EXHIBIT 5
ETHYOL(R) (AMIFOSTINE)
DISTRIBUTION AND MARKETING COLLABORATION AGREEMENT
BETWEEN
US BIOSCIENCE, INC.
AND
ALZA CORPORATION
DECEMBER 12,1995
* The Confidential material contained herein has been
omitted and has been separately filed with the Commission.
TABLE OF CONTENTS
ARTICLE - I................................................................. 1
DEFINITIONS................................................................. 1
1.1 "AFFILIATE"............................................. 1
1.2 "ALZA".................................................. 2
1.3 "COLLABORATION COMMITTEE"............................... 2
1.4 "COMMERCIAL KNOW-HOW"................................... 2
1.6 "COPROMOTION PERIOD".................................... 2
1.7 "DEVELOPMENT COSTS"..................................... 2
1.8 "EFFECTIVE DATE"........................................ 2
1.9 "EXTENSION PERIOD"...................................... 2
1.10 "FDA"................................................... 2
1.11 "LAUNCH DATE"........................................... 3
1.12 "MANAGED CARE SETTING".................................. 3
1.13 "MARKETING PLAN"........................................ 3
1.15 "NET SALES"............................................. 3
1.16 "PATENTS"............................................... 4
1.17 "PRODUCT"............................................... 4
1.18 "REGULATORY APPROVAL"................................... 4
1.19 "RESEARCH AND DEVELOPMENT".............................. 4
1.20 "RESIDUAL PERIOD"....................................... 4
1.21 "SALES CALL"............................................ 4
1.22 "SCIENTIFIC KNOW-HOW"................................... 5
1.23 "SPECIFICATIONS"........................................ 5
1.24 "TERRITORY"............................................. 5
1.25 "THIRD PARTY"........................................... 5
1.26 "TRADEMARK"............................................. 5
1.27 "USB"................................................... 5
1.28 "VIAL".................................................. 5
ARTICLE II.................................................................. 6
2.1 Collaboration Committee................................. 6
2.2 Meetings................................................ 6
2.3 Specific Responsibilities of the COLLABORATION
COMMITTEE............................................... 6
2.4 Quorum; Voting.......................................... 7
ARTICLE III................................................................. 8
3.1 Appointment of ALZA as Exclusive Distributor;
Use of TRADEMARKS....................................... 8
3.2 Acceptance of Appointment............................... 9
3.3 No Rights by Implication; USB Retained Rights........... 9
3.4 No Sales outside the TERRITORY.......................... 10
3.5 No Competitive Products................................. 10
3.6 Extension of COPROMOTION PERIOD......................... 11
ARTICLE IV.................................................................. 14
4.1 Advertising and Promotional Materials................... 14
4.2 Marketing Plan.......................................... 16
4.3 Party Names; Packaging and Labelling.................... 16
4.4 Advertising and Promotional Expenses.................... 17
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4.5 ALZA Sales Efforts and Sales Force...................... 18
4.6 Medical Inquiries....................................... 20
4.7 Customer Complaints..................................... 20
4.8 USB Sales Efforts and Sales Force....................... 21
4.9 Training................................................ 22
4.10 SALES CALL Reports...................................... 22
ARTICLE V................................................................... 23
5.1 Oversight............................................... 23
5.2 Responsibilities of the Parties......................... 23
5.3 Compliance with Law..................................... 25
5.4 DEVELOPMENT COSTS....................................... 25
ARTICLE VI.................................................................. 25
6.1 Purchase Orders......................................... 25
6.2 Supply of PRODUCT....................................... 25
6.3 Purchase Volumes........................................ 26
6.4 Rolling Twelve Month Forecasts.......................... 26
6.5 Introduction and Supply of
Nonrefrigerated PRODUCT................................. 26
6.6 Purchase Price Per VIAL for PRODUCT..................... 27
6.7 USB Shipment............................................ 29
6.8 Title to PRODUCT........................................ 29
6.9 Payment for PRODUCT..................................... 30
6.10 PRODUCT Warranty........................................ 30
6.11 Quality Assurance; Defective PRODUCTS................... 30
6.12 SPECIFICATIONS.......................................... 32
6.13 Alternate Manufacture................................... 32
6.14 Bankruptcy.............................................. 33
ARTICLE VII................................................................. 34
7.1 Upfront Payments and Distribution Fees.................. 34
7.2 Loan.................................................... 35
ARTICLE VIII................................................................ 35
8.1 Reverse PRODUCT Payment................................. 35
8.2 Reverse PRODUCT Payment Terms........................... 37
8.3 USB Diligence........................................... 37
ARTICLE IX.................................................................. 37
9.1 Licenses, Filings, Registrations,
Permits and REGULATORY APPROVALS........................ 37
9.2 Communication With Agencies............................. 37
9.3 Governmental Inspections................................ 38
9.4 Adverse Reactions, etc.................................. 38
9.5 PRODUCT Recalls, etc.................................... 39
ARTICLE X................................................................... 40
10.1 Ownership of SCIENTIFIC KNOW-HOW and COMMERCIAL
KNOW-HOW; Disclosure.................................... 40
ii
10.2 Confidential Information................................ 42
10.3 AFFILIATES and Sublicensees............................. 43
10.4 Ownership............................................... 44
10.5 Legal Proceedings....................................... 44
10.6 Public Announcements.................................... 44
10.7 Publications............................................ 45
ARTICLE XI.................................................................. 45
11.1 THIRD PARTY Patent or Trademark Litigation.............. 45
11.2 Infringement............................................ 45
11.3 Control of Litigation, Assistance and Settlement........ 46
11.4 Expenses and Awards..................................... 46
11.5 Obligation to Inform.................................... 46
ARTICLE XII................................................................. 46
12.1 Term.................................................... 47
12.2 Termination by Either Party............................. 47
12.3 Termination by ALZA..................................... 47
12.4 Termination by USB...................................... 48
ARTICLE XIII................................................................ 48
13.1 Monies Paid or Due...................................... 48
13.2 Termination of Distribution Rights...................... 49
13.3 Remaining PRODUCT....................................... 50
13.4 Transfer of Information................................. 50
13.5 Transfer of Reimbursement Approvals and
Purchase Contracts...................................... 50
13.6 Survival of Rights...................................... 50
13.7 Rights Not Exclusive.................................... 51
13.8 Safety Events........................................... 51
ARTICLE XIV................................................................. 51
14.1 Records................................................. 51
14.2 Place of Payment; Interest.............................. 52
14.3 No Set-offs, etc........................................ 52
14.4 Taxes................................................... 52
ARTICLE XV.................................................................. 53
15.1 Mutual Authority........................................ 53
15.2 Compliance with Applicable Laws......................... 53
15.3 Debarment............................................... 53
ARTICLE XVI................................................................. 53
16.1 Indemnification by ALZA................................. 53
16.2 Indemnification by USB.................................. 54
16.3 Conditions to Indemnification........................... 54
16.4 Settlements, etc........................................ 54
16.5 Limitation of Liability................................. 54
16.6 Insurance............................................... 55
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ARTICLE XVII................................................................ 55
17.1 Force Majeure........................................... 55
17.2 Governing Law........................................... 55
17.3 Injunctive Relief....................................... 55
17.4 Dispute Resolution...................................... 56
17.5 Severability............................................ 56
17.6 Entire AGREEMENT........................................ 57
17.7 Amendment............................................... 57
17.8 Notices................................................. 57
17.9 Assignment and Binding Effect........................... 58
17.10 Headings and References................................. 59
17.11 No Agency............................................... 59
17.12 No Strict Construction.................................. 59
17.13 Counterparts............................................ 59
LIST OF APPENDICES
Appendix A - DEVELOPMENT COSTS.............................................. 61
iv
THIS DISTRIBUTION AND MARKETING COLLABORATION AGREEMENT (hereinafter
"AGREEMENT") is made this 12th day of December, 1995, between US Bioscience,
Inc., a Delaware corporation ("USB"), and ALZA Corporation, a Delaware
corporation ("ALZA").
WITNESSETH THAT:
WHEREAS, USB is developing Ethyol(R) (amifostine) for use in reducing
toxicities of certain chemotherapeutic agents and as a radioprotective agent.
WHEREAS, ALZA is in the business of developing and commercializing
pharmaceutical products and USB desires to obtain the expertise of ALZA as USB's
exclusive distributor for Ethyol in the United States.
WHEREAS, USB and ALZA desire that USB copromote Ethyol with ALZA in the
United States.
WHEREAS, USB and ALZA desire to enter into an agreement to conduct further
clinical tests, promote, market, sell and distribute PRODUCT in the TERRITORY
(as such terms are hereinafter defined) on the terms set forth in this
AGREEMENT.
NOW, THEREFORE, in consideration of the covenants and obligations expressed
herein, and intending to be legally bound, the parties agree as follows:
ARTICLE - I
DEFINITIONS
1.1 "AFFILIATE" shall mean any corporation, firm, partnership or other
---------
entity, whether de jure or de facto, which, at the time in question, is directly
or indirectly owned by or controlled by, or under common control with, ALZA or
USB, as the case may be. For the purposes of this definition, "control" shall
mean the ownership, directly or indirectly, of more than 50% (fifty percent) of
the voting stock or shareholders' equity of a corporation or, in the case of a
non-corporate entity, the right to receive more than 50% (fifty percent) of
either the profits or the assets upon dissolution.
1
1.2 "ALZA" shall mean ALZA Corporation and its AFFILIATES.
----
1.3 "COLLABORATION COMMITTEE" shall mean the committee described in
-----------------------
Article II.
1.4 "COMMERCIAL KNOW-HOW" shall mean all commercial trade secret
--------------------
information relating to commercialization of the PRODUCT, and shall include
without limitation, customer lists, MARKETING PLANS, surveys, SALES CALL lists,
market research, customer information, service information, marketing strategy,
training materials, sales and marketing materials prepared by or on behalf of
ALZA or USB, and other information in the possession of a party or its agents
relating to advertising, marketing, promotion or commercial sale of PRODUCT.
1.5 "CONTRACT YEAR" shall mean the period beginning the first day of the
--------------
first full calendar quarter following the LAUNCH DATE and ending on the first
anniversary thereof, and each consecutive twelve-month period thereafter during
the COPROMOTION PERIOD.
1.6 "COPROMOTION PERIOD" shall mean the period beginning on the date
------------------
hereof and continuing until the end of the fifth CONTRACT YEAR, unless
terminated earlier in accordance with the provisions of Article XII hereof.
1.7 "DEVELOPMENT COSTS" shall mean all costs incurred and appropriately
-----------------
documented by a party in connection with RESEARCH AND DEVELOPMENT, plus the
costs of attainment and maintenance of necessary regulatory approvals for
PRODUCT as such costs are determined in accordance with Appendix A hereto.
1.8 "EFFECTIVE DATE" shall mean the date as of which this AGREEMENT is
--------------
effective and shall be the date of this AGREEMENT as first written above.
1.9 "EXTENSION PERIOD" shall mean the period, if any, during which the
-----------------
COPROMOTION PERIOD is extended by ALZA in accordance with the provisions of
Section 3.6 hereof.
1.10 "FDA" shall mean the United States Food and Drug Administration.
---
2
1.11 "LAUNCH DATE" shall mean the date of first commercial sale of
-----------
PRODUCT in the TERRITORY by ALZA.
1.12 "MANAGED CARE SETTING" shall mean an HMO, IPO, PPO, PBM, VA or
--------------------
military hospital and/or state medicaid organization or other similar
organization for delivery of health care or prescription benefits in a managed
care setting. A sales call in a MANAGED CARE SETTING is one in which a face-to-
face meeting takes place between the appropriate managed care representative
with decision-making authority and a professional representative of the
applicable party, in which meeting a presentation is made with the goal of
obtaining formulary listing for PRODUCT, reimbursement approval for PRODUCT or a
government contract for the purchase of PRODUCT.
1.13 "MARKETING PLAN" shall have the meaning ascribed to it in Section
--------------
4.2 of this AGREEMENT.
1.14 "NDA" shall mean USB's New Drug Application for PRODUCT (No. 20,221)
---
filed in accordance with the requirements of the FDA.
1.15 "NET SALES" means the total invoiced price of PRODUCT charged to an
---------
unaffiliated THIRD PARTY (whether an end-user, wholesaler, distributor or
otherwise) in the TERRITORY, net of returns and rejections, and after deducting,
to the extent charged or credited to the purchaser and identified on the invoice
or other documentation related to the sale, any sales or similar taxes,
packaging charges, freight, insurance, trade and quantity discounts, chargebacks
and allowances and rebates (including government-mandated rebates) and, with
respect to portions of the TERRITORY which are U.S. territories or possessions
(and not states or the District of Columbia), commissions paid to THIRD PARTY
distributors who act as sales agents for the PRODUCT in such territories or
possessions. For purposes of calculating NET SALES under this AGREEMENT, all
sales of PRODUCT hereunder made for other than cash, shall be deemed to be made
for cash, at the average NET SALES price of PRODUCT in the TERRITORY for the
relevant quarter. There will be only one NET SALE per VIAL. NET SALES shall
not include sales between a party and any of its AFFILIATES intended for resale;
in such cases, the resale shall be the sale as to which NET SALES are determined
hereunder. For sales pursuant to a relationship with a distributor, the sale to
the distributor (and not any sale by the distributor, except as may be provided
in Section 8.1 of this AGREEMENT) shall be
3
the sale as to which NET SALES are determined hereunder.
1.16 "PATENTS" shall mean all patents and patent applications in the
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TERRITORY which are owned or controlled, in whole or in part, by either party or
jointly by the parties, and in which either party has now the right to grant
licenses, which generically or specifically claim (i) PRODUCT, (ii) process for
manufacturing PRODUCT, (iii) intermediate used in such manufacturing process,
(iv) method to formulate or deliver PRODUCT, (v) use of PRODUCT, (vi)
improvement of PRODUCT or intermediate or any manufacturing process required or
useful for the production of PRODUCT, or (vii) any item of SCIENTIFIC KNOW-HOW
which is otherwise necessary or useful to make, use or sell PRODUCT. The scope
of the term PATENTS includes without limitation all continuations,
continuations-in-part, divisions, patents of addition, reissues, renewals or
extensions of any PATENTS. Prior to the EFFECTIVE DATE, USB has provided ALZA
with a list of all issued PATENTS. As additional PATENTS issue, USB will
promptly notify ALZA in writing of the PATENT number and date of issuance.
1.17 "PRODUCT" shall mean any product containing amifostine (Ethyol(R))
-------
as an active ingredient and any improvements thereto, including without
limitation any other dosage strengths and the nonrefrigerated formulation of
PRODUCT.
1.18 "REGULATORY APPROVAL" shall mean the FDA approval for the PRODUCT
-------------------
(including any prerequisite manufacturing approval or authorization related
thereto) that is required for commercial sale of the PRODUCT in the TERRITORY,
and shall not include any THIRD PARTY reimbursement approvals.
1.19 "RESEARCH AND DEVELOPMENT" shall mean preclinical and clinical
------------------------
research and development of the PRODUCT.
1.20 "RESIDUAL PERIOD" shall mean the period during which reverse
----------------
PRODUCT payments are due to ALZA under this AGREEMENT.
1.21 "SALES CALL" shall mean a face-to-face meeting, in an individual or
----------
group practice setting, between a health care professional with prescribing
authority and a professional
4
representative of the applicable party during which a Major Presentation of
PRODUCT is made to such health care professional. When used as a verb, "SALES
CALL" shall mean to engage in a SALES CALL. The term "Major Presentation" as
used in this section shall mean a PRODUCT presentation during which key PRODUCT
attributes are verbally presented.
1.22 "SCIENTIFIC KNOW-HOW" shall mean all information and expertise that
-------------------
relates to PRODUCT, other than COMMERCIAL KNOW-HOW, and shall include without
limitation all chemical, pharmacological, toxicological, clinical,
pharmacoeconomic data, assay, quality control and manufacturing data and any
other scientific information and reagents relating to PRODUCT and useful or
required for the RESEARCH AND DEVELOPMENT of PRODUCT that is known as of the
EFFECTIVE DATE of this AGREEMENT or developed after the date of this AGREEMENT,
to the extent that the party with knowledge thereof has the right to disclose it
to the other party in accordance with this AGREEMENT. In addition, the scope of
the term "SCIENTIFIC KNOW-HOW" shall include all data, information and results
that relate to PRODUCT obtained from the RESEARCH AND DEVELOPMENT of USB and/or
ALZA of the PRODUCT contemplated by this AGREEMENT, other than COMMERCIAL KNOW-
HOW.
1.23 "SPECIFICATIONS" shall have the meaning ascribed to it in Section
--------------
6.12.
1.24 "TERRITORY" shall mean the United States of America and its
---------
possessions and territories.
1.25 "THIRD PARTY" shall mean any person other than a party (including
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its AFFILIATES) to this AGREEMENT.
1.26 "TRADEMARK" means a trademark such as Ethyol(R) and any variation
---------
thereof or substitute mark proposed by USB and approved by ALZA, including
approval of its trademark counsel (such approval not to be unreasonably
withheld) for use with PRODUCT in the TERRITORY, whether such mark is pending,
allowed or registered. The TRADEMARK or TRADEMARKS approved by the parties for
the PRODUCT will be owned by USB and designated in writing by USB, and shall be
registered and maintained by USB at its sole expense.
5
1.27 "USB" shall mean U.S. Bioscience, Inc. and its AFFILIATES.
---
1.28 "VIAL" shall mean with respect to the PRODUCT a vial containing 500
----
mg. amifostine.
ARTICLE II
COLLABORATION COMMITTEE
-----------------------
2.1 Collaboration Committee. To facilitate the collaboration, promptly
-----------------------
after the EFFECTIVE DATE, the parties shall set up a committee containing senior
marketing/sales, clinical research, regulatory and business development members
from both parties (hereinafter the "COLLABORATION COMMITTEE"), and such
COLLABORATION COMMITTEE shall, in good faith, (i) determine the overall strategy
for this collaboration, (ii) coordinate the parties' activities hereunder and
(iii) approve plans for the collaboration. The COLLABORATION COMMITTEE shall
consist of eight members, four of whom shall be appointed by ALZA and four of
whom shall be appointed by USB. Each party shall designate its members to the
COLLABORATION COMMITTEE and shall notify in writing the other party if it
substitutes any of its members of the COLLABORATION COMMITTEE. In addition, if
one or more members of the COLLABORATION COMMITTEE is unavailable for any
meeting, such member may designate a substitute to participate in lieu of the
absent member.
2.2 Meetings. The COLLABORATION COMMITTEE shall meet at such times and
--------
places as it may select but, in any event, it shall meet at least four (4) times
per CONTRACT YEAR after the EFFECTIVE DATE, and in addition shall meet within
thirty (30) days after the EFFECTIVE DATE and shall determine the number of
meetings to be held between the EFFECTIVE DATE and the LAUNCH DATE. If the
COLLABORATION COMMITTEE does not determine to meet elsewhere, its meetings shall
alternate locations between the parties with the first meeting to be held at
USB's offices located in West Conshohocken, Pennsylvania and the next meeting to
be held at ALZA's offices located in Palo Alto, California. The COLLABORATION
COMMITTEE may meet in person or by telephone or video conference, and individual
members may participate in any of the foregoing ways. All cost of
participation by each member in the activities of the COLLABORATION COMMITTEE
shall be borne by the party appointing such member.
2.3 Specific Responsibilities of the COLLABORATION COMMITTEE. In
--------------------------------------------------------
addition to its
6
overall responsibility for the collaboration established by this AGREEMENT, the
COLLABORATION COMMITTEE shall, in particular, with respect to the PRODUCT be
responsible for:
(a) establishing overall strategy for commercialization in the TERRITORY;
(b) review and approve MARKETING PLANS, review and comment on the
marketing budget, and sales and marketing strategies, including the launch plan,
positioning statement and detailing message for the PRODUCT;
(c) review and comment on sales training, advertising and promotional
materials;
(d) planning of publications;
(e) review and comment on the marketing, selling and promotional efforts
geographically and among market segments;
(f) coordination of the deployment of sales forces of ALZA and USB;
(g) determination of presence at major conferences and meetings in
oncology in addition to those set forth in Section 4.5 (e) below;
(h) review and comment on the RESEARCH AND DEVELOPMENT plans of each
party, including proposed protocols for new studies;
(i) establishing procedures for coordination of activities of the parties
to assure regulatory compliance with respect to the PRODUCT; and
(j) performing such other functions as appropriate to further the
commercial success of the PRODUCT in the TERRITORY and the purposes of this
AGREEMENT as determined by the parties, including the periodic evaluation of
performance against goals.
The COLLABORATION COMMITTEE shall not be responsible for determining PRODUCT
pricing,
7
discounts, reimbursement approvals, managed care contracts or other price-
related matters, which shall be the sole responsibility of ALZA.
2.4 Quorum; Voting. The presence of at least four (4) members, two (2) of
--------------
whom shall have been selected by each party, shall constitute a quorum for
purposes of consideration and action by the COLLABORATION COMMITTEE. Each member
shall have one vote on all matters, and whenever action is to be taken by vote
of the COLLABORATION COMMITTEE, it shall be authorized by a majority of the
votes cast, provided that such majority shall include at least one (1) vote cast
by a member selected by USB and one (1) vote cast by a member selected by ALZA.
For matters as to which the COLLABORATION COMMITTEE is to review and provide
comment (rather than take action or make a determination), or matters as to
which the COLLABORATION COMMITTEE is deadlocked, USB shall have the tie-breaking
vote with respect to USB clinical and medical, safety and regulatory compliance
issues, and ALZA shall have the tie-breaking vote with respect to sales,
marketing, ALZA Phase IV clinical, and all promotional issues. If the
COLLABORATION COMMITTEE is unable to obtain the vote required to approve, or
take other action on, any matter, or if four members of the COLLABORATION
COMMITTEE wish to contest a deadlock-breaking vote by one party's members, then
the matter may be approved or settled in accordance with Section 17.4, and any
requirement for approval by the COLLABORATION COMMITTEE under this AGREEMENT
shall be satisfied by action in accordance with Section 17.4. The COLLABORATION
COMMITTEE shall have a secretary whose task it shall be to keep minutes of the
meetings of the COLLABORATION COMMITTEE. The secretary shall be selected on a
rotating basis each year by USB and ALZA (initially to be selected by ALZA).
Meetings may be adjourned and reconvened if a quorum is not present.
ARTICLE III
DISTRIBUTION
3.1 Appointment of ALZA as Exclusive Distributor; Use of TRADEMARKS. USB
---------------------------------------------------------------
hereby appoints ALZA as its exclusive distributor during the COPROMOTION PERIOD
(and any EXTENSION PERIOD) to sell and distribute PRODUCT in the TERRITORY,
which right shall be exclusive even as to USB, subject to USB's rights to
copromote PRODUCT in the TERRITORY as provided herein and to sell PRODUCT to
THIRD PARTIES for resale outside the TERRITORY. USB hereby grants a
nonexclusive license to ALZA to use the TRADEMARKS in the TERRITORY solely to
the extent
8
necessary or useful and incidental to the activities of ALZA contemplated under
this AGREEMENT, including without limitation, the marketing, promotion, sale and
distribution of PRODUCT during the term of this AGREEMENT. USB hereby grants
ALZA a nonexclusive license to USB's U.S. PATENT No. 5,424,471 "Crystalline
Amifostine Compositions and Methods of the Preparation and use of Same" in the
TERRITORY for use solely in connection with having the PRODUCT made pursuant
------
to Section 6.13 of this AGREEMENT. ALZA's distribution rights during the
COPROMOTION PERIOD and any EXTENSION PERIOD shall also include the right to
distribute, on the same terms, the nonrefrigerated version of the PRODUCT
currently under development by USB, and all other PRODUCTS developed or licensed
in by USB (or as to which USB otherwise obtains rights in the TERRITORY) during
the COPROMOTION PERIOD or any EXTENSION PERIOD. Promptly after USB, in USB's
judgment, has sufficient data supporting a chemistry and manufacturing
supplement to the NDA for a nonrefrigerated formulation of the PRODUCT,
including stability data, USB shall diligently file and pursue FDA approval of
such a supplement to the NDA for the PRODUCT. The costs of such filing shall be
borne by USB and shall not be included in RESEARCH AND DEVELOPMENT.
3.2 Acceptance of Appointment. ALZA hereby agrees to serve as USB's
-------------------------
exclusive distributor of PRODUCT in the TERRITORY during the COPROMOTION PERIOD
(and any EXTENSION PERIOD) and to use its reasonable commercial efforts to
diligently promote, market, sell and distribute PRODUCT throughout the TERRITORY
in conjunction with the TRADEMARKS in accordance with the terms of this
AGREEMENT. With respect to any portion of the TERRITORY which is a territory or
possession (and not a state or the District of Columbia) if ALZA has not
commenced, in any such territory or possession, marketing the PRODUCT by the end
of the second CONTRACT YEAR, then upon 90 days prior written notice by USB to
ALZA, such territory or possession shall no longer be considered as in the
TERRITORY and shall no longer be subject in any respect to this AGREEMENT,
unless ALZA has commenced marketing the PRODUCT in such territory or possession
within such 90-day period.
3.3 No Rights by Implication; USB Retained Rights.
---------------------------------------------
(a) Except as specifically provided in this AGREEMENT, no rights or
licenses with respect to a party's patents, trademarks, know-how, technical
information, or other proprietary rights
9
are granted or deemed granted to the other party hereunder or in connection
herewith.
(b) During the COPROMOTION PERIOD (and any EXTENSION PERIOD), USB shall
retain all rights to PRODUCT in the TERRITORY that are explicitly reserved to it
under this AGREEMENT. In addition, USB retains both during and after the
COPROMOTION PERIOD (and any EXTENSION PERIOD), all rights in the TERRITORY for
products owned or controlled by it other than PRODUCT (and improvements to the
PRODUCT), including without limitation, the right to promote, market, sell and
distribute any such product other than PRODUCT in the TERRITORY.
3.4 No Sales outside the TERRITORY. ALZA expressly agrees not to make
-------------------------------
sales of PRODUCT outside the TERRITORY. To the extent permitted by applicable
law, during the COPROMOTION PERIOD (and any EXTENSION PERIOD), ALZA shall not
sell PRODUCT to a THIRD PARTY who it knows is actively soliciting resale of the
PRODUCT outside the TERRITORY. In the event that a USB licensee or distributor
for a territory outside the TERRITORY is selling directly PRODUCT in the
TERRITORY, USB shall use reasonable commercial efforts, consistent with
applicable law, to stop such licensee or distributor from selling directly
PRODUCT into the TERRITORY. To the extent USB has contractual obligations from
its licensees or distributors for PRODUCT which prohibit the sale of PRODUCT to
a THIRD PARTY whom such licensee or distributor knows is actively soliciting
resale of the PRODUCT outside the respective territory of such licensee or
distributor, and such licensee or distributor is selling PRODUCT to a THIRD
PARTY that is actively reselling PRODUCT in the TERRITORY, USB shall use
reasonable commercial efforts, consistent with applicable law, to enforce such
contractual obligations against such licensees or distributors.
3.5 No Competitive Products.
------------------------
(a) Unless otherwise agreed by the parties in writing, or contemplated by
his AGREEMENT, [ *
]
(b) Unless otherwise agreed by the parties in writing, or contemplated by
this
10
AGREEMENT, [ *
]
(c) Notwithstanding termination of this AGREEMENT prior to the end of its
stated term, ALZA agrees that its commitments set forth in Section 3.5 (a) shall
remain in place a minimum of [ * ]
Notwithstanding termination of this AGREEMENT prior to the end of its
stated term, but subject to Section 3.5 (f) of this AGREEMENT
ALZA agrees that its commitments set forth in Section 3.5 (b) shall remain in
place a minimum of [ * ]
(d) ALZA expressly acknowledges that ALZA shall not have the right to use
any SCIENTIFIC KNOW-HOW in making, using, developing, promoting, marketing,
distributing or selling any product [ * ]
except in connection with ALZA's activities under this AGREEMENT, except
pursuant to the exceptions to the confidentiality provisions relating to
SCIENTIFIC KNOW-HOW set forth in Section 10.1(a) of this AGREEMENT.
(e) During the period from the EFFECTIVE DATE up to the expiration or
termination of this AGREEMENT, if ALZA determines to [
*
] Notwithstanding termination of this AGREEMENT prior to the end of
its stated term, ALZA agrees that its commitments otherwise set forth in this
Section 3.5(e) shall remain in place a minimum of [ * ]
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(f) The provisions of Section 3.5(a), 3.5(b), 3.5(c), and 3.5(e) shall
terminate as of [ *
]
3.6 Extension of COPROMOTION PERIOD.
-------------------------------
(a) Notwithstanding any other provision of this AGREEMENT, the COPROMOTION
PERIOD shall be automatically extended if [
*
] such extension to be for a
period (or periods) of time equal to any period of time during which [ *
]
(b) ALZA shall have the option to extend the COPROMOTION PERIOD for an
additional 12-month period by giving USB written notice of ALZA's election to
extend, such notice to be given no later than 12 months prior to the expiration
of the COPROMOTION PERIOD (as it may have been extended pursuant to paragraph
3.6(a)).
(c) Except as otherwise provided in this AGREEMENT, during any EXTENSION
PERIOD, the terms and conditions of this AGREEMENT relating to the COPROMOTION
PERIOD shall remain in full force and effect.
(d) If ALZA extends the COPROMOTION PERIOD as provided in paragraph 3.6(b)
above, the following shall apply:
(i) ALZA shall pay to USB an amount equal to [ * ]
for the final twelve (12) month period of the COPROMOTION PERIOD (the "FINAL
COPROMOTION YEAR"), such amount to be paid in two installments. The first
installment shall be [ * ] for the first six month period
of the FINAL COPROMOTION YEAR, which shall be paid within 30 days after the end
of the first six months of the FINAL COPROMOTION YEAR. The second installment
shall be [ *
12
] for the final six-month period of the FINAL COPROMOTION YEAR which
shall be paid within 30 days after the end of the FINAL COPROMOTION YEAR;
(ii) For PRODUCT sold by USB to ALZA during the EXTENSION PERIOD, ALZA
shall pay to USB a purchase price per VIAL which shall be [ * ]
than the purchase price per VIAL calculated under Section 6.6 (a) of this
AGREEMENT, for example, if, pursuant to Section 6.6 (a) the purchase price per
VIAL during any quarter were equal to [ * ] of average per VIAL NET
SALES price of PRODUCT for the immediately preceding quarter, during the
EXTENSION PERIOD, the purchase price per VIAL would be [ * ] of average
per VIAL NET SALES price of PRODUCT for the immediately preceding quarter; and
(iii) The RESIDUAL PERIOD will begin at the end of the EXTENSION PERIOD
and USB's reverse PRODUCT payments (in lieu of reverse PRODUCT payments set
forth in Section 8.1 of this AGREEMENT) as a percent of NET SALES during the
RESIDUAL PERIOD shall be as set forth in the following table:
[
*
]
13
ARTICLE IV
PROMOTION AND MARKETING
4.1 Advertising and Promotional Materials. All marketing and
-------------------------------------
promotional materials related to PRODUCT shall be prepared by ALZA, subject to
review by USB in accordance with the procedures adopted by the COLLABORATION
COMMITTEE. With respect to written and visual promotional or educational
materials, to the extent such materials identify or otherwise make reference to
either of the parties, USB and ALZA shall both be presented and described with
equal prominence and emphasis as having joined and participated in the
development and joint commercialization of PRODUCT, as permitted by applicable
laws and regulations. All documentary information, promotional material and oral
presentations (where practical) regarding the detailing and promoting of PRODUCT
shall display the names and logos of USB and ALZA with equal prominence. ALZA
shall provide USB with all promotional material for timely filing with the FDA
in accordance with the then current FDA requirements, (e.g. launch materials
must be submitted to the FDA prior to launch, and other promotional material
must be submitted at first use). Promptly after the EFFECTIVE DATE, USB shall
designate ALZA to the FDA as the contact for review and discussion of all
promotional material, after which time ALZA will so timely file with the FDA all
promotional materials. In the event that USB determines that, in USB's
reasonable judgment, any advertising or promotional materials prepared by ALZA
are in violation of the law, rules, regulations or FDA guidelines or guidance,
USB shall have the right to so advise ALZA in writing (the "USB Notice") and if
ALZA is in disagreement, the parties shall review the matter with the
COLLABORATION COMMITTEE to see if a resolution can be quickly achieved. In the
event that resolution is not achieved in the COLLABORATION COMMITTEE, the
parties shall submit such advertising or promotional materials to an independent
regulatory expert mutually acceptable to the parties. The parties shall
expeditiously select such an expert and shall request expedited review. The
parties shall meet with such expert within 10 days of selection of the expert to
review such advertising and promotion and resolve the underlying dispute. From
the date of the USB Notice, ALZA shall refrain from using such material and both
parties shall fully comply with the final resolution of the dispute resolution
process. USB shall have the right to reproduce, distribute and otherwise use all
PRODUCT-related advertising and promotional materials prepared by ALZA during
the COPROMOTION PERIOD and any EXTENSION PERIOD and after the expiration or
termination of such period (but without the use of ALZA's name). USB shall have
the right to provide
14
such materials to THIRD PARTIES for use in developing their own similar
materials (but without the use of ALZA's name) for use outside the TERRITORY
during and after the term of this AGREEMENT and within the TERRITORY after
expiration or termination of the COPROMOTION PERIOD and any EXTENSION PERIOD
only for use in marketing the PRODUCT. USB shall, to the extent permitted by its
agreements with THIRD PARTIES, allow ALZA to use such THIRD PARTY'S PRODUCT-
related promotional materials in the TERRITORY during the COPROMOTION PERIOD and
any EXTENSION PERIOD. To the extent that USB enters into new agreements for
commercialization of PRODUCT outside the TERRITORY, USB shall use reasonable
efforts to obtain such right. Nothing contained in this Section 4.1 is intended
to prevent either party from using any COMMERCIAL KNOW-HOW, such as a similar
design, format, medium, etc., as used in or with the promotional materials for
the PRODUCT, with its other products.
4.2 Marketing Plan. ALZA shall submit a detailed marketing plan (the
---------------
"MARKETING PLAN") to the COLLABORATION COMMITTEE no later than 60 days prior to
the beginning of each calendar year during the COPROMOTION PERIOD and any
EXTENSION PERIOD. The first MARKETING PLAN shall be provided within 60 days of
the EFFECTIVE DATE and shall provide the launch plans for PRODUCT. The
MARKETING PLAN shall be designed to optimize commercialization of the PRODUCT in
the TERRITORY and shall set forth NET SALES objectives for sales of the PRODUCT.
Subject to Section 4.8, the MARKETING PLAN shall assign [ * ].
The MARKETING PLAN shall assign 100% of the marketing effort and expense
(except for USB's internal marketing personnel expenses) to ALZA [ * ]
The selling effort required by USB shall be designed to utilize USB sales
personnel in their present locations with commercially reasonable selling effort
and territory coverage assignments.
4.3 Party Names; Packaging and Labelling.
------------------------------------
(a) The packaging and labelling (including promotional materials) of
PRODUCT shall be reviewed by the COLLABORATION COMMITTEE and shall identify USB
and ALZA (including each logo) with equal prominence. It is the intention of the
parties to develop and use a single trade dress for the PRODUCT for use by the
parties throughout the COPROMOTION PERIOD and any EXTENSION PERIOD and for use
by USB (if USB so chooses) after the COPROMOTION PERIOD without reference to the
ALZA name. ALZA acknowledges that USB may wish to use a uniform
15
tradedress worldwide, to the extent practicable. While ALZA does not object to a
uniform tradedress, USB agrees that during the COPROMOTION PERIOD and any
EXTENSION PERIOD to the extent such PRODUCT tradedress is under USB's control,
all such PRODUCT tradedress for PRODUCT for sale outside the TERRITORY will be
easily distinguishable, at quick glance, from PRODUCT intended for sale in the
TERRITORY, both in the external and internal packaging. In the event that USB
enters into new agreements for the PRODUCT outside the TERRITORY during the
COPROMOTION PERIOD and any EXTENSION PERIOD, USB shall require that the
tradedress used to commercialize the PRODUCT under such agreements, during the
term of the COPROMOTION PERIOD and any EXTENSION PERIOD, be easily
distinguishable at a quick glance from the PRODUCT tradedress used by the
parties. To the extent that USB enters into new agreements for commercialization
of PRODUCT outside the TERRITORY, USB shall require that PRODUCT packaging be
distinguishable at a quick glance from PRODUCT packaging in the TERRITORY. The
parties agree that a different company logo and company name on the PRODUCT
packaging will be considered to be sufficient to distinguish the PRODUCT at a
quick glance.
(b) Nothing in this AGREEMENT shall be construed as a grant of rights, by
license or otherwise, to either party, to use the name of the other party or any
of its AFFILIATES for any purpose whatsoever except as otherwise expressly
provided in this AGREEMENT.
4.4 Advertising and Promotional Expenses. ALZA shall bear financial
------------------------------------
responsibility for all advertising and promotional expenses for the PRODUCT in
the TERRITORY from the EFFECTIVE DATE through the COPROMOTION PERIOD and any
EXTENSION PERIOD, except as otherwise provided in this Section 4.4. Up through
the first CONTRACT YEAR, USB shall bear financial responsibility for
[ * ] for PRODUCT in the TERRITORY. For the
purposes of this Section 4.4 direct advertising and promotional expenses of a
party shall be the out-of-pocket expenses of such party. ALZA agrees that the
expenses of USB incurred or to be incurred in connection with the "University of
Arizona Ethyol Research Workshop" [ * ] in direct
advertising and promotion expenses for PRODUCT set forth in this Section 4.4. Up
through the first CONTRACT YEAR, ALZA shall bear financial responsibility for
and spend a minimum of [ * ] in direct advertising and promotion expenses for
the PRODUCT. Thereafter, ALZA shall spend a minimum of the following [ *
16
]
17
[
*
]
The parties acknowledge that the direct advertising and promotion expenses will
be based on estimates of NET SALES for the relevant period and to the extent
ALZA spends less than the required amount in any CONTRACT YEAR, ALZA shall be
required to spend the amount of such deficiency in the next CONTRACT YEAR. To
the extent that ALZA spends in excess of the required amount on such advertising
and promotion in any CONTRACT YEAR, ALZA shall be entitled to credit such excess
amount to the advertising and promotion expense required in the next CONTRACT
YEAR. Notwithstanding the foregoing, ALZA, shall not be required to spend in
excess of $4 million on direct advertising and promotion expenses in any
CONTRACT YEAR. To the extent that ALZA provides discretionary spending to sales
representatives for advertising and promotion of the PRODUCT in the TERRITORY,
ALZA shall provide such discretionary spending to USB sales representatives on a
proportionally equivalent basis for advertising and promotion of the PRODUCT.
4.5 ALZA Sales Efforts and Sales Force.
----------------------------------
(a) During the COPROMOTION PERIOD and any EXTENSION PERIOD, ALZA, at
its expense, shall use its reasonable commercial efforts to diligently promote
sales of PRODUCT throughout the TERRITORY, subject to the provisions of Section
3.2. Without limiting the generality of the foregoing, ALZA shall promote sales
of PRODUCT in accordance with the MARKETING PLANS. ALZA shall diligently make
SALES CALLS for PRODUCT in the TERRITORY in each CONTRACT YEAR during the
COPROMOTION PERIOD and any EXTENSION PERIOD sufficient to carry out the
MARKETING PLAN approved by the COLLABORATION COMMITTEE. ALZA, at its expense,
shall use its reasonable commercial efforts to diligently promote sales of
PRODUCT in the TERRITORY in the MANAGED CARE SETTING. Without limiting the
generality of the foregoing, ALZA shall promote the PRODUCT in the MANAGED CARE
SETTING in accordance with the MARKETING PLANS approved by the COLLABORATION
COMMITTEE. The parties anticipate that USB will require 90 days from the date
final labelling (containing the USB and ALZA names) is submitted to and approved
by the FDA for
18
USB to be in a position to supply launch quantities of PRODUCT to ALZA. ALZA
agrees to launch the PRODUCT hereunder no later than the date that is six months
after the date of the FDA approval letter for the PRODUCT, subject to the
following exceptions: (i) adequate launch quantities of PRODUCT are not
available; (ii) in the event the parties mutually agree that launch of the
PRODUCT should be postponed; (iii) a THIRD PARTY lawsuit is filed seeking to
enjoin launch of the PRODUCT; (iv) subsequent to the EFFECTIVE DATE of this
AGREEMENT in the event that there is a material change in the frequency or
severity of serious adverse PRODUCT-related events, which events require
additional or modified contraindications or warnings in the PRODUCT labelling
and as a result sales of the PRODUCT would be significantly and adversely
affected so as to preclude a successful launch as contemplated by the MARKETING
PLAN; (v) in the event that the FDA prohibits commercial sale of the PRODUCT or
otherwise requires withdrawal of the NDA. The parties will cooperate in good
faith in any of the foregoing events to attempt to resolve any such issue which
has led to a delay in the launch of the PRODUCT.
(b) To fulfill its obligations under this Section 4.5, ALZA shall
establish and maintain a sales force for the promotion and selling of PRODUCT in
the TERRITORY sufficient to carry out its responsibility to diligently promote
and sell PRODUCT in the TERRITORY and to carry out its responsibility under the
MARKETING PLANS approved by the COLLABORATION COMMITTEE. ALZA shall bear all
costs associated with the establishment and maintenance of its sales force. The
members of the ALZA sales force shall be ALZA employees or consultants or agents
(or otherwise ALZA's responsibility as between ALZA and USB), and ALZA shall be
solely responsible for the hiring, compensation, management and evaluation of
such individuals. Without the prior written consent of USB, ALZA employees shall
not represent less than 90% of the ALZA sales force detailing the PRODUCT.
(c) If USB believes that ALZA is not adequately promoting the PRODUCT
in accordance with the MARKETING PLANS approved by the COLLABORATION COMMITTEE
or the terms of this AGREEMENT, USB shall bring such concerns to the
COLLABORATION COMMITTEE, and any disputes with respect to ALZA's efforts shall
be resolved by the COLLABORATION COMMITTEE, and, if not resolved to the
satisfaction of USB in that forum, in accordance with Section 17.4 hereof.
(d) During the COPROMOTION PERIOD and any EXTENSION PERIOD ALZA, at
its
19
expense, shall purchase from a reputable THIRD PARTY (such as Walsh or IMS) and
make available to USB in ALZA's format, market research and sales data from such
source which shall identify the sales of PRODUCT in the TERRITORY by month, zip
code and outlet; provided however, that USB shall bear the additional out-of-
pocket expense, if any, of providing such information to USB. ALZA shall use
reasonable efforts to avoid or minimize such additional out-of-pocket expense.
(e) ALZA, at its expense, shall have a material presence for the PRODUCT at
(i) the annual meeting for American Society Clinical Oncology (ASCO), (ii) the
annual meeting of the Oncology Nursing Society (ONS) and at such other major
conferences and meetings in the field of oncology which are held in the United
States as determined by the COLLABORATION COMMITTEE. ALZA shall diligently
pursue submissions of abstracts for both poster and oral presentation at major
national oncology conferences and meetings as are determined by the
COLLABORATION COMMITTEE. At no cost to ALZA, USB shall provide reasonable
assistance to ALZA in providing data available to USB which USB has the right to
provide for preparation of such abstracts and oral presentations.
4.6 Medical Inquiries. During the COPROMOTION PERIOD and any EXTENSION
------------------
PERIOD, ALZA shall have initial responsibility for all correspondence with
physicians in the TERRITORY relating to marketed PRODUCT and for providing
information to physicians. ALZA shall have 24 hour a day physician services
available for physician inquiries relating to PRODUCT. ALZA will keep such
records as shall be necessary to document such inquiries in compliance with
applicable regulatory requirements. Except in the case of medical emergency, USB
will refer all questions relating to the marketed PRODUCT raised by such
physicians to ALZA for its response. The parties will work together to develop
an appropriate standard operating procedure to handle medical inquiries and
adverse experience reports in a manner so as to address medical questions and
meet all regulatory requirements. In the case of medical emergency questions
handled by USB, USB shall provide ALZA with a report identifying the individual
making the inquiry and containing the question(s) asked and the information
provided in response. USB shall make available to ALZA, on a 24 hour a day
access basis and at USB's expense, the services of a physician appointed by USB
to respond to emergency questions. At the request of ALZA, USB shall cooperate
with ALZA to jointly develop form response letters which contain information
responding to the most frequent or routine questions received regarding the
marketed PRODUCT. ALZA shall have the right to refer medical inquiries to USB if
ALZA
20
does not have the requisite PRODUCT-related medical expertise to respond to such
inquiries. In such event, USB physicians shall have direct access to the
inquiring physicians. USB acknowledges that ALZA may contract with a THIRD
PARTY, such THIRD PARTY to be subject to the reasonable approval of USB, to
fulfill a portion of ALZA's obligations under this Section 4.6.
4.7 Customer Complaints. As soon as practicable after execution of this
--------------------
AGREEMENT, the parties shall develop mutually agreed upon standard operating
procedures applicable to customer complaints and inquiries. Such procedures
shall provide that the appropriate party shall complete its investigation and
report its results to the other party within 30 days after the complaint is
received. The parties acknowledge that USB shall be responsible for filing the
NDA Annual Report with the FDA and that in order to file an accurate report USB
is required to have certain information regarding all PRODUCT complaints which
is in ALZA's possession. ALZA shall provide USB with all information which is in
ALZA's possession or to which ALZA has access which is reasonably requested by
USB to meet USB's reporting obligations to the FDA and other regulatory
agencies. The parties intend that customer complaints shall be initially
received by ALZA who shall log the complaint and determine whether a response by
ALZA or USB is appropriate. All complaints reasonably expected to relate to
manufacturing processes shall be referred to USB for investigation. ALZA shall
make commercially reasonable efforts to reclaim the PRODUCT which is the subject
of the customer complaint.
4.8 USB Sales Efforts and Sales Force.
---------------------------------
(a) During the COPROMOTION PERIOD and any EXTENSION PERIOD, USB shall,
at its expense, use its commercially reasonable efforts to diligently promote
sales of PRODUCT in the TERRITORY. Without limiting the generality of the
foregoing, USB shall promote sales of PRODUCT in accordance with the MARKETING
PLANS. USB shall diligently make SALES CALLS for PRODUCT in the TERRITORY in
each CONTRACT YEAR during the COPROMOTION PERIOD and any EXTENSION PERIOD in
accordance with the MARKETING PLANS approved by the COLLABORATION COMMITTEE.
ALZA, at its expense, shall promptly provide USB with reasonable quantities of
all advertising and promotional material prepared for use in advertising and
promotion of the PRODUCT in the TERRITORY. Unless otherwise agreed by the
parties, such materials shall be shipped to the USB address set forth in Section
17.9 of this AGREEMENT, Attention: Vice President Sales. Unless otherwise agreed
in writing by USB, USB shall have no obligation during the COPROMOTION PERIOD
21
and any EXTENSION PERIOD, as a result of the MARKETING PLAN or otherwise under
this AGREEMENT to maintain a sales force greater than [ * ] and the
MARKETING PLANS shall not provide for USB efforts in excess of reasonably
commercial efforts relating to [ * ]
(b) To fulfill its obligations under this Section 4.8, subject to
Section 4.8 (a), USB shall establish and maintain a sales force for the
promotion and selling of PRODUCT in the TERRITORY sufficient to carry out USB's
responsibilities under the MARKETING PLANS approved by the COLLABORATION
COMMITTEE. USB shall bear all costs associated with the establishment and
maintenance of its sales force; provided, however, that ALZA shall be
responsible for the costs and expenses of training the members of the USB sales
force as provided in Section 4.9. The members of the USB sales force shall be
USB employees or consultants or agents (or otherwise USB's responsibility as
between USB and ALZA), and USB shall be solely responsible for the hiring,
compensation, management and evaluation of such individuals.
(c) If ALZA believes that USB is not adequately promoting the PRODUCT
in accordance with the MARKETING PLANS approved by the COLLABORATION COMMITTEE
or the terms of this AGREEMENT, ALZA shall bring such concerns to the
COLLABORATION COMMITTEE, and any disputes with respect to USB's efforts shall be
resolved by the COLLABORATION COMMITTEE, and, if not resolved to the
satisfaction of ALZA in that forum, in accordance with Section 17.4 hereof.
4.9 Training. ALZA, at its cost and expense, shall develop and provide,
--------
from time to time as reviewed by the COLLABORATION COMMITTEE, general sales
training, oncology training and PRODUCT specific training for the sales forces
of each party. USB shall provide ALZA such reasonable assistance, at USB's
expense, as requested by ALZA in development of such training materials and
participating in the training session(s), except that the out-of-pocket expense
of providing a USB physician to train at such session(s) shall be borne by ALZA.
All such training materials shall be provided by ALZA to USB for review and
comment prior to use, and USB shall provide its comments in writing within 10
working days after USB receives such materials. ALZA and USB shall each absorb
the costs of transporting, housing and maintaining its own sale representatives
for such training. All costs associated with the training facilities shall be
borne by ALZA. All training
22
materials will be prepared and supplied by ALZA. ALZA shall conduct the initial
and subsequent training sessions at times and locations mutually acceptable to
the parties. USB shall assist in such training by providing appropriate medical,
clinical and scientific information in order to permit ALZA to fulfill its
obligations under this Section 4.9. USB shall have the right to use all such
training materials prepared by ALZA during and after the term of this AGREEMENT.
USB shall have the right to provide such materials to THIRD PARTIES for use in
developing their own similar materials (but without the use of ALZA's name) for
use outside the TERRITORY during and after the term of this AGREEMENT and within
the TERRITORY after expiration or termination of the COPROMOTION PERIOD and any
EXTENSION PERIOD. USB shall, to the extent permitted by THIRD PARTIES, allow
ALZA to use such THIRD PARTY'S PRODUCT-related training materials in the
TERRITORY during the COPROMOTION PERIOD and any EXTENSION PERIOD.
4.10 SALES CALL Reports. Each party shall submit to the COLLABORATION
------------------
COMMITTEE, within 45 days after the end of each calendar quarter during each
CONTRACT YEAR, a written report containing an accounting of the number of SALES
CALLS, (including SALES CALLS in a MANAGED CARE SETTING), made by its sales
force in the TERRITORY, as well as any other information the COLLABORATION
COMMITTEE deems necessary regarding such calls held during the preceding
quarter.
ARTICLE V
RESEARCH AND DEVELOPMENT
5.1 Oversight. RESEARCH AND DEVELOPMENT of PRODUCT will be reviewed and
---------
monitored by the COLLABORATION COMMITTEE as described in Article II.
5.2 Responsibilities of the Parties
-------------------------------
(a) USB shall have responsibility to conduct the Phase III clinical
trials program of RESEARCH AND DEVELOPMENT of the PRODUCT in pursuit of FDA
approval for new indications for the PRODUCT in accordance with the program
description agreed upon in writing by the parties simultaneously with the
execution of this AGREEMENT, as revised by USB from time to time with review and
comment by the COLLABORATION COMMITTEE. USB has commenced or shall promptly
23
commence and diligently conduct such program. USB shall have discretion to
revise such program; however, all material revisions to such program shall be
reported to and reviewed by the COLLABORATION COMMITTEE. USB shall expend no
less than the following amounts in DEVELOPMENT COSTS on such RESEARCH AND
DEVELOPMENT program during the COPROMOTION PERIOD without the agreement of the
COLLABORATION COMMITTEE:
24
[
*
]
The parties acknowledge that USB shall have the right to conduct any and
all additional studies, including clinical studies, relating to the PRODUCT that
USB desires to conduct. USB shall advise ALZA in writing of its intent to
initiate any new clinical study involving ten (10) or more patients in the
TERRITORY during the COPROMOTION PERIOD and any EXTENSION PERIOD, and shall
provide to ALZA the protocols therefor, for comment by ALZA, in advance of the
commencement thereof. ALZA shall have ten (10) working days in which to provide
its comments to USB with respect to any such protocol. Promptly after
completion or early termination of any such study, USB shall provide ALZA with a
detailed report of the results thereof.
(b) ALZA shall have responsibility to conduct clinical trials to support
the commercial development of the PRODUCT in the TERRITORY, such clinical
program of RESEARCH AND DEVELOPMENT for the PRODUCT to be in accordance with the
program description agreed upon in writing by the parties simultaneously with
the execution of this AGREEMENT, as revised by ALZA from time to time with
review and comment by the COLLABORATION COMMITTEE. ALZA shall promptly commence
and diligently conduct such program. ALZA shall have discretion to revise such
program; however, all material revisions to such program shall be reported to
and reviewed by the COLLABORATION COMMITTEE. ALZA shall expend no less than the
following amounts in DEVELOPMENT COSTS on such RESEARCH AND DEVELOPMENT program
during the COPROMOTION PERIOD without the agreement of the COLLABORATION
COMMITTEE:
[
*
25
]
(c) Each of the parties shall allocate sufficient resources to its
respective responsibilities in conduct of its required RESEARCH AND DEVELOPMENT
program as described in paragraphs (a) and (b) above so as to diligently carry
out such programs. Nevertheless, it is understood that the parties require and
shall have reasonable flexibility.
(d) The parties shall cooperate and render reasonable research assistance
to each other, including making their respective personnel available upon
reasonable request and at reasonable times (each at its own expense), to
expedite the conduct of the RESEARCH AND DEVELOPMENT programs, with due
consideration given to carrying out the RESEARCH AND DEVELOPMENT programs
efficiently and avoiding unwarranted duplication of effort.
5.3 Compliance with Law. All work done in connection with the RESEARCH
-------------------
AND DEVELOPMENT shall be carried out in compliance with federal, state and local
laws, regulations and guidelines governing the conduct of the RESEARCH AND
DEVELOPMENT.
5.4 DEVELOPMENT COSTS
-----------------
(a) USB shall be responsible for all DEVELOPMENT COSTS related to the USB
RESEARCH AND DEVELOPMENT program as described in Section 5.2 (a) above.
(b) ALZA shall be responsible for all DEVELOPMENT COSTS related to the ALZA
RESEARCH AND DEVELOPMENT program as described in Section 5.2 (b) above.
ARTICLE VI
MANUFACTURING, PURCHASE AND SHIPMENT
6.1 Purchase Orders. ALZA shall submit binding purchase orders to the
---------------
designated representative of USB at least ninety (90) days prior to the
designated shipment dates for PRODUCT; provided, however, that the parties will
work closely together, and USB shall provide the most flexibility as commercial
reasonableness permits, to have manufactured launch quantities of PRODUCT. In
no
26
event will the use of any form of a purchase order be effective to vary,
alter or modify the terms and provisions of this AGREEMENT.
6.2 Supply of PRODUCT. ALZA shall purchase PRODUCT only from USB and USB
-----------------
shall supply all of ALZA's requirements of PRODUCT (subject to Sections 6.3 and
6.13 of this AGREEMENT). If at any time USB experiences a shortage of PRODUCT
supply and the available supplies are not sufficient to satisfy all of ALZA's
requirements for PRODUCT in the TERRITORY, USB shall allocate its available
worldwide supplies equitably among its own requirements and those of its
licensees, distributors and other purchasers.
6.3 Purchase Volumes. Each year under this AGREEMENT, ALZA shall provide
----------------
USB with a twelve (12) month forecast which forecasts ALZA's requirements for
PRODUCT for the subsequent calendar year (the "ANNUAL FORECAST"). The ANNUAL
FORECAST shall be provided by ALZA no later than September 1 each year for the
subsequent calendar year. ALZA shall give USB three (3) months advance notice
if ALZA reasonably anticipates that the annual unit volume of PRODUCT ordered in
a given calendar year will exceed [ * ] of the ANNUAL
FORECAST provided for such year. USB shall not be obligated to satisfy orders
for PRODUCT quantities in the given calendar year in excess of [ *
] of the ANNUAL FORECAST for such year, but USB shall use its reasonable
commercial efforts to do so. The first ANNUAL FORECAST is being provided by
ALZA simultaneously with the execution of this AGREEMENT and is forecasting
ALZA's requirements for PRODUCT for the period beginning the date of this
AGREEMENT through the calendar year 1996. The parties acknowledge that it will
be extremely difficult to predict the required quantities for the first two
CONTRACT YEARS, and they will work closely together to attempt to assure that
required quantities of PRODUCT are made available in the TERRITORY as quickly
and efficiently as possible.
6.4 Rolling Twelve Month Forecasts. ALZA shall provide USB with a rolling
------------------------------
twelve-month forecast (the "ROLLING TWELVE MONTH FORECAST") updated monthly
which updates the ANNUAL FORECAST. The ROLLING TWELVE MONTH FORECAST shall not
be construed to increase USB's obligation to supply PRODUCT set forth in Section
6.3 of this AGREEMENT.
27
6.5 Introduction and Supply of Nonrefrigerated PRODUCT. The parties shall
---------------------------------------------------
work together toward an orderly introduction of a nonrefrigerated PRODUCT if and
when approved by the FDA. The parties shall develop a written plan for such
PRODUCT introduction which shall be presented to the COLLABORATION COMMITTEE for
review and comment. The plan shall be reviewed reasonably in
advance of the planned nonrefrigerated PRODUCT introduction. The plan shall be
designed to minimize the cost (subject to any FDA requirements) of the
introduction of the nonrefrigerated PRODUCT to both parties, including without
limitation planning inventory utilization such that minimum inventory will be
required to be replaced with nonrefrigerated PRODUCT. For the nonrefrigerated
PRODUCT introduction period, not to exceed six months, USB agrees to provide to
ALZA nonrefrigerated PRODUCT at a purchase price of [ * ] (i) as
replacement PRODUCT for refrigerated PRODUCT returned by wholesalers and
distributors to ALZA; and (ii) as replacement PRODUCT for ALZA inventory of
refrigerated PRODUCT (not to exceed three (3) months ALZA inventory for the
three months immediately prior to implementation of the plan). USB shall
instruct ALZA with respect to disposition of refrigerated PRODUCT (cost of
transportation to be borne by ALZA and cost of disposition to be borne by USB)
which is replaced pursuant to this Section 6.5. In the event that FDA requires
a recall of the refrigerated PRODUCT prior to introduction of a nonrefrigerated
PRODUCT, ALZA shall conduct the recall, and the expenses of the recall (as such
expenses are defined in Section 9.5, except for replacement PRODUCT which ALZA
will purchase in accordance with this Section 6.5) shall be shared equally by
the parties.
6.6 Purchase Price Per VIAL for PRODUCT.
-----------------------------------
(a) The purchase price per VIAL for PRODUCT supplied to ALZA hereunder
during any quarter shall be calculated as follows:
28
[
*
]
(b) The purchase price for shipments of commercial PRODUCT to ALZA under
this AGREEMENT up through the end of the first quarter in which commercial
PRODUCT is shipped to ALZA hereunder shall be estimated at [ * ]
Within 30 days after the end of the first quarter in which commercial sales of
PRODUCT are made, ALZA shall provide USB with a report of NET SALES for such
quarter and the purchase price for such quarter shall be determined in
accordance with this ARTICLE VI. If any amounts in addition to those invoiced
by USB are determined under this Section 6.6 and are shown on such report to be
due to USB, ALZA will pay such amounts with such report. If such report shows
an overpayment, the amount of the overpayment, subject to Section 6.6(e) below,
will be credited against USB's next invoice to ALZA. Subsequent shipments of
PRODUCT shall be at the purchase price calculated in accordance with Section 6.6
(a) as described more particularly in Section 6.6 (d) and subject to Section
6.6(e) of this AGREEMENT.
(c) Within 10 business days after the end of each quarter during the
COPROMOTION PERIOD and any EXTENSION PERIOD, ALZA shall supply USB with a report
of NET SALES and the
29
corresponding number of VIALS sold, net of returns, for the
preceding quarter. At the same time
ALZA shall also provide USB with a report of NET SALES for each of the
immediately preceding four consecutive quarters with a determination of [
*
] pursuant to
Section 6.6(a) of this AGREEMENT for the then current quarter.
(d) Together with such report, ALZA shall calculate the [ *
] during the immediately preceding quarter according to the following formula:
*
[ ]
The purchase price per VIAL for PRODUCT shipped after the close of the
immediately preceding quarter, but before the price for the new quarter has been
determined, shall be estimated as the [ * ] calculated at the
close of the immediately preceding quarter times the applicable percentage from
Section 6.6 (a) of this AGREEMENT. If any amounts in addition to those invoiced
by USB are determined under this Section 6.6 and are shown on such report to be
due to USB, ALZA will pay such amounts with such report. If such report shows an
overpayment, the amount of the overpayment, subject to Section 6.6(e) below,
will be credited against USB's next invoice to ALZA. The purchase price per VIAL
for PRODUCT shall be subject to adjustment at the close of each quarter of the
COPROMOTION PERIOD and any EXTENSION PERIOD as set forth in Section 6.6 (a), (c)
and (d).
(e) Except as set forth in this Section 6.6 (e), and notwithstanding
anything herein to the contrary, the purchase price per VIAL of PRODUCT supplied
to ALZA by USB for commercial sale shall not be less [ * ] USB
shall supply PRODUCT to ALZA at a price [ * ] for PRODUCT sold
hereunder to ALZA for use in ALZA's program(s) for the indigent; provided
however, that VIALS of PRODUCT to be provided at the
[ * ] USB shall provide clinical supplies of
PRODUCT to ALZA for use in the ALZA RESEARCH AND DEVELOPMENT program as
described in Section 5.2(b) of this AGREEMENT at a
30
price of [ * ] but only for studies where PRODUCT
will be provided free of charge to investigators. USB, at ALZA's request, shall
also supply a reasonable quantity of PRODUCT (not to
exceed [ * ] commercially sold by ALZA per CONTRACT YEAR) for use as
samples at a price to ALZA of [ * ] In the event that the average
per VIAL NET SALES price of PRODUCT for commercial sale by ALZA into the market
falls below [
*
]
6.7 USB Shipment. All shipments of PRODUCT from USB to ALZA hereunder
------------
shall be made F.O.B. point of shipment (which shall be within the U.S.A.).
USB shall ship PRODUCT to such destinations (not to exceed 5 different
locations) within the U.S.A. in accordance with ALZA's written delivery
instructions by carrier mutually acceptable to the parties. ALZA may change the
shipment destinations to different locations within the United States by written
notice to USB. Each shipment shall be accompanied by a Certificate of
Analysis.
6.8 Title to PRODUCT. Subject to Sections 6.10 and 6.11 hereof, title to
----------------
PRODUCT sold hereunder, and risk of loss with respect to such PRODUCT, shall
pass to ALZA upon delivery of PRODUCT to the carrier pursuant to the terms of
Section 6.7. Upon the passage of title, USB's liability for risk of loss shall
cease, and ALZA shall be the owner of such PRODUCT for all purposes, subject to
Sections 6.10 and 6.11 hereof. Except as otherwise provided in this AGREEMENT,
PRODUCT sold to ALZA under this AGREEMENT is nonreturnable.
6.9 Payment for PRODUCT. USB shall invoice ALZA for the purchase price
--------------------
per VIAL of PRODUCT in accordance with Section 6.6 no sooner than the time of
shipment. The invoice shall include actual freight and insurance charges, which
shall be prepaid by USB. Payment of invoice is due within thirty (30) days of
date of USB invoice, except with respect to disputed invoices.
6.10 PRODUCT Warranty. USB will manufacture or have manufactured PRODUCT
----------------
in accordance with the SPECIFICATIONS and at NDA approved site(s) meeting the
current Good Manufacturing Practices ("cGMP") requirements of the FDA. For
each lot of PRODUCT sold to ALZA
31
by USB hereunder, USB shall provide to ALZA a Certificate of Analysis in a form
agreed to by the parties prior to the first shipment. USB warrants that all
PRODUCT shipped hereunder at the time of shipment, and for the shelf life of the
PRODUCT when stored and handled in accordance with labelled conditions,: (i)
shall meet all SPECIFICATIONS for the shelf life of such PRODUCT, (ii) shall be
manufactured in accordance with cGMPs and all applicable laws and regulations,
in each case in effect at the time of manufacture, and (iii) shall not be
adulterated or misbranded as a result of acts or omissions by USB or USB's
manufacturer, USB's suppliers, or USB's testing agents. USB also warrants that
all PRODUCT shipped hereunder shall be properly packaged to avoid breakage and
in accordance with USB's packaging specifications reasonably approved by ALZA.
THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO SUPPLY OF
PRODUCT HEREUNDER TO ALZA.
6.11 Quality Assurance; Defective PRODUCT(S).
---------------------------------------
(a) As soon as practicable after execution of this AGREEMENT, the parties
shall develop a mutually agreed upon manual of standard operating procedures
applicable to quality assurance, cGMPs, and similar activities. In addition,
the parties shall execute a GMP Agreement prior to the first shipment of PRODUCT
hereunder.
(b) ALZA shall have the right, on reasonable notice and during normal
business hours to periodically (typically once per year) inspect the facilities
used by or on behalf of USB and/or USB's supplier(s) of finished PRODUCT, and
USB's records relating to manufacture, adverse events and complaint
investigations with respect to PRODUCT to be supplied hereunder, in order that
ALZA may audit USB's compliance with cGMPs and the provisions of this AGREEMENT
with respect thereto. USB will use its reasonable efforts to include ALZA in
audits of supporting vendors and will supply ALZA with copies of all audit
reports and the vendors' responses.
(c) USB shall conduct all ongoing stability studies of PRODUCT as required
by cGMPs at its own expense. USB shall, on a quarterly basis, provide ALZA with
a report on the results
32
of such studies, including the data obtained. All PRODUCT with expiration dating
of less than 24 months shall, when shipped to ALZA, have dating of at least the
expiration date less three months. All PRODUCT with expiration dating of 24
months or greater shall, when shipped to ALZA have dating of at least the
expiration date less six months. USB will use its diligent efforts to extend the
dating of the PRODUCT beyond 15 months.
(d) Any claim by ALZA that PRODUCT when shipped did not meet SPECIFICATIONS
for all or any portion of PRODUCT so shipped, or for shortages, must be made
with full particulars thereof, in writing, dispatched to USB within 30 days of
receipt of shipment by ALZA if such defect is reasonably discoverable by ALZA
within such period, or otherwise, as promptly as practicable after such defect
is discovered by ALZA. ALZA shall have the right to perform analytical testing,
but typically not microbiological testing (such as sterility and endotoxin) on
the PRODUCT following cross-over testing of methods and procedures. Promptly
after execution of this AGREEMENT, the parties will work together to develop a
standard operating procedure for ALZA sampling and testing of PRODUCT to be
shipped hereunder. PRODUCT failing testing under such procedure shall be
returned by ALZA to USB at USB's expense, and USB shall replace such PRODUCT
with PRODUCT meeting the SPECIFICATIONS and USB's warranties under Section 6.10.
Except as described above, no shipment or portion of a shipment of any quantity
of PRODUCT shall be returned to USB for replacement without USB's prior written
consent. In the event that ALZA makes such a claim which relates specifically
to the failure of PRODUCT to meet SPECIFICATIONS and USB disagrees with ALZA's
findings, at USB's request, ALZA shall submit a sample of the contested batch
sealed by ALZA and USB shall submit a retained sample from the same batch to an
unrelated and independent laboratory, reasonably acceptable to USB and ALZA, and
the check assays of such laboratory shall be accepted by the two parties as
final and binding. The cost of such analysis made by the laboratory and the
cost of disposal of PRODUCT shall be borne by the party whose position is not
substantiated. If no such claim is made by ALZA in accordance with this Section
6.11, ALZA shall be deemed to have accepted PRODUCT. Except as otherwise
specifically provided in this AGREEMENT, including Section 6.5 and this Section
6.11, ALZA's sole remedy, with respect to PRODUCT not yet in distribution by
ALZA, for failure of USB to supply PRODUCT conforming to the requirements set
forth in Section 6.10 of this AGREEMENT shall be replacement of PRODUCT by USB.
33
6.12 SPECIFICATIONS. The SPECIFICATIONS for PRODUCT approved by the FDA
--------------
at approval of the NDA (the "SPECIFICATIONS") will be delivered to ALZA promptly
after the EFFECTIVE DATE of this AGREEMENT. The SPECIFICATIONS will comply with
the current NDA with respect to PRODUCT. ALZA shall not be obligated to accept
delivery of any lot or batch of PRODUCT unless the lot or batch meets the
SPECIFICATIONS applicable to such PRODUCT. In the event of a proposed
change in the formulation or manufacturing process of PRODUCT, USB shall
promptly notify ALZA thereof, provide ALZA with documentation of such proposed
change and a period of 10 working days in which to review and comment on such
proposed change. USB and ALZA shall cooperate in good faith to design a plan to
resolve any PRODUCT supply issues that may result from changes in
SPECIFICATIONS. USB shall obtain all necessary and appropriate regulatory
approvals prior to making any such change. USB shall provide ALZA with
necessary revisions to the SPECIFICATIONS of PRODUCT as so changed. Any change
in SPECIFICATIONS which would materially adversely affect the marketing of the
PRODUCT (in ALZA's reasonable judgement, and if USB disagrees then the issue
will be resolved by the COLLABORATION COMMITTEE or, if necessary, pursuant to
Section 17.4) (except changes due to court order or unilateral regulatory
action) will require ALZA's prior written review and consent, not to be
unreasonably withheld. Notwithstanding Sections 6.8 and 6.11, ALZA shall be
entitled to return to USB any PRODUCT which the parties reasonably agree cannot
or should not be sold due to a change in SPECIFICATIONS.
6.13 Alternate Manufacture. Promptly after the EFFECTIVE DATE of this
---------------------
AGREEMENT, USB shall file with the FDA, and shall diligently pursue FDA approval
of, a supplement to the PRODUCT NDA to qualify USB's manufacturing facility
located in Nijmegen, The Netherlands, as an alternate site of manufacture of
PRODUCT. If, at any time during the COPROMOTION PERIOD or any EXTENSION
PERIOD, USB is unable to supply at least [ * ] of PRODUCT duly
ordered by ALZA in accordance with the provisions of this AGREEMENT, including
without limitation, the provisions of ARTICLE VI, whether due to force majeure,
lack of manufacturing facilities or capacity, refusal or inability to supply or
otherwise, for a period of three consecutive months or more, USB hereby consents
to ALZA's rights to purchase PRODUCT directly from USB's THIRD PARTY
manufacturers, Ben Venue Laboratories and Sipsy S.A. or any successor suppliers
during the period USB is unable to so supply and for such period thereafter as
the term required by such THIRD PARTY supplier. ALZA may not and shall not
purchase directly from USB's THIRD PARTY suppliers, Ben Venue Laboratories and
Sipsy S.A. or any successor suppliers, unless and until USB has failed to so
34
supply at least [ * ] of PRODUCT duly ordered by ALZA in
accordance with the provisions of this AGREEMENT, including without limitation,
the limitations of ARTICLE VI, hereunder for a period of three consecutive
months. ALZA's right to exercise its rights to purchase directly from USB's
THIRD PARTY suppliers granted hereunder shall continue for so long as USB is
unable to supply [ * ] and for such period
thereafter as is required by such THIRD PARTY suppliers in order to agree to
manufacture the PRODUCT. With respect to any PRODUCT purchased directly from
USB's THIRD PARTY suppliers pursuant to this Section 6.13, ALZA shall pay USB's
THIRD PARTY suppliers directly for PRODUCT and, in lieu of the payments provided
for in Section 6.6, ALZA shall pay USB [ * ] of such PRODUCT. Promptly after
execution of this AGREEMENT, at ALZA's request, USB will assist ALZA in making
appropriate arrangements directly with USB's suppliers, Ben Venue Laboratories,
and USB's supplier of bulk drug substance for PRODUCT, Sipsy S.A. to provide for
such direct supply of PRODUCT. It is the intention of the parties that ALZA's
rights under this AGREEMENT, including this Section 6.13, shall remain in place
in the event of USB's bankruptcy, insolvency, or if voluntary or involuntary
proceedings are instituted by or against USB, or a receiver or custodian is
appointed for USB's business, or a substantial portion of USB's business is
subject to attachment or similar process, or USB is unable to satisfy its
financial obligations as they become due, USB enters into any composition or
arrangement with its creditors or enters into liquidation (each a "USB
BANKRUPTCY EVENT").
6.14 Bankruptcy. It is the intent of the parties that ALZA remain the
-----------
exclusive distributor of PRODUCT in the TERRITORY during the COPROMOTION PERIOD
and any EXTENSION PERIOD, even in the event of a USB BANKRUPTCY EVENT. To that
end, USB agrees that ALZA may make direct arrangements (with which USB will
assist ALZA) with USB's THIRD PARTY suppliers of PRODUCT for drug substance and
drug product and testing services, and USB intends that ALZA have the right to
continue distributing the PRODUCT, under the TRADEMARKS, for the COPROMOTION
PERIOD and any EXTENSION PERIOD, even in the event of any such USB BANKRUPTCY
EVENT.
ARTICLE VII
AMOUNTS PAYABLE TO USB DURING THE COPROMOTION PERIOD
7.1 Upfront Payments and Distribution Fees. In consideration of the
--------------------------------------
exclusive distribution
35
rights in the TERRITORY granted to ALZA hereunder, ALZA
shall pay USB upfront fees and distribution fees, in the following
installments:
(a) upfront fees and distribution fees totalling $20,000,000 as follows:
[ *
]
[ * ]
(b) a $10,000,000 distribution fee within ten (10) business days after the
first to occur on or after [
*
] and
(c) a $5,000,000 distribution fee within ten (10) business days after the
occurrence, on or after [
*
]
(d) All the payments provided for pursuant to this Section 7.1 shall be
nonrefundable and noncreditable.
7.2 Loan. If USB's cash (or cash equivalents) balance at anytime during
----
calendar year 1998 or 1999 is less than $30 million, ALZA shall, on USB's
written request made during such period, make loan of $5,000,000 to USB. The
loan shall be evidenced by a promissory note bearing interest at the lowest rate
permitted by law on the date of the loan so as not to give rise to any imputed
interest. The loan shall be repaid by USB to ALZA in five equal annual
installments of principal, plus accrued interest, beginning on January 3, 2002.
Prepayment in full will be required in any of the following events: (i) upon a
change of control of USB as defined below; (ii) on or after January 3, 2002 in
the event of a public or private financing by USB with net proceeds in excess of
$40 million; (iii) if, in the RESIDUAL PERIOD, NET SALES of PRODUCT in the
TERRITORITY in any CONTRACT YEAR exceed $100 million; or (iv) upon valid
termination of this AGREEMENT by ALZA due to a material breach hereof by USB.
The loan will be secured by USB assets having a fair market value from time to
time equal to 100% of the principal and accrued interest, such assets to be
reasonably acceptable to ALZA on the basis of value and liquidity. For purposes
of this Section 7.2, a "change of control" means (i) a merger, consolidation or
combination in which a party to this AGREEMENT is not the surviving corporation,
or (ii) any "person" (within the meaning of Section 13(d) and Section 14(d)(2)
of the Securities Exchange Act of 1934) is or becomes the beneficial owner,
directly or indirectly, of securities of the party representing 50% or more of
the combined voting power of the party's then-outstanding securities.
36
For purposes of this Section 7.2, a "change of control"
means (i) a merger, consolidation or combination in which a party to this
AGREEMENT is not the surviving corporation, or (ii) any "person" (within the
meaning of Section 13(d) and Section 14(d)(2) of the Securities Exchange Act of
1934) is or becomes the beneficial owner, directly or indirectly, of securities
of the party representing 50% or more of the combined voting power of the
party's then-outstanding securities.
ARTICLE VIII
REVERSE PRODUCT PAYMENTS
8.1 Reverse PRODUCT Payments. Except as provided in Sections 3.6(d), and
------------------------
13.1, following expiration or termination of the COPROMOTION PERIOD and any
EXTENSION PERIOD, and for a period of [ * ] after the expiration or
termination of the COPROMOTION PERIOD, USB shall pay to ALZA a reverse PRODUCT
payment in respect of USB NET SALES of PRODUCT in the TERRITORY as set forth
below. The reverse PRODUCT payments payable by USB to ALZA pursuant to this
Article shall be as follows:
37
[
*
]
In the event USB commercializes PRODUCT through license, or exclusive
distribution, copromotion arrangements or other similar arrangement with a THIRD
PARTY where such THIRD PARTY is selling PRODUCT in the TERRITORY during the
RESIDUAL PERIOD, ALZA shall be paid reverse PRODUCT payments on NET SALES of
PRODUCT in the TERRITORY in the percentages set forth above. For determining
the NET SALES of PRODUCT to calculate reverse PRODUCT payments hereunder, the
sale into the market, and not the sale to any commercial partner or partners,
shall be the relevant sale.
38
8.2 Reverse PRODUCT Payment Terms. During the RESIDUAL PERIOD, within 60
-----------------------------
days after the end of each calendar quarter, USB shall deliver to ALZA a true
accounting of: (i) NET SALES of PRODUCT in such quarter in the TERRITORY as to
which payments are due under either Section 3.6(d)(iii) or 8.1 (a) above; and
(ii) a calculation of reverse PRODUCT payments due with respect thereto.
Simultaneously with delivery of such accounting to ALZA, USB shall pay the
reverse PRODUCT payments then due.
8.3 USB Diligence. During the RESIDUAL PERIOD, USB will use its
-------------
reasonable commercial efforts to diligently market or have marketed PRODUCT
throughout the TERRITORY. In the event any of the conditions set forth in
Section 12.3(b) occurs, USB's diligence obligations shall be suspended until
such time, if ever, as promotion and sale of PRODUCT by or on behalf of USB
resume.
ARTICLE IX
REGULATORY MATTERS; ADVERSE REACTIONS; MARKET RECALLS; INSPECTION
9.1 Licenses, Filings, Registrations, Permits and REGULATORY APPROVALS.
------------------------------------------------------------------
USB shall be responsible for seeking, obtaining and maintaining REGULATORY
APPROVAL for the PRODUCT. ALZA shall be responsible for seeking, obtaining and
maintaining those licenses, registrations and permits required to be obtained by
ALZA to enable ALZA to act as the exclusive distributor of PRODUCT pursuant to
this AGREEMENT. Each of the parties shall cooperate with the other in making
and maintaining all regulatory filings that may be necessary or desirable in
connection with the execution, delivery and performance of this AGREEMENT and
each party shall use its reasonable efforts to obtain any regulatory approvals
relating thereto. ALZA shall be responsible for obtaining all reimbursement
approvals reasonably necessary to commercialize the PRODUCT in the TERRITORY
during the COPROMOTION PERIOD and any EXTENSION PERIOD.
9.2 Communication With Agencies. USB shall have responsibility for
---------------------------
communications with the FDA which relate to the NDA for the PRODUCT; and ALZA
shall have responsibility for communications with the FDA concerning marketing
and advertising materials. Except as set forth above, the COLLABORATION
COMMITTEE shall determine from time to time which party shall have
responsibility for communications with various other government agencies and
shall divide those responsibilities as it sees fit, provided that each party
shall have responsibility for such
39
communications as are required of such party by virtue of its ownership of
PRODUCT licenses or permits. During the term of this AGREEMENT, each party shall
promptly provide the other with copies of any communications it sends to or
receives from, and any significant communications (which are known to the party
to exist and which the party can obtain copies of) with, any governmental agency
in the TERRITORY concerning PRODUCT. In the event a party cannot obtain a copy
of any such significant communication, such party shall inform the other party
of what such party believes to be the content of any such communication.
9.3 Governmental Inspections. During the COPROMOTION PERIOD and any
------------------------
EXTENSION PERIOD, each party shall advise the other party of any governmental
visits to, or written or oral inquires about, any facilities or procedures for
the manufacture, storage, handling of PRODUCT, or the marketing, selling,
promotion or distribution of the PRODUCT promptly (but in no event later than
two (2) business days) after notice of such visit or inquiry. Each party shall
furnish to the other party, within three (3) business days, any report or
correspondence issued by or provided to the governmental authority in connection
with such visit or inquiry, purged only of trade secrets of such party that are
unrelated to the other party's activities under this AGREEMENT and any
information that is unrelated to PRODUCT. Each party shall designate a
representative to receive such notice and documentation. Each party shall
permit the relevant governmental authorities to inspect its facilities in
connection with the activities contemplated by this AGREEMENT.
9.4 Adverse Reactions, etc.
-----------------------
(a) For PRODUCT, USB shall have the responsibility for reporting of adverse
experience information to meet the current requirements for Adverse Drug
Reaction ("ADR") reporting to the FDA. If at any time during this AGREEMENT
ALZA receives notice of an adverse drug event that is a serious adverse drug
event ("SADE"); or OTHER INFORMATION (as defined hereinafter), ALZA shall notify
USB in a timely manner (but not later than 48 hours) by telephone, confirmed in
writing, to the person designated as USB's contact from time to time. USB shall
have responsibility to determine whether such information must be reported to
the FDA. USB shall make an initial determination as to reportability and shall
communicate such information to ALZA within an additional 48 hours. USB shall
report to ALZA any marketed product SADE or OTHER INFORMATION within 48 hours
after USB receives it. USB will provide ALZA with copies of all 15 Day Alert
Reports submitted
40
to the FDA within 48 hours of submission. USB will also
provide ALZA with copies of the NDA Periodic Report together with a summary of
worldwide spontaneous adverse event information and a trending analysis of these
events within 30 days of the designated NDA quarterly reporting period. The
parties shall promptly meet after the execution of this AGREEMENT, to develop
mutually acceptable written guidelines and procedures to govern the sharing of
adverse experience information and the assessment and submission of adverse
experience reports to the FDA.
(b) For purposes of this AGREEMENT, "OTHER INFORMATION" consists of the
following:
(i) information on disapproval or cancellation of the REGULATORY
APPROVAL of PRODUCT;
(ii) information on modifications required to be made in the
contents of the REGULATORY APPROVAL of PRODUCT in order to prevent, or
to warn against risks of, death or bodily harm;
(iii) information on withdrawal of PRODUCT from the
marketplace in the TERRITORY;
(iv) information on important revisions of precautions in the
usage of PRODUCT as set forth in the labelling pursuant to the
REGULATORY APPROVAL and;
(v) any information which could adversely impact the marketing of
PRODUCT.
(c) Disclosure of information by either party to the other hereunder
shall continue as long as ALZA continues to distribute or clinically test
PRODUCT or at the request of a party such longer period is reasonably necessary
in connection with this AGREEMENT. All such reports and disclosures shall be
made to the regulatory representative of each party designated in writing to the
other party from time to time.
9.5 PRODUCT Recalls, etc. ALZA shall prepare and maintain a written
---------------------
Standard
41
Operating Procedure ("SOP"), subject to the approval of USB, to handle
any recalls of PRODUCT in the TERRITORY. In the event that (i) any governmental
agency or authority issues a request or directive or orders that PRODUCT be
recalled or retrieved; (ii) a court of competent jurisdiction orders that
PRODUCT be recalled or retrieved; or (iii) USB and ALZA reasonably determine,
after mutual consultation, that PRODUCT should be recalled, retrieved or a dear
doctor letter is required relating to restrictions on use of the PRODUCT, ALZA
shall conduct such activity and the parties shall take all appropriate
corrective actions and shall execute the steps detailed in the SOP. In the event
such action results from the breach of USB's representations and warranties
under this AGREEMENT, or USB negligence, or willful misconduct, USB shall be
responsible for the expenses thereof. In the event such action results from a
breach of any of ALZA's representations and warranties under this AGREEMENT or
ALZA's negligence or willful misconduct, ALZA shall be responsible for the
expenses thereof. For purposes of this AGREEMENT, the expenses of the action
shall be the expenses of notification and return or destruction (if authorized
by USB) of the PRODUCT, the cost of replacement PRODUCT and any costs directly
associated with the distribution of replacement PRODUCT. Otherwise, the parties
shall be responsible for the expenses of the action in the proportion of [ * ]
ALZA and USB shall cooperate fully with one another in conducting any such
action. ALZA shall destroy lawfully reclaimed PRODUCT only upon USB (or
governmental authority) written instruction to destroy such PRODUCT. Otherwise,
ALZA may return such PRODUCT to USB within 30 days after completion of the
action. For the purposes of determining USB's contribution to the expenses of
the action, USB's supply of replacement PRODUCT shall be valued at [ * ]
ARTICLE X
KNOW-HOW; CONFIDENTIAL INFORMATION
10.1 Ownership of SCIENTIFIC KNOW-HOW and COMMERCIAL KNOW-HOW; Disclosure.
--------------------------------------------------------------------
(a) It is the intention of the parties that USB shall be the owner of all
right, title and interest in and to all SCIENTIFIC KNOW-HOW, whether generated
by USB, ALZA or others under agreement with USB or ALZA, as a result of the
activities contemplated by this AGREEMENT. ALZA shall use its reasonable
commercial efforts to obtain for USB the rights to all SCIENTIFIC KNOW-HOW
generated under clinical study agreements with THIRD PARTIES. To the extent
that ALZA gives
42
THIRD PARTIES unrestricted grants to conduct clinical studies
with PRODUCT, ALZA shall use its reasonable commercial efforts to obtain from
such THIRD PARTIES the rights to the SCIENTIFIC KNOW-HOW generated by such THIRD
PARTIES. To the extent ALZA is unable to obtain such rights from THIRD PARTIES,
ALZA and USB shall mutually agree on whether to proceed with studies with
any such THIRD PARTIES and on what terms. In the event that USB requires that
ALZA not enter into arrangements for a material number of clinical studies due
to the foregoing, ALZA shall not be deemed to be in breach of its obligations
pursuant to Section 5.2 (b) of this AGREEMENT and the parties shall mutually
agree on terms under which ALZA's RESEARCH AND DEVELOPMENT program for the
PRODUCT should proceed. USB shall provide ALZA with the SCIENTIFIC KNOW-HOW,
subject to this Section 10.1 of this AGREEMENT and, to the extent necessary in
connection with ARTICLE VI hereof, chemistry and manufacturing SCIENTIFIC KNOW-
HOW shall be provided to ALZA for use by ALZA in performance of its activities
under this AGREEMENT. USB shall be the owner of all right, title and interest
in and to any and all SCIENTIFIC KNOW-HOW developed or conceived by ALZA, or
others under agreement with ALZA, as well as any patent rights which may be
obtained thereon, including such rights which relate to the manufacture, use or
sale of PRODUCT, or are a result of using USB's SCIENTIFIC KNOW-HOW or
CONFIDENTIAL INFORMATION, whether as a result of the ALZA RESEARCH AND
DEVELOPMENT program or its other activities hereunder. ALZA will, at USB's
request and USB's expense, execute all applications, assignments or other
documents and provide such assistance as USB shall deem necessary or useful in
order to apply for and obtain copyrights, patents and other intellectual
property protection for such inventions and discoveries. ALZA shall disclose
all such proprietary information to USB in a timely manner such that USB may
obtain such intellectual property protection. SCIENTIFIC KNOW-
43
HOW shall include all SCIENTIFIC KNOW-HOW disclosed by USB to ALZA under the
EXISTING CONFIDENTIALITY AGREEMENTS (as defined in Section 17.7 below). ALZA
will hold in strict confidence the SCIENTIFIC KNOW-HOW and will take all
reasonable steps to prevent disclosure or use of the SCIENTIFIC KNOW-HOW except
as permitted by this AGREEMENT or as is necessary to carry out the activities
contemplated hereby. Without the prior written consent of USB, ALZA shall not
use the SCIENTIFIC KNOW-HOW for any purpose other than performing its
obligations or exercising its rights under this AGREEMENT. ALZA shall have the
right to disclose the SCIENTIFIC KNOW-HOW only to its directors, employees,
consultants and clinicians under written agreements of confidentiality at least
as restrictive as those set forth in this AGREEMENT who have a need to know such
information in connection with such party performing its obligations as
contemplated by this AGREEMENT. The obligations of ALZA with respect to the
SCIENTIFIC KNOW-HOW shall not apply to SCIENTIFIC KNOW-HOW: (i) which ALZA can
demonstrate by its written records was known by ALZA prior to the disclosure
thereof by the disclosing party not obtained directly or indirectly through the
parties to this AGREEMENT or the activities undertaken under this AGREEMENT;
(ii) which is disclosed to ALZA without restriction by a THIRD PARTY who has the
right to make such disclosures who did not obtain the SCIENTIFIC KNOW-HOW
directly or indirectly through the parties to this AGREEMENT or the activities
undertaken under this AGREEMENT; or (iii) which falls within the exceptions set
forth in Section 10.2 (b) (iii) and (iv) below. No provision of this AGREEMENT
shall be construed so as to preclude such disclosure of SCIENTIFIC KNOW-HOW as
may be inherent in or reasonably necessary to the securing from any governmental
agency of any necessary approval or license, or to the obtaining of patents by
USB. Upon the termination, expiration, cancellation or abandonment of this
AGREEMENT, ALZA shall promptly return to USB all copies and embodiments of the
SCIENTIFIC KNOW-HOW, except that ALZA shall be permitted to retain one copy of
any such material to monitor ALZA's continuing obligations hereunder.
(b) It is the intention of the parties that ALZA and USB shall be joint
owners of all right, title and interest in and to all COMMERCIAL KNOW-HOW,
whether generated by USB, ALZA or others under agreement with USB or ALZA. Each
party shall have full rights to use the COMMERCIAL KNOW-HOW during and after the
term of this AGREEMENT.
10.2 Confidential Information.
------------------------
(a) Each party has and may hereafter, from time to time in the course
of the performance of this AGREEMENT, disclose CONFIDENTIAL INFORMATION (as
defined below) to the other party. Each party will hold in strict confidence
the CONFIDENTIAL INFORMATION of the other party and will take all reasonable
steps to prevent disclosure to, or use of the CONFIDENTIAL INFORMATION of the
other party by, any THIRD PARTY, except as permitted under this AGREEMENT or as
necessary to carry out the activities contemplated hereby. Further, neither
party shall, without the prior written consent of the other party, use the
CONFIDENTIAL INFORMATION of the other party for any purpose other than
performing its obligations or exercising its rights under this AGREEMENT. Each
party will disclose the CONFIDENTIAL INFORMATION of the other party only to its
directors, employees, consultants, vendors and clinicians under written
agreements of confidentiality at least as restrictive as those set forth in this
AGREEMENT who have a need to know such information in
44
connection with such party performing its obligations or exercising its rights
under this AGREEMENT. No provision of this AGREEMENT shall be construed so as to
preclude such disclosure of CONFIDENTIAL INFORMATION as may be inherent in or
reasonably necessary to the securing from any governmental agency of any
necessary approval or license, or to the obtaining of patents by the parties.
Upon the termination, expiration, cancellation or abandonment of this AGREEMENT,
each party shall promptly return to the other party all copies and embodiments
of the CONFIDENTIAL INFORMATION of such other party, subject to the retention of
one (1) complete copy for archival purposes. The obligations of the parties
relating to CONFIDENTIAL INFORMATION shall expire ten years after the date of
the termination, expiration, cancellation or abandonment of this AGREEMENT.
(b) "CONFIDENTIAL INFORMATION" shall mean all trade secret and
proprietary information and data, (but shall not include SCIENTIFIC KNOW-HOW or
COMMERCIAL KNOW-HOW) provided by a party to the other party pursuant to this
AGREEMENT or the EXISTING CONFIDENTIALITY AGREEMENTS (as defined in Section 17.6
below) or generated pursuant to this AGREEMENT except any portion thereof which:
(i) the recipient can demonstrate by its written records was
known by the recipient prior to the disclosure thereof by the
disclosing party;
(ii) is disclosed to the recipient without restriction after
disclosure thereof by the disclosing party by a THIRD PARTY who has
the right to make such disclosure;
(iii) is or becomes part of the public domain through no breach
of this AGREEMENT by the recipient; or
(iv) the recipient can demonstrate by its written records was
independently developed by or for the recipient without reference to
the information or date disclosed by the disclosing party and by
individuals or entities who have not had access to such information or
data disclosed.
(c) This Section 10.2 shall not be construed to grant any rights to ALZA
in or to any SCIENTIFIC KNOW-HOW.
45
10.3 AFFILIATES and Sublicensees. Nothing herein shall be construed as
---------------------------
preventing either party (each, a "Receiving Party") from disclosing any
information received from the other party to an AFFILIATE, sublicensee or
distributor of the Receiving Party, provided such AFFILIATE, sublicensee or
distributor has agreed with the Receiving Party, in writing, to maintain the
confidentiality of such information to the same extent as the Receiving Party is
bound under this AGREEMENT, and subject to the other provisions of this
AGREEMENT.
10.4 Ownership. CONFIDENTIAL INFORMATION furnished hereunder by USB to
---------
ALZA shall remain the sole property of USB. Nothing contained herein shall be
construed as giving ALZA any rights in or with respect to any such CONFIDENTIAL
INFORMATION, except the right to use such CONFIDENTIAL INFORMATION in connection
with performance under this AGREEMENT. CONFIDENTIAL INFORMATION furnished
hereunder by ALZA to USB which is unrelated to the PRODUCT shall remain the sole
property of ALZA and nothing contained herein shall be construed as giving USB
any rights in or with respect to any such CONFIDENTIAL INFORMATION, except the
right to use such CONFIDENTIAL INFORMATION in connection with performance under
this AGREEMENT.
10.5 Legal Proceedings. Subject in all cases to the provisions of ARTICLE
------------------
X, all CONFIDENTIAL INFORMATION disclosed by one party to the other shall remain
the intellectual property of the disclosing party. In the event that a court or
other legal or administrative tribunal, directly or through an appointed master,
trustee or receiver, assumes partial or complete control over the assets of a
party to this AGREEMENT based on the insolvency or bankruptcy of such party, the
bankrupt or insolvent party shall promptly notify the court or other tribunal
(a) that CONFIDENTIAL INFORMATION received from the other party under this
AGREEMENT remains the property of the other party, (b) of the confidentiality
obligations under this AGREEMENT and (c) of the provisions of Section 6.13. In
addition, the bankrupt or insolvent party shall, to the extent permitted by law,
take all steps necessary or desirable to maintain the confidentiality of the
other party's CONFIDENTIAL INFORMATION and to ensure that the court, other
tribunal or appointee maintains such information in confidence in accordance
with the terms of this AGREEMENT.
10.6 Public Announcements.
--------------------
48
(a) The parties shall agree on the form of initial press release
announcing this transaction to be issued by each party or jointly, as the
parties may agree.
(b) A party may disclose the terms and conditions of this AGREEMENT to
the extent that such disclosure is required by law, including without limitation
the securities laws of the United States. The parties acknowledge and agree
that the determination that a disclosure is required by law shall be made in the
sole, but reasonably exercised, discretion of the party making such disclosure.
To the extent a party determines that a disclosure is necessary under this
paragraph 10.6(b), the parties will work together in good faith to attempt to
agree upon the content of the disclosure.
(c) The parties may also disclose the existence or terms of this
AGREEMENT to bankers and other business associates if such persons have agreed
in writing to keep the information confidential.
10.7 Publications. Neither party shall submit for written or oral
------------
publication any manuscript, abstract or the like which includes data or other
information related to the PRODUCT without providing in advance a copy of such
submission to the other party for review and comment. With respect to a
manuscript, the manuscript shall be provided a minimum of thirty (30) days in
advance and with respect to an abstract, the abstract shall be provided fourteen
(14) days in advance.
ARTICLE XI
PATENT AND TRADEMARK LITIGATION
11.1 THIRD PARTY Patent or Trademark Litigation. In the event of the
------------------------------------------
institution of any suit by a THIRD PARTY against USB or ALZA for patent or
trademark infringement involving the manufacture, use, sale, distribution or
marketing of PRODUCT anywhere in the TERRITORY, the party sued shall promptly
notify the other party in writing. USB shall have the first right, but not the
obligation, to defend such suit at its expense. If USB does not commence a
defense of such suit within 60 days after it receives written notice thereof,
ALZA, after so notifying USB in writing, shall be entitled to defend the suit at
ALZA's expense. USB shall indemnify and hold harmless ALZA and its officers,
directors, stockholders, employees, successors and assigns from any loss, damage
or liability
47
(including reasonable attorneys' fees) in any such patent or trademark
infringement action arising from the manufacture or use of the PRODUCT in the
TERRITORY or the sale, distribution or marketing of the PRODUCT in the TERRITORY
in accordance with the PRODUCT labelling.
11.2 Infringement. In the event that USB or ALZA becomes aware of actual
------------
or threatened infringement of a PATENT or TRADEMARK related to PRODUCT anywhere
in the TERRITORY, that party shall promptly so notify the other party in
writing. USB shall have the first right, but not the obligation, to bring, at
its own expense, an infringement action or file any other appropriate action or
claim related to infringement of the PATENT or the TRADEMARK, wherein such
infringement relates to PRODUCT, against any THIRD PARTY. If USB does not
commence a particular infringement action within 90 days after it receives
written notice of such infringement, ALZA, after so notifying USB in writing,
shall be entitled to bring such infringement action or any other appropriate
action or claim at ALZA's expense. In any action pursuant to this section, the
party bringing the action shall have the right to use the name of the other
party in connection therewith, or to join the other party to the extent
necessary provided that the party bringing the action indemnifies and holds
harmless the other party, its officers, directors, shareholders, employees,
successors and assigns from any loss, damage or liability, including reasonable
attorneys' fees, resulting from such naming or joining.
11.3 Control of Litigation, Assistance and Settlement. The party
------------------------------------------------
conducting any action pursuant to this Article shall be entitled to bring and
control the action through counsel of its choice, and, upon request, the other
party shall cooperate and provide reasonable assistance in any such action at
the expense of the requesting party. No settlement or consent judgment or other
voluntary final disposition of any suit defended or action brought by one party
pursuant to this Article may be entered into without the consent of the other
party if such settlement would require the non-settling party to be subject to
an injunction or to make a monetary payment in excess of the percentages set
forth in Section 11.4, or would adversely affect the non-settling party's rights
under this AGREEMENT.
11.4 Expenses and Awards. The costs and expenses of the party bringing an
-------------------
action under Section 11.2 shall be reimbursed first out of any damages or other
monetary awards recovered, and any remaining recovery shall then be applied to
reimburse the expenses incurred by the other party in connection therewith. Any
excess recovery remaining after the expenses of both parties have been
reimbursed shall be split (i) [ * ] during the COPROMOTION
PERIOD (and any
48
EXTENSION PERIOD) and (ii) [ * ] during the
RESIDUAL PERIOD. The party bringing such action shall request that the court
make a determination regarding the period of time, including allocation between
the COPROMOTION PERIOD and any EXTENSION PERIOD, if any, and the RESIDUAL
PERIOD, for which such damages are being awarded.
11.5 Obligation to Inform. The parties shall keep one another informed of
--------------------
the status of, and their respective activities regarding, any litigation
concerning PRODUCT.
49
ARTICLE XII
TERM AND TERMINATION
12.1 Term. Unless otherwise earlier terminated pursuant to this Article,
----
this AGREEMENT shall expire ten years after the end of the COPROMOTION PERIOD,
or if extended by ALZA pursuant to Section 3.6(b), nine years after the end of
the EXTENSION PERIOD. In the event that this AGREEMENT shall be terminated
prior to the expiration of the COPROMOTION PERIOD, the COPROMOTION PERIOD shall
be deemed to be terminated as of the effective termination date of this
AGREEMENT.
12.2 Termination by Either Party. This AGREEMENT may be terminated
---------------------------
unilaterally by any party hereto upon written notice to the other party in the
event of any of the following:
(a) nonpayment of any properly due and payable amount that is
continuing for twenty (20) business days after the defaulting party has received
notice from the nondefaulting party of such nonpayment;
(b) material breach by the other party of any provision herein (other
than as specified in subsection (a) above) that is continuing forty-five (45)
days after the non-breaching party gives the breaching party notice of such
breach specifying in reasonable detail the particulars of the alleged breach (or
if such breach cannot be cured within 45 days, no steps have been taken by the
breaching party during such 45 day period to cure such breach); or
(c) the other party becomes insolvent, or voluntary or involuntary
proceedings are instituted by or against the other party, or a receiver or
custodian is appointed for such party's business, or a substantial portion of
such party's business is subject to attachment or similar process, or the other
party is unable to satisfy its financial obligations as they become due, enters
into any composition or arrangement with its creditors or enters into
liquidation.
12.3 Termination by ALZA. ALZA may terminate this AGREEMENT as follows:
-------------------
50
(a) for any reason upon 12 months prior written notice delivered to
USB by ALZA after completion of the First CONTRACT YEAR such termination to be
effective after such 12-month notice period.
(b) Upon thirty (30) days written notice to USB subsequent to the
LAUNCH DATE in the event that there is a material change in the frequency or
severity of serious adverse PRODUCT-related events, which events require
additional or modified contraindications or warnings in the PRODUCT labelling
and as a result NET SALES of the PRODUCT are significantly and adversely
affected during each of three consecutive calendar months.
12.4 Termination by USB. USB may terminate this AGREEMENT as follows:
-------------------
(a) upon written notice to ALZA in the event that the launch of the
PRODUCT has not occurred on or before the first anniversary of the date of the
FDA approval letter for the PRODUCT, except if such failure to launch is a
result of an event specified in Section 4.5(iv) of this AGREEMENT.
ARTICLE XIII
RIGHTS AND DUTIES UPON TERMINATION OR EXPIRATION
13.1 Monies Paid or Due.
------------------
(a) Upon the termination of this AGREEMENT prior to its expiration
under Article XII, USB shall have the right to retain all payments received from
ALZA pursuant to Articles VI and VII, ALZA shall have the right to retain all
payments received from USB pursuant to Article VIII and each party shall pay to
the other all sums accrued hereunder which are then due.
(b) The termination of this AGREEMENT under Section 12.2 during the
COPROMOTION PERIOD or any EXTENSION PERIOD shall terminate the nondefaulting
party's obligation to make any remaining payments required by Articles III, VII
or VIII from the first to occur of the giving of notice of default or the
effective date of the termination.
(c) If ALZA terminates this AGREEMENT under Section 12.2 above, for
USB
51
breach, then the RESIDUAL PERIOD shall be a period equal to two years for each
CONTRACT YEAR (plus a proration for partial years) until the date of termination
at one hundred percent (100%) of the relevant percentages from the table set
forth in Section 8.1.
(d) If ALZA terminates this AGREEMENT under paragraph 12.3(a) above,
ALZA shall pay USB all sums accrued or due hereunder up through the effective
date of termination, including, if earned, payments pursuant to Section 7.1 of
this AGREEMENT and, with respect to reverse PRODUCT payments under this
AGREEMENT, the following shall apply:
(i) If the period from the LAUNCH DATE to the effective date of
the termination (the "MARKETED PERIOD") is less than three (3)
years, then such termination shall terminate USB's obligation to
make reverse PRODUCT payments pursuant to this AGREEMENT;
(ii) If the MARKETED PERIOD is greater than or equal to three
(3) years but less than four (4) years, with respect to reverse
PRODUCT payments, USB shall be obligated to pay [ *
] of the relevant percentages from the table set forth in Section
8.1 for a period equal to [ *
]
(ii) If the MARKETED PERIOD is greater than or equal to four (4)
years but less than five (5) years, with respect to reverse
PRODUCT payments, USB shall be obligated to pay [
* ] of the relevant percentages from the table set
forth in Section 8.1 for a period equal to [
* ]
(e) If ALZA terminates this AGREEMENT under paragraph 12.3(b) above,
ALZA shall pay USB all sums accrued or due hereunder up through the effective
date of termination, including, if earned, payments pursuant to Section 7.1 of
this AGREEMENT and, with respect to reverse PRODUCT payments under this
AGREEMENT, and, in the event USB continues to market PRODUCT, USB shall be
obligated to pay [ * ] of the relevant percentages from the table
set forth in Section 8.1 for a period equal to [ * ]
52
(f) If USB terminates this AGREEMENT under paragraph 12.4(a) above
such termination shall terminate each party's obligation to make any remaining
payments required by Articles III, VII or VIII from the effective date of
termination.
13.2 Termination of Distribution Rights. Upon expiration or termination of
----------------------------------
the COPROMOTION PERIOD and any EXTENSION PERIOD, ALZA's rights to market and
sell PRODUCT in the TERRITORY shall terminate, and all rights to market and sell
PRODUCT shall revert to USB. Upon such expiration or termination, all
promotional materials related to PRODUCT that contain ALZA's name shall no
longer be used to promote, market and sell the PRODUCT.
13.3 Remaining PRODUCT. Upon expiration or termination of the COPROMOTION
-----------------
PERIOD and any EXTENSION PERIOD, ALZA shall notify USB of the amounts of PRODUCT
that ALZA then has on hand, and USB, in its sole discretion, with respect to all
or any specified portion of such amounts, may elect (i) to permit ALZA and its
distributors to sell the remaining amounts of PRODUCT for a period following the
expiration or termination of the COPROMOTION PERIOD and any EXTENSION PERIOD not
to exceed six (6) months; or (ii) repurchase such PRODUCT from ALZA at the
actual purchase price paid by ALZA for such PRODUCT provided however in the
event of termination by ALZA for USB breach pursuant to Section 12.2, the
foregoing election shall be made by ALZA. In the event that either party elects
the option set forth in Section 13.3 (i), USB and ALZA shall cooperate to
achieve a smooth transition with respect to the PRODUCT marketing and USB shall
have no obligation to accept from ALZA the amounts of PRODUCT that ALZA has on
hand at the end of the COPROMOTION PERIOD and any EXTENSION PERIOD.
13.4 Transfer of Information. Promptly following the expiration or
-----------------------
termination of the COPROMOTION PERIOD and any EXTENSION PERIOD, each party shall
provide to the other copies of all COMMERCIAL KNOW-HOW in such party's
possession which is not in the other party's possession.
13.5 Transfer of Reimbursement Approvals and Purchase Contracts. By the
----------------------------------------------------------
end of the COPROMOTION PERIOD (or any EXTENSION PERIOD), ALZA shall take such
reasonable steps as shall be required to attempt to cause the transfer to USB
(or USB's designated AFFILIATE) of any reimbursement approvals and purchase
contracts related to PRODUCT in the TERRITORY that remain
53
in the name of ALZA or an ALZA AFFILIATE, to the extent permitted by applicable
law and to the extent they are transferrable pursuant to the terms thereof. Any
out-of-pocket fees and similar expenses incurred by ALZA to effect such transfer
shall be borne by USB.
13.6 Survival of Rights. Articles I, IX, X, XI, XIII, XIV, XVI, XVII and
------------------
Sections 3.5, 4.7, 6.10, 6.11, 6.12, 6.13, 6.14, and any other provision which
by its terms is to stated to survive this AGREEMENT, shall survive the
termination or expiration of this AGREEMENT. In addition, any other provision
required to interpret and enforce the parties' rights and obligations under this
AGREEMENT also shall survive to the extent required for the full observation and
performance of this AGREEMENT by the parties hereto.
13.7 Rights Not Exclusive. All rights to terminate, and rights upon
--------------------
termination, provided for either party in this AGREEMENT are in addition to
other remedies in law or equity which may be available to either party.
13.8 Safety Events. In the event that ALZA does not terminate this
--------------
AGREEMENT and there has occurred a safety-related event as described in Section
12.3(b) ("SAFETY EVENT"), the parties expressly acknowledge that USB shall have
the right to require that the PRODUCT not be sold under this AGREEMENT pending
satisfactory resolution of any such event, the AGREEMENT shall remain in place,
and if sales and marketing of PRODUCT are resumed, the AGREEMENT shall be
extended for the period of suspension of marketing of PRODUCT as a result of any
such SAFETY EVENT. In the event that PRODUCT is not launched hereunder as a
result of a SAFETY EVENT within fifteen (15) years of the date of such SAFETY
EVENT, this AGREEMENT shall terminate. Post-launch, in the event that PRODUCT
sales or marketing are not resumed by or through USB within fifteen (15) years
of such SAFETY EVENT, this AGREEMENT shall terminate.
ARTICLE XIV
PAYMENT TERMS GENERALLY; RECORDS
14.1 Records. Each party shall maintain at a location in the United States
-------
true and complete books and records in accordance with generally accepted
accounting principles, in sufficient detail to enable NET SALES of PRODUCT in
the TERRITORY and the calculation of amounts payable
54
to the other party hereunder, or expended by such party in accordance with this
AGREEMENT, to be verified and to enable verification of all other quantifiable
obligations hereunder. All such relevant records (wherever located) shall be
maintained for at least three years after the submission of each report required
to be provided under this AGREEMENT. Within 90 days after the end of each
party's fiscal year, such party shall deliver to the other party a letter from
the independent auditors of such party confirming the correctness of all
payments made and amounts expended hereunder during the preceding twelve month
period. Each party shall have the right, through its independent auditors to
conduct an annual audit, during normal business hours and following reasonable
prior notice to the other party, to examine the books and records of the other
party for the purpose of verifying the payments or expenditures of such party
hereunder. The parties agree that information furnished as a result of any such
examination shall be limited to a written statement by such accountants to the
effect that they have reviewed the books of account of the party being audited
and either (i) the amounts of the payments due or expenditures made under this
AGREEMENT are in conformity with such books of account and the applicable
provisions of this AGREEMENT or (ii) setting forth any required adjustments. The
fees and expenses of the accountants performing such verification shall be borne
by the party requesting the audit. If any such audit shows any underpayment or
overcharge, a correcting payment or refund shall be made within 30 days after
receipt of the written statement described above. Notwithstanding the foregoing,
if any such audit results in any underpayment or overcharge with respect to any
twelve month period more than the greater of (i) $10,000 or (ii) 5% of the
payment actually due then the party being audited shall bear all costs of the
audit. Such access shall be available not more than once in each calendar year
and for eighteen (18) months after the expiration or termination of this
AGREEMENT, but absent a finding of gross negligence or bad faith or a payment
discrepancy of 15% or more, in no event shall a party be entitled to review or
audit a matter occurring more than three years before the requested date of the
review or audit.
14.2 Place of Payment; Interest. All payments to be made under this
--------------------------
AGREEMENT shall be paid in U.S. dollars by wire transfer in immediately
available funds, to such account as the receiving party shall have designated
from time to time in writing to the other party. Any such payment shall be
deemed to have been paid when recorded in the proper account. Any payment that
is not paid when due shall bear interest from the due date until payment in
full, at a rate equal to one percent per month (or at the maximum per annum rate
allowed by applicable law, if less).
55
14.3 No Set-offs, etc. No part of any amount properly due and payable to
-----------------
either party hereunder may be reduced due to any counterclaim, set-off,
adjustment or other right which the other party may have.
14.4 Taxes. The party receiving any payments pursuant to this AGREEMENT
------
shall pay any and all taxes levied on such payments. If laws or regulations
require that taxes be withheld on any payment, the remitting party will (i)
deduct those taxes from the payment, (ii) pay the taxes to the proper taxing
authority and (iii) send evidence of the obligation together with proof of
payment to the other party within sixty days following that payment.
ARTICLE XV
REPRESENTATIONS AND WARRANTIES; COVENANTS
15.1 Mutual Authority. USB and ALZA each represents and warrants to the
----------------
other that (i) it has the authority and right to enter into and perform this
AGREEMENT and (ii) its execution, delivery and performance of this AGREEMENT
will not conflict in any material fashion with the terms of any other agreement
to which it is or becomes a party or by which it is or becomes bound.
15.2 Compliance with Applicable Laws. ALZA and USB each covenants to the
-------------------------------
other that it will comply fully with all laws applicable to it and its
activities under this AGREEMENT.
15.3 Debarment. Each party represents that neither it nor any of its
---------
employees or consultants have been debarred or the subject of debarment
proceedings by the FDA.
ARTICLE XVI
INDEMNIFICATION; INSURANCE
16.1 Indemnification by ALZA. ALZA shall indemnify, defend and hold
-----------------------
harmless USB and its affiliates, employees, officers and directors, and its
successors and assigns, (each, a "USB INDEMNIFIED PARTY") from and against any
and all liability, loss, damage, cost, and expense (including reasonable
attorneys' fees), subject to the limitations in Section 16.5 (collectively, a
"LIABILITY"), which the USB INDEMNIFIED PARTY may incur, suffer or be required
to pay resulting
56
from or arising in connection with (i) the breach by ALZA of any covenant,
representation or warranty contained in this AGREEMENT, (ii) any negligent act
or omission of ALZA, in the promotion, marketing, distribution and sale of
PRODUCT or any other activity conducted by ALZA under this AGREEMENT which is
the proximate cause of injury, death or property damage to a THIRD PARTY, (iii)
promotion and advertising of the PRODUCT, interactions and communications with
governmental authorities in connection with such promotion and advertising,
including any FDA requirements or recommendations with respect to such promotion
and advertising, including without limit corrective advertising and dear doctor
letters, and any charge by FDA that PRODUCT is misbranded as a result of any
PRODUCT advertising or promotion; or (iv) the successful enforcement by a USB
INDEMNIFIED PARTY of any of the foregoing.
16.2 Indemnification by USB. USB shall indemnify, defend and hold harmless
----------------------
ALZA and its affiliates, employees, officers and directors and its successors
and assigns (each, an "ALZA INDEMNIFIED PARTY") from and against any LIABILITY
(subject to the limitations in Section 16.5), which the ALZA INDEMNIFIED PARTY
may incur, suffer or be required to pay resulting from or arising in connection
with (i) the breach by USB of any covenant, representation or warranty contained
in this AGREEMENT, (ii) any negligent act or omission of USB in the
manufacture, promotion or marketing of PRODUCT or any other activity conducted
by USB under this AGREEMENT which is the proximate cause of injury, death or
property damage to a THIRD PARTY, or (iii) the successful enforcement by an ALZA
INDEMNIFIED PARTY of any of the foregoing.
16.3 Conditions to Indemnification. The obligations of the indemnifying
-----------------------------
party under paragraphs 16.1 and 16.2 are conditioned upon the delivery of
written notice to the indemnifying party of any potential LIABILITY promptly
after the indemnified party becomes aware of such potential LIABILITY. The
indemnifying party shall have the right to assume the defense of any suit or
claim related to the LIABILITY if it has assumed responsibility for the suit or
claim in writing; however, if in the reasonable judgment of the indemnified
party, such suit or claim involves an issue or matter which could have a
materially adverse effect on the business, operations or assets of the
indemnified party, the indemnified party may waive its rights to indemnity under
this AGREEMENT and control the defense or settlement thereof, but in no event
shall any such waiver be construed as a waiver of any indemnification rights
such indemnified party may have at law or in equity. If the indemnifying party
defends the suit or claim, the indemnified party may participate in (but not
control) the defense thereof
57
at its sole cost and expense.
16.4 Settlements, etc. Neither party may settle a claim or action related
-----------------
to a LIABILITY without the consent of the other party, if such settlement would
impose any monetary obligation on the other party or require the other party to
submit to an injunction or otherwise limit the other party's rights under this
AGREEMENT. Any payment made by a party to settle any such claim or action shall
be at its own cost and expense.
16.5 Limitation of Liability. With respect to any claim by one party
-----------------------
against the other arising out of the performance or failure of performance of
the other party under this AGREEMENT, the parties expressly agree that the
liability of such party to the other party for such breach shall be limited
under this AGREEMENT or otherwise at law or equity to direct damages only and in
no event shall a party be liable to the other party for indirect, incidental,
special or consequential damages, including without limitation, lost profits.
16.6 Insurance. Each party shall, during the term of this AGREEMENT,
---------
maintain commercially reasonable amounts of insurance from a reputable insurance
carrier for liability insurance, including products liability and contractual
liability insurance, in an amount not less than $5,000,000. Each party shall
provide the other party with evidence of such insurance upon request. Promptly
after the EFFECTIVE DATE, each party shall name the other party an "additional
insured" on such party's relevant insurance policies.
ARTICLE XVII
MISCELLANEOUS
17.1 Force Majeure. Subject to Section 6.13, if the performance of any
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part of this AGREEMENT by either party, including the performance of the
RESEARCH AND DEVELOPMENT, or of any obligation under this AGREEMENT, is
prevented, restricted, interfered with or delayed by reason of any cause beyond
the reasonable control of the party liable to perform, unless conclusive
evidence to the contrary is provided, the party so affected shall, upon giving
written notice to the other party, be excused from such performance to the
extent of such prevention, restriction, interference or
58
delay, provided that the affected party shall use its reasonable efforts to
avoid or remove such causes of non-performance and shall continue performance
with the utmost dispatch whenever such causes are removed. When such
circumstances arise, the parties shall discuss what, if any, modification of the
terms of this AGREEMENT may be required in order to arrive at an equitable
solution.
17.2 Governing Law. This AGREEMENT shall be deemed to have been made in
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the State of Delaware and its form, execution, validity, construction and effect
shall be determined in accordance with the laws of the State of Delaware,
without giving effect to the principles of conflicts of law thereof.
17.3 Injunctive Relief. The parties hereby acknowledge that damages at
-----------------
law may be an inadequate remedy for the breach of any of the agreements
contained in Article X, and, accordingly, either party shall be entitled,
without the need of establishing actual damages, to such injunctive relief as
may be necessary to prevent, or to enjoin the continuation of, any such breach.
17.4 Dispute Resolution.
------------------
(a) Any matter that cannot be resolved by the required vote of the
COLLABORATION COMMITTEE having jurisdiction thereof under this AGREEMENT and any
other dispute, controversy or claim arising out of or relating to this
AGREEMENT, or the breach, termination, or invalidity of this AGREEMENT, shall be
submitted in the first instance to the Chief Executive Officer of USB and the
Chief Executive Officer of ALZA.
(b) If the matter or dispute cannot be resolved by the individuals
designated in Section 17.4 (a) within 30 days after such submission, it shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, except as modified by this section. The
number of arbitrators shall be three, one of whom is selected by ALZA, one of
whom is selected by USB and one of whom is selected by USB and ALZA (or by the
other two arbitrators if the parties cannot agree). The arbitration proceeding
shall be conducted in the English language. Any arbitration proceeding
instituted by ALZA shall be brought in Philadelphia, Pennsylvania, and any
arbitration proceeding instituted by USB shall be brought in Palo Alto,
California, unless the parties
59
agree in writing to conduct the arbitration in another location.
(c) The arbitration decision shall be binding and not be appealable to
any court in any jurisdiction. The prevailing party may enter such decision in
any court having competent jurisdiction.
(d) Each party shall pay its own expenses of arbitration and the
expenses of the arbitrators shall be equally shared except that if, in the
opinion of the arbitrators, any claim by a party hereto or any defense or
objection thereto by the other party was unreasonable, the arbitrators may in
their discretion assess as part of the award all or any part of the arbitration
expenses of the other party (including reasonable attorneys' fees) and expenses
of the arbitrators against the party raising such unreasonable claim, defense
or objection.
17.5 Severability.
------------
(a) If any provision of this AGREEMENT is held by a court of competent
jurisdiction to be invalid or unenforceable, it shall be modified, if possible,
to the minimum extent necessary to make it valid and enforceable or, if such
modification is not possible, it shall be stricken and the remaining provisions
shall remain in full force and effect; provided, however, that if a provision is
stricken so as to significantly alter the economic arrangements of this
AGREEMENT, the party adversely affected may terminate this AGREEMENT upon 60
days' prior written notice to the other party.
(b) If any of the terms or provisions of this AGREEMENT is in conflict
with any applicable statute or rule of law in any jurisdiction, then such term
or provision shall be deemed inoperative in such jurisdiction to the extent of
such conflict and the parties will renegotiate the affected terms and conditions
of this AGREEMENT to resolve any inequities.
17.6 Entire AGREEMENT. This AGREEMENT constitutes the entire agreement
----------------
between the parties relating to the subject matter hereof and supersedes all
previous writings and understandings, whether oral or written, including without
limitation the Confidentiality Agreements between the parties dated August 25,
1995 and dated November 10, 1995 (the "EXISTING CONFIDENTIALITY
60
AGREEMENTS"), relating to the subject matter of this AGREEMENT. In the event of
any inconsistency between this AGREEMENT and any schedule, appendix, standard
operating procedure or other ancillary agreement or document contemplated by
this AGREEMENT, the terms of this AGREEMENT shall govern.
17.7 Amendment. This AGREEMENT may not be amended, supplemented or
---------
otherwise modified except by an instrument in writing signed by both parties
that specifically refers to this AGREEMENT.
17.8 Notices. Any notice required or permitted under this AGREEMENT shall
-------
be sent by certified mail or courier service, charges pre-paid, or by facsimile
transmission, to the address or facsimile number specified below:
If to USB:
One Tower Bridge
100 Front Street
West Conshohocken, Pennsylvania 19428
Fax No: 610-832-4595
Attention: Chief Executive Officer
With a copy to:
General Counsel
Fax No: 610-832-4595
If to ALZA:
950 Page Mill Road
P.O. Box 10950
Palo Alto, California 94303
Fax No.: (415) 496-8048
Attention: Vice President and General Counsel
61
or to such other address or facsimile number as the person may specify in a
notice duly given to the sender as provided herein. A notice will be deemed to
have been given as of the date that is five days after it is deposited in the
United States mail or the date it is delivered by a courier service or, in the
case of facsimile transmission, when received.
17.9 Assignment and Binding Effect. This AGREEMENT shall be binding upon
-----------------------------
and inure to the benefit of the successors and assigns of the parties hereto.
Neither party may assign any of its rights, or delegate any of its obligations,
under this AGREEMENT without the written consent of the other party, except that
either party may assign this AGREEMENT or any PATENT owned by it to any
AFFILIATE or to any corporation with which it may merge or consolidate, or to
which it may transfer all or substantially all of its assets to which this
AGREEMENT relates, and ALZA may appoint distributors in the TERRITORY in
possessions or territories, but not states or the District of Columbia, without
obtaining the consent of USB. Such consent will not be unreasonably withheld if
the proposed assignee has capabilities at least comparable to those of the
assigning party to carry out its obligations hereunder.
17.10 Headings and References. All section headings contained in this
-----------------------
AGREEMENT are for convenience of reference only and shall not affect the meaning
or interpretation of this AGREEMENT. Unless the context requires otherwise, all
references in this AGREEMENT to any article, section, schedule or appendix shall
be deemed and construed as references to an article or section of, or an
schedule or appendix to, this AGREEMENT, and any such schedules and appendices
are incorporated in this AGREEMENT by such reference.
17.11 No Agency. It is understood and agreed that each party shall have
---------
the status of an independent contractor under this AGREEMENT and that nothing in
this AGREEMENT shall be construed as authorization for either party to act as
agent for the other. Members of the COLLABORATION COMMITTEE shall remain
employees of ALZA or USB, as the case may be, and neither party shall incur any
liability for any act or failure to act by employees of the other party,
including members of any of the foregoing committees who are employees of the
other party.
17.12 No Strict Construction. This AGREEMENT has been prepared jointly
----------------------
and shall not be strictly construed against either party.
62
17.13 Counterparts. This AGREEMENT shall become binding as of the
------------
EFFECTIVE DATE when any one or more counterparts hereof, individually or taken
together, shall bear the authorized signatures of each of the parties hereto.
This AGREEMENT may be executed in any number of counterparts, each of which
shall be an original as against any party whose signature appears thereon but
all of which together shall constitute but one and the same instrument. A
facsimile transmission of the signed AGREEMENT shall be legal and binding on all
parties.
63
IN WITNESS WHEREOF, the parties, through their authorized officers, have duly
executed this AGREEMENT as of the date first written above.
U.S. BIOSCIENCE, INC.
BY:________________________________________
Title: Chairman and Chief Executive Officer
ALZA CORPORATION
BY:________________________________________
Title: Vice President, Sales and Marketing
64
LIST OF APPENDICES
Appendix A - DEVELOPMENT COSTS
65
EXHIBIT A
DEVELOPMENT COSTS
Development Costs are equal to the sum of (i) Research Expenses, (ii) General
and Administrative Expenses and (iii) Capital Asset Expenditures.
(i) Research Expenses include both Direct Expenses and Indirect
Expenses related to PRODUCT, with the cost elements outlined on
Exhibit A-1.
(a) Direct Expenses include Direct Salaries, Clinical Expenses,
Supplies and other expenses incurred specifically in
connection with the PRODUCT.
(b) Indirect Expenses include Research Management and support
costs of the organization. Indirect Expenses are allocated to
the PRODUCT at a fixed rate of [ * ]
(ii) General and Administrative Expenses include cost elements
outlined on Exhibit A-2. General and Administrative Expenses are
allocated to the PRODUCT at a fixed rate of [ *
]
(iii) Capital Asset Expenditures are the actual costs of new assets
acquired specifically for the PRODUCT to use in RESEARCH AND
DEVELOPMENT.
The DEVELOPMENT COSTS described in this Exhibit A are intended to cover only
activities pursuant to the parties' RESEARCH AND DEVELOPMENT of the PRODUCT
under this AGREEMENT, which will consist largely of clinical activities and
related activities.
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EXHIBIT A-1
Research Expenses
-----------------
Direct Expenses
- ---------------
Direct Research Salaries*
Product Clinical Expenses and Outside Services
Product Specific Supplies
Product Travel and Related Expenses
Clinical Investigator Meeting Expenses
Miscellaneous Product Expenses
Regulatory and Filing Fees and Maintenance Payments
Indirect Expenses
- -----------------
Research Management and Indirect Salaries*
General Research Supplies and Materials
General Research Consulting and Outside Services
Facilities Expenses
Telephone and Communications
Equipment Depreciation, Rent, Maintenance and Services
Clinical Research Travel and Related Expenses
Patent and Trademark Expenses
Miscellaneous Indirect Research Expenses
*Salaries include Benefits
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EXHIBIT A-2
General and Administrative Expenses
-----------------------------------
Corporate Management, Administrative, and Indirect Salaries*
Telephone and Communications
Equipment Depreciation, Rent, Maintenance and Services
Board of Directors and Corporate Consulting
Annual Audit, Accounting and Legal Expenses
Facilities Expenses
Information Services (data processing) Expenses
Miscellaneous General and Administrative Expenses
69