Exhibit 10.13
RELEASE AND AMENDMENT AGREEMENT
This Release and Amendment Agreement (the "Agreement") is made this 1st day
of May 1998, by and between Pharmaceutical Resources, Inc., a New Jersey
corporation ("PRI"), Par Pharmaceutical, Inc., a New Jersey corporation ("Par"),
SANO Corporation, a Florida corporation ("SANO"), and Elan Corporation, plc, an
Irish company of Lincoln House, Lincoln Place, Dublin 2, Ireland (together with
its affiliates, "ELAN"). All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the Prior
Distribution Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, SANO, PRI and Par are parties to the Amended and Restated
Distribution Agreement, dated as of July 28, 1997 (the "Prior Distribution
Agreement");
WHEREAS, pursuant to the Prior Distribution Agreement, PRI and Par have
exclusive rights to distribute, among other products, the transdermal
nitroglycerin product (general equivalent of Transderm Nitro(R)) described as
Product C therein ("Product C"); and
WHEREAS, PRI and Par have agreed to release all of their rights with
respect to Product C to ELAN in consideration of the mutual agreements set forth
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
1. Product C Release. Subject to the terms and conditions hereof
(including Sections 3 and 5(a) hereof), PRI and Par hereby release and
transfer to ELAN all of their rights under the Prior Distribution
Agreement with respect to Product C (the "Product C Release"). Subject
to Section 5(a) below, SANO and ELAN hereby acknowledge that PRI and
Par have no further obligations or liabilities with respect to Product
C.
2. Product A Release. Subject to Section 5(a) hereof and Par's right of
election set forth in Section 6 hereof, PRI and Par hereby release and
transfer to ELAN all of their rights under the Prior Distribution
Agreement with respect to the transdermal nitroglycerin product
(generic equivalent of Nitro Dur(R)) described as Product A therein
("Product A"). Subject to Section 5(a) below, SANO and ELAN hereby
acknowledge that PRI and Par have no further obligations or liabilities
with respect to Product A.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE SUCH OMISSION
3. Consideration.
(a) The aggregate cash consideration for the Product C Release (the
"Consideration") shall be the aggregate of (i) [****] in cash, (ii) the
royalty payments described in Section 4 below, (iii) all amounts owing
under the promissory note attached as Exhibit C to the Prior
Distribution Agreement in the principal amount of $1,953,393 (plus
accrued interest of $118,729 from July 28, 1997 to April 15, 1998 plus
$454.90 per day until payment of the amounts due pursuant to Section
3(c) hereof is made), plus (iv) all amounts owing under Sections
13.14(a) and (c) of the Prior Distribution Agreement (i.e., [****] and
[****], respectively).
(b) The Consideration specified in Section 3(a)(i) and (iv) above shall
be payable by ELAN to Par in readily available funds in the form of a
certified check or wire transfer and shall be due and payable no later
than five days from the date hereof.
(c) The Consideration specified in Section 3(a)(iii) above shall be
payable by SANO to Par in readily available funds in the form of a
certified check or wire transfer and shall be due and payable no later
than five days from the date hereof. Upon payment of the foregoing
amount, Par shall return to SANO the original promissory note referred
to in Section 3(a)(iii) above, marked to reflect its cancellation.
4. Royalty Payments. (a) ELAN shall pay Par royalty payments (the "Royalty
Payments") equal to [****] of all Net Sales of Product C following the
date hereof by ELAN and its Affiliates (and any transferee(s) or
successor(s) of the rights to Product C) and/or, where applicable, any
distributors and licensees thereof (the "Royalty Parties") in the
United States (as defined in the Prior Distribution Agreement) and
Israel. Par acknowledges that it is not entitled to Royalty Payments
from both ELAN and a distributor or licensee thereof in respect of
sales of the same units of Product C.
(b) As used herein, the term "Net Sales" shall mean the gross amount
invoiced for sales of Product C made by ELAN or any of the other
Royalty Parties to any unaffiliated wholesaler, chain, distributor,
repackager, or buying or similar group for eventual sale reduced by the
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following to the extent that they are properly allocable to the
quantity of Product C 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 Product C and not reimbursed by the purchaser.
(c) Par's rights to the Royalty Payments shall be irrevocable,
perpetual, unconditional and, subject to the last sentence of this
subsection (c), not subject to offset for any reason. Royalty Payments
shall be payable quarterly on the 60th day following the end of each
calendar quarter. ELAN reserves the right to deduct before effecting
payment to Par the amount of any taxation it is required by law to
withhold from Par in respect of the payment of royalties due hereunder
to Par. In the event of any such deduction, ELAN shall secure and
furnish promptly to Par official tax receipts evidencing the payment of
such taxation.
(d) ELAN shall deliver to Par quarterly, on the 60th day following
the end of each calendar quarter, a sales summary showing all sales of
Product C made by ELAN and/or, where applicable, by the other Royalty
Parties during the immediately preceding calendar quarter, a statement
certifying its calculation of the Net Sales from gross revenues during
such calendar quarter, the units of Product C sold, and a computation
of the amounts due to Par.
(e) Subject to any contractual obligation of ELAN to the other
Royalty Parties, ELAN shall make available for inspection by Par at
ELAN's facilities such additional information concerning any sales
and/or any other information provided pursuant to Section 4(d) above as
Par may reasonably request from time to time to enable Par 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 ELAN pursuant to Section 4(f) hereof).
(f) ELAN shall keep complete and accurate records and books of
account containing all information required for the computation and
verification of the amounts to be paid to Par. Subject to any
contractual obligations of ELAN to the other Royalty Parties, ELAN
further agrees that at the request of Par, it will permit one or more
accountants selected by Par, except any to whom ELAN 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
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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 ELAN to report or make payment
pursuant to the terms of this Agreement. Such accountant shall not
disclose to Par any information relating to the business of ELAN except
that which is reasonably necessary to inform Par of:
(i) the accuracy or inaccuracy of ELAN's reports and payments;
(ii) compliance or non-compliance by ELAN 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 ELAN from that which is reasonably
necessary to so inform Par, the accountant may disclose any information
necessary to so inform Par and Par shall retain all other information
disclosed as confidential.
ELAN shall provide full and complete access to the accountant
to ELAN's 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
ELAN's payments or non-compliance by ELAN and should ELAN fail to
acknowledge in writing to Par 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 Par 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 ELAN). 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 ELAN, including ELAN's Chief Financial Officer. If any
audit under this Section shall reveal an underpayment or understatement
of the amount payable to Par by more than $5,000.00 for any period in
question, ELAN shall reimburse Par for all costs and expenses relating
to such investigational audit. Par shall only have the right to audit
such books and records of ELAN pursuant to this Section 4(f) 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 $5,000.00, as aforesaid, in which
case Par 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 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 customer) of any customer of
ELAN, but shall identify such customer to Par, if necessary, by the
customer code number used by ELAN in its reporting obligations to Par
and ELAN shall make such information known to the accountant. ELAN 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 4(f).
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(g) Except as specifically set forth to the contrary, all payments to
be made under this Agreement shall bear interest equal to two (2%)
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.
(h) ELAN shall have sole discretion in setting the sales price for
the sale of Product C, provided that ELAN shall not specifically
discount the price of Product C for the benefit of ELAN's other
products or to otherwise use Product C as a loss leader or incentive to
procure the sale of ELAN's other products. Rebate and other discount
programs (excluding any program where the price of Product C is
discounted primarily for the benefit of enhancing the sale of ELAN's
other products) generally available to ELAN's customers on the purchase
of pharmaceutical products shall not be prohibited by this Section
4(h), provided that such programs shall be in accordance with industry
standards for comparable products and shall be designed to promote the
sale of Product C and no other products.
(i) ELAN shall use its reasonable efforts to cause the other Royalty
Parties to comply with the provisions of this Section 4, including,
without limitation, to provide such information as is necessary to
confirm that all necessary royalty payments shall have been made to
Par.
5. Amendment to the Prior Distribution Agreement.
(a) The Prior Distribution Agreement shall be amended and restated as
set forth in the Amended and Restated Distribution Agreement, of even
date herewith, by and among SANO, PRI and Par, in the form attached as
Exhibit A hereto (the "Amended Distribution Agreement"). The Amended
Distribution Agreement shall replace and supersede the Prior
Distribution Agreement in its entirety; provided, however, that any
agreements relating to or in connection with Product C or Product A
which, pursuant to the terms of the Prior Distribution Agreement,
survive termination of the Prior Distribution Agreement, including
indemnification obligations, shall remain in effect on the same terms
and conditions as provided therein.
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(b) Notwithstanding any references in the Amended Distribution
Agreement to Product A, the term "Licensed Product" in the Amended
Distribution Agreement shall not include Product A and the provisions
thereof shall not apply to Product A, unless and until PRI exercises
its right of election set forth in Section 6 below.
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
ASTERISKS DENOTE SUCH OMISSION
6. Right of Election. In the event that ELAN obtains ANDA approval by the
FDA covering Product A, PRI shall have the right to elect, by written
notice to ELAN and the payment to ELAN of [****], to include Product A
as a "Licensed Product". In the event that PRI, makes such election,
the provisions of the Amended Distribution Agreement will be reinstated
with respect to Product A on the terms and conditions provided therein
as of the date hereof.
7. 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 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 ELAN:
Elan Corporation, plc
Lincoln House
Lincoln Place
Dublin 2, Ireland
Attn: Vice President and General Counsel
Elan Pharmaceutical Technologies, a division of
Elan Corporation, plc
Fax: (011) 353-1-662-4960
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If to PRI or Par:
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 (or in the case
of notice to or by ELAN by registered airmail), 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 States then such
notice shall not become effective until the fifth business day
following the date of resumption of normal mail service.
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8. 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.
9. Binding Agreement. This Agreement shall be binding upon the parties
hereto, and their respective successors and permitted assigns.
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.
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 ELAN 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:
(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.
12. Entire Agreement. This Agreement, together with the Amended
Distribution Agreement, represents the entire agreement of the parties
with respect to the subject matter hereof, superseding all prior
agreements and understandings, written or oral.
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IN WITNESS WHEREOF, this Release and Amendment Agreement has
been executed and delivered by the parties hereto as of the date first above
written.
PHARMACEUTICAL RESOURCES, INC.
By: /s/Kenneth I. Sawyer
--------------------------------------
Name: Kenneth I. Sawyer
Title: President and Chief Executive Officer
PAR PHARMACEUTICAL, INC.
By: /s/Kenneth I. Sawyer
--------------------------------------
Name: Kenneth I. Sawyer
Title: President and Chief Executive Officer
SANO CORPORATION
By: /s/Reginald Hardy
--------------------------------------
Name: Reginald Hardy
Title: President
ELAN CORPORATION, PLC
By: /s/Thomas G. Lynch
--------------------------------------
Name: Thomas G. Lynch
Title: Executive Vice President and
Chief Financial Officer
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