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EXHIBIT 10.30
BETASITE(R) CONTRACT MANUFACTURING AGREEMENT
THIS CONTRACT MANUFACTURING AGREEMENT is entered into this 18th day of
July, 1996, by and between INSITE VISION INCORPORATED, with offices at 965
Atlantic Avenue, Alameda, California 94501 ("InSite"), and BAUSCH & LOMB
PHARMACEUTICALS, INC., with offices at 8500 Hidden River Parkway, Tampa, Florida
33637 ("B&L").
WITNESSETH:
WHEREAS, InSite desires that B&L manufacture and supply to InSite the
Product and Clinical Trial Material (both as hereinafter defined); and
WHEREAS, in order to perform B&L's manufacturing obligations under this
Agreement, B&L has agreed to construct a Manufacturing Space (as hereinafter
defined) at the Facility (as hereinafter defined), and InSite has agreed to
reimburse B&L for certain expenses incurred in connection therewith; and
WHEREAS, InSite owns certain Equipment (as hereinafter defined) and has
agreed to provide B&L with the use thereof in the Manufacturing Space in
connection with the manufacture of the Product and Clinical Trial Material, and
other purposes described below.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements set forth in this Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
The following words and phrases shall, for purposes of this Agreement,
have the following meanings (with any term or phrase referred to below, or
defined elsewhere in this Agreement, in the singular to include the plural and
vice versa as the context requires):
"Action" shall mean any suit, action, investigation (governmental or
otherwise), claim or proceeding initiated or filed against a party to this
Agreement, which results in or could result in a Loss or Losses for which
indemnification is required by the other party under Article XV or XVI below.
"Additional Products" shall mean any product developed and/or improved
by InSite for the treatment of glaucoma.
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"Affiliate" of any party shall mean any Person that is controlled by,
controls, or is under common control with such party. Control as used in this
definition shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management of a Person, whether through
ownership of voting securities, by contract, or otherwise.
"Agreement" shall mean this Agreement as it is amended from time to
time in the manner provided herein.
"DMF" shall mean B&L's drug master file covering the manufacture of the
Product at the Facility.
"Equipment" shall mean the blow, fill and seal machine and ancillary
support equipment more particularly described in APPENDIX A attached hereto.
"Facility" shall mean B&L's facility located in Tampa, Florida.
"FDA" shall mean the United States Food and Drug Administration and all
agencies under its direct control or any successor organization.
"FFDCA" shall mean the Federal Food, Drug and Cosmetic Act of 1934, as
amended from time to time, and the regulations promulgated pursuant thereto, or
any successor statute adopted to replace such act.
"GMPs" shall mean the current Good Manufacturing Practice regulations
in effect, and from time to time promulgated by the FDA, governing the
manufacture of the Product.
"Indemnified Party" shall mean the party to this Agreement entitled to
be indemnified by the Indemnifying Party against a Loss or Losses pursuant to
Article XVI below.
"Indemnifying Party" shall mean the party to this Agreement required to
indemnify the Indemnified Party against a Loss or Losses pursuant to Article XVI
below.
"InSite Volume Forecast" shall mean InSite's forecast of the quantity
of Product that InSite will request B&L to manufacture for purchase by InSite
each calendar year, or portion thereof, throughout the Term.
"Loss" or "Losses" shall mean any liability, loss, cost, damage or
expense, including reasonable attorneys' fees and expenses, incurred or suffered
by a party to this Agreement for which indemnification is required under Article
XVI below, but shall in no event include consequential or special damages such
as lost profits or loss of business opportunity.
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"Manufacture" and "Manufacturing" and other forms of such word or
phrase shall refer to the manufacturing, handling, storage and/or disposal of
the Product and the raw materials and components used in connection therewith.
"Manufacturing Costs" shall mean B&L's standard cost of manufacturing
the Product (and Clinical Trial Material, as defined under Section 5.2 below),
which shall include direct labor, direct and variable materials (including
scrap) freight, variable overhead and an allocation of fixed overhead, yield
losses which do not exceed a mutually agreed to percentage of the quantity of
Product manufactured by B&L; all determined in accordance with generally
accepted accounting principles applied consistently and in accordance with
existing and demonstrable B&L practices; but provided that, in determining such
allocation, B&L shall use the lowest and most favorable method of allocation
used by B&L for any product manufactured by B&L at its facility in Tampa,
Florida (in volumes similar to the quantity of Product manufactured by B&L for
InSite) exclusively for sale to, and distribution by, an unrelated third party.
"Manufacturing Space" shall mean the space within the Facility where
the Equipment shall be installed and the Product shall be manufactured
hereunder.
"NDA" shall mean the New Drug Application for the Product, supplements
or other filings relating thereto that are filed with the FDA pursuant to its
rules and regulations.
"Other Costs" shall mean in each case set forth in a reasonably
detailed statement delivered to InSite by B&L with each invoice for Product: (i)
a reasonable and customary allocation as between B&L and InSite of the
reasonable out-of-pocket costs incurred by B&L in connection with or as a result
of FDA inspections or compliance with FDA regulations, orders, directives or
suggestions (collectively, "FDA Compliance Costs") following or in connection
with FDA approval of the NDA and pertaining to the Product; (ii) a normal,
customary and reasonable allocation of FDA Compliance Costs related to the
Facility, generally; and (iii) capital expenditures and/or leasing costs made or
incurred to acquire or use equipment exclusively and solely related to the
manufacturing of the Product under this Agreement ("Capital Equipment"), subject
to the prior approval of InSite which shall not be unreasonably withheld;
provided that if such approval is given by InSite, InSite may, at its option,
elect to acquire or lease such Capital Equipment and provide the same to B&L for
the duration of this Agreement.
"Party" or "Parties", when referring to the parties to this Agreement,
shall mean and include InSite and B&L, or each of them individually.
"Person" shall mean any individual, partnership, association,
corporation, trust or legal person or entity.
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"PilaSite(R) License Agreement" shall mean that certain agreement of
event date herewith by and between the Parties relating to the commercialization
of PilaSite(R), as defined therein.
"Product" shall mean an ophthalmic formulation containing levobunolol
hydrochloride as the sole active ingredient in the DuraSite(R) polymer
suspension vehicle.
"Specifications" shall mean (i) for Product prior to FDA approval of
the NDA, those specifications contained in InSite's Investigational New Drug
Application for the Product, and (ii) for Product after NDA approval, those
specifications incorporated into the NDA, as such specifications may be amended
from time to time by a supplement to the NDA mutually agreed to by the Parties
or as required by FDA.
"Timolol Development Agreement" shall mean that certain agreement of
even date herewith by and between the Parties relating to the development and
commercialization of Timolol Product, as defined therein.
"Venture" shall mean the manufacture of the Product by B&L and/or
InSite pursuant to this Agreement.
"Warehousing Costs" shall mean B&L's direct warehousing costs of
Product manufactured by B&L and raw materials held by B&L under this Agreement,
plus normal and customarily allocable warehousing overhead costs; all determined
in accordance with generally accepted accounting principles applied consistently
and in accordance with existing and demonstrable practices of B&L, but provided
that in determining such allocable warehousing overhead costs B&L shall use the
lowest and most favorable method of allocation used by B&L for any B&L
proprietary product stored by B&L at the Facility.
ARTICLE II
TERM
2.1 Term. The initial term of this Agreement shall commence on the date
hereof and shall continue until the date which is five (5) years after the date
of B&L's first shipment of commercial quantities of Product to InSite, except as
otherwise extended or terminated in accordance with the terms of this Agreement
(the "Term").
2.2 Renewal Periods. InSite shall have the right to extend this
Agreement for two (2) additional periods of five (5) years each (the "Renewal
Periods") by delivery of written notice to B&L at least 120 days prior to the
end of the initial Term or any Renewal Period. For purposes of this Agreement,
"Term" shall refer
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collectively to the Term under Section 2.1 hereof and the Renewal Periods under
Section 2.2 hereof.
ARTICLE III
MANUFACTURING SPACE
3.1 Manufacturing Space. B&L agrees to construct, or cause to be
constructed, the Manufacturing Space, as promptly as possible, in accordance
with specifications and drawings mutually agreed to by the parties; it being
understood and acknowledged that the Manufacturing Space will be of adequate
design and size to permit the normal and customary operation of the Equipment.
Furthermore, B&L agrees that it will obtain, prior to the commencement of any
commercial manufacturing hereunder, all approvals required by the FDA for the
Facility and the Manufacturing Space, and that the Manufacturing Space will
conform during the Term to GMPs. Without the prior written consent of InSite,
which shall not be unreasonably withheld, B&L shall not manufacture the Product
at any location other than the Manufacturing Space, or package the Product at
any location other than the Facility.
3.2 Construction Expenses. InSite agrees to reimburse B&L, within 10
days of invoicing, for B&L's "Construction Costs", as hereinafter defined, which
invoicing shall commence with the first day of the first calendar month
following the date on which construction of the Manufacturing Space commences.
For purposes of this Agreement, B&L's "Construction Costs" shall include any and
all verifiable out-of-pocket costs directly incurred by B&L in connection with
the construction of the Manufacturing Space. Notwithstanding the foregoing,
InSite shall have no obligation to reimburse B&L for Construction Costs in
excess of * * *. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
3.3 Delivery and Installation of Equipment. InSite shall deliver the
Equipment to B&L F.O.B. the Facility promptly after the date hereof, but by no
later than the completion date of the Manufacturing Space. InSite shall assume
all risk of loss to the Equipment prior to its delivery to B&L. Furthermore,
InSite shall provide B&L with such assistance and cooperation as may be
reasonably necessary for B&L to install the Equipment with the effect that it is
fully operational in accordance with applicable specifications. InSite
represents to B&L that when installed, the Equipment shall be in good working
order and condition except for reasonable wear and tear attributable to InSite's
prior use and excluding any damage caused by B&L. InSite shall provide, at its
cost, any parts, support, technical assistance or labor necessary to bring the
Equipment within the applicable specifications and to cure any breach of the
above-referenced warranty.
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3.4 Title. Except as otherwise provided herein, title to the Equipment
shall remain with InSite subject to B&L's duties as a bailee for hire.
3.5 Warranty. InSite agrees to transfer to B&L any warranties made by
the original manufacturer of the Equipment to the extent assignable by InSite.
If any such warranties are not assignable then InSite shall offer B&L, as agent,
its reasonable assistance in pursuing remedies under the applicable warranties.
EXCEPT AS OTHERWISE PROVIDED HEREIN, INSITE SHALL DELIVER THE EQUIPMENT TO B&L
WITH NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR NONINFRINGEMENT.
ARTICLE IV
USE OF EQUIPMENT
4.1 Standard of Care. B&L shall exercise at least the same standard of
care in using the Equipment that B&L exercises with its own comparable
equipment, but in no event will such standard of care be lower than the standard
of care commonly practiced by pharmaceutical manufacturers in the United States
with respect to comparable equipment. Without limiting the foregoing, B&L shall,
at its own expense, subject to InSite's obligations with respect to the
Equipment herein contained, be responsible for repairing, servicing and
maintaining the Equipment in good working order, excluding reasonable wear and
tear.
4.2 Use of Equipment. Use of the Equipment by B&L shall be dedicated,
on a first priority basis, to manufacturing InSite's requirements for Product in
accordance with the terms of this Agreement. Subject to the foregoing, B&L shall
have the right to use the Equipment to manufacture any other products other than
the Product ("B&L Products"); provided, however, that in consideration of B&L's
use of the Equipment to manufacture B&L Products, B&L shall pay InSite a * * *
per unit royalty for all B&L Products manufactured using the Equipment and which
are sold or transferred by B&L. Royalties on B&L Products manufactured using the
Equipment shall be paid to InSite on a quarterly basis within 30 days following
the end of each quarter. Remittance of royalty payments to InSite hereunder
shall be accompanied by a report which states the aggregate units of B&L
Products manufactured using the Equipment and sold or transferred by B&L during
the preceding royalty period. Notwithstanding anything contained herein to the
contrary, in the event that FDA does not approve the NDA for PilaSite (as
defined in the PilaSite License Agreement), B&L shall receive a credit against
royalties payable to InSite hereunder equal to * * *. [* INDICATES THAT MATERIAL
HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL
SUCH OMITTED
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MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
4.3 Transfer of Title. InSite agrees that, after it has received
aggregate royalty payments from B&L in connection with B&L's use of the
Equipment to manufacture B&L Products under Section 4.2 (including any credited
amounts thereunder) equal to * * *, InSite shall deliver to B&L a bill of sale
transferring good and marketable title to the Equipment to B&L. [* INDICATES
THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
4.4 Survival. The obligations of the parties under this Article IV
shall survive any termination of this Agreement.
ARTICLE V
PRODUCT DEVELOPMENT
5.1 Drug Master File. B&L shall exercise its reasonable efforts to
develop a DMF covering the manufacture of the Product at the Facility promptly
following the date hereof. Such efforts shall be consistent with those employed
by B&L for other customers of B&L for contract manufactured product. B&L shall
allow InSite to reference the DMF in the course of seeking and obtaining FDA
approval of the NDA, and shall provide InSite with a DMF reference letter;
provided, however, that B&L's obligation to disclose to InSite the contents of
the DMF shall be limited to those sections which pertain to B&L's manufacture of
the Product. B&L shall be responsible for preparing and providing to InSite the
CMC section of the NDA.
5.2 Clinical Trial Material. B&L agrees to exercise reasonable efforts
to supply InSite with its requirements of clinical trial batches of Product and
PilaSite (as defined in the PilaSite License Agreement) ("Clinical Trial
Material") when and as ordered; provided that B&L shall not be required to make
delivery of such Clinical Trial Material any earlier than 60 days following
receipt of an order from InSite.
5.3 Validation Services. Following the execution of this Agreement, B&L
shall manufacture and validate stability batches of the Product in accordance
with GMP requirements and as necessary for InSite to file and obtain FDA
approval of the NDA; provided, that, in the event that B&L, after five good
faith attempts is unable to successfully manufacture, stability test and
validate three QA/QC-release lots of Product for NDA registration purposes, B&L
and InSite shall equally share all costs incurred in connection with the
manufacture, stability testing and validation of three additional QA/QC-release
lots for NDA registration purposes (the "Additional Stability Studies");
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and further provided, that in the event that the parties are unable to
successfully complete the Additional Stability Studies, B&L's president and
InSite's chief executive officer shall, within 10 days, meet to jointly
determine the appropriate action.
5.4 Price. The price to be paid for Clinical Trial Material supplied to
InSite by B&L under Section 5.2 above shall be equal to * * *. Payment for the
Clinical Trial Material will be made in accordance with the payment provisions
set forth in Article VII hereof. [* INDICATES THAT MATERIAL HAS BEEN OMITTED AND
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL
HAS BEEN FILED SEPARATELY WITH THE COMMISSION PURSUANT TO RULE 24b-2.]
5.5 Delivery. B&L shall deliver the Clinical Trial Material to InSite
in the same manner as required for Product under Article VIII hereof.
ARTICLE VI
SUPPLY OF PRODUCT
6.1 Quantities. Throughout the Term, InSite agrees to order exclusively
from B&L all of its requirements of Product, and B&L agrees to manufacture and
supply InSite with such Product, as and where ordered by InSite in accordance
with the Specifications, GMPs, the NDA and the FFDCA; provided that if B&L fails
to satisfy InSite's requirements, it may purchase substitute Product from
sources other than B&L.
6.2 Ordering Through Submittal of Rolling Forecast. During the Term,
InSite will provide B&L with a twelve (12) month rolling forecast of its
requirements by month for Product. Such rolling forecasts shall be delivered to
B&L by or on the tenth day of each month during the Term of this Agreement. The
first three months of each twelve month rolling forecast shall be binding on
InSite and shall constitute a firm purchase order ("Firm Purchase Order") for
the Product indicated for such months. B&L shall accept each Firm Purchase Order
by delivering a written order acknowledgment form to InSite within 30 days of
B&L's receipt of each Firm Purchase Order.
6.3 InSite's Initial Rolling Forecast. InSite's initial twelve (12)
month rolling forecast by month shall be provided to B&L within thirty (30) days
of the date of FDA approval of the NDA.
6.4 Orders Other Than Through Rolling Forecasts. Subject to the
provisions of Paragraph 6.2, InSite may submit additional purchase orders for
Product in excess of the quantities specified in the rolling forecasts. B&L
shall use its commercially reasonable efforts to accept and fill such orders
consistent with efforts used by B&L to
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fill excess orders for other customers of contract manufactured product.
Acceptance of such additional purchase orders shall be by written order
acknowledgment given to InSite.
ARTICLE VII
PRICE; PAYMENT
7.1 Product Price. The price for Product manufactured and supplied by
B&L hereunder (the "Product Price") shall equal * * * of B&L's Manufacturing
Costs, plus * * * of Other Costs and Warehousing Costs. On a monthly basis, B&L
shall invoice InSite in an amount equal to the Product Price for that quantity
of Product delivered to InSite hereunder. InSite shall pay B&L's invoices by
check or wire transfer, as designated by B&L, within 30 days of receipt of B&L's
invoice. InSite agrees not to make any deductions of any kind from any payment
becoming due to B&L unless InSite has received an official credit memorandum
from B&L authorizing such deduction in accordance with its policies. [*
INDICATES THAT MATERIAL HAS BEEN OMITTED AND CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED THEREFOR. ALL SUCH OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
COMMISSION PURSUANT TO RULE 24b-2.]
7.2 Reconciliation. By December 15 of each calendar year throughout the
Term (and following the effective date of termination of this Agreement), B&L
shall prepare and deliver to InSite a detailed statement (the "Statement") which
provides a reconciliation of B&L's Manufacturing Costs for Product based upon
the actual quantity of Product delivered to InSite, as compared to B&L's
standard costs based upon the estimated quantities contained in the InSite
Volume Forecast. Based upon the Statement, B&L may make a positive or negative
adjustment to the Product Prices paid or payable to B&L based upon the actual
increase or decrease in Manufacturing Costs, which shall be satisfied by B&L or
InSite, as the case may be, within 60 days of InSite's receipt of the Statement.
Such adjustment shall be deemed accepted if not protested by InSite within 30
days of receipt of the Statement unless subsequently protested by InSite
pursuant to Section 22.7 below. If InSite protests B&L's calculation of an
adjustment to the Product Prices pursuant to this Section or Section 22.7 below,
and the parties are unable to mutually resolve the matter in protest, either
party may request to have the controversy settled by binding arbitration in
accordance with the then existing rules of the American Arbitration Association.
ARTICLE VIII
DELIVERY; RISK OF LOSS
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Unless otherwise agreed in writing by the parties, one (1) month's
requirement of each Firm Purchase Order shall be delivered to InSite F.O.B.
B&L's loading dock at its facility in Tampa, Florida (the "F.O.B. Point"),
commencing within sixty (60) days of the date a Firm Purchase Order is received
by B&L, and continuing each month thereafter. At the request and expense of
InSite, B&L shall ship the Product ordered by InSite by such carrier or carriers
as InSite may designate. Such shipping instructions shall be submitted by InSite
to B&L. Unless otherwise agreed by the parties hereto, all risk of loss or
damage to the Product from any cause whatsoever shall be borne by InSite after
delivery to InSite or InSite's carrier at the F.O.B. Point.
ARTICLE IX
PACKAGING AND LABELING
InSite shall develop all packaging, labeling and artwork for the
Product and shall select the InSite trademark ("InSite Trademark") to be used
for the Product. Thereafter, upon reasonable written notice, B&L will make, at
InSite's expense (which shall include reimbursement in an amount equal to B&L's
actual cost of any packaging components which are not used by B&L as a result of
a packaging change requested by InSite), any improvements or alterations to
packaging or labeling as requested by InSite and shall implement such
alterations or improvements at the earliest opportunity and otherwise as may be
necessary to allow InSite to comply with applicable law.
ARTICLE X
WARRANTIES; ACCEPTANCE AND CLAIMS
10.1 Limited Product Warranty. B&L represents and warrants to InSite
that at the time of delivery, the Product manufactured and supplied hereunder
will conform to the NDA, GMPs and the FFDC Act, and other applicable laws and
regulations. THE FOREGOING WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHER
WARRANTIES EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. EXCEPT WHERE
B&L COMMITS A WILLFUL, INTENTIONAL BREACH OF ANY MATERIAL PROVISION UNDER THIS
AGREEMENT, B&L SHALL NOT BE RESPONSIBLE OR LIABLE UNDER ANY PROVISION OF THIS
AGREEMENT OR UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY FOR ANY RESULTANT INDIRECT, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES INCLUDING, BUT NOT LIMITED TO LOSS OF REVENUES AND LOSS OF PROFITS FROM
B&L'S FAILURE TO PROVIDE THE PRODUCT TO INSITE OR OTHERWISE.
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10.2 Notification of Defects. All Product shall be received subject to
InSite's inspection and may be rejected if any such Product fails to be in the
condition warranted hereunder. InSite shall be deemed to have accepted each
order of Product if B&L does not receive written notice to the contrary as set
forth in this Paragraph 10.2. InSite shall notify B&L in writing within 15 days
after delivery to InSite or its customers of any non-conforming Product
containing obvious defects discoverable without affecting the integrity of the
Product's packaging and within 30 days of its discovery of any latent defects,
or InSite's rights as to such obvious or latent non-conformance shall be waived
by InSite. At B&L's request, InSite shall promptly supply either some of the
Products which are allegedly defective or some other evidence of deficiency
which B&L shall specify. In the event of any dispute between B&L and InSite as
to whether any of the Products conform to the warranties hereunder, a sample of
the units in dispute shall be sent by InSite and B&L to a testing laboratory
mutually agreed to by B&L and InSite whose findings will be binding on the
parties except in cases of gross and manifest error. The cost of such testing
and Product shall be borne by the losing party.
10.3 Returns. B&L shall accept for return and replacement any Product
manufactured and supplied to InSite under this Agreement which does not conform
with the warranty set forth above and for which proper notice has been given,
provided InSite obtains prior shipping authorization from B&L. All returns of
Product with obvious defects shall be in the original manufactured condition.
B&L will pay reasonable return freight and shipping charges, but InSite shall
assume the risk of loss in transit associated with such returns.
ARTICLE XI
FDA INSPECTIONS AND COMMUNICATIONS
InSite and B&L shall promptly notify the other party of any FDA
inspections or communications relating to the Product. Each party shall promptly
deliver to the other party all reports, data, information and correspondence
received by it from the FDA or any state or local authority with respect to the
Product and any GMP issues relating thereto and any written response,
information, data or correspondence delivered by such party to the FDA or any
state or local authority with respect to the Product and shall cooperate to the
extent reasonably requested by such other party in its response to the FDA or
such other state or local authority.
ARTICLE XII
COMPLAINT HANDLING;
ADVERSE DRUG REACTION REPORTS
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12.1 Complaint Handling. In the event that InSite or B&L receives any
complaint, claims or adverse reaction reports regarding the Product, including
notices from the FDA regarding any alleged regulatory non-compliance of the
Product, each party shall, within five (5) business days, provide the other with
all information contained in the complaint, report, or notice and such
additional information regarding the Product as may be reasonably requested.
InSite shall comply, at a minimum, with FDA and GMP requirements for complaint
handling.
12.2 Adverse Drug Reaction Reports. InSite shall establish a system for
monitoring, investigating and following-up on adverse reaction reports involving
the Product. If either party becomes aware that the Product contains a defect
which could or did cause death or injury, each party shall immediately by FAX
and telephone provide the other with a complete written description of all
relevant details known to such party concerning any such incident, including but
not limited to, a description of any defect and such other information which may
be necessary to report the incident to the FDA. InSite will be responsible for
preparing adverse drug reaction reports, administering adverse drug reaction
files relating to the Product and filing all such reports with FDA, at its sole
expense.
12.3 Recordkeeping. B&L agrees to maintain internal records that will
permit the tracing of Product by lot number, so as to facilitate the tracing of
such Product in the event such tracing becomes necessary.
ARTICLE XIII
ACCESS TO FACILITIES AND RECORDS
Upon reasonable notice, each party shall have access during normal
business hours to inspect those areas of the facilities of the other party where
and at such times as Product is manufactured, packaged, tested or stored and to
review the records of the other party relating to the manufacturing, packaging
and quality control of the Product.
ARTICLE XIV
RIGHTS OF FIRST DISCUSSION AND OFFER
For a period of one (1) year following the date of the First Closing
(as defined under that certain Stock Purchase Agreement between InSite and B&L
of even date herewith) in the event InSite desires to negotiate, or is solicited
to enter into, a corporate partnering, licensing or other transaction with a
third party with respect to the development, marketing or sale of the technology
and know-how related to the Product,
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or any Additional Products (a "Third Party Corporate Transaction"), InSite shall
deliver written notice (the "Notice") to B&L which shall set forth its intention
to negotiate such Third Party Corporate Transaction and the terms thereof. For a
period of 60 days after the Notice is deemed to have been made in accordance
with this Agreement, InSite and B&L shall in good faith negotiate the terms of a
corporate partnering, licensing or other transaction substantially similar to
the Third Party Corporate Transaction (a "B&L Corporate Transaction"); provided,
however, that if B&L does not in good faith intend to pursue a B&L Corporate
Transaction, B&L shall notify InSite of such fact within 10 days of the date
that such decision is made. With respect to the Product and any other products
within the beta blocker category (excluding proprietary beta blockers of third
parties) only, B&L and InSite in good faith cannot agree on the terms of a B&L
Corporate Transaction within the 60 day period set forth above, or B&L earlier
notifies InSite that it does not intend to pursue such a transaction, InSite
shall be entitled to negotiate and enter into a Third Party Corporate
Transaction with any third party; provided that the terms and conditions thereof
are no more favorable to such third party than the terms set forth in the
Notice, if any; provided further, however, that if B&L made a definitive offer
to InSite with respect to the terms of a B&L Corporate Transaction which was not
accepted by InSite (the "B&L Offer"), then InSite shall not enter into any Third
Party Corporate Transaction with any third party pursuant to terms and
conditions which are on balance more favorable than the terms set forth in the
B&L Offer.
ARTICLE XV
PRODUCT RECALL
To the extent permitted or required by law, any decision to recall,
withdraw or cease distribution of the Product as a result of a violation of the
NDA or of any law, rule or regulation, or because the Product presents a
possible safety risk may be made by either party after consulting with the other
party, and taking such reasonable action as InSite, as the owner of the NDA
under which the Product is manufactured may deem to be appropriate under the
circumstances to minimize the risk to both parties. Any such recall shall be
controlled by InSite; provided, however, that the parties shall use their best
efforts to work together to repossess the affected Product.
ARTICLE XVI
INDEMNIFICATION
16.1 Indemnification of B&L. InSite shall indemnify, defend, save and
hold B&L and each of its Affiliates, officers, directors, employees and agents
harmless from and against Loss or Losses resulting from, or arising out of (a)
any material breach
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of any warranty hereunder or material non-fulfillment or non-performance by
InSite of any agreement, covenant or obligation of InSite under this Agreement;
(b) any bodily injury arising as a result of a negligent act or omission of
InSite; (c) FDA enforcement action, inspections or Product recalls or market
withdrawals except where arising out of or resulting from B&L's failure to
manufacture Product in accordance with the terms of this Agreement; (d) InSite's
acts relating to the promotion, marketing and/or distribution of Product, except
where arising out of or resulting from B&L's failure to manufacture Product in
accordance with the terms of this Agreement; and (e) any actual or alleged
infringement or violation of any patent, trade secret or proprietary right
governing the Product.
16.2 Indemnification of InSite. B&L shall indemnify, defend, save and
hold InSite and each of its Affiliates, officers, directors, employees and
agents harmless from and against Loss or Losses resulting from, or arising out
of (a) any material breach of any warranty hereunder or material non-fulfillment
or non-performance by B&L of any agreement, covenant or obligation of B&L under
this Agreement; (b) any actual or alleged defect in any Product manufactured and
delivered to InSite hereunder arising out of B&L's failure to manufacture
Product in accordance with the terms of this Agreement; (c) any actual or
alleged infringement or violation of any patent, trade secret or proprietary
rights used by B&L in manufacturing Product; and (d) FDA enforcement action,
inspection or Product recalls or market withdrawals resulting from B&L's failure
to manufacture the Product in accordance with the terms of this Agreement.
16.3 Survival. The indemnification contained herein shall survive any
termination of this Agreement.
ARTICLE XVII
INDEMNIFICATION PROCEDURES
Upon the occurrence of an event which requires indemnification under
this Agreement, the Indemnified Party shall give prompt written notice to the
Indemnifying Party providing reasonable details of the nature of the event and
basis of the indemnity claim. The Indemnifying Party shall then have the right,
at its expense and with counsel of its choice, to defend, contest, or otherwise
protect against any such Action. The Indemnified Party shall also have the
right, but not the obligation, to participate at its own expense in the defense
thereof with counsel of its choice. The Indemnified Party shall cooperate to the
extent reasonably necessary to assist the Indemnifying Party in defending,
contesting or otherwise protesting against any such Action provided that the
reasonable cost in doing so shall be paid by the Indemnifying Party. If the
Indemnifying Party fails within thirty (30) days after receipt of such notice
(a) to notify the Indemnified Party of its intent to defend, or (b) to defend,
contest, or otherwise protect against such suit, action, investigation, claim or
proceeding, or fails to diligently continue
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to provide such defense after undertaking to do so, the Indemnified Party shall
have the right, upon ten (10) days' prior written notice to the Indemnifying
party, to defend, settle and satisfy any such suit, action, claim, investigation
or proceeding and recover the costs of the same from the Indemnifying Party.
ARTICLE XVIII
CONFIDENTIALITY
18.1 Confidentiality. Each party agrees that during the Term, and,
notwithstanding any other provision herein, for a period of five (5) years
thereafter (whatever the reason for termination), it will hold in confidence,
will not disclose to others and will not use for any purpose not contemplated by
this Agreement any technical or business information it obtains from the other
party in connection with this Agreement (collectively, the "Proprietary
Information"). These obligations shall not extend to any portion of the
Proprietary Information which:
(i) is known to the receiving party as documented by its
written records at the time of disclosure; or
(ii) is or becomes public or generally available to the public
through publication or otherwise but through no fault of the receiving party; or
(iii) corresponds in substance to information furnished to the
receiving party on a nonconfidential basis by a third party having a bona fide
right to do so and not having any confidential obligation, direct or indirect,
to the disclosing party with respect to same; or
(iv) corresponds to information furnished by the disclosing
party to any third party on a nonconfidential basis except in limited consumer
testing; or
(v) the receiving party can demonstrate was developed by the
receiving party independently of the disclosure of the Proprietary Information
by the disclosing party; or
(vi) is disclosed by the receiving party pursuant to a legal
requirement provided the receiving party has complied with the provisions set
forth in section (b) below.
18.2 External Disclosure. If a party becomes legally required to
disclose any of the Proprietary Information, it will give the other party prompt
notice of such requirement so that the other party may seek a protective order
or other appropriate
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remedy concerning such disclosure and will consult with the other party, if
requested to do so, regarding the nature and extent of such disclosure.
18.3 Internal Disclosure. The parties agree that they will make the
Proprietary Information received available to persons within their organizations
only on a "need to know" basis and that all persons to whom such Proprietary
Information is made available will be made aware of the confidential nature of
the Proprietary Information and the restrictions comprised hereunder.
ARTICLE XIX
TERMINATION
19.1 Termination. This Agreement shall terminate upon the occurrence of
any of the following events or conditions, which termination shall automatically
occur where termination by a specified party is not indicated and shall occur by
action of the specified party where so indicated:
(i) The expiration of the Term;
(ii) The breach by either party of any provision of this
Agreement which is not cured within thirty (30) days from the date of written
notice delivered to the defaulting party in the case of a payment default, and
within ninety (90) days from the date of such notice in all other cases;
provided, however, that only the aggrieved party can terminate this Agreement
pursuant to this subsection (ii);
(iii) The mutual written agreement of the parties to this
Agreement;
(iv) The occurrence of any of the following:
(A) the purchase by a Person of all or substantially
all of the assets of B&L or InSite; or
(B) the purchase by a Person of that number of shares
of the voting capital stock and/or securities convertible into
voting capital stock of B&L or InSite that after such purchase
will give such Person more than fifty percent (50%) of the
voting capital stock of B&L or InSite, determined on a fully
diluted basis; or
(C) a merger or consolidation of B&L or InSite with or
into another Person other than an Affiliate of B&L or InSite
in which such party is not the survivor or in control thereof;
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provided, however, that only the party who is not directly involved in such
transaction may terminate this Agreement and then only if it does so by written
notice delivered to the other party or parties within thirty (30) days from the
date of its receipt of written notice from the other party or parties advising
it of the anticipated closing date for the closing of such transaction and the
name of the Person acquiring such assets or stock or involved in such merger or
consolidation, which notice from the other party shall be delivered not later
than thirty (30) days prior to the actual closing of the transaction; or
(v) The filing of a bankruptcy petition by or against a party
or the appointment of a receiver for the assets or business of a party that is
not dismissed within sixty (60) days from the date of such filing or
appointment.
19.2 Effect of Termination. Within 30 days following the effective date
of termination of this Agreement, B&L will provide InSite with a detailed
accounting of (i) the amount of raw materials, components and printed materials
held by B&L for manufacturing into Product under this Agreement, (ii) the amount
of Product in the process of being manufactured by B&L for InSite under this
Agreement and (iii) the amount of finished Product then held in inventory by B&L
(including Product which has not be subjected to B&L's quality assurance testing
procedures) under this Agreement. Unless otherwise mutually agreed by the
parties prior to the effective date of termination or as otherwise set forth in
this Agreement, B&L shall deliver to InSite or to such other person or place as
InSite shall direct in writing, at InSite's sole cost and expense (except at
B&L's sole cost and expense, if InSite terminated the Agreement for cause), all
raw materials and Product described above and InSite shall pay B&L, within 30
days of such delivery, the Product Price owing to B&L for finished Product,
Manufacturing Costs for work in process, and B&L's verifiable out-of-pocket
costs incurred in connection with unused inventories of packaging components and
raw materials. No termination of this Agreement shall have any effect on, or
relieve either party from, the obligation to make any payment or perform any act
arising prior to the effective date of termination.
ARTICLE XX
RESOLUTION OF DISPUTES
Except as otherwise specifically provided herein, in the event of any
dispute or difference arising out of or relating to this Agreement or the
performance or failure of performance hereunder, such dispute or difference
shall, at the written request of either party be submitted to the Chief
Executive Officers of each party or another executive officer of a party
designated by the Chief Executive Officer as his or her representative for such
purpose. The Chief Executive Officer or designated representatives, as the case
may be, shall meet within thirty (30) days from the date of such written request
to attempt to resolve the dispute. If the Chief Executive Officers or designated
representatives, as the case may be, are able to resolve the dispute, the
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resolution shall be set forth in a written instrument signed by each of them. If
the Chief Executive Officers or designated representatives, as the case may be,
are not able to resolve the dispute within such thirty (30) day time period or
within such extended period as mutually agreed to by them, such dispute or
difference shall be submitted upon the mutual agreement of each of them, to
binding arbitration pursuant to the expedited procedures of and in accordance
with the rules of the American Arbitration Association.
The arbitrator shall be mutually selected by the parties or, if they
cannot agree on such selection, each party shall designate one arbitrator to
represent it in the selection process and the two arbitrators shall appoint a
third arbitrator who shall arbitrate such dispute or difference. Such selection
process shall be completed within sixty (60) days from the end of the period or
extended period during which the Chief Executive Officers have responsibility
for attempting to resolve such dispute. The disputed matter shall be arbitrated
at such location as the parties shall mutually designate or, if they are not
able to agree on such location, at a location selected by the arbitrator or the
third arbitrator, as the case may be. The arbitrator or third arbitrator
selected, as the case may be, shall, if reasonably possible, be one who is
familiar with the commercial and manufacturing practices of the pharmaceutical
industry.
The arbitrator's award shall be final and binding on the parties hereto
and enforceable by either party in any court of competent jurisdiction. The fees
and expenses of the arbitrator shall be shared equally by the parties hereto.
The right to enforce arbitration under this Article shall take precedent over
the right to terminate this Agreement and any exercise of the right of
termination pursuant thereto shall itself by subject to arbitration under this
Article upon mutual agreement of the parties.
ARTICLE XXI
FORCE MAJEURE
Except for the obligation of each party hereunder to make payments to
the other party (which shall not be deferred or extended for any reason),
neither party to this Agreement shall be responsible to the other party for any
failure to perform or delay in performing if such failure or delay is due to any
strike, riot, civil commotion, sabotage, embargo, war or act of God or other
cause beyond its reasonable control. Likewise, neither party shall be
responsible for any failure to perform or delay in performing due to inability
to obtain deliveries where such inability is caused by the supplier of such
party.
ARTICLE XXII
GENERAL PROVISIONS
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22.1 Assignment. Neither party may assign any of its rights or
obligations under this Agreement to other than an Affiliate without the prior
written consent of the other. Any such attempt to assign this Agreement without
such consent shall be deemed a default by the assigning party under this
Agreement.
22.2 Notices. Any notice, request, instruction or other communication
required or permitted to be given under this Agreement shall be in writing and
shall be given by sending such notice properly addressed to the other party's
address shown below (or any other address as either party may indicate by notice
in writing to the other from time to time) (i) by hand or by prepaid registered
or certified mail, return receipt requested, in either of such cases which
notice shall be deemed delivered upon receipt, (ii) via telecopy or telegram, in
either of such cases which notice shall be deemed delivered upon receipt, or
(iii) via nationally recognized overnight courier, in which case such notice
shall be deemed delivered upon receipt. All such notices shall be deemed given
when received.
If to InSite: InSite Vision Incorporated
965 Atlantic Avenue
Alameda, California 94501
Attention: Chief Executive Officer
with a copy to: Brobeck, Phleger & Harrison LLP
2200 Geng Road
Two Embarcadero Place
Palo Alto, California 94303
Attention: J. Stephan Dolezalek, Esq.
If to B&L: Bausch & Lomb Pharmaceuticals, Inc.
8500 Hidden River Parkway
Tampa, Florida 33637
Attention: President
with a copy to: Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604
Attention: General Counsel
22.3 Publicity. Except to the extent required by law or deemed
appropriate by legal counsel to comply with securities laws, including the
furnishing of a press release and the filing of such documents and information
with the Securities and Exchange Commission as may be required by federal
securities laws and the filing of any report, statement or document required by
any other federal or state regulatory body, neither party to this Agreement
shall publish, disclose or otherwise announce the
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existence of this Agreement or the terms hereof without the consent of the other
party, which consent shall not be unreasonably withheld.
22.4 Waiver. The failure of either party to terminate or seek redress
for a breach of, or to insist upon strict performance of any term, covenant,
condition or provision contained in, this Agreement shall not prevent a similar
subsequent act from constituting a breach of this Agreement.
22.5 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
22.6 Independence of Parties. B&L and InSite shall at all times act as
independent parties without the right or authority to bind the other with
respect to any agreement, representation or warranty made with or to any third
party. Except as otherwise stated herein, B&L and InSite each shall be
responsible for all costs, expenses, taxes and liabilities arising from the
conduct of its own business, as well as from the activities of its officers,
directors, agents or employees, and each shall hold harmless and indemnify the
other from any such obligations.
22.7 Audit. B&L shall keep accurate books and records (for a period of
two (2) years from creation) reflecting fully and adequately Manufacturing
Costs, Warehousing Costs and Other Costs under this Agreement, in sufficient
detail to permit verification thereof. During the Term of this Agreement and for
a period of two (2) years thereafter, B&L will permit these books and records to
be examined and copied from time to time upon reasonable prior written notice,
during normal working hours by InSite or any representative of InSite. Such
examination shall be made at InSite's expense, except that if such examination
discloses a discrepancy of 5% or more in any amount due InSite under this
Agreement, B&L shall reimburse InSite for the out-of-pocket cost of such
examination, including any reasonable professional fees and expenses incurred by
InSite. In connection with any examination or copying of books and records in
accordance with this Section , InSite or such representative of InSite shall
examine only such information as is required to verify B&L's compliance under
this Agreement. InSite agrees to cause each representative to hold all such
information in confidence and not use such information for any purpose other
than for purposes of assisting InSite in the enforcement of its rights under
this Agreement.
22.8 Entire Agreement. This Agreement contains the entire and only
agreement between the parties with respect to the manufacture and sale of the
Product and no oral statements or representations or written matter not
contained in this Agreement shall have any force or effect. This Agreement shall
not be amended or modified in any way except by a writing executed by authorized
representatives of both parties.
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22.9 Partial Invalidity. If any portion of this Agreement is determined
to be illegal or otherwise unenforceable by agreement of the parties, by an
arbitrator, by a court of competent jurisdiction or by an administrative agency
of competent jurisdiction, such section, to the extent permitted by law, shall
be treated as deleted from this Agreement and the remaining portions of this
Agreement shall continue to be in full force and effect according to the terms
hereof.
22.10 Headings. The headings and captions used in this Agreement are
for the convenience of reference only and shall not be construed as part of this
Agreement or as a limitation on the scope of any provisions of this Agreement.
22.11 Other Products. The parties may, from time to time, agree to add
one or more additional products for manufacture and supply pursuant to this
Agreement. Such additional products shall be added to this Agreement upon
completion and execution of an annex which describes the particular product, the
specifications therefor, the materials (including active drug substance and
other materials) to be supplied by InSite and B&L, respectively, and the
purchase price of such additional products. Except as set forth in the annex
described above, the rights, duties and obligations of the parties relating to
such additional products shall be governed by the terms of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have set their hands and seals
on the date written at the beginning hereof.
INSITE VISION INCORPORATED BAUSCH & LOMB
PHARMACEUTICALS, INC.
By: /s/ S.K. CHANDRASEKARAN By: /s/ ALAN P. DOZIER
------------------------------- --------------------------------
Its: Chief Executive Officer Its: President
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APPENDIX A
DESCRIPTION OF EQUIPMENT
Automatic Liquid Packaging (ALP) 624 filling machine and related spare parts
Lee Industries 500-Liter 316L stainless steel pressure/vacuum kettle
Heavy Duty Lightnin mixer (mdl UND-2A)
Twenty Four Cavity Mold 1 ML Vial
Sanitary rupture disc; Viton gasket, burst pressure
Sanitary Pressure Transmitter
Mark 62 Pressure Regulator