EXHIBIT 10.2
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by [***], have been
separately filed with the Securities and Exchange Commission.
INVESTMENT AND COMMISSION AGREEMENT
This Investment and Commission Agreement (the "Agreement") is made as of
December 10, 2001, by and between Discovery Laboratories, Inc., a Delaware
corporation ("Discovery"), and PharmaBio Development, Inc., a North Carolina
corporation ("PharmaBio").
Background and Overview
A. Discovery and Quintiles Transnational Corp. ("Quintiles"), an Affiliate of
PharmaBio, have executed a Commercialization Agreement (herein so called)
on the date hereof, pursuant to which Quintiles will provide exclusive
Commercialization Services in the Territory for the Product.
B. Discovery and PharmaBio have agreed that PharmaBio will fund the payments
for the Commercialization Services, pursuant to the terms and conditions
set forth herein.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1.0 Definitions.
1.1 "Affiliate" shall mean, as to any person or entity, any corporation or
business entity controlled by, controlling, or under common control with
such party or entity. For this purpose, "control" shall mean direct or
indirect beneficial ownership of at least fifty percent (50%) of the
voting stock or income interest in such corporation or other business
entity.
1.2 "Annual Period" shall mean a twelve-month period beginning on the Launch
Date and each anniversary thereof.
1.3 "Commercialization Expenses" shall mean the fees and expenses payable to
Quintiles for the Commercialization Services.
1.4 "Commercialization Services" shall mean (i) sales and marketing services
provided by Quintiles under the Commercialization Agreement after the
Launch Date (including, but not limited to, services provided after the
Launch Date related to the deployment and management of a dedicated sales
force for the promotion of the Product), and (ii) services provided under
the Commercialization Agreement before the Launch Date for the following
specific activities: (x) recruitment, hiring and training for the sales
force; (y) establishing sales force targets, territory alignments, mapping
and sales
force optimization, and validation of practitioner's state license; and
(z) conducting launch meetings and the national, regional and district
meetings.
1.5 "Commission Term" means the ten (10) consecutive Annual Periods beginning
on the Launch Date.
1.6 "FDA" shall mean the US Food and Drug Administration.
1.7 "JCC" shall mean the joint commercialization committee established under
the Commercialization Agreement. If for any reason the Commercialization
Agreement is terminated or the JCC is otherwise disbanded under the
Commercialization Agreement, then Discovery and PharmaBio shall in good
faith, as promptly as practicable, form an advisory body composed of an
equal number of designees of Discovery and PharmaBio (the "Advisory
Board"); provided, that Discovery shall have at least the same rights and
authority with respect to such advisory body as it had with respect to the
JCC (and PharmaBio shall have at least the same rights and authority with
respect to such advisory body as Quintiles had with respect to the JCC).
In such event, (i) the Advisory Board shall perform all of the obligations
under this Agreement that would otherwise have been performed by the JCC,
and all references to the JCC herein shall thereafter be deemed references
to the Advisory Board, and (ii) PharmaBio shall appoint members to the
Advisory Board who are at least as experienced in pharmaceutical marketing
and sales activities as Quintiles' members of the JCC.
1.8 "Launch Date" shall mean the date upon which the Product is first shipped
in the United States for commercial sale.
1.9 "Maximum Investment" shall mean $10,000,000 per year for each of the seven
(7) years following the Launch Date. (All dollar references in this
Agreement shall refer to United States Dollars).
1.10 "Minimum Sales Force Level" shall mean the sales force size for the
Product recommended by the JCC from time to time as provided for in the
Commercialization Agreement (provided that, for purposes of such
calculation, the recommended sales force size will not exceed the sales
force size that could be reasonably supported by the amount of
Commercialization Expenses funded by PharmaBio under this Agreement). If
the parties are not able to unanimously agree to such sales force size
calculation, then such calculation shall be made in accordance with the
dispute resolution process set forth in Section 11 of this Agreement.
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1.11 "Net Sales" means the amount billed by Discovery or an Affiliate or any
sublicensee, or on behalf of or for the benefit of Discovery or an
Affiliate or any sublicensee, for sales of the Product to a third party in
the Territory less: (i) discounts, including cash and quantity discounts,
charge-back payments, refunds and rebates granted to managed health care
or similar organizations or to federal, state and local governments
(including, without limitation, Medicaid rebates), their agencies, and
purchasers and reimbursers or to trade customers, including but not
limited to, wholesalers and chain and pharmacy buying groups, (ii) credits
or allowances actually granted upon claims, damaged goods, rejections or
returns of such Product, including recalls, regardless of the party
requesting such, (iii) freight, postage, shipping and insurance charges
actually allowed or paid for delivery of Product, to the extent billed,
(iv) taxes, duties or other governmental charges levied on, absorbed or
otherwise imposed on sale of such Product, including without limitation
value-added taxes, or other governmental charges otherwise measured by the
billing, when included in billing, as adjusted for rebates, charge-backs
and refunds, and (v) bad debts related to Product sales (defined as any
bills unpaid for 120 days after due), provided that (a) any subsequent
collection by Discovery on such bad debt shall be restored as Net Sales at
the time of collection, and in the amount, of such collection, and (b)
Discovery shall follow commercially reasonable practices of collecting and
otherwise administering debt related to Product sales. Provided, however,
in no event shall Net Sales be less than [***] of the gross sales of the
Product in the Territory.
1.12 "Product" shall mean the product currently known as Surfaxin, as such name
may change from time to time, for any and all formulations and delivery
mechanisms (i) for the indications of (x) idiopathic respiratory distress
syndrome ("IRDS") and (y) meconium aspiration syndrome ("MAS"); and (ii)
solely for the purposes of Section 1.11, include all "off-label" uses.
1.13 "Territory" shall mean the United States (including Puerto Rico).
2.0 Commercialization Agreement.
The Commercialization Agreement is in the form attached hereto as Exhibit
A. All defined terms used herein but not defined in this Agreement shall
have the meanings set forth in the Commercialization Agreement.
Information marked by [***] has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
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3.0 Investment and Commission; Related Agreements.
3.1 PharmaBio will support the commercialization of the Product as follows:
(a) PharmaBio shall fund one hundred percent (100%) of the
Commercialization Expenses for the period ending on the seventh
anniversary of the Launch Date (the "Commitment Period"), subject to
the Maximum Investment for each such year and the other terms and
conditions in this Agreement.
(b) PharmaBio shall fund the amounts payable under Section 3.1(a) by
paying the invoices submitted by Quintiles that correspond to the
applicable Commercialization Expenses that accrue during the
Commitment Period, which payments shall be made by PharmaBio within
twenty (20) days of PharmaBio's receipt of the invoice. As directed
by Discovery, PharmaBio shall make such payment through either (i) a
payment to Discovery, or (ii) an inter-company payment directly to
Quintiles.
3.2 In consideration for the performance of PharmaBio of its funding
commitments set forth in Section 3.1, Discovery shall pay PharmaBio a
commission on Net Sales during the Commission Term. The commission
payments payable by Discovery to PharmaBio with respect to each Annual
Period are as follows:
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Annual Period during the Commission on Net
Commission Term Sales
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1 [***]
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2 [***]
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3 [***]
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4 [***]
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5 [***]
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6 [***]
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7 [***]
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8 [***]
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9 [***]
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10 [***]
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The commission payments under this Section 3.2 shall be paid as soon as
reasonably practicable following the end of each calendar quarter (but not
later than thirty (30) days following the end of each calendar quarter)
during the ten (10) Annual Periods in the Commission Term.
Information marked by [***] has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
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3.3 The JCC shall take the following actions a reasonable time prior to the
Launch Date: (i) prepare a marketing plan for the Product, including a
sales forecast; (ii) agree to the Commercialization Services reasonably
necessary to support sales of the Product in the Territory at the levels
set forth in such sales forecast (including the optimum sales force size
to support such sales of the Product); and (iii) agree to a related budget
for Commercialization Expenses. On or about each anniversary of the Launch
Date, the JCC shall update such items. The above actions will be taken by
the JCC with due regard to the size and value of the market for the
Product in the Territory, taking into account, among other variables, the
clinical safety and efficacy of the Product (and related labeling claims),
the competitive environment in which the Product is being promoted, and a
reasonable budget for the sales and marketing activities. Notwithstanding
anything to the contrary in this Agreement or the procedures for JCC
decisions set forth in the Commercialization Agreement, the parties agree
to the following:
(a) Discovery shall have the final decision on the marketing plan for
the Product and the activities (including the Commercialization
Services) necessary to implement such marketing plan.
(b) Notwithstanding anything to the contrary in this Agreement,
PharmaBio shall have the final decision on the amount of
Commercialization Expenses that will be funded by PharmaBio under
Section 3.1 of this Agreement, provided that PharmaBio shall not act
unreasonably or in bad faith in determining such amount. For
purposes of the preceding sentence, PharmaBio shall be deemed to
have acted unreasonably or in bad faith if PharmaBio sets the amount
of Commercialization Expenses that PharmaBio is willing to fund
under Section 3.1 at a level that cannot reasonably be justified in
light of the size and value of the market for the Product.
Notwithstanding anything to the contrary in this Agreement,
PharmaBio cannot be deemed to have acted unreasonably or in bad
faith for purposes of this Section 3.3(b) by failing to fund
Commercialization Expenses in excess of the Maximum Investment.
Further, PharmaBio shall not be deemed to have acted unreasonably or
in bad faith for purposes of this Section 3.3(b) by failing to fund
Commercialization Expenses (or suspending such funding) upon certain
events impacting the marketing of the Product that are not within
PharmaBio's control, which is defined as: (i) a material breach by
Discovery of any obligation or representation or warranty under this
Agreement; (ii) withdrawal of Product caused by actual or threatened
regulatory action by the FDA or other governmental entity, safety
concerns relating to Product, the loss of Discovery's license rights
or other rights to Product, or similar cause; (iii) significant
unforeseen new information regarding the safety or efficacy of
Product which has a material adverse effect on the sales of Product;
or (iv) other material factors adversely impacting Net Sales of the
Product that were not reasonably foreseeable by, or within the
control of, PharmaBio as of the date hereof. If PharmaBio shall
decide not to fund some amount of the Commercialization Expenses,
then (i) Discovery shall be entitled to fund such amounts
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directly, and (ii) subject to prior termination as provided for in
Section 7.0, PharmaBio's right to receive the commission payments
set forth in Section 3.2 shall not be reduced.
3.4 Discovery shall use commercially reasonable efforts to commercialize the
Product in the Territory. In this regard, Discovery will provide a sales
force of a size not less the Minimum Sales Force Level during the
Commitment Period. If, at any time during such period, Discovery reduces
the Product sales force below the Minimum Sales Force Level for a period
of more than [***], then Discovery and PharmaBio will negotiate in good
faith to restructure PharmaBio's commitments under Section 3.1 and the
corresponding commission amounts under Section 3.2 , which negotiations
will take into account the implications of the reduced sales force size on
future sales of the Product. If the parties are unable to agree to such
restructuring within thirty (30) days after PharmaBio gives written notice
to Discovery of its intent to pursue a remedy under this Section 3.4 for
Discovery's failure to maintain the Minimum Sales Force Level, then
PharmaBio may, at its sole discretion by written notice to Discovery,
elect to suspend the following: (i) all future funding obligations under
Section 3.1; and (ii) the running of the Commission Term (including,
without limitation, the then-current Annual Period). During the suspension
period, PharmaBio shall continue to receive royalties at the rate equal to
the commission amount applicable immediately prior to the effective date
of the suspension period. If PharmaBio elects this remedy, the then
operating Annual Period for commission payments under Section 3.2, and the
funding commitments under Section 3.1, shall be suspended until the
Minimum Sales Force Level is satisfied. Such Annual Period, and the
funding commitments under Section 3.1, shall restart when the Minimum
Sales Force Level is satisfied, at the same time point such Annual Period
was suspended, such that PharmaBio enjoys the full length of the ten (10)
Annual Periods described in Section 3.2 with the benefit of the Minimum
Sales Force Level for seven (7) full twelve-month periods, and the term
"Commission Term" shall, for all purposes under this Agreement, be
extended accordingly. PharmaBio's remedies under this Section 3.4 shall
not apply for any period that Quintiles fails to satisfy its sales force
staffing obligations under the Commercialization Agreement.
Notwithstanding anything herein to the contrary, PharmaBio's rights under
this Section 3.4 shall be expressly subject to the provisions of Section
3.5.
3.5 In the event that Discovery terminates the Commercialization Agreement
under Section 12.3 thereof, then:
(a) Discovery shall use commercially reasonable efforts in good faith to
identify, retain and train a new sales force (the "New Sales Force")
as soon as practicable to perform substantially similar functions as
were to have been provided by Quintiles under the Commercialization
Agreement;
Information marked by [***] has been omitted pursuant to a request for
confidential treatment. The omitted portion has been separately filed with the
Securities and Exchange Commission.
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(b) During the period (the "Transition Period") beginning on the
effective date of Discovery's termination of the Commercialization
Agreement and ending on the first day of the month next following
the date on which the New Sales Force begins detailing physicians:
(i) Discovery's obligation to provide the Minimum Sales Force
Level shall be suspended;
(ii) PharmaBio shall have none of the suspension or other remedial
rights that it would otherwise have under Section 3.4 as a
result of Discovery's failure to provide the Minimum Sales
Force Level or otherwise;
(iii) in lieu of the commission rate set forth in Section 3.2,
Discovery's commission obligation to PharmaBio hereunder shall
equal the product of (A) the commission rate set forth in
Section 3.2 multiplied by (B) the percentage that Net Sales is
during the Transition Period of projected Net Sales for the
Transition Period (based on the JCC's most recent Net Sales
forecast, prorated, to the extent necessary, on a reasonable,
good faith basis); and
(iv) the Commission Term shall continue to run during the
Transition Period such that it will continue to expire on the
tenth (10th) anniversary of the Funding Date.
(c) PharmaBio's funding commitments under Section 3.1 shall continue in
full force and effect, and all references hereunder to Quintiles
shall be deemed to refer to the New Sales Force (and all references
to (i) the Commercialization Agreement hereunder shall be deemed to
refer to the agreement, if any, pursuant to which Discovery retains
the New Sales Force and (ii) Quintiles hereunder shall be deemed to
refer to the New Sales Force or the contract provider of the New
Sales Force, as applicable).
3.6 As of the date hereof, the parties have entered into a Common Stock and
Warrant Purchase Agreement. The representations and warranties set forth
in Article IV of the Stock Purchase Agreement with respect to Discovery
(excluding Sections 4.02, 4.14 through 4.18 and 4.20, and after modifying
Section 4.04 so that "Transaction Documents" shall mean this Agreement)
and in Article V with respect to PharmaBio (excluding Section 5.03 through
5.06 and after modifying Section 5.02 so that "Transaction Documents"
shall mean this Agreement) are incorporated in this Agreement by reference
and form part of the consideration given to each party in exchange for the
other party's commitments set forth herein. Discovery agrees to continue
to exercise diligent efforts to submit the NDA (as defined in the
Commercialization Agreement) for the Product to the FDA and to reasonably
diligently seek FDA approval for the Product. Upon the approval of either
the MAS or the IRDS indication, Discovery shall continue to use
commercially reasonable
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efforts to submit the NDA for the other indication to the FDA and to seek
FDA approval of such.
3.7 Each Party shall keep or cause to be kept such records as are required to
determine, in a manner consistent with generally accepted accounting
principles in the United States, the sums or credits due under this
Agreement. Upon the written request of either party, the other party shall
permit an independent certified public accountant appointed by such party
and reasonably acceptable to the other party, accompanied by
representatives of the financial department of such party at reasonable
times and upon reasonable notice, to audit only those records as may be
necessary to determine the correctness or completeness of any report or
payment made under this Agreement. Results of any such audit shall be (i)
limited to information relating to the Product, (ii) made available to
both parties and (iii) subject to the confidentiality protections set
forth herein. The party requesting the audit shall bear the full cost of
the performance of any such audit, unless such audit discloses a variance
of more than five percent (5%) from the amount of the original report,
royalty or payment calculation. In such case, the party being audited
shall bear the full cost of the performance of such audit.
3.8 Without the prior approval of PharmaBio, Discovery shall not, nor shall it
allow any Affiliate or third party acting on behalf of or for the benefit
of Discovery or any Affiliate to, commercialize a product that would
reasonably be expected to compete with the Product in the Territory during
the Commission Term.
3.9 The parties acknowledge and agree that (i) Discovery may pursue additional
formulations and/or delivery technologies for the Product, which may
result in pre-launch and launch promotional activities for the additional
formulations and/or delivery technologies, (ii) such pre-launch and launch
promotional activities are within the scope of the Commercialization
Agreement, and (iii) the expenses associated with such pre-launch and
launch promotional activities will be considered "Commercialization
Expenses" for purposes of this Agreement and shall be subject to
PharmaBio's funding obligations hereunder in accordance with the terms and
limitations set forth herein.
3.10 PharmaBio shall make milestone payments to Discovery pursuant to the terms
set forth in this Section 3.10. The "First Milestone" (herein so called)
shall be paid on the earlier to occur of the receipt of FDA approval ("FDA
Approval") to commercialize (x) the MAS Indication or (y) the IRDS
Indication. The amount of the First Milestone shall be seventy percent
(70%) of the outstanding principal (as of the controlling FDA Approval)
under the Loan Agreement (herein so called), dated as of the date hereof,
between PharmaBio and Discovery. The "Second Milestone" (herein so called)
shall be paid on the earlier to occur of (x) the completion by Quintiles
or an appropriate Affiliate of a written assessment and report in
customary form indicating the "approvability" by the FDA of Discovery's
NDA for the Product for the indication that was not approved as a
condition for the First Milestone, which shall include without limitation
an assessment and report as to the quality of the documentation comprising
such NDA and the clinical data included in such NDA, or
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(y) the issuance by the FDA of a letter in customary form indicating that
Discovery's NDA for the Product for such indication is "approvable." The
amount of the Second Milestone payment shall be the remaining principal
amounts outstanding under the Loan Agreement. PharmaBio shall have the
right to apply the First Milestone and Second Milestone payments against
any amounts then outstanding under the Loan Agreement.
4.0 Confidentiality and Ownership of Information.
4.1 Discovery on the one part and PharmaBio on the other part each
acknowledges that, in the course of performing its obligations hereunder,
it may receive information from the other party which is proprietary to
the disclosing party and which the disclosing party wishes to protect from
public disclosure ("Confidential Information"). Each receiving party
agrees to retain in confidence, during the Commission Term, and thereafter
for a period of seven (7) years, all Confidential Information disclosed to
it by or on behalf of the other party, and that it will not, without the
written consent of such other party, use Confidential Information for any
purpose other than the purposes indicated herein. These restrictions shall
not apply to Confidential Information which: (i) is or becomes public
knowledge (through no fault of the receiving party); (ii) is made lawfully
available to the receiving party by an independent third party that, to
the knowledge of the receiving party, is under no duty of confidentiality
to the disclosing party; (iii) is already in the receiving party's
possession at the time of receipt from the disclosing party (and such
prior possession can be demonstrated by competent evidence by the
receiving party); (iv) is independently developed by the receiving party
and/or Affiliates (and such independent development can be demonstrated by
competent evidence by the receiving party); or (v) is required by law,
regulation, rule, act or order of any governmental authority or agency to
be disclosed by the receiving party, provided, however, if reasonably
possible, such receiving party gives the disclosing party sufficient
advance written notice to permit it to seek a protective order or other
similar order with respect to such Confidential Information and,
thereafter, the receiving party discloses only the minimum Confidential
Information required to be disclosed in order to comply.
4.2 PharmaBio on the one hand and Discovery on the other hand shall limit
disclosure of the other party's Confidential Information to only those of
their respective officers, representatives, agents and employees
(collectively "Agents") who are directly concerned with the performance of
this Agreement and have a legitimate need to know such Confidential
Information in the performance of their duties.
4.3 All Discovery inventions, processes, know-how, patents, trade secrets,
copyrights, trade names, trademarks, service marks, marketing materials,
proprietary materials or other intellectual property of any kind, and all
improvements to any of the foregoing (collectively, "Discovery Property"),
disclosed, used, improved, modified or developed in connection with the
relationship contemplated by this Agreement shall remain the sole and
exclusive property of Discovery. PharmaBio shall not have any right, title
or interest in or to any Discovery Property.
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4.4 Discovery acknowledges that PharmaBio (and its Affiliates) possess certain
inventions, processes, know-how, trade secrets, improvements, other
intellectual properties and other assets, including but not limited to
analytical methods, procedures and techniques, computer technical
expertise and software, and business practices, including, but not limited
to the Innovex Territory Management System (ITMS), which have been
independently developed by PharmaBio and/or its Affiliates (collectively
"Quintiles Property"). Any Quintiles Property or improvements thereto
which are disclosed, used, improved, modified or developed by Quintiles
under or during the term of this Agreement shall remain the sole and
exclusive property of PharmaBio or the respective Affiliates.
5.0 Independent Contractor Relationship.
For the purposes of this Agreement, Discovery and PharmaBio are
independent contractors and nothing contained in this Agreement shall be
construed to place them in the relationship of partners, principal and
agent, employer and employee or joint venturers. Neither Discovery nor
PharmaBio shall have the power or right to bind or obligate the other
party, nor shall either party hold itself out as having such authority.
6.0 Termination.
Either party may terminate this Agreement for material breach upon thirty
(30) days written notice specifying the nature of the breach, if such
breach (i) has not been substantially cured within the thirty (30) day
period or (ii) is not curable within such 30-day period and the breaching
party has not commenced and diligently continued during such 30-day period
reasonable actions to cure such breach. During the 30-day cure period for
termination due to breach, each party will continue to perform its
obligations under this Agreement. Either party may terminate this
Agreement immediately upon provision of written notice if the other party
becomes insolvent or files for bankruptcy or is not otherwise able to pay
its obligations as they become due and payable.
7.0 Indemnification and Liability Limits.
7.1 PharmaBio shall indemnify, defend and hold harmless Discovery, its
Affiliates and its and their respective directors, officers, employees and
agents from and against any and all losses, claims, actions, damages,
liabilities, penalties, costs and expenses (including reasonable
attorneys' fees and court costs) (collectively, "Losses"), resulting from
any: (i) material breach by PharmaBio (or its employees) of its
obligations hereunder; (ii) willful misconduct or grossly negligent acts
or omissions of PharmaBio or its employees; and (iii) material violation
by PharmaBio or its employees of any municipal, county, state or federal
laws, rules or regulations applicable to the performance of PharmaBio's
obligations under this Agreement; except, in each case, to the extent such
Losses are determined to have resulted from the gross negligence or
willful misconduct of Discovery or its employees.
7.2 Discovery shall indemnify, defend and hold harmless PharmaBio and its
Affiliates and their respective directors, officers, employees and agents
from and against any and all
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Losses resulting from: (i) any third party claim arising from the
manufacture, storage, packaging, production, transportation, distribution,
use, sale or other disposition of the Product; (ii) material breach by
Discovery (or its employees) of its obligations hereunder; (iii) willful
misconduct or grossly negligent acts or omissions of Discovery or its
employees; and (iv) material violation by Discovery or its employees of
any municipal, county, state or federal laws, rules or regulations
applicable to the performance of Discovery's obligations under this
Agreement, except, in each case, to the extent such Losses are determined
to have resulted from the gross negligence or willful misconduct of
PharmaBio or any of its employees.
7.3 In the event of a third party claim or lawsuit, the party seeking
indemnification hereunder (the "Indemnified Party") shall give the party
obligated to indemnify (the "Indemnifying Party") prompt written notice of
any claim or lawsuit (including a copy thereof), provided that the failure
of an Indemnified Party to notify the Indemnifying Party on a timely basis
will not relieve the Indemnifying Party of any liability that it may have
to the Indemnified Party unless the Indemnifying Party demonstrates that
the defense of such action is materially prejudiced by the Indemnified
Party's failure to give such notice. The Indemnified Party and its
employees shall fully cooperate with Indemnifying Party and its legal
representatives in the investigation and defense of any matter the subject
of indemnification, which defense shall be managed by the Indemnifying
Party in a manner, including the selection of legal counsel, reasonably
acceptable to the Indemnified Party. The Indemnified Party shall not
unreasonably withhold its approval of the settlement of any such claim,
liability, or action by Indemnifying Party covered by this indemnification
provision; provided that such settlement does not include an admission or
acknowledgement of liability or fault of the Indemnified Party.
7.4 Neither PharmaBio nor Discovery, nor any of such party's Affiliates,
directors, officers, employees, subcontractors or agents shall have, under
any legal theory (including, but not limited to, contract, negligence and
tort liability), any liability to any other party hereto for any loss of
opportunity or goodwill, or any type of special, incidental, indirect or
consequential damage or loss, in connection with or arising out of this
Agreement. For the avoidance of doubt, a claim by PharmaBio for
commissions on Net Sales payable by Discovery hereunder or a claim by
Discovery for payments pursuant to Section 3.1 shall not be limited in any
way pursuant to the provisions set forth in the preceding sentence.
8.0 Notices.
Any notice required to be given by either party shall be in writing. All
notices shall be to the parties and addresses listed below, and shall be
deemed sufficiently given (i) when received, if delivered personally or
sent by facsimile transmission with confirmed receipt, or (ii) one
business day after the date mailed or sent by an internationally
recognized overnight delivery service with charges prepaid.
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If to PharmaBio: PharmaBio Development, Inc.
4709 Creekstone Drive
Durham, NC 27703
Attention: President
Fax: 919-998-2090
With a copy to: General Counsel
PharmaBio Development, Inc.
4709 Creekstone Drive
Durham, NC 27703
Fax: 919-998-2090
If to Discovery: Discovery Laboratories, Inc.
350 South Main Street, Suite 307
Doylestown, PA 18901
Attention: Robert J. Capetola, Ph.D., President and CEO
Fax: 215-340-3940
With a copy to: Roberts, Sheridan & Kotel
The New York Practice of
Dickstein Shapiro's Corporate & Finance Group
1177 Avenue of the Americas
New York, NY 10036-2714
Attn: Ira L. Kotel
Facsimile: (212) 835-1400
9.0 Assignment.
No party may assign any of its rights or obligations under this Agreement
to any third party without the written consent of the other party, except
that Discovery may assign its rights or obligations under this Agreement
to a bona fide third party that (i) acquires all of Discovery's business
(a "Permitted Sale") provided that such party assumes all of Discovery's
rights and obligations under this Agreement. Other than pursuant to a
Permitted Sale, Discovery may not, without the written approval of
PharmaBio, assign any of its rights in the Product in the Territory to a
third party. PharmaBio may at any time assign or transfer any of its
rights or obligations under this Agreement to an Affiliate so long as such
Affiliate agrees in an enforceable written instrument to be bound by all
the terms and conditions of this Agreement as if it were PharmaBio and a
party thereto, which instrument shall be delivered a reasonably
practicable time prior to such assignment. Nothing in this Section 9.0
shall preclude the transfer of a party's rights and obligations under this
Agreement in conjunction with a merger in which such party is not the
surviving entity.
10.0 General Provisions.
10.1 This Agreement shall be construed, governed, interpreted, and applied in
accordance with the laws of the State of Delaware, without giving effect
to the principles of conflict of laws.
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10.2 The provisions of Articles 1 (except for Section 1.7), 2, 45, 7, 8, 10 and
11 shall survive the termination of this Agreement for any reason.
10.3 This Agreement contains the entire understandings of the parties with
respect to the subject matter herein and cancels all previous agreements
(oral and written), negotiations and discussions dealing with the same
subject matter. The parties, from time to time during the term of this
Agreement, may modify any of the provisions hereof only by an instrument
in writing duly executed by the parties.
10.4 No failure or delay on the part of a party in either exercising or
enforcing any right under this Agreement will operate as a waiver of, or
impair, any such right. No single or partial exercise or enforcement of
any such right will preclude any other or further exercise or enforcement
thereof or the exercise or enforcement of any other right. No waiver of
any such right will have effect unless given in a signed writing. No
waiver of any such right will be deemed a waiver of any other right.
10.5 If any part or parts of this Agreement are held to be illegal, void or
ineffective, the remaining portions of this Agreement shall remain in full
force and effect. If any of the terms or provisions are in conflict with
any applicable statute or rule of law, then such term(s) or provision(s)
shall be deemed inoperative to the extent that they may conflict
therewith, and shall be deemed to be modified or conformed with such
statute or rule of law. In the event of any ambiguity respecting any term
or terms hereof, the parties agree to construe and interpret such
ambiguity in good faith in such a way as is appropriate to ensure its
enforceability and viability.
10.6 The headings contained in this Agreement are used only as a matter of
convenience, and in no way define, limit, construe or describe the scope
or intent of any section of this Agreement.
10.7 The individuals signing below are authorized and empowered to bind the
parties to the terms of this Agreement.
10.8 Whenever provision is made in this Agreement for either Party to secure
the consent or approval of the other, that consent or approval shall not
unreasonably be withheld or delayed, and whenever in this Agreement
provisions are made for one Party to object to or disapprove a matter,
such objection or disapproval shall not unreasonably be exercised. For the
avoidance of doubt, PharmaBio's funding decisions under Section 3.3(b)
shall not be deemed a "consent or approval" for purposes of this Section
10.8.
11.0 Dispute Resolution:
11.1 Governing Law. This Agreement, including, without limitation, the
interpretation, performance, enforcement, breach or termination thereof
and any remedies relating thereto, shall be governed by and construed in
accordance with the laws of the State
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of Delaware, United States of America, as applied to agreements executed
and performed entirely in the State of Delaware, without regard to
conflicts of law rules.
11.2 Internal Review. In the event that a dispute, difference, claim, action,
demand, request, investigation, controversy, threat, discovery request or
request for testimony or information or other question arises pertaining
to any matters which arise under, out of, in connection with, or in
relation to this Agreement (a "Dispute") and either party so requests in
writing, prior to the initiation of any formal legal action, the Dispute
will be submitted to the JCC, which will use its good faith efforts to
resolve the Dispute within ten (10) days. If the JCC is unable to resolve
the Dispute in such period, the JCC will refer the Dispute to the Chief
Executive Officers of Discovery and Quintiles Corp. For all Disputes
referred to the Chief Executive Officers, the Chief Executive Officers
shall use their good faith efforts to meet at least two times in person
and to resolve the Dispute within ten (10) days after such referral.
11.3 Arbitration.
(a) If the parties are unable to resolve any Dispute under Section 11.2,
then either party may require the matter to be settled by final and
binding arbitration by sending written notice of such election to
the other party clearly marked "Arbitration Demand". Thereupon such
Dispute shall be arbitrated in accordance with the terms and
conditions of this Section 11.3 Notwithstanding the foregoing,
either party may apply to a court of competent jurisdiction for a
temporary restraining order, a preliminary injunction, or other
equitable relief to preserve the status quo or prevent irreparable
harm.
(b) The arbitration panel will be composed of three arbitrators, one of
whom will be chosen by Discovery, one by Quintiles, and the third by
the two so chosen. If both or either of Discovery or Quintiles fails
to choose an arbitrator or arbitrators within 14 days after
receiving notice of commencement of arbitration, or if the two
arbitrators fail to choose a third arbitrator within 14 days after
their appointment, the American Arbitration Association shall, upon
the request of both or either of the parties to the arbitration,
appoint the arbitrator or arbitrators required to complete the
panel. The arbitrators shall have reasonable experience in the
matter under dispute. The decision of the arbitrators shall be final
and binding on the parties, and specific performance giving effect
to the decision of the arbitrators may be ordered by any court of
competent jurisdiction.
(c) Nothing contained herein shall operate to prevent either party from
asserting counterclaim(s) in any arbitration commenced in accordance
with this agreement, and any such party need not comply with the
procedural provisions of this Section 11.3 in order to assert such
counterclaim(s).
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(d) The arbitration shall be filed with the office of the American
Arbitration Association ("AAA") located in Wilmington, Delaware or
such other AAA office as the parties may agree upon (without any
obligation to so agree). The arbitration shall be conducted pursuant
to the Commercial Arbitration Rules of AAA as in effect at the time
of the arbitration hearing, such arbitration to be completed in a
sixty (60) day period. In addition, the following rules and
procedures shall apply to the arbitration:
(e) The arbitrators shall have the sole authority to decide whether or
not any Dispute between the parties is arbitrable and whether the
party presenting the issues to be arbitrated has satisfied the
conditions precedent to such party's right to commence arbitration
as required by this Section 11.3.
(f) The decision of the arbitrators, which shall be in writing and state
the findings the facts and conclusions of law upon which the
decision is based, shall be final and binding upon the parties, who
shall forthwith comply after receipt thereof. Judgment upon the
award rendered by the arbitrator may be entered by any competent
court. Each party submits itself to the jurisdiction of any such
court, but only for the entry and enforcement to judgment with
respect to the decision of the arbitrators hereunder.
(g) The arbitrators shall have the power to grant all legal and
equitable remedies (including, without limitation, specific
performance) and award compensatory damages provided by applicable
law, but shall not have the power or authority to award punitive
damages. No party shall seek punitive damages in relation to any
matter under, arising out of, or in connection with or relating to
this Agreement in any other forum.
(h) The parties shall bear their own costs in preparing for and
participating in the resolution of any Dispute pursuant to this
Section 11.3, and the costs of the arbitrator(s) shall be equally
divided between the parties; provided, however, that each party
shall bear the costs incurred in connection with any Dispute brought
by such party that the arbitrators determine to have been brought in
bad faith.
(i) Except as provided in the last sentence of Section 11.3(a), the
provisions of this Section 11.3 shall be a complete defense to any
suit, action or proceeding instituted in any federal, state or local
court or before any administrative tribunal with respect to any
Dispute arising with regard to this Agreement. Any party commencing
a lawsuit in violation of this Section 11.3 shall pay the costs of
the other party, including, without limitation, reasonable
attorney's fees and defense costs.
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11.4 Costs. The parties shall bear their own costs in preparing for and
participating in the resolution of any Dispute, and the costs of
mediator(s) and arbitrator(s) shall be equally divided between the
parties.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
through their duly authorized officers on the date(s) set forth below.
PHARMABIO DEVELOPMENT, INC. DISCOVERY LABORATORIES, INC.
By: /s/ Thomas C. Perkins By /s/ David L. Lopez
------------------------------- ---------------------------------
Name: Thomas C. Perkins Name: David L. Lopez
------------------------------- ---------------------------------
Title: Vice President and General Title: Vice President and
Counsel General Counsel
------------------------------- ---------------------------------
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