SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 27, 2002
(August 26, 2002)
ENDO PHARMACEUTICALS HOLDINGS INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 39040 13-4022871
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(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
100 Painters Drive
Chadds Ford, Pennsylvania 19317
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(Address of principal executive offices) (Zip Code)
(610) 558-9800
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events.
Effective August 26, 2002, the Registrant's wholly owned subsidiary Endo
Pharmaceuticals Inc. ("EPI") entered into an amendment agreement with
Bristol-Myers Squibb Pharma Company ("BMS Pharma") amending certain of the
terms and conditions of that certain Manufacturing and Supply Agreement
effective August 26, 1997 by and between EPI and BMS Pharma (as
successor-in-interest to DuPont Pharmaceuticals Company formerly known as
The DuPont Merck Pharmaceutical Company). A copy of this amendment
agreement is filed herewith as Exhibit 10.17.2 and is incorporated herein
by reference.
In connection with the amendment agreement, on August 26, 2002, the
Registrant issued a press release, a copy of which is filed herewith as
Exhibit 99.1 and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
Exhibit Number Description
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10.17.2 Amendment Agreement effective August 27, 2002 by
and between Endo Pharmaceuticals Inc. ("EPI")
and Bristol-Myers Squibb Pharma Company as
successor-in-interest to DuPont Pharmaceuticals
Company formerly known as The DuPont Merck
Pharmaceutical Company**
99.1 Press release issued by Endo Pharmaceuticals
Holdings Inc. on August 26, 2002
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** Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment
request in accordance with Rule 406 of the Securities Act of 1933.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
ENDO PHARMACEUTICALS HOLDINGS INC.
(Registrant)
By: /s/ CAROL A. AMMON
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Name: Carol A. Ammon
Title: Chairman & Chief Executive
Officer
Dated: August 27, 2002
INDEX TO EXHIBITS
Exhibit Number Description
10.17.2 Amendment Agreement effective August 27, 2002 by
and between Endo Pharmaceuticals Inc. ("EPI")
and Bristol-Myers Squibb Pharma Company as
successor-in-interest to DuPont Pharmaceuticals
Company formerly known as The DuPont Merck
Pharmaceutical Company**
99.1 Press release issued by Endo Pharmaceuticals
Holdings Inc. on August 26, 2002
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** Confidential portions of this exhibit have been redacted and filed
separately with the Commission pursuant to a confidential treatment
request in accordance with Rule 406 of the Securities Act of 1933.
Exhibit 10.17.2
AMENDMENT AGREEMENT TO THE MANUFACTURE AND SUPPLY
AGREEMENT BETWEEN ENDO PHARMACEUTICALS INC. AND
BRISTOL-MYERS SQUIBB PHARMA COMPANY AS SUCCESSOR-IN-INTEREST
TO DUPONT PHARMACEUTICALS COMPANY
The confidential portions of this exhibit have been filed
separately with the Securities and Exchange Commission pursuant to
a confidential treatment request in accordance with Rule 24b-2 of
the Securities and Exchange Act of 1934, as amended. REDACTED
PORTIONS OF THIS EXHIBIT ARE MARKED BY AN ***.
THIS AMENDMENT AGREEMENT (this "Amendment") effective the 27th day of
August, 2002 (the "Effective Date"), is by and between Endo Pharmaceuticals
Inc. ("EPI"), having its principal offices at 100 Painters Drive, Chadds
Ford, Pennsylvania, and Bristol-Myers Squibb Pharma Company as
successor-in-interest to DuPont Pharmaceuticals Company formerly known as
The DuPont Merck Pharmaceutical Company, having its principal offices at
Longmeadow Drive, Wilmington, Delaware, and amends that certain Manufacture
and Supply Agreement effective August 26, 1997 between EPI and The DuPont
Merck Pharmaceutical Company, as amended by amendment effective May 7,
1999, and further amended by two amendments, both dated July 1, 1999
(collectively, the "Original Agreement").
PRELIMINARY STATEMENTS
WHEREAS, pursuant to a purchase agreement by and among Bristol-Myers Squibb
Company, DuPont Pharmaceuticals Company and other DuPont entities effective
October 1, 2001, Bristol-Myers Squibb Pharma Company ("BMS Pharma") became
the successor-in-interest to DuPont Pharmaceuticals Company effective
October 1, 2001;
WHEREAS, EPI and BMS Pharma wish to amend the Original Agreement to extend
the term thereof and make certain other amendments, all upon the terms and
subject to the conditions set forth in this Amendment;
NOW, THEREFORE, in consideration of the Preliminary Statements and the
mutual covenants contained in this Amendment and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged,
the parties hereby agree to amend the Original Agreement and be legally
bound as follows:
AMENDED TERMS AND CONDITIONS
1. Parties. All references to DuPont Pharmaceuticals Company, The
DuPont Merck Pharmaceutical Company, DuPont Merck Pharma and/or DuPont
Pharma in the Original Agreement are hereby amended and replaced with
Bristol-Myers Squibb Pharma Company or BMS Pharma.
2. Defined Terms. (a) Unless set forth herein, the capitalized
terms contained in this Amendment shall have the meaning set forth in the
Original Agreement.
(b) Whenever references to sections are made in this Amendment,
unless another document is specifically referred to, such references shall
refer to the sections in the Original Agreement.
3. Definition. (a) Section 1.2 is amended to delete in its
entirety the following defined terms: "Additional Compensation Factor" and
"Agreed Manufacturing Level."
(b) Section 1.2 is further amended to add the following defined
term:
"'2002 Amendment' shall mean that certain amendment to this
Agreement, dated as of August 27, 2002, by and between Endo
Pharmaceuticals Inc. and Bristol-Myers Squibb Pharma Company."
4. Non-Exclusivity. Section 2.3 is deleted and replaced in its
entirety as follows:
"2.3 Non-Exclusivity. BMS Pharma agrees to sell to EPI all of
EPI's requirements for Products for resale anywhere in the world.
Except as set forth in this Agreement, including EPI's commitment
set forth in Paragraph 20 of the 2002 Amendment; it is
specifically agreed that EPI shall have the right to have up to
100% of its requirements for any Product to be produced by BMS
Pharma or have production for such requirements transferred to a
third party, at EPI's sole discretion."
5. New Products. The provisions of Section 2.4 shall continue to
apply to any New Product added prior to the Effective Date, provided
however, EPI shall not have any right to add any New Product on or after
the Effective Date.
6. Adequate Supply - API Inventory Levels. Section 2.5(a) is
deleted and replaced in its entirety as follows:
"(a) API Inventory Levels. BMS Pharma shall maintain inventory of
API for each Product at levels mutually agreed upon by the
parties, as may be modified from time to time through the S&OP
Process (as referenced in Section 2.7(c)), or at such higher
levels as may be specified by EPI pursuant to Section 5.1(b) and
agreed to by BMS Pharma. BMS Pharma specifically agrees that it
will not unreasonably withhold consent for EPI's requests for
higher levels of inventory. In the event that BMS Pharma believes
it is necessary to make changes to the inventory levels of API for
a particular Product outside of the S&OP process set forth in the
Agreement, EPI specifically agrees that it will not unreasonably
withhold consent which could prevent BMS Pharma's compliance with
Section 2.5(c); so long as (x) all Product containing such API has
at least 90% of expiration dating and (y) following the
termination or expiration of the Agreement, EPI shall not be
obligated to pay for any API that is in BMS Pharma's inventory as
a result of any such inventory level change requested by BMS
Pharma.
Notwithstanding the foregoing, EPI may order from BMS Pharma up to
*** kilograms of *** API and up to *** kilograms of *** API to be
delivered to EPI or its designee; provided that, EPI places such
orders with BMS Pharma in writing no later than 5:00 PM (EST) on
***. In the case of the *** API only, BMS Pharma shall adhere to
the plan for the qualification of *** API in the product *** which
plan is attached hereto as Attachment A, it being understood that
in the event that BMS Pharma does not adhere to such plan, EPI may
order up to *** kilograms of *** API. Each written order shall
identify the API as well as the number of kilograms requested for
production. BMS Pharma shall deliver such API ordered to EPI or
its designee during the ***, on any particular date or dates it
determines in its discretion so long as BMS Pharma provides EPI
five (5) business days notice prior to such delivery. The cost of
this API to be charged EPI shall be set at the 2003 Variable
Standard Cost (as further described in Paragraph 16 (iii) of the
2002 Amendment). In no event shall the production and/or delivery
of such quantities of API be construed as any extension of the
Final Term."
7. Adequate Supply - Validation of Alternate Facility. The
provisions of Section 2.5(b) shall continue to apply to any alternate
facility validated prior to the Effective Date; provided however, BMS
Pharma shall have no obligation to validate any alternate facility on or
after the Effective Date other than to provide the assistance and
documentation as contemplated in Paragraph 14 of this Amendment.
8. Adequate Supply - Agreed Manufacturing Level. Section 2.5(c) is
deleted and replaced in its entirety as follows:
"(c) Agreed Manufacturing Level. BMS Pharma agrees that it will
not knowingly take on additional manufacturing responsibilities or
commitments at the Facilities or otherwise knowingly take any
actions that would prevent it from manufacturing Products in
accordance with this Agreement."
9. Failure to Supply. Section 2.6 is deleted and replaced in its
entirety as follows:
"2.6 Failure to Supply. If BMS Pharma fails to supply (a) any
Product to meet EPI's requirements that has been ordered in
accordance with Article 5 of this Agreement or (b) any API that
has been ordered in accordance with Section 2.5(a) (other than
EPI's failure to supply API sourced by EPI), in either case, for a
period in excess of thirty (30) days from the agreed date of
delivery, then this Agreement shall be extended, for such Product
or API only, beyond the last day of the Final Term or any
Extension Period, as the case may be, until such date that BMS
Pharma has supplied EPI with 100% of its 2003 Forecast for
Products and 100% of API ordered in accordance with Section
2.5(a), at no additional cost to EPI (other than the Variable
Costs due in accordance herewith following EPI's receipt of the
Product or API). Notwithstanding the foregoing, in no event shall
BMS Pharma deliver any Product to EPI with expiration dating that
is less than 90%."
10. Contact Persons/Teams. Section 2.7(a) is amended by
substituting Umesh Dalvi in place of each of the representatives listed for
the three BMS Pharma sites.
11. Term. Section 3.1 is amended to provide that the Original
Agreement is renewed for an additional one-year term (the "Final Term")
commencing at 12:01 a.m. (EST) on August 27, 2002 and ending at 11:59 p.m.
(EST) on August 26, 2003. Unless otherwise extended as set forth in
Paragraph 12 below, the Original Agreement, as hereby amended, will expire
at 11:59 p.m. (EST) on August 26, 2003 and BMS Pharma's manufacture and
supply of the Products (***, to the extent the manufacture and supply of
such Products becomes subject to a separate agreement negotiated between
the parties hereto pursuant to Paragraph 29 below) will cease on that date.
The pricing terms for the Final Term are set forth below in
Paragraphs 15 and 16 of this Amendment.
12. Final Term Extension. Section 3.1 is further amended to
provide that EPI may extend the Final Term one time for up to an additional
four months, which extension period shall commence at 11:59 p.m. (EST) on
August 26, 2003 and end no later than 11:59 p.m. (EST) on December 31, 2003
(any such period, the "Extension Period"); provided that EPI gives written
notice of such extension to BMS Pharma no later than 5:00 p.m. (EST) on
February 28, 2003. Such written notice of such extension shall specify the
number of months (not to exceed four) the Final Term is being extended.
Under no circumstances will EPI have any right to extend the Final Term
beyond December 31, 2003. The pricing terms for such extension are set
forth below in Paragraphs 15 and 16 of this Amendment.
13. Special Termination Provisions. Section 3.2 is deleted and
replaced in its entirety as follows:
"3.2 [deleted]"
14. Effect of Termination. Section 3.4 is deleted and replaced in
its entirety as follows:
"3.4 Effect of Termination. Upon termination or expiration of this
Agreement:
(a) Transfer of EPI Property. To the extent not
previously transferred at Closing, BMS Pharma will transfer all
NDA's, ANDA's and DMF's, all documents required to be transferred
pursuant to 21 CFR 314.81 and all of EPI's Intellectual Property,
technical information and other documentation with respect to the
Products within sixty (60) business days of the completion of the
last production to EPI or a third party designated by EPI. For the
avoidance of doubt, the transfer of technical documentation shall
mean the transfer of technical documentation regarding the
manufacture and testing of the Products and confirmance that the
technical documentation transferred is the most current and
approved version thereof. BMS Pharma will also deliver all other
property of EPI in its possession (including, but not limited to,
equipment purchased by EPI), to EPI or a third party designated by
EPI. BMS Pharma will provide such assistance with respect to such
transfer or delivery as EPI reasonably requests. For the further
avoidance of doubt, assistance to EPI shall mean: (i) permitting
observation of BMS Pharma's commercial manufacturing and
analytical procedures for the Products by EPI or by third-party
representatives designated by EPI; (ii) responding to technical
questions regarding such manufacturing and analytical procedures
raised by EPI or such third-party representatives; (iii)
supplying, upon request, analytical quantities of samples, such as
API, EPI-specific reference standards and impurities, Excipients
and finished product to EPI to assist in the transfer of the
Products to a third-party manufacturing facility; and (iv)
providing data from normal release testing of API, impurities,
degradation products and finished products. For the further
avoidance of doubt, BMS Pharma will not (a) perform comparative
testing or additional Interlaboratory Qualification testing on any
API, degradation products and finished products, (b) be obligated
to train third parties, review or approve third party documents,
or (c) resolve technical issues between EPI and third parties. All
requests for technical information/documentation and assistance
shall be made in writing with reasonable notice to BMS Pharma.
(b) Inventory. BMS Pharma shall deliver all inventory of
finished Products on hand to EPI or a third party designated by
EPI within forty-five (45) days of such termination or expiration
so long as the amount of any such inventory is consistent with the
2003 Forecast; provided that EPI agrees to consider in good faith
purchasing any inventory of finished Products in excess of the
2003 Forecast. BMS Pharma shall invoice EPI, and EPI shall make
payment pursuant to the payment terms set forth in Section 6.2 for
such inventory of finished Products at the applicable Variable
Cost.
(c) Retained Samples.BMS Pharma shall deliver all
retained quality samples of Product to EPI or a third party
designated by EPI within forty-five (45) days of such termination
or expiration; provided that EPI shall be solely responsible for
the expense of the delivery of such retained quality samples. Upon
transfer of such retained quality samples, EPI shall assume all
regulatory responsibilities with respect to such retained samples.
15. Fixed Costs During the Final Term and Any Extension.
Notwithstanding anything to the contrary in this Amendment or in the
Original Agreement (including Sections 4.1 and 4.2 thereof), the parties
hereby agree that: (A) during the Final Term, EPI shall pay BMS Pharma a
total of Five Million Dollars ($5,000,000) in respect of Fixed Costs at
both the Manati Facility and the Garden City Facility, which amount shall
be payable in four equal quarterly installments of One Million Two Hundred
Fifty Thousand Dollars ($1,250,000) each on September 1, 2002, December 1,
2002, March 1, 2003 and June 1, 2003; (B) in the event EPI extends the
Final Term pursuant to Paragraph 12 above, EPI shall pay BMS Pharma Five
Hundred Thousand Dollars ($500,000) per month of the Extension Period in
respect of Fixed Costs at both the Manati Facility and the Garden City
Facility, payable on the 5th day of each month of the Extension Period; and
(C) in the event EPI extends the Final Term pursuant to Paragraph 12 above
and only requests BMS Pharma to manufacture *** and/or *** during such
extension, then EPI shall only be obligated to pay BMS Pharma One Hundred
Fifty Thousand Dollars ($150,000) per month of the Extension Period in
respect of Fixed Costs at the Garden City Facility, payable on the 5th day
of each month of the Extension Period.
16. Variable Costs During the Final Term and Any Extension.
Notwithstanding anything to the contrary herein or in the Original
Agreement (including Sections 4.1 and 4.2 thereof), the parties hereby
agree that (i) the term "Variable Costs" (also referred to as Standard
Variable Costs or Standards) for the period of August 27, 2002 through
December 31, 2002 (the "2002 Stub Period") are as set forth in the
electronic mail from Hal Torman dated April 3, 2002 to EPI, attached to
this Amendment as Exhibit A; (ii) during the 2002 Stub Period, EPI shall
pay to BMS Pharma the Variable Costs of Products manufactured by BMS
Pharma, which amounts shall be invoiced as provided in Section 6.2 of the
Agreement; (iii) Variable Standard Costs for the calendar year 2003 shall
be adjusted to reflect expected cost increases or decreases from the
Variable Standard Costs for the 2002 Stub Period; it being understood that
any such adjustment will be capped at five percent (5%) of the 2002 Stub
Period Variable Standard Costs; it being further understood that EPI shall
have the right to ask material questions to BMS Pharma regarding the 2003
Standards and BMS Pharma shall answer such questions with reasonable
diligence and in good faith; it being still further understood that EPI
shall be responsible to BMS Pharma for any amounts attributable to any
labor variance and any inventory or material write-offs, including without
limitation, inventory build for API, resulting from EPI changing the volume
forecast for the period January 1, 2003 to August 26, 2003 which was
provided to BMS Pharma on June 28, 2002 and is attached to this Amendment
as Exhibit B (as may be amended as a result of any Extension Period, the
"2003 Forecast"); and (iv) the Variable Costs provided to EPI include (x)
all direct materials (excluding API) used in the manufacture of the
Products, (y) all direct labor used in the manufacture of the Products and
(z) reasonable profit for BMS Pharma with respect thereto.
17. Transfer Fee. Notwithstanding anything to the contrary in this
Amendment or in the Original Agreement (including Sections 4.1 and 4.2
thereof), the parties hereby agree that in consideration of BMS Pharma
allowing EPI to transfer up to 100% of any EPI Product out of any BMS
Pharma facility at any time, and for the assistance provided EPI by BMS
Pharma as reflected in Paragraph 14 above, EPI shall make to BMS Pharma a
payment of Nine Million Dollars ($9,000,000), which payment is due and
payable on August 27, 2002.
18. Additional General Compensation Matters - Cash Cap Amount;
Promissory Notes Stay in Effect. Notwithstanding anything to the contrary
in this Amendment or in the Original Agreement (including Sections 4.1, 4.2
and 4.3 thereof), the parties hereby agree with respect to the Final Term
and any Extension Period, no Cash Cap Amount shall apply. This Amendment
shall have no effect on the obligations under any promissory notes issued
and/or executed under the Original Agreement.
19. Additional General Compensation Matters - Adjustment of
Variable Costs. Section 4.3(c) is deleted and replaced in its entirety as
follows:
"(c) [deleted]"
20. Forecasts and Orders. Notwithstanding anything to the contrary
in this Amendment or in the Original Agreement (including Section 5.1
thereof), EPI hereby agrees that its actual orders during the period
January 1, 2003 to August 26, 2003 shall not, in the aggregate, be less
than seventy-five percent (75%) nor greater than one hundred twenty five
percent (125%) of the 2003 Forecast. EPI shall update the forecast monthly
on the fifth day of the month on a rolling basis, with the forecast for the
most current three-month period constituting a firm order which shall state
in detail the quantities of Products ordered and shall bind both parties
regarding the Products to be purchased.
21. Addresses. Section 5.4 is amended to delete and replace (a)
EPI's address with Endo Pharmaceuticals Inc., 100 Painters Drive, Chadds
Ford, PA 19317, (b) BMS Pharma's Wilmington address and representative with
Bristol-Myers Squibb Pharma Company, 1 Squibb Drive, New Brunswick, New
Jersey 08903; Attention: Larry Jaffe and (c) BMS Pharma's contact person,
Ilsa M. Esteves, at the Manati Facility with Luis Albors.
22. Payment Provisions - Variable Costs. Section 6.2(a) is amended
to provide that Schedule H shall not apply for the Final Term or Extension
Period, if any.
23. Retention Samples. Section 10.4 is deleted and replaced in its
entirety as follows:
"10.4 Retained Samples. Subject to Section 3.4(c), BMS Pharma will
store and maintain retention samples of raw material, API and
Product from each lot to meet regulatory requirements."
24. Product Notices. Section 13.8 is amended to delete and replace
(a) EPI's address with Endo Pharmaceuticals Inc., 100 Painters Drive,
Chadds Ford, PA 19317 and (b) BMS Pharma's Wilmington address with
Bristol-Myers Squibb Company, One Squibb Drive, New Brunswick, NJ 08903,
Attention: Robert Tagliente, 732-519-2171 (Tel).
25. Notices. Section 17.1 is amended to delete and replace (a)
EPI's address with Endo Pharmaceuticals Inc., 100 Painters Drive, Chadds
Ford, PA 19317; Attention Carol A. Ammon, Chairman and Chief Executive
Officer; Fax 610/558-9682 and (b) BMS Pharma's Wilmington address with
Bristol-Myers Squibb Pharma Company, 1 Squibb Drive, New Brunswick, New
Jersey 08903; Attention: William Keane, VP, Sourcing, Strategy and
Operations Effectiveness and Senior Counsel, Technical Operations; Fax
732/519-1086.
26. ***. Notwithstanding anything to the contrary in this
Amendment or in the Original Agreement, (a) BMS Pharma hereby agrees to
validate the current process used in the manufacture of *** using *** API
manufactured by BMS in accordance with the plan for the qualification of
BMS *** API in the product *** which plan is attached hereto as Attachment
B and (b) once such validation is completed, EPI hereby agrees to purchase,
and BMS Pharma hereby agrees to manufacture and supply, *** post-validated
batches of ***, *** of which will be delivered by BMS Pharma to EPI or its
designee on or about each of ***, ***, and ***; provided that each batch
shall have at least sixteen (16) months of expiration dating upon delivery
to Endo (or its designee); provided further that these batches shall be in
addition to the batches necessary for the validation set forth in clause
(a) above. BMS Pharma shall invoice EPI, and EPI shall make payment
pursuant to the payment terms set forth in Section 6.2 of the Original
Agreement for such inventory of finished Products at the applicable
Variable Cost. To the extent a validation issue arises, the parties agree
to negotiate in good faith to revise the delivery schedule set forth in the
plan.
27. Assignment. Section 17.4(b) is deleted and replaced in its
entirety as follows:
"(b) Assignment by BMS Pharma. BMS Pharma may not assign this
Agreement, or its rights and obligations hereunder, without the
prior written consent of EPI. Subject to the preceding, this
Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns. Notwithstanding the foregoing:
(i) In the event of the sale or other disposition of all
or substantially all of the business or assets of BMS Pharma prior
to December 31, 2003, BMS Pharma may assign this Agreement, and
its rights and obligations hereunder, to the successor to the
business or assets of BMS Pharma provided that EPI consents to
such assignment, which consent shall not be unreasonably withheld
(and in determining whether to consent, EPI shall consider the
pre-acquisition financial strength of the successor and if such
successor has at least $250 million of tangible net worth, such
amount of tangible net worth shall be prima facie evidence of the
satisfactory financial strength of the successor). Notwithstanding
the foregoing, in the event BMS Pharma desires such sale or
disposition to occur after August 27, 2003 and on or prior to
December 31, 2003, EPI agrees that it will grant its consent to
such sale or disposition so long as Bristol-Myers Squibb Company
guarantees the delivery of 100% of the Products set forth in the
2003 Forecast. For the avoidance of doubt, any proposed assignment
subsequent to December 31, 2003 will not require the consent of
EPI; and
(ii) If BMS Pharma determines to sell or otherwise
transfer either or both Facilities prior to December 31, 2003, it
may do so and in connection therewith it may assign this Agreement
(insofar as applicable to the subject Facility or Facilities) to
the acquiring entity; provided that the acquiring entity shall be
bound by the terms and conditions of this Agreement and that this
Agreement shall be enforceable by EPI against such acquiring
party; provided, however, that in the event that EPI determines,
in its sole discretion, that the acquiror of the Facility or
Facilities would not be an acceptable manufacturer of the
Products, then BMS Pharma shall not assign this Agreement (or
applicable rights and/or obligations hereunder) to the acquiror
but shall instead be responsible at BMS Pharma's cost to implement
appropriate arrangements for the manufacture and supply of
Products that otherwise would have been manufactured at the
subject Facility or Facilities in accordance with the terms hereof
at and from the other Facility (if still owned) and/or at and from
one or more alternate manufacturers located within the continental
United States or Puerto Rico, satisfactory to EPI in its sole
discretion. BMS Pharma will reimburse EPI for incremental
distribution costs if transfer of production from the Facility
being transferred results in increased distribution costs. Once
the foregoing arrangements are implemented in all material
respects to the reasonable satisfaction of EPI, BMS Pharma may
complete the transfer of the subject Facility or Facilities.
Notwithstanding the foregoing, in the event BMS Pharma desires
such sale or transfer to occur after August 27, 2003 and on or
prior to December 31, 2003, EPI agrees that it will grant its
consent to such sale or transfer so long as BMS Pharma guarantees
the delivery of 100% of the Products set forth in the 2003
Forecast, provided, however, in the event that such sale or
transfer is to a Competitor of EPI with respect to the Products,
BMS Pharma will deliver (x) 100% of any such Competitive Product
in accordance with this Agreement and (y) 100% of the EPI property
referred to in Section 3.4(a) of this Agreement that relate to the
Competitive Product, in each case, prior to consummating such sale
or transfer. For the purposes of this section, "Competitor" shall
mean any third-party that manufactures, markets, sells or
distributes any product(s) that contain the same active
pharmaceutical ingredient(s) as those used in any Product(s); and
"Competitive Product" shall mean any product that contains the
same active pharmaceutical ingredient(s) as those used in any
Product(s). For the avoidance of doubt, any proposed sale or
transfer subsequent to December 31, 2003 will not require the
consent of EPI."
28. Survival. Section 3.3 is deleted and replaced in its entirety
as follows:
"3.3 Survival. The rights and obligations contained in Sections
3.4(c) [Retained Samples], 10.4 [Retention Samples], 10.7 [Records
Retention], 12.2 [EPI Inspections], 12.3 [Audit Rights] and 17.7
[Governing Law] and Articles 11 [Confidential Information], 13
[Complaints, ADERs, Recalls], 14 [Indemnity] and 16
[Mediation/Arbitration] will survive termination or expiration of
this Agreement, as will any rights to payment or other rights or
obligations that have accrued under this Agreement prior to
termination or expiration. Termination or expiration will not
affect a party's liability by reason of any act, omission, default
or occurrence prior to termination or expiration."
29. *** Agreement. Notwithstanding the conclusion of the Final
Term, the parties agree to negotiate in good faith to enter into a separate
*** agreement limited to the manufacture and sale of *** on commercially
reasonable terms mutually acceptable to both parties. If such agreement has
not been executed by the parties on or prior to the sixth (6th) month
anniversary of BMS's first delivery to EPI of the first draft agreement
containing standard terms and conditions ordinarily found in such an
agreement, neither party shall have any obligation to the other to enter
into any further discussion in connection with such separate agreement
beyond such six-month anniversary; provided that each party hereby agrees
to use its commercially reasonable efforts to negotiate and execute such
agreement in a timely manner.
30. Effectiveness of Amendment. This Amendment shall take effect
as of the Effective Date set forth above so long as the Nine Million Dollar
($9,000,000) payment referred to in Paragraph 17 above has been wire
transferred to an account designated by BMS Pharma.
31. All Other Provisions of the Original Agreement in Full Force
and Effect. Except as specifically amended in this Amendment, in all other
respects the Original Agreement shall remain in full force effect, is
hereby confirmed and is and unaffected by this Amendment.
32. Entire Agreement. This Amendment, together with the Original
Agreement, any schedules or exhibits hereto and thereto, constitute the
entire agreement between the parties with respect to the subject matter
hereof and supersedes any and all prior or contemporaneous understandings,
agreements, negotiations, or discussions, whether written or oral,
concerning the subject matter hereof. To the extent there is any conflict
between this Amendment and the Original Agreement, the applicable
provisions of this Amendment shall control.
33. Amendment; Waiver. No terms or provisions of this Amendment
shall be varied, amended, extended or modified by any prior or subsequent
statement, conduct or act of either of the parties, except by a written
instrument executed by the parties in the same manner as this Amendment.
34. References in the Original Agreement. On and after the
effectiveness of this Amendment, each reference in the Original Agreement
to "this Agreement", "hereunder", "hereof", "herein" or words of like
import referring to the Original Agreement shall mean and be a reference to
the Original Agreement as amended by this Amendment.
35. Paragraph Headings and Subheadings.Article and subsection
headings in this Amendment are included herein for convenience only and
shall not constitute a part of this Amendment for any other purpose or be
given any substantive effect.
36. Authorization. Both parties acknowledge agreement to the terms
of this Amendment by having an authorized representative sign one copy in
the space provided below. Each party represents and warrants that the
authorized representative has actual power and authority to execute this
Amendment on behalf of the respective company, and that this Amendment
shall be binding upon the respective company, its successors and assigns.
37. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be attached from multiple separate
counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
38. Successors and Assigns. This Amendment will be binding upon,
inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
IN WITNESS HEREOF, the parties hereto have caused this Amendment
to be executed by their duly authorized representatives.
BRISTOL-MYERS SQUIBB PHARMA COMPANY
By: /s/ Thomas M. Primm
Title: Vice President
Date: August 22, 2002
ENDO PHARMACUETICALS INC.
By: /s/ Jeffrey Black
Title: Chief Financial Officer
Date: August 22, 2002
EXHIBIT A
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EXHIBIT B
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ATTACHMENT A
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ATTACHMENT B
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Exhibit 99.1
[ENDO LOGO]
For Immediate Release CONTACT:
Bill Newbould
Endo Pharmaceuticals
(610) 558-9800
ENDO PHARMACEUTICALS AMENDS MANUFACTURING AGREEMENT
WITH BRISTOL-MYERS SQUIBB
CHADDS FORD, Pa., August 26, 2002 -- Endo Pharmaceuticals Holdings Inc.
(Nasdaq: ENDP; ENDPW) today announced that it has amended its manufacturing
and supply agreement with the Bristol-Myers Squibb Pharma Company ("BMS")
as successor-in-interest to DuPont Pharmaceuticals Company, formerly known
as The DuPont Merck Pharmaceutical Company. The amended agreement has a
term of one year, ending on August 26, 2003.
Carol A. Ammon, chairman and chief executive officer of Endo
Pharmaceuticals, said, "This amendment to our existing agreement with BMS
allows us to transfer the majority of our manufacturing from BMS to
Novartis in an effective manner, with no interruption in supply. Since
September 2001, Novartis has been an excellent partner as a key
manufacturer of Endo's leading product, Percocet(R), and we look forward to
expanding our relationship with them. Novartis will provide Endo with the
high-quality, reliable products that our customers expect of us." The
transfer of manufacturing and supply from BMS to Novartis is not expected
to impact the Company's previously announced guidance for 2002 of $350
million in net sales and $125 million in consolidated EBITDA, which
excludes the non-recurring costs of transfer and the transfer fee discussed
below.
In May 2001, Endo entered into a long-term manufacturing and development
agreement with Novartis Consumer Health, Inc., whereby Novartis agreed to
manufacture substantially all of Endo's commercial products and products in
development. Endo has incurred, and expects to continue to incur,
significant costs associated with the preparation of Novartis'
manufacturing operations under this agreement. These costs, which totaled
approximately $1.3 million in the second quarter of 2002, primarily relate
to the preparation of test batches of drug product for FDA approval and
Endo's own quality assessment and administrative costs relating to the
transfer of existing production to Novartis.
In consideration for BMS allowing Endo to transfer up to 100% of any Endo
product out of any BMS facility at any time, and for its assistance in the
transfer, Endo will make a one-time payment to BMS of $9.0 million on
August 27, 2002. This transfer fee will be expensed in the third quarter of
2002.
Endo's cash and cash equivalents totaled $151.8 million at June 30, 2002.
On August 26, 2002, Endo utilized a portion of its cash and cash
equivalents to repay all of the promissory notes that it has issued to BMS,
including promissory notes issued under the manufacturing and supply
agreement, which totaled $118.9 million. Endo believes that its (a) cash
and cash equivalents, (b) cash flow from operations and (c) its credit
facility (which has an available unused line of credit of $75 million) will
be sufficient to meet Endo's normal operating, investing and financing
requirements in the foreseeable future. This includes the funding of its
pipeline projects in the event that its collaboration partners are unable
to fund their portion of any particular project. In the future, Endo may
use a portion of its cash and cash equivalents for possible acquisitions or
licenses. For the six months ended June 30, 2002, Endo generated cash flow
from operating activities of $64.0 million.
About Endo
A wholly owned subsidiary of Endo Pharmaceuticals Holdings Inc. (Nasdaq:
ENDP; ENDPW), Endo Pharmaceuticals Inc. is a fully integrated specialty
pharmaceutical company with market leadership in pain management products.
The company researches, develops, produces and markets a broad product
offering of both branded and generic pharmaceuticals, meeting the needs of
healthcare professionals and consumers alike. More information, including
this and past press releases of Endo Pharmaceuticals Holdings Inc., is
available online at www.endo.com.
Forward-Looking Statements This press release contains forward-looking
statements, within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934, as amended, that
are based on management's beliefs and assumptions, current expectations,
estimates and projections. These statements are subject to risks and
uncertainties and, therefore, actual results may differ materially from
those expressed or implied by these forward-looking statements.
Forward-looking statements are not historical facts and include information
regarding the Company's possible or assumed results of operations. Also,
statements or expressions that are preceded by, followed by, or that
include, the words "believes," "anticipates," "plans," "expects,"
"intends," "estimates" or similar expressions are forward-looking
statements. Endo's estimated or anticipated future results, product
performance or other non- historical facts are forward-looking and reflect
Endo's current perspective on existing trends and information. Many of the
factors that will determine the Company's future results are beyond the
ability of the Company to control or predict. The reader should not rely on
any forward-looking statement. The Company undertakes no obligations to
update any forward-looking statements whether as a result of new
information, future events or otherwise. Several important factors, in
addition to the specific factors discussed in connection with these
forward-looking statements individually, could affect the future results of
the Endo and could cause those results to differ materially from those
expressed in the forward-looking statements contained herein. Important
factors that may affect future results include, but are not limited to:
market acceptance of the Company's products and the impact of competitive
products and pricing; dependence on sole source suppliers; the success of
the Company's product development activities and the timeliness with which
regulatory authorizations and product launches may be achieved; successful
compliance with extensive, costly, complex and evolving governmental
regulations and restrictions; the availability on commercially reasonable
terms of raw materials and other third party manufactured products;
exposure to product liability and other lawsuits and contingencies;
dependence on third party suppliers, distributors and collaboration
partners; the ability to timely and cost effectively integrate
acquisitions; uncertainty associated with pre-clinical studies and clinical
trials and regulatory approval; uncertainty of market acceptance of new
products; the difficulty of predicting FDA approvals; risks with respect to
technology and product development; the effect of competing products and
prices; uncertainties regarding intellectual property protection;
uncertainties as to the outcome of litigation; changes in operating
results; impact of competitive products and pricing; product development;
changes in laws and regulations; customer demand; possible future
litigation; availability of future financing and reimbursement policies of
government and private health insurers and others; and other risks and
uncertainties detailed in Endo's Registration Statement on Form S-4 filed
with the Securities and Exchange Commission on June 9, 2000, as amended,
and in Endo's Registration Statement on Form S-3 dated October 17, 2001.
Readers should evaluate any statement in light of these important factors.
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