EXHIBIT 10.59
TERMINATION AGREEMENT
This Termination Agreement (the "Termination Agreement") is made as of the 24th
day of October, 2001 (the "Effective Date") by and between Andrx Labs, Inc.,
formerly known as Aura Laboratories, Inc. ("Andrx Labs"), Andrx Pharmaceuticals,
Inc. ("Pharmaceuticals") and Anda, Inc., formerly known as Anda Generics, Inc.
("Anda"), each of which is a subsidiary of Andrx Corporation ("Andrx"), and
Geneva Pharmaceuticals, Inc. ("Geneva" and collectively with the other
signatories hereto, the "Parties").
WHEREAS:
A Product Distribution, Development and Licensing Agreement was executed as of
the 1/st/ day of May, 1999 by the Parties and Global Generics Sector of Novartis
AG ("Novartis Generics"), which agreement was amended by Amendment Number 1,
Amendment Number 2, Amendment Number 3 and Amendment Number 4 (collectively, the
"Agreement"); and
The Parties have determined that it is in their mutual best interest to
terminate the Agreement and for Geneva to transfer all of its right, title and
interest in and to the Andrx Products to Andrx on the terms and conditions
herein set forth;
NOW, THEREFORE, the parties agree as follows:
1. Capitalized Terms. All capitalized terms not defined herein shall have the
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meaning ascribed to them in the Agreement.
2. Termination of Agreement. The Agreement and all covenants and provisions
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thereof are terminated as of the Effective Date and the parties shall be
released from all obligations to one another in accordance with the
following terms and conditions:
A. All requirements of Anda to purchase Geneva Products pursuant to the
Agreement are terminated as of the Effective Date. In conjunction with
entering into the Agreement, Anda and Geneva entered into a Supply
Agreement dated December 18, 1998 (that supply agreement including all
subsequent agreed to modifications is now defined as the "Supply
Agreement"). Notwithstanding the termination of Anda's obligation to
purchase certain minimum amounts of Geneva Products, the Parties agree
that Anda is an authorized distributor for Geneva under the terms of
the Supply Agreement. Until such time as the parties enter into a new
Customer Purchase Agreement, the existing Supply Agreement shall
continue to apply.
B. In consideration of Geneva's performance, to date, under the Agreement
and its agreement herein to relinquish all of its rights in and to the
Andrx Products, Andrx herein agrees to make the payments set forth on
Exhibit A-1 to Geneva, within ten days of the event therein described.
In addition to the payments, Andrx shall pay Geneva a royalty on the
Net Sales from the sale of Metformin in the United States on a
quarterly basis for a term of five (5) years in accordance with the
schedule attached hereto as Exhibit A-2. For purposes of this
Termination Agreement, Net Sales shall mean the actual gross amount
invoiced by Andrx and its Affiliates to their non-Affiliated customers
for the sale of Metformin Extended Release, less customary discounts,
returns, promotional allowances, volume and incentive rebates, shelf
stock adjustments and other similar customary adjustments or
allowances actually accrued in accordance with U.S. GAAP to such
customers in the normal course of business by Andrx or its Affiliates.
C. Maintenance of Records; Inspection. Andrx shall maintain complete and
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accurate books and records in connection with the sale of Metformin
Extended Release by Andrx and its Affiliates to their non-Affiliated
customers in the normal course of business by Andrx or its Affiliates
("Commercial Sales"). Such books and records shall be made available
from time to time and upon reasonable prior written notice to Andrx
for review and audit by outside auditors who are not affiliated with
either Party or their respective Affiliates and who are reasonably
acceptable to the Party whose books and records are to be audited
("Auditors"). The cost of such audit shall be borne by the Party
requesting such audit unless such audit shows that the audited Party
overstated the amount which it was entitled to receive or understated
the amount which the auditing Party was entitled to receive by two and
one-half (2.5%) percent or more ("Excessive Error") in which event the
Party whose records were audited shall reimburse the other Party for
the cost of such audit. Any such audit shall be scheduled during
regular business hours within two (2) weeks after the Party whose
books and records are to be audited and the Party requesting such
audit have agreed upon the Auditors to be employed. Such Auditors
shall not disclose any information to the Party requesting such audit
other than whether in their opinion the Commercial Sales have been
properly calculated or reported, or if in their opinion they have not
been accurately reported, then the extent of any inaccuracy. The
Auditors and the auditors of the Party whose books and records were
examined shall meet to resolve any differences of opinion, and, if
such differences cannot be resolved within thirty (30) days, then they
shall choose a third accounting firm to resolve such differences. If
they are unable to agree upon a third accounting firm within sixty
(60) days after the Auditors have presented their initial findings,
then either Party may apply to the American Arbitration Association to
have a third accounting firm appointed to resolve such differences
("Independent Accounting Firm"). The decision of the Independent
Accounting Firm shall be final and binding upon the Parties. The fees
and expenses of the Independent Accounting Firm shall be borne equally
by the Parties except if the decision of such Independent Accounting
Firm confirms that an Excessive Error was made in which event the fees
of the Independent Accounting Firm shall be borne solely by the Party
who committed the Excessive Error. The Auditors shall, before
commencing their audit, execute a confidentiality agreement in form
and substance reasonably satisfactory to the Party whose books and
records are being audited.
3. Publicity. Neither Geneva nor Andrx shall publicly disclose the continuing
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financial terms reflected in the attachments to this Termination Agreement
or the products covered by the Agreement, without the other's written
consent, unless required by law.
4. Notices. Any notice or other communication required or desired to be given
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to any Party under this Termination Agreement shall be in writing and shall
be deemed given when: (i) deposited in the United States mail, first-class
postage prepaid, and addressed to that Party at the address for such Party
set forth at the end of this Termination Agreement; (ii) delivered to
Federal Express, Airborne, or any other similar express delivery service
for delivery to that Party at that address; or (iii) sent by facsimile
transmission, with electronic confirmation, to that Party at its facsimile
number set forth at the end of this Termination Agreement. Any Party may
change its address or facsimile number for notices under this Termination
Agreement by giving the other Party notice of such change.
5. Governing Law; Venue. All questions concerning the validity or meaning of
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this Termination Agreement or relating to the rights and obligations of the
Parties with respect to performance under this Termination Agreement shall
be construed and resolved under the laws of the State of Delaware. The
Parties hereby designate: the courts of the State of New York as the court
of proper jurisdiction and venue for any actions or proceedings relating to
this Termination Agreement if such action or proceeding if commenced by
Geneva/Novartis Generics and the courts of the State of Florida if such
action or proceeding is commenced by Andrx; irrevocably consent to such
designation, jurisdiction, and venue; and waive any obligations or defenses
relating to jurisdiction or venue with respect to any actions or
proceedings initiated in such court.
6. No Implied Waivers; Rights Cumulative. No failure on the part of Geneva or
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Andrx to exercise and no delay in exercising any right, power, remedy or
privilege under this Termination Agreement or provided by statute or at law
or in equity or otherwise, including, without limitation, the right or
power to terminate this Termination Agreement, shall impair, prejudice or
constitute a waiver of any such right, power, remedy or privilege or be
construed as a waiver of any breach of this Termination Agreement or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise
thereof or the exercise of any other right, power, remedy or privilege.
7. Complete Agreement. This Termination Agreement and the attachments referred
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to herein contain the entire agreement between the Parties and supersedes
all prior or contemporaneous discussions, negotiations, representations,
warranties, or agreements. No changes to this Termination Agreement will be
made or be binding on either Party unless made in writing and signed by
each Party.
8. Signature Authority. Each signatory to this Termination Agreement
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represents and warrants to the other that he or she has signature authority
and is empowered on behalf of his or her respective Party to execute this
Termination Agreement.
9. Attorneys' Fees. Except as otherwise set forth in this Termination
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Agreement, all costs and expenses, including reasonable attorneys' fees,
incurred in the enforcement of this Termination Agreement, shall be paid to
the prevailing Party by the non-prevailing Party, upon demand.
10. Counterparts This Termination Agreement may be executed in one or more
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counterparts, all of which may be considered one and the same agreement and
each of such counterparts shall be deemed an original.
11. No Partnership or Other Relationship. Nothing contained in this Termination
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Agreement is intended nor shall be deemed or construed to (i) create a
partnership or joint venture between the Parties, (ii) cause any Party to
be responsible for the debts, liabilities, obligations, and expenses of the
other or any of the Party's officers, directors, employees, independent
contractors or agents, or (iii) substitute any Party for the other Party's
officers, directors, employees, independent contractors or agents.
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IN WITNESS WHEREOF, the Parties hereto, through their duly authorized officers,
have set their hands and do hereby agree to the terms set forth above on the
date first written above.
ANDRX LABS, INC. ANDA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Title: VP. and CFO Title: VP. and CFO
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Date: October 24, 2001 Date: October 24, 2001
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Address: Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ 2915 Weston Road
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Telephone Number: ___________________ Telephone Number: ___________________
Facsimile Number: __________________ Facsimile Number: __________________
ANDRX PHARMACEUTICALS, INC. GENEVA PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: VP. and CFO Title: Chief Operating Officer
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Date: October 24, 2001 Date: October 24, 2001
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Address: Address:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ 101 ▇▇▇▇▇▇ ▇▇▇▇
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Telephone Number: ___________________ Telephone Number: ___________________
Facsimile Number: __________________ Facsimile Number: __________________
Exhibit A-1
Payments
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(i) Upon completion of trial 301 study report, but in no event later than December 31, 2001. (*)
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(ii) Upon filing the NDA for Metformin Extended Release with the FDA. (*)
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(iii) Upon obtaining the Approvals for Metformin Extended Release. (*)
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(iv) Upon the first Commercial Sale of Metformin Extended Release. (*)
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(*) Marked text omitted pursuant to an application for an order for
confidential treatment by Andrx Corporation.
Exhibit A-2
Royalty
Andrx shall pay Geneva a (*)% royalty on the Net Sales for the sale of Metformin
Extended Release in the United States on a quarterly basis for a term of five
(5) years in accordance with this schedule.
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Term Royalty
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*First year of commercialization (*)
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Second year of commercialization (*)
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Third year of commercialization (*)
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Fourth year of commercialization (*)
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Fifth year of commercialization (*)
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* The first year of commercialization shall commence upon the first
Commercial Sale and shall continue for 364 consecutive days.
** Provided however that if a third party introduces a fully approved AB rated
generic version of Metformin Extended Release in years 3 through 5, the
minimum royalty amount shall be reduced from (*) to (*).
(*) Marked text omitted pursuant to an application for an order for
confidential treatment by Andrx Corporation.