CONFIDENTIAL TREATMENT REQUEST
[ * ] INDICATES INFORMATION THAT HAS
BEEN OMITTED PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST AND
THIS INFORMATION HAS BEEN FILED UNDER
SEPARATE COVER WITH THE COMMISSION
EXECUTION COPY
PRODUCT DEVELOPMENT, MANUFACTURING, AND DISTRIBUTION AGREEMENT
[ * ] COATED PELLETS ORAL CAPSULE [ * ]
This PRODUCT DEVELOPMENT, MANUFACTURING AND DISTRIBUTION AGREEMENT ("Agreement")
entered into as of this 30th day of March 2005, among Harris Pharmaceutical,
Inc. ("Harris") located at 12500 World Plaza Lane, Suite 3 Fort Myers, Florida
33907, a corporation of the State of Florida, Tish Technologies LLC ("Tishtec"),
located at 27 Yale Court, Livingston, NJ], a corporation of the State of New
Jersey, 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, Harris, Tishtec 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, Tishtec 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, Harris is in the business of marketing pharmaceutical drug products;
Whereas, the Parties desire that Harris 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 [ * ] Coated Pellets Oral Capsule [ * ] (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.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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.
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, Tishtec 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.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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.
C. Harris 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 Harris 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 Harris, Tishtec, 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 Tishtec 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.
Tishtec and Elite will prepare those portions of the minutes relating
to their responsibilities. Harris shall prepare the balance of the
minutes, incorporating Tishtec'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/HARRIS INSPECTION
A. Tishtec hereby agrees, and any third party conducting the
Bioequivalence Study shall agree, to permit representatives of
Harris 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
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
studies) being conducted pursuant to this Agreement (each, a
"Study") are being conducted in compliance with the protocol,
this Agreement and applicable law.
B. Tishtec and any such third party conducting the Bioequivalence
Study shall immediately notify Harris and Elite if FDA
schedules, or, without scheduling, begins an inspection of a
study site, or Tishtec. In addition, Tishtec will immediately
provide Harris 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
Tishtec 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
Harris, Tishtec 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 Harris, Tishtec 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.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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.
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 Tishtec and Elite shall
use commercially reasonable efforts to develop the Product
according to the activity descriptions set forth in Exhibit "A,"
and Harris will pay [ * ] percent ([ * ]%) of the Development
Costs in accordance with Section 5.1.
B. BIOEQUIVALENCE STUDY. Harris shall have the final decision as to
the clinical research organization used for the pilot and the
pivotal Bioequivalence Studies. Harris and Elite shall be
responsible for funding the pilot and the pivotal Bioequivalence
Studies in their proportionate allocated share of [ * ] percent
([ * ]%) Harris and [ * ] percent ([ * ]%) Elite as set forth in
Exhibit "A". It is expressly understood and agreed that Harris
shall have all rights, title and interest in the Product.
C. ANDA. Harris 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 Harris within ten (10) days of filing such
documents with the FDA. Harris, Elite and Tishtec shall be
responsible for prosecuting and filing the ANDA. Harris 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 Harris
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 Harris desire
to assign, transfer, sell or license the Product or any of its
Proprietary Rights:
a. Harris shall notify Tishtec and Elite in writing within
ninety (90) days of the decision.
b. Tishtec shall have the right of first negotiation to
acquire such Product or Proprietary Rights as Harris may
transfer.
c. If Tishtec 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, Harris 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
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
commencing), Harris is free to assign, transfer, sell or
license the Product and its Proprietary Rights within
thirty (30) days on terms no less favorable to Harris than
those offered to Tishtec and Elite.
e. If Harris 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 Tishtec's
and Elite's right of first negotiation as set forth above.
f. Harris shall pay for all Product ordered by Harris through
the date of assignment, transfer, and sale or licensing.
Harris may not transfer any of its rights to the Product,
whether to Tishtec, Elite, or a third party, unless the
transferee agrees in writing to be bound by Harris'
obligations under this Agreement, including without
limitation Harris' obligations to market the Product and
pay Tishtec and Elite their Profit Shares.
C. If Elite desires to sell its manufacturing facility:
a. Elite shall inform Harris of its intent to sell within
ninety (90) days of the decision.
b. Harris 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
Harris prior to terminating Elite's obligations under this
Agreement. Elite and Tishtec 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 Harris 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
Harris within sixty (60) days of such election.
D. Upon the sale of all or substantially all of Harris' assets to a
third party entity, Harris 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 Harris then shall assume all of
Harris' obligations under this Agreement), or of terminating
this Agreement. If the successor to Harris does not wish
manufacturing of this Product to be continued at the Elite
facility, Harris must give nine (9) months notice to Elite.
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 Harris label or Harris
designated private label, all in accordance with the ANDA review
process and the ANDA and all applicable laws and regulations,
including,
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
but not limited to the laws and regulations enforced by the FDA.
Tishtec, Elite and Harris 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 Harris, which consent may be withheld by Harris for any
reason in its sole discretion.
4.4. PURCHASE AND DISTRIBUTION
A. Harris 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. Harris 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. Harris
shall diligently market and promote the Product in the Territory
using commercially reasonable efforts to maximize Product sales
and Profit Share. Harris 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, Harris shall, at least once per
calendar quarter, provide to Elite and Tishtec, in writing, an
outline of Harris' commercial plans, planned marketing
activities, and sales expectations for the Product for the
upcoming three (3) calendar quarters.
C. Harris shall file all labeling, marketing, advertising and
promotional materials to the regulatory agency. Harris shall
store, transport, sell, market and distribute the Product in
compliance with all applicable laws and regulations. If
requested by Harris, Tishtec shall make any additional
regulatory filings as Harris' 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 Tishtec and Elite agrees that, unless directed by
Harris, it will not develop or manufacture the Product for itself or
any other party other than Harris and Harris agrees not to have the
Product developed or manufactured for sale by any party other than
Tishtec 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, Harris shall be the
exclusive distributor of the Product, Elite will be the exclusive
manufacturer of the Product, Elite will supply Harris with all of
Harris' requirements of the Product for distribution and sale by
Harris, in the Territory and Harris will purchase all of its
requirements of the Product in the Territory from 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, Tishtec and
Harris shall have the option to have the Product manufactured at an
alternate manufacturing site and by an alternate manufacturer, subject
to Harris' ongoing obligation to pay Elite's Profit Share for all such
Product (regardless of
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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." Harris 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. Tishtec 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). Harris shall pay
its respective share of such Development Costs within thirty
(30) days after receipt of such invoice. Harris 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
Harris, 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. Harris shall pay Elite [ * ] percent ([ * ]%) of the Transfer
Price for a given shipment of Product within thirty (30) days of
the date of the invoice.
E. During the term of this Agreement, on a quarterly basis within
thirty days of the calendar quarter then ended, Harris shall pay
each of Elite and Tishtec its respective Profit Share for such
calendar quarter, along with a detailed statement setting forth
the calculation of Profit Share.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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 Harris and Tishtec, that upon the execution of
this Agreement, Harris shall pay Tishtec a fee of $150,000 for the
identification and development of the Product opportunity and the
oversight of the formulation development work to be completed at Elite
and/or Tishtec. Tishtec agrees that documentation of this process shall
be provided to Harris on a monthly basis.
6.2. It is agreed between Harris, Tishtec, 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 Tishtec develops such intellectual property,
they shall be required to license the use of such "trade secret"
or patentable technology to Harris or Elite (as applicable), on
an exclusive basis for the manufacture of the Product, for a fee
of $25,000 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 Harris 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 Harris
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
A. Elite will deliver to Harris or shall cause the finished Product
to be delivered to Harris in bottles packed in cases and stacked
on pallets as specified by Harris under Section 7.1(c) below.
Harris shall order Product in multiples of Elite's batch size
for the Product.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
B. Harris 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 Harris 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, Harris
shall provide Elite with specific written instructions
concerning the packaging, labeling (unless under a private label
other than Harris, which will require 60 days prior notice to
Elite and Harris 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 Harris
shipping and delivery instructions. Elite shall pay the cost to
ship the bulk packaged Product to a third party labeler/packager
and Harris shall pay the shipping cost of the finished Product
shipped from a pre-approved cGMP facility under Section 4.3, to
Harris' desired location. Each shipment shall be made to arrive
within five (5) days of the shipping date. Upon shipment, Elite
shall invoice Harris in writing for the Transfer Price. Harris
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 Harris
when the Product has been tendered to the shipper, and title and
risk of loss of the Product shall be deemed to pass to Harris
upon such tender.
7.2. GUARANTEE
Elite guarantees that the Product delivered to Harris 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
Harris 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 Harris shall have the right
to reject such nonconforming shipment of Product or the nonconforming
portion thereof, as the case may be. Harris shall give written notice
to Elite of its rejection within fifteen (15) days of Harris' 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
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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
Harris. Elite will bear the cost of any Recall (as defined below) of
any Product due to acts or omissions of Elite. Harris will bear the
cost of any Recall of any Product due to acts or omissions of Harris.
In all other events, the costs of any Product Recall shall be allocated
[ * ] percent ([ * ]%) to Harris, [ * ] 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 Tishtec 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. Tishtec further represents
and warrants that none of Tishtec 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 Tishtec under this Agreement.
D. Harris 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 Harris 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 Harris 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
Harris' label.
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 Harris under this Agreement (a "Recall"), Elite
and Harris
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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 Harris 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 Tishtec 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 Harris on an annual basis or whenever any change
is made by Elite or any third-party supplier in such policy of
insurance.
B. Harris 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. Harris will provide evidence of
this coverage to Elite on an annual basis or whenever any change
is made by Harris in such policy of insurance.
7.7. INDEMNIFICATION
A. Elite and Tishtec agree to indemnify and hold harmless Harris,
its directors, officers, employees and agents(collectively,
"Harris 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 Tishtec's
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
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
not related in any way to Harris', or any third party supplier
engaged by Harris', negligence, fault, or other act or omission.
Harris agrees to indemnify, defend and hold harmless Elite,
Tishtec, and their respective directors, officers, employees and
agents (individually, "Elite Indemnified Parties" and "Tishtec
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 Harris' representations or warranties set forth in
this Agreement; (ii) Harris', or any third party supplier
engaged by Harris', negligence with respect to the transporting,
storing, sale, marketing, promotion or distribution of Product
hereunder; or (iii) any third party supplier engaged by Harris'
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 Tishtec's (or any third
party supplier engaged by Elite or Tishtec's) negligence, fault,
or other act or omission.
B. Elite shall indemnify, defend and hold harmless Harris
Indemnified Parties and Tishtec Indemnified Parties from the
costs and expenses of settling, paying or defending any and all
claims, actions or proceedings resulting from an assertion
against Tishtec Indemnified Parties or Harris 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 Tishtec, Harris, or any third party.
C. Tishtec shall indemnify, defend and hold harmless Harris
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 Harris Indemnified Parties
that Tishtec's Intellectual Property infringes upon a third
party's intellectual property rights ("Tishtec Infringement
Claims"); provided however that Tishtec shall not be responsible
for any Infringement Claim relating to Intellectual Property
provided by Elite, Harris, or any third party.
D. Except with respect to Product Liability Claims, breaches of
confidentiality obligations, and Elite Infringement Claims and
Tishtec 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 Tishtec, Elite and Harris
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 Harris 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.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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 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 Florida 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 Florida
Statutes (Florida 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, Florida Statutes. All arbitration
proceedings shall be held in Lee County, Florida.
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.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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 Harris 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 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 Harris
wishes to terminate for any reason:
A. Harris shall give thirty (30) days notice in writing to Tishtec
and Elite.
B. All of Harris' rights to the Product and the ANDA shall revert
back to Tishtec upon repayment to Harris by Tishtec of the one
time Product development fee of $150,000. If Tishtec does not
pay the $150,000 to Harris within thirty (30) days of Harris'
notice, Elite shall have the right to all of Harris' rights upon
payment of$150,000 to Harris.
C. Harris shall pay Tishtec 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 Harris 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 three hundred thousand dollars ($300,000). If
the Agreement is terminated under this section by Harris, Harris agrees
to pay for all Product ordered by it.
If the Agreement is terminated under this section by Harris, Harris
shall have the option to transfer and sell the ANDA and its rights to
the Product to Tishtec and Harris shall take such actions, and execute
and deliver such documents, as Tishtec may from time to time reasonably
request to effectuate the transfer of the ANDA to Tishtec hereunder. If
Tishtec 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 Harris
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 Harris' rights and obligations for the Product.
If the Agreement is terminated under this section by Elite, Elite
agrees, at the request of Harris, 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 Harris 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.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
9.3. TERMINATION FOR CAUSE
This Agreement may be terminated by either Elite or Harris 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.
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 Harris, upon the termination or
expiration of this Agreement, Harris 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 Harris 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 Harris or Tishtec, 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 Harris 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 Harris or Tishtec, 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 Harris is the assignor, (ii) Harris, if Elite is the assignor, or
(iii) Elite and Harris, if Tishtec 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.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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.
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 Harris, Tishtec, 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 Harris and Elite and, if and to the extent such modification
or waiver modifies Tishtec's rights or obligations, by Tishtec, too.
10.4. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Florida,
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
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
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.
IN WITNESS WHEREOF, each of Harris, Tishtec 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
TISH TECHNOLOGIES, LLC
- --------------------------------------
Satish Patel, Ph.D., M.B.A., President
HARRIS PHARMACEUTICAL, INC.
- --------------------------------
Brian A. Harris, M.D., President
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
ATTACHMENTS
EXHIBIT A: Product development activity schedule
EXHIBIT B: Transfer price for [ * ] Capsule Coated Pellets [ * ]
EXHIBIT C: Profit Sharing Calculation
EXHIBIT D: Example of Profit Sharing Calculation
ELITE LABORATORIES, INC.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
EXHIBIT A: Product Development Activity Schedule [ * ] BASE STRENGTHS (03-06-05)
FOR THE UNITED STATES MARKET
- ------ ----------------------------------------- --------------------- ----------------------- -----------------------
RESPONSIBILITY TIME LINES COSTS, $*
# ACTIVITIES --------------------- ----------------------- -----------------------
ELITE HARRIS ELITE HARRIS * *
- ------ ----------------------------------------- ---------- ---------- ------------ ---------- ----------- -----------
[ * ]
---------------------------------------------------------------------------------------------------------------
[ * ] [ * ]
----------------------------------------- ----------
1 [ * ] [ * ]
----------------------------------------- ---------- [ * ] [ * ] [ * ] [ * ] [ * ]
[ * ] [ * ]
----------------------------------------- ----------
[ * ] [ * ]
- ------ ----------------------------------------- ---------- ---------- ------------ ---------- ----------- -----------
[ * ]
---------------------------------------------------------------------------------------------------------------
2 [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------- ---------- ---------- ------------- ---------- ----------- ----------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
- ------ ----------------------------------------- ---------- ---------- ------------- ---------- ----------- ----------
[ * ]
---------------------------------------------------------------------------------------------------------------
3 [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------- ---------- ---------- ------------ ----------- ----------- ----------
[ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
- ------ ----------------------------------------- ---------- ---------- ------------ ----------- ----------- ----------
4 [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
- ------ ----------------------------------------- ---------- ---------- ------------ ----------- ----------- ----------
5 [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
- ------ ----------------------------------------- ---------- ---------- ------------ ----------- ----------- ----------
6 [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
- ------ ----------------------------------------- ---------- ---------- ------------ ----------- ----------- ----------
7 [ * ] [ * ] [ * ] [ * ] [ * ] [ * ] [ * ]
- ------ ----------------------------------------- ---------- ---------- ------------ ----------- ----------- ----------
TOTALS [ * ] [ * ]
- ---------------------------------------------------------------------- ------------ ----------- ----------- ----------
The cost of $[ * ] includes the cost of the active pharmaceutical ingredient
*ALL DEVELOPMENT COSTS ARE TO SHARED [ * ]% HARRIS, [ * ]% ELITE.
**PRODUCT FORMULATION, COMPOSITION AND MANUFACTURING PROCESS SHALL BE PROVIDED
BY TISHTEC.
EXHIBIT B
ESTIMATED TRANSFER PRICE (MANUFACTURING COSTS) FOR [ * ]
- ----------------------------------------------------------------------------- --------------------- ------------------------
100 MG 75 MG.
ACTIVITIES PER BOTTLE OF PER BOTTLE OF
50 CAPSULES, $ 50 CAPSULES, $
- ----------------------------------------------------------------------------- --------------------- ------------------------
Active pharmaceutical ingredient [ * ] [ * ]
- ----------------------------------------------------------------------------- --------------------- ------------------------
- ----------------------------------------------------------------------------- --------------------- ------------------------
Inactive pharmaceutical ingredients, capsules, and any other materials [ * ] [ * ]
included in the product
- ----------------------------------------------------------------------------- --------------------- ------------------------
- ----------------------------------------------------------------------------- --------------------- ------------------------
Packaging from a third party: Packaging components, container closure [ * ] [ * ]
system, labels, insert, and shipping
- ----------------------------------------------------------------------------- --------------------- ------------------------
- ----------------------------------------------------------------------------- --------------------- ------------------------
Manufacturing labor [ * ] [ * ]
- ----------------------------------------------------------------------------- --------------------- ------------------------
- ----------------------------------------------------------------------------- --------------------- ------------------------
Manufacturing facilities, equipment, utilities [ * ] [ * ]
- ----------------------------------------------------------------------------- --------------------- ------------------------
- ----------------------------------------------------------------------------- --------------------- ------------------------
Analytical labor [ * ] [ * ]
- ----------------------------------------------------------------------------- --------------------- ------------------------
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
- ----------------------------------------------------------------------------- --------------------- ------------------------
100 MG 75 MG.
ACTIVITIES PER BOTTLE OF PER BOTTLE OF
50 CAPSULES, $ 50 CAPSULES, $
- ----------------------------------------------------------------------------- --------------------- ------------------------
Analytical facilities, equip, utilities, materials [ * ] [ * ]
- ----------------------------------------------------------------------------- --------------------- ------------------------
- ----------------------------------------------------------------------------- --------------------- ------------------------
Indirect costs (regulatory, accounting, etc.) [ * ] [ * ]
- ----------------------------------------------------------------------------- --------------------- ------------------------
- ----------------------------------------------------------------------------- --------------------- ------------------------
COST PER BOTTLE OF [ * ]CAPSULES, $ [ * ] [ * ]
- ----------------------------------------------------------------------------- --------------------- ------------------------
YEARLY OBLIGATION OF STABILITY - ONE BATCH OF EACH STRENGTH (TOTAL OF 2 BATCHES) = $[ * ]
Assumptions:
1. [ * ]
2. [ * ]
3. [ * ]
4. [ * ]
[ * ]
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
EXHIBIT C
PROFIT SHARING CALCULATION
Gross Sales = Aggregate invoice price
Net Sales = Gross sales - Trade Deductions (capped at [ * ]%
of Gross Sales) (see below)
Gross Margins = Net Sales- Transfer Price
Net Gross Margins = Gross Margins less a one time charge, up to
$150,000, to be agreed upon by all Parties for
the advertisement and promotional marketing
activities, less Royalties, less the Product
Development Fee
- --------------------------------------------------------------------------------
Royalties = Amount paid on potential Intellectual Property
as provided in Section 6.2(B)._
Product Development Fee = One time fee of $150,000 paid to Tishtec
The Profit Share for each Party shall equal the following percentage of NET
GROSS MARGINS:
[ * ]% Harris
[ * ]% Elite
[ * ]% Tishtec
Trade Deductions include:
o Customs and excise duties or other sales taxes (but, for the avoidance of
doubt not income or corporation tax), directly related to the sale of the
Product
o Costs incurred by Harris in respect of transport, shipping and insurance
costs; and industry standard or mandatory discounts or rebates related to
the sale of the Product, including, without limitation, any credit in
respect of any Federal or state Medicaid, Medicare or similar program; and
o Amounts repaid or credited by Harris, consistent with its ordinary or
customary business practices for similar products, by reason of the
rejection or return of goods and allowances, including trade, quantity and
cash discounts and any other adjustments, including those granted on
account of price or shelf stock adjustments, billing errors, rejected
goods, damaged goods, recalls, returns, rebates, charge backs,
reimbursements, similar payments granted or given to wholesalers or other
distributors, buying groups, health care insurance carriers or other
institutions.
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.
EXHIBIT D
EXAMPLE OF PROFIT SHARING CALCULATION
SAMPLE - [ * ]
Gross Sales = [ * ]
Net Sales = [ * ]
Gross Margins = [ * ]
Royalties = [ * ]
Product Development Fee = [ * ]
One time charge agreed upon by = [ * ]
All parties for the advertisement
And Promotional marketing
activities
NET GROSS MARGINS = [ * ]
- ---------------------------------------------------------------------
The NET GROSS MARGINS will be shared by the three parties as follows:
[ * ]% Harris
[ * ]% Elite
[ * ]% Tishtec
* Trade deductions
** Transfer price
* Portions of this exhibit have been omitted and filed separately pursuant to an
application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended.