Exhibit 10.12
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
This Amended and Restated Distribution Agreement (the "Agreement") is
entered into as of the 1st day of May, 1998 (the "Execution Date") by and among
SANO Corporation, a Florida corporation ("SANO"), Pharmaceutical Resources,
Inc., a New Jersey corporation ("PRI"), and Par Pharmaceutical, Inc., a New
Jersey corporation ("Par").
WHEREAS, SANO, PRI and Par have previously entered into that certain
Amended and Restated Distribution Agreement as of the 28th day of July, 1997
(the "Prior Agreement");
WHEREAS, SANO, PRI and Par wish to amend and restate their agreement
with respect to the subject matter of the Prior Agreement, and supersede the
Prior Agreement in its entirety;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE SUCH OMISSION
ARTICLE I
TERMS AND CONDITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the meaning ascribed to them below:
(a) "Affiliate," as to any Person, shall have the meaning set forth in
Rule 405 under the Securities Act of 1933.
(b) "Costs" shall mean, with respect to production of a Licensed
Product, the cost of goods incurred by SANO in the production thereof determined
in accordance with generally accepted accounting principles applied on a
consistent basis, as determined by SANO's independent certified public
accountants; provided, however, that notwithstanding the foregoing, it being the
intent of the parties that Costs make SANO whole with respect to all reasonable
expenditures related to the Licensed Product, Costs shall include, without
limitation, (i) the delivered cost of all ingredients and other raw materials
used therein, (ii) a percentage of SANO's overall labor cost equal to the
portion which labor hours devoted to the Licensed Product's production bears to
total labor hours devoted to all SANO product production, (iii) packaging and
other direct manufacturing and quality control costs and (iv) ratably allocated
costs of marketing and promotion (if any), product liability insurance and
general overhead; provided, further, that, notwithstanding the foregoing, Costs
shall not include (i) any cost incurred by SANO in completing the Development
Program, (ii) any royalties or similar payments paid or payable by SANO with
respect to any Licensed Product, or (iii) any cost specifically related to the
distribution of the Licensed Product outside the United States; additionally,
(x) with respect to the transdermal nicotine Licensed Product (generic of
Habitrol(R)) described herein as Product B, Costs shall be reduced on a one-time
basis by [****], and (y) with respect to the transdermal nitroglycerin product
(generic of Nitro Dur(R)) described herein as Product A, Costs shall be reduced
on a one-time basis by the sum of the amount set forth as an additional Licensed
Product Fee for that Licensed Product pursuant to Section 7.4 hereof.
(c) "Development Program" shall mean all actions, including, without
limitation, research conducted as a part of SANO's pre-clinical and clinical
activities, which is required or reasonably necessary to obtain all requisite
governmental approvals for the testing, manufacture and sale of Licensed
Products during the term of this Agreement.
(d) "Exclusive" shall mean, with respect to any right herein granted,
that no other party shall have such right, directly or indirectly.
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(e) "Generic" shall mean, with respect to any drug or product, that
such drug or product does not comprise a substance or compound that is covered
by a claim under any unexpired U.S. Patent and/or which is not entitled to any
period of market exclusivity under the Orphan Drug Act or the Drug Price
Competition and Patent Term Restoration Act of 1984 according to 21 U.S.C.A.
355(j)(4)(D)(i)or (ii).
(f) "Licensed Product" shall mean the Transdermal Generic Drug
Delivery Systems listed on Exhibit A hereto. Notwithstanding any references to
Product A herein, Licensed Product shall not include the transdermal
nitroglycerin product(generic of NitroDur(R)) described as Product A, unless and
until (i) SANO obtains approval of its abbreviated new drug application ("ANDA")
by the United States Food and Drug Administration ("FDA") covering Product A and
(ii) PRI elects, by written notice, to include Product A as a Licensed Product.
(g) "Net Sales" shall have the meaning set forth in Exhibit B hereto.
(h) "Person" shall include any individual, corporation, partnership,
association, cooperative, joint venture, or any other form of business entity
recognized under the law.
(i) "Sale" shall mean any action involving selling.
(j) "SANO's Technology" shall mean any and all data, information,
technology, know-how, process, technique, method, skill, proprietary
information, trade secret, development, discovery, and inventions, owned or
controlled by SANO and specifically related to a Transdermal Generic Drug
Delivery System for the Licensed Products now existing or developed in the
future under and during the course of the Development Program or otherwise, as
well as information related to the manufacture of Licensed Product(s) and
specifications and procedures related thereto.
(k) "Sell" shall mean to, directly or indirectly, sell, distribute,
supply, solicit or accept orders for, negotiate for the sale or distribution of,
or take any other action that is in furtherance of any of the foregoing.
(l) "Specifications" shall mean the terms and conditions applicable to
the Licensed Product(s) as described in the ANDA approved by the FDA covering
the Licensed Product(s), as the same may be supplemented from time to time.
(m) "Standard Packaging" shall mean a Licensed Product packaged in
individual pouches and in individual folding cartons consisting of pouch units
per carton reasonably specified by Par and containing any labels and labeling
required therefor by the FDA and provided in packages that are appropriate for
regulatory and marketing purposes, and produced at a SANO facility in the United
States, the grade and quality of the labels, labeling and packaging materials
being as specified in the ANDA therefor.
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(n) "Transdermal Generic Drug Delivery System" shall mean a generic
version of a branded transdermal adhesive patch.
(o) "United States" shall mean the 50 states of the United States of
America, plus the District of Columbia, the Commonwealth of Puerto Rico, the
U.S. Virgin Islands, Guam, Samoa and any other territory which, on the Execution
Date, is a United States government protectorate wherein an ANDA approved by the
FDA is required to sell the Licensed Products in such territory.
ARTICLE II
REPRESENTATIONS OF SANO
2.1 SANO represents and warrants as follows:
2.1.1 Organization, etc. It is duly organized and validly existing
under the laws of the State of Florida, has all requisite power and authority to
conduct its business as now, and as proposed to be, conducted and to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly authorized, executed and delivered by SANO and represents a valid and
binding obligation enforceable against SANO in accordance with its terms.
2.1.2 No Conflicts; Consents. Execution and delivery hereof, or
performance by SANO hereunder, will not (a) violate or create a default under
(i) SANO's Articles of Incorporation or by-laws (true and correct copies of
which have been delivered to Par), (ii) any mortgage, indenture, agreement, note
or other instrument to which it is a party or to which its assets are subject or
(iii) any court order or decree or other governmental directive or (b) result in
the action of any lien, charge or encumbrance on any material portion of SANO's
assets, except as contemplated hereby.
2.1.3 SANO's Technology. SANO's Technology is, to the best knowledge
of SANO, sufficient to enable SANO to complete the Development Program as
contemplated hereby. Except as set forth in Schedule 2.1.3, SANO has received no
notice, and is not aware, that any portion of SANO's Technology infringes upon
the rights of any other Person.
2.1.4 Development Program. SANO has filed an ANDA with respect to each
of the Licensed Products and has no knowledge of any fact or circumstance which
is reasonably likely to prevent approval by the FDA, other than general
conditions related to the approval process; SANO does not hereby represent or
warrant that any Licensed Product will be approved for commercial sale, or will
ultimately be marketed.
2.1.5 Information. All data and other information relating to SANO
and/or the Licensed Products provided by SANO, or its agents, to Par was derived
from SANO's records (which have been diligently, and to the best of SANO's
knowledge, accurately maintained in all material respects) and is an accurate
copy or summary thereof in all material respects.
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2.1.6 Employees. All key employees of SANO have executed appropriate
confidentiality agreements with SANO and assignments of intellectual property
rights in favor of SANO. All key employees of SANO have executed appropriate
non-compete agreements which, by their terms, extended at least until December
31, 2000.
2.1.7 Status. SANO represents and warrants to Par that, to the best of
its knowledge, information and belief, it is not prohibited by any federal,
state or local law, rule or regulation or by any order, directive or policy of
the United States government or any state or local government thereof or any
federal, state or local regulatory agency or authority having jurisdiction with
respect to the distribution of pharmaceutical products within its territorial
jurisdiction from selling the Licensed Products within the territorial
jurisdiction of such government, regulatory agency or authority (on the
assumption that it holds whatever licenses are required for a foreign
corporation to carry on business generally within such jurisdiction) and that
SANO is not an Ineligible Person or Person from whom any United States federal,
state or local government, regulatory authority or agency which purchases
pharmaceutical products (including, without limitation, the federal Defense
Logistics Agency) will or may not purchase any products manufactured by it or
with whom it will or may not otherwise conduct business as a result its being
publicly listed or otherwise (except for the fact that it is a foreign
corporation).
ARTICLE III
OBLIGATIONS OF SANO
3.1 Level of Effort. SANO shall use its reasonable efforts, including,
without limitation, the employment of a sufficient number of technically
qualified officers and employees, to attempt to complete the Development Program
for each Licensed Product.
3.2 Progress Reports. SANO shall, on a monthly basis, by the tenth day
of each month, inform Par in writing of the progress of the Development Program
and the commencement of any project within the Development Program.
3.3 Program Updates. On a date which shall be approximately three (3)
months after the date hereof, and at three-month intervals thereafter,
representatives of SANO and of Par shall meet to review the progress and status
of the Development Program then underway. At such meetings, Par shall have the
right to request the allocation of priorities to the various projects comprising
the Development Program and to suggest procedures for their implementation,
which requests shall be reasonably considered by SANO.
3.4 Supply and Use of Information. The parties shall, as promptly as
possible, provide to each other any information that comes to the knowledge of a
responsible officer of any party relating to any adverse reaction or other
adverse event occasioned during research on, development or use of a Licensed
Product. Any provision of information to Par shall be subject to the
confidentiality obligations of Section 14.4.
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3.5 Clinical Testing. All pre-clinical, clinical and post-clinical
testing and stability testing and other actions, including but not limited to
completion of the Development Program, required to obtain all requisite
government approvals in the United States for the manufacture and sale of each
Licensed Product shall be conducted by SANO, at its expense unless otherwise set
forth herein.
3.6 Governmental Approvals. SANO shall file all appropriate requests
and other filings with the appropriate government agencies within the United
States in order to seek to obtain all requisite approvals for the testing,
manufacture, sale and use of the Licensed Product(s). The decision regarding the
timing of said filings shall be in SANO's sole discretion. SANO shall have full
and complete ownership of all governmental approvals relating to Licensed
Products. SANO shall provide Par with appropriate sections of and a right of
reference to any application for registration in the United States except with
respect to those aspects of any formulation or manufacturing process that is
reasonably deemed proprietary by SANO.
3.7 Other Products. SANO shall reasonably apportion or allocate its
resources among its products to accommodate the Development Programs for
Licensed Products.
3.8 Title. SANO will protect and defend its rights to all Licensed
Products and SANO's Technology, and will indemnify and hold Par, PRI and their
Affiliates, harmless, from and against any claims of infringement or other claim
that SANO is not the owner thereof.
3.9 Subsidiaries and Affiliates. SANO will cause its subsidiaries and
affiliates to comply with the restrictions and limitations imposed on SANO
hereunder with respect to Licensed Products.
ARTICLE IV
EXCLUSIVE DISTRIBUTOR
4.1 Subject to the provisions of this Agreement, SANO hereby appoints
Par as the exclusive distributor of the Licensed Products for the United States
and Par hereby accepts such appointment and agrees to act as such exclusive
distributor. The rights and licenses granted to Par under this Agreement shall
henceforth be referred to as "the Right." Par acknowledges that it has no rights
with respect to SANO's Technology or the Licensed Products, except for the
distribution rights with respect to the Licensed Products as herein described.
4.2 SANO, or Par, as applicable, covenants and agrees that, during the
term of this Agreement or until the Right (or its exclusive nature) is
terminated in accordance with the provisions hereof:
4.2.1 SANO will refer to Par all inquiries concerning potential
purchases of Licensed Products received by it from Persons located in the United
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States or from Persons outside the United States if SANO knows or reasonably
suspects that such Person intends to resell or export the Licensed Product to
the United States;
4.2.2 SANO will not, directly or indirectly, knowingly sell any
Licensed Product in the United States nor to any Person outside of the United
States if SANO reasonably expects that such Person intends to resell or export
the Licensed Product to the United States and, if notified by Par that one of
SANO's customers is selling the Licensed Product in the United States in any
material respect, SANO shall either cease to supply such customer or obtain (and
enforce, if necessary) an undertaking from such customer not to sell the
Licensed Product in the United States (unless SANO is precluded from taking such
action under applicable law). Par acknowledges that SANO will use reasonable
efforts to prevent the sale of Licensed Products in United States by Persons
other than Par, but shall not be held responsible if, despite such efforts, it
is unsuccessful in so doing (subject to its obligations above to cease to supply
or to obtain and enforce the undertaking as and to the extent contemplated
above).
4.2.3 Par shall not, and shall not authorize, permit or suffer any of
its Affiliates to, purchase any Transdermal Generic Drug Delivery System which
has the same strength, contains the same active ingredient and is for the same
indication as, and is competitive with, any of the Licensed Products (a
"Competitive Product") for distribution, sale or use in the United States from
any Person other than SANO. Par shall not, and shall not authorize, permit or
suffer any of its Affiliates to, seek regulatory approval in the United States
for any Competitive Product or to, directly or indirectly, manufacture, sell,
handle, distribute or be financially interested (except as a stockholder with
not greater than a 5% interest in a public company) in the sales of such
products within the United States for its own account or for the account of any
other Person as agent, distributor or otherwise.
Notwithstanding the foregoing, if Par or PRI becomes an Affiliate of
an entity (the "Merger Partner") as a result of a merger, acquisition, or other
similar extraordinary corporate transaction, and such Merger Partner is engaged
in the manufacture or distribution of a Competitive Product, Par shall so notify
SANO and shall offer (the "Offer") to sell, assign and transfer to SANO the
Right with respect to the Licensed Product with which such Competitive Product
is competitive in exchange for an amount equal to the Licensed Product Fee (as
hereinafter defined) for such Licensed Product. If, within thirty (30) days
after its receipt of the Offer, SANO accepts the Offer, SANO shall, within
fifteen (15) days of such acceptance, deliver to Par, against delivery of
appropriate instruments of release and transfer, its promissory note in form and
substance reasonably acceptable to Par, payable to the order of Par, in the
principal amount of the Licensed Product Fee, bearing interest at the prime rate
of Citibank, N.A., as announced from time to time at its offices in New York
City (the "Prime Rate"), with interest and principal payable on the first
anniversary of the date of delivery of such note. From and after the date of
delivery of such note, Par shall have no rights with respect to the relevant
Licensed Product and SANO shall be free to grant any rights related thereto to a
third party or to retain such rights for itself. If SANO declines to accept the
Offer or fails to accept the Offer within the aforesaid 30-day period, this
Agreement shall remain in full force and effect, except that the provisions of
this Section 4.2.3 shall not apply to that Competitive Product. Par shall notify
SANO promptly if any Merger Partner has a Competitive Product.
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4.2.4 Par shall not, and shall not authorize, permit or suffer any of
its Affiliates to, directly or indirectly, sell any Licensed Product to any
Person outside of the United States, nor to any Person in the United States if
Par or any of its Affiliates reasonably expects that such Person intends,
directly or indirectly, to sell or export the Licensed Product outside of the
United States. If Par is notified by SANO that one of its customers or a
customer of Par or any of its Affiliates is exporting the Licensed Product from
the United States in any material respect Par shall (or shall cause its
Affiliates to) either cease to supply such customer or obtain (and enforce, if
necessary) an undertaking from such customer not to sell the Product outside of
the United States (unless Par or any such Affiliate is precluded from taking
such action under applicable law). SANO acknowledges that Par will use (and will
cause its Affiliates to use) reasonable efforts to prevent its customers from
exporting any Licensed Product out of the United States but shall not be held
responsible if, despite such efforts, it is unsuccessful in so doing (subject to
its obligations above to cease to supply or to obtain and enforce the
undertaking as and to the extent contemplated above).
4.2.5 Par shall refer to SANO any inquiry or order for Licensed
Products which Par or any of its Affiliates may receive from any Person located
outside of the United States and from any Person located in the United States
where Par or any of its Affiliates knows or has reason to suspect that such
Person intends to export the Licensed Products outside of the United States.
4.2.6 The parties acknowledge, agree and declare that the relationship
hereby established between Par and SANO is solely that of buyer and seller, that
each is an independent contractor engaged in the operation of its own respective
business, that neither party shall be considered to be the agent of the other
party for any purpose whatsoever, except as otherwise expressly indicated in
this Agreement, and that, except as otherwise expressly indicated in this
Agreement, neither party has any authority to enter into any contract, assume
any obligations or make any warranties or representations on behalf of the other
party. Nothing in this Agreement shall be construed to establish a partnership
or joint venture relationship between or among the parties.
4.2.7 SANO shall not engage in marketing and promotion of the Licensed
Products in the United States unless reasonably requested to do so by Par.
ARTICLE V
REPRESENTATIONS OF PAR AND PRI; OBLIGATIONS
5.1 Par and PRI jointly and severally represent, warrant and covenant
as follows:
5.1.1 Organization, etc. They are duly organized and validly existing
under the laws of the State of New Jersey, have all requisite power and
authority to conduct their business as now and as proposed to be conducted and
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to execute, deliver and perform their obligations under this Agreement. This
Agreement has been duly authorized, executed and delivered by Par and PRI and
represents a valid and binding obligation enforceable against Par and PRI in
accordance with its terms.
5.1.2 No Conflicts; Consents. Execution and delivery hereof, or
performance by either Par or PRI hereunder, will not (a) violate or create a
default under (i) Par's and PRI's Certificates of Incorporation or by-laws (true
and correct copies of which have been delivered to SANO), (ii) any mortgage,
indenture, agreement, note or other instruments to which either is a party or by
which either's assets are subject or (iii) any court order or decree or other
governmental direction or (b) result in the action of any lien, charge or
encumbrance on any material portion of Par's and PRI's assets.
5.1.3 Information. All data and other information relating to Par and
PRI provided to SANO by Par and PRI, or their agents, was derived from Par's and
PRI's records (which have been diligently maintained) and is an accurate copy or
summary thereof in all material respects.
5.1.4 Sufficiency. Par maintains and agrees that it will continue to
maintain those places of business and equipment to be used in storing and
shipping the Licensed Products in accordance with Current Good Manufacturing
Practices of the FDA and all other applicable requirements of the FDA (as the
same may be modified from time to time). Par hereby further represents and
warrants that it currently has and/or has available to it and maintains and
agrees to continue to have and/or to have available to it and maintain an
adequate marketing organization and qualified sales persons to promote the sale
of the Licensed Products in the United States.
5.2 Par shall purchase the Licensed Products from SANO as contemplated
in Article VI hereof.
5.3 Par will use its reasonable efforts (utilizing its marketing,
distribution and management systems and those of its Affiliates) to develop a
market for and sell the Licensed Products in the United States, such efforts to
be not less rigorous than those efforts used by Par in relation to its leading
or principal products. Par shall devote particular attention to the marketing
and sale of the Licensed Products and shall use its resources in a way it deems
most effective in promoting the Licensed Products given market conditions.
5.4 Par shall have sole discretion in setting the sales price for the
sale of the Licensed Products, provided that Par shall not specifically discount
the price of the Licensed Products for the benefit of Par or any of its
Affiliates' other products or to otherwise use the Licensed Products as a loss
leader or incentive to procure the sale of Par's or any of its Affiliates' other
products. Rebate and other discount programs (excluding any program where the
price of the Licensed Products are discounted primarily for the benefit of
enhancing the sale of Par's or any of its Affiliates' other products) generally
available to Par's customers on the purchase of pharmaceutical products shall
not be prohibited by this Section 5.4, provided that such programs shall be in
accordance with industry standards for comparable products and shall be designed
to promote the sale of the Licensed Products and not other products.
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5.5 Par shall comply with all applicable laws, rules and regulations
relating to transporting, storing, advertising, promoting and selling of the
Licensed Products within the United States and shall assume sole responsibility
for all credit risks and collection of receivables with respect to Licensed
Products sold by it and its Affiliates, and, except as expressly provided
herein, in respect of all dealings between itself (and its Affiliates) and its
(and their) customers.
5.6 Par shall notify SANO promptly upon becoming aware of any adverse
information relating to the safety or effectiveness of a Licensed Product and
shall consult from time to time with regard to competition or potentially
competitive products.
5.7 Par hereby further represents and warrants to SANO that, to the
best of its knowledge, information and belief, neither it nor any of its
Affiliates is prohibited by any federal, state or local law, rule or regulation
or by any order, directive or policy of the United States government or any
state or local government thereof or any federal, state or local regulatory
agency or authority having jurisdiction with respect to the distribution of
pharmaceutical products within its territorial jurisdiction from selling the
Licensed Products within the territorial jurisdiction of such government,
regulatory agency or authority and that neither Par nor any of its Affiliates is
a Person who, by public notice, is listed by a United States federal agency as
debarred, suspended, proposed for debarment or otherwise ineligible for federal
programs in the United States (an "Ineligible Person") or Person from whom any
United States federal, state or local government, regulatory authority or agency
which purchases pharmaceutical products (including, without limitation, the
federal Defense Logistics Agency) will or may not purchase any products or with
whom it will or may not otherwise conduct business as a result of any of its
Affiliates or Par being publicly listed or otherwise.
ARTICLE VI
DELIVERY
6.1 Licensed Products shall be made available to PRI for pickup ready
for shipment in Standard Packaging, or as otherwise permitted by the FDA, at
SANO's facilities located in Plantation, Florida, or such other facilities in
the continental United States as SANO may utilize with the consent of Par, which
consent shall not be unreasonably withheld or delayed, and SANO shall use its
reasonable efforts to make available to Par sufficient quantities of the
Licensed Products to satisfy orders for the Licensed Products. SANO shall be
solely responsible for the contents of the labels and artwork on all finished
labeled products sold by PRI and its Affiliates. SANO shall provide all Standard
Packaging for the Licensed Products.
6.2 To assist SANO in scheduling production for the manufacture of the
Licensed Products, Par shall provide to SANO, quarterly, a nine month rolling
forecast of its requirements for a Licensed Product. The first forecast shall be
provided by Par to SANO approximately six months prior to the anticipated market
launch of a Licensed Product, as reasonably estimated by the parties, and
thereafter shall be provided to SANO on or before the 20th day of the first
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month of each successive quarterly period (to forecast the requirements for the
next nine succeeding calendar months). It is understood and agreed that all
forecasts are estimates only and Par shall only be bound to purchase the
Licensed Products pursuant to purchase orders submitted by it to SANO. All
purchase orders shall be for minimum batch size quantities reasonably agreed by
the parties and shall anticipate an order/production/availability cycle of
approximately twelve weeks during the first two contract years (as defined
below) of this Agreement and an order/production/availability cycle of
approximately sixteen weeks thereafter.
6.3 Par shall arrange for shipping and/or transportation of the
Licensed Products from SANO's facility to Par's Spring Valley, New York facility
and pay all shipping and related costs. Risk of loss and title to the Licensed
Product(s) shall pass to Par upon pick-up of the Licensed Products by, on behalf
of or for the account of Par at SANO's facility.
6.3.1 SANO shall promptly notify Par by both fax and telephone that
any order (or part thereof acceptable to Par) is available for pick-up at SANO
(this notice shall hereafter be referred to as the "Availability Notice").
6.3.2 Par shall use reasonable and good faith efforts to pick up the
Licensed Products that are the subject of an Availability Notice within ten (10)
business days of receipt of the Availability Notice; provided that, if such
pickup has not occurred on or prior to the expiry of such ten day period, Par
shall, for purposes of its payment obligations to SANO pursuant to Section 7.2
below, be deemed to have picked up the Licensed Products which are the subject
of the Availability Notice on the last business day of such ten-day period. If
the Licensed Products in question have not been picked up by or on behalf of Par
within twenty (20) business days of an Availability Notice, SANO may, but shall
not be obligated to, cause the Licensed Products to be delivered to Par's Spring
Valley, New York, facility by truck or other overland delivery at Par's sole
cost and expense and risk of loss and title to the Products shall pass to Par
upon pickup of the Products at SANO's facility in the same manner as if the
pickup had been effected by Par itself, provided that SANO shall provide for the
Licensed Products to be insured during transit in a commercially reasonable
manner at Par's sole cost and expense.
ARTICLE VII
PAYMENTS AND PAYMENT TERMS
7.1 [INTENTIONALLY OMITTED]
7.2 Price. The price to PRI for each order, or part thereof reasonably
acceptable to PRI as contemplated in Section 8.2(d), of Licensed Products made
available to PRI hereunder shall be SANO's Costs related to such order or part
thereof. Par shall also pay to SANO any applicable federal or state sales or
excise tax payable on the purchase of such Licensed Products, which payment
shall be remitted with the payment of the price as contemplated in Section 7.3
below and upon payment thereof by Par to SANO, SANO shall be solely responsible
for remitting the amount so paid on account of such taxes to the relevant
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CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE SUCH OMISSION
governmental collecting authorities. Promptly upon Par's request, SANO shall
provide Par with reasonable evidence of such direct costs and applicable taxes
and payment of such taxes.
7.3 Payment Terms. Payment for each order of Licensed Products made
available by SANO for pick-up by Par shall be due within 35 days of pick-up
(whether actual or deemed pursuant to Section 6.3.2) by Par at SANO's facility.
7.4 Additional Licensed Product Fee. Upon request by SANO, Par will
remit up to an aggregate of [****] to fund skin irritation studies required by
the FDA for any of the Licensed Products. Such request shall specify the amount
to be paid for the specific Licensed Product which is the subject of such study
or studies, and the amount so paid by Par shall be deemed an addition to and
part of the Licensed Product Fee for such Licensed Product.
7.5 Additional Consideration. Par shall pay to SANO the Additional
Consideration described in Section 11.1 and Schedule B hereto, in accordance
with the provisions of said Section 11.1.
ARTICLE VIII
PRODUCT ACCEPTANCE
8.1 SANO shall manufacture the Licensed Products and make them
available for pickup by Par in accordance with all applicable laws, rules and
regulations including, without limitation, the Specifications applicable to the
Licensed Product in question, Current Good Manufacturing Practices of the FDA
(as the same may change from time to time) and all other applicable requirements
of the FDA and other governmental authorities having jurisdiction.
8.2 All Licensed Products made available for pick up by Par shall be
accompanied by quality control certificates of analysis signed by a duly
authorized laboratory official of SANO confirming that each batch of Licensed
Product covered by such certificate meets its release Specifications and shall
be deemed accepted by it unless Par, acting reasonably and in good faith, shall
give written notice of rejection (hereafter referred to as a "Rejection Notice")
to SANO within 35 days after pick up of the Licensed Products by, on behalf of
or for the account of Par at SANO's facility.
(a) The Rejection Notice shall state in reasonable detail (sufficient
to enable SANO to identify the nature of the problem and the tests or studies to
be conducted by or on its behalf to confirm or dispute same) the reason why the
Licensed Products are not acceptable to Par. If the Licensed Products meet the
applicable provisions of Section 8.1 and are in quantities specified in a
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purchase order, Par shall not be entitled to reject them. Any Rejection Notice
shall be accompanied by copies of all written reports relating to tests, studies
or investigations performed to that date by or for Par on the Licensed Product
batch rejected.
(b) Upon receipt of such Rejection Notice, SANO may require Par to
return the rejected Licensed Products or samples thereof to SANO for further
testing, in which event such Licensed Products or samples thereof, as the case
may be, shall be returned by Par to SANO or, at SANO's direction, at SANO's
expense. If it is later determined by the parties or by an independent
laboratory or consultant that Par was not justified in rejecting the Licensed
Products or that Par or its Affiliates were the cause of or were responsible for
the problem, Par shall reimburse SANO for the costs of the return, as well as
any other costs or expenses incurred by SANO as a result of the rejection or
return.
(c) Par's test results or basis for rejection shall be conclusive
unless SANO notifies Par, within 30 days of receipt by SANO of the rejected
Licensed Products or samples or such longer periods of time as may be reasonable
in the circumstances to enable SANO to conduct (and receive the results of) the
appropriate tests, studies or investigations which SANO should reasonably
conduct to confirm the problem in question and to identify the source thereof,
that it disagrees with such test results or its responsibility for the problem
in question. In the event of such a notice by SANO, representative samples of
the batch of the Licensed Product in question shall be submitted to a mutually
acceptable independent laboratory or consultant (if not a laboratory analysis
issue) for analysis or review, the costs of which shall be paid by the party
that is determined by the independent laboratory or consultant to have been
responsible for the rejection.
(d) If a Licensed Product is rejected by Par, Par's duty to pay the
amount payable to SANO pursuant to Section 7.2 hereof in respect of the rejected
Licensed Product shall be suspended until such time as it is determined (i) by
an independent laboratory or consultant that the Licensed Product in question
should not have been rejected by Par or (ii) by the parties or by any
arbitration conducted pursuant hereto or by a final order of a court of
competent jurisdiction (which is not subject to further appeal) that any act or
omission of, on behalf of or for which Par or its Affiliates is responsible was
the cause of the problem that was the basis for the rejection. If only a portion
of an order is rejected, only the duty to pay the amount allocable to such
portion shall be suspended.
8.3 In the event any Licensed Products are appropriately rejected by Par
(being Licensed Products that do not meet the applicable provisions of Section
8.1 other than as a result of any act or omission by Par or its Affiliates),
SANO shall replace such Licensed Products with conforming goods or, if requested
by Par, shall provide a credit to Par for the amount, if any, previously paid by
Par to SANO on account of the Licensed Products in question. The credit shall be
provided by SANO to Par immediately following the expiry of the period during
which SANO may dispute a Rejection Notice as contemplated in Section 8.2(c)
above (unless the Rejection Notice is disputed by SANO, in which event such
credit shall be given only if the dispute is resolved in favor of Par).
Replacement Licensed Products, as aforesaid, shall be delivered to Par at no
cost to Par if Par has already paid for the rejected Licensed Products and not
received a credit therefor, as aforesaid. All delivery costs, including
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insurance, incident to the return of Licensed Products to SANO and delivery of
the replacement Licensed Products to Par's Spring Valley facility shall be paid
by SANO, unless the rejection is determined not to have been appropriately
rejected, in which case the last sentence of Section 8.2(a) shall apply.
ARTICLE IX
RETURNS AND ALLOWANCES
9.1 Returns. If Par, acting reasonably and in good faith, accepts from a
customer a return of a Licensed Product and issues to such customer a credit for
the invoice price thereof, Par may debit against the amount of Additional
Consideration, as hereinafter defined, due to SANO with respect to Net Sales, as
hereinafter defined, in the month in which such return occurs, any Gross Profit,
as hereinafter defined, previously paid, credited or due to SANO in respect of
the sale of such returned Licensed Product.
9.2 Handling of Returns.
(a) In the event any Licensed Product is returned to Par by its
customers because the Licensed Product is alleged to be defective and Par
reasonably believes that such defect is due to the fault of SANO, Par shall
notify SANO within ten (10) working days of any such return and provide or make
available to SANO such samples (if available) and other information concerning
the returned Licensed Product so as to allow SANO to test and evaluate the
allegedly defective Licensed Product. Par shall retain a sufficient number of
samples of the allegedly defective Licensed Product so that additional samples
are available at a later date should additional testing be required by an
independent testing laboratory as described in Section 9.3(b) below, or by Par
or SANO for their own purposes. If not enough samples exist to be so divided,
then the parties shall confer and reach agreement as to the handling of any
available samples.
(b) SANO shall complete its review and evaluation of the returned
Licensed Product within twenty (20) business days of receiving the returned
Licensed Product from Par or such longer period of time as may be reasonable in
the circumstances to enable SANO to conduct or cause to be conducted such tests,
studies or investigations (and to receive the results therefrom) as may be
required to confirm or dispute the existence of the problem or to identify the
cause or source thereof.
9.3 Costs and Credits.
(a) If SANO concludes or it is otherwise determined pursuant to
Section 9.3(b) hereof that the returned Licensed Product is defective due to the
fault of SANO:
(i) any replacement Licensed Product to be provided by SANO in
respect of the returned Licensed Product shall be made available to Par
without charge or appropriate credit shall be given therefor (giving
account to any adjustment made pursuant to Section 9.1 hereof);
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(ii) all delivery costs, including insurance, incident to the
delivery of the replacement Licensed Products to Par's Spring Valley
facility shall be paid by SANO or appropriate credit shall be given
therefor; and
(iii) SANO shall provide a credit to Par for the reasonable costs
incurred by Par (or where the duty has been performed by an Affiliate,
pursuant to the provisions of this Agreement, for the reasonable costs
incurred by such Affiliate) in respect of the defective Licensed
Product.
(b) If SANO asserts that the returned Licensed Product is
defective due primarily to any act or omission of Par or its Affiliates or any
agents or other persons acting on their behalf as aforesaid, then representative
samples of the Licensed Products shall be submitted to a mutually acceptable
independent laboratory or consultant (if not a laboratory analysis issue) for
analysis or review, the costs of which shall be paid by the party determined by
the independent laboratory or consultant to have been responsible.
(c) If it is determined in accordance with Section 9.3(b) above
that any such defect is primarily due to any act or omission by Par, then no
credit or other payment of costs shall be due from SANO, and Par shall reimburse
SANO for all costs and expenses it incurred in connection with the return and
investigation.
(d) If it is determined in accordance with Section 9.3(b) above
that no such defect exists or, if existing, cannot be attributable primarily to
an act or omission of either party, then any replacement Licensed Product in
respect of the returned Licensed Product shall be made available to Par without
additional charge or appropriate credit, if any, shall be given therefor, but no
other credits or payments of costs shall be due from SANO.
9.4 Par acknowledges that the Licensed Products may be of a
perishable nature and that the Licensed Product must be stored and shipped in
accordance with the Specifications applicable thereto (to the extent disclosed
in writing to Par or its Affiliates) or the conditions, if any, set forth on its
package label.
9.5 Par agrees to notify SANO of any customer complaints with respect
to the quality, nature or integrity of a Licensed Product or alleged
adverse-drug experiences ("ADE") within five (5) working days of their receipt
by Par and of any Par or FDA complaints within 24 hours, except on weekends and
holidays. SANO shall have the sole and primary obligation to file any required
adverse experience report with FDA. SANO shall also be responsible for
maintaining complaint files as required by FDA regulations. SANO agrees to
investigate and respond in writing to any complaint or ADE forwarded to it by
Par promptly and in no event later than 30 days after receipt of the ADE or
complaint from Par (or such longer period as may be required in the
circumstances to enable SANO to conduct such tests, studies or investigations as
may be reasonably required [and to receive the results therefrom] to enable SANO
to appropriately respond). SANO shall provide Par with a copy of any
correspondence, reports, or other documents relating to a complaint or ADE
within a reasonable period following generation of such document by SANO.
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9.6 The provisions of this Article 9 shall survive the termination or
expiration of this Agreement.
ARTICLE X
DAMAGES, INDEMNIFICATION AND INSURANCE
10.1 Subject to the limitations set forth in this Article X and to the
other provisions of this Agreement, SANO, on the one hand, and Par, on the other
hand, covenant and agree to indemnify and save harmless the other of them from
and against any and all claims, demands, actions, causes of action, suits,
proceedings, judgments, damages, expenses (including reasonable attorney fees
and expenses), losses, fines, penalties and other similar assessments (the
"Damages") relating to or arising out of a breach by any such party of any of
its representations, warranties, covenants or agreements contained herein;
provided that, except where the breach arises out of a representation or
warranty made by a party in this Agreement being intentionally false or
inaccurate, or constitutes a willful material breach by a party of any of its
duties or obligations hereunder, the claim of an aggrieved party for Damages
arising out of the breach shall be limited to claiming the amounts owing or
payable to it in accordance with the provisions of this Agreement and any
out-of-pocket costs and expenses (including amounts paid or payable by it to
third parties, other than re-procurement costs [except to the extent
contemplated in Section 14.3 hereof] which it has incurred and the aggrieved
party shall not be entitled to recover from the defaulting or breaching party
any lost profits or consequential or punitive damages, including loss or damage
to its goodwill or reputation. For purposes of this Agreement where Par is in
breach of its duties or obligations hereunder and such duties or obligations, if
delegated by Par to any of its Affiliates, could reasonably be performed by such
Affiliate and Par has either not delegated such duty or obligation to such
Affiliate or such Affiliate has either refused to perform or willfully breached
such duty or obligation then Par shall be deemed to have willfully breached such
duty or obligation hereunder. Similarly, whenever in this Agreement Par is
required to cause any of its respective Affiliates to do or to refrain from
doing any thing herein provided and such Affiliate refuses to do or refrain from
doing such thing or otherwise willfully breaches the provision herein
contemplated (on the assumption that such Affiliate were bound by the provision
herein contemplated as if a signatory hereto) then Par will be deemed to have
willfully breached the provision of this Agreement in question.
10.2 In the event that the release of a Licensed Product by Par or
its Affiliates in the United States results in a third party claim:
(a) to the extent that the Damages awarded or incurred relate to
or arise out of the safety or effectiveness of the Licensed Product or the
manufacturing, packaging, labeling, storage or handling of the Product by SANO,
SANO shall be responsible therefor and shall indemnify and hold Par harmless
from and against all such damages; and
(b) to the extent that the Damages awarded or incurred relate to
or arise out of the transportation, storage, handling or selling of the Licensed
16
Product by Par or its Affiliates, then Par shall be responsible therefor and
shall indemnify and hold SANO harmless from and against all such damages.
Upon the assertion of any third party claim against a party hereto that
may give rise to a right of indemnification under this Agreement, the party
claiming a right to indemnification (the "Indemnified Party") shall give prompt
notice to the party alleged to have the duty to indemnify (the "Indemnifying
Party") of the existence of such claim and shall give the Indemnifying Party
reasonable opportunity to control, defend and/or settle such claim at its own
expense and with counsel of its own selection; provided, however, that the
Indemnified Party shall, at all times, have the right fully to participate in
such defense at its own expense and with separate counsel and, provided,
further, that both parties, to the extent they are not contractually or legally
excluded therefrom or otherwise prejudiced in their legal position by so doing,
shall cooperate with each other and their respective insurers in relation to the
defense of such third party claims. In the event the Indemnifying Party elects
to defend such claim, the Indemnified Party may not settle the claim without the
prior written consent of the Indemnifying Party. The Indemnifying Party may not
settle the claim without the prior written consent of the Indemnified Party
unless, as part of such settlement, the Indemnified Party shall be
unconditionally released therefrom or the Indemnified Party otherwise consents
thereto in writing. If the Indemnifying Party shall, within a reasonable time
after such notice has been given, fail to defend, compromise or settle such
claim, then the Indemnified Party shall have the right to defend, compromise or
settle such claim without prejudice to its rights of indemnification hereunder.
Notwithstanding the foregoing, in the event of any dispute with respect to
indemnity hereunder, each party shall be entitled to participate in the defense
of such claim and to join and implead the other in any such action.
In addition to the foregoing, SANO will defend, at its sole cost and
expense, its rights with respect to the Licensed Products and Par's rights to
distribute the Licensed Products hereunder against any claim, action, suit or
proceeding ("Action") by any third party asserting prior or superior rights with
respect to the Licensed Product, product infringement or similar claims (other
than as may be based on acts of Par not contemplated herein or authorized
hereby) and shall indemnify and hold Par and its affiliates harmless from the
cost of the defense thereof. Par shall, at all times, have the right fully to
participate in such defense at its own expense. SANO shall control such defense
and shall, in its reasonable discretion, defend or settle such Action; provided
that, notwithstanding the foregoing SANO shall not enter into any settlement or
compromise of any such Action which requires Par or any of its Affiliates to
make payments of any kind without the prior written consent of Par or an
unconditional release of Par and its Affiliates with respect to the subject
matter of such Action. The provisions of this paragraph should not be construed
as requiring SANO to bear any damages, judgments or other liabilities entered
against Par in any such Action, provided that the foregoing shall not be
construed as or deemed a waiver of any rights Par may have against SANO as a
result of such Action hereunder, at law or otherwise, and all of such rights, if
any, are expressly reserved.
10.3 Insurance. Each of SANO and Par shall carry product liability
insurance in an amount at least equal to Ten Million Dollars ($10,000,000) with
an insurance carrier reasonably acceptable to the other party, such insurance to
17
be in place at times reasonably acceptable to the parties, but not later than
the date of the first commercial sale of a Licensed Product. Each party shall
promptly furnish to the other evidence of the maintenance of the insurance
required by this Section 10.3 and shall name the other as an "additional
insured" under such insurance policy. Each party's coverage shall (i) include
broad form vendor coverage and such other provisions as are typical in the
industry and (ii) name the other party as an additional insured thereunder. SANO
shall carry clinical testing insurance in an amount and at times reasonably
acceptable to the parties.
10.4 Survival. The provisions of this Article X shall survive the
termination or expiration of this Agreement, provided that the requirement to
maintain the insurance contemplated in Section 10.3 above shall only survive for
a period of 36 months from the effective date of termination or expiration of
this Agreement.
ARTICLE XI
ADDITIONAL CONSIDERATION, REPORTING AND VERIFICATION
11.1 Additional Consideration. As additional consideration for SANO
entering into this Agreement and permitting Par to sell the Licensed Products in
the United States in accordance with the provisions hereof, Par agrees to pay to
SANO the additional amounts more particularly described in Exhibit B to this
Agreement in respect of the aggregate Gross Profit (as that term is defined in
Exhibit B) of the Licensed Products. The amount payable to SANO determined in
accordance with Exhibit B is herein and in Exhibit B annexed hereto referred to
as the "Additional Consideration." Par shall pay to SANO, monthly, on the
seventh day of each month, commencing on the seventh day of the third month
after the month in which sales of the Licensed Products commence, the Additional
Consideration payable to SANO in respect of the Net Sales of the Licensed
Products made by Par and its Affiliates during the third preceding month. For
greater certainty, examples of what constitutes the "third preceding calendar
month" are contained in Exhibit B annexed hereto. The consideration payable to
SANO pursuant to this Article XI shall be paid to it as part of the sale price
of the Licensed Product from SANO to Par and shall not be treated as a royalty
or similar payment.
11.2 Reporting and Information Obligations of Par.
(a) Approved Contracts. Par shall provide to SANO, monthly, within
seven days of the expiry of each calendar month during the term hereof, a copy
of each Approved Contract (as hereinafter defined), entered into by Par with its
customers during the immediately preceding month irrespective of whether a copy
of such contract had previously been forwarded to SANO. If the Approved Contract
has a term of less than 18 months, Par may delete (e.g., by blacking out) any
information in the Approved Contract that tends to indicate the identity or
location of the Par customer; provided, however, that Par marks each such
Approved Contract with a unique customer code relative to the customer that is
the party to that Approved Contract.
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(b) Net Sales and Gross Profits. Par shall report to SANO monthly,
on the 7th day of each calendar month during the term hereof and for 12 months
after the termination hereof:
(i) a sales summary, in the form annexed hereto as Exhibit C,
showing all sales of the Licensed Products made by Par and its
Affiliates during the immediately preceding calendar month;
(ii) a detailed statement showing all returns and all
credits, rebates, allowances and other debit and credits relevant
to the calculation of Net Sales and Gross Profits (as those terms
are defined in Exhibit B annexed hereto) for the immediately
preceding calendar month together with copies of all documentation
to support allowable adjustments used in computing Net Sales
during the period in question;
(iii) a certificate signed by the Chief Financial Officer of
Par certifying that, to the best of his knowledge, information and
belief, after reasonable investigation, the foregoing statements
contemplated in (i) and (ii) above are true and correct and do not
omit any material information required to be provided pursuant to
this Section 11.2(b) and
(iv) a summary of the calculation of the Additional
Consideration payable to SANO on such date.
For purposes of this Agreement a sale shall be considered to have been
made at the time the Product(s) are shipped to the customer.
11.3 Par shall make available for inspection by SANO at Par's
facilities and shall cause its Affiliates to make available for inspection by
SANO at their respective facilities, promptly following a reasonable request
therefor, such additional information concerning any sales (including, without
limitation, in respect of any sale, the date of the shipment, the code number of
the customer [or the name of the customer in the case of a customer disclosed to
SANO pursuant to Section 11.2(a) hereof and an Approved Contract], the number of
units of each Licensed Product in each dosage involved (broken down by container
size per Product, and the invoice price charged by Par or its Affiliates),
credits, returns, allowances and other credits and debits previously reported to
SANO pursuant to Section 11.2(b)(ii) hereof or with respect to Approved
Contracts previously reported to SANO pursuant to Section 11.2(a) hereof as SANO
may reasonably require from time to time (except information concerning the
identity or location of a customer where Par is not already required to disclose
that information to SANO pursuant to Section 11.2(a) hereof) to enable SANO to
confirm or reconcile the amounts which are or were to have been paid to it
pursuant to this Agreement (without the need to audit the books and records of
Par or its Affiliates pursuant to Section 11.4 hereof).
11.4 Par shall keep and shall cause its Affiliates to keep complete and
accurate records and books of account containing all information required for
19
the computation and verification of the amounts to be paid to SANO hereunder.
Par further agrees that at the request of SANO, it will permit and will cause
its Affiliates to permit one or more accountants selected by SANO, except any to
whom Par or such Affiliate has some reasonable objection, at any time and from
time to time, to have access during ordinary working hours to such records as
may be necessary to audit, with respect to any payment report period ending
prior to such request, the correctness of any report or payment made under this
Agreement, or to obtain information as to the payments due for any such period
in the case of failure of Par to report or make payment pursuant to the terms of
this Agreement. Such accountant shall not disclose to SANO any information
relating to the business of PRI except that which is reasonably necessary to
inform SANO of:
(i) the accuracy or inaccuracy of Par's reports and payments;
(ii) compliance or non-compliance by Par with the terms and
conditions of this Agreement; and
(iii) the extent of any such inaccuracy or non-compliance;
provided, that if it is not reasonably possible to separate
information relating to the business of Par from that which is
reasonably necessary to so inform SANO, the accountant may
disclose any information necessary to so inform SANO and SANO
shall retain all other information disclosed as confidential.
Par shall provide and shall cause its Affiliates to provide full and
complete access to the accountant to Par's and such Affiliates' pertinent books
and records and the accountant shall have the right to make and retain copies
(including photocopies). Should any such accountant discover information
indicating inaccuracy in any of Par's payments or non-compliance by Par or its
Affiliates with any of such terms and conditions, and should Par fail to
acknowledge in writing to SANO the deficiency or non-compliance discovered by
such accountant within ten (10) business days of being advised of same in
writing by the accountant, the accountant shall have the right to deliver to
SANO copies (including photocopies) of any pertinent portions of the records and
books of account which relate to or disclose the deficiency or non-compliance
(to the extent not acknowledged by Par). In the event that the accountant shall
have questions which are not in its judgment answered by the books and records
provided to it, the accountant shall have the right to confer with officers of
Par or such Affiliate, including Par's or such Affiliate's Chief Financial
Officer. If any audit under this Section shall reveal an underpayment or
understatement of the amount payable to SANO by more than $10,000.00 for any
period in question, Par shall reimburse SANO for all costs and expenses relating
to such investigational audit. SANO shall only have the right to audit such
books and records of Par and its Affiliates pursuant to this Section 11.4 no
more often than twice in any contract year unless earlier in such contract year
or in any of the prior three contract years such investigation revealed a
discrepancy of more than $10,000.00, as aforesaid, in which case SANO shall have
the right to audit such books and records three times in such contract year. For
purposes of this Agreement, a contract year shall be a period of twelve months
commencing on either the date of this Agreement or on an anniversary thereof.
Unless the disclosure of same is reasonably required by SANO in connection with
any litigation or arbitration arising out of such audit, the accountant shall
20
not reveal to SANO the name or address (or other information reasonably tending
to identify the location of a customer) of any customer of Par or its Affiliates
[other than one whose name has been disclosed to SANO pursuant to Section 11.2
hereof], but shall identify such customer to SANO, if necessary, by the customer
code number used by Par in its reporting obligations to SANO [and Par and its
Affiliates shall make such information known to the accountant]. Par may, as a
condition to providing any accountant access to its books and records (or those
of its Affiliates), require SANO to execute a reasonable confidentiality
agreement consistent with the terms of this Section 11.4.
11.5 Except as specifically set forth to the contrary, all payments to
be made under this Agreement shall bear interest equal to two percent above the
prime rate as quoted by Citibank N.A., New York, New York, calculated daily (as
at the close of business on each such day) and compounded monthly, from the day
following the day the payment is due until the date on which it is paid. Any
adjustment to the prime rate as quoted by Citibank N.A. from time to time shall
result in a corresponding adjustment to the rate of interest payable hereunder,
the rate of interest quoted by Citibank N.A. at the close of business on each
day to be the rate applicable for such day.
11.6 The obligation of Par to make the payments contemplated in Section
11.1 and to provide the reports and information contemplated in Sections 11.2
and 11.3 and the right of SANO to conduct its audits or investigations pursuant
to Section 11.4 hereof shall survive the termination or expiration of this
Agreement and shall apply to all Licensed Products made available to Par by SANO
prior to the effective date of the termination or expiration of this Agreement
(or made available to Par after such date pursuant to any provision of this
Agreement) notwithstanding that such Licensed Products may have been resold by
Par or its Affiliates to its or their customers after the effective date of
termination or expiration. For greater certainty, the parties acknowledge and
agree that it is their intention that Par pay to SANO the Additional
Consideration applicable to Net Sales of all Licensed Products supplied by SANO
to Par pursuant to this Agreement (in respect of which the purchase price
charged by SANO to Par therefor [whether paid or owing] was determined in
accordance with the provisions of Section 7.2 hereof or was provided to Par free
of such charge pursuant to any other provision of this Agreement) irrespective
of whether such Licensed Product is resold by Par or its Affiliates prior to or
subsequent to the effective date of termination or expiration of this Agreement
and that SANO's rights pursuant to Section 11.4 hereof shall continue for a
period of twelve (12) months following the final sale of all such Licensed
Products.
11.7 Par shall have the right, upon reasonable advance written notice
to SANO, to inspect SANO's facilities at which the Licensed Products are being
manufactured to monitor compliance by SANO with FDA Good Manufacturing Practices
and to otherwise confirm that the Licensed Products are being manufactured in
accordance with their respective Specifications. Similarly, SANO shall have the
right, upon reasonable advance written notice to Par to inspect those facilities
of Par and any of its Affiliates which are used in the storage of any of the
Licensed Products to ensure compliance by Par or such Affiliate with FDA Good
Manufacturing Practices and to otherwise ensure that the Licensed Products do
not cease to meet their Specifications as a result of any storage or shipping
conducted by Par or its Affiliates. SANO shall cooperate with Par in providing
access to its facilities and Par shall cooperate and shall cause its Affiliates
21
to cooperate in providing access to SANO to its facilities and those of its
Affiliates used as aforesaid.
11.8 SANO shall keep complete and accurate records and books of account
containing all information required for the computation and verification of
SANO's Costs as contemplated in Section 7.2 hereof with respect to the Licensed
Product(s) made available to Par by SANO pursuant hereto. SANO further agrees
that at the request of Par it will permit one or more accountants selected by
Par except any to whom SANO has some reasonable objection, to have access during
ordinary working hours to such books and records as may be necessary to audit
the amounts previously charged by SANO to Par pursuant to Section 7.2 hereof.
Such accountant shall not disclose to Par any information relating to the
business of SANO except the accuracy or inaccuracy of SANO's previously reported
charges and the amount, if any, that Par may have been overcharged or
undercharged with respect to Licensed Products made available to it. Should any
such accountant discover information indicating that Par has been overcharged
for Products made available to it, and should SANO fail to acknowledge in
writing to Par the inaccuracy discovered by such accountant within ten (10)
business days of being advised of same in writing by the accountant, the
accountant shall have the right to make and retain copies (including
photocopies) of any pertinent portions of the records and books of account which
relate to or disclose the inaccuracy (to the extent not acknowledged by SANO).
SANO shall provide full and complete access to the accountant to SANO's
pertinent books and records. In the event that the accountant shall have
questions which are not in its judgment answered by such books and records, the
accountant shall have the right to confer with officers of SANO, including
SANO's Chief Financial Officer. If any audit under this Section shall reveal an
overstatement of the amount payable to SANO by more than $10,000.00 for the
Licensed Products in question, SANO shall reimburse Par for all costs and
expenses relating to such investigation/audit. It is understood and agreed that
Par shall only have the right to audit such books ad records of SANO pursuant to
this Section 11.8 no more often than twice in any contract year unless earlier
in such contract year or in any of the prior three contract years such
investigation revealed a discrepancy of more than $10,000.00, as aforesaid, in
which case Par shall have the right to audit such books and records three times
in such contract year. Unless the disclosure of same is reasonably required by
Par in connection with any litigation or arbitration arising out of such audit,
the accountant shall not reveal to Par the name or address (or other information
reasonably tending to identify the location of a supplier) of any supplier of
materials to SANO in the manufacturing or packaging of the Licensed Products
(but shall identify such supplier to Par if necessary, by a code name or number
supplied by such accountant) or the name of or financial information relating to
any employee of SANO. SANO may, as a condition to providing any accountant
access to its books and records, require Par to execute a reasonable
confidentiality agreement consistent with the terms of this Section 11.8. The
rights of Par pursuant to this Section 11.8 shall survive the termination or
expiration of this Agreement for a period of one year.
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ARTICLE XII
RIGHT OF FIRST REFUSAL
12.1 Right of First Refusal. During the term hereof, Par shall have the
right of first refusal to distribute the Licensed Products in the State of
Israel, on a product by product basis, in accordance with the following
procedures.
12.2 Procedures. For each Licensed Product with respect to which SANO
proposes to enter into a distribution agreement in Israel with a third party,
SANO shall communicate to Par in writing a reasonably detailed description of
the provisions of such agreement (a "Proposed Israeli Distribution Agreement").
Within 30 days of its receipt of a Proposed Israeli Distribution Agreement (the
"Acceptance Period"), Par shall notify SANO whether it wishes to enter into an
agreement with SANO on such terms. If Par notifies SANO within the Acceptance
Period that it wishes to do so, Par and SANO will enter into a distribution
agreement on such terms. If Par fails to notify SANO of its election to enter
into such an agreement within the Acceptance Period, SANO may enter into a
license or distribution agreement with respect to such Licensed Product with a
third party on substantially the same terms as set forth in the Proposed Israeli
Distribution Agreement and Par's rights under this Article XII will terminate.
SANO may not enter into such an agreement with a third party on terms
substantially different from those set forth in the relevant Proposed Israeli
Distribution Agreement without first offering such terms to Par for a period of
thirty days. If SANO shall not enter into the Proposed Israeli Distribution
Agreement within 30 days following the expiration of the Acceptance Period or
any extension thereof as set forth in the preceding sentence, SANO's execution
of any such Agreement or any other Proposed Israeli Distribution Agreement shall
again be subject to Par's rights under this Article XII. Each Proposed Israeli
Distribution Agreement for each Licensed Product shall be subject to Par's
rights of first refusal in accordance with the procedures set forth in this
Section 12.2.
ARTICLE XIII
TERMS AND TERMINATION
13.1 This Agreement shall become effective on the date hereof and shall
remain in effect for a period of ten years per Licensed Product starting on the
date such Licensed Product becomes available for sale in commercial quantities,
unless earlier terminated in accordance with the provisions of this Agreement.
Thereafter, this Agreement shall automatically be renewed as to each Licensed
Product from year to year unless either party gives notice of termination to the
other party at least one hundred and twenty days prior to the expiry of the
initial term or of any renewal term.
13.2 Either party may, by notice in writing to the other party,
terminate this Agreement if such other party shall have breached any of its
material duties or obligations under this Agreement (other than the obligations
of Par to pay to SANO any amount due to SANO hereunder [whether on account of
23
Additional Consideration, the price for the Licensed Products or otherwise] or
to provide SANO with the reports or information contemplated in Section 11.2 or
11.3 hereof) and such breach shall remain uncured for at least sixty days after
the aggrieved party shall have given notice of the breach to the other party.
13.3 SANO may, by notice in writing to Par, terminate this Agreement if
Par fails to pay to SANO any amount payable by Par to SANO hereunder, whether on
account of the Additional Consideration, the purchase price for the Licensed
Products, interest or otherwise, as and when the same shall have become due and
payable or Par shall have failed to deliver (or caused to be delivered, as the
case may be), in timely fashion, the reports or information contemplated in
Section 11.2 or 11.3 hereof, and in either case, such breach shall have
continued unremedied for a period of twelve business days after written notice
of such breach has been given by SANO to Par; provided that Par shall not have
the right to such twelve-day grace period within which to cure such default and
SANO shall have the immediate right to terminate the Agreement for such breach
if Par shall have previously breached Section 11.2 or 11.3, or failed to remit
any sums of at least $10,000.00 to SANO, when due, in the aggregate, one time in
the twelve month period immediately preceding the default in question.
13.4 Either party may terminate this Agreement on thirty days prior
written notice to the other party if such party or the other party is legally
prohibited from performing its obligations hereunder (other than by reason of a
breach of its obligations hereunder) or becomes (or, in the case of Par, its
Affiliate becomes) an Ineligible Person (and, where the party purporting to
terminate the Agreement is also the party prohibited from performing or it or
its Affiliate is the Ineligible Person, it [or its Affiliate, as the case may
be] has made diligent good faith best efforts to remove the prohibition or its
status as an Ineligible Person) and such prohibition or status as an Ineligible
Person shall have continued uninterrupted for a period of 120 days.
13.5 Either party may terminate this Agreement in respect of a
particular Licensed Product (the "Specific Product"), but this Agreement shall
continue in respect of any other Licensed Product, on thirty (30) days prior
written notice to the other party (which notice must be delivered within 90 days
of the expiration of the applicable contract year) if the aggregate Net Sales of
the Specific Product made by PRI and its Affiliates for any complete contract
year after the second anniversary of the date on which such Specified Product
became available for sale shall be less than the amounts stated in or determined
pursuant to Section 13.8; provided, however, SANO may not terminate with respect
to any Specific Product pursuant to this Section 13.5 without the consent of Par
in the event that SANO shall have previously terminated the exclusive nature of
the Right pursuant to Section 13.8 and shall be selling, directly or indirectly,
such Licensed Product in the United States.
13.6 Either party may terminate this Agreement in accordance with the
provisions of Section 15.1 hereof.
13.7 Par or SANO shall have the right to terminate this Agreement upon
written notice to the other in the event that any one or more of the following
events shall become applicable to such other party (herein referred to as the
"Party"):
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(a) an order is made or a resolution or other action of such Party
is taken for the dissolution, liquidation, winding up or other termination of
its corporate existence;
(b) the Party commits a voluntary act of bankruptcy, becomes
insolvent, makes an assignment for the benefit of its creditors or proposes to
its creditors a reorganization, arrangement, composition or readjustment of its
debts or obligations or otherwise proposes to take advantage of or shelter under
any statute in force in the United States for the protection of debtors;
(c) if any proceeding is taken with respect to a compromise or
arrangement, or to have such Party declared bankrupt or to have a receiver
appointed in respect of such Party or a substantial portion of its property and
such proceeding is instituted by such Party or is not opposed by such Party or
if such proceeding is instituted by a Person other than such Party, such Party
does not proceed diligently and in good faith to have such proceeding withdrawn
forthwith;
(d) a receiver or a receiver and manager of any of the assets of
such Party is appointed and such receiver or receiver and manager is not removed
within ninety days of such appointment;
(e) such Party ceases or takes steps to cease to carry on its
business.
SANO shall similarly have the right to terminate this Agreement upon written
notice to PRI if any of the foregoing events becomes applicable to any Affiliate
of PRI that has been expressly assigned obligations under this Agreement.
13.8 (a) If
(i) in the twenty-four (24) month period (such period being
herein referred to as the "A Period") beginning on the date (the
"A Commencement Date") the first of any shipments of Licensed
Product "A" is made available to Par hereunder, the aggregate Net
Sales of Licensed Product "A" for such A Period is less than the
Product Sales Threshold (as hereinafter defined);
(ii) in the twenty-four (24) month period (such period being
herein referred to as the "B Period") beginning on the date (the
"B Commencement Date") the first of any shipments of Licensed
Product "B" is made available to Par hereunder, the aggregate Net
Sales of Licensed Product "B" for such B Period is less than the
Product Sales Threshold; or
(iii) in any twelve month period commencing on the second and
each subsequent anniversary of the A Commencement Date or the B
Commencement Date the Net Sales of the relevant Licensed Product
sold by Par and its Affiliates in such period is less than the
Product Sales Threshold;
and the shortfall in sales cannot be attributable primarily to the fault of
SANO, SANO shall have the right to convert Par's Right hereunder from an
exclusive to a non-exclusive right to
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SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE SUCH OMISSION
distribute such Licensed Product upon ninety days prior written notice to Par.
As used herein, as to any Licensed Product, the Product Sales Threshold shall
mean an amount reasonably agreed upon by Par and SANO after consideration of
relevant market factors and conditions, provided that if Par and SANO shall fail
or be unable to agree as to any Licensed Product for any period in question, the
Product Sales Threshold for such period and Licensed Product shall be [****].
(b) Notwithstanding the exercise by SANO of its right pursuant to
Section 13.8(a) hereof, and the resultant conversion of Par to a non-exclusive
distributor hereunder, Par shall have the right to sell the Licensed Products on
a non-exclusive basis on the terms and conditions as set forth herein, except as
provided otherwise in this Paragraph 13.8, during the balance of the term of the
Agreement (subject to earlier termination as herein provided) and SANO shall
continue to supply the Licensed Products to Par in accordance with the
provisions hereof, provided that the obligation of SANO to use its reasonable
best efforts to supply Par with its requirements of the Licensed Products shall
take into account Par's requirements as well as the requirements of SANO and any
other third party distributor or distributors appointed by SANO to sell the
Licensed Products in the United States.
(c) In the event that SANO exercises its rights under Section
13.8(a) and contemporaneously therewith or subsequent thereto enters into an
agreement with any Person (herein referred to as a "Third Party Licensee"),
authorizing or licensing such Third Party Licensee to sell any of the Licensed
Products in the United States on royalty, payment or other cash equivalent or
otherwise readily economically measured terms more favorable to the Third Party
Licensee (such more favorable terms being herein referred to as the "MFP") then:
(i) SANO shall promptly notify Par of such agreement and
shall describe in the notice both the MFP and any obligations,
duties, undertakings or other consideration to be provided by the
Third Party Licensee; and
(ii) Par shall have thirty days from the date of receipt of
such notice to notify SANO whether Par desires to have the benefit
of the MFP, which can be accepted only if Par shall agree (to the
extent not already assumed in this Agreement) to any additional
obligations, duties, or undertakings, and to provide any
consideration to be provided by the Third Party Licensee.
Par's entitlement to seek the benefit of the MFP shall be conditioned upon and
subject to Par assuming and being capable of fully performing all the non-cash
obligations assumed by the Third Party Licensee in a manner substantially as
valuable to SANO. If Par shall dispute such assessment, Par shall so notify
SANO, whereupon the issue shall be deemed to be a dispute between the parties
and subject to resolution pursuant to Section 15.2 hereof.
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13.9 Notwithstanding the termination or expiration of this Agreement
pursuant to this Article XIII or any other provision of this Agreement, all
rights and obligations which were incurred or which matured prior to the
effective date of termination or expiration, including accrued Additional
Consideration and any cause of action for breach of contract, shall survive
termination and be subject to enforcement under the terms of this Agreement.
Termination of this Agreement shall not affect any duty of Par or SANO existing
prior to the effective date of termination or expiration and which is, whether
or not by expressed terms, intended to survive termination. Without limiting the
generality of the foregoing, termination shall not affect any duty to keep
confidential any Confidential Information (within the meaning of Section 14.4
hereof) disclosed by one party to the other (or its Affiliate) as contemplated
in Section 14.4 hereof, but rather such Confidential Information shall be held
by the receiving party subject to such restrictions on use and disclosure as
provided in the said Section.
13.10 Upon termination of this Agreement by Par pursuant to Section
13.2 or 13.7 or pursuant to Section 13.4 as a result of SANO's inability to
perform its obligations hereunder or becoming an Ineligible Person or the
termination of this Agreement by SANO pursuant to Section 13.5 hereof, SANO
shall, at the request of Par, repurchase all Licensed Products then in the
possession, custody or control of Par and available for sale (and which have not
been adulterated since they were made available for pick up by Par) and all
packaging material in the possession, custody or control of Par which were
specifically acquired by Par for these Licensed Products and which cannot be
used by Par or its Affiliates for any other products sold by any of them, at the
price originally paid by Par therefor plus all transportation costs previously
incurred (even if not yet paid) by Par payable in cash on delivery by Par to
SANO. SANO shall pay all transportation costs associated with shipping the
repurchased Licensed Product to SANO or to such other places SANO may require.
13.11 In the event that this Agreement is terminated pursuant to the
provisions of Section 13.4 hereof as a result of a party (herein referred to as
the "Prohibited Party") being unable to perform its obligations hereunder as
therein contemplated or having become (or its Affiliate having become) an
Ineligible Person and within twelve (12) months of the effective date of
termination of this Agreement the Prohibited Party is again able to perform its
obligations hereunder or has ceased (or its Affiliate has ceased) to be an
Ineligible Person, then the Prohibited Party shall, by notice in writing, advise
the other party (herein referred to as the "Receiving Party") that it is no
longer legally prohibited from performing its duties and obligations hereunder
or that it has ceased (or that its Affiliate has ceased) to be an Ineligible
Person and the Receiving Party shall have the right, to be exercised by notice
in writing given to the Prohibited Party within thirty (30) days of receipt of
the aforesaid notice from Prohibited Party, to reinstate this Agreement;
provided, however, that if the Prohibited Party is Par then SANO shall have the
right to reinstate this Agreement as if a proper notice had been given pursuant
to Section 13.8 of this Agreement and Par shall be reinstated on a non-exclusive
basis, but only to the extent that such reinstatement will not violate the
provisions of any agreement SANO shall have entered into during the period Par
was a Prohibited Party.
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CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE SUCH OMISSION
13.12 If SANO terminates this Agreement pursuant to Section 13.2, 13.3
and 13.7 hereof then Par shall not and shall cause its Affiliates not to, for a
period of twelve (12) months following the effective date of termination, sell
in the United States any Competitive Product.
13.13 In the event that SANO terminates this Agreement in respect of a
Specific Product pursuant to Section 13.5 hereof, SANO shall, at the request of
Par, make available to Par within a reasonable period of time of such
termination, such number of units of such Specific Product as shall be equal to
the net number of units of such Specific Product sold by Par during the entire
contract year immediately preceding the year in which this Agreement is so
terminated or such lesser number of units of each such Specific Product as Par
shall advise SANO in writing within ten business days of such termination. Such
Specific Product shall be made available to Par in accordance with the
provisions of this Agreement and the provisions of this Agreement shall apply to
all such Specific Product as if such Specific Product had been supplied by SANO
during the term of this Agreement.
(a) If SANO has not received an approval of an ANDA for Licensed
Product B prior to the later of [****] for Par may terminate this Agreement with
respect to Licensed Product B by providing SANO with written notice of such
termination and neither party shall have any obligation hereunder with respect
to Licensed Product B other than applicable confidentiality provisions and the
payment by SANO described in the following sentence. In the event of such
termination, SANO shall pay Par the sum of (i) [****] and (ii) the amount paid
by Par in respect of Licensed Product B pursuant to Section 7.4 hereof, with
half of such sum payable three (3) months after SANO's receipt of notice of such
termination and half of such sum payable fifteen (15) months after SANO's
receipt of notice of such termination.
(b) For the purposes of this Section 13.14, the dates on which
ANDAs were filed for the respective Licensed Products shall be as set forth on
Exhibit A attached hereto.
ARTICLE XIV
RECALLS, ADMINISTRATIVE MATTERS AND CONFIDENTIALITY
14.1 Recalls. In the event that it becomes necessary to conduct a
recall, market withdrawal or field correction (hereafter collectively referred
to as "recall") of any Licensed Product manufactured by SANO and sold by Par or
its Affiliates the following provisions shall govern such a recall:
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(a) After consulting with SANO, and on terms and conditions
reasonably satisfactory to SANO, Par shall conduct (and shall cause its
Affiliate to conduct) the recall and shall have primary responsibility therefore
and SANO and Par shall each cooperate with the other in recalling any affected
Licensed Product(s). Par covenants and agrees to maintain and to cause its
Affiliates to maintain such records of all sales of the Licensed Products made
by Par or its Affiliates as are required by the FDA or as are reasonably
appropriate for a distributor of pharmaceutical products to maintain so as to
enable a recall to be properly completed.
(b) Irrespective of whether the recall is initiated by Par or by
SANO:
(i) If it is later demonstrated that the reason for the
recall was due primarily to acts or omissions of SANO (or the
safety or efficacy of the Licensed Product other than as a result
of acts or omissions of Par or its Affiliates), then SANO shall
pay or reimburse, as the case may be, all reasonable direct
out-of-pocket expenses, including but not limited to reasonable
attorney's fees and expenses and credits and recall expenses
claimed by and paid to customers, incurred by Par or SANO in
connection with performing any such recall, provided that expenses
incurred by Par shall be in accordance with the terms and
conditions of the recall approved by SANO; or
(ii) If it is later determined that the reason for the recall
was due primarily to the acts or omissions of Par or its
Affiliates, then Par shall pay or reimburse, as the case may be,
all direct out-of-pocket expenses, including but not limited to
reasonable attorney's fees and expenses and credits and recall
expenses claimed by and paid to customers, incurred by Par or SANO
in connection with performing any such recall; or
(iii) If the parties are unable to agree that the cause of
the recall was due primarily to the act or omission of one of the
parties (or its Affiliates, as the case may be) within sixty days
of the initiation of the recall and have not commenced arbitration
proceedings to resolve such dispute within such sixty day period
then all direct out-of-pocket costs incurred by Par and SANO,
including but not limited to reasonable attorney's fees and
expenses and credits and recall expenses claimed by and paid to
customers, shall be shared by the parties in proportion to their
sharing of Gross Profits in respect of the Licensed Products
recalled.
Each of the parties shall use its reasonable best efforts to minimize the
expenses of recall which it incurs. It is understood and agreed that the direct
out-of-pocket costs and expenses of the recall contemplated in Paragraphs (i),
(ii) and (iii) above shall not include the invoice price charged by PRI or its
Affiliates to the customers for the Products recalled, which amount shall be
dealt with in accordance with the provisions of Section 9 hereof and shall also
not include any excess re-procurement costs (within the meaning of Paragraph
14.3 hereof) and related penalties and assessments, which costs, penalties and
assessments shall be an expense of Par except to the extent that it is an
expense of SANO pursuant to Section 14.3 hereof (provided that where the
provisions of Paragraph (iii) above apply, the excess reprocurement costs and
29
related penalties and assessments incurred pursuant to Approved Contracts [as
that term is defined in Section 14.3 hereof] shall be shared by the parties in
the proportion in which Gross Profits are shared in respect of the recalled
Products sold pursuant to such Approved Contracts).
(c) All Licensed Products recalled pursuant to this Section 14.1
shall be treated as Licensed Products returned to Par by its customers and the
provisions of Section 9 shall apply thereto.
(d) The party initiating the recall shall inform FDA of the
proposed recall; however, nothing contained herein shall preclude either party
from informing FDA of any proposed or actual recall by either party should the
recalling party fail to inform FDA of that recall within ten (10) days of a
written request by the non-recalling party to so inform FDA.
(e) For greater certainty, in the event of a recall, neither party
or its Affiliates shall profit from any out-of-pocket expenses incurred by it in
connection with the recall and for which it is reimbursed by the other party
and, except where the recall relates directly to an intentional breach of a
representation or warranty contained in this Agreement or arises directly out of
a willful material breach by a party of any of its duties or obligations
hereunder (in each case, as contemplated in Section 10.1 hereof), neither party
shall have a claim against the other party for any damages, losses or expenses
which it suffers or incurs as a result thereof except to the extent permitted or
contemplated in this Section 14.
(f) Each party shall provide reasonable evidence to the other of
the out-of-pocket expenses being claimed by it and the rights of SANO pursuant
to Section 11.4 and the rights of Par pursuant to Section 11.8 shall apply
thereto.
14.2 ANDA-Related FDA Correspondence. Each of the parties shall provide
the other with a copy of any correspondence or notices received by such party
from FDA relating or referring to the Licensed Product(s) within ten (10) days
of receipt. Each party shall also provide the other with copies of any responses
to any such correspondence or notices within ten (10) days of making the
response.
14.3 Excess Re-procurement Costs.
(a) In the event that a recall occurs which recall was
necessitated primarily by any act or omission of SANO and SANO does not supply
Par with replacement Licensed Product on a timely basis or if SANO, in breach of
its obligations under this Agreement, fails to make Licensed Product(s)
available to Par, SANO shall, in addition to any reimbursement required under
Section 14.1, pay any excess re-procurement costs and/or related penalties or
assessments incurred by, or assessed on, Par by a customer of Par pursuant to an
Approved Contract (as that term is defined below) due to Par's inability to
supply Licensed Product(s) to such customer due to the aforesaid acts, omissions
or breaches of SANO.
(b) SANO shall cooperate with Par with respect to any legal or
administrative proceedings that arise pursuant to the Approved Contracts as a
30
result of Par's inability to supply Licensed Product(s) to such customer due to
the aforesaid acts, omissions or breaches by SANO. The foregoing shall be
without prejudice to any other damages, expense or costs that Par may have
suffered in connection with SANO's inability to supply the Licensed Product as
aforesaid, subject to the limitations and other provisions set forth in this
Agreement.
(c) For purposes hereof the term "Approved Contract" shall
mean a contract entered into by Par on or after the Execution Date with one of
its customers:
(i) pursuant to which Par agrees to supply such customer with
pharmaceutical products which include the Licensed Products (or
any of them), and which provides that if Par fails to supply such
customer with the Licensed Product in accordance with specified
terms and conditions therein set forth then such customer shall
have the right to procure a comparable replacement product for the
Licensed Product in substitution for the Licensed Products that
Par has failed to supply to such customer in accordance with the
provisions of its agreement and to charge back to Par any costs
and expenses incurred by such customer to acquire such comparable
replacement product in excess of the price which was to have been
charged by Par to the customer for the Licensed Products which it
failed to provide (such excess costs and expenses being the excess
re-procurement costs contemplated in Section 14.1 and in this
Section 14.3);
(ii) which has a term of twelve (12) months or less; and
(iii) which provides for the supply of the relevant Licensed
Product in an amount not greater than the amount forecast by Par
pursuant to Section 6.2 hereof, taking into account all other
sales of the Licensed Product in the relevant period; or
(iv) where the contract has a term of more than 12 months, or
provides for an amount greater than that contemplated by Paragraph
(iii) above, SANO has approved or has been deemed to have approved
such contract in accordance with the provisions of Section 14.3(v)
hereof; or
(v) if the approval of SANO as contemplated in Paragraph (iv)
above is requested, Par shall have provided to SANO, in accordance
with the provisions of this paragraph, a complete copy of the
proposed final agreement between Par and its customer prior to
entering into such contract. A copy of any contract to be provided
to SANO as contemplated in this Paragraph (v) shall be forwarded
to SANO in the manner contemplated in Section 15.4 hereof. SANO
shall have a period of ten business days from the date upon which
copies of such contract are actually received by it as aforesaid
to notify Par in writing that it does not approve of the contract
and failing such notice from SANO within such ten business day
period SANO shall be deemed to have approved of such contract.
31
14.4 Confidentiality.
(a) The parties agree that, without the prior written consent of
the other party (such consent not to be unreasonably withheld) or except as may
be required under law or court order, the provisions of the Agreement shall
remain confidential and shall not be disclosed to any Person not affiliated with
any of the parties.
(b) Par and SANO hereby agree not to reveal or disclose any
Confidential Information (as defined below) to any Person without first
obtaining the written consent of the disclosing party, except as may be
necessary in regulatory proceedings or litigation. For purposes hereof
Confidential Information shall mean all information, in whatever form, which is
or was disclosed by one party to another or to an Affiliate of the other prior
to or during the term of this Agreement and which relates in any way to the
Products or to the business of the disclosing party, including, without
limitation information relating to customers and pricing. Confidential
Information shall not include information that a party can demonstrate by
written evidence:
(i) is in the public domain (provided that information in the
public domain has not and does not come into the public domain as
a result of the disclosure by the receiving party or any of its
Affiliates);
(ii) is known to the receiving party or any of its Affiliates
prior to the disclosure by the other party: or
(iii) becomes available to the party on a non-confidential
basis from a source other than an Affiliate of that party or the
disclosing party and Par covenants and agrees to cause its
Affiliates to comply with the provisions of this Section 14.4.
ARTICLE XV
GENERAL TERMS AND CONDITIONS
15.1 Force Majeure Clauses. Neither party shall be considered to be in
default in respect of any obligation hereunder, other than the obligation of a
party to make payment of amounts due to the other party under or pursuant to
this Agreement, if failure of performance shall be due to Force Majeure. If
either party is affected by a Force Majeure event, such party shall, within 20
days of its occurrence, give notice to the other party stating the nature of the
event, its anticipated duration and any action being taken to avoid or minimize
its effect. The suspension of performance shall be of no greater scope and not
longer duration than is required and the non-performing party shall use its
reasonable best efforts to remedy its inability to perform. The obligation to
pay money in a timely manner is absolute and shall not be subject to the Force
Majeure provisions, except to the extent prohibited by governmental rule or
regulations other than rules or regulations incident to bankruptcy or insolvency
proceedings of a party. Force Majeure shall mean an unforeseeable or unavoidable
cause beyond the control and without the fault or negligence of a party (and,
where the party is Par, beyond the control and without the fault or negligence
of any of its Affiliates) including, but not limited to, explosion, flood, war
32
(whether declared or otherwise), accident, labor strike, or other labor
disturbance, sabotage, acts of God, newly enacted legislation, newly issued
orders or decrees of any Court or of any governmental agency. Notwithstanding
anything in this Section to the contrary, the party to whom performance is owed
but to whom it is not rendered because of any event of Force Majeure as
contemplated in this Section 15.1 shall, after the passage of one hundred and
twenty days, have the option to terminate this Agreement on thirty days prior
written notice to the other party hereto. For greater certainty, the inability
or failure of Par to cause any of its respective Affiliates to comply with any
of the provisions of this Agreement expressed o be applicable to its Affiliates
or which require such party to cause the Affiliate to do or not to do something
shall not be considered Force Majeure unless the Affiliate in question is unable
to comply by reason of unforeseeable or unavoidable causes beyond the control
and without the fault or negligence of such Affiliate.
15.2 Arbitration. All disputes arising out of, or in relation to, this
Agreement (other than disputes arising out of any claim by a third party in an
action commenced against a party), shall be referred for decision forthwith to a
senior executive of each party not involved in the dispute. If no agreement can
be reached through this process within thirty days of request by one party to
the other to nominate a senior executive for dispute resolution, then either
party hereto shall be entitled to refer such dispute to a single arbitrator for
arbitration under Florida law, such arbitration to be held in Miami, Florida on
an expedited basis in accordance with the rules and regulations of the American
Arbitration Association. Any party demanding arbitration shall with service of
its demand for arbitration propose a neutral arbitrator selected by it. In the
event that the parties cannot agree upon a neutral arbitrator within thirty (30)
days after the demand for arbitration, an arbitrator shall be appointed by the
American Arbitration Association who shall be a partner in a Miami, Florida law
firm having at least ten (10) partners.
15.3 Assignment. This Agreement may not be assigned nor can the
performance of any duties hereunder be delegated by Par or by SANO without the
prior written consent of the other parties, which consent shall not be
unreasonably withheld; provided that any such assignment shall not relieve the
assignor from any of its obligations hereunder or under any other document or
agreement delivered by such party pursuant to, or delivered (or acknowledged to
have been delivered) contemporaneously with or in connection with the execution
of, this Agreement, which shall continue to be binding upon such party
notwithstanding such assignment. Notwithstanding the foregoing, Par may delegate
from time to time some of its duties hereunder to any of its Affiliates provided
that, prior to any such delegation, it gives written notice thereof to SANO
(indicating the duties being so delegated and the duration of such delegation);
provided that no such delegation shall relieve Par from any of its obligations
hereunder in respect of the duties being delegated or otherwise.
15.4 Notices. Any notice required or permitted to be given under this
Agreement shall be sufficiently given if in writing and delivered by registered
or certified mail (return receipt requested), facsimile (with confirmation of
transmittal), overnight courier (with confirmation of delivery), or hand
33
delivery to the appropriate party at the address set forth below, or to such
other address as such party may from time to time specify for that purpose in a
notice similarly given:
If to SANO:
SANO Corporation
3250 Commerce Parkway
Miramar, Florida 33025
Attn: President
Fax: (954) 430-3390
with a copy to (other than regularly prepared notices, reports, etc.
required to be delivered hereunder):
Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Gary Epstein, Esq.
Fax: 305-579-0717
If to PRI
c/o PRI Distributors, Ltd.
One Ram Ridge Road
Spring Valley, NY 10977
Attn: President
Fax: 914-425-7922
with a copy to (other than regularly prepared notices, reports, etc.
required to be delivered hereunder):
Hertzog, Calamari & Gleason
100 Park Avenue
New York, New York 10017
Attn: Stephen A. Ollendorff, Esq. and
Stephen R. Connoni, Esq.
Fax: (212) 213-1199
Any such notice shall be effective (i) if sent by mail, as aforesaid, five
business days after mailing, (ii) if sent by facsimile, as aforesaid, when sent,
and (iii) if sent by courier or hand delivered, as aforesaid, when received.
Provided that if any such notice shall have been sent by mail and if on the date
of mailing thereof or during the period prior to the expiry of the third
business day following the date of mailing there shall be a general postal
disruption (whether as a result of rotating strikes or otherwise) in the United
34
States then such notice shall not become effective until the fifth business day
following the date of resumption of normal mail service.
15.5 Governing Law and Consent to Jurisdiction.
(a) Except as otherwise provided herein, this Agreement shall be
deemed to have been made under, and shall be governed by, the laws of the State
of Florida in all respects including matters of construction, validity and
performance, but without giving effect to Florida's choice of law provisions.
(b) In connection with any action commenced hereunder, each of the
undersigned consent to the exclusive jurisdiction of the state and federal
courts located in Miami, Florida. Notwithstanding the foregoing, each party also
agrees to the jurisdiction of any court which a third party claim has been
brought.
15.6 Binding Agreement. This Agreement shall be binding upon the
parties hereto, and their respective successors and permitted assigns.
15.7 Entire Agreement. This Agreement and all other documents and
instruments delivered by any of the parties or their Affiliates pursuant hereto
or in connection with the execution and delivery of this Agreement contain the
entire agreement and understanding of the parties with respect to the subject
matter hereof and thereof and supersedes all negotiations, prior discussions and
agreements relating to the Licensed Products or the Right. This Agreement may
not be amended or modified except by a written instrument signed by all of the
parties hereto.
15.8 Headings. The headings to the various articles and paragraphs of
this Agreement have been inserted for convenience only and shall not affect the
meaning of the language contained in this Agreement.
15.9 Waiver. The waiver by any party of any breach by another party of
any term or condition of this Agreement shall not constitute a waiver of any
subsequent breach or nullify the effectiveness of that term or condition.
15.10 Counterparts. This Agreement may be executed in identical
duplicate copies. The parties agree to execute at least two identical original
copies of the Agreement. Each identical counterpart shall be deemed an original,
but all of which together shall constitute one and the same instrument.
15.11 Severability of Provisions. If, for any reason whatsoever, any
term, covenant or condition of this Agreement or of any other document or
instrument executed and delivered by either Par or SANO pursuant hereto or in
connection with the completion of the transaction contemplated herein, or the
application thereof to any party or circumstance is to any extent held or
rendered invalid, unenforceable or illegal, then such term, covenant or
condition:
35
(i) is deemed to be independent of the remainder of such
document and to be severable and divisible therefrom and its
validity, unenforceability or illegality does not affect, impair
or invalidate the remainder of such document or any part thereof;
and
(ii) continue to be applicable and enforceable to the fullest
extent permitted by law against any party and circumstances other
than those as to which it has been held or rendered invalid,
unenforceable or illegal.
15.12 Publicity. Neither party shall issue any press release or other
public statement regarding, or disclosing the existence of, this Agreement
without the prior written consent of the other party; provided, however, that
neither party shall be prevented from complying with any disclosure obligation
it may have under applicable law. The parties shall use their best efforts to
agree on the form and content of any such public statement.
ARTICLE XVI
GUARANTEE OF PRI
16.1 Guarantee. PRI does hereby unconditionally guarantee to SANO the
full and prompt payment and performance by Par of all of the obligations of
every nature whatsoever to be performed by Par under this Agreement (the
"Guaranteed Obligations") as and when required to be paid or performed under
this Agreement. The guarantee set forth in the preceding sentence (this
"Guarantee") is an absolute, unconditional and continuing guarantee of the full
and punctual payment and performance of the Guaranteed Obligations and is in no
way conditioned upon any requirement that SANO first attempt to enforce any of
the Guaranteed Obligations against Par, any other guarantor of the Guaranteed
Obligations or any other Person or resort to any other means of obtaining
performance of any of the Guaranteed Obligations. This Guarantee shall continue
in full force and effect until Par shall have satisfactorily performed or fully
discharged all of the Guaranteed Obligations. No performance or payment made by
Par, PRI, any other guarantor or any other Person, or received or collected by
SANO from Par, PRI, any other guarantor or any other Person in performance of or
in payment of the Guaranteed Obligations shall be deemed to modify, reduce
(except to the extent that any such performance or payment shall reduce the
Guaranteed Obligations), release or otherwise affect the liability of PRI under
this Guarantee which shall, notwithstanding any such payment or performance
other than those made by PRI in respect of the Guaranteed Obligations or those
received or collected from PRI in respect of the Guaranteed Obligations, remain
liable for the amount of the Guaranteed Obligations, until the Guaranteed
Obligations are paid and performed in full.
16.2 No Subrogation. Notwithstanding any payment or performance by PRI,
PRI shall not be entitled to be subrogated to any of the rights of SANO or any
other guarantor or any collateral security held by SANO against Par or any other
guarantor or any collateral security for the payment of the Guaranteed
Obligations, nor shall PRI seek or be entitled to seek any contribution or
reimbursement from Par or any other guarantor in respect of payments made by PRI
under this Guarantee. PRI HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS AND CLAIMS WHICH PRI MAY NOW HAVE OR HEREAFTER ACQUIRE TO BE
SUBROGATED TO ANY SUCH RIGHTS OF SANO AND TO SEEK OR BE ENTITLED TO SEEK ANY
SUCH CONTRIBUTION OR REIMBURSEMENT FROM Par OR ANY OTHER GUARANTOR. THE
36
OBLIGATIONS OF AND WAIVERS BY PRI SET FORTH IN THIS SECTION 16.2 SHALL SURVIVE
THE TERMINATION OF THIS GUARANTEE AND THE PAYMENT, PERFORMANCE AND SATISFACTION
IN FULL OF ALL OF THE GUARANTEED OBLIGATIONS.
16.3 Amendments, etc. with Respect to Guaranteed Obligations; Waiver of
Rights. PRI shall remain obligated under this Guarantee notwithstanding that,
without any reservation of rights against PRI and without notice to or further
assent by PRI, any demand for payment or performance of any of the Guaranteed
Obligations made by SANO may be rescinded by SANO and any of the Guaranteed
Obligations continued, and the Guaranteed Obligations, or the liability of any
other Person upon or for any part thereof, or any collateral security (or
guarantee therefor may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by SANO and this Agreement, any collateral security document or other
guarantee or document in connection herewith may be amended, modified,
supplemented or terminated, in whole or in part, as SANO may deem advisable from
time to time, and any collateral security or guarantee at any time held by SANO
for the payment or performance of the Guaranteed Obligations may be sold,
exchanged, waived, surrendered or released. SANO shall not have any obligation
to protect, secure, perfect or insure any lien at any time held by it as
security for the Guaranteed Obligations or for this Guarantee or any property
subject thereto. When making any demand hereunder against PRI, SANO may, but
shall be under no obligation to, make a similar demand on Par or any other
guarantor, and any failure by SANO to make any such demand or to collect any
payments from Par or any such other guarantor or any release of Par or such
other guarantor shall not relieve PRI of its obligations or liabilities under
this Guarantee, and shall not impair or affect the rights and remedies, express
or implied, or as a matter of law, of SANO against PRI.
16.4 Extent of Liability and Waivers. PRI understands and agrees that
the obligation of guarantee of PRI pursuant to Section 16.1 are intended to
render PRI liable hereunder in each instance where Par would be liable under
this Agreement, and no more, and except that the obligations of PRI hereunder
shall not be discharged by any bankruptcy or similar proceeding which may
discharge Par herefrom. Accordingly, PRI acknowledges that it will not assert,
and hereby waives to the fullest extent permitted by law, any rights to avoid
performance hereunder available to it as guarantor which are not also available
to Par. PRI waives any and all notice of the creation, renewal, extension or
accrual of any of the Guaranteed Obligations and notice of or proof of reliance
by SANO upon this Guarantee or acceptance of this Guarantee; the Guaranteed
Obligations, and any of them, shall conclusively be deemed to have been created,
contracted or incurred, or renewed, extended, amended or waived, in reliance
upon this Guarantee; and all dealings between Par or PRI, on the one hand, and
SANO on the other, pursuant to this Agreement shall likewise be conclusively
presumed to have been had or consummated in reliance upon this Guarantee. PRI
waives diligence, presentment, protest, demand for payment and notice of default
or nonpayment or nonperformance to or upon Par or any other guarantors with
respect to the Guaranteed Obligations. When pursuing its rights and remedies
hereunder against PRI, SANO may, but shall be under no obligation to, pursue
37
such rights and remedies as it may have against Par or any other Person or
against any collateral security or guarantee for the Guaranteed Obligations, and
any failure by PRI to pursue such other rights or remedies or to collect any
payments from Par or any such other Person or to realize upon any such
collateral security or guarantee, or any release of Par or any such other Person
or any such collateral security or guarantee, shall not relieve PRI of any
liability hereunder and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of SANO against PRI.
This Guarantee shall remain in full force and effect and be binding upon PRI and
its successors and assigns and shall inure to the benefit of SANO and its
successors and assigns, until all the Guaranteed Obligations shall have been
satisfied by payment and performance in full.
16.5 Reinstatement. This Guarantee shall continue to be effective, or
be reinstated, as the case may be, if at any time payment or performance, or any
part thereof, of any of the Guaranteed Obligations is rescinded or must
otherwise be restored or returned by SANO upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Par or PRI, or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, Par or PRI, or any substantial part of its or their
property, or otherwise, all as though such payments had not been made.
16.6 No Waiver; Cumulative Remedies. SANO shall not by any act (except
by a written instrument pursuant to Section 15.7), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any breach of any of the terms and conditions of this Agreement.
No failure to exercise, nor any delay in exercising, on the part of SANO, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by SANO of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the SANO
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
16.7 Affiliates. To the extent that Par or PRI is obligated hereunder
to cause its Affiliates to do or refrain from doing anything, PRI will do all
things that it may lawfully and reasonably do to cause such Affiliate to comply.
38
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the Execution Date.
SANO CORPORATION
By: /s/Reginald Hardy
-----------------------------------
(Signature)
Name: Reginald Hardy
Title: President
PHARMACEUTICAL RESOURCES, INC.
By: /s/Kenneth I. Sawyer
-----------------------------------
(Signature)
Name: Kenneth I. Sawyer
Title:President and Chief Executive Officer
PAR PHARMACEUTICAL, INC.
By: /s/Kenneth I. Sawyer
-----------------------------------
(Signature)
Name: Kenneth I. Sawyer
Title:President and Chief Executive Officer
39
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE SUCH OMISSION
EXHIBIT A
LICENSED PRODUCTS
Product A Sano FDA
Drug Name ANDA# Filing Date Accepted Date
Nitroglycerin Transdermal System [****] [****] [****]
[****]*
Nitroglycerin Transdermal System [****] [****] [****]
[****]*
Nitroglycerin Transdermal System [****] [****] [****]
[****]*
Nitroglycerin Transdermal System [****] [****] [****]
[****]*
Nitroglycerin Transdermal System [****] [****] [****]
[****]*
Nitroglycerin Transdermal System [****] [****] [****]
[****]*
*Generically equivalent to such strengths in Nitro Dur(R).
Product B Sano FDA
Drug Name ANDA# Filing Date Accepted Date
Nicotine Transdermal System 74-645 03/09/95 04/06/95
7 mg/day*
Nicotine Transdermal System 74-611 01/20/95 04/06/95
14 mg/day*
Nicotine Transdermal System 74-612 01/20/95 04/06/95
21 mg/day*
*Generically equivalent to such strengths in Habitrol(R).
40
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE SUCH OMISSION
EXHIBIT B
As used herein, the term "Net Sales" shall mean the gross amount
invoiced for sales of Licensed Product(s) made by PRI or its Affiliates to
independent third parties, reduced by the following to the extent that they are
properly allocable to the quantity of Licensed Product(s) so sold: all trade,
quantity and cash discounts allowed; credits or allowances actually granted on
account of rejections; returns, billing errors and retroactive price reductions
(including, without limitation, shelf stock adjustments); credits, rebates,
chargeback rebates, fees, reimbursements or similar payments granted or given to
wholesalers and other distributors, buying groups, health care insurance
carriers, governmental agencies and other institutions in respect of the
purchase price; freight, transportation, insurance or other delivery charges;
and all taxes (except income taxes), tariffs, duties and other similar
governmental charges paid by the seller on sales of the Licensed Product(s) and
not reimbursed by the purchaser. "Gross Profit" shall mean (i) with respect to
Product A, the difference between Net Sales for any amount of Product A and the
price paid to SANO pursuant to Section 7.2 hereof with a good faith effort by
SANO to reduce costs and (ii) with respect to Product B, the difference between
Net Sales for any amount of Product B and the lesser of (a) the price paid to
SANO pursuant to Section 7.2 hereof with a good faith effort by SANO to reduce
the costs thereof or (b) [****] per transdermal patch.
Product A. During the term of the Agreement, the Additional
Consideration payable to SANO with respect to Product A shall be [****] of Gross
Profit. Payment of Additional Consideration is to be made in respect of the
third preceding month, as set forth in Section 11.1.
The following illustrates payments to SANO under the foregoing formula,
assuming that sales of Product A commenced in January 1998:
JAN. FEB. MARCH APRIL MAY JUNE JULY AUGUST SEPT. OCT. NOV. DEC.
1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998
NET SALES [****] [****] [****] [****] [****] [****] [****] [****] [****]
PRICE TO
PRI [****] [****] [****] [****] [****] [****] [****] [****] [****]
------ ------ ------ ------ ------ ------ ------ ------ ------
GROSS
PROFIT [****] [****] [****] [****] [****] [****] [****] [****] [****]
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
PAYMENT
TO SANO [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****]
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
RETAINED
BY Par [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****]
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
41
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE SUCH OMISSION
Product B. During the term of the Agreement, the Additional
Consideration payable to SANO with respect to Product B shall be[****] of all
Gross Profit commencing retroactively to January 1, 1998. Payment of Additional
Consideration is to be made in respect of the third preceding month, as set
forth in Section 11.1. The following illustrates payments to SANO under the
foregoing formula, assuming that sales of Product B commenced in January 1998:
JAN. FEB. MARCH APRIL MAY JUNE JULY AUGUST SEPT. OCT. NOV. DEC.
1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998
NET SALES [****] [****] [****] [****] [****] [****] [****] [****] [****]
PRICE TO
PRI [****] [****] [****] [****] [****] [****] [****] [****] [****]
------ ------ ------ ------ ------ ------ ------ ------ ------
GROSS
PROFIT [****] [****] [****] [****] [****] [****] [****] [****] [****]
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
PAYMENT
TO SANO [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****]
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
RETAINED
BY Par [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****] [****]
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
42
EXHIBIT C
[SALES SUMMARY FORM]
43