Exhibit 10.51
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SUPPLY AND DISTRIBUTION AGREEMENT
THIS SUPPLY, DISTRIBUTION AND MARKETING AGREEMENT (the "Agreement") is hereby
entered into and effective as of September 4, 2003 (the "Effective Date") by and
between Advancis Pharmaceutical Corporation ("Advancis"), a Delaware
corporation, having an address at 20425 Seneca Meadows Parkway, Germantown, MD
20876, and Par Pharmaceutical, Inc. ("Par"), a Delaware corporation with offices
located at One Ram Ridge Road, Spring Valley, New York 10977.
WHEREAS, Advancis is engaged in the development of pharmaceutical products and
wishes to provide Par with rights to promote, sell and distribute certain of its
products in the Territory;
WHEREAS, Par desires to market and sell certain of Advancis's products in the
Territory NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE 1. DEFINITIONS
1.1. "ACQUISITION PRICE" means Par's actual out of pocket expense for API
and fully packaged Product as paid to Advancis or to a Third Party
manufacturer.
1.2. "ADVANCIS APPLICABLE PERCENTAGE" means [***] or the percentage set
forth in Section 6.6 in the event that Advancis reduces the Advancis
Applicable Percentage pursuant to Section 6.6.
1.3. "AFFILIATE(S)" means any Person (defined below) which directly or
indirectly controls, is controlled by, or under common control with a
Party. For purposes of the foregoing definition, the term "control"
(including with correlative meaning, the terms "controlling",
"controlled by", and "under common control with") as used with
respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of
voting securities, by contract, or otherwise.
1.4. "ANDA" means an Abbreviated New Drug Application filed with the FDA
with respect to Product.
1.5. "API" means the active pharmaceutical ingredient clarithromycin.
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1.6. "APPLICABLE LAWS" means all applicable laws, rules, regulations and
guidelines that may apply to the development, marketing or sale of
the Product in the Territory or the performance of either Party's
obligations under this Agreement including laws, regulations and
guidelines governing the import, export, development, marketing,
distribution and sale of the Product, to the extent applicable and
relevant, and including all current Good Manufacturing Practices or
current Good Clinical Practices or similar standards or guidelines
promulgated by the FDA and including trade association guidelines,
where applicable, as well as U.S. export control laws and the U.S.
Foreign Corrupt Practices Act.
1.7. "APPROVED MANUFACTURING CONTRACT(S)" means the manufacturing
contracts with respect to API and Product between Advancis and a
Third Party(ies) pursuant to Section 5.1 that has been approved by
Par.
1.8. "COMMERCIAL EXPENSES" means commercially reasonable costs and
expenses related solely to marketing (including promotional
activities, symposia, and the like), selling and distributing the
Product that are incurred by Par. Commercial Expenses shall not
exceed five (5) percent of Net Sales.
1.9. "COMMERCIAL LAUNCH" or "COMMERCIALLY LAUNCH" means the first
introduction in the United States of Product by Par, or a Par
Affiliate to each of a major retail chain and a major distributor (as
those terms are commonly understood in the industry) after the FDA
has approved the ANDA for the Product.
1.10. "Competing Product" means any pharmaceutical product that is either
A/B rated to Biaxin(R) XL Filmtab(R) or which posses substantially
the same pharmacokinetic profile as Biaxin(R) XL Filmtab(R)
1.11. "CONFIDENTIAL INFORMATION" means with respect to a Party, all
information of any kind whatsoever (including without limitation,
data, compilations, formulae, models, patent disclosures, procedures,
processes, projections, protocols, results of experimentation and
testing, specifications, strategies, techniques and all non-public
Intellectual Property Rights (defined below)), and all tangible and
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intangible embodiments thereof of any kind whatsoever (including
without limitation, apparatus, compositions, documents, drawings,
machinery, patent applications, records and reports), which is
disclosed by such Party to the other Party and is marked, identified
or otherwise acknowledged to be confidential at the time of
disclosure to the other Party. Notwithstanding the foregoing,
Confidential Information of a Party shall not include information
which the other Party can establish by written documentation (a) to
have been publicly known prior to disclosure of such information by
the disclosing Party to the other Party, (b) to have become publicly
known, without fault on the part of the other Party, subsequent to
disclosure of such information by the disclosing Party to the other
Party, (c) to have been received by the other Party free of an
obligation of confidentiality at any time from a source, other than
the disclosing Party, rightfully having possession of and the right
to disclose such information free of an obligation of
confidentiality, (d) as demonstrated by written records, to have been
otherwise known by the other Party prior to disclosure of such
information by the disclosing Party to the other Party, or (e) to
have been independently developed by employees or agents of the other
Party without the use of such information disclosed by the disclosing
Party to the other Party.
1.12. "GMP" means current Good Manufacturing Practices promulgated by the
FDA.
1.13. "FDA" means the United States Food and Drug Administration or any
successor agency thereto.
1.14. "IMPROVEMENTS" means any and all improvements, enhancements, or
modifications of the Product, including any different dosage
strengths or delivery forms (e.g. capsules vs. tablets etc.) of the
Product.
1.15. "INTELLECTUAL PROPERTY RIGHTS" means without limitation all of the
following which relates to or underlies or arises out of the Product:
(i) patent applications, continuation applications, continuation in
part applications, divisional applications, any corresponding foreign
patent applications to any of the foregoing, and any patents that may
grant or may have been granted on any of the foregoing, including
reissues, re-examinations and extensions; (ii) all know-how, trade
secrets, inventions (whether patentable or otherwise), data,
processes, techniques, procedures, compositions, devices, methods,
formulas, protocols and information, whether patentable or not; (iii)
copyrightable works, copyrights and applications, registrations and
renewals in connections with the Product; (iv) other proprietary
rights; and (v) copies and tangible embodiments of any one or more of
the foregoing.
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1.16. "LABEL," "LABELED" or "LABELING" means all labels and other written
printed or graphic matter upon (i) the Product or any container or
wrapper utilized with the Product, or (ii) any written material
accompanying the Product, including without limitation, package
inserts.
1.17. "NET PROFIT" means the difference between Net Sales and Par's Total
Cost of Product.
1.18. "NET SALES" means the dollar amount determined by deducting from the
gross invoiced sales price billed for the Product sold by Par, or by
an Affiliate of Par, or by a permitted sub-licensee, as the case may
be, in the Territory to Third Parties in arms length transactions,
the following: (i) all applicable sales credits accrued in accordance
with accounting principles generally accepted in the United States,
(ii) payments or rebates incurred pursuant to federal, state and
local government assistance programs, whether in existence now or
enacted at any time hereafter, (iii) costs for transit insurance,
freight, handling or other transportation, (iv) customs duty, sales,
use or excise taxes and (v) the write-off of bad debt not to exceed
one percent (1%) of Net SALES. Sales credits accrued in accordance
with accounting principles generally accepted in the United States
can include credits or discounts related to the following: (i)
customer returns, returned goods allowances including those made as
part of a recall, billing and shipping errors, rejected goods and
damaged goods (ii) cash or terms discounts (iii) customer rebate
programs (iv) chargebacks and administration fees or similar credits
or payments granted to customers pursuant to contract or other
purchases (v) sales promotions, trade show discounts and stocking
allowances and (vi) price adjustments, including those on customer
inventories following price changes.
1.19. "PACKAGING" means all primary containers, including bottles, cartons,
shipping cases or any other like matter used in packaging or
accompanying the Product.
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1.20. "PAR AGREEMENTS" means any and all agreements between Par and a Third
Party with respect to manufacture, sale, distribution and marketing
of Product. The Par Agreements include the Approved Manufacturing
Agreements assigned to Par.
1.21. "PAR APPLICABLE PERCENTAGE" means 100% minus the Advancis Applicable
Percentage.
1.22. "PERSON" means an individual, corporation, partnership, limited
liability company, firm, association, joint venture, estate, trust,
governmental or administrative body or agency, or any other entity.
1.23. "PRODUCT" means clarithromycin extended-release 500 mg tablets which
are A/B rated to Biaxin(R) XL Filmtab(R).
1.24. "REGULATORY APPROVALS" shall mean any approvals, product and/or
establishment licenses, registrations or authorizations, including
without limitation approvals under ANDAs which are necessary for the
commercial manufacture, use, storage, importation, transport,
promotion, pricing or sale of the Product in the Territory.
1.25. "TERRITORY" means Canada and the United States its territories,
possessions and the Commonwealth of Puerto Rico.
1.26. "THIRD PARTY(IES)" means a person other than a Party or its
Affiliate.
1.27. "TOTAL COST" means the sum of Commercial Expenses and Acquisition
Price for the Product.
1.28. "TRADEMARK" means any and all trademarks, trademark applications and
trademark registrations with respect to Product in the Territory.
ARTICLE 2. DEVELOPMENT
2.1. GENERAL DEVELOPMENT RESPONSIBILITIES. Subject to Advancis' rights and
obligations under this Agreement, Advancis shall have the sole
control and responsibility for developing the Product, except that
Par shall have sole control of and responsibility for preparing any
patent certifications and related notice letters in connection with
the ANDA for the Product. Advancis responsibilities shall include,
without limitation, the following:
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2.1.1. Developing a formulation for the Product A/B rated by the FDA to
Biaxin(R) XL clarithromycin extended release tablets.
2.1.2. Advancis shall keep Par reasonably informed of the progress of
the development of the Product.
2.1.3. Conducting, without limitation, all necessary testing,
analytical studies, and human bioequivalence studies necessary
to support an ANDA for the Product.
2.2. COMPLIANCE. Advancis shall comply with, and shall require compliance
with by its Third Party contractors, all Applicable Laws in the
conduct of all activities associated with the development of the
Product.
2.3. DEVELOPMENT EXPENSES. Advancis shall be responsible for all costs and
expenses associated with the development of the Product, including,
without limitation, internal and third party costs and expenses
related to materials (e.g. API), facilities, personnel, analytical
testing (e.g., outside laboratory expenses) and human bioequivalence
studies (e.g., pilot and pivotal biostudies).
ARTICLE 3. REGULATORY APPROVAL
3.1. INITIAL ANDA OWNERSHIP. Until such time as the ANDA is transferred to
Par pursuant to Section 6.5, the ANDA for the Product shall be owned
exclusively by Advancis.
3.2. PROSECUTION. Advancis shall use commercially reasonable efforts to
perform a first pivotal biostudy with respect to the bioequivalency
of the existing formulation of Product with respect to Biaxin(R) XL
Filmtab(R), and if successful to thereafter use commercially
reasonable efforts to prepare, file, and prosecute the ANDA for the
Product.
3.3. EXPENSES. Advancis shall have sole responsibility for all expenses
associated with preparing, filing and prosecuting the ANDA for the
Product.
3.4. PROGRESS UPDATES. Advancis shall keep Par informed of the progress of
the prosecution of the ANDA for the Product, including providing Par
with good faith projections of the approximate time at which approval
of the ANDA may be expected and providing Par with notice of any
negative communications from the FDA which could affect approval
timing.
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3.5. COOPERATION. Each Party agrees to provide the other Party with all
information in its possession or control that is necessary for the
other Party to comply with any applicable reporting requirements. Par
shall use commercially reasonable efforts to make its regulatory
personnel available to consult with Advancis regarding the
prosecution of the ANDA for the Product.
3.6. In the event that a first pivotal biostudy of the existing
formulation of Product fails to demonstrate that such formulation is
bioequivalent to Biaxin(R) Filmtab(R), then the parties shall
negotiate in good faith an amendment to the terms and conditions of
this Agreement with respect to further development of Product and the
financial terms thereof and if the parties fail to reach agreement as
to such an amendment within sixty (60) days after Advancis provides
to Par the final report of the results of such study furnished by the
contract research organization that conducted the study, then this
Agreement shall terminate.
ARTICLE 4. COMMERCIALIZATION
4.1. LICENSE GRANT. Advancis hereby grants to Par an exclusive license
under its rights in and to the Regulatory Approvals for the Product
and under its Intellectual Property rights associated with the
Product, to import, market, use, manufacture, have manufactured,
promote, distribute and sell the Product in the Territory. The
foregoing license shall include the right for Par to appoint
sub-contractors to market, distribute and sell the Product within the
Territory. The license granted under this Section 4.1 is subject to a
license retained by Advancis to develop Product pursuant to this
Agreement.
4.2. MARKETING AND DISTRIBUTION OBLIGATIONS.
4.2.1. The Parties agree to work together in good faith to develop a
marketing and/or branding strategy for the Product. Ultimate
responsibility and decision making control with regard to
marketing and pricing of the Product shall belong solely to Par.
4.2.2. Subject to Section 15.12, Par agrees to use commercially
reasonable efforts to market, promote, distribute and sell the
Product in the Territory consistent with Par's efforts in regard
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to its other premier generic or branded products, as applicable.
Par agrees to comply and shall require all of its Third Party
contractors to comply with all Applicable Laws in the conduct of
activities with respect to marketing, promotion distribution and
sale of Product in the Territory.
4.2.3. Par will not use the Product as a loss leader or bundle the
Product in any fashion which decreases the revenue directly
attributable to the Product.
4.3. COMMERCIAL LAUNCH. Par's management, and its board of directors,
shall have the ultimate decision-making authority with respect to the
scale and timing of the Commercial Launch of the Product.
(a) Subject to Section 4.3(b), Par agrees to Commercially Launch
the Product before the later of June 1, 2005 or six (6) months after
Regulatory Approval.
(b) Par's obligations to Commercially Launch the Product shall be
suspended during the existence of any one or more of the following:
(i) Par is engaged in litigation with respect to Intellectual
Property Rights of a Third Party that concern Product or
Par is in good faith negotiations with a Third Party to
obtain a license to Intellectual Property Rights that
affect the ability to market Product; or
(ii) there is a court order that, in the United States,
Product infringes a valid claim of a patent of a Third
Party or Advancis is prohibited from marketing the
product by any judgment, order, injunction, decree or
award of any court, administrative agency, or arbitrator
or government body; or
(iii) Subject to 4.3(c), Par is acting in a commercially
reasonable fashion in consideration of reasonable threats
of patent infringement. Par agrees to keep Advancis
informed regarding such potential patent issues.
(c) In the event that Par has not yet launched the product
pursuant to Section 4.3(b)(iii) above and Advancis desires to
nevertheless launch the Product Advancis will so notify Par.
Following such notice, Advancis may if it so chooses seek in good
faith an opinion of counsel, which counsel is reasonably acceptable
to Par, that such patents that Par is considering pursuant to Section
4.3(b)(iii) are not infringed and/or invalid and/or unenforceable. If
Advancis receives such an opinion, Advancis will notify Par and
provide a copy of the opinion to Par for its review. If after 45 days
("Par's review period") Par has not notified Advancis that it intends
to launch the Product and otherwise comply with the requirements of
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this Section 4.3 Advancis shall have the right to seek to have a
Third Party launch and market the Product or launch and market the
Product itself and this Agreement shall automatically terminate as of
either (1) the date that Advancis has entered into such an agreement
with the Third Party or (2) the date that Advancis launches the
Product. With respect to the foregoing item (2), Par hereby agrees
that following Par's forty-five (45) day review period Advancis shall
be free to enter into such arrangements as necessary to launch and
market the Product on its own in reliance upon the ultimate
termination of this Agreement and to the extent required Par grants a
license under its rights under this Agreement in order to implement
such launch.
(d) In the event that this Agreement is terminated under
Section 4.3(c), Advancis agrees to refund to Par any amounts paid to
Advancis under Section 6.2 of this Agreement. Advancis agrees to make
such payments at the rate of 50% of its revenue in connection with the
Product.
4.4. COMPETITIVE ACTIVITIES. Subject to Section 4.3(c), during the term of
this Agreement, Advancis shall not develop, make, have made, sell,
offer for sale, distribute or otherwise make available (nor contract
with a third Party to do any of the foregoing) the Product or any
Competing Product to any Person in the Territory other than Par.
During the term of this Agreement Par shall not market, promote,
sell, offer for sale, distribute or otherwise make available (nor
contract with a third Party to do any of the foregoing) the Product
or any Competing Product, except as supplied to Par by Advancis or a
mutually agreed third party manufacturer, to any Person in the
Territory.
4.5. RECALL. In the event that either Party believes it may be necessary
to conduct a recall, field correction, market withdrawal, stock
recovery, or other similar action with respect to any Product sold
under this Agreement (a "Recall"), Advancis and Par shall promptly
consult with each other as to how best to proceed, it being
understood and agreed that the final decision as to any Recall of any
Product shall be made by Par; provided however, that neither Par nor
Advancis shall be prohibited hereunder from taking any action that it
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is required to take by Applicable Law. The cost of any Recall of
Product shall be paid for by the Parties in accordance with the Par
Applicable Percentage and the Advancis Applicable Percentage. Any
Recall required because of a negligent or illegal act or omission in
the handling, storage or distribution of Product by Par shall be at
Par's sole expense.
ARTICLE 5. SUPPLY AND PURCHASE
5.1. Advancis agrees to enter into a contract with one or more Third
Parties to manufacture API and to produce Product containing API.
Advancis shall not sign any such contract(s) until Par in writing
approves the terms and conditions thereof, which approval shall not
be withheld or delayed unreasonably.
5.2. Until assignment of the Approved Manufacturing Contract, Advancis
agrees to supply Product to Par and Par agrees to order, accept and
pay for Product and API in accordance with the terms and conditions
of the Approved Manufacturing Contracts.
5.3. The only warranties with respect to API and Product shall be those
provided by the Third Party manufacturer in the Approved
Manufacturing Contracts and Advancis shall have no liability with
respect to any breach of any such warranties. At the request of Par,
to the extent that there is any breach of any warranty under an
Approved Manufacturing Contract that has not been assigned to Par,
Advancis shall bring an action to enforce such warranties and each
Party shall bear the cost and expense thereof in accordance with its
Applicable Percentage.
5.4. PRODUCT REPRESENTATIONS AND WARRANTIES.
5.4.1. Par warrants that it will use reasonable commercial efforts to
market, promote and sell the Product and will comply with all
Applicable Laws in the conduct of activities with respect to
handling, storage, distribution, marketing, promoting and
selling of Product.
5.5. ADVANCIS shall have no liability to Par with respect to manufacture
and supply of Product and the only remedies available to Par with
respect to any API or Product supplied under an Approved
Manufacturing Contract are those available thereunder.
ARTICLE 6. FINANCIAL PROVISIONS
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6.1. PRODUCT SUPPLY PRICE. To the extent that Advancis supplies Product to
Par under the Approved Manufacturing Contracts, Par shall pay for
Product and API under the terms and conditions of the Approved
Manufacturing Contracts.
6.2. MILESTONE PAYMENTS. Provided that executed Approved Manufacturing
Contracts are in place for the supply of API and for the
manufacturing and supply of finished Product, Par shall make the
following milestone payments to Advancis which may in the aggregate
amount to up to Six Million U.S. dollars ($6,000,000):
6.2.1. Upon demonstration by Advancis that the Product meets the FDA's
statistical criteria for bioequivalence to Biaxin(R) XL
clarithromycin extended release tablets Par shall pay to
Advancis [***] .
6.2.2. Upon the later of January 7, 2004 or the receipt of written
notice from the FDA that the ANDA for the Product has been
accepted, Par shall pay to Advancis [***] .
6.2.3. Upon Commercial Launch of the Product by Par, Par shall pay to
Advancis [***] .
6.2.4. If after one hundred and eighty (180) days following Commercial
Launch of the Product by Par there is no more than one other
ANDA (in addition to the Advancis/Par ANDA) approved for a
product bioequivalent to Biaxin(R) XL clarithromycin extended
release tablets, Par shall pay to Advancis [***] . In the event
that executed Approved Manufacturing Agreements for both API and
finished and packaged Product are not in place for the supply of
API and for the manufacturing and supply of Product at the time
of achieving the foregoing milestones, such Milestone Payments
shall only become due and payable upon the execution of such
agreements for the supply of clarithromycin API and for the
manufacturing and supply of finished Product to Par.
6.3. NET PROFITS. Net profits shall be determined on a calendar quarter by
calendar quarter basis. Par shall pay to Advancis the Advancis
Applicable Percentage of Net Profits for a calendar quarter within
thirty (30) days of the end of each calendar quarter in which sales
of Product have been made by Par. Each Net Profit payment shall be
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accompanied by a copy of a calculation of the amount due and payable,
including a statement as to Net Sales, Acquisition Price and
Commercial Expenses.
6.4. RECORDS AND AUDITS. Advancis shall have the right once each calendar
year, at its own expense, for any period during which Product is sold
by Par hereunder and for one (1) year thereafter, to have an
independent public accountant, reasonably acceptable to Par, audit
the relevant financial books and records of account of Par at normal
business hours, upon reasonable demand, to determine or verify the
amounts due and payable to Advancis hereunder. If errors of five
percent (5%) or more in Advancis's favor are discovered as a result
of such audit, Par shall reimburse Advancis for the expense of such
audit and pay the deficiency with interest immediately at the prime
rate set forth in the Wall Street Journal, Eastern Edition plus two
percent (2%). As a condition to such examination, the independent
public accountant selected by Advancis shall execute a written
agreement, reasonably satisfactory in form and substance to Par, to
maintain in confidence all information obtained during the course of
any such examination except for disclosure to Advancis as necessary
for the above purpose.
6.5. Six months after Commercial Launch of Product in the United States,
Advancis agrees to assign to Par the Regulatory Approvals and the
Approved Manufacturing Contracts in each case for no additional
consideration.
6.6. (a) At any time up until three (3) months after Commercial
Launch, by written notice from Advancis to Par, Advancis shall have
the right to reduce the Advancis Applicable Percentage to [***], at
which time, if not previously assigned, Advancis shall assign to Par
the Regulatory Approvals and the Approved Manufacturing Contracts.
(b) In the event that Advancis reduces or has reduced the
Advancis Applicable Percentage under Section 6.6(a) and there is an
accusation and/or court action that Product sold by Par infringes a
patent of a Third Party and as a result of an unappealed or
unappealable court decision or as a result of a settlement or
compromise, Par is able to continue sale of Product in the United
States, then Par shall pay to Advancis in addition to any other
amounts paid or to be paid hereunder an amount equal to [***] of Net
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Profits of Product sold after the date of such reduction and prior to
the date of such decision, settlement or compromise, and thereafter
the Advancis Applicable Percentage shall be [***] .
ARTICLE 7. COMMERCIALIZATION COMMITTEE
7.1. ESTABLISHMENT OF THE COMMERCIALIZATION COMMITTEE. Promptly after the
Effective Date, the Parties will form a committee (the
"Commercialization Committee") to be comprised of two (2)
representatives of each of Advancis and Par. Each Party shall have
the right from time to time to substitute new members, on a permanent
or temporary basis, for any of its previously designated members of
the Commercialization Committee. Each Party shall bear its own costs
associated with participation in the Commercialization Committee.
7.2. PURPOSE AND RESPONSIBILITIES OF THE COMMERCIALIZATION COMMITTEE. The
Commercialization Committee shall oversee the commercialization of
the Product, including (i) the timelines for and occurrence of
milestones, general timelines for commercial launch, following launch
to monitor marketing and sales of Product, and such other matters as
are provided to the Commercialization Committee by mutual agreement
of the Parties. The Commercialization Committee shall not have any
authority to impose financial, cost or other obligations on either
party in excess of those expressly set forth in this Agreement unless
expressly consented to in writing by such party.
7.3. COMMERCIALIZATION COMMITTEE MEETINGS. During the term of this
Agreement, the Commercialization Committee shall meet at least once
each calendar quarter or at such other frequency as the
Commercialization Committee agrees. The Parties shall meet on a date
and time and at a location agreed to by the Commercialization
Committee. Upon written notice by either Party to the other that a
meeting is required or requested, a meeting will be held within
thirty (30) calendar days of such notice on a date and time and at a
location to be agreed upon by the Parties, or sooner if warranted by
the circumstances. Notice requesting such a meeting shall include
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adequate information describing the activity to be reviewed. Any
meetings of the Commercialization Committee may be held in person at
a location to be agreed to by the Parties, or by videoconference or
teleconference. A reasonable number of additional representatives of
either Party including outside consultants and independent
contractors, subject to the other party's reasonable consent) may
attend meetings of the Commercialization Committee in a non-voting
capacity. At least one week prior to any meeting of the
Commercialization Committee, each Party shall provide the other with
a a proposed agenda of the matters to be discussed at such meeting.
Within (30) days after each meeting, the Commercialization Committee
chairperson will provide the Parties with a written report
describing, in reasonable detail, the status of the Product including
pricing and marketing data, a summary of the results and progress to
date, the issues requiring resolution and the agreed resolution of
previously reported issues.
ARTICLE 8. INTELLECTUAL PROPERTY
8.1. GENERAL OWNERSHIP. Par understands and agrees that as between the
Parties, ownership of all intellectual property shall be determined
in accordance with U.S. patent law.
8.2. THIRD PARTY INFRINGEMENT. To the extent that any Third Party asserts
patent infringement against Par and/or Advancis or any of their
Affiliates in connection with this Agreement or the Product, Par
shall have sole control in addressing such assertions and in managing
and conducting any related litigation using counsel of its choice.
Par agrees to keep Advancis and its nominated legal counsel informed
with respect to the progress of such claims and to disclose to
Advancis' counsel all papers filed or served in the action and all
material decisions issued by the courts in such matters. Following
the execution of a mutually agreeable joint privilege agreement,
Advancis, and its nominated counsel in furtherance of the mutual
defense shall be allowed full access to Par's designated legal
counsel in connection with the defense and shall be allowed to
participate in the development of the litigation strategy. The
counsel nominated by Par shall represent both Par and Advancis where
both Par and Advancis are parties to the suit. Neither Party shall
agree to any settlement of any disputes with a Third Party that
pertain to the Product without the express written consent of the
other Party, which consent shall not be unreasonably withheld.
Advancis and Par shall share equally in all expenses, costs, and fees
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associated with all of the foregoing set forth in this Section 8.2,
except that Par shall be responsible for one hundred percent (100%)
thereof in the event that Advancis reduces the Advancis Applicable
Percentage under Section 6.6.
8.3. Advancis and Par agree to cooperate with each other with regard to
assessing, avoiding and defending against threats of infringement of
Third Party Intellectual Property Rights; provided however, that
Advancis shall have no obligation to re-formulate the Product. In
this respect the parties agree to enter into a joint defense
agreement with respect to infringement, if any, of Third Party
Intellectual Property Rights. Without limiting the foregoing, Par
agrees to make available to Advancis the evaluation of Intellectual
Property Rights of Third Parties made by Par and its counsel with
respect to Product within three (3) months of filing an ANDA; and
upon approval of an ANDA; and within thirty (30) days of Commercial
Launch.
ARTICLE 9. CONFIDENTIALITY AND PUBLIC DISCLOSURE
9.1. During the term of this Agreement and for a period of five (5) years
thereafter, a Party shall not disclose to any Third Party any
Confidential Information received by it hereunder from the other
Party or use any such Confidential Information for its own benefit.
Each Party agrees to protect Confidential Information received from
the other Party at least as well as it would its own proprietary and
confidential information
9.2. To the extent it is reasonably necessary or appropriate to fulfill
its obligations or exercise its rights under this Agreement, a Party
may disclose the other Party's Confidential Information to its
Affiliates, consultants, outside contractors, collaborators and
clinical investigators on a need-to-know basis on condition that such
entities or persons agree to keep Confidential Information
confidential for the same time periods and to the same extent as
required by this Agreement.
9.2.1. The obligation of a Party not to disclose Confidential
Information of the other Party shall not apply to any part of
such Confidential Information that is disclosed by a Party
pursuant to an order or demand issued by a court or governmental
agency or pursuant to a legal proceeding or as otherwise
required by law; PROVIDED, HOWEVER that such Party notifies the
other Party prior to disclosure, giving the other Party
sufficient advance notice to permit it to seek a protective
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order or other similar order with respect to such Confidential
Information AND PROVIDED FURTHER that such Party furnishes only
that portion of the other Party's Confidential Information which
it is advised by counsel is legally required.
9.3. Each Party shall bind all persons having access through it to any
Confidential Information to take no steps inconsistent with or
preventing such Party from carrying out the terms of this Agreement.
Each Party hereby represents to the other that the receiving Party
will be responsible for the acts of any officer and/or employee
receiving the Confidential Information.
9.4. Upon termination of this Agreement, each Party, at the request of the
other, shall return all Confidential Information disclosed to it
hereunder, in whatever form contained, including all notes or
memoranda made by its employees, agents, or representatives obtained
or derived from any such Confidential Information, including any
listing which identifies the documents which were provided.
9.5. Neither party shall disclose the terms or conditions of this
Agreement that have not been previously disclosed to the public or
make any public announcement concerning this Agreement without the
consent of the other party, which shall not be unreasonably withheld,
except such consent shall not be required (i) where such disclosure
is required in accordance with any applicable law, rule or regulation
(including, without limitation, disclosure requirements of the U.S.
Securities and Exchange Commission, NASDAQ or any other stock
exchange on which securities are traded), (ii) in connection with an
equity investment, loan, financing or similar transaction provided
that such disclosure is subject to an obligation of confidentiality
except in the case where after reasonable efforts the disclosing
party can not obtain such an obligation of confidentiality , (iii) in
connection with a consolidation, merger, change in control or sale of
all or a portion of the business of a Party or similar transaction
subject to an obligation of confidentiality by the receiving party ,
(iv) in connection with an order of a court or government agency, (v)
where such disclosure is made to attorneys, accountants and other
advisors to a party subject to an obligation of confidentiality . In
the event of a required public announcement, to the extent
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practicable under the circumstances, the party making such
announcement shall provide the other party with a copy of the
proposed text prior to such announcement sufficiently in advance of
the scheduled release of such announcement to afford such other party
a reasonable opportunity to review and comment upon the proposed
text.
9.6. The Parties understand and agree that each will be required to make a
public disclosure regarding this Agreement as a matter of compliance
with the United States laws and regulations of the Securities
Exchange commission ("SEC") regarding securities. Without limiting
either party's obligations under the securities laws and regulations,
the parties agree to work together in good faith to make mutually
acceptable public announcements of this Agreement at mutually
acceptable times. Additionally, if a party is required to file a copy
of this Agreement with any of its SEC filings, it agrees to seek
confidential treatment for the Agreement, and to work together with
the other party in good faith in seeking such confidential treatment.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES
10.1. Advancis here hereby represents and warrants that as of the Effective
Date:
10.1.1. Advancis is a company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
formation;
10.1.2. Advancis has the power and authority to enter into and be
bound by the terms and conditions of this Agreement and to
perform its obligations hereunder;
10.1.3. Advancis has taken all necessary action on its part to
authorize the execution and delivery of this Agreement and
this Agreement has been duly executed and delivered on behalf
of Advancis and constitutes a legal, valid, binding
obligation, enforceable against Advancis in accordance with
its terms; and,
10.1.4. Advancis is subject to no legal, contractual or other
restrictions, limitations or conditions which conflict with
its rights and obligations under this Agreement or which might
affect adversely its ability to perform hereunder.
10.2. Par here hereby represents and warrants that as of the Effective
Date:
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10.2.1. Par is a company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation;
10.2.2. Par has the power and authority to enter into and be bound by
the terms and conditions of this Agreement and to perform its
obligations hereunder;
10.2.3. Par has taken all necessary action on its part to authorize
the execution and delivery of this Agreement and this
Agreement has been duly executed and delivered on behalf of
Par and constitutes a legal, valid, binding obligation,
enforceable against Par in accordance with its terms; and,
10.2.4. Par is subject to no legal, contractual or other restrictions,
limitations or conditions which conflict with its rights and
obligations under this Agreement or which might affect
adversely its ability to perform hereunder.
10.3. Advancis represents and warrants that it has not failed to disclose
to Par granted United States patents that as of the Effective Date to
the knowledge of Advancis should be considered by Par with respect to
the potential infringement risks, if any, as to the Product that is
being developed by Advancis as of the Effective Date. Appendix A is a
list of patents disclosed to Par.
10.4. NEITHER PARTY MAKES ANY OTHER REPRESENTATION OR WARRANTY HEREUNDER
AND DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING,
BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR USE
OR WITH RESPECT TO THE VALIDITY, ENFORCEABILITY, OR PATENTABILITY OF
ANY PATENTS OR THAT PRODUCTS WILL NOT INFRINGE PATENT RIGHTS OF A
THIRD PARTY OR THAT AN ANDA WILL APPROVED.
ARTICLE 11. INDEMNIFICATION
11.1 Par shall defend, indemnify and hold Advancis and its
directors, officers, employees, shareholders and agents, harmless from and
against any and all Third Party claims, suits or demands for liabilities,
damages, losses, costs and expenses (including the reasonable fees of attorneys
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and other professionals) arising out of or resulting from Product that was
manufactured and/or distributed and/or marketed and/or sold by or on behalf of
Par or by any of its Affiliates, distributors, co-marketers or sublicensees,
each a "Par Indemnified Loss" except for a Par Indemnified Loss which arises
solely out of the intentional misconduct of Advancis. The foregoing
notwithstanding, the indemnity under this Section 11.1 is limited to [***] of
Par Indemnified Loss, except that such limitation shall not apply, and Par shall
be responsible for [***] of each Par Indemified loss where (i) Advancis has
reduced the Advancis Applicable Percentage under Section 6.6(a) and/or (ii) the
Par Indemnified Loss results from the intentional misconduct of Par and/or the
negligence of Par and/or (iii) the Par Indemnified Loss results from a failure
by Par to comply with Applicable Laws.
11.2 Advancis shall indemnify and hold Par and its directors,
officers, employees, shareholders and agents, harmless from and against any and
all Third Party claims, suits or demands for liabilities, damages, losses, costs
and expenses (including the reasonable fees of attorneys and other
professionals) resulting from development activities with respect to Product
prior to Commercial Launch performed by or on behalf of Advancis, each an
"Advancis Indemnified Loss," except for an Advancis Indemnified Loss which
solely arises out of the intentional misconduct of Par. The Indemnity under this
Section 11.2 is limited to the Advancis Applicable Percentage of Advancis
Indemnified Loss.
11.3 A Party or any of its Affiliates or their respective
directors, officers, employees or agents (the "Indemnitee") that intends to
claim indemnification under this Article 11 shall promptly notify the other
Party (the "Indemnitor") of any claim or action in respect of which the
Indemnitee intends to claim such indemnification, and the Indemnitor shall
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assume the defense thereof with counsel mutually satisfactory to the Parties;
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
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential conflicting interests between
such Indemnitee and any other Party represented by such counsel in such
proceedings. The indemnity agreement in this Article 11 shall not apply to
amounts paid in settlement of any claim or action if such settlement is effected
without the prior 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 claim or action, if
materially prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 11 with respect
to such action. The Indemnitee under this Article 11, its employees and agents,
shall cooperate fully with the Indemnitor and its legal representatives in the
investigation and defense of any claim or action covered by this
indemnification. The Indemnitee shall not settle any such claim or action
without the consent of the Indemnitor .
11.4 The indemnity of Section 11.1 does not apply to a Par
Indemnified Loss arising out of infringement of a patent of a Third Party, and
any such Par Indemnified Loss is covered by Section 8.2, except that in the
event that Advancis reduces or has reduced the Advancis Applicable Percentage
under Section 6.6 (a), then the indemnity of Section 11.1 shall extend to each
Par Indemnified Loss arising out of patent infringement and Par shall be
responsible for one hundred percent (100%) of each such Par Indemnified Loss
ARTICLE 12. LIMITATION OF LIABILITY
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, EXCEPT WITH RESPECT
TO THIRD PARTY CLAIMS PURSUANT TO THE INDEMNIFICATION OBLIGATIONS SET FORTH IN
THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY
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CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES OR LOSS OF OPPORTUNITY OR USE OF
ANY KIND SUFFERED BY THE OTHER PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE.
ARTICLE 13. TERM AND TERMINATION
13.1. TERM. Unless earlier terminated pursuant to this Article 13, this
Agreement shall continue in force and effect from the Effective Date
for so long as Par continues to market Product.
13.2. TERMINATION FOR BREACH. Either Party may terminate this Agreement
upon written notice to the other Party at any time during the term of
this Agreement if the other Party is in breach of any material term
of this Agreement and has not cured such breach within thirty (30)
days after notice requesting cure of the breach.
13.3. TERMINATION BY PAR. If at any time Par determines in good faith that
it does not want to launch the Product or no longer wishes to sell
the Product. Par may terminate this Agreement upon ninety (90) days
prior written notice to Advancis.
13.4. SURVIVAL. Sections 13.4, 13.5 and 13.6 and Articles 1, 9, 11, 12 and
15 shall survive any expiration or termination of this Agreement. In
addition, unless otherwise expressly set forth herein, no expiration
or termination of this Agreement shall have any affect on any
payment, obligation, representation or warranty under this Agreement
accruing or arising prior to such expiration or termination.
13.5. Upon any termination of this Agreement, Par shall assign to Advancis
all right, title and interest in and to all Regulatory Approvals, the
Approved Manufacturing Contracts, the Par Agreements, the Trademark,
and Intellectual Property Rights of Par, provided however that to the
extent that such Intellectual Property Rights of Par pertain to
products other than Product, instead of assigning such Intellectual
Property Rights of Par, Par agrees to grant and hereby grants to
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Advancis in the Territory an exclusive license with the right to
sublicense under such Intellectual Property Rights of Par to make,
have made, use, sell, offer to sell and import Product.
13.6. Upon termination of this Agreement, Par shall terminate marketing and
sale of Product.
ARTICLE 14. INSURANCE
Each party shall obtain and maintain at all times during the term of
this Agreement, prudent comprehensive general liability coverage appropriate to
its activities with reputable and financially secure insurance carriers to cover
its activities related to this Agreement. Additionally such insurance coverage
shall include, without limitation, product liability coverage in an amount of no
less than Ten Million dollars per occurrence to be in place prior to the
Commercial Launch and for so long as Product is being sold pursuant to this
Agreement.
ARTICLE 15. MISCELLANEOUS
15.1. INTERPRETATION. Unless the context of this Agreement otherwise
requires, (i) the terms "include," "includes," or "including" shall
be deemed to be followed by the words "without limitation" unless
otherwise indicated; (ii) words using the singular or plural number
also include the other; (ii) the terms "hereof," "herein," "hereby,"
and derivative or similar words refer to this entire Agreement; (iii)
the terms "Article," "Section" and "Exhibit" refer to the specified
Article, Section and Exhibit of this Agreement, and (iv) words of any
gender include each other gender . Whenever this Agreement refers to
a number of days, unless otherwise specified, such number shall refer
to calendar days. The headings in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of
this Agreement.
15.2. INDEPENDENT CONTRACTOR STATUS. . It is understood and agreed that the
Parties hereto are independent contractors and are engaged in the
operation of their own respective businesses, and neither Party
hereto is to be considered the agent of the other Party for any
purpose whatsoever, and neither Party shall have any authority to
enter into any contracts or assume any obligations for the other
Party nor make any warranties or representations on behalf of that
other Party.
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15.3. WAIVER. The waiver by either Party of a breach of any provisions
contained herein shall be in writing and shall in no way be construed
as a waiver of any succeeding breach of such provision or the waiver
of the provision itself.
15.4. ASSIGNMENT. This Agreement may not be assigned by either Party
without the prior consent of the other Party; provided, however,
without consent either Party may assign this Agreement (a) to any
entity which acquires substantially all of its assets or business or
(b) in connection with a merger, consolidation or similar
transaction.
15.5. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
Parties regarding the subject matter hereof and supersedes all prior
agreements, understandings and negotiations regarding the same. This
Agreement may not be changed, modified, amended or supplemented
except by a written instrument signed by both Parties. Furthermore,
it is the intention of the Parties that this Agreement be controlling
over additional or different terms of any order, confirmation,
invoice or similar document, even if accepted in writing by both
Parties, and that waivers and amendments shall be effective only if
made by non-pre-printed agreements clearly understood by both Parties
to be an amendment or waiver.
15.6. SEVERABILITY. If any provision of this Agreement shall be held
illegal or unenforceable, that provision shall be limited or
eliminated to the minimum extent necessary so that this Agreement
shall otherwise remain in full force and effect and enforceable.
15.7. FURTHER ASSURANCES. Each Party hereto agrees to execute, acknowledge
and deliver such further instruments, and to do all such other acts,
as may be necessary or appropriate in order to carry out the purposes
and intent of this Agreement.
15.8. USE OF PARTY'S NAME. No right, express or implied, is granted by this
Agreement to either Party to use in any manner the name of the other
or any other trade name or trademark of the other in connection with
the performance of this Agreement
15.9. NOTICE AND REPORTS. All notices, consents or approvals required by
this Agreement shall be in writing sent by certified or registered
air mail, postage prepaid or by facsimile or cable (confirmed by such
certified or registered mail) to the Parties at the following
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addresses or such other addresses as may be designated in writing by
the respective Parties:
TO ADVANCIS: 20425 Seneca Meadows Parkway Germantown, MD 20876 Attn:
CEO
TO PAR:
One Ram Ridge Road
Spring Valley, New York 10977
Attn: CEO
Notices shall be deemed effective on the date of mailing.
15.10. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Delaware without regard to the
conflicts of laws provisions thereof. The exclusive jurisdiction
and venue of any action with respect to this Agreement shall be the
state and federal courts of Delaware.
15.11. CAPTIONS. Paragraph captions are inserted for convenience only and
in no way are to construed to define, limit or affect the
construction or interpretation hereof.
15.12. FORCE MAJEURE. A Party shall not be liable for nonperformance or
delay in performance [(other than of obligations regarding payment
of money or confidentiality)] caused by any event reasonably beyond
the control of such Party including, but not limited to wars,
hostilities, revolutions, riots, civil commotion, national
emergency, strikes, lockouts, unavailability of supplies,
epidemics, fire, flood, earthquake, force of nature, explosion,
embargo, or any other Act of God, or any law, proclamation,
regulation, ordinance, or other act or order of any court,
government or governmental agency.
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IN WITNESS WHEREOF, the Parties hereto have executed this Supply and
Distribution Agreement to be effective as of the Effective Date.
ADVANCIS PHARMACEUTICAL CORPORATION
By: /s/ EDWARD M. RUDNIC
-----------------------------
Title: President & CEO
-----------------------------
PAR PHARMACEUTICAL, INC.
By: /s/ SCOTT L. TARRIFF
-----------------------------
Title: President & CEO
-----------------------------
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