Distribution Agreement - MedImmune Inc. and Abbott International Ltd.
DISTRIBUTION AGREEMENT
This Distribution Agreement ("AGREEMENT") is entered into as of
November 26, 1997 (the "Effective Date") by and between MedImmune, Inc., a
Delaware corporation, having its principal place of business at 35 West
Watkins Mill Road, Gaithersburg, MD 20878 ("MEDIMMUNE") and Abbott
International, Ltd., a Delaware corporation, having its principal place of
business at 200 Abbott Park Road, Abbott Park, IL 60064.
WITNESSETH
WHEREAS, the parties hereto desire that ABBOTT engage in the
distribution in the TERRITORY (as hereinafter defined) of the PRODUCT (as
hereinafter defined); and
WHEREAS, MEDIMMUNE and ABBOTT desire to set forth in this AGREEMENT
the terms and conditions of such distribution.
NOW, THEREFORE, the parties hereto agree as follow:
1. DEFINITIONS
1.1 "ABBOTT" shall mean Abbott International, Ltd., and its AFFILIATES.
1.2 "AFFILIATE" shall mean any corporation or other business entity that
directly or indirectly controls, is controlled by, or is under common
control with a PARTY. Control means ownership or other beneficial
interest in fifty percent (50%) or more of the voting stock or other
voting interest of a corporation or other business entity. In
addition, the following entities are AFFILIATES of ABBOTT: ABBOTT
Laboratories (India) Ltd., and ABBOTT Laboratories Nigeria Limited.
1.3 "AGENCY" shall mean any governmental or regulatory authority in the
TERRITORY responsible for granting any health or pricing approvals or
registrations necessary before any PRODUCT may be marketed in the
TERRITORY.
1.4 "CALENDAR QUARTER" shall mean the period of three consecutive calendar
months ending on March 31, June 30, September 30 or December 31, as
the case may be.
1.5 "CONTRACT YEAR" shall mean July 1 of a calendar year through June 30
of the following calendar year.
(PAGE 1)
1.6 "COST OF GOODS" shall mean the fully allocated cost to manufacture
PRODUCT determined in a reasonable manner consistent with MEDIMMUNE's
normal internal accounting practices and in accordance with generally
accepted accounting principles ("GAAP") which includes but is not
limited to: (i) direct labor (salaries, wages and employee benefits);
(ii) direct materials; (iii) operating costs of building and equipment
used in connection with the manufacture of PRODUCT, (iv) allocated
depreciation and repairs and maintenance; (v) quality and in-process
control; (vi) an allocation of overhead costs incurred in connection
with the manufacturing of PRODUCT, including: raw material supply and
manufacturing administration and management; materials management,
storage and handling; and manufacturing and employee training;
(vii) any charges for obsolescence, out of date product, spoilage,
scrap or rework costs; and (viii) the cost of packaging and labeling,
if applicable. To the extent that the manufacturing of PRODUCT or any
component thereof is performed for MEDIMMUNE by a THIRD PARTY, amounts
paid to such THIRD PARTY shall be included in COST OF GOODS.
1.7 "FIRM ORDER" shall have the meaning set forth in Section 5.1
1.8 "MAJOR MARKET" shall mean each of the following countries: United
Kingdom, France, Germany, Italy, Spain, Canada and Japan.
1.9 "MARKETING APPROVAL" shall mean all governmental approvals required to
market and sell the PRODUCT in any given country of the TERRITORY.
1.10 "NET SALES" shall mean with respect to PRODUCT that sum determined by
deducting from the gross amount invoiced for PRODUCT sold for use in
the TERRITORY in an arms length transaction to customers who are not
AFFILIATES of ABBOTT: (i) transportation charges to the extent
included in the billing; (ii) trade, quantity or cash discounts, to
the extent allowed; (iii) credits or allowances, if any, given or made
on account of price adjustments, or returns, to the extent made; (iv)
any and all Federal, state or local government rebates, whether in
existence now, or enacted at any time during the term of this
AGREEMENT, to the extent made; (v) any tax, excise or other
governmental charge upon or measured by the production, sale,
transportation, delivery or use of the PRODUCT to the extent
separately billed; (vi) a reasonable allowance for bad debt; in each
case determined in accordance with ABBOTT's normal internal accounting
practices and GAAP.
1.11 "PARTY(IES) shall mean ABBOTT and/or MEDIMMUNE, as the case may be.
1.12 "PRODUCT" shall mean the humanized antibody directed against
respiratory syncytial virus ("RSV") and known as MEDI-493
(palivizumab).
(PAGE 2)
1.13 "SPECIFICATIONS" shall mean, with respect to the PRODUCT, the
specifications, test procedures, process descriptions, and other
information relating to such PRODUCT. The current SPECIFICATIONS are
attached as Schedule A.
1.14 "TERRITORY" shall mean all countries of the world except the United
States of America and its territories, possessions and commonwealths.
1.15 "THIRD PARTY" shall mean a party other than ABBOTT, MEDIMMUNE or their
AFFILIATES.
1.16 "TRADEMARK" shall mean the trademark(s) for the PRODUCT, owned by
ABBOTT, all in accordance with Section 8.
1.17 "UNIT SALE PRICE" shall mean total NET SALES of PRODUCT for a defined
period divided by the number of units of PRODUCT included in NET SALES
for the defined period. The UNIT SALE PRICE shall be expressed in
U.S. Dollars for each type of vial sold.
2. APPOINTMENT
2.1 (a) MEDIMMUNE hereby appoints ABBOTT as the exclusive distributor of
the PRODUCT in the TERRITORY and ABBOTT accepts such appointment.
(b) ABBOTT agrees that ABBOTT (i) will only sell and distribute
PRODUCT in countries of the TERRITORY as to which ABBOTT maintains
distribution rights under this AGREEMENT ; (ii) will only sell in the
TERRITORY PRODUCT which is purchased from MEDIMMUNE; and (iii) will
only sell PRODUCT in the TERRITORY under the TRADEMARK.
2.2 ABBOTT agrees that ABBOTT will not without MEDIMMUNE'S written consent
discount the selling price of PRODUCT in order to promote the sales of
other products of ABBOTT and that it will conduct all price
negotiations in good faith on an arms length basis.
2.3 ABBOTT shall prepare all labeling and packaging for PRODUCT in
conformance with regulatory guidelines in each country of the
TERRITORY and which shall be satisfactory in form and substance to
MEDIMMUNE, which labeling shall clearly indicate that the PRODUCT is
being distributed by ABBOTT. ABBOTT shall submit such labeling and
packaging for MAJOR MARKET countries to MEDIMMUNE for approval, which
approval shall not unreasonably be withheld. MEDIMMUNE shall be
deemed to have approved such submitted labeling and packaging unless
MEDIMMUNE provides ABBOTT written objection thereto within twenty (20)
days after receipt thereof. Upon MEDIMMUNE's reasonable request or if
the proposed PRODUCT labeling and packaging for a non-MAJOR MARKET
country differs materially from the labeling and packaging previously
(PAGE 3)
approved by MEDIMMUNE pursuant to this Section 2.3, ABBOTT shall
submit the labeling and packaging for such non-MAJOR MARKET country to
MEDIMMUNE for approval, which approval shall not unreasonably be
withheld. MEDIMMUNE shall be deemed to have approved such submitted
labeling and packaging unless MEDIMMUNE provides ABBOTT written
objection thereto within twenty (20) days after receipt thereof.
2.4 ABBOTT agrees not to sell PRODUCT through subdistributors without the
written consent of MEDIMMUNE, which consent shall not be unreasonably
withheld. If such consent is granted, ABBOTT shall remain fully
liable and responsible to MEDIMMUNE for the activities of a
subdistributor appointed by ABBOTT.
3. PURCHASE OF PRODUCTS
3.1 (a) Subject to Section 3.4 hereof, MEDIMMUNE shall sell and ABBOTT
shall purchase an amount of PRODUCT equal to ABBOTT's requirements in
the TERRITORY. ABBOTT shall pay the price for such PRODUCT as set
forth in Section 3.2 according to the volume purchased.
(b) Subject to availability of PRODUCT from MEDIMMUNE, ABBOTT shall
maintain sufficient inventories of PRODUCT to enable ABBOTT to
effectively satisfy demand for PRODUCT in the TERRITORY.
3.2 (a) The price of PRODUCT shall be the following percentages of NET
SALES of PRODUCT sold by ABBOTT or its AFFILIATES:
(i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
(ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
(b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
3.3 (a) MEDIMMUNE will invoice ABBOTT for PRODUCT shipped and ABBOTT
shall pay as follows:
(i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
(A) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
(B) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
(C) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
(ii) The price set forth in Section 3.2 shall be calculated
and paid quarterly within forty-five (45) days following the end
of each CALENDAR QUARTER with the amount paid under Section
3.3(a)(i) for PRODUCT sold in a CALENDAR QUARTER (on a first in
(PAGE 4)
first out basis) being credited against the actual amount due
under this Section 3.3 (a)(ii) for such CALENDAR QUARTER. In the
event that the credit exceeds the amount due for a CALENDAR
QUARTER, then such excess amount shall be credited until
exhausted against amounts due under this Section 3.3(a)(ii) for
subsequent CALENDAR QUARTERS, but only if such excess results
from payments which are made based on UNIT SALE PRICE. If at the
end of a CONTRACT YEAR a carry over credit exists, then MEDIMMUNE
shall promptly pay to ABBOTT an amount equal to such carry over
credit. Each such quarterly payment shall be supported by the
accounting prescribed in Section 3.3(b). Whenever for the
purpose of calculating payment, conversion from any foreign
currency shall be required, such conversion shall be completed
for each month of the CALENDAR QUARTER as follows: (CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED), using central bank fixing rates in
countries where available and open market rates otherwise.
(iii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
(iv) An example using the formulas set forth in this Section
3.3(a) is attached hereto as Schedule B.
(b) With each quarterly payment, ABBOTT shall deliver to MEDIMMUNE a
full and accurate accounting to include at least the following
information:
(i) Quantity of each PRODUCT sold and/or withdrawn by
transaction type (by country) by ABBOTT, and its AFFILIATES and
if applicable, it's subdistributors.
(ii) Total amount invoiced for each PRODUCT (by country) in
local currency.
(iii)Calculation of NET SALES (by country) in local
currency.
(iv) Exchange rates for converting each local currency into
U.S. Dollars for each month of the CALENDAR QUARTER.
(v) NET SALES in U.S. dollars in each country.
(vi) Total compensation payable to MEDIMMUNE.
(vii)Credits taken by ABBOTT pursuant to Section 3.3(a)(ii).
(c) Within forty five (45) days following each CONTRACT YEAR, ABBOTT
shall provide MEDIMMUNE an inventory reconciliation for such CONTRACT
(PAGE 5)
YEAR.
(d) ABBOTT shall keep, and shall cause each of its AFFILIATES to
keep, and if applicable, its subdistributors, full and accurate books
of account containing all particulars that may be necessary for the
purpose of calculating all payments payable to MEDIMMUNE. Such books
of account shall be kept at their principal place of business and,
with all necessary supporting data shall, for the two (2) years next
following the end of the calendar year to which each shall pertain be
open for inspection by an independent certified accountant selected by
MEDIMMUNE and reasonably acceptable to ABBOTT upon reasonable notice
during normal business hours at MEDIMMUNE's expense for the sole
purpose of verifying payments or compliance with this AGREEMENT, but
in no event more than once in each calendar year. All information and
data offered shall be used only for the purpose of verifying payments.
In the event that such inspection shall indicate that in any calendar
year that the payments which should have been paid by ABBOTT are at
least five percent (5%) greater than those which were actually paid by
ABBOTT, then ABBOTT shall pay the cost of such inspection. All
underpayments are immediately due and payable.
(e) MEDIMMUNE shall forward all invoices for PRODUCT ordered
hereunder to a U.S. location as designated by ABBOTT.
3.4 MEDIMMUNE shall use commercially reasonable efforts to satisfy
ABBOTT's requirements for PRODUCT. All PRODUCT shipped to ABBOTT
shall be manufactured in accordance with the SPECIFICATIONS.
MEDIMMUNE shall promptly advise ABBOTT of any proposed or required
changes to the SPECIFICATIONS. To the extent such changes require a
new or amended Product Registration, as defined herein, MEDIMMUNE and
ABBOTT shall cooperate and coordinate the adoption of such changes to
the SPECIFICATIONS so as to minimize any disruption of the marketing,
promotion and sale of PRODUCT in any country within the TERRITORY.
However, MEDIMMUNE's obligation to supply PRODUCT under Section 3.1
hereof shall at all times be subject to the condition that MEDIMMUNE
is able to obtain or make a sufficient supply of such PRODUCT for sale
both inside and outside of the TERRITORY. In the event that PRODUCT
available to MEDIMMUNE is in short supply, MEDIMMUNE shall notify
ABBOTT of such shortage as soon as possible. In the event there is a
short supply of PRODUCT and MEDIMMUNE cannot supply PRODUCT to ABBOTT
in an amount equal to ABBOTT's FIRM ORDER, then MEDIMMUNE shall
allocate available PRODUCT to ABBOTT in each month that such a
shortfall exists (and in each month thereafter until the shortfall to
ABBOTT is remedied) in an amount equal to the product of (i) the
amount of available PRODUCT for that month and (ii) a fraction the
numerator of which is the aggregate quantity of FIRM ORDERS made by
ABBOTT over the subsequent twelve (12) month period including the
(PAGE 6)
shortfall month and the denominator of which is the sum of (x) the
aggregate quantity of FIRM ORDERS made by ABBOTT over the subsequent
twelve (12) month period including the shortfall months and (y) the
aggregate quantity of PRODUCT over the same twelve (12) month period
required by MEDIMMUNE outside the TERRITORY by reference to FIRM
ORDERS placed with THIRD PARTY manufacturers for MEDIMMUNE's
requirements and the amount to be produced at a MEDIMMUNE facility for
MEDIMMUNE's requirements, in each case outside the TERRITORY.
3.5 ABBOTT agrees to use and distribute the PRODUCT only in accordance
with the terms, conditions and purposes of this AGREEMENT.
4. DELIVERY, PAYMENT AND RISK OF LOSS
4.1 (a) All payments under this AGREEMENT shall be remitted in
immediately available funds. Unless otherwise agreed between the
parties all payments shall be in U.S. Dollars.
(b) In the event that any payment due hereunder is not made when due,
the payment shall accrue interest beginning on the first day of the
month following the date when such payment was due, calculated at the
annual rate of the sum of (i) two percent (2%) plus (ii) the prime
interest rate quoted by Citibank, N.A., New York, New York, on the
date such payment is due, or on the date payment is made, whichever is
higher, the interest being compounded on the last day of each calendar
month; provided that in no event shall said annual rate exceed the
maximum legal interest rate for corporations. Such payment when made
shall be accompanied by all interest accrued. Said interest and the
payment and acceptance thereof shall not negate or waive the right of
MEDIMMUNE to any other remedy, legal or equitable, to which MEDIMMUNE
may be entitled because of the delinquency of the payment.
4.2 Title to PRODUCT sold hereunder, and risk of loss with respect to such
PRODUCT, shall pass to ABBOTT upon delivery of the PRODUCT to a
carrier designated by ABBOTT at the place at which PRODUCT is
manufactured. ABBOTT shall be responsible for the cost of freight and
insurance. Upon the passage of title, MEDIMMUNE's liability with
respect to risk of loss shall cease, and ABBOTT shall be the owner of
such PRODUCT for all purposes, including, without limitation, the
marketing, sale and setting of prices for the PRODUCT sold by ABBOTT
to its customers.
4.3 No provision on ABBOTT's purchase order forms which may purport to
impose different conditions upon the parties hereto shall modify the
terms of this AGREEMENT.
(PAGE 7)
4.4 After the sale of PRODUCT to ABBOTT, ABBOTT shall ship such PRODUCT
outside the country in which ABBOTT takes title.
5. FORECASTS AND ORDERS
5.1 (a) ABBOTT shall provide MEDIMMUNE on the tenth of the last month of
each quarter with a three-year product forecast planning horizon. The
rolling forecasts are to be broken down to single months. The
forecasts within the first year (month 1 through 12) are firm orders
and cannot be changed. The forecast for the second year (month 13
through 24) is a partly binding forecast which means that the forecast
can be changed within this period. The forecast can be increased, but
is limited to the following restrictions when decreased.
Month 13 - 15 -- the forecast can be reduced by
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
Month 16 - 18 -- the forecast can be reduced by
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
Month 19 - 21 -- the forecast can be reduced by
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
Month 21 - 24 -- the forecast can be reduced by
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
The forecast for the third year (month 25 - 36) is
a non-binding forecast.
Notwithstanding the foregoing, MEDIMMUNE shall make every reasonable
effort to comply with unplanned changes in FIRM ORDERS, but shall not
be held liable for its inability to do so. In each FIRM ORDER for any
month, ABBOTT shall state, after consultation with MEDIMMUNE, a
reasonable delivery schedule for PRODUCTS to be delivered in that
month. With respect to calendar year 1998, the parties shall agree on
or before February 15, 1998, upon a FIRM ORDER for that calendar year
and the partly binding and non-binding estimates for the following
twenty four (24) months.
(b) Notwithstanding the foregoing, MEDIMMUNE reserves the right to
spread the supply of PRODUCT throughout a CONTRACT YEAR
(c) PRODUCT shall be provided to ABBOTT by MEDIMMUNE and shall be
ordered by ABBOTT in 50 mg or 100 mg vials; without labeling or
packaging. ABBOTT shall be responsible for the labeling and packaging
of PRODUCT, at ABBOTT's sole cost and expense.
(d) In any month for which ABBOTT places an order, the order shall be
no less than 1000 vials of PRODUCT, and MEDIMMUNE shall only be
required to deliver PRODUCT to ABBOTT once in each month.
(PAGE 8)
5.2 ABBOTT shall have sixty (60) days from receipt of any delivery of
PRODUCT to examine such PRODUCT. ABBOTT shall promptly notify
MEDIMMUNE of any defective PRODUCT and shall return to or otherwise
dispose of any defective shipments in accordance with MEDIMMUNE'S
instructions at MEDIMMUNE'S cost and expense. Subject to Section 3.4
MEDIMMUNE shall provide for replacement delivery within one (1) month
from existing production stock of the THIRD PARTY manufacturer, if
available, and if not available, within twelve (12) months therefrom.
Such replacement shall be ABBOTT's sole and exclusive remedy with
respect to defective PRODUCT delivered by MEDIMMUNE hereunder.
6. DILIGENCE
6.1 MEDIMMUNE shall, as soon as practical after execution of this
AGREEMENT provide ABBOTT with all data and information which MEDIMMUNE
has in its possession with respect to PRODUCT which is necessary for
ABBOTT to obtain appropriate PRODUCT approvals in the TERRITORY, which
data and information includes, but is not limited to, the PRODUCT BLA
filing with the United States Food and Drug Administration. MEDIMMUNE
shall provide ABBOTT reasonable technical assistance and cooperation
in connection with ABBOTT's efforts in obtaining regulatory approval
of PRODUCT in each MAJOR MARKET.
6.2 At its sole cost and expense, ABBOTT shall exert best efforts to
obtain in each MAJOR MARKET all approvals which are required to enable
ABBOTT to sell and distribute PRODUCT in each MAJOR MARKET including
but not limited to regulatory and pricing approvals. In the event
that clinical trial(s) is required to obtain or maintain such
approvals in a country(ies) of the TERRITORY, then ABBOTT shall have
the right to terminate this AGREEMENT in such country(ies) by written
notice to MEDIMMUNE within the following time periods after ABBOTT is
notified that clinical trial(s) for PRODUCT is required in such
country:
(i) within thirty (30 ) days if ABBOTT's good faith
estimate of the cost to complete such clinical trial is less than
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED);
(ii) within sixty (60 ) days if ABBOTT's good faith estimate
of the cost to complete such clinical trial is greater than
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED);
(iii)within ninety (90 ) days if ABBOTT's good faith
estimate of the cost to complete such clinical trial is greater
than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED);
(PAGE 9)
(iv) within one hundred twenty (120 ) days if ABBOTT's good
faith estimate of the cost to complete such clinical trial is
greater than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED);
With respect to a country(ies) in the TERRITORY in which this
AGREEMENT is terminated pursuant to this Section 6.2, ABBOTT
hereby grants to MEDIMMUNE a royalty free license to use any and
all technical, clinical and regulatory information, filings and
licenses of ABBOTT with respect to such PRODUCT in such
country(ies) and ABBOTT shall effect prompt transfer thereof to
MEDIMMUNE.
6.3 ABBOTT shall take any and all necessary steps to maintain regulatory
and pricing approval for PRODUCT in each country of the TERRITORY in
which it is obtained.
6.4 Prior to initiating a clinical trial with respect to PRODUCT, the
PARTY who is to conduct such clinical trial shall provide the other
PARTY with an opportunity to review the clinical trial proposal and
such PARTY shall consider any advice and suggestions of the other
PARTY with respect to such clinical trial. In the case of a clinical
trial to be conducted by or on behalf of ABBOTT with respect to
PRODUCT, such clinical trial shall not be initiated without the
written consent of MEDIMMUNE, which consent shall not be unreasonably
withheld.
6.5 In the event that, notwithstanding ABBOTT's best efforts, ABBOTT does
not achieve the following milestones in the TERRITORY, MEDIMMUNE may,
in its sole discretion, convert the exclusive rights granted herein to
non-exclusive rights:
(i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
6.6 In the event that ABBOTT does not have a significant interest in
obtaining regulatory approval of and marketing PRODUCT in any country
of the TERRITORY, ABBOTT shall notify MEDIMMUNE. If MEDIMMUNE
requests in writing that ABBOTT indicate whether or not ABBOTT has an
interest in marketing PRODUCT in a country(ies) of the TERRITORY,
within thirty (30) days thereafter ABBOTT shall notify MEDIMMUNE as to
whether or not ABBOTT has such an interest. In the event that ABBOTT
notifies MEDIMMUNE that it does not have a significant interest in
marketing PRODUCT in any country(ies) of the TERRITORY, MEDIMMUNE may
terminate ABBOTT's rights in such country(ies) of the TERRITORY,
provided that the marketing in such country(ies) does not adversely
affect marketing of PRODUCT in a country in which ABBOTT is seeking or
has obtained regulatory approval.
(PAGE 10)
6.7 (a) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED):
(i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
(ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
(iii)(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
(iv) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED):
(x) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
(y) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
(z) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
(b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
6.8 During the term of this AGREEMENT, ABBOTT shall exercise its best
efforts to promote the use and sale of PRODUCT in the MAJOR MARKETS of
the TERRITORY and in each country of the TERRITORY in which PRODUCT is
approved for sale and shall maintain, at its own cost and expense, an
adequate sales organization for this purpose. ABBOTT shall keep
MEDIMMUNE advised of general market, economic and regulatory
developments that may affect the sale of PRODUCT.
7. PAYMENTS
In consideration for the clinical and other data provided by MEDIMMUNE
in support of regulatory approvals in the TERRITORY, ABBOTT will make
the following payments to MEDIMMUNE:
(i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED);
(ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED);
(iii)(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED);
(iv) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); and
(v) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED).
8. OTHER RESPONSIBILITIES OF ABBOTT
8.1 In distributing the PRODUCT in the TERRITORY, ABBOTT will comply with
all provisions of the laws, rules and regulations applicable in the
TERRITORY. ABBOTT shall promptly notify MEDIMMUNE of any changes in
such provisions.
(PAGE 11)
8.2 ABBOTT agrees not to export PRODUCT outside the TERRITORY without the
express permission of MEDIMMUNE.
8.3 ABBOTT shall supply MEDIMMUNE with a market progress report each
CALENDAR QUARTER indicating the quantities of the PRODUCT in inventory
and sales of the PRODUCT in each country of the TERRITORY.
8.4 The appointment of ABBOTT hereunder shall not create a joint venture,
or any employer-employee relationship or principal-agency
relationship, and nothing under this AGREEMENT shall be deemed to
authorize ABBOTT to act for, represent, or bind MEDIMMUNE or any of
its AFFILIATES.
8.5 (a) During the term of this AGREEMENT, it is contemplated that a
PARTY will disclose to the other PARTY proprietary and confidential
technology, specifications, technical information and the like which
are owned or controlled by a PARTY ("Confidential Information"). The
receiving PARTY agrees to retain the disclosing PARTY's Confidential
Information in confidence and not to disclose any such Confidential
Information to a THIRD PARTY without the prior written consent of the
disclosing PARTY and to use the disclosing PARTY's Confidential
Information only for the purposes of this AGREEMENT. The obligations
of confidentiality will not apply to Confidential Information which:
(i) was known to the receiving PARTY or generally known to
the public prior to its disclosure hereunder;
(ii) subsequently becomes known to the public by some means
other than a breach of this AGREEMENT;
(iii)is subsequently disclosed to the receiving PARTY by a
third party having a lawful right to make such disclosure;
(iv) is required by law or bona fide legal process to be
disclosed provided that the receiving PARTY takes all reasonable
steps to restrict and maintain confidentiality of such disclosure
and provides reasonable prior notice to the disclosing PARTY; or
(v) is approved for release by the PARTIES.
(b) Upon termination or expiration of this AGREEMENT, each PARTY
shall return to the other PARTY all tangible forms of confidential
information furnished by the other PARTY, including all copies thereof
and all memoranda of oral disclosure, except that each PARTY may
retain one copy in its files to ensure compliance with any legal
obligations.
(PAGE 12)
(c) This Section shall survive until the tenth anniversary of the
termination or expiration of this AGREEMENT.
8.6 During the term of this AGREEMENT and for one year thereafter, ABBOTT
agrees that neither ABBOTT nor an AFFILIATE of ABBOTT shall research,
clinically develop, promote, market or sell directly or indirectly or
assist another party in marketing or selling in the TERRITORY any
immunoglobulin or antibody product (or antibody derivative) for
prevention and/or treatment of respiratory syncytial virus disease.
8.7 ABBOTT agrees to provide MEDIMMUNE with ABBOTT's annual U.S. Dollar
sales forecast for PRODUCT to be sold in the TERRITORY for the sole
purpose of assisting MEDIMMUNE in its financial planning.
9. TRADEMARKS, LOGOS AND PATENTS
9.1 ABBOTT shall propose to MEDIMMUNE trademarks for use with the PRODUCT
in the TERRITORY, and with the written consent of MEDIMMUNE a proposed
trademark(s) shall become the TRADEMARK for the PRODUCT in the
TERRITORY.
9.2 The TRADEMARK shall be owned by ABBOTT.
9.3 In the event that ABBOTT's rights to PRODUCT under this AGREEMENT are
terminated in any country(ies) of the TERRITORY or this AGREEMENT is
terminated for reasons other than MEDIMMUNE's breach of the terms of
this AGREEMENT, ABBOTT shall grant to MEDIMMUNE a non-cancellable
royalty free exclusive license to use the TRADEMARK with respect
to PRODUCT in such country(ies) or to all countries of the TERRITORY,
respectively, and shall perform all acts and sign and execute any and
all papers required to effect such licensing all at no cost or expense
to MEDIMMUNE.
9.4 ABBOTT agrees to use the TRADEMARK only with respect to PRODUCT
purchased from MEDIMMUNE and only in those countries of the TERRITORY
in which ABBOTT retains the right to distribute PRODUCT.
9.5 At its cost and expense, ABBOTT undertakes to comply with all legal
requirements pertaining to the TRADEMARK to maintain the TRADEMARK in
force at all times, in the TERRITORY in which ABBOTT retains the right
to distribute PRODUCT.
9.6 If ABBOTT becomes aware of any infringement of the TRADEMARK within
the TERRITORY, ABBOTT shall, at its expense, take such steps as ABBOTT
may reasonably determine for the protection of its rights in the
TRADEMARK. The commencement, strategies, termination and settlement
of any action relating to the validity and/or infringement of such
(PAGE 13)
TRADEMARK shall be finally decided by ABBOTT.
9.7 (a) The patents in the TERRITORY relating to PRODUCT owned by or
licensed to MEDIMMUNE are set forth in attached Schedule C.
(b) In the event that ABBOTT notifies MEDIMMUNE that ABBOTT believes
that a THIRD PARTY is selling a monoclonal antibody against RSV in the
TERRITORY which infringes a patent owned by or licensed to MEDIMMUNE
and MEDIMMUNE has the right to bring suit under such patent then:
(i) MEDIMMUNE shall have the first right to bring an
infringement action against such THIRD PARTY at its cost and
expense and MEDIMMUNE shall retain all amounts recovered in such
action; or
(ii) if MEDIMMUNE does not initiate such action within
thirty (30) days of written notice of such infringement from
ABBOTT, at the request of ABBOTT, to the extent that MEDIMMUNE
has the right to do so, MEDIMMUNE shall initiate an infringement
action against such THIRD PARTY at the cost and expense of ABBOTT
and ABBOTT shall retain all amounts recovered in such action.
(c) In any infringement suit instituted by MEDIMMUNE to enforce the
patent rights pursuant to this AGREEMENT, ABBOTT shall cooperate fully
with MEDIMMUNE.
10. INDEMNITY
10.1 ABBOTT shall defend, indemnify and hold harmless MEDIMMUNE and its
AFFILIATES and their licensors related to the PRODUCT and their
respective employees, agents, officers, shareholders and directors and
each of them (a "MEDIMMUNE Indemnified Party") from and against any
and all THIRD PARTY claims, causes of action, losses, damages and
costs (including reasonable attorney's fees) of any nature made or
asserted against a MEDIMMUNE Indemnified Party or lawsuits or other
proceedings filed or otherwise instituted against a MEDIMMUNE
Indemnified Party, in each case by a THIRD PARTY (hereinafter
individually and collectively a "Loss(es)") to the extent that such
Loss results or arises from clinical trials, testing, sale or use of
any PRODUCT which is used or sold by or on behalf of ABBOTT, provided,
however, that the foregoing indemnification shall not be applicable to
any Loss to a MEDIMMUNE Indemnified Party to the extent that such Loss
arises or results from the negligence or willful misconduct of such
MEDIMMUNE Indemnified Party or infringement of a patent of a THIRD
PARTY as a result of manufacture, use or sale of PRODUCT in the
TERRITORY.
(PAGE 14)
10.2 Indemnification by MEDIMMUNE.
MEDIMMUNE shall defend, indemnify and hold harmless ABBOTT and its
AFFILIATES and their respective employees, agents, officers,
shareholders and directors and each of them (a "ABBOTT Indemnified
Party(ies)") from and against any and all THIRD PARTY claims, causes
of action, losses, damages and costs (including reasonable attorney's
fees) of any nature made or asserted against a ABBOTT Indemnified
Party or lawsuits or other proceedings filed or otherwise instituted
against a ABBOTT Indemnified Party, in each case by a THIRD PARTY
(hereinafter individually or collectively a "Loss(es)") to the extent
that such Loss results or arises from the negligence or willful
misconduct of MEDIMMUNE or the infringement of a patent of a THIRD
PARTY as a result of ABBOTT's use or sale of PRODUCT in the TERRITORY,
except to the extent that such Loss arises from the negligence or
willful misconduct of such ABBOTT Indemnified Party.
10.3 Conditions to Indemnification.
A person or entity that intends to claim indemnification under this
Section 10 (the "Indemnitee") shall promptly notify the other party
(the "Indemnitor") of any loss, claim, damage, liability or action in
respect of which the Indemnitee intends to claim such indemnification,
and the Indemnitor shall assume the defense thereof with counsel
mutually satisfactory to the Indemnitee whether or not such claim is
rightfully brought; provided, however, that an Indemnitee shall have
the right to retain its own counsel, with the fees and expenses to be
paid by the Indemnitor if Indemnitor does not assume the defense, or
if representation of such Indemnitee by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other person represented by
such counsel in such proceedings. The indemnity agreement in this
Section 10 shall not apply to amounts paid in settlement of any loss,
claim, damage, liability or action if such settlement is effected
without the consent of the Indemnitor, which consent shall not be
withheld or delayed unreasonably. The failure to deliver notice to
the Indemnitor within a reasonable time after the commencement of any
such action, only if prejudicial to its ability to defend such action,
shall relieve such Indemnitor of any liability to the Indemnitee under
this Section 10, but the omission so to deliver notice to the
Indemnitor will not relieve it of any liability that it may have to
any Indemnitee otherwise than under this Section 10. The Indemnitee
under this Section 10, its employees and agents, shall cooperate fully
with the Indemnitor and its legal representatives in the
investigations of any action, claim or liability covered by this
indemnification.
(PAGE 15)
11. CLINICAL TRIALS AND ADVERSE REACTION REPORTING
11.1 Each party hereto shall be responsible for the conduct of clinical
trials, including drug monitoring with PRODUCT in its territory and
the parties will keep each other informed and share data resulting
from such clinical trials.
11.2 In order to guarantee that all applicable regulatory requirements as
well as the PARTIES' interests regarding pharmacovigilance of the
medicinal products concerned can be met, the PARTIES shall exchange
appropriate information. The PARTIES shall make sufficient efforts to
promptly establish and adopt sufficient procedures concerning this
exchange. These procedures shall be documented in writing as Schedule
D to this AGREEMENT.
11.3 Each PARTY agrees to notify the other PARTY as soon as possible of any
information it may receive regarding any threatened or pending action
by an AGENCY which may affect the safety or efficacy claims of PRODUCT
or the continued marketing of such PRODUCT.
11.4 Each PARTY shall promptly notify the other PARTY in writing of any
facts relating to the advisability of the recall, destruction or
withholding from the market of the PRODUCT anywhere in the world
(collectively, "Recall"). If at any time (a) any governmental or
regulatory authority in the TERRITORY issues a request, directive or
order for a Recall; (b) a court of competent jurisdiction orders a
Recall in the TERRITORY; or (c) ABBOTT determines, following
consultation with MEDIMMUNE (except in emergency situations in which
there is insufficient time for such consultation), that a Recall in
the TERRITORY is necessary or advisable, ABBOTT shall take all
appropriate corrective actions, at ABBOTT's expense, to effect the
Recall and MEDIMMUNE shall provide ABBOTT with such cooperation in
connection with the Recall as ABBOTT may reasonably request.
12. WARRANTIES
12.1 Each party warrants and represents that it has the full right and
authority to enter into this AGREEMENT and that it is not aware of any
impediment which would inhibit its ability to perform the terms and
conditions imposed on it.
12.2 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS SECTION 12, NEITHER
PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR VALIDITY OF
ANY PATENTS ISSUED OR PENDING.
(PAGE 16)
13. TERM AND TERMINATION
13.1 This AGREEMENT is effective as of the date first above written and,
unless sooner terminated as provided herein, shall continue for as
long as ABBOTT is distributing the PRODUCT in the TERRITORY.
13.2 This AGREEMENT may be terminated by either party if:
(a) (i) the other party fails to observe, perform or otherwise
breaches any of its material covenants, agreements or obligations
under this AGREEMENT in any material respect and (ii) such failure
continues for a period of thirty (30) days after receipt by the other
party of notice thereof from the electing party specifying such
failure. Following such period, the electing party has ninety (90)
days to give notice to the other party of its election to terminate
this AGREEMENT; or
(b) (i) the other party files or institutes bankruptcy,
reorganization, liquidation, receivership or similar proceedings under
any debt relief laws or fails for more than sixty (60) days to take
steps to oppose the initiation of such actions against it.
13.3 Upon the termination of this AGREEMENT for any reason other than for
breach of this AGREEMENT by ABBOTT, ABBOTT shall have the right to
sell all PRODUCT in inventory at the time of termination. All such
sales of PRODUCT shall be subject to the terms of this AGREEMENT, as
in effect immediately prior to termination. If this AGREEMENT
terminates for any breach by ABBOTT, then MEDIMMUNE may at its
discretion buy back all or part of the PRODUCT that remain in the
possession of ABBOTT and are in good condition with a reasonable
remaining shelf life. All PRODUCT which is not repurchased by
MEDIMMUNE within four (4) weeks after termination shall be immediately
destroyed by ABBOTT at ABBOTT's expense. Upon termination, ABBOTT
shall discontinue use of the TRADEMARK, except in connection with any
sale of inventory as provided in this Section.
13.4 The termination of this AGREEMENT shall not affect any outstanding
obligations of ABBOTT or MEDIMMUNE hereunder, including but not
limited to any payments owed under the provisions of this AGREEMENT
while it was in effect and payment for binding and partially binding
orders under Section 5.1(a). Any such amount owed to a party shall be
paid within thirty (30) days of the termination of this AGREEMENT.
The provisions of Sections 3.3, 4.1, 5.1(a), 8.5, 8.6, 9.2, 9.3, 9.4,
Section 10, 13.3, 13.4 and 14.1 shall survive the termination of this
AGREEMENT for the longest period permitted by applicable law.
(PAGE 17)
13.5 ABBOTT may obtain PRODUCT registrations, licenses, permits, consents
and other approvals required from time to time to distribute and sell
the PRODUCTS in a country within the TERRITORY (the "Product
Registrations"). Upon termination of this AGREEMENT and at the
request of MEDIMMUNE, ABBOTT shall take all necessary or appropriate
actions to transfer to MEDIMMUNE or its designee the Product
Registrations which ABBOTT obtained in order to import, distribute or
sell PRODUCT in a country(ies) within the TERRITORY, to the extent
permitted by applicable law and regulation.
14. MISCELLANEOUS PROVISIONS
14.1 This AGREEMENT shall be governed by and construed in accordance with
the laws of State of Maryland without giving effect to its conflict of
law rules and regulations.
14.2 The United Nations Convention on the International Sale of Goods shall
not apply to this AGREEMENT, nor to any sale of PRODUCT made pursuant
to this AGREEMENT.
14.3 This AGREEMENT sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and supersedes
all prior agreements in this respect. There shall be no amendments or
modifications to this AGREEMENT, except by a written document which is
signed by both parties.
14.4 The headings in this AGREEMENT have been inserted for the convenience
of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular article or
section.
14.5 Any delay in enforcing a party's rights under this AGREEMENT or any
waiver as to a particular default or other matter shall not constitute
a waiver of a party's right to the future enforcement of its rights
under this AGREEMENT, excepting only as to an expressed written and
signed waiver as to a particular matter for a particular period of
time.
14.6 In the event any provision of this AGREEMENT should be held invalid,
illegal or unenforceable, the remaining provisions shall not be
affected or impaired and the parties will use all reasonable efforts
to replace the applicable provision within a valid, legal and
enforceable provision which insofar as practical implements the
purposes hereof.
14.7 Unless agreed upon in writing in advance by the PARTIES, the PARTIES
shall not discuss with THIRD PARTIES or originate any publicity, news
(PAGE 18)
release or other public announcement, written or oral, whether to the
public press, stockholders or otherwise, any matters relating to the
terms of this AGREEMENT without the prior written consent of the other
PARTY except as may be required to obtain the Product Registrations.
However, the PARTIES acknowledge and agree that MEDIMMUNE and ABBOTT
shall be entitled to comply with the information obligations to the
public as set out in the company laws or security laws of the U.S.
14.8 If a dispute or claim arising out of or in connection with this
AGREEMENT develops between the PARTIES, the respective appropriate
officers of the PARTIES shall negotiate in good faith in an effort to
resolve the dispute for a period of thirty (30) days; provided,
however, nothing in this Section 14.8 shall prevent either PARTY from
seeking equitable relief. The PARTIES may, but are not obligated to,
agree to use the alternate dispute resolution procedure set forth in
Schedule D.
15. FORCE MAJEURE
Neither party shall be liable to the other for any default hereunder,
which is not a payment default, which is due to cause beyond the
control of the party in default, including but not limited to the
actions or inactions of any government agency or instrumentality;
breakdown of plant or machinery or shortages of labor, fuel,
transportation of materials, fires, floods, earthquakes, war, riots or
insurrections. If either party shall seek to rely on Force Majeure it
shall give written notice to the other indicating the details of the
act which it claims has put due performance of its obligations beyond
its control. In addition, the affected party shall exert all
reasonable efforts to eliminate or cure any Force Majeure event and to
resume performance with all possible speed. In the event this cannot
be done within six (6) months, the parties shall either resolve the
matter by mutual agreement or terminate this AGREEMENT.
16. SUCCESSORS
Subject to Section 17, the rights and obligations included in this
AGREEMENT shall be binding upon the parties hereto and their
successors and assigns.
17. ASSIGNMENT
This AGREEMENT may not be assigned by either party without the consent
of the other except MEDIMMUNE may assign this AGREEMENT without
consent in the event of a merger, acquisition or transfer of all or
substantially all of its business or assets relating to this
AGREEMENT.
(PAGE 19)
18. NOTICES
Any notice to be given under this AGREEMENT shall be deemed to have
been sufficiently given and delivered upon the earlier of (i) when
received at the address set forth below or (ii) three (3) business
days after being mailed by registered or certified mail, postage
prepaid with return receipt requested, addressed to the party to be
notified at its address stated below or at such other address as may
hereafter be furnished in writing to the notifying party or (iii) on
the day when sent by facsimile as confirmed by registered or certified
mail. Notices shall be delivered to the respective parties at the
addresses set forth below:
<TABLE>
<CAPTION>
<S> <C>
To MEDIMMUNE: MEDIMMUNE, Inc. Copy to: Carella, Byrne, Bain,
35 West Watkins Mill Road Gilfillan, Cecchi, Stewart
Gaithersburg, MD 20878 & Olstein
ATTN: CEO 6 Becker Farm Road
Roseland, New Jersey 07068
Fax: (201) 994-1744
ATTN: Elliot M. Olstein, Esq.
To ABBOTT: ABBOTT International, Ltd. Copy to: Abbott Laborities
D-6WP, AP30 D-364, AP6D
200 Abbott Park Road 100 Abbott Park Road
Abbott Park, IL 60064 Abbott Park, IL 60064
Phone: (847) 937-1760 Phone: (847) 937-8906
Fax: (847) 938-8325 Fax: (847) 938-6277
ATTN: President ATTN: General Counsel
</TABLE>
19. PAYMENTS TO BE PAID IN FULL
To the extent any payments due to MEDIMMUNE under in this AGREEMENT
shall be subject to withholding tax, ABBOTT shall be responsible for
the payment of and pay such tax without recourse to MEDIMMUNE. ABBOTT
shall have the right to reduce payments to MEDIMMUNE by the tax paid
on behalf of MEDIMMUNE. To the extent that MEDIMMUNE is unable to
recover VAT or a similar tax accrued in a country in connection with
its supply of PRODUCT to ABBOTT hereunder, ABBOTT shall assist
MEDIMMUNE in recovering such tax.
(PAGE 20)
20. CURRENCY CALCULATION
In all cases where calculations or amounts are made or stated in U.S.
Dollars, conversion from local currency to U.S. Dollars shall be made
as set forth in Section 3.3(B)(ii).
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to
be executed by their respective representatives hereunto duly authorized as
of the day and year first above-written.
<TABLE>
<CAPTION>
<S> <C>
ABBOTT INTERNATIONAL, LTD. MEDIMMUNE, INC.
By:/s/Robert L. Parkinson, Jr. By:/s/David M. Mott
Robert L. Parkinson, Jr. David M. Mott
President President
</TABLE>
JOINDER
The undersigned, Abbott Laboratories, an Illinois corporation, hereby joins
in the execution of this Distribution Agreement (the "Agreement") for the
purpose of obligating itself to the obligations and undertakings of Abbott
International, Ltd., as set forth in the Agreement.
ABBOTT LABORATORIES
By:/s/Robert L. Parkinson, Jr.
Robert L. Parkinson, Jr.
Senior Vice President
Dated: December 1, 1997
(PAGE 21)
SCHEDULE A
SPECIFICATIONS
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
SCHEDULE B
PRIOR TO FIRST COMMERCIAL SALES AND COMPLETION OF FIRST CONTRACT YEAR
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
SCHEDULE C
MEDI-493 PATENTS
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
SCHEDULE D
ADVERSE DRUG REPORTING
Post-marketed Events
ABBOTT Pharmacovigilance to MEDIMMUNE
All serious adverse events originating in the
TERRITORY will be faxed by ABBOTT to MEDIMMUNE on an ABBOTT
Adverse Event Data Collection form to MEDIMMUNE within five (5)
calendar days of ABBOTT awareness.
No ABBOTT International Pharmacovigilance
assessment of expectedness or causality will be made on these
faxed reports.
MEDIMMUNE to ABBOTT Pharmacovigilance
All serious adverse events originating outside the
TERRITORY will be faxed on a MEDIMMUNE Adverse Event Data
Collection form to ABBOTT Pharmacovigilance within five (5)
calendar days' of MEDIMMUNE awareness.
No MEDIMMUNE assessment of expectedness or
causality will be made on these faxed reports.
Clinical Study Events (both directions)
To be handled according to the process with spontaneous reports
with the following exceptions:
(PAGE 22)
Serious clinical study adverse events that involve
a death or are life-threatening must be faxed by ABBOTT
Pharmacovigilance to MEDIMMUNE within one (1) working day of
the ABBOTT awareness date.
A summary of any individual 3-Day IND telephone
Adverse Event report discussed to the FDA must be faxed to
ABBOTT Pharmacovigilance the same day as discussed with the
FDA.
<TABLE>
<S> <C>
TO ABBOTT: Abbott Laboratories
Abbott International
Attn: Manager
Pharmacovigilance
Dept. 6RH, Bldg. AP34
200 Abbott Park Road
Abbott Park, IL USA 60064-3500
Telephone: (847) 938-8351
Facsimile: (847) 938-4886
TO MEDIMMUNE: MEDIMMUNE, Inc.
35 West Watkins Mill Road
Gaithersburg, MD 20878
ATTN: CEO
</TABLE>
EXHIBIT E
ALTRNATIVE DISPUTE RESOLUTION
The parties recognize that a bona fide dispute as to certain matters
may arise from time to time during the term of this AGREEMENT which relates
to either party's rights and/or obligations. To have such a dispute
resolved by this Alternative Dispute Resolution ("ADR") provision, a party
first must send written notice of the dispute to the other party for
attempted resolution by good faith negotiations between their respective
presidents (or their equivalents) of the affected subsidiaries, divisions,
or business units within twenty-eight (28) days after such notice is
received (all references to "days" in this ADR provision are to calendar
days).
If the matter has not been resolved within twenty-eight (28) days of
the notice of dispute, or if the parties fail to meet within such
twenty-eight (28) days, either party may initiate an ADR proceeding as
provided herein. The parties shall have the right to be represented by
(PAGE 23)
counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to
the other party of the issues to be resolved by ADR. Within fourteen
(14) days after its receipt of such notice, the other party may, by
written notice to the party initiating the ADR, add additional issues
to be resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to
preside in the resolution of any disputes in this ADR proceeding. If
the parties are unable to agree on a mutually acceptable neutral
within such period, either party may request the President of the CPR
Institute for Dispute Resolution ("CPR"), 366 Madison Avenue, 14th
Floor, New York, New York 10017, to select a neutral pursuant to the
following procedures:
(a) The CPR shall submit to the parties a list of not less than
five (5) candidates within fourteen (14) days after receipt of the
request, along with a Curriculum Vitae for each candidate. No
candidate shall be an employee, director, or shareholder of either
party or any of their subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her
impartiality.
(c) Each party shall number the candidates in order of
preference (with the number one (1) signifying the greatest
preference) and shall deliver the list to the CPR within seven (7)
days following receipt of the list of candidates. If a party
believes a conflict of interest exists regarding any of the
candidates, that party shall provide a written explanation of the
conflict to the CPR along with its list showing its order of
preference for the candidates. Any party failing to return a list
of preferences on time shall be deemed to have no order of
preference.
(d) If the parties collectively have identified fewer than
three (3) candidates deemed to have conflicts, the CPR immediately
shall designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference. If a tie
should result between two candidates, the CPR may designate either
candidate. If the parties collectively have identified three (3)
or more candidates deemed to have conflicts, the CPR shall review
the explanations regarding conflicts and, in its sole discretion,
may either (i) immediately designate as the neutral the candidate
for whom the parties collectively have indicated the greatest
(PAGE 24)
preference, or (ii) issue a new list of not less than five
(5) candidates, in which case the procedures set forth in
subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56)
days after selection, the neutral shall hold a hearing to resolve each
of the issues identified by the parties. The ADR proceeding shall
take place at a location agreed upon by the parties. If the parties
cannot agree, the neutral shall designate a location other than the
principal place of business of either party or any of their
subsidiaries or affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely
in any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of each
witness;
(c) a proposed ruling on each issue to be resolved, together
with a request for a specific damage award or other remedy for
each issue. The proposed rulings and remedies shall not contain
any recitation of the facts or any legal arguments and shall not
exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20)
pages. This page limitation shall apply regardless of the number
of issues raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no
discovery shall be required or permitted by any means, including
depositions, interrogatories, requests for admissions, or production
of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall
be governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing
time to present its case. The neutral shall determine whether
each party has had the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony,
documents or other evidence, to cross-examine witnesses, and to
make a closing
(PAGE 25)
argument. Cross-examination of witnesses shall occur
immediately after their direct testimony, and cross-examination
time shall be charged against the party conducting the
cross-examination.
(c) The party initiating the ADR shall begin the hearing and,
if it chooses to make an opening statement, shall address not only
issues it raised but also any issues raised by the responding
party. The responding party, if it chooses to make an opening
statement, also shall address all issues raised in the ADR.
Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in
the same sequence.
(d) Except when testifying, witnesses shall be excluded from
the hearing until closing arguments.
(e) Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances.
Affidavits prepared for purposes of the ADR hearing also shall not
be admissible. As to all other matters, the neutral shall have
sole discretion regarding the admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a post-hearing brief in
support of its proposed rulings and remedies, provided that such brief
shall not contain or discuss any new evidence and shall not exceed ten
(10) pages. This page limitation shall apply regardless of the number
of issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14)
days following completion of the hearing. Such ruling shall adopt in
its entirety the proposed ruling and remedy of one of the parties on
each disputed issue but may adopt one party's proposed rulings and
remedies on some issues and the other party's proposed rulings and
remedies on other issues. The neutral shall not issue any written
opinion or otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the
fees and expenses of a court reporter, and any expenses for a hearing
room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such fees
and expenses.
(PAGE 26)
(b) If the neutral rules in favor of one party on some issues
and the other party on other issues, the neutral shall issue with
the rulings a written determination as to how such fees and
expenses shall be allocated between the parties. The neutral
shall allocate fees and expenses in a way that bears a reasonable
relationship to the outcome of the ADR, with the party prevailing
on more issues, or on issues of greater value or gravity,
recovering a relatively larger share of its legal fees and
expenses.
9. The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non-appealable, and may be
entered as a final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence
of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and
briefs), and the rulings shall be deemed Confidential Information.
The neutral shall have the authority to impose sanctions for
unauthorized disclosure of Confidential Information.
(PAGE 27)