EXHIBIT 10.19
CO-DEVELOPMENT, SUPPLY AND LICENSING AGREEMENT made as of
the 26th day of June, 1995 between F.H. FAULDING & CO. LIMITED of
160 Greenhill Road, Parkside in the State of South Australia
(hereinafter called "Faulding") and PUREPAC PHARMACEUTICAL CO. of
200 Elmora Avenue, Elizabeth, New Jersey, United States of America
(hereinafter called "Purepac");
WHEREAS, Purepac is engaged in the development of certain
Tabletting Technology, among other reasons, to enable Purepac to
manufacture, distribute and sell a certain Formulated Product in
the Territory (as those terms are hereinafter defined);
WHEREAS, Faulding is engaged in the development of
certain Pellet Technology to enable Faulding to manufacture
Pellets, which Purepac requires for the manufacture of the
Formulated Product;
WHEREAS, in anticipation that the Pellet Technology will
be successfully developed by Faulding, Purepac has requested
Faulding, and Faulding has agreed, subject to the terms and
conditions set forth in this Agreement, to supply all of Purepac's
requirements of the Pellets for Purepac's use in the Territory;
WHEREAS, if the parties determine during the course of
this Agreement that Purepac shall manufacture the Pellets, Faulding
agrees to grant Purepac an exclusive license to use the Pellet
Technology to manufacture the Pellets for the sole purpose of
manufacturing, distributing and selling the Formulated Product
within the Territory.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. DEFINITIONS
For the purposes of this Agreement the following terms
shall have the following meanings:
1.1 "Affiliates" means (a) an entity controlled by a
common parent that owns more than fifty percent of the voting stock
of both such entity and one of the parties to this Agreement and
(b) such parent company.
1.2 "ANDA" means Abbreviated New Drug Application.
1.3 "FDA" means the United States Food and Drug
Administration or any successor body.
1.4 "Fiscal Year" means the twelve month period
commencing on July 1 of each year and ending on June 30, or any
other twelve month period designated as the fiscal year of
Faulding.
1.5 "Formulated Product" means the tabletted product
described on Schedule A hereto.
1.6 "GMP" means good manufacturing practice as required
by the regulations of the FDA.
1.7 "Patents" means patents as to the manufacture, use
and/or sale of the Pellets, the Pellet Technology, the Tabletting
Technology and the Formulated Product as described in Section 10
hereof.
1.8 "Pellet" means the coated pellet described on
Schedule B hereto, as that Schedule may be amended from time to
time by mutual agreement of the parties.
1.9 "Pellet Technology" means technology currently under
development by Faulding, including technical, scientific, industrial
information or knowledge, confidential information and
expertise in relation to the Pellets described on Schedule B
hereto, as that Schedule may be amended from time to time by mutual
agreement of the parties, and the processes and the means and
procedures for the manufacture and production of the Pellets.
1.10 "Project Review" means a meeting between the parties
(a) to discuss, among other matters, the amounts expended by each
party to date, expectations of future earnings and\or costs and any
other matters that may materially affect the continued viability of
the parties' development and manufacture of the Pellets or the
Formulated Product, as the case may be, and the sales of the
Formulated Product in the Territory and (b) to determine whether it
is in both parties' interests to continue to develop and/or
manufacture the Pellets and the Formulated Product, as the case may
be, and to sell the Formulated Product pursuant to the terms of
this Agreement.
1.11 "Regulatory Authority" means the FDA and/or any
other like authority whether Federal or State regulating the
manufacture, distribution, marketing and/or sale in the Territory
of therapeutic substances.
1.12 "Special Circumstances" shall mean the circumstances
described in Section 9.2 of this Agreement.
1.13 "Tabletting Technology" means technology including
technical, scientific, industrial information or knowledge,
confidential information and expertise in relation to the
Tabletting development process described on Schedule A hereto and
the processes and the means and procedures for the manufacture and
production of the Formulated Product in tablet form.
1.14 "Territory" means the United States of America and
its commonwealth states and territories.
2. DEVELOPMENT OF PELLET AND TABLETTING TECHNOLOGIES
2.1 Immediately upon execution of this Agreement,
Faulding will (a) continue with all due diligence the development
of the Pellet Technology to permit Purepac to complete the
tabletted presentation of the Formulated Product and (b) provide to
Purepac details of all work done to date in relation to the
development of the Pellets. Faulding will provide regular reports
on progress with this work to Purepac and in any event will report
not less than twice a month.
2.2 Upon Faulding's completion of its development work
with respect to the Pellets, Faulding will provide to Purepac all
Pellet Technology in its possession as may be necessary or helpful
for Purepac to complete the tabletting stage of the Formulated
Product's development. Faulding will promptly provide to Purepac
all technology which may subsequently be created or acquired by
Faulding as may be necessary or helpful for Purepac to complete the
tabletting stage of the Formulated Product and otherwise to fulfill
its obligations under this Agreement. The timing of each such
transfer of data will be agreed upon by the parties.
2.3 At the written request of Purepac, but not more
than twice in any calendar year, Purepac personnel will be entitled
to visit Faulding's premises in Australia for technical discussions
relating to the development and scale-up work on the Pellet
Technology PROVIDED, HOWEVER, THAT such visits will be at
Purepac's sole expense, will be held at a time reasonably convenient
to Faulding and, together, will be of an aggregate duration
of no more than two weeks.
2.4 Faulding shall pay the development costs incurred
in connection with the development of the Pellet Technology and
Purepac shall pay the development costs incurred in connection with
the development of the Tabletting Technology and the Formulated
Product. The parties agree that each of them , as of the date
hereof, have incurred the respective development costs detailed on
Schedule C hereof and that Faulding owes Purepac an aggregate of
$U.S. 577,546 in consideration for the amount expended by Purepac
on the development of the Pellet Technology up to and including the
date hereof. Faulding agrees to pay the total amount due Purepac
by no later than 30 days after the date of the Agreement.
3. SUPPLY OF PELLETS
3.1 Subject to the provisions of Section 3.2 of this
Agreement, Faulding shall sell to Purepac and Purepac shall
purchase from Faulding all of Purepac's requirements of the
Pellets for the sole purpose of manufacturing, distributing and
selling the Formulated Product within the Territory during the term
of this Agreement. Purepac agrees that it will not manufacture,
sell or attempt to sell the Formulated Product outside the
Territory either on its own account or through any third party nor
will it sell any Formulated Product to any person or corporation
within the Territory where Purepac has reasonable grounds to
believe that such other person or corporation intends to sell the
Formulated Product outside the Territory.
3.2 If at any time during the term of this Agreement,
the parties decide that Purepac shall manufacture the Pellets,
Faulding agrees to grant Purepac, at the estimated price set forth
in Section 6 of this Agreement, an exclusive license to the Pellet
Technology for the remainder of the term of the Agreement for the
sole purpose of manufacturing and selling the Formulated Product in
the Territory. Purepac agrees that it will not use or exploit the
Pellet Technology for any purpose other than the manufacture and
sale of the Formulated Product in the Territory.
3.3 Faulding agrees that it will not sell or transfer
the Pellet Technology or grant any rights to use or exploit the
Pellet Technology to any other person or corporation for the
manufacture of the Formulated Product within the Territory during
the term of this Agreement but the parties understand and agree
that Faulding has the right to license the Pellet Technology both
within and outside the Territory for any purpose other than the
manufacture of the Formulated Product and outside the Territory for
any purpose whatsoever, subject, however, in each instance to the
provisions set forth in Sections 4.2, 10.2 and 10.3 of this
Agreement.
3.4 In the event that Faulding desires to enter into an
agreement with any unaffiliated third party for such third party to
use the Pellets and/or the Pellet Technology in any other product
for sale within the Territory (a "Third Party Transaction"),
Faulding agrees to grant Purepac a prior right of first refusal to
use the Pellets and/or the Pellet Technology as follows:
(a) Faulding shall notify Purepac in writing of any such
intended Third Party Transaction at least sixty (60) days
prior to the intended closing date thereof, which notice
(the "Transaction Notice") shall contain all the material
terms of the proposed transaction. The right of first
refusal shall be exercisable by Purepac by delivery of
written notice ("Election Notice") to Faulding within
fifteen (15) business days after receipt of the Transaction Notice.
(b) If Purepac shall fail to elect to enter into the
transaction described in the Transaction Notice, then,
subject to the provisions of Section 10.3 hereof,
Faulding shall be free to effect such transaction on the
terms and conditions, including price, specified in such
Notice.
3.5 In the event that Purepac otherwise makes a written
request of Faulding to use the Pellets and/or Pellet Technology in
any other product, or in the sale of Product outside the Territory,
the parties agree to negotiate in good faith to determine whether
they can reach mutually acceptable and commercially reasonable
terms for such use of the Pellets and/or the Pellet Technology by
Purepac.
4. REGULATORY APPROVAL
4.1 Purepac hereby agrees to:
4.1.1 carry out all work necessary for the registration
of the Formulated Product in the Territory, other than that
set forth in Section 5 hereof as the responsibility of Faulding,
including scale-up and definitive pharmacokinetic and stability
studies on the tabletted presentation of the Formulated Product;
4.1.2 seek all necessary approvals and/or registrations
from the appropriate Regulatory Authority in the Territory to
permit the conduct of pharmacokinetic studies using the Formulated
Product and/or the manufacture, distribution, marketing and sale of
the Formulated Product in the Territory; and
4.1.3 comply with the reporting compliance requirements
of the Regulatory Authority in the Territory during the term
of this Agreement.
4.2 The parties agree that if Faulding desires to
register the Formulated Product anywhere outside the Territory,
Faulding shall not be permitted to use, and Purepac shall not be
required to disclose to Faulding, any confidential information
regarding the Tabletting Technology. The parties agree to
negotiate in good faith to determine the mutually acceptable and
commercially reasonable consideration that Faulding shall pay to
Purepac for the right to use the Tabletting Technology.
4.3 Purepac agrees that it will, in accordance with the
laws and regulations of the Territory as such laws and regulations,
may from time to time be amended, promptly (a) notify Faulding of
(i) any serious and unexpected adverse reactions reported to it or
to any sub-licensee of Purepac resulting from the use of the
Formulated Product , (ii) any complaints from third parties
involving the Formulated Product and (iii) any recall of the
Formulated Product and (b) provide to Faulding copies of all other
adverse reaction reports received by it or any sub-licensee of
Purepac.
4.4 Purepac agrees to maintain adequate quality control
in respect of its manufacture, packaging, labelling and storage of
the Formulated Product and to ensure that all manufacture of and
packaging and labelling used for the Formulated Product meets all
the requirements under the applicable laws, rules and regulations
in the Territory.
4.5 In the event that Faulding uses the Pellets or
Pellet Technology, either within or outside the Territory, in the
manufacture of any other product ("Other Pellet Product"), Faulding
agrees that it will, in accordance with the laws and regulations of
the Territory as such laws and regulations, may from time to time
be amended, promptly (a) notify Purepac of (i) any serious and
unexpected adverse reactions reported to it or to any sub-licensee
of Faulding resulting from such use of the Pellets or Pellet
Technology in any Other Pellet Product (ii) of any complaints from
third parties involving such Other Pellet Product, and (iii) any
recall of any such Other Pellet Product, and (b) provide to
Purepac copies of all other adverse action reports received by it
or any sub-licensee of Faulding.
4.6 Each party shall immediately notify the other party
of any inspections by any Regulatory Authority as a result of the
recall or other regulatory issue related to the Formulated Product
or any Other Pellet Product, as the case may be.
5. MANUFACTURE OF THE PELLETS BY FAULDING
5.1 Faulding will manufacture the Pellets in accordance
with all regulations of the Regulatory Authority and in conformance
with GMP and the specifications for the Pellets agreed to by the
parties and Purepac's purchase orders described below in Section 7
hereof. Faulding agrees to maintain adequate quality control in
respect of its manufacture, packaging, labelling and storage of the
Pellets and to ensure that all packaging and labelling used for the
Pellets meets all the requirements under the applicable laws, rules
and regulations in the Territory. Faulding also agrees to maintain
complete and accurate records for such period of time as required
by applicable law.
5.2 Faulding acknowledges and agrees that, as the
approved site of manufacture of the Pellets, it may be required, at
its own cost, to undergo preapproval and other periodic inspections
by the Regulatory Authority and that it will, when and as required
by, and in the name of Purepac, assist Purepac in gaining
marketing approval of the Formulated Product, including, without
limitation, undertaking:
5.2.1 the quality control testing of all materials
used in the manufacture of the Pellets in accordance
with the standards of the United States
Pharmacopeia and any other specification which may
be required by the Regulatory Authority;
5.2.2 the scale-up and stability tests of the
Pellets and the manufacture and scale-up of exhibit
and registration stability batches of the Pellets;
5.2.3 the conduct of ongoing stability trials as
required by the Regulatory Authority in the Territory;
and
5.2.4 the completion of all documentation necessary
for the registration of the Formulated Product
in the Territory.
5.3 The quality control testing referred to in Section
5.2 hereof shall be conducted in accordance with all relevant
scientific and legal standards and with all reasonable diligence
and expedition.
5.4 Faulding agrees that any manufacturing and quality
control changes to the Pellets will be made in accordance with the
applicable laws and regulation in the Territory and with the prior
written consent of Purepac.
5.5 Faulding will store and maintain retention samples
of the Pellets from each lot to meet the requirements of the
Regulatory Authority in the Territory.
5.6 All Pellets received by Purepac shall be deemed
accepted unless Purepac gives Faulding written notice (the
"Objection Notice") within thirty (30) days of such receipt
specifying the manner in which the Pellets do not conform to
specifications. The Objection Notice shall be accompanied by
written reports of any testing performed by or for Purepac on the
Pellets. Upon receipt of the Objection Notice, Faulding may request
Purepac to return the rejected Pellets or samples thereof for
further testing. The test results, if any, submitted to Faulding by
Purepac shall be deemed conclusive unless Faulding notifies Purepac
within thirty (30) days of its receipt of the Objection Notice or
the samples, whichever is later, that it disagrees with such test
results. In the event of such notice by Faulding, the rejected
Pellets or samples thereof shall be submitted to a mutually
acceptable independent laboratory (the "Independent Laboratory")
for analysis in the form of a written report (the "Report"), the
costs of which shall be paid by the party against whom the
discrepancy is resolved. In the event that the results of the
Report determine that any of the Pellets rejected by Purepac do not
meet specifications, Faulding will replace such Pellets with
conforming goods within ninety (90) days from the date of the
Report, provided that the departure from specifications is not due
to the fault or act of Purepac. All transportation, shipping and
insurance costs and other fees incident to the shipping back to
Faulding of the Pellets determined by the Report to be defective
and the shipping to Purepac of the replacement Pellets will be paid
for by Faulding if the Pellets have been determined by the Report
to be defective.
5.7 Purepac shall have the right, at its own cost, (a)
twice annually and (b) upon the (i) report to Purepac or any sub-
licensee of Purepac of any serious and unexpected adverse
reactions resulting from the use of the Formulated Product , (ii)
any complaints from third parties involving the Formulated Product,
(iii) any recall of the Formulated Product , (iv) any serious and
unexpected adverse reactions reported to Purepac by Faulding
resulting from the use of the Pellets or Pellet Technology in any
Other Pellet Product , (v) of any complaints from third parties
involving Other Pellet Products, and (vi) any recall of any such
Other Pellet Product, to visit Faulding's manufacturing plant for
the Pellets during regular business hours, provided reasonable
prior written notice is provided to Faulding and that each such
visit shall be of a duration of no more than fourteen (14) business
days.
5.8 During any such visit contemplated by Section 5.7 of
this Agreement, Purepac shall have the right (a) to inspect the
manufacturing facilities, (b) to inspect quality control procedures
and (c) to review any records maintained pursuant to Section 5.1,
to ensure that Faulding complies with GMP regulations and other
applicable regulations for the Pellets.
6. MANUFACTURE OF THE PELLETS BY PUREPAC
6.1 If at any time the parties determine that Purepac
shall manufacture the Pellets, the parties agree to negotiate in
good faith to amend this Agreement as follows:
6.1.1 Faulding shall cooperate with Purepac, at
Purepac's cost, to gain approval by the Regulatory Authority of an
alternate site of manufacture of the Pellets and shall continue to
manufacture and supply the Pellets until such time as the alternate
site is approved.
6.1.2 Upon the payment to Faulding of a technology
transfer fee of $U.S. 250,000 and the agreement to pay to Faulding
an ongoing royalty at the rate of 7.2% of the Gross Margin of all
Formulated Product sold in the Territory by Purepac, Faulding shall
grant Purepac an exclusive license to the Pellet Technology for the
remainder of the term of this Agreement for the sole purpose of
manufacturing and selling the Formulated Product in the Territory,
as set forth in Section 3.2 hereof. As used in this Section, Gross
Margin shall mean the Net Sales Price less the Direct Material
Costs; Net Sales Price shall mean with respect to any calendar
quarter, the gross income of Purepac from sales of the Formulated
Product to independent third parties (not including amounts
received as reimbursement of freight, insurance and other costs or
taxes) invoiced by Purepac during such quarter, less price
discounts, trade returns, trade allowances, chargebacks or rebates
relating to such sales, as calculated using Purepac's standard
accounting procedures, in accordance with U.S. generally accepted
accounting principles, consistently applied. It is understood and
agreed that where the amount of any such deduction can not be
fairly determined during the quarter immediately following the
quarter in question, such deduction may be claimed by Purepac with
respect to Net Sales made during a subsequent quarter; and Direct
Material Costs shall mean, with respect to any calendar quarter,
the actual material costs of the manufacture of the Formulated
Product, including, without limitation, the costs of packaging, as
determined in accordance with generally accepted U.S. accounting
principles, consistently applied.
6.1.3 Faulding shall provide to Purepac all Pellet
Technology in its possession as may be necessary or helpful for
Purepac to replicate and scale up the process for the manufacture
of the Pellets and Formulated Product. The timing of such transfer
of data will be agreed upon by the parties.
6.1.4 Purepac will be entitled to request Faulding
to provide scientists and engineers, as the parties shall mutually
agree to be appropriate, to aid Purepac at Purepac's site in the
replicating and scaling up of the process of manufacture of the
Formulated Product. All of such services will be at Purepac's
expense including travel, accommodation and an appropriate per diem
fee for each of the personnel provided. Faulding agrees to provide
such services to Purepac at commercially reasonable rates.
7. FORECASTS AND PURCHASE ORDERS FOR PELLETS; PAYMENTS
7.1 Purepac shall place written purchase orders with
Faulding, receipt of which shall be promptly acknowledged by
Faulding in writing, for the quantities and the delivery dates of
Pellets which Purepac desires to purchase under this Agreement.
Such purchase orders and acknowledgments thereof may be issued or
given on Faulding's or Purepac's standard forms, as the case may
be, containing standard terms and conditions, but the terms and
conditions of this Agreement, and not such standard terms and
conditions, shall govern the purchase and sale of Pellets under
this Agreement.
7.2 The price of the Pellets purchased by Purepac shall
be as set forth on Schedule D hereto.
7.3 Any amounts due and payable shall be paid in full by
Purepac to Faulding within sixty (60) days from the date of receipt
of the Pellets. Payments for the Pellets, and for any other
services under this Agreement, as set forth in Sections 2.4, 5.2,
6.1 and 17.1, shall be paid in U.S. dollars by wire transfer to
the account specified by the recipient party from time to time.
The payor shall convert the amounts due and payable into U.S.
dollars during the month that such amount is posted within its
books. The exchange rate shall be the T/T mid rate of the
Australia and New Zealand Banking Group Limited in Adelaide,
Australia on the last business day of the month immediately
preceding the month that such amount is posted.
7.4 Immediately before the commencement of every
calendar quarter, Purepac shall provide Faulding with a forecast of
the number of Pellets to be ordered for delivery during each of the
five (5) quarters following the date of the forecast. Such
forecast shall not create a binding obligation on the part of
either party to this Agreement. However, Purepac shall use all
reasonable efforts to make each forecast as accurate as possible.
7.5 Faulding shall not be required to supply during any
particular quarter more than one hundred twenty percent (120%) of
the most recent forecasted amount for such quarter, but will use
all reasonable efforts to supply the full amount ordered.
8. SHIPMENT OF PELLETS
8.1 Deliveries of the Pellets to the destination in the
Territory designated by Purepac shall be made by Faulding as
designated in the purchase orders, but in no event will any such
purchase order require delivery within less than sixty (60) days
after the placement of the purchase order by Purepac. Faulding
will ensure that deliveries of the Pellets are accompanied by
quality control certificates of analysis and will send copies of
such certificates of analysis contemporaneously by telecopier
(confirmed by hard copies mailed) to Purepac. Identification of
the goods to the contract shall occur and title thereto and risk of
loss shall pass to Purepac upon delivery to the carrier.
8.2 Purepac may choose the means of shipment by
notifying Faulding of its choice on its Purchase Order. Purepac
shall pay for all freight and insurance costs. Identification of
the goods to the contract shall occur and risk of loss shall pass
to Purepac upon delivery of the Pellets to the carrier. In the
event Purepac has not furnished Faulding with shipping and
insurance instructions in its purchase order, Faulding shall
deliver the Pellets to Purepac F.O.B. Faulding's plant in Salisbury,
South Australia within 90 days of acceptance of the order by
delivery to a carrier selected by Faulding and Faulding shall, in
its sole discretion, obtain insurance coverage thereon, the cost of
which shall be borne by Purepac and added to the purchase price.
8.3 Purepac (a) shall be responsible for the payment of
any import, customs or similar duties imposed by governmental
authorities and of any federal, state, county or municipal sales or
use tax, excise or similar charge, or any other tax assessment
(other than that assessed against income), license, fee or other
charge lawfully assessed or charged on the use or transportation
of the Pellets sold and delivered to Purepac pursuant to this
Agreement; and (b) shall obtain any licenses, authorizations or
other documents required by any governmental authorities in order
to permit the importation of the Pellets sold and delivered to
Purepac pursuant to this Agreement. Faulding shall be responsible,
at its own cost, for obtaining and paying any export clearances.
8.4 If Purepac claims that there is a shortage of any of
the Pellets delivered by Faulding pursuant to a purchase order, it
shall submit written notice to Faulding within ten (10) days of the
date of the delivery of such order. In case of alleged
non-delivery, a written claim must be submitted to Faulding within
thirty (30) days of Faulding's delivery advice notice. In the
absence of such a written claim, in the case of either alleged
shortage or non-delivery, the Pellets shall be deemed to have been
delivered in accordance with this Agreement. In any event, Purepac
shall not be entitled to refuse to accept delivery by reason only
of an alleged shortage.
9. PROJECT REVIEW
9.1 Within 60 days after the end of each Fiscal Year, or
as otherwise agreed, the parties shall conduct an annual Project
Review.
9.2 In addition to the annual Project Review, either
party, upon the occurrence of any Special Circumstances, may give
notice in writing to the other party requiring a Project Review
within 30 days of the receipt of the notice. The Special Circumstances
are as follows:
(a) the manufacture, use or sale of the Pellets or the
Formulated Product has resulted in, will result in, or will be
likely to result in, the infringement of a third party's
patent or other intellectual property rights relevant to the
Territory or to Australia;
(b) development of the Pellet Technology or the Formulated
Product, submissions to the Regulatory Authority or the
issuance of the ANDA is not going to be achieved, or are not
likely to be achieved, within six (6) months after the
relevant due dates agreed to by the parties;
(c) during any Fiscal Year, the forecasted sales of Formulated
Product are less than 75% of the budgeted sales of Formulated
Product for such Fiscal Year that have been approved either by
the Board of Directors of Purepac's sole stockholder, Purepac,
Inc. or by the management of Faulding;
(d) during any Fiscal Year, the forecasted net income from
sales of Formulated Product is less than 75% of Purepac's
budgeted net income from sales of Formulated Product for such
Fiscal Year that has been approved either by the Board of
Directors of Purepac, Inc. or the management of Faulding ;
(e) projected development costs of either party are currently
expected to be greater than 130% of the costs previously
forecasted by such party;
(f) development, manufacture or sale of the Pellets or the
Formulated Product has ceased to be commercially viable and
relevant to the business objectives of Faulding or Purepac,
respectively; or
(g) Faulding is unable to supply Pellets for a period of time
(i) exceeding one hundred eighty (180) days after the requested
delivery date or (ii) exceeding ninety (90) days after
the requested delivery date and the parties agree that it is
likely that Faulding will be unable to supply Pellets for at
least an additional ninety (90) days.
9.3 If during, or within 15 days after, any Project
Review, either party determines that as a result of the occurrence
of a Special Circumstance, it is not in its best interest to
continue to develop, manufacture and sell the Pellets or the
Formulated Product, as the case may be, pursuant to the terms of
this Agreement, such party may terminate the Agreement in accordance
with the provisions of Section 20.3 of this Agreement;
provided, however, with respect to a termination arising from any
of the Special Circumstances set forth in Subsection (a), (b) and
(g) of Section 9.2 hereof, if such Special Circumstance is no
longer applicable within a period of six (6) months after such
termination, the parties agree to negotiate in good faith to resume
the manufacturing and marketing of the Formulated Product and to
establish the commercial terms between them with regard to such
resumption.
10. INTELLECTUAL PROPERTY RIGHTS
10.1 Purepac acknowledges and agrees that Faulding is
the owner of the Pellet Technology and all industrial and intellectual
property rights of any kind in relation to the Pellet
Technology including the right to patents, registered or other
designs, copyright, trademarks or trade names and any other
confidential information. Nothing contained in this Agreement shall
be effective to give Purepac any rights of ownership in and to the
Pellet Technology and to the intellectual property owned by
Faulding and the licensing of the Pellet Technology under this
Agreement is for the sole purpose of developing, registering,
manufacturing and selling the Formulated Product in the Territory.
10.2 Faulding acknowledges and agrees that Purepac is
the owner of the Tabletting Technology and all industrial and
intellectual property rights of any kind in relation to the
Tabletting Technology, including the right to patents, registered
or other designs, copyright, trademarks or trade names and any
other confidential information. Nothing contained in this
Agreement shall be effective to give Faulding any rights of
ownership in and to the Tabletting Technology, including, without
limitation, any improvements to the Tabletting Technology described
in Section 12 hereof, and to the intellectual property owned by
Purepac.
10.3 In the event that Faulding shall desire to register
the Formulated Product anywhere outside the Territory, the parties
agree to negotiate in good faith to determine the mutually
acceptable and commercially reasonable consideration that Faulding
shall pay to Purepac for the right to use the Tabletting Technology.
11. FORMULATED PRODUCT IMPROVEMENTS BY FAULDING
If Faulding makes or discovers any improvements to the
Pellet Technology as it applies to the Formulated Product during
the term of this Agreement and Faulding wishes to include such
improved Pellet in the Formulated Product, it shall have the option
to do so; provided, however, that the improved Pellet shall first
be approved for use by the Regulatory Authority in the Territory,
that Faulding shall fully cooperate with Purepac in achieving such
regulatory approval and that if Purepac does not agree with
Faulding that the improved Pellet should be included in the
Formulated Product, the cost of incorporating such improved
Pellet, including, without limitation, the cost of achieving
approval by the Regulatory Authority shall be to Faulding's
account. Purepac may use any such improved Pellet without payment
of any further sum; provided, however, that if any such improvements
to the Pellet Technology cause a material reduction in
Purepac's overall costs of manufacturing the Formulated Product or
give any other material commercial advantage to Purepac, then the
parties shall negotiate in good faith whether, and what, modifications
should be made to the commercial terms between them.
12. FORMULATED PRODUCT IMPROVEMENTS BY PUREPAC
12.1 Any improvements to the Pellet Technology as it
applies to the Formulated Product made or discovered by Purepac
during the term of this Agreement shall be made known by Purepac to
Faulding and Faulding shall be entitled to use and commercially
exploit any such improvement without payment of any fee or royalty.
12.2 Purepac shall make known to Faulding any improvements
to the Tabletting Technology that are required to be known by
Faulding to effect the Pellet Technology development.
13. CONFIDENTIALITY
13.1 Purepac agrees with Faulding that it will not
disclose to any person or corporation any of the Pellet Technology
without the prior written consent of Faulding and that Purepac will
use all reasonable efforts to prevent unauthorized publication or
disclosure by any person of such Pellet Technology, including,
without limitation, requiring its employees, consultants, sub-licensees
and agents to enter into similar confidentiality
agreements in relation to the Pellet Technology.
13.2 Faulding agrees with Purepac that it will not
disclose any of the Tabletting Technology and any other confidential
information of Purepac that it may acquire at any time during
the term of this Agreement without the prior written consent of
Purepac and that Faulding will use all reasonable efforts to
prevent unauthorized publication or disclosure by any person of the
Tabletting Technology and such other confidential information,
including requiring its employees, consultants and agents to enter
into similar confidentiality agreements in relation to the
Tabletting Technology and such other confidential information.
13.3 The obligations undertaken by each party under this
Section 13 shall continue in force for a period of five (5) years
following the termination or expiration of this Agreement.
13.4 The obligations contained in this Section 13 do not
apply:
(a) to any information which was at the time of receipt
by a party in the public domain or generally known in the
pharmaceutical manufacturing industry otherwise than by
breach of a party's duty of confidentiality;
(b) information which a party can establish to have been
known to it at the time of receipt from the other party
and not to have been acquired directly or indirectly from
the other party;
(c) information acquired by a party from a third party
otherwise than in breach of an obligation of confidence
to the other party; and
(d) information with respect to the Pellet and Tabletting
Technologies provided to the Regulatory Authority in
connection with the registration of the Formulated
Product.
14. FAULDING'S WARRANTIES
Faulding represents and warrants to Purepac that:
14.1 it has the corporate authority to enter into this
Agreement and to perform its obligations hereunder;
14.2 it is not aware of any legal, contractual or other
restriction, limitation or condition which might affect adversely
its ability to perform hereunder;
14.3 all Pellets manufactured and delivered to Purepac
by Faulding pursuant to this Agreement shall meet the specifications
for such product at the time of delivery by Faulding to
Purepac, as such specifications may be subsequently agreed to by
the parties, and shall be manufactured and stored by Faulding in a
plant which meets the requirements of the Regulatory Authority in
the Territory, in accordance with Purepac's regulatory filings in
the Territory and GMP;
14.4 to the best of its knowledge as of date of this
Agreement, the Pellet Technology as it is known as of the date
hereof does not infringe any published U.S. or Australian patent;
and
14.5 upon the transfer of the Pellet Technology to
Purepac, as contemplated by Section 3.2 of this Agreement (a) it
will be the owner of the Pellet Technology free and clear of any
liens or encumbrances of third parties and (b) to the best of its
knowledge as of the date of this Agreement, it will have sufficient
right, title and interest in the Pellet Technology to grant the
license to Purepac granted hereunder.
15. PUREPAC'S WARRANTIES
Purepac represents and warrants to Faulding that:
15.1 it has the corporate authority to enter into this
Agreement and to perform its obligations hereunder;
15.2 it is not aware of any legal contractual or other
restriction, limitation or condition which might affect adversely
its ability to perform hereunder;
15.3 it is the owner of the Tabletting Technology free
and clear of any liens or encumbrances of third parties and to the
best of its knowledge as of the date of this Agreement, it has
sufficient right, title and interest in the Tabletting Technology
to use such technology in the tabletted presentation of the
Formulated Product; and
15.4 to the best of its knowledge as of the date of this
Agreement, the Tabletting Technology as of the date hereof does not
infringe any published U.S. patent.
16. INDEMNITY
16.1 Faulding agrees to indemnify, defend and hold
harmless Purepac, its Affiliates and subsidiaries and their
respective employees against any and all claims, losses (except
consequential losses, such as, for example, the loss of business or
of profits), damages and liabilities (including reasonable
attorney's fees, and liabilities for personal injury suffered by
any person) arising out of any breach of any obligation by
Faulding hereunder or any representation or warranty by Faulding
hereunder or any act or omission of Faulding in connection with its
contract obligations hereunder.
16.2 Purepac agrees to indemnify, defend and hold
harmless Faulding, its Affiliates and subsidiaries and their
employees against any and all claims, losses (except consequential
losses, such as, for example, the loss of business or of profits),
damages and liabilities (including reasonable attorney's fees and
liabilities for personal injury suffered by any person) arising out
of any breach of any obligation by Purepac hereunder or any
representation or warranty by Purepac hereunder or any act or
omission of Purepac or any of its agents or sub-licensees in
connection with the marketing, distribution and sale of the
Formulated Product.
16.3
(a) If Purepac or any of its Affiliates or subsidiaries or
Faulding or any of its Affiliates or subsidiaries (in each case an
"Indemnified Party") receives any written claim which it believes
is the subject of indemnity hereunder by Faulding or Purepac, as
the case may be, (in each case as "Indemnifying Party"), the
Indemnified Party shall, as soon as reasonably practicable after
forming such belief, give notice thereof to the Indemnifying Party,
including full particulars of such claim to the extent known to the
Indemnified Party; provided, that the failure to give timely notice
to the Indemnifying Party as contemplated hereby shall not release
the Indemnifying Party from any liability to the Indemnified party
other than pursuant to this Section 16. The Indemnifying Party
shall have the right, by prompt notice to the Indemnified Party, to
assume the defense of such claim with counsel reasonably satisfactory
to the Indemnified Party, and at the cost of the Indemnifying
Party. If the Indemnifying Party does not so assume the defense of
such claim or, having done so, does not diligently pursue such
defense, the Indemnified Party may assume such defense, with
counsel of its choice, but for the account of the Indemnifying
Party. If the Indemnifying Party so assumes such defense, the
Indemnified Party may participate therein through counsel of its
choice, but the cost of such counsel shall be for the account of
the Indemnified Party.
(b) The party not assuming the defense of any such claim
shall render all reasonable assistance to the party assuming such
defense, and all out-of-pocket costs of such assistance shall be
for the account of the Indemnifying Party.
(c) No such claims shall be settled other than by the party
defending the same, and then only with the consent of the other
party, which shall not be unreasonably withheld; provided, that the
Indemnified Party shall have no obligation to consent to any
settlement of any such claim which imposes on the Indemnified Party
any liability or obligation which cannot be assumed and performed
in full by the Indemnifying party.
16.4 Faulding shall have no liability hereunder for any
claim which, if true, would constitute a breach of the warranties
contained in Sections 14.4 and 14.5 hereof (hereinafter an
"Infringement Claim") based on Purepac's manufacture or distribution
of the Formulated Product, as the case may be, after Purepac
receives a notice from Faulding that Purepac should cease such
manufacture or distribution due to an Infringement Claim.
17. PATENT PROSECUTION, MAINTENANCE AND INFRINGEMENT
17.1 The party responsible for applying for and
obtaining Patents (the "Responsible Party") involving the
Tabletting Technology shall be Purepac and involving the Pellets,
the Pellet Technology and any combination of the Pellet and
Tabletting Technologies shall be Faulding. Each Responsible Party
shall immediately furnish the other party with true copies of the
Patent(s) concerned. Other than with respect to any Patents
combining the Pellet and Tabletting Technologies (the "Combined
Patents"), all expenses for the prosecution and maintenance of each
of the aforementioned Patents shall be paid by the Responsible
Party. The parties shall equally share the expenses for the
prosecution and maintenance of the Combined Patents and the
Combined Patents will be applied for in the names of both Faulding
and Purepac. Each of the parties agrees to cooperate, as
reasonable necessary with the party prosecuting the patent
application, upon the request of such prosecuting party.
17.2 Each party will promptly notify the other party of
any infringement or possible infringement by a third party of any
of the Patents and any claim of litigation by a third party
alleging invalidity of any of the Patents. Moreover, in the event
of any claim of litigation by a third party alleging infringement
by any of the Patents or if either party discovers that any of the
Patents infringe, or may possibly infringe, a third party's
intellectual property rights, each Party shall promptly give notice
of such claim or litigation to the other Party.
17.3 Subject to the warranties set forth in Sections 14
and 15 hereof, the "Litigating Party", which shall be:
(a)Faulding with respect to any actions associated with
alleged infringement of or by Patents involving the Pellets or
Pellet Technology; and
(b) Purepac with respect to any actions associated with
alleged infringement of or by Patents involving the Tabletting
Technology, the Formulated Product or active drug substances,
shall have the right but not the obligation to defend or prosecute
any right with respect to such Patent. In such event, the other
party shall cooperate with the Litigating Party.
17.4 If the Litigating Party fails to prosecute or
defend any such action within one (1) year after giving or
receiving notice thereof, then the other party shall have the
right, but not the obligation, to prosecute or defend any such
action on its own behalf and, if necessary to sustain standing, the
right to name the Litigating Party, or, if applicable, its succes-
sor or assignee, as a party plaintiff. In such event, the
Litigating Party shall reasonably cooperate with the other party.
17.5 The party prosecuting or defending the action shall
control all aspects of such action and bear all costs of such
action and the proceeds of such action, of which there is no
indemnification or for which indemnification is not sought, shall
belong to the prosecuting or defending party, except that with
respect to actions involving the Combined Patents, the parties
shall equally share the costs and proceeds of such actions.
18. TAXATION ISSUES
18.1 Each of the parties is aware that the commercial
arrangements of this Agreement may be subject to transfer pricing
reviews by the relevant taxation authorities in the Territory and
Australia. As a result, this Agreement may be subject to internal
reviews by either or both parties and to audits by the relevant
taxation authorities. If as a result of such reviews or audits, it
becomes necessary or advisable for either party (the "Affected
Party")to change any commercial arrangements of this Agreement,
including, without limitation, making retroactive adjustments, the
other party, within thirty (30) days after written notification by
the Affected Party, which notification shall explain in reasonable
detail the reason for the proposed change, shall meet with the
Affected Party and each of the parties agrees to negotiate in good
faith, and to use its best efforts to reach agreement with respect
to, any modifications to the commercial terms of this Agreement.
In the event that the parties, despite their best efforts, cannot
reach agreement with respect to any material change, which in the
opinion of either party is necessary or advisable for the reasons
set forth in this Section 18.1, either party, upon written notice
to the other party, may terminate this Agreement. The provisions
of Sections 24.4 and 24.5 of this Agreement shall apply upon any
termination of the Agreement pursuant to this Section 18.1.
19. NOTICES
Notices provided under this Agreement to be given or served by
either party on the other shall be given in writing and served
personally or by prepaid registered airmail post, express mail or
by means of facsimile to the following respective addresses or to
such other addresses as the parties may hereafter advise each other
in writing. It being agreed and understood by the parties that any
such notice shall be deemed given and served on the dates transmitted
by facsimile or a date ten (10) days after the date of airmail
or express mail.
To: Faulding
The Company Secretary
F.H. Faulding & Co. Limited
160 Greenhill Road
Parkside, South Australia 5063
Facsimile +61 8 373 3120
To: Purepac
President
Purepac Pharmaceutical Co.
200 Elmora Avenue
Elizabeth, New Jersey 07207
United States of America
Facsimile +1 908 527-0649
20. ASSIGNMENT
Neither party to this Agreement shall assign any rights
hereunder to third parties other than the right of payment of
monies accrued without the prior written consent of the other
party; provided, however, that the restriction contained herein
shall in no way limit the rights of either party to make assignments
to Affiliates. This Agreement shall be binding upon any
permitted assignee or successor of either party.
21. TERM; TERMINATION
21.1 This Agreement shall be for a term of ten (10) years
commencing as of the date of this Agreement and thereafter shall be
automatically renewed for successive periods of two (2) years
unless either party shall give six (6) months prior written notice
to the other party of its intention not to renew this Agreement.
21.2 This Agreement may be terminated by notice in
writing by either party
(a) if the other party shall default in the
performance of any of its obligations under this
Agreement and such default shall continue for a
period of not less than ninety (90) days after
written notice specifying such default shall have
been given;
(b) if the other party makes an arrangement with
its creditors or goes into receivership or liquidation
(other than voluntary liquidation) for the
purpose of internal reorganization, or if a receiver
or a receiver and manager is appointed in
respect of the whole or part of the property or
business of the party in default; or
(c) if a major part of the assets or all of the
assets of the other party are disposed of to or
compulsory acquired by any other person.
21.3 Upon the occurrence of a Special Circumstance, as
described in Section 9.2 hereof, either party, either during or
within 15 days after a Project Review, may terminate the Agreement
upon 30 days' written notice to the other party, which notice shall
provide details of each of the Special Circumstances that are
relied upon as the basis for such notice.
21.4 Upon termination of this Agreement, howsoever
arising, the following provisions shall have effect:
(a) The obligations of the parties pursuant to Section
13 shall continue, notwithstanding termination of this
Agreement.
(b) The full amount of any amounts outstanding by either
party to the other shall be paid forthwith.
(c) All rights and licenses granted hereunder shall
terminate.
21.5 Upon the latter of (a) the termination or
expiration of this Agreement, or (b) with respect to any records or
other data that must be retained for a period of time in accordance
with, and as set forth in, the regulations of the Regulatory
Authority (the "Retention Period"), the expiration of the Retention
Period, Purepac shall immediately deliver to Faulding all information
with respect to the Pellet Technology in Purepac's possession
and Faulding shall immediately deliver to Purepac all information
with respect to the Tabletting Technology in Faulding's possession.
22. FORCE MAJEURE
Neither party shall be liable or be in breach of any provision
of this Agreement for failing or delay in its part to perform any
obligation where such failure or delay has been occasioned by any
act of God, war, riot, fire, explosion, flood, sabotage, accident
or breakdown of machinery, unavailability of fuel, labor, containers
or transportation facilities, accidents of navigation or
breakdown or damage of vessels or other conveyancers for air land
or sea, other impediments or hindrances to transportation,
government intervention, strikes or other labor disturbances or any
other cause beyond the control of the parties.
23. RELATIONSHIP OF THE PARTIES
The relationship between Faulding and Purepac that is created
by this Agreement shall be that of vendor and purchaser and
licensor and licensee and not that of principal and agent. In the
performance of this Agreement, neither party shall have the
authority to assume or create any obligation or responsibility,
either expressed or implied, on behalf of or in the name of the
other party, or to bind the other party in any manner whatsoever.
24. EXECUTION OF ALL NECESSARY ADDITIONAL DOCUMENTS
Each party agrees that it will forthwith upon the request of
the other party execute and deliver all such instruments and
agreements and will take all such other actions as the other party
may reasonably request from time to time in order to effectuate the
provisions and purposes of this Agreement.
25. NON WAIVER
Any party's failure to exercise or enforce any right conferred
upon it under this Agreement shall not be deemed to be a waiver of
any such right or operate to bar the exercise or performance
thereof at any time or times thereafter nor shall any party's
waiver of any right under this Agreement at any given time
including rights to any payment be deemed a waiver for any other
time.
26. GOVERNING LAW
This Agreement shall be deemed to be a contract made under and
shall be governed by and construed in accordance with the laws of
the State of New York.
27. ENTIRE AGREEMENT
This Agreement incorporates the entire understanding of the
parties and revokes and supersedes any and all agreements,
contracts, understandings or arrangements that might have existed
heretofore between the parties regarding the subject matter hereof.
28. HEADINGS
The headings used in this Agreement are intended for guidance
only and shall not be considered part of this written understanding
between the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties on the date first above written.
PUREPAC PHARMACEUTICAL CO.
By: /s/
------------------------
F.H. FAULDING & CO. LIMITED
By: /s/
-------------------------
SCHEDULE A
A tablet dosage form containing pseudoephedrine hydrochloride in
sustained release pellets (the "Pellets") compressed into tablets
with pseudoephedrine hydrochloride and terfenadine (the
"Tabletting"), approved by the U.S. FDA as an A/B rated substitutable
equivalent of Marion Merrell Dow's Seldane D tablets.
SCHEDULE C
Total charges from Faulding to Purepac $561,990
Less tablet development costs included in above $7,669
Credit on charges from Australia $554,321
Plus Charges from Purepac for active drug substance $23,225
Net adjustment $577,546
SCHEDULE D
The price of the Pellets sold by Faulding to Purepac will be based
on Faulding's Total Manufacturing Cost (the "TMC") of the Pellets
with a 63.4% margin based on the following formula:
FOB price/Kg Pellets = TMC $(Aus) of Pellets/ 0.366
For purposes of pricing and calculating the formula, TMC will be
calculated according to Faulding's standard costing system, subject
to normal auditing procedures and consistent with Australian GAAP.