EXHIBIT 10.1
REDACTED VERSION
EXECUTION COPY
PRODUCT DEVELOPMENT, MANUFACTURING, AND DISTRIBUTION AGREEMENT
[ * ]
This PRODUCT DEVELOPMENT, MANUFACTURING AND DISTRIBUTION AGREEMENT ("Agreement")
entered into as of this 30th day of March 2005, among [ * ]. ("[ * ]") located
at [ * ], a corporation of the State of [ * ], [ * ] ("[ * ]"), located at [ *
], a corporation of the State of [ * ], and Elite Laboratories, Inc., ("Elite")
a wholly owned subsidiary of Elite Pharmaceuticals, Inc., located at 165 Ludlow
Ave, Northvale, NJ 07647, a corporation of the State of New Jersey.
RECITALS
Whereas, [ * ], [ * ] and Elite (each, a "Party" and collectively, the
"Parties") represent and warrant to each other that the recitals, as pertains to
such Party herein are true and correct;
Whereas, Elite is in the business of research and development, and manufacturing
pharmaceutical drug products in a manner conforming with applicable regulations
found at 21 CFR Parts 210 and 211 ("cGMPs");
Whereas, [ * ] is in the business of pharmaceutical product formulation
development and pharmaceutical product analytical test method development and
ANDA filing in a manner conforming with applicable regulations found at 21 CFR
Parts 210 and 211 ("cGMPs');
Whereas, [ * ] is in the business of marketing pharmaceutical drug products;
Whereas, the Parties desire that [ * ] shall be the sponsor, and the owner of
the ANDA asset; and
Whereas, the Parties desire to collaborate to develop, obtain regulatory
approval for, manufacture, and sell [ * ] (the "Product") in accordance with the
terms and conditions specified herein and in the Exhibits hereto.
Now, therefore, for the consideration and covenants set forth herein, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
ARTICLE I: DEFINITIONS
The following terms as used in this Agreement have the following respective
meanings:
1.1. FDA: The term "FDA" means the United States Food and Drug
Administration.
1.2. MILESTONES: The term "Milestones" means the project activities and
performance descriptions set forth on Exhibit "A."
1.3. ANDA: The term "ANDA" means Abbreviated New Drug Application for the
Product prepared and submitted to FDA under this Agreement.
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1.4. DEVELOPMENT COSTS: The term "Development Costs" means the fully
absorbed direct and indirect cost of performing the Product development
activities provided for in Article II of this Agreement and as
estimated in Exhibit "A" hereto.
1.5. PROFIT SHARE: The term "Profit Share" means a Party's share of Profits
as determined in accordance with Exhibit "C" to this Agreement.
1.6 BIOEQUIVALENCE STUDY OR STUDIES: The term "Bioequivalence Study" or
"Bioequivalence Studies" means a study conducted to ensure the
Product's compliance with the FDA Bioequivalence requirement in
accordance with 21 CFR 320.1.
1.7 FDCA: The term "FDCA" means the Federal Food, Drug and Cosmetic Act set
forth in 21 U.S.C ss.301 et. seq.
1.8. TRANSFER PRICE: is defined in Section 4.4.
1.9 PROPRIETARY RIGHTS: The term "Proprietary Rights" means, with respect
to the Product, all know-how, technical and clinical data generated
during the Term related to the development of the Product (including,
without limitation, inventions, whether or not patentable and whether
or not tested or reduced to practice, any and all data, techniques,
discoveries, developments, designs, trade secrets, confidential
business information, know-how and tangible expressions, tests,
reports, processes, formulae, specifications, improvements, results,
experiments, samples, statistics and test analyses relating to the
Product), except to the extent any of the foregoing is based on or
incorporates Confidential Information of any Party to this Agreement or
of any third party.
1.10 TERRITORY: The term "Territory" means the United States of America,
Canada, Mexico, and Puerto Rico.
1.11 REFERENCED LISTED DRUG: The term "Reference Listed Drug" means [ * ].
ARTICLE II: DEVELOPMENT OF PRODUCT; PROPRIETARY RIGHTS
2.1. PRODUCT DEVELOPMENT.
A. Elite shall be responsible for, and shall exert commercially
reasonable best efforts in, developing the Product according to
the activity descriptions and the timelines set forth in Exhibit
"A". Without limiting the foregoing, [ * ] shall be responsible
for, and shall exert commercially reasonable best efforts in
providing to Elite the initial Product formulation composition
and process, and conducting, through an acceptable third party,
pilot and pivotal Bioequivalence Studies for the Product to
evidence bioequivalence to the Reference Listed Drug in
accordance with study plan protocols agreed upon by the Parties
to this Agreement, and compiling an approvable ANDA for
submission to the FDA. Elite shall be responsible for overseeing
packaging related activities for the Product, including, but not
limited to subcontracting such packaging services to a qualified
cGMP facility.
B. Elite shall be responsible for [ * ] percent ([ * ]%) of the
Development Costs, including, but not limited to, packaging
costs, and preparation, submission and prosecution of the ANDA
for the Product to the FDA, as set forth in Sections 4.1 and 5.1
below.
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C. [ * ] shall be responsible for [ * ] percent ([ * ]%) of the
Development Costs, including but not limited to packaging, and
preparation, submission and prosecution of the ANDA for the
Product to the FDA, as set forth in Sections 4.1 and 5.1 below.
2.2. INTELLECTUAL PROPERTY
All rights, title and interest in and to all intellectual property
rights relating to the Product, including without limitation,
inventions, discoveries, creations, information, data, reports,
results, and/or improvements to any confidential information, know-how,
study inventions, regulatory filings, patent rights, processes,
techniques, and any improvements, modifications, alterations thereto
and patents issuing thereon made during the term of this Agreement
(collectively, "Intellectual Property") are and shall, in all events,
be the sole and exclusive property of the Party who develops such
Intellectual Property. The other Parties may not grant any sublicense
to such Party's Intellectual Property Rights without such Party's prior
written consent, which consent may be granted or withheld in such
Party's sole discretion. Such Intellectual Property may be used by the
developing Party on other unrelated products, however the developing
Party or Parties hereby grant [ * ] the exclusive right and license to
use such Intellectual Property in a commercial manner for the
production of the Product. Notwithstanding the above, in no event shall
any of the Parties hereto use the Intellectual Property in connection
with the development of any product containing the [ * ] molecule.
2.3. STATUS MEETINGS AND MONTHLY REPORTS
The Parties shall conduct meetings to review and discuss the Product
development progress. These meetings will be held monthly or quarterly
depending upon the needs of [ * ], [ * ], and Elite. The meetings shall
be attended by at least one (1) member or designee of each Party and
may be held by telephone conference call at the request of any Party.
Five (5) days prior to the meeting, both [ * ] and Elite shall provide
the other Parties with a report summarizing its Product development
activities for the preceding period. At the meetings, the Parties shall
discuss and review the development of the Product, the budgeted
Development Costs, the scheduling of Product development, and such
other information and topics relating to the Product as each Party may
reasonably request. The discussions and all information discussed at
these meetings shall be briefly summarized in the form of minutes. [ *
] and Elite will prepare those portions of the minutes relating to
their responsibilities. [ * ] shall prepare the balance of the minutes,
incorporating [ * ]'s and Elite's portions and distributing the
complete minutes to all Parties. Such minutes shall not be considered
final until they have been received, reviewed and acknowledged as
accepted by an attending representative of each Party. The time and
location of such monthly meetings shall be mutually agreed upon by the
Parties.
2.4 FDA/[ * ] INSPECTION
A. [ * ] hereby agrees, and any third party conducting the
Bioequivalence Study shall agree, to permit representatives of [
* ] and/or of the FDA to examine at any reasonable time during
normal business hours, and where applicable, make copies of
relevant information and facilities necessary to confirm that the
clinical trials (or studies) being conducted pursuant to this
Agreement (each, a "Study") are being conducted in compliance
with the protocol, this Agreement and applicable law.
B. [ * ] and any such third party conducting the Bioequivalence
Study shall immediately notify [ * ] and Elite if FDA schedules,
or, without scheduling, begins an inspection of
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a study site, or [ * ]. In addition, [ * ] will immediately
provide [ * ] and Elite copies of any correspondence form or to
the FDA or other regulatory authorities related to the clinical
trials, including but not limited to any FD-483s or warning
letters, as well as any other correspondence with a governmental
agency that is reasonably likely to affect the suitability of [ *
] or such third party to continue conducting the Bioequivalence
Study.
2.5. MARKETING OUTSIDE OF THE TERRITORY
This Agreement sets forth the obligations, rights and responsibilities
of the Parties for developing, securing regulatory approval,
manufacturing, marketing, distributing and selling the Product in the
Territory. The Parties will negotiate separate agreements governing
their respective obligations, rights and responsibilities for countries
outside of the Territory.
ARTICLE III: CONFIDENTIALITY
3.1. CONFIDENTIALITY OBLIGATION
[ * ], [ * ] and Elite shall keep in strictest confidence all materials
and information provided by the other, in whatever form provided, that
are confidential or proprietary in nature, relating to the other
Party's business, operations and technology ("Confidential
Information"). Such Confidential Information includes, but is not
limited to, information and technology relating to each Party's
marketing plans, research and development activities, marketing trends,
products, designs, technical specifications and data for the Product,
Proprietary Rights, flowcharts, logic diagrams' notes, memoranda,
know-how, trade secrets and products, as well as any materials and
information that, from the circumstances in which they are made
available to the other Party, in good faith ought to be treated as
confidential or proprietary. Except as necessary in carrying out its
obligations under this Agreement, no Party shall use or disclose, nor
permit its employees, suppliers, customers or agents to use or
disclose, any such Confidential Information without the prior written
consent of the disclosing Party. The confidentiality obligation
contained in this Section 3.1 shall remain binding on all Parties for
five (5) years after any termination of this Agreement, regardless of
the cause of such termination.
3.2. EXCEPTION TO CONFIDENTIALITY OBLIGATION
The obligations of each Party under this Article III shall not apply to
information which is: (a) presently available to the public domain
(except as disclosed by any Party in violation of this Agreement); (b)
lawfully received by any Party from a third party who is not or was not
bound in a confidential relationship to either [ * ], [ * ] or Elite;
or (c) required to be disclosed as a matter of law in legal
proceedings, and regulation or government authority, in which event the
Party so required to disclose the information shall forthwith give
notice to the originating Party and duly allow it to appeal or litigate
the required disclosure.
3.3. RETURN OF CONFIDENTIAL INFORMATION
Each Party shall, at the termination of this Agreement, return to the
originating Party all of its Confidential Information and copies
thereof and any information related to the development and manufacture
of the Product, except to the extent the Party is entitled to retain
such Confidential Information under another provision of this
Agreement.
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ARTICLE IV: OBLIGATIONS OF THE PARTIES
4.1. PRODUCT DEVELOPMENT, BIOEQUIVALENCE STUDIES, AND REGULATORY APPROVAL TO
MARKET PRODUCT
A. DEVELOPMENT. Per Section 2.1, each of [ * ] and Elite shall use
commercially reasonable efforts to develop the Product according
to the activity descriptions set forth in Exhibit "A," and [ * ]
will pay [ * ] percent ([ * ]%) of the Development Costs in
accordance with Section 5.1.
B. BIOEQUIVALENCE STUDY. [ * ] shall have the final decision as to
the clinical research organization used for the pilot and the
pivotal Bioequivalence Studies. [ * ] and Elite shall be
responsible for funding the pilot and the pivotal Bioequivalence
Studies in their proportionate allocated share of [ * ] percent
([ * ]%) [ * ] and [ * ] percent ([ * ]%) Elite as set forth in
Exhibit "A". It is expressly understood and agreed that [ * ]
shall have all rights, title and interest in the Product.
C. ANDA. [ * ] shall be the sponsor and owner of the ANDA for the
Product Elite will provide copies of all correspondence with the
FDA and required supporting filing (i.e. copies of annual
reports etc.) to [ * ] within ten (10) days of filing such
documents with the FDA. [ * ], Elite and [ * ] shall be
responsible for prosecuting and filing the ANDA. [ * ] shall be
responsible for maintaining the ANDA after approval of the ANDA.
4.2. ASSIGNMENTS, TRANSFER, SALE OR LICENSE OF PRODUCT
A. At any time prior to filing the ANDA with the FDA, if [ * ]
wishes to terminate for any reason, it shall comply with the
provisions of Sec. 9.1 of this Agreement.
B. Following approval of the ANDA by the FDA, should [ * ] desire
to assign, transfer, sell or license the Product or any of its
Proprietary Rights:
a. [ * ] shall notify [ * ] and Elite in writing within ninety
(90) days of the decision.
b. [ * ] shall have the right of first negotiation to acquire
such Product or Proprietary Rights as [ * ] may transfer.
c. If [ * ] declines the opportunity to enter into such
negotiations, or if the Parties are not able to conclude
such negotiations and reach an agreement within sixty (60)
days after beginning negotiations (subject to the
negotiations commencing within ten (10) days of the end of
the ninety (90) day notice period, [ * ] then shall enter
into negotiations with Elite.
d. If Elite thereafter, declines the opportunity to enter into
such negotiations, or if the Parties are not able to
conclude such negotiations and reach an agreement within
sixty (60) days after beginning negotiations (subject to
negotiations commencing), [ * ] is free to assign, transfer,
sell or license the Product and its Proprietary Rights
within thirty (30) days on terms no less favorable to [ * ]
than those offered to [ * ] and Elite.
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e. If [ * ] fails to consummate such assignment, transfer, sale
or license of the Product and the Proprietary Rights to a
third party within such 30-day period, then the license
rights shall once again be subject to [ * ]'s and Elite's
right of first negotiation as set forth above.
f. [ * ] shall pay for all Product ordered by [ * ] through the
date of assignment, transfer, and sale or licensing. [ * ]
may not transfer any of its rights to the Product, whether
to [ * ], Elite, or a third party, unless the transferee
agrees in writing to be bound by [ * ]' obligations under
this Agreement, including without limitation [ * ]'
obligations to market the Product and pay [ * ] and Elite
their Profit Shares.
C. If Elite desires to sell its manufacturing facility:
a. Elite shall inform [ * ] of its intent to sell within ninety
(90) days of the decision.
b. [ * ] would prefer the right to continue to have the product
manufactured at the Elite facility under the same terms and
conditions granted under this Agreement. If the successor to
Elite's facility elects not to continue manufacturing and
supplying the Product under this Agreement, Elite must give
nine (9) months notice to [ * ] prior to terminating Elite's
obligations under this Agreement. Elite and [ * ] shall in
good faith and with due diligence, use its best efforts to
assist in the transfer of the manufacturing process
(including the transfer of any and all documentation related
to the Product and/or the ANDA) to another facility.
c. If [ * ] elects to transfer the Product manufacture to
another facility, Elite shall provide all information,
including but not limited to the documentation and technical
support necessary to transfer the Product manufacture to a
manufacturing facility designated by [ * ] within sixty (60)
days of such election.
D. Upon the sale of all or substantially all of [ * ]' assets
to a third party entity, [ * ] shall inform Elite of their
intended change of control within ninety (90) days of the
decision. Elite shall have the option of continuing to
manufacture the Product under the same terms and conditions
granted under this Agreement (and the acquiring entity of [
* ] then shall assume all of [ * ]' obligations under this
Agreement), or of terminating this Agreement. If the
successor to [ * ] does not wish manufacturing of this
Product to be continued at the Elite facility, [ * ] must
give nine (9) months notice to Elite.
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4.3. MANUFACTURING, PACKAGING & DELIVERY
Following ANDA approval, Elite shall manufacture the Product in
accordance with the terms and conditions of this Agreement. In
connection with its manufacturing obligations under this Agreement,
Elite shall be responsible for overseeing the packaging of the Product
at a cGMP facility in its retail package, preparing the Master Label,
including final printed labeling, text and printing the required labels
and inserts for the Product under a designated [ * ] label or [ * ]
designated private label, all in accordance with the ANDA review
process and the ANDA and all applicable laws and regulations,
including, but not limited to the laws and regulations enforced by the
FDA. [ * ], Elite and [ * ] shall review and approve the form of the
label and insert before final printing. Notwithstanding any such review
and approval by them, Elite shall be responsible for manufacturing,
storing and overseeing the labeling, packaging and shipping of the
Product in a manner that complies with all applicable legal
requirements, including, but not limited to the laws and regulations
enforced by the FDA. It is expressly understood and agreed by the
Parties that Elite shall not assign or transfer its responsibility to
manufacture the Product under this Agreement without the prior written
consent of [ * ], which consent may be withheld by [ * ] for any reason
in its sole discretion.
4.4. PURCHASE AND DISTRIBUTION
A. [ * ] shall purchase finished (ready to market) Product from
Elite at the Transfer Price established in Exhibit "B" (the
"Transfer Price"), subject to Elite's (including any third party
supplier's) compliance with the terms and conditions of this
Agreement.
B. [ * ] shall distribute Product in a commercially prudent manner
and in a manner consistent with its status as a generic drug and
in compliance with all applicable laws and regulations. [ * ]
shall diligently market and promote the Product in the Territory
using commercially reasonable efforts to maximize Product sales
and Profit Share. [ * ] shall devote such marketing efforts to
the Product as its competitors customarily would exert for
generic products with comparable market size and profit
potential under comparable competitive conditions. Following
approval of the ANDA by the FDA, [ * ] shall, at least once per
calendar quarter, provide to Elite and [ * ], in writing, an
outline of [ * ]' commercial plans, planned marketing
activities, and sales expectations for the Product for the
upcoming three (3) calendar quarters.
C. [ * ] shall file all labeling, marketing, advertising and
promotional materials to the regulatory agency. [ * ] shall
store, transport, sell, market and distribute the Product in
compliance with all applicable laws and regulations. If
requested by [ * ], [ * ] shall make any additional regulatory
filings as [ * ]' agent under the ANDA filing for advertising as
well as any additional scientific questions.
4.5. EXCLUSIVITY
During the term of this Agreement, except as otherwise provided in this
Agreement, each of [ * ] and Elite agrees that, unless directed by [ *
], it will not develop or manufacture the Product for itself or any
other party other than [ * ] and [ * ] agrees not to have the Product
developed or manufactured for sale by any party other than [ * ] and
Elite, subject to and in accordance with the terms and conditions of
this Agreement. It is the intent of this Agreement that, except as
otherwise provided in this Agreement, [ * ] shall be the exclusive
distributor of the Product, Elite will be the exclusive manufacturer of
the Product, Elite will supply [ * ] with all of [ * ]' requirements of
the Product for distribution and sale by [ * ], in the Territory and [
* ] will purchase all of its requirements of the Product in the
Territory from
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Elite, subject to and in accordance with the terms and conditions of
this Agreement and in all events following regulatory authorization to
market the Product in that country. Notwithstanding the above, if FDA
regulatory action limits or precludes Elite's ability to produce the
Product, [ * ] and [ * ] shall have the option to have the Product
manufactured at an alternate manufacturing site and by an alternate
manufacturer, subject to [ * ]' ongoing obligation to pay Elite's
Profit Share for all such Product (regardless of the site of
manufacture), and subject to the alternate manufacturer's entering
into confidentiality obligations running to Elite safeguarding Elite's
Confidential Information.
ARTICLE V: DEVELOPMENT COSTS, MANUFACTURING COSTS AND SALES
5.1. DEVELOPMENT COSTS.
A. The Parties have developed an agreed upon budget setting forth
the projected Development Costs, by Activity, which is attached
hereto as Exhibit "A." [ * ] will be responsible for payment of [
* ]% of the Development Costs. Elite, shall be responsible for [
* ]% of the Development Costs. No Party shall be responsible for
Development Costs in excess of [ * ] percent ([ * ]%) of the
estimated costs of the development as per Exhibit "A" hereto
incurred without such Party's prior written consent. It is the
belief of the Parties that only one (1) pivotal Bioequivalence
Study will be required to obtain the approval of both Product
strengths because they will be dose-proportional.
B. [ * ] or Elite, as the designated Party responsible for the
Activity, shall issue invoices for the actual Development Costs
of the Product, including costs of the validation batches on an
Activity basis, and on a monthly basis. With each invoice, they
shall provide an accounting detail supporting the actual time and
costs associated with each Activity (including but not
all-inclusive of experiments and lab records). [ * ] shall pay
its respective share of such Development Costs within thirty (30)
days after receipt of such invoice. [ * ] has the right to
terminate this Agreement in its entirety if a pilot
Bioequivalence Study has not been successfully completed within
nine (9) months of the date of this Agreement as per Exhibit A.
5.2. MANUFACTURING COSTS AND SALES; PROFIT SHARE.
A. All parties shall agree as to the timing to make the validation
batches, giving Elite ninety (90) days advance notice.
B. Upon FDA approval of the ANDA for the Product under this
Agreement, if any validation batch of Product is not saleable
due to short dating, Elite shall be entitled to payment from [ *
], for the costs of such validation batches, including but not
limited to all raw materials costs, as part of its Development
Costs.
C. Upon FDA approval of the ANDA for the Product under this
Agreement, if any validation batch of Product is not saleable
due to failure of such batch to meet Product specifications of
the ANDA (other than relating to expiry dating), then Elite
shall be responsible for the costs of such validation batches,
including but not limited to all raw materials costs.
D. [ * ] shall pay Elite [ * ] percent ([ * ]%) of the Transfer
Price for a given shipment of Product within thirty (30) days of
the date of the invoice.
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E. During the term of this Agreement, on a quarterly basis within
thirty days of the calendar quarter then ended, [ * ] shall pay
each of Elite and [ * ] its respective Profit Share for such
calendar quarter, along with a detailed statement setting forth
the calculation of Profit Share.
5.3. AUDIT; INSPECTION
Within one hundred eighty (180) days following the close of each
calendar year during the term of this Agreement and for a period of
twelve (12) months following expiration or earlier termination of this
Agreement, upon the request of a Party ("Requesting Party") the other
Party shall provide the Requesting Party's accountants, at Requesting
Party's sole cost and expense, with access, during regular business
hours and upon reasonable prior written notice, and subject to the
confidentiality obligations set forth herein, to the other Party's
books and records relating to the Product in the Territory solely for
purposes of verifying costs and expenses and Profit Share in connection
with this Agreement, and for verifying the accuracy of the calculations
hereunder for the calendar year then ended and for the two (2) calendar
years prior thereto. If any such verification shows any underpayment or
overpayment, a correcting payment or a refund shall be made within
thirty (30) days of completion of such verification and submission of
the results thereof, with details of the calculations included therein.
ARTICLE VI: PRODUCT DEVELOPMENT FEES AND INTELLECTUAL PROPERTY
6.1. It is agreed between [ * ] and [ * ], that upon the execution of this
Agreement, [ * ] shall pay [ * ] a fee of $[ * ] for the identification
and development of the Product opportunity and the oversight of the
formulation development work to be completed at Elite and/or [ * ]. [ *
] agrees that documentation of this process shall be provided to [ * ]
on a monthly basis.
6.2. It is agreed between [ * ], [ * ], and Elite that if, during any
process of Product development (including but not all inclusive to
packaging and marketing), if any Parties develop patentable
manufacturing not currently available in the market place:
A. The developing Party shall be the sole owner of the intellectual
property and may seek to protect this process as either a "trade
secret" or patent the process.
B. If Elite and/or [ * ] develops such intellectual property, they
shall be required to license the use of such "trade secret" or
patentable technology to [ * ] or Elite (as applicable), on an
exclusive basis for the manufacture of the Product, for a fee of
$[ * ] per year of each year in which there are a full twelve
(12) months sales of the Product, for use by Elite in the
manufacture and [ * ] in the sales of the Product under this
Agreement.
C. Such "trade secret" or patentable technology may be used by the
developing Party on other unrelated products, however [ * ] shall
have the right of first refusal to use such process in a
commercial manner for the production of the Product.
ARTICLE VII: DELIVERY, GUARANTEE, INSURANCE, INDEMNITY AND RELATIONSHIP OF THE
PARTIES
7.1. ORDERING AND DELIVERY
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A. Elite will deliver to [ * ] or shall cause the finished Product
to be delivered to [ * ] in bottles packed in cases and stacked
on pallets as specified by [ * ] under Section 7.1(c) below. [ *
] shall order Product in multiples of Elite's batch size for the
Product.
B. [ * ] will provide to Elite on a monthly basis a forecast of its
expected supply needs for the Product for the then following six
(6) months, along with requested shipment dates for the Product.
Each monthly forecast shall be deemed to be a firm purchase order
as to the Product, binding upon [ * ] and subject to Elite's
acceptance or rejection, in whole or in part, scheduled for the
first three (3) months of the forecast, and non-binding as to the
last three (3) months of the forecast. If a monthly forecast
increases the monthly quantity of Product by more than 25% over
the quantity scheduled in the immediately preceding month
forecast, Elite shall not be required to manufacture and ship the
quantity of Product that exceeds a 25% increase. At the time of
each quarterly forecast, the Parties will agree on shipment dates
for the Product scheduled for the first three (3) months of the
forecast, to the extent they have not already agreed, and Elite
will make shipments, or cause all shipments to occur, in
accordance with the agreed dates. If a monthly forecast increases
the quantity of any Product over the quantity scheduled in the
immediately preceding monthly forecast, the Parties will agree on
an equitable adjustment in the shipment dates.
C. In addition to monthly forecasts, at least thirty (30) days
before the shipment date agreed upon for any Product, [ * ] shall
provide Elite with specific written instructions concerning the
packaging, labeling (unless under a private label other than [ *
], which will require 60 days prior notice to Elite and [ * ]
shall ensure that Elite has sufficient inventory of such private
labels at least thirty days before the desired shipment date of
Product), and shipping of such Product.
D. Elite will ship, or shall ensure that any third party
labeler/packager ships, the Product in accordance with [ * ]
shipping and delivery instructions. Elite shall pay the cost to
ship the bulk packaged Product to a third party labeler/packager
and [ * ] shall pay the shipping cost of the finished Product
shipped from a pre-approved cGMP facility under Section 4.3, to [
* ]' desired location. Each shipment shall be made to arrive
within five (5) days of the shipping date. Upon shipment, Elite
shall invoice [ * ] in writing for the Transfer Price. [ * ]
shall pay Elite the Transfer Price within thirty (30) days of the
date of the invoice as in accordance with Section 5.2(c). Elite
shall be deemed to have delivered the Product to [ * ] when the
Product has been tendered to the shipper, and title and risk of
loss of the Product shall be deemed to pass to [ * ] upon such
tender.
7.2. GUARANTEE
Elite guarantees that the Product delivered to [ * ] will not be, on
the date of delivery, adulterated or misbranded within the meaning of
the FDCA or an article which may not, under the provisions of Sections
404, 505 or 512 of the FDCA, be introduced into interstate commerce.
Elite further guarantees that the Product will be manufactured in all
respects in accordance with the ANDA and will conform in all respects
with cGMPs. Elite agrees to comply with and be bound by all reasonable
[ * ] quality standards that may be agreed to by the Parties in writing
and appended to this Agreement. If any Product is found to fail to
conform to the specifications of the ANDA or is not manufactured in
accordance with current good manufacturing practices, and such failure
is due to acts or omissions of Elite, then [ * ] shall have the right
to reject such nonconforming shipment of Product or the
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nonconforming portion thereof, as the case may be. [ * ] shall give
written notice to Elite of its rejection within fifteen (15) days of [
* ]' receipt of the Product, specifying the grounds for such rejection.
The nonconforming Product shall be held for Elite's disposition, or
shall be returned to Elite, as directed by Elite in writing.
Nonconforming packaged Product shall be returned to Elite within ten
(10) business days of Elite's so directing. Elite will replace the
Product at no cost to [ * ]. Elite will bear the cost of any Recall (as
defined below) of any Product due to acts or omissions of Elite. [ * ]
will bear the cost of any Recall of any Product due to acts or
omissions of [ * ]. In all other events, the costs of any Product
Recall shall be allocated [ * ] percent ([ * ]%) to [ * ], [ * ]
percent ([ * ]%) to Elite.
7.3. OTHER REPRESENTATIONS AND WARRANTIES
A. Elite represents and warrants that it will use commercially
reasonable efforts to ensure that any third party supplier of the
Active Pharmaceutical Ingredient ("API") for the Product shall
have an active Drug Master File with the FDA, shall have been
qualified by FDA to supply the API under the ANDA, and is in
compliance with the obligations imposed by the FDCA.
B. Elite represents and warrants that it will use commercially
reasonable efforts to ensure that any third party
packager/labeler it subcontracts with pursuant to Section 4.4
shall perform its packaging, storing, labeling and shipping
services in a manner which comports with all obligations
hereunder, and is in compliance with the obligations imposed by
the FDCA.
C. Each of [ * ] and Elite represents that performance of its
obligations set forth in this Agreement (whether performed
directly by Elite or through a supplier, such as provision of API
from a third party supplier) shall not infringe on the
intellectual property rights, including but not limited to any
patent rights, of any third party. [ * ] further represents and
warrants that none of [ * ] or any of its officers, directors,
employees or shareholders is bound by any restrictions or
obligations (of confidentiality, nondisclosure or otherwise)
owing to any third party with respect to the formulations,
technology, know-how or information to be provided by [ * ] under
this Agreement.
D. [ * ] represents and warrants that its sale and distribution of
the Product will not violate any agreement or order to which it
is a party or by which it is bound. The Parties will immediately
notify each other of, and assist each other in answering customer
or regulatory inquiries and complaints concerning the Product.
E. DISCLAIMER OF WARRANTIES: EXCEPT AS SPECIFICALLY PROVIDED HEREIN,
ELITE EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OF ANY
KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
F. Elite and [ * ] each agrees to notify the other within
twenty-four (24) hours of any serious and unexpected adverse
reactions reported to either of them resulting from the use of
the Product (whether inside or outside of the Territory). Elite
and [ * ] shall each notify the other promptly of any other
complaints or adverse reactions from third parties reported to
either of them resulting from use of the Product sold under [ *
]' label.
11
G. In the event either party believes it may be necessary to conduct
a recall, field correction, market withdrawal, stock recovery, or
other similar action with respect to any Product sold by Elite to
[ * ] under this Agreement (a "Recall"), Elite and [ * ] shall
consult with each other as to how best to proceed, it being
understood and agreed that the final decision as to any Recall of
any Product shall be made by Elite; provided, however, that [ * ]
shall not be prohibited hereunder from taking any action that it
is required to take by applicable law.
7.4. COMPLIANCE WITH LAW
The Parties herein represent and warrant that they will perform their
respective obligations hereunder in accordance with all applicable law.
7.5 LIMITATION OF LIABILITY
EXCEPT WITH RESPECT TO (x) CONSEQUENTIAL DAMAGES AWARDED TO THIRD
PARTIES FOR PRODUCT LIABILITY CLAIMS COVERED BY THE INDEMNIFICATION
OBLIGATIONS SET FORTH IN SECTION 7.7(A) OF THIS AGREEMENT, ELITE
INFRINGEMENT CLAIMS AND [ * ] INFRINGEMENT CLAIMS COVERED BY SECTIONS
7.7(B) and 7.7(C) OF THIS AGREEMENT, AND (y) ANY BREACH OF THE
CONFIDENTIALITY OBLIGATIONS SET FORTH IN ARTICLE III OF THIS AGREEMENT,
NO PARTY TO THIS AGREEMENT SHALL BE LIABLE FOR ANY OTHER PARTY'S
CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES, OR LOSS OF
PROFITS.
7.6. INSURANCE
A. Elite represents and warrants that it has product liability
insurance in the amount of at least $1,000,000 per claim and
$5,000,000 in the aggregate covering the Product developed,
manufactured, packaged and labeled hereunder and shall ensure
that any third party supplier hired by Elite in connection with
its obligations hereunder shall carry product liability insurance
in the same amounts. Elite will provide evidence of his coverage
to [ * ] on an annual basis or whenever any change is made by
Elite or any third-party supplier in such policy of insurance.
B. [ * ] represents and warrants that it has product liability
insurance in the amount of at least $1,000,000 per claim and
$5,000,000 in the aggregate including products covering Product
distributed from its facility. [ * ] will provide evidence of
this coverage to Elite on an annual basis or whenever any change
is made by [ * ] in such policy of insurance.
7.7. INDEMNIFICATION
A. Elite and [ * ] agree to indemnify and hold harmless [ * ], its
directors, officers, employees and agents(collectively, "[ * ]
Indemnified Parties"), from any liability or expense, including
reasonable fees and costs of defense, they incur arising out of
or in connection with third party claims relating to: (i)
Elite's, or any third party supplier engaged by Elite's,
negligence with respect to the manufacturing, storage, packaging,
labeling or shipment of the Product; (ii) personal injury or
death resulting from use of Product that was manufactured,
stored, or shipped by Elite, or any third party supplier engaged
by Elite, in a manner that does not comply with the terms and
conditions of this Agreement (a "Product Liability Claim"); or
(iii) any breach of Elite's or [ * ]'s
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representations or warranties set forth in this Agreement,
including but not limited to those set forth in Sections 7.2, 7.3
(but specifically excluding Section 7.3(C)), and 7.4; all
provided that the liability or expense which is the subject of
the third party claim is not related in any way to [ * ]', or any
third party supplier engaged by [ * ]', negligence, fault, or
other act or omission. [ * ] agrees to indemnify, defend and hold
harmless Elite, [ * ], and their respective directors, officers,
employees and agents (individually, "Elite Indemnified Parties"
and "[ * ] Indemnified Parties"), from any liability or expense,
including reasonable fees and costs of defense, they incur
arising out of or in connection with third party claims relating
to: (i) a breach of [ * ]' representations or warranties set
forth in this Agreement; (ii) [ * ]', or any third party supplier
engaged by [ * ]', negligence with respect to the transporting,
storing, sale, marketing, promotion or distribution of Product
hereunder; or (iii) any third party supplier engaged by [ * ]'
packaging, labeling or shipment of Product in accordance with the
terms and conditions of this Agreement; all provided that the
liability or expense which is the subject of the claim is not
related in any way to Elite's or [ * ]'s (or any third party
supplier engaged by Elite or [ * ]'s) negligence, fault, or other
act or omission.
B. Elite shall indemnify, defend and hold harmless [ * ] Indemnified
Parties and [ * ] Indemnified Parties from the costs and expenses
of settling, paying or defending any and all claims, actions or
proceedings resulting from an assertion against [ * ] Indemnified
Parties or [ * ] Indemnified Parties that Elite's Intellectual
Property infringes upon a third party's intellectual property
rights ("Elite Infringement Claims"); provided however that Elite
shall not be responsible for any Infringement Claim relating to
Intellectual Property provided by [ * ], [ * ], or any third
party.
C. [ * ] shall indemnify, defend and hold harmless [ * ] Indemnified
Parties and Elite Indemnified Parties and pay all costs and
expenses of settling, paying or defending any and all claims,
actions or proceedings resulting from an assertion against Elite
Indemnified Parties or [ * ] Indemnified Parties that [ * ]'s
Intellectual Property infringes upon a third party's intellectual
property rights ("[ * ] Infringement Claims"); provided however
that [ * ] shall not be responsible for any Infringement Claim
relating to Intellectual Property provided by Elite, [ * ], or
any third party.
D. Except with respect to Product Liability Claims, breaches of
confidentiality obligations, and Elite Infringement Claims and [
* ] Infringement Claims, in no event shall a Party's liability to
indemnify under this Section 7.7 or otherwise exceed the
aggregate Profit Share payments received by such Party as of the
date of the claim for indemnity hereunder.
7.8 RELATIONSHIP OF THE PARTIES
It is expressly understood and agreed that [ * ], Elite and [ * ] are
independent contractors and that the relationship between them by
virtue of this Agreement shall not constitute a partnership or agency
of any kind. No Party to this Agreement shall have the authority to
make any statements, representations or commitments of any kind, or to
take any action, which shall be binding on the other Party without the
prior written authorization of that other Party. It is further
understood that [ * ] is not a tenant of Elite or its Lessee or Lessor,
and shall not be responsible for any rent or lease expense incurred by
Elite.
ARTICLE VIII; DISPUTE RESOLUTION/ARBITRATION
8.1. In the event that a dispute arising out of or relating to this
Agreement cannot be resolved through
13
negotiation between the Parties, the Parties hereto agree to submit
the dispute to mediation and will jointly appoint a mutually
acceptable mediator, seeking assistance in such regard from the CPR
Institute of Dispute Resolution (366 Madison Avenue, New York, NY
10017, telephone number 212-949-6490) if they are unable to promptly
agree upon such appointment. Mediation must commence within fifteen
(15) days after either Party hereto serves a written notice of
mediation upon the other and the Parties hereto shall bear equally the
cost of the mediation. The Parties agree to participate in good faith
in the mediation and related negotiations for a period of five [5]
days. If the Parties are not successful in resolving the dispute
through mediation, the parties may then arbitrate. This Agreement
shall be governed by and construed in accordance with the laws of the
State of [ * ] without regard to conflicts of laws provisions.
8.2. ARBITRATION: In the event a dispute cannot be resolved in accordance
with Section 8.1, all controversies or claims arising out of or
relating to this Agreement, or of a breach of it, shall be submitted to
binding arbitration pursuant to Section 682.01 et seq, of the [ * ]
Statutes ([ * ] Arbitration Code) as amended from time to time and not
under the rules of the American Arbitration Association.
A. The arbitration shall be before one (1) arbitrator. If the
Parties fail to agree on the sole arbitrator within fifteen (15)
days of written notice from either Party of a dispute to be
submitted to arbitration, either Party may apply to have the
arbitrator appointed by a court of competent jurisdiction
pursuant to Section 682.04, [ * ] Statutes. All arbitration
proceedings shall be held in [ * ].
B. The arbitration hearing shall be held within forty-five (45)
days from the date of the arbitrator's acceptance of his or her
duties, unless otherwise agreed by all Parties, or extended by
the arbitrator on good cause shown.
C. The fees and costs of the arbitration shall be equally divided
so that each Party shall pay one third. If a Party fails to pay
the fees of the arbitrator as requested from time to time, the
other Party may advance any such fees, which shall be due with
interest at the maximum legal rate permitted by law from the
date of advancement, and shall be part of the award in
arbitration.
D. The Parties agree that the Arbitrator shall be granted the power
to award reasonable attorneys' to the prevailing Party.
E. Any award rendered in the arbitration shall be binding and
conclusive upon the Parties and shall not be subject to retrying
or appeal before any court. The arbitrator shall have the right
to decree specific performance. Judgment upon the award rendered
in the arbitration may be entered in any court having
jurisdiction.
ARTICLE IX: TERM AND TERMINATION OF AGREEMENT
This Agreement shall continue in effect as of the Effective Date for a period of
ten (10) years from the first shipment of commercial production quantities of
the Product under this Agreement (the "Initial Term"). After the Initial Term,
this Agreement shall continue for successive terms of five (5) years each (the
"Additional Terms"), unless either [ * ] or Elite provides written notice to the
other Party at least forty-five (45) days before the end of the then-current
Term that such Party desires
14
to terminate this Agreement (the Additional Terms and Initial Terms being
referred to herein collectively as the "Term"). Notwithstanding the foregoing,
this Agreement may be terminated in accordance with the following provisions:
9.1. TERMINATION WITHOUT CAUSE DURING DEVELOPMENT
Before the FDA approves the ANDA with respect to the Product, if [ * ]
wishes to terminate for any reason:
A. [ * ] shall give thirty (30) days notice in writing to [ * ] and
Elite.
B. All of [ * ]' rights to the Product and the ANDA shall revert
back to [ * ] upon repayment to [ * ] by [ * ] of the one time
Product development fee of $[ * ]. If [ * ] does not pay the $[
* ] to [ * ] within thirty (30) days of [ * ]' notice, Elite
shall have the right to all of [ * ]' rights upon payment of $[
* ] to [ * ].
C. [ * ] shall pay [ * ] and Elite its prorated share of
Development Costs through the date of notice and as set forth on
Exhibit "A".
9.2. TERMINATION WITHOUT CAUSE AFTER DEVELOPMENT.
After eighteen (18) months of launch of the Product into the market,
either [ * ] or Elite may terminate this Agreement on six (6) months'
written notice to the other if the Profit Share to the terminating
party for the twelve (12) month period preceding the date of notice of
termination is less than [ * ]($[ * ]). If the Agreement is terminated
under this section by [ * ], [ * ] agrees to pay for all Product
ordered by it.
If the Agreement is terminated under this section by [ * ], [ * ]
shall have the option to transfer and sell the ANDA and its rights to
the Product to [ * ] and [ * ] shall take such actions, and execute
and deliver such documents, as [ * ] may from time to time reasonably
request to effectuate the transfer of the ANDA to [ * ] hereunder. If
[ * ] does not accept rights and does not request transfer of the ANDA
in writing within thirty (30) days of the notice, Elite may elect to
accept the transfer of the ANDA its rights to the Product and [ * ]
shall take such actions, and execute and deliver such documents, as
Elite may from time to time reasonably request to effectuate the
transfer of the ANDA to Elite hereunder. The accepting party shall
have all of [ * ]' rights and obligations for the Product.
If the Agreement is terminated under this section by Elite, Elite
agrees, at the request of [ * ], to transfer the Product manufacturing
to another facility and shall provide all information necessary to
transfer the Product manufacturing to a manufacturing facility
designated by [ * ] within sixty (60) days of such termination notice.
Any such termination by Elite shall be effective upon FDA approval of
the new manufacturing facility, or if earlier, on nine months' from
the date of Elite's notice of termination.
9.3. TERMINATION FOR CAUSE
This Agreement may be terminated by either Elite or [ * ] in the event
of a material breach or default by a Party which is not cured within
thirty (30) days after receipt of written notice detailing the breach
or default.
15
9.4. RIGHTS UPON TERMINATION
Subject to Sections 9.1(B) and 9.2, or upon termination of the
Agreement due to a material breach by [ * ], upon the termination or
expiration of this Agreement, [ * ] shall continue to have the
ownership rights to the ANDA, including the right to license, sell or
transfer the ANDA.
9.5 ACTS OF INSOLVENCY
Either Elite or [ * ] may terminate this Agreement for default by
written notice if the other Party becomes insolvent, makes a general
assignment for the benefit of creditors, files a voluntary petition of
bankruptcy, suffers or permits the appointment of a receiver for its
business assets, or becomes subject to any proceeding under any
bankruptcy or insolvency law, whether domestic or foreign, or has wound
up or liquidated, voluntarily or otherwise. A Party hereto shall
immediately notify the other Party upon an occurrence of any such
event.
9.6 FORCE MAJEURE
Either Party, Elite or [ * ] or [ * ], shall be excused from failure to
perform any of its obligations hereunder to the extent such failure is
caused by acts of God, fires, floods, war, sabotage, unavailability of
raw materials, governmental laws or regulations, labor disputes,
strikes or similar occurrences, where such Party is without fault or
negligence (a "Force Majeure Event"), provided such Party gives
immediate notice of such Force Majeure Event to the other Party, and
exercises due diligence to remove the cause as soon as practicable. As
applicable due to natural disaster, Elite will make reasonable efforts
to assist [ * ] to find/establish another approved cGMP manufacturing
site.
ARTICLE X: MISCELLANEOUS
10.1 ASSIGNMENT
Neither this Agreement nor any interest therein may be assigned, in
whole or in part, by either Party, Elite or [ * ] or [ * ], without the
prior written consent of the other, except that either Party may assign
its rights and obligations to an affiliate, division, subsidiary, or
parent company, or to a successor approved by (i) Elite, if [ * ] is
the assignor, (ii) [ * ], if Elite is the assignor, or (iii) Elite and
[ * ], if [ * ] is the assignor (such approval not to be unreasonably
withheld), in which event such assignee or successor shall assume the
respective Party's rights and obligations hereunder. Subject to the
foregoing, this Agreement shall be binding upon and inure to the
benefit of the Parties hereto, and their respective successors and
assigns.
10.2. NO WAIVER
No delay or omission by any Party hereto to exercise any right of power
occurring upon any noncompliance or default by the other Party or
Parties with respect to any of the terms of this Agreement shall impair
any such right or power or be construed to be a waiver thereof. A
waiver by any of the Parties hereto of any of the covenants,
conditions, or agreements to be performed by the other shall not be
construed to be a waiver of any succeeding breach thereof of any
covenant, condition, or agreement herein contained. Unless stated
otherwise, all remedies provided for in this Agreement shall be
cumulative and in addition to and not in lieu of any other remedies
available to any Party at law, in equity, or otherwise.
16
10.3. ENTIRE AGREEMENT; MODIFICATIONS TO THE AGREEMENT
This Agreement, including all Exhibits attached hereto, constitutes the
entire agreement between the Parties. All prior contemporaneous
agreements, proposals, understandings, whether oral or written,
relating to the subject matter hereto are hereby superceded by this
Agreement, except of the Confidentiality Agreement dated December 1,
2004, among [ * ], [ * ], and Elite, which shall continue in full force
and effect. No modification or waiver of any of the provisions of this
Agreement shall be valid unless it is provided in writing and signed by
[ * ] and Elite and, if and to the extent such modification or waiver
modifies [ * ]'s rights or obligations, by [ * ], too.
10.4. GOVERNING LAW
This Agreement shall be governed by the laws of the State of [ * ]
United States of America.
10.5. NOTICES
All communications required or permitted hereunder, shall be in
writing, and shall be effective upon delivery to the above provided
addresses.
10.6. AUTHORITY
Each person signing on behalf of a Party to this Agreement below herein
represents and warrants that it has the legal right and authority to
enter into this Agreement, and to fully perform its obligations
hereunder, and that none has made nor will make any commitments in
conflict with its respective obligations hereunder.
10.7. HEADINGS
The headings and subheadings utilized herein are not a part of this
Agreement, but are merely guides or labels to assist in locating and
reading the provisions hereof.
10.8. SURVIVAL
The following provisions in this Agreement shall survive termination or
expiration of this Agreement for any reason: Article I, Article II
Section 2.2, Article III, Sections 7.2, 7.3(A), (B) (C) (D), (E), (F)
and (G), 7.5, and 7.7, Article VIII, Article IX, and Article X
10.9 SEVERABILITY
It is not the intention of any Party hereto to violate any public
policy statutory or common laws, rules, regulations, treaty, or
decisions of any government agency or executive body thereof of any
country or community or association of countries. Should one or more
provisions of this Agreement be or become invalid or unenforceable by
reason of such a violation, then the Parties hereto shall substitute,
by mutual consent, valid provisions for such invalid provisions, which
valid provisions in their economic effect come so close to the invalid
provisions that it can be reasonably assumed that the Parties would
have contracted this Agreement with those new provisions. In case such
provisions cannot be found, the invalidity of one or more provisions of
the Agreement shall not affect the validity for the Agreement as a
whole, unless the invalid provisions are of such essential importance
for this Agreement that it is to be reasonably assumed that the Parties
would not have contracted this Agreement without the invalid
provisions.
17
IN WITNESS WHEREOF, each of [ * ], [ * ] and Elite have executed this
Product Development, Manufacturing, and Distribution Agreement by their
duly authorized officers as of the Effective Date.
ELITE LABORATORIES, INC.
- ---------------------
Bernard J. Berk, President
[ * ]
- ------------------------------
[ * ]
[ * ]
- -------------------------
[ * ]
18
ATTACHMENTS
EXHIBIT A: Product development activity schedule
EXHIBIT B: Transfer price for [ * ]
EXHIBIT C: Profit Sharing Calculation
EXHIBIT D: Example of Profit Sharing Calculation
ELITE LABORATORIES, INC.
19
EXHIBIT A: [ * ]
EXHIBIT B [ * ]
EXHIBIT C [ * ]
EXHIBIT D [ * ]
20