EXHIBIT 10.4
SUBLICENSE, CO-MARKETING AND SUPPLY AGREEMENT
BETWEEN
SCHEIN PHARMACEUTICAL, INC.
AND
XXXXXX R&D LABORATORIES, INC.
SUBLICENSE, CO-MARKETING AND SUPPLY AGREEMENT
This Sublicense, Co-Marketing and Supply Agreement ("Agreement") is entered
into as of the 30th day of September, 1996, by and between Schein
Pharmaceutical, Inc., a Delaware corporation ("Schein"), and Xxxxxx R&D
Laboratories, Inc., a California corporation ("R&D").
WITNESSETH:
WHEREAS, R&D and Xxxxx-Xxxxxxx Xxxxx GmbH, a limited liability company
organized under the laws of the Federal Republic of Germany ("RPR"), have
heretofore entered into that certain Distribution Agreement dated June 24, 1993,
as amended to date (the "Distribution Agreement"), and that certain Trademark
Agreement dated August 26, 1993, as amended to date (the "Trademark Agreement");
and
WHEREAS, the Distribution and Trademark Agreements grant to R&D, upon and
subject to the terms and conditions contained therein, the exclusive license to
import the Products and use and sell the Products in the Territory (as such
terms are defined in the Distribution Agreement) and to use the Trademark
"Ferrlecit" in connection with R&D's activities under the Distribution
Agreement; and
WHEREAS, RPR represents itself as the sole and exclusive worldwide owner of
all proprietary information, compounds, know how, trade secrets, data and
technology relating to the manufacture of the Product (as defined below); and
WHEREAS, R&D and Schein desire to enter into this Agreement in order to
provide for the joint commercialization of R&D's rights under the Distribution
and Trademark Agreements, upon and subject to the terms and conditions contained
herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, Schein and R&D agree as follows:
1. Definitions. As used in this Agreement, the following definitions
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shall apply:
"Affiliate" shall, unless otherwise expressly provided herein, mean
any person, firm, corporation or other business entity which directly or
indirectly controls, is controlled by or is under common control with, R&D or
Schein. The term "control" means possession, direct or indirect, of no less than
a majority of the power to direct or cause the direction of the management and
policies of such entity, whether pursuant to the ownership of voting securities,
by contract or otherwise.
"Confidential Information" shall mean any information pertaining to
the Product from time to time communicated by or on behalf of R&D to Schein
(including without limitation any RPR Know How), or by or on behalf of Schein to
R&D, as the case may be, including, without limitation, trade secrets, business
methods, pricing, cost, supplier, manufacturing and customer information,
whether of a written, oral or visual nature, and it is expressly understood and
agreed that the term "confidential information" means and includes any and all
"RPR know-how" and/or "R&D know-how," as such terms are defined in Subsections
1.6 and 1.7, respectively, of the Distribution Agreement.
"Cost of Goods" shall have the meaning set forth in clause
7(c)(iii)(3) hereof.
"FDA" shall mean the United States Food and Drug Administration.
"Final Net Profit Determination" shall have the meaning set forth in
clause 7(c)(iv) hereof.
"Foreign Registrations" shall mean the registrations and permits
required by applicable government authorities in the Territory outside of the
United States for the importation into and for the marketing, sale and
distribution of the Product in a country in the Territory.
"Marketing Authorization" shall mean approval by the FDA of the NDA
and the procurement of the Foreign Registrations.
"Marketing Plan(s)" shall mean the annual plan(s) to be developed (in
accordance with the guidelines set forth in Exhibit E hereto) by Schein for each
country in the Territory, subsequent to and consistent with the Strategic
Commercialization Plan(s).
"NDA" shall mean the new drug application, which shall be and remain
owned by R&D, which is prepared by R&D for submission to the FDA in order to
obtain approval to sell the Product in the United States and to manufacture the
Product.
"Net Profit" shall have the meaning set forth in clause 7(c)(iii)(1)
hereof.
"Net Sales" shall have the meaning set forth in clause 7(c)(iii)(2)
hereof.
"Product" shall have the meaning ascribed to it in Subsection 1.5 of
the Distribution Agreement.
"Recall Costs" shall have the meaning set forth in Paragraph 13(b)
hereof.
"R&D Know How" shall mean all (i) patents (if any), proprietary rights
and/or applications of R&D or with respect to which R&D has rights (but only to
the extent of such rights) with respect to the Product, all registrations of R&D
or with respect to which R&D has rights (but only to the extent of such rights)
with respect thereto and all technology, know how and goodwill of R&D or with
respect to which R&D has rights (but only to the extent of such rights)
associated therewith, (ii) proprietary scientific and medical information,
technical data and marketing studies in R&D's possession, or from time to time
invented, developed or acquired by or on behalf of R&D or under the control of
R&D relating to the Product, and (iii) the trademark "Ferrlecit." It is
expressly understood and agreed that the term "R&D Know-How" means and includes
any and all "RPR know-how" and/or "R&D know-how" as such terms are defined in
Subsections 1.6 and 1.7, respectively, of the Distribution Agreement.
"RPR Agreements" shall collectively mean the agreements between RPR
and R&D as follows:
(a) the Distribution Agreement, Amendment 1 thereto dated
November 8, 1994, Exhibit A thereto dated July 6, 1993, Exhibit A/1 thereto
dated December 18, 1995, and Exhibit B thereto dated July 6, 1993, each of which
Exhibits and Amendments has already been provided by R&D to Schein, with it
being acknowledged that said Exhibit B and the Trademark Agreement were provided
to Schein only in redacted form;
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(b) the Trademark Agreement; and
(c) any additional executed written amendments, waivers or
modifications to the RPR Agreements that are provided to Schein by R&D prior to
the date hereof.
"Strategic Commercialization Plan(s)" shall mean the plan(s) to be
developed (in accordance with the guidelines set forth in Exhibit F hereto) by
R&D and Schein in accordance with Paragraph 5(a) hereof.
"Supply Agreement" shall mean the Manufacturing and Supply Agreement
between R&D and Schein discussed in Section 6, below, pursuant to which R&D will
supply Schein its requirements of Product.
"Term" shall have the meaning set forth in Section 2 hereof.
"Territory" shall mean the United States, Canada, and those regions
and/or countries set forth in Exhibit A attached hereto, as such Exhibit may be
amended from time to time by mutual consent of the parties hereto.
"United States" shall mean the United States of America and, to the
extent included in the territory covered by the Distribution Agreement, its
territories and possessions.
"Upfront Payments" shall mean the payments by Schein to R&D provided
for in clauses 7(a)(i), 7(a)(ii), 7(a)(iii) and 7(a)(iv).
2. Term. The term of this Agreement (the "Term") shall be coterminous
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with the term provided for in the Distribution Agreement, subject to earlier
termination as provided in Section 14 hereof. Promptly following the signing of
this Agreement, R&D will use its best efforts to extend the term of the
Distribution Agreement to not less than 15 years following Marketing
Authorization. Upon R&D's obtaining such extension, it promptly shall so notify
Schein in writing, specifying the period and territories covered by such
extension. The term of this Agreement shall be automatically extended for a
period equal to any such extension of such rights of R&D under the RPR
Agreements, if any, at no additional cost to Schein, unless Schein gives written
notice to R&D that it does not wish to extend the Agreement with respect to the
Product in the Territory or part thereof. Subject to Paragraph 14(c) hereof, all
rights granted to Schein under this Agreement shall revert to R&D upon
termination or expiration of this Agreement.
3. Product Registration and Development.
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(a) R&D shall use its best efforts to procure, and thereafter
maintain, Marketing Authorization for the distribution and sale of the Product
in each,country in the Territory. These efforts shall, without limitation,
include (i) gathering, evaluating and presenting all data needed in order to
prepare and submit the NDA, including all applicable sections, to the FDA; (ii)
preparing and submitting the NDA to the FDA and supporting it through the
approval process and thereafter; (iii) preparing and submitting Foreign
Registrations with other applicable authorities in other countries in the
Territory, and (iv) conducting all Phase I, II and III clinical trials (or their
equivalent as required in a particular country) required to obtain Marketing
Authorization in each country in the Territory.
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(b) Effective with the date of execution hereof, any and all costs
incurred by R&D on or after the execution of this Agreement directly and/or
indirectly in connection with the activities discussed in clauses (i), (ii),
(iii) and (iv) of Paragraph 3(a) hereinabove shall be paid by R&D. On a monthly
basis thereafter, R&D shall provide Schein with supporting documentation as to
the out-of-pocket portion of such costs and Schein shall reimburse R&D for such
of those out-of-pocket costs as are reasonable ("Qualified Expenditures"), with
it being understood that out-of-pocket costs shall in no event be construed to
include indirect charges such as overhead allocations. Such reimbursement shall
be made to R&D by Schein (subject to the limitation below), within thirty (30)
days of receipt by Schein of the applicable supporting documentation of the
Qualified Expenditures; provided, however, that the Schein reimbursements
required as aforesaid shall be limited to one hundred percent (100%) of the
first Five Hundred Thousand Dollars ($500,000) of Qualified Expenditures and
fifty percent (50%) of the Qualified Expenditures in excess of Five Hundred
Thousand Dollars ($500,000), with R&D being required to absorb fifty percent
(50%) of the Qualified Expenditures in excess of the first Five Hundred Thousand
Dollars ($500,000). In addition, it is further understood and agreed that (i)
R&D shall consult with Schein in advance of any single expense in excess of
Fifty Thousand Dollars ($50,000) if such expense would be a Qualified
Expenditure (although this obligation to consult shall not be construed as an
obligation to obtain approval), (ii) R&D shall consult with Schein with respect
to the incurring of further Qualified Expenditures once the first $1.5 million
of Qualified Expenditures has been incurred, (iii) Schein shall have no
obligation to reimburse any part of any Qualified Expenditures in excess of the
first $2 million thereof unless it shall first consent thereto in writing, and
(iv) for purposes of computing the amount of Qualified Expenditures incurred,
out-of-pocket costs incurred by Schein in pursuance of the matters set forth in
Paragraph 3(a) shall be deemed to be Qualified Expenditures if they have been
incurred with R&D's consent.
(c) Notwithstanding the foregoing, NDA filing fees, if any, and the
cost of any post Marketing Authorization clinical trials that R&D is required to
perform in the future, that Schein may wish to perform, or that the Joint
Marketing Committee deems appropriate to perform in order to exploit the
commercial potential for the Product with a view to optimizing Product sales,
profits and return on investment, shall be borne exclusively by Schein, except
as provided below. In addition to the foregoing, Schein shall provide, at no
cost to R&D, such technical and regulatory assistance of Schein employees as R&D
may reasonably request to obtain Marketing Authorization, and Schein shall be
responsible for any and all costs incurred in connection with Phase IV studies,
whether FDA mandated or undertaken in connection with the marketing of the
Product or otherwise ("Phase IV Studies"). It is expressly understood and agreed
that in the case of NDA filing fees, (i) Schein shall be required to pay only
the user application fee and the first supplemental fee, if any, with R&D being
required to pay the annual product fee and with R&D and Schein being required to
share equally any additional supplemental fees, (ii) R&D shall bear the cost of
any FDA filing fees hereafter enacted as fees different from those referred to
in (i), and (iii) R&D shall use its best efforts to obtain a reduction of the
FDA user fee under the procedures available therefor. It is also understood and
agreed that no costs incurred by R&D or Schein pursuant to this Paragraph 3(c)
shall be considered to be Qualified Expenditures or reimbursements therefor. To
the extent permitted under applicable laws and regulations, Schein shall be
responsible for filing with the FDA annual Product reports and adverse drug
reports for the Product during the Term.
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(d) R&D has developed and implemented a program designed to secure
regulatory approval to sell and market the Product in the United States
marketplace. Since entering discussions with Schein related to the collaboration
which is the subject of this Agreement, Schein has provided certain suggestions
and input to R&D concerning this process. Upon execution of this Agreement, R&D
wishes to avail itself as to the Product of Schein's experience and expertise
with respect to gaining regulatory approvals to market and sell products.
Therefore, promptly upon the execution of this Agreement, R&D and Schein shall
form a Research and Development Committee ("R&D Committee").
(i) Prior to FDA acceptance of the filing of the NDA, the R&D
Committee shall serve only in an advisory capacity to R&D. During this period,
Schein's internal research and development resources shall be made available to
R&D, as and to the extent that Schein determines to be reasonable, to assist R&D
in the preparation and submission of the NDA, with such resources being provided
at no cost to R&D.
(ii) After FDA acceptance of the NDA for filing, the R&D
Committee shall cease to be merely advisory and shall be responsible for
managing the NDA until the time Marketing Authorization for the United States is
received. The R&D Committee shall determine the most appropriate methods, plan,
and/or approach to secure regulatory approval for the Product in the U.S., as
well as other countries in the Territory, and to secure Marketing Authorizations
in those other countries. The R&D Committee shall have not less than four (4)
members and such greater number of members as R&D and Schein may agree,
consisting of an equal number of members from both R&D and Schein. All members
shall have equal voting rights. Xx. Xxxxx Xxxxxx, if a member, shall be the
chairperson of this Committee. The R&D Committee shall meet on such schedule as
is deemed appropriate by its members.
(iii) All decisions by the R&D Committee shall be made by
majority vote of the authorized number of its members. A quorum for any meeting
of the R&D Committee shall consist of at least two appointees, one of whom shall
be an R&D appointee and one of whom shall be a Schein appointee. Participation
at a meeting may be in person, by telephone, or by video conference, provided
that all participants can hear and be heard by one another at all times
throughout the meeting. All members of the R&D Committee not in attendance shall
be immediately notified of any action taken or approved by the R&D Committee
and provided with written approved minutes of such meetings. The R&D Committee
shall meet on such schedule as deemed appropriate by its members, but no less
frequently than quarterly and with any one member being empowered to call a
meeting of the R&D Committee upon at least ten (10) business days' notice;
provided, however, that no notice of a meeting may be given until any then
previously noticed meeting has actually been held (or holding thereof has been
waived unanimously).
(iv) In the event that the R&D Committee should become
deadlocked, then the deadlock shall be referred to and reviewed by independent
outside firm(s) which shall be mutually agreed by the parties. It is important
to note that the nature of such firms may vary depending on the issue. Each
deadlock referred to such independent outside firm(s) shall be reviewed in
accordance with the overall standards and objectives set forth in this
Agreement. Both parties shall cooperate fully with this firm(s), including
providing such information concerning Product as the outside firm(s) shall
reasonably require. Both parties agree that all decisions of the outside firm(s)
shall be final and binding upon them. Such outside firm(s) shall be guided by
this Agreement in interpreting the intent of the parties. Each party shall bear
its own expenses and shall share the fees and costs of the outside firm(s)
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equally. Because of the potential importance that such outside firm(s) could
play in assisting the parties to achieve the mutual objectives set forth herein,
immediately after the execution hereof, R&D and Schein shall work together to
jointly identify such firm(s). However, of course, such firm(s) would not be
engaged until, or unless, necessary.
4. Grant of Rights. Subject to obtaining the written consent thereto of
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RPR, which consent (the "Grant Consent") R&D shall use its best efforts to
obtain promptly, R&D does hereby grant to Schein and its Affiliates, upon and
subject to the terms and conditions provided herein, the exclusive sublicense
and right to use, promote, market, sell and sub-distribute the Product in the
Territory pursuant to and in accordance with the RPR Agreements, and the right,
subject to the RPR Agreements, to use and exploit the R&D Know How in connection
therewith; provided, however, that the grant of any rights hereunder to any
Affiliate of Schein must first receive the written approval of RPR and R&D makes
no representations about the likelihood of such approval being received.
Concurrently herewith, R&D and Schein are executing and delivering the
Limited Liability Company Operating Agreement, which is attached hereto as
Exhibit B. If, by the date that the FDA has provided R&D with the Marketing
Authorization for the United States, R&D has not received the consent of RPR to
the foregoing grant of rights, then, if, but only if, this Agreement has not
theretofore terminated, said Agreement shall immediately become effective as
provided therein. It is understood and agreed that in the event that it should
be determined by competent authority or by agreement of the parties that either
the organization of the entity which is the subject of the aforesaid Operating
Agreement or the contribution to such entity of the rights to be contributed
pursuant to Paragraph 2.2(a) of said Operating Agreement constitutes a default
under or breach of either of the RPR Agreements or is invalid thereunder, then,
if the Grant Consent has not been obtained, Schein and R&D shall work together
and use their best efforts to arrive at an alternative arrangement which would
be permitted by the RPR Agreements and come as close as reasonably possible to
achieving for the parties their economic purposes and expectations in entering
into this Agreement.
5. Marketing of Product.
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(a) Joint Marketing Committee.
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(i) R&D and Schein shall form a Joint Marketing Committee to
develop multi-year Strategic Commercialization Plan(s) for the marketing,
promotion, sale, and distribution of the Product, with the intent of optimizing
Product sales, profits and return on investment. This Committee shall consist of
four (4) members, each having equal voting rights. R&D and Schein shall each
designate two representatives to the Joint Marketing Committee. Schein shall
market, promote, sell and distribute the Product in accordance with the
Strategic Commercialization Plan(s) agreed to from time to time in writing by
the Joint Marketing Committee. This Committee shall be formed immediately upon
execution of this Agreement and shall immediately commence the process of
developing the Strategic' Commercialization Plan(s).
(ii) In general and consistently with the overall goals of
optimizing Product sales, profits and return on investment, Schein shall employ
diligent efforts to develop and maintain sales of the Product in each country in
the Territory and shall employ a level of advertising, sales, marketing, and
promotion efforts in each country in the Territory where Marketing Authorization
for Product has been obtained which is: (1) commensurate with that
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put forth by other pharmaceutical companies for products of similar market
potential for similar audience size in that country in the Territory, and (2)
sufficient with respect to the potential for that country to fully exploit the
market potential for Product as depicted in the Strategic Commercialization
Plan(s) for that Territory.
(1) within twelve (12) months of execution of this
Agreement and annually thereafter, the Joint Marketing Committee shall evaluate
all countries included in the Territory, with the exception of the United States
and Canada, in order to determine the feasibility of commercialization of the
Product in each such country at that time or in the future, and decisions to
defer commercialization shall be reevaluated in good faith annually, with it
being understood that at each such annual reevaluation the parties shall
consider in good faith whether they reasonably foresee ever considering
commercialization for a country and if, at that time, the Joint Marketing
Committee affirmatively makes the decision that commercialization of the Product
in a particular country in the Territory is not reasonably foreseeable at any
time in the future, then all rights granted hereunder with respect to that
country shall immediately revert back to R&D. It is also understood and agreed
that failure to pursue commercialization in a country can result in a
termination by RPR of R&D's rights with respect thereto as provided in the
Distribution Agreement, which termination by RPR would also terminate Schein's
derivative rights hereunder with respect thereto.
(2) Subject to clause 5(a)(ii)(1), above, the Joint
Marketing Committee shall develop Strategic Commercialization Plan(s), one each
for the United States and Canada and one each for each country in the Territory
in which the Product is to be marketed, for the purpose of optimizing Product
sales, profits, and return on investment in that country. The Strategic
Commercialization Plan(s) will be initiated immediately for the United States
and Canada and will be completed by the later of the date on which the NDA is
accepted by the FDA for filing and June 30, 1997 in the case of the United
States, and six (6) months after the later of such two dates in the case of
Canada. The Strategic Commercialization Plan(s) will be initiated for other
countries in the Territory according to a schedule to be developed by the Joint
Marketing Committee. If by June 1, 1997, it reasonably appears to R&D or Schein
that the Plan(s) for either of those countries may not be completed by the dates
specified for the United States and Canada, respectively, above, then the
parties shall immediately agree upon an outside firm for the resolution, in
accordance with clause 5(a)(ii)(4), below, of all open issues and do everything
necessary so that the Plan(s) are completed by the specified dates.
(3) The Strategic Commercialization Plan(s) shall set
forth estimates of the size of the markets for Product in the Territory in
reasonable detail and shall define the overall strategy for exploitation of the
commercial opportunity for Product in the Territory. The Strategic
Commercialization Plan(s) shall be substantially in accordance with the
requirements set forth in Exhibit F hereto. The Strategic Commercialization
Plan(s) shall address the markets for Product in the Territory in a manner
consistent with that customarily utilized by pharmaceutical companies for
products in markets in that country in the Territory equivalent in size to those
set forth in the Strategic Commercialization Plan(s). Thereafter, from time to
time as necessary, the Joint Marketing Committee shall review the Strategic
Commercialization Plan(s) together and revise them as necessary as the parties
shall mutually agree.
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(4) Any dispute concerning the Strategic
Commercialization Plan(s), or their revision, as well as any anticipated
inability to complete a Plan in a timely manner, as contemplated in clause
5(a)(ii)(2) above, shall be referred to and reviewed by independent outside
firm(s) which shall be mutually agreed by the parties. It is important to note
that the nature of such firms may vary depending on the issue. Each dispute
referred to such independent outside firm(s) shall be reviewed in accordance
with the overall standards and objectives set forth in this Agreement, including
the goal of optimizing Product sales, profits and return on investment. Both
parties shall cooperate fully with this firm(s), including providing such
information concerning Product as the outside firm(s) shall reasonably require.
Both parties agree that all decisions of the outside firm(s) shall be final
and binding upon them. Such outside firm(s) shall be guided by this Agreement
in interpreting the intent of the parties. Each party shall bear its own
expenses and shall share the fees and costs of the outside firm(s) equally.
Because of the potential importance that such outside firm(s) could play in
assisting the parties to achieve the mutual objectives set forth herein,
immediately after the execution hereof, R&D and Schein shall work together to
jointly identify such firm(s). However, of course, such firm(s) would not be
engaged until, or unless, necessary.
(5) Within six (6) months following NDA submission in
the United States (and similar submissions in other countries in the Territory),
annually thereafter, and with such more frequent updates as Schein might wish to
make, Schein will prepare and deliver to the Joint Marketing Committee a
Marketing Plan for the next following twelve-month marketing period for the
Product in each country of the Territory substantially in conformance with the
applicable portions of the Strategic Commercialization Plan(s). Each Marketing
Plan shall refine the strategy (or strategies) initially set forth in the
pertinent Strategic Commercialization Plan(s) by including specific tactics to
support those strategies and by identifying specific actions that Schein plans
to take to achieve the objectives set forth in the Marketing Plan. Each
Marketing Plan shall include projections, updated from time to time by Schein,
for expected sale of Product by Schein during the period covered by such
Marketing Plan. These projections shall include both unit projections and
revenue projections.
(6) The Strategic Commercialization Plan(s) shall
govern the commercialization process for Product in the Territory by Schein.
With the intent of optimizing Product sales, profits and return on investment,
Schein shall apply such level of sales, advertising, marketing and promotional
efforts and expenditures in marketing the Product as is consistent with that
level of effort and expenditures made by pharmaceutical companies for
pharmaceutical products of similar market potential for similar audience size in
that country in the Territory, if any. Schein shall have the responsibility and
authority to make all sales, marketing and pricing decisions with respect to the
Product throughout the Term of this Agreement, provided that all such decisions
(x) are consistent with the strategy and general guidelines set forth in the
Strategic Commercialization Plan(s) for a given country of the Territory, and
(y) are subject to any authority expressly reserved to the Joint Marketing
Committee with respect thereto.
(7) Schein shall be deemed not to be using diligent
efforts in any country in the Territory if Schein has not sold at least fifty
percent (50%) of cumulative projected unit sales of Product as set forth in
Schein's most recent Marketing Plan for that country for the three year period
just preceding the fourth anniversary of the first commercial sale of Product in
that country under this Agreement. In that case, if R&D has been ready, willing
and able to supply Schein with Product substantially in accordance with Schein's
requested delivery schedules (formulated in accordance with the Supply
Agreement) so as to
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have enabled Schein to have met the minimum requirements of the previous
sentence, R&D, as its exclusive remedy, shall be entitled to identify a person
or entity of R&D's choosing to market the Product with Schein in the country
involved in the capacity of Schein's co-marketing or co-promotion partner (but
under the same brand name), with it being understood and agreed, however, that
R&D will consult with Schein as to who will be chosen (although this obligation
to consult shall not be construed to be an obligation to obtain approval). The
terms of the arrangement to be entered into with the person or entity chosen
shall likewise be within the discretion of R&D, except that (x) R&D shall not
enter into any arrangement that does not permit R&D to review the arrangement by
no later than the end of the second full year thereof in order to permit R&D to
determine whether it wishes to continue the arrangement thereafter or to
identify a new co-marketing partner or dispense therewith (which determination
shall be made by R&D in good faith in its discretion), and (y) the compensation
payable to the person or entity chosen shall be within R&D's discretion, but
(aa) such compensation shall consist solely of commissions, (bb) R&D shall use
its best efforts to obtain a favorable rate, (cc) such rate shall be within the
limits of that which is then reasonable and customary in the industry generally
for arrangements of the nature in question, (dd) such rate shall not exceed
fifty percent (50%) of the stated sales price for units of Product, and (ee)
commissions for any twelve (12) month period during such arrangement shall be
payable only on that incremental portion of unit sales of Product which exceeds
actual unit sales for the twelve (12) full calendar months immediately following
the month in which the arrangement is to be entered into, or the forecast as at
such time for unit sales of Product for the twelve (12) full calendar months
immediately following the month in which the arrangement is to be entered into,
whichever standard R&D elects to use, and pro rated for partial periods.
Notwithstanding the foregoing, it is understood and agreed that whether and on
what terms to engage such person or entity shall be made jointly by R&D and
Schein in the case of any country in the Territory as to which Schein has, with
the approval of the Joint Marketing Committee, sublicensed its marketing and
distribution rights under this Agreement to (or otherwise engaged for marketing
or distribution purposes) a person or entity other than a Schein Affiliate.
(8) If Schein fails to market, promote, sell and
otherwise commercialize the Product in a country in the Territory in accordance
with the applicable Commercialization Plan(s) and Marketing Plan(s) within six
(6) months following Marketing Authorization in that country, Schein shall
forfeit its exclusivity in such country in the Territory and R&D shall be free
to find another commercialization partner or partners (or licensee or licenses)
in that country in the Territory. It is understood that if R&D were then still
unable to introduce the Product in that country by a date twelve (12) months
after obtaining the applicable Marketing Authorization then, pursuant to the
Distribution Agreement, RPR would be able to terminate R&D's license (and, as a
result thereof, Schein's sublicense) as to that country.
(iii) The Joint Marketing Committee shall meet on such
schedule as deemed appropriate by its members, but no less frequently than
quarterly and with any one member being empowered to call a meeting of the Joint
Marketing Committee upon at least ten (10) business days' notice (which notice
shall include a description of all actions to come before the Committee at such
meeting for consideration or action); provided, however, that no notice of a
meeting may be given until any then previously noticed meeting has actually been
held (or holding thereof has been waived unanimously). The first meeting of the
Joint Marketing Committee shall take place prior to January 1, 1997.
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At meetings, each member shall have the right to
provide information for consideration and the Joint Marketing Committee shall
consider all such input. All decisions by the Joint Marketing Committee shall be
made by majority vote of the authorized number of its members. A quorum required
for any meeting of the Joint Marketing Committee shall consist of at least two
appointees, one of whom shall be a Schein appointee and one of whom shall be an
R&D appointee. Participation at a meeting may be in person, by telephone, or by
video conference, provided that all participants can hear and be heard by one
another at all times throughout the meeting. All members of the Joint Marketing
Committee not in attendance shall be immediately notified of any action taken or
approved by the Joint Marketing Committee and provided with written approved
minutes of such meetings.
(b) Consulting Agreement. R&D and Schein shall retain Dr. W.
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Xxxxxxx XxXxxx ("XxXxxx") of Xxxxxxx, XxXxxx and Twist, Inc., to consult, advise
and support the Joint Marketing Committee with respect to the development of a
Strategic Commercialization Plan. R&D and Schein shall enter into a Consulting
Agreement with XxXxxx for an initial two year term with a minimum annual
retainer of One Hundred Thousand Dollars ($100,000) (exclusive of out-of-pocket
expenses), with successive automatic one-year extensions unless any party
thereto gives notice at least three months prior to the expiration of the then-
current term of its or his election not to extend. The Consulting Agreement
shall commence on the date of the first meeting of the Joint Marketing
Committee. The hourly rate charged by XxXxxx shall be his standard billing rate
for similar consulting services, and shall be credited against the retainer
provided for above. R&D, Schein and XxXxxx shall collectively decide on a
reasonable schedule for XxXxxx to render the consulting services anticipated by
this Paragraph. The parties hereto shall share equally the expense under such
Consulting Agreement.
(c) Promotion. Subject to any Strategic Commercialization
---------
Plan(s) developed by the Joint Marketing Committee, Schein shall commence
marketing the Product in the Territory or part thereof as soon as practical
after Marketing Authorization is obtained and after Schein has inventory of
Product that the Joint Marketing Committee deems sufficient to launch the
Product in that country in the Territory. Subject only to any Strategic
Commercialization Plan(s) developed by the Joint Marketing Committee, Schein
shall develop and implement a Marketing Plan(s) for the Product, the development
and implementation of which shall, subject to said Strategic Commercialization
Plan(s), be within Schein's complete and unfettered discretion and control and
subject to modification by Schein from time to time as it sees fit. To the
extent that R&D participates in the marketing of the Product pursuant to such
Plan(s), it shall be reimbursed by Schein, within thirty (30) days of Schein's
receipt of the supporting documentation relating thereto, for those of R&D's
documented out-of-pocket costs and expenses which are incurred in connection
therewith within the limits provided for in such Plan(s). Schein shall be solely
responsible for the cost of its marketing efforts regarding the Product. Schein
shall promote the Product following Marketing Authorization in the manner set
forth in Schein's Marketing Plans, subject to the Strategic Commercialization
Plan(s) and consistently with the objectives of optimizing Product sales,
profits and return on investment.
10
6. Supply of Product.
-----------------
(a) Product Requirements of Schein; Backup Manufacturing.
----------------------------------------------------
(i) R&D and Schein shall negotiate in good faith in order that
they might execute and deliver, as soon as practicable following the execution
and delivery of this Agreement, a Supply Agreement providing for R&D's supplying
to Schein Schein's requirements of Product for the Territory during the Term.
The Supply Agreement shall contain provisions for such agreements which are
customary in the pharmaceutical industry, including, without limitation,
assurances as to continuous supply; forecast, order, shipment and delivery
terms; the obtaining and maintenance of insurance coverage; supplier
representations and indemnities as to Product quality; and provisions as to
Product packaging and labelling (collectively, "Customary Supply Provisions");
provided, however, that it is understood and agreed that R&D's abilities with
respect to supply are wholly derivative of its rights and remedies under the RPR
Agreements. R&D shall endeavor in good faith to have the RPR Agreements
modified to include Customary Supply Provisions. The price at which R&D shall
sell Product to Schein under the Supply Agreement shall be governed by Section 7
of this Agreement.
(ii) R&D and Schein agree that it would be in their respective
best interests to have a backup manufacturer of Product in the event that RPR
were, unable to supply Schein's requirements for Product. To that end, R&D
agrees to use its best efforts to obtain RPR's consent to the designation of
Schein and/or one of its Affiliates as backup manufacturer, to be called upon to
manufacture as a backup in the event that RPR is unable or unwilling to supply
Product as required hereunder or under the Supply Agreement referred to in
clause 6(a)(i), above.
(1) Upon the obtaining of such consent of RPR, R&D shall
undertake to file, at Schein's expense (notwithstanding any provision of Section
3 hereof to the contrary), such supplements to the NDA as shall be necessary to
permit Schein or its designated Affiliate to be such a backup manufacturer (the
"Backup"), and such costs and expenses shall be neither Qualified Expenditures
nor Product Related Expenses (as the latter term is defined in clause
7(c)(iii)(4) hereof); provided, however, that R&D shall be entitled to approve
or disapprove or discontinue the designation of Schein or one of its Affiliates
as Backup on the basis of reasonable objections based on lack of FDA approval of
the applicable manufacturing facility, failure to be in substantial compliance
with then current Good Manufacturing Practices or lack of assurance as to
adequate capacity, but not on any other grounds.
(2) In the event that Schein or its Affiliate is designated
and approved as Backup as provided above, then Schein shall initially bear all
costs necessary to ready one already existing FDA approved facility to
manufacture Product, subject to reimbursement of the direct out-of-pocket
portion of such costs, only as follows:
(x) One-half (1/2) of not to exceed $3,000,000 of
those costs incurred prior to the time that R&D has consented to the
commencement of the incurring of such costs, if such costs have been incurred
prior to the time that the Backup is actually required for supply, shall be
reimbursable by R&D commencing with the time, if any, at which revenues from
sales of Product (by whomsoever manufactured) commence to be realized, with
R&D's obligation to reimburse to be payable in equal quarterly installments
11
amortized over one hundred percent (100%) of the Term of this Agreement
remaining as of the later of (aa) the incurring of the cost, or (bb) the
commencement of revenue from the sale of Product;
(y) One-half (1/2) of not to exceed $3,000,000
(including, for purposes of calculating whether the limit has been exceeded, any
costs referred to in clause 6(a)(ii)(2)(x), above) of those costs incurred
subsequent to the time that R&D has consented to the commencement of the
incurring thereof or subsequent to the time that the Backup is actually required
for supply shall be reimbursable by R&D commencing with the time that revenues
from sale of Product (by whomsoever manufactured) commence to be realized, with
R&D's obligation to reimburse to be payable in equal quarterly installments
amortized over one-half (1/2) of the Term of the Agreement remaining as at the
later of (aa) the incurring of the cost, or (bb) the commencement of revenue
from sale of Product; and
(z) No such costs shall be reimbursable by R&D unless
and until there is revenue from sale of Product (by whomsoever manufactured, but
other than sales by R&D to Schein by way of supply) under this Agreement, with
it being understood that if costs exceed or are reasonably expected to exceed
$3,000,000, then R&D shall discuss in good faith with Schein R&D's agreeing to
be liable to reimburse a part of such excess on a basis to be mutually agreed
(but with no obligation on the part of R&D to reimburse with respect to such
excess unless R&D shall first consent thereto in writing).
(3) In the event that the Backup is manufacturing, then the
price to be paid by R&D for Product manufactured by the Backup shall be an
amount equal to one hundred and twenty percent (120%) of the Backup's fully
absorbed cost of manufacture, with such fully absorbed cost ("Fully Absorbed
Cost") to be calculated in a manner consistent with past practice (which
practice R&D shall be entitled to review and discuss with Schein prior to its
application), and subject to R&D's reasonable review, and with all costs of
build-out and all costs of supplemental filings relating to the Backup to be
excluded from Fully Absorbed Cost; provided, however, that, notwithstanding any
other provision of this clause 6(a)(ii) to the contrary, R&D shall be entitled
to designate as Backup a person or entity other than Schein or one of its
Affiliates unless Schein or one of its Affiliates is willing to supply Product
as Backup for no more than one hundred and ten percent (110%) of the price at
which such other person or entity makes a bona fide offer to supply Product to
R&D as Backup for similar quantities of Product for the Term (or such shorter
period of time as Schein or its designated Affiliate has then agreed to supply
Product), except that Schein or its designated Affiliate shall nonetheless be
entitled to be Backup if otherwise entitled to do so under this clause 6(a)(ii)
if the bona fide offer by the other person or entity is at a price which is less
than one hundred percent (100%) of Fully Absorbed Cost but Schein or its
Affiliate agrees to sell manufactured Product to R&D at the greater of one
hundred percent (100%) of Fully Absorbed Cost or one hundred and ten percent
(110%) of the bona fide offer.
(4) It is understood and agreed that nothing contained
in this clause 6(a)(ii) shall be construed to entitle Schein or any of its
Affiliates to obtain from R&D or RPR any information concerning the methods,
processes or know-how pertaining to manufacture of the Product unless and until
Schein has surrendered or there have lapsed all of Schein's rights to terminate
this Agreement under clauses 14(a)(v), (vi) and (vii) hereof. Immediately after
any such surrender or lapse, upon Schein's request and subject to the
confidentiality provisions of this Agreement, R&D shall provide Schein with all
such information and R&D Know How as may be necessary to enable Schein or its
designated Affiliate to be Backup.
12
(5) In the event that there should be any dispute as
to what constitutes Fully Absorbed Costs, then such dispute shall be settled in
accordance with the procedures for the Dispute Resolution Auditor set forth in
clause 7(c)(iv) hereof.
(b) Product Packaging and Labeling. Schein will provide R&D with
------------------------------
proposed label copy for the Product, which shall include Schein's name. In
addition, this label copy shall include RPR's name, as is required by the RPR
Agreements, and be approved by RPR and, to the extent permitted by applicable
laws and regulations, the label copy shall also include R&D's name. R&D shall
have the Product packaged and labeled in accordance with the applicable
Marketing Authorizations and in accordance with the Schein label copy, including
additional instructions delivered from time to time by Schein consistent with
the applicable Marketing Authorization. Notwithstanding the foregoing, labeling
language used for the Product shall be subject to the requirements of the
Distribution Agreement.
7. Payments to R&D. Upon and subject to the terms and conditions of this
---------------
Agreement, Schein shall pay to R&D as full consideration for the rights granted
hereunder, the following:
(a) Upfront Payments.
----------------
(i) Simultaneously with the execution of this Agreement,
Schein shall pay R&D the sum of Two Million Dollars ($2,000,000);
(ii) Upon acceptance of the NDA for filing by the FDA - Center
for Drug Evaluation and Research, Schein shall pay R&D the sum of Two Million
Dollars ($2,000,000);
(iii) Schein shall pay R&D the sum of Three Million Dollars
($3,000,000) on January 2, 1998, or such later date upon which the FDA shall
first have accepted the NDA for filing; and
(iv) Schein shall pay R&D the sum of Five Million Dollars
($ 5,000,000) upon the receipt of final FDA Marketing Authorization in the
United States and upon Schein's reasonable satisfaction that R&D can, through
RPR or some other source permitted by RPR, consistently supply Schein's
requirements of Product throughout the Term; provided, however, that (x) Schein
shall pay to R&D Two Hundred and Fifty Thousand Dollars ($250,000) of this Five
Million Dollars ($5,000,000) sum upon receipt of final Marketing Authorization
from the Canadian health authorities (HPB), if such HPB Marketing Authorization
is obtained prior to FDA Marketing Authorization, and (y) Schein shall (subject
to the aforesaid satisfaction as to supply) pay to R&D the sum of Three Million
Dollars ($3,000,000) in lieu of the said Five Million Dollars ($5,000,000)
payment (i.e., a Two Million Dollar ($2,000,000) reduction) if the FDA approves
---
any other injectable iron product (other than an iron dextran product) prior to
FDA Marketing Authorization.
(b) Royalties.
---------
(i) Except if Schein or one of its Affiliates is manufacturing
the Product as contemplated in clause 6(a)(ii) hereof, Schein shall pay to R&D
an aggregate sum equal to ****** ******* ***** of annual Net Sales of the
Product, which amount shall function to compensate R&D both by way of royalty in
respect of its grant of rights pursuant to Section 4 hereof and for R&D's costs
to supply Product to Schein. If Schein or one of its Affiliates manufactures the
Product, in lieu of the amounts called for in the preceding
* redacted pursuant to confidential treatment request.
13
sentence, Schein instead shall pay to R&D a royalty in an amount equal to the
following: (x) ****** ******* ***** of the annual Net Sales of the Product, less
(y) Cost of Goods. All amounts payable under this clause 7(b)(i) shall, subject
to the provisions of clause 7(b)(ii) and Paragraph 7(d) hereof, be payable
quarterly, within forty-five (45) days following the end of each of Schein's
fiscal quarters, beginning with the first commercial sale of the Product by
Schein, and amounts payable under this clause 7(b)(i) shall be reduced by
applicable Product Payments made pursuant to Paragraph 7(d) hereof.
(ii) Twenty-five percent (25%) of the amount of each quarterly
payment (or, where Schein or one of its Affiliates is not the manufacturer, the
royalty portion thereof, if, but only if, R&D has disclosed to Schein the Cost
of Goods component of such payment), due and owing to R&D pursuant to clause
7(b)(i) above, shall be excluded from such quarterly payments and retained by
Schein ("Recovered Royalties"). When the cumulative amount of such Recovered
Royalties equals the total of (a) fifty percent (50%) of the Upfront Payments,
plus (b) the accumulated interest (calculated as set forth below), the payments
required by clause 7(b)(i) hereof shall thereafter be made without further
reductions or retention by Schein, but with Schein entitled to keep the full
amount of the Recovered Royalties which it was theretofore entitled to retain.
(iii) For purposes of clause 7(b)(ii), above, interest shall be
calculated quarterly in arrears and, the amount so calculated, accumulated. The
interest rate used in the quarterly calculation of interest, shall be the simple
average of the interest rates from the weekly U.S. Treasury Xxxx auctions that
occurred during the weeks included in the fiscal quarter in question. Interest
shall not be calculated on that portion of the fifty percent (50%) of Upfront
Payments that has been recouped previously by Schein in the form of Recovered
Royalties. Recovered Royalties shall be credited first against interest and then
against Upfront Payments. Concurrently with each quarterly payment, Schein shall
provide R&D with a statement as to the amount of then unrecouped interest and
Upfront Payments.
(c) Profit Sharing Payments; Definitions; Disputes.
----------------------------------------------
(i) In lieu of the method of payment set forth in Paragraph
7(b), above, R&D shall have the option to receive instead ***** ******* ***** of
the Net Profit from the sale and delivery of the Product by Schein. R&D shall
exercise its right to receive this percentage of Net Profit by delivering to
Schein written notice of its election within thirty (30) days after Schein's
initial commercial sale of the Product. Following any such election, Net Profit
shall be determined by Schein quarterly during the Term, and Schein shall
distribute to R&D payment of its share thereof within forty-five (45) days
following the end of each of Schein's fiscal quarters; provided, however, that
no such election shall be effective (and the provisions of Paragraph 7(b) shall
govern), until fifty percent (50%) of the Upfront Payments, together with
interest as provided above, is recouped in full by Schein.
(ii) Notwithstanding the foregoing, if R&D and Schein form a
joint venture/alliance (other than the entity established pursuant to the
Operating Agreement referred to in Section 4 hereof) for disease management
which by written agreement between R&D and Schein expressly includes the Product
as part of that venture/alliance and replaces this Agreement, then R&D's share
of the Net Profit from the sale and delivery of the Product by Schein and/or
such venture/alliance shall be increased from ***** ******* ***** to *****
******* ***** under the agreement by which such venture/alliance is governed.
(iii) For the purposes of this Section 7, the following
definitions shall apply:
* redacted pursuant to confidential treatment request.
14
(1) "Net Profit" shall mean Net Sales, less the sum of
(x) Cost of Goods and (y) Product Related Expenses.
(2) "Net Sales" shall mean gross sales of the Product
invoiced by Schein and its Affiliates, less those offsets and reductions set
forth below (collectively referred to as the "Reductions"). The Reductions shall
include any chargebacks, rebates (or any other required payments imposed by a
government agency), free goods, cash discounts, Medicaid rebates (or any other
required payments imposed by a government agency), trade discounts, excise taxes
and consumption taxes to the extent included in Product sales, customs duty,
credits or allowances granted on account of rejection or return of the Product,
and credits for inventory and price protection in the event of any price
decrease, provided that any item to be treated as a Reduction shall be properly
allocable as a charge against sales rather than as a marketing expense, as
determined consistently with industry practice, and with any dispute with
respect thereto to be conclusively resolved and determined by the Dispute
Resolution Auditor process for the resolution of disputes provided for in clause
7(c)(iv), below.
(3) "Cost of Goods" shall mean:
(A) if R&D or a third party supplies the Product
to Schein in packaged and labeled finished dosage form, Schein's acquisition
cost of the Product (which, for Product supplied by R&D or RPR, shall include
only the manufacturing costs and freight); or otherwise
(B) if Schein or its Affiliates manufacture the
Product as contemplated in clause 6(a)(ii) hereof, then an amount determined
under clause 6(a)(ii)(3) hereof.
(4) "Product Related Expenses" shall mean Schein's
sales and marketing costs directly related to the Product, distribution and
related costs in connection with the Product, and marketing costs reimbursed to
R&D by Schein that directly related to the Product, to the extent incurred under
the Strategic Commercialization Plan(s) or the Marketing Plan, and other direct
costs incurred by Schein directly related to the Product beginning with the
actual launch activities for Product, including, without limitation, write-offs
for out-of-date inventory, out-of-pocket legal and regulatory expenses and
product liability insurance premiums. However, such Product Related Expenses
shall exclude the Product registration expenses paid and/or reimbursed by either
party pursuant to Section 3, but it is expressly understood and agreed that
Product Related Expenses shall include any costs of Phase IV Studies (as such
term is defined in Paragraph 3(c) hereof), whenever incurred if incurred by
Schein, and the following pre-launch expenses, if incurred by Schein: sales
meetings; travel; symposia and conventions; and any other expense reasonably
incurred prior to launch for the purpose of launching the Product.
(iv) If Schein or its Affiliates are manufacturing the
Product, thirty (30) days prior to the commencement of each calendar year,
Schein shall provide R&D with its budgeted calculation of fully absorbed
manufacturing costs for the upcoming calendar year. If R&D disagrees with
Schein's calculations and/or the methodology employed in making such
calculations and such disagreement cannot be otherwise resolved between the
parties, then R&D and Schein shall submit the issue(s) to the Dispute Resolution
Auditor (as defined below) for resolution. The finding of the Dispute Resolution
Auditor shall be binding on the parties
15
and shall determine the revised method and calculation (if any revision is
necessary) that Schein will utilize in allocating its manufacturing costs to the
Product in the calendar year in question.
Within ninety (90) days following each calendar year
during the Term when Schein or one of its Affiliates is manufacturing Product,
Schein will provide R&D with a schedule detailing Schein's calculation of Fully
Absorbed Cost. The parties' determination of their respective costs in
determining Net Profits with respect to each calendar quarter shall be
determinative, subject to the Final Net Profit Determination using the Dispute
Resolution Auditor (as defined below). Within ninety (90) days following the
close of each fiscal year during the Term, R&D and Schein shall provide each
other's independent certified public accountants with access, during regular
business hours and upon reasonable prior notice, and subject to the
confidentiality undertakings contained in this Agreement, to such party's books
and records relating to the Product solely for purposes of verifying the
accuracy of the calculations hereunder and that the methodology used in
allocating manufacturing costs is appropriate for the year then ended.
Once the parties have either agreed that the original
calculations made by Schein are correct, or have agreed on a different
calculation (based on the results provided by the two different certified public
accountants), a correcting payment or refund, together with interest at the
current prime lending rate established by leading New York banks as published in
The Wa# Street Journal, shall be made by the appropriate party within thirty
(30) days thereof. However, if after thirty (30) days such an agreement cannot
be reached, a dispute resolution auditor ("Dispute Resolution Auditor") will be
appointed by the mutual consent of the parties. The Dispute Resolution Auditor
shall review the calculations made pursuant to this Section 7, and/or
methodology used, and then provide the parties with the verification discussed
above (the "Final Net Profit Determination"). The decision of such independent
auditor with respect to the payments if any, to be made pursuant to this
Paragraph 7(c) shall be final and binding on the parties. The costs of such
independent auditor shall be borne equally by the parties.
(d) Certain Product Payments. As an advance against payments
-------------------------
due R&D under Paragraphs 7(b) or 7(c), above, as applicable, Schein shall pay to
R&D a "Product Payment." The amount of any Product Payment shall be an amount
equal to ten percent (10%) of the product obtained by multiplying (x) the
average selling price per unit of Product during the calendar quarter
immediately preceding the one in which the Product Payment being calculated is
to be made (or, if there are no Product sales in the preceding quarter, then the
average selling price shall be deemed to be equal to the projected average
selling price as determined in accordance with Schein's then most recent
Marketing Plan), by (y) the number of units of Product delivered to Schein in
respect of which the Product Payment is being calculated. The Product Payment
shall be paid to R&D not later than one (1) business day preceding the date on
which the corresponding payment for goods must be made by R&D to its supplier
(as certified to by R&D in writing), and shall be made in immediately available
funds.
8. Representations and Warranties.
------------------------------
(a) Each of R&D and Schein represents and warrants to the other as
follows:
16
(i) It has full corporate power and authority to enter into
this Agreement and consummate the transactions contemplated hereby.
(ii) It has such permits, licenses and authorizations of
governmental or regulatory authorities as are necessary to own its respective
properties and conduct its business to the extent material to the consummation
of the transactions contemplated hereby. Any FDA approvals regarding the NDA and
any Marketing Authorizations are specifically excluded from any R&D
representations and warranties contained in this clause 8(a)(ii).
(iii) It is not currently debarred, suspended or otherwise
excluded by the United States from receiving Federal contracts.
(b) R&D represents and warrants to Schein as follows:
(i) Except to the extent resulting from any action or omission
by Schein following its receipt of such Product or in connection with the
manufacture of Product by Schein or one of its Affiliates, the Product supplied
to Schein under this Agreement shall be, and remain throughout its stated shelf
life, in accordance with the specifications delineated within the FDA-approved
NDA for such Product, the Drug Master File, if any, and the Foreign
Registrations.
(ii) The current manufacturing facility for the Product that R&D
shall provide to Schein is located in Dagenham, UK. This facility has been
approved by the FDA for other drug products. RPR and R&D are currently working
together to prepare the CMC section of the NDA and as necessary to conform
various plant procedures to meet FDA requirements. R&D shall use its best
efforts to have RPR ensure that, prior to such FDA inspection, such facility
conforms in all material respects to applicable laws, regulations and approvals
governing such facility and are adequate to produce the quantities of the
Product reasonably contemplated hereby.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
17
(iii) All material laboratory, scientific, technical and/or other
data submitted by or on behalf of R&D relating to the Product shall be true and
correct and shall not contain any material falsification, misrepresentation or
omission.
(iv) All Product supplied to Schein under this Agreement, except
to the extent resulting from any action or inaction by Schein or one of its
Affiliates if they are manufacturing the Product, shall have expiry dating of at
least 36 months from delivery to Schein.
(v) The Product supplied by R&D, except to the extent resulting
from any action or inaction by Schein or one of its Affiliates if they are
manufacturing the Product, shall be in accordance with the process set forth in
RPR's patent(s), if any.
(vi) The RPR Agreements are valid and in full force and effect
as of the date hereof. There are no existing or claimed defaults by any party
under the RPR Agreements and no event, act or omission has occurred which (with
or without notice, lapse of time or the happening or occurrence of any other
event) would result in a default by R&D or, to the knowledge of R&D, by RPR,
under the RPR Agreements.
(vii) All clinical studies to support the NDA have been or will
be conducted in accordance with then current Good Clinical Practices, and, to
the extent within R&D's control and, if and to the extent not within its
control, then to the best of its knowledge, all clinical supplies utilized
therein have been or will be manufactured in accordance with current Good
Manufacturing Practices. None of the clinical consultants or investigators
involved in any such clinical studies have or had any financial, equity or other
interest in R&D (but R&D has disclosed to Schein that Xxxxxxx XxXxxx and Jur
Strobos have or may acquire shares of the Common Stock of R&D).
Notwithstanding the foregoing provisions of this Section 8, R&D does not purport
to convey any rights with respect to the Product or the Territory which are
greater than those which it has to convey under the RPR Agreements.
9. Other Representations. R&D further represents and warrants to Schein
---------------------
that:
(a) subject to the rights of RPR under the RPR Agreements with
respect thereto, it is the exclusive owner of all rights, title and interest in
the R&D know-how, as such term is defined in the Distribution Agreement;
(b) to R&D's best knowledge, there are no rights of third parties,
other than RPR as set forth in the Distribution and Trademark Agreements, to any
of the R&D Know How which conflict with the rights granted to Schein under this
Agreement.
(c) to R&D's best knowledge there is no infringement by third parties
of any R&D Know How;
(d) there is no pending or, to R&D's knowledge, threatened action,
suit, proceeding or claim by others challenging R&D's rights in or to such R&D
Know How, and R&D is unaware of any facts which would form a reasonable basis
for any such claim;
18
(e) there is no pending or, to R&D's knowledge, threatened action,
suit, proceeding or claim by others challenging the validity or scope of such
R&D Know How and R&D is unaware of any facts which would form a reasonable basis
for such a claim;
(f) there is no pending or, to R&D's knowledge, threatened action,
suit, proceeding or claim by others that any of the R&D Know How or any rights
granted to Schein under this Agreement infringes or otherwise violates any
patent, trademark, copyright or trade secret rights of others, and R&D is
unaware of any facts which would form a reasonable basis for such a claim;
(g) to R&D's best knowledge there is no patent or patent application
of others which contains claims that dominate or may dominate any R&D Know How.
10. Other Covenants and Agreements.
------------------------------
(a) R&D shall arrange to have RPR provide to Schein a certificate of
analysis for each lot of Product shipped to Schein, listing test results.
Without limiting the foregoing, from each batch of Product produced by R&D, R&D
agrees to use its best efforts to cause to be retained a representative sample
for a period of at least 12 months past the expiration date stated thereon (or,
if longer, as required under any Marketing Authorization), and, upon request, to
supply or arrange for RPR to supply Schein with a portion of such representative
sample, for use in the event later analysis becomes necessary.
b) Without limiting any other remedy available to it, in the event
of Schein's reasonably finding that the quality of the Product is not acceptable
in terms of specifications set forth in this Agreement, Schein shall promptly
notify R&D after making such determination, specifying the respects in which the
quality is unacceptable. As soon as possible and without cost to Schein, R&D
shall replace such non-conforming quantities. In the event that R&D shall
dispute any such determination of Schein, the parties shall use their best
efforts to resolve such dispute amicably. If they are unable to do so, then
absent a determination by a Regulatory Authority (whose determination shall
govern for these purposes), the matter shall be referred for resolution to a
mutually-acceptable independent laboratory located in the United States whose
decision shall be final and binding. Any charges of such laboratory shall be
paid for by the party against whom the dispute is decided.
(c) Schein, in its discretion and at its cost, shall review from time
to time, through independent United States or foreign patent counsel mutually
acceptable to Schein and R&D, any process patent obtained by RPR or R&D for the
manufacture of the Product to determine whether such process patent may infringe
any United States or foreign patent.
(d) R&D and Schein may inspect, from time to time, each other's and
RPR's manufacturing facilities, quality control procedures and records during
normal business hours, upon reasonable prior notice. However, all such
inspections are subject to the provisions of Section 11 hereof and Schein's
inspection of RPR's facilities shall require the written consent of both R&D and
RPR. R&D shall use its best efforts to attempt to obtain such RPR consent.
(e) R&D shall provide to Schein copies of all correspondence from the
FDA and other applicable regulatory authorities relating to the Product, and all
inspection reports issued by the FDA and such other regulatory authorities
during the Term, and related correspondence, including with respect to the
manufacturing site of the Product, as such reports and correspondence become
available.
19
(f) It is understood and agreed that R&D and Schein may, except as
otherwise expressly provided in this Agreement, engage in other business
activities, even such activities as may be in competition with the activities
contemplated herein, and it is understood and agreed that if R&D or Schein
should learn about or develop an opportunity which might be competitive with
the Product, such party shall, except as otherwise provided herein, be under no
obligation to offer such opportunity for exploitation by the other or by the
collaboration contemplated hereby and shall be free to take advantage thereof
for its own account or for the accounts of other persons with whom such party is
or may become associated, in which case the other party hereto shall have no
right to any income or profits derived therefrom. Accordingly, it is expressly
understood and agreed that neither party shall have any right or claim by reason
of the existence of this Agreement under or in respect of any product, device,
formulation, idea, invention, process or other opportunity of any kind or
nature whatsoever which is neither directly competitive with the Product nor
------- ---
reliant upon, to be used in connection with or developed, identified or
discovered, directly or indirectly, using any aspect of the R&D Know How.
Notwithstanding the foregoing, however, it is expressly understood and agreed as
follows:
(i) Any product, device, formulation, idea, invention, process
or other opportunity of any kind or nature whatsoever which becomes known to or
is proposed for development or exploitation by either party and which is reliant
upon, to be used in connection with or developed, identified or discovered,
directly or indirectly, using, any aspect of the R&D Know How shall be brought
to the R&D Committee established pursuant to Paragraph 3(d) hereof. The R&D
Committee shall have sole responsibility for determining whether the
collaboration established by this Agreement will exploit the opportunity and
what amount of funds, if any, is to be expended in connection therewith, and
this responsibility shall be full notwithstanding that the Committee might
otherwise then only be advisory in capacity, with it being understood and
agreed, however, that, notwithstanding any other provision of this Agreement to
the contrary, approval of the Committee shall be deemed to have been obtained if
all Schein members of the Committee have voted for approval, with it being
understood that Schein shall, in such case, be responsible for costs just as
though full Committee approval had been obtained. If the R&D Committee
determines to pursue the opportunity, it shall be pursued in accordance with the
Committee's determination as to the level of funds to be expended in connection
therewith, and all funds required in connection therewith, within the limits
approved by the Committee, shall be provided by Schein and shall constitute
neither Qualified Expenditures nor Product Related Expenses, and R&D shall have
no obligation to provide any of such funds or to reimburse Schein therefor. If
the Committee determines to pursue the opportunity, then, except as to the
question of funding (which shall be handled as aforesaid), the opportunity shall
be treated in all respects under this Agreement as though it had been included
as part of the RPR Agreements and within the definition of Product thereunder,
but Schein shall have complete control over development of the opportunity,
including any product connected therewith. If the Committee determines not to
exploit the opportunity or fails affirmatively to decide to exploit the
opportunity, then neither party shall do so during the Term.
(ii) Disclosure concerning the existence and nature of any
product, device, formulation, idea, invention, process or other opportunity of
any kind or nature whatsoever which becomes known to or is proposed for
development or exploitation by either party and which is not reliant upon, to be
---
used in connection with or developed, identified or discovered, directly or
indirectly, using, any aspect of the R&D Know How but which is potentially
--
directly competitive with the Product shall be made in writing by that party to
the
20
other party within thirty (30) days of the time at which the presenting party
first decides to proceed with U.S. clinical studies; provided, however, that if
the presenting party intends to pursue such opportunity in combination with any
person other than the person or persons, if any, who brought, or who has rights
(originating prior in time to those of the presenting party) to such opportunity
to the presenting party, then, for a period of one hundred and twenty (120)
days preceding the presenting party's first offering the opportunity to such a
third party, the presenting party and the other party to this Agreement shall
negotiate in good faith to attempt to reach an agreement as to terms upon which
such opportunity might be jointly exploited or pursued by them, failing which
agreement the noticing party shall be free to exploit the opportunity as though
it were a non-competitive one.
(g) During the Term, R&D shall not, except as otherwise provided
herein (including in the case of any reversion of rights provided for herein),
directly or indirectly, sell, ship and/or distribute any injectable iron
pharmaceutical product in any country in the Territory unless agreed to in
writing by Schein.
(h) R&D shall duly perform all of its obligations under the RPR
Agreements so as to prevent any default by it thereunder, and R&D shall provide
Schein with prompt written notice of any default by either party thereunder and
of any event, occurrence or non-occurrence which with the passage of time, would
become an event of default thereunder. R&D shall also use its best efforts to
obtain from RPR amendments to the RPR Agreements which would permit R&D's
sublicensees and assignees thereunder notice from RPR of any default by R&D
thereunder and a reasonable period of time in which to cure any default by R&D,
and R&D hereby agrees to indemnify Schein against and to reimburse it upon
demand for any and all costs of cure.
(i) R&D shall keep Schein apprised of the course of, and consult with
Schein concerning, any negotiations with RPR concerning any proposed
modifications or amendments to any of the RPR Agreements, and R&D will promptly
furnish Schein with copies of any modifications or amendments as and when
executed.
(j) R&D shall be responsible for submitting to the FDA, and
maintaining, a complete and adequate Drug Master File for the bulk active
utilized in the Product. If Schein is the Backup, R&D will provide to Schein a
reference letter for the Drug Master File.
11. Confidentiality.
---------------
(a) The Confidential Information shall be treated by Schein and R&D,
respectively, as confidential and in the manner required by the Distribution
Agreement, shall not be disclosed or revealed to any third party and such
information shall only be used in connection with the performance of this
Agreement; provided, however, that Confidential Information shall not, except as
otherwise provided in the Distribution Agreement, include information that the
parties can document as having been:
(i) public knowledge prior to the disclosure, or which
hereafter becomes public knowledge through no fault of the receiving party;
(ii) lawfully in its possession prior to the time of disclosure
by the other party;
21
(iii) received, after the time of disclosure, from a third party
not under a similar obligation of confidentiality to the other party;
(iv) independently developed by its employees without access to
the other party's Confidential Information; or
(v) required to be disclosed pursuant to (1) any order of any
court having jurisdiction and power to order such information to be released or
made public; or (2) any lawful action of a governmental or regulatory agency.
(b) Each party shall take all such precautions as it normally takes
with its own Confidential Information and, as required by the Distribution
Agreement, to prevent any improper disclosure; provided, however, that
Confidential Information may be disclosed within the limits required to obtain
any authorization from the FDA or any other United States or foreign
governmental or regulatory agency or, with the prior written consent of the
other party.
(c) If either party shall breach any of the provisions of this
Section, in addition to and without limiting any other remedies available to
such party at law or in equity, the other party shall be entitled to immediate
injunctive relief in any court to restrain any such breach or threatened breach
and to enforce the provisions of this Section. The parties hereto acknowledge
and agree that there is no adequate remedy at law for any such breach or
threatened breach and, in the event that any proceeding is brought seeking
injunctive relief, the parties shall not use as a defense thereto that there is
an adequate remedy at law.
(d) This Section 11 and the obligations contained herein shall
survive termination of this Agreement, whether pursuant to Section 14 hereof, by
expiration of the Term or otherwise.
12. Indemnification: Insurance.
--------------------------
(a) R&D shall indemnify and hold Schein and its Affiliates harmless
from and against any claim, action, suit, proceeding, loss, liability, damage or
expense (including without limitation reasonable attorneys' fees) arising
directly or indirectly as a result of R&D's negligent acts or omission or breach
of its representations, warranties, covenants or other obligations hereunder,
provided, however that R&D shall not be required to indemnify Schein with
respect to any claim, action, suit, proceeding, loss, liability, damage or
expense arising from or related to Schein's breach of its representations,
warranties, covenants or other obligations hereunder, or from information
supplied by Schein to R&D or contained in regulatory filings prepared by Schein.
Without limiting the generality of the foregoing, R&D shall protect and defend
Schein from any and all claims, actions, suits, judgments, royalties, demands
and causes of action whatsoever arising out of any alleged infringement of the
proprietary rights of others by reason of the performance of this Agreement and
the purchase, importation, distribution, marketing, sale and/or use of the
Product by Schein; provided, however, that notwithstanding the foregoing, the
indemnification available to Schein under this sentence shall be limited to that
which is available to R&D from RPR under the RPR Agreements, with it being
understood and agreed, however, that R&D shall use its best efforts to have RPR
modify the RPR Agreements to provide for a level of indemnification by RPR which
is more in line with that which is customary in the industry.
22
(b) Schein shall indemnify and hold R&D harmless from and against any
claim, action, suit, proceeding, loss, liability, damage or expense (including
without limitation reasonable attorney's fees) arising directly or indirectly as
a result of Schein's negligent acts or omissions or breach of its
representations, warranties, covenants or other obligations hereunder; provided,
however, that Schein shall not be required to indemnify R&D with respect to any
claim, action, suit, proceeding, loss, liability, damage or expense arising from
or related to R&D's breach of its representations, warranties, covenants or
other obligations hereunder, or from information supplied by R&D to Schein or
contained in regulatory filings or correspondence prepared or delivered by R&D.
(c) The foregoing provisions of this Section 12 and the obligations
contained therein shall survive termination of this Agreement, whether pursuant
to Section 14 hereof, by expiration of the Term, or otherwise.
(d) R&D shall use its best efforts to have RPR agree to have R&D and
Schein named as additional insureds on RPR's product liability insurance. During
the Term, R&D and Schein shall each at all times maintain at least $10 million
of product liability insurance coverage and will, from time to time, review the
appropriate level of insurance to be maintained by them (not necessarily the
same for each) given their respective roles hereunder and the level of insurance
maintained by RPR. R&D and Schein shall each cause the other to be named as
additional insureds on their respective product liability policies immediately
before the commencement of the first sale of Product hereunder.
13. Customer Complaints; Recall.
---------------------------
(a) R&D agrees to notify Schein promptly of any serious and
unexpected adverse reactions reported to R&D resulting from the use of the
Product (whether inside or outside of the Territory). Schein shall notify R&D
promptly of any complaints from third parties reported to Schein involving any
serious and unexpected adverse reactions resulting from use of the Product. All
complaints relating to the Product will be handled as described in Exhibit C
hereto, entitled "Complaint Handling Procedures."
(b) In the event of any recall of the Product, as suggested or
requested by any governmental authority, or any recall to which both parties
agree in writing, R&D and Schein shall perform the recall of the Product sold by
Schein and in the Territory. If the recall arises from Schein's or its
Affiliate's acts or omissions in the manufacturing, packaging, 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 Schein. If the recall arises from R&D's (or RPR's)
acts or omissions in the manufacturing, packaging, marketing, distribution,
storage or handling of such Product, the Recall Costs shall be borne by R&D. In
all other events, Schein shall bear fifty percent (50%) of the Recall Costs and
R&D shall bear fifty percent (50%) of the Recall Costs.
14. Termination.
-----------
(a) The term of this Agreement may be terminated immediately upon
written notice of termination given by:
23
(i) The non-defaulting party in the event that the other party
shall: (A) commit a material breach or default under this Agreement, which
breach or default shall not be remedied within sixty (60) days after the receipt
of written notice thereof by the party in breach or default, except that such
sixty (60) day period shall be fifteen (15) days in the case of a monetary
default; or (B) have made a material misrepresentation of any representation or
warranty contained herein; or
(ii) Schein, in the event that a preliminary injunction or other
order is granted by a court or authority enjoining or restricting the
manufacture and/or distribution of the Product as contemplated hereby; or
(iii) R&D or Schein, if the other shall at any time under the
laws of the United States or any state (A) make an assignment for the benefit of
creditors, (B) permit the appointment of a trustee or receiver of all or a
substantial part of its assets, or (C) institute voluntary proceedings in
bankruptcy or insolvency or permit voluntary institution of such proceedings
against it.
(iv) If a lawsuit has been commenced in a court of applicable
jurisdiction and has resulted in a judgement in that jurisdiction that the
importation, manufacture and/or distribution of the Product as contemplated
hereby infringes any patent or other proprietary right of any other person, firm
or corporation then Schein may terminate this Agreement with respect to the
Product in that jurisdiction.
(v) Either party, (x) in the event that there should, after the
granting of Marketing Authorization by the FDA and the receipt by R&D of all of
the payments contemplated in Paragraph 7(a) hereof, be an adverse development
with respect to the indications for or required warning labeling of the Product
which did not exist at the time of Marketing Authorization by the FDA and which,
if known at the time of entering into this Agreement by the party seeking to
terminate, could reasonably be expected so severely to have affected the
reasonable economic expectations of that party as to the performance of the
Product as to have caused that party not to enter into this Agreement, or (y)
but, only until the Supply Agreement is executed, in the event that the parties
shall have failed, despite having negotiated in good faith to do so, to enter
into the Supply Agreement at or before the granting of Marketing Authorization
by the FDA.
(vi) Schein, for any reason, but if but only if Schein elects to
terminate pursuant to this clause 14(a)(vi) after January 1, 1998 and before the
FDA has accepted the NDA for filing.
(vii) Schein, for any reason, but if but only if Schein elects to
terminate pursuant to this clause 14(a)(vii) after January 1, 1999 and before
Marketing Authorization from the FDA.
(b) Notwithstanding any termination of this Agreement, then subject
to any rights or remedies which one party may have against the other for any
breach of this Agreement, (i) no amounts previously paid or reimbursed by Schein
to R&D through the date of such termination shall be refundable to Schein, (ii)
if R&D has terminated this Agreement upon Schein's breach or Schein terminates
this Agreement where there has been no breach by R&D (including, by way of
example, where Schein's termination is under any one of clause (ii) through
(vii), above, but there has been no breach or default under this Agreement by
R&D), Schein shall be required to reimburse R&D promptly for all Qualified
Expenditures paid
24
or accrued by R&D prior to the date of such termination up to the limits
provided in Paragraph 3(b) hereof; and (iii) Schein shall also be required to
pay to R&D any and all other amounts accrued hereunder through the date of
such termination.
(c) Notwithstanding anything herein to the contrary, subject to RPR's
approval (which R&D shall use its best efforts to obtain promptly following the
execution and delivery of this Agreement), Schein shall have the right to sell
any quantities of the Product obtained from R&D hereunder after expiration or
termination (other than on Schein's breach) of this Agreement, and R&D shall
fill all of Schein's orders for Product received during the one hundred and
eighty (180) day period following any notice of termination, upon the terms of
this Agreement.
(d) Failure to obtain Marketing Authorizations in any country in the
Territory other than the United States, shall not result in a termination of
this Agreement.
15. Force Majeure. If either R&D or Schein shall be prevented by fire,
-------------
strike, lockouts, war, civil disturbances, acts of God or other similar events
beyond the reasonable control of R&D or Schein from performing its respective
obligations hereunder, neither R&D nor Schein shall be liable to the other for
damages. The party being able to perform may, at its sole option, extend the
duration of this Agreement by a term equal in length to the period during which
the other party was unable to perform its obligations hereunder, or waive such
obligations, but in no event shall the Term be extended hereunder beyond that of
the RPR Agreements.
16. Assignment. This Agreement shall inure to the benefit of, and shall be
----------
binding upon each of, the parties hereto and their respective successors and
assigns. This Agreement can be assigned in whole or in part by either party
subject to prior written consent of the other, which consent will not be
unreasonably withheld or delayed and, to the extent applicable, subject to RPR's
prior written consent. R&D or Schein may, without the prior written consent of
the other, but subject to obtaining such consent, if any, as might be required
under the RPR Agreements (which R&D agrees that it would use its best efforts to
obtain), assign this Agreement, in whole or in part, to an Affiliate or to any
third party acquiring all or substantially all of the assets of Schein or R&D or
with or into whom R&D or Schein may be merged, provided that the assigning party
shall remain fully responsible for performance of the obligations of its
assignees under this Agreement. In any event, the party so assigning shall give
the other party written notice at least sixty (60) days prior to such
assignment.
17. Notices. All notices, reports and other communications required by
-------
this Agreement shall be transmitted by overnight courier service or by facsimile
transmission with confirmed answer back to the other party at its address set
forth below, or such other address as shall be specified by the parties hereto
by written notice given in accordance with this section and shall be effective
upon receipt thereof.
If to Schein: Schein Pharmaceutical, Inc.
000 Xxxxxx Xxxxx
Xxxxxxx Xxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: General Counsel
25
If to R&D: Xxxxxx R&D Laboratories, Inc.
0000 Xxxxxxxxx Xxx, Xxxxx 000
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq. Chief Financial Officer
18. Publicity. Except for such disclosure as is deemed necessary, in the
---------
reasonable judgment of a party, to comply with applicable laws or to obtain
Marketing Authorizations, and except for disclosures contemplated under the
Marketing Plans or the Strategic Commercialization Plans, no announcement, news
release, public statement or publication 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 shall not
be unreasonably withheld. Also, prior to the commencement of the sale of the
Product, advance representative copies of such publications shall also be
provided to RPR by the parties.
19. Amendment and Waiver. This Agreement (including the Exhibits hereto)
--------------------
may be amended, modified, superseded or canceled, and any other of the terms or
conditions hereof may be modified, only by a written instrument executed by both
parties hereto or, in the case of a waiver, by the party waiving compliance.
Failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right of such party at a later
time to enforce the same, and no waiver of any nature, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or considered as
a further or continuing waiver of any other provision of this Agreement.
20. Governing Law, Venue and Arbitration. This Agreement and all rights,
------------------------------------
obligations and liabilities arising hereunder shall be construed and enforced in
accordance with the laws of the State of California. The parties mutually agree
to arbitration in accordance with the rules of the American Arbitration
Association in effect as of the date of this Agreement (which are incorporated
by reference herein), and judgment upon the award rendered by the Arbitrator(s)
may be entered in any court having jurisdiction. Venue for such arbitration
shall be Los Angeles County, California if commenced by Schein and Xxxxxx
County, New Jersey if commenced by R&D. Both parties agree that such judgment
shall not be appealable. The arbitration shall proceed in the absence of any
party which, after due notice, fails to be present or fails to obtain an
adjournment. The parties shall have the right to conduct discovery pursuant to
the provisions of Section 1283.05 of the California Code of Civil Procedure, and
the aforesaid arbitration requirement shall not operate to preclude either party
hereto from seeking or obtaining injunctive relief in a court of competent
jurisdiction or from pursuing in a court of competent jurisdiction rather than
through arbitration any relief which it might seek in connection with any
occurrence, matter or question where it is reasonably foreseeable that a third
party (including RPR) might bring a claim with respect thereto, connected
therewith or arising therefrom or be a party thereto in a judicial forum. It is
also understood and agreed that in the case of any arbitration involving
technical claims of a noncommercial nature, arbitrators shall be drawn only from
among persons having appropriate technical background or expertise in the areas
concerned, and it is further understood and agreed that the parties'
negotiations for the entering into of the Supply Agreement shall not be subject
to arbitration.
21. Attorney Fees. In the event that it becomes necessary for either party
-------------
to commence any proceeding or action (including arbitration) to enforce the
provisions of this Agreement, the prevailing party in such proceeding or action
shall be entitled to recover all costs and expenses thereof, including, but not
limited to reasonable attorneys' fees and
26
customary court costs, with it being understood and agreed, however, that Schein
shall be entitled to offset against any of its payments next otherwise coming
due from it to R&D under this Agreement any and all fees and costs then due from
R&D to Schein under this Section 21.
22. Severability. In the event that any one or more of the agreements,
------------
provisions or terms contained herein shall be declared invalid, illegal or
unenforceable in any respect, the validity of the remaining agreements,
provisions of terms contained herein shall in no way be affected, prejudiced or
invalidated thereby.
23. Entire Agreement. This Agreement, together with the Exhibits hereto,
----------------
contains the entire agreement between the parties hereto and supersedes any
agreements between them with respect to the subject matter hereof.
24. Section Headings. The section headings contained in this Agreement are
----------------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
25. Counterparts. This Agreement may be executed in any number of separate
------------
counterparts, each of which shall be deemed to be an original, but which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SCHEIN PHARMACEUTICAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------
Authorized Officer
XXXXXX R&D LABORATORIES, INC
By: [SIGNATURE ILLEGIBLE]
-------------------------
Authorized Officer)
27
