1
COMMERCIAL SUPPLY AGREEMENT
THIS AGREEMENT is made and entered into as of this day of March 6, 1998, by and
between SONUS PHARMACEUTICALS, INC., a Delaware corporation ("SONUS") and * .
RECITALS:
WHEREAS, * in the business of, among other things, fluorochemical
research and development, scale-up, bulk manufacturing and marketing of neat
fluorochemicals, * and *; and
WHEREAS, SONUS desires to have * supply, in bulk, neat medical grade
*, in accordance with specifications shown in Schedule 1, and to author Drug
Master File(s) ("DMF(s)") for * and *, for the development of and use in the
Product (as hereinafter defined) to be developed by SONUS;
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, SONUS and * do
hereby agree as follows:
1. DEFINITIONS
1.1 The following capitalized terms shall have the respective meanings set
forth below for purposes of this Agreement.
1.2 "Affiliate" shall mean a corporation or business entity that directly or
indirectly is controlled by, controls, or is under common control with a
party to this agreement. For this purpose, the meaning of the work
"control" shall be ownership of more than fifty percent (50%) of the
voting shares or interest in the respective corporation or business
entity or ownership of the maximum amount of the voting share or
interest in the respective corporation or business entity permitted by
law in a particular country.
1.3 "Approval Date" shall mean that date on which SONUS receives from the
U.S. FDA final approval of its new drug application (NDA) for the
Product.
1.4 "Confidential Information" shall have the meaning assigned to such term
in Section 6.1 hereof.
Page 1 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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1.5 "Contract Year" shall mean each twelve (12) month period during the term
of this Agreement commencing upon the first approval date by the Food
and Drug Administration of the Product for use in the Field.
1.7 "Research and Development Year" shall mean each twelve (12) month
period, or partial year before approval, immediately following execution
of the "Commercial Supply Agreement" and until commencement of Contract
Year one.
1.8 "Field" shall mean those human or animal pharmaceutical applications or
treatments involving * or * used in diagnostic ultrasound imaging. The
Field shall include, without limitation, topical, dermal, epidermal,
injectable, transdermal, intravital or nasal administration of any
Product.
1.9 "*" shall mean *, purified as * medical grade, which shall
meet or exceed the minimum specifications set forth on Schedule 1
hereto, and which shall be used by SONUS and/or other SONUS developers
for the development, manufacture, sale and distribution of the Products.
1.10 "*" shall mean *, purified as * medical grade, which shall
meet or exceed the minimum specifications set forth on Schedule 1
hereto, and which shall be used by SONUS and/or other SONUS developers
for the development, manufacture, sale and distribution of the Products.
1.11 "Patent Estate" shall mean those valid under law patents issued to SONUS
as specified on Schedule 5 attached hereto.
1.12 "Product or Products" shall mean any one or more commercial products
developed and manufactured by SONUS and/or SONUS developers, for
application in the Field and containing * or * in any form, quantity or
developed or purified state.
1.13 "Third Party" shall mean any person or entity other than SONUS,
* or their Affiliates.
1.14 "SONUS" shall include SONUS Pharmaceuticals, Inc., its Affiliates and
distributors.
1.15 "Excess Purchases" Any purchase of product by SONUS from * in
contract years 1 of * in contract year 2, any purchase of product by
SONUS from * in contract years 3,4 of * per contract year and
* in contract year 5.
Page 2 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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2. SUPPLY AND PURCHASE OF * AND *
2.1 Obligations of SONUS.
(a) SONUS hereby agrees that it will use its commercially reasonable best
efforts to attempt to obtain approval of a new drug application ("NDA") for one
or more of the Product(s) in the United States from the Food and Drug
Administration ("FDA") of the United States government within (7) years of the
date of the last signing party to this agreement.
(b) SONUS hereby agrees that, commencing upon the Research and Development Year
and/or the first Contract Year, as applicable and continuing during the term
hereof, SONUS and its Affiliates and distributors shall purchase from * not less
than the following amount of *:
Contract Year 1 *
Contract Year 2 *
Contract Year 3 *
Contract Year 4 *
Contract Year 5 and each subsequent year *
(a) SONUS hereby agrees that commencing in Contract Year three to negotiate in
good faith for * to provide SONUS with up to *, or minimums as above, whichever
is greater, of SONUS' world wide requirements of * and * beginning in contract
year four for the remaining term of the Agreement. * must prove to the
reasonable satisfaction of SONUS that it is a reliable supplier of * and/or *
conforming to the Specifications during R&D and Contract Years one and two per
Section 2.2 of the Agreement for this obligation to apply. However, in any given
contract year during contract year 1 through 5, * of the excess purchases shall
be applied as a reduction to the remaining contract years minimum purchases of
product, said reduction to be applied to the first, most distant of the 5
contract years minimum purchases to which minimum purchases apply.
2.2 Supply Obligation.
(a) * hereby agrees that, during the term hereof, it shall utilize its best
efforts at its own expense to maintain capacity to supply, at all times, * of
the annual forecasted volume requirements of SONUS; as provided for in Section
2.5, Estimates and Orders.
Page 3 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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(b) * agrees to hold, at the end of any calendar quarter commencing at the
beginning of the first Contract Year, a minimum of six (6) months supply of
medical grade * as specified in Schedule 4. SONUS agrees that it will purchase
all such inventories held by * within twelve (12) months of the inventory report
date, as set forth in SECTION 2.5 Estimates and Orders, or at the termination of
this agreement, whichever is sooner; provided that such inventories have * shelf
life and are within specification. The parties agree to consult regularly on the
adequacy of such minimum supply of *. * agrees to provide a copy of Schedule 4
to SONUS at least quarterly and * warrants that it has, in fact, the indicated
quantity of * in Inventory.
(c) * agrees to utilize its commercially reasonable best efforts to * and to
modify its DMF or prepare new DMF to * manufactured *. * will advise SONUS of
its plan and activities, including an estimate of time necessary to *. * agrees
to utilize its best efforts, including the procurement of increased quantities
of raw materials to make * in order to insure an uninterrupted supply of * to
SONUS * and to supply * in accordance with minimum supply levels set forth in
Paragraph 2.2(b), above. SONUS and * shall consult upon the amounts of raw
materials * shall use to make * and * for inventory during the changeover * and
SONUS shall purchase all of * * and said raw materials used to in making *
within 90 days after SONUS' complete conversion to *.
(d) * will produce * under DMF(s) during the term hereof. Said DMF(s) will
provide adequate detail on the facilities, purification, stability and quality
control processes * in accordance with current Good Manufacturing Practices
("GMP") and all applicable FDA and similar foreign regulations. * agrees to
provide authorization for the FDA to review the DMF(s) directly or to refer to
the DMF(s) during its review of any regulatory investigation of SONUS; or the
review of any submission made by SONUS. * shall provide a copy of the DMF(s) to
SONUS for review and a copy of each update to the DMF(s) prior to filing such
update with the FDA.
Page 4 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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Further, during the term hereof, should * DMF(s) be determined by the FDA to
not comply with its guidelines and regulations or if * proposes to make a change
in the DMF(s) or in the underlying process, * will notify SONUS. * will provide
SONUS with a summary of information relevant to any noncompliance or in support
of any proposed process or DMF(s) change, and SONUS will have 90 days to
evaluate and notify * that SONUS believes the noncompliance or change to be
significant. * will increase minimum inventory to an agreed upon level to ensure
no interruptions to SONUS in manufacturing of the Product. SONUS may engage a
Third Party consultant, to review the DMF(s) and recommend changes to the DMF(s)
for compliance with FDA guidelines or evaluate the * proposed change for
compliance with the FDA requirements, respectively. FDA is the final authority
and * agrees to use its best efforts to fully respond to FDA all requirements in
a timely fashion in order to bring its DMF(s) into compliance.
(e) In the event that SONUS or SONUS designate files foreign equivalents of
NDAs in countries outside the United States, then * will utilize its
commercially reasonable best efforts to file the appropriate documentation
regarding * supply in the same geographic territories in support of the
development efforts of SONUS. SONUS shall reimburse * for its reasonable costs
in connection with such efforts as mutually agreed upon by SONUS and *. Any
charges to SONUS shall be paid within thirty (30) days, net invoice amount. No
additional work shall be undertaken by * in writing as to the scope of the
additional work and the amounts to be paid by SONUS.
(f) * acknowledges that SONUS has represented that it is the holder of certain
patents directed to biocompatible ultrasound contrast media and methods of use
of said media and methods of use of said media comprising certain medical grade
fluorocarbon gases and gaseous precursors as specified in the SONUS Patent
Estate attached hereto as Schedule 5. So long as the minimums in paragraph
2.1(b) are met, * agrees that it will not make or use, nor knowingly sell, any *
to anyone other than SONUS for use in the Field without the express written
permission of SONUS.
(g) * acknowledges that no license is granted to * under any SONUS rights for *
manufacture, use or sale of * to Third Parties in the Field, or otherwise.
Page 5 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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2.3 Acceptance of *.
(a) Each shipment of * shall be weighed within 3 days of receipt by SONUS or
SONUS designate to confirm the quantity of * received. If there is a weight
discrepancy, SONUS shall promptly notify * and within 10 days, SONUS and * will
attempt to amicably resolve the cause of the discrepancy and the quantity that
SONUS will pay for. If the parties are unable to resolve any differences
concerning delivered quantities, the issue shall be resolved by arbitration as
set forth in Sections 9.1 and 9.2. It is agreed in paragraph 3.1 that the price
is FOB *, therefore any losses incurred in shipment (other than leaky valves or
defective shipment cylinders) are the responsibility of SONUS. Each shipment of
* supplied by * to SONUS hereunder shall conform to the specifications therefore
as set forth on Schedule 1 hereto. The parties may mutually agree to amend such
specifications, as necessary from time to time, provided that if any such
amendment shall materially affect * cost or timing of production, the parties
shall negotiate in good faith to amend the pricing or delivery terms
accordingly. If the parties are unable to resolve any differences concerning
pricing and/or delivery in this matter, the issue shall be resolved by
arbitration as set forth in Sections 9.1 and 9.2. Each such shipment shall be in
accordance with the required methods of analysis applicable *, and within the
guidelines of any applicable federal, state or local law, rule or regulation. *
shall send to SONUS with each such shipment a Certificate of Analysis specifying
the results of each analytical test required to show conformance of such
shipment with such specifications. The figures set forth in the certificate of
Analysis shall be accepted as accurate for the purposes of this Agreement unless
SONUS, within thirty (30) days of the receipt of such shipment, notifies * in
writing that it has analyzed such shipment in accordance with such methods of
analysis and has determined that such shipment does not conform to such
specifications.
(b) If it is determined that a lot of * does not conform to the applicable
specifications set forth on Schedule 1 hereto, * shall replace, at * expense,
such lot with a substitute lot which meets such specifications within thirty
(30) days from the date such nonconforming shipment is determined not to meet
the specifications therefore by the parties hereto. The nonconforming shipment
shall be returned at * expense by SONUS to * upon final determination in
accordance with Section 2.3(a) above that it does not meet the specifications
therefore.
Page 6 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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(c) The parties hereto agree that the supply of * by * hereunder shall be
subject to and governed by the terms and conditions hereof. None of the terms
and conditions set forth on any purchase or order form, invoice or like document
shall change, add to or modify the provisions of this Agreement, unless mutually
agreed to by the parties in writing. To the extent there shall exist any
inconsistency or additional terms between the terms and conditions of such
purchase or order form, invoice or like document and this Agreement, and there
is no written mutual agreement supporting such inconsistency or additional terms
then the terms and conditions of this Agreement shall control to such extent.
(d) * represents and warrants that each shipment * supplied pursuant to this
Agreement shall meet the specifications for * adopted hereunder and shall be
manufactured in accordance with current GMP applicable to the manufacture of
such bulk chemicals and all applicable laws, rules or regulations, as specified
by the United States Food and Drug Administration.
(e) * and SONUS each warrant that they shall individually comply with all
applicable laws, rules and regulations governing the transportation of hazardous
materials, occupational safety and health laws, and waste disposal laws with
respect to the handling of *.
(f) SONUS or SONUS' representatives shall have the right, upon reasonable
written notice to * but not more than twice per year to conduct a quality
assurance audit and inspection of * records including the DMF(s) and production
facility relating to the production and manufacture of *. Such audit shall focus
on a review of FDA compliance with applicable laws and regulations relating to
the manufacture of *. SONUS agrees to perform such audit during normal business
hours and to conduct the audit at its own expense. SONUS will issue a report
that will summarize * overall compliance and denote any recommended actions
where * is found deficient. * will have 30 days from the date of issuance of the
report to discuss the deficiencies and recommended actions with SONUS and to
initiate an agreed upon action plan.
Page 7 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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2.4 Warranty.
* warrants the manufacturing or sale of the Product(s) sold and delivered
hereunder will not infringe any U.S. Patent, but does not warrant against such
infringement by reason of the use of the Product alone, or in combination with
other goods, or in the operation of any process or use. SONUS agrees to
indemnify and hold * harmless against any and all claims, costs, or causes of
action which may arise out of the use of the Product(s) alone or in combination
with other goods. * further warrants that the shipments * supplied to SONUS
under this Agreement shall conform to the descriptions of Section 2.3 at the
time of shipment and that * shall have good and marketable title to transfer
same, free of any and all encumbrances. However, SONUS shall have the ability to
conduct its own analysis on each shipment of * received from * to check for
conformance with the specifications set forth on Schedule 1. * makes no
representation regarding any ingredient, chemical or constituent of a shipment
of * that is not specified in the specifications set forth in Schedule 1 as
being an impermissible ingredient, chemical or constituent of * or impermissible
concentration of any of the foregoing ("Unspecified Constituents"). SONUS agrees
to assume all responsibility for Unspecified Constituents and the biological
consequences thereof in the medical applications for any Unspecified
Constituents of the * by SONUS unless such unspecified constituent were due to *
failure to manufacture * in compliance with section 2.2d. SONUS shall bear the
burden of proof that an Unspecified Constituent was present due to * failure to
manufacture the * in compliance with 2.2 (d). With regard to the specifications
set forth in Schedule 1 and the specification's applicability to the medical
applications of SONUS, SONUS agrees and acknowledges that * does not have
expertise in that field and that SONUS does have expertise in that field, and
SONUS shall be solely responsible for the suitability of * and the specification
for the medical application(s) that SONUS contemplates under this Supply
Agreement. * MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, IN FACT OR BY LAW,
INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABLITY OR FITNESS
FOR A PARTICULAR PURPOSE.
Page 8 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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2.5 Estimates and Orders.
(a) (1) SONUS shall, within sixty (60) days after execution of the commercial
supply agreement for any Product, provide * with a written estimate of the
quarterly purchase of * by SONUS for the first year following the anticipated
NDA approval date; per the order forecast, Schedule 3, attached.
(2)* shall, within sixty (60) days following receipt of Schedule 3, inform SONUS
as to its anticipated capacity for supplying * to SONUS, including volumes and
lead times, and shall update such information when its actual capacity becomes
known.
(3) * acknowledges that such quantities shown on Schedule 3 are estimates only
and are not binding obligations on SONUS, subject to minimum purchase
obligations set forth in Paragraph 2.1(b) and agreement to pay for *
manufactured as a result of SONUS estimates and held by * for 12 months as
outlined in Paragraph 2.2(b). SONUS shall fully cooperate in the estimated
schedule and production for the commercial order(s) to be placed by SONUS in
anticipation of NDA approval for the Product.
(b) SONUS agrees to submit purchase orders at least 45 days prior to a requested
delivery date. * will ship the requested volume of * within forty five (45) days
of receipt, but * will use all reasonable efforts to ship the requested volume
of * within the periods requested in the purchase order therefore from SONUS,
provided that such orders are reasonably consistent with estimates previously
provided by SONUS. For purposes of the Section 2.5 (b), "reasonably consistent"
shall mean an order not in excess of one hundred fifty percent (150%) of the
relevant estimated volume, as shown on the forecast Schedule 3, in effect at the
time the purchase order is placed. SONUS may cancel any purchase order if *, as
requested, is not received within 45 days from *.
Page 9 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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2.6 Deliveries.
(a) All shipments of * from * hereunder shall be FOB * plant, freight collect or
third party billing to Sonus account. Each shipment of * shall be in accordance
with all applicable federal, state and local laws, rules and regulations with
respect to the packaging and shipping of *, including, without limitation, all
applicable environmental laws. * shall be shipped to SONUS or SONUS designate in
returnable * stainless steel containers or other such container sizes as the
parties may mutually agree, and in accordance with * DMF(s). As appropriate, *
will provide SONUS in advance of each shipment of * all necessary information
relating to such shipment, including, without limitation, the identity of the
carrier, flight number or truck number or similar information, scheduled arrival
date and time and shipment identification number.
(b) * shall have the responsibility of, and shall bear all costs incurred in
obtaining approval under or otherwise complying with all applicable laws, rules
and regulations related to the manufacture and supply of *, and SONUS shall
cooperate as reasonably required to obtain such approvals and such compliance.
3. PRICE AND PAYMENT
3.1 Price. The price with respect to * shall be as set forth on Schedule 2
hereto, ("Price: Schedule"), and is the FOB Price * manufacturing facility.
3.2 Invoicing. * will submit an invoice after each shipment of * to SONUS
requesting payment for such shipment corresponding to a specific purchase order
submitted to * by SONUS. Such invoice shall reflect a total invoice price for
such shipment calculated pursuant to the pricing terms set forth on Price
Schedule 2.
3.3 Adjustments. SONUS may, after reviewing the invoice charges, contest in good
faith the charges or any aspect thereof by giving * written notice of the
objection within forty-five (45) days of receipt of such invoice from *. Within
forty-five (45) days from receipt of the notice from SONUS, the parties agree to
resolve any disagreements between the parties.
Page 10 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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3.4 Payments. Subject to the terms and provisions of Section 3 hereof, all
payments to * for * under this Agreement shall be made in U.S. dollars within
forty-five (45) days from the date of the invoice which invoices are dated by *,
with a three percent (3%) discount if paid within 10 days of the invoice date,
or upon such other terms as agreed upon in writing from time to time between the
parties.
3.5 Taxes. * shall bear and pay all federal, state and local taxes upon or
measured by its net income, and all franchise taxes based upon its corporate
existence, or its general corporate right to transact business. SONUS shall bear
any and all sales taxes due as a result of sales under this agreement.
4. INDEMNIFICATIONS
4.1 By *. * hereby agrees to defend, indemnify, and hold SONUS harmless from any
loss, claim, action, damage, expense or liability, including defense costs and
attorney's fees, including but not limited to the costs of any environmental
sampling, cleanup and remediation resulting from or arising out of * manufacture
of * or of * handling or * disposing of any wastes relating thereto, or its
breach of any representation, warranty, covenant or obligation under this
Agreement.
4.2 BY SONUS. SONUS hereby agrees to indemnify and hold * harmless from any
loss, claim, action, damage, expense, or liability, including defense costs and
attorneys' fees, resulting from or arising out of SONUS' or its customers' or
agents' or end users' use * or sale or use of any Product or its breach of any
representation, warranty, covenant or obligation under this Agreement, other
than any loss claim, action, damage, expense or liability that results from the
manufacturing process of * by * or the adulteration of * by *. SONUS
acknowledges that there are hazards associated with the handling and use of *,
that it understands such hazards, and that it is the responsibility of SONUS to
warn and protect its employees and others exposed to such hazards through
storage, handling, and use *. * shall provide SONUS with copies of Material
Safety Data Sheets relating to * for SONUS to make the warnings set forth
therein, which may not be a comprehensive, all inclusive set of warnings, and
SONUS shall hold harmless, indemnify, and defend * from and against any loss,
cost, claim, action, expense, or liability, including, but not limited to
attorneys' fees incurred by * because such warnings or any other warnings
required by law or otherwise for the safe use, handling, and storage of * and
products containing * were not made.
Page 11 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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4.3 Conditions of Indemnity. The obligations and liabilities of either party
hereto with respect to claims resulting from the assertion of liability by the
other party or a Third Party shall be subject to the following terms and
conditions:
(a) The party seeking indemnification shall give prompt written notice to the
other party of any assertion that might give rise to a claim by the party
seeking indemnification against the other party based on the indemnity agreement
contained in Section 4.1 or 4.2 hereof, stating the nature and basis of said
claims and the amounts hereof, the extent known; provided, however, that the
failure to give such notice shall not reduce or eliminate the indemnifying
party's obligations hereunder unless the indemnifying party's shall have been
materially prejudiced by the failure to give such notice.
(b) In the event any action, suit or proceeding is brought against any party
hereto or any of its Affiliates with respect to which the other party may have
liability under the indemnity agreement contained in Section 4.1 or 4.2, such
other party may, at its option, elect to join or assume the defense of any such
action, suit or proceeding, subject to the reasonable approval of counsel by the
other party.
(c) The party seeking indemnification shall be kept fully informed of such
action, suit or proceeding at all stages thereof whether or not it is
represented by counsel, in circumstances involving multiple defendants and
rights of contribution, fees and expenses of counsel shall be apportioned in
proportion to the ultimate liability.
(d) The parties agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper and adequate
defense of any such action, suit or proceeding, including making available to
each other and/or to each other's attorneys its books and records relating to
such proceedings or litigation and making individuals available for the giving
of testimony (including depositions). Out-of-pocket costs (but not salaries or
overhead attributable to employees of a party) shall be considered costs subject
to indemnification.
(e) Neither party shall make any settlement of claims without the written
consent of the other party, unless such settlements provide for a full and
unconditional release of all claims against the other party.
(f) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY, IN CONTRACT OR
IN TORT, FOR INCIDENTAL, EXEMPLARY, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES.
Page 12 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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4.4 Limit of Liability. No claim or liability of any kind with respect to
non-delivery of * shall be greater than the price payable hereunder for the *,
whichever is applicable, in respect to which such claim is made and SONUS' sole
and exclusive remedy (except for the remedy of termination for material breach)
for delivery of non-conforming *, whichever is applicable, shall be replacement
by * or a Third Party of a like quantity of conforming *, whichever is
applicable, at no additional cost to SONUS, as set forth in Section 2.3 (b).
4.5 SONUS Product Liability Coverage. So long as commercially practicable, SONUS
hereby agrees to have in effect at the time of regulatory approval of any
Product, and to maintain in effect for the duration of this Agreement, a
commercial general liability insurance policy or in combination with an excess
liability insurance policy, coverage to include products liability, a minimum of
$5,000,000 combined single limit per occurrence.
5. FORCE MAJEURE
5.1 No liability to any party shall result from any delay in performance or
nonperformance directly or indirectly caused by circumstances beyond the control
of the party affected, including, but not limited to acts of God, fire,
explosion, flood, earthquake, governmental action (including but not limited to
laws, decrees, and regulations), acts of war or accident, so long as the
affected party shall use all reasonable efforts to correct or mitigate the
circumstances causing such delay in performance or such non performance.
Page 13 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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6. CONFIDENTIALITY
6.1 All business and technical information, in writing and identified as
confidential at the time of disclosure, including, but not limited to, the
existence and terms of this Agreement, technical knowledge, specifications,
quality standards, formulae, instructions, procedures and manufacturing
processes (the "Confidential Information") which either party may disclose to
the other party or to any employee, agent, or representative of the other party,
shall be received, used and retained by such other party and its employees,
agents and representatives on a strictly confidential basis and, except as
expressly provided for herein or as required by applicable law, shall not be
disclosed to any, Third Party (except for disclosures required by applicable
law, including compliance with the disclosure requirements of applicable
securities laws) or in any way used by the recipient party other than for the
purposes set forth in this Agreement. The party receiving the Confidential
Information shall not disclose any such information to any person within its
organization who does not have a need to know, or to any Third Party without the
prior written consent of the disclosing party. Oral disclosures must be reduced
to writing, identified as confidential and delivered to the recipient party
within fifteen (15) days of initial disclosure to be accorded the benefits of
this section.
The term "Confidential Information" shall not include any information that:
(a) is in the public domain at the time of receipt by either party or which
comes into the public domain without breach of any obligation assumed hereunder,
or
(b) was known, and can be shown by clear and convincing evidence to have been
known by the receiving party at the time of receipt from the other party, or
(c) becomes known to the receiving party through a Third Party source whose
acquisition was independent of either party and not in breach of any obligation
of confidentiality under any agreement to which such Third Party was subject,
and the use of which is not subject to any other confidentiality agreement.
6.2 The obligations of confidentiality under this Section 6 shall remain in
effect during the term of and for a period of ten years from the date of
termination of this commercial supply agreement.
7. NOTICES
7.1 All notices provided for in this Agreement shall be in writing and shall
be given by registered mail, courier, or personal delivery addressed to
the parties at the addresses listed below;
Page 14 Initials: *
* Confidential portions omitted and filed Initials: SONUS
separately with the Commission.
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If to SONUS:
SONUS Pharmaceuticals, Inc.
00000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx, M.D, Ph.D
President and Chief Executive Officer
If to *:
*
*
*
*
*
A party may change its address for purposes of receiving notices by providing
written notice of such change to the other party. Notice shall be deemed to have
been given as of the date of receipt of the party receiving the notice.
8. TERM AND TERMINATION
8.1 Term. This Agreement shall continue and remain in full force and effect,
unless terminated, for an initial term commencing on the date hereof and ending
five (5) years from the Approval Date ("Initial Term") unless the Approval Date
does not occur within seven (7) years of the date of this Agreement, in which
event this Agreement shall terminate seven (7) years after the date of this
Agreement. The Agreement shall remain in force after the Initial Term for
successive three (3) year periods unless and until one party gives to the other
party written notice of termination at least one hundred and eighty (180) days
prior to the expiration of the Initial Term or any successive three (3) year
period.
8.2 Termination. This Agreement may be terminated upon the occurrence of any of
the following:
(a) Either party's material breach of any term or obligation hereof, unless such
breach of any term or obligation is cured within ninety (90) days following
notice by the other party of its intention to terminate this Agreement due to
such breach or if the breach is of a nature that cannot be reasonably cured
within such period, unless the breaching party has taken all reasonable steps to
cure the breach within such periods and proceeds diligently to effect a cure as
soon thereafter as reasonably practicable but in any event within ninety (90)
days following the original notice;
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(b) The entry of an order for relief under the United States Bankruptcy Code (or
any corresponding remedy under successor laws) against a party; the filing of a
voluntary petition by a party under any bankruptcy, insolvency or similar law,
or the filing of an involuntary petition (which petition is not dismissed within
one hundred and twenty (120) days after filing); the appointment of a receiver
for party's business or property; a party's making of a general assignment for
the benefit of its creditors; or the liquidation or dissolution of a party.
8.3 Material Breach by *.
(a) In the event SONUS notifies * of termination per Paragraph 8.2(a) due to an
uncured * material breach, * will provide reasonable assistance as requested by
SONUS to establish an alternative viable source of * at no cost to SONUS.
(b) For purposes of Paragraph 8.3(a), assistance shall include teaching the
alternate source of supply for SONUS * the process for *, transfer of * DMF(s),
Test Methods, Standard Operating Procedures, and all other current documentation
necessary for the manufacture * and all equipment of * dedicated exclusively to
manufacturing of * at an agreed on reasonable price.
9. ARBITRATION
9.1 In the event the parties are unable to resolve a disagreement concerning any
matter under this Agreement, either party by written notice to the other may
initiate arbitration proceedings to resolve the matter pursuant to Section 9.2.
9.2 Any controversy concerning the interpretation of this Agreement, or any
breach thereof, shall be settled by final and binding arbitration in accordance
with the then existing rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction over the party against which the award is entered (or the
ultimate parent of such party) thereof. The prevailing party in any such
arbitration as determined by the arbitrator shall be entitled to receive from
the other parties costs and expenses incurred in connection with the
arbitration, including reasonable attorneys' fees. The arbitration shall be
conducted in King County, Washington, if * initiates the process and * if SONUS
initiates the process. In any such arbitration the rights of the parties shall
be determined according to the law of Section 10 of this agreement (excluding
its or any other jurisdiction's choice of law principles). The parties hereto
agree that the service of any notice in the course of such arbitration at the
respective addresses as provided for in Section 7.1 shall be valid and binding.
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10. GOVERNING LAW
10.1 This Agreement shall be governed as to validity, enforcement, construction,
effect and in all other respects, by the laws of the State of Washington.
11. PROPRIETARY RIGHTS
11.1 Except as set forth herein, all right, title and interest in any
proprietary information in the possession of either party prior to the date of
this Agreement or developed solely by either party on or after the date of this
Agreement shall remain the sole property of that party and the other party shall
be subject to the confidentiality requirements contained herein with respect to
such information. Without limiting the generality of the foregoing, SONUS shall
retain the sole and exclusive title to the Product, together with all patents,
copyrights, trademarks and trade secrets relating thereto. Each Party shall have
a royalty-free, perpetual license to utilize and sublicense any jointly owned
information subject to the terms, conditions and limitations set forth in this
Agreement. Each party shall be free to utilize for any purpose information owned
solely by it, subject to the terms conditions and limitations set forth in this
Agreement. Anything herein to the contrary notwithstanding, SONUS shall own the
exclusive right, title and interest to any and all patents, proprietary
information or other rights included in the SONUS Patent Estate.
11.2 Each party shall be responsible for and bear the cost of pursuing patents
(both within the United States of America and worldwide) to protect intellectual
property owned by such party. In the event that any intellectual property is
owned jointly, either party may notify the other party in writing of the first
party's intent to apply for one or more patents covering such property. The
other party shall within thirty (30) days of such notice notify the first party
in writing whether the second party desires to join in such applications. If the
second party joins in such application, it shall be responsible for and pay
one-half of all costs incurred in obtaining such patent, including, but not
limited to attorneys' fees associated therewith, and shall timely execute any
and all documents necessary or desirable in connection with the application. If
the second party fails to elect or declines such invitation, title to the patent
or patents shall be issued solely in the name of the first party, and the second
party shall be deemed to have waived any and all rights in and to such property
and patents. Each party shall provide non monetary assistance when reasonably
required, to pursue all appropriate patents.
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11.3 All intellectual property developed exclusively by or purchased by either
party from any Third Party other than in conjunction with this project, is
excluded from the terms hereof.
11.4 The provisions of this Section shall survive the termination of this
agreement.
12. SEVERABILITY
12.1 If any provision of this Agreement is held to be unenforceable or illegal,
the other provisions of this Agreement shall not be affected by any such holding
and shall remain in full force and effect. In such event the parties shall use
all reasonable efforts to replace any such unenforceable or illegal provision
with a provision reflecting as nearly as possible the intent, purpose, and
economic effect of such provision.
13. ASSIGNMENT, FDA REVIEW REQUEST
13.1 * shall not, without the prior written consent of SONUS, sell, assign,
transfer, encumber, or otherwise dispose of its interest in this
Agreement, whether by merger, consolidation, sale of stock, sale of assets or
otherwise, and any such prohibited transfer, if made, shall be void and without
force or effect. SONUS shall not without the prior written consent of * , sell,
assign, transfer, encumber or otherwise dispose of its interests in this
Agreement, except in connection with any merger, consolidation, sale of
stock or sale of assets of SONUS as to which this Agreement relates, in which
case no such consent shall be required. Any permitted assignee shall fully
assume the obligations of the assigning party hereunder, but the assigning
entity shall nonetheless remain liable unless the parties agree otherwise.
13.2 Notwithstanding paragraph 13.1, * , shall have the right to sell
assign or transfer this Agreement and all or part of its medical business,
together with the right, title and interest in this Agreement and * DMF(s),
to an as yet unnamed successor corporation, partnership or other organization,
comprised of: * ; or any combination of the above and/or trusts set up by the
above. Said sell or transfer may occur at any time during the term of this
Agreement, and any such assignee shall acquire all of the rights and assume
all of the obligations of * , under this Agreement.
13.3 If requested by the FDA, either party may provide a copy of this Agreement
to the FDA. In such event, the party providing the copy shall immediately notify
the other party that a copy has been or will be provided to the FDA.
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14. SURVIVAL
14.1 The provisions of Sections 2.2(f), 4.1, 4.2, 4.3, 4.4, 6.1, 6.2, 8.3, 9 and
11 shall survive termination or expiration of this Agreement (as the case may
be) and shall remain in full force and effect.
15. CAPTIONS
15.1 The captions of this agreement are solely for the convenience of reference
and shall not affect its interpretation.
16. ENTIRE AGREEMENT
16.1 This Agreement and the Schedules hereto represent the entire agreement
between the parties and supersedes all prior or contemporaneous oral or written
agreements of the parties. This Agreement may be modified, amended or changed
only by a written instrument signed by the parties except with respect to the
updates of Schedule 3 hereto to be provided by SONUS to * from time
to time as provided for in Section 2.5(a) hereof.
17. COUNTERPARTS
17.1 This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall constitute a single
agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives on the date and year first written above.
SONUS PHARMACEUTICALS, INC. *
By: /S/ Xxxxxx X. Xxxx
-------------------------------
Date: March 27, 1998
Name: Xxxxxx X. Xxxx, M.D., Ph.D.
Title: President & Chief Executive Officer
By: *
-------------------------------
Date: March 6, 1998
Name: *
Title: President
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PAGE 1 OF SCHEDULE 1
SPECIFICATIONS FOR *
SPECIFICATION *
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PAGE 2 OF SCHEDULE 1
SPECIFICATION FOR *
SPECIFICATION *
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PRICING SCHEDULE
*
(Proposed)
Volume Purchases
Contract Year Price per * Price per *
* * *
* * *
* * *
* * *
* will be shipped in * owned *. Containers not returned to * within 60 days
will be charged a container rental charge of * per month. Containers not
returned to * within 12 months will be invoiced to Sonus at * per container.
Sonus will use their best efforts not to contaminate or damage * shipping
containers.
/ /97
Schedule 3
QUARTERLY ESTIMATES OF * ORDERS
/ /97
Schedule 4
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INVENTORY CERTIFICATE FOR *
*
Date
Previous six (6) months purchases
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Total
Average of Total (divide by 6)
I CERTIFY, that on the above shown date * met its Inventory
Requirements.
Name
Schedule 5
SONUS PATENT ESTATE
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