***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 240.24b-2
LICENSE AGREEMENT
BETWEEN
NOVARTIS CONSUMER HEALTH, INC.
AND
CIMA LABS., INC.
Dated: July 1, 1998
INDEX
PAGE
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2. GRANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
4. LICENSE FEES, MILESTONE PAYMENTS AND ROYALTIES. . . . . . . . . . . . . . . . .8
5. PAYMENT PROCEDURES, RECORDS, AUDITING . . . . . . . . . . . . . . . . . . . . 10
6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . 11
7. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8. TERM AND TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9. PATENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
10. INFRINGEMENT OF CIMA PATENT . . . . . . . . . . . . . . . . . . . . . . . . . 16
11. INFRINGEMENT OF THIRD PARTY RIGHTS. . . . . . . . . . . . . . . . . . . . . . 17
12. CIRCUMSTANCES FOR MANUFACTURE BY NCH. . . . . . . . . . . . . . . . . . . . . 18
13. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15. PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
17. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
18. SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
19. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
20. INDEPENDENT CONTRACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
21. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
22. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2
LICENSE AGREEMENT
This License Agreement (the "License Agreement") is made and entered into as
of this First day of July, 1998 ("Effective Date"), by and between Novartis
Consumer Health, Inc. (hereinafter referred to as "NCH"), a corporation
organized and existing under the laws of the State of Delaware, having an
office at 560 Morris Avenue, Summit, New Jersey 07901-1312, and CIMA LABS.,
Inc. (hereinafter referred to as "CIMA"), a corporation organized and
existing under the laws of the State of Delaware, having an office at 10000
Valley View Road, Eden Prairie, Minnesota 55344-9361.
WITNESSETH:
WHEREAS, CIMA owns or possesses rights to certain patents and know-how (CIMA
Patents and Know-How) and thus has the right to grant licenses with respect
to the technology covered under the patents and know-how; and
WHEREAS, CIMA wishes to grant to NCH a license under the CIMA Patents and
Know-How to make and have made (under specified circumstances), use, offer
for sale and sell Products (as hereinafter defined) in the Field (as
hereinafter defined) and in the Territory (as hereinafter defined); and
WHEREAS, NCH desires to acquire a license under said CIMA Patents and
Know-How, on the terms and subject to the conditions set forth herein; and
WHEREAS, NCH has substantial expertise and experience in the development,
commercialization and marketing of human pharmaceutical products; and
WHEREAS, the parties simultaneously herewith are entering into a Supply
Agreement (the "Supply Agreement") with respect to the supply by CIMA to NCH
of NCH's commercial requirements of Products covered by the terms of this
License Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
obligations set forth herein, CIMA and NCH hereby agree as follows:
1. DEFINITIONS
The following terms, as used in this License Agreement, shall have the
meanings set forth in this Article 1:
1.1 "Active Ingredients" shall mean [...***...]
1.2 [...***...]
3
1.3 "Affiliate" shall mean any corporation or entity which directly or
indirectly owns, is owned by, or is under common ownership with, a party to
this License Agreement, where own or ownership means direct or indirect
possession of at least fifty percent (50%) of the outstanding voting
securities of a corporation or a comparable equity interest in any other type
of entity.
1.4 "Agreement Period" shall mean the period commencing upon the Effective
Date and extending until the end of the Royalty Period (as hereinafter
defined).
1.5 "Date of First Sale" shall mean the date of first commercial sale of
one or more of the Products by NCH or any of its Affiliates.
1.6 "Development Agreement" shall mean the Development and License Option
Agreement, between NCH and CIMA, executed November 18, 1997 and attached
hereto as EXHIBIT A.
1.7 The "Field" shall mean [...***...]
1.8 "Net Sales" shall mean the actual gross sales invoiced by NCH or its
sublicensees or Affiliates from factory sales to parties other than NCH or
its Affiliates, for those Products made, used or sold in the Field and in the
Territory, less, (i) trade, quantity and cash discounts actually allowed and
taken in such amounts as are customary in the trade, if any, (ii) credits or
allowances actually granted to customers, (iii) independent broker or agent
commissions actually allowed and paid, up to [...***...] (iv) customer
returns actually allowed, (v) freight, insurance, handling and transportation
charges and (vi) all taxes other than income taxes on the income of NCH or
its Affiliates.
1.9 "OraSolv Technology" shall mean CIMA's proprietary oral effervescent,
fast-dissolving or chewable, drug-delivery tablet manufacturing and packaging
technology [...***...]
1.10 "Improvements" shall mean any enhancement to the OraSolv Technology or
Products (as hereinafter defined) made during the period as of November 18,
1997 (the Effective Date of the Development Agreement) through the expiration
of the last to expire [...***...] or the earlier termination of this License
Agreement.
1.11 "CIMA Patents" shall mean all patents and patent applications owned,
or controlled, or licensed (with right to sublicense), during the term of
this License Agreement, by or on behalf of CIMA or any of its Affiliates,
which contain a claim covering inventions necessary to the development,
manufacture, packaging, use, offer for sale or sale of Products, including
those patents and patent applications now owned, controlled or licensed by
CIMA listed in EXHIBIT B, attached hereto, which list shall be updated from
time to time as appropriate, but at least once per calendar year, to
incorporate any additional patents and patent applications NOT listed in
EXHIBIT B as of the Effective Date, including patents covering any
Improvements NCH elects to use in connection with the Products pursuant to
Section 3.4 hereof, as well as any continuations, continuations-in-part,
divisions, re-examinations, reissues or extensions to the patents or patent
4
applications listed in EXHIBIT B. CIMA Patents shall include Exclusive CIMA
Patents, Nonexclusive CIMA Patents, [...***...] (each as hereinafter defined).
1.12 "CIMA Know-How" shall mean all tangible and intangible inventions,
technology, trade secrets, data, processes, methods and any physical or
chemical material, including any replication of any part of such material,
other information that CIMA owns, controls or has a license to with the right
to sublicense, existing as of the Effective Date, which are necessary or
useful to the formulation, development, manufacture, packaging or
commercialization of a Product, and any Improvements made to any of the
foregoing.
1.13 [...***...]
1.14 "Product" shall mean the pharmaceutical products, in any flavor,
dosage or form, that are developed using the OraSolv Technology and that
contain as pharmaceutically active compounds only NCH Active Ingredients, and
includes without limitation those formulations listed in EXHIBIT C attached
hereto and made a part hereof, including Improvements, modifications and
variations thereto made by CIMA or its Affiliates during the term of this
License Agreement.
1.15 "Results" shall mean Product formulations as set forth in EXHIBIT C,
Product prototypes, Product samples and finished Products, including any
additional Product formulations, prototypes, Product samples and unfinished
Product developed pursuant to Section 4.5 hereof, NCH proprietary processes
and analytical methodology used in the validation, stability testing and
other testing or analysis of the Products, [...***...] including information
and data directly relating to any of the foregoing, obtained or developed
from conduct of evaluations, product development, commercialization or
manufacturing of the Products pursuant to this License Agreement or the
Development Agreement; PROVIDED THAT, Results shall not include any tablet
manufacturing or packaging processes or technology which are owned or
otherwise controlled by CIMA and used to obtain, develop, manufacture or
package Product formulations, Product prototypes, Product samples and
finished Products, nor shall Results include information or data directly
relating to such manufacturing or packaging processes or technology or any
knowledge, skill or experience with respect to OraSolv Technology gained by
CIMA personnel in performance of this License Agreement and/or the
Development Agreement.
1.16 "Royalty Computation Period" shall mean a three (3) month calendar
quarter ending on the last day of March, June, September and December of a
given year.
1.17 "Royalty Period" means that period beginning on the Date of First Sale
of the Products in the Field and in the Territory by NCH, and ending on
[...***...]
1.18 "Territory" shall mean [...***...] or as otherwise amended from time
to time as agreed upon in writing by the parties.
1.19 "FDA" shall mean the United States Food and Drug Administration.
5
1.20 "Exclusive CIMA Patent" shall mean those CIMA Patents to which CIMA
has the right to grant an exclusive license, as listed in EXHIBIT B hereto.
1.21 "Nonexclusive CIMA Patent" shall mean those CIMA Patents to which CIMA
does not have the right to grant an exclusive license, as listed in EXHIBIT B
hereto.
1.22 [..***...]
1.23 [...***...]
1.24 "NCH Active Ingredients" shall mean [...***...]
2. GRANTS
2.1 Subject to the terms of this License Agreement, CIMA hereby grants,
and NCH hereby accepts, an exclusive license under the Exclusive CIMA Patents
and Know-How; and a nonexclusive license under the Nonexclusive CIMA Patents,
all as set forth in EXHIBIT B, including the right to sublicense, to make and
have made (subject to Article 12 hereof), use, market, distribute, offer for
sale and sell the Products in the Field and in the Territory. [...***...]
2.2 CIMA hereby grants, and NCH hereby accepts, an exclusive option to
acquire an exclusive license under the Exclusive CIMA Patents and Know-How;
and a nonexclusive license under the Nonexclusive CIMA Patents, including the
right to sublicense, to make and have made (subject to terms substantially
similar to those set forth in Article 12 hereof), market, distribute, offer
for sale and sell pharmaceutical products in the Field and in the Territory
[...***...] The Option shall be in effect for [...***...] beginning on the
Effective Date (the "Option Period"). In consideration for the Option, NCH
shall pay to CIMA a non-refundable option fee of [...***...] (the "Option
Fee") upon execution of this License Agreement. NCH may exercise the Option
by notifying CIMA in writing at any time during the Option Period of its
decision to do so. NCH and CIMA shall negotiate in good faith mutually
agreed upon terms under which NCH shall acquire the exclusive license
described above in this Section 2.2, which terms shall be no less favorable
to NCH than the terms of this License Agreement. The final agreement
memorializing these terms shall be entered into in the event NCH exercises
the Option, no later than the end of the Option Period. During the Option
Period, CIMA will not enter into discussions with any other party concerning
developing, commercializing or making any product covered by the Option. The
Option Fee shall be fully creditable against any license fees, royalties
and/or milestone payments payable by NCH to CIMA pursuant to any agreement
entered into between NCH and CIMA memorializing the agreed upon terms under
which NCH shall acquire the exclusive license described in this Section 2.2.
2.3 [...***...]
6
2.4 Upon the expiration (but not the earlier termination) of the Royalty
Period, NCH shall have a nonrevocable, perpetual, paid-up, royalty-free,
non-exclusive license under the CIMA Patents and Know-How, with the right to
sublicense, in the Field and in the Territory, to make and have made (subject
to Article 12 hereof), use, market, distribute, offer for sale and sell
Products in the Field and in the Territory.
3. COVENANTS
3.1 CIMA hereby covenants and agrees that in the event that CIMA enters
into any Option, Development, License or Supply Agreement with a third party
relating to the granting or possible granting of a license under the CIMA
Patents or Know-How to make, have made, market, use, distribute, offer for
sale and/or sell any [...***...] pharmaceutical product using the OraSolv
Technology, which products are used for the treatment of [...***...] and
contain any or all of the NCH Active Ingredients (but not [...***...] alone),
to the extent permissible by law, CIMA shall contractually require of said
third party that all such products, as well as any labels, promotional,
advertising or marketing activities or materials relating to or used in
conjunction with such products, exclude any indication, suggestion or
reference, whether direct or indirect, or expressed, implied or inferred,
regarding [...***...] use of such products.
3.2 CIMA hereby covenants and agrees that it shall use the Results and
Confidential Information belonging to NCH (as to which obligations of
confidentiality apply) solely for the purposes specified in this License
Agreement and for no other purpose.
3.3 NCH hereby covenants and agrees that it shall use the licensed CIMA
Patents and Know-How and Confidential Information belonging to CIMA (as to
which obligations of confidentiality apply) solely for the purposes specified
in this License Agreement and for no other purpose.
3.4 CIMA hereby covenants and agrees to keep NCH fully informed of all
Improvements to the OraSolv Technology, but only to the extent such
Improvements relate to the Products, including but not limited to improved
taste masking. Information initially provided to NCH by CIMA under this
Section 3.4 shall be sufficient to permit NCH to evaluate applicability of
the Improvements to the Products. If NCH elects to use Improvements in
connection with the Products, CIMA shall disclose such information as CIMA
may have concerning such Improvement that is necessary to permit NCH to
utilize the Improvement consistent with the rights granted under this License
Agreement. In the event that NCH requests CIMA to incorporate an
Improvement, NCH shall pay CIMA reasonable incremental costs associated with
incorporating such Improvement that have been preapproved in writing by NCH.
3.5 CIMA hereby covenants and agrees during the term of this License
Agreement, not to (1) commercialize, or cause to be commercialized, or fund,
or provide services, including without limitation, consulting, research,
development and/or manufacturing services, with respect to, the
commercialization of, any chewable and/or fast dissolving, solid, oral dosage
form pharmaceutical products that contain any NCH Active Ingredient in the
Field and in the
7
Territory, or (2) license, assign or otherwise convey, to any third party,
except as expressly permitted in Article 16 of this License Agreement, any of
the rights or licenses granted to NCH under this License Agreement, and
specifically including any rights or licenses with respect to Sections 2.1,
2.2 and 2.3; [...***...]
4. LICENSE FEES, MILESTONE PAYMENTS AND ROYALTIES
4.1 In consideration of the license granted to NCH under this License
Agreement as stipulated in Article 2 above, NCH shall pay to CIMA the
following non-refundable license and option fees and milestone payments at
the times stated below:
[...***...]
4.1.5 All payments by NCH to CIMA pursuant to Sections 4.1.2 and
4.1.3 and 4.5 will be made within [...***...] of receipt by NCH of
documentation from CIMA verifying successful completion of the relevant
activity. Such documentation shall be in the form of a written final report
of findings for the relevant activity.
4.2 As further consideration for the license granted to NCH under this
License Agreement as stipulated in Article 2 above, NCH shall pay to CIMA a
running non-refundable royalty of [...***...] of Net Sales of all Products in
the Field and in the Territory, in accordance with the provisions of Article
5. The running royalty shall be fully creditable against minimum annual
royalties, as set forth below in Section 4.4.
4.2.1 The obligation to pay running royalties shall expire, on a
country-by-country basis, with the expiration of the Royalty Period, except
as otherwise provided for under this License Agreement.
4.2.2 In the event that all [...***...] expire or all claims of all
[...***...] are held invalid or otherwise unenforceable by a court of
competent jurisdiction prior to [...***...], the running royalty rate in the
relevant country shall be reduced to [...***...] of the then-current running
royalty rate until [...***...] or as otherwise provided for under this
License Agreement.
4.2.3 If, as of the later of (i) [...***...] or (ii) the date on
which the last to expire [...***...] expires, CIMA has obtained or possesses
[...***...], then NCH shall continue to pay CIMA a running royalty equal to
[...***...] of the then-current running royalty rate, and NCH shall continue
to have an exclusive license with respect to such [...***...] until such time
as the [...***...] expire, or all claims thereof which cover [...***...] are
held invalid or otherwise unenforceable by a court of competent jurisdiction,
whichever is sooner, at which time NCH's obligation to pay royalties shall
cease.
8
4.2.4 In the event that CIMA materially breaches the Supply
Agreement and fails to cure the material breach within [...***....] of being
notified by NCH of the material breach, then the running royalty rate shall
be reduced to [...***...] of the then-current running royalty rate until
the expiration of the Royalty Period or until such time as the breach is
cured, subject to additional adjustments as set forth in this Section 4.2 and
Articles 8, 10 and 11 hereof. Upon cure, the royalty rate shall be increased
to a rate equal to the rate in effect at the time of the breach, subject to
any additional adjustments that have been made, or are later made, pursuant
to this Section 4.2 or Articles 8, 10 or 11 hereof.
4.2.5 To the extent that CIMA is unable to meet NCH's firm orders
made pursuant to, or any other NCH Product supply requirement in accordance
with, the terms and conditions of the Supply Agreement, and as a direct
result of CIMA's nonperformance with respect thereto, NCH is unable to supply
Product to the Field such that an out-of-stock condition ensues in NCH
warehouses, and NCH receives backorders for the Product, CIMA shall
[...***...] Failure by CIMA to supply Product ordered pursuant to a change
order issued to CIMA pursuant to Article 4 of the Supply Agreement which
increases the order for the related month above NCH's forecast shall not be
considered nonperformance by CIMA for purposes of this Section 4.2.5 and
Section 12.2 of the Supply Agreement.
4.2.6 [...***...]
4.3 Royalties payable by NCH to CIMA under Sections 4.2 and 4.4 hereof
further shall be reduced or otherwise adjusted in accordance with Articles 8,
10 and 11 hereof.
4.4 Commencing in the first calendar year in which NCH launches a Product
on a national scale in [...***...] NCH shall pay to CIMA a minimum annual
royalty, as set forth below, against which running royalties accrued during
the relevant calendar year for which the minimum annual royalty is due are
fully creditable. Should total running royalties accrued in any calendar year
not equal at least the minimum annual royalty due for the relevant calendar
year, concurrent with its submission to CIMA of its statement of Net Sales,
as required under Section 5.2 hereof, for the last Royalty Computation Period
of the calendar year, NCH shall pay to CIMA according to the provisions of
Article 5 hereof, the difference between the minimum annual royalty due and
the total annual running royalty accrued in the relevant calendar year.
4.4.1 The minimum annual royalty shall be equal to [...***...]
per year, and shall be payable as set forth herein until [...***...] or until
all of the [...***...] expire, or all claims of all of the [...***...] which
cover the Products are held invalid or otherwise unenforceable by a court of
competent jurisdiction, whichever is sooner, except as otherwise provided for
in this License Agreement.
4.4.2 In the event all of the [...***...] expire or all claims of
all of the [...***...] which cover the Products are held invalid or otherwise
unenforceable by a court of competent jurisdiction prior to [...***...] and
CIMA has neither obtained nor possesses [...***...] then
9
the annual minimum royalty due shall be reduced to [...***...] of the
then-current minimum annual royalty until [...***...] at which time the
obligation to pay minimum annual royalties shall cease.
4.4.3 In the event all of the [...***...] expire or all claims
of all of the [...***...] which cover the Products are held invalid or
otherwise unenforceable by a court of competent jurisdiction prior to
[...***...] and CIMA has obtained or possesses [...***...] at least one claim
of which covers [...***...] then the annual minimum royalty due shall be
equal to [...***...] of the then-current minimum annual royalty until such
time as the [...***...] expire, or all claims thereof which cover [...***...]
are held invalid or otherwise unenforceable by a court of competent
jurisdiction, at which time the obligation to pay minimum annual royalties
shall cease.
4.4.4 In the event that CIMA commercializes, or causes to be
commercialized, or funds, or provides services, including without limitation,
consulting, research, development and/or manufacturing services, with respect
to, the commercialization of, any oral chewable and/or fast dissolving,
solid, dosage form pharmaceutical products which contain Active Ingredients
other than NCH Active Ingredients, in the Field and in the Territory, then
the minimum annual royalty due shall be reduced to [...***...] of the
then-current minimum annual royalty, subject to additional adjustments, until
expiration of the Royalty Period, at which time the obligation to pay minimum
annual royalties shall cease; [...***...] This reduction in royalties shall
be NCH's sole remedy for such commercialization.
4.4.5 [...***...]
4.5 As further consideration for the license granted in this License
Agreement, NCH agrees to develop one additional Product formulation, subject
to the provisions and terms of this License Agreement and as set forth on
EXHIBIT D. [...***...]
5. PAYMENT PROCEDURES, RECORDS, AUDITING
5.1 All payments due CIMA pursuant to Article 4 shall be made in U.S.
dollars by wire transfer to such bank in the United States of America as CIMA
shall specify from time to time. For purposes of determining the running
royalty payment due to CIMA, Net Sales shall be converted on a
country-by-country basis to U.S. dollars at the exchange rate prevailing at
the close of the last business day of the relevant Royalty Computation Period
as published the next day in The Wall Street Journal.
5.1.1 Payments hereunder shall be made without deduction other than
such amounts, if any, as NCH is required by law to deduct or withhold. NCH
shall obtain a receipt from the relevant taxing authorities for all
withholding taxes paid and forward such receipts to CIMA to enable CIMA to
claim any and all tax credits for which it may be eligible. NCH shall
reasonably
10
assist CIMA in claiming exemption from such deductions or withholdings under
any double taxation or similar agreement or treaty from time to time.
5.2 NCH shall pay to CIMA royalties as set forth in Article 4 within
[...***...] after the end of each Royalty Computation Period. Each payment
of royalties shall be accompanied by a statement, on a country by country
basis of the amount of Net Sales during such quarter, the amount of aggregate
Net Sales in the Territory during such quarter and the amount of royalties or
other payments due on such sales.
5.3 During the Agreement Period, NCH shall keep complete and accurate
books and records setting forth gross sales, net sales, amounts deducted from
gross sales to arrive at Net Sales, calculations of royalty payments owed to
CIMA, and any other information necessary to allow the calculation of
royalties to be paid by NCH to CIMA for each country within the Territory,
for no less than three (3) years after the end of each Royalty Computation
Period. NCH shall permit CIMA, at CIMA's expense, to have said books and
records examined by independent certified public accountants retained by CIMA
and acceptable to NCH, during regular business hours upon reasonable advance
notice but not later than three (3) years following the close of the Royalty
Computation Period in question, and no more than one (1) time per year. Such
accountant shall report to CIMA only those findings required to verify or
contradict the royalty amounts calculated by NCH to be owed to CIMA, and the
amounts of any discrepancy. Any information obtained or reports completed by
said accountants during such examination will be considered Confidential
Information of NCH under Article 7 hereof. If it is determined as a result
of said examination that there was an underpayment of royalties due CIMA, NCH
will pay to CIMA the balance of the royalties due within [...***...]
Similarly, in the event it is determined that there has been an overpayment
of royalties, CIMA will credit such overpaid amount against running royalty
payments owed by NCH at the end of the next Royalty Computation Period, or
subsequent Royalty Computation Periods when required, until such time as such
overpayment has been fully credited against the running royalties; PROVIDED,
HOWEVER, that such credit shall not exceed [...***...] of any royalties due
CIMA in such Royalty Computation Period, and any residual credit shall be
carried over to the next Royalty Computation Period and applied in accordance
with this Section 5.3.
6. REPRESENTATIONS AND WARRANTIES
6.1 CIMA warrants and represents that:
6.1.1 It is a corporation duly organized, existing and in good
standing under the laws of the state of Delaware, with full right, power and
authority to enter into and perform this agreement and to grant all of the
rights, powers and authorities herein granted in Article 2.
6.1.2 The execution, delivery and performance of this License
Agreement do not conflict with, violate or breach any agreement to which CIMA
is a party, or CIMA's Certificate of Incorporation or Bylaws.
11
6.1.3 This License Agreement has been duly executed and delivered
by CIMA and is a legal, valid and binding obligation enforceable against CIMA
in accordance with its terms.
6.1.4 CIMA has the right, title and interest in and to the CIMA
Patents and Know-How which are the subject of this License Agreement,
necessary to grant the license granted pursuant to Article 2, and which, to
the best of CIMA's knowledge, are free of any lien or encumbrance or any
rights or claims of any third party in the Territory.
6.1.5 To the best of CIMA's knowledge as of the Effective Date, the
practice of the OraSolv Technology does not infringe any valid patents or
other proprietary rights of third parties, nor do said third parties have any
claim of ownership with respect to the CIMA Patents and Know-How.
6.1.6 To the best of CIMA's knowledge as of the Effective Date, the
CIMA Patents licensed under this License Agreement are neither invalid nor
unenforceable, nor would they be held invalid or unenforceable by a court of
competent jurisdiction. If, during the Agreement Period, CIMA (a) becomes
aware that anyone (including CIMA) has requested a re-examination of any such
CIMA Patents, (b) requests a re-issuance of any such CIMA Patents, or (c)
becomes aware that a declaratory judgment action has been filed to have any
such CIMA Patents declared invalid or unenforceable, CIMA promptly shall
notify NCH of such and specify which CIMA Patents are involved.
6.1.7 During the term of this License Agreement, CIMA shall not
enter into any agreement that is inconsistent with or in derogation of CIMA's
representations and warranties under this License Agreement.
6.1.8 As of the Effective Date, CIMA is not aware of any third
party that is infringing the CIMA Patents licensed to NCH.
6.2 NCH warrants and represents that:
6.2.1 It is a corporation duly organized, existing and in good
standing under the laws of the state of Delaware, with full right, power and
authority to enter into and perform this License Agreement.
6.2.2 The execution, delivery and performance of this License
Agreement do not conflict with, violate or breach any agreement to which NCH
is a party, or NCH's Certificate of Incorporation or Bylaws.
6.2.3 This License Agreement has been duly executed and delivered
by NCH and is a legal, valid and binding obligation enforceable against NCH
in accordance with its terms.
7. CONFIDENTIALITY
12
7.1 Both CIMA and NCH agree that subject to the limitations set forth in
Section 7.3, all information disclosed to the other party, whether in oral,
written or graphic form, and identified in writing by the disclosing party as
confidential shall be deemed "Confidential Information" of the disclosing
party. In particular, Confidential Information shall be deemed to include,
but not be limited to Results, including any information or documentation
relating thereto, any patent application or drawing or potential patent
claim, trade secrets, information, ideas, inventions, samples, processes,
procedures, methods, formulations, packaging designs and materials, test
data, future development plans, Product launch date, technological know-how
and engineering, manufacturing, regulatory, marketing, servicing, sales,
financing or human resources matters relating to the disclosing party and its
business.
7.2 Both parties will take precautions as it normally takes with its own
confidential and proprietary information to prevent disclosure to third
parties.
7.3 Both CIMA and NCH agree that, notwithstanding the above, the
obligations of confidentiality shall not be deemed to apply to:
7.3.1 Information which at the time of disclosure is or thereafter
becomes generally known or available to the public, through no wrongful act
or failure to act on the part of the receiving party.
7.3.2 Information that was known by or in the possession of the
receiving party at the time of receiving such information from the disclosing
party as evidenced by written records.
7.3.3 Information obtained by the receiving party from a third
party source who is not breaching a commitment of confidentiality to the
disclosing party by revealing such information to the receiving party.
7.3.4 Information that is independently developed by the receiving
party without use of confidential information of the other party as evidenced
by written records.
7.3.5 Information that is the subject of a granted written
permission to disclose that is issued by the disclosing party to the other
party.
7.3.6 Information that is required to be disclosed pursuant to the
law, but only to the extent required to be disclosed; PROVIDED, THAT, the
disclosing party notifies the other party in writing and gives the other
party reasonable time to comment on the same prior to disclosure.
7.4 During the Agreement Period and for a period of five (5) years after
the end of the Agreement Period (seven (7) years for manufacturing process
information) each party shall maintain all Confidential Information in trust
and confidence and shall not disclose any Confidential Information to any
third party or use any such information for any unauthorized purpose, other
than as authorized in Section 7.3 hereof or as necessary to accomplish the
purpose of this License Agreement subject to an appropriate binder of
confidentiality as set forth in Section 7.5. Each party may use such
Confidential Information only to the extent required to
13
accomplish the purposes of this License Agreement. Confidential Information
shall not be used for any purpose or in any manner that is not consistent
with this License Agreement or that would constitute a violation of any laws
or regulations including, without limitation, the export control laws of the
United States. Each party hereby agrees that it will not in any way attempt
to obtain, either directly or indirectly, any information regarding any
Confidential Information from any third party who has been employed by,
provided consulting services to, or received in confidence information from,
the other party.
7.5 Both parties will make diligent efforts to ensure that all employees,
consultants, agents, subcontractors and manufacturing contractors who may
have access to Confidential Information of the other party, and any other
third parties who might have access to Confidential Information, will use
such information in a manner consistent with the terms of this License
Agreement and will be bound by the terms set forth in this Article 7. No
Confidential Information shall be disclosed to any employees, subcontractors,
agents or consultants who do not have a need to receive such information.
7.6 To the extent either party discloses confidential information of the
other party to an employee, consultant, subcontractor or manufacturing
contractor (collectively "Agents") or permits an Agent to have access to such
confidential information, such party shall indemnify the other party for any
claims, damages, losses, liabilities, costs or expenses, including reasonable
attorneys' fees, incurred by the other party as a result of the indemnifying
party's Agent further disclosing or misusing such confidential information.
8. TERM AND TERMINATION
8.1 The term of this License Agreement shall begin as of the Effective
Date and shall remain in effect for the Agreement Period, unless earlier
terminated as provided herein.
8.2 In the event either party commits a material breach or defaults in the
performance or observance of any of the material provisions of this License
Agreement, and such breach or default is not cured within [...***...] days
after the receipt of notice thereof from the other party specifying such
breach or default, the party not in breach or default shall be entitled
(without prejudice to any of its' other rights) to terminate this License
Agreement, without additional penalty, termination fee or cost, by giving
notice to take effect immediately.
8.3 In addition to the provisions specified in Section 8.2, NCH shall have
the right to terminate this License Agreement [...***...]
8.4 In addition to the provisions specified in Section 8.2, NCH shall have
the right to terminate this License Agreement [...***...]
8.5 If NCH, in its sole discretion, chooses not to pursue the remedy
provided for in Section 8.2 hereof in the event CIMA commits a material
breach or defaults in the performance or
14
observance of any of the material provisions of this License Agreement, and
such breach or default is not cured within [...***...] or, if such breach is
not reasonably capable of cure within such [...***...] and CIMA reasonably
demonstrates to NCH that it is making good faith efforts to cure such breach,
[...***...] after the receipt of notice thereof from NCH specifying such
breach or default, NCH shall be entitled to [...***...]
8.6 NCH shall have the right to terminate this License Agreement and the
royalty obligations with respect thereto, without cause, effective on, or any
time after, [...***...] by providing CIMA with [...***...] prior written
notice of such termination and payment of a [...***...] termination fee upon
such termination plus such other amounts as have accrued under this License
Agreement and remain unpaid as of the date of termination, including the
amount of the prorated minimum royalty for the year of termination or the
actual earned royalties whichever is greater. [...***...]
8.7 The termination of this License Agreement by either party shall not
release either party from any obligation that matured prior to the effective
date of the termination.
8.8 Termination of this License Agreement by NCH pursuant to Sections 8.2,
8.3, 8.4, 8.5 or 8.6 shall immediately terminate any further minimum annual
royalty obligation as to NCH.
8.9 The confidentiality provisions set forth in Article 7 hereof shall
survive the termination or expiration of this License Agreement as set forth
therein.
8.10 Except as otherwise expressly provided in this License Agreement, upon
termination of this License Agreement:
8.10.1 All licensed rights under the CIMA Patents and Know-How
granted to NCH shall terminate and revert to CIMA, and NCH shall not make any
use whatsoever of said rights, nor sell any Products in the Territory, except
as expressly provided for elsewhere in this License Agreement.
8.10.2 Title and ownership rights in the [...***...] and other
Confidential Information of CIMA shall remain at all times with CIMA and NCH
will have no title thereto as a result of this License Agreement. Upon
written request by CIMA, NCH shall promptly return to CIMA all information
regarding said [...***...] or Confidential Information; PROVIDED THAT, NCH
will be permitted to keep archive copies of such Confidential Information.
8.10.3 Title and Ownership rights in the [...***...] and
Confidential Information of NCH shall remain at all times with NCH and CIMA
will have no title thereto as a result of this License Agreement. Upon
written request by NCH, CIMA shall promptly return to NCH all information
regarding said [...***...] and Confidential Information; PROVIDED THAT,
CIMA will
15
be permitted to keep archive copies of said [...***...] for CIMA's internal
use only and CIMA shall be prohibited from disclosing or providing [...***...]
to any third party.
8.10.4 NCH shall have up to [...***...] from the date of termination
of this License Agreement to sell or otherwise dispose of its existing stock
of the Products and to fulfill any outstanding contractual obligations with
respect to the sale or supply of the Products; PROVIDED THAT, CIMA shall
continue to receive royalty payments as stipulated in Article 4 hereof. The
parties acknowledge the seasonal nature of the Products, however, NCH shall
make reasonable commercial efforts to dispose of such existing stock as
expeditiously as reasonably possible.
8.10.5 Except as otherwise set forth herein, termination under this
Article 8 shall be without prejudice to and shall not affect the right of
either party to recover any and all damages to which it may be entitled, or
exercise any other remedies which it may otherwise have under this License
Agreement course and conduct of patent application prosecution matters within
the scope of CIMA Patents licensed under this License.
9. PATENTS
9.1 CIMA shall undertake and shall bear all costs of the prosecution and
maintenance of the Patent Rights in the Territory. CIMA shall employ
reasonable efforts to keep NCH fully and timely informed, at NCH's reasonable
expense, in respect to the course and conduct of the Patent application
prosecution matters within the scope of the CIMA Patents licensed under this
License Agreement and such information (to which the obligation of
confidentiality applies) disclosed pursuant to this Section 9.1 shall be
Confidential Information for purposes of Article 7. (CIMA shall not be
obligated to furnish any information or documents to NCH other than documents
filed in, or received from patent offices in the Territory in respect of the
CIMA Patents.)
9.2 NCH shall mark appropriately all Products with the patent number of
any CIMA patent, at least one claim of which covers the Products and/or
packaging therefor, or processes for making or packaging the Products.
10. INFRINGEMENT OF CIMA PATENT
10.1 If either party shall become aware of any infringement of any CIMA
Patent in the Territory and in the Field, then the party having such
knowledge shall give notice to the other within ten (10) days of becoming
aware of such infringement and the basis therefor.
10.2 Subject to Section 10.3 hereof, CIMA shall have the sole right to take
such action, as it deems appropriate and reasonable, whether by action, suit,
proceeding or otherwise, at its own expense, to prevent or eliminate the
infringement of the CIMA Patents by others and to collect damages. NCH
agrees to cooperate with CIMA in any reasonable manner in an action brought
by CIMA. CIMA agrees to pay all reasonable out-of-pocket expense incurred by
NCH as a result of NCH's cooperation in the prosecution of any such action,
suit or proceeding for
16
infringement. CIMA shall be entitled to retain any damages recovered by
bringing the action for patent infringement.
10.3 Within [...***...] of receipt of notice by CIMA of the infringement of
any Exclusive CIMA Patents by commercial sale or offer for commercial sale
through more than one (1) sales outlet within one (1) or more countries of
the Territory, or by commercial use of the products in the Field, or
contributing to, or inducement of, any of the foregoing, CIMA shall commence
reasonable action to terminate such infringement. Should CIMA take such
reasonable action within [...***...] of receipt of such notice and
nevertheless fails to terminate the infringement within [...***...] of
receipt of notice of such infringement, CIMA shall bring formal suit against
the infringer in a court of competent jurisdiction to terminate such
infringement. Should CIMA fail to take reasonable action to terminate such
infringement within said [...***...] or to terminate such infringement within
said [...***...] then, (i) if the infringed CIMA Patents include one or more
[...***...] or (ii) if the Exclusive CIMA Patents in such country consist
solely of [...***...] the running royalty for Products sold in such country
shall be immediately reduced to [...***...] of the then-current running
royalty rate, whereas if the infringed Exclusive CIMA Patents consist solely
of [...***...] but one or more [...***...] are in force in such country at
the time such infringement commences, the running royalty rate for Products
sold in such country shall be reduced to [...***...] of the then-current
royalty rate. The reduced rate shall remain in effect until expiration of
the Royalty Period, or until such time as the infringement terminates, the
infringed Exclusive CIMA Patents expire (as discussed in Sections 4.4.2 and
4.4.3), or as otherwise provided for in Article 4 of this License Agreement.
11. INFRINGEMENT OF THIRD PARTY RIGHTS
11.1 If either party to this License Agreement shall become aware of any
action, or suit, or threat of action or suit, by a third party alleging that
the manufacture, use, marketing, distribution, offer for sale or sale of any
Product infringes a patent, or violates any other proprietary rights of any
third party, the party aware of same shall notify the other party of the same
and fully disclose the basis therefor within ten (10) days of becoming aware
of such action, or suit, or threat of such action or suit.
11.2 CIMA shall have the right, but not the obligation, (a) to secure a
license, at CIMA's expense, with the right to sublicense, which would obviate
the alleged infringement and CIMA shall grant to NCH, at no additional cost,
a sublicense under such license; or (b) to develop at CIMA's expense one or
more substitute Products which are substantially equivalent in performance to
the then-existing Products but which are free of the alleged infringement.
NCH shall cooperate at NCH's reasonable expense in such development, and in
negotiations for such license, as CIMA may reasonably request.
11.3 In the event CIMA elects not to exercise its rights under Section 11.2
within [...***...] of receiving notice of such claim, or otherwise
notifies NCH within such [...***...] that it does not intend to exercise
such right, NCH shall have the right to defend any such claim at its own
17
expense and sole discretion as to the control, conduct and prosecution of
such defense. If, by the terms of any settlement or if by a judgment, decree
or decision of a court, tribunal or other authority of competent jurisdiction
emanating from NCH's defense of such claim, NCH is required to obtain a
license from a third party in order to make, have made, use, offer for sale,
sell or import Product (hereinafter "Third Party License") and/or to
compensate or pay damages to such third party, and/or pay royalties under
such license, and/or incur cost or expense in the defense of such claim,
then, if such claim arises from the use of any OraSolv Technology or any
Improvement thereto, NCH shall have the right to credit [...***...] of any
such compensation, damages, royalties and reasonable out-of-pocket cost and
expense against running royalties owed to CIMA until such time as any
allowable credit is fully taken; PROVIDED THAT, CIMA shall have the right to
approve any credits resulting from settlement (other than by judgment, decree
or decision of a court, tribunal or other authority of competent
jurisdiction) by NCH and the third party of any claim or action, which
approval shall not be unreasonably withheld, and the dollar amount of any
credit taken in any one Royalty Computation Period shall not exceed
[...***...] of the dollar amount of royalty payments due CIMA in the relevant
Royalty Computation Period.
11.4 Nothing in this Article 11, or in Article 10, shall be construed as a
waiver or cure of any breach of any warranties set forth in Article 6, or any
release of any claim by NCH as may be appropriate relating thereto.
12. CIRCUMSTANCES FOR MANUFACTURE BY NCH
12.1 NCH shall have the right to make the Product, or have the Product made
by a third party supplier (reasonably acceptable to CIMA), only under the
following circumstances:
[...***...]
12.2 In the event NCH begins to make the Product, or have a third party
supplier make the Product, in accordance with Section 12.1 hereof and/or
Article 12 of the Supply Agreement, CIMA shall cooperate fully with NCH and
the third party supplier, if any, and shall use commercially reasonable best
efforts to enable NCH and/or the third party supplier to qualify and validate
the Novartis Manufacturing Facility (as defined in the Supply Agreement) or
the third party supplier's facilities, as the case may be, and to manufacture
and package the Product. CIMA shall give NCH and any third party supplier
prompt and unrestricted access to, or, if requested, CIMA immediately shall
provide to NCH and any third party supplier, all Technical Information (as
defined in the Supply Agreement). Any disclosure or use of Technical
Information will be subject to the confidentiality restrictions set forth in
Article 7 of this License Agreement. NCH and any third party supplier shall
have the right to observe the operation of any laboratory and manufacturing
and/or packaging facility of CIMA (subject to CIMA's obligations of
confidentiality to third parties) and to have a reasonable number of
employees or other representatives of CIMA visit the Novartis Manufacturing
Facility or the third party supplier's facilities, at NCH's option and in
accordance with a mutually agreed time table, to demonstrate and explain any
of the Technical Information and the manufacturing and packaging processes.
In the event that NCH manufactures and/or packages the Product, or has a
third party
18
supplier manufacture and/or package Product pursuant to Section 12.1(ii) or
(iii) above, [...***...]
13. NOTICES
All notices required or permitted hereunder shall be given in writing
and sent by facsimile transmission, or mailed postage prepaid by first class
certified or registered mail, or sent by a nationally recognized express
courier service, or hand delivered at the following addresses:
Novartis Consumer Health, Inc.
560 Morris Avenue
Summit, New Jersey 07901
Attention: Office of the Vice President, Marketing
With a copy to: General Counsel
CIMA LABS, Inc.
10000 Valley View Road
Eden Prairie, Minnesota 55344-9361
Attention: Vice President Business Development
Any notice, if mailed properly addressed, postage prepaid, shall be
deemed made three (3) days after the date of mailing as indicated on the
certified or registered mail receipt, or on the next business day if sent by
express courier service or on the date of delivery or transmission if hand
delivered or sent by facsimile transmission.
14. FORCE MAJEURE
Neither party shall be responsible or liable to the other hereunder
for failure or delay in performance of this License Agreement due to any war,
fire, flood, accident or other casualty, or any labor disturbance or act of
God or the public enemy, or any other contingency beyond such party's
reasonable control. In addition, in the event of the applicability of this
Article, the party affected by such force majeure shall use reasonable
efforts, consistent with good business judgment, to eliminate, cure and
overcome any of such causes and resume performance of its obligations.
15. PUBLICITY
CIMA and NCH agree not to issue any press release or other public
statement disclosing the existence of or relating to this License Agreement
without prior written consent of the other party; PROVIDED, HOWEVER, that
neither CIMA nor NCH shall be prevented from complying with any duty of
disclosure it may have pursuant to law subject to notifying the other party
in writing and giving such other party reasonable time to comment on the same
prior to disclosure. Notwithstanding the foregoing, NCH and CIMA each shall
have the right to disclose information regarding this License Agreement to
potential investors and its financial advisors (including
19
allowing such investors and financial advisors to review this License
Agreement itself); PROVIDED THAT, the disclosing party has obtained a
commercially reasonable confidentiality agreement from each such investor and
financial advisor. CIMA and NCH agree that the Press Releases attached
hereto as EXHIBIT E are approved for release to the public immediately upon
the execution of this License Agreement.
16. ASSIGNMENT
This License Agreement and all rights and obligations hereunder are
personal to the parties hereto and may not be assigned without the express
prior written consent of the other party. Any assignment or attempt at same
in the absence of such prior written consent shall be void and without
effect; PROVIDED THAT, either party may assign this License Agreement to an
Affiliate or any successor by merger or sale of all or substantially all of
its business units to which this License Agreement relates without such
consent. This License Agreement shall be binding upon the successors and
permitted assigns of the parties and the name of a party appearing herein
will be deemed to include the names of such party's successors and permitted
assigns to the extent necessary to carry out the intent of this License
Agreement.
17. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware as though made and to be fully performed in
said State.
18. SEVERABILITY
If any one or more of the provisions of this License Agreement shall
be held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby. In the event any provision shall be held
invalid, illegal or unenforceable the parties shall use commercially
reasonable efforts to substitute a valid, legal and enforceable provision
which, insofar as possible, implements the purposes hereof.
19. MISCELLANEOUS
19.1 CIMA must inform NCH in writing of CIMA's intention to file a
voluntary petition in bankruptcy, or of another's intention to file an
involuntary petition in bankruptcy in respect to CIMA at least thirty (30)
days prior to the filing of such a petition; PROVIDED, THAT, if CIMA is not
aware of another's intention to file an involuntary petition in bankruptcy in
respect of CIMA thirty (30) days prior to the filing of such petition, CIMA
shall inform NCH in writing of such other party's intention to file as soon
as reasonably possible after CIMA becomes aware of it. Upon receipt of such
notice, NCH in its sole discretion shall have the option of terminating this
License Agreement upon sixty (60) days written notice to CIMA, unless CIMA
refrains from
20
filing its petition, withdraws its petition, prevents the other party from
filing its involuntary petition or obtains dismissal of the petition, as the
case may be, during this sixty (60) period. The filing of such petition
without conforming to this requirement shall be deemed a material,
pre-petition incurable breach of this License Agreement.
19.2 The failure of any party hereto at any time or times to require
performance of any provisions hereof shall in no manner affect its rights to
enforce such provision at a later time.
19.3 Nothing in this License Agreement shall prevent NCH from labeling the
Products with [...***...]
19.4 For the period beginning the Effective Date and ending on or about
[...***...] NCH shall have the right to limit commercial sale of the
Products to a regional market within the Territory. By no later than
[...***...] NCH shall notify CIMA whether it intends to (i) launch the
Products on a national scale or (ii) terminate this License Agreement
pursuant to either Section 8.3 or 8.4 hereof, as appropriate. If NCH elects
to proceed under clause (i) of this Section 19.4, it shall so launch by no
later than [...***...] unless it is prevented from doing so due to CIMA's
failure to produce sufficient Product pursuant to the Supply Agreement.
21
20. INDEPENDENT CONTRACTORS
The parties shall perform their obligations under this License Agreement as
independent contractors and nothing contained in this License Agreement shall
be construed to be inconsistent with such relationship or status. This
License Agreement shall not constitute, create or in any way be interpreted
as a joint venture or partnership of any kind.
21. COUNTERPARTS
This License Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
22
22. ENTIRE AGREEMENT
This License Agreement together with the Supply Agreement constitute
the entire understanding between the parties relating to the subject matter
thereof, and no amendment or modification to this License Agreement shall be
valid or binding upon the parties unless made in writing and signed by the
representatives of such parties.
IN WITNESS WHEREOF, the parties hereto have caused this License Agreement to
be executed as of the date first written above by their duly authorized
officers.
NOVARTIS CONSUMER HEALTH, INC. CIMA LABS., INC
560 Morris Avenue 10000 Valley Road
Building F Eden Prairie, Minnesota 55344
Summit, New Jersey (612) 947-8700
(908) 598-7614
By: /s/ [...***...] By: /s/ Jack Khattar
------------------------------- ------------------------------------
[...***...] Name: Jack Khattar
Vice President & CFO -----------------------------------
Title: Vice President
----------------------------------
23