AGREEMENT
AGREEMENT
THIS
AGREEMENT is made and entered into as of this 4th day of October, 2006, by
and
between Interpharm, Inc., having
its principal place of business at 00 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx, 00000
(“Interpharm”),
and Tris
Pharma, Inc. having its principal place of business at 0000 Xxxxx 000, Xxxxx
X,
Xxxxxxxx Xxxxxxxx, XX 00000
(“Tris”).
RECITALS
A. Interpharm
is engaged in, among other things, the marketing and sale of finished drug
products;
B. Tris
is
engaged in,
among other things,
research
and product development of pharmaceutical liquids and manufacturing of
pharmaceutical products;
C. Interpharm
and Tris desire to establish a relationship pursuant to which Tris will develop
and manufacture, and Interpharm will market and sell,
certain pharmaceutical liquids;
D. Interpharm
and Tris previously entered into an agreement for the development of liquid
products dated as of February 24, 2005 (the “Prior Agreement”);
E. As
set
forth below, this Agreement shall supersede the Prior Agreement, which shall
be
of no further force or effect;
F. On
February 24, 2005, Interpharm and Tris entered into an agreement whereby Tris
is
to transfer certain research and technology to Interpharm which it will use
to
develop and manufacture certain solid oral dosage pharmaceutical products (the
“Solids Agreement”);
G. On
July
6, 2005, Interpharm and Tris entered into an amendment to the Solids Agreement
(“Amendment No. 1”) to add certain pharmaceutical products to the Solids
Agreement;
H. On
April
28, 2006, Interpharm and Tris entered into an amendment (Amendment No. 2) to
the
Solids Agreement, as amended by Amendment No. 1; and
I. On
October 4, 2006, Interpharm entered into an Amendment No. 3 to the Solids
Agreement, as amended by Amendment No. 1 and Amendment No. 2.
NOW,
THEREFORE, in consideration of the foregoing premises, and the mutual covenants
and obligations set forth herein, Interpharm and Tris hereby agree as
follows:
ARTICLE
I
DEFINITIONS
1.1. “ANDA”
shall
mean the Abbreviated New Drug Application for a Product filed with the FDA
by
Interpharm, and any supplements thereto.
1.2
“API”
shall
mean the active pharmaceutical ingredient for a Product.
1.3
“Commercialization”
shall
mean the use of Commercially Reasonable efforts for the commercial marketing
and
sale of a Product in the Territory, including advertising, education, planning,
marketing, promotion, distribution, market and product support studies for
the
Products in the Territory.
1.4
“Commercially
Reasonable”
shall
mean a party’s reasonable efforts and diligence in accordance with its business,
legal, medical and scientific judgment, taking into account the competitiveness
of the marketplace, the proprietary position of a Product, the regulatory
structure involved, the profitability of a Product, and other relevant factors
including, without limitation, technical, legal, scientific or medical
factors.
1.5
“Confidential
Information”
shall
mean, with respect to a party, all information of any kind whatsoever (including
without limitation, data, compilations, formulae, models, patent disclosures,
procedures, processes, projections, protocols, results of experimentation and
testing, specifications, strategies and techniques), and all tangible and
intangible embodiments thereof of any kind whatsoever (including without
limitation, apparatus, compositions, documents, drawings, machinery, patent
applications, records and reports), which is disclosed by such party to the
other party and is marked, identified as or otherwise acknowledged to be
confidential at the time of disclosure to the other party, including all Product
Details and this Agreement. Notwithstanding the foregoing, Confidential
Information of a party shall not include information which the other party
can
establish by written documentation (a) to have been publicly known prior to
disclosure of such information by the disclosing party to the other party,
(b)
to have become publicly known, without fault on the part of the other party,
subsequent to disclosure of such information by the disclosing party to the
other party, (c) to have been received by the other party at any time from
a
source, other than the disclosing party, rightfully having possession of and
the
right to disclose such information, (d) to have been otherwise known by the
other party prior to disclosure of such information by the disclosing party
to
the other party, or (e) to have been independently developed by employees or
agents of the other party without the use of such information disclosed by
the
disclosing party to the other party.
1.6
“Direct
Labor and Benefits”
shall
mean that portion of basic wages, labor and related payroll taxes and employee
benefits spent in actual production of a Product which can be identified with
or
charged to a Product.
1.7
“FDA”
shall
mean the United States Food and Drug Administration, and any successor agency
thereto.
1.8
“GMP”
shall
mean current Good Manufacturing Practices promulgated by the
FDA.
1.9
“Labeling”
shall
mean all labels and other written, electronic, printed or graphic matter upon
(i) a Product or any container or wrapper utilized with a Product, or (ii)
any
written material accompanying a Product, including, without limitation, package
inserts.
2
1.10
“Liquids
Pro Rata Share”
shall
mean, with respect to a Party, such Party’s portion contributed to the Liquids
Set Aside Amount in proportion to the other Party.
1.11 “Liquids
Set Aside Amount”
shall
mean an amount of money equal to: (i) the Initial Payment, (ii) the Second
Payment, (iii) the Third Payment, (iv) the Fourth Payment and (v) all Research
and Development Costs.
1.12
“Losses”
shall
mean any liabilities, damages, costs or expenses, including reasonable
attorney's fees, incurred by either party which arise from any claim, lawsuit
or
other action by a third party.
1.13 “Manufacturing
Costs”
shall
mean, with respect to a Product, raw material costs, Product components and
the
actual cost of manufacturing a Product, including the cost of Direct Labor
and
Benefits, and Manufacturing Overhead, all determined in accordance with U.S.
Generally Accepted Accounting Principles.
Upon Interpharm’s prior written approval which shall not be unreasonably
withheld, Manufacturing Costs shall include, to the extent applicable, the
cost
to Tris of having some portion of the manufacturing process (e.g., particle
size
reduction of API), performed by a third party.
1.14
“Manufacturing
Overhead”
shall
include a pro-rata portion of all operating expenses incurred by and in support
of the particular manufacturing cost centers, purchasing department and quality
assurance operations, with respect to a Product, including indirect labor,
related payroll taxes, employee benefits, depreciation, taxes, insurance, rent,
repairs and maintenance, supplies, utilities, and factory administrative
expenses. The
pro-rata portion of operating expenses shall be determined by taking the total
output of Products during the applicable period divided by Tris’ manufacturing
capacity and multiplying the result by the total amount of liquid products
manufacturing overhead for the applicable period. Manufacturing Overhead shall
exclude selling, general and administrative, research and development, and,
interest expenses and all debt service payments of Tris (other than interest
expenses and debt service payments which are related to manufacturing which
may
be included in Manufacturing Overhead).
1.15
“Net
Profits”
shall
mean the gross invoice sales of Product to third parties, less the following
deductions:
1.15.1
any
statutory or contractual liability for rebates to be paid to any government
entity, including but not limited to, rebates to be paid pursuant to Medicaid
rebate legislation and state and local government rebate programs;
1.15.2
cash
discounts;
1.15.3
any
adjustments for allowances or credits for returned Product, damaged Product,
commercial rebates, promotional allowances given in lieu of price adjustments,
chargebacks, shelf stock adjustments, trade discounts or any similar and then
customary discounts, credits or adjustments, whether or not such commercial
rebates, or trade discounts are paid directly to the customer;
1.15.4
actual
freight, shipping and insurance costs incurred by Interpharm;
3
1.15.5
actual
bad debts;
1.15.6
all
costs
incurred as the result of any recall, field correction, market withdrawal,
stock
recovery, or other similar action with respect to any Product that is not
recovered through insurance or other third-party claim;
1.15.7
all
Manufacturing Costs incurred by Tris; and
1.15.8
all
costs
incurred for Packaging and Labeling.
Sales
or
transfers of Products to affiliates for ultimate use or resale by such persons
shall be at prices (or deemed prices) that are consistent with sales made to
non-affiliates of the same or a similar business type that make purchases in
similar quantities. Similarly, any discounts, adjustments, rebates and
allowances given to customers who are affiliates shall be consistent with such
adjustments or allowances given to customers who are non-affiliates and are
in
the same or similar business and make purchases in similar quantities. In
addition, if Interpharm enters into an agreement with a third party pursuant
to
which Interpharm agrees not to market a Product and, in consideration of that
agreement, Interpharm receives rights to one or more other products or other
monetary or non-monetary consideration, the revenues received by Interpharm
from
the sales of such other products and the fair market value of any other
consideration shall be included in Interpharm’s Net Profits
hereunder.
1.16
“Packaging”
shall
mean all primary containers, including blisters, cartons, shipping cases or
any
other like matter used in packaging or accompanying a Product, including
electronic files.
1.17.
“Products”
shall
mean the pharmaceutical immediate release liquid products developed,
manufactured and sold pursuant to this Agreement which are listed on Exhibit
A
hereto.
1.18. “Product
Details”
shall
mean all properties, specifications and formulations relating to a Product,
including specifications and formulations of the API, and all properties,
specifications, formulations and manufacturing processes for the finished
product necessary for Tris to manufacture and Interpharm to file a complete
and
approvable ANDA with the FDA. Product Details shall also include such advice
and
counseling regarding information provided by Tris as may be reasonably required
by Interpharm.
1.19
“Replacement
Products”
shall
mean the Products that are listed on Exhibit B by Interpharm from time to time,
and as may be amended from time to time.
1.20
“Research
and Development Costs”
shall
mean biostudy costs, raw materials and all other costs incurred in connection
with the research and development of the Products.
1.21. “Territory” shall
mean the United States of America and its territories and
possessions.
4
ARTICLE
II
COOPERATION
2.1. Termination
of the Prior Agreement.
The
Parties hereby agree that upon execution of this Agreement, the Prior Agreement
shall be terminated and of no further force or effect, with neither Party having
any further obligations thereunder. The Parties further agree to release and
discharge each other from any and all liabilities, claims, actions, causes
of
action, suits, debts, sums of money, accounts and demands whatsoever, in law
or
equity, which either Party may have against the other, at any time, arising
from
the Prior Agreement.
2.2
Cooperation.
Upon
and
subject to the terms and conditions of this Agreement, Interpharm and Tris
shall
cooperate with respect to researching, developing, manufacturing and marketing
of up to fourteen (14) Products listed on Exhibit A hereto. Tris hereby agrees
that the development of each Product shall be completed such that Tris shall
have taken all steps necessary for Interpharm to file an ANDA for each Product.
2.3
Tris’
Exclusivity Obligation. Tris
shall not cooperate with any other person or entity with respect to the
research, development, manufacture, supply or distribution of a Product
in
the Territory without
the prior written consent of Interpharm during the term of this Agreement.
For
the avoidance of doubt, Tris may not provide Product Details for a Product
to,
or manufacture any Product for, any person or entity outside the Territory
if
such person or entity intends to, or will sell Products in the Territory. Tris
shall take Commercially Reasonable steps to ensure that other parties do not
sell Products in the Territory, including, but not limited to, requiring such
other parties to agree not to do so and taking Commercially Reasonable actions
to enforce such agreements. In the event that Products or Product Details are
sold in the Territory in contravention of this Agreement, Tris hereby agrees
that it shall pay over to Interpharm the greater of all profits earned with
respect to such Products and Product Details or the amount of Interpharm’s lost
profits as determined by the amount of Products sold in contravention of this
Section.
2.4 Interpharm’s
Exclusivity Obligation.
2.4.1
Interpharm
hereby covenants not to in-license, market, sell, distribute or have marketed,
have sold or have distributed any Competitive Product in the Territory during
the Term. Notwithstanding the foregoing, if Interpharm or an Interpharm
Affiliate acquires an entity or all or substantially all of the assets of an
entity and such assets include, a Competitive Product, Interpharm shall use
its
Commercially Reasonable efforts to divest itself of such Competitive Product
within one-hundred and twenty (120) days of the closing of such acquisition
(subject to any binding commitments to customers), if such Competitive Product
is not being sold commercially at such time. If, however, any sales of a
Competitive Product are made, Tris shall be entitled to payment by Interpharm
of
the total Net Profits (determined on the same basis under this Agreement as
in
the case of the sale of the Product to which the Competitive Product relates)
from the sales of such Competitive Product. For purposes hereof, a "Competitive
Product"
means,
with respect to any Product, the generic AB rated product equivalent to the
branded Product listed in Exhibit A.
5
2.4.2
Interpharm
hereby
covenants that it will not, without the prior written authorization of Tris,
utilize the Product Details delivered hereunder to: (i) promote or actively
solicit sale of a Product or advertise a Product, outside of the Territory;
(ii) purchase or cause to be purchased a Product which Interpharm has
represented, directly or indirectly, as being for the purpose of sale in the
Territory for sale in any other country outside the Territory; or (iii)
knowingly sell or distribute for resale a Product purchased hereunder to a
third
party who intends to sell outside of the Territory.
2.5. The
Parties’ Responsibilities.
2.5.1
Interpharm’s
Responsibilities.
Interpharm
shall be responsible for:
2.5.1.1 Making
the following payments to Tris. In the event that Interpharm fails to make
any
of the following payments, Tris’ sole remedy shall be the commencement of an
arbitration in accordance with Section 8.2:
2.5.1.1.1
An
initial payment of $250,000 to Tris, which has already been paid by Interpharm
and which Tris hereby acknowledges receiving from Interpharm as of the date
hereof (the “Initial Payment”);
2.5.1.1.2
$500,000
to Tris upon execution of this Agreement;
2.5.1.1.3
[Intentionally
left blank.]
2.5.1.1.4
$250,000
to Tris by December 15, 2006 (the “Fourth Payment”);
2.5.1.1.5
payment
for all Research and Development Costs on net 45 terms;
2.5.1.1.6
payment
for all Packaging and Labeling, on net 45 terms, to the extent not provided
by
Interpharm pursuant to Section 2.4.1.7 below;
2.5.1.1.7
payment
for all raw materials and product components necessary to manufacture the
Products, on net 45 terms, to the extent not otherwise provided by Interpharm
pursuant to Sections 2.5.1.1.6, 2.5.1.2 or 2.5.1.6 hereof;
2.5.1.1.8
payment
of all Tris Manufacturing Costs on net 45 terms; and
2.5.1.1.9
conducting
all biostudies for the Products as necessary to obtain FDA marketing approval
in
the territory.
2.5.1.2
Selecting
the API suppliers (including auditing them) and providing to Tris and paying
for
the APIs necessary to manufacture the Products, and, to the extent available,
related substances, impurities and technical packages/dossiers of the Products
(the “Product Information”), and testing of samples for microbial contamination
during development. In the event that the Product Information is not available,
Tris may elect not to proceed with the specified Product under this Agreement
by
giving notice to Interpharm in writing. Upon receipt of written notice from
Tris, Interpharm
shall have the right (i) not to continue with said Product, thereby reducing
the
number of Products in Exhibit A by one (1) or (ii) to select a Replacement
Product pursuant to the provisions of Section 2.5.3, including Section
2.5.3.1.
Should Interpharm elect to reduce the number of Products pursuant to clause
(i)
of this Section 2.5.1.2, it
shall
have the right to recover the “Penalty” (as defined in Section 2.5.3.1 below).
Any such recovery will be applied against future payments owed to Tris, whether
pursuant to Section 2.5.1.1 or Section 3.1, as designated by Interpharm, in
its
sole discretion.
6
2.5.1.3
Supplying
to Tris samples of the branded, and if generic versions of the branded Product
are sold commercially, samples of the generic versions of the Products which
Tris is requested to develop.
2.5.1.4
obtaining
approval of,
and
maintenance of, any ANDAs for a Product and
if required by FDA.
If any
other federal or foreign government or regulatory submissions or agreements
are
required to manufacture a Product in accordance with the ANDAs, Interpharm
shall
be responsible for completing such submissions and for payment of associated
fees;
2.5.1.5
Commercialization
of the Products and payment of all related costs (“Marketing
Costs”);
2.5.1.6
performing
an analysis of all Products to determine whether a Product will infringe on
the
intellectual property of another party (an “IP Analysis”). Interpharm shall
perform an IP Analysis within sixty (60) days of receipt from Tris of the
Product Details for a Product. In the event that Interpharm believes within
the
sixty (60) day period that a Product, as formulated in the Product Details,
infringes the intellectual property of another party, it shall provide written
notice to Tris. Tris shall thereupon advise Interpharm as to whether it agrees
with Interpharm’s position. If (i) Tris does agree with Interpharm, or (ii) if
it does not, but Interpharm, acting in good faith, remains convinced, after
hearing Tris’ arguments, that the Product infringes, the parties shall meet in
good faith to decide on a course of action. In the event that the parties are
unable to agree on a reformulation plan for the Product so as not to infringe
on
the intellectual property of another party, Interpharm shall select a
Replacement Product with the consent of Tris, such consent not to be
unreasonably withheld. In the event that Interpharm selects a Replacement
Product, all rights to the original Product shall revert exclusively to Tris;
and
2.5.1.7
providing
Tris, beginning 180 days after the filing date of each Product ANDA, twelve
month sales forecasts for such Product (the “Forecasts”). Interpharm shall have
the right, at any time, to amend the Forecasts in good faith based upon changes
in market conditions for a Product. The Parties agree to negotiate and finalize
a comprehensive manufacturing and supply agreement for the Products within
six
months from the effective date of this Agreement.
7
2.5.2
Tris’s
Responsibilities.
Tris
shall be responsible for:
2.5.2.1
providing
Product Details for the Products, as well as conduct stability testing and
take
all steps necessary for Interpharm to file for an ANDA for each Product.
2.5.2.2
the
manufacturing and supply of each Product in the event that an ANDA for a Product
is necessary and is obtained. Specifically, Tris shall manufacture, fill,
package, label and warehouse each Product in conformity with GMP, the ANDA
and
all applicable laws and regulations;
2.5.2.3
providing
any and all Product Details to Interpharm in the form that may be necessary
or
required to manufacture a Product, market a Product, obtain an ANDA for a
Product, if an ANDA is necessary, for any step necessary in obtaining an ANDA
and as may be reasonably requested by Interpharm;
2.5.2.4
conducting
any
studies (other than the biostudies) required to support an ANDA for a Product
or
to reply to a deficiency letter from the FDA with respect to a Product,
including, but not limited to, stability and microbial testing; and
2.5.2.5
obtaining
all equipment necessary to manufacture the Products, and having such equipment
validated, prior to completion of development of the first Product listed on
Exhibit A.
2.5.2.6 within
5
business days after each shipment of Product, provide Interpharm with a
statement of its standard manufacturing costs for the Product (“SMC Statement”).
“SMC Statement” shall mean Tris’ good faith estimate of the Manufacturing Costs
for a specific shipment of Product.
2.5.2.7 within
45
days after the end of each calendar quarter, provide Interpharm with a true
and
accurate statement of its manufacturing costs for the Product (“TMC Statement”).
“TMC Statement” shall mean Tris’ actual Manufacturing Costs for a specific
shipment of Product.
2.5.3
Replacement
Products.
With the
written consent of Tris, such consent not to be unreasonably withheld,
Interpharm may substitute one of the Replacement Products for any Products
listed on Exhibit A at any time prior to Tris commencing formulation for a
Product listed on Exhibit A; provided, that Interpharm shall only have a right
of substitution in the event that one of the following occurs: (1) Tris confirms
that it is unable to deliver a formulation for such Product; (2) the
commencement of such formulation is delayed; or (3) Interpharm has the right
to
select a Replacement Product pursuant to Section 2.5.1.7 above.
2.5.3.1 In
the
event that Interpharm has the right to request a Replacement Product for a
Product pursuant to Section 2.5.3 above and Tris withholds consent for more
than
two (2) Replacement Products for such Product, Interpharm shall have the right
not to continue with said Product, thereby reducing the number of Products
referred to in Section 2.1 by one (1). In the event that Interpharm exercises
its rights under this Section 2.5.3, it shall have the right to recover any
amounts paid to Tris under Section 2.4.1.1.4 above, and a pro rata portion
of
any payment made to Tris under Section 2.4.1.1.1, 2.4.1.1.2 or Section 2.4.1.1.3
above (the “Penalty”). Any such recovery will be applied against future payments
owed to Tris, whether pursuant to Section 2.4.1.1 or Section 3.1, as designated
by Interpharm, in its sole discretion.
8
2.6
Tris
License.
Tris
shall not, at any time during the term of this Agreement, manufacture or sell
any Product under License unless, on a product-by-product basis, Interpharm
(i)
fails to commercially launch a Product within 12 months of FDA approval and
such
decision to delay the launch of the Product is not the result of (a) an
outstanding infringement claim involving the Product or (b) Tris’ inability to
manufacture the Product; or (ii) fifteen months after FDA approval of a Product,
Interpharm’s market share of that Product is less than 35% of the market share
forecast in the initial Forecast under term 2.5.1.7. In the event that Tris
wishes to manufacture and/or sell any Product pursuant to this Section 2.6(i)
or
(ii), it shall first provide Interpharm with at least 90 days prior written
notice (a “Tris Manufacturing Notice”). For the sake of clarity, the Tris
Manufacturing Notice may not be submitted to Interpharm earlier than 90 days
prior to the 12 month or 15 month time point respectively provided in terms
2.6(i) and (ii). “License” shall mean Tris’ limited right to manufacture and/or
sell Product under Interpharm’s ANDA which right shall only be triggered under
the conditions set forth in this Section 2.6.
ARTICLE
III
PROFIT
SHARING, EXPENSE RECOVERY, SET ASIDE AND BREACH
3.1. Profit
Sharing.
3 .1.1
Sales
by Interpharm.
Upon
the commencement of Interpharm’s sale of each Product, under this Agreement, 10%
of Net Profits shall be set aside to be distributed to the Parties (the “Liquids
Set Aside”), to satisfy each Party’s Liquids Pro Rata Share of the Liquids Set
Aside Amount, pursuant to Section 3.1.3.1 of the Solids Agreement, as amended.
Tris shall be entitled to receive 40% of the remaining Net Profits after the
Liquids Set Aside (the “Tris Payment”). Within twenty (20) business days of the
end of each month, Interpharm shall provide to Tris a calculation of the Tris
Payment based on monies actually collected and received by it (the “Tris Net
Profit Statement”) along with payment in the amount of the Tris Payment. In
order for Interpharm to calculate the Tris Payment, Tris must provide to
Interpharm, no more than five (5) business days after each shipment of Product
to Interpharm, its SMC Statement for the shipment of Product. In the event
that
Interpharm fails to deliver a Tris Net Profit Statement for any month, which
is
not the result of Tris’ failure to provide its SMC Statement, Tris shall provide
a written notice of such non-delivery to Interpharm after which it shall have
an
additional five (5) business day to provide the Tris Net Profit Statement.
During each following calendar quarter, Interpharm and Tris shall reconcile
the
SMC Statements against the TMC Statements for the preceding quarter and shall
accordingly adjust the Net Profits due to each Party within 90 days from the
end
of the preceding quarter. With respect to any breaches or disputes that arise
pursuant to this Section, Tris’ sole remedy shall be the commencement of
arbitration pursuant to Section 8.2.
3.1.2
Sales
by Tris.
In
the
event that Tris begins sales of a Product pursuant to a Tris Manufacturing
Notice, Interpharm shall be entitled to receive its share of the Liquids Set
Aside, plus 40% of the remaining Net Profits after the Liquids Set Aside (the
“Interpharm Payment”). Within twenty (20) business days of the end of each
month, Tris shall provide to Interpharm a calculation of the Interpharm Payment
based on monies actually collected and received by it (the “Interpharm Net
Profit Statement”) along with payment in the amount of the Interpharm Payment.
In the event that Tris fails to deliver an Interpharm Net Profit Statement
for
any month, Interpharm shall provide a written notice of such non-delivery to
Tris after which it shall have an additional five (5) business day to provide
the Interpharm Net Profit Statement.
9
ARTICLE
IV
FURTHER
OBLIGATIONS OF THE PARTIES
4.1. Regulatory
File Maintenance.
Interpharm shall be solely responsible for maintaining the ANDA and all other
applicable FDA approvals and registrations to permit the sale of
Product.
4.2. Facility
Qualification.
Tris
shall take all Commercially Reasonable actions to qualify (and thereafter to
maintain qualification of) the facility (or facilities) at which Tris will
manufacture Products hereunder, as required under applicable law.
4.3. Adverse
Reactions; Recall.
In
the
event Interpharm believes it may be necessary to conduct a recall, field
correction, market withdrawal, stock recovery, or other similar action with
respect to a Product (a “Recall”), Interpharm shall have sole discretion to make
all decisions with respect to such events. To the extent
the
Recall arises
solely from Interpharm acts or omissions in the, marketing, distribution,
storage or handling of such Product, the cost of goods sold, distribution
expenses and third-party recall expenses (collectively, "Recall Costs") shall
be
borne by Interpharm.
To the extent the
recall arises solely from the manufacture of Product or Tris’ breach of this
Agreement, the Recall Costs shall be borne by Tris. In the event the Recall
is
not the fault
of either
party the
Recall Costs shall be borne
by the parties
equally.
4.4
Audit
Rights.
4.4.1 Tris
Audit Rights.
Tris
shall have the right at any time and from time to time to nominate a firm of
independent certified public accountants to have access to the financial records
of Interpharm relating to Products to verify, at Tris’ expense, Net Profits. In
the event that the auditing accountant finds that Interpharm’s calculation of
Net Profits, varies from the actual amounts by more than five percent (5%),
Tris
shall provide Interpharm with notice of the variance. Interpharm shall have
thirty (30) days from the receipt of such notice to analyze the variance. At
the
conclusion of the thirty (30) day period, Interpharm shall either (i) pay the
cost of that audit and any monies owed as a result of the variance with interest
at five percent (5%) per annum on such amount for the period of time that the
variance existed or (ii) provide Tris written notice of any disagreement with
Tris’ position (the “Interpharm Notice”). In the event that Tris disagrees with
the Interpharm Notice, then
Tris’s sole remedy shall be commencement of an arbitration in accordance with
Section 8.2.
4.4.2
Interpharm
Audit Rights.
Interpharm
shall have the right at any time and from time to time to nominate a firm of
independent certified public accountants to have access to the financial records
of Tris relating to Products to verify, at Interpharm’s expense, Manufacturing
Costs. In the event that the auditing accountant finds that Tris’ calculation of
Manufacturing Costs, varies from the actual amounts by more than five percent
(5%), Interpharm shall provide Tris with notice of the variance. Tris shall
have
thirty (30) days from the receipt of such notice to analyze the variance. At
the
conclusion of the thirty (30) day period, Tris shall either (i) pay the cost
of
that audit and any monies owed as a result of the variance with interest at
five
percent (5%) per annum on such amount for the period of time that the variance
existed or (ii) provide Interpharm written notice of any disagreement with
Interpharm’s position (the “Tris Notice”). In the event that Interpharm
disagrees with the Tris Notice, then
Interpharm’s sole remedy shall be commencement of an arbitration in accordance
with Section 8.2.
10
ARTICLE
V
REPRESENTATIONS,
WARRANTIES AND COVENANTS
5.1. Representations
and Warranties by each Party.
Each
Party hereby represents and warrants to the other party as follows:
5.1.1 Corporate
Existence.
Such
Party is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated.
5.1.2
Authorization
and Enforcement of Obligations.
Such
party (a) has the corporate power and authority and the legal right to enter
into this Agreement and to perform its obligations hereunder, and (b) has taken
all necessary corporate action on its part to authorize the execution and
delivery of this Agreement and the performance of its obligations hereunder.
This Agreement has been duly executed and delivered on behalf of such party,
and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
5.1.3
No
Conflict.
The
execution and delivery of this Agreement and the performance of such party’s
obligations hereunder (a) do not conflict with or violate any requirement of
applicable laws or regulations, and (b) do not conflict with, or constitute
a
default under, any material contractual obligation of such party.
5.2
Additional
Representations, Warranties and Covenants by Tris.
Tris
hereby represents, warrants and agrees with Interpharm that all Product Details
provided to, and to be provided to Interpharm, are and will be true and accurate
in all respects and will include use of only pharmaceutically accepted products
listed in the IIG Guide or GRAS (Generally Recognized as Safe)
products.
ARTICLE
VI
OTHER
AGREEMENTS
6.1.
Ownership
of Intellectual Property Rights other than ANDAs.
Tris
hereby grants to Interpharm a royalty free and fully paid up license to use
all
technology, discoveries, patent applications, patents, know-how and inventions
relating to a Product or any Product Details for a Product in the Territory
(the
“Interpharm License”). Interpharm may use or exploit the Interpharm License for
any purpose whatsoever in the Territory.
11
6.2
Ownership
of ANDAs.
Tris
hereby agrees that Interpharm shall have all ownership rights with respect
to
all Product ANDAs.
ARTICLE
VII
CONFIDENTIALITY
AND PUBLIC DISCLOSURE
7.1.
Confidentiality.
Except
for literature and information intended for disclosure to customers, and except
as may be required to obtain government approval to manufacture, sell or use
a
Product, or as may be required under applicable federal securities laws, each
Party will treat as confidential the Confidential Information, and will take
all
necessary precautions to assure the confidentiality of such information. Each
party agrees to return to the other party upon the expiration or termination
of
this Agreement all Confidential Information acquired from such other party,
except as to such information it may be required to retain under applicable
law
or regulation, and except for one copy of such information to be retained by
such party’s legal department or outside counsel. Neither Party shall, during
the period of this Agreement or for five (5) years thereafter, without the
other
party’s express prior written consent use or disclose any such Confidential
Information for any purpose other than to carry out its obligations hereunder.
Each Party, prior to disclosure of such Confidential Information to any
employee, consultant or advisor shall ensure that such person is bound in
writing to observe the confidentiality provisions of this Agreement. The
obligations of confidentiality shall not apply to information that the receiving
party is required by law or regulation to disclose, provided however that the
receiving party shall so notify the disclosing party of its intent and cooperate
with the disclosing party on reasonable measures to protect the confidentiality
of the information.
7.2. Public
Disclosure.
Except
for such disclosure as is deemed necessary, in the reasonable judgment of a
Party, to comply with applicable laws, no announcement, news release, public
statement, publication, or presentation relating to the existence of this
Agreement, the subject matter hereof, or either Party’s performance hereunder
will be made without the other Party’s prior written approval, which approval
shall not be unreasonably withheld. The Parties agree that they will use
reasonable efforts to coordinate the initial announcement or press release
relating to the existence of this Agreement so that such initial announcement
or
press release by each is made contemporaneously.
ARTICLE
VIII
TERM;
ARBITRATION OF CERTAIN DISPUTES
8.1
Term.
Unless
sooner terminated as provided in this Agreement, in the event that Interpharm
obtains an ANDA for any Products, the term of this Agreement shall be for the
same term that the last remaining ANDA for a Product that is valid and in
effect.
8.2
Arbitration
Procedure.
The
Parties hereby agree that only Sections 2.4.1.1, 3.1 and 4.4 of this Agreement
shall be subject to arbitration. Any arbitration shall be conducted in
accordance with the following provisions:
12
8.2.1
Any
Party
seeking to commence an arbitration hereunder shall send a written notice
providing the facts underlying the potential arbitration to the other Party.
The
Parties shall then make a good faith effort to settle the dispute. In the event
that the dispute is not settled within thirty (30) days of delivery of the
notice, the Party that delivered the notice may commence an arbitration
hereunder;
8.2.2
Arbitrations
shall be conducted in accordance with the Commercial Rules of the American
Arbitration Association (“AAA”) by three arbitrators at a AAA facility in New
York City;
8.2.3
The
costs
of the arbitration and of the Parties in conducted the arbitration, including
reasonable attorneys’ fees, shall be borne by the losing Party;
8.2.4
Upon
and
after the submission of any dispute to arbitration, the Parties shall continue
to exercise their remaining respective rights, and fulfill their remaining
respective obligations under this Agreement;
8.2.5
Any
arbitration award rendered in accordance with the provisions of this Section
8.2
shall be final and binding upon the concerned Parties, and the Parties further
agree that such award may be enforced by any court having jurisdiction over
the
Party against which the award has been rendered or the assets of such Party
wherever the same may be located. The arbitrators shall be instructed that
any
such arbitration shall be completed and an arbitration award issued within
three
(3) months following the commencement thereof.
8.2.6
Liquidated
Damages.
In
the
event that Interpharm fails to pay a final arbitration award in favor of Tris
within thirty (30) days of the rendering of the final award, Interpharm shall
pay to Tris liquidated damages of $20,000 in addition to the award. The Parties
acknowledge and agree that the sums payable hereunder are liquidated damages
and
not penalties. The parties further acknowledge that (i) the amount of loss
or
damages likely to be incurred by Tris is incapable or is difficult to precisely
estimate, (ii) the amounts specified bear a reasonable proportion and are not
plainly or grossly disproportionate to the probable loss likely to be incurred
by Tris in the event that a final arbitration award is not paid promptly, and
(iii) the Parties are sophisticated business parties and have been represented
by sophisticated and able legal counsel and negotiated this Agreement at arm’s
length.
8.3 Termination
by Either Party for Cause. This
Agreement may be terminated prior to the expiration of the Term by either Party
if the other Party is subject to a Chapter 7 or other liquidation bankruptcy,
dissolution or winding-up of operations (other than dissolution or winding
up
for the purposes or reconstruction or amalgamation)
8.4
Effect
of Termination.
8.4.1
Upon
termination of the Agreement by Tris with respect to a particular Product,
the
following shall occur:
13
8.4.1.1
All
rights and licenses granted to Interpharm for such particular Product shall
terminate immediately;
8.4.1.2
Interpharm
shall have no further rights hereunder in the particular Product, and the ANDA
for such Product shall revert and be transferred to Tris, subject to
Interpharm's option to sell off existing inventory of such particular Product
for two (2) years after the termination date;
8.4.2
Upon
termination of the Agreement by Interpharm, the following shall
occur:
8.4.2.1
All
future payment obligations to Tris shall terminate immediately, other than
the
obligation to pay any amounts that were due and owing prior to the date of
termination;
8.4.2.2
Interpharm
shall have the unrestricted right to manufacture and sell the Products in or
outside of the Territory on a royalty-free basis.
8.4.3
Expiration or termination of this Agreement shall not relieve the Parties of
any
obligation, including any payment obligation, accruing prior to such expiration
or termination. .
8.4.4
Within thirty (30) days following the expiration or termination of this
Agreement, the non-terminating Party shall return to the other Party, or
destroy, upon the written request of the other Party, any and all Confidential
Information of the other Party in its possession and upon a Party's request,
such destruction (or delivery) shall be confirmed in writing to such Party
by a
responsible officer of the other Party.
ARTICLE
IX
INDEMNIFICATION
| 9.1 |
Indemnification.
|
9.1.1
Tris
Indemnification.
Tris
agrees to indemnify, defend and hold Interpharm harmless from and against any
Losses resulting from or arising out of the execution by Tris of this Agreement,
the performance or breach by Tris of its representations, warranties, covenants
or obligations under this Agreement, failure by Tris to take any action required
to be taken by it (and not by Interpharm) hereunder, at law or otherwise, its
manufacturing, storage, handling, packaging or labeling of a Product., or its
negligence or willful misconduct in the performance of its obligations
hereunder. In the event that Tris markets or sells any Product pursuant to
Section 2.6, Tris shall further indemnify, defend and hold Interpharm harmless
from and against any Losses resulting from or arising out of Tris’ sale,
marketing or commercialization of any Product.
9.1.2
Interpharm
Indemnification.
Interpharm agrees to indemnify, defend and hold Tris harmless from and against
any Losses resulting from or arising out of (i) Interpharm’s breach of its
representations, warranties, covenants or obligations under this Agreement,
(ii)
any act of Interpharm or failure by Interpharm to take any action required
to be
taken by it (and not by Tris) hereunder, at law or otherwise, (iii) infringement
on the intellectual property of a third party, or, subject to Tris’s performance
of Section 5.2, (iv) any injuries caused by (a) the marketing or distribution
of
a Product, or (b) the failure to warn of the risks associated with a
Product.
14
9.1.3
Indemnification
Procedure.
A Party
seeking indemnification (“Indemnified Party”) shall notify, in writing, the
other party (“Indemnifying Party”) within fifteen (15) days from the assertion
of any claim or discovery of any fact upon which the Indemnified Party intends
to base a claim for indemnification. An Indemnified Party's failure to so notify
the Indemnifying Party shall not, however, relieve such Indemnifying Party
from
any liability under this Agreement to the Indemnified Party with respect to
such
claim except to the extent that such Indemnifying Party is actually denied,
during the period of delay in notice, the opportunity to remedy or otherwise
mitigate the event or activity(ies) giving rise to the claim for indemnification
and thereby suffers or otherwise incurs additional liquidated or other readily
quantifiable damages as a result of such failure. The Indemnifying Party, while
reserving the right to contest its obligations to indemnify hereunder, shall
be
responsible for the defense of any claim, demand, lawsuit or other proceeding
in
connection with which the Indemnified Party claims indemnification hereunder.
The Indemnified Party shall have the right at its own expense to participate
jointly with the Indemnifying Party in the defense of any such claim, demand,
lawsuit or other proceeding, but with respect to any issue involved in such
claim, demand, lawsuit or other proceeding with respect to which the
Indemnifying Party has acknowledged its obligation to indemnify the Indemnified
party hereunder, the Indemnifying Party shall have the right to select counsel,
settle, try or otherwise dispose of or handle such claim, demand, lawsuit or
other proceeding on such terms as the Indemnifying Party shall deem appropriate,
subject to any reasonable objection of the Indemnified Party.
9.1.4 Settlements. The
Indemnifying Party shall not have the right to settle or compromise any claim
against the Indemnified Party.
ARTICLE
X
MISCELLANEOUS
10.1. Independent
Contractor.
It is
understood that each Party is acting as an independent contractor for its own
account and this Agreement does not establish a joint venture, agency,
partnership or employer/employee relationship between the Parties. Neither
Party
shall have authority to conclude contracts or otherwise to act for or bind
the
other Party in any manner.
10.2.
Notices.
All
notices or other communications given pursuant hereto by one party hereto to
the
other party shall be in writing and deemed given (a) when delivered by
messenger, (b) when sent by telecopier, (with receipt confirmed), (c) when
received by the addressee, if sent by Express Mail, Federal Express or other
express delivery service (receipt requested), or (d) five days after being
mailed in the U.S., first-class postage prepaid, registered or certified, in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate
as
to itself by notice to the other party):
15
If
to
Tris, to it at:
Tris
Pharma, Inc.
0000
Xxxxx 000, Xxxxx X, Xxxxxxxx Xxxxxxxx, XX 00000
Attention:
Xxxxx Xxxxx
Phone:
000-000-0000; Fax: 000-000-0000
If
to
Interpharm, to it at:
Interpharm,
Inc.
00
Xxxxx
Xxxxxx
Xxxxxxxxx,
Xxx Xxxx, 00000
Attention:
Xxxxxxx Xxxxxx. Esq.
Facsimile:
(000) 000-0000
with
a
copy to:
Guzov
Ofsink, LLC
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Facsimile:
(000)
000-0000
10.3. Assignment.
Neither
Party shall, without the prior written consent of the other Party having been
obtained, assign or transfer this Agreement to any person or entity, in whole
or
in part, provided that, each Party may assign or transfer this Agreement to
any
affiliate or to any successor by merger of such Party, or upon a sale of all
or
substantially all of such Parties assets, provided that such assigning Party
shall remain liable for its obligations hereunder. All of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit
of
and be enforceable by the Parties hereto and their respective successors and
assigns.
10.4. Severability.
If any
portion of this Agreement is held invalid by a court of competent jurisdiction,
such portion shall be deemed to be of no force and effect and the Agreement
shall be construed as if such portion had not been included herein, provided
however, if the deletion of such provision materially impairs the commercial
value of this Agreement to either party, the Parties shall attempt to
renegotiate such provision in good faith.
10.5. Entire
Agreement.
This
Agreement attached hereto contain the sole and entire agreement and
understanding of the parties hereto and their respective affiliates and
representatives related to the subject matter hereof and supersede all oral
or
written agreements concerning the subject matter made prior to the date of
this
Agreement.
16
10.6. Amendment;
Waiver.
This
Agreement cannot be amended, changed, modified or supplemented orally, and
no
amendment, change, modification or supplement of this Agreement shall be
recognized nor have any effect, unless the writing in which it is set forth
is
signed by Interpharm and Tris, nor shall any waiver of any of the provisions
of
this Agreement be effective unless in writing and signed by the party to be
charged therewith. The failure of either Party to enforce, at any time, or
for
any period of time, any provision hereof or the failure of either Party to
exercise any option herein shall not be construed as a waiver of such provision
or option and shall in no way affect that party’s right to enforce such
provision or exercise such option. No waiver of any provision hereof shall
be
deemed to be, or shall constitute, a waiver of any other provision, or with
respect to any succeeding breach of the same provision.
10.7. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York, as though made and to be fully performed therein without
regard to conflicts of laws principles thereof.
10.8. Force
Majeure.
10.8.1
The
obligations of the either Party hereunder shall be suspended during the time
and
to the extent that such Party is prevented from complying therewith due to
any
event or circumstances beyond the control and without the fault or negligence
of
that Party so affected (which circumstance is hereinafter referred to as “Force
Majeure”) including but not limited to accidents, perils of navigation, floods,
fire, storms, earthquakes, lockouts, explosion, hostilities, war (whether
declared or undeclared), civil disturbances, order or acts of any government,
whether de jure or de facto or any official purporting to act under authority
of
any such government, illegality arising from domestic or foreign laws or
regulations, insurrections, quarantine or custom restrictions, strikes,
lockouts, or other labor difficulty at the parties, or acts of God or other
similar events beyond the reasonable control of Interpharm or Tris resulting
in
hindrance of the performance by either Party of its respective obligations
hereunder.
10.8.2
As
soon
as possible after being affected by a Force Majeure circumstance, the Party
so
affected shall furnish to the other party all particulars of the Force Majeure
and the manner in which its performance is thereby prevented or delayed. The
Party whose obligations hereunder have been suspended shall promptly and
diligently pursue appropriate action to enable it to lift the Force Majeure
situation, except that party shall not be obligated to settle any strike,
lockout or other labor difficulty on terms contrary to its wishes. In the event
that a Force Majeure circumstance is not resolved within ninety (90) days the
other Party may immediately terminate this Agreement.
10.9. Singular
and Plural Forms.
The use
herein of the singular form shall also denote the plural form, and the use
herein of the plural form shall denote the singular form, as in each case the
context may require.
10.10
Headings.
The
headings contained in this Agreement are for convenience of reference only
and
shall not constitute a part hereof or define, limit or otherwise affect the
meaning of any of the terms or provisions hereof.
17
10.11
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which, when taken together, shall constitute
one
and the same instrument.
10.12
Arbitration.
Only
disputes arising under Sections 2.3.1.1, 3.1 and 4.4 of this Agreement shall
be
arbitrable. The Parties hereby agree that any other dispute arising under this
Agreement shall not be submitted for arbitration and shall not be
arbitrable.
18
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
respective duly authorized officers as of the date first above
written.
| INTERPHARM, INC. | ||
| |
|
|
| By: | ||
|
|
||
| Xxx Xxxxxxx, COO | ||
| TRIS PHARMA, INC. | ||
| |
|
|
| By: | ||
|
|
||
| Xxxxx Xxxxx, CEO and President | ||
19
