor shall any party's waiver of any right under this Agreement at any given time including rights to any payment be deemed a waiver for any other time. 26. GOVERNING LAW This Agreement shall be deemed to be a contract made under and shall be governed by and construed in accordance with the laws of the State of New York. 27. ENTIRE AGREEMENT This Agreement incorporates the entire understanding of the parties and revokes and supersedes any and all agreements, contracts, understandings or arrangements that might have existed heretofore between the parties regarding the subject matter hereof. 28. HEADINGS The headings used in this Agreement are intended for guidance only and shall not be considered part of this written understanding between the parties hereto. IN WITNESS WHEREOF, this Agreement has been executed by the parties on the date first above written. PUREPAC PHARMACEUTICAL CO. By: /s/ ------------------------ F.H. FAULDING & CO. LIMITED By: /s/ ------------------------- SCHEDULE A A tablet dosage form containing pseudoephedrine hydrochloride in sustained release pellets (the "Pellets") compressed into tablets with pseudoephedrine hydrochloride and terfenadine (the "Tabletting"), approved by the U.S. FDA as an A/B rated substitutable equivalent of Marion Merrell Dow's Seldane D tablets. SCHEDULE C Total charges from Faulding to Purepac $561,990 Less tablet development costs included in above $7,669 Credit on charges from Australia $554,321 Plus Charges from Purepac for active drug substance $23,225 Net adjustment $577,546 SCHEDULE D The price of the Pellets sold by Faulding to Purepac will be based on Faulding's Total Manufacturing Cost (the "TMC") of the Pellets with a 63.4% margin based on the following formula: FOB price/Kg Pellets = TMC $(Aus) of Pellets/ 0.366 For purposes of pricing and calculating the formula, TMC will be calculated according to Faulding's standard costing system, subject to normal auditing procedures and consistent with Australian GAAP. EX-11 8 EXHIBIT 11.1 COMPUTATION OF EARNINGS PER SHARE Year Ended June 30, ------------------------------------------ 1995 1994 1993 - --------------------------------------------------------------------------- DATA AS TO EARNINGS: Income (loss) before cumulative effect of a $ (846,856) $ 4,298,116 $ 9,160,048 change in accounting for income taxes Less: preferred stock dividends (2,080,380) (2,080,380) (2,080,380) - ---------------------------------------------------------------------------- Income (loss) before cumulative effect applicable to common and common equivalent shares $ (2,927,236) $ 2,217,73 $ 7,079,668 - ---------------------------------------------------------------------------- Cumulative effect of a change in accounting for income taxes $ --- $4,149,000 $ --- - ---------------------------------------------------------------------------- DATA AS TO NUMBER OF COMMON SHARES: Weighted average shares outstanding 12,538,537 12,468,184 12,417,536 Common equivalent shares relating to contingent issuance 35,877 85,298 98,108 - ---------------------------------------------------------------------------- Average number of common shares and common share equivalents 12,574,414 12,553,482 12,515,644 ============================================================================ PRIMARY EARNINGS PER COMMON SHARE: Income (loss) before cumulative effect of a change in accounting for income taxes $ (.23) $ .18 $ .57 Cumulative effect of a change in accounting for income taxes --- .33 --- - ---------------------------------------------------------------------------- Net Income (Loss) $ (.23) $ .51 $ .57 ============================================================================ EARNINGS PER COMMON SHARE AND COMMON SHARE EQUIVALENT (Note 1, below): Income (loss) before cumulative effect of a change in accounting for income taxes $ (.23) $ .18 $ .57 Cumulative effect of a change in accounting for income taxes --- .33 --- - ---------------------------------------------------------------------------- Net Income (Loss) $ (.23) $ .51 $ .57 ============================================================================ Note 1: Common share equivalents in the aggregate dilute the primary earnings per common share by less than 3 percent. EX-11 9 EXHIBIT 11.1 COMPUTATION OF EARNINGS PER SHARE ASSUMING FULL DILUTION Year Ended June 30, ------------------------------------------ 1995 1994 1993 - ---------------------------------------------------------------------------- DATA AS TO EARNINGS: Income (loss) before cumulative effect of a change in accounting for income taxes $ (846,856) $ 4,298,116 $ 9,160,048 - ---------------------------------------------------------------------------- Cumulative effect of a change in accounting for income taxes $ --- $ 4,149,000 $ --- - ---------------------------------------------------------------------------- DATA AS TO NUMBER OF COMMON SHARES: Average number of common shares and common share equivalents (Exhibit 11) 12,574,414 12,553,482 12,515,644 Additional shares assuming full dilution 5,005,490 5,005,128 5,005,208 - ---------------------------------------------------------------------------- Average number of common shares assuming full dilution 17,579,904 17,558,610 17,520,852 - ---------------------------------------------------------------------------- EARNINGS PER COMMON SHARE ASSUMING FULL DILUTION (1995 - ANTIDILUTIVE): Income (loss) before cumulative effect of a change in accounting for income taxes $ (.05) $ .24 $ .52 Cumulative effect of a change in accounting for income taxes --- .24 --- - ---------------------------------------------------------------------------- Net Income (Loss) $ (.05) $ .48 $ .52 ============================================================================ EX-21 10 EXHIBIT 21 SUBSIDIARIES Name State of Incorporation - ------------------------- ----------------------- Purepac Pharmaceutical Co. Delaware EX-27 11
5 YEAR JUN-30-1995 JUN-30-1995 1,156 0 9,703 2,054 17,832 34,183 26,603 0 64,929 12,372 0 126 0 8 52,423 64,929 61,146 61,146 46,476 16,558 0 0 63 (1,951) (1,104) (847) 0 0 0 (847) (.23) 0
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