EXHIBIT 10.39
AGREEMENT
This Agreement is made the 9th day of July 2001 between Breathe Easy Limited
("BreathEasy") and Par Pharmaceutical, Inc. ("Par").
Par and BreathEasy have agreed to enter into a joint development and marketing
agreement for Lantanoprost final dosage form (the "Product"), a generic
alternative to the brand name drug "Xalatan". In connection therewith,
BreathEasy has represented to Par that, to the best of its knowledge and good
faith belief, (i) BreathEasy has substantially completed development of a
product (the "BreathEasy Product"), based on an active pharmaceutical ingredient
(and "API") developed by BreathEasy (the "BreathEasy API"), which is a true
generic alternative to "Xalatan", (ii) the BreathEasy Product is approvable
(both tentative and final) by the United States Food and Drug Administration the
"FDA") (a tentative approval by the FDA being hereinafter referred to as a
"Tentative Approval" and the final approval by the FDA being hereinafter
referred to as an "Approval"), (iii) the BreathEasy API process does not
infringe upon the patents (whether or not such patents are listed in the "Orange
Book") of Pharmacia and Upjohn and/or any other party in connection with
"Xalatan" in the United States (the "Existing Patents"), and (iv) the BreathEasy
Product will be granted "first to file" status by the FDA. Similarly, Par has
represented to BreathEasy that, to the best of its knowledge and good faith
belief, Par holds the worldwide rights to an API and API process (together, the
"Par API") which PAR is in the process of developing into a generic product
alternative to "Xalatan" and that, as part of such development, Par has engaged
appropriate parties to issue good faith opinions (the "Opinions") that the Par
API process does not violate the Existing Patents (other than a compound patent
due to expire shortly) issued by the United States Patent and Trademark Office
(whether or not such patents are listed in the "Orange Book").
1. BreathEasy hereby grants Par an exclusive license (including a license to
any applicable patents that may be issued), commencing on the Execution
Date (being 9 July 2001) and ending on the 10th anniversary of the
Execution Date to produce, market, sell and otherwise utilize the Product
incorporating the BreathEasy API (the "BreathEasy Product") and all of its
components including, without limitation, the BreathEasy API for use in
the Product (the "BreathEasy License"), in the United States and all of
its territories (collectively, the "USA"), provided that Par is
responsible for and will use all reasonable efforts to maximize sales and
profits in the USA.
2. Par hereby grants BreathEasy an exclusive ten-year license (including a
license to any applicable patents that may be issued) (the "Par License"),
commencing on the Execution Date, to produce, market, sell and otherwise
utilize the Par API in the Product using the PAR API (the "PAR Product")
in all markets of the world outside the USA (the "Specified Markets")
except that the grant will be reduced to five years in those markets where
BreathEasy has, in such five year period, taken no steps to begin
commercializing the BreathEasy Product (such as lodging a license
application), provided that BreathEasy is responsible for and will use all
reasonable efforts to maximize sales and profits in certain open markets
(New Zealand, Israel, South Africa, Norway, Denmark and Brazil (in each
case if no blocking patent exists)) and reasonable commercial efforts in
other significant markets (if no blocking patent exists).
3. Subject to the terms of Sections 3b. and 3c. below, Par will pay to
BreathEasy a License Fee of $5,000,000 for the BreathEasy License, as
follows:
a. Par will pay BreathEasy $5,000,000, of which $500,000 will be paid
seven days after execution. Par will pay the remainder of the
License Fee as follows:
$2,000,000 within seven days of formal acceptance by FDA of ANDA
filing for the BreathEasy Product;
the final $2,500,000 not later than 11 January 2002 but earlier if
in good faith Par receives cash from any new product launch.
b. "Net Profit" on USA sales of either the Par Product or the
BreathEasy Product (each being referred to as the "Generic Product")
will be shared 52 1/2% to Par and 47 1/2% to BreathEasy. "Net
Profit" means an amount equal to (i) net sales (determined in
accordance with Generally Accepted Accounting Principles in the
United States) of the applicable Generic Product, less (ii) actual
cost of manufacturer's product and API (not to include any research
and development component), less (iii) a fee equal to 1% of such net
sales that will be retained to offset marketing fees, warehouse
fees, cost of money and other overhead.
c. Notwithstanding the License Fee outlined above, if the Generic
Product, which is the subject of the ANDA (as defined below), is
approvable but a third party has previously filed an ANDA for a
generic alternative to "Xalatan", which results in such third party
being granted "first to file" status based on the date of filing of
such ANDA, then Par will reduce the fee for the BreathEasy License
to $2,000,000, be relieved of its obligation to fight the legal
cases and share Net Profit (as defined above) with BreathEasy on USA
sales of the BreathEasy Product, 52 1/2% to Par and 47 1/2% to
BreathEasy, at which point the royalties on foreign use would remain
as described in Section 4 below.
4. BreathEasy will have the exclusive right to produce, market, sell and
otherwise utilize the BreathEasy Product and Par Product in the Specified
Markets ("BreathEasy Use"). BreathEasy will pay a royalty on Net Profit
generated by BreathEasy Use, as follows:
a. For use in countries in which there is no Existing Patent filed
which prohibits the sale of the Generic Product or no patent fight
is commenced in any such country (i.e., open markets), BreathEasy
will pay a royalty of 15% on Net Profit on BreathEasy sales of the
Products in such countries; and
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b. For use in countries in which there is an Existing Patent filed
(which prohibits the sale of Generic Product) and BreathEasy is
required to engage in a patent dispute (i.e., non-open markets),
BreathEasy will pay a royalty of 5% on Net Profit on BreathEasy's
sales of the Products in such countries provided BreathEasy has
incurred bona fide legal expenses in such territory, failing which
(a) above will apply.
5. BreathEasy hereby grants to PAR the sole right to file and own an
abbreviated new product application ("ANDA") with the FDA for the
BreathEasy Product. Par will agree to file the ANDA with the FDA
immediately on receiving the necessary data. At Par's cost, PAR will have
the flexibility, at PAR's option, to substitute at any time the Par API
for the BreathEasy API (or vice versa) in the ANDA subject to a veto by
Breath Easy based on reasonable commercial grounds. If Par is, for legal
or regulatory reasons, required to use Par's API then BreathEasy will pay
all necessary costs. The ANDA and the "first to file" rights relating
thereto will be the sole and exclusive property of PAR. BreathEasy will be
solely responsible for all costs which it incurs in the preparation,
filing and prosecution of the ANDA as well as protecting the "first to
file" as it relates to product and its components (including the
preparation of the DMF) and all facilities involved in or necessary for
the manufacture of the Generic Product. PAR shall be responsible for
undertaking the patent fights and all costs with respect to any Existing
Patent contained in the Orange Book with respect to "Xalatan" as well as
Par API.
6. The parties to this Agreement acknowledge that legal actions may be
brought against Par and/or BreathEasy concerning the Generic Products,
having as its basis a claim that the Generic Product infringes on an
Existing Patent or other intellectual property rights (in any such case,
an "Infringement Action"). If any Infringement Action is brought relating
to either Generic Product in the USA, Par and BreathEasy will establish a
committee of Tony Tabatznik and Ken Sawyer to determine how to prosecute,
defend against and/or settle such action. If any Infringement Action is
brought relating to the BreathEasy Product which materially affects Par's
ability to sell such Product, BreathEasy shall, with respect to BreathEasy
API, prosecute and defend against such claims. If BreathEasy fails to
prosecute and defend any such claim, Par shall have the right to take over
such defense and use BreathEasy or Par API and BreathEasy will support Par
Technically in this variation.
7. Both parties will use best efforts to ensure that the ANDA filing is
accepted by FDA as soon as reasonably possible. Subject to this, Par will
have the right to terminate this Agreement if FDA fails to accept filing
of ANDA within 6 months of such filing in which case Par will be refunded
its down payment and this Agreement becomes null and void.
8. BreathEasy will use all reasonable commercial efforts to ensure final
approval and commercialization of the Product as represented in the ANDA
at BreathEasy's expense on a timely basis. BreathEasy will bear all costs
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and expenses of preparation of the DMF using BreathEasy API for the
BreathEasy Product. BreathEasy shall provide Par with unlimited access to
all work product used in the development of the BreathEasy Product and API
(and its components) and the appropriate employees, consultants, agents
and contractors that participated in the development of the BreathEasy
Product (and all of its components) and Par will similarly provide
BreathEasy with the same. BreathEasy will provide reasonable support to
Par and use reasonable efforts to procure support and co-operation from
its suppliers to assist Par's endeavours to be granted Approval.
9. If there are any product recalls involving the Generic Product, any and
all Liabilities incurred by BreathEasy and Par in connection with such
recall will be borne 47 1/2% by BreathEasy and 52 1/2% by PAR. Any damages
recovered by either party from the product manufacturer as a result of
such recall also will be shared in the same proportions.
10. BreathEasy and Par agree to obtain and carry throughout the term of this
Agreement, at their own expense, adequate product liability insurance,
covering liabilities that may result from the manufacture and sale of the
BreathEasy API and/or the Par API and naming the other party as an
additional insured.
11. BreathEasy will grant to PAR all necessary rights to use, and will
authorize and direct ALP to provide PAR access to, and to allow PAR to
use, all work product in ALP's possession or control that has been used or
developed in connection with the BreathEasy Product and to waive, with
respect too PAR, confidentiality and exclusivity applicable to the
BreathEasy Product without prejudice to clause 15.
12. If Par API patents block entry into the USA market by third parties
resulting in exclusive marketing of Product by Par, Par will recoup
$2,400,000 from the first 50% of Net Profits available to BreathEasy.
13. BreathEasy's obligations under the Agreement, relating to repayment of any
money paid by Par and needing to be repaid will be personally guaranteed
by Tony Tabatznik.
14. Each party to this Agreement agrees not to make any public announcements
with respect to this Agreement without the written consent of the other
party.
15. Each party to this Agreement agrees that the other party hereto may
deliver or cause to be delivered information about such party or its API
not generally available to the public (such information, "Confidential
Information"), and that in the event of such disclosure, the recipient
will: (i) hold in confidence all Confidential Information; (ii) protect
and safeguard all such Confidential Information against unauthorized
disclosure; and (iii) not use any such Confidential Information except as
permitted under this Agreement or as may be authorized in writing by the
other party. The parties hereto acknowledge that the covenants and
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undertakings contained in this clause ("Covenants") relate to matters
which are of unique and special nature, and that a violation of any of
these Covenants by a party ("Violating Party") will cause irreparable harm
to the other party ("Non-Violating Party"), and that such harm cannot be
adequately compensated by money damages. Accordingly, each party agrees
and understands that the Non-Violating Party shall have the right to seek
and obtain in any court of competent jurisdiction an injunction to
restrain a violation (actual, alleged or intended) of these covenants by
the Violating Party, in addition to all other relief that may be available
to the Non-Violating Party, at law or in equity.
16. Both parties will assert their rights in respect of third party
infringement of their rights in and to the Product (including API) and to
render reasonable assistance to the other party in this regard.
This Agreement may be executed in one or more counterparts. This Agreement is
governed by New York law and the parties submit to the jurisdiction of the
courts of New York.
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AS WITNESS whereof this Agreement has been duly entered into the days and year
first above written.
ATTESTATIONS
Signed by Kenneth Sawyer )
For and behalf of )
PAR PHARMACEUTICAL, INC. )
Signed by Tony Tabatznik )
For and behalf of )
BREATHE EASY LIMITED )
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