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EXHIBIT 10.10
CONFIDENTIAL TREATMENT REQUESTED
Confidential portions of this agreement which have been redacted are marked
with brackets ("[***]"). The omitted material has been filed separately with the
Securities and Exchange Commission.
EXCLUSIVE PATENT LICENSE AGREEMENT
THIS AGREEMENT made and effective this 1st day of January, 2000, by and
between Xxxx Fine Chemicals, Inc., having a place of business at 000 Xxxx Xxxx
Xxxxxx, Xxxxx Xxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as "Licensor").
and
Horizon Pharmaceutical, Corporation., having a place of business at 000
Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (collectively hereinafter
referred to as "Licensee").
WHEREAS, Licensor is the owner of the entire right, title and interest in,
to and under Letters Patent of the United States [***] (said patents
collectively referred to as the Licensed Patents); and
WHEREAS, Licensee is desirous of securing and Licensor is willing to grant
a semi-exclusive license under the Licensed Patents to use, sell and distribute
Finished Dosage Products (defined below) containing to [***];
NOW, THEREFORE, in consideration of the covenants and obligations
hereinafter set forth to be well and truly performed, the parties hereto hereby
agree as follows:
SECTION ONE
The following definitions will apply to the respective terms as used
throughout this Agreement.
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(a) "Net Sales" shall mean Licensee's gross invoice price of sales of
Finished Dosage Products covered by the claims of the Licensed Patents in the
Territory to third party customers after deduction of (i) cash, trade and/or
quantity discounts actually allowed; (ii) amounts repaid or credited by reason
of rejection or returns of goods, rebates (including government mandated
rebates) or because of retroactive price reductions unrelated to the sale or
pricing of another product of Licensee; and (iii) freight, postage, and duties
paid for and separately identified on invoices. A sale of a product is deemed to
have occurred upon the earliest of invoicing, shipment or transfer of title in
the product to a party other than Licensee or its affiliates or sublicensees.
(b) "Baseline Net Sales" shall mean Licensee's actual Net Sales for the
period January 1, 1999 through December 31, 1999.
(c) "Annual Net Sales" shall mean Licensee's actual Net Sales for a twelve
month period January 1 to December 31 of a given year.
(d) "Territory" means the United States of America, including its
territories and possessions and Puerto Rico.
(e) "Contract Year" shall mean the twelve (12) month period commencing on
January 1, 2000 and ending December 31, 2000 for the first Contract Year and
subsequent twelve (12) month periods commencing on the anniversary of the day
immediately following the end of the first Contract Year.
(f) "Finished Dosage Products" means products that contain active
pharmaceutical ingredients and are in a form ready for sale to a final consumer
(including, without limitation, a liquid suspension or tablet).
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SECTION TWO
(a) Licensor agrees to grant and does hereby grant to Licensee under the
Licensed Patents the exclusive right and license to use, sell and distribute
Finished Dosage Products containing [***] covered by the Licensed Patents in the
Territory, except only as to the license rights of Unisource, Inc., a Colorado
corporation (Unisource) and or [***] pertaining to products that contain [***]
and are covered by the Licensed Patents.
(b) Licensee agrees that it will purchase or otherwise obtain Finished
Dosage Products containing [***] from Unisource, Inc. and its successors or
assigns.
SECTION THREE
(a) Upon execution of this Agreement, Licensee agrees to pay to Licensor a
license fee of [***] less the [***] advance paid by Licensee to Licensor.
(b) Effective at the beginning of the first Contract Year, Licensee further
agrees to pay to Licensor, as royalty, [***] of its Annual Net Sales derived by
Licensee from all sales of Finished Dosage Products covered by the Licensed
Patents and made in accordance with the inventions covered thereby; "sales" as
herein employed shall mean sales of the Finished Dosage Products covered by the
Licensed Patents which are made in the United States, its territories,
possessions and Puerto Rico.
(c) Suspension of royalties:
(i) Generic. For purposes of this Section THREE (c), "Generic" shall
mean a generic to [***] or Tanafed but shall not include (A) products that
infringe upon the Licensed Patents or (B) products made from raw material
supplied by Licensor prior to the effective date of this Agreement.
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[***] - CONFIDENTIAL TREATMENT REQUESTED
(ii) Suspension. If a Generic enters the market, then, per a
determination made as of December 31 of such year of entry and December 31
of each subsequent year of this Agreement (all of which calendar years,
including the year of entry, shall collectively be referred to as the
"Calendar Years Potentially Suspended"), Licensee's obligation for the
royalty may be suspended for one or more Calendar Years Potentially
Suspended as determined as follows. Licensee is not obligated for the
royalty for any given Calendar Year Potentially Suspended if i) the gross
sales in ounces in the entirety of such Calendar Year Potentially Suspended
do not exceed the Threshold Sales (hereinafter defined) applicable to that
Calendar Year Potentially Suspended AND ii) the Generic is available in the
Territory at any time during such Calendar Year Potentially Suspended.
(iii) Refund of Royalties. Accordingly, if Licensee is not obligated
for the royalty in a given Calendar Year Potentially Suspended, then,
within 30 days after the end of that calendar year, Licensor shall (A)
refund royalties to Licensee so that the net effect of such refund will be
that Licensee did not pay any royalties for such calendar year and (B) pay
Licensee interest on the royalties refunded at the prime rate as of
December 31 of the calendar year for which royalties are being refunded. In
the event Licensee is not obligated for the royalties in a given calendar
year, Licensee may still be obligated for the royalty in future year(s).
(iv) THRESHOLDS. The Threshold Sales are as follows:
Potential Threshold Sales applicable to the
corresponding Calendar Year
Suspension Potentially Suspended
Calendar Year
2000 Gross sales of [***] ounces (which is [***] of
Licensee's gross sales in ounces in 1999 which
was [***] ounces)
2001 [***] of the gross sales (in ounces) in
calendar years 1999 or 2000, whichever is
higher
2002 [***] of the gross sales (in ounces) in
calendar years 1999, 2000 or 2001, whichever
is highest
2003 and thereafter [***] of the gross sales (in ounces) in
ounces) in calendar years 1999, 2001, 2002
or any other subsequent Calendar Year
Potentially Suspended, whichever is highest
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(v) Partial Refund of Licensing Fee: If in the year 2000, there is a
Generic available AND Licensee's Gross Sales do not exceed [***] ounces,
then Licensor will refund one half of the up-front fees paid upon execution
of this agreement.
(v) Example:
2000
Based on a calculation made as of December 31, 2000, i) if Licensee's gross
sales (in ounces) for calendar 2000 (including gross sales in calendar 2000
prior to the entry of the generic) do not exceed [***] ounces, AND ii) the
Generic is available in the Territory at any time during such Calendar Year
Potentially Suspended then Licensee would not be obligated for royalties for the
entirety of calendar 2000 and would be refunded calendar 2000 royalties
accordingly; and
2001
Based on a calculation made as of December 31, 2001, i) if Licensee's gross
sales in ounces for calendar 2001 do not exceed [***] of the gross sales (in
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ounces) in calendar years 1999 or 2000, whichever is highest, AND ii) the
Generic is available in the Territory at any time during such Calendar Year
Potentially Suspended then Licensee would not be obligated for royalties for the
entirety of calendar 2001 and would be refunded calendar 2001 royalties
accordingly; and
2002
Based on a calculation made as of December 31, 2002, i) if Licensee's gross
sales (in ounces) for calendar 2002 do not exceed [***] of the gross sales (in
ounces) of calendar years 1999, 2000 or 2001, whichever is highest, AND ii) the
Generic is available in the Territory at any time during such Calendar Year
Potentially Suspended then Licensee would not be obligated for royalties for the
entirety of calendar 2002 and would be refunded calendar 2002 royalties
accordingly; and
2003 and thereafter
Based on a calculation made as of December 31 of 2003 and of each year
thereafter, if i) Licensee's gross sales (in ounces) for any such calendar year
do not exceed [***] of the gross sales (in ounces) of the previous calendar year
of this Agreement in which Gross sales (in ounces) were the highest, AND ii) the
Generic is available in the Territory at any time during such Calendar Year
Potentially Suspended, then Licensee would not be obligated for royalties for
the entirety of the calendar year ending on the December 31 on which such
calculation was made, and would be refunded royalties for such calendar year
accordingly.
(d) The term of this Agreement shall be from the date hereof to the later
of the expiration of either of the Licensed Patents or any reissue, continuation
or extension of the Licensed Patents. In the event that Licensor becomes the
owner of or has rights to patents in addition to the Licensed Patents which
additional patents pertain to the products covered by the Licensed Patents, the
term of this Agreement shall automatically extend to the expiration of such
additional patents. In any event, Licensee may continue to renew this Agreement
for [***] year renewal periods beyond the above-referenced patent expiration
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dates by providing Licensor written notice of its intent to so renew prior to
such patent expiration dates.
SECTION FOUR
It is mutually understood and agreed that the sale of compositions covered
by the Licensed Patents may be subject to approval and/or regulation by the Food
and Drug Administration or other applicable government agency and in the event
that such approval is refused or such regulation prohibits the sale of products
covered by the Licensed Patents, Licensee shall have the right to cancel this
Agreement and the license herein granted to it; in the event of such
cancellation, Licensee shall not be liable to Licensor for the payment of any
royalties hereunder or any additional license fees, as the case may be.
SECTION FIVE
All royalties provided for by this License Agreement shall be due and
payable quarterly and Licensee agrees to pay to Licensor on or before the last
day of each of the months of February, May, August and November of each Contract
Year during which this Agreement is in force, the total amount of royalties due
and payable on account of its operations under this Agreement during the
calendar quarter immediately preceding said dates.
SECTION SIX
Licensee agrees that it will render to Licensor with each such
royalty payment a written statement setting forth the total Annual Net Sales
from its royalty-bearing sales during the period covered by such statement and
Licensee agrees to keep a separate record in a suitable book or set of books
provided for the purpose, in sufficient detail to enable the royalties payable
hereunder to be determined, and further agrees that it will permit such book or
set of books to be examined by an auditor or accountant, authorized by Licensor,
at any reasonable time during business hours to the extent necessary to verify
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the records and payments here provided for, it being agreed that such auditor or
accountant shall make his report to Licensor in such manner that names of
customers or other information deemed confidential by Licensee will not be
disclosed to Licensor.
SECTION SEVEN
In the event that Licensor makes or acquires any improvements or additional
patents in or relating to the inventions covered by the Licensed Patents, such
improvements and patents shall be and are hereby included as part of the
Licensed Patents upon the same terms and conditions as the said Licensed
Patents; Licensee shall not be obligated to pay to Licensor any further or
additional royalty or other consideration for the license to any such additional
improvements or patents. Licensee's only obligation to Licensor shall be to
continue to pay the royalty stipulated in Section Three until the expiration of
the last such patent or any reissue or extension thereof unless otherwise
provided herein.
SECTION EIGHT
Licensee shall, at its option, with the prior written consent of Licensor,
have power to institute and prosecute, at its own expense, suits for
infringement of the Licensed Patents, and, Licensor will cooperate in such suits
by furnishing such evidence, documents, and testimony as may reasonably be
required, and if required by law, Licensor will join as a party plaintiff in
such suits. All expenses in such suits will be borne entirely by Licensee and
Licensee will pay to Licensor [***] of any excess of recoveries over expenses
(including without limitation attorney fees) in such suits.
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SECTION NINE
(a) Licensor warrants, that effective as of the date hereof, Licensor and
Unisource have established a business relationship (the Relationship) whereby
Unisource Inc. may purchase [***] and [***] from Xxxx Fine Chemicals and the
Relationship shall continue for a duration at least as long as the duration of
this Agreement. Licensor further warrants that pursuant to the Relationship, for
a period of 12 months, and thereafter it will not increase the prices for such
Active Pharmaceutical Ingredients by an amount exceeding the percentage increase
in the PPI (except that Licensor may increase such price to reflect documented
increases in direct costs which include labor, raw materials, utilities and
direct overhead costs to maintain its existing profit margin which increases
will not be subject to the PPI cap, but which increases shall have been
documented to the satisfaction of Licensee and Unisource). Licensor will
decrease the prices of the Active Pharmaceutical Ingredients to reflect
decreases in the cost of such manufacturing components. Under the terms of the
Relationship, Licensor will notify Unisource and Licensee of the change in
dollars per Kg and the effective date of any price change of each Active
Pharmaceutical Ingredient utilized by Unisource for Finished Dosage Product
supplied to Licensee.
(b) Licensor warrants that, if for any reason Licensor is unable to supply
product to meet all of the needs of Unisource, Unisource shall have the
exclusive right, along with [***], to receive Licensor's production of the
products covered by the Licensed Patents based on the respective amounts of such
products ordered during the preceding twelve (12) month period.
SECTION TEN
(a) Licensor represents and warrants that, as of the date hereof, it has
entered into a license agreement with [***], a corporation having a place of
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[***] - CONFIDENTIAL TREATMENT REQUESTED
business in [***], in a form similar to this Agreement and whereby [***] has a
semi-exclusive license to the Licensed Patents as they pertain to [***]. (b)
Licensor warrants that in its Relationship and Licensing Agreement with
Unisource, (i) Unisource is prohibited from selling or distributing Finished
Dosage Products containing [***] to any person or entity other than Licensee and
(ii) Unisource does not have the right to sell [***] as a stand alone active
ingredient.
(b) Licensor warrants that (a) it owns the Licensed Patents; (b) it has the
right to license the Licensed Patents to Licensee; (c) no third party has filed
any civil action against Licensor in connection with the Licensed Patents or
notified Licensor that the Licensed Patents violate such third party's patent,
trademark, copyright, or trade secret rights; (d) to the best of Licensor's
knowledge, the Licensed Patents do not infringe any third party's copyright or
patent; (e) it has not granted to any third party any rights in or to the
Licensed Patents that are inconsistent with any right granted to Licensee under
this License Agreement or that will adversely affect any exercise by the
Licensee of its rights granted under this License Agreement.
(c) Licensor agrees to indemnify, defend, and hold harmless Licensee
against any losses, liabilities, claims, damages, costs, and expenses (including
reasonable attorney's fees) (the "Claims") that result from Licensor's material
breach of any of the above warranties. Licensor shall assume all expenses with
respect to the defense, settlement, adjustment, or compromise of any Claims as
to which this section requires Licensor to indemnify, defend, or hold harmless
Liensee and, upon such assumption, shall have sole control over the defense,
settlement, adjustment, or compromise of such Claims; provided, however, that
(i) Licensor shall obtain prior written approval of Licensee, which Licensee
shall not unreasonably withhold, before entering into any settlement,
adjustment, or compromise of such Claims; and (ii) Licensee may, if it so
desires, employ counsel at its own expense to assist in the handling of such
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claim or undertake sole control of the defense, settlement, adjustment, or
compromise of such Claims.
SECTION ELEVEN
In the event that Licensee defaults or breaches any of the provisions of
this License Agreement or fails to account for or pay to Licensor any of the
royalties due and payable to Licensor hereunder, Licensor reserves the right to
cancel the license here granted upon sixty (60) days' written notice to
Licensee; provided, however, that if Licensee, within the sixty (60) day period
referred to, cures the said default or breach, the license herein granted shall
continue in full force and effect until the expiration of the Licensed Patents
or any reissue, continuation or extension thereof. In the event of the
termination of the license herein granted by Licensor to Licensee, Licensee
shall not be relieved of the duty and obligation to pay in full royalties
accrued and due and payable at the effective date of such termination.
SECTION TWELVE
In the event of any adjudication of bankruptcy, appointment of a Receiver
by a court of competent jurisdiction, assignment for the benefit of creditors or
levy of execution directly involving Licensee, this Agreement shall thereupon
forthwith terminate and no longer be of any further force and effect.
SECTION THIRTEEN
This Agreement shall be governed by, interpreted in accordance with, and
enforced under the laws of the State of New Jersey, U.S.A. (regardless of its or
any other jurisdiction's choice of law principles), or, as necessary, the laws
of the United States of America.
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SECTION FOURTEEN
This Agreement constitutes the entire agreement between the parties hereto
respecting the subject matter hereof, and supersedes and terminates all prior
agreements respecting the subject matter hereof, whether written or oral, and
may be amended only by an instrument in writing executed by both parties hereto.
SECTION FIFTEEN
(a) Indemnification by Licensee - Licensee shall indemnify and hold
Licensor harmless against all liability, damage, cost or expense (including
reasonable attorneys' fees) arising out of the promotion, distribution, sale or
use of products made using the products supplied by Licensor or its designee to
Licensee hereunder, including those resulting from any personal injury
(including death) to any person including employees, servants, or agents of
Licensee, except to the extent such liability, damage, cost or expense is caused
by the negligence, omission, failure to act, intentional malfeasance, willful
misconduct, and/or breach of the warranties or other obligations of Licensor
under this agreement. In the event of any claim arising under this indemnity,
prompt notice of such claim shall be given by Licensor to Licensee which shall
have the right to conduct the defense in respect thereto, but Licensor may have
counsel present at its own expense and shall be entitled to participate in the
defense of any such claim. Licensor shall cooperate with Licensee in such
defense at the expense of Licensee. No settlement of any such matter shall be
made without the written approval of Licensee and Licensor, which will not be
unreasonably withheld.
(b) Indemnification by Licensor - Licensor shall indemnify and hold
Licensee harmless against all liability, damage, cost or expense (including
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reasonable attorneys' fees) arising out of any breach of this Agreement by
Licensor and/or the manufacturing, packaging and storing of products supplied by
Licensor.
SECTION SIXTEEN
This Agreement and the license herein granted shall be binding upon and
inure to the benefit of each of the parties hereto, their successors and the
assigns of the entire business relating thereto of each of the parties.
SECTION SEVENTEEN
If any term or provision of this Agreement is found held to be excessive,
or invalid, void or unenforceable, the offending term or revision shall be
deleted or revised to the extent necessary to be enforceable, and, if possible,
replaced by a term or provision which, so far as practicable, achieves the
legitimate aims of the parties.
SECTION EIGHTEEN
Any notice or other communication given by either party hereto to the other
party relating to this Agreement shall be sent by registered or certified mail,
return receipt requested, addressed to such other party at the address set forth
above. Changes of address shall be given in the same manner as any other notice.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized representatives as of the day and year first
above written.
XXXX FINE CHEMICALS, IN.
Attest: By: ______________________________
Title: ___________________________
HORIZON PHARMACEUTICALS, INC.
Attest: By: ______________________________
Title: ___________________________
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