Exhibit 10.1
Confidential Materials omitted and filed separately with the Securities
and Exchange Commission. Asterisks denote omissions.
LICENSE AND SUPPLY AGREEMENT
among
COLLAGENEX PHARMACEUTICALS, INC.,
and
MUTUAL PHARMACEUTICAL COMPANY, INC.
and
UNITED RESEARCH LABORATORIES
APRIL 8, 2004
COLLAGENEX-MUTUAL License & Supply Agmt
i
LICENSE AND SUPPLY AGREEMENT
Table of Contents
ARTICLE I - DEFINITIONS................................................ 2
ARTICLE II - INTELLECTUAL PROPERTY GRANTS.............................. 11
ARTICLE III - PAYMENTS AND INVENTORY COMPETITIVE PRICING
ADJUSTMENTS............................................................ 14
ARTICLE IV - SUPPLY.................................................... 24
ARTICLE V - REPRESENTATIONS, WARRANTIES AND COVENANTS.................. 36
ARTICLE VI - INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION........ 43
ARTICLE VII - TERM AND TERMINATION..................................... 47
ARTICLE VIII - INDEMNIFICATION, INSURANCE AND DISPUTE
RESOLUTION............................................................. 53
ARTICLE IX - MISCELLANEOUS............................................. 61
LICENSE AND SUPPLY AGREEMENT
PREAMBLE
This LICENSE AND SUPPLY AGREEMENT dated as of the 8th day of April, 2004
(the "Execution Date") is by and among CollaGenex Pharmaceuticals, Inc., a
Delaware corporation having its principal place of business in Newtown,
Pennsylvania ("COLLAGENEX"), on the one hand; and Mutual Pharmaceutical Company,
Inc., a Pennsylvania corporation having its principal place of business in
Philadelphia, Pennsylvania ("Mutual") and United Research Laboratories, Inc., a
Pennsylvania corporation having its principal place of business in Philadelphia,
Pennsylvania ("URL") (Mutual and URL are, collectively, "URL/MUTUAL"), on the
other hand (CollaGenex and URL/Mutual are, collectively, the "Parties").
WHEREAS, the Parties wish to amicably settle certain litigation currently
ongoing between them; and WHEREAS, URL/MUTUAL desires to exclusively purchase
certain products from COLLAGENEX for resale to its distributors and other
customers for ultimate sale to consumers in the Territory, and COLLAGENEX
desires to supply such products to URL/MUTUAL in the Territory, subject to the
terms and conditions set forth in this Agreement; and
WHEREAS, COLLAGENEX is willing to grant, and URL/MUTUAL is willing to
receive, a sublicense under certain patents owned by The Research Foundation of
State University of New York, a non-profit educational corporation organized
under the laws of New York state ("FOUNDATION") to enable URL/MUTUAL to sell
such products in the Territory to its distributors and other customers for
ultimate sale to consumers in such Territory, subject to the terms and
conditions set forth in this Agreement.
1
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
stipulations set forth herein, and in the Consent Agreement (as defined
hereinafter), Settlement Agreement (as defined hereinafter), and the Stipulated
Orders (as defined hereinafter), the receipt and legal sufficiency of which are
hereby mutually acknowledged, COLLAGENEX and URL/MUTUAL hereby agree as follows:
ARTICLE I - DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms, whether
used in the singular or plural, shall have the following meanings:
"A/B Rated" shall mean "therapeutically equivalent" as evaluated by FDA,
applying the definition of "therapeutically equivalent" set forth in the Preface
to the current edition of the FDA publication "Approved Drug Products With
Therapeutic Equivalence Evaluations" (the "Orange Book").
"Adverse Event Reports" shall have the meaning set forth in Section 4.3.
"Affiliate" shall mean any corporation, firm, partnership or other entity,
whether de jure or de facto, which controls, is controlled by, or is under
common control with a Party. For purposes of this definition, "control" shall
mean: (a) in the case of corporate entities, direct or indirect ownership of at
least 50% of the stock or shares (or such lesser percentage which is the maximum
allowed to be owned by a foreign corporation in a particular jurisdiction)
entitled to vote for the election of directors or otherwise having the power to
vote on or direct the affairs of such Party; and (b) in the case of
non-corporate entities, direct or indirect ownership of at least 50% of the
equity interest or the power to direct the management and policies of such
noncorporate entities.
"Agreement" shall mean this License and Supply Agreement.
2
"AMP" shall mean Average Manufacturer's Price for Periostat(R)as reported
quarterly by CollaGenex to The Secretary of the United States Department of
Heath and Human Services and/or the Heath Care Financing Administration pursuant
to Section 1927 of the Social Security Act, 42 U.S.C.ss.1396s, and/or Section
4401 of the Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508.
"ANDA" shall mean an Abbreviated New Drug Application as defined in the
U.S. Federal Food, Drug and Cosmetic Act and all applicable regulations
promulgated thereunder.
"Applicable Law" shall mean all applicable provisions of all U.S. federal
or state statutes, laws, regulations, ordinances, decrees, orders, decisions,
injunctions, judgments, and permits and licenses of or from U.S. federal or
state governmental authorities relating to the use or regulation of the subject
item.
"Bottle" shall mean a bottle containing one hundred (100) tablets of
COLLAGENEX Supplied Product. "Box" shall mean a box of twelve (12) Bottles.
"Business Day" shall mean any day other than a day which is a Saturday, a Sunday
or federal bank holiday in the USA. "cGMP" shall mean current good manufacturing
practices of the FDA, as set forth in 21 C.F.R. Parts 210 and 211 and all
Applicable Law.
"Calendar Quarter" shall mean each of the three (3) month periods during a
calendar year starting on the first of January, April, July and October.
"Change of Control" shall mean, with respect to the applicable Party, an
event where:
(a) any Third Party (alone or together with such Third Party's
Affiliates) or "group" (as such term is defined under Section 13(d) of the
Securities Exchange Act of 1934, as
3
amended) (i) acquires beneficial ownership of capital stock of such Party
entitling the holder(s) thereof to greater than fifty percent (50%) of the
voting power of the then outstanding capital stock of such Party with
respect to the election of directors of such Party, or (ii) otherwise
actually controls or is in a controlling position with respect to the
voting power of the then outstanding capital stock of such Party; or
(b) such Party consummates a merger, consolidation, reorganization or
similar transaction or series of related transactions, whether direct or
indirect, with another Third Party, alone or together with such Third
Party's Affiliates (the "Acquiring Corporation"), in which: (i) such Party
is not the surviving corporation in such transaction, (ii) the members of
the Board of Directors of such Party prior to such transaction constitute
less than one half of the members of the Board of Directors of the
Acquiring Corporation following such transaction, (iii) greater than fifty
percent (50%) of the voting power of the outstanding capital stock of the
Acquiring Corporation with respect to the election of directors following
such transaction is held by Third Parties who were shareholders of the
Acquiring Corporation prior to such transaction, or (iv) such Party is
otherwise effectively controlled by the Acquiring Corporation, or
(c) such Party sells to any Third Party(s) (alone or together with
such Third Party's Affiliates) in one or more related transactions
properties or assets representing greater than fifty percent (50%) of: (i)
such Party's consolidated total assets as reflected on its most recent
annual audited financial statements, provided that, all or substantially
all of the properties and assets used in connection with such Party's
pharmaceutical business are included in such transaction(s), (ii) such
Party's pharmaceutical business, or (iii) such Party's consolidated
operating income for the most recent fiscal year as reflected on its most
recent annual audited financial statements.
4
Notwithstanding anything to the contrary in this definition, a Change of
Control shall not be deemed to have occurred with respect to a Party where any
acquisition, merger, consolidation, reorganization, sale or similar transaction
occurs solely between such Party and any one or more of its Affiliates.
"COLLAGENEX" shall have the meaning set forth in the Preamble.
"COLLAGENEX NDA" shall mean NDA No. 50,783 for Periostat(R) 20 mg tablets
as approved by the FDA.
"COLLAGENEX Party" shall have the meaning set forth in Section 8.2.
"COLLAGENEX Safety Stock" shall have the meaning set forth in Section
4.2(c)(i).
"COLLAGENEX Supplied Product" shall mean all doxycycline hyclate 20 mg
immediate-release tablets bearing the URL/MUTUAL imprint MP-573 and supplied to
URL/MUTUAL by COLLAGENEX manufactured pursuant to the COLLAGENEX NDA in effect
as of the Effective Date.
"Commercial Quantities" shall mean such quantities of a Competitive Generic
Product that is A/B Rated to Periostat(R) [**] in the Territory. URL/MUTUAL and
COLLAGENEX shall each use their respective commercially reasonable efforts to
determine when Commercial Quantities of a Competitive Generic Product have first
been offered by a Third Party for prompt delivery to such major retail chains,
major pharmaceutical wholesalers, distributors, or managed care providers in the
Territory, and the Party first making such determination shall report such
information to the other Party as soon as practicable.
5
"Competitive Generic Entry" shall mean the first date, subsequent to the
Effective Date, on which the Parties agree, in good faith, that Competitive
Generic Product has been shipped, and remains available for purchase for more
than [**] consecutive Business Days after COLLAGENEX is made aware of such
shipment and/or availability for purchase, in Commercial Quantities in the
Territory from, directly or indirectly, any Third Party, other than COLLAGENEX
Supplied Product which is supplied, directly or indirectly, to such Third Party
by URL/MUTUAL or its Affiliates; provided, however, that if, within [**]
consecutive Business Days after COLLAGENEX is made aware of such shipment and/or
availability for purchase, all shipments or sales are enjoined or otherwise
terminated, then the Competitive Generic Entry shall not have occurred.
"Competitive Generic Offer Period" shall mean each period, beginning
subsequent to the Effective Date, during which the Parties agree, in good faith,
that Competitive Generic Product is available for purchase in Commercial
Quantities in the Territory from, directly or indirectly, any Third Party, other
than COLLAGENEX Supplied Product which is supplied, directly or indirectly, to
such Third Party by URL/MUTUAL or its Affiliates; provided, however, that a
Competitive Generic Offer Period shall be deemed to have terminated (i) upon the
date when such shipments or sales are enjoined or otherwise terminated, if,
within [**] consecutive Business Days after COLLAGENEX is made aware of such
shipment and/or availability for purchase, all such shipments or sales are
enjoined or otherwise terminated, or (ii) upon the occurrence of a Competitive
Generic Entry.
"Confidential Information" shall mean any and all confidential information
regarding, related to, or associated with the Product, the Patents, and this
Agreement (including the terms and conditions hereof) that is disclosed by the
Disclosing Party to the Recipient as of and after
6
the Execution Date. Provided, however, that Confidential Information shall not
include information which: (i) at the time of disclosure is in the public domain
or otherwise publicly known; (ii) after disclosure becomes part of the public
domain or otherwise publicly known, except through breach of this Agreement or
the Settlement Agreement; (iii) the Recipient can demonstrate by reasonable
proof was in its possession prior to the time of disclosure by the Disclosing
Party hereunder, and was not acquired directly or indirectly from the Disclosing
Party; or (iv) becomes available to Recipient from a Third Party who did not
acquire such information directly or indirectly from the Disclosing Party and
who is not otherwise prohibited from disclosing such information. In addition,
the terms and conditions of this Agreement shall be considered the Confidential
Information of each Party.
"Consent Agreement" shall mean that certain Consent Agreement, which is
dated as of the Execution Date, among COLLAGENEX, FOUNDATION and URL/MUTUAL,
pursuant to which FOUNDATION consents to the sublicenses granted to URL/MUTUAL,
among other things.
"Disclosing Party" shall have the meaning set forth in Section 6.3(a).
"Effective Date" shall be the date upon which the last of the following
events shall have occurred: (a) receipt of the Settlement Payment by the law
firm of Hoffmann & Baron, LLP, as escrow agent; (b) execution of this Agreement;
(c) the Parties' execution of the Stipulated Order in the New York action; (d)
the Parties' execution of the Stipulated Order in the Pennsylvania action; (e)
Mutual's execution of the Stipulated Order in the FDA action; and (f) URL/MUTUAL
having received notice from First DataBank, Inc. that the COLLAGENEX Supplied
Product is listed as a branded product. Until the Effective Date, (x) none of
the Intellectual Property Grants set forth in Article 2 shall become effective,
and (y) the Settlement Payment and the Stipulated
7
Orders shall be held in escrow by the law firm of Hoffmann & Baron, LLP, as
escrow agent, and (z) neither this Agreement nor the Settlement Agreement shall
be effective in settling or compromising any of the disputes referenced therein.
"Execution Date" shall be the date upon which this Agreement shall be
mutually executed by authorized representatives of each Party, which date shall
be that which is set forth in the Preamble.
"FDA" shall mean the U.S. Food and Drug Administration, or any successor
agency thereto. "Firm Order" shall have the meaning set forth in Section
4.2(c)(ii).
"Initial Quantity" shall mean [**] bottles of CollaGenex Supplied Product,
each containing 100 tablets, and each bottle bearing the label of Mutual
Pharmaceutical Company, Inc.
"Month's Supply" or "Months' Supply" shall mean, on any date, 1/6 of the
total quantity of Periostat and COLLAGENEX Supplied Product sold during the
immediately preceding six (6) full calendar months, as reported by IMS Health.
"NDA" shall mean a New Drug Application as defined in the U.S. Federal
Food, Drug, and Cosmetic Act and all applicable regulations promulgated
thereunder.
"NDC" shall mean a National Drug Code number.
"URL/MUTUAL" shall have the meaning set forth in the Preamble.
"URL/MUTUAL ANDA" shall mean ANDA No. 65-134, unapproved as of the
Execution Date.
"URL/MUTUAL Party" shall have the meaning set forth in Section 8.1(c).
8
"URL/MUTUAL Product" shall mean doxycycline hyclate 20 mg tablets that are
made by or for URL/MUTUAL and that are the subject of the URL/MUTUAL ANDA if the
URL/MUTUAL ANDA is then-approved by the FDA.
"URL/MUTUAL Product Action" shall have the meaning set forth in Section
5.9(c).
"Patents" shall mean U.S. Patent No. 4,666,897 and Reissue Patent No. RE
34,656, and any reissues, reexaminations, and extensions of such patents.
"Periostat(R)" shall mean Periostat(R) brand of doxycycline hyclate 20 mg
immediate release tablets approved under NDA No. 50,783.
"Product" shall mean, collectively or individually, depending on context,
the following drug products:
(a) any doxycycline hyclate 20 mg immediate release tablet approved
under the COLLAGENEX NDA;
(b) any doxycycline hyclate 20 mg immediate release tablet approved
under the URL/MUTUAL ANDA or any other ANDA of URL/MUTUAL;
(c) any doxycycline hyclate 20 mg immediate release tablet that is A/B
Rated to Periostat(R) that shall have been approved under the ANDA of a
Third Party ("Competitive Generic Product").
"Product Action" shall have the meaning set forth in Section 5.6(b).
"Product Claims" shall have the meaning set forth in Section 8.1(a).
"Recipient" shall have the meaning set forth in Section 6.3(a).
"Settlement Agreement" shall mean that certain Settlement Agreement, which
is dated as of the Execution Date, among COLLAGENEX, FOUNDATION and URL/MUTUAL
regarding the civil action pending in the United States District Court for the
Eastern District of New York
9
captioned CollaGenex Pharmaceuticals, Inc. and The Research Foundation of State
University of New York v. Mutual Pharmaceutical Company, Inc. and United
Research Laboratories, Inc., Civil Action No. 03-3322 (CPS) (MDG) (the "New York
action"), the civil action pending in the United States District Court for the
Eastern District of Pennsylvania entitled Mutual Pharmaceutical Company, Inc. v.
CollaGenex Pharmaceuticals, Inc., Civil Action No. 03-4042 (TJS) (the
"Pennsylvania action"), and the civil action pending in the United States
District Court for the District of Columbia, entitled CollaGenex
Pharmaceuticals, Inc. v. Thompson et al., Civil Action No. 1:03-01405 (RMC) (the
"FDA action") (collectively, the "Pending Actions").
"Settlement Payment" shall have the meaning defined in Section 2 of the
Settlement Agreement.
"Stipulated Orders" shall mean, collectively, (a) the Stipulated Order for
Judgment in the New York action, substantially in the form attached to the
Settlement Agreement as Exhibit A, (b) the Stipulation of Dismissal in the
Pennsylvania action, substantially in the form attached to the Settlement
Agreement as Exhibit B, and (c) a proposed Order effecting the withdrawal of
Mutual's intervention in the FDA action, substantially in the form attached to
the Settlement Agreement as Exhibit C.
"Supply Term" shall mean the period beginning on the Effective Date and
continuing until the earliest to occur of: (a) a Competitive Generic Entry, (b)
the withdrawal of the COLLAGENEX NDA and/or the withdrawal of Periostat(R) from
the market, (c) a material breach of this agreement by any Party that is not
cured within the time frames set forth in Section 7, Section 4.2(a)(i), Section
4.2(c)(i), Section 4.2(d)(ii), Section 4.2(g) or Section 4.2(i), (d) a final
determination by a court of competent jurisdiction, from which no appeal has
been taken or
10
all appeals have been exhausted, that the Patents are invalid, or unenforceable,
or (e) the expiration date of the last of the Patents to expire (currently
anticipated by the Parties to be May 15, 2007) (the earliest of (a) through (e),
the "Supply Termination Date").
"Term" shall have the meaning set forth in Section 7.1.
"Territory" shall mean the United States of America and its territories and
possessions, including Puerto Rico. "Third Party" shall mean any person,
corporation, partnership, associations, joint venture, trust or other entity
other than URL/MUTUAL or COLLAGENEX or FOUNDATION, or an Affiliate of any of
them.
"URL/MUTUAL Weighted Average Selling Price" shall mean, on the date of
delivery to URL/MUTUAL of COLLAGENEX Supplied Product, the weighted average of
the prices at which URL/MUTUAL sold any COLLAGENEX Supplied Product during the
fifteen (15) Business Days immediately preceding such date.
Section 1.2 The word "including" or any variation thereof means "including
without limitation" or any variation thereof and shall not be construed to limit
any general statement which it follows to the specific or similar items or
matters immediately following it.
ARTICLE II - INTELLECTUAL PROPERTY GRANTS
Section 2.1 Intellectual Property Grant for Sale of CollaGenex Supplied
Product.
(a) (i) Effective as of the Effective Date, and subject to the terms
and conditions of this Agreement, COLLAGENEX hereby grants to URL/MUTUAL,
for the period comprising the Supply Term, a sole, non-transferable,
non-sublicenseable sub-license under the Patents in the Territory, to offer
for sale and sell COLLAGENEX Supplied Product to URL/MUTUAL's distributors
and other customers in the Territory for the purpose of ultimate
11
sale by such distributors and other customers to consumers in the
Territory. (ii) For the avoidance of doubt, the Parties agree that the
foregoing right of selling COLLAGENEX Supplied Product in the Territory
shall permit URL/MUTUAL to sell COLLAGENEX Supplied Product to its
distributors and other customers for the purpose of ultimate sale by such
distributors and other customer to consumers in the Territory during the
Supply Term, which activities would, but for the license herein granted,
infringe one or more of the Patents. URL/MUTUAL shall have the right under
this Agreement during the Supply Term to sell COLLAGENEX Supplied Product
for any indications in the COLLAGENEX NDA. (iii) The foregoing grant shall
only be in effect for the Supply Term and shall automatically terminate
upon the Supply Termination Date. URL/MUTUAL may not deliver or tender (or
cause to be delivered or tendered) any COLLAGENEX Supplied Product outside
of the Territory. URL/MUTUAL shall not sell any COLLAGENEX Supplied Product
to a purchaser if URL/MUTUAL knows or has reason to believe that such
purchaser intends to remove those COLLAGENEX Supplied Products from the
Territory.
(b) The Parties hereby agree and acknowledge that the use of "sole" in
the foregoing paragraph shall mean that neither COLLAGENEX, nor its
Affiliates, shall grant any Third Party (expressly or by implication) a
sublicense under the Patents to sell or offer for sale any Product
manufactured pursuant to the CollaGenex NDA in generic trade dress for the
purpose of ultimate sale to consumers in the Territory during the Supply
Term; for the avoidance of doubt, the Parties agree that COLLAGENEX, and
its Affiliates, retain and reserve all rights to make, have made, use, sell
to its distributors and other customers, offer for sale to its distributors
and other customers in the Territory, Periostat(R) or any other doxycycline
hyclate product during the term of the Agreement.
12
Section 2.2 Intellectual Property Grant Upon Competitive Generic Entry
(a) Effective as of the termination of the Supply Term due to a
Competitive Generic Entry, and subject to the terms and conditions of this
Agreement, COLLAGENEX hereby grants to URL/MUTUAL, a non-exclusive,
fully-paid, non-transferable, non-sublicenseable sub-license under the
Patents in the Territory, to make, have made, offer for sale and sell
URL/MUTUAL Product (made by URL/MUTUAL or its Affiliates), and to offer to
sell and sell COLLAGENEX Supplied Product, to URL/MUTUAL's distributors and
other customers in the Territory for the purpose of ultimate sale by such
distributors and other customer to consumers in the Territory. The
foregoing license grant shall remain in effect for the entire life of the
Patents.
Section 2.3 Intellectual Property Grant for Launch of URL/MUTUAL Product
(a) Effective upon URL/MUTUAL's termination of the Agreement, pursuant
to Section 7.2(a), on account of a material breach by COLLAGENEX of its
supply obligations set forth in Article IV of this Agreement, unless the
provisions of Section 2.2 of this Agreement shall have become effective
earlier, and subject to the terms and conditions of this Agreement,
COLLAGENEX hereby grants to URL/MUTUAL a non-exclusive, fully-paid,
non-transferable, non-sublicenseable sub-license under the Patents in the
Territory, to make, have made, offer for sale and sell URL/MUTUAL Product
(made by URL/MUTUAL or its Affiliates), and to offer to sell and sell
COLLAGENEX Supplied Product, to URL/MUTUAL's distributors and other
customers in the Territory for the purpose of ultimate sale by such
distributors and other customers to consumers in the Territory. The
foregoing license grant shall remain in effect for the entire life of the
Patents.
13
Section 2.4 [Reserved for Future Use].
Section 2.5 Retained Rights.
(a) [Reserved for Future Use].
(b) Any intellectual property rights of COLLAGENEX or Foundation not
expressly granted to URL/MUTUAL under the provisions of this Article II
shall be retained by COLLAGENEX or Foundation, respectively.
(c) In no event shall any of the licenses granted under the Patents,
pursuant to this Article 2, be deemed to extend past the expiration of the
Patents or the earlier final determination by a court of competent
jurisdiction, from which no appeal has been taken or all appeals have been
exhausted, adjudicating the Patents to be invalid or unenforceable.
ARTICLE III - PAYMENTS AND INVENTORY COMPETITIVE PRICING ADJUSTMENTS
Section 3.1 Price to URL/MUTUAL of CollaGenex Supplied Product
(a) Initial Quantity. CollaGenex shall supply the Initial Quantity of
CollaGenex Supplied Product to URL/Mutual at a price equal to the
following: [**]% of CollaGenex's reported AMP for a bottle of 100 tablets
of Periostat(R) [**] for the first [**] Bottles (the "Initial Quantity
Price"), plus CollaGenex shall supply the remaining [**] Bottles of the
Initial Quantity at no charge to URL/MUTUAL as a one-time promotional
allowance. For the avoidance of doubt, CollaGenex represents that its AMP
for a bottle of 100 tablets of Periostat(R) [**] was $[**] per bottle.
Accordingly, URL/Mutual shall pay CollaGenex $[**] per Bottle ([**] x
$[**]) for the first [**] Bottles of the Initial Quantity.
Payment terms with respect to the Initial Quantity shall be as
follows:
14
1. Net, [**] days for the first one-third (1/3) of the Initial
Quantity Price;
2. Net, [**] days for the next one-third (1/3) of the Initial
Quantity Price; and
3. Net, [**] days for the final one-third (1/3) of the Initial
Quantity Price.
All such payment time periods shall commence from the date of receipt of
the [**] Bottle of the Initial Quantity by URL/MUTUAL.
(b) Subsequent Quantities. For all quantities of CollaGenex Supplied
Product shipped to URL/Mutual subsequent to the Initial Quantity, the price
of the CollaGenex Supplied Product shall be determined as of the date that
the relevant Firm Order is placed by URL/MUTUAL. The price and payment
terms of all such shipments shall be calculated as follows:
1. Except as provided with respect to the Initial Quantity and
in Section 3.1(b)(3), below, for all Firm Orders placed
during the Calendar year 2004, the purchase price shall be
[**]% of the average of COLLAGENEX's reported AMP [**]
immediately preceding the date the Firm Order was placed,
2. Except as provided in Section 3.1(b)(3), below, for all Firm
Orders placed during calendar year 2005 through the
remainder of the Supply Term, the purchase price shall be
[**]% of COLLAGENEX's reported AMP for [**] immediately
preceding the date the Firm Order was placed.
3. Notwithstanding the foregoing provisions set forth in
Sections 3.1(b)(1) and (2), in the event that COLLAGENEX's
reported
15
Wholesale Acquisition Cost ("WAC") for Periostat(R) 20 mg
immediate release tablets decreases, then the price of
URL/MUTUAL's purchases from the date of the WAC decrease
back to [**] shall be reduced retroactively by the same
percentage as the decline in reported WAC. Any such
retroactive price adjustments, and any payments in respect
of the Competitive Pricing Adjustment provisions set forth
in Section 3.2, below, shall be taken by URL/MUTUAL in the
first instance as setoff against amounts otherwise due and
owing to COLLAGENEX in respect of the purchase of COLLAGENEX
Supplied Product. In the event that such amounts due from
COLLAGENEX to URL/MUTUAL exceed URL/MUTUAL's then-current
financial obligations to COLLAGENEX, COLLAGENEX shall make
the foregoing payments within [**] days of their being
invoiced by URL/MUTUAL.
In addition, if there is a Competitive Generic Entry, URL/MUTUAL shall, if
requested by COLLAGENEX, accept delivery of all COLLAGENEX Supplied Product
subject to Firm Orders which is already manufactured but not yet delivered, and
shall purchase and accept delivery of all COLLAGENEX Supplied Product which is
subject to non-cancellable orders placed with COLLAGENEX's manufacturers
(provided, however, that COLLAGENEX shall use commercially reasonable efforts to
try to cancel such orders) and up to [**] Supply of the available COLLAGENEX
Safety Stock, in each case at a price equal to the lesser
16
of (A) $[**] per bottle of 100 tablets or (B) $[**] less than the applicable
URL/MUTUAL Weighted Average Selling Price. URL/MUTUAL shall request any
adjustment in price pursuant to this Section 3.1(b)(3) by providing written
notification to COLLAGENEX, and COLLAGENEX shall have the right to review all
materials relied upon by URL/MUTUAL in calculating the deduction. URL/MUTUAL and
COLLAGENEX agree that all claims or disputes asserted by either party against
the other arising from or relating to the operation of this Section 3.1(b)(3)
shall be resolved in accordance with Section 9.7A.
4. For all COLLAGENEX Supplied Product other than the Initial
Quantity, payment terms shall be Net, [**] days, with such
payment term to commence from the date of receipt of the
complete quantity set forth in the applicable Firm Order.
Section 3.2 Competitive Pricing Adjustment.
(a) [Reserved for Future Use.]
(b) The Parties also recognize that, during any Competitive Generic
Offer Period and/or upon or after a Competitive Generic Entry, inventory of
COLLAGENEX Supplied Product that is in the retail and wholesale
distribution channel and URL/MUTUAL's inventory may undergo multiple
devaluations if the Competitive Generic Product is priced less expensively
than URL/MUTUAL's selling price of the COLLAGENEX Supplied Product. The
Parties therefore agree that COLLAGENEX will provide retroactive price
adjustments to URL/MUTUAL in respect of such devaluations as follows:
1. On the first day of any Competitive Generic Offer Period,
URL/MUTUAL shall document the number of Bottles of
COLLAGENEX Supplied Product in the inventory of each
URL/MUTUAL customer on
17
such day (the lesser of (A) such aggregate number of
Bottles, or (B) [**] Bottles, the "Customer Bottles at
Risk"). Also, on the first day of any Competitive Generic
Offer Period, URL/MUTUAL shall document the number of
Bottles of COLLAGENEX Supplied Product in URL/MUTUAL's
inventory (the "Day 1 URL/MUTUAL Inventory"). URL/MUTUAL
shall promptly provide such documentation to COLLAGENEX.
2. "URL/MUTUAL Bottles at Risk" means (a) with respect to a
Competitive Generic Offer Period which is terminated other
than by a Competitive Generic Entry, the lesser of (i) the
COLLAGENEX Supplied Product in URL/MUTUAL's inventory which
URL/MUTUAL is reasonably required to ship to its customers
during such period or (ii) the URL/MUTUAL Inventory Risk
Limit, and (b) with respect to a period which starts with a
Competitive Generic Offer Period and continues directly into
a Competitive Generic Entry without any intervening
termination of such Competitive Generic Offer Period (such
period, as measured starting on the first day of such
Competitive Generic Offer Period and continuing until the
termination of this Agreement or thereafter, if applicable
in accordance with Section 7.3(d), the "Full Competitive
Generic Adjustment Period"), the lesser of (i) the sum of
(A) the Day 1 URL/MUTUAL Inventory and (B) the quantity of
COLLAGENEX Supplied Product shipped by COLLAGENEX to
18
URL/MUTUAL during the relevant Competitive Generic Offer
Period and (ii) the URL/MUTUAL Inventory Risk Limit.
3. "Maximum Credit" means, with respect to either a Competitive
Generic Offer Period which is terminated other than by a
Competitive Generic Entry or a Full Competitive Generic
Adjustment Period, the difference between (a) the product of
(I) [**] and (II) the [**] and (III) the sum of (A) the
Customer Bottles at Risk and (B) the applicable URL/MUTUAL
Bottles at Risk, and (b) the product of (I) $[**] and (II)
the sum of (A) the Customer Bottles at Risk and (B) the
applicable URL/MUTUAL Bottles at Risk.
4. During a Competitive Generic Offer Period or Full
Competitive Generic Adjustment Period, COLLAGENEX shall
provide URL/MUTUAL with credits or rebates equal to the
amount of any retroactive price adjustment, rebate or shelf
stock adjustment requested by URL/MUTUAL's customers and
actually provided by URL/MUTUAL to URL/MUTUAL's customers
with respect to such period for COLLAGENEX Supplied Product
on the shelves of URL/MUTUAL's customers during such period,
which amount shall in no event exceed, in the aggregate for
such period, the applicable Maximum Credit.
5. During a Competitive Generic Offer Period or Full
Competitive Generic Adjustment Period, COLLAGENEX shall
provide rebates and/or credits to URL/MUTUAL so as to reduce
the cost to URL/MUTUAL for the applicable URL/MUTUAL Bottles
at Risk down to a level equal to the
19
greater of (A) [**] or (B) $[**] per Bottle. "URL/MUTUAL
Inventory Risk Limit" means, as of any date following the
date on which the amount of the Initial Quantity in
URL/MUTUAL's warehouse has been reduced to less than one (1)
Month's Supply due to shipments of the COLLAGENEX Supplied
Product to URL/MUTUAL's distributors or other customers, one
(1) Month's Supply of COLLAGENEX Supplied Product, or, prior
to such date, any amount of the Initial Quantity actually in
URL/MUTUAL's warehouse.
6. For the sake of clarity, the Parties agree that, in the
event a Competitive Generic Offer Period is terminated
within [**] consecutive Business Days after COLLAGENEX is
made aware of such shipment and/or availability for
purchase, then the price adjustments provisions in Sections
3.2(b)(4) and 3.2(b)(5) shall apply only to those claims for
retroactive price adjustment, rebate or shelf stock
adjustment requested by URL/MUTUAL's customers, and actually
provided by URL/MUTUAL to URL/MUTUAL's customers, for
Customer Bottles at Risk which claims arose as a result of
such Competitive Generic Offer Period and which claims are
reasonably verifiable, and no price adjustments shall be
given with respect to any claims for retroactive price
adjustment, rebate or shelf stock adjustment requested by
URL/MUTUAL's customers which arose other than as a result of
such Competitive Generic Offer Period, unless
20
there is a subsequent Competitive Generic Offer Period, in
which case the provisions of this Section 3.2(b) shall again
apply.
7. To ensure that the price adjustment provisions in this
Section 3.2 are applied to no more than the Customer Bottles
at Risk and URL/MUTUAL Bottles at Risk, URL/MUTUAL shall
provide to COLLAGENEX, during a Full Competitive Generic
Adjustment Period, monthly reports within [**]Business Days
after the end of each calendar month, in the form attached
as Exhibit A, specifying for each URL/MUTUAL customer (a)
the quantity of COLLAGENEX Supplied Product in such
customer's inventory, based on that customer's most recent
request(s) for retroactive price adjustment, rebate or shelf
stock adjustment which was actually paid by URL/MUTUAL
(which, for the sake of clarity, the Parties agree may have
been requested by such customer during a prior calendar
month but not requested by such customer and/or paid by
URL/MUTUAL until the calendar month for which the report is
being delivered), along with the price(s) at which the
COLLAGENEX Supplied Product in such customer's inventory was
sold to such customer, (b) the quantity of COLLAGENEX
Supplied Product shipped to such customer during such month
and the price at which such quantity was sold to such
customer, and (c) URL/MUTUAL's conclusion of whether such
customer's request(s) for retroactive price adjustment,
rebate or shelf stock adjustment are correct and whether
such request(s) are subject to credits or rebates to
URL/MUTUAL from COLLAGENEX pursuant to this Section
21
3.2(b). In addition, URL/MUTUAL shall include with such
report a count of the number of Bottles which remain
eligible for adjustment pursuant to Section 3.2(b)(4) or
3.2(b)(5) at the end of such calendar month.
8. In the event that a Competitive Generic Offer Period is
terminated within [**] consecutive Business Days after
COLLAGENEX is made aware of such shipment and/or
availability for purchase, then the maximum amount of
credits or rebates available to URL/MUTUAL in the event of a
subsequent Competitive Generic Offer Period shall be reset
at the full amount of the Maximum Credit, and the amounts of
credits or rebates previously provided by COLLAGENEX to
URL/MUTUAL shall not be applied toward the Maximum Credit
available to URL/MUTUAL in connection with subsequent
Competitive Generic Offer Periods or Full Competitive
Generic Adjustment Period.
9. In order to permit the tracking of compliance with the price
adjustment provisions of this Section 3.5(b), following the
Supply Term URL/MUTUAL shall ship to its distributors or
other customers any COLLAGENEX Supplied Product in its
inventory before it ships any other Product to its
distributors or other customers.
(c) URL/MUTUAL shall request any adjustment in price pursuant to
Section 3.2(b) by providing written notification and documentation to
COLLAGENEX, which shall be in the form of written documentation from
URL/MUTUAL's customers requesting such retroactive price adjustments,
rebates or shelf stock adjustments. COLLAGENEX shall have the right to
review all materials relied upon by URL/MUTUAL in calculating the
deduction.
22
URL/MUTUAL hereby consents to COLLAGENEX seeking wholesale "Sales Out"
reports from URL/MUTUAL's customers, at COLLAGENEX's expense. URL/MUTUAL
makes no representation or warranty that COLLAGENEX will be able to get
such wholesale "Sales Out" reports from such URL/MUTUAL customers.
Section 3.3 Method of Payment. URL/MUTUAL shall make all payments to
COLLAGENEX, and COLLAGENEX shall make all payments to URL/MUTUAL, in lawful
money of the United States by check in accordance with Section 9.9 (provided
that any payment made by check must be received by the receiving Party on or
before the date such payment is due pursuant to this Agreement), or by
electronic transfer to the following account or to an account designated in
writing in accordance with Section 9.9 by COLLAGENEX or URL/MUTUAL,
respectively, or by such other means as may be agreed in advance by both
Parties.
Payments To CollaGenex:
----------------------
RECEIVING BANK
NAME AND ADDRESS: Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA 95054
RECEIVING BANK
ROUTING #: 121140399
ACCOUNT #: [**]
ACCOUNT NAME: CollaGenex Pharmaceuticals, Inc.
Payments To Mutual:
------------------
RECEIVING BANK
NAME: Wachovia Bank, NA
RECEIVING BANK
ROUTING #: 031201467
ACCOUNT #: [**]
23
ACCOUNT NAME: Mutual Pharmaceutical Company, Inc.
Section 3.4 Taxes. All taxes and duties (and any related penalties or
interest) imposed on any payment by URL/MUTUAL to COLLAGENEX shall be the
responsibility of URL/MUTUAL, excluding any taxes and duties imposed on the net
income of COLLAGENEX. URL/MUTUAL and COLLAGENEX shall bear sole responsibility
for payment of compensation to their respective personnel, employees or
subcontractors and for all employment taxes and withholding with respect to such
compensation pursuant to Applicable Law.
Section 3.5 Interest on Overdue Amounts. All payments not paid when due
shall bear interest at a rate which is the lesser of: (a) 12% per annum; or (b)
the maximum lawful interest rate permitted under applicable law. Such interest
shall accrue on the balance of unpaid amounts from time to time outstanding from
the date on which portions of such amounts become due and owing until payment
thereof in full.
Section 3.6 Sale Price. URL/MUTUAL, in its sole discretion, shall determine
the sales price of the COLLAGENEX Supplied Products sold by URL/MUTUAL to its
customers. ARTICLE IV - SUPPLY
Section 4.1 Supply Term.
(a) COLLAGENEX shall supply URL/MUTUAL with [**] Bottles of the
Initial Quantity of CollaGenex Supplied Product (the "Initial Shipment") on
or before the later of (i) April 8, 2004 and (ii) [**] Business Days after
the Effective Date (the "Initial Shipment Date"). COLLAGENEX shall supply
URL/MUTUAL with [**] Bottles of the Initial Quantity of CollaGenex Supplied
Product (the "Second Shipment") on or before the later of (i) [**] and (ii)
[**] Business Days after the Effective Date (the "Second Shipment Date").
COLLAGENEX understands that URL/Mutual expects to begin to
24
supply COLLAGENEX Supplied Product for sale to URL/MUTUAL's
distributors and other customers in the Territory pursuant to the
provisions of this Agreement on or about April 8, 2004; provided,
however, that if the Effective Date does not occur before April 8,
2004, then COLLAGENEX shall not be required to ship the Initial
Quantity until [**] days after the Effective Date. The provisions of
Section 4.2(d)(ii) shall apply to any delays in the shipments of the
Initial Shipment or the Second Shipment. URL/MUTUAL shall use its
commercially reasonable efforts to sell COLLAGENEX Supplied Product to
its distributors and other customers in the Territory, which sales
shall be solely pursuant to the terms hereof during the Supply Term.
(b) Upon the written request of URL/MUTUAL in the event of a
Competitive Generic Entry, the Supply Term may be extended up to [**] days
beyond the otherwise applicable Supply Termination Date in order for
URL/MUTUAL to engage in the necessary ordering and production activities to
support the launch of the URL/MUTUAL Product provided that neither URL nor
Mutual is, at the time of such request, in material breach of any of its
obligations under the terms of the Agreement and provided that the Supply
Term shall, under no circumstances, be deemed to extend past the expiration
of the Patents or the earlier final determination by a court of competent
jurisdiction, from which no appeal has been taken or all appeals have been
exhausted, adjudicating the Patents to be invalid or unenforceable.
(c) The Parties agree that URL/MUTUAL shall not be obligated to accept
any COLLAGENEX Supplied Product for which the expiration date is less than
[**] months after the date shipped by COLLAGENEX.
25
Section 4.2 Supply Terms.
(a) Sole Supply.
(i) URL/MUTUAL hereby agrees and acknowledges that, during the
Supply Term, it shall receive one hundred percent (100%) of its
requirements of Product for sale in the Territory from COLLAGENEX (or
its Affiliates) pursuant to this Agreement. For the avoidance of
doubt, URL/MUTUAL hereby agrees and acknowledges that, during the
Supply Term, it shall not repackage COLLAGENEX Supplied Product, nor
any URL/MUTUAL Product or other product, as a generic version of
Periostat nor as a URL/MUTUAL branded version of a Product. Any breach
by URL/MUTUAL of any of its obligations pursuant to this Section
4.2(a)(i) shall be a material breach of this Agreement, and COLLAGENEX
shall have the right to terminate this Agreement immediately by
providing written notice to URL/MUTUAL of such breach.
(ii) Further, URL/MUTUAL hereby agrees and acknowledges that it
shall not market, sell or pre-book orders for COLLAGENEX Supplied
Product prior to the issuance of the Formal Press Release as described
in Section 6.4.
(iii) COLLAGENEX hereby agrees and acknowledges that it (and its
Affiliates) shall not sell or supply Product manufactured pursuant to
the COLLAGENEX NDA in generic trade dress to any Third Party for
distribution or sale in the Territory during the Supply Term.
(b) Specifications and Supply. COLLAGENEX hereby warrants that all
COLLAGENEX Supplied Product shall be in fully finished form, labeled and
packaged for supply to the ultimate consumer. COLLAGENEX further warrants
that all COLLAGENEX Supplied Product shall be white or off-white in color
and embossed with the URL/MUTUAL
26
imprint as has been provided to COLLAGENEX by URL/MUTUAL and mutually
agreed by the Parties.
(c) Ordering/Safety Stock.
(i) Beginning [**] and continuing through the earlier of the
Supply Termination Date or [**], COLLAGENEX shall maintain, at its own
risk and expense, [**] Supply of COLLAGENEX Supplied Product (the
"COLLAGENEX Safety Stock"); provided, however, that URL/MUTUAL agrees
and acknowledges that the COLLAGENEX Safety Stock shall be reduced
from time to time below [**] Supply by Firm Orders placed by
URL/MUTUAL in accordance with Section 4.2(c)(ii) and provided further
that COLLAGENEX shall only be obligated to place orders to replenish
such COLLAGENEX Safety Stock once such COLLAGENEX Safety Stock has
fallen to a [**] Supply, although COLLAGENEX may, in its sole
discretion, replenish such COLLAGENEX Safety Stock sooner and may, in
its sole discretion, maintain more than [**] Supply of COLLAGENEX
Supplied Product as COLLAGENEX Safety Stock. COLLAGENEX's failure to
reorder COLLAGENEX Supplied Product from its suppliers on or before
the date on which such COLLAGENEX Safety Stock falls to a [**] Supply
shall constitute a material breach of this Agreement. In the event of
such failure, URL/MUTUAL shall have the right, as its sole remedy and
COLLAGENEX's exclusive liability, to terminate the Supply Term if
COLLAGENEX does not cure such failure within [**] Business Days after
COLLAGENEX's receipt of URL/MUTUAL's written notice of such failure.
COLLAGENEX shall, upon the reasonable request of URL/MUTUAL from time
to time, inform URL/MUTUAL with respect to the then-current levels of
COLLAGENEX Safety Stock. The Parties agree and acknowledge that, as
long as COLLAGENEX places orders, for
27
delivery to COLLAGENEX within [**] calendar days after COLLAGENEX
Safety Stock has fallen to a [**] Supply, to replenish the COLLAGENEX
Safety Stock to the level of a total of [**] Supply when (or before)
such COLLAGENEX Safety Stock has fallen to a [**] Supply, then
COLLAGENEX shall not be in breach of this Agreement if the level of
Safety Stock falls below [**] Supply.
(ii) Starting on the later of [**] or the date on which the
amount of the Initial Quantity in URL/MUTUAL's warehouse has been
reduced to less than [**] Supply due to shipments of the COLLAGENEX
Supplied Product to URL/MUTUAL's distributors or other customers, and
thereafter from time to time during the Supply Term, URL/MUTUAL shall
have the right to place binding purchase orders for quantities of the
COLLAGENEX Safety Stock for shipment by COLLAGENEX within [**]
Business Days, and delivery to URL/MUTUAL's warehouse in Philadelphia,
Pennsylvania within [**] Business Days after the order is shipped
(each, a "Firm Order"), provided, however, that, as of any date,
URL/MUTUAL shall order no more than the quantities then required to be
maintained as COLLAGENEX Safety Stock as described in Section
4.2(c)(i) and provided that URL/MUTUAL shall not place orders which
are to be shipped by COLLAGENEX more than [**] Business Days after the
date on which URL/MUTUAL placed the order. URL/MUTUAL shall be
required to accept and pay for [**]% of all COLLAGENEX Supplied
Product described in a Firm Order. URL/MUTUAL shall not place any
single Firm Order for more than [**] Supply; and, if URL/MUTUAL does
place a single Firm Order for more than [**] Supply, COLLAGENEX shall
not accept such Firm Order without getting additional confirmation
from URL/MUTUAL. In the event that a force majeure condition described
in Section 9.3 prevents CollaGenex's suppliers from supplying
28
COLLAGENEX with sufficient Product to permit COLLAGENEX to
simultaneously fulfill its obligations to maintain Safety Stock in
accordance with Section 4.2(c)(i) and obtain sufficient quantity of
Product for COLLAGENEX's own sales, COLLAGENEX shall use commercially
reasonable efforts to reallocate the orders placed with the affected
supplier(s) to allocate the amount of Product able to be produced by
such supplier(s) to each of COLLAGENEX and URL/Mutual in proportion to
the sales of Product made by COLLAGENEX and URL/MUTUAL, respectively,
during the calendar month immediately preceding the start of such
force majeure condition; provided, however, that in no event shall
COLLAGENEX be obligated to provide URL/MUTUAL with Product imprinted
with the COLLAGENEX imprint.
(iii) Notwithstanding anything to the contrary, URL/MUTUAL's Firm
Orders for COLLAGENEX Supplied Product from COLLAGENEX shall be in
full batch quantities of [**] Boxes (equivalent to [**] Bottles or
[**] tablets) or full multiples thereof. Except with respect to a
return pursuant to Section 4.2(h), URL/MUTUAL may not return, nor
receive a refund for, COLLAGENEX Supplied Product to COLLAGENEX for
any reason.
(iv) Upon the termination of the Supply Term due to a material
breach of this Agreement by COLLAGENEX that is not cured within the
time frames set forth in Section 7, Section 4.2(c)(i), Section
4.2(d)(ii) or Section 4.2(g), as applicable, or a final determination
by a court of competent jurisdiction, from which no appeal has been
taken or all appeals have been exhausted, adjudicating the Patents to
be invalid or unenforceable, URL/MUTUAL shall, if requested by
COLLAGENEX, accept delivery of all COLLAGENEX Supplied Product subject
to Firm Orders which is already manufactured but not yet delivered,
and purchase and accept delivery of all COLLAGENEX Supplied Product
which is subject to
29
non-cancellable orders placed with COLLAGENEX's manufacturers
(provided, however, that COLLAGENEX shall use commercially reasonable
efforts to try to cancel such orders) and up to [**] Supply of the
available COLLAGENEX Safety Stock, in each case at a price equal to
the lesser of (A) $[**] per Bottle or (B) $[**] less than the
applicable URL/MUTUAL Weighted Average Selling Price.
(v) URL/MUTUAL shall provide COLLAGENEX with the artwork for
tooling for the manufacturing process and for all labels, packaging,
and product inserts, which shall be subject to the mutual approval of
the Parties and, to the extent so approved, each Party (the "Non-TM
Party") is permitted to use the trademarks of the other Party (the "TM
Party") solely to reproduce and distribute the labels, packaging and
product inserts with the COLLAGENEX Supplied Product. All rights,
including goodwill, based on a Non-TM Party's use of the TM Party's
trademark shall inure to the benefit of such TM Party. The Non-TM
Party shall (a) use the TM Party's trademark in compliance with all
Applicable Law, (b) not modify the TM Party's trademark in any way,
and (c) not use the TM Party's trademark in connection with any other
goods or services other than the COLLAGENEX Supplied Product. As
stated in this Agreement, COLLAGENEX shall be responsible for the
nature and quality of the COLLAGENEX Supplied Product. Artwork and
tooling will be at COLLAGENEX's expense. Delivery of all COLLAGENEX
Supplied Product from COLLAGENEX or COLLAGENEX's contract manufacturer
to URL/MUTUAL shall be CIP Philadelphia, Pennsylvania (Incoterms
2000).
(d) Initial Quantity Delivery and Preparation.
(i) [Reserved for Future Use].
30
(ii) In the event that COLLAGENEX does not deliver the Initial
Shipment of the Initial Quantity of the COLLAGENEX Supplied Product to
URL/MUTUAL on or before the Initial Shipment Date or the Second
Shipment on or before the Second Shipment Date, (A) URL/MUTUAL may
receive as liquidated damages an amount of $[**] for each day, after
the Initial Shipment Date or the Second Shipment Date, as applicable,
until the entire Initial Shipment or Second Shipment, as applicable,
has been received by URL/MUTUAL, and (B) subject to the provisions of
Section 9.3, COLLAGENEX shall be deemed to be in material breach of
this Agreement. The Parties acknowledge that the amount of liquidated
damages is reasonable in light of the fact that URL/MUTUAL's damages
may be difficult to fix with precision. In the event of such a breach,
URL/MUTUAL may, as its sole remedy and COLLAGENEX's exclusive
liability in addition to the liquidated damages, terminate the Supply
Term if COLLAGENEX does not cure such failure within [**] Business
Days after COLLAGENEX's receipt of URL/MUTUAL's written notice of such
failure; provided that such termination is effected prior to
URL/MUTUAL's receipt of the delayed Initial Shipment or Second
Shipment, as the case may be. For the sake of clarity, the Parties
agree that if the failure of COLLAGENEX to deliver the Initial
Shipment by the Initial Shipment Date or the Second Shipment by the
Second Shipment Date is due to a force majeure condition described in
Section 9.3, such force majeure condition shall not excuse
COLLAGENEX's obligation to pay liquidated damages as described in this
Section 4.2(d)(ii) but shall delay URL/MUTUAL's right to terminate the
Supply Term until such force majeure condition lasts for at least 180
consecutive days.
(iii) COLLAGENEX and URL/MUTUAL shall use their commercially
reasonable efforts to make all reasonable manufacturing preparations
to enable COLLAGENEX
31
to be able to meet the obligations set forth in Section 4.1(a), and as
of the Execution Date, COLLAGENEX and URL/MUTUAL shall exercise their
reasonable efforts, and shall co-operate with each other, to obtain
all necessary certifications, permits and other registrations required
pursuant to Applicable Law to enable COLLAGENEX to have manufactured
and supply, and URL/MUTUAL to sell, the COLLAGENEX Supplied Product
pursuant to the provisions of this Agreement.
(e) Labeling. The labels, package inserts and trade dress for all
COLLAGENEX Supplied Product shall be approved in advance by COLLAGENEX and
URL/MUTUAL (such approval not to be unreasonably withheld or delayed), and
shall comply with Applicable Law (including the terms of the COLLAGENEX
NDA). Also, COLLAGENEX will notify URL/MUTUAL in writing of any COLLAGENEX
Supplied Product labeling change requirements pursuant to Applicable Law.
Such notification shall be made within a reasonable time period after such
COLLAGENEX Supplied Product labeling change is made.
(f) Manufacturing. COLLAGENEX shall have all COLLAGENEX Supplied
Product manufactured in substantial compliance with Applicable Law,
including cGMP.
(g) Delivery. COLLAGENEX shall ship to URL/MUTUAL all such COLLAGENEX
Supplied Product as may be ordered by URL/MUTUAL under a Firm Order issued
to COLLAGENEX pursuant to this Agreement within [**] Business Days after
COLLAGENEX's receipt of URL/MUTUAL's Firm Order, which orders shall be
shipped from COLLAGENEX Safety Stock in a first-in/first-out manner.
COLLAGENEX's failure to ship substantially all such quantities of
CollaGenex Supplied Product within [**] Business Days after COLLAGENEX's
receipt of the relevant URL/MUTUAL Firm Order shall constitute a material
breach of this Agreement. In the event of such failure, URL/MUTUAL shall
have the
32
right to terminate the Supply Term of this Agreement if COLLAGENEX does not
cure such failure within [**] Business Days after COLLAGENEX's receipt of
URL/MUTUAL's written notice of such failure. Nothing herein shall be
construed as limiting the Parties' ability to mutually agree in writing to
any adjustment to a shipment date without any modification to a then
outstanding Firm Order.
(h) Rejection. COLLAGENEX or its authorized supplier shall provide a
certificate of analysis to URL/MUTUAL for each lot of COLLAGENEX Supplied
Product taken into COLLAGENEX Safety Stock. Within [**] days of receipt of
any COLLAGENEX Supplied Product or the relevant certificate of analysis,
URL/MUTUAL may, if it reasonably suspects that the COLLAGENEX Supplied
Product does not conform to the applicable certificate of analysis,
reasonably request that COLLAGENEX have reperformed the relevant analysis
of such COLLAGENEX Supplied Product to determine whether the COLLAGENEX
Supplied Product conforms to the applicable certificate of analysis. Any
COLLAGENEX Supplied Product for which URL/MUTUAL does not request such
reperformance within [**] days of receipt of shipment shall be deemed
accepted by URL/MUTUAL. COLLAGENEX, upon confirmation, through the
reperformance of the analysis, of the non-conformity of the COLLAGENEX
Supplied Product with the applicable certificate of analysis, shall use its
reasonable commercial efforts to replace the defective COLLAGENEX Supplied
Product, which replacement shall be URL/MUTUAL's sole and exclusive
financial remedy, and COLLAGENEX's exclusive financial liability, with
respect to defective COLLAGENEX Supplied Product, and URL/MUTUAL shall
return the non-conforming COLLAGENEX Supplied Product to COLLAGENEX if such
COLLAGENEX Supplied Product had been received by URL/MUTUAL. COLLAGENEX
shall ship such replacement quantity from the
33
then-available COLLAGENEX Safety Stock in accordance with the provisions of
Section 4.2(g). In the event that the then-available COLLAGENEX Safety
Stock is insufficient to permit COLLAGENEX to ship the entire replacement
quantity, the Parties shall meet and confer in good faith to determine a
mutually acceptable shipment schedule. If COLLAGENEX and URL/MUTUAL do not
agree, following the reperformance of the analysis, on the non-conformity
of COLLAGENEX Supplied Product with the applicable certificate of analysis,
then either Party may refer the matter for final analysis to a specialized
laboratory of national reputation acceptable to both Parties for the
purpose of determining the results. Any determination by such laboratory
shall be binding upon both Parties. The cost of any such reperformance of
the analysis, and, if applicable, the testing and evaluation by an
independent Third Party, shall be borne by URL/MUTUAL if it is determined
that the COLLAGENEX Supplied Product materially conforms to the COLLAGENEX
NDA, and by COLLAGENEX if determined that it does not.
(i) URL/MUTUAL Product Inventory. URL/MUTUAL shall provide to
COLLAGENEX, within [**] days after the Effective Date, an accounting of the
doxycycline hyclate 20 mg tablets in the inventory of URL/MUTUAL, its
Affiliates, suppliers or distributors, other than any COLLAGENEX Supplied
Product (the "Counted Quantity"). COLLAGENEX may, in its discretion and at
its expense, participate in such accounting. In addition, COLLAGENEX may,
at its expense, from time to time during the Supply Term upon reasonable
notice to URL/MUTUAL conduct an audit, during normal business hours, of the
books and facilities of URL/MUTUAL, its Affiliates and suppliers, in order
to determine the quantity of doxycycline hyclate 20 mg tablets in their
inventory. During the Supply Term, URL/MUTUAL and its Affiliates shall
retain all doxycycline hyclate 20 mg tablets (other than COLLAGENEX
Supplied Product) in the inventory of the URL/MUTUAL facilities at 1100
Orthodox Street or 4629 Adams Avenue in Philadelphia, Pennsylvania, and
URL/MUTUAL and its Affiliates shall not transfer, market or sell
doxycycline hyclate 20 mg tablets (other than COLLAGENEX
34
Supplied Product) from their inventory, except that URL/MUTUAL and its
Affiliates may transfer such doxycycline hyclate 20 mg tablets from their
inventory solely to a destruction facility for purposes of destruction. If
URL/MUTUAL or its Affiliates have transferred, marketed or sold doxycycline
hyclate 20 mg tablets (other than COLLAGENEX Supplied Product) from their
inventory other than for the documented destruction thereof or any audit
reveals a more than immaterial discrepancy between the actual quantity of
doxycycline hyclate 20 mg tablets in their inventory (other than COLLAGENEX
Supplied Product) and the Counted Quantity (except to the extent
doxycycline hyclate 20 mg tablets in inventory has been destroyed and such
destruction is reasonably documented), URL/MUTUAL shall be in material
breach of this Agreement, and COLLAGENEX shall have the right to terminate
this Agreement immediately by providing written notice to URL/MUTUAL of
such breach.
Section 4.3 Pharmacovigilance
(a) URL/MUTUAL shall promptly notify COLLAGENEX (with such notice made
to the contact listed below) of all information coming into its possession
concerning adverse event reports within the scope of 21 C.F.R. ss.
314.80(c)(iii) associated with commercial or clinical uses, studies,
investigations or tests with COLLAGENEX Supplied Product (animal or human),
throughout the world, whether or not determined to be attributable to
COLLAGENEX Supplied Product ("Adverse Event Reports"), and URL/MUTUAL shall
use reasonable commercial efforts to transmit such Adverse Event Reports to
COLLAGENEX in a timely manner after receipt by URL/MUTUAL, and within such
reporting period(s) as may be required
35
by Applicable Law. COLLAGENEX shall promptly notify URL/MUTUAL of any
Adverse Event Reports that require the cessation or substantial alteration
of the activities contemplated under this Agreement. URL/MUTUAL shall
submit all Adverse Event Reports to: Mark Coyne, or such replacement
designated by COLLAGENEX in accordance with Section 9.9. URL/MUTUAL shall
also cooperate, if reasonably requested by COLLAGENEX, in obtaining any
additional information that may bear upon any Adverse Event Reports.
(b) COLLAGENEX shall be responsible for processing and submitting to
the applicable authorities or agencies all Adverse Event Reports regarding
COLLAGENEX Supplied Product.
ARTICLE V - REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties. Each of COLLAGENEX and
URL/MUTUAL hereby represent, warrant and covenant to the other Party as of the
Execution Date, as follows:
(a) It is an entity duty organized, validly existing and is in good
standing under the laws of its jurisdictions of formation, and has all
requisite power and authority, corporate or otherwise, to execute, deliver
and perform this Agreement.
(b) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action and do not and will
not (i) require any consent or approval of its stockholders, (ii) violate
any provision of any Applicable Law or any provision of its certificate of
incorporation, by-laws or other founding document, or (iii) result in a
breach of or constitute a default under any material agreement, mortgage,
lease, license, permit or other instrument or obligation to which it is a
party or by which it or its properties may be bound or affected.
36
(c) It is not currently debarred, suspended or otherwise excluded by
any government agency from receiving government contracts, nor is it or any
of its employees disbarred under the applicable provisions of the Food,
Drug, and Cosmetic Act.
(d) It is not under any obligation, contractual or otherwise, to any
Third Party that is conflicting or inconsistent in any material respect
with the terms of this Agreement or that would impede the diligent and
complete fulfillment of its obligations hereunder.
(e) This Agreement is a legal, valid and binding obligation
enforceable against it in accordance with its terms and conditions, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect,
affecting creditor's rights generally.
Section 5.2 Representation. COLLAGENEX represents to URL/MUTUAL as of the
Execution Date that the expiration date for doxycycline hyclate 20 mg immediate
release tablet approved under the COLLAGENEX NDA is three (3) years from the
date of manufacture.
Section 5.3 Representations/Covenants.
(a) In no event shall either Party be required to conduct any
activities or undertake any actions hereunder that are contrary to
Applicable Law.
(b) Each of COLLAGENEX and URL/MUTUAL agrees, represents and covenants
it shall cause its employees responsible for the supply, distribution, sale
or promotion of Product in the Territory to act in a professional, ethical
and lawful manner and consistent with the same diligence used with regard
to other products marketed by COLLAGENEX and URL/MUTUAL, respectively.
(c) URL/MUTUAL agrees, represents and covenants it shall use its best
efforts to ensure that its employees responsible for the distribution, sale
or promotion of Product
37
in the Territory shall not make any statement, representation or warranty,
oral or written, to any Third Party concerning use of Product that is
inconsistent with, or contrary to, the then-applicable approved FDA
labeling for Product.
(d) [Reserved for Future Use].
(e) [Reserved for Future Use].
(f) COLLAGENEX shall, within [**] Business Days after COLLAGENEX's
receipt thereof, inform URL/MUTUAL of any adverse manufacturing notice to
COLLAGENEX or its manufacturer affecting the manufacture of COLLAGENEX
Supplied Product including an FDA Form 483, warning letter, a consent
decree, or other regulatory action.
(g) Each of COLLAGENEX and URL/MUTUAL hereby agrees, represents, and
covenants to the other Party that it will not, after the Execution Date but
during the Term, enter into any obligation, contractual or otherwise, to
any Third Party that is conflicting or inconsistent in any material respect
with the terms of this Agreement or that would impede the diligent and
complete fulfillment of its obligations hereunder. (h) COLLAGENEX shall
not, during the Supply Term, withdraw the COLLAGENEX NDA or request that
the FDA place the COLLAGENEX NDA on FDA's list of discontinued products,
provided, however, COLLAGENEX shall be entitled to withdraw such NDA: (i)
pursuant to an FDA (or other regulatory agency) request, advisory or order
to withdraw such NDA; or (ii) or upon a determination by the FDA that the
COLLAGENEX Supplied Product is not safe, or effective for use in accordance
with the approved label.
(i) In the event that COLLAGENEX elects to reintroduce, sell, offer
for sale or manufacture doxycycline hyclate 20 mg capsules in the United
States, or to license the rights to
38
undertake such activities to any Third Party, COLLAGENEX shall first offer
the rights to undertake such activities to URL/MUTUAL on terms no less
favorable that those provided to URL/MUTUAL under the terms of this
Agreement with respect to the COLLAGENEX Supplied Product. Nothing in this
Agreement shall permit URL/MUTUAL to import into the Territory any
doxycycline hyclate 20 mg capsules from outside the United States nor to
resell in the Territory any doxycycline hyclate 20 mg capsules imported
from outside the United States.
(j) The Parties shall supply each other with such data relating to the
COLLAGENEX Supplied Product and/or Periostat(R) required for such other
Party's regulatory reporting purposes, which, during the Term of this
Agreement, shall include those relating to AMP, "best price" and baseline
AMP.
(k) Neither COLLAGENEX nor its Affiliates, nor URL, MUTUAL or any of
their Affiliates, whether directly or indirectly, shall cause or attempt to
cause or influence First DataBank, Inc. to list COLLAGENEX Supplied Product
as anything other than a branded product.
Section 5.4 [Reserved for future use].
Section 5.5 Regulatory Matters.
(a) COLLAGENEX warrants that it has an FDA approved NDA for the
COLLAGENEX Supplied Product, and that it has appropriate registrations,
approvals, facilities or suppliers to manufacture or have manufactured the
COLLAGENEX Supplied Product in substantial compliance with Applicable Law,
including cGMP. URL/MUTUAL represents and warrants that, prior to the
Execution Date, it has obtained its own labeler code and its own NDC for
use in connection with the sale of COLLAGENEX Supplied Product pursuant to
the terms and conditions of this Agreement, and has provided such
information to COLLAGENEX as needed for inclusion on the COLLAGENEX
Supplied Product labeling.
39
(b) During the Supply Term, COLLAGENEX shall be responsible for
processing and submitting to the applicable authorities or agencies any
required reporting of matters regarding the manufacture, integrity, and
conformance to specifications of COLLAGENEX Supplied Product.
(c) As between COLLAGENEX and URL/MUTUAL, COLLAGENEX shall be
responsible for handling and responding to any FDA or other governmental
agency inspections with respect to the manufacture of the COLLAGENEX
Supplied Product supplied to URL/MUTUAL during the Supply Term.
Section 5.6 Business Operations.
(a) Product Complaints. As between COLLAGENEX and URL/MUTUAL,
COLLAGENEX shall have the sole right and responsibility in the Territory
for responding to quality complaints relating to COLLAGENEX Supplied
Product. URL/MUTUAL shall promptly refer any such quality complaints it
receives regarding COLLAGENEX Supplied Product to COLLAGENEX. URL/MUTUAL
shall also cooperate, if reasonably requested by COLLAGENEX, in obtaining
any additional information that may bear upon any such complaints.
(b) Recalls, Withdrawals, Field Alerts and Other Field Corrections.
(i) [Reserved for Future Use]. (ii) URL/MUTUAL shall promptly provide
COLLAGENEX with any information it has or receives concerning any
bacteriological contamination or any chemical, physical, or other change or
deterioration in the COLLAGENEX Supplied Product. COLLAGENEX shall promptly
notify URL/MUTUAL when it is more likely than not that COLLAGENEX will
undertake a recall, product withdrawal or stock recovery with respect to
the
40
COLLAGENEX Supplied Product (a "Product Action"), and shall notify
URL/MUTUAL as promptly as possible if it intends to or has provided a field
alert to FDA. URL/MUTUAL shall undertake whatever assistance may be
reasonably requested by COLLAGENEX to facilitate a Product Action,
including but not limited to ensuring dissemination of information to its
distributors and other customers and administering the retention, return
and disposition of the applicable COLLAGENEX Supplied Product inventory in
the applicable Territory.
(iii)The costs of any Product Actions shall be borne by COLLAGENEX;
provided, however, URL/MUTUAL shall be responsible for those
costs associated with a Product Action to the extent that any
URL/MUTUAL acts, or failure to act, caused such Product Action.
For the avoidance of doubt, the Parties agree that the cost of
any Product Action may include, without limitation, URL/MUTUAL
recall costs and any charges to URL/MUTUAL from its customers
related to their recall procedures, including product costs,
administrative costs, shipping costs, customer notification costs
and the cost of product destruction.
(c) Marketing Materials. URL/MUTUAL shall provide COLLAGENEX with
specimens of mailing pieces and any other labeling or advertising which
URL/MUTUAL devises for promotion of the COLLAGENEX Supplied Product at
least three (3) Business Days before their initial dissemination or
publication. URL/MUTUAL shall submit such specimens to: Chris Powala, VP,
Regulatory, or such replacement designated by COLLAGENEX in accordance with
Section 9.9. COLLAGENEX shall submit each such specimen to FDA with a Form
FDA-2253 at the time of its initial dissemination or publication.
41
Section 5.7 DISCLAIMER OF WARRANTIES.
(a) EXCEPT FOR THE EXPRESS WARRANTIES AND REPRESENTATIONS AND
COVENANTS CONTAINED IN THIS AGREEMENT, NEITHER URL/MUTUAL NOR COLLAGENEX
MAKES, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY WARRANTIES OR
REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, WHETHER IN FACT OR IN LAW,
INCLUDING WITHOUT LIMITATION IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
(b) Nothing in this Agreement shall be construed as:
(i) A warranty or representation by CollaGenex or Foundation as
to the validity or enforceability of the Patents;
(ii) A warranty or representation by CollaGenex or Foundation
that the COLLAGENEX Supplied Product is or will be free from
infringement of patents or other rights of Third Parties;
(iii) A requirement that CollaGenex or Foundation file,
prosecute, or maintain any patent application, or secure or renew any
patent;
(iv) An obligation of CollaGenex or Foundation to bring, defend,
or prosecute actions or suits against Third Parties for infringement
of any patent;
(v) Granting to Mutual and URL, by implication, estoppel, or
otherwise, any licenses or rights under any patent right other than
the Patents, except as provided in Section 2.1(a)(ii); or
(vi) An obligation of any Party to furnish know how or any other
technical information not disclosed in the Patents to any other Party.
42
ARTICLE VI - INTELLECTUAL PROPERTY AND CONFIDENTIAL INFORMATION
Section 6.1 Ownership of Pre-Existing Intellectual Property Rights. Any
intellectual property rights (including patents, patent applications,
copyrights, trade dress and trademarks) owned by either Party prior to the
Execution Date shall remain solely owned by such Party. Except as otherwise
explicitly provided herein, no right, express or implied, is granted by the
Agreement to use in any manner the names "COLLAGENEX," "URL/MUTUAL,"
Periostat(R) or the name of any Party or any Affiliate of any Party.
Section 6.2 Recognition of Validity and Infringement. URL/MUTUAL hereby
acknowledges the validity and enforceability of the Patents and admits that the
manufacture, importation, commercial use, sale or offer for sale of the
URL/MUTUAL Product would infringe the Patents, but for the license herein
granted.
Section 6.3 Confidential Information, Publicity, and Publication.
URL/MUTUAL and COLLAGENEX each hereby recognize and acknowledge that the other
Party's Confidential Information constitutes valuable and confidential
information. Subject to other express provisions of this Agreement, COLLAGENEX
and URL/MUTUAL each agree that during the Term, and for a period of [**] years
after the effective date of termination for any reason of this Agreement or the
date of expiration hereof:
(a) the Parties shall not disclose, directly or indirectly, in any
manner whatsoever to any Third Parties any Confidential Information
received from the other Party (the "Disclosing Party") without first
obtaining the written consent of the Disclosing Party, and the other Party
("Recipient") shall keep confidential, all of the Disclosing Party's
Confidential Information that is disclosed to Recipient. Recipient agrees
to use the same level of care in
42
safeguarding the Disclosing Party's Confidential Information that Recipient
uses with its own confidential information of a similar nature, but in no
event less than reasonable care. Recipient shall restrict disclosure of the
Disclosing Party's Confidential Information solely to those of its
employees or representatives having a need to know such Confidential
Information in order to accomplish the purposes of this Agreement. Each
Party represents that its respective employees and representatives who
shall have access to the Confidential Information of the Disclosing Party
are bound by an agreement to maintain such Confidential Information in
accordance with the confidentiality obligations set forth in this Article
VI.
(b) Recipient shall not use the Disclosing Party's Confidential
Information in any manner whatsoever other than solely in connection with
the performance of its obligations or exercise of its rights under this
Agreement.
(c) Except as expressly set forth herein, Recipient shall not,
directly or indirectly, without the Disclosing Party's prior written
consent, disclose in any manner whatsoever to any Third Party the fact that
the Disclosing Party's Confidential Information exists or has been made
available to Recipient.
(d) In the event Recipient is requested pursuant to, or required by,
Applicable Law, including without limitation the rules or regulations of
the United States Securities and Exchange Commission or similar regulatory
agency in a country other than the United States, or the rules or
regulations of any stock exchange (including without limitation Nasdaq), or
if, in order for the Recipient to defend or prosecute litigation it is
necessary for the Recipient, to disclose any of the Disclosing Party's
Confidential Information, the Recipient shall notify the Disclosing Party
promptly so that the Disclosing Party may seek a protective order or other
appropriate remedy or, in the Disclosing Party's sole discretion, waive
compliance with the
44
confidentiality provisions of this Agreement. At the Disclosing Party's
expense, Recipient shall co-operate in all reasonable respects, in
connection with any reasonable actions to be taken for the foregoing
purpose. In the event that no such protective order or other remedy is
obtained prior to the time at which Recipient is required to make the
disclosure, or that the Disclosing Party waives compliance with the
confidentiality provisions of this Agreement, Recipient is permitted to
disclose the Confidential Information of the Disclosing Party, provided
that Recipient shall, without liability hereunder, furnish only that
portion of the Confidential Information which Recipient is advised by its
counsel is legally required, and Recipient will exercise reasonable efforts
to obtain reliable assurances that confidential treatment will be accorded
the Disclosing Party's Confidential Information.
(e) Upon the date of the expiration or termination of this Agreement
for any reason, either Party may request in writing, and the other Party
shall either: (i) promptly destroy all copies of the requesting Party's
Confidential Information in the possession of the other Party and confirm
such destruction in writing to the requesting Party, or (ii) promptly
deliver to the requesting Party, at the other Party's expense, all copies
of such Confidential Information in the possession of the other Party,
provided, however, the other Party shall be permitted to retain, one (1)
copy of the requesting Party's Confidential Information for the sole
purpose of determining any continuing obligations and rights hereunder.
Additionally, both Parties shall immediately cease all use of the other
Party's Confidential Information, including, without limitation, by
removing all references to such Confidential Information from its analyses,
compilations, studies or other documents except as already disclosed
pursuant to Section 6.3(d) or 6.4. All Confidential Information shall
continue to be subject to the terms of this Agreement for the period set
forth in this Section 6.3.
45
(f) Each Party represents and warrants to the other Party that it
shall have, as of the date of disclosure, the right to disclose its
Confidential Information to the other Party. Each Party may seek to enforce
all rights and legal remedies available under this Article VI or by law,
including, without limitation, injunctive relief, specific performance and
other equitable remedies in the event of a breach of the provisions of this
Article VI by the other Party.
(g) To the extent Recipient is performing its obligations or
exercising its rights through its Affiliates, Recipient may disclose the
Disclosing Party's Confidential Information, without obtaining Disclosing
Party's prior consent, to such Affiliates and shall cause its Affiliates to
observe the terms of this Article VI hereof, and shall be responsible for
any breach of such provisions by any of its Affiliates.
(h) Notwithstanding the provisions of this Article VI, the Parties
agree that nothing contained in this Article VI shall prevent Recipient in
any way whatsoever from disclosing any of the Disclosing Party's
Confidential Information, without obtaining Disclosing Party's prior
consent, to any Third Party through which Recipient is permitted to perform
its obligations or exercise its rights under this Agreement, provided such
Third Party has undertaken an obligation of confidentiality similar to such
obligations contained in Article VI herein with respect to the Disclosing
Party's Confidential Information and Recipient shall be responsible for any
breach of such provisions by any of such Third Parties.
Section 6.4 Nothing in this Agreement shall be construed as preventing or
in any way inhibiting either Party from complying with Applicable Law governing
activities and obligations undertaken pursuant to this Agreement or otherwise
governing such Party, in any manner which it reasonably deems appropriate,
including, for example, by disclosing to regulatory authorities confidential or
other information received from the other Party, subject to Section 6.3(d). In
46
addition, URL/MUTUAL agrees that, in compliance with Applicable Law, COLLAGENEX
is permitted to issue a press release and make any filing required under the
rules or regulations of the United States Securities and Exchange Commission or
similar regulatory agency in a country other than the United States, or the
rules or regulations of any stock exchange (including without limitation
Nasdaq), on or after the Effective Date, to announce the effectiveness of this
Agreement and the settlement of the Pending Actions, without being subject to
the provisions of Section 6.3(d), but in any event COLLAGENEX shall issue a
press release on or before the first (1st) Business Day after the Effective Date
(the "Formal Press Release").
ARTICLE VII - TERM AND TERMINATION
Section 7.1 Term. This Agreement shall become effective as of the Execution
Date and, unless sooner terminated as provided herein, shall automatically
expire as of the date the last of the Patents expires or the earlier final
determination by a court of competent jurisdiction, from which no appeal has
been taken or all appeals have been exhausted, that the Patents are invalid or
unenforceable (the "Term"), with the exception of those certain obligations of
the parties set forth herein at Section 7.3.
(a) Promptly after the Execution Date, the Parties shall use
commercially reasonable efforts to have the Effective Date occur on or
before April 22, 2004. On and after the Effective Date, the Intellectual
Property Grant set forth in Section 2.1 of this Agreement shall also become
effective and shall remain in effect during the Supply Term, and URL/Mutual
shall use its reasonable commercial efforts to commence marketing the
COLLAGENEX Supplied Product.
(b) [Reserved for Future Use].
47
Section 7.2 Termination.
(a) Termination for Breach. Except as otherwise provided in Section
4.2(a)(i), Section 4.2(i) or this Section 7.2, each Party shall be entitled
to terminate this Agreement by written notice to the other Party in the
event that the other Party shall be in material default or breach of any of
its obligations hereunder, and shall fail to remedy any such default or
breach within sixty (60) days (or, solely with respect to a payment
obligation under this Agreement, thirty (30) days) after notice thereof by
the non-defaulting/non-breaching Party. If such default or breach is not
corrected within the foregoing sixty (60), or thirty (30), day period, as
applicable, the non-breaching Party shall have the right to terminate this
Agreement by giving written notice to the other Parties, provided the
notice of termination is given within six (6) months of the default and
prior to correction of the default.
(b) Termination upon Bankruptcy. Either Party may terminate this
Agreement if, at any time, the other Party shall file in any court or
agency pursuant to any statute or regulation of any state or country, a
petition in bankruptcy or insolvency or for reorganization or for an
arrangement or for the appointment of a receiver or trustee of the Party or
of its assets, or if the other Party proposes a written agreement of
composition or extension of its debts, or if the other Party shall be
served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed with sixty (60) days
after the filing thereof, or if the other Party shall propose, or be a
party to, any dissolution or liquidation of such other Party, or if the
other Party shall make an assignment for the benefit of creditors.
(c) Termination upon Delayed Effective Date.
(i) This entire Agreement may be terminated by COLLAGENEX,
immediately upon written notice to URL/MUTUAL, at any time after April
22, 2004 but prior to
48
the Effective Date if, and only if, the Effective Date does not occur on or
before April 22, 2004 other than as a result of COLLAGENEX's failure to (A)
deliver the Settlement Payment to Hoffmann & Baron as escrow agent, (B)
execute this Agreement, (C) execute the Stipulated Order in the New York
action or (D) execute the Stipulated Order in the Pennsylvania action.
(ii) This entire Agreement may be terminated by URL/MUTUAL,
immediately upon written notice to COLLAGENEX, at any time after April
22, 2004 but prior to the Effective Date if, and only if, the
Effective Date does not occur on or before April 22, 2004 other than
as a result of URL/MUTUAL's failure to (A) execute this Agreement, (B)
execute the Stipulated Order in the New York action, (C) execute the
Stipulated Order in the Pennsylvania action, (D) execute the
Stipulated Order in the FDA action or (E) receive notice from First
DataBank, Inc. that the COLLAGENEX Supplied Product is listed as a
branded product.
(iii) It is expressly understood by the Parties that in the event
of a termination pursuant to this Section 7.2(c), this Agreement shall
be null and void, and the law firm of Hoffmann & Baron, LLP, as escrow
agent, shall return the Settlement Payment to COLLAGENEX and Hoffmann
& Baron, LLP shall not cause the Stipulated Orders to be filed in any
Court. It is further understood by the Parties that the admissions of
infringement, validity and enforceability of the Patents by URL/MUTUAL
set forth in this Agreement, the Settlement Agreement and the
Stipulated Orders have been made by URL/MUTUAL as part of the
consideration for this Agreement and the Settlement Agreement and that
such admissions shall be null and void upon termination of this
Agreement pursuant to this Section 7.2(c) and shall not be used by
COLLAGENEX or Foundation for any purpose, including for the purpose of
establishing liability for infringement, the validity or
enforceability of the patents, or the
49
objective reasonableness of the assertion of the patents against URL/MUTUAL
in any litigation between or among the Parties.
(d) For the sake of clarity, the Parties acknowledge that the
termination of the Supply Term may, under certain circumstances, occur
prior to the termination of the Agreement, and that the termination of the
Supply Term, in and of itself, does not terminate this Agreement.
Section 7.3 Effect of Termination.
(a) Upon the expiration of this Agreement or the termination of this
Agreement by COLLAGENEX pursuant to Sections 4.2(a)(i), 4.2(i), 7.2(a) or
7.2(b), (i) all licenses granted to URL/MUTUAL pursuant to Article II shall
terminate, (ii) URL may retain the Settlement Payment (subject to Section
7.3(e)), (iii) COLLAGENEX may, in its discretion and provided that the
Supply Term had not been terminated prior to the expiration or termination
of this Agreement, require URL/MUTUAL to accept delivery of any undelivered
portions of the Initial Quantity and all quantities of COLLAGENEX Supplied
Product that have been ordered pursuant to a Firm Order (in which event the
relevant provisions of Section 3.1 and Article IV shall survive termination
with respect to such deliveries), or COLLAGENEX may cancel such orders,
(iv) COLLAGENEX may, in its discretion and provided that the Supply Term
had not been terminated prior to the expiration or termination of this
Agreement, require URL/MUTUAL to purchase and accept delivery of all
quantities of COLLAGENEX Supplied Product which are subject to
non-cancellable orders placed with COLLAGENEX's manufacturers (provided,
however, that COLLAGENEX shall use commercially reasonable efforts to try
to cancel such orders) and up to [**] Supply of available COLLAGENEX Safety
Stock, in each case at a price equal to the lesser of (A) $[**] per Bottle
or (B) $[**] less than the applicable URL/MUTUAL Weighted Average Selling
Price, provided, however, that, in the event this clause (iv) is triggered
by the expiration, not the termination, of this Agreement, the total
quantity of COLLAGENEX Supplied Product which COLLAGENEX may require
URL/MUTUAL to purchase and accept delivery of, pursuant to this
50
clause (iv), shall be limited to [**] Supply, and (v) the provisions of
Section 7.3(e) shall apply.
(b) Upon the termination of this Agreement by URL/MUTUAL pursuant to
Sections 7.2(a) or 7.2(b), (i) all licenses granted to URL/MUTUAL pursuant
to Sections 2.2 or 2.3, as applicable, shall continue, (ii) URL may retain
the Settlement Payment (subject to Section 7.3(e)), (iii) if the Supply
Term had not been terminated prior to the expiration or termination of this
Agreement, URL/MUTUAL shall accept delivery of any undelivered portions of
the Initial Quantity, all quantities of COLLAGENEX Supplied Product that
have been ordered pursuant to a Firm Order and, if requested by COLLAGENEX,
URL/MUTUAL shall purchase and accept delivery of all quantities of
COLLAGENEX Supplied Product which are subject to non-cancellable orders
placed with COLLAGENEX's manufacturers (provided, however, that COLLAGENEX
shall use commercially reasonable efforts to try to cancel such orders) and
up to [**] Supply of the available COLLAGENEX Safety Stock (and the
relevant provisions of Section 3.1 and Article IV shall survive termination
with respect to all the foregoing deliveries), provided that, with respect
to this Section 7.3(b)(iii), the purchase price for such COLLAGENEX
Supplied Product shall be reduced to the lesser of (A) $[**] per Bottle or
(B) $[**] less than the applicable URL/MUTUAL Weighted Average Selling
Price, and (iv) the provisions of Section 7.3(e) shall apply.
(c) Upon the termination of this Agreement by any Party pursuant to
Section 7.2(c), (i) all licenses granted to URL/MUTUAL pursuant to Article
II shall terminate, (ii) the Settlement Payment shall be returned to
COLLAGENEX (subject to Section 7.3(e)), (iii) the
51
Initial Quantity and any quantities of COLLAGENEX Supplied Product that
have been ordered pursuant to a Firm Order shall be cancelled or, if any
COLLAGENEX Supplied Product had been received by URL/MUTUAL, returned by
URL/MUTUAL to COLLAGENEX for a full credit to URL/MUTUAL for URL/MUTUAL's
cost for such product, and (iv) the provisions of Section 7.3(e) shall
apply.
(d) Upon the expiration of this Agreement or the termination of this
Agreement by URL/MUTUAL pursuant to Sections 7.2(a) or 7.2(b), the
provisions of Section 3.2 shall survive such expiration or termination.
(e) (i) The expiration or termination of this Agreement in accordance
with the provisions hereof and, the operation of any provisions of this
Section 7.3, shall not in any way prejudice the rights of either Party
against the other accrued or accruing under this Agreement before such
expiration or termination, including, without limitation, the obligations
to pay any amounts owed pursuant to this Agreement, nor otherwise limit the
Parties' remedies that may be otherwise available to them in law or equity.
(ii) Except as otherwise provided in this Section 7.3, expiration
or termination of this Agreement shall terminate all outstanding
obligations and liabilities between the parties arising from this
Agreement except those described in Sections 2.5, 3.3, 3.4, 3.5,
4.2(h), 4.3, Section 5.7, Article VI, this Section 7.3 and Articles
VIII and IX, and, solely with respect to any COLLAGENEX Supplied
Product delivered during the Term or after the Term pursuant to
Sections 7.3(a)(iii), 7.3(a)(iv) or 7.3(b)(iii), Sections 5.3(b),
5.3(c), 5.3(j), 5.3(k), 5.5(c), 5.6(a) and 5.6(b).
52
ARTICLE VIII - INDEMNIFICATION, INSURANCE AND DISPUTE RESOLUTION
Section 8.1. Product Claims: COLLAGENEX and URL/MUTUAL hereby agree:
(a) "Product Claims" shall mean Third Parties' actual or
threatened claims, demands or causes of action that allege negligence,
breach of warranty, and/or strict liability with regard to the
development, testing, labeling, and/or manufacturing of the COLLAGENEX
Supplied Product and that seek monetary or equitable relief for
realized, future or potential personal bodily injuries or deaths
allegedly caused by the use of the COLLAGENEX Supplied Product.
Product Claims do not include any actual or threatened claims, demands
or causes of action associated with, related to or arising from (i)
URL/MUTUAL Product, or (ii) the marketing or sales activities of
URL/MUTUAL or any URL/MUTUAL Party with respect to the COLLAGENEX
Supplied Product, or the negligence or intentional misconduct, or
breach of its obligations hereunder, of URL/MUTUAL or any URL/MUTUAL
Party (a "URL/MUTUAL Negligence Product Claim").
(b) URL/MUTUAL shall provide COLLAGENEX with prompt written
notice of any Product Claims against URL/MUTUAL or a URL/MUTUAL Party
(as defined in Section 8.1(c)), as well as copies of all papers or
other documents received by URL/MUTUAL or a URL/MUTUAL Party that
contain or give notice of such Product Claims, and shall tender its
defense of all Product Claims to COLLAGENEX. Thereafter, COLLAGENEX
shall, in writing, within ten (10) Business Days after receipt of such
URL/MUTUAL notice and tender, advise URL/MUTUAL as to whether it will
accept URL/MUTUAL's tender of any Product Claims, which acceptance
COLLAGENEX shall not unreasonably withhold. Prior to COLLAGENEX's
written acknowledgement and acceptance of URL/MUTUAL's tender,
URL/MUTUAL shall
53
retain the obligation to defend against any Product Claims, which
shall include the obligation to prevent default.
(c) Upon accepting the tender of any Product Claims: (i)
COLLAGENEX agrees to defend and indemnify URL/MUTUAL, its Affiliates,
and its and their officers, directors, trustees, agents and employees
(individually and/or collectively referred to herein as an "URL/MUTUAL
Party") from and against any and all losses, liabilities, damages
(excluding all special, indirect, incidental, or consequential losses
or damages), expenses and fees (including reasonable attorneys' fees
paid or payable by URL/MUTUAL or a URL/MUTUAL Party to a Third Party
in connection with a Product Claim; and (ii) COLLAGENEX shall have the
exclusive right to control the defense of such Product Claims, which
right shall include, but is not limited to, the right to select legal
counsel of its choice and determine whether to settle and the amount
of any settlement. COLLAGENEX shall use good faith efforts in such
defense, and shall not make any admissions of liability on the part of
URL/MUTUAL or compromise any substantive right of URL/MUTUAL in such
action without URL/MUTUAL's prior written consent, which shall not be
unreasonably withheld or delayed.
(d) URL/MUTUAL agrees to cooperate in good faith with COLLAGENEX
and its legal counsel in the defense of any suit and to provide
COLLAGENEX with any information or other assistance reasonably
requested in a timely manner.
(e) In accepting tender of and agreeing to defend and indemnify
URL/MUTUAL against Product Claims, COLLAGENEX does not waive, and
expressly reserves, its right to contribution from URL/MUTUAL for
monies paid by COLLAGENEX, in whole or part, arising out of conduct by
URL/MUTUAL that is finally determined by a court of
54
competent jurisdiction to have created, or contributed to the creation
of, COLLAGENEX's liability for such Product Claim.
(f) URL/MUTUAL and COLLAGENEX agree that all claims or disputes
asserted by either Party against the other arising from or relating to
a Product Claim, including those for indemnification or contribution,
shall be resolved in accordance with Section 9.7A. Neither URL/MUTUAL
nor COLLAGENEX shall be compelled to assert any claims, cross-claims
or counter-claims against the other in any Product Claims covered or
claimed to be covered by this section 8.1, and neither Party shall
ever argue that the other has waived its right to seek contribution or
other monetary relief by not filing a claim, cross-claim or
counter-claim in any underlying lawsuit or that any later claim
between them should be dismissed or otherwise disposed of because it
should have been raised as a claim, cross-claim or counter-claim in
the underlying lawsuit; provided, however, that any such claim,
cross-claim or counter-claim shall be brought by the Parties within
twelve (12) months after final resolution of the underlying lawsuit.
The Party seeking to mediate or arbitrate any claim or group of claims
under this section 8.1 shall give timely notice thereof, but nothing
herein shall prevent the Parties from agreeing to postpone mediation
or arbitration for any length of time if they believe that doing so is
in their mutual best interest. Further, nothing herein shall prevent
the Parties from mediating or arbitrating multiple claims in a single
aggregated proceeding.
(g) URL/MUTUAL and COLLAGENEX shall each be responsible for its
own attorney's fees and costs arising out of or related to any
mediation or arbitration to resolve any claim for indemnification or
contribution pursuant to this section 8.1.
55
Section 8.2 URL/MUTUAL Product Claims.
(a) URL/MUTUAL agrees to defend, indemnify and hold harmless each
of COLLAGENEX and Foundation, and, with respect to each, its
Affiliates, and its and their officers, directors, trustees, agents
and employees (individually and/or collectively referred to herein as
an "COLLAGENEX Party") from and against any and all losses,
liabilities, damages (including any special, indirect, exemplary,
incidental, or consequential losses or damages), expenses and fees
(including all reasonable attorney's fees and other legal fees and
costs) incurred, suffered, paid or payable by COLLAGENEX, Foundation
or a COLLAGENEX Party in connection with any and all actual or
threatened lawsuits, injunctions, claims, demands or other causes of
action arising from, related to, or associated with a URL/MUTUAL
Product or URL/MUTUAL Negligence Product Claim (either, a "URL/MUTUAL
Product Claim").
(b) COLLAGENEX shall provide URL/MUTUAL with prompt written
notice of any URL/MUTUAL Product Claim against COLLAGENEX or a
COLLAGENEX Party, as well as copies of all papers or other documents
received by COLLAGENEX or a COLLAGENEX Party that contain or give
notice of such URL/MUTUAL Product Claims.
(c) The Parties agree to cooperate with each other and their
respective legal counsel in the defense of any URL/MUTUAL Product
Claim and to provide each other with any information or other
reasonable assistance requested in a timely manner. URL/MUTUAL shall
use good faith efforts in such defense, and shall not make any
admissions of liability on the part of COLLAGENEX or compromise any
substantive right of COLLAGENEX in such action without COLLAGENEX's
prior written consent, which shall not be unreasonably withheld or
delayed.
56
(d) URL/MUTUAL and COLLAGENEX agree that all claims or disputes
asserted by either Party against the other arising from or relating to
a URL/MUTUAL Product Claim, including those for indemnification or
contribution, shall be resolved in accordance with Section 9.7A.
Neither URL/MUTUAL nor COLLAGENEX shall be compelled to assert any
claims, cross-claims or counter-claims against the other in any
URL/MUTUAL Product Claims covered or claimed to be covered by this
section 8.1, and neither Party shall ever argue that the other has
waived its right to seek contribution or other monetary relief by not
filing a claim, cross-claim or counter-claim in any underlying lawsuit
or that any later claim between them should be dismissed or otherwise
disposed of because it should have been raised as a claim, cross-claim
or counter-claim in the underlying lawsuit; provided, however, that
any such claim, cross-claim or counter-claim shall be brought by the
Parties within twelve (12) months after final resolution of the
underlying lawsuit. The Party seeking to mediate or arbitrate any
claim or group of claims under this section 8.2 shall give timely
notice thereof, but nothing herein shall prevent the Parties from
agreeing to postpone mediation or arbitration for any length of time
if they believe that doing so is in their mutual best interest.
Further, nothing herein shall prevent the Parties from mediating or
arbitrating multiple claims in a single aggregated proceeding.
(e) URL/MUTUAL and COLLAGENEX shall each be responsible for its
own attorney's fees and costs arising out of or related to any
mediation or arbitration to resolve any claim for indemnification or
contribution pursuant to this section 8.2.
Section 8.3 Other Claims: This section applies solely to all actual or
threatened claims, demands or causes of action brought by Third Parties and
arising out of, related to, or associated with this Agreement that are not
Product Claims or URL/MUTUAL Product Claims ("Other Claims"). Examples of such
Other Claims (which are not meant to be exhaustive in any
57
way) may include claims of: antitrust violations; fraud or abuse in marketing;
unfair business or trade practices; unfair or discriminatory labor practices;
tortious interference; or violations of any securities laws.
(a) URL/MUTUAL agrees to defend, indemnify and hold harmless
COLLAGENEX, Foundation and any COLLAGENEX Party for any and all
losses, liabilities, damages (including all special, indirect,
exemplary, incidental, or consequential losses or damages), expenses
and fees (exclusive of all legal fees) paid or payable by COLLAGENEX,
Foundation or a COLLAGENEX Party to any Third Party on an Other Claim
that is finally determined by a court of competent jurisdiction to be
attributable to the improper, unlawful or otherwise liability-creating
conduct of URL/MUTUAL and any URL/MUTUAL Party.
(b) COLLAGENEX agrees to defend, indemnify and hold harmless
URL/MUTUAL and any URL/MUTUAL Party for any and all losses,
liabilities, damages (including all special, indirect, exemplary,
incidental, or consequential losses or damages), expenses and fees
(exclusive of all legal fees) paid or payable by URL/MUTUAL and any
URL/MUTUAL Party to any Third Party on an Other Claim that is finally
determined by a court of competent jurisdiction to be attributable to
the improper, unlawful or otherwise liability-creating conduct of
COLLAGENEX or a COLLAGENEX Party.
(c) Any Party seeking to assert a right of indemnification under
this Section 8.3 shall provide the other with prompt written notice of
the Other Claim against it, as well as copies of all papers or other
documents received by it that contain or give notice of such Other
Claims, and shall tender its defense of such Other Claims to the
indemnifying Party in such notice.
58
(d) Any Party granting indemnification under this Section 8.3
shall have the right to control the defense of such Other Claim, which
right shall include, but is not limited to, the right to select legal
counsel of its choice and determine whether to settle and the amount
of any settlement, provided, however, that an indemnified Party may
participate in, but not control, the defense of such Other Claims
using attorneys of its choice and at its sole cost and expense, and
further provided that the indemnifying Party may not settle such Other
Claims in any manner that would require payment by the indemnified
Party, or would materially adversely affect the rights granted to the
indemnified Party under this Agreement, or would materially conflict
with the terms of this Agreement, without first obtaining the
indemnified Party's prior written consent, which consent shall not be
unreasonably withheld or delayed.
(e) URL/MUTUAL and COLLAGENEX are responsible for their own legal
fees (including attorney's fees) and costs arising out of or related
to any Other Claims. URL/MUTUAL and COLLAGENEX are further responsible
for their own attorney's fees and costs arising out of or related to
any mediation or arbitration to resolve any claim for indemnification
or contribution pursuant to this section 8.3.
(f) To the extent the Parties do not have a conflict of interest
with respect to the Other Claim, the Parties agree to cooperate with
each other and their respective legal counsel in the defense of any
Other Claim and to provide each other with any information or other
reasonable assistance requested in a timely manner.
(g) In the event an Other Claim is based partially on a claim
indemnified by one Party and partially on a claim indemnified by the
other Party pursuant to this Section 8.3, any payments incurred in
connection with such claims are to be apportioned between the Parties
in accordance with the degree of cause attributable to each Party.
59
Section 8.3A. Allocation. In the event a claim is based partially on an
indemnified claim described in Sections 8.1, 8.2 or 8.3 and partially on a
non-indemnified claim, or is based partially on a claim described in Section 8.1
or 8.3 and partially on a claim described in Section 8.2 or 8.3, any payments in
connection with such claims are to be apportioned between the Parties in
accordance with the degree of cause attributable to each Party.
Section 8.4. OTHER THAN AS EXPRESSLY SET FORTH HEREIN RELATING TO PRODUCT
CLAIMS, URL/MUTUAL CLAIMS OR OTHER CLAIMS OR WITH RESPECT TO A BREACH OF ARTICLE
VI, IN NO EVENT SHALL EITHER PARTY, ITS DIRECTORS, TRUSTEES, OFFICERS,
EMPLOYEES, AGENTS OR AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT,
INCIDENTAL, PUNITIVE, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED
UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR
OTHER TORT, A PRODUCT CLAIM, OR OTHERWISE ARISING OUT OF OR RELATED TO THIS
AGREEMENT.
Section 8.5 Insurance.
(a) For the Term, and for a period of five (5) years after the
expiration of this Agreement or the earlier termination thereof, both
COLLAGENEX and URL/MUTUAL shall maintain at their respective sole cost
and expense, product liability and other insurance in amounts,
respectively, which are reasonable and customary in the USA
pharmaceutical industry for companies of comparable size and
activities at the respective places of business of COLLAGENEX and
URL/MUTUAL, provided in no event shall the product liability insurance
amounts be less than, with respect to MUTUAL, 10 Million U.S. Dollars
(U.S. $10,000,000) per occurrence (or claim), and, with respect to
URL, 1 Million U.S. Dollars (U.S. $1,000,000) per
60
occurrence (or claim). Such insurance shall insure against all
liability, including personal injury, product liability, physical
injury, clinical development liabilities, or property damage arising
out of the development, manufacture, sale, distribution, or marketing
of, with respect to COLLAGENEX, COLLAGENEX Supplied Product or
Periostat, and, with respect to URL/MUTUAL COLLAGENEX Supplied Product
or URL/MUTUAL Product. Each Party shall provide the other Party with a
certificate of insurance evidencing such insurance within thirty (30)
days after the Effective Date and annually thereafter. Foundation
shall be named as an additional insured on each such insurance policy.
ARTICLE IX - MISCELLANEOUS
Section 9.1 Assignment. This Agreement may not be assigned by either Party
to a Third Party without the prior written consent of the other Parties and
without the execution of a novation reasonably acceptable to the other Parties;
provided, however, that each Party may, without such prior written consent and
without the execution of a novation, assign, to any of its Affiliates, all the
rights, licenses and obligations of such Party under this Agreement, provided
that such Affiliate is fully capable of fulfilling the assigned rights, licenses
and obligations, in which event such assignment shall not be deemed to relieve
the assigning Party of its liabilities or obligations to the other Parties under
this Agreement, and the assigning Party expressly acknowledges and agrees that
it shall remain fully and unconditionally obligated and responsible for the full
and complete performance of all of its obligations under the terms and
conditions of this Agreement. For the sake of clarity, the Parties agree that a
Change of Control of any Party shall not release such Party from its obligations
under this Agreement nor act to terminate this Agreement. Any assignment not in
conformity with the provisions of this Section 9.1 shall be void.
Notwithstanding the foregoing, URL/MUTUAL agrees and acknowledges that
61
COLLAGENEX may use Third Parties to manufacture, label, package and ship the
COLLAGENEX Supplied Product.
Section 9.2 Counterparts. This Agreement may be executed in any number of
counterparts, including originals and facsimile or scanned copies transmitted
electronically, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 9.3 Force Majeure. Neither Party shall lose any rights hereunder or
be liable to the other Party for damages or losses on account of failure of
performance of any obligation (other than a payment obligation) by the
defaulting Party if the failure is occasioned by government action or inaction,
war, other armed hostilities, fire, explosion, earthquake, flood, storm,
drought, epidemics, quarantine restrictions, strike, lockout, embargo, riot,
sabotage, terrorism, invasion, accidents, failure of public utilities, failure
or delay of transportation, unforeseeable shortage of materials or utilities, or
act of God, provided that the Party claiming force majeure has exerted all
reasonable efforts to avoid or remedy such force majeure; provided, however,
that in no event shall a Party be required to settle any labor dispute or
disturbance. Such excuse shall continue as long as the condition preventing the
performance continues; provided that the defaulting Party will no longer be
excused once such condition continues for more than 180 consecutive days. Upon
cessation of such condition, the affected Party shall promptly resume
performance hereunder. Each Party agrees to give the other Party prompt written
notice of the occurrence of any such condition, the nature thereof, and the
extent to which the affected Party will be unable to perform its obligations
hereunder. The affected Party further agrees to use all reasonable efforts to
correct the condition as quickly as possible and to give the other Party prompt
written notice when it is again fully able to perform its obligations.
62
Section 9.4 Further Assurances. Each Party hereto agrees to execute,
acknowledge and deliver such further instruments and do all such further acts as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
Section 9.5 Modification. No waiver, alteration or modification of any of
the provisions hereof shall be binding unless made in writing and signed by the
Parties by their respective officers thereunto duly authorized.
Section 9.6 Independent Contractors. The Parties are independent
contractors and this Agreement shall not constitute or give rise to an
employer-employee, agency, partnership or joint venture relationship among the
Parties and each Party's performance hereunder is that of a separate,
independent entity.
Section 9.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to its conflicts of laws principles.
Section 9.7A Dispute Resolution. Any dispute, controversy or claim arising
out of or relating to this Agreement, or the breach, termination or invalidity
thereof, shall be resolved as follows:
(a) If the senior management of the Parties cannot resolve such
disputes within ten (10) Business Days after either Party requests
such a meeting, then either Party may make a written demand for formal
dispute resolution.
(b) Within fifteen (15) Business Days after such written demand,
the Parties agree to meet for one day with an impartial mediator and
consider dispute resolution alternatives other than litigation or
arbitration. If an alternative method of dispute resolution is not
agreed
63
upon within seven (7) Business Days after such written demand, then at
either Party's option, dispute resolution may be pursued as described
in (c).
(c) Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach, termination or invalidity thereof,
that cannot be settled pursuant to paragraphs (a) or (b), above, shall
be resolved by a Party filing suit in the United States District Court
for the Eastern District of New York within twenty (20) days after
completion of alternative dispute resolution efforts conducted
pursuant to paragraph (b). The Parties stipulate and agree that
personal jurisdiction for resolution of any dispute or controversy
under this Agreement shall be proper, and venue for resolution of any
dispute or controversy under this Agreement shall reside exclusively,
in the United States District Court for the Eastern District of New
York. If suit is not timely filed, or if the court lacks jurisdiction
over the subject matter of the dispute, then the dispute shall be
settled by binding arbitration conducted in the English language in
New York, New York, by one (1) arbitrator experienced in the
pharmaceutical business and mutually agreeable to URL/MUTUAL and
COLLAGENEX, under the commercial arbitration rules of the American
Arbitration Association ("AAA"), which shall administer the
arbitration and act as appointing authority. If the Parties cannot
agree on a single arbitrator within ten (10) Business Days, a panel of
three (3) arbitrators experienced in the pharmaceutical business shall
be selected as follows: each of COLLAGENEX, on the one hand, and
URL/MUTUAL, on the other hand, shall appoint an arbitrator and the two
(2) arbitrators so appointed shall jointly appoint a third arbitrator;
provided, however, that if they cannot agree (or if one Party refuses
to appoint an arbitrator) within thirty (30) days after the initiation
of the arbitration, then this third arbitrator shall be appointed by
the President of the AAA. No past or present employee of, or
consultant to, a Party or of any Affiliate of a Party shall be
selected as an
64
arbitrator. Disputes about arbitration procedure shall be resolved by
the arbitrators or failing agreement, by the AAA in New York, New
York. The arbitrators may proceed to an award notwithstanding the
failure of the other Party to participate in the proceedings.
Discovery shall be limited to mutual exchange of documents relevant to
the dispute, controversy or claim; depositions shall not be permitted
unless agreed to by both Parties. Each Party shall, within thirty (30)
days from the date the panel is complete, submit to the panel and to
the other Party a written statement presenting such Party's position
on the issue. The panel shall, within thirty (30) days after receipt
of both Parties' statements, hold a joint hearing on the issue at
which each Party will have an opportunity to make a presentation,
offer live testimony of witnesses and allow for cross-examination, and
respond to the other Party's presentation. No deposition testimony
will be considered or admitted in the arbitration. Within fifteen (15)
days of the conclusion of the hearing, the panel shall render its
decision in writing, provided that if the arbitrators are unable to
render a decision within such 15-day period, they shall render such
decision as soon thereafter as is practicable. All rulings of the
arbitrators shall be in writing and shall be delivered to the Parties.
The arbitrators shall be authorized to grant interim relief, including
preventing the destruction of goods or documents involved in the
dispute, protect trade secrets and provide for security for a
prospective monetary award. Under no circumstances shall the
arbitrators be authorized to award punitive damages, including but not
limited to federal or state statutes permitting multiple or punitive
damage awards. Any purported award of punitive or multiple damages or
of other damages not permitted under Section 8.4 shall be beyond the
arbitrators' authority, void, and unenforceable. Each Party shall bear
its own costs and attorneys fees expended in pursuing the arbitration.
The award of the arbitrators shall be final and not
65
appealable, and shall be the sole and exclusive remedy of the Parties,
enforceable in any court of competent jurisdiction.
Section 9.8 Article Headings. The Article and Section headings are placed
herein merely as a matter of convenience and shall not affect the construction
or interpretation of any of the provisions of this Agreement.
Section 9.9 Notices. Notices required or permitted under this Agreement
shall be in writing and sent by prepaid registered or certified air mail or by
overnight express mail (e.g., FedEx), or by telefacsimile confirmed by prepaid
registered or certified air mail letter or by overnight express mail (e.g.,
FedEx), (failure of such confirmation shall not affect the validity of such
notice by telefacsimile to the extent the receipt of such notice is confirmed by
the act of the receiving Party (e.g., a telefacsimile of the receiving Party
submitting its receipt of such notice)) and shall be deemed to have been
properly served to the addressee upon receipt of such written communication, to
the following addresses of the Parties:
If to URL/MUTUAL:
----------------
President President
Mutual Pharmaceutical Company, Inc. United Research Laboratories
1100 Orthodox Street 1100 Orthodox Street
Philadelphia, PA 19124-3131 Philadelphia, PA 19124-3131
With a copy to:
--------------
Andrew M. Berdon, Esq. Andrew M. Berdon, Esq.
QUINN EMANUEL, ET AL. QUINN EMANUEL, ET AL.
335 Madison Avenue, 17th 335 Madison Avenue, 17th
New York, New York 10017 New York, New York 10017
If to COLLAGENEX:
Colin Stewart
COLLAGENEX PHARMACEUTICALS, INC.
41 University Drive
Newtown, Pennsylvania 18940
66
With a copy to:
--------------
James C. Burling, Esq.
HALE AND DORR LLP
60 State Street
Boston, Massachusetts 02109
Section 9.10 Third Parties. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any Third Party; provided, however, that
this Agreement shall bind and inure to the benefit of any successors and
permitted assigns of the Parties.
Section 9.11 Waiver. The waiver by either Party of a breach or a default of
any provision of this Agreement by the other Party shall not be construed as a
waiver of any succeeding breach of the same or any other provision, nor shall
any delay or omission on the part of either Party to exercise or avail itself of
any right, power or privilege that it has or may have hereunder operate as a
waiver of any right, power or privilege by such Party.
Section 9.12 Severability. If any part of this Agreement is declared
invalid by any legally governing authority having jurisdiction over either
Party, then such declaration shall not affect the remainder of the Agreement and
the Parties shall revise the invalidated part in a manner that will render such
provision valid without impairing the Parties' original intent.
Section 9.13 Entire Agreement. This Agreement constitutes the entire
agreement between the Parties relating to the subject matter hereof and
supersedes all previous writings and understandings with respect to the subject
matter hereof. The terms of this Agreement shall supersede any conflicting terms
included in any purchase order or invoice. The Parties agree and acknowledge
that the Settlement Agreement, the Consent Agreement and the Stipulated Orders
are being executed on the Execution Date.
[signatures appear on the following page]
67
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of the Execution Date by their duly authorized representatives.
COLLAGENEX PHARMACEUTICALS, INC.
By: /s/ Colin Stewart
------------------------------
Duly Authorized
MUTUAL PHARMACEUTICAL COMPANY, UNITED RESEARCH LABORATORIES,
INC. INC.
By:/s/ Richard H. Roberts, M.D., Ph.D. By:/s/ Richard H. Roberts, M.D., Ph.D.
----------------------------------- -----------------------------------
Duly Authorized Pres & CEO Duly Authorized Pres & CEO
68
EXHIBIT A
Price Adjustment Report Form
Attachment "A"
Section 3.2a.7.
Report to be filed for all customers within [**] business days after the end of
each accounting month
[attached]
Activity for April 2004 Report Date: 05-10-2004
Customer # 123456
Customer Name: Customer #1
Invoice Qty
Invoice # Date NDC Description Shipped U/P
- -----------------------------------------------------------------------------------------------------------------
11111 4/1/2004 5348955001Doxycycline Hyclate Tablets USP 20mg [**] [**]
22222 4/6/2004 5348955001Doxycycline Hyclate Tablets USP 20mg [**] [**]
33333 4/15/2004 5348955001Doxycycline Hyclate Tablets USP 20mg [**] [**]
44444 4/22/2004 5348955001Doxycycline Hyclate Tablets USP 20mg [**] [**]
Total Current Month Shipments [**]
Prior Shipments 0
Total Current Month Shipments [**]
Total Bottles Remaining for Potential
Future Price Devaluation Events [**]
Price Change/Devaluation Event
Effective 05-01-2004 [**]
Customer Reported Inventory As Of
05-01-2004 [**]
Price Difference [**]
Total Price Protection [**]
Customer Request Valid Y
Total Bottles Remaining for Potential
Future Price Devaluation Events [**]
A-1
Activity for April 2004 May-04 Report Date: 06-10-2004
Customer # 123456
Customer Name: Customer #1
Invoice Qty
Invoice # Date NDC Description Shipped U/P
- -----------------------------------------------------------------------------------------------------------------
55555 5/2/2004 5348955001Doxycycline Hyclate Tablets USP 20mg [**] [**]
66666 5/5/2004 5348955001Doxycycline Hyclate Tablets USP 20mg [**] [**]
77777 5/18/2004 5348955001Doxycycline Hyclate Tablets USP 20mg [**] [**]
88888 5/25/2004 5348955001Doxycycline Hyclate Tablets USP 20mg [**] [**]
Total Current Month Shipments [**]
Prior Shipments/Reported Inventory [**]
Total Current Month Shipments [**]
Total Bottles Remaining for Potential
Future Price Devaluation Events [**]
Price Change Effective 05-01-2004 [**]
Customer Reported Inventory [**]
Price Difference [**]
Total Price Protection [**]
Customer Request Valid Y
Total Bottles Remaining for Potential
Future Price Devaluation Events [**]
A-2